At a recent congressional hearing, I watched as a Senator praised the “innovative spirit of American entrepreneurs” in an opening statement. Later that week, that same Senator proposed legislation that would make it effectively impossible for entrepreneurs to compete in emerging technologies.
This wasn’t an isolated incident. It’s a pattern.
Policymakers say they love entrepreneurs. Every stump speech, countless campaign ads, and press releases declare, “small businesses are the backbone of America.” And they’re right. Entrepreneurs and small businesses provide nearly half (46.4 percent) of private sector jobs in the United States, and were responsible for more than half (55 percent) of the jobs created from 2013 to 2023, with the tech industry serving as the number one driver of this growth.
But if you look at recent years of legislation, regulation, and public discourse, you’d think entrepreneurs were the enemy. Not only do some policymakers not prioritize helping entrepreneurs, our government has created a system that impedes the very people who take risks, invent new tools, create jobs, and build the next generation of American companies.
This isn’t just hypocrisy. It’s a threat to America’s future.
America was forged by builders. From Edison to Ford to the founders of the internet, much of America’s identity has been defined by people who reimagined what was possible–and made it real. They weren’t waiting for permission. They weren’t protecting incumbents. They were creating entirely new industries—often with nothing but an idea, grit, and a garage.
The modern builder is no different. Today, they’re building with AI models, crypto protocols, and precision-manufactured parts. They’re not just launching apps–they’re launching companies that change lives. And up until recently they’ve been doing it with opposition from the government institutions that claim to support them.
America has always had a cultural bias toward big swings. But in recent years, that spirit has taken a beating from the very people who claim to be championing it. Some policymakers increasingly treat builders as a risk to contain rather than a force to empower.
The Disconnect: Why Some Policymakers Say One Thing and Do Another
So why do some policymakers claim they support builders while proposing rules that shut them out? It’s primarily the result of three compounding forces:
1. All new technology is treated like Big Tech
Over the last decade, backlash against social media giants has reshaped how Washington and state capitals think about all technology. Because lawmakers couldn’t—or wouldn’t—rein in a few powerful platforms, they’ve developed a reflex: treat every new technology sector, and the entrepreneurs building in the space, like Big Tech. New ideas in areas like AI, biotech, crypto, and American manufacturing, get swept up in the politics against these legacy platforms.
The result is overreach. Take California’s proposed AI safety bill, SB 1047. While ultimately vetoed, the legislature passed the bill with nearly unanimous support despite it proposing sweeping obligations—like banning open source (which has been the backbone of the internet since its inception and is essential to ensuring transparency, innovation, and accessibility), mandating virtually impossible-to-achieve audits that functioned as a backdoor to hobble progress, and assigning expansive liability. Though the bill claimed to target only the largest AI models, these requirements didn’t just apply to tech giants—some versions of the bill would have hit research labs, individual coders, and hobbyists just as hard. Similarly, AB 1018, a new bill in California and New York’s RAISE Act propose burdensome regulations that risk creating comparable barriers for AI developers. The message from both is clear: if you’re building in AI, expect the government to make it as difficult as possible. Instead of creating a level playing field, these efforts threaten to lock out the next generation of builders before they can even begin.
This approach mirrors the steps taken in the post-2008 financial crisis, when Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. “Dodd-Frank” was a sweeping piece of legislation meant to rein in Wall Street and curb systemic risk. In practice, it did the opposite. Since the passage of Dodd-Frank, more than one thousand small community banks have closed, while the biggest institutions, who created the crisis, got bigger. This outcome should have been predictable. When we place burdensome regulations on an entire industry with little regard for the size and limitations of small businesses, only the largest players can afford the teams of attorneys necessary to comply with those regulations. Inevitably, small entities are forced out of business, or swallowed up by incumbents. Consumers suffer as their choices are reduced and competition dwindles. As time goes on, an oligopoly emerges.
We’re now watching a similar playbook unfold in areas where entrepreneurship is most fertile– emerging technologies. Regulation is being designed not for what’s being built—but for the political baggage of what came before. The slope we’re on, paved by frustration with social media, large financial institutions, and other incumbents, is now attempting to block the next generation of innovation entirely.
2. Regulation is being shaped by well-funded advocacy networks
Much of the energy behind this regulation isn’t coming from everyday Americans or technology experts. In fact, small businesses, innovation, and entrepreneurship remain extremely popular among American voters. The skepticism and downright hostility is coming from an extensive ecosystem of advocacy groups—many operating under the banner of “consumer safety”—that receive funding from large philanthropic networks and legacy corporations that benefit from stifling competition. Their primary tool? Fear.
These groups use doomsday scenarios to help shape legislation, issue white papers, and testify before Congress. But their financial backers often have a vested interest in slowing down competition and market disruptors. While these organizations speak the language of public protection, their work often helps entrench the incumbents already in power.
This is a classic “baptists and bootleggers” dynamic—one our firm’s cofounder, Marc Andreessen, highlighted in his essay, “Why AI Will Save the World.” Advocacy groups are made up of idealists and opportunists, working in parallel. The idealists think they’re protecting the public. The opportunists know they’re protecting market share.
What looks like a popular movement for oversight and consumer protection is often a well-funded effort to tilt the playing field against upstarts. This is exactly why we built our policy and political program at a16z—to stand up for builders and innovators and make sure the next generation of entrepreneurs actually has a chance to compete without getting shut out by entrenched interests.
3. Many policymakers think builders are already winning
Policymakers often assume anyone who is an entrepreneur is already rich, already powerful, and already winning. That belief distorts policy decisions and helps explain why rules are pushed as if every company is a large legacy institution.
In reality:
- Over two-thirds of startups fail.
- The average early-stage founder earns about $50,000 a year.
- Most entrepreneurs spend years without stable income, often risking personal savings and credit.
We think we’re regulating platforms. But at a company’s earliest stages, we’re regulating people.
Here’s the dirty secret: most regulation doesn’t hit the big guys the way policymakers suggest. They have lawyers, massive networks of lobbyists, and compliance teams. They can afford to pay the hefty fines (sometimes in the billions of dollars) levied against them when they step out of line. Upstarts do not have the same resources.
Regulation becomes a moat protecting the castle of success where the incumbents already reside. For startups, doing their best to cross that moat without the same legal and financial resources as well-established incumbents, these regulations are often fatal.
The Next Wave: Why it Matters
We are standing at the edge of a generational opportunity—a moment as important as the invention of the internet. A whole new wave of technological innovation is upon us, and a plethora of new products and services are coming online at the same time. AI, crypto, and the re-industrialization of American manufacturing aren’t isolated movements. They are deeply intertwined and foundational to the next American century. Across every one of these domains, attempts at aggressive regulation, legal ambiguity, and institutional drift are making it harder—not easier—for entrepreneurs to build.
Here’s the big picture: AI scales intelligence. Crypto enables ownership. And American manufacturing brings these advancements into the real world. These aren’t separate stories—they’re parts of a similar stack. Break one, and the others weaken. Get it right, and we unlock a new era of growth and leadership.
But if we miss the moment, we risk freezing the system just as it’s starting to run—handing the future to countries that are moving faster, especially China.
AI: the intelligence layer
AI isn’t just another tool—it’s becoming a valuable component of the modern internet and economy. Like electricity or the microchip, AI is a general-purpose technology that will touch nearly every part of American life.
But AI doesn’t work alone. Its success depends on the systems we build around it—how we evaluate its outputs, manage its use, and ensure its benefits are widely available. Just as the internet needed things like browsers and broadband to grow, AI needs new support systems that build trust, transparency, and alignment with the public good.
That’s why AI isn’t a silo. It’s the intelligence layer of a larger system that also includes decentralized tools and real-world infrastructure.
Unfortunately, fear is being pushed aggressively by some in the space. Many of the loudest voices in the debate aren’t pointing to real problems—they’re spreading dramatic speculation about AI turning into killer robots. These headlines may get attention, but they don’t reflect where the technology actually is today.
Of course, protecting Americans is essential. As AI enables builders to solve problems, streamline processes, and improve our lives, inevitably, bad actors may seek to exploit this technology to their own ends. This is not new, and is certainly not unique to AI. Bad actors have found ways to exploit nearly every new technology from the discovery of fire, to the US dollar, to email (spam).
We should prioritize safety. We need to ensure that when AI is used to harm others, the bad actors are held accountable. Fortunately, AI is already covered by a wide range of state and federal laws, from consumer protection and anti-discrimination to privacy and national security. If a company is building with AI, that doesn’t give them a free pass—they’re still bound by the law.
That said, we do need smart rules that reflect AI’s unique traits and close real gaps. As we have said previously, new regulation in this space should focus on the use of this technology, not on its development, and should be crafted with precision to separate those who wish to use this tool for good from the bad actors who seek to misuse it.
But what we’re seeing now is something else entirely. All 50 states and the federal government have introduced over 1,000 AI-related bills. Many of them rely on vague legal language, impossible audit demands, and backdoor bans on open-source development—the very tools that built the modern internet. These aren’t guardrails. They’re barriers disguised as common sense regulation. And they threaten to stop the next generation of builders before they even start.
Thankfully, there’s real momentum. In July, the Trump Administration rolled out the AI Action Plan—a major step forward that shows a clear commitment to builders. The plan focuses on speeding up research, working hand-in-hand with the private sector, and keeping regulation flexible and practical. That approach matters: it means entrepreneurs and researchers—especially in Little Tech—will have the support to bring new ideas to market and keep America in the lead.
Crypto: the ownership layer
Crypto isn’t just about digital currency—it’s about giving people more control over their lives online. Right now, the internet is dominated by a few big companies that decide what you can see, what you can publish, and how you can earn money. Crypto changes that by making the internet more open and fair.
It’s the only internet-native technology that can push back against this kind of central control—without becoming another gatekeeper itself. Crypto networks are open-source, meaning anyone can use or build on them. They don’t rely on a CEO or board of directors. The value they create flows to individual users and communities, not corporations. At its core, crypto is a tool for the little guy.
If AI is the intelligence layer of the next internet, crypto is the ownership layer. It allows people and businesses to prove ownership, transfer value, and build shared rules—without needing permission from a big platform. As AI takes on a more central role in our everyday lives – crypto can provide the technology to catalog training systems, explain decision-making, and trace ownership, ensuring that AI remains transparent and fair.
Of course, crypto has had its problems. Scams, fraud, and speculative excesses have dominated headlines and drawn public skepticism. Those issues are real—and that’s exactly why we need clear, thoughtful rules. A strong legal framework would help weed out bad actors while giving honest builders a fair shot to innovate. We have written about this extensively.
But over the last four years, some policymakers and regulators have tried to shut down crypto—not through clear laws, but through lawsuits and public pressure. Instead of giving entrepreneurs a clear rulebook, they’ve created a legal mess that only the biggest companies can afford to navigate. Many startups are stuck in limbo.
The result? Regular Americans are the ones losing out. Instead of building better systems for saving, spending, or owning online content, we’ve made it harder for responsible entrepreneurs to compete with the status quo. Some officials have even said they don’t support any rules—because they don’t think crypto should exist in the US at all. That’s out of step with reality: more than 50 million Americans have used crypto in some form.
And we’re already seeing the impact. According to the 2023 a16z State of Crypto Report, America’s share of crypto developers has dropped from 40 percent to under 30 percent in just a few years. That’s not just jobs going abroad—it’s our influence in building the future internet slipping away.
Crypto’s promise is simple: cut out the middleman, share control, and give people real ownership online. But to get there, we need policies that support responsible innovation—not ones that shut it down.
We have seen a real shift since January. A bipartisan group in Congress has been working in earnest and the Trump Administration has shown leadership in making crypto policy a priority. For the first time, there’s real alignment across the legislative and executive branches to bring long-needed clarity to the space. This July, the GENIUS Act—establishing clear rules for stablecoin issuers—was signed into law, marking a major milestone. At the same time, Congress is moving forward with market structure legislation that could finally set the ground rules for how digital assets are traded in the US. Together, these steps represent meaningful progress toward ensuring that crypto is not only safe and trusted, but also positioned to remain a permanent part of America’s financial and technological future.
American manufacturing: the physical layer
AI is already powering smart factories and quality control. Crypto is helping manage power grids and payments between machines. And together, they’re enabling a new kind of industrial growth—faster, smarter, and more resilient. This isn’t about bringing back old factories—it’s about building the future. Entrepreneurs today are launching companies that make robotics, defense systems, advanced energy, and high-performance datacenters. These are high-tech, high-impact industries—and they’re hiring.
But policy hasn’t kept up. Getting permits takes too long. Government contracts are still written for legacy firms. And the rules haven’t changed to support 21st-century technology. As a result, many of the best companies run out of time before they can scale.
Look at defense: some of the most promising startups face 18-24 month delays just to win a contract. That’s longer than most startups can survive. In energy, we have an incredible opportunity to build cheap, abundant power—especially through new nuclear technologies. But outdated regulations have made it nearly impossible to build. We’ve sidelined one of our best chances at low-cost, reliable, clean energy.
This has real consequences. Higher prices for consumers. Fewer good jobs. Missed opportunities to lead globally. And all while demand for data centers, robotics, and electric infrastructure is skyrocketing.
The Fix: How Policymakers Can Support Builders
The fix isn’t complicated. But it does require one big shift: stop treating builders like a threat and start treating them like a competitive advantage.
Here’s where to start:
- Create a level playing field—don’t entrench incumbents. The goal of regulation should be to ensure open markets, not lock in the advantages of the largest players. A five-person business shouldn’t be forced to meet compliance standards designed for trillion-dollar companies. When rules assume scale, they block competition before it begins. Regulation should enable challengers to compete—not erect barriers that protect incumbents.
- Stop regulation by enforcement. Entrepreneurs can work within sets of rules—what kills them is uncertainty. When policymakers refuse to clarify how laws apply and instead regulate through punitive actions, builders are left in limbo. Other countries have adopted a “guidance first, enforcement second” approach which offers one possible model: create clarity up front, so companies can innovate responsibly without walking into a trap.
- Reward experimentation, don’t punish it. Policymakers should create safe paths for companies to test new technologies and use what they learn to improve them. Just like in medical trials, technology startups should be able to experiment without risking existential penalties for early mistakes. States like Arizona and Utah have pioneered regulatory sandbox programs that give early-stage companies room to operate under controlled conditions. These programs show that pro-innovation regulation is possible at the state level—if there’s political will.
- Appoint builders to decision-making roles. Every regulatory body that touches emerging technology should include people who’ve actually helped build companies. We don’t let people write tax law who’ve never filed a return. Why should we let teams of regulators with zero firsthand experience design innovation policy?
- Default to permissionless innovation until there’s a clear reason not to. Innovation should be assumed legal unless clearly shown to be dangerous. That posture is what made the American internet boom possible—and it’s exactly what some are abandoning today. Where innovation is regulated, those regulations should be focused on use – not development – and the burden should be on regulators to prove why such regulation is necessary, not on founders to prove why innovation should be allowed before they can even start.
The Human Cost of Getting This Wrong
When we talk about innovation policy, we often talk in abstractions: growth rates, competitive advantages, technological progress. But there’s a human story behind every opportunity we miss.
Each regulatory barrier we put in front of builders represents thousands of potential businesses that never launch and millions of lives that aren’t improved. That’s the real cost of our failure to match our actions to our rhetoric.
Consider the case of early aviation. In the 1920s and 1930s, the US aviation industry was rapidly innovating with new aircraft designs and commercial routes. However, a patchwork of state and federal regulations—ranging from inconsistent air traffic rules to restrictive licensing—slowed the growth of airlines and aircraft manufacturers. The Civil Aeronautics Act of 1938 eventually centralized regulation, but the delay in coherent oversight initially hampered the industry’s ability to scale, leading to slower job growth and delayed improvements in air travel safety and accessibility.
If we kill or hamper innovation—whether intentionally or accidentally—before it has a chance to develop, we may never learn what problems could have been solved, what discoveries we could have made, and what lives we could have saved.
Supporting builders—especially Little Tech—isn’t just good policy, it’s politically popular. People want a system that rewards new ideas, not one that protects entrenched interests.
The momentum is real. Lawmakers and regulators are starting to ask better questions. Founders are educating themselves about policy and politics and stepping into public service. Coalitions are forming around smarter innovation policy.
That’s encouraging, but we need much more. Just as entrepreneurs build products and breakthroughs, we must build the political muscle to fight this fight. It will take hard work and resources, but it can also define a new era of productivity, sovereignty, and global leadership for America.
Just like the old saying goes, “you might not be interested in politics, but politics is interested in you.”
