With the startup community creating new markets across the United States and world, governments are beginning to find ways to regulate them in order to receive proper taxation.  Many startups are within regulated markets – for example biotech and pharma– however many new businesses and their markets are not, such as fantasy sports betting sites like Draft Kings.

There is no foolproof method to avoid regulation altogether.  But, with a thoughtful strategy, you can design your communications and marketing campaigns in a way that makes it more likely for you to garner a seat at the regulatory table rather than a seat in the Attorney General’s waiting room.

Here are some tips for developing strategic communications in an emerging industry that is more likely to put you in the good graces of regulators and law enforcement rather than on the firing line:

#1 – Don’t Be Jerks


If you or your company looks like a jerk in the public eye, particularly in a new and unregulated business entity, it is going to put you at a disadvantage from launch.

The startup community is a “who you know” culture, but the outside world of Attorney Generals, the IRS, the Justice Department, state governments and the SEC are not. In many cases, these entities have an exact opposite culture, acting as pure business, interested in pursuing the public good, and basically designed to stop rogues from disserving the public.  Those that are scouting for flagrant lack of regard for regulation are usually elected and have higher political ambitions. Putting those that misbehave in their crosshairs for a regulatory takedown makes for great headlines.

You can see this example now with Draft Kings.  The company has played their “rogue” card well in marketing, advertising and public relations. They have lots of players and growth in an unregulated marketplace.  They have seemingly challenged regulators and thumbed their fantasy football noses at them.

For that, the company is now kicked out of the State of Nevada as a gambling operation and under scrutiny from the Massachusetts Attorney General and the New York Attorney General, with likely increased state scrutiny to follow.  

Don’t invite controversy unless you have a plan to handle it.

communications strategy#2 – Create a proactive crisis communication plan

Whether you are TJ Maxx dealing with a massive hack of credit card numbers, Uber facing worldwide protests from taxi drivers to regulate the new “gig” economy,  or Draft Kings and Fan Duel dealing with insider trading accusations, unexpected controversy with a poor public relations and marketing strategy will likely result in regulators sprinting toward your company at lightning speed.

These breaches in new-market companies showcase a lack of prep controversy and how crisis can sink your stock, customer trust, and bring in the regulators.

Avoid this. Establish a proactive strategic communication plan that deals with potentials risk before they occur. In many instances, depending on your business model and the new market that your company is playing in, you can actually reach out to regulators and law enforcement proactively and seek their counsel.  It will go far towards getting you to the bargaining table rather than waiting for the verdict to come out.

#3  –  Hire advisers that have been in a regulatory or law enforcement role – and promote that fact in your marketing

You can readily hire experts that are ex-regulators and ex-law enforcement to guide your development of security measures. By putting their name, and thus their seal of approval, on elements of your public relations strategy, you will be setting up a safety net.  While this strategy has a high up-front cost, it could save your company millions in the long run.

Draft Kings did this – albeit after their proverbial horse left the barn – by hiring the former Massachusetts Attorney General Martha Coakley to advise them as the current Massachusetts Attorney General, and Coakley protégé, Maura Healey starts to investigate their operation.

Uber recently did the same a year ago by hiring Obama campaign manager David Plouffe to be its “Evangelist-in-Chief” during the height of protests and global regulatory action. This has contributed to an overall decrease in criticism. Plouffe’s new goal at Uber is to talk about how Uber is helping the U.S. economy recover. Plouffe was just on NPR this week discussing how Uber is helping its employees and the economy.  Well played Uber.

Again, this isn’t foolproof, but it can be an extremely effective proactive approach.

#4 – Laud good deeds and works in your strategy (if you don’t have good deeds, you should get some)

Creating goodwill is imperative to establishing a foundation of trust with the general public, especially for companies in new and unregulated markets.   By establishing goodwill, trust and happy thoughts from the general public about your company will lessen the blowback if regulators begin to interfere with your service or commodity.  People will be outraged that a company that is doing so much good is being trampled on by a government entity.

marketing plan volunteer

Don’t let your good deeds go unnoticed!

CareWell Urgent Care, an urgent care chain that entered Massachusetts in 2012 (with no licensing regulations for urgent care centers currently in place),  used this strategy and conducted open houses for their host communities, did volunteer work at schools, churches, and conducted free community health fairs.  As a result, when the Massachusetts Department of Health wanted to create a new license for this new health care entity, CareWell was at the table.  As an aside, they also hired a lawyer that was the former General Counsel for the agency.  Regulations came out in their favor and did not interfere with their business model.  Well played CareWell.

Similarly, Uber began to promote its more philanthropic endeavors prior and after detractors claimed they were putting hardworking cabbies out of business.  Uber promoted its hiring of veterans, giving free rides for the inebriated on New Year’s Eve by partnering with local non-profits, and through goodwill gimmicks such as delivering ice cream to your door on hot days, bringing you a Christmas tree, and even bringing by adoptable kittens to snuggle with for 15 minutes. Result of David Plouffe + marketing of goodwill gestures has resulted in favorable or in some cases stalled regulations and an outpouring of support from the general public.  Well played Uber.

The moral of the story:  the smart and strategic companies do win.