Three Ways Governments and Startups Cross Paths in Emerging Mobility
Written by guest author Kenny Fennell. Kenny is a consultant with WSP’s New Mobility Group. His work focuses on emerging mobility pilots, policy, and planning. Prior to this role, he worked in the City of Detroit’s Office of Mobility Innovation. Views shared here are his own.
A mobility startup needs to interact with the government. Below is an introduction to government roles and thoughts on how startups can navigate those relationships.
Ultimately, the government’s goal is simple: improve the lives of residents. However, this goal is complicated given the various definitions of what it means to improve one’s life. While we can agree on the improvement of air quality, infrastructure, and public transportation, the process to accomplish these goals differs for each government official. The combination of the personalities and the various levels, jurisdictions, and stakeholders of government creates a labyrinth of competing values and interests.
For example, to create safer streets a government might explore the following questions: Is the roadway located in a city or rural area? Who are the primary users? Who owns the roadway (City, County or State)? What are the social equity implications? How do we prioritize where to deploy solutions? Based on the answers to these questions, local lawmakers would decide whether to create people-first, car-free zones or invest in vehicle-to-infrastructure (V2X) technology for cars to interact with intersections.
Unless a startup has first-hand experience in government, participates in an accelerator program in partnership with a government agency (e.g. Transit Tech Lab), or has a policy team, navigating government ecosystems is a challenging task for early-stage mobility companies.
Despite having common goals, competing methods, incentives, and miscommunications between early-stage mobility companies and the government affects a company’s ability to execute their business model and a government’s ability to achieve its socioeconomic goals.
Every mobility company has three scenarios of government engagement:
- Government as a customer.
- Government as a regulator.
- Government as an influencer.
Scenario 1: Government as a Customer
This scenario is straightforward: The mobility startup is selling a product or service to a government agency to solve a problem. For example, an Intelligent Transportation Systems (ITS) company is selling transit signal priority hardware to city governments to reduce traffic congestion. In this scenario, it’s likely the tech provider and the government have similar goals: Give buses green lights at intersections to increase bus speeds and increase ridership. This would result in reducing traffic congestion.
Governments are responsible for operating, maintaining, and improving public roadway infrastructure and the transit system. As a result, the startup is engaging the government as a customer through business development, product development, and sales.
However, government sales are more complex than typical enterprise sales processes due to procurement rules. In addition to learning these procurement rules and process, the startup must determine who to connect with so they can be in position to win the deal when it is advertised. Given the complexity of the government ecosystem, determining the point of contact is challenging. Rather than trying to sift through red tape and government bureaucracy, I would advise looking for an Office of Mobility Innovation. Mobility Innovation offices were created at various levels of government over the last 5 years (a simple Google search shows this proliferation) to explore emerging mobility solutions and will likely be a champion in navigating government. The leader of this type of office typically has a title of “Chief of Mobility Innovation” or “Director of Innovative Mobility” with staff titles including “Mobility Strategist” or “Mobility Planner.” They are the first point of contact and if interests align, can help the startup move forward.
Scenario 2: Government as a Regulator
In this scenario, obtaining government approval is part of the process of deploying the service. This is particularly salient for micromobility companies deploying shared fleets in cities across the world. While the company has business goals of revenue generation and customer acquisition, they can also have social goals of improving air quality by providing people an option to use micromobility vehicles rather than greenhouse gas emitting motor vehicles. The government likely also has these goals; however, they also likely have additional questions related to improving the lives of their residents: Will the micromobility service equitably serve all residents regardless of income, race, gender, ability, and where they live? Is the service safe for our residents to use? How will the service interact with other people who use the street? Are there liability concerns for the city if this service operates in the public right of way? Given these variables, the government is likely to regulate the industry to achieve their goals and it’s the startup’s job to adhere to these regulations. Governments typically regulate an industry by delaying deployments until a plan is created (Seattle Starts the Electric Scooter Process), banning vehicles to avoid a catastrophic outcome (Atlanta Bans Overnight Scooters), or by launching a pilot program to determine what regulations work to achieve desired outcomes (Chicago Permit Pilot Program). Engaging in the pilot program is likely to be the most common, especially for larger markets.
As we’ve seen with the various micromobility permit pilot programs across the US, cities have evolved significantly since ride-hail companies (notably Lyft and Uber) launched and are much better equipped to quickly respond to the emergence of new services through regulation. Given this, it’s likely not in the startup’s interest to launch unannounced without first engaging with city officials. Choosing to launch without notice could have lasting consequences for the company including a tarnished reputation or being barred from deployment because permit criteria were not met: See San Francisco.
Instead of a blitz deployment, the preferred avenue for the company is building a relationship with the government stakeholders within the permit program, identifying mutual interests and keeping the city informed when ready to apply to participate in the permit program. To apply, the startup typically completes an application and submits evidence that they are able to meet the criteria outlined in the permit. If the startup is unable to participate in the permit program, they should seek a legal workaround that isn’t insulting to city officials such as deploying on a privately owned campus or implementing an alternative get to market strategy: See Bird in San Francisco. I know how complicated the permit process can be, so a reminder the company should look for a person at the Office of Mobility Innovation to be a champion.
Scenario 3: Government as an Influencer
For the final scenario, the government isn’t the startup’s customer and government isn’t a regulator. Instead, the government plays a role through a federal, state, or city legislative body making a policy decision that affects a component of the industry.
For example, a SaaS company selling a data aggregation platform to consulting firms. The SaaS company’s value centers on the platform’s ability to aggregate data from various mobility service providers. If the California State Legislature passes a bill that supersedes all California city requirements that mobility providers share their mobility data, the data that feeds the platform is no longer available along with the core value of the company. While this is a nightmare scenario, it could happen in California with AB-1112 Shared Mobility Devices Local Regulation. The take away is the language has changed from limiting to empowering a city to regulate mobility data but the outcome is still uncertain. This scenario occurs regularly with topics ranging from mobility data sharing to parking policy to congestion pricing. The best approach for the startup is to engage the government representative that’s involved in the appropriate committee at the House of Representatives, the Senate or City Council. However, startups have little influence in the conversation, with companies like Lyft, Uber, and Lime carrying a heavy influence.
For the mobility startup facing legislative headwinds, the best way forward may be a business model pivot. For the later-stage company, this is a job for their policy team. Ultimately, this is a scenario that can play out at a federal, state, or city level and navigating these ecosystems is more complex than the previous two scenarios.
A 3-Step Process for Engaging Government
To navigate these and other scenarios, I advocate the startup develop a general government stakeholder engagement process:
- First, understand the business model and values.
- Second, given the business model, determine what role government plays (customer, regulator, influencer or other) and the respective values of the agencies and individuals in this role.
- Third, given the first two answers, build a relationship with the appropriate government stakeholder(s). Remember the mobility innovation offices are more likely to champion a startup through the government system.
While each startup’s path will be unique dependent on its business model and the context surrounding the policy topic, this process can help provide clarity on how to move forward.
Click here for a table that breaks down the government by federal, state, and local, and explains the various agencies’ responsibilities and possible roles.