Tech Entrepreneur's Startup City in Malaysia Shut Down Over Licensing and Israeli Visitors

Technology entrepreneur Balaji Srinivasan has long envisioned creating new companies and eventually new nations. In 2024, he launched Network School in southern Malaysia within a luxury Chinese-backed development called Forest City, valued at around $100 billion but largely unoccupied. The project combined a startup incubator, residential living, and a self-improvement retreat, offering workspaces, fitness facilities, classes, and meals for about $1,500 per month. The initial cohort included 128 participants, eventually growing to several hundred residents.

However, last week Malaysian authorities ordered the campus to cease operations due to licensing issues. The decision followed immigration investigations triggered by reports that Israeli citizens were present at the site. Malaysia does not maintain diplomatic relations with Israel and requires special permits for Israeli visitors. Authorities stated no evidence of passport violations has been found yet, but the inquiry continues. Srinivasan denied the allegations, emphasizing that the project complied with Malaysian law.

Network School was intended as a prototype for Srinivasan's concept outlined in his book "The Network State," where online communities unite around shared values, accumulate capital, acquire land, and potentially seek state recognition. Yet, participants complained about mold in rooms, limited nightlife, and a low number of women. Srinivasan responded that humidity issues were being addressed and that attendees came primarily to work, exercise, and build businesses.

Despite the closure in Malaysia, Srinivasan quickly announced plans to open a new campus in Kazakhstan, stating several countries have offered to host the project. While the vision of founding a new nation remains distant, Network School's experience highlights the necessity of adhering to existing national regulations even when attempting to innovate statehood.