Listen:
Key Points From This Episode:
- Introducing Mark, his background, and his interest in charter cities.
- The concept of Charter Cities and how they can alleviate poverty.
- Mark and Brooke’s experience of a pop-up community experiment called Zuzalu.
- How community gatherings help drive innovation in a society.
- Explore creating a sustainable community with a vibrant culture.
- The Neighborhood project and how it helping to build communities.
- What role the internet plays in facilitating the formation of real-life communities.
- Details about the governance structure of the Próspera development.
- Incorporating families and children into Vibecamp communities.
- Insights into how long communities will take to grow to scale.
- Why mimicking successful models from history is essential.
- The important sense of community and shared values that festivals provide.
- Why there is a need for economic development alongside community building.
- An overview of the legal mechanisms to ensure long-term success.
Quotes:
“[Charter cities] are a mechanism for building new institutions that can help alleviate poverty on a substantial scale.” — @MarkLutter [0:03:24]
“A charter city is basically a new city with better laws.” — @MarkLutter [0:06:00]
“A lot of times – we get stuck in these modes of interacting with people – It’s very professional [and] it’s hard to break out of that.” — @gptbrooke [0:13:32]
“[A development] needs to be this meaningful mutual co-creation effort on some margin. Otherwise, you end up lacking legitimacy and it ends up causing tension down the line, which is always a challenge and a headache.” — @MarkLutter [0:29:10]
“My broad theory on these projects is going with existing best practices.” — @MarkLutter [0:33:14]
Links Mentioned in Today’s Episode:
Charter Cities Institute on Facebook
Transcript
[INTRODUCTION]
Kurtis Lockhart: Welcome to the Charter Cities Podcast. I’m Kurtis Lockhart. On each episode, we invite a leading expert to discuss key trends in global development in the world of cities, including the role of charter cities and innovative governance will play in humanity’s new urban age. For more information, please follow us on social media, or visit chartercitiesinstitute.org.
[EPISODE]
Brooke Bowman: Hi, everybody. Thank you for coming.
Mark Lutter: This is Mark Lutter.
Brooke Bowman: I am Brooke Bowman. Didn’t really plan this out super carefully, we’re just winging it. We’re going to talk a little bit. I’m going to hand it over to Mark first, he’s going to talk a little bit about what he does, and to Charter Cities, specifically.
Mark Lutter: Thanks Brooke. My background, I did a PhD in economics at George Mason and got interested in kind of the question of economics. Which is, why are some countries rich other countries poor? The answer that I came across, that’s by no means unique to me is, rich countries tend to be rich because they have good institutions, good governance. Poor countries tend to be poor because they have bad institutions and bad governance. Obviously, institutions, governance are very broad terms. What it means approximately is having things like rule of law, property rights, incentive structures that lead to socially good actions, and good things like that.
The challenge is, in a lot of places, it’s very difficult to change institutions at the national level. There’s a lot of interest groups that benefit from the current status quo, even if the current status quo is net harmful. This led to overlapping with an interest in cities. For example, Africa will have over one billion new urban residents over the next 30 years. There needs to be new urban spaces for these new urban residents. It’s basically, we’re in the final stage of urbanization and human history. The US reached 50% urbanization in about 1920. Europe, probably a decade or two earlier. East Asia reached 50% urbanization, probably 1960s, 1970s. Now, we’re seeing finally the urbanization happening in Africa, as well as parts of Asia where they’re starting to hit 50% or greater urbanization. No, 50% of the total population living in urban areas versus rural areas.
For most of human history, people farmed, and then as people got richer, and they moved to urban areas, good things happen. Long story short, combining this interest in governance with new cities, new urban spaces, the idea is it’s very hard to change governance on a national level. But on a local level, it’s possible to implement better rules, better laws, because there are fewer special interest groups. If you can identify the places where urbanization is happening but hasn’t really fully been instantiated yet, you can create better laws, better regulations that lead to more economic activity, increase economic growth rates by one to two percentage points a year. Which over a 30, 50-year time horizon compounds and makes more people a lot less poor.
One example of this is China. China in the last 40, 50 years has raised 800 some million people out of poverty. Their economic development strategy was largely urbanization combined with special economic zones. So, thinking about how to make that happen. That’s the high-level framing of I think, why charter cities are interesting. It’s a mechanism for building new institutions that can help alleviate poverty on a substantial scale.
I started the Charter Cities Institute about five years ago. We work mostly in Africa, and Latin America, working with governments, as well as new city developers to make this happen. I think one other thread of Charter Cities, while most of my past work is focused on making poor places less poor. There’s also the idea of pushing the institutional frontier. The U.S. is still the world leader in innovation, but a lot of our institutions are not as good as they could be. One kind of example is during COVID, the U.S., and in fact, no other country adopted human challenge trials. Just exposing people to very low doses of COVID, and then giving them vaccines as a way to expedite the vaccine studies. Which given the huge economic as well as human costs of COVID could really have accelerated a vaccine deployment.
The fact that no countries were willing to embrace this, in my opinion, somewhat common sense procedure indicates we can come up with better institution, better kind of ways to do things for really high-income places pushing the frontier. What this takes me to is about two years ago, I was approached by a concerned resident on a large Caribbean island, who basically said, “Hey, look. We’ve got a failed special economic zone. The government’s in a bit of fiscal challenges. The current managers of the special economic zone haven’t been reinvesting substantial capital, and the economy has been stagnant for 20 years, and there needs to be a change.”
I was like, “Holy shit, this is a great opportunity. Great. You’ve got a lots of land, over 50,000 acres of land. You’ve got decent infrastructure, a port, water, sewage, electricity, airport. You’ve got a good proximity to the U.S., an hour flight from Miami, a few hours from New York. You’ve got a government that seems willing to cut a deal to create a good legal and regulatory environment that can help push the frontier of innovation. Both in terms of technology as well as potentially in terms of culture.”
I’ve basically been working on that for the past two years, full-time for about a year and a half, figuring out how to put together the team to engage the asset owners, as well as work with the government. To create this new legal framework that can hopefully build a really awesome city that can help accelerate technological innovation, as well as has cool culture and stuff like that. Let me pause there and see –
Brooke Bowman: That was an excellent, high-level overview of what you’re working on. Can you just for people who maybe haven’t been as plugged into the scene just give like a brief description of what is a charter city.
Mark Lutter: A charter city is basically a new city with better laws. Classic examples of what might be described as proto-charter cities include Singapore, Shenzhen, Hong Kong, and Dubai. Singapore is an independent country, Hong Kong was British, and then under China, one country, two systems. Dubai is part of a confederacy, but basically largely independent. Shenzhen was a special economic zone but had a huge amount of delegated authority. Then, historically, city-states, or close to city-states have been one of the longest-lived forms of social organization in history.
Everybody is familiar with Venice. There was the Hanseatic League, a confederation of states that actually went to war with nation-states, and won some of those wars. We’re not trying to pursue sovereignty. I don’t think that’s necessary for economic success. If you talk about sovereignty with governments, the best-case scenario, they never talk to you again. Worst case scenario, they arrest you for treason. We try to focus on win propositions with governments. How do you create value for them, and how do you create a framework that can attract capital and people to make the location very successful? If you have a question, we’ll do that in 30 minutes or so.
Brooke Bowman: I’m going to pivot really quickly. Let’s go ahead and start talking a little bit about Zuzalu. Actually, I think I like your – I know you’ve been talking a lot, but I like your description of it. If you want to start and then I’ll share my sort of impressions of it. Because a lot of people here, probably even a lot don’t know what it was at all.
Mark Lutter: Sure. I’m not sure which exactly description you remember me saying, but I’ll spit ball. So I met Brooke at Zuzalu, and it was great because we have the same level of social awkwardness. So we became conference buddies and just were like, “This conversation is too much. This conversation is good.” Just vibing out most of the time.
Zuzalu was a kind of two-month pop-up village in Montenegro, organized by Vitalik Buterin. The way he frames it is, you can think about in-person human organizations along two separate axes. One is time, the other is the number of people. One human organization that is very long lived, as well as has lots of people is like a nation-state or a city. Those lasts for hundreds of years and have lots of people.
A human kind of organization that has a small number of people and is short-lived is a dinner party. You might have ten people over a dinner party that lasts a few hours. Then, you’ve got like universities that are four years between, medium amounts of people. You’ve got conferences, lots of people, short time. You’ve got like hacker house, small number of people, long time. But what is a medium number of people, like several hundred for an extended period, but not super long, two months. What does that social organization look like? Can we do an experiment like that.
For those of you who are familiar with network states, and Balaji Srinivasan. Vitalik, was inspired a bit by Balaji, but put his own spin on it with a bit more focus on community, with less focus on a single cause, instead just a general vibe. Then, instead of, Balaji wants sovereignty, Vitalik was like, “Hey, let’s just do something cool and talk to the government and see if they like our ideas.” This happened in Montenegro. It was in a kind of nice resort on the ocean. It was 200 full-time residents, and then about a hundred people cycling in and out every week over two months.
So every week or so, there was a new sub-event, I organize the sub-event of new cities at network states, which happened about a month in. I was there for two and a half weeks, so not the entire thing, but long enough to get a feel. What I found very interesting about the event is one, just like it worked, like two months in one place. Lots of people worked better than I thought it would. Two is, just seeing how kind of social dynamics changed and evolved over time. Because there was no advertising done for this, so it’s just kind of word of mouth. And seeing as people got excited, people about interested in the event, more people came. How the dynamics change with each weekly events, and sub-event, how new people coming in, interacted with the residents who were there full-time, how the cultures played off each other. That broad social dynamic, I found very fascinating.
Brooke Bowman: It was really interesting for me. I was there for three weeks. I came out for the Network State, and Charter City Conference, or sub-event that Mark helped organize, and stayed for quite a while after that. One of the things that I found interesting as soon as I got there, I didn’t know much about it. There was a webpage like I’ve heard some friends mentioned it. The webpage made it sound very intellectual, like tech-focused, bleeding edge, AI crypto. There was like a whole week for ZK-proofs. There was the Network State Charter Cities, there’s biotech, and longevity.
I get there and it was like weirdly like Vibecamp in some ways, much more academic, much more conference style. In some ways, they were really trying to make it a co-created experience. They were doing it all through, basically telegram. I didn’t really get involved in the ZK-proof stuff. I think some people were building apps over that. But it was like, some people would organize daily cold plunges, they had rafting trips, they had other dinner nights, they had lots of music nights and things like that. I think, at the time I was getting there – it ran from March 25 through May 25. I got there at the end of April. I think, I heard a few people comment that it was like, Zuzalu was just finally figuring out how to party.
Mark Lutter: I might have helped with that.
Brooke Bowman: Excellent work. I came away with a really strong impression that, this is an amazing thing. It’s unlocking things in people’s minds. This is like a whole new way of people gathering. Also, they need to be by beer.
Mark Lutter: Probably fair. It did have the community-led stuff. For example, my engagement was, Vitalik supported by a non-profit for a while. So, he came for launch in Zambia, one of our regional offices, or I guess, our original office. Spoke there, and told me about it, and I was like, “Okay, this sounds interesting. But also, I don’t really know what this is, and two months is a long time, and maybe I’ll check it out.” Then, a few weeks later, he texts me and he’s like, “Yes, we’re organizing New Cities and Network States weekend. Here are some of the people who want to come, blah, blah, blah.” I was like, “Here’s an agenda, here’s the schedule, you might want to think about doing it like this.” He was like, “Do you want to run it?” I was like, “Sure.” And put it together, invited a bunch of people, ended up flying out a week earlier, just because I was like, “I don’t know what this is, and I need to be on the ground here to actually get a sense of the vibe.” I’ve had lots of help from people who had spent a bit more time there, so I can understand that a little bit more.
One of the things that strikes me as similar to Vibecamps is one, just the general openness. You can walk up to almost any conversation, engaged, people are warm and welcoming. Two, just a pretty high density of good conversations. Obviously, people have differing interests. If people are talking about very technical stuff about longevity, that’s not my cup of tea. But the conversational hit rate was extremely high. There was relatively high serendipity. Then two, I think, yeah, given kind of Vitalik, and Vitalik’s personality. Getting people who are a little bit more vibey, I think is important for events like that. Vitalik’s fantastic.
Brooke Bowman: That’s one thing that I’ve been telling people some over this weekend is, there’s this thing that has happened at a few key moments in places in my life. One was when I was in college in Santa Cruz, another one was Zuzalu, another one is [inaudible 0:13:00], but I’m soon to be in the neighbourhood at San Francisco. Those are all places where I could pretty reliably walk out to get food, just go for a walk, whatever, and run into people that I know, or people that I am like far more likely than average to have a really interesting conversation with. It’s certainly nourishing and fulfilling. I think Vibecamp does that a little bit. It does a lot of bits, in my opinion, but it’s also just such a short period of time. It’s something different when you’re not jam packing your day full of event, and connections, and things like that. You’re going to the grocery store, and then, “Oh shit. It’s you.” There’s something really magical about that.
I feel like a lot of times, particularly in places like San Francisco, but everywhere, we get stuck in these modes and interacting with people a little bit in San Francisco, it’s very professional, as network, it’s hard to break out of that. If you are approaching conversations with the intention to network, you’re going to be just like focusing on whatever your actual project or job is. But if you have a conversation with somebody where you’re talking about the things that you are really interested in, you might have a whole new project come up that never would have even been touched on had you stayed in that box. I think that’s one of the really crucial things about facilitating these sorts of connections with people. You’re running into people outside of the normal contexts. So that’s something I’m really interested in. I came away from Zuzalu with the idea, a lot of people – I don’t know how many people are staying after in Philly for this Vibecamp. Last year, we had people – I was there for a month in Austin. I was there longer than just about anybody else.
A lot of people came early, a lot of people stayed for a week or two late. If we can get people out for that amount of time, it’s not that big of a reach to imagine, maybe we get a smaller number of people somewhere for two months. Do you want to speak a little bit on why you think that working with a group like Vibecamp might be beneficial for your project?
Mark Lutter: Sure. Before going into that, because I think touching on the serendipitous conversations to perhaps put it in a broader context. For those of you who know progress studies, I don’t know, this should be a little bit familiar. But throughout human history, certain times and places contribute disproportionately to human progress, broadly defined. Ancient Greece, Renaissance Italy, the Dutch Golden Age, Turn of the century Vienna.
One of the things that consistently pops up in these times and places is this, what might be described broadly as serendipity. There’s some kind of type of meeting place, there’s some kind of type of gathering, whether it’s like coffee houses. Or whether it’s some social event, some social function that allows for people to explore creativity, pushing the frontiers to generate new ideas that really, hopefully can lead to meaningful changes in ideas, and technology in the human condition broadly defined. I think it’s at least, obviously, there’s a kind of individual personal satisfaction, at least. I and I assume many people here get out of this, but I think there’s a broader social context that’s worth mentioning as well.
As to why I think doing a vibe city or a similar kind of adjacent event in a new city development is important. I guess, let me just give a broad framing. My background, I’m an economist. So I think about kind of economic developments. When we’re thinking about this Caribbean project, what this looks like is initially starting with tourism and hospitality. Because it’s the Caribbean, they’ve got very nice beaches. You need that to do two things. One, to have a lot more flights. Then two, create a lot of jobs because the government wants jobs, the locals want jobs government wants tax revenue, and tourism tend to be very capital-intensive jobs, labor-intensive industry. So it keeps the government happy. It makes sure the local population is employed, gets everybody on the same page.
But a lot of tourism and hospitality, at least at that scale, like it’s going to be people, a lot of lawyers, bankers from New York, people who make good money, have families, but perhaps not the people pushing the frontier of knowledge. Not the people that I want to have random dinner conversations with. I think figuring out how to make it not just a place where kind of economic development economic activity happens, but a place where there’s a meaningful culture is critically important.
This, I think has two things. One, last year, I probably spent 40% of the year on this island. Right now, it’s very boring. Part of it is just like, my personal desire to have interesting people around. More broadly, I think, there is the opportunity to see a new interesting culture that I think can build and grow meaningfully over time. Will it be the largest percentage of the population in the city? No, but you only really need a small percentage of population, 1%, 2%, 3%, to drive culture. And figuring out how to attract those people that have that founding effect on culture that lead to this openness of ideas. This kind of type of exchange, these sets of activities that people like, that people enjoy, that attract more people, that get more people talking about it, I think, can really critically help drive the city’s development, help drive the narrative, and really create, I think one of the better places to live, at least in this hemisphere.
Brooke Bowman: I mentioned The Neighborhood earlier. I want to, assuming that some of you don’t know what that is. It’s a project started by Jason Ben in San Francisco. And wanted like the feeling of community, and co-living without kind of the overhead that normally comes from it. Hopefully, I’m doing justice to it. But he sat down and he picked up like a one square mile of San Francisco, based on different metrics like walkability, things like that. He just basically planted a flag and said, “All the cool people, all the friendly ambitious nerds, move here.” It worked, and there are now hundreds of people living in this very compact area. I mentioned earlier is that, it’s a place where I could go, and I almost always run into people that I know.
Patty over there in the audience started a commons in that area, it’s a really great shelling point, third place. There’s just so many cool things happening with this concentration of values-aligned people living in a specific area. At Zuzalu, I heard several people ask, “Will people still be here in June? Can I come back?” No, this is a weird random five-star resort on the coast of Montenegro, full of Russian oligarchs. People are not going to just hang out here year-round. But if we could do it in some place with like this project, I am in need of land. Mark is in need of some kind of culture seed. It’s possible that if we start to do something like that, there’s some handful of people who might stick around, or might come back and then help actually seed this thing, and build it. I just think, there can’t really be too many places in the world. I’ve heard very great things about Berlin. I think Lisbon is this way, where there’s just these really thriving interesting communities and cultures blooming.
Mark Lutter: I think that’s right. I think one interesting thing that’s happening with Vibecamp as a kind of certain instantiation of, as the Internet is a giant sort of device. What’s happened, I think first in San Francisco is this sort of device has become realized IRL. So you’ve got a lot of group houses, you’ve got a lot of these communities that build on each other. This was starting to spread beyond SF. But then, COVID really unlocked it where now with some digital nomads, historically, people have tended to sort themselves through things like class, through race through ethnicity. Now, increasingly, people are sorting themselves through some degree of shared interests, what might be described as like vibe broadly defined.
And figuring out how these new sorting mechanisms take place. Then two, creating different locations for different types of people that might be interested. Not everybody will be interested in this particular project that we’re working on, but I suspect at least a lot of people in the audience might be given that you’re here at Vibecamp and it’s a kind of overlapping vibe that we are going for creating the space. Then, two, when thinking about the impact of these cultures, I think embedding them within a kind of larger project or something that can help them scale is important. I think culture matters.
It’s one thing to get together with your friends for a weekend, it’s another to be a critical part in this kind of long-term projects that a lot of people are paying attention to that are interested in. That can help, hopefully, creating a positive feedback loop that spreads beyond the kind of initial community. It draws more people in and demonstrates how, all right, if we are a little bit more kind, if we are a little bit more open, if we are a little bit more creative, we are a little bit more – I’m sure you’ve got better words than I do. Then, this might be kind of cool way to live.
Right now, what we’re doing, we’re finalizing the team that we’re putting together to be able to execute on this. It’s basically a kind of a very large real estate and/or private equity transaction that’s quite complicated. We’re finalizing the team and in discussions with our investors to finalize terms, that we can then go and actually acquire the asset. Until we acquire the asset, there’s not much to do. So I guess, I’ve got a lot of work to do.
Brooke Bowman: On your end, perhaps. On our end, I’m really interested in trying to experiment with this format of gathering whether or not I do it in partnership with Mark, sorry. But some of the big unanswered questions, like how do you make Vibecamp the kind of thing, like this sort of vibe, sustainable over two months? Because there are already people going home today because they are burned out. So it cannot be this kind of intensity. I’m really interested, and I haven’t determined the place yet. But Tuesday, if anybody’s still in Philadelphia, I would love to have a workshop, where we talk about both ways that we can improve Vibecamp itself. Then, also, what would something like a vibe city – city is used very loosely in these contexts. But what would something like a two-month-long event look like you.
You would have to have high-speed Internet, you would have to have co-working space, you would have to have the ability. One thing that I felt like was missing from my Zuzalu experience was like, it felt not quite a conference, but a conference. It never felt like real life to me. That’s the kind of thing that I’m craving. I’m craving, this morning, some of us in the staff house up there, some of the volunteers. Six of us on the porch, drinking coffee, and just chatting. It was such a lovely way to start the day. That’s the kind of thing I want in my life. I don’t think anybody wants super intense experiences all day, every day.
But if we can find a way to bring in this group of co-creation and play, and all those things, while making it sustainable in terms of energy, in terms of our lives. And yes, like initially, this would have to be something where it’s like, people who – it’s like mostly for people who are on sabbatical or work from home just for – two months is a very long time. Those are questions swirling around in my head right now. I don’t really have a playbook. I went from Zuzalu, went home for two weeks, it’s all been like the mad rush. But that’s something to think about. [Inaudible 0:23:04] now. Gee, do you have other questions or do you have anything else you want to add to that? Okay. Any questions?
Audience Member: For the Caribbean project, what are your current thoughts on the governance structure [inaudible 0:23:14]?
Brooke Bowman: Do you want to just also say what Próspera is in case people don’t know?
Mark Lutter: Yes, sure. Próspera is a charter city development in Honduras, in Roatan. I think the key differences that we’re focusing on are, in terms of governance, we’re taking, in my opinion, the Próspera governance system is a little bit complex. For example, you can use any law from any OECD country. So you could use French labour law, or English labour law. Whether the set of things that are in French labour law, and a set of things that are in English labour law are the same, that isn’t clear to me. So we’re just going to go with the country as a common law country. So we’re just basically going to try to make it really easy to start a business, to buy land, to build things. Then, we’re going to focus very heavily on having a strong partnership with government.
One of our key advantages is that, Prospera doesn’t have any special visas, and so, we’ll work with the government to expedite visas for workers, for residents, things like that to make sure that we can attract the relevant population. Then two, I think the other kind of key distinguishing feature is that, we will be able to have scale. The entire island of Roatan is, I think, 23,000 acres, and we’ll have over 50,000 acres of land. Being able to sell that broader long-term vision of, this isn’t just a community, this isn’t just one or two things. This can grow into a hopefully a globally competitive city 50 plus years. I think that can attract a different type of people and get more interesting things happening.
Brooke Bowman: Yes. A couple other things that have been on my mind with this. I think there’s a really interesting opportunity here to bring in families more. Vibecamp already has more children here than Zuzalu had. One of the parents in Zuzalu had not brought his child. I think there was actually, Michael Vassar, maybe had the only baby there. It was just too hard for people to book travel out there. Then also, the kids weren’t really welcome in the conference spaces. It had a very conference feel, and there’s a daycare run by Montenegrin local.
You run up into all kinds of issues. If you’re having other people watch your kids like, how did they do that? What kind of parenting teaching styles do they use? There’s a lot of room to reconceptualize how we bring these kinds of groups together. I think that’s a really common failure mode. In co-living houses, there is a bunch of young 20-somethings or whatever who want to live with their friends, and then it goes poof when they move out to have children. We can find a way to address that. I’m also really interested in the possibility of working with people like Nat Sharp, other people who are interested in revolutionizing the education system.
We are making an attempt to building a city. That’s a crazy opportunity to just change how we do a lot of things, just built it from scratch. If you’re following a model where you’re there for a couple of months out of the year, or whatever. Maybe some people stay longer. But that’s a way to take little bites of this thing and not fully commit. It’s hard. Prospera seems cool. I’m not going to move the Prospera until there are enough of my friends there, there’s enough things going on. It’s just uprooting your whole life, but two months. I could do two months. Especially if it was something that I was like, a part of building, and has the potential to meaningfully change the world.
Audience Member: It seems like you were both talking about different ends of the scale spectrum. Mark is [inaudible 0:26:23]. On that note, what do you think is like the minimum viable scale of something like this? How small can you get to [inaudible 0:26:38] actually get something you can take forward to a larger project?
Brooke Bowman: These are two different projects that we are in discussions about working together on. But I think that answer is probably going to be different for each of us. For me, it would be like, I don’t know, just yes, figuring out a place we could go for very cheap. Maybe it’s even just getting like a bunch of Airbnbs near each other, or like finding somebody with a property. I’m not really sure. I think that there is a minimum viable Vibecity out there. It would make things a lot easier if we had land, and like we were working on this broader project that we can like slot into a puzzle piece. But I do think if that falls through or something like that, I think that there’s a lot of room to play around and figure out a way to try it.
Mark Lutter: Yes. I think, from my perspective, part of the challenge in a group of cities, minimum viable product is very big. So you need enough land, you need to start with good relations with the host country. You ideally, you need a good location. Ideally, you have decent infrastructure available, because otherwise, the upfront capital costs just go through the roof. This is, in my experience, the minimum most viable product I’ve seen for a city, probably by an order of magnitude.
A lot of the projects along these lines run into significant challenges because they don’t effectively engage the local community. In this particular example, one is, we’re closely with those country, which is democratically elected. Two is, there is an existing basically private special economic zone that our pitch to the government was, “Look, you’ve got what’s now a bit of a hole in your sovereignty. We’ll come with you, we’ll partner with you, we’ll modernize the zone. But because we’re going to invest a lot of capital, we need X, Y, Z rights to make sure there is that return on capital.”
Three, I think in terms of community, will incur a major failure mode, as if the locals end up only in service jobs. It’s both the American and other expats there who are in the higher productivity jobs. What we’ll have to do is, one of the things I think Zuzalu could improve on is there was not very much integration with the local community. So I’d want to do if there’s like a Vibecity, or Zuzalu 3.0, or whatever it is. Okay, every twice a week, you go to the local community. Like once, maybe you just take a bus, go meet people. And then on Sundays, have local churches invite people in, even if you’re not religious. That’s their thing, so you go and say, “Hey, look, this is cool. We like your community, here’s what we’re building. We would like to be a part of what you already have and build on it and make this more awesome.”
Setting that seat early is critically important. And not just having, “Here’s the doc, some money for a school” or “Here’s some money for whatever.” It needs to be this meaningful, kind a mutual co-creation effort on some margin. Otherwise, you end up lacking that legitimacy and ends up causing tension down the line, which is always a challenge and a headache.
Brooke Bowman: I tend to adopt different conference buddies, and my conference buddy before Mark was John Hillis.
Mark Lutter: The hare and the boar. I feel betrayed.
Brooke Bowman: Yes. John Hillis is running Cabin, which just launched their network city, I think it’s what they’re calling it, a few weeks ago, I think. If you guys aren’t familiar with that, I would highly recommend looking into it. John is just a fabulous human being. I feel really aligned with him in values. He’s actually the reason Vibecamp was at the first location outside of Austin, because I reached out to him, and I was like, “You seem really cool. I like what you’re doing. Can we host this weird thing on your land?” He was like, “We don’t have the logistics, but my brother owns this children’s summer camp. There’s a bit of Vibecamp lore there.”
I knew that there’s just – I mean, there are new infinite ways of exploring these kinds of things. There are a lot of people working on really cool things. There’s a bunch of people right now, like fractal in New York, all over, the micro solidarity people. There’s so many groups who are experimenting with new ways of being human together. Whether that’s living together, or meeting each other online, or whatever it is. We’re all kind of like working towards this end goal, I think of like a world where everybody’s flourishing. I think it’s going to take all these different experiments. It’s going to take a lot more than that to all kind of like work towards our future.
There’s a lot of different possibilities. This is kind of something that only really came to mind during Zuzalu, which is very recent. So if anybody wants to have – I would like to have many, many, many, many hours of conversations about the directions this could go. Maybe it’ll look like something totally different. Vibecamp was going to be like, I don’t know, at first, we were like, “Let’s do like a burn for our Internet friends,” and this is not quite what that is. Things can change over time, and I’m just really excited to talk to people about it and see what we can come up with.
Mark Lutter: The second question, the answer is, yes. First is, the acquisition is a few 100 million. Then, then subsequent investment ends up going up a lot because cities require a lot of investment.
Audience Member: I see things changing, like over the course of like 50 years on a pretty long timescale, from maybe not like legal power, but like influence being transferred from nation states to megacities. That seems to be the way like humans are going in reorganizing themselves. If this is important what you’re doing to things that don’t scale first, it’s like figure out how cities should be run. If cities are going to be like how people organize themselves. Do you ever think about it on that spirit of like long term? [Inaudible 0:31:42]
Mark Lutter: No, I think that’s a very important point. I mean, one of my long-term goals and hope. If you look at human history, often times, innovation kind of comes from islands that later spreads to continents. UK has the Industrial Revolution, and it spreads to France and the rest of Europe. Japan kind of copies the German industrialization models, spreads to South Korea, Hong Kong to China. You do have this long history of island, or maybe even like ancient Greece. Not an island, but basically a seafaring people that spread throughout the Mediterranean.
I think, like this mimesis is very, very important. So figuring out how to make sure you get it right, and can have that kind of positive, long-term overlapping aspects, I think is really critical. The way you kind of generally think about, let’s call it governance, culture, infrastructure, broadly defined, is it’s very complicated. I just want to uncomplicate things as much as possible, which means, I’m not trying to reinvent the wheel. I’ll just hire people that have done approximately the thing before, and then adjust it slightly. Somebody comes up to me and says, “We can put blockchain on the land registry.” I’ll be like, “Great. We’re going to hire this company that has done land registries for 50 years without blockchain because that seems to work and kind of minimize the risks there.” Because even if you do that, and it will probably work once you have probably a dozen times. One of them doesn’t, then you’ve got this kind of cascading failure mode.
My broad kind of theory on these projects is just go with existing best practices. Then, the broader long-term view is like, a lot of these just doing things on the margin a little bit better, attracting cool people has this compounding effect that hopefully can demonstrate to others, how this is a kind of, might be a better way to do things. And you might want to adopt some of the things that we’ve got going on there.
Brooke Bowman: This isn’t intentionally related. But just from the culture side of things, I keep hearing from people that, they’ll go to festivals. And we’re having this conversation on the porch this morning, actually. Like, this isn’t actually a festival, it might be like in size, like close to some smaller festivals, but this is something a little bit different. It’s a little bit chiller, it’s a little bit more focused on just talking to people and making connections.
But I keep hearing from people who kind of do the festival circuit, that if they could live in those festivals all the time, have that just be their lives, if they would love it. That’s not the kind of life I want to have. I think maybe people would actually get tired of like Burning Man 24/7. It’s exhausting and a huge resource drain. I kind of wonder, what is it about festivals that makes people say those kinds of things? I think it’s kind of like the spirit of, we’re all in this together. I am adding value, I am going to pick up that piece of trash that somebody else dropped because have some sense of ownership. I feel like this is my home a little bit. Also, just like, we kind of have found ourselves in a world where it’s not considered – like it’s considered taboo to talk to people in the grocery store. Some people do it, but it’s definitely not the norm.
Here, it is the norm to go and talk to people you don’t know. If you see someone who’s like, “Hey, that seems interesting, that I heard you saying this thing” or whatever. I kind of wonder how much of those sorts of sentiments come from just the different norms that are in place at festivals. And what could happen if we could find a way to bring those norms to the longer-scale experiment.
Mark Lutter: I think that’s right. To build on that point, a term that I think Brooke uses frequently is that, we’re in a bit of a crisis of meaning, which is causing events like this to happen. And figuring out how you can build a community that has some sense of shared values, and I think the values that I particularly like are kind of openness, curiosity, kindness. That is something kind of meaningful for people who live and hopefully can show it to other people that, “Hey, these values are good. If you adopt that, maybe you can bring a little bit more joy to your life and your kind of relationships around you, and leave the world in a little bit of a better place.”
Audience Member: How do you think about those transition from that [inaudible 0:35:39]?
Mark Lutter: So I don’t think it’s a transition per se. I think you have to do these things concurrently. To give a sense of the broad kind of economic development that starts with tourism, my guess is, the first decade or so, it will be basically like extremely high tourism growth, just because it’s been very depressed on the island for a long time. At some point, that’ll kind of peak, and it will still go up, but not at the same rate it was going on before.
There are other industries we can engage in logistics. The island has a very good port. We could – there’s some manufacturing on the island already. The long-term economic driver we see as, what might be called as immigration arbitrage. Go to Google, say you’re hiring 10,000 H1Bs, you only got 2,000, open a campus here, we guarantee everybody gets a visa. It’s basically people who want to be close to the U.S., but because of U.S. labour restrictions aren’t legally able to enter. But you do that concurrently with Vibecity or something similar.
A lot of the culture in cities tends to be set by a very small percentage of the population. By kind of setting that culture right in the beginning, even though you have other broader industries that are occurring, the conversation has dominated the blogs, the cafes, the podcasts, whatever is being dominated by people in this culture. People talking about it, and it kind of spreads over time to include these people that might not be immediately familiar with it from the start.
To interpret the private equity question, let’s just call it corporate structure broadly aligned with these goals. That’s one of the challenges that we’re either working for now, is identifying kind of a team as well as capital sources that have these long-term vision alignments, that allow us to make sure that we can do this deal in a way that has this kind of positive growth cycle over time, and doesn’t corrode, and corrupt in a way that kind of transactional processes often do.
Brooke Bowman: Just quick note about like Vibecamp attendees, this kind of general social scenes, like we are very loud, and we love talking about our norms. I think that we could probably easily have an outsized influence on the development of culture. I think that’s a good thing. I think that there are a lot of ways that we can make this better. There’s a lot more we can do to set norms. I’d love to hear from any of you, all of you about that. We’ll be sending out an exit survey as well. I think it’s more of the world was like, you guys, I don’t think that the world would be better for it.
Audience Member: Several of us here at Vibecamp would probably self describe as a little bit weird. Are there particular strategies for what it looks like to evangelize this, say it loudly in a corner where all people are? How does this make the leap from a group of people making something special to something that’s really actually bringing in outsiders and not just people who would be here if they heard of it?
Mark Lutter: Yes. I mean, I think it needs to be intentional. Ultimately, there’s going to be a degree of friction at the beginning. This country is relatively religious. The average person probably a little bit socially conservative, just because that’s their background. But at the same time, the country’s primary industry is tourism. So they’re used to kind of people coming in, and most of the tourists don’t interact with them very much, other than to buy food, or be waited on, or whatever. There is a sense of hospitality there, and I think there will be an openness to people coming and saying, you go up and you say, “We have a group coming, they would love to just participate in your church servants just to listen. Then to, afterwards, chat with people.”
You don’t start by saying, “Hey, look. This is who we are, here are our values.” You start by going and saying, “Okay, this is who you are. I’m trying to understand who you are. Also, this is who we are. I’m interested. I’m here for two months, whatever, three months. I’m thinking maybe I want to extend it for another month, maybe I want to make this annual vacation spot. Maybe I do want to remote work here for three months afterwards.” But trying to get a sense of it, and kind of have an honest, and open dialogue with people. I think even people from different backgrounds, even if there’s not a lot of immediate cultural connection would be open to that. People like, when you express interest in their lives, and who they are, and people like a little bit of, let’s call it, spontaneity, weirdness. Perhaps, not as much as Vibecamp, but like, I think that interaction if set right on the ground level can create something a little bit more harmonious than a lot of these projects do.
Brooke Bowman: My comment about how loud we are, and how much we love talking about norms. That was a little bit of a shitpost. When I got off the streets, I was like, “Wow, I feel like I’m thriving. I’m very happy. I want all my friends to be this happy.” So I spent in a Discord server, a few of you might have been friends with me long enough to remember this. I had like 400-something channels of like long-form interconnected blog posts, basically. Trying to just dump out all of the things that I got. As much as I could think of, they contributed to like me, finding happiness. And like, no one was reading that shit, it was not having an impact. So I kind of like switched over to like, I will just like live happily publicly.
I think that there is so much power in just leading through example. Actually, if you guys are coming to the dating show tonight, which I highly recommend, we’re going to be doing a song. I’s called the Get Shit Done. Don’t talk about it is like the hook. I think there’s real power to that. I think if you come in, and you post dinner parties, you do things like that. That’s a lot of what I’m seeing in San Francisco. I’ve mentioned this to a few people here, like, San Francisco, everyone talks about the tech scene there. But the reason I’m there is there are some like world-class community builders doing really, really like revolutionary things. It all kind of just spreads from like a small group of people trying something new, and then inviting a few other people into the circle.
Then “Oh. That is really cool. I want to do that too.” Then, you have all these co-living houses, you have these certain spaces, you have all these cool things happening. I really think that that’s a much more powerful way. The only efficient way at all to transmit norms is just b –,
Mark Lutter: Living.
Brooke Bowman: Huh?
Mark Lutter: Living.
Brooke Bowman: Yeah. It’s actually really nice, like be friendly, and kind to each other. Maybe I should do that more.
Audience Member: Where do we keep this conversation? What next step do we need and how we can help today?
Brooke Bowman: You can sit and chat with me afterwards because I’ve been a little bit distracted. I don’t know if you’ve heard but I was hoping to run a festival. [Inaudible 0:41:58]
Mark Lutter: I thought it was a big festival.
Audience Member: I understand you.
Brooke Bowman: Something festival-ish. But yes, I’d love to chat with some of you after – I got a few free hours. Well, I won’t take that long, but if you guys want to come up to the stage after we’re done and figure that out. That would be awesome and very helpful.
Audience Member: You mentioned you’ve been living there. Have you gone to church, the local to start [inaudible 0:42:20]?
Mark Lutter: I’ve went once. Right now, I haven’t done too much just because there’s a risk of – if you talk about on deals like this, you just can’t be very public about them. So I was living there to get a sense, not as a large of a sense as I would like. Just because like, who I am, if you Google who I am, you might start talking to me. You ask, “What do you do?” It just becomes like hard.
Brooke Bowman: You did adopt a local dog, though.
Mark Lutter: He followed me on the bar. I didn’t even feed him that night.
Audience Member: [Inaudible 0:42:49] sure longevity sort of thing?
Mark Lutter: There are various legal mechanisms you can use. You can get investment from the sovereign wealth fund, get them to sign a bilateral treaty to protect the concessions. But the heart of it is, you need to make sure you honor your end of the bargain, and you are a good steward for a very important national asset. You create a lot of jobs, you respect the locals. And ultimately, if you do those things, by the time you get to legal mechanisms, you’ve already lost half the battle. I think really critical is just starting right, creating jobs, creating tax revenue, having local engagement, treat the locals fairly, treat the government fairly. And that builds up trust over time to where it’s a real partnership, and not seen as kind of something extractive that’s taking advantage of a local population.
Brooke Bowman: That’s what happened with Próspera. To my understanding, they had a deal negotiated. The government went out of power, and now they’re up against – they’re having some trouble. Where do you think they went wrong?
Mark Lutter: Honduras passed the additional legislation after a constitutional crisis. The previous president was put on a plane by the military and shipped to Costa Rica. In defence of the military, the Congress had turned against the president. The Supreme Court had turned against the President. The President was trying to run for a second term, which was illegal by the Constitution. Was it a coup? Was it not a coup? I don’t think the semantics matter that much. It was a constitutional crisis. At any time, large reforms are passed after a constitutional crisis, they lack full legitimacy.
Second is, Latin America tends to have very strict left-right divides in politics. Except like the left is more extreme than American left, and the right is more extreme than the American right. That leads to major policy shifts when different parties are in power. The Caribbean political parties tend to be a little bit more populist and a little bit less ideological. There’s less risk of, this is bad because it’s bad, and more just a, make sure people who vote for us are getting jobs because that’s how we get re-elected. There’s a little bit less risk on that front, just because of that dynamic.
Lastly, Próspera, I think, branded themselves in a way, and also did not create a lot of local. That was seen as negative by parts of the host country. There are other kinds of charter city projects in Honduras that haven’t gotten nearly as much press or publicity because they didn’t brand themselves in a certain way because they focus a little bit more on local communities. I think getting that initial stage right is really critical to minimize some of those risks.
Brooke Bowman: Okay. We are at one now. Thank you guys so much for coming out, and we’re open for – if you guys want to come up and ask for questions. Thank you so much. Thank you, Mark.
[END OF INTERVIEW]
Kurtis Lockhart: Thanks so much for listening. We love engaging with our listeners, so please always feel free to reach out. Contact information is listed in the show notes. To find out more about the work of the Charter Cities Institute, please follow us on social media, or visit chartercitiesinstitute.org.
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