🤯 Network School: Malaysia Shut Balaji's Campus in 24 Hours

How Balaji's Forest City campus lost its licences over premises and signage breaches — and why Network School isn't dead, just rebuilding in Kazakhstan.

Author

Admond Lee
August 02, 2026

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Today's story is about how Network School was shut in 24 hours over paperwork, not the allegations that triggered it — and where Network School went next. Let's get to it! 🚀

Today at a Glance:

  • ☠️ 1 Failed Startup → Network School (Malaysia)

  • ⚠️ 2 Mistakes → Turned a fixable problem into a public showdown

  • 🧠 3 Lessons Learned → Match your paperwork to what you actually do

  • 🔗 The Runway Insights → 10 ways Clay's GTM engineers use AI to accelerate sales 

  • 💰 Southeast Asia Funding Radar → Cove closes $4.5M to expand its Singapore co-living platform into South Korea and Japan

☠️ 1 Failed Startup: Network School (Malaysia)

🚀 The Rise of Network School

🇲🇾 Founded by Balaji Srinivasan in 2024, Network School was a residential community at Forest City, Johor — a physical prototype of Balaji's "network state" thesis, built for founders, engineers, and crypto/AI developers.

🕺🏻 Founders’ Story

In 2022, Balaji Srinivasan — former Coinbase CTO, ex-a16z GP, Stanford-trained engineer — published The Network State.

He argued that internet-native communities could eventually crowdsource land and negotiate with governments to form new countries.

But a book is just a book. In August 2024, he announced Network School — a 90-day residential programme to test the thesis in real life. He pitched it as an "island near Singapore".

🔓 The bet was simple → build Silicon Valley outside Silicon Valley, and bundle it as a lifestyle.

  • The Problem —  🎓 Remote founders and engineers had no continuous physical community to plug into.

    • The US undergraduate model was expensive, episodic, and disconnected from real entrepreneurship.

    • WeWork, Selina, and nomad retreats never bundled housing, meals, workspace, and community into one thing.

  • The Solution — 🏫 Network School offered an all-inclusive residential membership at a Forest City campus, run on a "Learn, Burn, Earn, Fun" framework.

    • Hotel accommodation, 3 meals a day, 24-hour gym, library, childcare, co-working — all included in one price.

    • Continuous AI learning, gamified fitness, daily startup bounties, and hackathons on campus.

🇲🇾🧠 In short, Network School was a residential prototype of Balaji's network state thesis — packing hundreds of founders into Malaysia's emptiest mega-city.

Balaji Srinivasan (Founder of Network School)

🇲🇾 The location made sense on paper.

Forest City was Malaysia's famously empty $100 billion Chinese-backed mega-development — cheap land, 30 minutes from Singapore, and a government keen to attract digital nomads.

🏝️ The first cohort launched on 23 September 2024 with roughly 100–150 participants. Balaji had marketed it as "a beautiful little island near Singapore".

By 2025, Ethereum, Solana, Coinbase, and Anthropic were all hosting events on the Forest City campus. Network School held Malaysia Digital status from MDEC — the federal government's digital-economy stamp of approval.

🔥 At its peak, Network School:

  • served roughly 260–300 concurrent members from ~40 countries at Forest City

  • charged US$1,500 (shared) to US$3,000 (private) monthly

  • had Balaji claiming "over RM100 million" invested into the campus

  • operated across 3 premises — main campus, admin office, and offices inside Marina Hotel

  • announced a planned RM500 million+ expansion with a global merit scholarship programme

🏄🏻‍♂️ Balaji had built the network state he'd been writing about. From the outside, it looked untouchable.

📉 The Fall of Network School

Then one promotional video went viral for the wrong reason.

🤯 Balaji kept describing the campus as "a beautiful island near Singapore". Malaysians noticed the missing word — Malaysia. A pro-Palestinian group alleged Israeli entrepreneurs were entering on dual passports — an allegation investigators would later find no evidence for.

The Prime Minister weighed in. The Chief Minister called for a federal probe.

Within 11 days of that Instagram post, the licences were gone.

📌 Here’s what happened to Network School:

❝

We aren’t asking for any money — just a meeting, to help restore confidence in Malaysia as an investable jurisdiction. Alternatively, if you don’t want our investment, or those of our colleagues at billion dollar funds and trillion dollar companies, we will of course respect your wishes, and reallocate our capital to other countries instead.

— shared by Balaji on X

📖 Cloud first, Johor next

  • Jul 2022 — 📖 Balaji published The Network State, arguing that internet-native communities could eventually form real countries.

  • 23 Sep 2024 — 🚀 First 90-day cohort began at Forest City, Johor with roughly 100–150 participants.

  • 2025 — Ethereum, Solana, Coinbase, and Anthropic hosted events on campus. Membership grew to hundreds of foreigners from ~40 countries.

  • Oct 2025 — ⚠️ Israeli vlogger Nuseir Yassin (Nas Daily) appeared in a video filmed in Johor promoting Network School, which drew controversy — Malaysia does not recognise Israel.

🚨 The state punches back

  • 10 Jul 2026 — A slick Network School promotional video describing the campus as "a man-made island near Singapore" reignited scrutiny.

    • A pro-Palestinian group posted an Instagram post alleging Israeli entrepreneurs were entering on dual passports.

  • 12 Jul 2026 — 🔍 MBIP began inspections and enforcement checks at Network School's premises.

  • 14 Jul 2026 — Johor Chief Minister Onn Hafiz Ghazi called for a comprehensive federal probe involving Home Ministry, Immigration, police, Customs, and Higher Education Ministry.

  • 15 Jul 2026 — ⚖️ PM Anwar Ibrahim publicly said any Israelis found at Network School would be "deported immediately".

  • 17 Jul 2026 — 💰 Balaji publicly announced further Malaysian investment — including a planned RM500 million (US$122 million) expansion — was "on hold" until assurances were given.

    • Immigration said 256 of the 266 foreigners inspected held social-visit passes and 10 held Professional Visit Passes under the Nomad category, all with valid documents.

  • 18 Jul 2026 — Balaji downplayed enforcement notices as "a signage change and one missing licence" on joined units, telling members they were "otherwise unaffected".

  • 21 Jul 2026 — ✅ Immigration said it had checked 379 of the 430 foreigners linked to the school across 2 operations and found no evidence of Israeli nationals or passport misuse.

  • 21 Jul 2026 — 🚫 MBIP special council meeting revoked NSO Malaysia's business and advertising licences. The formal reason wasn't Israel — it was running classrooms in a unit licensed only for office use, missing premises licences, and non-compliant signage.

  • 22 Jul 2026 — 🔒 The cease order took effect. Network School's premises were closed and signboards taken down or covered.

    • The same day, Balaji signed a 5-year MOU with Kazakhstan's Ministry of Artificial Intelligence and Digital Development.

🙏🏻 To be clear → Network School has not shut down. 

Only its Malaysian operation was ordered to cease. The company signed a 5-year memorandum of understanding with Kazakhstan's Ministry of Artificial Intelligence and Digital Development and is rebuilding there — though the new campus location and opening date have not yet been announced.

What ended was the Malaysian chapter. The community was real, the tech partnerships were real, the money was real. And the immigration probe that started the whole thing found no wrongdoing.

📜 What ended it was the paperwork. Malaysia Digital status doesn't override a municipal signboard rule. A "beautiful island near Singapore" is still, legally, Johor.

Licence revoked. Premises closed the next day. Kazakhstan MOU inked the same day. That's how fast a network state moves when it doesn't own the land.

Want to learn more about Network School’s story?

⚠️ 2 Mistakes

Mistake 1: Ran physical operations on cloud-community assumptions

Network School was a residential business in Johor. Balaji ran it like a Discord server with a lease.

  • One premises operated with no business licence at all

  • Another ran classrooms inside a unit licensed strictly for office use

  • Signboards didn't match the advertising approvals

  • 256 of the 266 foreigners inspected held social-visit passes rather than the Professional Visit Pass built for long-stay nomads — though Immigration confirmed all 266 held valid documents

Network School operated under federal Malaysia Digital status from MDEC.

🚨 But that designation doesn't override a Johor signboard rule — or match a member's pass class to what they actually do on site.

When MBIP inspected on 12 July 2026, it didn't cite Israel at all. It cited premises use, licensing and signage — and that was enough to end the campus.

Mistake 2: Turned a fixable problem into a public showdown

❝

All further investment we were planning to make in Malaysia is on hold until we get sufficient assurance that such issues won’t recur.

— shared by Balaji on X

The breaches were real. They were also fixable — new signage, the missing licence, classrooms in a unit zoned for them.

🤦🏻‍♂️ MBIP had already inspected on 12 July. On 17 July, Balaji publicly froze a planned RM500 million (US$122 million) expansion and offered to negotiate an MOU with Putrajaya.

That didn't cause the revocation — the breaches did. It closed the quiet exit. No official can approve a signage fix once the question is whether Malaysia bows to a foreign investor.

🧠 3 Lessons Learned

Lesson 1: Match your paperwork to what you actually do

Network School was a residential business in Johor. Federal Malaysia Digital status from MDEC looked like legitimacy — until MBIP found one unlicensed premises and classrooms in an office-zoned unit.

Separately, Immigration found 256 of the 266 foreigners it inspected were on social-visit passes rather than the Professional Visit Pass built for nomads — all with valid documents, and no offences established.

🌮 Key Takeaways:

  • A federal permit doesn't override a municipal rule. Every level of government must approve you separately — one gap is enough to shut you down.

  • Every visa carries activity restrictions. If your programme requires long stays and daily work, tourist passes are a ticking bomb.

🛠️ Operator Playbook:

  • 📋 Build a permit matrix before signing your first lease

    • List every activity you'll run on-premises (residential, education, co-working, events, F&B)

    • Cross-reference each against local zoning, business licensing, and signboard rules

    • For Malaysia: MBIP/DBKL grant municipal-level permits. Malaysia Digital status from MDEC doesn't replace them.

  • 🛂 Design visa architecture around actual member activity

    • Match the visa category to what members actually do on-site

    • For long-stay tech communities in Malaysia, look at the DE Rantau nomad pass or MM2H instead of social-visit passes

    • Treat immigration classification as customer-facing risk, not just a founder problem

Lesson 2: You can't win a public fight with the state

5 days into MBIP's investigation, Balaji publicly put a planned RM500 million (US$122 million) expansion on hold and offered to negotiate a memorandum of understanding with Putrajaya. A licensing dispute became a sovereignty question.

Once the matter was public and framed that way, the room for a quiet administrative fix was gone.

🌮 Key Takeaways:

  • Local disputes often have administrative remediation paths. Public ultimatums collapse them into a single yes/no question the state must win.

  • Regulators judge you on political risk. Every public escalation makes quiet remediation harder for officials who could still help you.

🛠️ Operator Playbook:

  • 🤐 Exhaust the administrative pathway before touching the political one

    • What's the appeal window? Who is the officer of record? What remediation is technically possible?

    • Only escalate to national politicians AFTER the local path is documented as exhausted

    • Diagnostic: "If this dispute hit the headlines tomorrow, would our public posture make officials more or less willing to help?"

Lesson 3: Regulators read your marketing too

Balaji told his audience they now had "a beautiful little island near Singapore" — but the campus sat in Forest City, Johor, and the marketing rarely said so. When the scrutiny came, that framing was the first thing Malaysians pointed at.

🌮 Key Takeaways:

  • Your host government is always in your audience. Every promo video, X thread, and podcast clip becomes a political input.

  • Ideology that plays well with your community can read as a sovereignty threat to the state on whose land you operate.

🛠️ Operator Playbook:

  • 📢 Run a "regulator audience" pass on every launch

    • Before every promo video, founder podcast, or landing page, ask: how would this read if a Chief Minister translated it word-for-word tomorrow?

    • Flag any language that obscures your host jurisdiction, minimises local rules, or positions you as a competing authority

    • Test your narrative on a local founder before publishing — they'll catch cultural risks lawyers can't

🔗 The Runway Insights

  • 10 ways Clay's GTM engineers use AI to accelerate sales (Read)

  • Miscellaneous thoughts about building stuff with AI in July 2026 (Read)

  • Code review (as we know it) must die (Read)

  • The 7 hires a hardware startup needs to get right (Read)

  • Don't hit the NOS too soon: A founder's guide to PR (Read)

💰 Southeast Asia Funding Radar

  • Cove closes $4.5M to expand its Singapore co-living platform into South Korea and Japan (More)

  • Rekosistem bags $7M (Series A) to scale AI-driven waste supply chain management and circular economy solutions across Indonesia (More)

  • Moonshot AI raises $3.5B (Series F) to advance AI development, achieving a $35B valuation after surpassing its funding goal (More)

  • Pluang secures $10M (Series C) to grow its Indonesian wealthtech platform after reaching profitability, led by MUFG Innovation Partners (More)

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That’s all for today

Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.

You can always write to me by simply replying to this newsletter and we can chat.

See you again next week.

- Admond

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