Startup general interest

Government and startups: It’s not them vs us

By July 23, 2015 One Comment


There’s a widespread notion in the tech world that governments get in the way of innovation. The idea that slow moving, self-interested bureaucracies make it harder for nimble entrepreneurs to change the world by raising taxes and creating regulations is an easy narrative – but it’s wrongheaded.

The problem starts with a mistaken view that the public and private sector are separate entities in conflict with one another. There is no point where one stops and other starts. Rather they bleed into one another. Society needs a range of services to function and some are best provided by government, some by the private sector and many by a blend of the two. Transport infrastructure and defence are examples of ‘public goods’ that are best provided by government. The prison service and the health service are amongst those best provided by a blend of government and the private sector. Finally, food and clothing are on the long list of things best provided by the public sector.

In different times and in different countries there have been a multitude of experiments where services have been moved between the public and private sector, but these three categories have always been present, from black market economies in communist Russia to transport infrastructure in the USA.

The chart above shows how theory translates into practice. It’s from a Techcrunch article urging startups to partner with government rather than fight it. I couldn’t agree more. It’s what society needs, and as we can see from the frequency and size of the green bars above, it’s a good way to make money.