Balaji Srinivasan wanted a network state. He found the limits of sovereignty
His experimental community in Malaysia combined startups, residential life and self-improvement. Its shutdown shows that even would-be digital states remain dependent on the governments whose territory they occupy.
Technology entrepreneur Balaji Srinivasan has spent years dreaming of building new companies from scratch, and eventually, new countries. But according to a Wall Street Journal report on his latest experiment, he has run into an obstacle that may be harder to overcome than any business challenge: the country in which he operates.
In 2024, Srinivasan founded Network School in southern Malaysia, inside a hotel in Forest City, a $100 billion Chinese luxury development that remains largely empty. The project was conceived as a combination of startup incubator, residential community and self-improvement retreat, offering workspaces, a gym, classes and meals.
Accommodation started at about $1,500 a month, with participants able to stay for a month or longer. The first cohort had 128 participants, according to Srinivasan, and the project later grew to several hundred guests at any given time.
Last week, however, local authorities ordered the campus to shut down over licensing issues. According to the Journal, the decision followed an investigation by immigration authorities into reports that Israeli citizens were staying at the campus. Malaysia has no diplomatic relations with Israel and requires Israeli citizens to obtain special permission to enter the country.
Authorities said they had found no evidence of wrongdoing in the passport-related investigation, which remained ongoing. Srinivasan said the publicity that triggered the controversy was based on false claims and stressed that Network School had complied with Malaysian law.
The school was designed as a prototype for the idea Srinivasan laid out in his book, The Network State: How to Start a New Country: a community that begins online, brings together people around shared values, builds up capital, acquires land and, eventually, could seek political recognition.
The reality proved considerably less utopian. Participants complained about issues including mold in their rooms, limited nightlife and a lack of women. Srinivasan responded that the humidity problems were being addressed and argued that participants came to Network School to work, train and build businesses rather than party.
The closure in Malaysia, however, did little to slow the broader project. Hours after authorities ordered the campus shut, Srinivasan posted a video from Kazakhstan in which he signed an agreement to open a new campus there. He said several countries had already offered to host the project.
For now, the vision of establishing a new country remains distant. But Network School has already encountered one of the oldest lessons of sovereignty: even those seeking to reinvent the state must first operate within the rules of one that already exists.
