So Daniel sent us this one, and I'm going to read it out because there's a lot to set up here. He writes: "That was a wonderfully informative episode about lobbying and how it works. I'd love to ask about the world of public affairs, which, for anyone who's worked in public relations, seems like a more politicized version of what PR agencies do. We often assume that it is synonymous with lobbying, or even a euphemism for it. What do public affairs firms, especially those offering services in geopolitical consulting, actually do and advise clients upon?" Great question, Daniel. And honestly, I think the confusion here is totally understandable because the industry is almost designed to be opaque.
If lobbying is the art of influencing lawmakers, public affairs is the art of shaping the entire battlefield. That's the distinction that most people miss. And when you layer geopolitical consulting on top of that, you're talking about firms that are essentially helping corporations navigate a world where trade policy, AI regulation, and national security are all colliding at once.
Before we go deeper, quick note for listeners: today's script is being generated by Claude Sonnet four point six, which I find appropriately meta given that AI regulation is one of the core themes we're about to get into.
Genuinely fitting. So let's actually define what we're talking about, because these terms get thrown around loosely. Public affairs, at its core, is the strategic management of an organization's relationship with its external political and social environment. That includes governments, media, communities, regulators, and any stakeholder group that can affect your ability to operate or grow. Lobbying is one tool within that, but it's a subset. It's the direct legislative piece.
The way I've heard it framed is that public affairs is the operating system and lobbying is just one of the applications running on top of it.
That's a clean way to put it. And the other applications include things like reputation management, crisis communications, coalition building, media strategy, and increasingly, geopolitical risk intelligence. What's happened over the last few years is that the external environment has gotten so volatile that corporations can't just hire a lobbyist to push a bill and call it a day. They need a firm that can tell them what the regulatory landscape in Brussels looks like alongside what's happening in Washington, and how a shift in US-China trade policy affects their factory siting decisions in Vietnam.
So the old model was reactive. Something happens in Congress, you hire a lobbyist. The new model is more like continuous environmental monitoring.
The industry has a phrase for it: moving from reactive risk management to strategic foresight. And that shift is real. The Public Affairs Council put US public affairs spending at four point three billion dollars in 2025. That's not just lobbyists. That's a whole ecosystem of firms doing intelligence, narrative development, stakeholder mapping, regulatory forecasting.
Four point three billion. And that's just the US figure. What does the actual work look like on a day-to-day basis? Because I think most people's mental model is some guy in a suit taking a senator to dinner.
That guy still exists, by the way. But he's now supported by an analytics team running legislative tracking software. The core services break down into a few categories. First is policy landscape mapping, which is essentially building a real-time picture of where legislation is heading, who the key decision-makers are, and what their pressure points look like. Then you have stakeholder analysis, which is identifying every actor who has a stake in your regulatory outcome, from trade associations to environmental groups to foreign governments. Then regulatory risk assessment, which is quantifying the financial exposure of various policy scenarios. And then narrative development, which is crafting the framing that positions your client favorably before the debate even gets started.
That last one is the most interesting to me. Because that's where you're not just responding to the conversation, you're trying to set the terms of it.
And that's where the line between public affairs and what we'd traditionally call PR starts to blur. But the distinction is that PR is primarily about brand perception. Public affairs is about policy outcomes. The narrative development in public affairs is specifically designed to make your position seem like the natural, reasonable, public-interest position before a regulator or legislator even sits down to write the rules.
Okay, so what are the actual technical tools these firms are using? Because you mentioned analytics and legislative tracking, and I know there's a whole software ecosystem here.
There is. FiscalNote and Quorum are probably the two most widely used platforms for legislative intelligence. FiscalNote aggregates regulatory filings, legislative text, committee schedules, and voting histories across hundreds of jurisdictions globally, and then uses machine learning to flag relevant developments for clients. Quorum is more focused on relationship mapping, tracking which staffers are working on which issues, who's meeting with whom, what the amendment history on a bill looks like. These are essentially CRM systems for the political environment.
So it's Salesforce but for senators.
Essentially, yes. And then on the geopolitical intelligence side, you have firms using Palantir's Foundry platform for synthesizing open-source intelligence, which the industry calls OSINT. That means pulling from news feeds, satellite data, trade flow databases, regulatory filings across multiple countries, and building a unified picture of where a particular market or region is heading. The top geopolitical consulting firms, outfits like Control Risks and Eurasia Group, charge upwards of five hundred thousand dollars for annual risk assessments. And those assessments are built on this kind of continuous data synthesis.
Half a million dollars a year to be told that geopolitics is complicated.
To be told very specifically how geopolitics is complicated in ways that are material to your business. And that specificity is what you're paying for. Let me give you a concrete example. In 2025, a major tech company, and this is a composite of several real situations, was simultaneously trying to comply with the EU's AI Act and navigate US export controls on advanced chips. Those two regulatory regimes were pulling in opposite directions. The EU's AI Act required transparency and explainability for high-risk AI systems, which meant keeping certain model architectures and training data in European jurisdiction. But US export controls were restricting which compute hardware could be sold to certain entities, including some EU-based research institutions. A public affairs firm advising that client wasn't just helping them lobby in Brussels or Washington separately. They were building a unified regulatory strategy that mapped the intersection points, identified where compliance with one regime created exposure under the other, and then developed a narrative for both regulators simultaneously that positioned the company as a responsible actor trying to navigate genuinely conflicting requirements.
So the geopolitical consulting piece isn't just about exotic risks in unstable regions. It's about the fact that the major regulatory blocs themselves are now operating as geopolitical actors.
That's the shift that's happened. The EU, the US, and China are all treating AI, semiconductors, and data infrastructure as national security assets. And that means any company operating at scale in those sectors is essentially navigating a three-body problem in regulatory space. The geopolitical consultants are the ones helping them model the scenarios. What does the world look like if US-China tech decoupling accelerates? What if it plateaus? Where do you build your next data center given those two scenarios? Those are board-level strategic questions now, not just legal compliance questions.
And firms like EY-Parthenon, McKinsey, and Rice Hadley Gates and Manuel are all doing this kind of work?
Yes, and the interesting thing about that last firm you mentioned is that it's literally named after former Secretaries of State and Defense. Condoleezza Rice, Robert Gates, Stephen Hadley. The value proposition is explicit: we have the relationships and the institutional knowledge to tell you how governments actually think. EY-Parthenon has gone further and built what they're calling neurosymbolic AI systems to model the revenue impact of geopolitical shifts at scale, moving away from the traditional expert-intuition model toward something more quantitative.
Which is either very impressive or a great way to give a quantitative veneer to what is still fundamentally guesswork about the future.
Probably both. The uncertainty is real. But even a probabilistic model that gives you sixty percent confidence in a scenario is more useful than flying blind. And the scenario planning methodology is actually quite rigorous. They build what they call two possible worlds models, where they take a key variable, say the pace of US-China trade decoupling, and model what the world looks like at the two extremes. Then they help clients build strategies that are robust across both scenarios rather than betting everything on one outcome.
That's essentially what defense planners have been doing for decades. Red team, blue team, war-gaming. The corporate world just borrowed the methodology.
The supply chain resilience work is a direct descendant of that. The phrase "friend-shoring" has become a term of art in geopolitical consulting. It means restructuring your supply chain so that your critical inputs come from politically aligned countries rather than adversarial ones. After the disruptions of the early part of this decade, companies were scrambling to reduce exposure to single-source dependencies in high-risk jurisdictions. Geopolitical consultants are the ones advising on which alternative jurisdictions are actually stable, which have the infrastructure, which have the labor force, and which have the regulatory environment that won't create a new set of problems.
So let's talk about the second-order effects of this industry, because I think that's where things get genuinely interesting and also a little uncomfortable. We've talked about what these firms do for their clients. But what are they doing to the broader policy environment?
This is where the inside-outside framework becomes really important. Inside lobbying is the direct, one-on-one engagement with policymakers. It's technical, it's often quiet, and it's focused on specific legislative language or regulatory tweaks. Outside lobbying is about shifting the public debate. That means PR, media placements, op-eds, think tank reports, coalition building with NGOs and industry groups. The reason public affairs firms invest so heavily in outside lobbying is that it's the prerequisite for effective inside lobbying.
Explain that mechanism, because it's not obvious.
Research on lobbying effectiveness consistently shows that direct legislative access only works if the position you're advocating is at least superficially credible as a public-interest argument. If a pharmaceutical company walks into a Senate office and says "lower our drug prices and it will hurt innovation," that's a hard sell. But if that same company has spent eighteen months funding academic research on innovation economics, placing op-eds by respected economists in major publications, and building a coalition that includes patient advocacy groups who genuinely believe that argument, then the inside lobbying conversation is completely different. The Senator's staff has already encountered this framing in multiple credible contexts. It doesn't feel like a special interest argument anymore. It feels like a legitimate policy debate.
So the think tank placements and the media strategy aren't separate from the lobbying. They're the soil preparation for the lobbying.
Upstream agenda setting is the phrase the industry uses. And the most sophisticated public affairs firms are operating years ahead of the legislative cycle. They're not responding to a bill that's been introduced. They're shaping the intellectual environment that determines which bills get introduced in the first place. There's a reason major corporations fund policy institutes and academic chairs and industry coalitions. It's not just reputational charity. It's structural influence over the terms of debate.
There's a pharmaceutical example that illustrates this really well from 2024.
The drug pricing debate is a perfect case study. When Congress was seriously debating Medicare drug price negotiation reforms, the pharmaceutical industry's public affairs effort wasn't primarily about lobbying against the bill directly. It was about seeding the debate with the innovation-investment framing years earlier. Studies funded by industry-adjacent think tanks. Testimony from academic economists at congressional hearings. Patient advocacy groups making the case that price controls would slow the development of drugs for rare diseases. By the time the legislative debate heated up, the industry's preferred framing was already embedded in the mainstream discourse. The lobbying was the last mile, not the whole journey.
And this is where the ethical gray zone starts. Because at what point does "strategic communication" become something more problematic? The coalition building you're describing, where you have patient advocacy groups making arguments that happen to align perfectly with pharmaceutical company interests, that's not transparent about the underlying relationship.
The disclosure requirements around this are genuinely inadequate. Under the Lobbying Disclosure Act, firms have to register and report direct legislative contact. But the upstream activities, funding a think tank that produces a report, placing an op-ed by a credentialed academic, building a coalition of ostensibly independent voices, those don't trigger the same disclosure requirements even when they're clearly part of a coordinated influence campaign. The industry would say that's because these are legitimate forms of public participation. Critics would say it's astroturfing with extra steps.
The purpose-led branding angle is interesting here too. Because increasingly these companies aren't just doing the think tank work. They're doing full brand repositioning around social purpose before they even start the policy campaign.
The inside-outside trap is real. Research shows that outside lobbying, the public PR component, only works if the underlying position has genuine public appeal. If a company tries to run a PR campaign for a position that's fundamentally unpopular, it doesn't just fail to help. It actually damages their inside lobbying credibility because legislators see the gap between the manufactured narrative and the public reality. Which is why public affairs firms have become so insistent on purpose-led branding as the prerequisite. You need to have genuine credibility on the issue before you can deploy it strategically. You can't just manufacture it in the moment.
That's almost a reassuring constraint on the industry, in a way. The manipulation has to be grounded in something real or it backfires.
To a degree. Though "something real" can be a very thin reed. A company that has one green energy project among a hundred fossil fuel operations can still build a credible green thought leadership platform if they invest enough in communications. The question of how much substance is required to support a given narrative is genuinely contested.
Let's talk about the cost of inaction, because I think that's an underappreciated dimension of this. Businesses sometimes frame public affairs engagement as an optional extra. But what's the actual cost of not playing?
The cost of inaction is asymmetric and usually invisible until it's catastrophic. The most common scenario is that a company that hasn't invested in public affairs finds itself subject to a regulatory regime that was designed without their input, and often designed with their competitors' input. The GDPR is the classic example. When the EU was developing data protection regulations, the companies that were deeply engaged in the drafting process, through industry associations, through direct regulatory engagement, through public affairs firms with Brussels relationships, ended up with compliance frameworks that they could actually work with. The companies that showed up late found themselves subject to requirements that were operationally much harder for their specific business models.
So the regulation didn't change based on who engaged. But how it was implemented did.
The language of regulation is where it all happens. A requirement that says "data must be protected by appropriate technical measures" is infinitely more workable than one that specifies exactly which technical measures are required. The public affairs work is often about keeping the language flexible enough that your existing practices can qualify as compliant, or rigid enough that your competitors' practices can't. That's not nefarious in a simple sense. It's just that whoever is in the room when the language gets written has enormous power over the outcome.
I want to pick up on something you mentioned earlier about water rights, because it came up in Daniel's background material and I think it's one of the more unexpected niches in this industry.
This is genuinely one of the fastest growing areas in geopolitical consulting right now. Data centers and semiconductor fabrication plants are extraordinarily water-intensive. A large hyperscale data center can use millions of gallons of water per day for cooling. As AI infrastructure has scaled, the competition for water rights between tech companies and local agricultural and municipal users has become a serious flashpoint. And the consultants are now doing what they'd call water diplomacy, brokering agreements between corporations and local governments over water access, helping companies navigate the regulatory frameworks around water extraction in different jurisdictions, and advising on the geopolitical risk of building infrastructure in water-stressed regions.
Because if you build your data center in a region that's going to have serious water scarcity in a decade, that's a stranded asset problem.
And it's also a political problem. The backlash against tech companies over water use has been significant in parts of the US Southwest and in some European markets. A company that didn't anticipate that and didn't build the community relationships and regulatory framework in advance is now fighting fires reactively. The geopolitical consultants who are advising on this are essentially doing long-range environmental and political risk assessment that most corporate planning functions don't have the capability to do internally.
Let's bring this back to something practical. Because I think one of Daniel's underlying questions is: who actually needs these services? The assumption is that this is all Fortune 500 territory. Giant pharma, Big Tech, defense contractors.
That assumption is wrong, and it's a misconception worth addressing directly. Startups and NGOs use public affairs tools too, and increasingly they have to. If you're a startup building in a regulated space, whether that's fintech, health tech, autonomous vehicles, or AI, the regulatory environment is going to be the single biggest determinant of whether your business model is legal in five years. The companies that are actively engaging with regulators now, through industry associations if not through dedicated firms, are the ones who have a shot at shaping the rules in their favor. The ones who are heads-down building and assuming the regulation will sort itself out are taking a massive unacknowledged risk.
And the cost of entry for smaller players isn't necessarily a five-hundred-thousand-dollar annual retainer.
There's a spectrum. At the high end, yes, you've got firms like Control Risks and Eurasia Group charging that kind of money for comprehensive geopolitical risk monitoring. But at the other end, you have boutique public affairs consultants who work with startups on regulatory strategy for much more accessible fees. Industry associations spread the cost across many members. And the basic tools, following regulatory proceedings, engaging in public comment processes, building relationships with relevant legislative staffers, those are low-cost activities that any company can do if they understand the landscape.
What about the USMCA trade review? Because that's a 2026 flashpoint that's been on everyone's radar in manufacturing and automotive.
The USMCA review is a perfect illustration of why geopolitical consulting has become a board-level issue. The trade agreement has a review mechanism built in, and the political dynamics around it are complicated by the current US posture on trade, the automotive sector's transition to electric vehicles, and the question of where EV battery supply chains are going to be rooted. Companies that have manufacturing operations across the US, Mexico, and Canada are running scenario models on what the review outcomes could mean for their tariff exposure. The consultants advising them are not just tracking the trade negotiation. They're tracking the domestic political dynamics in all three countries, the lobbying positions of the major industry associations, and the secondary effects of any outcome on related sectors like steel and semiconductors.
And the AI angle on this keeps coming up. The fact that governments are now treating AI as a national security asset fundamentally changes the regulatory environment for any company that's building AI-adjacent products.
The concept of sovereign AI is one of the most significant developments in the regulatory landscape right now. Governments are increasingly asserting that AI systems trained on national data, or deployed in critical national infrastructure, need to be subject to national control. That means data localization requirements, restrictions on cross-border model training, requirements that certain AI systems be developed domestically. For a company that's built a global AI product, that's potentially a requirement to fragment your product into multiple national variants, each with different training data, different compute infrastructure, and different compliance requirements. The public affairs work around this is enormous. Companies are simultaneously lobbying for interoperability standards, engaging with regulators on what "national control" actually means in practice, and building the credibility to be trusted as a partner rather than a threat.
Okay, let's get into the practical takeaways for people listening to this. What should a business leader actually do with what we've discussed?
The first thing is to audit your regulatory exposure honestly. Most companies have a vague sense that regulation is a risk, but they haven't actually mapped which regulatory developments in the next two to three years could materially affect their business model. That mapping exercise, even done internally, is enormously clarifying. You're looking at pending legislation, regulatory proceedings, international agreements, and the political dynamics that determine how each of those resolves. Once you've done that mapping, you have a basis for prioritizing where to engage.
And engagement doesn't have to mean hiring a firm immediately. It can mean showing up.
Showing up is underrated. Public comment processes, congressional hearings, industry association working groups, these are all venues where companies can make their positions known at low cost. Regulators genuinely do read substantive public comments, particularly from companies with direct operational expertise in the area being regulated. The mistake is assuming that these processes are theater and that the real decisions are made in back rooms. Some of them are, but many regulatory outcomes are genuinely shaped by the quality of the input regulators receive.
The OpenSecrets angle is worth mentioning here too. For anyone who wants to understand who's influencing the issues that affect their industry, OpenSecrets is an invaluable resource.
It's the best public tool available for tracking lobbying spending and political contributions. You can search by industry, by company, by issue area, and see exactly who's spending what on influencing which regulatory and legislative outcomes. It won't tell you about all the upstream public affairs activity we've been discussing, because a lot of that doesn't have disclosure requirements. But it gives you the visible part of the iceberg, which is still very useful for understanding the competitive dynamics of regulatory engagement in your sector.
The second takeaway I'd pull out is around the startup misconception. If you're building in a regulated space and you're telling yourself "we'll deal with regulation when it becomes a problem," you're already behind.
The regulatory environment is not a stable background condition that you can ignore until it becomes acute. It's a dynamic landscape that's being actively shaped right now by companies that understand this. The AI regulatory environment in the EU, in the US, in the UK, in Singapore, all of these are being written and rewritten in real time. The companies that are engaged in those processes are influencing their own future operating conditions. The ones that aren't are inheriting whatever the engaged players negotiated.
And the third one, which I think is the most conceptually important, is to understand that public affairs is fundamentally about controlling the narrative before it controls you. The firms we've been talking about are not primarily reactive. They're trying to shape the intellectual environment in which future decisions get made.
That's the core insight. And it applies even if you never hire a public affairs firm. Understanding that the policy debates that will affect your business are being actively pre-framed by other actors, and that you can participate in that pre-framing, changes how you think about everything from your brand positioning to your media strategy to your relationships with academic researchers and think tanks. You don't have to be cynical about it. A lot of the thought leadership that companies produce is genuinely valuable and genuinely reflects their expertise. The strategic dimension is that it also builds the credibility infrastructure that makes your policy positions more credible when it matters.
So where does this industry go from here? Because the question of AI-driven disinformation and its effect on public affairs is one I keep coming back to.
It's the open question that keeps people in this industry up at night. The tools that public affairs firms use for narrative development and stakeholder influence are becoming dramatically more powerful as AI scales. The ability to generate targeted content at scale, to identify and engage specific stakeholder communities with personalized messaging, to monitor and respond to narrative shifts in near real-time, these capabilities are making the upstream influence work more sophisticated and harder to detect. The same technology that makes it easier for a legitimate company to build genuine thought leadership also makes it easier for bad actors to manufacture the appearance of it. And the disclosure frameworks that are supposed to provide transparency haven't kept pace with the capabilities.
The multipolar geopolitical environment compounds that problem, because you're not just dealing with domestic corporate influence campaigns. You're dealing with state actors who have both the resources and the incentive to shape public discourse in foreign markets.
And that's where geopolitical consulting and public affairs genuinely intersect with national security. The firms doing serious geopolitical intelligence work are increasingly having to advise clients on whether the information environment they're operating in has been deliberately shaped by state-level actors, and how to make sound strategic decisions in that context. It's a long way from the lobbyist taking a senator to dinner. But it's all part of the same ecosystem of influence over the conditions in which decisions get made.
As geopolitics fragments further, the demand for people who can navigate that complexity is only going to grow. Which is either exciting or alarming depending on your disposition.
Probably both, simultaneously. That seems to be the theme of most things worth paying attention to right now.
Alright, that's a good place to leave it. Thanks as always to our producer Hilbert Flumingtop for keeping this whole operation running. Big thanks to Modal for providing the GPU credits that power the show. And thanks to Daniel for a genuinely meaty question on a topic that I think is more consequential than most people realize.
If you want to track the lobbying and public affairs spending we talked about, OpenSecrets is your starting point. It's free and it's genuinely illuminating.
Find us at myweirdprompts dot com for the RSS feed and all the ways to subscribe. This has been My Weird Prompts. I'm Corn.
And I'm Herman Poppleberry.
We'll see you next time.
