Zachary Caceres Courtesy Zachary Caceres

A young American in Guatemala wants to bring a spirit of entrepreneurship to municipal governance through his think tank, the Startup Cities Institute.

Zachary Caceres likes to tell people about a conversation he had with a trash picker in a Guatemalan landfill. She told him a tragic story rife with slums, corruption, and violence—in short, life at the mercy of public policy failures—until a ringing phone interrupted her.

"And she reached into her pocket and pulled out this really nice smart phone," Caceres says. "That's the central paradox of the modern world. How can you have access to such incredible futuristic physical technologies, but social technologies like governance are so deeply dysfunctional for billions of people around the world?"

Caceres thinks governance should be tackled the same way cell phones and other technologies are: through intense competition and experimentation. That's the heart of his approach at the Guatemala City-based Startup Cities Institute (SCI), housed in the Universidad Francisco Marroquín.

SCI itself resembles a startup, led by the entrepreneurial, 25-year-old Caceres with only one other full-time staff member and a rotating cast of collaborators.

The think tank is based on the idea that governance can be improved through targeted innovations, which can offer proof of concept before wider adoption. The key, Caceres believes, is to give neighborhoods and cities autonomy to implement small-scale reforms, so they serve as testing grounds for new approaches. A startup city might have a different legal system or police force. Communities become startups themselves, testing out prototype reforms and modifying policies until they work well.

This lean-government, laissez-faire vision (Caceres has described himself as a "progressive libertarian") fits broadly within the charter city concept originally espoused by economist Paul Romer. That idea was based on the notion that autonomous cities in developing countries can adopt international best practices—legal structures, security policies, business regulation—from around the world and create havens of rapid development unfettered by existing politics and rules.

But while charter cities are about creating business-friendly zones in pursuit of economic growth, Startup Cities, a nonprofit, widens the scope to governance and human development.

This perspective has a lot to do with Caceres' own unusual path to becoming an urban policy entrepreneur. After dropping out of high school in the U.S., he made his way through a series of interests, including education and classical music, before winding up at New York University, where he got a degree in Politics, Philosophy and Economics.

The initial inspiration for Startup Cities came while Caceres was researching street markets in Kenya, where he admired vendors' informal but functioning system of governance. His work caught the attention of the president of the Universidad Fernando Marroquín (where the library is named for Austrian School economist and libertarian guiding light Ludwig von Mises). The president invited Caceres to Guatemala. SCI is funded by the university and, Caceres says, a philanthropist in Silicon Valley.  

Caceres gives a lecture on startup cities at the Universidad Francisco Marroquín (Zachary Caceres)

Startup Cities is developing a "lean reform platform," a toolkit that developers, governments, and citizens can use to implement rapid reforms or find testing grounds for solutions to complex problems. Due to be launched next year, it will provide services that many municipalities in developing countries have never dreamed of accessing.

For example, thanks to SCI's partnership with the Vernon Smith Center for Experimental Economics at the same university, reformers will be able to design computer models and control trials to see how new policies could play out. These kinds of experiments can help detect perverse incentives created by a reform before it is put into place, according to Caceres.

In another partnership, with Mexican architecture firm Fernando Romero Enterprise, SCI is developing a model for the "minimum viable city," with only the essential components needed to start a new city. It has already beta-launched along with Locality, a library of laws from highly autonomous jurisdictions around the world.  

Yet another component of the platform will include evaluation of political risk, so stakeholders have a better idea of what they're getting into with certain reforms. And in order to help cash-strapped municipalities, SCI is setting up a network of urban policy volunteers to lend a hand on the ground. Most elements of the platform will be available free of charge.

"This bigger idea is what differentiates us from traditional urban think tanks," Caceres says. "Not only do we see cities as places for social progress, creativity, [and] economic growth, but also as laboratories for the future of governance."

In Guatemala City, SCI is working with the municipal government and developers to encourage a budding arts and creative district.

"Neighborhoods try to attract people with cool buildings. Countries try to attract investment through low taxes or easy profit repatriation," Caceres says. "But there are now tons of places all over the world that offer these things.

"So this competition between cities or neighborhoods will need to go deeper for places to truly differentiate themselves," he continues. "And that means greater boldness, and also greater administrative autonomy, in the public policies you bring to urban areas."

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