#33 - Ben Horowitz

0:00Ben, thank you for speaking at the Network State Conference. Good to see you, biology. Ready to go. Awesome. So, you know, Ben, you've been, you know, a mentor and I think I'd say a friend, hopefully, for many years now. And, you know, one thing is in 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 ASIC and Z crypto and everything, and Coinbase and all that stuff.

0:42And now we're building internet communities. So I'd love to hear your thoughts on that as, you know, I think of them as the third kind of thing, startup societies, internet communities, network states. I'd love to hear your thoughts. Do you think they're the next big thing or could be? Yeah, so I think they're very kind of parallel in the development in that, you know, 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 technology.

1:16So 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. And I think that what the network state is, is in network school is, is very much like that. And that we have all the primitive building blocks of community. We've got, you know, Discord and WhatsApp groups. And, you know, we've got, we have Bitcoin now. We have many kind of different currencies, stable coins and so forth. But, you know, nobody's brought them all to, we have VR, but nobody's put the whole package together. And that's really when it gets unleashed.

1:58I mean, in my experience, that's kind of where you hit the knee in the curve when is that the integration? And it doesn't seem, 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, you know, it's not actually the thing. It's not the product. 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.

2:33Right. Exactly. Exactly. And that's kind of the deceptive thing, because until that point, you know, people might have tried it and failed or, you know, it's kind of like this. Oh, no, that doesn't work. Right. You know, that kind of thing. Yeah, same with Bitcoin, right? Like it put together like a lot of techniques, you know, 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. Right. Because ECVSA existed. Yeah. Hash functions existed. Hashcast existed. And in a sense, I think somebody exactly as you said. Yeah.

3:12Remarked is just it was quote, it was a clever integration of existing things, but they all existed before and they didn't innovate on cryptography. They integrated on the on the system. Right. Right. Um, and, uh, you know, it's funny you say that because, um, I myself actually had not thought of that before in quite that way as the analogy to the web browser. But once you do snap all this piece together, then that itself becomes a platform for other things. Yes, exactly. Exactly. And then you have web apps and you had everything else because then you could, right. And so what we're starting to see is, um, these startup societies, I call them like the parallel physical are each usually inspired by the parallel digital.

3:53For example, there's Star of Society that is like a cul-de-sac, which is based on all the microbiome stuff and it wants to be a walkable community. Right. And then there's, you know, Prospera which has mini circle and it's inspired by the biotech innovations. And then there's another one that's booting up, which is inspired by all the educational innovations. Yeah. And so the digital is inspiring the physical. Yes. Yeah, no, exactly. And I think that's going to, I think the number of ideas around that is really going to multiply because, you know, one of the things that if you look at the primitive version, it's all kind of, you know, a community around an idea.

4:33But what about a community around the intersection of many ideas? You know, just for my own sake, it would be great if there was a tech hip hop community. But, you know, you could imagine many, many dimensions. You know, just sort of if you think of every policy that you might be interested in, anything you might be interested in or any policy you might vote on. If you took the intersection and found all the like minded people in the world and put them in a community, that would be a kind of very powerful thing. Yes. And, you know, one thing is some of the other folks were having speak the conference, for example, the CEO of AngelList read the Network State book and they've just opened this AngelList Founders Cafe in San Francisco.

5:17And he said he was kicking himself for not doing it three years ago because on the one hand, it seems an obvious thing, but it's also like a non-obvious thing because people drop in, they give customer feedback so you can materialize the cloud into land. And so many, many digital things that we have that we think is purely digital have some physical manifestation that might actually be non-obvious. Yeah, no, for sure. And then when you add the physical, it does add a whole another dimension of possibility for sure. Yes. That's very interesting. So, you know, one way that we've, we start to establish a few templates in the space.

5:58for example the pop-up which is somewhere in between let's say a conference which is like a one-day thing and what we're doing in network school is a permanent where it's like a permanent setup yeah exactly that's right so a pop-up like uh like a one-month thing ish right um and so it's longer than a conference because people you know they have to bring you know change clothes laundry to you know it's more than that um so do you have any kinds of things that you've been so you mentioned a tech hip hop thing. And obviously, we're used to thinking about, okay, we could solve this with a new tech company, we could solve this with a new currency.

6:37Have you thought about communities that you'd like to see? Well, there's so many, you know, like, there's the kind of, I'm part of like, many primitive communities in, you know, the form of WhatsApp groups and so forth. And it would be really nice to see those be much more highly dimensional, maybe have a physical incarnation. You know, it's everything from like, you know, the LLM community to, you know, various different kinds of things. But they're all so primitive because there's no money in them. There, you know, there's no crypto in these communities. There's no physical dimension. There's no virtual reality dimension.

7:15There's, you know, all you can really do is chat, which is, you know, one of the things you'll do in a community. But there's many, many, many more ideas that you could have. Yeah. You know, it's funny you say that because the WhatsApp and Signal groups, what I like about them is you have a lot of busy CEOs and investors and so on, and we can remain in kind of lightweight contact with a lot of people. And then you have the physical, like, you know, maybe there's a coffee and you put in an invite there, a Luma invite, and 20 of the people or 10 of the people from the group show up there. And you can just pick up right where you left off with this long running group chat conversation.

7:57So there's definitely this amazing thing there. Yeah. But you know, what, what, what's interesting is when you, when you, when you say what you just said, you kind of want to be able to boom, hold a meetup within the chat or like hit a button and create a meetup or boom, hold a meetup and do maybe like a quick VR talk or something like that. I don't know. Maybe the chat, chat interface will get there. Maybe we'll need something completely new. Yeah. Yeah. Yeah, because right now, you know, you can do that, but it's a little bit of a heavy cognitive and like social lift, right? Like now it's a little more risky to say, hey, let's all get together.

8:39You don't want people to go. No. Yeah, yeah, right. Right. Well, you know, there's something, you know, one thing that's interesting about that is, you know, with WhatsApp, you know, a very modern question is, where are you? Because, you know, probably if you analyze text in the 1800s, for example, it's very rare for someone to ask, where are you? Where are you? I'm on the other side of the table from you or what have you. You know, because there's not that many times, you know, maybe you send a telegram, but the telegram, you know, or, you know, you send a postal message, but it's rare that you wouldn't know the other person's physical location.

9:19Yeah, you would certainly know where they are if you're sending a postal message. Yes, that's right. So, but one thing that's interesting, you know, WhatsApp itself is location aware, but an interesting thing that happens is people cycle around the globe and they're kind of, you know, they're in the Spain airport or they're here and they're just kind of sending messages. And we sort of take for granted the level of mobility there, even though they're in one place in the chat world, they're moving around the physical world. So maybe there's something that would suggest, you know, to reduce the social overhead, as you mentioned, that, oh, these people are nearby.

9:51you guys should meet up, but you need to allow it to do that location tracking. That's like one concept, for example. Yeah, that would be super convenient because then you'd also not have to worry, oh, hey, let's meet up. Oh, I'm in France, right? Right. That's going to be hard. Okay, well, that was a waste of a message for me. Yes. The thing is that the people would have to also want to be location tracked. It has to be done in exactly the right way that they feel good about it. Yeah. So, okay. So internet communities, I mean, there's another angle on this, which is, for example, things like self-driving, things like many of the biotech things that we're interested in.

10:32We can potentially have those within special economic zones. And, you know, do you see my post from a few months ago on the special Elon zone? Oh, I didn't see that. I got to look at that. That sounds like a good post. Yeah. Yeah. That's all Elon's tech gets to work for free. Exactly. Yeah. Exactly. That's right. So my thought was, what is the sort of westernized version of the Asian cause of the special economic zone, the special Elon zone, or more generally, the special founder zone would be find some swath of territory. maybe it's in the u.s maybe it's elon salvador okay so elon gets uh you know because tesla's a global business and so on so some country gives or some state carves out a piece of territory and says okay elon you can move the speed of physics rather than permits you can crank out all the humanoids you want you can mine stuff out of the ground uh and what they would do is they'd import existing regulations on i don't know graffiti and stuff you don't have to rewrite every single law You just allow, however, quick changes to existing laws.

11:40And the crucial thing being that it's like an essentially an uninhabited territory as close to Burning Man as possible. Yeah. What are your thoughts on something like that? Yeah, no, I think that's a I by the way, I think it's very doable. There's so many states in the U.S. that would want to do that. I know Nevada would want to do that. And I mean, they have Burning Man. They would certainly rather have something that was productive. So I think that's super viable. You know, there are certain sites, of course, you could never do it. But for sure. And I think it could be, it could not only be really productive, but it would also kind of create a very special community.

12:26Almost of kind of both like-minded people and then people who knew how to build things. That's right. And actually, the thing about this is if it worked for Elon, then it could work for Palmer Luckey to have the drone zone. And you could have different kinds. You know, like a more mundane thing, manufacturing. Exactly. So on that point. Rare mining mining. Exactly. That's right. Right. So like if you know about how Deng Xiaoping reformed China, when he took over, the country was like all brainwashed, total communists. And he couldn't like reform it all at once. So he just set up a few special economic zones, especially Shenzhen near Hong Kong.

13:08And actually, he didn't allow everybody in. They actually there was like a membership process or an admissions process where only the most capitalist sympathetic people were allowed in and they weren't going to make trouble. They weren't still diehard Maoists, right? And of course, that became this gigantic Chinese city there. And this way, they could gradually reform communism rather than try to change it for the whole country at once. They could experiment with new laws and so on and so forth. So for manufacturing, all of the OSHA, EPA-type stuff, right, you could suspend that in this one zone.

13:42and everybody who came in signed a new social smart contract that would basically say, guess what? I'm coming into this totally desolate peace territory and I'm coming because of the new rules. Yeah. Yeah, yeah. No, I think that would, I think that's a great idea. That would be very good for the, it would be amazing for the US if we could do it here. Yes. So here, not there where you are. Well, we could do it in Singapore. Yes. So I want to, of course, it'd be amazing if we do in the U.S. And in a sense, if you can do in the rest of the world, then that gives you a template to bring into the U.S.

14:21potentially. Right. So, you know, so we can we can parallel path potentially. So, okay, on that topic, actually, relatedly, there are a bunch of countries that are pursuing interesting kinds of pro-tech legislation, like digital nomad laws, crypto laws, Dow laws. I'd love to know your thoughts on the progressive. For example, in Wyoming, they did the first Dow law. Tennessee followed up with the Dow law. I'd love to know your thoughts on the jurisdictions, politicians, et cetera, that are kind of pursuing the most technologically progressive interactions with not just tech companies, tech currencies, protocols, startup communities.

15:04You must have some thoughts on this. Yeah. So, I mean, you know, in the U.S., it does tend to be like the states that want to do that do tend to be the red states or the purple states, at least. So, you know, Wyoming, Nevada, Florida, Texas, to some degree. A lot of the southern states are very kind of open to manufacturing and these kinds of things. You know, around the world, it's been interesting. So like WorldCoin, I think their most kind of active country per capita is Argentina. And I think half the citizens of Buenos Aires are active users on WorldCoin. And then they also made a lot of progress, surprisingly, with Malaysia.

15:51which is pretty good. You know, of course, in the UAE, Dubai has been very, very aggressive. And so they've been good. So I think countries are now seeing kind of tech policy as a way to really compete. But it tends to be the, you know, it tends to be countries that want to grow as opposed to, you know, what's going on in Europe or, you know, some other places or in California even, where they kind of are like, well, we're rich enough. And now we need to divide up the pie and protect our children, the people. That's right. They're basically, unfortunately, taking prosperity for granted. Yeah. And then you mentioned this thing about places that want to grow.

16:46One of the things I've been most pleasantly surprised by over the last five years or so is small states putting themselves on the map, like El Salvador, but also like small states like Palau, Marshall Islands. You know, they've taken very pro-crypto kinds of, you know, approaches. And my general pattern on this is actually that, you know, there's 190 to 193 UN members. and it's there it's a little bit like a reverse merger or digital asset treasury company where you've got kind of a listed company and it's got a symbol and you've got a coin that wants to be listed and there's a deal they can do to kind of list the coin and then this guy has a symbol and a sense of political legitimacy but not capital and it says capital but not legitimacy and then they merge together that's a digital asset treasury company or reverse merger yeah And that can now be done at the level of the state, whether a sovereign state or like a U.S.

17:45state. Yeah, no, that is a very, very smart move, I think, by those states. I mean, I think it's really interesting that you can differentiate just by thinking about how to grow and how to maintain prosperity, that there are whole societies that have given up on that idea. Yeah, we, Mark and I just had dinner with one of the kind of potential economists for prime minister of the UK. And she was going through like, you know, like, what's your differentiation? She's like, growth, like, we can grow the economy. And I was like, wow, that's a very interesting differentiator. It's interesting also because, you know, historically people have said natural resources is a differentiator.

18:34But I actually think it is, you know, human resources, so to speak, or capital, like basically. Right. Letting the human resources do their thing. Yes. And we should come up with a term for that. But I'd like to at some point organize a conference of small countries and pro-growth jurisdictions. And that's kind of like one side of a two-sided market. Then we have all the tech founders and venture capitalists as the other side of the two-sided market and put them together. I mean, Network State Conference is like the V1 of that, right? And we've got a bunch of, you know, folks here who are doing that.

19:12Yeah. Yeah, yeah, no, for sure. I think that goes together. You know, 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. Yeah, because we can bring talent and capital there, just like crypto, just like, you know, just like tech itself. So now, what has surprised you about the last 5, 10, 15 years in terms of tech and policy? Or maybe there's so many things. But what have you found to be interesting or something that we should look at, pursue, pay attention to? Well, so I think the big wake up call for me was first kind of how interested, you know, nation states got in technology policy, which is very like all of a sudden because we ran my whole career.

20:17Nobody cared. I mean, you know, like what were the issues? Stock option accounting, H-1B visas, like real, like relative fringe stuff compared to, you know, like we're going to ban crypto or we are going to call Google and Meta and tell them what they can publish. You know, that was a real change. And I think that, you know, my big conclusion is 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. So like, you know, it's always under the guise of safety, but it's really power. Right. And, you know, it's been it's been quite interesting.

21:15I mean, like it took us a long time to unravel like why the Biden administration was so keen on banning crypto and like taking the U.S. out of a whole technological space. Probably, you know, one of the two most important kind of technology platforms for the next 25 years. They're also anti-AI. Yeah. Yeah. Yeah, and AI. Well, both of them, right? Yeah. Why would you withdraw from that? And it really has to do with, well, you know, control. If we can't control the money, then we can't control the speech. And if we can't control the speech, then we can't control the people. And, you know, both AI and crypto are like, well, we better shut them.

22:01We better have control of those things. Like, they better not be in control of somebody else. And that's, you know, it's just a really interesting learning that that's, I guess I had to grow up and learn how the world works, but that is how it works. It is interesting because, you know, for, you know, you're a little bit older than I am actually, I mean, 15 years. And, you know, during the period where for many years, we had to convince people that tech was important. Yeah. And then suddenly they're like, it's too important. And that happened right in the mid 2010s or thereabouts after about 30, 40 years of building the intranet.

22:40Yeah. Yeah. Yeah. No, crazy. It is. It's just so so we were probably, you know, it's the same with all the I mean, the first thing. And the first sign I got of it was, you know, the big push for like women in tech and like, which was always surprising to me because it was like, well, you guys are discriminating against women. There's enough women in tech. But like nobody wanted to go into tech. Like going into tech was like a weird ass thing when I went into it. Like I got like ridiculed and my friends like, what are you doing that for? like, you know, like really computers, this and that, you know, it's so hard.

23:26And like, you know, there's not that much money in it and this and that and the other. And like, all you do is work. And, and so like going in, in that world, and then all of a sudden, you know, Google and MetaHit and people are getting so rich. And, and then people all of a sudden, it's like, well, you guys are discriminating. You're not letting people in. And it's like, oh, okay, you want in? Okay. No one cares about the demographics of plumbing, for example, right? Like they haven't, yes. So now, but the other part about that is tech is actually, in a real sense, very globally meritocratic because we've got people from just about every country that are participating in tech in some sense.

24:07Well, that's how we always thought of it, right? Like it's like, oh, there's all these Jews, Chinese, Indians, like all these people are coming from all over the world. they're doing tech, you know, like it's, it's not the, you know, kind of canonical, um, white man or whatever who's doing it, but, but it was all self-selected, you know, it wasn't like, like, there was no, no, nobody ever cared. Like there was never a conversation in any of the companies that I worked at, like that would get you to think anybody cared what race or gender you were like, Like, it just was never a thing. But nobody applied.

24:45You know, it's one of those things. And look, if you were kind of not Jews, Chinese, or Indians, you would definitely feel a little on the outside because that's what most people were. I mean, it's just like that. Yeah. Well, yeah. The thing about the Midwest, too, I guess. Yes, that's right. So, I mean, basically, we have many different demographics. But, you know, the thing about this is one thing I've been formulating is the thesis of the Internet is to America as America was to Britain, like the version 3.0. It's like 10x bigger. And in particular, lots of traditional American values like freedom of speech or protection against search and seizure.

25:25You can protect them on the Internet with encryption in a way that is stronger than the protections of a law, for example. Right. And so like a smart contract is rule of law. You know, for example, Delaware is melting down, but smart contracts are booting up. Yeah, yeah, yeah, yeah. We just actually moved the we reincorporated the firm into Nevada. And that's an opportunity, right, for many countries. I mean, I know you guys are like are in Nevada now. But the fact that, you know, Delaware was was a stable jurisdiction for for decades, maybe centuries, depending on, you know, how long you think the chancery court was was the main event.

26:02And so now I think there's sort of a jump ball where if, you know, there's some jurisdiction that could say, hey, guess what? We've got a better Dow law and we're better than Delaware because we allow you to port your company from place to place. We've got the crypto stuff. It feels there's a real opportunity in rule of law integrated with rule of code. Maybe you'd agree with that. Well, I definitely think so, because the thing that we've seen, you know, in the U.S. over the last, probably mainly over the last five years is, you know, we've always kind of a huge strength of the U.S. has been rule of law and the amount of case law and like the predictability of the law.

26:41But that kind of presumed that you didn't have people who were above the law who were judges and, you know, prosecutors and these kinds of things. And so then what's happened in the last five years is, particularly in the Delaware Chancery Court, is the chair of the Delaware Chancery Court just chose to completely ignore the law and make her own law, which, you know, it was quite stunning. You know, like the board of directors didn't have a say. And then even the shareholders didn't have a say in how the company. This is the Tesla case. Just whatever she imagined would be the right thing. And, you know, like it took a lot of us by surprise.

27:27It's like, OK, wow. So Delaware doesn't have rule of law anymore. Right. Which it doesn't. Like, it absolutely doesn't. And it's hard to even get to a point where you think it does. But, you know, there was also if you look at, you know, there was the prosecution of Trump over the real estate deal, which was also, you know, like, forget about the law. Like I, the prosecutor and I, the judge, will just go like the law about, you know, what it means to have an agreement with a bank to get a loan is no longer the law. It's what I believe. and because I believe that they shouldn't have given you a loan because I don't like you, then therefore you were cheating other people.

28:16But it's like, well, if I go to borrow money, I disclose the thing, you kind of evaluate my collateral and I lend you the money. That's not legal in New York or it wasn't legal for that case. So, you know, you get into this, We're in a different world where the law has been very politicized, I would just say. And, you know, as a result of that, you're kind of you were in like uncharted territory a bit. So I do think that creates an opening. Absolutely. I mean, yes, my view on that is if you imagine like a house and there's two factions and they're fighting over the territory, that house is now a battleground and it can have a window blown up here or some guys can take it and shoot down from here.