When to Launch An Illegal Product Some business ideas are good enough to change the law. But you may never know unless you build it first.
Pat Kinsel was almost living in a convenient, digital future. It was 2013. He was selling his social search company to Twitter and managed to e-sign every document from the back of a taxicab in South Korea while traveling for business. Then he returned home to Boston and discovered that one document needed notarizing, which he had to do in person. "I waited in line for nearly an hour, and they forgot to sign it," Kinsel says. Right then, he decided his next startup would enable online notarization. The only problem was that 49 states (except Virginia) considered that illegal.
Kinsel built the product anyway.
"Illegal" is usually the cue for ditching your idea. Changing laws requires bulldozing through layers of bureaucracy, state by state and lawmaker by lawmaker. But for entrepreneurs who succeed, the payoff is leading a new category, which is why there's been a tectonic shift in investors' attitudes toward these kinds of projects. Many watched the massive success of regulation-changing companies such as Uber, DraftKings, and Airbnb, and are now thinking, "Let's just underwrite this business in the hope and a prayer that regulators will act rationally," says Alexander Niehenke, a partner at Scale Venture Partners, who invests in regulated industries.