A playbook on how startups should enter regulated markets

Photo credit: Succo

The opposite of disruption is the status quo.

If you’re a startup trying to disrupt an existing business, you need to read The Fixer by Bradley Tusk and Regulatory Hacking by Evan Burfield. Here’s why:

One of the great things about teaching has been seeing the innovative, unique, groundbreaking, and sometimes simply crazy ideas of my students. They use the business model (or mission model) canvas to keep track of their key hypotheses and then rapidly test them by talking to customers and iterating their MVP. This allows them to quickly find product-market fit.

Except when they’re in a regulated market.

A playbook for entering a regulated market

There’s nothing magical about dealing with regulated markets. However, every regulated market has its own rules, dynamics, languages, players, politics, etc. And they are all very different from the business-to-consumer or business-to-business markets most founders and their investors are familiar with.

Here’s what you should do.

1. Diagram your business model

The best way to start is by drawing a business model canvas. In the customer segments box, you’re going to discover that there may be five, 10, or more different players: users, beneficiaries, stakeholders, payers, saboteurs, rent seekers, influencers, bureaucrats, politicians, and regulators. As you get out of the building and start talking to people, you’ll discover more.

Instead of lumping them together, each of these players, require a separate value proposition canvas. This is where you start figuring out not only their pains, gains, and jobs to be done, but also what products/services solve those pains and gains.

When you do that, you’ll discover that the interests of your product’s end user vs a regulator vs an advocacy group, key opinion leaders, or a politician are radically different. For you to succeed, you need to understand all of them.

One of the critical things to understand is how the regulatory process works. For example:

Lessons learned