How State and Local Leaders Shape Tech Policy

TL;DR

State and local leaders can accelerate technology adoption by protecting public health and safety while removing outdated regulatory barriers. Arizona welcomed autonomous-vehicle testing, while South Bend treated dockless bike sharing as a low-cost experiment, illustrating how executive leadership, manageable risk, and cooperation among local officials can move innovation forward even when Washington is politically paralyzed.

Transcript

Hi, and welcome to the a16z Podcast. This episode of the podcast is all about how many of the big tech policy issues of the day play out beyond Washington at the state and local level. Recorded at our annual summit in November 2017, Ted Eliott, head of a16z's Policy and Regulatory Affairs team, discusses with Governor of Arizona, Doug Ducey, and th... Read More

Key Insights

• State and local governments shape major technology policies through their daily decisions about testing, regulation, public services, and infrastructure. Their actions on autonomous vehicles and bike sharing can establish practical approaches that later influence broader public policy.
• Arizona's innovation policy prioritizes public health and public safety before allowing entrepreneurship to flourish. Doug Ducey presented this threshold as an alternative to applying regulations written decades earlier for established industries to newer services and technologies.
• Outdated taxicab regulations initially threatened Uber and Lyft operations during Arizona's Super Bowl. Ducey responded by removing those restrictions through executive action and dismissing the agency leader who had planned a sting to shut the services down.
• South Bend's beta-city strategy uses its size as an advantage. The city is large enough for new ideas to encounter meaningful complexity, yet small enough for companies to reach the mayor and for officials to adjust regulatory barriers creatively.
• Dockless bike sharing reduced the financial obstacle that had prevented South Bend from adopting a conventional system. Because stations were unnecessary and no city cash funded the rollout, officials could test the service without placing the financial risk on taxpayers.
• State and local officials exchange policy ideas through relationships that cross party lines, regions, and even national borders. South Bend discovered the bike-sharing opportunity through another mayor who believed the service better matched South Bend's size.
• Technology policy is often nonpartisan because questions involving drones, financial technology, autonomous vehicles, and service delivery do not fit cleanly into Republican or Democratic categories. Practical responsibilities create pressure for state and local leaders to focus on outcomes.
• Pro-innovation government requires leadership and cultural change inside public institutions. Ducey argued that officials must establish a vision, convene appropriate people, define accountability metrics, make thoughtful decisions, and overcome the bureaucratic tendency to default to no.

Questions & Answers

Q: How can state and local governments encourage technology innovation?

State and local governments can encourage innovation by establishing clear public health and safety requirements, then removing outdated rules that unnecessarily block testing or deployment. Leaders can set a pro-innovation vision, select agency heads who support it, define accountability metrics, accept manageable experiments, and exchange successful ideas with officials in other cities and states.

Q: Why did Arizona welcome autonomous-vehicle testing?

Arizona wanted to be viewed as open for business and believed autonomous vehicles could support economic development and innovation. After officials were satisfied that public health and public safety concerns had been addressed, companies were invited to test and deploy vehicles. This contrasted with other states that, according to Ducey, imposed permitting fees, recertification, or additional licensing.

Q: How did Arizona change its approach to Uber and Lyft?

An Arizona agency leader planned to use a sting to shut down Uber and Lyft during the Super Bowl. Governor Doug Ducey rejected that approach because the applicable regulations had been created decades earlier for the taxicab industry. He removed the restrictions through executive action and returned the agency leader to the private sector, signaling a change in governmental culture.

Q: What does it mean for South Bend to be a beta city?

Being a beta city means positioning South Bend as a test bed for new technologies, social ideas, policies, and businesses. Buttigieg said the city combines enough scale to expose an idea to real complexity with enough accessibility and flexibility for innovators to reach local leadership and work creatively around regulatory barriers. Successful experiments there can therefore provide meaningful evidence.

Q: Why was dockless bike sharing suitable for South Bend?

Dockless bike sharing eliminated the station costs that had been the largest obstacle to introducing bike share in South Bend. The business model required no city cash, so the municipality could experiment without putting taxpayer funds at risk. The approach also aligned with the city's broader goal of welcoming new technologies and serving as a test environment.

Q: How do mayors and governors discover innovative companies and policies?

Mayors and governors can discover innovations through networks of state and local officials who share ideas and referrals across political, regional, and international boundaries. Buttigieg learned about the dockless bike company from another mayor who believed it was not appropriate for that mayor's city but would fit South Bend. Such cooperation can continue without waiting for national governments.

Q: Why are many technology policy issues considered nonpartisan?

Technology issues such as drones, financial technology, autonomous vehicles, and local service delivery do not naturally belong to one political party. Ducey called them nonpartisan rather than bipartisan because leaders can discuss shared challenges without emphasizing party affiliation. State and local governments also face direct pressure to deliver essential services, which encourages practical decisions and cooperation focused on results.

Q: How can public leaders overcome resistance to government innovation?

Public leaders can overcome resistance by setting a clear vision, choosing responsible agency leadership, convening the right participants, defining measurable expectations, and making thoughtful decisions. Ducey argued that innovation must be led because bureaucracies often default to an institutional no. Buttigieg similarly observed resistance inside government, including difficulty persuading employees to adopt an email platform such as Outlook.

Summary & Key Takeaways

• Arizona sought to become a pro-innovation state by replacing outdated rules with an approach centered on public health and safety. Governor Doug Ducey described lifting taxicab-era restrictions affecting Uber and Lyft, holding agency leaders accountable, and welcoming autonomous-vehicle companies that encountered added fees, licensing, or recertification requirements elsewhere.

• South Bend positioned itself as a beta city for technologies, policies, and businesses. Mayor Pete Buttigieg argued that the city was large enough to present meaningful complexity but small enough for direct access and regulatory creativity. Dockless bike sharing addressed the cost of stations without requiring city funding.

• Ducey and Buttigieg characterized many technology questions as nonpartisan because state and local governments must deliver practical services and economic development. They emphasized leadership, experimentation, collaboration among officials, and cultural change inside government, where institutional resistance and a tendency to reject unfamiliar ideas can obstruct otherwise promising innovations.