I’m going to say something that might sound crazy. The EU AI Act? It’s mostly a distraction. A very expensive, time-consuming, and ultimately misguided distraction.
For the last year, my inbox has been a disaster zone of panic. I’ve had founders—brilliant, driven people—on the verge of a nervous breakdown over the EU AI Act. They’re sending me panicked 2 AM emails, forwarding terrifying memos from law firms that charge $2,000 an hour, and talking about pivoting their entire roadmap to avoid being classified as “high-risk.”
They’re all asking me for the secret to navigating the new AI rulebook. My answer? You’re asking the wrong question. You’re looking in the wrong direction.
I feel like I’m watching a movie I’ve already seen three times. First, it was the rise of social media in the late 2000s. Everyone was terrified of privacy laws and user-generated content liabilities. Then came the mobile app explosion, and the panic shifted to app store policies, data collection, and location tracking. Most recently, with RemoteTeam, we were at the center of the storm around global employment and tax laws. Each time, a wave of regulation crashed down, and the startup world collectively lost its mind.
And each time, the companies that won weren’t the ones with the biggest legal teams. They were the ones who understood the real game being played.
The Great Compliance Charade
Let me be crystal clear. I’m not telling you to break the law. You need to do the bare minimum to be compliant with the EU AI Act. But that’s precisely what it is: the bare minimum. It’s a checklist. A series of boxes to tick. It is not the existential threat that an entire industry of consultants and lawyers is making it out to be.
The real threat is something far more insidious: the chilling effect of regulatory fear. It’s the slow, creeping paralysis that sets in when a company’s culture shifts from innovation to litigation avoidance.
While you’re in a six-hour meeting debating the specific definition of “meaningful human oversight,” your competitor, who spent exactly one day on a compliance sprint, is shipping three new features. While you’re spending your seed round on a “Fractional Chief AI Ethics Officer,” they’re hiring two senior engineers who are building the thing that will make your product obsolete. While you’re drafting a 50-page risk mitigation policy, they’re talking to users, getting feedback, and iterating their way to product-market fit.
I saw this happen firsthand. A friend of mine runs a promising AI startup in the medical imaging space. They have a genuinely life-saving product. But for the last six months, they’ve been stuck in limbo, terrified of the “high-risk” classification. Their roadmap is frozen. They’ve delayed their European launch indefinitely. The team is demoralized. The tragedy is that their technology could be saving lives right now, but it’s sitting on a server because of a phantom fear.
This isn’t theoretical. This is the real cost of the compliance charade.
The Unpopular Opinion That Could Save Your Startup
So here’s my unpopular opinion, the one that gets me angry emails from legal experts: stop listening to the fear-mongers. The entire cottage industry of AI compliance has a vested interest in making this seem impossibly complex. They want you to be scared, because fear is their business model. When you’re scared, you write them very, very large checks.
Instead of obsessing over compliance, you need to obsess over building a product that is so good, so essential, that it becomes its own defense. A product so valuable it can withstand a little regulatory friction.
This is what I tell the founders of the 200+ companies I’ve invested in, from giants like Anthropic, OpenAI, and Scale AI to early-stage teams you haven’t heard of yet:
- Your product is your only true moat. The best defense against regulation isn’t a legal strategy; it’s a product that is 10x better than anything else on the market. A product so sticky your customers would riot if it were taken away.
- Embrace the gray. Perfect regulatory clarity is a myth. It will never come. The market moves too fast. The most successful founders I know are not lawyers; they are masters of calculated risk. They have a strong internal compass for what’s right and a high tolerance for ambiguity.
- Weaponize your users. Your users are your most powerful advocates and your most effective lobbyists. If you build a product that solves a burning pain for them, they will fight for you. They will email their representatives. They will be your army when the regulators come knocking.
Think about it. When we were building RemoteTeam, we were navigating a labyrinth of international labor, tax, and benefits laws. It was an absolute nightmare. We could have easily burned our entire seed round on lawyers from 50 different countries. Instead, we made a critical decision: focus 90% of our resources on building a platform that made hiring and paying international talent so seamless that it felt like magic. We took a calculated risk on the legal side, building in flexibility and transparency, and focused on creating overwhelming value. It paid off. Our customers loved the product so much they were willing to work with us through the complexities. And that’s what led to our acquisition by Gusto.
My Counter-Intuitive Playbook for the New AI Rulebook
This is not legal advice. This is a founder’s playbook, forged in the trenches of building and scaling companies through multiple waves of regulatory panic. This is what I’m telling my portfolio companies to do right now.
1. Run a One-Day “Bare Minimum” Compliance Sprint. Get your team in a room for one day. Not a month, not a quarter. One day. Read the summaries of the EU AI Act (not the whole thing, you’re a founder, not a paralegal). Make a good-faith effort to classify your system. Brainstorm the top five potential risks. Write down a one-page plan to address them. Appoint a single person to own this document. And then—and this is the most important part—move on. Your goal is not to be 100% compliant on day one. Your goal is to be “compliance-aware” and get back to building.
2. Appoint a “Designated Worrier.” This should not be the CEO or the CTO. Find someone on your team who is detail-oriented and enjoys reading the fine print. Make it 20% of their job to keep an eye on the regulatory landscape. They can join the webinars, read the legal blogs, and update the one-page plan once a quarter. This frees up the rest of the company, especially the founders, to focus on what matters: product and customers.
3. Build a Founder “War Room.” Don’t try to do this alone. You have a dozen other founder friends who are just as confused and scared as you are. Create a shared channel. Once a month, get on a call and compare notes. “What are you hearing? What lawyer did you talk to? What was the advice? How are you handling data documentation?” This informal, trusted network is infinitely more valuable than any single law firm.
4. Go on the Offensive with Transparency. Instead of defensively hiding your methods, go on the attack with radical transparency. Publish a blog post detailing the architecture of your system. Explain your data sources. Document the safety measures you have in place. Talk openly about your model’s limitations. This does two things. First, it builds immense trust with your users. Second, it frames the conversation with regulators. You’re no longer a mysterious black box; you’re a responsible actor who is thinking deeply about these issues.
5. Weaponize Your Product Roadmap. Your roadmap is your most powerful strategic document. Use it as a weapon. Are you worried about a certain regulatory interpretation? Build a feature that makes it a non-issue. For example, if you’re concerned about algorithmic bias, don’t just write a policy document; build a user-facing dashboard that provides transparency into the factors driving your model’s recommendations. Turn compliance requirements into product features that your competitors are too lazy or too scared to build.
The Real Danger Isn’t the Law, It’s the Fear
I’ve watched big, slow incumbents use regulation as a weapon to crush smaller, more innovative startups for my entire career. They love it. They have armies of lawyers and compliance officers. They can afford to move slowly. They want you to get bogged down in the same swamp.
Don’t fall for it.
The history of technology is written by the people who build, not the people who ask for permission. It’s written by the founders who are obsessed with solving a problem, who have an unwavering belief in their product, and who have the courage to operate in the messy, ambiguous present.
Stop reading the legal memos. Stop paying the fear-mongers. Get back to work. The future isn’t going to be built by the compliant. It’s going to be built by the committed.
Frequently Asked Questions
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.
What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 200+ startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.
What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.