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President Trump’s anti-regulation policies might actually be good for tech startups

I know, I know. But I’m begging you to read this till the end, and not take me out of context.

President Donald Trump meets with CEO of General Motors Mary Barra (L), CEO of Fiat Chrysler Automobiles Sergio Marchionne (3rd R) and Fiat Chrysler Head of External Affairs Shane Karr (2nd R) in the Roosevelt Room of the White House on Jan. 24, 2017.
Shawn Thew-Pool / Getty

Well, it happened. I thought it was a joke when he started campaigning, and I was aghast when he was elected, but that’s all history at this point: Donald Trump is president. Rather than spend time on sour grapes, I think it’s more productive to make a clear-eyed appraisal of what his administration might mean for my industry. I know that what I say next risks being taken out of context, but from my vantage as a longtime tech entrepreneur and venture capitalist, I believe that there’s a real chance Trump will be — I’m begging you to read till the end and not take me out of context — good for startups.

First off, change in general is good for entrepreneurs, because it creates new circumstances for them to exploit or gaps for them to fill. Regulatory change, more specifically, is ripe with opportunity. Moreover, Trump has historically made a lot of pro-small-business noises, and has signaled that he will shake up the Small Business Administration. Professional-wrestling magnate Linda McMahon is potentially taking over, and may be receptive to the type of changes that would allow emerging enterprises — in tech and outside it — to grow, including making it easier for first-time entrepreneurs to access startup grant funding.

The most significant reason Trump might be good for early-stage companies is that he is very anti-regulation. The White House has already issued a freeze on new or pending regulations to all executive departments and agencies, for example. One can argue whether less regulation is good or bad for society. But it’s only good news for startups, which are always in a hurry to ship their ideas into the real world.

People I’ve spoken with in the health sector expect that the new administration will aggressively pare back FDA regulations, thereby opening the window for a lighter-weight process for health-care startups of all kinds — devices or drugs — to get their products to market. (I’m not arguing that this will necessarily be good for patients.)

Meanwhile, a more liberal policy on drones will make commercial applications of the technology easier to realize. This is a space that I’ve spent a good deal of time looking at as an investor, and where I happen to agree with FAA head Michael Huerta, who said, “We need … to stop moving at the speed of government.” If the regulatory burden is lifted, expect drone startups for everything from delivering pizzas, handling insurance claims, even herding unruly sheep to go mainstream.

Beyond regulations, Trump’s pick for education secretary, Betsy DeVos, has long championed charter schools. Setting aside the political and pedagogical debates around them, I’ll just note that charter schools are likely to provide opportunities for education technology (or edtech). Because charter schools, by design, are trying to avoid replicating the model of old schools, they experiment with new teaching methods and learning models, and are eager buyers of edtech.

Lastly, Trump has promised to make huge investments in infrastructure, largely to be funded by debt. While the macroeconomic impact of such a policy is debatable, for entrepreneurs this will create enormous possibility. If the federal government does commit to a massive program of building new bridges, tunnels and roads, they won’t be built the way they were in the 1940s and ’50s. Rather, startups will be waiting to meet the president, carrying his golden shovel, with innovations like urban simulation, “smart bridges” and “smart tunnels.”

None of the above is to say that Trump will be good for the tech industry overall. In fact, he will almost certainly cause problems for large technology companies like Google, Netflix and Amazon. His style of populism involves ostentatious displays of corporate activism — “going after” vested interests — and Big Tech at this point is as sizable as Big Oil & Gas. (Facebook might be given a pass, since his little tech buddy Peter Thiel is on the board.) Of real concern, moreover, are early indicators that the administration will gut existing rules on network neutrality. His newly named FCC chairman, Ajit Pai, has gone so far as to say that net neutrality’s “days are numbered.” Such a shift would definitely hurt tech giants — as well as a subset of startups.

Therefore, as to whether Trump will be beneficial for the broader economy — I’m agnostic. And what his impact on geopolitics, social issues and democratic norms will be, I leave to more knowledgeable and wiser commentators. But speaking strictly about the entrepreneurial ecosystem, of which I do have some expertise, my rational assessment is that the Trump administration will be neutral-to-positive for startups. Of course, only time will prove this forecast out. At present, judging from my Facebook feed, the only thing that President Trump seems to be disrupting in Silicon Valley is its morale.

Ashu Garg is a general partner at Foundation Capital, where he invests in B2B software across the stack. He currently serves on the boards of TubeMogul, Localytics, Conviva, ZeroStack and Yozio, among others. Reach him @ashugarg.

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