The Startup Government

10 minute read

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The Startup Government

By Tim Draper

Posted October 10, 2019

Preface. Tribalism to globalism.

The Startup Religion. We have a particularly diverse student body at Draper University, and in the program, the students are asked to do challenging projects in teams. As a result, they build extraordinarily tight bonds with each other. Most of them overcome biases that they may have held before entering the school.

One particularly powerful and illustrative moment of this took place in the spring of 2019.

I was starting to give my 20th Draper University graduation speech, when I noticed that about 10 Arab students were missing. I asked where they were, and a fellow student said that they were out praying.

I said, “Go get them. We will all pray.” So, the praying Arab students were rounded up, and proceeded to lead the class of about 80 students in a Muslim prayer.

Then I asked, “Would anyone else like to lead a prayer,” and the magic began. Doron Segev, our one Israeli female student said, “I will lead a Jewish prayer.” We all followed along with her.

Then I said, “Anyone else?” And three Indians got up and led us in a Hindu prayer.

Finally, two Catholics led us in a Catholic prayer.

It was such a strong emotional event, I got chills. The spirits were loving this.

“Only at Draper University,” I claimed, but deep down, I hoped that this was the beginning of a series of magical moments that might open the hearts of the people of the world. If it could happen here, maybe it could start to spread. The various religions, the various people, and the various countries could find a spiritual love for each other, we might all start to understand each other better, and barriers, whether they be religious, geographic, or political, would start to fall.

The Startup Currency. In a seemingly unrelated event, about 10 years earlier, Bitcoin was created. Bitcoin is a currency that is global, open, transparent, and decentralized. With it, people everywhere can send money frictionlessly, without the need to pay banks and credit card companies (2.5–4%), Western Union (8–16%), or central government authorities (whatever they take).

With Bitcoin, and the decentralization that comes with Bitcoin, geographic borders have become less relevant. No longer are we at the mercy of dictators and toll trolls to grow the world economy. Venezuelans, Nigerians, and Venezuelans now have a currency that can get them out of the clutches of failing government currencies. And while in the short-term we may have some governments with (control freak, fear spreading) leaders trying to turn this technology into their own power center, in the long-term I believe with regard to business and economics, we are, more than ever, one world.

The Startup Government. So now given this “one world”, what is a political leader to do?

Before we can answer that question, we need to think about what is the purpose of government.

Tribal to global

Thousands of years ago, people organized into tribes because they afforded security and protection. They wanted to feel secure that if they worked to create something (be it: food, clothing, shelter, or a business) they wouldn’t have to fight off others to keep it. That security afforded by tribes was primarily built around the defense of geographic territory. Each territory had its own set of rules that people needed to follow to be accepted into the tribe or else they would be banished as outlaws. This system worked well for the people of the world. People generally kept to their own tribe as long as everyone was fed, clothed and housed. When there were times of scarcity, however, there were cross-tribal battles for survival.

Over time, tribes found that they could trade goods and services in a way that benefited everyone. The goods, services and eventually the currencies that each tribe offered would often need translation so that the dealings would seem fair to both sides. Banks served to make the fair translations as a trusted third party.

Banking grew trade inside tribes and among tribes. As this web of trade grew and became more intertwined, the world began to open up and prosper in an unprecedented way. The world became much wealthier as the banks created more and more liquidity. People prospered.

Tribes with similar rules even started to band together (eg. The United States from 1776, the Chinese over the centuries, and the European Union more recently). These larger alliances between tribes thrived both economically and politically, and while there were still rivalries between allied tribes, they were generally not violent and instead were more strategic. Scarcity became abundance, as people could trade across tribes and around the world.

People married across borders and across religions, and this blending brought with it bonds that made all people more worldly, more safe, more wealthy and more powerful. Soon people started to understand that their tribe was really no different from the tribe next door or the tribe around the world from them. In fact, they found that their tribalism was actually curtailing their success. Businesses and trade were limited when tribe governing bodies were building barriers to free trade in the form of customs, tariffs, and regulations. People realized that they are a part of a big world and more interconnected than their own (relic) tribalism allowed.

Today, people are discovering that they are all a part of something bigger than their tribes. People are discovering they are part of one big open world.

The change in thinking from tribal to global is exciting for some of us, but scary and difficult for many of those of us who cling to the security of our tribes and might have remnant xenophobia. To shield ourselves from the scary change, some of us are lashing out, trying to cling to the past tribal world. As a psychological defense mechanism, we deflect our discomfort and call others “racist” or “nationalist” or “anti-semetic” or “fascist” or whatever because we are dealing with these feelings inside ourselves as we struggle to leave our tribal world and enter this new global one.

But the change is happening.

In our impromptu prayer exercise at Draper University, my students discovered that their religions are not incompatible; instead, they are more sides of the same house, the same church.

Bitcoin made it clear to us all that we can all share in the same global economy with the same basic values using a unifying global currency. Those that resist this global currency cling to tribalism by saying things like, “I don’t understand bitcoin.” Or “Bitcoin was just a means to an end. The blockchain is the thing.” or “bitcoin is not money because it is not backed by any (tribe).”

But for many of us, Bitcoin was our bright light, our “a-ha!” moment, our spiritual awakening. Tribalism is dying. And like the dying roar of the king of the jungle, we are hearing political leaders beat their chests as they try to cling to the power they once wielded when the world was still only tribal.

It is ironic when governments try to distinguish themselves from one another. All the tribes look remarkably similar now. The rules are pretty close to the same wherever you go with subtle differences created by governments with more or less desire for control over their constituents.

There are Starbucks and McDonalds wherever you go. There are search engines and Uber drivers and AirBnBs in almost every tribe. You can communicate across any tribe with Skype and email and text. You can buy and sell products and services across tribal borders with relative ease.

It does seem that the dying lions are roaring to try to make this global opening more difficult with trade wars and walls, but I believe that those that encourage free trade will win out in the end.

So, going back to my original question, what is a government to do about our becoming “one world”?

I believe that governments, like any business that is challenged by a new environment, must adapt to the new marketplace. And this is the marketplace of accountable, transparent, and competitive governance. In addition to those services that a government provides that are local and tied to geographic territory (tribe), today’s government must determine what they can provide across border to the cloud (virtual) economy. So, what does a government sell that can be provided virtually?

I would argue that most of what a government sells is safety and security for their people. The virtual portion of security is insurance. Insurance is about to take a great leap forward as smart contracts and artificial intelligence are combined to create a completely transparent, fair and consistent insurance company. The virtual portion of security includes identity security, where individuals can distinguish each other with certainty. Identity is also about to take a great leap forward as data is established as a number of proof points. Those proof points are about who is asking, at what time, from what location, and are these consistent proof points. An identity system like this will build more probabilistic confidence in anyone’s unique identity as the data knowledge base compounds.

The Startup Government Pioneer.

In 2013, The Prime Minister of Estonia came to Draper University to speak. He explained his and his President’s vision of creating a virtual government. The Estonian e-Government is a breakthrough in tribal to global thinking. The idea of an e-Government is that governance, the services of government, can now be provided across geographic borders. Estonia’s e-governance doesn’t offer a lot yet, just the ability to easily do business in the EU through a virtual residency identity program, but down the road they promise a plethora of services. But the game is afoot. Malaysia has a virtual residency program now, and Kazakhstan is working on a virtual citizenship program. Governments are going to compete for us virtually.

What else could a government potentially provide? I have a few ideas.

How about a global health care insurance package that is more efficient and effective (and works globally) than Medicare where the premiums are in bitcoin and the claims are settled to the letter with smart contracts and monitored by artificial intelligence.

Or a comprehensive global camera security service that protects people from intrusion wherever they are. At Hero City, we had several computers stolen, and when we went to the police with a find my computer blinking in a specific house in San Mateo, the police were hamstrung and could not enter the house. So we just put up a network of cameras as a deterrent, and crime went to almost zero.

Or a pension that is not at the mercy of political forces like social security or public pensions, but one that is simply a form of fixed smart contract with the pensioner.

Today, governments, global governments that are willing to eschew tribal tendencies, can provide services across borders the way businesses always have, providing “choice” to global citizens. And we, citizens of the world can potentially pick and choose the services we want from each provider. We can potentially participate as customers in a governance marketplace. As citizens, we could potentially allocate our money to those governments that provide us the best services. In turn, the enlightened governments could be incentivized to more efficiently and effectively meet the needs of the various global citizens. These governments will begin to look at constituents as potential customers.

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Bitcoin brought with it a few fundamental technologies that can accelerate our transformation from a tribal planet to a global one. In this, my second book, I will explain why I think these technologies, when combined with artificial intelligence, will transform not only industries like banking, finance, health care, real estate and insurance, but also the biggest of them all: government.

I look forward to sending a few more chapters via Medium, and then publishing “The Startup Government,” my second book.

Best, Tim Draper

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