An American's Failed Nation-Building Experiment in China's Abandoned Buildings

Original Title: "An American's Failed Nation-Building Experiment in China's Abandoned Buildings"
Original Author: Dongcha Beating

In February 1996, John Perry Barlow signed the "Declaration of the Independence of Cyberspace" in Davos. He told the 'governments of the industrial world' that cyberspace is not under your sovereignty. Then he wrote a line, 'Cyberspace does not lie within your borders.'

Relationships in cyberspace need not be determined by birth, military, or real estate; a person can speak, trade, and associate in front of a screen, regardless of whether they are in Beijing, New York, or Bangalore.

Thirty years later, the internet age has not overturned this statement; instead, it has led more and more people to ponder the latter half of it.

The strangest change in recent years of the internet age is the reassembly of people. Digital nomad communities, Hacker Houses, and temporary cities are emerging one by one from social media, transforming into a plane ticket, a lease, co-living, and an ID.

Balaji Srinivasan is the person who has thought most seriously about this. In his book "The Network State," he describes a path called "Cloud First, Land Last," where communities first form in the cloud, gathering networks and capital, then move to the real world to buy or rent dispersed nodes, and finally, he says, can seek diplomatic recognition.

In 2024, he established the first step of this path with a school called Network School, located in the forest city at the southern tip of Malaysia. On July 21, 2026, the Iskandar Princess City Hall revoked its business license, effective from the 22nd.

Genes, Attention, Money, and Then People

To understand why Balaji started Network School, let’s first look at what he has been doing for the past twenty years.

He grew up in Long Island, New York, with parents who were doctors immigrated from Tamil Nadu. He studied electrical engineering at Stanford from undergraduate to PhD, and also obtained a master's in chemical engineering, then co-founded Counsyl, which does genetic carrier screening. Families preparing for childbirth receive a report detailing the risks and probabilities of familial recessive diseases. This report transforms research and expert terminology that was previously locked in laboratories into a document that couples can take home and discuss at the dinner table.

He worked on a project called Earn, allowing strangers to pay for a reply with cryptocurrency, giving a price tag to a person's time for the first time. In 2018, Coinbase acquired Earn, and Balaji became the CTO of Coinbase, promoting the launch of the stablecoin USDC during his tenure. Additionally, he was once a GP at a16z.

You see, these experiences are essentially about the same thing: transforming what was previously explained, preserved, and verified by large institutions into records that individuals can read, carry, and trade. Genetic risks are like this, attention is like this, and money is like this. Following this line of thought, the next thing that can be packaged and taken away is the person themselves, along with their works, credit, and social relationships.

So he moved first. He settled in Singapore and posted a widely circulated message on social media in March, suggesting that libertarianism can only operate with a Lee Kuan Yew-style order.

Someone Must Stand at the Door

The idea of moving people along with their property is not something Balaji came up with on a whim; it has a clear line of intellectual evolution.

In 1997, former editor of The Times, William Mogg, and American investment writer James Davidson co-authored a book called "Sovereign Individual," predicting that information technology would shrink nation-states, transforming individuals from citizens into customers, and they also described a type of encrypted, anonymous digital currency that could be traded in a borderless market. Twelve years later, Bitcoin emerged, closely aligning with what was written in the book, and many believe that Satoshi Nakamoto drew inspiration from it.

Peter Thiel said this book influenced him more than any other. In 2009, he wrote a famous article stating that he no longer believed freedom and democracy could coexist, listing cyberspace, outer space, and seasteading as the frontiers where freedom might regrow.

Thiel asked how to leave a disappointing system. Balaji continues to pursue this question, asking, what happens after leaving?

In "The Network State," there is a term, Recognized Founder. A movement calling for personal freedom, when it comes down to an operational manual, begins with establishing a leader.

Balaji has his reasons for writing this. The ability to exit has never been evenly distributed among everyone. Some can change passports, time zones, and lives, while others are pinned in place by family, debt, and professional licenses. Friends, clients, reputation, and assets are often tied to the previous ship, and no one can independently dismantle their share. Therefore, exiting cannot be done individually; someone must take the lead, gathering dispersed people and money together, paving the way for those who cannot move. This leading person is the recognized founder.

This role is somewhat akin to Zhang Beihai in "The Three-Body Problem," the military political commissar who does not believe humanity can win, who disguises loyalty for decades, and steals an interstellar warship before the doomsday battle, taking thousands into deep space. The novel gives him a tragic fate but also leaves a thorn. The "Natural Selection" ship is not his; it was built by all humanity together. The one preparing to exit for the many does not solely use their own resources.

This thorn has also been seen by Ethereum founder Vitalik Buterin. After reading "The Network State," he acknowledged that Balaji takes moral and communal living more seriously than most self-centered libertarians, then questioned two things. Why must there be a recognized founder? Who accounts for the resources used by the new community from the surrounding society? The first question doubts the power in the hands of the leader; the second question concerns the ship of Zhang Beihai.

In the spring of 2023, Vitalik organized a temporary city called Zuzalu by the bay in Montenegro, where about two hundred people lived for two months, discussing cryptocurrency, longevity, and governance. This time, there was nominally no recognized founder, and everything relied on self-organization among members. After two months, meals, fitness, and events went relatively smoothly; over a year later, he reflected and admitted that two of the most challenging issues remained unresolved: governance and membership, especially the latter. Moreover, whether he personally wanted it or not, the outside world consistently referred to this place as "Vitalik's temporary city."

After going around in circles, the question returns to the starting point. No matter how warm the term community is, someone must stand at the door to decide who enters and who exits. The only difference is whether this person is written into the charter in black and white or is tacitly accepted by reality.

Network School is Balaji's answer.

How an Application Form Filters a Community

In August 2024, Balaji announced the establishment of Network School, with the first session running from September 23 to December 23. Co-living costs $1,000 per month, while renting a single room is $2,000. The daily activities can be summed up in four words: Learn, Burn, Earn, Fun. Learn technology, exercise, earn money together, and live together.

He refers to the recruits as "Dark Talent," borrowing the term from "dark matter," meaning talents that have not yet been seen by old institutions. This term resonates with many. Degrees, company names, and big cities still pre-allocate work and life for people, and many capable individuals never encounter a real opportunity in their lifetime.

However, upon closer inspection, you will find that Network School has not eliminated the threshold; it has merely changed its form. Some early applicants paid a deposit of up to $2,000 before the school’s location was announced. The application form not only inquires about technical backgrounds but also asks you to rate a series of unrelated items, including Bitcoin maximalism, military technology, Dubai, Marx, Jordan Peterson, and Israel. The first session received over 4,000 applications from more than 80 countries, but only 128 spots were available.

Entrance elevator of a side event in Xuhui District

Today, individuals, couples, families, and teams can apply to join Network School, staying for a month or a year. Co-living costs have risen to $1,500 per month, while single rooms are $3,000. Fellowship is another application method. Founders and creators from any country can apply for a $100,000 grant plus a year of membership, with a list of star investors displayed on the page.

In his 2025 review, Balaji admitted that the two activities of attending classes and earning money are somewhat contradictory for everyone. The courses are too basic, making senior engineers feel it’s a waste of time; if the courses are challenging, those primarily wanting to meet people cannot keep up. A single course cannot simultaneously meet the needs of both types of people. Ultimately, the most successful activities turned out to be fitness, play, and communal meals.

A member who stayed for a month in 2025 recalled that the school was located in a hotel in the forest city, with a gym on the rooftop, the thirteenth floor used for dining and events, and co-working spaces a kilometer away. During the same period, over a hundred people attended, with the most Indian faces, followed by Americans, and about 80% were male; most activities were optional and often organized by members themselves.

The Process Itself Is a Punishment

In early July, an anonymous Instagram account raised allegations that Network School harbored Israelis who entered Malaysia with third-country passports. At this time, the Johor state election, where Network School is located, was imminent, and Malaysia does not recognize Israel, with no diplomatic relations between the two countries. This accusation became a political issue.

On July 14, the Ministry of Home Affairs intervened. The next day, the immigration bureau checked 266 foreign nationals from 40 countries, and all documents were valid.

On the 16th, Balaji posted a lengthy response, which essentially involved three actions: proclaiming innocence, calculating accounts, and laying cards on the table.

He said the accusations were baseless, and the officials who came were polite and professional, but he quoted an old saying from the American judicial system: "The process itself is punishment." Even if nothing comes of the investigation, the mere fact of being investigated has already penalized him. Time, reputation, and morale are all being consumed in this process.

He calculated the numbers very carefully. Over a hundred million ringgit in real cash, dozens of local jobs, and even the surrounding property prices have been driven up by this project. After tallying the accounts, he announced a halt. The originally planned 500 million ringgit expansion and the global scholarship program co-hosted with the founder of Replit were all put on hold.

Then he laid his cards on the table; he wanted to meet Prime Minister Anwar to sign a memorandum stating in black and white that he and his friends were welcome here. He said they didn’t want money, just a meeting. He mentioned that executives from global tech giants and the largest venture capital funds were watching how Malaysia would handle this situation.

On the other side, officials from the municipal hall came and found that one of the two sites had no business license at all, while the other had an office license but was holding classes inside. Thus, a closure notice was issued on the 18th, and the license was officially revoked on the 21st. The state minister, Ong Hafiz, expressed support and stated that no one is above the law, and he also requested the digital department to re-examine the various official recognitions this company had previously obtained.

This Empty City Was Already Waiting for Them

Many people might think this is yet another story of a rebellious tech community crossing a conservative country's red line. But the truth is quite the opposite; Malaysia is not conservative at all; it is even one of the countries in the world that is working hardest to attract this group of people.

Let’s first look at the Forest City area. It is located at the southernmost tip of Johor, adjacent to the Second Link between Malaysia and Singapore, and was created through land reclamation. Forest City is a joint venture between Country Garden and a state-owned company in Johor, with the Chinese side holding 60%. Launched in 2016, then-Prime Minister Najib personally promoted it and announced that it would be a tax-free island. The total project is worth about 100 billion USD, with plans for nearly a million residents.

This city was originally mainly sold to Chinese buyers. Sales offices were opened in dozens of cities across China, with 60% of buyers coming from China, attracted by the tax exemption, proximity to Singapore, and the prospect of obtaining an overseas property certificate.

The subsequent events unfolded in two directions. On the Chinese side, in 2017, the currency exchange controls tightened, limiting each person to an annual quota of 50,000 USD, explicitly prohibiting the use of this quota to purchase property abroad, leading to the closure of exhibition halls one after another. On the Malaysian side, the 2018 election changed everything; Najib, who had previously supported Forest City, was ousted, and the new Prime Minister Mahathir stated that houses in this city could not be sold to foreigners, and those who wanted to live there should not expect to obtain a visa. Although this statement did not become an official decree, the market understood it. Those who wanted to come could not, and those who bought were uncertain about whether they could live there, leaving a city prepared for a million residents hanging by the strait.

When the BBC visited in 2023, the project was only about 15% complete, with just over 1% of the planned residents actually living there. The high-rise buildings at night were mostly dark, resembling a ghost town, and this city, intended for a million people, became the largest inventory of the entire era of going abroad.

Frame from the movie "The Great Gatsby" | Source: Douban

Malaysia, on the other hand, doubled down on its investment. In 2024, the government designated Forest City as the country’s first special financial zone, specifically attracting companies and family offices in the fintech industry. Prior to that, there was the KL20 plan, which aimed to benchmark against global tech centers, digital nomad visas, and economic zones co-built by Johor and Singapore. Balaji later stated that he chose to establish Network School here because he was attracted by these policies.

A country eager to clear its inventory and a community eager to find a location found common ground in this empty city. The government offered policies and discounts, while the community provided people and money, and during the honeymoon phase, no one paid attention to the contracts. The government thought it was attracting investors, while the community believed it had found a foundation. The enthusiasm for investment and the rigidity of law enforcement have always been two sides of the same coin; welcoming you only indicates that it needs you, not that it knows you.

There is also a complex issue at play. Count how many types of power are layered on this reclaimed land. The city built by Chinese developers, with Johor's state-owned assets involved, the federal government providing special zone policies, the Sultan holding traditional authority, and across the strait, Singapore's capital overflow, now joined by a community that claims to be a network state. In medieval Europe, such overlapping sovereign territories were called borderlands, where residents faced the lightest taxes, enjoyed the most freedom, and had the most unstable rules. Balaji chose Forest City precisely because it is a 21st-century borderland, with many gaps and low prices. However, any layer of power in a borderland can turn against you and bring everything to a halt.

The Cow Grows Wings

In "The Sovereign Individual," there is a metaphor that describes how the state treats taxpayers like farmers treat cows, keeping them in the farm to milk them, but soon, "the cows will grow wings."

Many people like this phrase and read it as an inspiring story. However, the next page actually states that desperate farmers will take desperate measures to contain the fleeing herd, using covert and arbitrary means to restrict people from accessing the technologies that bring liberation.

Wings represent trends, while fences represent reality; both statements are prophecies, but their fulfillment comes at different times. Johor in July demonstrated how fences would be erected.

Once the fences are up, there is actually a historical precedent.

In 2013, Honduras legislated to allow private semi-autonomous cities, and the American company Próspera actually built one on an island, with its own regulations and a written commitment for fifty years without change. In 2022, the political situation flipped, and the new Congress unanimously repealed this law, with the president stating it was a reclaiming of sovereignty. Próspera did not move; it sued the country in the World Bank's arbitration court, claiming nearly 11 billion USD, which is about two-thirds of Honduras's entire annual budget. Honduras's response was to withdraw from this arbitration mechanism. The lawsuit is still ongoing today.

Looking at the experiments discussed earlier, the lightest one, Zuzalu, disbanded upon expiration; the deepest one, Próspera, is engaged in an endless lawsuit; and the moderately engaged Network School was asked to leave due to a license issue. Their commonality is that as long as they land, they are within the range of sovereignty.

After taking this hit, what Balaji revealed was those wings. Capital can be reallocated, and people can move to other countries. This card is not effective against everyone. For a city that has been empty for ten years and is counting on his money to recover, this statement is a threat; but for a government that just publicly stated, "No one is above the law," being bent by money in front of everyone comes at a cost far greater than losing an investment, especially since it coincides with election month.

On July 22, the closure order for Network School took effect. The rooftop gym, the thirteenth-floor restaurant, and that one-kilometer stretch of road were all emptied. At night, the Forest City had even fewer lit windows.

Thirty years ago, Barlow said, cyberspace is everywhere, but it is not a place where bodies reside. Now the first half of the sentence has returned to an accessible website, while the second half is left for the darkened buildings of Forest City.

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