So you want to start a Government Affairs function?

As the CEO of a fast-growing scale-up software company, why on earth would you want to start a government affairs function? As one CEO asked me, why would I want to hire a high-priced person to just play golf all day?

Hidden in that dismissive and unfair comment, there is a kernel of truth — many of our software CEOs don’t understand government affairs. For many CEOs with numerous other priorities, Government Affairs (GA) seems like an additional cost center, with unclear predictability of succeeding — and it has a reputation of being relationship-driven.

And yet, entrepreneurs of growing companies realize that they want to contribute to the public dialogue — yes, advocate for things in their company’s interest, but also bring their perspective to the national stage, to make government work better.

In my opinion, most of the Insight portfolio doesn’t need a full-time government affairs function — at least not until the company is headed towards a public offering, or of substantial scale (e.g. closing in on $100M annual recurring revenue). There are notable exceptions to this rule of thumb for our more government-focused, government-adjacent, or highly-regulated businesses, but for the majority of Insight’s enterprise-focused software companies, this is a good starting place.

The decision to create a Government Affairs (GA) function in a scaling technology company is dependent on several factors, including:

• The product/service the company offers;
• The company’s interest and commitment to federal/government business;
• The stage and size of the company;
• The CEO’s experience/relationship with government officials;
• The CEO’s prior experience with the GA function;
• Regulatory exposure/liability (and opportunity); and
• The company’s strategic goals.

I’ve written this post primarily for existing and future CEOs of the Insight portfolio, but it might be useful to others, and thus I’m publishing it openly. It may also uncover contrasting opinions — which are appreciated and possibly also right!

What does GA do?

Government Affairs, in the context of a ScaleUp software company, is responsible for:

• Creating and executing the company’s public policy strategy, including its legislative and policy agenda, to support the company’s strategic business priorities;
• Identifying and providing advice on business opportunities (and risk) stemming from pending policy, legislative, regulatory, and procurement-related initiatives;
• Establishing and maintaining relationships with key government decision-makers, including Congress, senior Administration officials, and state/local government officials;
• Representing the company in key government forums and educating government officials about your industry and your technology category;
• Advancing the public narrative of the company and contributing to thought leadership — especially as it relates to government-focused media; and
• Advising the CEO and the management team on all things government.

Why Government Affairs Creates Public Value

Government affairs, as a function, can help your company achieve its goals, but importantly, can also create substantial public value. In other words, Uncle Sam needs you!

Policymakers and government officials rely on outside expertise from academia, nonprofits, and private companies — as they develop new laws and regulations, update and repeal old ones, and execute on their priorities inside the executive branch. They want input on a range of topics, formally through rulemaking, testimony, and federal advisory commissions, and informally through conferences, meetings, and other engagements. Government needs to hear from you if it is going to be effective.

For example, most of the critical infrastructure in this country — power grids, cell phone towers, chemical plants, financial markets, and much more — is private-sector owned and operated. Yet the federal government makes rules (e.g. FERC, FCC, SEC, etc.) and operates programs (e.g. DHS) to safeguard critical infrastructure, including from cybersecurity attacks. How can government best regulate and defend private sector infrastructure if it doesn’t listen to and engage closely with industry? How can it understand the supply chain vulnerabilities without the specialized expertise of leading cybersecurity vendors?

The private sector also has specialized expertise that is important for identifying research priorities. The federal government spends $150B on R&D (across NIH, DoD, DOE, etc.), much of which is spent in government labs and academia. Private sector expertise and input on where to invest federal R&D dollars is an important counter-balance to our talented scientists and officials inside of government.

Educating government officials about modern industry practices is good for government, the taxpayer, and the citizen. Software-as-a-Service (SaaS) vendors, in particular, can play an important role in explaining the value of commercial software that spreads product innovation and customer support costs across hundreds of customers — in contrast to government-built software that requires contractors to indefinitely support and maintain a single custom system.

Where does Government Affairs Fit?

In my experience, Government Affairs is distinct but complementary with Public Sector Sales and Marketing, Legal, PR/Communications, and Corporate Social Responsibility (Social Impact).

So where should a VP (or senior director) of Government Affairs report?

Most likely, they will report to a Founder, CEO, President, COO, CFO, or General Counsel. My preference is founder, CEO, or President because that is the person the government most often wants to hear directly from. If your founder has moved into a CTO role and is externally focused, that’s a great possibility too. Given that your government affairs strategy may include educating government officials about your technology, having a strong working relationship with the CTO can be quite helpful.

Reporting to the General Counsel can also work, but isn’t ideal, because general counsels tend to focus on minimizing risk and cost. But this is often the natural place to start a GA function.

Government Affairs could also report to a Chief Marketing Officer (CMO) or Chief Revenue Officer (CRO), especially if the government affairs function is generating opportunities for the sales team. But this can be challenging since much of what a GA leader is doing is outside traditional marketing and sales motions — and it becomes harder to manage in comparison to those activities.

While it’s possible to have Government Affairs report to the VP of Public Sector Sales (who typically will report to the VP North American Sales or directly to the CRO), I’d recommend against this and instead suggest seeing them as peers who will need to have a tight working relationship, but with separate lanes.

A Government Affairs function can start with a single, experienced hire — and may remain a single person, supported by external consultants and trade groups. At this stage, it’s unlikely to grow beyond a small team.

A Government Affairs leader should be a strategic hire. As one of them told me: “A GA person can offer a strategic perspective across lines of business…connecting the dots across disparate business objectives. Companies don’t have tons of these corporate-wide people who are focused on business outcomes, so a GA person, given the right standing, can be a fundamental contributor to strategy formulation. This is almost always true for companies who are significantly reliant on government actions (sell to, or heavily regulated by the government) but is almost never true for other types of companies and yet should be!”

Objectives and Key Results (OKRs)

Government Affairs doesn’t have as simple OKRs as a sales quota, but that’s ok — there are still objectives and key results (OKRs) that you can measure progress against.

I’ve interviewed GA professionals in software ScaleUps — both inside and external to the Insight portfolio — and all of them emphasized that one of their primary functions is to create, accelerate, and defend the business, and that is key to their ROI. Secondary goals often included market awareness and visibility with government officials. Policy matters, of course, but in the context of achieving business goals.

At the federal level, all of the GA professionals I spoke with emphasized engaging with the appropriations process in Congress as a key part of their role (directly, and via contracted lobbyists and consultants). As one experienced VP of GA put it to me, “you work on 5 or 6 things over 18 months, and one of them works out, and that justifies your immediate level ROI”.

In practice, this means working to support the creation of programs of record, funding streams for prospective and existing federal customers, and advocating for adoption for your technology category.

Defensive OKRs are harder to prove a negative, but protecting your programs of record from funding cuts can be a key part of the job.

Another part of defense is advocating for the entire category — which is best done in collaboration with other companies, often via trade associations. There are a couple of newer trade groups (Alliance for Digital Innovation, The Alliance For Commercial Technology in Government) that are focused on promoting government buying commercial technology that are very relevant for the Insight portfolio.

There are also important non-Hill opportunities to encourage adoption of your technology category, like impacting NIST-led private-sector standards and best practices, and other places where your company’s technology can be encouraged or outright required. Given executive budget requests are organized according to the NIST cybersecurity framework, which is built on the security controls in foundational NIST documents (like Special Publication 800–53 Revision 5), influencing NIST standards and best practices can directly impact government requirements for your product category.

Another role of government affairs is ensuring the CEO/founder is used for the highest impact conversations — i.e. figuring out when a government meeting, event, or speech is really worth the CEO’s time. GA professionals can represent the CEO in meetings in DC, prepping him/her for meetings with situational awareness, talking points, expectations, etc. Government affairs also build relationships with home-state politicians — governor, home state members of Congress, and local officials.

OKRs can also include thought leadership, which includes working with the CEO on amplifying and focusing voices and stories for government audiences. A senior GA professional should be developing and communicating the narrative, not just relaying it. If you hire someone with a lot of experience in cyber policy, being a talking head (in the DC area) would be an important (but potentially secondary) part of the job. And if you have a corporate social responsibility (CSR) function in your company, the VP GA amplifies those stories (when appropriate) in government settings.

So what would OKRs look like? It’s going to depend on the company, but here is a strawman:

• Build Admin executive relationships that contribute to an enterprise-level deal or major program win, in partnership with federal sales;
• Protect and grow existing programs of record and make them a public success story for the public and government documents and hearings;
• Catalyze the creation of Administration and/or Congressional positions (e.g. policy document, executive order, presidential memorandum, public statements, NDAA or IAA reports) highlighting the importance of your product category, or even driving requirements for that category;
• Increase awareness of the company and policy priorities through exec level meetings with Congressional members, key Administration officials, or other mutually agreed upon government executives;
• Secure/support CEO/Founder testifying on the Hill; and
• Thought leadership: 3 Op-eds per year.

Working with Sales and Marketing

In my mind, GA is most effective when they are working closely with Public Sector Sales and Marketing to elevate in accounts, tell the success story of the federal customers to Congress and the White House, and build stronger relationships with political appointees, senior executives, and general officers. None of them are likely the immediate buyer for your technology, but they influence policy, budget, and government execution.

Ideally, GA can help grow and protect funding for the go-to-market team. With Hill and Admin engagement, they help shape market requirements, help the sales and solutions team be more strategic, and give context to help account executives rise above simply having transactional conversations.

Said another way, GA can inform the sales team about what Congress cares about, what a Cabinet Secretary cares about, why he/she is getting called to the Hill, what oversight agencies like GAO/IG/OMB are focused on, and other things that account executives don’t typically have a lot of visibility into — to help account executives be more of a trusted advisor to their clients, at a more senior level.

To take a current example, a government affairs professional is in a good position to explain why Congress and the Biden Administration are focused on the Technology Modernization Fund, explain what types of projects are good candidates for the fund, and work with the sales team to develop a qualification strategy (i.e. a few simple questions they can use in conversations with a prospective federal customer) to determine if it makes sense to propose using the TMF to help fund the project.

External Firm vs Founding VP of Government Affairs

Outside Gov Affairs firms have very experienced people from the Hill and prior Administrations. They are savvy in all the ways you are not — but I’m a bit skeptical of hiring an outside firm to start. They can be expensive and can give you advice that lines up with their expertise, relationships, and knowledge — which may or may not be what the company needs. As a CEO perhaps not sophisticated about government affairs, you may not be able to weigh their advice, and/or act on it or have a good sense of whether it was a useful activity. Hiring an outside firm to start can make sense, however, if you have a very targeted GA need — or if you are using them primarily in a business development capacity.

Typically, a founding GA professional will have some budget to use with lobbyists, consultants, and trade groups. But before they engage any of those, he/she should spend time getting to know the product and sales teams well (in addition to the executive management team), and figuring out what the government engagement strategy should be.

Profile of Founding Hire

It helps to hire someone with Hill experience when starting the GA function; e.g. a former Appropriations, Intel, Armed Services, Homeland Security, or Energy and Commerce committee staffer. Appropriations staffers are seasoned dealmakers and a great place to hire from, but they aren’t necessarily as deep in your subject area. The advantage of a staffer from an authorizing committee (e.g. Armed Services) is he/she knows how to build consensus for a policy change (in this case, at the DoD) that can drive requirements for your category.

Otherwise, I’d recommend hiring someone with significant executive branch expertise in engaging the Hill with a track record of success from a GA shop, lobbying firm, or a trade group. Hiring someone who has experience from the Executive Office of the President (e.g. NSC, OMB, OSTP, etc.) can also provide a helpful perspective on how interagency policy-making works in the executive branch.

I think it’s helpful, but not required, to hire someone that has done it before. One option: hire someone from a top GA practice in a tech company, maybe the #2 or #3 in that shop.

Insight Case Study

Tenable is an example of an Insight investment — now a public company — that has built a successful global government affairs practice. Serial cybersecurity entrepreneur Amit Yoran joined the company as CEO after the Insight investment. Yoran’s past military and DHS experiences, in addition to his exposure to the government affairs function at RSA, where he was the President, meant that he understood the value a GA team could deliver. James Hayes founded the Tenable Government Affairs function, and hired Jill Shapiro and Jamie Brown, to build a GA team that covers the Hill, executive branch, and state government relationships. They’ve helped Yoran contribute to the cyber policy debate at the highest levels of Congress and the Executive Branch, advocating for cybersecurity policy, regulations, and funding for cybersecurity programs, all the while articulating the value of vulnerability management as a critical foundation of cyber protection.

Summary

Government Affairs needs to make sense for your business objectives. A cybersecurity company in the DC area with substantial government business and a high-profile CEO is different from a marketing automation company in the Bay Area with a few government accounts. A health IT company or company that touches more regulated markets might have very different needs.

There is no one right answer — it depends on your company, your interest in contributing to national policy conversations, and how important government markets and regulation are to your business.

Government Affairs relies on personal relationships (not necessarily on the golf course!), but it’s also increasingly becoming data-driven too. If you are considering building a GA function, I’m happy to connect you with professionals who occupy these roles to learn more!