If you read the news today, you might think tech businesses are in the hot seat.
Of the SEC’s 100 cryptocurrency-related litigations and administrative proceedings since 2013, almost 50 occurred between 2020 and 2021¹.
In July 2020, Uber paid a multimillion-dollar settlement to the federal government³, and in 2022, Amazon faced unionization across warehouses and lawsuits in states like California³.
Pundits say 2022 could be a “watershed year”⁴ for tech companies. Pressure is mounting for them to work more with regulators in the federal and state governments or face hefty fines and legal bills.
Facebook reportedly spent a record amount on lobbying in 2022 (as much as $5 million⁵). Amazon spent about the same amount in Q2 of the same year. With that kind of investment in DC, these businesses might weather the coming storm.
But what about the new innovators in these spaces?
Founders Jason Frye and Mary Jones believe startups deserve as much of a voice in DC as any Fortune 500 business with a lobbyist. They created their startup, Terrapin Strategy, to help thousands of new businesses influence legislation and tap into government funding – a lobbyist at scale, of sorts.
After careers in politics and academia, Jason and Mary met while sharing offices at a think tank in Washington DC. They commiserated that American politics only seemed to work for wealthy businesses. Smaller companies and startups often changed the world but had limited access to government help or funding.
Mary and Jason teamed up in early 2022 to help small businesses communicate more easily with the federal government. To validate their product, they worked tirelessly as budget lobbyists, figuring out how they could help startups succeed.
In nine months, they’ve grown Terrapin to an estimated $180,000 in ARR. They’re building a series of applications to help new businesses understand how policy is made and get their voice heard. The founders got on a call with me to talk about how they’ve built the business so far and the difficulties of bringing tech into politics.
A Fateful Meeting on Capitol Hill
Growing up, Jason was heavily exposed to politics on both sides of his family. He says he had a Reagan supporting father and a Walter Mondale supporting mother.
“I learned I don’t care who’s in office – I’d rather people work together,” he says.
Jason joined the military after the 9/11 attack on the World Trade Center in New York. He served multiple tours in Iraq and returned to work in government affairs in the legislative branch. Eventually, he served as legislative director for congressman Tom Emmer, the current Deputy Republican Party Whip dubbed the “Crypto King of Congress” for his support of the industry.
For over a decade, Mary worked at academic organizations and think tanks in DC and the greater DC area. She worked her way up to Assistant Director of outreach and communications at the Mercatus Center at George Mason, enhancing its influence on state policymakers. Eventually, she became Chief of Staff for George Mason’s Law and Economics Center in 2020.
Jason and Mary met at the Mercatus Center in Virginia in 2016. Both worked as associate directors in different departments and shared an office. They struck up a friendly
camaraderie over technology’s role in government and how to return power to the average American.
Too Much Power in the Hands of The Few
Rubbing shoulders with the heavy hitters on Capitol Hill made Jason and Mary painfully aware of the realities of modern politics. They recognized that large corporations and trade groups could pay thousands of dollars for lobbyists that small businesses could not.
“If you look at historical trends, public opinion is the least indicator of public policy,” says Mary. “If company A has a million dollars for lobbying and company B has zero, company A has an advantage. The barriers to entry are hiring a marquee firm and having a presence on the street.”
“The result has been that faith in the government is at an all-time low,” says Jason.
Lobbyists want clients who can pay their multimillion-dollar retainers, leaving many founders unwilling and unable to find people to represent them and their interests.
“There are 34 million other companies that the government isn’t paying attention to,” says Jason.
“Just because you’re not a Fortune 500 company doesn’t mean you should be scared to speak up and have a say in new ideas,” Mary adds. “Wealthy people can get ahead of everyone else in line today because they have more resources and better networks.”
Jason and Mary frequently discussed solutions to these issues in their shared Virginia office. But these talks remained discussions. By 2018, they’d moved on to other jobs: Jason to a lobbying firm and Mary to a higher position at George Mason.
However, by late 2020, both were working from home during the pandemic and excited about the world of startups. They began discussing plans to launch a lobbying firm for small businesses.
“In 2021 the idea began to weigh heavily on me,” says Jason. “The world changed a lot during the pandemic, and I finally thought, ‘If not now, when?’ and decided to jump in with both feet.”
And so, in early 2022, they quit their jobs together to found their new business, Terrapin Strategy.
“While it’s scary to leave the security of an established company, it’s even more exciting to think about the possibilities of creating something that can help others.”
“While it’s scary to leave the security of an established company, it’s even more exciting to think about the possibilities of creating something that can help others,” adds Mary.
Lobbying for Startups
Mary and Jason needed to validate their idea before building it. Rolling up their sleeves, they offered lobbying and policy advisory services to dozens of startups at bargain prices.
“We’re a fraction of what Old Man River across the street from the capital costs,” jokes Jason. “But right now, we work morning, noon, and night to meet the volume of things we do.”
Terrapin Strategy launched on January 6th, 2022. They started with a handful of clients from Jason and Mary’s networks and expanded slowly through word of mouth.
Working with numerous clients at lower prices, the founders learned they couldn’t force new legislation through the classic route of slow and steady financial contributions. Instead, they focused on helping companies learn about and adapt to new legislation. At the same time, they educated government entities across the country about the startup ecosystem.
“Before we do anything, we first ensure startups have a proper orientation and that their goals aren’t an impediment to it,” says Jason. “If you want to walk on the moon, your first step is a government relationship. Maybe we’ve recently seen large amounts of legislation for near-Earth orbit instead of the moon and can reorient you towards that. Startups need to understand their idea might be so new that the government doesn’t get what they’re doing.”
Once Jason and Mary help clients with their orientation, they bring their cases before government offices and programs.
“We first identify the program administrator and the correct office for a program that affects a client. We tell them we have a company that fits in with their program right now and that they have a legal obligation to talk to us about them,” says Jason.
While the politicians can be skeptical at first, Mary and Jason say those they talk to usually fall in love with the idea.
“I love when they have the lightbulb moment. They sit back in the chair and have a heavy sigh or say, ‘Oh my God, I see what you’re doing now.”
“Most people in government affairs know we are wild cards, but we’ve been down traditional routes so they hear us out,” Jason continues. “I love when they have the lightbulb moment. They sit back in the chair and sigh or say, ‘Oh my God, I see what you’re doing now.’ We want to shorten how long it takes for that moment.”
Mary and Jason agree that getting clients to understand that government relationships aren’t as simple as money-in and deals-out is their biggest hurdle. Working with the government is an ongoing process with wins and losses.
“We can’t always make the government listen to us, which is frustrating for clients,” says Mary. “We’re not going around the government to accomplish company goals. We try to find where each company fits in the current regulatory environment and then work from there.”
Lobby in Public
Terrapin is a matchmaker, of sorts, sourcing startups interested in their services and legislators who want to work with those startups. Mary and Jason intermediate to secure the best outcomes for each.
They’ve created a library of inbound content to attract clients and publish a regular blog on Substack. They want to build in public and share lessons they’ve learned from running a startup in the government space.
“Admitting we’re not perfect and that we’re learning has been liberating for me.”
“Our build-in-public series has surprisingly been a stress reliever,” says Mary. “Admitting we’re not perfect and that we’re learning has been liberating for me.”
And although both are well-connected in the US government, Mary and Jason are careful not to reveal too much of their carefully curated network. They know it is one of their largest value-adds.
“Building trust is difficult when you’re a new company,” says Mary. “You don’t always want to ask your friends or professional connections for business since you’re still figuring things out.”
Creating GovTech
While at this stage Terrapin is still more of an agency than a tech company, Jason and Mary are attempting to “SaaS-ify” their work. So far, they’ve reinvested all profits back into the business.
“Salespeople get Salesforce. Marketers get Hubspot. We want government relations to get Terrapin,” says Jason. “Our prototype is a centralized platform that lets companies access information about future government affairs and manage their relationships.”
They’re currently finishing two applications for Terrapin. One is a full-service government relations service called Operator, a legal CRM helping businesses track and manage their outreach to government agencies.
They’ve created another tool purely for data called Upstream. In the future, they want clients to use it to track government funding and success rates for engaging officials. Besides these two, they hope to create at least two more tools as they figure out what their customers need.
“We were surprised at how expensive software and databases have been,” says Jason. “Also, due to the complexity of the problems we’re solving, creating a repeatable process took much longer than expected.”
While the cofounders are confident that technology will solve bottlenecks in government regulation, they admit their product will be slow to catch on at first. Both knew Terrapin would be a marathon, not a sprint.
“We’re in a very traditional space so the whole idea of creating a tech solution makes people in DC skeptical,” says Mary. “We want to work in an established way but make it different too. No one has been unkind, but people love to see people fail here. Our friends won’t be surprised when we quit and get a normal job.”
“We like to remind ourselves we’re being contrarian on purpose,” says Jason. “Designing the product has been fun but the greatest challenge is staying focused on who we’re trying to be. We believe the good times are ahead.”
Resources:
³https://www.washingtonpost.com/technology/2022/09/14/california-amazon-antitrust-lawsuit/
⁴https://www.washingtonpost.com/politics/2022/01/03/why-2022-could-be-watershed-year-tech-regulation/
⁵https://www.opensecrets.org/news/2020/07/facebook-spends-big-lobbying/
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