5 Reasons "Startup Societies" are Better than Standard Governments

Standard governments are often very large and extremely centralized. There is very little diversity in types of governance within them, and are often enacted from the top-down.

In contrast, startup societies are a newly minted category of government. Invented by the Startup Societies Foundation, a startup society is any form of experimental governance in a small geographic area. They are like startups because they are experimental, small, lean, focused on technology, and geared towards those they serve.

While the word itself is new, there are plenty of examples today. Cities such as Hong Kong, Shenzhen, and Singapore have lifted millions out of poverty. They oftentimes have the same economic output as nation states.

Here are four reasons why small, experimental governments will outcompete large standard ones:

1. Fewer special interests impeding change


The world needs experimentation in governance to address 21st century problems. However entrenched special interest hamper any change, making reform near impossible. In contrast, startup societies have fewer special interests to contend with. Bureaucracies and lobbying corporations have too much at stake to allow new changes.  As a consequence, they can more freely enact new policies.

2.  They are easy to leave

 Special Economic Zones in China led to 100s of millions of Chinese to move to competing cities.

Special Economic Zones in China led to 100s of millions of Chinese to move to competing cities.

The bigger the country's territory, the more difficult it is to leave the country.  If a government is too large, citizens will be stuck with it by default, creating a monopoly. As we know from cable TV and energy companies, monopolies lead to higher prices and worse service. The true is same in government.

However, because startup societies are small, citizens can easily leave. If they don’t serve their citizens, startup societies can quickly lose them. As a result, startup societies will take extra care not to upset their citizenry.

Moreover, making exit easy allows for more radical experimentation. Normally when reforms are enacted, their negative consequence would reach every segment of society. However since Startup Societies are small, bad policies would be concentrated. If the policy is a success, they can be easily adopted by other startup societies and standard governments.

3. More Data to use

 Using many, small examples provide a “bigger sample size”, than having one large example.

Using many, small examples provide a “bigger sample size”, than having one large example.

Right now, “social science” is not good science. Proper science requires a large sample size, meaning many examples to draw from. With large, centralized states, there is less precedent to make predictions. Consequently, policymakers make policy in the dark with only remote knowledge that their designs will work for their specific circumstances.

Startup societies put the “science” in social science. Since startup societies are small and decentralized, there will be more data points for each reform. With more policy examples to draw from, policy makers can more accurately implement policy based on richer data.

4. Local government is good government


Standard Governments usually operate in far away capitals, governing large swaths of diverse people. There is so much information, and they are so far removed, that their policies are often are counter productive.

A local Government is a knowledgeable Government. They have close proximity with the people's needs. Locals often share the same values, language, and economy. Consequently, they usually know which policies are best for them. Because of the size of startup societies, local governance is the norm.

5. Technology is a startup society’s best friend

Since startup societies are small, they have to take every precaution to remain competitive and retain citizens. As a consequence, they often turn to technology. Shenzhen is now seen as the “silicon valley of hardware” and Singapore is often called a future city.

That’s why many technology companies are trying to create “smart cities”, or cities that are built upon state of the art information and transportation infrastructure. In fact, blockchain technology startups are interested in using their products to govern cities more effectively.

Not only can blockchain technology provide startup society infrastructure, but  funding as well. The concept of the initial coin offering or “ICO” has exploded this year, with $1B in raised in 2017. When applied to standard investment vehicles such as real estate investment trusts, ICO’d cities can produce crowd sourced financing for new societies.

To learn more about this topic attend the Startup Societies Summit on August 11th-12th at City College San Francisco.