Silicon Valley's Ultimate Exit Is a Fantasy of Seceding from the U.S.

What if the perfect liquidity event for Silicon Valley was not a blockbuster IPO, or an acquisition that paid out at some insane multiple, but a literal exit from the United States of America? No more lumbering bureaucracies, no lobbying incumbents, no "petty" laws, no obstructionist unions. That's what a Stanford lecturer and genetics startup cofounder Balaji Srinivasan proposed at Y Combinator's annual startup school this weekend.

Srinivasan’s lecture, entitled "Silicon Valley's Ultimate Exit" explored the idea of techno-utopian spaces, which could even mean entirely new countries that would “operate beyond the bureaucracy and inefficiency of government,” reports CNET. With an “air of forced evangelism,” Srinivasan told the crowd, “We need to build opt-in society, outside the US, run by technology”:

"We didn't securitize mortgages, order bailouts, start wars, or refuse to write movies or articles on this until too late," read one of Srinivasan's slides on where the blame lies and what the real problems are that are holding technology back. [...]

With 3D printing, regulation is being turned into DRM. With quantified self, medicine is going mobile. With Bitcoin, capital control becomes packet filtering. All of these examples, Srinivasan says, are ways in which technology is allowing people to exit current systems like physical product production and distribution; personal health; and finance in favor of spaces of their own creation.

"The best part is this, the people who think this is weird, the people who sneer at the frontier, who hate technology, won't follow you there," he said. "We need to run the experiment, to show what a society run by Silicon Valley looks like without affecting anyone who wants to live under the Paper Belt," he added, using the term "paper belt" to refer to the environments currently governed by pre-existing systems like the US government.

The Paper Belt. Expect to hear that term a lot more. What better way to sneer at the bureaucratic nightmare of government than to picture an entire swath of the country—from Washington D.C. to New York—gasping for its last breath under a pile dead-trees slices as Silicon Valley whizzes by on a Hyperloop toward maximum efficiency.

The “Ultimate Exit” may sound like a line from a Heaven’s Gate manual or a certain German euphemism, but it’s merely a more extreme example of the “anarchist cheerleading,” as Kevin Roose called it that, we’ve seen from privileged technocrats during the government shutdown.

Srinivasan just picks up where Larry Page’s vision of Google Island, Elon Musk’s Mars colony, Peter Thiel’s investment in a lawless seastead, and the floating startup incubator 30 minutes from Silicon Valley left off. Only he begins to extrapolate some best exit practices:

Srinivasan even went so far as to point out — perhaps with a bit of tongue-in-cheekiness — that Silicon Valley, including the up-and-coming entrepreneurs in the Y Combinator crowd, must design these processes for exit peacefully, as combating current systems like the US government would result in violent failure.

This is the Tea Party with better gadgets. It’s probably no coincidence that Srinivasan’s genetics startup (started in a Stanford dorm room, naturally) has raised more than $65 million in funding from investors like Peter Thiel's Founders Fund. Thiel, of course, was a big backer of Ted Cruz and single-handedly funded a Ron Paul super PAC before the last presidential election.

Silicon Valley likes to imagine that it can build a better world that the one we live in. That's partly because the tech sector spends so much time thinking about the future and partly because it fancies itself populated by exceptional objectivists.

As George Packer wrote in the 2011 profile of Thiel:

No technological change would have more effect on the living standards of struggling Americans than improvements in energy and food, which dominate the economy and drive up prices. “That’s not one I focus on as much,” Thiel admitted. “It is very heavily politically linked, and my instinct is to stay away from that stuff.” Such oversights are telling. In Thiel’s techno-utopia, a few thousand Americans might own robot-driven cars and live to a hundred and fifty, while millions of others lose their jobs to computers that are far smarter than they are, then perish at sixty.

Srinivasan’s plan also has its convenient oversights. What does a society run exclusively on technology mean? Uber, for example, doesn’t yet own a single vehicle and does not want to be responsible for the vetting process of drivers. Airbnb owns no homes. Even with Twitter’s $22 million in tax breaks, it’s going to have to have to rely on the public markets to achieve profitability, just as Facebook’s backers became billionaires at the expense of some retail investors. Srinivasan’s startup Counsyl scans the DNA of parents in 3 percent of all births in U.S., but that’s one very small, early-stage slice of healthcare needs.

It’s like the Idaho tea party candidate who rails against government while his kids are on Medicaid.

Replace public infrastructure and safety nets established by a (deeply flawed) government, and what will these pioneering Y Combinator Columbuses be able to offer? Little fixes that piggyback on the world as we know it. And those companies that do have big ideas end up acting like just as much of an innovation-stomping incumbent or, in the case of another Thiel-related company, contracting for the government itself.

Sorry, Silicon Valley, but it looks like we’re stuck with each other.

[Image via TrendHunter]