In September 1519, a Spanish fleet led by Ferdinand Magellan, who is now a renowned explorer, set sail into the ocean. During this famous voyage, which lasted three long years full of hardships and turmoil, Magellan pushed humanity towards an impressive milestone: for the first time men managed to circumnavigate the planet Earth. Magellan and his crew had paved the way through the interoceanic passage that is now bearing his name: the Strait of Magellan.

Ferdinand Magellan - The Royal Library: The National Library of Denmark and Copenhagen University Library, Denmark - CC BY-NC-ND.

Link to image.

In his book Magellan, Stefan Zweig portrays the explorer as a man of character, driven by scientific curiosity and extreme personal ambition, as one who wishes to claim a name for himself and win fame. Magellan died during the expedition in 1521, and did not manage to complete the trip and circle earth. However he had certainly accomplished his personal goal: here we are, hundreds of years later, mentioning his name and speaking about the expedition that changed the world and brought him fame. This man extended the limits of what humans can do and imagine doing. To this day, his character serves as inspiration for entrepreneurs, scientists and poets. His name is enshrined in the pages of human history.

Ambitious expeditions like this one, led by Magellan, or others like Columbus, besides the cultural achievements had also sparked a wave of technological and economic innovation in naval transportation, weaponry, and financial technology. One example is the invention of stocks, that happened a little bit later, commonly credited to The Dutch East India Company, established in 1602, as the first company to issue stocks. Stocks, and before stocks the concept of shared investments in ventures, were the financial instruments that allowed the funding and organising of such quests. These expeditions were the high-risk ventures of the day, and so hungry investors needed a new instrument that will allow them to partake in the financial gains from the goods acquired in end of the adventours. Therefore, stocks were invented as a means to distribute future dividends, based on the amount of stock an investor owned in a venture, proportionate to the level of risk, and stage of the funding. These financial developments were the driving force behind the astonishing explorers that we worship today.

“Always when important discoveries or inventions are made, those who make them believe that they do so under stress of moral impulsion, whereas often at bottom material motives are at work. No doubt kings and their counsellors would have been impressed by the ideas of Columbus and Magellan, would have been friendly to these explorers’ schemes for ideal reasons. But they would never have opened their purse strings freely, nor would merchant adventurers have backed the hazards to the extent of equipping fleets, had there not been good prospects of discovering a new trade route to the Indies, the land of gold and spices. Throughout that age of amazing discoveries and explorations, the driving force was the mercantile spirit.”
(Excerpt From Magellan, by Stefan Zweig.)

The underlying financial force and new financial instruments had a huge impact on the outcome of the expeditions as well. Putting aside Magellan’s personal achievements and the influence of his quest on our culture and society, this type of expedition also brought fatal consequences to humanity: the new naval routes paved by explorers became the infrastructure used by the West in its attempts to conquer and control the rest of the world, what today we refer to colonialism. When investors invest, they are not only looking to support great ideas and innovation, they are looking for outcomes. And hence colonialism, brought with it great exploitation and many conflicts. To a certain extent, me visiting this conference more than five hundred years later, contemplating ways to solve the Israeli-Palestinian conflict, is a ricochet of the same colonialism, a political system riding the huge achievements of explorers such as Magellan.

The conference started with a short opening note from Balaji that set the frame and the agenda. The idea behind the conference was not only to show that building Network States is doable, but that it is rather happening as we speak, and that a fresh movement of supporters and builders had sparked and is trying to pave the way to the new frontier. This time it is not America, nor the East. The new frontier lays in the cloud.

There was also an attempt to discuss the path to launching a new Network State or a Startup Society, and lay some key guidelines into how this might be achieved. But standing in the audience as one that actually came to this conference with the thought of starting off a new startup society in mind, I have strong doubts about any one of the attendees finding interest in that kind of “actionable” advice. If anything, I had the feeling that this type of discourse was more aimed at explaining the strategic thinking behind what Balaji defines as Parallel societies and institutions, and why he believes it’s inevitable that they will succeed in the current political and market climates. It sounded more like that slide in a startup’s investors pitch which tries to explain what recently changed in the market that makes the idea possible. In this case: the covid pandemic that pushed all of us to upload bigger chunks of our life to the Internet, huge advancements in blockchain technology and AI, and startups replacing almost every existing legacy institution. All of this suggests that our current states are next in line.

The most frequently repeated keyword in Balaji’s speech was no doubt Parallel, we’re talking about parallel societies, parallel institutions, and in general about parallel establishments. But why “parallel”? This is where the speech of the startup founder mixes in. The idea is quite simple. It is rooted in startup culture, it is somewhat similar to a startup attempt to “disrupt” an industry. In business, a company could disrupt an industry by either building a much better product, or by significantly lowering prices, or both. According to Balaji, the idea of building a parallel establishment is quite the same: we are going to launch more and more parallel establishment. They are going to offer a much more compelling solution to our problems, and hence they will draw more and more users, who are going to slowly shift from using the services of legacy institutions to those of the newly built establishments. We have seen how companies like Culdesac (a new city without cars) are filling their houses with people moving out of San Francisco, or Y Combinator (a startup accelerator) positioned itself as a much better alternative to Harvard Business School or any other MBA program, or how companies such as X and Substack disrupted traditional media. In the same way, new startup societies will attract community members, and new recognised network states will disrupt our current legacy states.

I really could not stop thinking about what Zweig captured so well in the quote mentioned above. For a few hours we were watching entrepreneurs talking about the projects they have launched, their new startup societies and online communities. The tone of the presentations resembles a strange new mix of the usual startup TED-like pitches jargon, and a political revolutionary tone that reminds me my teenage days at the Socialist-Zionist youth movement I was part of. I have no doubt that the people presenting believe they work “under stress of moral impulsion” as Zweig puts it. I felt the same urge when I was reading the Network State myself. But beyond the nice words and the fluent pitches, one can start noticing what “material motives are at work”, what are some of the financial and social principles that charge this new Network State movement that I now witness its buds with my own eyes.

Suddenly I got a little bit scared.

The Network States is an exciting idea, but is it a good idea?

Read Next: Part ⅠⅠⅠ: Loneliness Is a Disease

Cover image: Lithographie « Le Magellan » by Inconnu - Conservatory of the Gironde Estuary, France - CC BY-NC-ND.