I don’t know if you’ve noticed, but my home state of Utah has been making some news of late. People are starting to realize that there’s a booming tech market nestled within the Rocky Mountains. And with funding darlings like Qualtrics, InsideSales and Pluralsight all within an hour’s drive of each other, VC money raised in the state for 2014 outpaced markets many times the size of Utah.
But you may have missed the darker news that’s recently been reported. Earlier this year, after Lyft and Uber debuted in Utah, there was a slew of stories about drivers receiving huge fines. Now, this isn’t isolated to Utah — both companies have experienced similar issues all over the world.
In addition to this, there was a story in December about Zenefits being banned from doing business in Utah because it offers a free solution for small businesses to run HR processes through a single system. The basis of the ban was the pricing model and the fact that, and I quote, “It’s unfair to traditional insurance brokers.” Thankfully, Zenefits did respond to the outlandish mandate by the state’s Insurance Department. But it still begs the question …
The Big Capitalism Lie
Can we all stop pretending that we live in a capitalist society here in the USA? True capitalism went out the window centuries ago. We now live in an over-regulated environment where entrepreneurs who are looking to start a business are often faced with a pile of paperwork and red tape. And even when they fill out the correct forms and follow the rules, they can still be slapped upside the head with an injunction, similar to Zenefits.
People reading this outside the United States may be shocked to hear that we’re not capitalists. But if you do business in the States, you’ve known this your whole life.
School Yards and Marbles
My last true experience with capitalism was when I was 10 years old and was trading marbles on the grounds of my elementary school. Kids would exchange two cat’s eye marbles for a “Banger” (a larger marble designed to knock other marbles out of a circle), or they would save up their nickels and dimes and buy one off of their friend.
Soon, different kids developed reputations for being respectable brokers of marbles. They were known to have the best marbles and would offer them at great prices. Naturally, kids on the schoolyard flocked to these merchants and they often made a killing. Likewise, other kids were known to be misers who would never do a deal unless they were taking advantage of the buyer. In short order, those kids lost customers to the more affordable marble dealers, and pretty soon they were cut out of the marble trade.
That’s capitalism, damn it!
We never had our principal come out to the schoolyard and tell us that we couldn’t sell cat’s eyes for a dime because that was unfair to the other children who were trying to get a quarter for the same marble. Similarly, the principal didn’t ask us to register with the school in order to take part in the marble trade.
And the best part was that the marble dealers that sucked quickly went away, while those that rocked quickly ruled the schoolyard.
That’s capitalism folks. Everything else is just a bastardized version of it that uses the moniker.
Are we to believe that the Governor of Utah shot up in bed in the middle of the night, a cold sweat beading his forehead, and quickly called the attorney general and frantically told him that he was worried about the traditional insurance brokers and that they needed to stop the nefarious Zenefits?
Instead, what probably happened is that a traditional insurance broker with a cousin that works in the Governor’s office was able to put a bug in the Governor’s ear. Maybe he promised a campaign donation, or maybe he insinuated just how influential traditional insurance brokers are in the local business community. Either way, they convinced the Governor that the state needed to step in and ban Zenefits.
What a pile of horse shit.
I’m sorry, but when a company does something better, for cheaper, and steals customers from the established players in the industry, that’s called Economic Darwinism. It’s the same thing that Uber and Lyft are currently doing to traditional taxi companies. Consumers vote with their dollars, and very quickly they establish who they prefer. And you know what? It’s better for the consumers!
Yet the government feels the need to push its weight around and stick its nose where it doesn’t belong.
By aligning themselves with the old guard industries, politicians are drawing lines in the sand. They’re stating they are firmly in the camp of the dinosaurs of the business world. And, similar to Economic Darwinism, the politicians making it difficult for industry disruption to occur will experience Political Darwinism.
We are already seeing signs of this happening. People are no longer drinking the Kool-Aid when it comes to marijuana prohibition, and states are falling in line and legalizing the industry left and right. Similarly, net neutrality is causing even less-political citizens to get involved and attempt to stop an antiquated way of doing business and the politicians that support it.
As the voting population becomes younger and more accepting to new ideas, old ideas are ushered out with the previous regime. New politicians are voted in and take the place of old politicians, and over time the landscape begins to shift.
Unfortunately, this can take some time, and there are often casualties of asinine regulations before they can be abolished.
Be Careful Out There
So, the next time you’re giving your friends a lift home, make sure you don’t collect more than the exact amount of cash you need to replace the fuel you used. If you turn a profit, you might be in danger of operating a business illegally from your vehicle.
Then again, if you don’t make a profit from giving your friends a lift, couldn’t you be considered a non-profit and be subject to all that 501c regulation?
Yes, that’s a silly example, but it’s a silly law, so what do you expect?
Mike Templeman is the CEO of Foxtail Marketing, a digital-content marketing firm specializing in B2B lead generation and lead optimization. He is passionate about tech, marketing and startups. When not tapping away at his keyboard, he can be found spending time with his kids.