Startups Matter In DC

In the WSJ post about the FCC’s decision (announced yesterday) to adopt Title II as the mechanism to insure that last mile access providers don’t mess with the open Internet, they explain how the White House came around on this issue:

The prod from Mr. Obama came after an unusual, secretive effort inside the White House, led by two aides who built a case for the principle known as “net neutrality” through dozens of meetings with online activists, Web startups and traditional telecommunications companies.

Acting like a parallel version of the FCC itself, R. David Edelman and Tom Power listened as Etsy Inc., Kickstarter Inc., Yahoo Inc. ’s Tumblr and other companies insisted that utility-like rules were needed to help small companies and entrepreneurs compete online, people involved in the process say.

In an office on the fourth floor of the Old Executive Office Building, some companies claimed they would have never gotten off the ground if they had been forced to pay broadband providers. “We want to compete on product and service, not on our ability to negotiate preferable treatment with an Internet service provider,” said David Pashman, general counsel for Meetup Inc.

Note that startups like Meetup, Etsy, Kickstarter, and Tumblr are mentioned. These companies took the time to go to DC and explain how an open Internet allowed them to get into business and stay in business. And DC listened.

That’s hopeful and important in a world where it seems the big guys have all the weapons. David can beat Goliath. It is not just a fable.

#hacking government

Comments (Archived):

  1. David Semeria

    Meetup, Etsy, Kickstarter, and Tumblr… it looks like the President was not the only one doing some prodding 🙂

    1. fredwilson

      It’s possible that they prodded us

  2. andyswan

    I for one cannot wait until Internet providers have the same level of innovation-incentive as the….um… water company.A permanent solution to a temporary IMAGINED problem. History repeats.

    1. gorbachev

      They are free to innovate on products and services just like anyone else. Nothing will prevent them from doing that.

      1. andyswan

        Oh really?Can they offer me a budget package that excludes streaming video?Can they offer me a family package that excludes inappropriate content?Can they offer me a cheap service that works only with my household objects, because I prefer to get my internet content via wireless providers?

        1. gorbachev

          What would prevent them from doing that? Certainly not net neutrality rules.

          1. andyswan

            Net Neutrality doesn’t prevent ISP from discriminating against one piece of content for another? That’s the very core of all 3 of those packages.

          2. gorbachev

            I think you have this completely wrong.It does NOT prevent the ISP from selling you service packages you described.It DOES prevent the ISP from filtering or throttling for streaming video (for example), IF the customers service includes streaming video (i.e. it’s for a generic Internet connectivity).

          3. gorbachev

            I think it’s way too vaguely worded to say either or to be honest.I think it depends on the definition of “open internet”. What’s actually meant by that. Does it include service packages you described?

          4. andyswan

            That’s how unelected bodies work. They stake claim to authority over something with vaguely worded proposals, and then expand their authority and influence over time.

          5. David Semeria

            Philip Sugar’s water analogy works for me: they sell you bits of data without knowing or caring what they are.What you do with that data is up to you.

        2. Matt Zagaja

          That makes buying broadband start to sound about as straightforward and exciting as buying health insurance. Eww.

          1. andyswan

            I think the better analogy would be as exciting as buying mobile plans today.

    2. Dave

      That analogy only makes sense if your kitchen faucet could deliver any beverage from any beverage company or beverage hobbyist in the world.

      1. andyswan

        I like that analogy. I’m 93 years old. The only thing I want from my faucet is water. You’re going to make it illegal for them to offer a budget package that doesn’t stream Vanilla-Cherry-DrPepper-with-vodka into my home?

        1. JimHirshfield

          No, but if you’d like I can help you reverse engineer your home plumbing to serve you effluence. Operative word: “reverse”.

        2. Alex Murphy

          you look pretty good for 93

    3. kidmercury

      no worries, this ruling isn’t going to have any effect anyway (thank god): http://blog.streamingmedia….

      1. andyswan

        I know. It’s more a declaration of who gets to sit in the judge’s chair. SHOCKER: Unelected official wants to take the seat from the citizen.

    4. PhilipSugar

      We usually agree but do not on this one. Having worked with telcom companies I can tell you the first thought about VOIP was to intentionally introduce random latency into the network so that it would make the service unusable.How is that for innovation?? That way I can’t sit at home and make calls all over the world. (I still have suspicion my provider does it)I want my provider to be a dumb pipe.I’ll use your analogy. I want them to be the water company.The water company does not try and make sure I don’t use a reverse osmosis water filter and add a splash of the purified water to my bourbon.It doesn’t dictate I can’t make ice with the water and sell it to the boaters in my marina.It doesn’t care if I make beer with it.It doesn’t throttle the pressure back when I do any of these things. It charges based on a set rate plan and I pay.So yes. I want the last mile of my internet to be a dumb pipe, just like my water company.

      1. andyswan

        I *could* be talked into agreeing with you, if this was actually limited to the last mile… which it isn’t. This proposal explicitly grabs control of over-the-air ISPs as well. They’re already slipping down the slope….

        1. PhilipSugar

          I agree with you when you talk about un-elected officials getting to make regulations.As for the over the air ISP’s I have to think about that. Because the biggest thing the iPhone did was to wrest control from the wireless companies and let loose innovation. Before that the headset makers would kow-tow to people like Verizon, and Verizon would dictate what video you could watch, what games you could play, how you browsed the internet and even not allow you to use Skype.We have Steve Jobs to thank for that. (and see how it worked out for those companies that played the carrier’s game Nokia and BlackBerry)The problem is the telcom companies have a long history of this. I cannot take anybody seriously that has been doing this since my career started the concept of “dumb pipe” was developed in Bell Labs. I forget his name but I remember talking with him in the early nineties.Believe me the telcoms HATE more than anything thinking that somebody else is making money over their network: Here is a paper from the new Bell Labs Telcordia:…In any case I consider it an honor to be told “I *could* be talked into agreeing with you if…”

          1. andyswan

            I especially like the part where you cite Apple’s role in breaking up ISP controls via consumer demand, rather than government declaration. 🙂

          2. PhilipSugar

            This is true but that was a “black swan” event 🙂 The base case has been stifling of innovation.

          3. lonnylot

            You should google ‘United States 2008 wireless spectrum auction’. Would appear that both Google and the FCC helped to change how things worked as well.

    5. kev polonski

      Having handed over power to the FCC and Title II, the FCC can now dictate the price. Just wait until the broadband providers use lobbying power to raise the cost all around. Google can’t do jack to disrupt a market that is not a market but a government dictat. We as a society don’t understand what freedom means anymore. We trust an 8,000 lb gorilla with an insatiable appetite for power and a track record of failure to equalize the playing field. Well, what you ask for is what you get. Good thing my citizenship is of a different realm, otherwise I’d be very upset.

    6. howardlindzon

      me three 🙂

  3. robert levitan

    let’s hope the proposals announced yesterday become the rules of the land and do not get hijacked or roadblocked by other powerful interests

  4. andyswan

    It’s interesting to see Netflix and Yahoo referred to as David in a david vs goliath battle. We might need to do a little re-education on market caps….

    1. pointsnfigures

      Google ($GOOG) is building a network of fibre. It will be a competitive advantage for them as they build a walled garden. Heavy regulation will help Google because they can afford it.

  5. William Mougayar

    It’s weird that something so obvious and simple gets distorted and warped by others.If we are in the information age, then open the pipes til the last mile for everybody without playing games about it.

    1. andyswan

      Some of us don’t so easily lay claim to the pipes that others paid for.

      1. William Mougayar

        Andy- I know you like free markets and competition, right? So do I. But the telco’s monopolies are a farce. It needs to be broken, and this is a round about way to doing it. Let them compete in real, not as a monopoly.

        1. andyswan

          Why not just break them up then?Municipalities around the country can lay pipe for any “provider”, including their own, to use. I have no problem with that.Turning it over to the unelected FCC in DC? That’s just short-sighted. It’s as if no one can imagine a day where people that oppose them are in charge of the government, and therefore in charge of internet distribution.BTW I can stream movies from cell-towers to my phone via any of several competing providers….something I couldn’t do just a few years ago.Again– temporary problem getting a permanent solution.

          1. John Willkie

            What actual “problem” (as opposed to fanciful fear) does the (yet unreleased) proposal “solve?”

          2. William Mougayar

            I’m not sure that it would be so heavy-handed and detrimental as you might be implying. If it’s headed that way, then it will be done, and soon forgotten. just my hunch.

    2. kidmercury

      here are the facts:1. paid prioritization has been going on outside the last mile for all time2. the majority of factors related to speed and cost occur outside of the last mile3. internet speeds continue to get faster and access rates continue to grow4. NN rules, assuming they ever get implemented in the way they are being described, impact “all miles” of the internet — NOT just the last milein light of those facts, NN advocates claim it is “obvious” that NN should be implemented, and dismiss the need to respond to the facts by repeatedly citing the “obvious” nature of their claims.

      1. andyswan

        Totally. If it’s all about the last mile, then why is FCC explicitly declaring control over the zillion miles through the air?

      2. William Mougayar

        Are you sure about #2? Then why does Verizon drag their feet in implementing what they committed to previously?

        1. kidmercury

          #2 is probably the hardest one to prove, because so many factors go into internet speed. but that cuts both ways, in that it would be equally hard to prove that the last mile is where the speed action happens.

      3. David Semeria

        Most of what you wrote above is wrong Kid, but you’re right when you say it’s not about the last mile.The whole NN argument revolves around shared resources: the more you get, the less I get. The key point about the last mile is that it’s not a shared resource – it’s a dedicated line (usually in copper) that goes from the network box to your home. That line only has so much capacity, but if you go over nobody else suffers – only you.The ISP’s want us to believe that it’s the network boxes that can’t handle all the capacity and so it must be rationed. This is bullshit. From the network box onward it’s all fiber. Fiber can easily route a couple of hundred copper connections. If it can’t it’s because the routers are too old.So why don’t the ISPs upgrade the kit in their network boxes? Because they run local monopolies — without competition they have no incentive. Much better to charge companies extra for high speed access to (whose?) clients.

        1. kidmercury

          Most of what you wrote above is wrong Kidwhich points are wrong?

          1. David Semeria

            Neatly sidestepping the thrust of my comment….

          2. kidmercury

            i’m not interested in what the ISPs want us to believe — i’m only interested in fast, high quality internet, at the lowest possible price. i don’t see how NN gets us that — in fact i think NN takes us in the opposite direction. i cite the fact that paid peering is the way the internet has been operating, and that internet speeds are getting faster and access rates are growing, to suggest that we’re on the right path. this does not imply that ISPs are angels, though the morality of ISPs and their intentions is not the primary focus (at least for me).

          3. David Semeria

            The focus of the ISP’s argument is that bandwidth is limited and must therefore be rationed. This is simply not true. There was loads of interconnecting “dark fiber” laid during the millennium boom which has yet to be lit, and network boxes ( ie the fiber to copper interface) can easily handle current traffic with modern kit.Where you’re wrong is when you talk about paid prioritization (I assume you mean peering). It’s true that it’s been around for a long time, but it’s false to imply it’s relevant to the NN debate. NN is all about allocating a scarce resource (bandwidth) whereas peering is the equivalent of economic bartering — scarcity of resources does not come into it.For the same reasons, when you say “the majority of factors related to speed and cost occur outside of the last mile” I cannot agree. Like a chain, the speed of any network depends on its weakest link. The weakest link is almost always the network box, which is the relevant extremity of the last mile.Bottom line: the ISP’s realized they needed to upgrade their network box infrastructure be able to satisfy their all-you-can-eat retail contracts, but this investment would have a very low IRR. So what do they do? Try to extract rents from the producers of the bandwidth on the basis of their monopolized relationship with the end user.

          4. kidmercury

            paid peering absolutely is relevant, since NN rules explicitly try to impact it — and since netflix introduced it into the argument to get around paying the same fees that everyone else does under the argument that such fees were in violation of a neutral network.i accept your point that a chain is only as strong as its weakest link — though this essentially means that all links in the chain are of roughly equal importance, which suggests that the sum of all links minus the last one is greater than the last link. so, to create rules that adversely impact all links in the chain in the interest of improving the last link doesn’t make sense (let alone the issue of whether the proposed rules will actually improve the last link).

  6. Robert Heiblim

    Indeed Fred, we also lobbied on the part of Small Business from the CEA Small Business Council where our members agreed that a level playing field is required. All small businesses but a lot of them.

  7. Matt A. Myers

    “Note that startups like Meetup, Etsy, Kickstarter, and Tumblr are mentioned. These companies took the time to go to DC and explain how an open Internet allowed them to get into business and stay in business. And DC listened.”This is what Carlota Perez said was needed by tech companies in the interview you did with her –

    1. fredwilson


      1. Matt A. Myers

        Interesting how now “View in discussion” button goes to a conversations platform, curious what blog/site owners will feel about their visitors/commenters being moved away from their own site – less for re-visits. I’m sure traffic numbers are looking great on Disqus now though – along with potentially a better experience for users.@JimHirshfield:disqus – Any feedback?

        1. JimHirshfield

          Bloggers that use Disqus know that it’s a unified system (i.e. commenters have one account that allows them to comment on any site that uses Disqus…and Disqus is a uniform experience across those sites). A decision to use Disqus to power your commenting is a decision at the outset to be part of a network. And with it come network effects, such as more commenters and commenting. Having conversation threads on doesn’t take away from that. Rather it adds to the content and conversation discovery where value accrues to bloggers. We’re extending that further by providing conversationalists with the opportunity to initiate conversations, not just comment and converse on posts by bloggers.

          1. Matt A. Myers

            Thanks for your thoughtful response. The system they signed up for initially was different than it currently is – I’m sure you realize this. :)More commenters and commenting isn’t really a benefit until exposure is given – which a centralized discovery directory could facilitate – but moving conversation to a centralized platform doesn’t serve any real advantage to the site/blog owner, and in fact it reduces the amount of exposure they can have to their other offerings; sure, it makes the user experience better by removing the clutter and focusing in on a specific context – and perhaps most don’t care about this, however I am sure many do have a concern – if they care about their business overall.How do you show or prove to them that being part of the network generates more of a return for them than not – or maybe you don’t care to highlight that?If their content doesn’t produce high engagement – because they don’t have many followers yet or active conversation – then they’re not going to be listed anywhere to any degree of impact in discovery channels on Disqus – so is that benefit just an illusion for them?I’m genuinely concerned, in general, about ecosystems being fair for users. Large ecosystems that amass resources and attention inherently have a level of power, and a level of gravity that draws more power towards the platform/network. A platform can leverage this however they want, and for example, in Facebook’s case they haven’t treated users well – they’re taking advantage of them, mistreating them – and worse, they can get away with it because of network effects. I feel it’s important and that the right direction is for platforms not to take more than they need and to find solutions to compensate to return nearly 100% value back out to the userbase; this is trickier than it may seem and easy to not care about because the value then is retained by the company – who is essentially incentivized not to return more value, which I feel/see being actually detrimental to the ecosystem.

          2. JimHirshfield

            “The system they signed up for initially was different than it currently is”For sure. But so is Twitter, Facebook, and [fill in the blank]. Stuff changes. Hopefully for the better.”… but moving conversation…We’re not moving conversations. They still reside at their point of origin, the pub/blogger’s site.”exposure”…is based on many factors to boost discovery to users. Relevancy to user…not just a popularity contest (I know, you didn’t say pop contest…just using that as an example).”… prove to them that being part of the network generates more of a return for them than not…”Is there an onus on us to prove this? Let’s say there is…well we’ve openly shared those stats in the past. However, does Google have to prove that there’s more discovery if your site is indexed? Facebook that your blog will get more exposure? Not trying to be difficult; really just saying try it and see.Hard for me to see where there’s any unfairness in any of this.

          3. Matt A. Myers

            Well, they reside in both locations now – however I get brought to instead of reside there, sure, but also here. I clicked “View in discussion” on this comment and it brought me to…There’s no link back or integration required from Google in order to be indexed and gain that benefit – and they aren’t taking anything in return – they do gain value by having data to analyze and then provide links. Apple and orange example.I’m not sure if it’s unfair – just a question. Surely you realize and must agree that by having “View in discussion” link to vs. that it gives more value to and less to – merely by the fact that for every view/exposure has the potential to earn revenue (e.g. ad impressions or promoting something else, etc)?

  8. Matt Zagaja

    A few thoughts from the sidelines:1. I think that the work that Lara Hogan at Etsy has been doing on page speed has been fantastic and I see the impact of it on USV company websites. I’m sure plenty of others are involved as well, but I have to imagine that corpus of knowledge and experience was pretty important in making the case.2. Tumblr, David v. Goliath, I see what you did there ;)3. Educating lawmakers and the public is tough, especially on technical issues. Incredible work on that by general counsels and others, but also quite the assist by John Oliver. I bet a good number of people that submitted public comments to the FCC did that kind of thing for the first time and it is exciting when people engage with their government on specific issues like that.

  9. pointsnfigures

    I agree on the outcomes, but not the means. I think that Prof George Stigler’s theory on regulatory capture will prove to be correct. Those same tech firms that lobbied for a heavy handed FCC ruling ought to build an expense line called “K Street” into their budgets. The big firms will get bigger, and the competitors will be crushed, just like banking and medical insurance. I am in favor of figuring out ways to increase competition on the last mile, not mandates.

  10. JimHirshfield

    “Meetup, Etsy, Kickstarter, and Tumblr”Those are all USV portfolio companies. My invitation to the White House definitely got lost in the mail.

    1. fredwilson


    2. BillMcNeely

      do you have a Nick on your staff? 🙂

      1. JimHirshfield


    3. Matt A. Myers

      Perhaps Disqus is already ubiquitous and no need to mention..

    4. Joe Cardillo

      Also cool, they are all companies that have embraced being defined / growing with their users/customers.

  11. David Mitchell

    Awesome! Thanks for your work on this Fred. We appreciate it

  12. Alex Murphy

    David was set up to win. This is a great Ted talk by Malcolm Gladwell on the subject – nimble & a better weapon.While I don’t like the idea of limiting the service at the pipe, it seems like we are not that far away from real competition for Broadband access. Fixed point, Fiber lines, cable lines, new Google service, low orbit satellites, and cell LTE service are all competing to provide access.

    1. LE

      More nimble & a better weapon.Not really they just showed up and made a compelling argument. They sold their case. That’s what it’s all about.Half of the “whining” here on AVC (or on Hacker News) is by people who are just so sure that the game is rigged that they never even put on their thinking caps at all and try to play the game (if you want to call it that).



        1. alexandergiffin

          hello! I’m new here, so I am just say’in hi!

      2. alexandergiffin

        well! hello there! I would like to say hi to you!

  13. pointsnfigures… Don’t know if y’all saw this because of the net neut debate, but it will come to the net neut debate eventually.

  14. Todd Lash

    During the first dotcom boom/bust i was a founder of an interactive-tv advertising and ecommerce company that was reliant on a deal with the cable operators for success. I wouldn’t want ANY internet services to ever be in that position (again). On the consumer side, one needs only to compare the apps and content bundled wit cable or cellular phone companies with the variety internet to see where this slippery slope leads.

  15. LE

    Note that startups like Meetup, Etsy, Kickstarter, and Tumblr are mentioned. These companies took the time to go to DC and explain how an open Internet allowed them to get into business and stay in business. And DC listened.That’s hopeful and important in a world where it seems the big guys have all the weapons. David can beat Goliath. It is not just a fable.Told you so.

  16. John Saddington

    Are you familiar with startup The Iron Yard? It’s a new code school working with Disruption Corp in Crystal City. We want to support the growing startup economy in DC!

    1. Donna Brewington White

      Second time I’ve seen The Iron Yard mentioned in one day and it’s not even 10 a.m. PST. (Someone in my network just joined the rails school. )

      1. John Saddington

        Awesome! We’re excited to be a part of the job creation pipeline… there aren’t enough software developers to go around!



  17. iggyfanlo

    My thanks as both a citizen and an enrepenuer go out all those companies including Meetup, Etsy, Kickstarter, and Tumblr that took the time and money to go to DC for all of usThanks

  18. Twain Twain

    Hurrah for the open symbiosis of the two aides and the David startups.

  19. ShanaC

    What will happen in congress

  20. howardlindzon

    nice day.

  21. Sam

    You are a good man, Fred, and deserve to take a bow on this one.

  22. Terry J Leach

    Whenever an impediment to technological progress reaches a point of regulation with 10 years a new technology will make the former irrelevant. I believe there will be a breakthru boosting wifi to broadband speed.



      1. Jack Gavigan


  23. Chuck Reynolds

    The fact that government employees worked as a “parallel version of the FCC” is concerning. FCC has processes to get full representation and input. While these individual listened to those companies, they were not able to get full public opinion and it was done by invite only. What was wrong with the proper process?



      1. Chuck Reynolds

        Broken or not, those inside government shouldn’t be circumventing the government. That is a very slippery slope. Broken or not. Who’s to say you’ll agree with the next administration’s view when they go around the “broken” system?



  25. Ahteshamkhan

    what is your name

  26. Brandon


  27. L1ght3ningBugg

    I like to hear that DC is actually listening to what needs to be said. However, wouldn’t this just make things a whole lot harder for those entrepreneurs out there to get anything off the ground?