Why We Need Enlightened Regulation, with David Weild | Big Think

Well, there's been systematic growth in processing power in semiconductors. You know, Moore's Law at 1.8 improvements times improvement for every two years, I think, is about what the rate is. And we've, we used to fill up an entire room with what's now in your pocket. So there's been just remarkable ability to crunch data.

And, of course, the interconnectivity that's been created because of the Internet, all of these things are converging, and it creates just massive paradigm shifts and capabilities that heretofore didn't exist. But on the point of bottlenecks, and I think this is one of the things that people need to understand generally, is that regulation creates massive bottlenecks.

There's, you know, several areas - obviously financial markets, capital markets are highly regulated, and one of the things that I am very passionate about is getting capital into the hands of entrepreneurs because I believe that if you -- you have to fund scientists and engineers and put entrepreneurship together with capital in order to solve the major problems of the next generation.

And those are things like global warming, renewable energy. These things are tough problems and they have to be financed. And one of the things that has occurred is that because of major shifts in regulation over the years, we compromised the initial public offering market in the United States. So we used to do literally 500 IPOs a year based on a smaller economy back in the early 1990s, before the dot-com bubble.

And today, since 2000, when the dot-com bubble ended, we've averaged 165 corporate IPOs. We did a paper for the Organization of Economic Cooperation and Development, the OECD. We estimated that we should be doing 900 IPOs a year if we hadn't changed market structure. That was a regulatory shift.

So if you think about it, all this great technology, but it's not helping yet capital to get into the hands of entrepreneurs. You know, two other examples of bottlenecks in totally different industries would be obviously fossil fuel development. You're concerned about the environment. Healthcare. Personalized medicine and the ability to mine patient records. Obviously, there's concerns about privacy.

And so anytime there's a concern, just like in capital markets about investor protections, there tends to be a level of inertia that's driven by regulators. Pharmaceutical development - biotechnology, for example. You have clinical trials. And so if we could do things ultimately to remove these bottlenecks, which is one of the things we've worked on in capital markets, we think we can usher in a great new era of innovation and achievement and drive some of these exponential improvements, if you will, in other areas of the economy, not simply in technology.

It's interesting because when I was down in Congress, I was asked, you know, by the Republicans to say that there was too much regulation. And I was asked by the Democrats to say that there was too little regulation. And I -- what I like to say is I don't think that there's enough enlightened regulation.

You need regulation just like you need -- traffic lights are a form of regulation, and if we didn't have traffic lights, people would kill each other by going through intersections. In this particular instance though, the regulation that we need, on the one hand, has to be respectful of investors, but it can't be the kind of the nanny state.

And on the other hand, it has to give -- make it more effective and efficient for entrepreneurs and their representatives to raise capital to get America back to business. I believe that the delta between what we've done in the way of IPOs and what we should do, which is the difference between 165 IPOs and 900 IPOs a year, is worth about ten million jobs to the U.S. economy over the course of a decade.

That is your job problem in the United States. And it's something that we clearly can fix by changing market structure so that it benefits smaller companies and the development of an ecosystem to support those smaller companies. Most job growth in the United States occurs in small companies, not in large companies.

And there's actual data from the Brookings Institute that actually shows that the rate of creation of small companies has actually been in secular long-term decline in the United States. So those are the kinds of trends that we ultimately want to reverse. My company IssuWorks is actually focused on marketing, creating technologies to better market securities.

We effectively want to create the future of securities marketing. Why is that important? It's important because we've got plenty of capital out there. What we have is an inability for small companies to reach the right pockets of capital to cut the amount of wear and tear there is on management so that the management teams, which are very skinny in small entrepreneurial companies, can actually devote their time to the development of their new technologies and their new businesses.

And I think that if we can take that bottleneck, if you will, out of management's hands and effectively remove it, using technology better, turbocharging the marketing, if you will, so that the right ideas get to the right investors more quickly, we're all gonna be better off.