13 Reasons Why We Should Soon Expect The First Country On The Internet
- Most people live abroad
This is true, regardless of which country you are in. Even for a Chinese resident, over 80% of the world lives in another country. So what’s the problem?
Case: our company, SafetyWing. It is founded by Norwegians, incorporated in the US. Our team comes from 10 different countries, but most live in different locations now. Our investors are from the US, Japan, Hong Kong and Scandinavia — all of them also live in a different country than their home country. We are serving customers from 100 different countries, with almost all of them living abroad as well. We all work remotely on the internet, selling a product online that is mostly digital in nature. And what we are selling happens to be insurance for people who work online and live abroad.
So where is SafetyWing from: SafetyWing is from nowhere and everywhere. Like our employees and the market we operate in, SafetyWing was born on the internet.
The world is already like this, we are just a particularly glaring example. Since the internet is global, that means a national solution won’t work, even in principle.
Even the perfect country-solution in the world’s biggest economy will have to contend with the fact that most of its potential employees, investors and customers will be abroad. And that almost none of the national systems that ensure things like taxes, social services and regulations in general easily translate or apply to digital goods sold from foreign countries.
2. Countries are transforming from monopolies to competitors
Reasonable people then argue, countries have survived for long, they have all the guns, they will just take control gradually. After all, you have to live somewhere, you have to incorporate somewhere.
And yes, that is true, you do have to live somewhere, that has stayed the same. But the logic countries face has changed. It has changed from monopoly to competition.
Take the example of Hong Kong and company incorporation. It’s a single small country with an awful lot of internet companies started by foreigners. Why: it’s super easy to incorporate there.
If your product is sold online and everyone works online from different countries, choosing where to incorporate is done like buying a product. If your home country happens to be draconian, you just don’t incorporate there. Threatening people who incorporate abroad with guns won’t help. In fact it would only make your attractiveness as a destination for incorporation a lot worse and speed up your demise.
3. Competition negates all the things you need force to accomplish
A smart policy-person might conclude then: ah, so we just need to be attractive for internet companies, then we win. Not quite, because all the customers and employees of this company are outside of Hong Kong.
Can Hong Kong force foreign contractors to pay Hong Kong taxes? No. And if they tried, it wouldn’t work, again it would just force companies to move elsewhere.
Can Hong Kong make a rule that the company can only hire or sell locally? Sure, but again the companies would simply move elsewhere because the incorporation would then be useless.
Okay, but can’t Hong Kong at least enforce VAT on foreign purchases? That would be impressive if achieved given how impractical the enforcement would be, but again any company operating there would simply have to move to stay competitive.
These are examples from the frontier, but they illustrate the competitive dynamic all countries will gradually realize that they are in. Because countries are now in competition for all internet companies and their employees, they have a much weaker hand, then when they had a monopoly over people and businesses. Essentially they can only do things that are both simultaneously in their users and their interest.
Already there are hundreds of millions of people engaged in the internet economy as remote employees, freelancers or entrepreneurs. Billions, if you count customers who buy things from online companies. This is logic that countries have to deal with, as the internet economy gradually becomes the whole economy as “software eats the world”, as Marc Andreessen described it.
4. Top-down won’t happen in time (thankfully)
In theory all this competition could be avoided by top-down cooperation on a global scale between all countries. If all the world’s countries agreed on common rules for all these things, which would be akin to something like a world government, the competition would stop. But I haven’t heard a single person who thinks that is likely to be happening anytime soon. And there are good reasons to not want it, as it would include the risk of turning the whole world into North Korea with nowhere to escape to at some future point.
The only other viable option, and our conclusion is that whatever the solution is, it has to be a bottom-up one. An entity that provides the services for the borderless citizens of the internet they aren’t getting from their home countries, as well as negotiates with and between geographical countries for their safe passage and harmonious living in their host societies in cities and states around the world.
The main difference between this entity and the old ones is that this country would not have a monopoly. It would have to be voluntary. Which means, it would have to be more like a product than a state.
You might argue: If this is inevitable, and anyone can build this, won’t just countries do this and use bigger army diplomacy?
5. Governments are slow, both on purpose and by accident
When I worked as a policy advisor for the parliament of Norway, some innovator parliamentarians and I regularly proposed solutions to problems related to technology. I learned there that everything takes a long time in politics.
The reasons governments are slow by accident is the same reason big companies are slow: because they are big. Big organizations, like big organisms such as whales or elephants, are slow because of all the internal infrastructure they need to operate.
That works for elephants and whales, because the advantage of being the biggest is that you have no natural enemies.
The reason governments are even slower than big companies is on purpose — and this is mostly a good thing. Because governments are organizations that have a monopoly on force, it is much more important that they don’t collapse or do anything really stupid.
Rule of law, independent courts, checks and balances, different levels of government and all that stuff work to correct massive mistakes happening at any level of governing. It’s messy and slow, but at least over time it gets better, mistakes are fixed and total collapse avoided.
6. Governments and companies are differently equipped to survive in a competitive environment
If a company collapses, someone else will usually just take their place. In an evolutionary ecosystem of companies, the robustness of the whole system lies in all the different variations out there. If someone fails because of a mistake they did or a change in the environment, someone else had usually already done something different.
This is true even for edge cases like food suppliers. When the food supplier K-Mart went bankrupt, people just went to a different store. In fact the reason they went bankrupt in the first place was because people had already started going to different stores. They weren’t forced to go there. Therefore very few customers even noticed the collapse of an organization that was bigger than some countries.
When countries collapse, it’s different. You don’t go to a different store, you get empty food shelves, you get Venezuela. The reason is that the state has the monopoly of force, so it will force the same mistake on everyone. A bad strategic choice (in this case price controls) happens all the time in companies as well. People make mistakes everywhere. The only difference is that it only affects themselves. It will be painful, but not existential. The society as a whole survives. The flora of companies corrects the error automatically.
When people have a choice, they can’t be forced to do anything. K-mart sucks? I’ll just go to Trader Joe’s, thanks. Your country sucks? God help you.
Even worse, if your country sucks you aren’t just at risk for not getting the services you were promised. You are at risk of being killed instead. Or to die of starvation, because all the retailers collapse simultaneously. K-mart, SafeWay, the lot, empty shelves and ketchup as far as the eye can see.
The reason countries do this kind of stuff isn’t because they are more evil. Flawed people run countries just like flawed people run companies, and evil is found in lots of places. The only reason we see countries doing these things is because they get away with it. It’s because the companies and people in that country are stuck there. They have no other choice than this one government that happens to control this particular piece of land that you live on.
7: The rules of the game have changed (government has less leverage)
This is the point where I have to stop you, to quote an over-quoted villain.
You can close this tab, return to wonderland, wake up tomorrow and believe whatever you want to believe. Or you can keep reading and see how deep the rabbit hole goes.
Let me begin with a short true story. A few years ago I hired a Venezuelan freelancer, let’s call her Maria. She was highly educated and had built a customer base on the platform Upwork, since local jobs in Venezuela didn’t pay enough to cover the cost of bread and rent anymore. She received some of her money via the service Payoneer, while some customers paid her in bitcoin.
Only a small minority of Venezuelans are aware that this is even possible. But those who do, like Maria, have rapidly begun trading more in the internet economy than the local one. They work online and they buy things online.
Her problem was the worsening security situation in Caracas, but she was also stretched by trying to help starving friends and relatives who had not connected to the online economy yet.
So one day she decided to leave together with a group of friends and relatives for Columbia.
The astonishing thing about this story however, is that I only learned about this after it happened. Maria didn’t even miss a single day of work when she escaped. She didn’t want to bother us, so she escaped across the border to Columbia over the weekend. She reconnected on the other side living in an Airbnb and working out of a WeWork, with the same Dropbox, Paypal and bitcoin account she had. Silicon Valley to the rescue.
She even brought her social network with her abroad, with Gmail, Facebook and Whatsapp.
Observing her country collapsing was still traumatic. But I would guess less traumatic than if she had to do what previous generations of refugees had to: give up their livelihood and social networks to start anew with nothing in a strange land where they didn’t even speak the language.
Her story is becoming true for people at a rapid rate. In fact you can see it on freelancer platforms or bitcoin exchanges, when a country is collapsing, their citizens are suddenly in higher supply.
The Venezuelan rulers may technically still have a monopoly on force to some degree. But because they can’t confiscate Marias livelihood or assets, it doesn’t really matter to her. She lives on the internet.
When your life and livelihood is online, a tyrannical government goes from being life-ending to being more like an inconvenience. The logic of violence has changed, as the book “Sovereign Individual” puts it.
8. Everyone who works online is location-independent
Maria is unusual. Most people don’t live in Venezuela. Most people live abroad. Maria discovered that she could just move. This is true for people in stable liberal democracies too. If you work online, you are no longer bound to your local city.
In the past, most people chose where to buy a house primarily based on where their job was. But if you work online, that no longer matters. You could easily live anywhere in your home country. Soon you may ask, why not live abroad for a while?
As people discovered this possibility they returned to a deep human instinct. Human beings used to be nomadic before agriculture. We only live in one place and do the same thing our whole life out of economic necessity, not because it’s fun. As people who worked online discovered this, they naturally returned to this more free and adventurous lifestyle. Many of them became digital nomads.
Now this option is becoming economically accessible for many, and soon to most. If you work online either remote full-time or as a freelancer or entrepreneur — you can live anywhere. When you work online, you don’t necessarily become a self-described digital nomad, but you do by definition become location-independent. You are, from that moment on, free to choose where you want to live based on your own preferences.
9. Digital nomads are choosing cities and countries like they choose products
So, where do you want to live? Maybe the answer is exactly where you live. But then again, maybe not. Or, perhaps you want to live there, but spend the winters somewhere warmer.
One of the early things that happened in the digital nomad community was that people started ranking cities. Services like Teleport and Nomad List ranked all the cities of the world, on criteria that would be interesting for a digital nomad, like safety, internet speed, weather and cost-of-living.
If you live in a cold place with terrible weather, annoying people and very high cost of living. How about moving to a place with better quality of life, better weather and 80 % lower cost of living, if you can bring your job with you?
That is the question our customers have all asked themselves, and below you see their answer.
People are essentially choosing where to live similar to how they choose other products: they read reviews, compare them and then buy the one they like the best.
10. What Digital Nomads do now, everyone else does soon
Digital nomads have issues beyond internet speed. By moving abroad you also lose all the services provided by their home country. Therefore, there is a great need to build products for this group of people. Everything has to be recreated anew, from gym to phone subscription, and this time it has to be global and online.
But what we have seen is that things that started out for digital nomads, are starting to become mainstream fast. It is starting to look like digital nomads are more like early adopters of a new technology, than a curious breed of people.
The futurist Kevin Kelly, founder of the WIRED Magazine observed this, that many of the early users of the big phenomenon of today were digital nomads. Things like co-working spaces, short-term rentals, co-living spaces, freelancing, crypto, strict privacy messaging platforms and online collaboration tools were all pioneered by digital nomads, and quickly went mainstream. Still, in the nomad community these things are much more prevalent than in the rest of the economy, which I think says something about where we’re heading.
11. The infrastructure has just started working: anyone can now work from anywhere with anyone
The digital nomad movement spearheaded much of the infrastructure that had to be built before a true digital economy could emerge. And as they did this they also made some profound discoveries. Like the fact that it actually works to hire or work with people from anywhere in the world.
I discovered this when I started a web hosting company when I was 14 years old, together with a Dutch and Romanian kid. We hosted it on a server in my room, today we would use AWS. We accepted credit cards by misusing a system made for local businesses, today we would use Stripe and incorporate with Stripe Atlas. We met on IRC, which is equivalent to early Slack API or discord. We didn’t have video or even audio chat at all (which was good for me). I offered 24/7 customer service on the prepaid mobile phone I got for Christmas. Today we would have used Google meets or Sococo and offered customer service on Intercom.
Anyone anywhere in the world with internet access can now do the same, just much easier because the infrastructure is so much better. One by one, people are discovering this fact, and are not looking back.
Anyone can work from anywhere with anyone. The early infrastructure for the economy of the internet is built. And the question you might ask is what will be the second-order effects of that? What consequences will it have that the world is in the process of becoming a single internet economy?
12: The internet is a city
I used to use the analogy of a hive-mind to explain the end-state of the internet. But I’ve found that the simpler way to understand this new era is to visualize this: the internet is like a city.
Imagine a city of 3 billion people. Imagine the kind of cultural speed we would see there. Or how strange niches there would be a market for. Or how huge the biggest companies would be, in a city of 3 billion people. Seems familiar? Yes, because you are already here. Welcome to the internet.
This internet shares characteristics with regular cities, like the speed of it increasing with scale, as described in the book How information grows. Things move and change a lot faster in New York and Tokyo than in a small town. Especially in the realm of ideas: mimetic evolution.
As in any other city, this one might have clusters of specialization, but it’s also one big organism in many ways. It’s one big market. One big labor market and product market. Internet products have to be global, otherwise they will be obsolete as soon as a global product is released. Just ask anyone who used national social networks, or video, or music services before Facebook, Netflix and Spotify.
Just try to imagine if I told you that if you registered a company on your block, you could only hire and sell to people in the same block, or that your health insurance wouldn’t work if you worked for a company outside of your block. You wouldn’t be outraged by this, thinking there must be a mistake somewhere, because that obviously won’t work.
Even if a local politician told you that this block has a right to control what goes on within its own borders, and besides all the city-blocks are really different in culture and history. It wouldn’t help, it just doesn’t make sense to separate a city like that, no matter how much you want to. If you put out a job ad, you will still accept applicants from all over the city. If you sell a product you will still accept customers from all over the city. And if you don’t, you will quickly be outcompeted by someone who does.
The correct attitude in this city I would say is this: surely these issues must be best solved at the city-level? And if no one is doing that, then it’s about time someone did.
13. Someone has to build the first country on the internet, and it probably has to be a technology startup
The solution to all of this is simple. A true country on the internet. Not a legacy entity from the age of monopolies. But a fast-moving and software-capable technology-startup that is built from bottom-up like a company selling products.
A tech startup is perfectly suited for this task. Tech entrepreneurs who themselves were born on the internet have the software capabilities, the speed, talent and ambition needed to build something like this. While both countries and big companies would be too slow and bogged down by their legacy operations to take the leap.
It would need to eventually offer all those services people actually miss from their home countries when they are abroad, just much better. And it ideally eventually also a full citizenship, with a passport recognized for moving peacefully through all countries of the world. It would be the ultimate equalizer, giving all peoples of the world equal freedoms and opportunities. They would become the first citizens of the internet.
Written by — Sondre Rasch, CEO