Startups think they’re above the law. They’re not

The hunt of the unicorn.
The hunt of the unicorn.
Image: Reuters/Kieran Doherty
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Earlier this month, I ordered contact lenses from Hubble—a startup that sells them directly to consumers—using a fake prescription from a made-up doctor. I don’t actually wear contacts, but the company shipped them to me all the same. Hubble also delivered contacts to several friends and coworkers whom I had asked to try placing similar orders, with fake prescriptions from made-up doctors.

It turns out that people have strong feelings about contact lenses. Despite what Hubble’s co-founders told me—that most people aren’t “attempting to circumvent the system like you did”—there’s apparently a robust crowd of people who fake or alter their prescriptions to obtain contacts from various online websites. Many of them have written me to complain that “eye prescriptions are a shakedown,” “glasses and contacts are not like drugs,” there is no “actual harm being done” by Hubble, and the “original consumer safeguards are ridiculous.”

Many startups, on the proverbial path to disruption, have encountered a law they didn’t like. Uber ran into rules on the taxi industry, Airbnb on short-term rentals. Hubble came up against regulations on contact lenses, which in the US are classified as a medical device by the Food and Drug Administration and sold under specific rules from the Federal Trade Commission.

Uber fought or ignored the taxi rules that threatened to stifle it, and for that we got fast, sleek, convenient, on-demand rides that quickly dismantled the established services. Airbnb evaded laws on short-term rentals to become a new power in the hospitality world.

Hubble sees a similar opportunity in the contact lens industry, where federal regulations have constrained the market. Its investors seem to agree. They’ve backed the year-old company with more than $30 million, and value it at above $200 million. And Hubble might be perfectly right to look skeptically at these contact lens restrictions; maybe they are bad rules.

The trouble is that there’s a fine line between looking skeptically on rules and bending them in the name of progress. Move fast and break things, the classic Silicon Valley mantra, is also a uniquely Machiavellian approach. It’s the attitude that led to scandals at Zenefits and Theranos and, this year, Uber. It works, until suddenly it doesn’t. Uber spent years behaving as though it were above the law because it could; in 2017, the law caught up.

Toward the end of the latest season of HBO’s Silicon Valley, Richard, the protagonist, and his team devise a plan to trick conference-goers into downloading their software so they can secretly launch a mobile data storage network. One member of the team gets cold feet and confronts Richard about it, reminding him of their vow not to become like Hooli, the show’s fictional Google.

“How are we like Hooli?” Richard shoots back. “We are trying to give free internet to the entire world. If we have to bend a few rules for the greater good here and there, I mean it’s all for the greater good, is it not?”

The problem isn’t Hubble; it’s the all-too-common startup mentality that only some laws apply, and others can be ignored because disruption is more important. The “greater good,” coupled with technology, can be used to justify an awful lot. If a startup is above some laws—even the bad ones—it’s above them all.