Visa problems? 'Seasteading' your startup may be the answer

Silicon Valley's next hot incubator for startups could be located in an unusual place: a new company called Blueseed plans to set up shop in international waters, 12 miles off the California coast.

Declan McCullagh
Declan McCullagh Former Senior Writer
Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
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Floating city of entrepreneurs aims to drop anchor
Watch this: Floating city of entrepreneurs aims to drop anchor
PALO ALTO, Calif.--A new incubator for Silicon Valley startups is hoping to make waves by being located outside of Silicon Valley. In fact, it won't be anywhere near terra firma.

A recently formed company called Blueseed is planning an oceangoing hub for foreign entrepreneurs who have difficulty obtaining visas that would allow them to live in this sprawling megalopolis that so many venture capitalists and technology companies call home.

Blueseed's pitch is as ambitious as it is unproven. They hope company founders can be convinced to move to a platform floating 12 miles off the coast of Northern California, in international waters, with regular ferry service to the mainland. Oh, and excellent broadband connectivity too.

"We're creating a space that will be interesting and enticing enough and innovative enough to attract" the best startups and their founders, Max Marty, chief executive and co-founder of Blueseed, told CNET yesterday.

Artist's conception of a potential seastead located off the coast of northern California
Artist's conception of a potential seastead located off the coast of northern California. Click for larger image. Blueseed

While Blueseed aims to become the first fixed "seastead"--an existing exclusive yacht where millionaires can buy homes probably qualifies as the first mobile version--its founders haven't decided on the vessel. Possibilities include a repurposed cruise ship, or even an ocean-going barge, which might be cheaper because once it's towed into place, no engines are needed.

Their goal is to attract up to 1,000 entrepreneurs who want to live a short ferry's ride away from Silicon Valley, with its unsurpassed network of tech investors, law firms, suppliers, and social opportunities.

That means building a unique space on the high seas that could lure even U.S. entrepreneurs currently living on dry land. "If you want to make it big, you come to Blueseed," Marty says. "That's the kind of space we want to design."

The challenges are daunting. It's an untested business model, and leasing or buying and subsequently retrofitting a suitable vessel will cost tens of millions of dollars. Food, fuel, and other supplies must be delivered from the mainland. Sealand's related HavenCo project ended unceremoniously. And the entire enterprise could be jeopardized by immigration officials irritated by what amounts to jurisdictional arbitrage and a clever legal hack.

"There is no single person out there who has all the knowledge out there to run a novel business like this," Marty admits. "It's never been done."

On the other hand, Blueseed's business model includes taking a 5 percent equity stake in younger startups, meaning that if even one becomes the next Facebook, LinkedIn, or Groupon, the payoff for its founders and investors would be significant. It plans to charge $1,855 per person per month in rent, a manageable sum for many Web companies, and the leisure travel industry has established how much cruise ships cost to operate.

Plus, their timing couldn't be better. U.S. Citizenship and Immigration Services has been tightening visa rules, prompting entrepreneur Vivek Wadhwa to charge that the agency does everything it can to make life "miserable" for startup founders, and New York City mayor Michael Bloomberg to declare that the entire system is "broken." One Israeli entrepreneur who hired nine Americans avoided deportation only because ABC News highlighted his plight last week.

"They only need to find one firm who's really hurting from this specific problem and say, 'Look, guys, we have a shot at solving this for you,'" says Patri Friedman, founder and chairman of the Seasteading Institute who is not affiliated with Blueseed. "The one seastead that seems to make sense in the Bay Area is a tech incubator, as opposed to a medical tourism ship where you want to go to a different country every month."

Programmers relocating to Blueseed's maritime hub could bypass U.S. immigration entirely by taking chartered ferries from Mexico or Canada (of course, if a cruise ship is used, passenger-programmers could board in China or India directly). Or they could enter the U.S. on a business or temporary visa that doesn't allow earning income inside the country--which, as long as the work is done outside territorial waters, would theoretically make their stay entirely legal.

Because the Blueseed platform would float 12 miles west of the California coast, the nearest port would be Half Moon Bay, a town best known for its gargantuan pumpkins and elite surfing competition that happens to be only 18 miles from Sand Hill Road's venture capitalists and not much further from San Francisco. Blueseed expects to convince Citizenship and Immigration Services to set up a new customs checkpoint in Half Moon Bay.

Singapore's Intership Ltd. makes "accommodation work barges" with their own utility plant, running track, gyms, heliport, medical office, and arcade rooms. This version, called the Camelot, sleeps 685 people in 302 cabins.
Singapore's Intership Ltd. makes "accommodation work barges" with their own utility plant, running track, gyms, heliport, medical office, and arcade rooms. This version, called the Camelot, sleeps 685 people in 302 cabins. Intership Ltd.

Overseeing a ship and a ferry and a terminal at the port could prove a complicated task, especially for entrepreneurs without previous experience running a company, a fact that Marty acknowledges. "When it comes to running the ship itself, we have to find the best captain, the best team, the best logistics out there," he says. "We don't know how to run a ferry. We have to have a management company who knows how to deal with it."

Blueseed's founders, who include attorney Dario Mutabdzija and ex-Yahoo developer Dan Dascalescu, met at the Seasteading Institute, a non-profit educational and research organization. (See previous CNET coverage.)

They decided that, after brainstorming different seasteading business models (pedants might label a cruise ship a "shipstead"), an international hub for entrepreneurs would be the one most likely to succeed. It could also benefit from a positive public image: it brings jobs to California, even if they're relatively low-paid ones like ferry operation and supplying groceries.

Blueseed plans to register its seastead in a country with a reputable legal system, such as the Bahamas or the Marshall Islands, meaning that that nation's laws would apply. A Blueseed vessel would hardly be a floating libertopia that countenances recreational drugs, gambling, prostitution, and other related vices: the company intends to remain on friendly terms with U.S. law enforcement.

"There are a few things that we'll follow U.S. public policy on," Marty says. "If U.S. public policy is such that drugs are seen very negatively, that will be Blueseed policy as well."

Mutabdzija, the attorney, adds: "We need to do whatever we can not to provide them with any type of excuse to shut our operation down. Drugs? That would be a perfect excuse."

The trio has raised a small sum in seed money from initial investors and is hoping to raise another $500,000 in the next half year. Their next goal would be raising between $10 million and $30 million to charter or purchase a suitable vessel.

For Internet connectivity, they say that a laser link from the mainland would do the job, though it could be blocked by the fog common along the coast. Satellite connections, while slow and high in latency, would be a backup.

"Of all the business models for seasteading, the one they're pitching is one of the better ones," says Chris Rasch, a Bay Area programmer who has done seasteading consulting but is not affiliated with Blueseed. "The question is whether they can do it economically enough to make the numbers work out. That part I don't know."