I just want to start a new country. Network state is essentially about the it's about many things but it's fundamentally about the fact that institutions western institutions that were designed before the internet won't survive the internet.
This content is provided for informational purposes only and does not constitute legal, business, tax or investment advice. It does not constitute an invitation or recommendation to purchase or subscribe for and should not be relied upon when making any investment decision in any Antler fund or any other investment instrument.
Hi everyone, welcome to the Further Faster podcast. I'm Magnus Grimmlin, the CEO and founder of Antler. Very excited to have with me here on my good friend Balaji. Very excited to have this conversation with you. We're here at the network school in Malaysia. It's part of Singapore special economic zone. It's a great place where you have founders from all over the world coming from more than 100 nations. You can build here, you can live here, you can have your family here. It's just an incredible place. We're going to talk a bit about that and the theory behind it. But largely will be known very well to a lot of you. Obviously an incredibly successful founder. Educator at Stanford, then built a biotech company which he very successfully exited. Was the CTO of Coinbase, general partner in Andreessen Horowitz, written incredible books and a thought leader across the globe. Really recommend you reading the network state and yeah excited to have this conversation. Welcome on the podcast.
Well good to be here and good to have you here and this is actually I think your first time at Ever.
This is the first time here. Yeah, but we had a lot of portfolio companies come here and they had a tremendous time. They spent a few months there working out of here, building their company. Um, and one of the things they really highlight is the incredible community of other founders that are here, which is obviously a great draw in terms of mentorship and sharing ideas and driving things forward. So, great to finally be here and will come very often from now onwards.
Brought one of my great friends coming here is a tremendous founder who I think is considering coming here in a few weeks. So, that's great.
Absolutely. And this is a great location. It's really built for tech, but it's a tech community, not simply for tech. If you take a collection of tech companies that builds a tech community. So, it's not an individual tech company, it's a collection of them, but it's also more than that because everybody has a life outside of work. So, it's for families, couples, children, it's for work and play. It's basically if the platform was actually built internet first. That's how we think about it.
Yeah, it's great. And obviously a lot of people will know about you already and all the great things you've done through your life. But perhaps we could start there. We'd love to hear a little bit about your journey. Right. Obviously you're educated engineer at Stanford. You build an incredible business early on. You've been part of building out the whole blockchain industry. Also the CTO of blockchain of
Coinbase. Coinbase and wrote an incredible book.
So could you just share a little bit about your journey and sure. What brought you here?
In so far as I've accomplished anything, I guess, you know, my parents are from India, and I grew up in Long Island and I got my BS, MS, PhD at Stanford in electrical engineering, MS in chemical engineering. So I have a hard science background. My first company was a genome sequencing clinical genomics company that was sold for 375 million. Then I became a general partner at Andreessen Horowitz, and invested in a bunch of unicorns like Omada, OpenGov, Benchling, Digital Ocean, and also helped build out both our bio and crypto arms. Then as you mentioned became CTO of Coinbase. Sold a company to them called Earn and that actually became quite a successful product for Coinbase. You can look at their public SEC filings and so on. That got shut down afterwards. We're going to maybe reboot it here. And at Coinbase I launched a bunch of assets like USDC, which you may have heard of, and so number six global asset.
So 2018, October 23rd 2018, USDC was zero dollars and now basically seven, eight years later it's at 70, 80 billion. It's fast things can move right.
We're just talking with the team there. It's growing like crazy. Yes. So I launched the Coinbase side and the Circle side was Jeremy Allaire and Sean Neville, and together that was a collaboration. USDC was Circle and Coinbase, equal center, our coalition, and we provided a lot of liquidity early on. So it was definitely a team effort and lots of credit to the center guys, to Jeremy and Sean, and really the whole USDC community. Also we listed Zcash, we listed a bunch of other coins and so on at that time. And that basically, you know how Yahoo was a directory of sites, Google, right? So turning Coinbase from a Yahoo into a Google
meant that you had to turn it from only four assets at that time, Bitcoin, Bitcoin Cash, Litecoin, and Ethereum, into N assets, which is a total back-end rearchitecture as you can imagine. Everything from listing a new coin, you have to change everything from the number of decimal places to the legal agreements to obviously the code and so on. Okay. After Coinbase I wrote a book, The Network State, and that became a Wall Street Journal bestseller actually. But what's the point of that book? Why do that? Well, essentially, one way of putting it is my friend Bryan Johnson wants to live forever. Sam Altman wants to build a machine super intelligence. Elon wants to get to Mars. I just want to start a new country.
I'm actually that's been done hundreds of times before in history. Right. Yes. In many ways, what we're trying to do is like the boring enterprise SaaS of crazy tech things. And the reason I say that is in a sense it's much less radical than the other three. On the other hand, it's often considered more radical than the other three.
Right. Often people be like, 'Yeah, you might be able to live forever or get to Mars.' But the thing is those are purely technical things. This is technopolitical.
Right. So it actually involves, if you put it a different way, it's not just hardware or software, but wetware. It's the software in our heads, how we think about ourselves, which is actually a third kind of wear. So hardware, physical world; software, obviously computers; but wetware is actually just as important. It's how you coordinate human beings. Crypto is about that as well because it's not just about the hardware like the physical mining data centers or the software, but about the wetware to actually value that as a currency and organizational mode. These two interface with that, but that third is actually a neglected layer. Network state is essentially about many things, but it's fundamentally about the fact that western institutions that were designed before the internet won't survive the internet. The internet is like a Category Five hurricane that's just tearing everything apart and it's also rebuilding it back together again. We're on the rebuilding it side. But if you think about it, what do people say for a successful startup? They call it disruptive.
Yeah. There you go. Right. Exactly. So, it's disrupting the old world and building the new one. But I don't think people have realized how far down the stack that goes. Like if you think about it, 30, 40 years ago, it was actually pretty rare on a daily basis in the 80s and even the 90s to even do an electronic transaction or communication. You sent paper messages. You didn't even swipe a card. You paid cash. A lot of the world was very analog. And now today you might send a hundred electronic communications and do certainly multiple, if not dozens, and if you're in crypto many more than that electronic transactions in a day. That's a huge shift right.
So that means that your day starts internet first. The first thing is you might go and look at the sun like Huberman recommends you do, but then you're going and looking at your computer, looking at your phone. This is completely different from the rhythm of life of the 1980s and 90s. In the 1980s, you would get up, drink some coffee, maybe flip on the news, but it's a one-way broadcast. You're not talking back to the news. You might read the newspaper or watch the TV news. Again, both are one way. You're not talking back to it. And you putter in the morning, maybe make lunch for your kids, then drive to work. You go the same path most of the time, almost every day. You drive to work, do some work, maybe go for a lunch break at a Dunkin Donuts or something nearby, then drive back, maybe pass by the mall, but usually just go straight back home. You come back home, play with the kids, watch TV, go to sleep. How different is that from today? Once in a while you might go to the movie theater and go to a travel agent and book a flight, but all that was a whole procedure. Even to go outside the route you're going back and forth, you need a map. So you're very canalized. You're on the same path there and back. You can't talk back to the screen. You can't talk back to the newspaper. You can't broadcast. By contrast, we wake up today and 500 messages come into you before you get up.
It's zero. Basically it's a newspaper, but it wasn't like you open the mailbox and 5,000 mails come in every single day. It was actually pretty unusual to get a letter, especially a personal letter. And so then you don't even have to drive to work. You can internet to work. You're also getting all this inbound and outbound. You're broadcasting back. You might start a business. You can use a map with Google Maps to go anywhere you want. In a sense, the world is completely open.
In a way that it was totally closed and canalized. And institutions have not been designed for that world. They're not designed for this. Especially western institutions not designed for that. So they're all getting metabolized and melted down by this. And the question is what is built up on the other side.
Oh, this is brilliant. And I think it's most nations historically has been created through the act of war, right? This is a much better way of getting at creating a new nation. And
And I read your book. I think it's brilliant. And you're talking about how first you form an online community, then that gets coordinated around something geographical. And now we're here at this incredible place. For the people who haven't seen it, we'll have a little bit of a video at the end of the podcast where you can have a look at how this place looks like. But we're at this incredible island. It's tropical. It's amazing. There's lots of space here where a lot of founders can come. You have all the facilities that you need, trainers, eat, great place to live, other great founders working together towards creating new companies and solving important problems all over the world. Tell me about that transition you're in now, right? Because obviously you've been in the online space for quite a while building these communities and you have one of the larger communities in the world and now you turn that into something physical. Yes. How did that end up happening and
So first is one thing I want to stress which you said was very important. Network state, network school is nonviolent. And for example Singapore got its independence nonviolently. India got its independence through nonviolence. That's two that's very important. As a Hindu techno-capitalist I believe in nonviolence, peace, and trade cooperation, win-win. That is what I think the best parts of the West are to me and I think you believe in that.
So the entire American business model, the Western business model, is actually in a very deep sense premised on the use of force. But the internet isn't, Bitcoin isn't. Google, Facebook didn't fire a single shot to get the adoption that they got. Bitcoin didn't fire a single shot. It has no armies. How many divisions has the pope? As Stalin used to say, how many divisions has a military relative to Bitcoin? It doesn't. Bitcoin wins nonviolently. So that is a very important concept. As you go from Britain to America to the internet, in a sense the internet is stronger and it's weaker. It's weaker because it can't apply physical force, but it's stronger in that it doesn't need to. We can actually succeed nonviolently. And I think this is a very deep concept that is easier for people from Europe or from India, as you know my ancestry, because we haven't. Obviously Europe has had warlike times, but in recent
Yeah, since inception. But in the recent past, obviously there's this whole Ukraine thing that's unfortunate, it may have to militarize, but in general the Europeans are less likely to resort to physical force than the Americans. I think that means they're closer to this point of view of peace and trade.
But yeah, back to kind of where we are now. So if you think about what you're writing about in your book, moving from the online community to a geographical location, and this place is incredible. It's something like 25,000 apartments there. I know there's also plans to potentially build more. I heard something around you could build this community up to almost 700,000 people over time. And you started off now obviously with a network school where a lot of really talented people are coming here. Another thing I really noticed when I walk in is everyone who's here is really fit because I think there's some Navy SEAL here training everyone. And family started coming here. We just had some very good friends of ours who spent two months there, brought the kids over. So there's a whole community being built here right now. So talk about the transition from going online to offline and what you're building up here as a community and what the plans for that is going forward.
Absolutely. So we want to, in a real sense, what we're competing with is Stanford, Palo Alto, San Francisco, California. We want an alternative to those. There's a lot of great things about SF at one point, but I always prefer the South Bay and Palo Alto with the sun and the calm of that. But fundamentally I think San Francisco has organ rejection. Tech actually only really moved into San Francisco less than 20 years ago, 2008, 2009 after the financial crisis, because it was actually a South Bay thing before.
Yeah, it was very Palo Alto area.
Yeah, Palo Alto. Google is South Bay, Facebook grew in the South Bay. So all of those were pre, and that meant you focused, you didn't have the distractions of the city. It was only post-2008 financial crisis, early 2010s, that you really started to get a concentration of startups in the city as people call it. So the answer in my view is the social smart contract and exit. If you have exit rights and you can get out, and if you have the social smart contract above. So the social smart contract, what does that mean? That means before entering any jurisdiction physically or digitally, you sign literally with your crypto wallet and you vote for the core team or the party that is in your view the legitimate governor of that physical and digital territory. You get an 'I Voted' sticker. It's onchain so all the votes can be counted. Yep.
Okay. And now we know that everybody who's in this jurisdiction has voted for this person or this team. And literally that's a requirement to enter the jurisdiction. The NFT that you get is not just an evidence of your vote. It's also the key that opens the door.
And you voted with your wallet, in the sense of your crypto wallet, your ballot in the sense of your vote, and your feet in the sense of crossing the boundary at the same time. This is what I call techno-democracy, crypto democracy. That is a way.
So you're committed to the community.
Correct. And you have actually voted for the president of that network state. Okay, why is that so important?
Well, first is its legitimacy, its democracy. It is also a paradigm that anybody can apply. You can have a thousand different network states all based on that governance. It is reverse compatible with existing western institutions, but it is also forward compatible because it's opting into constraints. And you can opt out, you can exit. So now if the leader breaks their contract flagrantly, you can leave. Now, why do I think the crypto wallet is actually way more important than people think? The crypto wallet is upstream of Discords and DAOs, meaning it's upstream of your messages.
And your transactions already. It's also, people don't get this part, it's also going to be and already is partially upstream of doors and drones. Why? The same Ethereum address, the same private key that allows you to send an encrypted message or make a transaction allows you to open a door lock or turn on a robot. So Discord, DAO, door, and drone. A collection of crypto wallets means a collection of messages, transactions, doors, and drones together. In a sense, the collection of crypto wallets is a state. For example, you could have something which says I only grant search access to my premises if there's a warrant.
So 99.99% of the time you're the only person who has the smart lock that opens your door. But 0.001%, 1% of the time, you're part of a jurisdiction where you opted into the social contract which says if there's enough legitimacy, and all these people say yes, a legitimate warrant is issued, then a policeman can come and search your house and open the smart lock. Do you see what I'm saying?
Go ahead. So we can actually have a law above the politician which is
Yeah. Right. This is what I call going from God to state to the network. The network is the next Leviathan and it stands above that fallible politician.
Well, I mean it's, I do fundamentally believe in what you're saying about the internet becoming an incredibly important entity to drive these societies going forward. And we should get back to the
Yeah, sure. Network school. But just a couple comments on this. I think that Europe, we're definitely seeing that Europe needs to do more to get the entrepreneurial ecosystem going. They've been losing out for a while and we're seeing that happening now. There's more and more founders building great things. Hopefully it's going in the right direction.
I have some suggestions. I have some suggestions for what Europeans should build.
First of all, figure out how to kill GDPR cookies. I'm half kidding. Basically just that alone, the cookie thing has disfigured the entire internet. It's an enormous stupid tax, particularly on mobile. Particularly on mobile. It's just really dumb. You should basically be able to set it in your iPhone or Android settings and then you should never, or your Mac settings or Windows settings. You set it at the operating system or browser level. You don't have to click it 5,000 times on every site. Number two, instead of this cookie prompt, embrace ZK. Zero-knowledge attestations can establish to the state what it needs to know that you have a passport which shows that you're not part of a banned country, without giving up anything else. This is good for the individual and good for the state. It guards individual privacy while protecting security. It's the right balance and it also eliminates the honeypot problem of government databases that are hacked. So ZK is second direction. Third, EU Inc. This is a project that's kind of underway, but basically a virtual incorporation region which has common taxation across the EU. I think Eastern Europeans should drive this because they are more pragmatic since they had to rebuild from scratch 30 years ago. There's people who understood what being poor is, understood what it was to build up Poland and the Czech Republic and so on.
Poland is the most incredible story.
And tell me a little bit about the space there. Obviously we'll show some videos and so on, but like
