James & Patri Tour ResidenSea

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We came, we toured, we partied, we left.

Before tonight’s [Independent Institute](http://www.independent.org/) reception on ResidenSea, we were informed that we needed to submit our names 48 hours in advance for background checks, and bring an ID. Perfectly reasonable for a ship full of deci and centimillionaires (if you can afford $300k+/year for a property you use 3mo/year on average, you probably have quite a bit o’ juice!). James & I figured we’d be shuttled straight to the reception, and only get to tour the ship if we made a friend onboard. The security was as much as we expected – metal detectors, ID checks, guest list checks, etc. But once we were onboard, we were free to wander! So we toured the common areas of the whole ship, top to bottom, which took a bit over an hour. It was beautiful, inspiring, elegant, and wasteful.

Very high-class, luxury, and the stunning 270 degree vista of the Bay were not only awesome but conjured up visions of a new stunning vista every week. There was tons of public space – quiet places, windy places, vista places, eating places, drinking places, golfing places, video game places, sunning places, swimming places. I initially felt a bit claustrophobic at the low ceilings, but we soon got used to them.

It was also amazing, though, how much of the public spaces were closed and/or unused. The upper deck tennis court had puddles and piles of ship’s supplies next to it. There are 5 or 6 restaurants, but only 2 are open at a time, because demand was just not that high (ppl like to cook themselves, and like to eat on shore for variety). Besides mis-guessing what attractions residents would want enduringly through years of living at sea, they were wrong about the overall population numbers of the ship. Designed for 500-600, there are usually just 150 people onboard. So the 150-seat theater, which must have seemed reasonable when the ship was designed (“Well, say 1/4 of the people want to see a really popular new movie”) appeared wastefully large to my eyes. The restaurants and pool area similarly seemed way oversized for the number of actual residents.

So, there are two problems with the space on the ship. First, the private space of the ship is underused. It turns out that most people only want to live there 3mo/year or so, because they have friends and family to hang out with the rest of the year. Second, the public space is misallocated due to differences between what the ship designers thought would be useful (or just thought would sell the ship) and therefore promised, and what residents actually use. I feel strongly that market-based pricing combined with flexible, multipurpose space would be far more efficient at making common space useful.

Now, this is not a bad thing. Given how expensive ResidenSea is, the more inefficient they are, the better it means we can do! Also, I don’t think that it reflects poorly on them – as I understand it, there are still empty residential units. If the whole ship is oversized, well, what is the point in trying to reclaim / economize on public space? And if the residents are happy with 1/4 occupancy rates, well, they can afford it, so more power to ‘em.

Anyway, with full occupancy and giving people half as much space, I think we could achieve 5x-10x the population on the same size ship. Unfortunately, the increased occupancy doesn’t count in reducing the new cost structure. But at least we now know that we don’t have to increase capital costs to account for extra public space – RS’s common space could support a much larger population.

I am unsure how much the higher population would increase operational costs – fuel for travel is the same, but electricity use goes way up, so do staffing needs, food, etc. I need to see a detailed breakdown to really understand these costs and whether we can significantly reduce them. Another issue is that I had hoped that we could cut costs significantly by not being so luxurious – less marble, art, etc. I do think there are some cost savings to be had there, but I find it hard to believe that the extra cost of 5-star decor and amenities are a significant fraction of the vessel’s price, as opposed to the structure and infrastructure of the ship.

Anyway, that was what we were able to gather from an hour of wandering the common space.

The reception was enjoyable as well, we talked to [Mary Theroux](http://www.independent.org/aboutus/person_detail.asp?id=829) about the history of Minerva Reef, which her parents had been involved with, and I spoke quite a bit with [David Theroux](http://www.independent.org/aboutus/person_detail.asp?id=531) (president and founder) and [Marty Buerger](http://www.independent.org/aboutus/person_detail.asp?id=823) (VP/COO). David understood the significance of ResidenSea as a private transnational community before I even brought seasteading into the picture, commenting that “None of the people on-board understand how significant the ship is.” I tend to agree – I can easily imagine that if seasteading succeeds, especially if condo cruise ships are used as the first incremental residential steps, that ResidenSea will go down in history as the first full-time residential community on the oceans.

6 comments

  1. Carl Pålsson 1:22 pm

    Interesting write-up.

    On thing that brings the occupancy down is probably that they have chosen to completely waste the possibility of legal improvements by living on the sea.

    Also I believe the economy of this ship is largely or entirely planned (a command economy), with the company monopolizing all the services available. This also brings the required staff numbers way up. If there was a free market and residents could run businesses and supply services to each other, the staff could be minimal (and the competition would drive prices down). The biggest transport ships only require on the order of 20 people to run them.

  2. Captain Nozick 8:34 pm

    It’s easy to see why ResidenSea has taken a "theme park" approach of trying to design the entire economy, particularly because the model they’re following is cruise ships, but I guess with more time for experimentation, I agree we’ll see more operating in a model akin to shopping malls: providing basic services of infrastructure and civil protection while leasing the space to third parties who can more easily react to the demands of the community.

  3. Jeff Chan 12:17 am

    Hi Carl, IMO the reason crew size on cargo ships can be so small is that they’re only involved in keeping the ship itself running.  The cargo itself probably doesn’t take any mainenance while in transit; it’s just a passive passenger.  With human passengers, the staffing would need to be much larger for food service, cleaning, etc.  There’s also much more infrastructure to maintain on a passenger ship.  A cargo ship is mostly an empty space for containers or bulk materials.

    Hi Cap’n Nozick, I like your shopping mall analogy: rent out space and infrastructure for people to do competing business, as opposed to trying to own all the business.  Makes much sense. 

    Thanks much for the writeup Patri!  Sounds like a very informative visit.  I’m sorry I missed it.  The utilization of RS does seem inefficient. So much for central planning…. Leasing out modular spaces for competing businsses would probably be much more efficient and interesting.

    I didn’t know David was so keenly aware of this space, but it makes sense that he is.

  4. Carl Pålsson 12:59 am

    Jeff, I realize that people’s need for services don’t magically disappear if you open up the market. But it saves the owner of the ship having to worry about it. A cargo/tanker sized crew plus some cops would probably be enough. And even security can be simply purchased on the ship market by the owner.

    Of course even a large ship is a rather small local market so the level of competition and number of suppliers aren’t going to equal that of your average town. But I’m sure there is still efficiency gains to be made by marketizing.

  5. DanB 2:55 pm

    It seems like there could be some real money to be made here. All important mass techologies start off being wacky toys for the rich, that everyone assumes will never become cheap enough for average people to own and would have no market even if they were made cheap enough. Then along comes someone like Henry Ford, who figures out how to relentlessly cut the cost of the new technology, and so it becomes ubiquitous.

    Everyone knows the famous quote by the IBM president (or whoever) that the global market for computers was about five. It’s not obvious that lots of people would want to live on condo cruise ships if the costs could be reduced far enough, but that doesn’t mean it’s not true.

  6. Jeff Chan 3:10 am

    The most relevant and arguably best security is that which you provide yourself.  You have a vested interest in your own security.  A hired security staff doesn’t really.  In other words, police are not your personal budyguards.  It’s much better if you are your own bodyguard, for one, because you’re always there.  :)

    Agreed about competing businesses providing their own staff.  In that sense the ship’s own staff could be much less.

    In any case, the shopping mall and the condominium seem to be very good paradigms for services and housing respectively.

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