his past spring, my hometown of San Francisco was
invaded by electric scooters—
thousands of them, all on the
streets at the same time. It
seems that three companies—
Spin, LimeBike, and Bird—
had simultaneously decided
to make the city a test site for
their transportation revolution, and didn’t wait to ask
for permission, according to
San Francisco is a natural
place for such an experiment. The streets are chock-a-block with
alternative transport devices, from hoverboards to unicycles, and
the techy workforce is eager to play early adopter (see: Uber,
Postmates, TaskRabbit). But what pissed people o;—especially
local politicians—was the upstarts’ audacity in dumping their
experiment onto the sidewalks. Not only did they sidestep city
o;cials; they apparently didn’t care about whether their busi-
ness plan might encourage people to break any, you know, laws.
Fantasy plays a big part in entrepreneurship. You have to
be crazy to start a company, the cliché goes, and there’s more
than a little truth in that. Delusions of grandeur fuel many a
startup slide deck. If entrepreneurs truly knew what they
were getting into, fewer would make the leap. Maybe that’s
what the scooter people thought: The more you know the
rules, the more you’ll feel compelled to play by them—and
that’s no way to build a breakout company.
But there’s another, more pragmatic school of startups that
maintains the opposite: that the companies with the best
chances of success have founders who actually know what
they’re talking about. These entrepreneurs not only have the
inside dope on where the true needs and opportunities lie;
they also have the networks to turn contacts into contracts.
I’ve seen both approaches firsthand. Years ago, as a reporter
at The Wall Street Journal, my beat was the travel industry, and
I witnessed this new thing called the internet inspiring a flock
of entrepreneurs, some of whom had deep roots in the arcane
world of airline-reservation systems, and others who saw an S H A Y A
Is Breaking the Rules
for Rebels or Fools?
In San Francisco, electric scooter firms went rogue at launch.
City officials were not amused. Disrupters should know how
the game is played before they try to upend it.
industry destined for disintermediation. The successful ones, it
turned out, knew how to make the calls and get the deals done.
More recently, I’ve gone deep into health care, watching
the “make the world a better place” set founder while the
more seasoned—and more reasoned—startups manage to line
up paying contracts with health insurers and hospital systems.
Virta Health, Omada Health, and Pear Therapeutics, among
others, all recognized they’d be headed into regulatory waters
and built proper expertise into their founding and executive
teams. These people know the rules well enough to squeeze
through the pain of the startup phase and move quickly to
contracts and revenue and profit.
Transportation and health care are both highly regulated
industries, in which it seems only prudent to know the rules
before you play around them. But that hasn’t stopped oodles
of startups from jumping in without knowing much only to—
at worst—crash and burn, or—at best—quickly realize that they
had better hire expertise, fast.
I still believe in the power of blind ambition to shake up the
status quo. But whether you’re an old-school methodist or a
swaggering iconoclast, some awareness of what you do and
don’t know is probably the most valuable asset you can have.
This seems like common sense, but it’s more the exception
than the rule, as the scooters littering San Francisco prove.
Oh, about those scooters: O;cials, having learned their
lesson from Uber, quickly cu;ed the startups with new rules
that limit the number of scooters allowed in the city. Although
the three rogues will likely survive, the city o;ered no guarantees that they’ll be licensed to rent out scooters just because
they’re already there. Being a first o;ender is not exactly the
same thing as being a first mover.
(@tgoetz) is a
Iodine, a digital health startup
based in San