Ben Horowitz and Balaji Srinivasan on Netscape and Network States

Ben Horowitz (0:00)

Countries are now seeing kind of tech policy as a way to really compete, but it tends to be the countries that want to grow. A huge strength of the US has been rule of law and the amount of case law and like the predictability of the law. But that kind of presumed that you didn't have people who were above the law who were judges and prosecutors and these kinds of things. People who want the network state in their territory are probably the exact countries that are interested in kind of pushing forward into the future. What the state cares about is power and as tech kind of rose in power to the level of the state, then they got very, very interested.

SPEAKER_2 (0:50)

Can you build a new kind of country from the internet up? Not a metaphor, not a community, but something that actually replaces institutions we usually think of as fixed, money, law, governance. A few decades ago, China experimented with this idea physically, carving out special economic zones to test new rules without rewriting the entire system. Shenzhen was once a fishing village. Today, it's a global tech hub. Now the experiment has moved online. Crypto, digital identity, internet native communities and what some call network states are trying to turn code into coordination and coordination into legitimacy. But there's a real tension here. Code is deterministic. Societies aren't. So the question isn't whether these systems are clever. It's whether they can actually scale on what they replace if they do. In this episode, a16z co-founder Ben Horowitz joins Balaji Srinivasan on The Network State Podcast to examine how internet first institutions form, where they break and whether network states are a curiosity or the next phase of governance.

Balaji Srinivasan (1:51)

Ben, thank you for speaking at the Network State Conference.

Ben Horowitz (1:53)

Good to see you, Balaji. Ready to go.

Balaji Srinivasan (1:56)

Awesome. So, Ben, you've been a mentor and, I think, I'd say a friend, hopefully, for many years now. And one thing is, and the hard thing about hard things, in that book, you wrote about your time at Netscape. And Netscape, in many ways, was like the first internet company. And because it had downloads and so on and so forth, and it went viral, and you guys went public, and you had an acquisition, all the monodrama, right?

And then we worked together on the rise of Bitcoin, which was first internet currency, and obviously we've been very heavily involved in that, with the a16z crypto and everything, and Boeing Base and all that stuff. And now we're building internet communities. So I'd love to hear your thoughts on that. I think of them as the third kind of thing, start societies, internet communities, network states. I'd love to hear your thoughts. Do you think they're the next big thing or could be?

Ben Horowitz (2:44)

Yeah, so I think they're very kind of parallel in the development and that kind of before Netscape, which was the first thing that kind of brought all of the internet pieces together. There were many pieces. There's FTP and TCPIP and Gopher and this and that. But you needed something to unify all the technologies. So it was a little deceptive in that a lot of people deep in the tech kind of saw it as, well, what's new here?

It's just like you're just putting an interface on it. I think that what the network state is, in network school, is very much like that. We have all the primitive building blocks of community. We've got Discord and WhatsApp groups, and we have Bitcoin now, and we have many different currencies, stable coins, and so forth. But nobody's brought them all to a VR, but nobody's put the whole package together, and that's really when it gets unleashed. In my experience, that's where you hit the knee in the curve, when is that the integration? In a way, it doesn't seem like a lot because all the pieces were already there, but the pieces as pieces just aren't, it's not actually the thing, it's not the product.

Balaji Srinivasan (4:09)

It's funny because you're right, the system integration, and the thing is that actually has to happen after all the other pieces are mature because if any one piece of those is wiggly, then the whole thing doesn't work, you have to wait for that to be there. So only when all those pieces are mature can you snap them together.

Ben Horowitz (4:24)

Right, exactly, exactly, and that's kind of the deceptive thing because until that point, people might have tried it and failed, or it's kind of like this, oh no, that doesn't work, that kind of thing. Yeah, same with Bitcoin, right? Like it put together a lot of techniques, peer-to-peer, cryptography, et cetera, that had been around, but they weren't put together in a way where you could actually have money.