Meet Izzy the Innovator. A millennial IT professional and cat lover. Izzy spent spent his evenings and weekends volunteering at his local cat shelter and started to observe that cat adoptions were significantly decreasing as well overall foot traffic in the cat shelter. Izzy started asking questions and found out that people didn’t suddenly stop loving cats. They simply stopped coming to cat shelters, mostly due to traffic and parking. Izzy started scheming: if he couldn’t make people come to see the cats, what if he could make the cats come to them. Izzy started doing research and learned if he could create a cat delivery service, cat adoptions would increase by 35 percent. And that’s how Kwik Kat was born.
Izzy researched hiring drivers and quickly learned this would be cost too much for an early stage startup to hire a work force, so he came up with the idea to deliver the cats with drones. With 50k in seed funding, Izzy purchased 25 drones and launched his company in Boston, Massachusetts (the number one cat friendly city based on his research!).
Izzy contracted with cat shelters who would connect his technology with potential cat adopters. After filling out a quick application form on the Kwik Kat app and receiving approval, cats would be on their way to a new home. Izzy did most of his advertising through social media and the business began to take off. So much so that Izzy started to receive inquiries from investors who were interested in funding Kwik Kat’s expansion into new cities. Izzy was very excited about the growth his company and proud of how he solved the decrease in cat adoptions with new technology.
As Izzy was planning for his growth, one day received a cease and desist letter from the FAA stating that based on their review of the Kwik Kat website and social media, Izzy was using his drones without proper government authorization. The letter stated this was in violation of FAA rules and directed Izzy to cease all operations of Kwik Kat immediately in order to ensure public safety. Izzy was shocked to know that the FAA was shutting down Kwik Kat. When he drafted his business plan he never considered any government rules. He thought he was being innovative by using a new technology to solving his cat problem.
Within minutes Izzy also received a call from the Massachusetts Division of Animal Health requesting a meeting because they were concerned that the transport of cats via drones was “animal abuse” under the Massachusetts Protecting Animal Welfare and Safety (PAWS) Act. Izzy agreed to the meeting, but he had never heard of the PAWS Act, and frankly his business was to protect the welfare of homeless cats. He figured the best thing to do to prepare for the meeting would be to google the law. He opened his computer and noticed he had a new email from Boston Councilwoman Cat Lady. The email was to alert him of a upcoming city council meeting to discuss an ordinance to ban cat deliveries. Councilwoman Cat Lady’s email explained that while she loved cats and the spirit of Kwik Kat she had received a number of complaints from residents about the noise level associated with the shrieking cats as they flew across the city. She invited Izzy to attend and offer testimony but said she was certain the delivery ban would be enacted.
Izzy was at a total loss for what to do next since his business plan never considered the possibility of government having an an issue with his business model. Izzy’s only choice at this point was to shut Kwik Kat down.
Kwik Kat is fictional business (for now). But Izzy’s failure to consider how government barriers could impact his business is not a new or fictional scenario. There are many innovators just like Izzy who think that their business doesn’t need to consider government or think they can fly under the radar of government. As we have seen from companies like Uber to Draft Kings to Airbnb, its nearly impossible for most startups to ignore government, especially those that are disrupting highly regulated industries. Kwik Kat may not be a real story, but it is a real example of a company that decided to act fast and ask for forgiveness later. Though this “may have” worked for a company like Uber (which is still debatable) Uber is the exception and not the rule.
My advice to startups: Don’t let government lead your startup to the startup graveyard. Plan for government early on so it will be your friend and not your enemy. The best to break government barriers is with a plan!