I just got off a call with a founder who’s paying a consultant $50,000 a month to prepare for the EU AI Act. My advice to him? Fire the consultant and spend that money on engineers.
That might sound crazy. The internet is flooded with articles and LinkedIn posts screaming about fines, audits, and the compliance apocalypse. Lawyers are having a field day. But as someone who has been through the dot-com bust, the mobile revolution, and the rise of the cloud, I can tell you this: most of the panic around AI regulation is completely missing the point.
I’ve seen this movie before. When GDPR was announced, everyone predicted the death of targeted advertising. It didn’t happen. When Sarbanes-Oxley came out after the Enron scandal, people said it would kill early-stage startups. It didn’t. The ecosystem adapted. The real winners weren’t the companies that hired the most lawyers, but the ones that built better products.
The Wrong Panic: Compliance Theater
Right now, everyone is obsessed with compliance checklists. They’re hiring consultants to create documentation, conduct impact assessments, and write policies that will likely sit on a shelf, gathering dust. This is what I call “compliance theater.” It’s the illusion of security, a performance for regulators that does very little to address the real risks of AI.
Let’s be honest. For most startups, the risk of a massive fine from the EU is incredibly low. Regulators have limited resources. They’re going to go after the big fish first—the Googles and Metas of the world. The existential threat to your startup isn’t a bureaucrat in Brussels. It’s building a product that nobody wants, or a product that’s so flawed it destroys your reputation.
I remember one of my early angel investments, a company in the ad-tech space. They spent a fortune on GDPR compliance, a team of lawyers on retainer. They had every document in order. But their core product was a mess. It was slow, buggy, and the targeting was mediocre. They went out of business within a year, not because of a GDPR fine, but because their customers left for a competitor who had a better product. The competitor? They took a more pragmatic approach to GDPR, focusing on the core principles of data privacy and user trust, and poured their resources into engineering.
The Real Threat: The Innovation Ice Age
The real danger of the AI Act isn’t the rules themselves, but the culture of fear they create. This fear leads to an “innovation ice age,” where founders are too scared to experiment, to push the boundaries of what’s possible. They become so focused on avoiding risk that they forget their primary job: to innovate.
This is the insidious threat I mentioned. It’s not a sudden death, but a slow, creeping paralysis. It’s the founder who has a brilliant idea for a new AI-powered diagnostic tool but abandons it because they’re worried about the high-risk classification. It’s the team that waters down their product, removing powerful features to avoid regulatory scrutiny. When this happens, we all lose. Society is deprived of potentially life-saving or world-changing technologies.
And who benefits from this climate of fear? The incumbents. The large tech companies with armies of lawyers and compliance officers. They can afford to navigate the regulatory maze. For them, it’s a competitive advantage. They can use regulation as a weapon to crush smaller, more innovative competitors. The AI Act, in its current form, could very well become a moat for Big Tech, solidifying their dominance and making it harder for the next generation of startups to challenge them.
My Counterintuitive Guide to Surviving the AI Rulebook
So, what’s the answer? Should you just ignore the AI Act? Absolutely not. That would be reckless. But you need to approach it with the right mindset. Here’s my advice for founders:
1. Stop Reading the Headlines and Start Building.
Don’t get caught up in the fear-mongering. The endless stream of articles about fines and penalties is a distraction. Instead, focus on what you do best: building a great product. A product that is robust, reliable, and provides real value to your users. A well-engineered product is your best defense against any regulatory challenge.
2. Build for Trust, Not Just Compliance.
Instead of a compliance checklist, create a “trust checklist.” What are the things you need to do to earn and maintain the trust of your users? This means being transparent about how your AI works, giving users control over their data, and having a clear process for addressing errors and biases. If you build for trust, you’ll find that you’re already 90% of the way to compliance with any reasonable regulation.
I invested in a company that uses AI to help people with their mental health. From day one, they were obsessed with user trust. They had a clear and simple privacy policy. They were transparent about the limitations of their AI. They had a human in the loop for any critical decisions. When GDPR came along, they barely had to change a thing. They had already built a company that was worthy of their users’ trust.
3. Turn Regulation into a Competitive Advantage.
Instead of viewing regulation as a burden, see it as an opportunity. If your competitors are running scared, that’s your chance to pull ahead. While they’re busy with compliance theater, you can be building a product that is not only compliant but also more trustworthy, more reliable, and more innovative.
Think about it. If you can build an AI that is demonstrably fair, transparent, and accountable, that’s a powerful selling point. You can go to your customers and say, “Not only is our product the best on the market, but it’s also the most responsible.” In a world where trust in AI is low, that’s a huge advantage.
4. Don’t Go It Alone.
Finally, don’t try to navigate this on your own. The AI ecosystem is full of smart people who are grappling with the same challenges. Join communities of founders, engineers, and researchers who are working on responsible AI. Share your experiences, ask for help, and learn from others. I’m part of several such groups, and the collective wisdom is invaluable. We’re all in this together, and we’ll be much more successful if we work together.
The Unpopular Opinion
So here’s my unpopular opinion: the EU AI Act is a good thing. Not because of the rules themselves, but because it’s forcing a much-needed conversation about the future of AI. It’s forcing us to think about what it means to build responsible AI, and that’s a conversation we should have been having all along.
But don’t let the conversation be dominated by the lawyers and the consultants. This is a conversation for the builders, the innovators, the founders who are actually creating the future. So let’s stop panicking about compliance and start building a future with AI that we can all trust.
Frequently Asked Questions
How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.
How has this view evolved over time?
My thinking on most topics has changed significantly over the years. Early in my career, I held many conventional views that experience proved wrong. I try to update my beliefs when the evidence changes.
Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.