The Network State with Balaji Srinivasan

In this episode, we’ll explore the concept of The Network State with Balaji Srinivasan. As the world becomes more digital, it also becomes more distributed. This is obvious on the individual level – how you order goods, the way you chat with friends, and the news you consume… all from a handheld computer. It’s also becoming more obvious at the company level. The pandemic shook the world into remote work and many companies have decided that maybe work can be done in ways they never imagined. But what about the state – whatever that means? Could the network rival the state? In this episode we’ll explore what a nation state even is and how it may be challenged by a new Leviathan: the network. We also cover the difference between a nation and a state, how constants become variables, the cloud continent, digital power, your identity stack, calibrating risk, polycentric law, cloud regulations, building fast with atoms, founding vs inheriting, the powerful vs the powerless, and just about everything in between. Topics Covered: 0:00 - Introduction 2:40 - Nation vs state 15:13 - Constants becoming variables 16:49 - The cloud continent 20:52 - The three leviathans 31:11 - Digital power 38:50 - The identity stack 55:28 - Cloud first, land last 58:08 - Diplomatic recognition 1:04:30 - Root access to land 1:09:35 - Calibrating risk as society 1:19:40 - Regulatory harmonization 1:32:03 - Polycentric law 1:38:54 - Building fast with atoms 1:43:07 - Looking to history 1:46:18 - Founding vs inheriting 1:55:31 - The one commandment 2:23:16 - The powerful vs powerless 2:34:58 - The competition for people 2:40:10 - Historical lines 2:49:13 - v3 of governance Resources: * Balaji’s Twitter: https://twitter.com/balajis * Balaji’s website: https://balajis.com/ * The Network State: https://thenetworkstate.com/ Stay Updated: * Find us on Twitter: https://twitter.com/a16z * Find us on LinkedIn: https://www.linkedin.com/company/a16z * Subscribe on your favorite podcast app: https://a16z.simplecast.com/ * Follow our host: https://twitter.com/stephsmithio Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. For more details please see a16z.com/disclosures.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Balaji Srinivasan?

  Had somebody actually said, oh, I'm going to found a currency in 2007, 2008, almost every VC would have looked at them like they had four eyes.

• 0:10Steph Smith?

  Today, I had the absolute pleasure of talking to who I think is one of the most fascinating minds on the planet right now. That is Balaji Srinivasan, who you might recognize as the former CTO of Coinbase, former general partner at Andreessen Horowitz, who is also the co-founder of genetic testing company, Counsel, and Earn.com, which was acquired by Coinbase, an angel investor in many successful companies like Deal, Repli, and Superhuman. And today, we brought him in to discuss his bestselling book, The Network State. And as you can imagine, when you talk to Balaji for three hours, you can cover a lot of ground. In this episode, we cover the difference between a nation and a state, how constants become variables, the cloud continent, the newest Leviathan, digital power, your identity stack, calibrating risk, polycentric

• 0:53Steph Smith?

  law, cloud regulations, building fast with atoms, founding versus inheriting, the powerful versus the powerless, and just about everything in between. So I hope you enjoy this conversation as much as I did.

• 1:07Speaker 02

  The content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com/disclosures.

• 1:35Steph Smith?

  All right, we've got Balaji on the line. Balaji, thanks so much for being here.

• 1:38Balaji Srinivasan?

  Good to be here.

• 1:39Steph Smith?

  I have to confess, I am a Balaji fan. I've probably consumed an unhealthy amount of Balaji content, so very excited about this. Thank you for invading my brain. I also read your book recently, which is what we're going to be talking about today, this idea of the network state. And I also have to say that, similar to when I learned about cryptocurrency, it kind of forced me down this rabbit hole to reconcile what happened around me in the outside world, how monetary policy worked, as an example. The network state kind of did the same thing, but with other concepts, right? Like nations, states, what are these things? So I'm excited to dive into that, but I want to introduce the audience to a simple frame that I think was, again, an aha moment for me, which is that technology

• 2:22Steph Smith?

  has been able to reshape our lives at an individual level. I think many people can understand that, they can grasp that. Also at the company level, right? We've been able to start new companies that are digital. It's also reshaped our ability to participate in that ecosystem. And then more recently, currencies as well, right? The network has changed that. And your book discusses how technology can actually potentially create new states. Very interesting concept. And in order for us to dive into that, why don't we start off with what we have today? Which are nation-states? So how would you define a nation? And how would you define a state? And how do those kind of interplay together?

• 3:00Balaji Srinivasan?

  I actually have this at the beginning of chapter five in the book. And the thing is, we hear the term nation-state as a compound, you know, like a phrase, really. And we don't really give too much thought as to what it means. But it's useful to think about the distinction between those two words because they're actually very different. The nation, that comes from the same root as natality, like the Aladdin, like Nazis. And so it's like common birth, common descent. So like the Japanese nation, they have shared ancestry, shared culture, going back hundreds, you know, of years. And shared language, all the type of stuff. And then separate from that is the state, which is the administrative unit, that thin layer that sits over the nation. Okay.

• 3:42Balaji Srinivasan?

  And the state could be of, you know, the Japanese people themselves, or could be, for example, 1946, after World War II. The American government was basically the state over the Japanese nation, right? And so, once you think of this distinction between the nation and the state above it. The concept, the nation-state was every ethnic group has the right to have its own government. Now, the thing about this, of course, is that's like an abstraction, but in terms, many of the ethnic groups on the planet do not have their own government and/or they do not have their own territory, which is another part of it. And so if you're talking about the Catalonians or, you know, the Kurds, these are groups that have long histories

• 4:26Balaji Srinivasan?

  and they have like a legitimate nature from the perspective like the 1700s, 1800s person who think about, you know, the nation-state. They'd be considered a real nation, but they do not have territory. In the global game of musical chairs, they didn't get a seat. Okay, so like you have this map of the world and everybody's kind of moving around it and they just lost out in a seat. They're a stateless nation, okay? And so like the Kurds, for example, their ethnic group overlaps or their historical lands overlap like Turkey and other kinds of places, okay? And the Catalonians, for example, they overlap modern Spain. The reason for this is that the maps that we have are actually very abstract constructs. You know, if you think about a map of Africa or actually even in the US, you have these

• 5:10Balaji Srinivasan?

  straight lines on a map. Whenever you see straight lines on a map, that's like some surveyor said, "Okay, I'm gonna put this here because of latitude." That's some like abstract political decision. In a sense, a map is like a digital layer above the physical world. You don't see the lines of the map in the physical world, right? Often, those boundaries on a map do not reflect the ancestral, you know, long-running boundaries of language and culture and so on. There is, however, a feedback loop where what happens is those borders or those boundaries that humans impose then in turn change how humans start living. And so you will have something where there's now a sharp transition from French to German as you cross the Franco-German border. Signs change, languages change.

• 5:55Balaji Srinivasan?

  That human digital thing has caused a digital crease in the physical world, whereas before it might have been more continuous, right? Before we had modern map making, before the world was mapped, you sort of had a gradual decline, a gradual shift, right? So once you think of the difference between the nation and the state, that the nation is this group of people with common birth, the state is this administrative layer, and you think about how that relates to maps and so on, you can start thinking, "Oh, okay, the exact configuration that we have today is not only not how it's not always been, but not how it always will be."

• 6:26Steph Smith?

  Yeah, I think that was another aha moment for me because in my lifetime, those lines have been constant for the most part, right? There's exceptions, but you kind of accept that this is the way the world works, right? These are the countries. And I think another interesting concept that you mentioned in your book is even the United Nations is perhaps named incorrectly, right? It should really be like the chosen states or something along those lines.

• 6:49Balaji Srinivasan?

  The selected states, that's right.

• 6:50Steph Smith?

  The selected states.

• 6:51Balaji Srinivasan?

  Yeah, there's a guy, actually, the Kazakhstan head, he actually made this remark. He's like, "Look, if we allowed every group in the world with legitimate right to self-determination to get their own territory, there'd be chaos. We'd go from 193 countries to 600."

• 7:08Balaji Srinivasan?

  That's what he said, right? I think it's probably way more than 600. But that just gives you a sense of, oh, okay. I used to be against word games for the sake of word games. But then I got more into it. And one way of thinking about that, if you, you know, Dolly too?

• 7:26Steph Smith?

  Yep, exactly.

• 7:27Balaji Srinivasan?

  Yeah. So Dolly too, I had this tweet, like the age of the phrase, right? The short phrase, like whether it's a tweet, you know, on social media, or whether it's a 12 or 13 or 14 word phrase to go and reset your cryptocurrency, your wallet, you know, passphrase. Or if it's a short phrase with like, just a single, sometimes character or single word that's different, that changes what the computer generates. You can actually see that changing one word changes what is in somebody's brain. And the concept of Russell conjugation, I sweat, you perspire, but she glows. The same behavior can be flipped neutrally, negatively, positively.

• 8:09Balaji Srinivasan?

  Without lying, what you're just doing is just changing the tone of it. And so you can flip all of those variables negative. If you want to make somebody look bad or flip all them positive. He is, you know, in an uncontrollable range, but she claps back righteously. You know, that kind of thing, right? And you just characterize the situation differently. You've Russell conjugated, right? And so the point being that, that slight choice of word now with Dolly too, we can see a tiny change evokes literally a different visual in the computer brain. And it also evokes a different visual, probably in the human brain. So with that, just to descend onto this concept of the nation, the fact that people have conflated the nation and the state recently. Like people just say nation state.

• 8:53Balaji Srinivasan?

  They don't realize there's a difference between the nation and the state. Many states today are actually not nation states. Japan is a canonical example of a nation state. Israel is others like, let's say, India, that's like more of a civilization state. There's lots of different ethnic groups. India is more like Europe, you know? Like the South Indian and North Indian are like historically as different as like. You know, a Spaniard or somebody from Finland. Okay. India was not a country until recently. It was a civilization. They did have things in common, but a civilization state is different from a nation state. That's one example. Or you have something like, you know, Singapore or, or the United States, which is a multinational state where there's many different ethnic groups under one administrative zone. It's not a nation state.

• 9:38Balaji Srinivasan?

  It is a multinational state. Now, people could argue that there was an American nation like by mid 1900s. There was a lot of effort to kind of pack down people like Teddy Roosevelt talked about. He wanted the end of the hyphenated American, you know? He didn't want people to be, I'm a Polish American or this American. Everybody's just an American, right? So there's an enormous process where the state was trying to pack in and centralize and remove those points of distinctiveness. Everybody just think of themselves as American only. And by mid-century, you could argue that was somewhat successful. And that was like peak centralization. And why is that important? Well, then people start not thinking about the difference between the nation and the state. We're all, the state itself has formed the nation.

• 10:23Balaji Srinivasan?

  Do you see what I'm saying? The state now says the German state is Germany. The French state is France, right? The Italian state is Italy. The American state is America and it waves a flag and so on. And it's to the state's advantage to identify itself with the nation. One analogy I have in the book, which I think is a funny way of rethinking it. It's like labor and management. And in a small company, they're actually literally the same. You know, the founder is both the CEO and the person who's going and taking out the garbage or fixing the computers or whatever. Like every job is done by one person, right? There's no, you know, division of labor or what have you. And then as the company scales, then management and labor arguably get more alienated or whatever. And then people can say, oh, management is disaligned with labor. And what's interesting is

• 11:08Balaji Srinivasan?

  Those people who will accept that are often folks who will contest the idea that the state and the nation are disaligned, but it's actually a very useful analogy to see that they can be aligned, but they can also be disaligned, right? I'm obviously not somebody who's anti-management, but I recognize that you want equity structures and things like that to align folks, right? Once you kind of realize that the nation and the state are different, you can reexamine all these words. Example, multinational, right? So multinational, for multinational corporations, it's actually a misnomer. It really should be called multi-jurisdictional or multi-state, because it's not as if Google has like a direct ambassador to the Catalonians and the Basques and the Kurds and so on. It's actually talking to the states that have the administrative units, right? So it's multi-jurisdictional, multi-state.

• 11:52Balaji Srinivasan?

  The United Nations, as we just discussed, is really best called the selected states, because it doesn't have all the nations of the world, right? And in fact, many nations missed out on that game of musical chairs, and they don't have a seat at the United Nations. And now you can actually realize, oh, there's a whole queue of people, peoples really, I should say, groups, right? With long histories and cultures that are boxed out of the United Nations. And, you know, one that's very prominent is like the, you know, I mentioned the Kurds, Catalonians. One that's like sort of becoming a nation are like the Taiwanese, where there wasn't like historically this huge necessarily difference from mainland China, or at least

• 12:35Balaji Srinivasan?

  there was some difference, and a lot of folks in Taiwan came from mainland China because, you know, the Kuomintang, the nationalist lost the civil war, you know, a bunch of them moved out. Now Taiwan is like this, that's a very famous example, something that's sort of on the boundary between just a group of people and like a full-fledged country that's recognized by everybody, because China leans on people to not recognize Taiwan, right? That's like a famous example, but there's lots of other things that are in this sort of boundary zone in different ways, where some countries recognize them, but not all, you know? So it's not part of the club fully, but it's also not, totally not part of the club. It's like in this nether zone. There's a book called Invisible Countries on this. What I'm getting at is, once you distinguish nation and state, you reexamine words like

• 13:17Balaji Srinivasan?

  multinational, you reexamine words like the United Nations, you reexamine words like national security, or phrases like national security. Really, that's like federal security, right? Nation is often used to mean the whole thing, but really it's like federal, like the overall government, right? And you realize you've actually, there's a base that's being stolen. You know, the nation and the state are different. And once you realize the nation and state are different, you're like, oh, well, America actually is not a single nation at a minimum, it's bi-national.

• 13:45Steph Smith?

  As you said, the nation and the state are not always aligned and there is this gray zone. Many people accept that these lines are very concrete, they're very binary. And I think many of the examples you've given show that they're not necessarily. And I think that relates directly into this idea of a network state because if you accept that the lines are binary, they're set, you can't change them, there's no point of even going into this concept of a network state. But as you dive into these gray zones, and actually just to bring up one quick example from your book, is even just naming countries that many people didn't realize have emerged in the last couple of decades, right? You think back to like the largest countries like America, China, et cetera.

• 14:26Steph Smith?

  They have much longer histories, but there are new countries on the map that have happened within our lifetime. So that was another example of gray becoming part of the existing infrastructure.

• 14:38Balaji Srinivasan?

  This whole concept of constants becoming variables, I think, is a very important characteristic of our age. 14 years ago, it wasn't like fiat currency and cryptocurrency, right? There wasn't a distinction, it was just like, you know, it's currency. If you had walked into a VC's office in 2008, 2007, and you'd said, I'm gonna found a new currency, okay? Well, actually, Peter Thiel and PayPal, they kind of tried to do that, okay? But they didn't really say that that was the thing. They said, you know, it's like online payments and so on, they had the idea of founding a currency. But the fundamental issue, you know, which Satoshi later put a finger on, but it wasn't obvious, was decentralization. And then how do you actually make a decentralized backend in the blockchain, all this stuff we know?

• 15:23Balaji Srinivasan?

  Had somebody actually said, oh, I'm gonna found a currency in 2007, 2008, almost every VC would have looked at them like they had four eyes. And they would have said, what, are you gonna go petition like the IMF and the World Bank? Oh, it's like, and it's deflationary? To, haven't you read Econ 101? Paul Krugman proved that Deflation is bad and you can never make, you know, they just quote these like priests to you basically to say that it's impossible. It'd just be a joke to try and do something like that. And so those people were thought of as jokes. But Satoshi figured out a new way that literally started on a message board, you know, like he posted this on the like the Mets Dow cryptography

• 16:04Balaji Srinivasan?

  message board. And what Satoshi realized that I don't think most people realize is even if this is implicit, you can think of the internet as basically like giving rise to a new continent. Okay, imagine an Atlantis that just arose out of the middle of the ocean and people were just taking commuter flights there back and forth each day. Okay, so you'd spend eight hours in Atlantis and 16 hours at home. That's really what the internet is. You know how I can prove that?

• 16:33Steph Smith?

  Well, we're in it right now.

• 16:34Balaji Srinivasan?

  Well, right, exactly. Like one way of thinking about it is ask themselves what percentage of their time they spend their waking hours, they spend looking at a screen of some kind. Okay, whether it's laptop, mobile phone, tablet, you know, their smartwatch, something like that, right? What percentage of that time is that for you, Steph?

• 16:52Steph Smith?

  I unfortunately have to say it's probably like 14 hours a day, but I'm, I'm probably an outlier. I'd say probably the average person though, right? It's, it's a third of their day, maybe eight hours.

• 17:03Balaji Srinivasan?

  That's right. So what that means, and that's up from basically zero in 1991.

• 17:09Steph Smith?

  Yes.

• 17:09Balaji Srinivasan?

  Right? So, you know, this, this Atlantis, this cloud continent, right? So just to extend the metaphor, we're taking these commuter planes up to the cloud continent 14 hours a day and coming back and we're only spending two hours of our waking lives, in your case, on the land and 14 hours in the cloud, right? For other people, it might only be a few, like three or four hours, but like, that's amazing. Billions of people have migrated huge chunks of their lives to this cloud continent. Okay. When I say billions, I mean like three something billion just on Facebook, right? And you add all the people with smartphones and so on. So let's say it's under three, four billion people in the world. Half the people of the earth have,

• 17:52Balaji Srinivasan?

  are now spending half their lives in this cloud continent, half their waking hours. Okay, up from nothing in 1990 something. When we think about that, that is actually a different way of visualizing the whole thing. And you realize the internet is actually on par with the discovery of the Americas for the Europeans, right? Yes, of course, there were people in the Americas before the Europeans got there. I talk about this in the book, actually, that like if you go and look at the Bantu expansion or the Mongols sweeping across the world, there's essentially no ethnic group that has ever had some location since time immemorial. They just killed the previous folks and kind of took over their territory or whatever, right?

• 18:34Balaji Srinivasan?

  So leaving that whole part of things aside, from the perspective of the Europeans, like, quote, "the discovery of the new world was this huge thing." You know, similarly like the folks who went over the Bering Strait, their discovery of the Americas was this huge thing, this new frontier, right? Which is obviously thousands of years earlier. This internet frontier where we've migrated to will, over time, give rise to new countries just like the Americas did, right? The people came there and they didn't think of themselves as American or Brazilian or Mexican or Canadian or something like that. Nowadays, North and South America have, they're all, you know, slotted into the same grid as like the old world, right?

• 19:16Balaji Srinivasan?

  But initially, they thought of themselves as English or French, or, you know, they were colonists, they were settlers, right? They didn't identify with the new land as primary and the old world as secondary, right? They didn't think of themselves as a Polish-American or English-American, right? They thought it was just English. And that's similar to folks who spend all of this time in this cloud continent but have not made the flip, right? You're spending the majority of your time in the cloud continent, but you're not thinking of yourself as a cloud person first yet.

• 19:47Steph Smith?

  Yet is the key word.

• 19:49Balaji Srinivasan?

  Yet.

• 19:49Steph Smith?

  I think one

• 19:50Balaji Srinivasan?

  That's the key word, right?

• 19:51Steph Smith?

  Interesting thing for you to share would be, I think for many people, like the individual you might have just described, they In reality, spend a lot of time in the cloud, but they don't actually see the cloud or the network as a true challenger to something like the state or prior to that religion. And you talk about this as this idea of a new Leviathan. And I think what would actually help people wrap their head around this is what are some examples of where the network did challenge the state? Where there was almost like a head to head or strong sway that the network had in our wider world? So one thing I've heard you talk about is Wall Street Bets, which people might think is kind of a silly example, but there are larger ones, right?

• 20:36Steph Smith?

  So what are some of those examples?

• 20:37Balaji Srinivasan?

  So concept of a Leviathan generalizes, and you know, this is the least common word in Silicon Valley is God, okay? Or in technology is God, right? So basically, I'm gonna talk about God for a second. So the concept of Leviathan generalizes God. And what it basically means is, in this context, like Hobbes is Leviathan and I'm just kind of, you know, taking that concept and taking it a little bit further. And Leviathan is that all powerful force that stands above all men and makes antisocial people behave in pro-social ways. Okay, so I have introduced three Leviathans, God, state, and network. And it was actually gratifying. I have this passage in there in one of the footnotes by a guy named Jacob Burckhardt from Force and Freedom.

• 21:22Balaji Srinivasan?

  Did you see that passage? I'm not sure. It's like footnote N or whatever of it.

• 21:26Steph Smith?

  There's a lot of footnotes, a lot of links, but it's great. Why don't you, why don't you share what that footnote is?

• 21:30Balaji Srinivasan?

  Yeah, so here is, here is this pretty cool footnote. I think it's cool, at least it's the kind of thing I think is cool. So this is from a book that was written almost 200 years ago, okay? Force and Freedom. And I found this after I had written much of the book or whatever, just like, you know, just flipping through old stuff. And I was like, ha, ha, ha. And he identifies essentially three forces in the world. He calls them state, Church, and then the third force, he calls culture, right? And this is way before the internet or anything like that, obviously. And by state and church are kind of, you can kind of guess what those are, right? Culture, he defines as all the peer-to-peer interactions between people. He didn't say quite peer-to-peer, he says, I'll just give the exact quote. "Our theme is the state, religion, and culture in their mutual bearings.

• 22:15Balaji Srinivasan?

  We are fully aware of the arbitrariness of this division into three powers. The division, however, is a mere device to enable us to cover the ground. Indeed, any historical subject must proceed in this way, right? The three powers are supremely heterogeneous to each other and cannot be coordinated. And even if we were to coordinate the two constants, state and religion, culture would be still something essentially different. The state and religion, the expressions of political and metaphysical need, may claim authority at least over their particular peoples and indeed over the world. For our special purpose, however, culture, which means material and spiritual need in a narrow sense, is a sum of all that has spontaneously arisen for the advancement of material life as an expression of spiritual and moral life.

• 22:52Balaji Srinivasan?

  All social intercourse, technologies, arts, literature, and sciences is a realm of the variable, free, not necessarily universal, of all that cannot lay claim to compulsive authority." Wow, okay, that's like 200 years ago. And what he's talking about in modern language would be "Culture is the network of peer-to-peer volitional interactions between people as opposed to the top-down impositions of the church and the state respectively." And this relates to Kant's Leviathans. So the three Leviathans I describe as God, state, and network, right? And how do you think about this? So in the 1800s, what's the most powerful force in the world? God. Why? You do something wrong, you steal, God will punish you, right? That's why you don't steal, okay? By the 1900s, enough people didn't believe in God.

• 23:37Balaji Srinivasan?

  You had Nietzsche writing about how God was dead and, you know, essentially the basis for a lot of civilization. You had this, you went from this decentralized law enforcer who would hit you with lightning bolts if you did something bad. People actually believed in that as like the super cop, right? People didn't believe in that anymore. So instead, you had the rise to a greater extent of the state filling that void, right? The uniformed police forces, the boys in blue. In the extremists, it's the Soviet Union of a totally godless state and so on. And in fact, that was a huge collision in the 20th century between the Soviet Union, which was a pure state, and America, which was a god-state combination, like the Marine Corps of mid-century would say, you know, for God and country. So in the 1900s, why didn't you steal? Because the state would punish you. Right? Even if you didn't believe in God, the boys in blue would get you. That's why there's so many police procedurals on TV.

• 24:22Balaji Srinivasan?

  Right? Because the state is portrayed as omnipotent domestically. All of those things, even like a small little boy, you know, who knows what a cop and a robber is. Right? They can see the uniforms and so on and so forth. They are also, you know, taught, oh, the US military abroad can go and invade any country, blow anything up. It's big, bad, all powerful, blah, blah, blah. Right? And until I think about 2019, those kinds of things, while rickety, they like people kind of believed in them. And now what we're getting into is the third Leviathan, which is the network. And what that is, is that's a cryptocurrency network. That's a social network. And now the network, you have a third thing. You don't steal because the network won't let you. Either you'll get canceled by the social network,

• 25:05Balaji Srinivasan?

  or you will not be able to take it because the encryption prevents you. And it is a third way of thinking about it. God would smite you, 1800s. State will punish you, 1900s. Network won't let you, 2000s. Okay. These are three different theories of a prime mover. What is the most powerful force in the world? Is it God? Is it the US military? Or is it encryption? All kinds of political arguments, moral arguments, cultural arguments, social arguments. A lot of them reduced down to who is my Leviathan? Like, what is, what is the final thing that I'm invoking? That says basically like, my dad can be of your dad. Like, my God is stronger than your God. What do I think of as that, you know, thing?

• 25:49Balaji Srinivasan?

  And of course, there can be conflicts within people of God. Right? And there can be conflicts, as I mentioned, between people of God and people of the state, Christians and the state, like the Soviet Union persecuted people of God. And there can be conflicts between people of the state and people of the network, like the antitrust cases against tech companies, or the State Department versus Tornado Cash and so on and so forth. Right? Once you kind of see this, it's actually like a vocabulary for parsing the world. And just to generalize, is this a part that's not in V1 of the book, but it's coming in V2? So. With, you know, God, we're familiar with the concept of atheist, monotheist, polytheist. Right? Okay, so atheist doesn't believe in God. There's also agnostic and so on, but just for our purposes, right?

• 26:31Balaji Srinivasan?

  So atheist, monotheist, polytheist. Atheist doesn't believe in God. A monotheist, like, you know, a Christian or Muslim believes in one God. And a polytheist, like a Hindu, believes in many gods. Zero, one, N. We can now generalize this to the a-statist, the mono-statist and the poly-statist. And let's say the a-coinist, mono-coinist, poly-coinist, or you might say a-numist, like numism is like the Soviet coins, right? So what's the a-statist? The a-statist is an anarchist. Okay, they don't believe in the state at all. So it could be a crypto-anarchist, it could be an anarcho-communist, they just don't believe in the state at all. Okay, zero states. Mono-statist, that's somebody who believes that their empire should run the world, right?

• 27:11Balaji Srinivasan?

  Like a national greatness neo-con, or like somebody who thinks China should dominate the whole world, or whatever, right? Or back in the day, like someone, the Roman Empire, the Soviet, right? Soviet imperialist, that's like a mono-statist. Our state should run everything. And then the poly-statist is like somebody who's into competitive government, digital nomads, okay? Switching between countries, passports, okay? Now, you can also apply the same framework to coins, to the network. A-coinist is the no-coiner. They don't believe in coins at all. They hate coins, right? You know, Web 3 critics, blah, blah, blah. Okay. Mono-coinist is like the Bitcoin maximalist or maximalist of anyone. They think their digital currency or their network is just the number one, everybody, right?

• 27:56Balaji Srinivasan?

  The poly-coinist, I mean, there's actually, there's poly-chain, right? There's multi-coin. Those are literally funds that were set up on the premise that multiple coins will exist, which was controversial at the time that they set it up, right? Like in, you know, I think poly-chain was set up in 2015-ish, or thereabouts, multi-coin, I don't know the exact timeframe, but around that time. I'm just naming those as two funds, which are poly-chain and multi-coin. So the poly-coinist, okay? Or the poly-numist is another term. Numism is the study of coins, like numismatic, right? They believe in multiple coins. Now, here's what's interesting. Once you have this cleavage of the world, right?

• 28:32Balaji Srinivasan?

  You can realize, so that's like a three times three times three. Many ideologies can be further slotted into like combinations of these. For example, you have somebody who's the atheist, mono-statist, a-coinist, right? That is somebody who is like your secular, East Coast establishment person who doesn't believe in God, believes in the US government and especially the regulatory state and hates coins. You know, crypto-anarchists, Bitcoin maximalists. They're an atheist often, sometimes they're a mono-theist or poly-theist, right? Let's say often an atheist. They are an a-statist. They don't believe the state should exist, but they're a monomemist. Okay?

• 29:11Balaji Srinivasan?

  So that's a real conflict that's going to happen between the atheist, mono-statist, a-numist, and the atheist, a-statist, monomemist, right? That's like, that's a collision because they, they have different gods, right? That's going to be like the US government and the US dollar versus Bitcoin is as big a clash as like, you know, I don't know, Christian Muslim was during the Crusades or something. That's, that's a clash of, you know, or like the Soviet University of US. Those are two fundamentally different classes of ideologies.

• 29:42Steph Smith?

  I think to many people, that would seem a little outlandish. You know, being the devil's advocate, what comes to mind is these are all collective terms or structures or things that we all believe in or don't believe in, right? Some, some level of belief depending on where you fit in that matrix. And for many people, let's say we use God as the Leviathan. The repercussions, as you're saying, of like not behaving in certain ways. For them, the people who believe in that, they're like, I'm going to hell. That's like a lot of force or at least imagined force. The same thing is true with the state, right? So if, if I do something wrong, I'm going to jail. A lot of force again. What's interesting about the new Leviathan that you're describing as the network.

• 30:24Steph Smith?

  There's force, but it's it's not approached the same way, if if that makes sense. Like, it's it's actually

• 30:30Balaji Srinivasan?

  Yes.

• 30:30Steph Smith?

  A lack of force in some ways. It's it's cryptography and it's using the network to enforce certain things, but without the same force that you imagine through God or the state. And I think that's maybe why it's hard for some people to imagine this being a leviathan, because a lot of people view the network as what what is just a bunch of semiconductors and servers and and bytes running back and forth. But I think that's why it's important to think through like, or to to give these examples of where the network has actually been incredibly strong relative to other leviathans.

• 31:04Balaji Srinivasan?

  Well, so here's the thing is basically one of the things I touched on there and I talk about more in the book is fusions of leviathans, right? So you introduce these pure forms of like God, state and network, and you can have fusion. So I mentioned like God plus state is the American state, right? And there's different versions of network plus state. One is the titular version of the book, the eponymous network state, which is a fusion of network and state that you can think of as the network is the state, like it's it's the government, right? The network is the nation that underpins the state because you have a social network online that is actually giving legitimacy as opposed to a physical, physically based nation where everybody live together.

• 31:46Balaji Srinivasan?

  It's a digitally based nation where we think the same and they're aligned that way rather than same language, they have same culture, but this culture is online. There's different ways of parsing that. But to your point in terms of force, well, one fusion of a kind of network state is sort of what China's built, right? And actually what the US establishment is building. And so you connect the network to drones, right? You connect the network to robots, you connect first to those physical actuators, and that's like one way of thinking about it. So now that absolutely is forced in the physical world. And in fact, that's already being deployed and so on, right? Another way of thinking about it is, which is already there. So this thread that I just pasted into chat. So this was a while back, but basically, you know, I was thinking about digital power and how to articulate it.

• 32:30Balaji Srinivasan?

  Digital power is not really soft power. Okay, if you're deplatformed and seeing all your money frozen, that's Much more than just influence. But it's also not what we traditionally think of as hard power because it's invisible. It's intangible. You can use it on a hundred million people. There's no optics. There's no like fireworks, nothing blows up. There's no nuclear explosion. Like the human brain is not trained to react to the use of digital power. It's not dramatic in that way. It's like a bit flipping on a server. Right? So I was trying to think about how to classify it. And then I eventually was like, oh, you know, here's a four part classification. Analog soft power, analog hard power, digital soft power, digital hard power. Right? You could also say physical soft power, physical hard power, digital soft power, digital hard power. And what is that?

• 33:13Balaji Srinivasan?

  Analog soft power, that's culture and influence. Okay. Analog hard power, that's bombs and bullets. This is the classic soft hard power. Digital, digital soft power is ranking and recommendation. Digital hard power is deplatforming, freezing and seizing. And so the key differentiation is soft power is probabilistic and hard power is deterministic. Soft power, you're persuading. Hard power, you're compelling. Okay? So now you start to actually see, okay, that's another way. Besides the obvious thing of drones and so on, or you know, that's like compelling in a very gun, gun pointed at you kind of way. You can compel in a different way with the network where you lock people out. Either of their accounts online or they're, they can't access a building. Their key card is disabled.

• 33:58Balaji Srinivasan?

  Right? Their funds are frozen. Their account has permissions reduced, they're suspended, et cetera. That's actually a very significant punishment. In China, for example, like people, their COVID codes are used. The red and green zones are often marked as like COVID red. And then they can't travel. Their WeChat doesn't work. And yeah, in theory, like it doesn't actually affect their physical body. Like they're not hurt. Okay. But they're basically unpersoned. They are disconnected from huge chunks of the Chinese network. They have to rely on a friend to do things and so on. They are just much less like independent than they were. Right? It's similar, though it's not quite there to like exile, like when you're exiled from the community in like Greece or whatever. Right? So it's like digital exile.

• 34:41Balaji Srinivasan?

  Think digital power should not be underestimated. Even if it's like flips on bits on servers. It's growing in power. Drones are the most obvious example, but locking you out of an account or digital soft power like down ranking you. These are big things that can totally crash somebody's, you know, company. They can make or break you socially, et cetera, et cetera.

• 35:01Steph Smith?

  Yeah, and I think it's it's directly correlated to our dependency on the network. So as more people go online, as more people spend more time online. As we talked about before, if people are spending eight hours of their day online, that's a third of their living hours. Half of their awake hours in which that is important to them to some degree. And as it gets more integrated with work, let's say, that's that is a meaningful sense of power to your point. One interesting aspect to consider as well is that with all of these forms of powers, there's tiers, right? So like you could think of the most extreme tier of hard analog power or force is like the death penalty. Right. But you can actually dissuade someone from doing something by saying, you know, applying a night in jail.

• 35:46Steph Smith?

  Or maybe it's a month in jail, right? So there's tiers to it, and I think there's going to be tiers as well to digital power. Right. Where it's not just the extreme version at all times, but also it can be where you lose all access to your digital life. And that's that's quite significant.

• 36:00Balaji Srinivasan?

  And the thing is, your digital life just becomes your life, you know, in the sense of it's your login to all kinds of things, right?

• 36:06Steph Smith?

  Yeah, why don't we return to this idea that, you know, it sounds like this digital power concept may not resonate with everyone. But I want to give a couple of these examples because they really resonated with me that you've shared in your book and otherwise. So, I mean, I mentioned Wall Street Bets, it's maybe a silly example. Another example of a network utilizing some degree of force is Amazon HQ two. That's an example that you gave where actually like some concept.

• 36:30Balaji Srinivasan?

  Yeah, persuasion, though, that's not force.

• 36:31Steph Smith?

  Exactly.

• 36:32Balaji Srinivasan?

  Yes. So that that so, you know, there's convincing and there's compelling.

• 36:36Steph Smith?

  Yeah, I mean, something else that you've said is your immigration policy is your firewall. You've also shown how networks can be utilized in unison with humans, of course. So another example that you've given is the power of 12 Instagram engineers to beat 12,000 from Kodak, right? So.

• 36:52Balaji Srinivasan?

  Kodak, yeah, not not an example that's original to me, but yes, it's an important example.

• 36:56Steph Smith?

  Right. And so I think it's it's important to recognize how the network does. Change the game. It changes people's ability to participate within these systems, to challenge the state, to challenge previous Leviathans. And I think with that understanding, let's return back to the idea of the network state and actually building these new lines that many people assume are very much set.

• 37:20Balaji Srinivasan?

  Yeah. So, so I actually, I start off the book with this because people scam nowadays. And so network state in one informal sentence is a highly aligned online community with a capacity for collective action that crowds from territory around the world and eventually gains diplomatic recognition from pre-existing states. That's like an informal sentence, but just to kind of describe that. Highly aligned online community. Okay. So it's not just, you know, a Game of Thrones Facebook group. Okay. Such as people who are there to pop popcorn. They are highly aligned. They all think of themselves literally part of the same community. Okay. And they've got leadership and they've got an org chart of some kind and they've got probably membership dues and a cryptocurrency.

• 38:04Balaji Srinivasan?

  And like, this is at the top of their identity stack. Okay. You know, what you do is not what you are. You may not think of yourself as a left-hander, even if you are left-handed. It used to be, I'm Jim, I'm 32, I like the Steelers, live in Philly, whatever, something like that. Those are less and less common as bios, right? Instead, what people do is they put pound X, you know, like pound BTC or, you know, pound this movement, pound that movement in their bios. They'll basically put their tribal flags there, both their attack and their defense. Like, you kind of instantly know where somebody's coming from when you know their tribe, right? There's various shibboleths, various words and things people put in there that identify what gang they're informally a part of, what social network they are self-identifying

• 38:47Balaji Srinivasan?

  with, and that probably also accepts them to some extent. They are also ready to sort of defend that identity. They're putting it out there on their sleeve and often the attacks on somebody will attack them, ha, ha, lol, another Bitcoin nutter or something like that. You know, the people will say that, right? Or, oh, you know, how is meth? You know, some people call Ethereum meth, right? And, and of course, there's a zillion other things like this. Oh, it's a, you know,

• 39:10Balaji Srinivasan?

  Then the next step is it has a capacity for collective action, right? So it's aligned and it has common beliefs. Capacity for collective action, that's the part I was talking about with respect to the org chart and the leadership. So again, this is an extremely selective filter. The vast majority of online communities do not have a capacity for collective action. Why? Because I can, you know, if you look at a Twitter following, right? Let's say somebody has a million followers on Twitter. Okay. How many likes does a typical tweet get? Actually, a pretty good thing would be if you have a million followers to have a thousand or 2,000 likes. That's actually pretty good. All in the order of 0.1% to 0.2% are actually engaging with it. That is not what I'm calling a capacity for collective action. That is a capacity for popcorn action.

• 39:55Balaji Srinivasan?

  Okay. Yeah, it's a cool tweet, food like this, right? Okay. A capacity for collective action would mean that when you put something out to 1,000 people, you get 1,000 likes. You don't get one, right? You put something out to a million people, you get a million people hitting the button, basically. That's what a capacity for collective action is. It's something where the group moves as one. If you go and look at the web two internet, okay? You look at Hacker News and you look at Reddit and you look at Twitter, there's an aspect of it. You can't unsee once you see it, which is its entropy. It's just 30 random links. Every time you refresh the page, 30 random links. Okay.

• 40:37Balaji Srinivasan?

  And what that means is intellectually, you're like, oh, hey, you know, a shiny object. Oh, there's another one in that direction. Oh, that's cool, look, right? And so what happens if you randomly move like, you know, a meter in this direction and randomly in this direction? And then randomly in this direction, right? Do you make any progress? Probably not, right? That's actually what's like the so-called spherical random walk. You, you just kind of just drift away from the origin or what have you. And by contrast, if you have a focused direction and you're like, I'm learning AI and I'm learning this today and that tomorrow and that and that and that, then you're moving in a direction. Now, there's ways of combining these, by the way. I'm not saying serendipity is always bad.

• 41:17Balaji Srinivasan?

  The flagella of E. coli famously that have, they have the tumble mode, you know, where it like randomly seeks it out. And then it finds the nearest food supply and then it runs along that thing. It's like tumble and run. Okay. So you can combine the random search with the directed search and you get a good combination. Okay. Similar in some ways to like stochastic gradient descent or something like that.

• 41:40Balaji Srinivasan?

  And so the point being, though, that if you're just doing lots of entropic stuff, you're not making progress on an axis. And if you have lots of people who are just online to hit random buttons, to doom scroll, to whatever, to just click this and that and popcorn, there's no compulsion. They're, that's why they're wasting time, right? They're turning an hour of just looking at the screen into like a few clicks. It's a very low efficiency conversion of their intellectual energy into output. The capacity for collective action changes that. So now you have this meta organism. Okay, what's the third part of the definition? I never see as a highly aligned online community with the capacity for collective action that crowdfunds territory around the world. Once you've gotten people, you know, a thousand people in a Discord or something like that,

• 42:24Balaji Srinivasan?

  it might turn out to be, by the way, another kind of app. Because, for example, Discord doesn't like enforce tasking. Once you've done that, once you've shown a capacity for digital collective action, once you can get a thousand people to like something, which is hard, by the way, very hard to do that, okay? And you might need new kinds of apps. Once you can do that, well, you can get to a very high bar of collective action, which is not just getting a thousand people to like something, but a thousand people to buy something. And in fact, not just to buy any old thing, but to crowdfund territory and move in together.

• 42:55Steph Smith?

  I'm gonna pause you there because I wanna get to the rest of the definition, but, but that is something that, you know, is quite the leap. Of course, yes, I agree with you, getting a thousand people to do anything, even if it's liking a tweet, that, that is hard. But get me from there to crowdfunding land.

• 43:13Balaji Srinivasan?

  Sure, totally. So I had this, this article called Software as Your Organism in the World, you know, almost 10 years ago. And I had a little table in there, which I will, let me see if I can find it. Classification of cloud formations taking physical shape, right? It's a very picturesque term. A cloud formation, I define it as a group of people who meets on the internet, okay? And taking physical shape means they materialize out of the cloud and actually all come and aggregate in person. And even in 2013, almost 10 years ago, I was tracking these cloud formations taking physical shape, and here's a table, right? There's scale and duration, right? Scale is the number of people and duration, okay? So the simplest is

• 43:55Balaji Srinivasan?

  Two people, scale is two, duration is one day. So coffee with a LinkedIn contact. Okay, you meet someone on LinkedIn, get coffee with them, whatever. That was, I don't know if anybody's using LinkedIn today. No offense to LinkedIn people listening to this, all right? But that was happening back in the day, all right? So, all right, coffee LinkedIn contact. Then two people for a month is you meet a remote engineer. You interview them online, okay? And you bring them in for an onsite, okay? Come in for a month, okay? Two people for a year, that's like match.com. Even in 1995, I mean, obviously now there's Tinder or whatever. But point is like match.com was like the beginning of that. Let's say 1995. Two people for 10 years, that's like eharmony.com. Like, oh, they come together, you know? It's like very high intention, form a, you know, matrimonial bond with somebody, right? Okay.

• 44:40Balaji Srinivasan?

  10 people for a day, that's like Hackathon. Obviously been going on for a while, right? 10 people for a month, that's like a data science type program or one of these sort of immersive courses where people come and meet up. They take a course for a month and come somewhere, right? 10 people for a year, those are like hacker houses, which had started in the late 2000s. You're probably aware of some people who have kind of moved in and just got a big house. And the downside is communal living, but the upside is communal living. So the downside is there's other people around. So you don't have total privacy or whatever. But the upside is you get a much nicer house than you would otherwise. Like economies of scale get really good quickly with houses.

• 45:19Steph Smith?

  There's also the digital nomad version of that too, right? Where you don't actually have communal living. But kind of as you talk about cloud first, land last, the digital nomad hubs like Chengdu or Lisbon or Chiang Mai are equivalents of this, right? Like I would put them probably on the like 10,000 people for a couple of years.

• 45:36Balaji Srinivasan?

  Well, it's funny because people flit through them, but they don't stay. It's interesting. It's one of those things where it's like maybe the 10,000 people in the cloud, there's like 100 people who are in that location at any one given time or something like that, right? That community is kind of there and then it's gone. It's like a cloud like drifting through an area versus them all actually being present.

• 45:57Steph Smith?

  Right, well, I think so that's an interesting perspective. I, I would say that's true for some of them. I would also say that some of them are actually quite stable. And there are many nomads that spend, you know, many years in a given place, if not. Their intention is for

• 46:11Balaji Srinivasan?

  Yes, but there, but there, but 10,000 digital nomads in one location, while it's good and it's on the kind of track towards this, is not what I would call a cloud formation, unless all of those 10,000 people are basically friends with each other.

• 46:25Steph Smith?

  I see. Okay.

• 46:26Balaji Srinivasan?

  And this is actually, this is an important concept I have in the book. One of the things I developed, and this will be more, more in the V2, I've got a lot of graphics and stuff, quantitative definitions of terms from, that we've been using sort of verbally for a long time, right? So for example, what is a nation? There's like, like a dozen definitions that I've got in the book, or something along that order, you know, somebody's like, it's got a common language. Oh, no, it's, it's a, the folks who've lived in a territory, or no, it's a common ancestry. Or you have like Renan's definition, which I really like. It's like, a, a group of people who have done great things and wish to do great things together. My definition is it's a densely connected subgraph in a social network. What exactly does that mean? A graph, in, in the math sense, it's like nodes and edges, right?

• 47:09Balaji Srinivasan?

  Densely connected means all nodes are connected to all other nodes. For example, if you have four nodes as a subset of a giant graph that has 100 nodes, and those four nodes form a complete graph, they're densely connected if each of those four is connected to the other three. You know, it doesn't have to be a fully complete graph, but it's just a densely connected graph that's much closer to a complete graph than a random group of 10,000 digital nomads might have no connections between themselves. So that's not what I define as a cloud formation. This gets to our original thing about, people are used to using the internet individually and informally collectively, and this is now formally and

• 47:49Balaji Srinivasan?

  collective. If you have a densely connected subgraph amidst a bunch of loosely connected nodes, that's a natural unit of association where these folks should be capable of self-government, right? Because they all kind of know each other. My, my friend Yan Telin, who's like early Skype engineer, you know, very prominent investor and so on, he had a really amazing take on this, which I'm gonna quote, this is, this is Yan's phrase. He's like, Balaji, you know, he's kind of paraphrasing, and he's like, you know, I've been early to three things in life. AI, crypto, and dance.

• 48:23Balaji Srinivasan?

  I'm like, dance. Now, so he's like the investor in DeepMind. Right, right. And, you know, we've both been early on a bunch of this type of stuff. So yeah, I'm like, dance, what do you mean? And so what he meant was basically that when you see, you've probably seen this in movies, but maybe you've seen in real life, you know, let's say there's a couple who's really good at dancing, right? What happens is they're like locked on, you know, like a very choreographed kind of thing. The entire dance floor kind of clears back in admiration and looking at the coordination of these two people. People like seeing other people moving in formation. Or put it in another way, when you can get a group that is very highly aligned, as demonstrated by the fact that

• 49:07Balaji Srinivasan?

  they've, even if you're not consciously thinking of, oh, they must have practiced a lot for that, right? Their motion is pleasing to the eye. But they have, they're obviously quote self-sacrificing, like one person's elbow is not where the other person's face is at that time, you know, that they have coordinated the whole thing. Yeah. That is now something that garners respect from the outside because that's a unit. It's a coordinated unit. You can visually see it's a coordinated unit. These people are all acting together. And so as such, because they respect each other, they gain respect from the outside world. So to a non-obvious extent, this community, if it's highly aligned,

• 49:49Balaji Srinivasan?

  if it can do a dance digitally, right? Where it's moving in formation, that group, now you start thinking of it as a unit. And you both respect them and you don't want to mess with them. If I have to rephrase it another way, it's AI, crypto and social. Okay. Okay. Walk me through that. Because social technologies allow people to coordinate. Yes. Right? Messaging apps, discords, you're allowing people to do this digital dance. One way of kind of putting it all together, have you seen the movie Transcendence? I haven't. With Johnny Depp? No? No. Okay. So I'm going to spoil it for the viewers. Spoilers. Okay, go and watch it. All right, fine. Transcendence is an awesome movie. It's underrated, I think. I think it's a pretty good movie. There's a lot of stuff that I like like this, like surrogates or whatever. They're just good sci-fi explorations of, you know, potential future, even if they're

• 50:33Balaji Srinivasan?

  dystopian, which we can correct, by the way. On that note, digression on digression, many Hollywood movies are dystopian because they steal a base. They implicitly assume the present is okay. And then some tech guy came in and ruined it with their autonomous robots or something. They messed it up. Oh, my God, we had this good Eden going and they came to the garden Eden and spoilt it. Right. And the alternative framing is that the present is dystopian. And there's like a few founders that just might be able to get us out of the situation. If only they could get past the bureaucracy, et cetera, et cetera. Right. And that's a different framing of like implicitly is it is a present bad or future bad. Okay. Point is transcendence is I don't think it's dystopian. It hints at being dystopian early on, but then it actually gets more positive.

• 51:17Balaji Srinivasan?

  One of the things in it is you have Johnny Depp is this AI that coordinates all these human beings. And I thought it thought provoking because it extends the concept of like what you can do with smartphones in terms of coordinating humans to another level, right? Where it's not just, you know, let's say you're an alien looking down at the earth. And you saw like somebody walking in New York, right? And then they suddenly take a right angle turn and, you know, they're just going in a totally different direction. Why? Because somebody in Hong Kong hit some keys to send them a text message saying, oh, no, actually, the office is down the street the other way. Okay. That logic, like if you were some alien observing this, I mean, there's an obvious logic to from our perspective.

• 52:02Balaji Srinivasan?

  But like, it seems like it's a very subtle signal that moved from this person over here. Like backing that out is like really difficult to figure that out. Okay. But in the network, it's very visible. It's like, oh, this person coordinated the sort of person they did a dance. Okay. And if you take that up and it's not just like I send a text message every day or hour or something like that. We're sending packets. Now you can have a bunch of robots dancing in unison like this, right? Or a bunch of people dancing in unison or some combination of people and robots, people and servers. Okay. And you can coordinate. And so transcendence shows like essentially many becoming one, right? This is actually something else that's going in V2 of the book.

• 52:45Balaji Srinivasan?

  There's at least three different ways of thinking about many becoming one. There is, let's call it, there's democracy, right? Which is an aggregation, an election. Many become one because you all vote and then there's decision and it goes out. There's markets where many become one where you have an order book. You have supply and demand, let the market decide, right? You get a price. And there's actually a third version, which is harmony. Right? Many become one because many actually become a single organism.

• 53:16Steph Smith?

  In the case of network states, though, you go from, yes, I understand this collective unison online. What would be the reason that someone would want to go from that online digital collective unison to doing that in the physical world?

• 53:31Balaji Srinivasan?

  One point I make in the book is, look, obviously, I love digital space and so on and so forth. This is something, by the way, which I found the V3 is hard to communicate because people will hear something and they'll immediately bucket it into V1 or V2, but not V3. Okay? So, cloud first, land last, but not land never. Okay? Why do I say this? Whenever I talked about the network state or something like that, people would hear one of two things. They'd either hear, "Oh, it's totally digital. Yeah, that's great. You know, the physical world doesn't matter. We're all online, cryptocurrency, internet, blah, blah, blah." Or they'd hear, "It's purely digital. You moron. Like, you

• 54:12Balaji Srinivasan?

  know, humans are still physical beings. We're still guns. There's still buildings. You're gonna eat online. What are you, you know, idiot, like another tech guy, stupid tech bro, whatever, right?" Okay. So they'll basically hear that it's purely digital. But it's not purely digital. It is a cloud formation that has the ambition of projecting into the physical world. Okay? Just like Google has offices all around the world and your login gets you into any Google office. Right? Why do they have physical offices? Well, they do have meetup points and so on, right? You might argue there's less need for physical offices than there was, but there's still a need for it. You still want to have meetups. You still want to have, you have data centers. You have this kind

• 54:54Balaji Srinivasan?

  of thing. Cloud first, land last, but not land never. Right? Another version of this are like the embassies of a country around the world. Right? Another version of this are like Starbucks chains around the world. Right? Like basically a chain that has restaurants or storefronts around the world. And the examples I've just given are those that are basically commercial real estate or their companies or their states like embassies. But you could have it where it's not a Starbucks or a Google office, but residential real estate. You could have essentially a network of communities where it's not a Google login to enter and you see a Google logo. It's not your workplace, it's your residence, right? You have essentially an ethnic diaspora around the world and you walk in and it's a little piece of home everywhere you go.

• 55:37Steph Smith?

  Right. So I understand that-

• 55:38Balaji Srinivasan?

  Now, why would you want, so why would you want something like that?

• 55:41Steph Smith?

  Well, even more so than that, so I can imagine why a digital community would want to have these physical locations around the world. Google's a great example for offices. I can also imagine an example where it's a bunch of people who want these, yeah, these co-living houses and they just operate around them. But one very important aspect of the network state is the need to be diplomatically recognized. So why that step? Why not just operate within the states that already exist where you have these communities that are digital with a physical element? Why that extra step to be diplomatically recognized in your own state?

• 56:18Balaji Srinivasan?

  Not every business needs to have the ambition of becoming a public company, let alone becoming Google or Facebook, right? It's totally fine to have a sandwich store or a hardware store or something like that. In the same way, think of there being a funnel, okay? So in the book, you know, in V2, the way I'm defining it is network society, network union, network archipelago, network state. Network society or startup society, that's just like one person with a dream, okay? It starts as a one person with a dream and they assemble a small group, right? Then stage two is a network union where they're now able to have that union being able to take collective action, right? Which is a huge step above, like 99.9% of online groups do not have this capability.

• 57:00Balaji Srinivasan?

  In fact, messaging apps, discords are not built for tracking collective action. This is kind of the unification of cryptocurrency and Discord, you will get something that actually tracks that and has leaderboards for people and everybody can see who did what collective action and so on, who participated. There's a karma board, all the type of stuff, right? So the short answer to your question is, there's things that are useful just as network unions and just as network archipelagos that don't need to become full network states. Just like there's things that are useful as hardware stores or small businesses that don't need to become Google, right? What's an example of a useful network union that's, that can do digital collective action? An example I give in the book- Is of like a professional guild. Okay, so it's a guild of designers. And why?

• 57:44Balaji Srinivasan?

  So those thousand designers, let's say they're in a network union. Well, 99% of the time, they're just chatting and they are exchanging info on their latest designs. Maybe each day, somebody says, hey, you know, like, here's my work. I'd love a boost, right? And so, you know, if you think about it, there's a thousand people. So if you have three people a day, each person gets like one boost a year or something like that. Boom. So they can ask for it. They're actually asking for something from the community. In return, they are expected to give to the community and then RT or Fave or whatever. And this is disclosed on their, on their thing. They're like, look, I'm part of this community. I'm part of this network union. We're all signal boosting each other. And then some folks may not be able to put in time, or they may not have an account.

• 58:28Balaji Srinivasan?

  They could put in capital instead. They'd be like, look, I couldn't make it today, but I'm paying my union dues in capital rather than time. And that exchange rate is determined by like the union leader, right? So 99% of the time, this guild, it's boosting its members, it's helping to find those members a job, right? Somebody needs a job, I'm out of work. Okay. And then everybody just, okay, the other 999 people, someone can find them a job right away. Right? It starts to be a very powerful support network, a professional guild. That's why these things existed for many years. We're kind of rebuilding them online. Okay? And that's useful in its own right. And then 1% of the time, that person is under attack online. And then the union leader looks at their bylaws and, you know, it's not an unqualified defense of them, right?

• 59:12Balaji Srinivasan?

  But most of the time, online attacks are distortionary or, you know, they're distorting of some, some kind. So they basically say, okay, this guy's being attacked or canceled or something unfairly. Here's their version of the story. We're going to signal boost that to get them out, get, get that up there because it is actually in somebody's time of need, when their status is lowest, that they need the boost the most. And if everybody in the community acts together, the other 999 people cannot be attacked for supporting this person, right? So you essentially join the union, 99% of the time, it is for like kind of upside. 1% of the time, it's like cancellation insurance, protection against downside, right? So that's an example of a structure that should exist, that will exist, that we're going to see lots of, that's a purely digital structure. And you can do that for designers, you can do that for electrical engineers.

• 59:57Balaji Srinivasan?

  Basically, you'll see all kinds of guilds like this, right? Okay. And that's digital only, though. You don't have to have any physical for that. The next step is like a network archipelago, which takes that capacity for collective action that the network union has demonstrated. And now applies, as I mentioned, to crowdfunding territory in the physical world and having people live together. Now, when even two people from an online community start living together, let alone 10 people, it completely changes everything, right? You know, one concept that I mentioned is like, companies have logos, but communities have flags. And an important thing is if you go to thenetworkstate.com, if you see the logo in the upper left, it is what we call the plus flag. The plus flag stands for new country. Okay. Get it?

• 1:00:41Balaji Srinivasan?

  That's kind of clever, I thought, right? Yeah, yeah, yeah. And because, you know, the plus, every day you're hitting that in the upper right of Chrome, right there. What do you see? The plus? New tab, right? Every single app, the plus is new this, new that, right? So it stands for the principle that one can create a new country, right? It also stands for win and help win, right? Positive sum. So you could imagine each of these people, they're part of this network union, and they want to become part of a network archipelago. And so they're hanging the flag of their community in their room. They're seeing it every day. They've got it on their profile. And eventually they save up the money or the time. They're able to get to a remote work job or something like that.

• 1:01:24Balaji Srinivasan?

  And they're able to find one of the other 999 people in the community and be like, hey, look, why don't we go and get a group house together? And now, let's say there's six people who are associated with this in Boston. They start doing meetups and stuff. They don't live together right away, but they do meetups and other kinds of things. I mentioned this in the book. They start doing meetups, build trust. And you might like three of the people there, but only want to live with two of the people or something like that. Okay? This concept of group houses, hacker houses, all that stuff is a big thing among, you know, kind of younger generation, as you know. Or as your scale increases, you buy an entire apartment building with like 300 people. Or you buy like essentially a small town. And guess what? Now you've got self-driving car town because you have unanimity. You're the self-driving car community. You put 400 people into middle of nowhere Nebraska. Okay, 1,000 people, whatever.

• 1:02:10Balaji Srinivasan?

  And now the roads are all zoned for self-driving cars. You can rip up the roads, you can do whatever. You have root access to the physical world because you have alignment. If you're building a network archipelago, you want to build it on like Burning Man style territory, probably, right? Or at least territory that nobody else wants. There's a website called like landandfarm.com. You can see that there's like properties which on a per square meter basis are like 1,000x cheaper than Palo Alto. You know, why is Cornell, why does Ithaca have higher property values than other things nearby? It's because lots of smart people move there and thereby increase property values by moving there. So these thousand people can make something out of nothing into something. And the same way you can take a domain name that doesn't have any value and turn into something.

• 1:02:54Balaji Srinivasan?

  Because all these pointers are now looking at all these backlinks that are looking at. So capacity for collective action. You have these thousand people, they take a territory in the middle of nowhere that doesn't mean anything. And they make it into something and now suddenly it's valuable, right? This, this dance, right? That collective action turns something that any one person could not have done into something that a thousand people can do together when they're moving as a multicellular organism.

• 1:03:15Steph Smith?

  Just one example, by the way, of that is Chengdu, which I mentioned earlier. Back in, I think it must have been around like 2013 or so, Chengdu was very empty. You know, there's pictures of it back in the day where there's like Deus and one other building and then a bunch of rice fields. And it took one person who ran a coworking space or wanted to open one. And he worked with the locals, he built a fiber line there. And now if you look at Chengdu, it's, I mean, it's completely full, thousands of nomads. And to your point about property values, I think I saw a tweet the other day of someone, a friend of mine who lives there, who basically said that his rent there was more expensive than his rent in Singapore where he used to live. And so, yes, that's a perfect example of where property, as you're saying, that no one cares about can be turned into property that people care about.

• 1:03:58Steph Smith?

  But do a lot of people want to do this?

• 1:04:01Balaji Srinivasan?

  How many people do you need to do Google? What percentage of the world moves to the United States? Tiny percentage, right? That completely changed the world.

• 1:04:09Steph Smith?

  Yeah, I mean, it strikes me that, that there are people who will want to do this. But will they want to move to like rural Utah or some land that no one cares about? I guess you just need a few is what you're saying.

• 1:04:19Balaji Srinivasan?

  A tiny percentage of the world moved to the US. And the example of the United States, though, has been because there was new land, right? So to speak, at least from the perspective of Europeans, there were social experiments. In democracy and capitalism in particular, that then propagated back to Europe and to the rest of the world. Like, the French Revolution, while it was bad, was influenced by the American Revolution. All the democratization, lots of the market stuff, all kinds of things happened in the New World and came back to the Old World, right? To an extent that I don't think people fully appreciate. You know, it's like the Margaret Mead thing, right? Never doubt that a small group of highly motivated people can change the world. Indeed, it's the only thing that ever has, right? I mean, one thing I think is kind of interesting is, just to hover

• 1:05:02Balaji Srinivasan?

  on that point for a second, mass appeal comes last, right? That's like after something is completely being proved out and so on and so forth. And nothing ever goes from 0% to mass movement, or I shouldn't say nothing ever. It is hard to get it to mass movement overnight. And even if it does seem to do that, it is because lots of prerequisites were installed. Billions of people with smartphones, and they've got experience with Instagram, and you've got 5G LTE, and you've got the App Store, and you've got this, and you've got that. That's why TikTok could ride behind all those prerequisites, because people knew what social networks were, they knew what smartphones were, they knew what App Stores were, they knew what a feed was, blah blah. So sliding behind all of those things, I

• 1:05:44Balaji Srinivasan?

  mean, TikTok is like, you know, a good company or whatever, it's well executed. I'm sure people also say it's fireware, blah blah. But leaving that aside, they were not just an overnight success 10 years in the making, they were like 10 companies in the making.

• 1:05:56Steph Smith?

  It's very easy to dismiss this idea of startup societies and then eventually a network state, because there are going to be many failures, just like there are many failures with startups. And then we look at the successes today, but there's, you know, almost infinite numbers of people who tried to build the next Google somewhere in the last 30 years, right? And of course, we see the eventual success. And I wonder how you think about that in terms of the number of experiments that need to happen in order to, you know, see this network state?

• 1:06:25Balaji Srinivasan?

  How valuable do you think plane flight is?

• 1:06:28Steph Smith?

  I don't know. Very valuable, yeah.

• 1:06:30Balaji Srinivasan?

  Very valuable, right? Okay, so click this link, and this is A Century of Aircraft Accidents. And so you can literally see in this graph, it's like as of, you know, August 2022, 28,896 accidents with 159,859 fatalities in basically the last 100-something years of aviation. Okay? 20,000 accidents, fatal accidents, right? And a lot of non-fatal accidents, okay? So the point, I mean, no plane crashes, no planes. No train crashes, no trains, right? No explosions, no internal combustion engines, right? Basically, no risk, no reward. And so, you know, in a big way, like, we have virtualized all risk. And that's progress, right? Instead of all risk, but a lot of risk has been virtualized,

• 1:07:15Balaji Srinivasan?

  where it's just financial risk and so on and so forth. I kind of think people are foolhardy about physical risk, where people will, you know, like, do bungee jumping, or skydiving, or things like that. They'll take risks, in my view, with no reward, beyond just the thrill of it, or whatever. But they'll be averse to, okay, let me try an experimental drug that could save your life, right? You know, euthanasia is legal. In fact, it's like the sixth leading cause of death in Canada. Like, you can kill yourself, but you can't take an experimental drug.

• 1:07:46Steph Smith?

  Mm-hmm.

• 1:07:47Balaji Srinivasan?

  Okay? That's actually a misallocation of risk in the physical world. Instead, an alternate society would lionize those people who took one for the team and took a risk on an experimental drug. This is actually, at the beginning of the pandemic, by the way, we could have had a vaccine in a week. Why? Because mRNA vaccines could be printed out. All that time, over those nine months, was not spent, I mean, some of it was spent manufacturing, or whatever. But a lot of it was spent information gathering on whether the thing worked. There's a way to fast-forward all of that. And that would have been with challenge trials. What's a challenge trial? You have a bunch of healthy, brave volunteers at the beginning of the pandemic, okay? And they get the vaccine, and they volunteer to expose themselves to it.

• 1:08:32Balaji Srinivasan?

  I mean, you could have drafted the military for this, by the way, if you wanted to have groups, people who said, "I will risk my life for the country," or whatever, right? Soldiers, you could have asked for military volunteers to do it. You would have gotten soldiers who would have volunteered, okay? And you could have gotten it from different demographics and so on, because some people are in their 40s and 50s, or whatever, even in the military, right? You could have done this. You could have gotten extremely good data, very quickly, and iterated on it, if you had people who were willing to risk their lives for the greater good, for the health of the population. And of course, you'd pay them, and so on, just like you pay soldiers in a battle, and you reward them for taking this risk for the whole team. And they're not doing it to kill other people. They're doing it to save lives, right? Look, I'm not saying that you don't need a military at times, okay? But...

• 1:09:14Balaji Srinivasan?

  This is actually the kind of thing which is like a brave thing to do, right? Now, that kind of society which is clear-eyed about physical risk-taking, okay? And that is considered the pros and cons, but what it does is it basically says, again, no plane crashes, no planes. I mean, there's a book called The CRC Handbook of Chemistry and Physics. You know what this is?

• 1:09:34Steph Smith?

  I have not read that yet.

• 1:09:36Balaji Srinivasan?

  The CRC Handbook of Chemistry and Physics is the kind of thing that I would flip through in high school. Why? It was basically like printed out math world, or printed out the math portion of Wikipedia before that existed. All the compounds, especially the older compounds, you'd see, you know, smell and taste like cyanide. How did we know that cyanide smells like almonds? There's some guy who took a hit for the team. He was like, "Almonds!" You know, croaks after that, right? Because the old-school chemists were crazy enough to like smell and taste the compounds. That's why we have, you know, that's why we know how to do flavors in foods. It is because somebody's taking the hit to take that test. At some point, it needs to contact this girl. Someone must take a risk at some point.

• 1:10:22Steph Smith?

  Right. No risk, no reward.

• 1:10:24Balaji Srinivasan?

  No risk, no reward. Now, the thing is, this is being pathologized to be like, "Oh, you're encouraging them to take a risk, or you're exploiting them. You're exploiting them to take a risk and so on." Okay, well, like, the issue with this is it kind of assumes that there's no informed consent as possible, you know? If you're not paying somebody to do something, you're exploiting them. If you are paying them to do something, because you're paying them, you're convincing them to do it when they wouldn't have otherwise do it. So you're also exploiting them. Everything is exploiting, other than letting people go bunchy jump and take purposeless risks and self-destructive risks and military risks, and that's all fine. But you can't have calculated risks, right? Okay, so I disagree with that philosophy, and I understand why people have that philosophy, that all other people's physical risk is expectation. But I think it can be done in a proper way, and I think the way to do it is, you start with this online community,

• 1:11:09Balaji Srinivasan?

  you start with a network union, you develop lots of movies. It's basically a content union, okay? You develop movies, you develop books, you develop little short films. All this stuff is open source, okay? Why? It's almost like, have you heard the term devotional content?

• 1:11:24Steph Smith?

  No.

• 1:11:24Balaji Srinivasan?

  It's basically like Bitcoin maximalists in a sense are devotional content. Lots of folks on Twitter are cranking out what I consider devotional content for their hashtag. They're cranking out devotional content, which is here's why my cause is good. Here's why you're bad, right? Here's why I want to abolish the police. Here's why I want to like social security or something like that. Okay, that's, abolish the police is more like the kind of thing that gets you to zealous level, right? Bitcoin gets you to zealous level, devotional content. Okay. So what you'd have is lots of movies like Dallas Buyers Club. Okay, not exactly in that register, in that tone, but like some Dallas Buyers Club and some Limitless. Do you know Limitless?

• 1:12:01Steph Smith?

  I've heard of it. I haven't seen it.

• 1:12:02Balaji Srinivasan?

  Let me describe these two movies.

• 1:12:03Steph Smith?

  Yeah, please do. I've seen Dallas Buyers Club, but please, for those who haven't.

• 1:12:06Balaji Srinivasan?

  So why don't you describe Dallas Buyers?

• 1:12:08Steph Smith?

  So the movie is about a man who happens to get HIV. And at the time, I think there are drugs that potentially could cure him, but he cannot get access to them. Am I remembering this correctly?

• 1:12:19Balaji Srinivasan?

  That's right. Yes.

• 1:12:21Steph Smith?

  Yeah. And it's his fight to basically get that access and also get that access for other people. And I think he basically ends up breaking the law, getting in trouble because he's getting these drugs to himself and other people. He ends up dying, I think, but sorry, another spoiler. But am I remembering that correctly?

• 1:12:36Balaji Srinivasan?

  That's right. But basically the primary agency preventing him from getting the drugs is the FDA, right? And this is based on the true story of like ACT UP, where, you know, people would do die-ins where the FDA was preventing them from getting access to these. I mean, these people were, you know, had this life-threatening condition, obviously. Fundamentally, they're miscalibrated on terms of risk, right? They want to minimize PR risk for themselves, the agency, as opposed to allowing people to take a risk on their own, right? And why is that? It's because media only covers it when a drug doesn't work and doesn't cover it when a drug does work but has been delayed.

• 1:13:17Balaji Srinivasan?

  Calculations of so-called drug lag, you know, like Alex Tabarrok and others have pulled things together on this, right? You know, Daniel Henninger has written about this. Depending on how you calculate it, the number of lives that's been caused by the FDA. Basically, if you have a drug and it was held up by 10 years, and then, once it was approved, it reduced morbidity and mortality by X percentage. That means FDA's delay of 10 years multiplied by that is how many lives it cost, relative to just taking the risk at the beginning and shipping it. All right? Now, there is risk, okay? But, once you start having the ability to take calculated risks, you can move at the speed of software. Basically, do you know, for example, who Banting Invest were?

• 1:13:57Steph Smith?

  They're familiar, but why don't you share?

• 1:13:59Balaji Srinivasan?

  We need to get Banting Invest zones, okay? Banting Invest, they won the Nobel Prize in the 20s, 1920s. Why? Because they came with the concept for insulin supplementation to treat diabetes. They had the hypothesis. They tested it on dogs, okay? Then they tested it on themselves. Then they tested on patient volunteers. And like, you know, it's like a miracle drug, like people jumping out of bed type stuff, right? And then Eli Lilly had like scaled production for the entire North American continent in like two years, and they won the Nobel Prize in like two years after they started. Okay? That is when pharma moved at the speed of software.

• 1:14:42Balaji Srinivasan?

  That is what is possible in the physical world, once we can get a zone outside the FDA, once we can exit the FDA. People don't understand how bad the FDA is. Your entire life, it's like tens of trillions of dollars of values being held back by FDA. It's like incalculable how bad they are as an agency. And we saw this during COVID where they were holding back. I mean, FDA is why we were flying blind in February 2020, because they were holding back the tests. That's why the journos were reporting that, oh, there's no problem. It's not in the US yet. Actually, it was in the US. Why was it in the US? Because... It had actually come in via China and people were not able to run tests to confirm

• 1:15:25Balaji Srinivasan?

  it because they had to get a so-called emergency use authorization from FDA, which was delayed. So what happened was actually some labs actually did civil disobedience, just like Dallas Virus Club, and they defied FDA and they just went and ran the test. And later they got sort of a blessing from the journos, which was, okay, they Russell conjugated it as civil disobedience versus running an illegal test, blah, blah, blah, right? So they, they basically blessed it retroactively. So FDA did not go and crack down on those labs that actually managed to get the testing data out there. Okay. Vaccine could have been had in a week. Okay. The tests could have been there immediately. Fundamentally, FDA is, the problem with it is it's, it's got control over the entire world.

• 1:16:08Balaji Srinivasan?

  The single most important technological problem to solve in the world is the problem of regulatory harmonization. Regulatory harmonization is a process by which a group of unelected bureaucrats in the US write the regulations for the entire world. Just like a small website, right, will outsource its login to Facebook login. Okay. Because, hey, Facebook's big, you know, right? But in so doing, it's beholden to Facebook. You know, I, I respect Zuck, but I also don't necessarily want the login system to be completely at the discretion of some engineer there, right? In the same way, a small country, you know, Czechoslovakia or like some, some small country will outsource their regulation to the FDA, the SEC, FAA, right?

• 1:16:50Balaji Srinivasan?

  And they'll say, oh, well, look, America's regulators should be good enough for us. We're a small country of a few million people. This is a big country. It's got a big market. Therefore, if a company can get through FDA regulation, then we'll approve the product for sale in our country. If the plane can get through FAA, we'll approve for sale. If it can get through SEC, then seems like a decent financial product. We might list it on our stock exchange or something, or allow our citizens to buy it or something like that. This is actually something that is sought by FAA. SEC, FDA, respectively. If you go to their website and look for harmonization, they intentionally convene working groups with all the rest of the regulators in the world to say, use US regulations, harmonize, have everybody singing in unison.

• 1:17:33Balaji Srinivasan?

  Now, the thing is, both big business and big government like this. Obviously, the regulators like it because when you become a federal regulator, you're not doing it for profit, you're doing it for ambit, right? Ambit in like the scope, like, you know, ambit's the same root as ambition, right? You know, it's like a relatively uncommon word, but it's like the scope, extent, or bounds of something, right? So if a CEO wants maximum profit for their company, a regulator wants maximum ambit for their regulatory agency. They just want scope. I'm like the most baddest, you know, biggest regulator around, right? FDA brags they regulate something like 30 cents out of every dollar. They like brag about this, how big their regulatory ambit is, the most powerful regulatory agency in the world.

• 1:18:17Balaji Srinivasan?

  It's a food and drugs administration, literally everything you put in your body, every bite you take every single day is regulated by FDA in the US and around the world, right? So the power is absolutely immense. We have bionic eyes, they exist. We have super soldier serum, it's already real. Do you see that poster mine? No, I didn't. There's a little mouse on the left-hand side, and there's a myostatin null mouse on the right-hand side, okay? And then the second row, that's the chest of the mouse on the left and the mouse on the right. And that's literally like Captain America before and after. That paper is coming, came out like 15 years ago. People have known about myostatin null, literally this one, if you just inhibit myostatin, there's different ways of doing it, you can do knockdown, other stuff,

• 1:19:01Balaji Srinivasan?

  and there's other things, folliostatin, blah, blah. You could make somebody basically naturally jacked. And you know, the side effect would be because muscle is metabolically expensive, they'd be able to eat whatever they want. And of course, people say, oh, my God, you know, there'll have to be side effects. It's like Icarus, we flew too close to the sun. Well, actually, no, they don't have to be side effects. Yes, it might be plane crashes, but we eventually figured out how to get aviation basically without plane crashes. In the same way, you could figure out dosage, and with enough volunteers, enough people, you could probably get like- Very effective, either natural or artificial steroids or equivalents that would make somebody naturally muscular and fit. Just like we take caffeine every day. It's a known drug with known pluses and minuses. You have something that's like that, right?

• 1:19:45Balaji Srinivasan?

  This is just like one example. I can give like 50 more. Okay. The point is, the FDA is holding back so, so, so much. So that is like why you want a network state. Okay. So Network Union, as I mentioned, so you know, the progression, Network Union just does things digitally and collectively. So it's like a, like a guild working together, right? A network archipelago, now you're getting offline territory. But some things do, yes, require changes in law. So that's the highest level. A network state is something that has a collective action, capacity and the content, which aligns people, has the physical footprint and it has like the square meters of physical space. And then the last step is it gets big enough and strong enough and morally aligned enough, it can do the dance, right?

• 1:20:29Balaji Srinivasan?

  That a city or state or country recognizes it and does a deal with it. Okay. And what are the precedents for this? So like Wyoming has its DAO law. It's literally built an interface effectively to the Ethereum network, right? Or El Salvador, Bitcoin's a national currency there. So it's built an interface to the Bitcoin network. Or Nevada has, you know, done a deal with a lawn for the Geiger factory, right? So that's like there. Okay. Or Amazon with HQ2. Google tried something like this with Sidewalk Labs. It got pushback, but the concept was there. Okay. Point is that lots of these sovereign entities, cities, states, countries, or let's say not lots, enough of them, okay, have been doing deals with companies and digital currencies

• 1:21:14Balaji Srinivasan?

  that there is feasibility there. And so what you'd want is you want a group of people, which is large enough, motivated enough. Maybe it's A thousand people, maybe it's 10,000, maybe it's 100,000, maybe you need a million people. I don't know the scale of it. That's an empirical question. That they can go to all of the different mayors and governors and maybe presidents of the world. Cause it's a parallel process. That's the awesome thing. You're no longer just negotiating with just the US government, et cetera, right? Forget them, like the US federal government will be the last mover on everything. Like, everybody's over indexed on, "We need to reform the US government." No, you need to exit the US government. I shouldn't say ignore, but just assume they can do nothing good.

• 1:21:57Balaji Srinivasan?

  Okay, assume they can do nothing good and basically just focus on the other 96% of the world, right? Who are not American and the enormous part of the US which is breaking away from the US government. Meaning, you want to try to get a sanctuary city for biomedicine. A sanctuary city for cryptocurrency, a sanctuary city for self-driving cars, where federal law is not enforced, right, officially.

• 1:22:27Steph Smith?

  And is it not enforced only along that plane? Or is it, you are creating completely new sets of laws?

• 1:22:35Balaji Srinivasan?

  Well, it's both. So basically, the thing is, you can do this both within and outside the US, right? Outside the US, harmonization is rejected. Inside, so basically, the unelected bureaucrats of Silver Spring, Maryland, no longer have power. But why do I say that? Because those bureaucrats, I mean, for example, when Facebook is criticized, you know who runs Facebook? It's Zuck, right? You know he's in control of it. He is like attacked by name constantly. People personalize it, "It's Zuck's company, blah blah." Can you name a single person who works at FDA?

• 1:23:04Steph Smith?

  No.

• 1:23:04Balaji Srinivasan?

  Right. Despite the fact that every single bite you take every day is regulated by them. There's zero personal accountability, okay? If they're ever criticized, it's this abstract thing of the agency which has billions of dollars in annual budget and essentially infinite hit points, can't go bankrupt, right? It has appropriations from the government, right? You know, so no individual is ever accountable there. They're not accountable to the electorate. There's no elections, okay? And they're not accountable to the market because they have career tenure and can't be fired. And they're anonymous. They're not even accountable in terms of public criticism. So it's this totally unaccountable agency that determines everything you eat and drink, your vaccines, your drugs, your this and that.

• 1:23:45Balaji Srinivasan?

  And has delegitimated itself in its performance over COVID, where it held back the vaccines. And also, you know, the Johnson Johnson vaccine got held back by like a few weeks over some stupid scam. Like, you know, the problem, by the way, with the COVID conversation around like vaccines is either being like, yay, everybody is forced to take the vaccine, or, you know, oh, my God, vaccines are a world economic forum conspiracy, clash, et cetera. And what there hasn't been is option three, which is, we needed this in a week, and we could have like essentially gotten them to the vulnerable first, even if manufacturing needed some time to scale, which it would have. You get them to like the elderly rapidly, right? And you could have avoided like a million dead.

• 1:24:28Balaji Srinivasan?

  That million dead is on the FDA's head, like because challenge trials could have been done, you know? And so that's like a different interpretation of the problem with this, right? Now, the thing is that no country around the world has this formulated in quite this way. That's to say, despite the fact that these are, you know, ostensibly sovereign countries, they don't have the narrative that A, FDA is illegitimate and or delegitimated. And B, also, and this is important, I want to make this important point. I'm not saying zero regulations and a total free for all of all kinds. I'm actually saying a V3, right? So I'm not saying just end the FDA, I'm saying exit the FDA, just like you didn't just end the Fed and replace it with nothing. You're ending the Fed or exiting the Fed and replacing with Bitcoin.

• 1:25:13Balaji Srinivasan?

  The reason being, just to talk about this point for a second, because I think it's important. I've just spent all this time tearing the thing down. Now, let me give something to it to build it back up again. People want a regulated marketplace in the sense of they want a regulator that will do star ratings, like quality ratings of, you know, most actors and bans of bad actors, right? So you get a star rating, one to five stars on something, you know, that's a product in the market. And the zero star bad actors, the scammers are just like kicked out of the market entirely. One way of doing that is a national state-based regulator, like FDA, FAA, SEC, et cetera. Another way of doing it, which is actually not thought of as such, but it's really important,

• 1:25:53Balaji Srinivasan?

  is a cloud-based international regulator, like Amazon, eBay, actually even Gmail, Apple, et cetera. How are those regulators? What do you mean? Well, Obviously, Amazon has star ratings. eBay has star ratings, and they also kick bad actors, right? And they kick bad actors on the merchant side. Uber and Airbnb are also regulators. They're international regulators. They're better than the taxi medallions or the hotel regulators because Uber is tracking every trip. Right? They're giving star ratings on both the driver and the passenger. They're checking that payment can go through and that the passenger is good for it and so on. And then they are decommissioning people who have low ratings on either side or are abusive. This is just, in a sense, a much more intrusive regulator.

• 1:26:38Balaji Srinivasan?

  No taxi medallion could possibly do anything like that. Right? They do a, I mean, a very cursory inspection every six months that the windshield wiper still works. They're not getting reviews from every rider, certainly not collecting them in real time. It has to be like an accident for them to actually write up that taxi driver. It has to be a right tail kind of thing. So the state-based, paper-based regulator is fundamentally less efficient than the cloud-based international regulator, which also has data from around the world. Moreover, it's inefficient in a different way where typically we think of the state-based regulator as adversarial to the industry. Right? Oh, the taxi regulator is supposed to be adversarial to the taxi companies, keep them in check. What actually happens is they form a duopoly against the customer. There's a cozy relationship between the taxi regulator and the taxi drivers,

• 1:27:23Balaji Srinivasan?

  since the taxi drivers sort of, they get to know the regulator, but the taxi riders just flit in and out, you know? Like taxi riders have nothing in common besides driving a taxi, but the drivers keep meeting with the regulators, eventually form social bonds. In the same way, the FDA is, in many ways, adversarial to pharma companies, but it's also cooperative with them against startups and against patients who want novel treatments. Okay? So Uber and Lyft actually changed this, Airbnb changed this, because now you have a regulator, customer, provider complex. It's Uber, the regulator, the Uber driver, and the Uber passenger versus Lyft, the regulator, and the Lyft driver. For the passenger, right?

• 1:28:06Balaji Srinivasan?

  So the star rating and the provider are linked together and the efficiency comes from competition between regulators. It is, it's what's called polycentric law. Okay. So it is within the same jurisdiction, you have choice of law. Okay. I pick the Uber app or the Lyft app or in another country, Gojek or Grab, right? You have choice of regulator, right? Now, even two choices is better than one. Yeah, I get that it's duopolistic in some ways, but there's other like ride sharing apps and so on, right? That's a model where you're not saying no regulation whatsoever. You're saying a choice of regulator. Regulators are actually incredibly valuable, like these are multi-billion, multi- because the reason being because people want to pay one price to enter a market. The diligence regulators say that's a legit regulator, that one isn't.

• 1:28:49Balaji Srinivasan?

  And then they don't want to go and test every product in the market. They want to know it's at a basal level of quality and look through it. Otherwise, you have a situation where every coffee you get at Starbucks, you need to put a dipstick in it to see, you know, is this poisonous or not? So the point is, the V3 combines aspects of the V1 and the V2 to get like a third version. For example, with Bitcoin, right? It has aspects of gold, which people talk about, but it also has aspects of fiat. Why? You can send it across borders, you can represent it digitally, you can program with it and so on and so forth. You can't do any of those things with an inert block of gold. So it's digital gold, right? It is not just a dumb, you know, throwback to V1. It's not competitive as V1. V2 beat V1 for a reason.

• 1:29:34Balaji Srinivasan?

  V3 takes the good aspects of V1 and the good aspects of V2 to make something that's better than both. Right? This would be a V3 where, yeah, you don't want the totally unregulated market for patent medicines and scams and so on and so forth. They had great upside and they had great downside. We also don't want this, you know, harmonized environment where unelected bureaucrats just impose uniformity on everything and no one can take any risks and it's so risk- Intolerant that it's the riskiest of all, right? Because if you don't take small risks, you end up taking the biggest risk, which is not taking risks and then you you you just you never explore anything new and you can't adapt, right? So the V3 says, no regulation is bad, but this regulation is also bad and we can do

• 1:30:18Balaji Srinivasan?

  better with cloud regulators, right? International regulators. And what would that look like? Again, just to go into the FDA example, because the reason I go into this in great detail is this is one of the most motivating things as to why we need new states, right? There's a certain level of innovation you can get to that's sub-sovereign and there's a level that you actually need sovereignty for of some kind, at a minimum sanctuary city for biomedicine. Some governor, right, could put their state on the map by saying, this is a zone where, let's say it's Texas, right? They say, guess what? Approvals will now go through UT Austin. Because the thing is, the reason is you need some name brand, right? That the people respect locally to be the regulators. Okay, we've got some scientists there. We've got some physicians there and so on.

• 1:31:00Balaji Srinivasan?

  So you have some reputable brand in this jurisdiction, which is taking over review. So you're really not changing that much. What you are doing now is you're introducing the crucial thing of competition between regulators, right? And you might say, oh, this is, you know, biomedicine, I don't know, man, like, you know, bio is like really important. And the thing is, people just don't know about this market, okay? But basically, routes outside the FDA, like right to trial laws, like CLIA Labs and the LDT pathway, like compounding pharmacies, off-label prescription by MDs and countries that aren't fully harmonized with FDA. For example, you go to Germany for stem cells. Each of these things has been attacked by FDA. So off-label, people think it's bad, right? But there's a, there's a good, you know, article called like assessing the FDA by

• 1:31:44Balaji Srinivasan?

  the anomaly of off-label prescription, right? I think this is by Tabarok, which is worth reading. This is almost 20 years ago. And essentially, his point is that while off-label sounds bad, oh, right? It actually means that a doctor can prescribe a drug for some purpose other than what the FDA approves it for. And that's actually the way that like all kinds of things. seem to work. Once you understand the degree to which FDA holds things back. Once you understand that they have harmonized the whole world. Once you understand democracy doesn't work in this case because they're not up for election. You've never run an election on the FDA. Okay, markets don't work because they can't be fired. They're not like a company. They don't go bankrupt. So whether you believe in an electoral or market theory of accountability, they are completely unaccountable and anonymous, right? The press isn't holding them accountable either, right?

• 1:32:29Balaji Srinivasan?

  So you can only exit them and you need a new technique to exit them. That can be outside the US. You get places like Germany and so on to to allow for stem cells. You you get places that allow for biomedical treatments that the US is holding back. Right? Or it's inside the US and you're having sanctuary cities, just like sanctuary city. They won't enforce federal immigration law. Right? So precedent has been set. And in fact, actually, states are diverging from the federal government on education, on gun laws, on abortion laws, on marijuana laws. Like if medical marijuana can be legal, why can't, you know, like every other kind of experimental drug that you might want to take be potentially legal? Right? And obviously you have some framework around it. It's not no framework, but finally you have choice.

• 1:33:14Balaji Srinivasan?

  You have something that's outside this monopoly of the state regulator. Right? Again, unelected and unfireable. I mean, there's so many other reasons I think that we need innovation on sovereignty. But that alone is how we get to life extension. That alone is how we get to transhumanism. We get to brain machine interface. We get to limb regeneration and super soldier serum and all this stuff. There's so much stuff that's being held back. Okay, like by, I mean, that's why you see articles constantly like scientists have discovered X, right? You're like, wow, that's amazing. You're like reversing this guy's aging by like 10 years. Their hair is repigmenting from from gray to black. Right? Here's an example of that. Because people have to see this stuff because they don't believe it otherwise. Right?

• 1:33:57Steph Smith?

  They don't have the same exposure. If you don't see the examples outside of your reality of FDA or

• 1:34:07Steph Smith?

  Non-self-driving cars, or whatever society that you live in, it's impossible to even imagine that there are these other realities.

• 1:34:13Balaji Srinivasan?

  Exactly. It's Bastiat's point, "Seen and unseen." Are you familiar with that?

• 1:34:17Steph Smith?

  I think so. I didn't realize that was from him, but yes, exactly. Like, it's impossible to imagine those realities until you see it. And then it's like this spiral of, wait a minute.

• 1:34:26Balaji Srinivasan?

  That's right. It's basically, it's like, you know, it's basically something where it's like, I show people. So for example, take a look at this thing that I just sent you.

• 1:34:32Steph Smith?

  One, it says patient image pre-treatment and patient image post-treatment. And yes, exactly like you said, it's like gray hair. The man looks like he's in his 80s to a full head of brown, black hair.

• 1:34:44Balaji Srinivasan?

  People don't understand that we're not like within 10% of optimal or something like that. In many areas, we are 1,000x, 10,000x, 100,000x off from what is possible, right? You know, people said the pandemic was not going to be something. And it's like, you know, millions of people were affected by it. Like, it takes years to build a train station in the Bay Area, and it takes less than a day in China. That is not a, oh, they're 10% faster. They are literally 100x faster, maybe 1,000x. If you're talking one day, or like, let's say, nine hours, right? Versus a year, okay, that is about 1,000x faster. It's just a totally different thing. You know, your cost, by the way, the cost of everything comes way down

• 1:35:28Balaji Srinivasan?

  because it's now a subroutine. You can just invoke that. Boom, boom. Okay, train station, train station. Clone stamp like this, right? Versus the completely antiquated kind of thing in the physical world in the US. And all of that is the state. All of that is the state holding this back, right? And so ways to exit the state and gain sovereignty are how we reinvent the physical world. And in a sense, by the way, we talked about the V3. You know, Thiel has talked about how we can innovate in bits but not in atoms, right? And what the network state is, is among other things, it's many other things, but it is a recipe for using bits to reopen innovation in atoms.

• 1:36:04Steph Smith?

  Well, yeah, I think, I think that's a really important point because it's easy for people to see the exponential difference between physical and digital. A simple example is, physical mail can take days, weeks, months. Digital mail takes seconds, right? So, so they can see the delta there. But I do think it's hard for people to imagine that exponential delta within the physical world because it feels slower inherently. But I think the train station example is... Showcasing that, yeah, it's not going to happen in seconds. But there is a massive delta between what we have in certain arenas and what we could have.

• 1:36:40Balaji Srinivasan?

  Yes. So, you know, a friend of mine, when I showed him those videos, he's like, okay, you reset my belief in what is possible, right? This is senior executive at a trillion dollar company. Didn't know, you know, he's like, this is why we're doing bits and so on and so on. I'm like, atoms are actually possible

• 1:37:01Balaji Srinivasan?

  in other places and times, right? So other places, I'm showing China here where there's a thousand X. There's another link that's worth looking at, which is Patrick Carlson Fast. Patrick Carlson.com/fast. That's also worth putting up on screen where he goes to other times and shows that the US used to be much faster in building things. And by the way, people will say, oh, China's authoritarian. That's why I can build fast. We're a democracy. We, you know, they're basically making a virtue out of incompetence, right? That's actually not the case because quote unquote, the US was a democracy. I mean, if you think the US was a democracy mid-century, it was able to build fast then. I actually do argue that's part of the nature of the political system, but it's not necessarily democracy versus authoritarian.

• 1:37:43Balaji Srinivasan?

  And in fact, actually, the democracy of the mid 20th century America was quite authoritarian. Right? Democracy like capitalism or Christianity or communism is so capacious a term that can mean both X and its opposite. Communism, for example, meant kill all the capitalists. And then it means capitalists can be in the Communist Party, right? Christianity meant tear down the Roman Empire. And it also eventually meant have Christian kings and build a holy Roman Empire. Like democracy means tons of different things over time periods. Like the ancient Greeks thought democracy, there's a great book called Against Elections, The Case for Democracy. It's a hilarious title, okay? And it basically says that the ancient Greeks, they use a mechanism called sortition rather than election. Do you know what that is? It's like

• 1:38:26Steph Smith?

  No.

• 1:38:27Balaji Srinivasan?

  Random selection from the population and any, they drew lots. And so your president could be anybody from the community. What did that do? It eliminated the whole process of running for office. And what it also did is it kind of ensured that you had to maintain a high level of virtue in your community and actually a high level of equality because anybody could be the leader. And, you know, at first it seems like a crazy system. But the awesome thing about history is, you know, people estimate there's a hundred billion people who've ever lived, right? You have one life. And so just like we look at other places in the galaxy and we know what our star system looks like, but there's like dual star systems and black holes, all these crazy things in the huge expanse in, in space.

• 1:39:11Balaji Srinivasan?

  There's this enormous expanse in time where there's other configurations of humans that are totally counterintuitive to our current orientation. We think, we know this current state. Well, it doesn't work anymore, but let's say this current state of affairs kind of works. At least the ones that we've always, always known over our tiny window of 20 or 30 or 40 years on the world. But when you take the hundred billion human lifetimes and look at all these other configurations, like other star systems, you're like, oh, that's how elections used to work. That's how regulation used to work. That's how it worked here. And you can pick little subroutines from there and say, this was compatible with human nature back then. And maybe we can update it and make it work in the present day.

• 1:39:49Steph Smith?

  One thing that you brought up, which is important is this idea that there, there has to be the potential for a challenger. So like, if you take the taxi example before, it's like, yeah, I could choose person A's taxi or person B's taxi, but I didn't have an alternative outside of the taxi system. And something that's coming to mind is as we talked about the lines drawn around the world, or at least within our lifetime, or let's say my lifetime, they've been mostly fixed, obviously outliers, but mostly fixed. And to me, that reminds me of this idea that there, there are many people around the world who just assume that there is no challenger. And we've seen that competition drives innovation in many domains. And so it's almost fascinating to just imagine that we can get to potentially exponentially

• 1:40:34Steph Smith?

  better societies if we do have challengers. But there's almost like this underlying assumption that there aren't. There are challengers within the societies that we have, but not challengers to the societies.

• 1:40:46Balaji Srinivasan?

  I mean, just to talk about this for a second, like the US establishment is currently Fighting, has been fighting simultaneous conflicts with tech, with half its population, with Russia, with China, with, to a lesser extent, with Israel, India, Hungary, France, Brazil, with the Brexiteers in Britain, with Web 3 now, and with crypto. Like, it's just fighting on so many different fronts at the same time. At the same point, it is printing tons of money. And in many ways, its state capacity has fallen through the floor, where SF takes 20 years to reopen a bathroom. Or, you know, I had this thread where it's like a trillion-dollar disaster for the F-35.

• 1:41:30Balaji Srinivasan?

  And like, the Zumwalt, this is, you know, like this Navy ship, and that's a disaster. And a Ford-class carrier, another multi-billion, like incredibly expensive things that we just sort of were numb to it. Because you see another $100 billion here, $100 billion there, a trillion dollars here, a stimulus here. It's just money being thrown down a rathole. It's like a kid who, I mean, one of my points, you know, there's an article I wrote called "Founding vs. Inheriting." One really good way of thinking about the current US government, and the US establishment really, because more than just the US government, the reason that it can't execute, partly because it hasn't had competition, but partly because it's essentially inherited monopoly from better men. If you think about the difference, think about a founder who sets up a factory, okay?

• 1:42:14Balaji Srinivasan?

  They pass it down to their heir who passes it down, and it's just cranking out widgets and churning out money. And it's a great-grandson or whatever of the founders inherited the factory, okay? One day, and so it seems like the thing is working. It's, you know, DuPont brand widgets or something like that, right? And the great-grandson has the famous name, and he's got the money, and everybody looks at him legally as a legitimate heir of that founder. Because, hey, look at here's all the documents, the chain of custody or whatever, right? Then one fine day, that factory has to switch from making widgets to making masks, or like servers, or something new. It has to do something new. This great-grandson does not have the skill of the founder. They cannot change the assembly line. They don't know what they're doing.

• 1:42:59Balaji Srinivasan?

  Neither do the career managers who have been hired over the time. Like, the ability to do something from scratch, to do something new, that was the domain of the founder. So all these people are just running systems that men better than themselves set up. Years and years ago, right? They're not the founders or the heirs. And so we understand this within the context of a factory that the like great, great grandson of Rockefeller or DePond or whatever is not Rockefeller or DePond. I mean, in one sense, like, you know, half your genes go to your child and then half again and half, more generations you go down. It's not like the same person anymore. It's like one, one half to the nth power and generations down, right?

• 1:43:41Balaji Srinivasan?

  So not the same person, but they are legally, they're legitimate. They're just not competent. They were selected for legitimacy, but not competence, right? Conversely, if you select for competence, but not legitimacy, that's like someone taking over the factory, blam, blam, blam, hostile takeover, or not even hostile takeover. That's at least a legal thing. It's like seizing the factory. Maybe they're actually good at operating it, but they're considered illegitimate. The society is like, you just stole it from them, blah, blah. Okay. That's like, for example, nationalization of oil fields and stuff like that, you know, with various independence movements, this kind of thing. So what you want is both legitimate and competent and simply just identifying that as an axis, right? Legitimate and competent.

• 1:44:21Balaji Srinivasan?

  Well, that's why you need to have refoundings because nobody would have elected a lawn to run Tesla or elected Mark Zuckerberg to go and at 30 something years old to run a 3.6 billion communication network. He could only have proved it by doing it, by founding it, right? From scratch. So the from scratch aspect is so ridiculously important. And that relates to all of our current institutions because they're decades, in some cases, hundreds of years old, and they're just built for a different time and by better men. The, the people today, you know, like George Washington organized like the armies of the United States from scratch, right? The NYPD was at one point organized from scratch, right? Even FDA or whatever was organized from scratch at one point, right?

• 1:45:03Balaji Srinivasan?

  These organizations are now so many generations down that they're just inherited by heirs. Okay. And sometimes they're literal heirs in the sense, and I talked about this in the book in the founding versus inheriting chapter, I just pasted in here. But sometimes they're literal heirs in the sense of like a DePond or a Rockefeller or, you know, like Sulzberger, who's inherited the New York Times from his father's, father's, father's, father's, father, right? Like five generations. And by the way, just on that, I do talk about that in the book. It's like, there's this great website that you should check out. It's called tech journalism is less diverse than tech.com. And the point being that actually, the journos who endlessly talk about tech diversity, and so it's far less diverse than tech itself, right?

• 1:45:45Balaji Srinivasan?

  A lot of these tech journalists are basically employees of some East Coast nepotist, who has inherited millions of dollars and/or a newspaper and is funding their whole operation. So they're meritless nepotists and/or employees thereof, who are attacking the self-made, right? And once you see that, you're like, oh, these journos are basically like dogs on a leash. They're hitmen for old money, right? Assassins for the establishment. They have no legitimacy whatsoever. It's literally old money attacking new money. The merit lists attacking the merit, you know, the meritocracy, or the more meritocratic as privileged. It's like actually this amazing inversion when you apply that lens to it. The thing is, this entire establishment has, you know, it's declining legitimacy, but it has legitimacy, it doesn't have competence.

• 1:46:29Balaji Srinivasan?

  And so it can't innovate, because it's not selected for founders. Like, if you were a founder, but you go to the US government, or the US establishment? No, that's the whole point, is you can't found anything. You can't, like, your career ambition is to try to paste some language into an 1,100-page bill the night before it gets approved in a vote where nobody reads it, right? Like, and it's deployed to the entire country. It's, imagine if that's how Google was coded. Some giant political meeting, blah, blah, and someone like paste in some JavaScript. Obviously, that could be malware. Obviously, it could be self-interested. Obviously, that's not like the way to test something, to roll it out, to deploy it. Like, future historians will look at our current time and these institutions as so insane in many ways.

• 1:47:14Balaji Srinivasan?

  Like, just one example is the thing I just mentioned, where you're deploying code to 300 million people that you haven't read, you haven't tested in the sandbox, you haven't got any, you know, room for iteration. The people who are responsible for writing it aren't responsible for implementing it. It's like, totally broken on that level. On another level, you're voting for somebody, and the contract isn't binding. They give some campaign promise, and they say they're gonna do something, they're not gonna do it. It's literally like buying something that's labeled "milk" and getting "orange juice." That's fraud in the commercial, you know, in the commercial setting, that's fraud. Right. So electoral fraud is when, I mean, the most routineized version of it is when a politician says they're going to do X, gets your vote on that basis and does Y. Then people say, oh, that's

• 1:47:58Balaji Srinivasan?

  representative democracy there. I'm like, well, your vote literally didn't count and your vote doesn't count. There's literally, you have no recourse. They've got like, where it's, you know, some form of immunity, right? You basically, you cannot sue them for not voting your way. Right. So it's all completely symbolic. I mean, those are just like two examples, like ridiculous examples of how bad the current system is. And so you cannot fix that system. You have to figure out a way to get outside it. Why do you want to get outside it? Well, I mentioned the FDA is a huge motivation, but there's lots of others. You want self-driving, you're going to need sovereignty. Do you want drone delivery? You're going to need some form of sovereignty. Do you want like, you know, to be able to have nuclear power, you're probably going to need some form of sovereignty. Like Wyoming is pushing some of this. There's good things happening in some places. They're like accelerating it. You want to innovate in the physical world, you're going to need some

• 1:48:43Balaji Srinivasan?

  form of sovereignty. One of the big recipes of the network state is not to say, T L's correct observation, you can innovate in bits, you can't innovate in atoms. You can build a billion dollar business online, you need a billion permits to build a shed in San Francisco. That is true. We reconciled that tension by using bits to innovate in atoms, by building this aligned community online. And the alignment is ridiculously important. They need to do the dance, right? They need to coordinate and choreograph together. They need to be able to, if they can't all hit like on something, they literally can't do anything else. But if they can do that, then they might be able to do a lot of other things. You've turned them into a multicellular organism. Right. The content is also really important. It's not just the code, it's the community and the content as well as the code. Right. So all the messaging they're putting out, the Declaration of Independence, it actually had that thing at the beginning, which says, a decent respect to

• 1:49:27Balaji Srinivasan?

  the opinions of mankind requires that they should declare the causes which impel them to the separation. Okay. That's a really critical thing. Essentially, something that tech people underestimate and undervalue is that something like 10 or 20 or 30% of your actions, you need to allocate like at the header, just like HTTP headers, right? You need to allocate space for the moral justification for what you're doing and almost everything you're doing. Basically, let's just say first order everything. Right. It's almost like, I'm doing this because, and then you do it. For example, if you're fighting back on Twitter. You might think that everybody has seen the full context of the whatever number of tweets and attacks and so on back and forth.

• 1:50:11Balaji Srinivasan?

  You basically have to assume that most people are coming in with absolutely zero context. And in your limited space, you need to include the reason that this person, you know, like this person attacked you in the first place, you're defending yourself, and then the attack. So you're literally, this very spare space, spare capacity you have there, you have to put your justification for the attack, or the counterattack, or the defense, before you actually do the defense, right? In the same way, for every product, that moral justification, we are doing this because X is good and Y is bad, right? That is there, and that is like, you know, just baked in, whether it's a logo, or it's a slogan, or it's a mission statement, or it's a catechism, or whatever you want to call it. I call it the one commandment, right?

• 1:50:55Balaji Srinivasan?

  Which is your moral differentiation from society at large. That tells you, okay, society at large has gotten something wrong, we're going to get it right. And to get it right, we're going to need to shape the physical world. So you use bits to come to consensus. And you say, this group is now aligned, we need self-driving. Why? Because the current NHTSA is an abomination. The current thing of tens of thousands of automobile deaths a year is an abomination. We have the technology to fix it. We can't just retrofit the roads necessarily. Why? Because it's like trying to send maybe electrical power over a water line. Okay? The current roads were not built for self-driving. If you built a town for self-driving, it would look totally different.

• 1:51:37Balaji Srinivasan?

  You would have, the roads would have sensors instrumented there, they might be segregated farther away from human, you wouldn't have like, human crossings of the roads, all kinds of things, you can engineer your way out of the problem, where you just assume the road is completely self-driving, everything changes in terms of an engineering thing. You're not trying to send electrical power over a water line. That's one of the reasons self-driving is so hard, is you have to assume all of this legacy baggage there. If you could take that away, it could be easy. And in fact, we know this to be the case, because guys like Rio Tinto, this is a huge mining conglomerate, even as far back as like 2013, on closed roads. On private mines they were running, when they're the only ones who are running the miners and trucks, they just run them all from Perth in Australia. They can run the mine remotely,

• 1:52:22Balaji Srinivasan?

  okay, and move the things around because there's no one else on the road, or because it's a private road where they know all the cars on, right? This is a great example, the self-driving car zone. You have this moral commandment, you align people with their bits. You get that alignment, and then they go and take physical territory, and they just relentlessly negotiate with enough governments until they get a sanctuary city, or they get a de-harmonized zone, and they don't just replace it with nothing, they replace it with a new regulatory paradigm.

• 1:52:46Steph Smith?

  One clarifying question. So when you say that they develop their own regulatory framework, is that just, using the example of self-driving, is that just around self-driving, or is the intention that they regulate or re-regulate everything, from education to taxes, etc., or is it embedded?

• 1:53:03Balaji Srinivasan?

  Right. So the one commandment concept is, I think it's a useful thing in the book, it's actually one of the more important things in the book. So I'll get the short version and the long version. The short version is, you cannot change everything in society at once, but you can also not give up completely on societal change. So just like a startup sets out to fix one thing, right, in the market, a startup society sets out to fix one moral failing of society. Okay? So you're not saying, okay, profitable, unprofitable, you're saying good, bad. You're starting with a moral premise. It's not a market premise. This is really important. Like, a lot of DAOs, for example, will start with a market premise, and they'll be like, hey, you can all make money, come here, right?

• 1:53:47Balaji Srinivasan?

  And, you know, what it reminds me of is that scene from Idiocracy, you know, the guy's like, "You like socks and money too? Wow, me too!", right? Like, you know, it's like, these are like the human universals where there's absolutely no community there. People are just there for the money, they're there when airdrop, right, when token. It's like joking, but it's like, you know, dogs, like, waiting for some scraps, and they just grab the scrap and then run off, or whatever, right? And so there's nothing in, that's not a real community. That's just a bunch of people who are just there for an airdrop or something like that, right? So join a bunch of discords for the airdrop, whatever, right? So starting money first is wrong, right? Money comes, it's a superstructure on top of a community.

• 1:54:28Balaji Srinivasan?

  Okay, it's a way for the community to represent its debits and credits between each other. And that's why you see a bunch of these coins just drop to zero because there's no true community. There's speculation on whether they build a community and then it drops to zero because they don't build a community. One way of thinking about it is, so One Commandment, what are examples of One Commandment? So I mentioned the Digital Sabbath example, right? Where you're saying, look, technology is good, but you can have too much of a good thing. Just like, you know, highways, I think the internal combustion engine is good, cars are good, generally, I mean, electric engines are even better, whatever. But you could overdo it, where San Francisco, for example, had a highway that blocked access to the waterfront. And so you had overdone it, so you say, I'm not against cars, I want a V3 that takes

• 1:55:13Balaji Srinivasan?

  away that highway, so we have a walkable waterfront. And so in the same way, you're like, look, I'm pro internet, but I'm not pro internet all the time with all the notifications, so we have community support and we say we're offline 12 hours a day. And internet is cut 12 hours a day. And everybody's now, just like the weekend, synchronizes people, and they're like, okay, we have Saturday and Sunday off, right? The Soviet Union actually tried making it so that they could work seven days a week. So you had Mondays and Tuesdays off, and somebody else had Tuesdays and Wednesdays, and somebody else had Wednesdays and Thursdays. They tried these kinds of experiments, okay? And the problem is that there's a utility of everybody knowing that Saturday and Sunday are off, generally, means you don't have the coordination. Imagine you have to schedule your weekend like that, and you could never overlap with somebody else, okay?

• 1:55:56Balaji Srinivasan?

  So coordination, and everybody picking the same defaults, totally changes things. Once you have everybody except in this community that I'm offline 9pm to 9am, guess what? That changes the community. Okay, hey, guys, let's go and, you know, we'll go for a run, or, you know, we're all gonna have a outdoors dinner, or something like that, I don't know. You could figure out the exact timing, and maybe on the weekends, it's actually like, you're offline 12pm, like an entire day you're off, or something like that, right? And this is offline day, and we're gonna all do things, right? And so once you have that coordination, just like the weekend, new things arise out of that, when you can assume everybody's pointing to the same thing. Literally, new societal adaptations arise.

• 1:56:38Balaji Srinivasan?

  And the thing about this is money runs out, but a moral premise doesn't. Being part of that community, if digital Sabbath is important to you, being offline some of the day is important to you. If, you know, like, just, okay, everybody knows I'm offline and it's okay that I'm offline. And as this community expands, like more and more societal conventions, people know not to email you then. If you're offline, by the way, 9pm to 9am, 95% of jobs will be fine, right? Like some jobs or whatever, you need to be a site reliability engineer or something like that. Maybe it's more than like more than 95%, right? Like, most jobs don't expect you, you know, that's only like plus four hours or something like that relative to where normal working times are. Because people expect you to be asleep eight hours, something

• 1:57:19Balaji Srinivasan?

  like that. So 9pm to 9am, you should be pretty much okay, even outside your society. But as it grows, it becomes a million people, it's a totally different world, you know? Like, all kinds of things get scheduled for offline time versus online time, the coordination thing. This is a resource that doesn't run out. Money runs out. Morality, a moral premise doesn't. This is differentiated from the outside world in like a permanent and persistent, interesting way. It's like a wellspring that doesn't run out, right? Another example, keto kosher, okay? So you've got a network archipelago, by my definition. So you don't just have an online community, you've crowded from the territory, and you're treating sugar like cocaine, okay? You're interditing it at the border. You're literally not allowing, so every store and

• 1:58:04Balaji Srinivasan?

  every restaurant is not filled with high fructose corn syrup and chocolates. Because what you have, you have these really sophisticated corporations that have set it up so that when you're at the checkout line for something, you're hit in the face for five minutes with some, you know, chewy chocolate-like sugary kind of thing, right? So the point is like to wear down your resistance. You just want to be on a diet or something and avoid sugar. But it's like, literally, these experts from Madison Avenue have set up something to be maximally tempting to you and put it in the checkout line. So you're looking at it the whole time, right? Sort of trying to whittle it down, right? Against that giant corporation, your community collectively can provide some resistance.

• 1:58:48Balaji Srinivasan?

  By setting the defaults in a different way, right? Now, you know, what I'm describing there is like sort of outside of the normal like left, right kind of spectrum, right? Because you're talking about a community that's in the interest of the community. It's neither, you know, it's neither left or right. It's like, it's basically something which is just for what the community's values are, right? And what they would do is they'd say, okay, no sugar at the border, just not there. You have healthy food, you have lettuce, you have fruits, you have tomatoes, you have other kinds of stuff. Every meal is healthy. You know, you don't have to ask, what are your dietary restrictions? Everybody's now snapped to grid. It's not, I'm offline 9pm to 9am. It is, I am snapped to grid on a different thing, which is I'm either full keto or I'm just very low sugar or something like that. You can imagine variants of this. There's keto kosher, there's the paleo people, there's the carnivory community.

• 1:59:33Balaji Srinivasan?

  You could also have the vegan village, which is as different from the carnivory community as both are from mainstream society. But I would bet that both the vegan village and the carnivory community would both be far healthier than, you know, McDonald's eating mainstream America. Do you know what I mean? Like, they're quite different from each other, but those are both self-conscious. Vegan village, they're eating lettuce and tomatoes and stuff, carnivory, they're eating at least, they're eating like real meat and stuff, but they're not eating this processed horrible stuff, right? And so probably 20 pounds lighter, 30 pounds lighter. Okay? And this, again, this is a resource that doesn't run out. When you join that community, that moral premise where you have inverted something that society said was good, you're saying it's bad.

• 2:00:19Balaji Srinivasan?

  Society said it's good or at least acceptable to have sugar. You're saying it's actually morally bad. And everybody in your community agrees with that. So you get social support for that. The defaults are set for that. You literally need to travel outside of your day, outside of town to go and pick it up. It's literally like getting drugs, right? So you've now got several levels of defense. And this is, again, it's morality focused, right? And, you know, what's interesting about this, by the way, just to put it on, to relate to something else. Mike Moritz, famous investor at Sequoia, he's like quasi-retired now, famous guy. And he has this saying, which I think is very clever. That all of Sequoia's best startups, they satisfy one of the seven deadly sins.

• 2:00:59Balaji Srinivasan?

  Okay, so it's like sloth, or gluttony, pride, lust, et cetera, right? And what he means by that is it's really hard to build a company. And so you need to satisfy some sort of visceral drive, right? The more intellectual, the more academic, the more idealistic one's view of human nature, like, we will all gather to deliberate on X, right? The less likely that is going to be a thing, right? Not impossible, but less likely. And so, once you start doing this, you can actually take a lot of startups and you can map them. Tinder is lust, Twitter is wrath, Instagram is pride, and so on and so forth, right? Uber Eats is like gluttony, right? And many things, productivity apps are arguably sloth or whatever, right?

• 2:01:42Balaji Srinivasan?

  Because that, it is hard to build a company and you do want to align it to a visceral drive. The problem is that the seven deadly sins are sins for a reason, because you can overdo it, right? The reason they're sins is they all relate to lack of self-control. And the, I mean, you have lack of self-control, well, that's bad in various ways. You're fat, you're not on a diet or something like that, you spend too much money, you know, you get mad when you shouldn't get mad. Like, not being in control of yourself often means, if you don't have self-control, other control is imposed on you, others will control you, right? If you don't control yourself, others will control you in some way, which is bad. The other issue is that, once these companies get really big, they're no longer simply like fighting for survival and they have this visceral drive. Instead, they're kind of actually creating the deadly sin.

• 2:02:26Balaji Srinivasan?

  Netflix, you know, this is an offhand comment, I'm not like holding it against them or whatever, but they did say something like Netflix is competing with like having wine with your wife.

• 2:02:35Steph Smith?

  Right, they're competing for your time.

• 2:02:37Balaji Srinivasan?

  Yeah, but they said it-

• 2:02:38Steph Smith?

  The attention that you have.

• 2:02:39Balaji Srinivasan?

  Yeah, yeah, it's like this famous quote, it's like, competing for all of your time, including like wine with your spouse or something like that. It's meant to be tongue in cheek, but it's also true. It's like, people would rather have that than Netflix most of the time, right? So the issue is that these companies, once they get to a certain level, are exacerbating genuine, like, sins, right? And in many ways, America's become, not just America, the West, where there are lots of the world, has become like a quote sinful society in that sense, right? Where people are being pushed out of their desired- Self-control by these companies that are pulling them in these directions for private profit. Right. And now, again, I'm like, you're like, wow, this is a really different tone from you. I thought you were like a super capitalist, pro-profit VC kind of person.

• 2:03:21Balaji Srinivasan?

  I am, but I'm also really fundamentally a community person with, you know, both capitalism and democracy, by the way, are tools, are conflict resolution tools. You know, democracy is elections, capitalism is markets. But like, within a family, or even within a company or a community, not everything is an election or an auction. Many things are just a decision that is arrived at organically, where people are just aligned, they're harmonious, you know? It doesn't have to be, like, it's a conflict, you've got multiple competing options, be it an election, be it to have an auction, because if people really want this, they want to bid on it. Lots of things can be allocated by community if you have a real community. What's the opposite of the seven deadly sins? Well, keto-kosher is the opposite of gluttony. Right? It's satiety, right?

• 2:04:03Balaji Srinivasan?

  Digital Sabbath is like, I mean, it's opposite of several things, but it's probably the opposite of like wrath. You're not getting mad on Twitter, it's opposite of sloth, you're getting out of the house, right? Rather than being, you know, online all the time. And so now, the opposite, in some ways, the startup company is saying, look, it's hard to build a startup, so we have this visceral drive that we're satisfying. Here, what we do is we actually flip it. And probably you could take the seven cardinal virtues and build a startup society on each of the seven cardinal virtues, you invert the Moretz thing, right? And again, I'm not critiquing Mike here, like, his framework is a good framework in the sense of satisfying those visceral desires, but any good thing can be overdone. Okay, and I think we've overdone it in some ways. How do you bring it back? These startup societies, as opposed to startup companies,

• 2:04:48Balaji Srinivasan?

  have a moral innovation that may start with the seven cardinal virtues, or there's other things that are like this in other religions. The seven cardinal virtues is from Catholicism, but there's other religious kind of things. You take one of those, and you're like, keto-kosher is attacking the gluttony problem. How are we doing this? The community is giving you support. Our one commandment is, sugar is bad, right? And then that one commandment, by the way, leads to other things. If sugar is bad, continuous glucose monitoring might be good. So everybody gets CGM meters. And now you're snapped to grid in a different way. You can assume everybody in the society, 1,000 people, 10,000 people, 100,000 people, have continuous glucose monitors. And maybe they all opt in in some privacy preserving data sharing way to say, here is the glucose response of, you know, when I eat lettuce, I get this result. Then you go further down the tech tree.

• 2:05:33Balaji Srinivasan?

  Hey, I'm not just monitoring glucose. I'm monitoring my vitamin D levels and this level and that level. So you get a quantified self community out of that. Right? So, once you have that moral innovation, the moral innovation actually enables the technological innovation. This is something that we've sort of forgotten because what's happened in modern society is the technological progressives and the political progressives have separated. And the moral innovators who are coming up with new slogans online are different than the people who are making new technologies. In the past, that was actually one movement. For example, public health, right? In the early 1900s, the moral innovation was like cleanliness is next to godliness. Let's not all be filthy and so on. The technical innovation were like sewers, right? Hand washing and all that type of stuff, right? And those two things went hand in hand.

• 2:06:17Balaji Srinivasan?

  That moral innovation doesn't cost you anything. But it does mean you actually have to be concrete about what you believe in that is different than society at large. And I'm not saying come up with your own 10 commandments and your whole new religion. I am saying, however, one commandment, just like a focused startup has one thing. You have one commandment like sugar is bad. And then you can take that, you build a community out of that. And then you'll get your second and third and fourth derivation from that, like the CGM stuff and so on that comes out of it. Right? And that's just one example, but in this fashion, everybody has one thing that they think, maybe a few things, but often they can identify one thing they think of as like the problem with US society. Like they might say, oh, people are gambling too much on coins and assets and so on and so forth. They might say people are eating too much or people are too mad online.

• 2:07:00Balaji Srinivasan?

  They're canceling each other or they're too lazy and they're not fit or something. A lot of these things line up with the cardinal virtues thing I was talking about. Right? Or Tinder encourages like bad personal relationships. And we need something that's, you know, like much higher commitment level and much more courting beforehand. Right? Everybody has some critique of society like this. And now you can be president of your own startup society. Okay, you can start solving that problem because you set up your shingle, your one commandment, you have your whole set of graphs and charts, all your historical arguments that say why you actually think this is bad. You're willing to put this at the top of your Twitter profile and defend this in public, okay? Because people will, the thing is, you're arguing society is wrong, right? You're arguing you are right, society is wrong, and then you recruit a community of like-minded people that believe in this, and then either

• 2:07:45Balaji Srinivasan?

  it's online, or it's offline, or it's some combination, or you start getting territory. And then maybe you eventually need like a sovereign recognition to become a full network state, but even a network union or network archipelago can get very far. You are solving the problem for yourself. You are, remember the thing we were talking about, the bastia, the seen and unseen, which you mentioned, you are now making the unseen scene. You are showing in this sugar-free zone what the impact of sugar is on the sugar full zone. Everybody's 30 pounds lighter here, right? Diabetes has dropped X percent. Everybody's like much better looking, oh my god, right? Whatever, right? You know, like they have just let all these other conditions maybe go away when they're not overdosing on sugar all the time. And so that thousand people reforms a million people, 10 million people, because they make movies about what they're doing.

• 2:08:28Steph Smith?

  I like the analogy, or almost the framing of evidence over confidence, right? In the societies that we have today, they tell us what should be done, and perhaps the best way to to actually show an alternative is through evidence, right? So through these small societies that show, not say, what is better.

• 2:08:46Balaji Srinivasan?

  That's exactly right. And basically, the key thing is, so I mentioned the term president of a starved society, president of a network society, okay? The number of people in the world who could feasibly become president of the United States is actually, so you have to be like 35 years old, natural born American citizen, some other requirements, okay? So only 4% of the world is American, and so apply those requirements, it probably chops it in half again, right? Let's say it's maybe on the 2% of people could become president. And we're told this thing in school that anybody can become president and so on, but it actually means 98% of the world cannot become president of the United States. And even the president of the United States cannot actually fire these regulators who have career tenure and so on and so forth. There's a whole to do over that, right? Schedule

• 2:09:27Balaji Srinivasan?

  F. And practically speaking, first, 98% of the world cannot actually become president, and that president doesn't even have power in these regulatory agencies. So the current pathway cannot fix those regulatory agencies. There is no path to reform within the system. It's literally like... Making Blockbuster into Netflix, right? Making Barnes and Noble try and become Amazon. Making BlackBerry into Apple. You couldn't do it. You just disrupted. You had to build the alternative system, right? You could not have turned England into America or the UK into America. You had to build America, right? So now, though, you declare yourself president of a starved society. And guess what? The vast majority of the world, they'll all laugh at you. LOL, look at this idiot like, oh, your president is so... Right?

• 2:10:10Balaji Srinivasan?

  You know, it's like, you know, basically imaginary president. And you want that. You know why you want them to do that?

• 2:10:16Steph Smith?

  Because they won't stop you.

• 2:10:18Balaji Srinivasan?

  Exactly.

• 2:10:18Steph Smith?

  If you do have enough power, if you do have enough attention, then you are actually putting friction between you and your goal for a period of time.

• 2:10:25Balaji Srinivasan?

  That's right. So like the whole Gandhi line, which is overused, but it's also, you know, first day laughing. You want them to laugh at you, right? They're not taking you seriously. You know what? Because here's the thing, you don't need to win an election. You do not need to get 51% support. That thing you were mentioning at the beginning of will the majority go this? Everything doesn't have to be calibrated to whether the low attention voter can be convinced of this premise. And actually, the way they're convinced, here's another deficit of the current system. It's all acting. You're increasingly seeing people who are selected just for being influencers or actors in a literal sense. You know, whether it's Al Franken, or it's Trump, or it's Reagan, or it's... You have folks who are literally actors and are selected for their acting ability to be politicians.

• 2:11:09Balaji Srinivasan?

  But actors are liars. Like, we don't think of it that way because actors are procedures. A liar is not procedures. But an actor is a very skilled liar. They're incredibly convincing on camera. You believe they have that emotion. They blend into the character and then cut and they stop crying. Just get a tissue, they're like, all right, what's my next scene? You know, like that, right? And so you're selecting for politicians that are liars. Because, you know, there's that saying like actions speak louder than words. They actually don't. Online, words speak louder than actions. You know why? You see the Twitter feed of, I don't know, AOC or like, you know, any other politician, whatever. You see their Twitter feed. What most people are not looking at anywhere near us constantly

• 2:11:53Balaji Srinivasan?

  is not just their voting record, but their actual actions. Their actions are not legible in the same way. One of the things that crypto does, by the way, is we're going to be turning the LinkedIn resume of self-declared things into a feed of crypto credentials that is awarded to people by you. You close a sale, you get a crypto credential. It's an on-chain proof from your CEO at the time that you closed a sale for this amount at this time. You solve a math problem, you get a crypto credential from your professor, right? So you now have a machine-readable, on-chain resume that's provable. It's not simply assertions. It's timestamped, it happened at the time, it's digitally signed by that person. Now, actions start speaking on the same scale as words. And now you can start award, because there's a feed of them.

• 2:12:37Balaji Srinivasan?

  It's visible in the same way as the words online, except it's on-chain. And now you can actually start filtering your society by those people who actually are doing actions and not just words. Or actions plus words, right? Actions plus words is valuable. Actions alone is valuable. Words alone is usually not as valuable. And so, you know, you put this together and what you've got is something where your concept of evidence over confidence is really good, because confidence is the confidence of the actor, it's also the confidence of the confidence man, okay? Evidence is the evidence of one's own eyes. And here's the thing, you don't have to go and move to the society. You can tour the society. You can tour it in VR. You can tour it online. In fact, a good startup society, as I mentioned, you know, 20, 30% of your case is making the moral case for what you're doing.

• 2:13:20Balaji Srinivasan?

  They're constantly preaching their case from scratch, over and over again. Just like you're constantly pitching your startup, right? That tagline that you've heard 10,000 times, that person on the other side is hearing once, the first time, right?

• 2:13:35Steph Smith?

  Yep.

• 2:13:35Balaji Srinivasan?

  So you're constantly making their moral case, you're making it in videos, you're making it in content, because you're recruiting people to your community. But even more than that, you're trying to set an example for the rest of the world. And they may not adopt the entire thing, okay? They may not say, oh, you know, well, look, Digital Sabbath, we can't be offline 12 hours a day, but maybe we'll do eight, or some silly iteration thereof, right? But that's good. It's just like Google's example of using Linux eventually forced reform on Microsoft. And now they own GitHub or whatever, right? That would never have been done within the organization. The reform had to come from without. But it was reform, it was, but it was practical reform. It wasn't saying, hey, let's rely on this thing to change. You have the 1,000x, you have the people exiting to that jurisdiction, you have the loss of faith in the old, but you also have the building up of faith in the new, and that

• 2:14:20Balaji Srinivasan?

  forces reform.

• 2:14:21Steph Smith?

  Yeah, I think the parallel to startups is really illuminating in the sense that Every startup, as you said, has some sort of tagline, some sort of minor thing, minor at the time that they're founding, that can extend. It has inertia, in some cases, all the way to Google. In some cases, it ends up just being a bootstrap startup. In some cases, it's somewhere in between. And they, similar to the idea of these startup societies, are often ignored. And then, as they get bigger and bigger and bigger, they become too big to be ignored. And then there's other routes at that juncture, too, right? Some of them are absorbed and bought. Some of them continue to ascend and actually overthrow the existing company in that space.

• 2:15:02Steph Smith?

  And so, yeah, I think it's really interesting to consider that many of these startup society ideas will sound silly to many people at first, but they do become something, or they evolve over time, or they can evolve.

• 2:15:16Balaji Srinivasan?

  That's right. And basically, like startups, startup societies are like startup companies in this way, where startup companies, as I mentioned in the book, it's like, if you think of Twitter or SpaceX, right? Twitter sounded insanely trivial. SpaceX sounded insanely ambitious. Okay? Oh, 140 characters, breakfast tweet, and what is this, you know? And SpaceX sounded, okay, yeah, sure, you're gonna beat NASA? All right, good luck, right? So essentially, they were at opposite ends of the spectrum, but they're both now like $10 billion companies that have changed the world. One of them was considered too trivial, but it was infeasible. Lots of startup things are like that, where they're just outside the origin window, and all of it is in the execution. And so, you know, this guy, Idan Levine, had this great tweet where he's like, what is like the craziest thing?

• 2:16:00Balaji Srinivasan?

  And he's like a fan of this, so he's like, what is the craziest thing that would work as a one commandment? And that's a really good question.

• 2:16:07Steph Smith?

  What is your answer to that?

• 2:16:08Balaji Srinivasan?

  Oh, I mean, there's gonna be things I couldn't even predict, right? I mean, the obvious stuff is like, language communities, you know? Like religious communities, you know? You're gonna have, for example, like, Rob Dreher has this book called The Benedict Option, right? If you want to be a religious Christian... Guess what? Now you can actually do that. And you don't have to impose your values on the rest of society. So it's that V3, right? You're not imposing Christianity on people who don't agree with it. Nor are you seeing your Christian culture eroded or what have you. You go and gather with others and you actually go and crowd for terror and you practice and you actually live that holy life. And that's always harder to do in practice than in theory. People will, if you heard the term trad, right? People will LARP being trad.

• 2:16:52Balaji Srinivasan?

  I know that's two internet abbreviations in one, okay? But they will sort of pretend that they're like super traditional or whatever online because they inhabit this sort of fantasy world. But the actuality of how the trad stuff interacts with modernity. You know, for example, in Judaism, there's something called like modern orthodox, right? I don't know if you've heard the term, right?

• 2:17:13Steph Smith?

  Modern orthodox.

• 2:17:14Balaji Srinivasan?

  It's basically, it tries to synthesize like traditional orthodox Judaism with the modern world. And it has to make interesting kind of trade offs for that. You know, when you actually build that society, maybe it'll be pleasing, maybe it won't be. And the way you can test it is whether it attracts immigrants from the rest of the world, right? In fact, there's this really, here's something, this is going in V2 of the book. This is new content, okay? Ready for new content? Take a look at this pretty cool video, okay? And then here's a visual version of it, so you can see it in a graph, okay? Let's click the second link first. The population rank of every US state over 100 years, okay? And actually, there's a better version of this that goes all the way back to 1770. This is only over 10 years. You can watch that YouTube link as well, which kind of has an animation of this.

• 2:17:59Balaji Srinivasan?

  The thing is that the US has had something where, especially over 200 something years, different states have been like number one and the ones that are pulling in all the internal immigrants from other places, right? People talk about the US as a nation of immigrants. And that is talked about as coming from other countries. But there's two wrinkles on that. First is, it's not just a nation of immigrants, it's a nation of immigrants, right? Total logically, every immigrant emigrated from somewhere, so they left. Why did they leave Poland or India or Iran, right? Or China? Sometimes it's leaving like communism, like China, or Nazism fleeing Germany. Or you're leaving an economic basket case like India was. Or you're leaving, you know, just for, in search of a better life, like many people are, right?

• 2:18:43Balaji Srinivasan?

  But fundamentally, the people who leave are not the wealthy necessarily. What they are are the politically powerless. This is really important, by the way, because people say, "Oh, Balaji, all your exit stuff, it's all about like rich guys leaving and leaving guys holding the bag, blah, blah." And I'm like, "Have you looked at the profile of immigrants globally?" Like, they are not on balance the wealthy, right? In fact, the wealthy and powerful have big houses and political power in places like San Francisco, and they control the government, whereas the new money, right, the immigrants are the ones who do not control the government and thus had to leave San Francisco because

• 2:19:27Balaji Srinivasan?

  they could not get YIMBY through, because they could not fix the streets or whatever, because they got attacked, because they got priced out, and so on and so forth. So those who leave are not those who are financially wealthy, those who leave are those who are politically powerless, right? And once you look at it, they are often those who are, in a sense, fleeing, right? I mean, one way of putting it is, and this is kind of reduction out of the term, and it may seem like a digression, but entertain me, was Stalin rich?

• 2:19:51Steph Smith?

  Depends in what part of society.

• 2:19:55Balaji Srinivasan?

  Well, the thing is, it wasn't money, right? In fact, there's a Quora quote or something, I'm not sure if this is true, but it's very plausible, like, you know, Stalin didn't even have change in his pocket, right? But he could walk around and it's like, "Grand Theft Auto, you just carjack a car," right? That's like how Stalin and like the nomad clitoris walked around like the Soviet Union. They just had like root access to everything. They could commandeer your house, sometimes your wife, you know, like your farm or whatever. That's what collectivization meant. It was the people, and it was the people, it's the Communist Party, and it's the nomad clitoris that controls everything, right? So was he rich? No, he was powerful, right? Meaning, a wealthy person must still persuade, right? They're giving you money for something and you can reject that offer or not, but the powerful can compel.

• 2:20:39Balaji Srinivasan?

  So persuasion versus compulsion, right? Convincing versus coercing, those are different things. So was Stalin rich? No, he wasn't rich, he was powerful. And once we acknowledge that as a limit case, right? You can pull it back and be like, "Okay, actually, power is a different axis from wealth." And there can be people who are powerful but not wealthy, there are people who can compel, who cannot convince, and vice versa. Those who control territory are those who are powerful, and those who set the laws are those who are powerful. If you could set the laws, why would you leave?

• 2:21:06Steph Smith?

  Right.

• 2:21:07Balaji Srinivasan?

  You wouldn't, right?

• 2:21:08Steph Smith?

  There's no incentive.

• 2:21:09Balaji Srinivasan?

  There's no incentive, you're setting the laws, this is all bespoke, made to you, blah, blah, blah. Why would you leave, right? This is, you've carved out some stupid, you know... Bailout or something like that, you know, you're not seeing the folks who own housing in SF and who have been blocking housing. Those are not the folks who are leaving. It's the new people who are leaving, right? The politically powerless are leaving. And so the reason this is important, by the way, is often things are framed as masses versus elites. Or like, these rich elite are leaving. It's actually typically, it's at least three groups. There's masses, there's elite, and what Peter Chichen calls the counter elite. That term is a glorious term because it clarifies so much, right?

• 2:21:51Balaji Srinivasan?

  Basically, you don't get into this silly kind of situation of saying that someone who VC, you know, millionaire, or like a tech founder, or like a biomedical, you don't get into this silly game of like, are they elite or are they mass? Instead, they're the counter. The tech folks are a global meritocratic group relative to like, basically, the white nepotists of the American establishment. Now, I'm not the kind of person, by the way, who thinks white is an insult. Okay. But the US establishment does. So, once you kind of apply that lens, you see how many of their businesses, how many of their media corporations, how many of their East Coast kinds of things are either literally inherited, in the sense of like, passed by father to son, like the New York Times company, like Salzberger to Salzberger, five generations,

• 2:22:35Balaji Srinivasan?

  or informally inherited, like the Kennedy name, the Pelosi name. It's not East Coast, I mean, she's on the West Coast, but like, you know, these are like famous family dynasties, right? A very large fraction, if you go to that article, founding versus inheriting, there's a paragraph there, which is like, I say, now, of course, someone who attends political office isn't always a familial heir, though it's more common than you might think. And if you click those seven links, you'll see an article on so-called widow succession, hereditary politicians, history of wives replacing their dead husbands in Congress, the Kennedy family, the Bush family, the Clinton family, the Roosevelt family, and the list of the United States political families. And there's actually quite a lot of them, right? This is also, there's this movie, The Distinguished Gentleman,

• 2:23:20Balaji Srinivasan?

  which is about like, name recognition, you know? So, America has an ability.

• 2:23:25Balaji Srinivasan?

  It has de facto like hereditary titles. That's a huge advantage in running for office is that hereditary name of being a Kennedy or something like that, right? And so against that elite, that hereditary elite, sometimes in the literal sense of inheriting a media corporation, these what I call the meritless nepotists, right? And just calling them that, by the way, scales fall from the eyes. So much becomes clear. Old money against new is an eternal story. It's literally the old money calling the new money rich. That's like literally what it is. Okay. Once you kind of see that, you're like, okay, it's elite versus counter elite. And what that will probably mean is the US establishment wins within the territories

• 2:24:09Balaji Srinivasan?

  of the US that they control, but they lose outside. There's parts of the US that I think become more sanctuary city like, you know, diverging in different ways to the left and to the right of the federal government. And there's countries outside that diverge away from the federal government. And so what happens is the US establishment will have more power over fewer people.

• 2:24:28Steph Smith?

  Well, something that comes to mind is, I think I heard you say something along the lines of Google News basically made every magazine compete with every other magazine.

• 2:24:37Balaji Srinivasan?

  Yes.

• 2:24:38Steph Smith?

  Or every other blog, compete with every other blog. And I want to hear your take on how certain technological shifts like remote work, you know, we can relate this back to the network state, but even separate from that, changed the game in terms of every state or every city competing with every other city out there for talent.

• 2:24:55Balaji Srinivasan?

  The US is a nation of immigrants, but it's also a nation of immigrants where the people who left were those who are politically powerless, as we just talked about, from other countries. But it's also a nation, and it's not the financial, it's the politically powerless, but it's also a nation of internal immigrants. Less appreciated is the degree to which the number one, two, three, and four states in the US have been in flux over time. They have attracted people and repelled people and so on. And looking at that over time actually tells a really interesting story. Again, you know, we live. Twenty, thirty, forty, fifty, six, like if you're very old, you've seen some of these ups and downs, right? But once you take the window that's longer than a human life, because we've got data going back. Remember my thing about a billion, hundred billion people have lived. If you go back, you get more data.

• 2:25:39Balaji Srinivasan?

  You only have one life, right? So let's, why don't you get some leverage out of that, right? That's what history is. It's leverage, right? Financial leverage in a sense. It is alpha, okay? Other configurations of humans worked. So you look at these charts and you see, oh, wait a second. Like in the 1800s, Ohio was a really big deal. It was like one of the top states attracting lots of people. Like Pennsylvania, you're like, oh, yeah, that was like when it wasn't the Rust Belt. It was like making stuff, right? Like the higher river, all this stuff was like really important. And then you come forward and you see New York was like, for example, the very beginning of the US, Virginia was big. And now you kind of vaguely remember this, if you've read any early American history, you'll hear people talk about like, and as a Virginian, you know, like state identity was actually a big deal then.

• 2:26:22Balaji Srinivasan?

  Why? Because we have to warp back, but in the like the 1700s, individual what are now US states, like Pennsylvania was settled by like William Penn and his followers and like Massachusetts Bay colonies, like the Northeast and Virginia is like the Cavaliers and, you know, Ty... All these different districts, right? And I just like the sub-colonies. They were as different as tech companies were in like the year 2008, right? So you have Larry Page and Google, you have Zuckerberg and Facebook, you have Steve Jobs and Apple, you have Bill Gates and Microsoft, you have Jeff Bezos and Amazon. These are founder-run companies with different cultures and different personalities and so on.

• 2:27:06Balaji Srinivasan?

  Now, today, now that four out of those five companies have had their founders leave, right? Now, today, Microsoft, Google, Amazon and Apple are much more similar than they were 10 years ago. A lot of people have the resume of, I did three years here and two years here and three years here. But like big tech is its own thing. Facebook is the outlier because Zuck is still a founder and so he can actually do big things like rebranding to Meta that can take risks, okay? Point being that putting those states together, like Virginia was an identity of its own, like Virginia was a whole thing. After the Civil War, it went from the United States are to the United States is. Like, these states lost more of their individual identity and became like a federal

• 2:27:48Balaji Srinivasan?

  government, like a, like a union where they were just administrative subdivisions, right? And even more of that was knocked down over the early 20th century and the great central, you know, FDR did another big step with the 10th amendment basically being repealed. Everything that was supposed to be left to the states was now something where you could set up these regulatory agencies like the FDA and so on. They just said, hey, everything is interstate commerce, therefore the federal government regulates anything, right? So all this centralization happened, but even during this period, even during the high centralization, you still have people moving between states. And now you have something like Florida that's been coming up over the last 20 years and it's really with the Miami thing and so on, it's really giving California competition, right? But that's not something that just came out of nowhere. If you look at this graph, the visual capitalist graph,

• 2:28:30Balaji Srinivasan?

  you see like Florida's been gaining traction for decades. And so it's an overnight success, like, you know, 50 years in the making. You see with this is that internal competition of this kind between administrative subdivisions is very important for keeping things healthy. And this is the, remember that we're talking about like the different Leviathans, this is the poly status model as opposed to the mono status model, right? There's always a tension between these. Okay. There's this whole Chinese saying, which is the empire long united must divide, long divided must unite. Why? Because when it's long united, you have stultifying bureaucracy, harmonizing, like I was talking about, it's not responsive, et cetera. Then you decentralize, you divide. Then what happens? You have a period of, oh, it's all chaotic. Oh my God, I wish we had common sand, et cetera. So then you reunify.

• 2:29:13Balaji Srinivasan?

  Oh, wow. We've reunified. And then there's a honeymoon period. And so each time there's like a honeymoon period of, wow, we've got our independence. Oh my God, it's chaotic. Oh, let's reunify. Oh my God, it's sclerotic. Oh, let's divide, right? So it goes in cycles like this. And that's not to say that you come back in the same place. One of the points I make in the book is the helical theory of history, where from one axis, it looks like progress, from another axis, another projection, it looks like going in a circle. But if you look at it from outside, it's like, you know, maybe it's a x of t equals cos t, y of t equals sine t, z of t equals t is the parametric equation for helix in like three space. So it's cyclical on some axes and it's, you know, linear on others, right? So you are still making progress sometimes, even if it seems like you're going in a circle

• 2:29:58Balaji Srinivasan?

  of uniting, dividing. Bring that to the present day.

• 2:30:02Balaji Srinivasan?

  What we are going through and what we are going to see is much more polysatism. And the network state is a way of not just using the existing administrative units like Florida and what have you, but setting up new ones. Imagine a United States where you couldn't just found a company, but you could found the next California. Let's say to first order, the 34 million Californians own California. Okay, like this huge territory, right? The 500,000, let's take a smaller state, Wyoming, like about 500,000 Wyomingans or Wyomingers. I actually don't know what the, I'm sure someone will be like, it's

• 2:30:35Steph Smith?

  I don't either.

• 2:30:36Balaji Srinivasan?

  Yeah, it's like, you know, Wyoming guy. I don't know, like something like that, right? Okay, 580,000. Yeah, so it's the smallest city in the United States. So 580,000 Wyomingans basically own Wyoming, right? They could, in a sense, crowd fund Wyoming. Let's say, I don't know the exact ratio, but let's say on the order of 80 or 90% of Wyoming territory belongs to Wyoming residents. It's just some out of state holdings, some Chinese holdings, but let's just say, okay, first order. That's interesting because what that suggests is 500,000 people that you unify in an online network society, network union, network archipelago, could have a territory that amounts to the territory of Wyoming, just spread out.

• 2:31:18Balaji Srinivasan?

  I could actually found an administrative unit that competes with these other administrative units. And the key thing is that because I'm being able to buy a piece of territory that aren't connected to each other, I don't have to expand it in one place, right? This is a key insight, like I talked about this in the book, that the big thing about the nation state, see, you know, there's city states, nation states and network states. This is again, the V3, right? The city state was like this independent unit. It was innovative and so on, but it got beaten by the nation state. You know why? Because the nation state had scale, you know, what we now think of as Italy and like the language Italian, most people in the Italian peninsula, people argue that most people didn't speak Italian at the time that Garibaldi was unifying Italy. Eric Hobbes argues that at the time of the French Revolution, most people in France didn't speak what we now know as French.

• 2:32:03Balaji Srinivasan?

  They spoke other dialects, other languages, right? Germany, you know, Bismarck unified Germany and there's a whole thing in the 1800s called the German question about, you know, whether like Hanover and Austria, like how would, how would they actually interact? It's sort of like, you know, who would run the American republic would be Virginia or it would be the capital would be in DC, right? Garibaldi unified Italy after the French Revolution, France got unified and homogenized. The state actually shaped the nation because now all those people have no memory. Of a time when their ancestors spoke a language other than French, right? The nation and state have an interplay where the state has all this power. So it can actually reshape the nation and rewrite people's brains like Men in Black, you know, like Flash, you know, now the children are educated by the state. And so the state shapes the nation. There is a feedback effect, right?

• 2:32:48Balaji Srinivasan?

  It's sort of similar to the whole currency argument. What comes first? Barter, you know, or is it like debt, right? You know, various arguments on this. And I do think it's barter that comes first, but it is true that you can have a feedback effect. Okay. Why did I bring this up? The city state lost the nation state because the nation state had scale. Okay. And so it rolled up all of these smaller units into this big thing. And it had the scale to beat others. And in fact, once one group had that scale, then the nearby neighbors needed to also get together. Like, so the French Revolution and the Napoleonic Wars are what helped lead to German unification. All these guys are like, hey, we got to gang up together because France is going to beat us.

• 2:33:29Balaji Srinivasan?

  Right? There's actually a relic of the past, like a, like a duck billed platypus. That it's like a missing link that lives into the present. Ever been to, you know what San Marino is?

• 2:33:39Steph Smith?

  I, I recognize it, but I actually don't know. Why don't you explain what it is?

• 2:33:45Balaji Srinivasan?

  San Marino is this tiny little patch. If it's in what we think of as Italy, that is like a sovereign thing in the UN. It's got a flag. It's like 30,000 people. It's like this weird thing. What, what a country of 30,000 people? It's an enclave also. It's like in the middle of Italy. And so what it is, is basically before the unification of Italy, it's a whole complicated story about how it got unified. But Garibaldi was able to seek refuge in San Marino at one point. And in gratitude, he's like, okay, we'll just do a contract with you guys. We won't fold you into the full Italy. Okay. And so San Marino, by hook and by crook, managed to preserve its sovereignty to the present day. And they're like a relic of the past when the whole thing looked like that.

• 2:34:29Balaji Srinivasan?

  Lots of little San Marinos all over the map, right? If you look at a map of Germany before Bismarck, right? That's a map of Germany before Bismarck, right? Now here's another one, you know, a map of. The princely states, okay? When India got independence, it wasn't just independence from the British. That wasn't the only problem they had to solve. They also had to solve the problem of the princely states. Take a look at that. Basically, there were 562 princely states. I think that's the exact number about that constituted what we now know of as the Indian Union. If you look at that map, look at how complicated that looks.

• 2:35:09Steph Smith?

  It's wildly complicated.

• 2:35:10Balaji Srinivasan?

  Wildly complicated, right? This is, the physical world used to be complicated like this. But it meant it was very simple within those communities because people basically spoke the same language. They had things in common and so on and so forth. You're trading off like one kind of complexity. I'm not saying it's like all roses or whatever, right? But you often can trade off one kind of complexity for another, right? Clean lines on a map in Africa, you know, have put people who don't speak the same language, don't share the same culture together. And it's led to a lot of the African civil wars is these artificial nations that didn't reflect actual ethnic groups. Okay, this is actually, you know, the Sykes-Picot lines in the Middle East? It's actually something that like ISIS and others also hate. But basically, whenever you see these straight lines in the Middle East,

• 2:35:55Balaji Srinivasan?

  these are like artificial countries that don't reflect ethnic boundaries. And so it just gives rise to like endless conflict because people need to share culture before they can agree on law. You know, if your religion says this must be done and this guy's religion says this must not be done, you're just going to slug it out endlessly. You can't just agree. And it might be something really stupid. It might be some dietary thing or something that doesn't really matter in the grand scheme of things, or at least not to, not to people who don't share either religion. But they just slug it out endlessly if the boundaries aren't set in the right way. This is how the world used to work. If you look at San Marino, you get a piece of it. You look at the map of Germany before Bismarck. You look at Indian princely states. This is how actually the world also kind of works today. You know why?

• 2:36:39Steph Smith?

  Because a lot of countries are small countries.

• 2:36:41Balaji Srinivasan?

  Yes, so you know that part. The other thing is, if you've seen the county map of the US, and who's Democrat and who's Republican, that also looks fractal in this same way. It's complicated.

• 2:36:53Steph Smith?

  Right.

• 2:36:53Balaji Srinivasan?

  Right?

• 2:36:54Steph Smith?

  Yeah. The lines aren't representative necessarily of the nation behind those lines.

• 2:36:59Balaji Srinivasan?

  That's right. And so, in fact, you know, there's saying like, one nation, under God, indivisible, right? So, there's this really important, the unfortunate one-liner is, it's now two nations that don't believe in God, highly divisible, right? Why? Because, you know, you can take a look at, like, this graph. That's at the level of Congress, okay? But you can literally see it going from people basically voting together on things, to essentially all Republicans voting with all Republicans, all Democrats voting with all Democrats, right? And there's the rare bipartisan things, like where there's like gray lines that connect them, are like 9/11 and like the financial crisis.

• 2:37:42Balaji Srinivasan?

  So for like the, you know, bombings or bailouts type stuff, that's like, that's the bipartisan stuff, but otherwise they just never vote together on anything, you know? Then you look at that, that's at the level of Congress, and then you look at this graphic they just pasted in, this is at the level of Twitter or Facebook, okay? There's an article, CGR Study 2017. Basically, both Twitter and Facebook look the same, where it looks like this blue and red separated thing, right? So this is literally two nations. Going back to the very first thing in our chat, it is not one nation, it is two nations with different values. What we're thinking about it is, something like 96% of Democrats marry other Democrats. Only 4% marry Republicans, okay? So Democrats will not marry Republicans.

• 2:38:28Balaji Srinivasan?

  And what that means is ideology becomes biology in one generation. Like, this is becoming, or already is in some ways, like Sunni versus Shiite. It is not a political conflict in the traditional sense, it is a tribal conflict between groups that do not marry each other. Right? If you look at this graph over here, right? Marriages between Democrats and Republicans are rare. So when you have something like that, they are becoming different ethnic groups, as different as, you know, what do you call them, racial ethnic groups like Sunni and Shiite, you know, or Protestant and Catholic, you know, for a long time, that was a huge thing in Europe, right? Or, you know, Hoodoo and Tutsi or whatever, right?

• 2:39:09Steph Smith?

  And this relates to your idea of primary identity, right? Because these people are Democrats or Republicans, they're also American, there are also many other things, left-handed, right-handed, as you said, but there's one identity that people are now trending towards, right? As their primary in certain cases, and that's why you're saying basically the nation, which previously would have been primary identity, American.

• 2:39:31Balaji Srinivasan?

  Exactly.

• 2:39:32Steph Smith?

  Or in the past, primary identity Catholic.

• 2:39:34Balaji Srinivasan?

  That's right. It's like Yugoslavia, where that primary identity was a national, but now it's a sub-national identity. It's kind of actually, there's this book by, I think it's by Barbara Walter, okay? It's called like How Civil Wars Start. She talks about how in Iraq, she interviewed like a girl there and she's like, what was different about, you know, after the US occupation and so on? She's like, well, people started asking me a question they'd never asked me before, which is, are you Sunni or Shiite? So Saddam, for all of his many faults, basically kept the lid on Iraq. If you were in Iraq before Saddam, there are bad things about it, but it was not in civil war and ISIS and the like insanity that followed and the sectarian violence, because in the absence of the state, once the state was knocked out and the Americans

• 2:40:17Balaji Srinivasan?

  were considered illegitimate, you had God, you had, people fell back on that Leviathan, and so you had these sectarian disputes, which of course were fueled by Iran, all these terrorist groups, but it became Sunni versus Shiite, the national identity went away, right? And so what you're mentioning here is exactly like, the American flag is not actually, that's the state, right? But people don't identify, you'll see all these articles, NYT, other places, they'll criticize, oh my God, I don't like the American flag. Instead, the way of thinking about it, it's not just Republicans that are nationalists, it's Democrats that are also nationalists, they're for Democrats and Republicans are for Republicans, both are for their own tribe, their, their nation. Is not the American nation, it is Republicans for the Republican nation, Democrats for the Democrat nation. And both them actually have their own flags.

• 2:41:02Balaji Srinivasan?

  They're not called the Democrat flag and the Republican flag, but you can immediately think of them. You know, where it's a blue line, like the, the Blue Lives Matter flag or the Thin Blue Line flag, the Don't Trade on Me flag for the Republicans, or the Progress flag for the Democrats, et cetera. Like you, they have actually their own flags that are actually the flags of their nations. We don't recognize them as such today, but that's why I was saying like if in the 2010s, the question is, what is a currency? The 2020s, the question is, what is a nation? Once there is no longer an American nation, there's a Democrat nation, a Republican nation. You have these fractals that look just like the princely states of India in 1947, or Bismarck before Germany. We already have the fractal Democrat, Republican America. That complicated thing that I showed you that seemed like part of the distant past is actually our present. How does this relate?

• 2:41:47Balaji Srinivasan?

  The internet has actually made this possible to deal with. I mean, I'm not saying this is all going to be roses or what have you. But one of the things the internet has done as you progress, and connected to the previous thing, from city-state to nation-state to network-state. Those city-states like San Marino, that were little tiny things that couldn't survive on their own versus a big nation-state, can now with the internet group together around the world and have a collective scale that is again bigger than any local nation-state. A nation-state can no longer expand, right? Because the boundaries there are fixed. The network-state can expand at the speed of a TikTok or a Facebook, right? It can grab all these people globally. It's constantly competing for people. And so it can get greater scale than any nation-state. Or not any, let's say many nation-states, right?

• 2:42:32Balaji Srinivasan?

  And I mean, it'll be hard to be bigger than China or India, but Facebook is, right? Now, Facebook is not a network-state because it was not set up as such. The Facebook employees report to Zuck, they are in the leadership hierarchy. The Facebook users are just using a tool and they're not taking orders from Mark on this or that. But you could imagine a network that did have that kind of social contract, where when you came in, you were like, look, Here's the thing. This is the president. Here's the folks. Here's what we're doing. Here's the one commandment. Here would be like your slot in the hierarchy if we have to break up tasks and so on, just like when joining a company, right? Here's your title and your position. It doesn't have to be quite like that as hierarchical, but it could be, okay? Different network societies will have different varieties. And then you are signing that social smart contract upon entering it.

• 2:43:17Balaji Srinivasan?

  And now you've got something that has, it's like a V3. It has aspects of the city-state where it's like, everybody agrees on something. Like, it's innovative, it's agile, it's nimble, it's like founder-led. It has aspects of the nation-state which beat the city-state because it's got scale. You know, it has uniformity. Like, it is useful to have people in a large group all speak Italian or French. It allows laws and all the types of this. There's a reason the V2 happened. And this V3 combines aspects of both, just like Bitcoin combined aspects of both digital gold and fiat currency, right? And that is maybe what we're going to need as we move into this fractalized America, where you do have two nations not under God, because people don't believe in God anymore. Like, that's dropped off the cliff as well. Divisible.

• 2:44:02Balaji Srinivasan?

  You're going to need some new thesis of how to govern. And I think network states may be a piece of that. But even if you take America aside for now, the rest of the world, all of these other countries, all of these other groups within those places, the 96% of the world that's not American, they can also now have new ways of doing self-government that don't require winning a war or an election or what have you. Anybody can declare themselves president of a starved society, set up a one commandment, fix the problems they see in the world, and be an example for others.

• 2:44:32Steph Smith?

  Well, I think that's a good place to end it. This was really, really informative. I think I'm glad we covered certain topics, like, is this just for the wealthy? Or can this actually scale to the point that we consider states to be today? So Balaji, thank you for going through all this. If people are interested, they can go to what?

• 2:44:50Balaji Srinivasan?

  Thenetworkstate.com and also twitter.com/balajiyes. So it's free online, and you can also get it on Kindle.

• 2:44:58Steph Smith?

  Awesome. And if people are curious, thenetworkstate.com/dashboard. Looks like you have 26 startup societies that you're starting to track. So also a very interesting place to see who's building, what they're building, and there's a lot of diversity there, too.

• 2:45:11Balaji Srinivasan?

  That's right. So this space is, things are happening here.

• 2:45:13Steph Smith?

  Awesome. Thanks, Balaji.

• 2:45:17Steph Smith?

  Thanks for listening to the A16Z Podcast. If you liked this episode, don't forget to subscribe, leave a review, or tell a friend. We also recently launched on YouTube at youtube.com/A16Z underscore video, where you'll find exclusive video content. We'll see you next time.