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POLITICS

Silicon Valley's Secessionists Need a Reality Check

Unless you're living in Texas, you'd better pipe down about ditching the government.
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Silicon Valley is known for its daring ideas, but even New York magazine's Kevin Roose had to do a double-take when he heard an investor say the government shutdown was a good thing. As if that wasn't enough, at a Y-Combinator start-up school, one tech entrepreneur said the shutdown was just the start and he was hoping to see Silicon Valley secede from the United States. 

Yes, you read that right. These entrepreneurs really want to cut themselves off from the government. "We need to run the experiment, to show what a society run by Silicon Valley looks like without affecting anyone who wants to live under the Paper Belt," Balaji Srinvasan, the co-founder of San Francisco-based genetics company Counsyl, told the audience at Y Combinator last weekend in Cupertino, California. "We need to build opt-in society, outside the US, run by technology." 

In the words of the great Alec Baldwin, here's the thing. Entrepreneurs need Uncle Sam and to paint it as anything otherwise is downright foolish. Do they really think they can protect their intellectual property, stave off patent trolls, pay for healthcare, and innovate all on their own? It's one thing to say you that don't need the government when average joes are out of work across the country, but it's another to deny it was ever useful when so much evidence exists to the contrary.

Here are three other reasons these guys need a reality check. 

Uncle Sam innovates 

Think government funding only harms innovation? Allow us to introduce you to Uncle Sam's most successful start-up: Silicon Valley. As editor-in-chief Eric Schurenberg outlined in Inc., for a number of years, Stanford was essentially a research lab for the CIA and several of its engineering Ph.D. theses were  classified because they were so integral to its technology. Martin Kenney, a professor at UC Davis, described the Department of Defense on Marketplace as "the greatest venture capitalist of all." To his mind, much of the technology we use today was funded by the government, from cell phones to satellites to global positioning systems and even the Internet. 

In-Q-Tel backs cutting-edge start-ups

While most VCs have their eyes trained on the social-local-mobile craze, the CIA's venture arm, In-Q-Tel, has been quietly investing in start-ups that help the organization with its super-secret work. Among them are RedOwl Analytics, which harnesses the power of big data to keep the financial sector honest, and Destineer, a videogame developer whose first IQT project was created with help from active duty U.S. Marines. 

Small business owners need access to capital 

With the current economy in the shape that it is, everyone can agree that a loan would be helpful. Yes, total volume for all small business loans has steadily decreased since 2008, according to the Small Business Administration's small business lending report for 2012. But while job growth, wages, and gross domestic product have remained stagnant, Inc.'s Jeremy Quitner reports that demand is stronger than ever. In July, the Federal Reserve's Senior Loan Officer Survey reported a general easing of loan policies for commercial industrialization and commercial real estate loans from banks just to meet it. 

Last updated: Oct 22, 2013

JILL KRASNY | Staff Writer

Jill Krasny is a staff writer for Inc. magazine, where she covers the intersection of entertainment and startups. Prior to Inc., she was a writer for MTV and Esquire and an editor at TheStreet. She is a graduate of the University of Southern California with a degree in communication. She lives in New York City.




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