Founding vs Inheriting

You can found an institution, or you can inherit it.

• 6 min read
Founding vs Inheriting

You can found an institution or you can inherit it.

The East Coast of the United States is about inheritance. That means inherited wealth, like the Du Ponts, Forbes, and Mellon families. It means inherited names, like Kennedy, Bush, and Clinton. But most of all it means inherited institutions, like the media corporations of New York and the government bodies of Washington, DC.

Why call them inherited institutions? Well, the related term legacy institution is in common parlance, and a legacy is a synonym for an inheritance. But the nomenclature is useful because it focuses attention not simply on the age of these institutions (which are indeed old) but on the manner in which they select a new leader: through inheritance.

One way to inherit an institution is to pass it from parent to child, along with the fortune. That's the model that the Wall Street Journal and the New York Times Company still follow, where the Murdochs and Sulzbergers named their successors from within the family.

A more subtle way to inherit an institution is to win an election. Now, of course someone who attains political office through this route isn't always a familial heir, though it's more common than you might think. But when they inherit a seat they have inherited something they could never have built from scratch. In that sense they are a political heir. After all, most folks who assume political office in the modern US do not have the skills to organize anything like the Federal Reserve or the US Military from scratch, unlike George Washington or Alexander Hamilton. Their primary skill is getting elected, which is more like becoming popular on Twitter than creating Twitter. The banks they bail out are too big to fail, and the shoes they inherit are too big to fill.

When an heir inherits an institution, it's like inheriting a factory. During normal times the factory continues to operate, the widgets keep coming out, and the career managers appointed by the original founder appear to have everything in hand. Nothing seems amiss. But something important has been silently lost, which is the founder's ability to invent the institution from scratch – or reinvent it in the face of a crisis, like COVID-19. We can also think of this as read-only culture, the ability to repeat what an ancestor has handed down – but not recreate it from first principles.

Now, it might seem like a high bar to ask for the kind of leader who is capable of organizing the Federal Reserve or US Military from scratch. But such people walk the earth. Satoshi Nakamoto created Bitcoin and Vitalik Buterin created Ethereum, developments that in the fullness of time will be seen on par with what Alexander Hamilton accomplished. As for the US Military, as the saying goes: amateurs talk strategy and professionals talk logistics. And the logistics network built by Jeff Bezos in just a few short decades is more sophisticated than the backends of the vast majority of militaries on the planet.

That's what the West Coast of the United States was about: founding. We use the past tense because technology is now quickly decentralizing away from the West Coast. But in the same way we refer to the Greco-Roman origins of Western civilization, we can refer to the West Coast origins[1] of the technology founder, while recognizing that the concept and its correlates have now spread to virtually every country in the world. Much as the East Coast spread its (older, institutional) ideology around the world through mechanisms like the Columbia School of Journalism and Kennedy School of Government.

Heirs Failed, Founders Succeeded

That older, institutional ideology is now failing. Over the course of 2020, public health failed, public schools failed, fire departments failed, and police departments failed. National, state, and local governments failed. Media corporations failed and even the US military failed. Just about every institution run by a political heir failed, because it was presented with the unanticipated shock of COVID-19. The widgets these heirs' factories were cranking out were no longer suited for the occasion. And their failure has caused a crisis of faith in American institutions specifically, and in the postwar order more broadly.

Where heirs failed, founders succeeded. The internet stayed up. The state couldn't deliver checks, but Amazon could deliver packages. The legacy universities were closed but the MOOC platforms were open. The restaurants were shuttered but the delivery apps were shipping. The media corporations reported that the flu was a bigger threat while the tech companies prepared for remote work. And the billions spent on biodefense projects didn't do much, but the millions invested in Moderna did.

In other words, the alternative to the East Coast model has been beta-tested on the West Coast for the last 25 years, and took over many of the functions of running American society while the East Coast failed. Many of the functions – except those still run or heavily regulated by the state, like education, healthcare, police, fire, the management of the economy, and the physical control of a deadly disease.

Now, founding writ large certainly helped in some of those areas, particularly in the form of new biotech companies that created diagnostics and vaccines. But for the most part these regulated functions are not something that can be tackled by a startup. You need to be the mayor of a city, or the head of a state. Which leads to the question: how do we go about founding alternatives to the ultimate inherited institutions, namely cities and states?

The West Coast Forked the East to Found

One clue comes from the fact that many of the most prominent people on the West Coast sought it out as an alternative to the culture of the East.

For example, it's not a coincidence that both Bill Gates and Mark Zuckerberg dropped out of Harvard to go West and become tech founders. They are atypical in many other respects, but not this one. Many tech founders and investors would in another life have become (or remained) professors, jurists, or journalists. This set includes Paul Graham, Larry Page, Peter Thiel, Mike Moritz, Diane Greene, Daphne Koller, Andrew Ng, and many more.

These people had the intellectual horsepower to compete with the best of the East. Yet they chose to found something rather than inherit it. And that's how tech became a cultural fork of the East Coast. It's the same root but different branches, like the United States and the United Kingdom.

One reason that tech forked is that computer science collapsed the distinction between the word and the deed, and turned a generation of intellectuals into software CEOs. Another is that top professors and tech CEOs tend to both feel deeply that they should be in charge – and the low cost of registering a domain name gave every professor the opportunity to show just how "easy" it was to be a tech CEO, converting many of them into capitalists as part of the experience.

That was arguably the key to it all: that founding something became possible at relatively low cost.[2] And it is now possible to found a community, a company, or even a currency from your laptop. The next step is to make it possible to found new cities and new countries, rather than simply inherit them. And for that we will need some new ideas.

1 The East Coast/West Coast split can also be recast in tribal or functional terms, rather than geographical terms.
2 This is actually back to the future. The opening of the internet frontier in 1991 can be seen as the re-opening of the Western frontier that closed in 1890.

← Build the Network State
Inheritance, Incentives, Ideology →

Subscribe to 1729

Subscribe to the newsletter and unlock access to member-only content.

You've successfully subscribed to 1729
Welcome! You are now a 1729 subscriber.
Welcome back! You've successfully signed in.
Success! You are now a paying member and have access to all content.
Success! Your billing info is updated.
Billing info update failed.