All Segments
When Regulation Becomes Code
7 segments available
Regulations are at an all-time high, with over 50,000 federal banking rules driving up costs for businesses and stifling innovation. Angela Strange, General Partner at a16z, explores how AI is revolutionizing compliance by turning regulation into code—cutting costs, simplifying workflows, and empowering startups to compete. In this episode, she unveils her 2025 Big Idea, highlighting the transformative impact on businesses, consumers, and the economy. Timecodes: 00:00: The Growing Burden of Regulation 01:06: The Compliance Challenge 02:36: AI to the Rescue 03:19: The Role of LLMs in Compliance 05:23: Real-World Applications and Examples 07:41: Future Opportunities and Impact 09:54: Why It Matters to Everyone Resources: FInd Angela on X: https://x.com/astrange Check out all 50 Big Ideas: https://a16z.com/big-ideas-in-tech-2025/ Stay Updated: Let us know what you think: https://ratethispodcast.com/a16z Find a16z on Twitter: https://twitter.com/a16z Find a16z on LinkedIn: https://www.linkedin.com/company/a16z Subscribe on your favorite podcast app: https://a16z.simplecast.com/ Follow our host: https://twitter.com/stephsmithio Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures
Segments Timeline
The Growing Burden of Regulation
Angela Strange highlights the staggering increase in federal banking regulations, which have surged from 10,000 in 1970 to 50,000 today. She emphasizes the significant cost these regulations impose on existing companies and the barriers they create for new entrants and innovation, stressing the urgent need for a solution as the problem continues to escalate.
"there are 50,000 different rules and regs across different agencies and that's up from 10,000 in 1970 the everyday person should really care about [Music] this in 2025 regulation is going to become co..."
The Compliance Challenge
Strange discusses the current state of compliance, illustrating the cumbersome processes that companies face, such as navigating lengthy documentation and hiring numerous compliance officers. She cites the example of TD Bank's hefty fine due to compliance failures, underscoring the economic impact of these burdens on businesses, particularly startups.
"better that's just Federal every state is following exactly the same trend line has compliance always been this burum sun or like what's actually driving that increase here's how it's done today uh yo..."
AI to the Rescue
Angela Strange introduces the potential of AI to transform compliance processes. She envisions a future where every white-collar worker has a compliance co-pilot powered by AI, significantly reducing the time and effort required for compliance tasks. This shift could alleviate the pressure on compliance teams and streamline workflows.
"just like dealing with these fines how does this actually work out so large Banks right now up to 15% of their staff is just in compliance you want to the fourth fastest growing job in the United Stat..."
The Role of LLMs in Compliance
Strange explains how large language models (LLMs) can enhance compliance efforts by applying judgment and automating research tasks. She provides an example of how LLMs can assist compliance officers in quickly determining the compliance of communications, thus saving valuable time and resources.
"for this because they're able to apply some form of judgment and so let's think a very specific example near and dear to our hearts anytime we want to tweet something we are a registered investment ad..."
Real-World Applications and Examples
Angela discusses existing tools that leverage AI for compliance, highlighting companies like Norm AI that codify regulations to provide actionable insights. She emphasizes the importance of transparency in compliance processes and how these tools can significantly reduce the workload for compliance officers.
"colleagues that's a feature it comes out with great great creative uh fun and enhancing things in the world of compliance that is definitively a bug yes smarter entrepreneurs are getting around this i..."
Future Opportunities and Impact
Strange reflects on the rapid adoption of AI tools in compliance, noting that companies are increasingly willing to replace outdated systems with innovative solutions. She mentions the potential for new entrants to disrupt traditional banking models, ultimately benefiting consumers through improved services and reduced costs.
"the officer having to do all that work they can just check the box that makes sense and are you seeing these tools on the market give us some examples of what already exists notoriously Banks ins comp..."
Why It Matters to Everyone
Angela Strange concludes by explaining why the everyday person should care about the evolution of compliance through AI. She outlines how reducing regulatory burdens can lead to better services, lower costs, and increased access to financial products, ultimately enhancing the overall economy and consumer experience.
"um you know I've been investing in and around this space for the last for the last 10 years and the momentum and even just the acvs that some early companies are getting is is quite fast I think the t..."