Is Regulation 1.0 Slowing the Networked Economy?

Fred Wilson alerted me to a talk Nick Grossman recently gave representing their company Union Square Ventures relating to how regulators haven’t kept up with a number of peer to peer business models from Kickstarter to AirBnB to the lending business. Specifically there are fire code regulations which apply to renting out apartments to many tenants. Moreover neighbors may not want the foot traffic of strangers associated with renting apartments to others for brief periods online. Finally Kickstarter was sued in part for enabling accompany funded on its platform to infringe the patent of another company.

Grossman proposes regulation 2.0 which applies to the new intermediaries which function as service provider and information provider. He wonders how they should be regulated in the real world. He goes on to discuss trust 2.0 allowing members to transact with some degree of certainty.

My take is the challenge in getting to a regulation 2.0 world where global governments will facilitate the growth of new networked business models is the patchwork of local, state, federal and international laws which would need to be harmonized. Moreover there is a great deal of money in entrenched business models which gets funneled to government decision-makers who are being pressured to keep the status quo. The question will be whether regulators will side with the new entrants in the interest of helping the local population or get swayed by the existing business leaders looking to keep a lock on their current business models – like the taxi business as an example.

Here is the video of the presentation which has some audio issues and the slides follow below.

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