Balaji Srinivasan @ YC Startup School 2013
Let's talk about something different today: Silicon Valley's Ultimate Exit.
The US is like Microsoft. In 1998, when Microsoft appeared impregnable, they were most scared of someone doing something completely new in a garage. Larry and Sergey had to start their own company to actually make a difference.
Voice vs. Exit [1]: when a company/country is in decline, you can try to reform (voice), or leave to create a new system/join a competitor (exit). Examples: patch vs. fork, complaint form vs. take business elsewhere, turnaround plan in a company vs. leaving to found startup; voting vs. emigration.
The US is shaped by exit; so is Silicon Valley. It's an extremely important force and complement to voice, something that gives voice its strength. In Silicon Valley, this includes the Traitorous Eight + founding of Fairchild; noncompetes being unenforceable in CA; etc. Exit amplifies voice because when someone leaves A for B, the other guys in A see that people are leaving, pay more attention to the voice that tells why people are leaving. Exit is something we need to preserve.
Exit gives people the tools to reduce the influence of bad policies on their lives, without having to get involved in politics. Our ability in SV to reduce the impact of decisions made in DC without lobbying/sloganeering will be especially important in the coming years.
Silicon Valley vs. the Paper Belt (Boston/higher education, NY/newspapers, LA/entertainment, DC/government regulation): we're becoming stronger than all of them combined, reinventing every industry in these cities. The backlash is beginning ("The Paper Jam") — they're going to try to blame the economy on Silicon Valley, that the iPhone and Google done did it, not the bubbles, bombings, banks, bureaucracy, bailouts. Our counterargument: Silicon Valley reduces prices, the Paper Belt raises them; however, it won't be enough to respond via voice.
The ultimate counterargument is exit, to build an opt-in society, outside the US, run by technology. Larry Page wants unregulated experimentation in a small part of the world; Andreessen expects to see an explosion of companies in the years ahead. Private islands, Elon Musk settling Mars, Peter Thiel's sea colony. People who hate technology won't follow you out there. Even using Reddit instead of watching TV is in its own way exiting.
The most important things in the next ten years are to use technology to reduce the barriers to exit, to build a world run by software.
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[1] Exit, Voice and Loyalty, Responses to Decline in Firms, Organizations, and States, 1970, Albert O. Hirschman, Harvard University Press - http://www.hup.harvard.edu/catalog.php?isbn=9780674276604