The Age of Startup Cities: How Sovereign Individuals Will Build The Future
In 2020, the COVID-19 global pandemic initiated the future.
Although the world went up in flames last year, what rose from the ashes was a stronger, more geographically-independent, interconnected and more technically competent global network.
Before 2020, innovation was geographically concentrated to a handful of attractive cities, to the point where it was almost unfair for the rest of the world.
Politics were cumbersome, the economy was outdated and education was limited to the universities. Work was done in the workplace, vacations were capped at 2–3 weeks/year and 9–5 was the cornerstone of the working class. Creativity was a dying breed and conformity was becoming the status quo.
Before 2020, we looked ahead to the future. After 2020, we realized the future is now.
Thanks to the actions of a few noteworthy individuals, such as Miami’s mayor, Francis Suarez, recruiting entrepreneurs to his city over Twitter, Elon Musk creating a city that revolved around a spaceship launch station, and a community of developers that continued to advance the architecture for Ethereum, the world’s growing digital economy, the traditional models of fostering global innovation have shifted.
The next decade will be focused on curating the initial foundation that was laid in the wake of COVID-19. This will include improving mobile work capabilities, replacing traditional finance with decentralized finance, building new communities which are based on shared values and ideals, enabling education on a global scale, and moving innovation to the cloud.
The places which are the first to acknowledge this changing tide and the first to act in accordance with it will be the biggest winners in the end.
Over the last year or so, governments officials have bent to the wills of a handful of radical thinkers. Instead of supporting innovators, they’ve chosen to align themselves with those who sit on the sidelines and provide counter-productive criticism.
As seen with the mass exodus from California this past year, the time has come for government officials to stop being politicians and to start acting like startup founders.
But before we get into that, let’s start off with some background information.
The Current State of Innovation
Innovation has always been geographically concentrated.
Whether it was during period of Ancient History (3000 BCE — 500 AD), where technological and social innovation was bound to the Persian, Roman, and Greek empires; or during the Renaissance period (15th & 16th centuries), where Europe began to experience the shift from the Middle Ages to Modernity; or when the financial, agricultural, industrial and scientific revolutions turned Europe into a global superpower, spanning from approximately the start of the 16th century to the mid-20th century; finally to the Digital revolution (late 20th century to the present) which has been concentrated in Silicon Valley.
The reason for this is simple: innovators like to be surrounded by other innovators. The more innovators there are, the more innovation that can be achieved. Part of this is because innovators share a high degree of reciprocity between one another. They are the first to try each other’s products out; they provide the most useful feedback to one another; and they’re the first ones to integrate other products into their own. The earliest adopters of an innovative product are often those who are closest to the place of conception.
As such, places like California, Singapore or Germany don’t breed innovators — they attract innovators.
But innovation is the by-product of several factors. In order to understand how innovation is achieved, and how it can grow, these factors need to be understood. Once understood, they need to be improved. Once improved, innovation may flourish as a result.
Though there are several domains upon which innovation can take place, I have limited the scope of this post to politics, economics and education.
So what changed between 2019 and 2021?
The Current State of Politics, Economics and Education
Before the world went remote, it was not all that different than it was in the year 2000. With the exception of technologies, such as cell phones, tablets, laptops, or anything else that benefitted from the advancements made in microprocessors during that time, daily life was relatively similar.
People woke up in their own homes, in the city they had lived in for a number of years, ate the same breakfast, sat in the same traffic, went to work/school at the same place, with the same people at the same time, and came home and did the same things they always did, every single day.
Instead of watching cable TV as they did in the year 2000, people could binge watch a series on Netflix. Instead of staying in hotels when they travelled, they stayed in AirBnB’s. Instead of MySpace, they scrolled through the endless feeds on Instagram.
Overall, the difference between the year 2000 and the year 2019 was minimal. Politically, economically and educationally, things were relatively the same.
2020, however, changed everything.
Politics have always been influenced by external parties. Wealthy donors who support a specific party can significantly impact a candidate’s campaign; politicians who say the right thing at the right time for a specific demographic can sway voter impressions; international tensions between rival countries can fuel patriotism for good and for bad; and party agendas are almost always in direct conflict with the opposition’s agenda, which can lead to an us-versus-them mentality.
However, 2020 redefined the phrase “external influences” and revealed 2 things:
- Social media owns politics and essentially controls the outcome of any public election
- When a large group of ignorant conformists band together, the group can have have adverse consequences on determining what it true and what is the consensus among the general public
In light of “Cancel Culture”, western democracy is becoming a distant memory. In a world where anyone can say anything about anyone and distribute it to an entire network, striving to become a critical and free thinker has become a dangerous pursuit.
A centralized economy is by no means perfect, but it works (albeit, I suspect for not much longer). The many components of the economic machine work in synchronous with one another to ensure that goods and services are available for consumption to the majority of the population. The average consumer is able to borrow, invest and consume in proportion to their productivity/income as a result of a functioning economy.
I say majority because, as is the case in any hierarchical system, there is a disproportionate number of people who are not served by the system and who would benefit from restructuring (another post for another time).
Although western economic systems are functional and capitalism has acted as the engine of technological progress for the last few centuries, one major problem is that the reach of progress is often initially limited.
Take for example Tesla. When electric cars were first introduced to the general public, they were mainly targeted at the wealthy trendsetters in the nearby proximity of Silicon Valley. Only until recently have electric vehicles begun to expand on a global scale, with China, Europe and the rest of North America following suit.
A more relevant example would be the current limitations in cross-border transactions. At this point in time, we don’t have an efficient manner for transacting with people from different countries on a frequent basis. Wire transfers are slow and expensive and are often only useful for infrequent, large transactions between individuals.
Public funding and peer-to-peer transactions are much more difficult to do on a regular basis across borders. As such, there are many people in the world who are capable of contributing to innovation, but don’t have the opportunity, nor the incentive.
However, 2020 showed us the power of remote work. Physical borders no longer prevented individuals who lived outside the concentrated centres of innovation from being able to contribute.
Now that innovation is moving to the cloud, contribution is only dependent on skillset, access to internet and the proper incentive. More on this below.
Traditional education is outdated.
Some people may disagree, but when the U.S national student loan debt is approximately $1.6 trillion and most graduates are coming out of school with little to no employable skills, there’s a problem.
Instead of focusing on learning practical skills for the ever evolving world — such as software development, digital product design, aerospace engineering, etc. — most students are graduating with nothing more than a specialization in ideological aversion to anyone who thinks differently than them.
The good thing is, is that many people are working on solving this problem. Companies light Lambda School are offering great programs where people are able to learn software development at no cost until they’ve landed a job. Balaji Srinivasan — a hero among blockchain aficionados — recently founded a new initiative called 1729 that will actually reward users in cryptocurrency to learn.
The next step is expanding the reach of these educational opportunities. As we saw in 2020, remote education is more possible now than ever before. By utilizing the online platforms that have been established in the past year, in addition to implementing a globally accepted incentive for students wishing to further their education — we are reaching a point in time where educating and employing individuals across borders will become a real possibility.
Not only will this pull many under developed countries out of their economic and educational pits, this will continue to accelerate the growth of innovation on a global scale.
Like the old saying goes, give a man a fish and he’ll eat today. Teach him to fish, and he’ll never go hungry again.
The Rise of Sovereign Individuals and Startup Cities
Now that I’ve provided a brief overview of the existing political, economic and educational landscapes that govern western civilization, including some of their major flaws, I’d like to introduce a solution:
What is a startup city? There isn’t an official definition yet, but it’s something like this: Establish a government that consists of growth focused, highly-efficient individuals, whose intentions are to optimize both societal and technological growth, elevate levels of individual and group productivity and improve the quality of life on a global scale. Ensure these individuals are not bureaucrats who are slow, easily distracted and whose sole aim is to maintain their political power. Have these individuals begin to build a network of like-minded individuals who are deeply interested in technological growth, and provide them with a sufficient incentive to come together in one place. Once this group comes together, ensure the political, social and economic policies are fair for all inhabitants of the community, but are also set up in a manner to ensure that those who are the largest contributors to prosperity are rewarded accordingly (rather than taxed unfairly).
I’m convinced this is a good idea because what I’ve attempted to describe is the polar opposite of what California did during 2020.
Instead of rewarding the individuals who were attempting to do some good in the world, the California state government criticized and shamed the entrepreneurs that have made the state into one of the most productive places in the world. As a result, many of these entrepreneurs came to the realization that they were living in a place that was setup to stunt growth, not foster it.
Then came along Francis Suarez.
Instead of living into the politician archetype, Francis Suarez did something magnificent: He acted like the CEO of a startup, except that startup was Miami.
He didn’t point a finger at entrepreneurs and blame them for the wealth gap. He didn’t attempt to tax them for all they were worth. He didn’t put a cap on what type of innovation or what industries he was interested in. He didn’t attempt to poison the minds of entrepreneurs with political ideology.
He simply asked how he could help.
That simple question set off a chain reaction. Government officials all over the world then started to realize the value in attracting high-output entrepreneurs to their cities through mutually beneficial cooperation. They realized that entrepreneurs are not the wealthy overlords who are responsible for the denigration of society. Instead, they realized that entrepreneurs are the ones who will shape the future of the world to be a more inclusive, healthy, educated, technologically sound and prosperous place. They realized that putting these individuals in a position that would optimize their output should be a primary task on hand.
Startup cities will be built on a very different foundation than the rest of the world. Politically, economically, educationally, and technologically, these cities will become hubs for the world’s most foremost critical thinkers and problem solvers.
Political Structure of Startup Cities
Up to this point, I’ve attempted to convey how the existing political system is counter-productive to innovation. The most industrious people are at the mercy of bureaucrats who don’t understand what innovation is or how it can be furthered. That’s a problem.
In startup cities, the political structure needs to be redefined well before entrepreneurs will make the move at scale. Governments have to act in a manner that aligns with how entrepreneurs act. Innovators, after all, love being surrounded by other innovators; in the case of startup cities, technological innovators will benefit from being surrounded by political innovators, and vice-versa.
This will be a challenge in the early stages, although the shift has already begun. Countries like Estonia, Dubai, New Zealand and several cities within the US have begun to restructure their political policies so as to attract entrepreneurs. (For a full list of places who are transitioning, see here.)
Since entrepreneurs are some of the highest earners in the world, they can choose to live anywhere they see fit. But most entrepreneurs are not looking to live somewhere based on superficial factors, such as weather, lifestyle, earning potential, etc. Although those are part of the equation, they are primarily looking to be in a place that aligns with their ideals and supports them in pursuing their goals.
The aim of political systems that govern startup cities should not be to oversee innovation — it should be to ensure that the entrepreneurs who are overseeing innovation are able to do so in the most efficient and rewarding manner. The political system should be responsible for enabling technological innovation, not executing it.
Economic Structure of Startup Cities
It’s hard to have a conversation about future economics without bringing cryptocurrency into the discussion. Fortunately, I’m not trying to have that conversation — cryptocurrencies are the future of economics. And therefore, they will be the fundamental currency of startup cities.
The advantages of cryptocurrency over traditional finance are endless. In addition to enabling cross-border transactions at scale, they offer a much greater incentive in that they are appreciating assets. Paying someone in crypto costs you the same amount of money to pay them, but allows them to earn more and do more over time with those earnings.
Startup cities will also be hubs for sovereign individuals wishing to live in a community that aligns with their own values. With a large number of individuals working for themselves as a result of a high-functioning gig economy, peer-to-peer crypto transactions will be part of the foundation that makes startup cities so attractive.
There will still be many companies that will plant their roots in startup cities, but a large portion of the population will consist of freelancers who pick and choose what projects they want to work on, who they want to work with and how long they want to work for. Earning appreciating cryptocurrencies in a city that enables crypto-based transactions at scale will allow for a decoupling from traditional society. People will be able to live, eat, travel, and play in a new world.
There is also an implicit system of fairness that gets implemented as part of the adoption of cryptocurrency. Since all transactions are posted on a public ledger (the blockchain itself), it becomes almost impossible to game the system. When the big banks got bailed out by the US government after the 2008 financial crisis unfolded, many people were left wondering how some people could cause so much damage and pay so little consequences. This is almost impossible with cryptocurrency because transactions and earnings can almost always be retrieved from available data on-chain. People are held accountable since the economic machine can no longer be controlled by the bankers who run Wall Street.
As Nassim Taleb has previously outlined, the primary prerequisite for playing the game is having skin in the game. Cheating without paying the consequences will no longer fly.
Startup cities that are built on cryptoeconomies will begin to accelerate the migration from traditional economies that are becoming incapable of meeting the demands of a changing world. As many people continue to adopt digital solutions, it is inevitable that they will eventually adopt digital currency. And since digital currencies are inevitable, why not kick off the age of startup cities with the age of cryptocurrencies?
Educational Structure of Startup Cities
As stated above, the current state of our educational institutions are outdated and becoming increasingly irrelevant.
A potential solution to this problem will be to make education more accessible, more practical and more rewarding. Existing education fails to meet any of these requirements; it is only accessible for people in developed countries; most undergraduate degrees do not teach employable skills in the ever-evolving world; and since there is a surplus of young people graduating with no jobs lined up, but thousands of dollars in student loan debt, they are no longer rewarding either.
Education in startup cities will need to meet these conditions for it to be adopted at scale.
Fortunately, the reach of education has expanded to anywhere there is internet, as a result of remote learning. Now that people can learn from anywhere, there is no longer a need for individuals in developing countries to leave their families and their homes to seek educational and professional opportunities in more developed countries. They can learn to program or create digital content as long as they have access to internet and a computer. I understand that this is obviously not the case for many places in the world, but it is the case for some places in the world. And that should not be overlooked. We need to walk before we can run.
Since remote education is focused on teaching practical skills that are capable of obtaining employment, the second requirement — practical education — can also be met. Many people fail to understand that jobs in “tech” are not just software development related. There are jobs in digital marketing, digital sales and digital support, among many others. Establishing a background in these areas through online, directed learning enables people to learn the skills necessary to move with the times, rather than continuing to learn outdated, impractical skills.
Lastly, education in startup cities needs to be rewarding. Startup cities will be some of the most expensive places in the world to live — primarily because the inhabitants will be some of the highest earners in the world (think San Fransisco or New York). This means the jobs that people are going to be educated on performing need to be jobs that pay well enough that the inhabitants can afford to maintain the quality of life that startup cities can provide. This last condition is met from two fronts: the first is that the jobs will be in demand, and therefore compensated well. And secondly, since the compensation will be in the form of cryptocurrency, which is an appreciating asset, individual income will be much higher in startup cities than in places that fail to transition to the new landscape.
Education in startup cities will be focused on provide accessible, practical and rewarding skills that will continue to help build a more prosperous world.
2020 broke the world down, however, the future is promising.
We saw the existing political, economic and educational systems, among many other social institutions, fail in the face of a global crisis. Those who were trying to fix the world were overshadowed by those were trying to hold it back.
Instead of failing to adapt, a group of critically thinking misfits chose to do what they do best: solve problems.
Startup cities may be part of the solution to the plethora of problems that require solving. Many countries and cities are already carrying out what is required to kickstart this revolution. The next decade will be focused on continuing to build on what has since been started.
Political systems will be restructured so as to enable innovation, rather than slow it down. Politicians will support entrepreneurs to pave the way for a move technologically capable world; the days of bureaucracy limiting the reach of technology will soon become obsolete.
Economic systems will be restructured so as to support the world’s best problem solvers and largest contributors to innovation, while also ensuring that the rest of the world is awarded equal opportunities and security.
Educational systems will be restructured to disregard the outdated and no longer relevant content and implement an accessible, practical and rewarding system that propagates the present and future generations.
Like anything unknown, the future can be intimidating. But although it can be unpredictable, it promises of a more educated, healthy, technologically sound and prosperous place.
Instead of fearing it, it’s time we embrace it.