Daily Balajisms – Exit vs Reform
Network states vs SF maximalism
Balaji Srinivasan is the author of the book The Network State, a practical manual on how to do a gradual exit from the legacy nation state system with analog regulations that denies us amazing things like longevity and self-driving cars. He is all about exit, but at the Moment of Zen podcast, he did a two-part interview about how to turn around San Francisco.
In 2013, I started, but didn’t finish Startup Engineering MOOC taught by Balaji on Coursera, and watched some of its content. In early 2020, I rediscovered Balaji after years, thanks to his appearance on The Portal podcast, where Eric Weinstein pushed Balaji on the importance of reform, saying that he can’t be all about exit.
Balaji also caught a lot of flack in 2023, for his BitSignal posts about the coming financial crisis, that he calls Great Inflation, with some Americans claiming he is abandoning America.
Balaji left San Francisco for Singapore during Covid, and he invests and spends time regularly in India. He is not an anti-American but rather a post-American in this respect, escaping the dysfunctionality of a super blue city like SF.
Balaji understands the importance of orthogonal approaches – sometimes you need to go kitty-corner and cannot attack a problem directly. Google first needed to dominate search and later embrace open-source software to challenge Microsoft. It would be almost impossible to attack directly the core competency of Microsoft with Google Sheets as the first product, and thus create a better excel.
The success of Google indirectly reformed Microsoft, and under Satya Nadella it finally embraced open-source software and rose to the current valuation, after missing the mobile revolution and capitulating to Android.
Exit is the recourse of the powerless and it should be the default option for anyone without vast amounts of resources and political power to reform institutions, says Balaji.
He gives an example, during his MoZ podcast “course” on reforming SF how hard it is to reform even relatively recently captured or wokeified tech companies:
Elon Musk is the richest man in the world, who went all in, and spent 44 billion dollars so that people can ask once again 'What is a woman?'. It took that level of energy, it took the richest man in the world, spending all this money, for us to be able to say that XX and XY were different again.
And a year after his twitter takeover, Elon is being constantly attacked by the media, advertisers and old establishment of Blue America and its satellites, like the EU.
He managed to show the way how to reform and downsize bloated and wokified tech companies by “letting the bird free.” But reforming SF, or California, or the US, is on a whole new level of complexity.
Balaji thinks that it is possible, but it requires building a political machine of the grey tribe / the tech tribe to reclaim the city block by block, meetup by meetup through daily wins and regular collective action, like grey pride parades.
You first need learn how to crowdfund a brunch, before you can crowdfund a building, says Balaji. So reforming SF would be gradual - brunch by brunch, building by building and block by block.
Reforming SF is the opposite strategy to building network states, reform vs exit. It is something what Balaji calls tech-Zionism or we could call tech territorialism. Both are just tactics that are context dependent.
Balaji thinks that thanks to Twitter/X being a freer place for discussions and thanks to the current real estate crash in blue cities – it might be viable to start buying up real estate and turning whole buildings and blocks around. To build Grey-controlled zones where construction is legal - not just destruction, like in the current SF that de facto legalized crime.
Balaji has a term parallel establishment that includes founders, reformers and funders of parallel services and parallel societies – people that are optimalists and technological progressives who are exiting the old analog institutions and are building Internet-First alternatives.