The United States is home to approximately 585,000 technology-related companies, but lawmakers usually focus on four: Google, Amazon, Facebook, and Apple. State and federal policymakers have had these companies in their sights for years.
The problem is that technology policy doesn’t impact only Google, Amazon, Facebook, and Apple. It affects all companies, from the firm that just won its first round of venture funding to the young innovator who is still working out of mom’s basement. Engine gives these startups a voice. Founded in 2011, the nonprofit organization supports the growth of technology entrepreneurship through economic research, policy analysis, and advocacy.
For example: in October 2011, a federal lawmaker introduced the Stop Online Piracy Act (SOPA). The bill would have expanded U.S. law-enforcement efforts to combat online copyright infringement and online trafficking in counterfeit goods. The legislation sounded straightforward at first, and lawmakers quickly signed up to cosponsor the bill.
But in addition to curbing free speech, SOPA would have heaped huge new regulatory and legal costs on startups. According to Engine Foundation Executive Director Kate Tummarello, the bill would have created insurmountable burdens for startups. To demonstrate SOPA’s potential impact, on January 18, 2012, companies’ websites went dark for 16 hours. Americans took notice.
“SOPA was the first real grassroots movement for Internet policy,” says Tummarello. “The bill went from having support from dozens of members of Congress and high-profile organizations to being seen as a poison pill.”
The SOPA experience made it clear that there was a need for a permanent organization that could educate the public about how startups work and how public policy might impact them. The Engine Foundation opened its doors in San Francisco in December 2011.
Today Engine educates lawmakers on a wide range of issues, including tax and trade policy, intellectual property, privacy, and data security. It also provides resources for startups and research that helps lawmakers, the media, and consumers understand the scope of the startup economy.
“There are startups in every single U.S. state and probably in every single congressional district,” says Tummarello. “Our mission is to tell the story of our interconnected technology ecosystem by letting startup founders and employees speak for themselves.”
With support from the Charles Koch Institute, Engine launched its “Nuts and Bolts” policy education series in 2017. These briefings bring entrepreneurs and innovators to Capitol Hill to explain how technology works and to discuss topics like content moderation, encryption, global innovation policy, and state-based regulation in a creative and interactive way. One demonstration explains encryption by having participants finger-paint, while another asks participants to decide how they would moderate content on their own website. Usually, Capitol Hill briefings attract only a couple dozen legislative staff members, who often represent lawmakers in just one party. Engine’s educational events regularly attract bipartisan groups of more than 100 people.
“The sessions demystify the actual technology and, hopefully, depoliticize the issues surrounding it,” says Tummarello.
Engine has five “Nuts and Bolts” series planned for 2021, each of them featuring three events.
Given the continued success of the “Nuts and Bolts” series, CKI expanded its partnership with Engine in 2020 to include original research that will help stakeholders better understand the full scope of entrepreneurial technology activity in the United States.
The State of the Startup Ecosystem, released in April 2021, is the first comprehensive look at this topic. Engine found the number and value of startups has grown over the past 10 years, but the report also cautioned that the health of the ecosystem is easily impacted by public policy. Engine’s research showed, for example, that the average seed-stage startup is working with about $55,000 per month. That capital must cover everything from personnel and legal costs to product development and marketing.
“To most Americans, this might seem like a lot of money, but margins in the startup world are very narrow,” says Tummarello. “Any unforeseen cost, like the impact from a new state or federal regulation, puts the success and growth of these companies at risk.”
With CKI support, Engine has started a second research report examining the costs of content moderation.
Tummarello says policymakers and the public frequently underappreciate the current and potential economic impact technology startups will have on their communities. Engine is trying to change this mindset with its #StartupsEverywhere campaign. Through weekly profiles of entrepreneurs and innovators, the project showcases how startups impact communities like Medford, Massachusetts, Iowa City, Iowa, and Warner Robins, Georgia.
“Startups exist everywhere so technology policy impacts every U.S. community,” says Tummarello. “The ability to launch and sustain a business from any town will reduce the brain drain that has plagued some areas of the country and it will increase prosperity for everyone. That’s why we need a policy framework that embraces innovation.”