An entrepreneur or investor would do well to search within his or her respective spheres for forced multipliers, defined within the world of physics as a lever or wedge that increases the amount of force one can put on an object. Within the startup world – or perhaps almost any “world” – we could define a forced multiplier simply as tools or means that help to amplify one’s ability to get more done with the same amount of effort.
Over the last 20+ years, it could be argued that one of the best forced multipliers available to (aspiring) founders and investors interested in being on the cutting-edge of software and technology has been locating themselves at the center of the action, most notably within the Silicon Valley region found in Northern California, which many prominent tech companies and innovators call home, including Google, Apple, Facebook and more.
Marc Andreesen, co-founder of a16z – a world-renowned venture capital firm also headquartered in the Valley – famously articulated back in 2011 why he believed “software is eating the world,” and while embracing this analogy, Silicon Valley has been the site of an all-you-can-eat buffet.
However, there is much evidence to suggest that, indeed, software is not only eating the world, but also reorganizing the world, so much so that now, with the additional variables introduced by the likes of a global pandemic as well as the rapid development and expansion of blockchain technology innovations like Bitcoin, it is becoming increasingly clear that the Valley may not be the location forced multiplier it once was.
Indeed, there is an ongoing reorganization of where – and how – many choose to live.
It’s this reorganization that has helped significantly to give rise to startup cities, where people are not confined to engaging within legacy tech hubs like the Valley and are rather empowered – and oftentimes, incentivized – to relocate.
This is what former CTO of Coinbase and former General Partner at Andreessen Horowitz Balaji Srinivansan wrote in a Tweet:
In this post, I’d like to address some important questions: What are startup cities, and what are some of the key factors to their growth and (future) shaping? How does the decentralized economy support the growth of startup cities?
Let’s take a look.
What Are Startup Cities?
The United States is where the ecosystem for high-tech, modern startups was born. Venture capital originated in the 1940s in Boston, and eventually, this venture capital moved over to Silicon Valley. The concept of the startup city took off, a place where entrepreneurs and innovators get access to capital, plug into an ecosystem of talent, and much more.
Startup cities, then, are locations that maintain a certain level of friendliness towards enterprising individuals, technology and – increasingly – digital currencies; and there is ongoing growth in the globalization of startup activity and venture capital, particularly within cities in Europe, India and China. A global economy presents global opportunities, and where before Silicon Valley proved to have the best climate for tech venture success, this is no longer the case. Other cities in countries around the world are quickly becoming hubs in their own right.
From the perspective of the crypto sector, there are destinations that are more encouraging than others of Bitcoin, blockchain and crypto innovation pursuits, with Wyoming as one example. The state of Wyoming recently began offering those interested the opportunity to form DAO limited-liability companies. With there being no residency requirement to form a company in Wyoming, the state has positioned itself as one of the better options for individuals who seek a corporate entity but prefer to operate their lives or business in a more decentralized fashion.
More progressively, startup cities are being revealed based on individuals voting with their feet as well as their wallet. Developers, entrepreneurs and the ambitious in general are choosing to go where they’re treated best.
Recently, this was demonstrated by the city of Miami, where Mayor Francis Suarez quickly answered the call to work on making Miami appealing to the brightest and most innovative, by hosting Miami Tech Week, and being attentive to the interests of tech professionals open to “move Silicon Valley to Miami.” This speaks to there being a certain level of infrastructure in place for community-building that exists independently of physical cities.
The Decentralized Economy and Bitcoin Cities
The rapid growth of the decentralized economy – led by Bitcoin, Ethereum, Binance and more – has led to an increased awareness of distributed ledger technology with respect to the types of solutions possible within DeFi, the metaverse, blockchain , security and beyond. Beyond this, of course, there is the explosion in total cryptocurrency market cap led by the growth of Bitcoin as well as the fact that 94% of crypto buyers are GenZ/Millennials.
Moreover, the technology infrastructure available with blockchain, for example, enables programmatic governance of communities or networks, where one or many individuals need not rely on singular, centralized entities (i.e. local) but rather a permissionless smart contract that executes without human involvement.
In comparison to this vision, the creation of a Bitcoin city in El Salvador may seem like nothing to write home about, but it is a world-first. The President of El Salvador, Nayib Bukele, is leading the charge in his country to construct a city built with Bitcoin-backed bonds and powered by geothermal energy drawn from the Conchagua volcano nearby.
El Salvador has already become the world’s first country to accept Bitcoin as legal tender, and as the vision to establish the world’s first Bitcoin city is fully realized – a place where holders of BTC can invest tax-free and only have to endure value-added tax, or VAT, half of which the President has said will go towards funding bonds to build the city – it is reasonable to ask:
Could more countries around the world follow El Salvador’s lead?
And, how much of an advantage will countries like El Salvador have in the coming years by embracing the Bitcoin network as it has?
Bukele is betting on El Salvador becoming the financial center of the world.
What’s Next For Startup Cities?
What’s becoming increasingly clear is that cities around the world can transform into startup cities – or Bitcoin cities – to support the infrastructure already in place within the decentralized economy and the cloud in general.
Srinivansan believes that we may see cloud cities, or cloud countries in the future.
Or, has the country of Estonia already shown the world how a “cloud country” can look, with its highly-popular e-residency program where nearly anyone in the world can acquire e-residency to gain access to a suite of digital services?
Those desiring to start an Estonia business, as well, are able to leverage the e-residency.
It is true indeed that no one can truly predict the future, but one can keep the future in mind as they build in the present.
Will Silicon Valley be able to compete with Miami? or El Salvador’s Bitcoin City?