So, going to talk today about the open-source network state, how we print out the internet. And so, I want to talk a little bit about first theory and then practice of network states, where we are, and why I think this is a big part of the next thing for crypto, not just cryptocurrencies, but crypto communities. The ultimate real-world asset is a community, a city, even a country.
So, theory. In 2022, I wrote this book called The Network State, which is basically, you know, we have these gigantic social networks and cryptocurrencies. Is that the end of the road? Are we just going to sling coins and tokens all day? Or can we print them out in the physical world? And that's what Network State was about. And you know, the idea was to have a physical social network, but not just one of them, many of them. So, at the top right is like Network School, which I'm going to get to in a second. And then in the bottom right, you can see Vitalik's Zuzalu, Bryan Johnson's Don't Die community, and other kinds of things like this, like essentially networks of pop-ups that become permanent and so on over time.
And that was the theory. And then in practice, we built something called Network School in 2024. That's the opening day over there, and we brought thousands of people from all around the world, and we built this community on an island, a Malaysian island off the coast of Singapore, in this sort of ghost city. And we showed that we could actually print out the internet.
And then as you guys may have seen on X, some of you guys might have seen it, we moved to Kazakhstan. And why did we do that? Well, basically, we got a much better offer from Kazakhstan. And also, you know, Malaysia didn't want us there anymore. And Kazakhstan gave us an amazing deal, as you can see over here. And we have just started smashing attendance records and so on. We have lots of people signing up there because now we have full state support. And so this is really crypto in the physical world. Like when China shut down Bitcoin mining, Bitcoin just redistributed to other nodes, and we already know that crypto has that robustness in the physical world and or in the digital world, and this is what crypto looks like in the physical world. Okay.
And so, at this point, I'm satisfied that with the theory of 2022 and the practice of 2024, in 2026 we've at least proven to my satisfaction that we can A, print out the internet. We can bring thousands of people. This is a visualization of the people who came to Network School from all around the world, more than 80 countries. We can print out the internet, bring it to one location, and then B, we can move that community to another location, in this case Próspera, because we can rebalance and we can be as liquid in the physical world as we are in the digital world, albeit with some friction.
And so, given this, what's the next step? So we want to scale, but we also want to decentralize, and because I do think that this is a roadmap for the next thing after cryptocurrency, namely crypto community. And so we're open-sourcing everything we've learned, and I'm beginning that process today. So here's 12 of the key ideas for building startup societies, things we've learned from practice over the last few years of trying to put theory into practice.
So the first major concept is we can now compete with cities, not just companies and currencies. So you know that there's trillion-dollar companies like, you know, Google and trillion-dollar currencies like Bitcoin. But this table over here says that if you try to put a valuation on a city, okay, let's take the population of New York, 8 million people, 8 and a half million people thereabouts. And you estimate, this is a rough estimate, you can argue with it. You estimate the value of real estate is 300 or 400,000 dollars per person in New York City. Why per person? Well, every man, woman, and child, right? So, you got a couple, you have couples housing, and so on. So, let's say 300,000, you can argue with that. Maybe you say it's a million, fine. Point is, you can get a valuation on New York under that assumption. You get a valuation about 2 to 3 trillion dollars. And you can do something similar for every city, and you get something very interesting, which is the giant companies that we've built that are spread out all over the earth. If you printed them in one location, and you sort of liquidated and then reconstructed, you get something about the valuation of a New York City or an LA or a San Francisco. And this is actually really interesting because we haven't normally thought of cities in that way in terms of quantifying how much capital it would take to build them out. But it's about on par with the most successful companies. And you know what? That kind of makes sense. There's about as many of these kinds of cities as there are companies, right? Okay. So, we can compete with cities, not just companies and currencies.
And that immediately starts to lead to new ideas. For example, maybe you have a city asset. Could you have an NYC or SF? Maybe eventually, but you start with an asset that might build out a city. And number two is you can start thinking of, let's say, China's performance or something like that in a totally different way in terms of not just its tech companies, but Shanghai and Shenzhen as cities have a valuation, too.
And third, you can also think about building cities. So, for example, this is Astana, Kazakhstan, this incredibly sophisticated high-tech city. It actually flipped San Francisco 10 years ago. Okay, that's the hyper growth rate of Astana. It builds 100x the housing of San Francisco. If those were two startups, obviously, the blue line would be crushing the red line there, right? And that's because it is possible to build new cities, and it's possible to do them within our lifetime. Astana was sort of a 300,000 person thing in the late '90s, and they became turned into the capital city. It's like the Dubai of the north. And it's not just Astana, Kazakhstan is also building something called Alau Town, the first crypto city. And so, this is going to take a lot of digestion of Astana and take crypto and put it all together. So you're going to hear a lot more about this at Network State conference on Friday this week right here actually, October 9th.
So you can compute with cities, not just companies and currencies. And an important part is you don't necessarily have to have that city all in one place. You can have it be a network city. And how do I explain that? Well, Hilton actually has a million beds globally, which is like a million person city except just distributed. And it doesn't have just beds, it has offices, it has restaurants and stuff. So Hilton is like what a network city would look like. It doesn't have to all be in one place, okay?
Second key concept. So first concept, compute with cities. Second concept, cloud-first, land-last, but not land-never. The internet is simply the most popular thing ever in human history and is the force on the world that we all sort of know about but ignore in the sense of its upstream of AI and crypto and drones and everything else. And if you know, if you want to build a new crypto community, the first thing to think about is cloud-first, land-last. You have to start with your online community, which could be a Substack, it could be a Telegram chat, whatever, but it has to be motivated by something a little more than money.
Next concept, pop-ups are the new startups. What's a pop-up? So it could be like the Cursed Cafe, it could be like AngelList set up a cafe, it could be like Coinbase took over a small town. A pop-up is taking the cloud and printing it out in the physical world for a limited period of time. Hence a pop-up and then it shuts down, okay? And the first thing to do if you're interested in this broad space is to hold a pop-up. And it's much harder than it sounds. You have to get people to fly out, you have to take care of food and, you know, bedding, all this kind of stuff. It's actually much more logistically complicated than you might think. But if you've done that, then you can maybe take the next step.
So pop-ups are the new startups. And if that goes well, then you can start building a waitlist for permanent, which is a permanent location, and then you start actually leasing real estate and moving people in and leasing more real estate and moving more people in. Very similar to how Elon de-risked the Tesla build-out with his online waitlist. He got the capital online, then he built offline. Capital online, built offline. Use the cloud and land together. So, you can crypto crowd-fund your crypto community.
Next concept. The network state is actually about distressed real estate, okay? So, you know, many people who come to this broad area and they're thinking about printing out the internet, they think, "Oh, let me get a private island or something like that." Or some abandoned piece of land and so on. And that's kind of how you do tech, right? You take a domain name that has nothing on it, or you take an empty blockchain and you boot it up. But that's not how you should do real estate because real estate is very expensive. What you want to do is instead take some real estate that's already built out, but that's abandoned or that's under-occupied, and then put a new coat of paint on it. So, there's entire villages and towns for sale that you can buy, okay? You know, de-industrialized towns. And, you know, this is true in Japan as well. Unfortunately, due to Japan's declining fertility, there's like 9 million empty homes there. The thing is, these empty homes, of course, they need a coat of paint. If you take a look at them, they're in various, you know, conditions of disrepair. And so, you need to be willing to do what a startup is in the physical world. In the digital world, you're accustomed to the idea that a startup company, everything isn't going to work perfectly, there's going to be bugs. In the physical world, you also have to be accustomed to the idea that everything isn't going to work perfectly. There might be literal physical bugs, pests, and so on. There might be frozen pipes. There might be all kinds of things, and you need a hardy and determined people who think in terms of frontier, not fancy. They're not looking for a luxury resort in the same way that a startup person is not looking for the perks of a Google. Someone who wants to build one of these frontier communities wants to be there for the building experience. Like Habitat for Humanity. You're not coming to live in a luxury resort, you're coming to build.
And the thing about this is like if you look at this in America for example, all of these colleges are closing down, they're running out of money. Magdalene College, 129 acres, it's for sale. If you think about what this campus involves, obviously it's going to be somewhat in disrepair. There's going to be, you know, everything from shrubbery that needs to get weeded, all you know, all kinds of stuff like that is going to be there. And so you need a population of people in your community that takes this over that thinks in terms of frontier, not fancy, okay? And you know, this is something that's more common in the East because people in China, India, the UAE, they've all seen cities built from nothing. People in the West, you know, are less, you know, familiar with this, but this is for example, you know, I believe it's a — is it Shenzhen or Shanghai? I actually should remember. But this is a Chinese city in 1984 and then 2023, this is the before and after. And you want to be like the people on the top, not the people on the bottom. The people on the top built that city. The people on the bottom are great, but they're living in it, right? The kind of people who are building a startup society are like the people at the top who can look at something that's bare or barren or underdeveloped and see the potential in it. In the Western world that did exist, but that existed in the past in the frontier era, in the Wild West era, okay? So today Westerners are more accustomed to having their whole city built out and they're less accustomed to maintenance and plumbing and electrical work and so on, but there is a valor, there's a goodness in having to do those physical things from scratch if you move community and then you start fixing things up.
So next concept, concentric circles. So organically, if you go and start a startup society, you'll find that there's a core team that's analogous to the core developers. You have your long-termers who are similar to your maximalists or your long-term holders. Your members who are like your holders. Then you've got visitors and so on and so forth, okay? And you're going to find that you've got different levels of commitment among these groups and you're going to have different levels of interaction there. And so, it's not going to be that everybody's going to be building the society together any more than everybody's going to be building Solana or Ethereum or Bitcoin with the same level of energy. Some people will be holders, some people will be maximalists where they'll be like holders, but they'll be posting a lot, and others will be core developers, and so theirs will be like very active. So, you're going to have a continuum of engagement with the project. Many people will have day jobs, but they'll also be, you know, holding. So, they still wish you well, right? Okay.
Next concept, direction selection assimilation. So, when you're starting a startup society, it can't just be one airdrop, okay? It has to be more than money. It could be a vegan community. It could be like language immersion. There should be something for it to exist, some reason for it to exist. I'm not saying you need a new 10 Commandments, but as I point out in the Network State book, you do need a one commandment. You need some aspect of the world that you think is broken. Maybe people are online too much, and so you've got an offline village that, you know, the internet goes off at like 9:00 p.m. each day. They actually do this in Chinese colleges. They turn off the internet in the evening to make sure people don't surf the internet too much, right? There's other kinds of things. You could have the carb-free society. Many kinds of different twists on what your startup society might be, but this is the concept of like a one commandment. You want to select for people who are actually excited about that and want to build that in the physical world. Like a longevity community would be another good example.
And this is similar to how colleges work. Colleges have admissions essays. Colleges already select people. It's like a private club that you're selecting people in. And if colleges are legitimate because they're private clubs that have selective admissions, then certainly your startup society is also legitimate.
Next concept, society as a service. So, what's the business model of these things, even if they're not primarily monetary? What is the business model? And it's what I call society as a service. You can try other things, of course, but the idea is you just provide basically the Google campus as a subscription, okay? So, food and, you know, room and gym and events and all this kind of stuff. So, that's what we do in our school. And when you do this, you sort of vertically integrate something and you can bring down costs because you're bulk buying. You're bulk buying food. You're like Costco, but crypto Costco, right? This is a DAO, but in the physical world, okay? Society as a service, that's like the business model of these startup societies, okay?
And next concept is identity is community is security is territory. So, when you start a startup society, you want to unify the digital and physical borders. For example, you have some identity, some NFT or some coin that your members hold, and then they need that to actually enter your digital community like, you know, log in with Ethereum or log in into a token-gated community online. And you can apply that in the physical world as well, where they need that token or they need that coin or they need that staking in order to get past your, you know, Face ID or your, you know, digital identification, right? And this is exactly again the same as how college campuses work, how countries work. But basically, you have a club where the digital ID, the digital border and the physical border coincide with each other, okay? So, you've got a unification of the digital and the physical. And the reason you need that is identity is community is security is territory. Who they are determines what community they belong to. If they belong to your, let's say your NFT community or something. And then security, do they get past the checkpoint? And then are they allowed to be in your territory? And one way of thinking about this, imagine if your home was your home 99% of the time, but 1% of the time random people could walk through, then it wouldn't be your home, right? So, you need to actually have at least some locations which are only occupied by members of your community, otherwise your community isn't actually a community, okay? Need some physical space.
Next concept, upside offsets utility. When you've got a small social network, when you've got a small cryptocurrency, the utility is very low. The thing that has offset that, for example, early WhatsApp or early Bitcoin, is the upside. At 1 cent, you could dream about how big Bitcoin could get. If you look at Satoshi's very first post or Hal Finney's early posts, you know, they talk about, "Hey, maybe if this became a big deal, it could be worth a lot." That is the lever that you can use to teleport some potential value from the future into the present to make the future real. It is like Terminator in reverse. You're teleporting back, you know, value in order to create — you have a 0.001% chance of a trillion-dollar outcome, and so it's worth a million dollars today. And so you have that million dollars used to create the trillion dollars, right? That's what equity is. So you can do that for crypto, for internet companies, and for cryptocurrencies. I think you can also do that for crypto communities, where we would issue a crypto equity, and then we use that to materialize the future into the present. So stay tuned for that, you know, come on October 9th here, and I might say more about that. Okay, come to this exact room, I think, in about 48 hours.
Next concept. What's the metric for these physical societies? So in the digital world, we have CoinMarketCap. CoinMarketCap is the number of coins times the price per coin. What is the equivalent metric in the physical world? I argue it's the number of man-months. The number of people in your society times the number of months they've stayed in your society. So it's scale times duration. Okay? Duration is another way of saying investment. It's similar to like number of coins times price per coin. Price per coin is like amount invested per coin. So number of people times the amount of time per person is the man-month metric. And the utility of this is it sort of generalizes the concept of a census. You know, the census was actually in the US Constitution, but a census presumes that somebody is sessile. That's to say they're stationary and they're locked within a nation-state, you know, for their whole life, you know? And the population only goes up within that land border. Today, we have digital nomads. They move between things. So, if they're spending three man-months or five man-months a year out of seven or out of 12, rather, at your startup society, that's a lot. That's like 25% of their life if it's three man-months. So, adding up the number of man-months is a useful metric. It's hard to fake if you have proof of human and proof of location, and that's how I think we can start ranking these startup societies.
Last concept. You know, many people would tell me, "Oh, Balaji, you're so naive. You know, these network states don't have a military. The nation-states are all going to kill you, blah blah blah." And you know, the thing is I obviously knew that like, you know, nation-states have militaries, but clearly Google got to trillions of dollars without firing a shot. Bitcoin got to trillions of dollars without firing a shot. And now I've got it in a sentence, which is the non-violent alternative to a military is mobility. Okay? That's to say, if you've heard the term, you know, fight or flight, rather than a pointless fight, you can do organized premeditated flight. Okay? If you have a community of digital nomads, that's a digital nomadic tribe. And if that tribe can move collectively, collective exit is actually what built the US. That's the Puritans coming to the new world. Collective exit is actually a very powerful thing for essentially saying, "Okay, if you don't give us the terms we want, we'll sign with somebody else." Which we did. We actually had offers from 10 countries, and we took the best one. We moved to Costa Rica. We did that very, very quickly. So, you can just boom, instantly relocate a group of tech people to a new country, and we've proven that that leverage exists. Okay? That was theoretical maybe a year ago. It is now true. Many countries are out there. They're bidding for exactly a population like you. You have a lot of leverage not just as a sovereign individual, but even more as a sovereign collective, okay? And that's like the unbundling of sovereign individual and the rebundling of a sovereign collective. And so now we're, you know, working with the Republic of Costa Rica, where we didn't fight, we just moved, and now we've got a much better offer and we're working with a group that really wants us there.
So, for more on this, come to Network State 2026, our full conference on October 9th at Marina Bay Sands, right here in fact, and go to nsrconference.com, and if you're with Token 2049, you can get a code for a discount. Okay, thanks very much and we'll do a fireside in a second. Thanks.
