A Decentralised Network of Startup Cities
In the early days of the global pandemic when lockdowns were beginning to set in, many metropolitan dwellers who had the option of leaving, returned to their hometowns. In their exodus, they left behind a void in usually bustling cities. Rental prices for central locations plummeted. Shared common spaces for activities such as the office and the gym had to shut. For most people, spaces that once hosted activities usually separated from the sphere of homelife, became blended.
Many people were forced to search for an online alternative to their usual Third Place. For some, their search resulted in net positive outcomes such as friendships with strangers on platforms such as Clubhouse. For others, it has been more difficult to find an approximate substitute. This difficulty has brought on certain radicalisation and disinformation to various in-person communities.
The search has also made it more evident to a wider population of the problems and opportunities facing organisations that depend on a certain building as a feature of their operation. Buildings that typically emanate an organisation’s strength, became burdens as evident by the shuttering of long standing department stores. Institutions who could but did not provide any contingencies for remote operations have left themselves vulnerable to competition. Universities who could have opened dialogue, adopted feedback from their paying customers ( students) and reformed some of their offerings, by and large failed to do so.
Many other institutions and companies who have similarly failed to adapt have created opportunities for their stakeholders to exit to new alternatives.
By amalgamating the competitions and substitutes for these legacy institutions, therein lies an opportunity to build new ‘startup cities’. Rather than being just one city or even being tied to any legacy land, new cities can be built around a multitude of cloud communities. People who have become connected online can mobilise and move a great distance more cheaply and faster than ever before. This mobilisation can enable the building of new cities which could be more accessible, distributed, collectively more antifragile and built with mechanisms to provide social dividends for its residents.
0. Virtual Environments
One of the most immediate outcomes from a national lockdown, is the shuttering of non-essential indoor gathering spaces and a restriction on the people that one can meet. For spaces with legal permission to remain open such as primary schools and for the small number of people we were allowed to physically get together with, this operated under a system of ‘bubbles’. To limit the spread of any possible viral infections, interaction with others was only tolerated with those belonging to the same bubble.
The software concept of a virtual environment is similar to the bubble. It creates isolated environments for different applications. This means that each application can have their own supporting programs (dependencies) that are independent from the dependencies of other applications built in the same programming language. Each application can therefore have more purposeful dependencies rather than any global bloating.
The same concept of virtual environments, I think could be applied to building a startup city. Instead of any one hegemonic startup city or mecca existing like Silicon Valley largely due to population network effects, what if there could be multiple startup cities with each being able to quickly import the relevant people, communities and support as and when needed. Instead of each city competing to be the magnet with the most pull, they could instead be collaborative.
1. Technology’s Garage Legacy
In 1998 when Microsoft appeared impregnable, Ken Auletta asked Bill Gates what competitive challenge he feared the most. Gates did not respond with the usual litany of prominent foes at the time such as Apple, Netscape, Oracle or Sun Microsystems. Instead Bill was afraid of the “someone in a garage who is devising something completely new.”
There are two possible lessons that can be gleaned from this tale. The first comes from Balaji Srinivasan’s concept of forking and exiting. The second is that a disruptive idea is unlikely to emerge from a technology park. Innovation isn’t brought about by plots originating in magnificent buildings but more likely to occur from the gathering of smart individuals looking to start something (even if it is around a kitchen table).
Forking and exiting Silicon Valley is a concept that combines the method of cloning code from an open source project with Albert Hirschman’s theory of exit, voice and loyalty. Hirschman’s theory follows the premise that “no matter how well a society’s basic institutions are devised, failures of some actors to live up to the behavior which is expected of them are bound to occur”. A stakeholder in a society or organisation has the choice of either voicing their dissatisfaction or exiting the system.
Pioneers choose to exit the system. Rather than protest or revolt for reform, pioneers exit to create a competitive alternative which will eventually alter the status quo. A startup city could be a fork or a clean exit. Under models where individuals are unchanging in their level of rational economic behaviour, there may be a collision of individual preferences with societal interests. By nature, the larger the number of individuals in a network, the more possibilities there would be a clash of interests.
A startup city that just clones the existing economic model such as Silicon Valley would likely either be a lite version or an improved version of the same type of city. It would perhaps be a city with a lot of economic incentives aligned with creating technology projects and startups. I think this would just create a city that is like a factory floor with no past and no future.
What could be a possibly more interesting alternative is a decentralised network of startup cities. Each city being their own virtual environment purposefully aligned for different communities but able to import the best practices of other cities very quickly. Each city able to assess the efficacy of the other, have some type of version control to test programs that would benefit residents and be able to contain various cloud communities.
2. The first settlers
What I believe makes Silicon Valley so alluring and so magnificent a location that many a technologist outside of the U.S. would want to move there, is a blend of mythos and self-fulfilling network effects. Silicon Valley is where companies that started out from a garage became global companies with valuations exceeding the GDP of many countries. It is also an inheritor of social capital and generosity of those who have succeeded in the area. The most prominent legends such as the Traitorous Eight, Bell Labs or the PayPal Mafia are tied to the very essence of the compounding benefits of network effects.
An important part of creating a new startup city, an alternative to Silicon Valley is the seeding network. For Miami, this is a combination of the VCs who tweeted/moved there and its Latin-American ties. What matters is the people. In Paul Graham’s 2006 essay, ‘How To Be Silicon Valley’, he put this figure as low as thirty of the right people. Graham theorised that if he could have his pick, thirty would be enough to turn even Buffalo into a significant startup hub.
Influential people are network beacons. BitClout and Clubhouse are prime examples of how hype can generate a clamour of crowds wanting to enter. With an appealing aura of exclusivity, hype can be a signal for the movement of capital and people.
When the gates are opened however, the larger the network grows, the more challenging it is to maintain a sense of exclusivity and have people pay premiums to enter. If no new people enter the network, the network will also likely eventually die or find itself with competitors supporting different values. Traditional gentlemen clubs in Britain for example face this issue.
A startup city would face similar challenges. San Francisco faces the challenges of gentrification. The more popular a place becomes, the more magnified the tension that arises among its residents. Politics will take precedence over decisions based on rational utility.
In order to build a new community, a new city and a new country, what really matters in the beginning is who the first settlers are. If they do not put any investment or commitment into the city, they would have no skin in the game to help the network. A startup city or country should therefore begin with a cloud community that is aligned with its values.
A cloud community begins online. It could happen over a social network like Twitter, a slack group chat or email. If the network is decentralised and accessible, there could be multiple communities as nodes in the network that when combined would be able to form a locale.
3. Decentralised and distributed locales
Many major cities are not blessed by nature. They do not necessarily have an appealing natural environment or year round good climate. Those who do are often small or have not faced urban sprawl. For a city that isn’t purpose built from scratch, floating on the sea or on Mars, a possible tactical approach to be appealing is turn sprawl into a feature and not a big. Tokyo for example has created several distributed centers in its metropolis which has allowed for a high degree of connectivity.
Another interesting possibility for cities to become startup cities is to repurpose or create areas that are attractive to ambitious, tech driven and optimistic people. Berlin has done so in Europe with its more affordable rent, attractive nightlife and trendiness.
There are several factors as to what could be applied as an advantage for a city to become a startup city. The natural environment, the pro-tech attitude, the laws etc. But if a city doesn’t have these advantages, what can it do to be more attractive
Universities are historically a focal point for intelligent people to meet other intelligent people. When many of them had to shut their physical campuses in 2020 and many still have their campus remaining shut in 2021, students had to attend courses solely online. The bright minds of the future were not meeting in college dorms, university halls or campus anymore. Serendipitous interactions and societies became more muted. The alternative for many students was to skip the year or to supplement their intellectual interests with online communities.
The cloud communities which formed, the students that are globally distributed, can still come together physically when travel is allowed. Wherever they gather is a possibility to start the kindlings of what can become a startup city. The students who took a gap year to form a hacker house, the emergence of a hacker house of pan European ambition are all instances of communities that could seed a startup city.
Any of these population seeds could furthermore join forces and help create a much more distributed and decentralised network of hubs that could form startup city nodes. Each hacker house and each startup city, have different cultures and flavours but each able to borrow from each other’s template. New houses being able to fork the old.
Originally published at https://viralwegrow.com on May 11, 2021.
