Regulatory Lock-in Value

Shaan Puri and Sam Parr discuss how businesses built around mandatory government processes or regulatory requirements can become incredibly valuable, citing examples like Aceable and VitalChek.

• Aceable (Driver's Ed & Professional Licensing):

  • Bootstrapped initially, later raised ~$100M
  • Provides mandatory 32-hour driver's ed courses in 36 states
  • Expanded into realtor/broker licensing
  • Has served 13 million users
  • Likely a billion-dollar company now

• Keys to Success:

  • Regulatory lock-in through official approval status
  • Limited competition in early days
  • Dominated Google ads for relevant searches
  • Mandatory nature of services (customers have to get certified)

• VitalChek (Birth Certificates):

  • Partners with hundreds of government agencies nationwide
  • Charges premium prices (~$99 per certificate)
  • Owned by RELX (formerly LexisNexis), a $50B+ company
  • Shows potential for acquisition by larger companies

• Indicators of a Successful Regulatory Business:

  • Ugly website with high traffic
  • No prominent founder presence
  • Long operating history (e.g., "since 1992")
  • Multiple copycat companies
  • Government endorsements
  • Mandatory customer need

• Business Model Advantages:

  • Customers must use these services to comply with regulations
  • Acts as a third-party facilitator between government and citizens
  • High defensibility through official partnerships
  • Consistent cash flow from mandatory services
  • Potential for acquisition by larger companies