Build institutions, not apps

The burgeoning consciousness of Silicon Valley should become a political movement to focus on building institutions which can accelerate innovation.

Marc Andreessen published a call to action, It’s Time to Build. He starts by pointing out our institutional failures. He then proceeds to the broader challenges, lack of innovation. Fixing this sclerosis requires a cultural shift, the instillation of the belief that building is a core tenant of our humanity.

"Building isn’t easy, or we’d already be doing all this. We need to demand more of our political leaders, of our CEOs, our entrepreneurs, our investors. We need to demand more of our culture, of our society. And we need to demand more from one another. We’re all necessary, and we can all contribute, to building."

Andreessen is the most recent, but hardly the only, voice from Silicon Valley calling for revitalization. Tyler Cowen and Patrick Collison argued for a new science of progress last July. In January Tyler Cowen noticed that many libertarians were embracing the importance of state capacity. Much of this intellectual history can be traced to Peter Thiel, with his famous point that ‘we were promised flying cars but got 140 characters’.

The core of the arguments is that material progress has slowed down. The first step is that we have to want to change.

Building a better world requires a movement. That movement is finally coalescing, though it doesn’t yet have a name. ‘Progress Studies’ and ‘State Capacity Libertarianism’ have both been discussed, though neither has caught on. For now I will use the term builders. A builder is someone who wants to create a better world via the development and deployment of new technology.

What is hinted at in Andreessen’s essay, but not addressed, is the role institutions play in the lack of material progress. Jose-Luis Ricon explores how institutions have hindered building in the US. To make this explicit, the slowdown of building in the West is in no small part due to institutional failure. Zoning makes building new housing illegal. The FDA makes the cost of new drug development prohibitive.

Therefore, a movement dedicated to builders must consider policy entrepreneurs a key part, and afford them according status. This is where Silicon Valley has struggled.

As my friend Samo Burja likes to quip, “Silicon Valley likes to think they’re above politics while in fact they’re below it”. The result is San Francisco electing a District Attorney, Chesa Boudin, who worked for Hugo Chavez. The result is San Francisco, the most innovative city in a generation, proposing a Office of Emerging Technology to require any technology that uses public space, scooters for example, to get prior permission from the city. Politics is threatening technology and progress. Builders need to take that threat seriously if they want the freedom to build.

Part of this failure is because Silicon Valley has devalued institution building. Policy work is associated with the Acela corridor. Non-profits are thought to be a waste of time. Think tanks are seen as another group of paper pushing rent seekers. Again, there is a degree of truth in these beliefs, but they are not entirely accurate. If Silicon Valley wants an important role in building new institutions, they will have to engage think tanks and other non-profits.

Take, for example, housing. Apple has committed $2.5 billion to housing in the Bay Area. Google committed $1 billion. Mark Zuckerberg committed another $500 million. Microsoft committed $500 million to housing in the Seattle region. Despite the monumental investments, there is no indication that the tech giants can change the lever which matters the most, liberalizing zoning and land use regulations. In other words, the tech giants find it easier to spend hundreds of millions, if not billions of dollars than to reform city and local land use policies. A politically effective movement would hire a bunch of lobbyists and change zoning and land use for a fraction of the cost.

My day job is working on charter cities, arguably the most quintessential act of institution building. Last fall I applied and had an interview at a prestigious accelerator.  I told them the Charter Cities Institute helped draft regulations for Enyimba Economic City, a new city in Nigeria with a target population of 1.5m residents. Their response was, ‘so you’re consulting’. Unfortunately, we were not accepted to the accelerator. If they think writing the regulations governing a new city is consulting, perhaps it isn't surprising Silicon Valley can't figure out how to legalize housing.

There is an emerging political consciousness in Silicon Valley. Technologists are advancing a new way of understanding the challenges facing America and how to solve them that do not split neatly along the traditional left right axis. However, to implement change along those new lines, there must be a will.

Institution building is a political act and needs to be understood as such. Tech giants like Google have figured out how to lobby effectively for their own interests. However, that parochial view of protecting one’s domain is no longer enough. There instead needs to be a push, a demand, for a broader set of pro-innovation reforms.

It is not enough, however, to simply call for reforms. There must be specifics. How is the current regulatory environment stifling innovation? How is NEPA limiting infrastructure? How is the FDA limiting drug development? After the specifics comes politics.

The first step to politics is the same first step that a technical founder takes when hiring their first salesperson. Just call up the best political operatives you know and learn everything you can about political influence. It is possible that much of the traditional mechanisms of political influence, think tanks, lobbyists, and media, are outdated. However, there is still much value there. It’s worth approaching with an open mind to figure out what can be improved and what works well.

This knowledge is out there. Todd Moss has an interesting discussion of the process to establish the Development Finance Corporation, a new government agency with a $60 billion dollar investment mandate. Success requires a lot of insider knowledge and timing.

Part of politics will be co-opting old institutions. Get innovation sympathizers in key positions of power. When Balaji Srinivasan and Jim O’Neill were discussed as potential commissioners for the FDA, they had support from Silicon Valley, but were ridiculed by traditional media. How can the next batch of technologist political appointees be supported?

However, part of politics will also include building new institutions. Who is creating the Y Combinator for institution builders? Who is funding their intellectual development and empowering them with a network to execute it?

Every administration has two or three cabinet level positions that were formerly New York Bankers. Why aren’t the top minds from Silicon Valley there too? A successful political movement will see people, please excuse the brown-nosing, like Marc Andreessen as Secretary of Commerce.

Getting there, however, requires politics. It is not enough to build apps. We must build institutions.

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