State vs startups

The opposite of a startup state is a state that goes after startups.

Gov is dead. And the Network has killed it. SpaceX can build a huge rocket faster than the Paper Belt approves the launch.

My personal experience working in multiple sectors is that as a rule of thumb: an NGO can be 10x faster and more efficient than the state, a company can be 10x more efficient than an NGO, and a tech startup can be 10x more efficient than a regular company.

Starlink can deploy fast into areas hit by hurricanes or in Ukraine after the Russian invasion of 2022 - in a matter of hours or days. Joe Biden’s broadband program cost over 42 billion and connected zero rural homes so far. It is multiples of what was invested in SpaceX so far.

To paraphrase Balaji Srinivasan’s great observation - there are very few 100 billion dollar companies and even less trillion dollar companies. But the US increases its debt by a trillion dollars roughly every 100 days. Political billionaires going after tech billionaires won’t work. Heirs are not founders.

My personal experience is that flagship projects like the EU’s Global Gateway take years to design and sign, not to mention a slow rollout and a “soft” nature of these projects without tangible infrastructure components. And right from the start, the whole EU’s Global Gateway effort is 10 years behind China’s Belt and Road Initiative.

A similar example from Slovakia that I am personally familiar with - we are among the top five export-driven economies in the EU. But a soft loan instrument to support our exporters in the ascending world wasn’t piloted yet successfully - some 8 years after it was rolled out. Due to sad over-bureaucratization with multiple state actors involved in the approval process.

As Elon Musk points out - the more ministries and agencies are involved, the more time it takes to approve anything as meetings grow exponentially. It’s a multiplicative relationship of a vetocracy.

Some smaller countries, like Israel, Singapore or now El Salvador are called startup nations - but the last time a big country like the US acted as a startup was during the FDR era of the Manhattan Project and the Apollo Program. Back then, the state could attract top talent, because last century was an unusual period of high centralization that peaked in the 1950s.

Meaning the frontier has closed in 1890s in the US, as the State destroyed many of the robber barons and captains of industry, so the top talent had to work for highly centralized entities as it didn’t have options of today, with the reopened frontier after commerce became legal on the Internet in 1991.

Balaji Srinivasan talks about three Leviathans - God, State and Network. In the agrarian age people believed in God. In the industrial age the elites stopped believing in God and started to believe in the State instead, so Nietzsche proclaimed “God is dead”. In the network age the elites believe in the Network and stopped believing in the State - because free social media makes the unmanaged decline of blue tribe’s institutions, satellite countries and cities in the West hard to unsee.

I have worked in international relations and development cooperation for 18 years and have seen the machine from various sectors in Slovakia and abroad - working for a foundation largely funded and founded by Americans, for a state agency, as a CSR and business intelligence consultant for large companies and as a co-founder of a startup incubator in Kenya and two nonprofits.

And as I mentioned above I can attest to similar stories as Dominic Cummings talks about. The State is orders of magnitude less efficient and slower than startups. It’s not like a Tesla versus the old cars we see in Cuba. It’s like (a wreckage of) “the chariot in King Tut’s tomb”, as Curtis Yarvin recently wrote on reforming the USG.

Both Dominic Cummings and Marc Andreesen talk about a failure to build the drone industry. In the US the FAA went after drone manufacturers, while ignoring Chinese competition, and the result is Chinese dominance in drones. In Britain the efforts to pivot the defense spending into new drone projects were canceled by the new government and the legacy military contractors still control the game.

Dominic Cummings describes how all cabinet meetings in Britain are scripted and pre-written by staffers, including conclusions. That ministers are NPCs in more than a metaphoric sense. But he sees more wiggle room in Britain than in the US for reforms that the Department of Government Efficiency under Elon and Vivek envisions.

The State run by the blue tribe and its permanent bureaucrats can de(con)struct, but it can’t build. And it goes after builders. It can censor and persecute dissidents and normies, but it cannot compete with adversaries like China or Russia through innovation, and instead copies them in authoritarian half-measures.

The metaphor of a chariot wreckage by Yarvin or a decrepit building in Alana Newhouse’s essay Brokenism is thus only partially correct - the State can still effectively inflict damage through extra-legal (illegal) efforts like unbanking political dissidents and the Operation Chokepoint 2.0, when it went after Crypto startup founders.

A complementary metaphor would be a dog versus wolf distinction that Yarvin makes when he describes USG’s military escapades with a quote from The Dark Knight:

“I'm like a dog chasing cars, I wouldn't know what to do if I caught one, you know, I just do...things.”

Another metaphor to describe the State vs Startups is one of an evolved parasite as opposed to a naked predator, like Genghis Khan and 20th century totalitarians. An evolved parasite that always changes strategy if its tricks are revealed.

A parasite that steals money from normies via the Cantillon Effect, among many very destructive things (think funding gain-of-function research and censorship industrial complex), while constantly renaming these efforts and projecting its ethical failings to adversaries from the red (conservative, pro-business) tribe and the grey (pro-tech) tribe. If the State censors ideological opponents, it calls it fighting disinformation, misinformation and malinformation. If the State prints money it calls it quantitative easing and when it saves banks, that binged on US bonds, it calls it BTFP.

But Fukuyama’s End of History can be viewed as an instance of a peak predator theory, with S-curves of peak predators like Microsoft being replaced by Google. The blue blobocracy, unchecked by a matching superpower since 1991, degraded into idiocracy, that we have experienced over the last four years, and will be replaced by a netocracy.

This brings us to the distinction of stupid vs evil. Evil is zero-sum, stupid is negative-sum. Western state under blue tribe dominance is the opposite of a smart regulator that has very low false positive and false negative rates. It’s an anarcho-tyranny that prosecutes, tech founders, normies and ideological dissidents and lets criminals roam free.

A broken and reversed food pyramid (created by USDA) causes obesity. A broken and reversed economic and cultural pyramid causes civilizational obesity. A “public servant” is a misnomer.

Permanent bureaucrats over-classify and hide their activities from public and behave like secret aristocrats, that are almost never mentioned or investigated by the media. They are over-represented in the economy while movies like Dallas Buyers Clubs, that show bureaucrats in a negative light, are as rare as Hollywood movies depicting life under communism. Censorship and unbanking showed permanent bureaucrats behave towards proles like kings once did.

The internet started only in 2020, says Balaji, when the online world became primary with people working remotely on zoom calls during lockdowns. The up-and-coming netocrats like Elon Musk, Peter Thiel and Palmer Luckey are the true public servants - creating organizations that are not just orders of magnitude more efficient than the State or legacy companies, but also creating products that are orders of magnitude cheaper, faster and better - delivering massive “customer profits” as they put everything technology touches on a TV price curve.

Good news is that the blue tribe can crush the powerless, but it has a harder time challenging the power users. First they came for Canadian truckers for protesting Covid in 2022 - unbanking, censoring and threatening them in nasty ways (“First we take your driving license, then your insurance and then your children”). Then the blue tribe’s empty suits, to use Taleb's term, came for AI, Crypto and Social technology and tech founders, like Pavol Durov, Elon Musk, crypto or open source AI developers.

Marc Andreesen recently told Joe Rogan that 30 tech founders in their portfolio experienced unbanking.

And in 2024 they got a backlash from both the median voter and the tech counter-elites that aligned with Donald Trump. It is an open question if the Department of Government Efficiency will nudge the US and the West closer to current startup states like El Salvador with Bukele or Argentina with Milei.

But today we got a Saint Nicholas Day’s present of David Sacks as a new AI and Crypto Czar.