If you want to know how to kill a thriving tech ecosystem, Ben Horowitz has a playbook for you. And it's not theoretical—it's already happened in Norway.

The co-founder and General Partner of Andreessen Horowitz recently dropped a warning about California's proposed wealth tax that should make anyone in Silicon Valley pay attention. Speaking on a TBPN podcast with John Coogan and Jordi Hays, Horowitz called the tax "the best strategy" he's seen to dismantle Silicon Valley's seemingly unbreakable network effect.

The Norwegian Experiment Gone Wrong

Horowitz isn't speculating here. He's pointing to real-world data from Norway, where an unrealized capital gains tax created an entrepreneur exodus that gutted the country's tech scene.

"Norway has an unrealized capital gains tax and Norway's got a lot of extremely smart people, great entrepreneurs, but they all left," Horowitz explained.

The problem? Entrepreneurs faced a brutal catch-22. Their private companies would get marked up to valuations of a billion or two billion dollars, creating massive tax bills on paper wealth they couldn't actually access.

"When you talk to entrepreneurs in Norway, they're like, 'Well, I literally can't pay the tax because the company got marked up to whatever, a billion, $2 billion, and I own a lot of it and I can't get that money out. It's a private company,'" Horowitz said.

The result? What Horowitz describes as the death of tech entrepreneurship in Norway. And the numbers back him up. Data from Norwegian think tank Civita shows 261 residents with assets over 10 million kroner left in 2022, followed by 254 in 2023—more than double the exodus before the tax increase.

Why Silicon Valley Should Be Worried

Here's the thing about Silicon Valley: its dominance isn't just about weather and venture capital. It's about network effects. The right people, in the right place, building the right connections. Global leaders constantly ask how to replicate it—how California manages to create companies with GDPs larger than most countries.

"It's been so hard to break the Silicon Valley network effect, but this is the best strategy I've seen," Horowitz said, if the goal is to wreck California tech.

The Proposal and the Pushback

California's proposed wealth tax measures would target high-net-worth residents to address state budget deficits and fund public services. Sounds reasonable on paper, until you consider the Norway scenario playing out in real time.

Horowitz isn't alone in sounding the alarm. LinkedIn co-founder Reid Hoffman previously slammed the measure as "badly designed in so many ways," warning it could undermine Silicon Valley's innovation engine.

And some tech leaders aren't waiting around to see how this plays out. Alphabet (GOOGL) (GOOG) founders Larry Page and Sergey Brin have already moved business entities out of California.

The timing of Horowitz's comments matters. As California grapples with budget challenges and considers wealth taxes as a solution, the state faces a fundamental question: Can it afford to test whether Silicon Valley's network effect is actually breakable? Norway's experience suggests the answer might be more fragile than anyone thought.