When you're trying to change something — an industry, an institution, a platform — there are two strategies: work within the existing system to reform it, or build something parallel that competes with it.
The case for reform is intuitive: reform uses existing infrastructure, existing relationships, existing credibility. You don't have to build from scratch. The case against reform is structural: systems are designed to reproduce themselves. The mechanisms that select for leadership within any institution select for people who are adapted to that institution's incentives. Reformers who get far enough inside to have influence tend to get adapted before they have the influence they sought.
Building parallel has the inverse tradeoff: harder to start, no existing infrastructure, no inherited credibility. But it doesn't face the selection pressure that grinds down internal reformers. You get to design the new institution's selection mechanisms from scratch.
The structural condition that determines which approach is viable: whether the incumbent can block the parallel system from operating. When the incumbent controls the territory the parallel system needs — regulatory gatekeeping, geographic monopoly, platform lock-in with high switching costs — parallel building hits a ceiling that requires either overcoming the incumbent's resistance or moving to a domain where competition is structurally possible.
When the incumbent cannot block competition, the parallel system eventually wins on merit. The internet competing with newspapers. Electric vehicles competing with combustion. New programming languages competing with established ones. In each case, the incumbents had institutional inertia and existing infrastructure; the challengers had design freedom.
The practical question for any change project: what does the incumbent control that you need? If the answer is "relatively little," build in parallel. If the answer is "everything essential," either find a domain where you can operate, or accept that the reform path — with all its grinding-down — may be necessary despite its costs.
Source: Patri Friedman, "Beyond Folk Activism" (Cato Unbound, 2009). The piece argues a libertarian case; the structural insight applies more broadly.