What if the Hi Tech Industry were Regulated like the Medical Industry?
A friend came over the other night and as we sat watching the kids, he told me a story about a company in the tech space he admired called “Square”. The company grew from a tiny start-up making small square add-on devices for the iPhone that processed credit cards. It’s now a 3.25 billion dollar company in 4 years. This got me thinking, what if his industry had to deal with something equivalent to the FDA regulation burden? First, America wouldn’t be the leader in the space, period. The regulatory costs associated with getting new software or hardware “approved” would mean that companies like square would be dead in the water before they began. For example, if you were to place a 300 million dollar, 7-10 year approval burden on each software “product” before it reached the market and could be sold or marketed, we would never have Skype, Apple, Adobe, or even Google. All of these were start-ups that needed to show that their software was “insanely great” and popular before the big boys put in their money. Free software on the internet to grab eyeballs? Forget about it… In addition, the small initial rounds of funding that have become commonplace in this industry wouldn’t be anything close to the amount needed to get “approval” by the “SHA” (Software and Hardware Administration). The concept of “beta” software would also go out the window, as these companies would need to show that their products were perfect to an independent board of reviewers seeded of course by the giants of the software industry. What would we have? Big Blue IBM would be fine and would meter out a few basic products to us like a word processor and spreadsheet. A presentation software might only now, in 2012, be in the works, but held up in it’s “phase III” trials trying to convince the approval panel that obnoxious presenters wouldn’t harm viewers with overcrowd and garishly colored slides. A smartphone? Hah! The risks associated with texting while driving would spell certain death for the product. The upshot? If hi tech were like medicine, you wouldn’t have most of the gadgets and cool software we all rely on everyday and our economy would be stuck in reverse. Countries that didn’t have this tech regulatory buden would have developed their own “Silicon Valleys”. The real American “Silicon Valley” would be just another middle class suburb of San Francisco. Steve Jobs may still be working on a commune and Sergey Brin would be a promising programmer working his way up the corporate ladder at IBM. Wait a second…Skype was developed in Europe, so we’d still have Skype, but getting it “approved” in the US would be blocked by a bureaucratic nightmare. While I’m not saying we should treat medical regulation like the hi tech industry, this is a great thought exercise to see how excessive regulation smothers innovation. If you want to see how to solve these issues, read my new book…Request a Regenexx Appointment