Indian IT startups flock to Silicon Valley ‘seastead’ Blueseed (Times Online, September 6, 2012)
October 17, 2012 by Eric Jacobus
For those Sri Lankans IT startups that have not yet heard of a “seastead” venture called Blueseed, now is the time to sit up and take notice. Particularly since their Indian brethren are already way up front in ways of getting their foot in the door of US based Silicon Valley’s venture capital funding mecca.
Model of the ship
A project launched last year in the US, Blueseed is in its basic form an off-shore IT startup incubator. Nothing special about that, but what is unique about this venture is that this off-shore project is actually a “seastead”, or an ocean-based environment, which will be docked in international waters around 22 km (12 miles) southwest of San Francisco Bay. Another distinct feature of this project is that it was launched with the premise that it is a work visa-free alternative for IT startups trying to access to the IT resource rich Silicon Valley area which is the apex of IT innovation, in terms of talent, hiring, research, etc., as well as being the home of heavyweights such as Google, Facebook, Intel, Yahoo, etc.
According to blueseed.co, the project will be renting space to 1,000 entrepreneurs starting at around US$ 1,200 per person, plus a small stake in the startup. This will be for basic, shared accommodation and work space as well as offering all the technical and entertainment facilities a startup need, from a a 40 Gbps point-to-point laser link, with satellite link backup, to restaurants, swimming pools, rock climbing walls, etc. Importantly, it will also feature a twice-daily ferry service, and even access to speed boats and helicopters for those wishing to get to meetings in Silicon Valley quickly and, presumably, willing to pay more for it. Incidentally, more luxurious accommodations are available for US$ 3,000 per person.
Further, the concept is being marketed as a high tech dorm room mixed with a 24-hour hackathon, i.e. what blueseed.co calls “[living] and working in an awesome startup- and technology oriented- space”. Essentially, an IT entrepreneur’s dream environment. And this appears to be generating quite a lot of the interest in Blueseed as demonstrated in blueseed.co’s real-time survey in which 56.7% stated that the “awesome” space was critical importance to them, and a further 30.2% saying it was of a high importance.
Before dismissing this idea as pure fantasy too soon, one must take into account the expressions of interest having been registered by 289 companies, with the top three countries represented being the US (89), India (25) and the UK (18), as well as the 920 plus entrepreneurs, according to real-time data provided at blueseed.co. Additionally, Silicon Valley billionaire, Peter Thiel, an early Facebook investor and PayPal’s founder, signed up in end-2011 to lead seed funding for the company. Mr. Thiel has already invested US$ 1.25 million in the Seastead Institute, according to mashable.com.
Why Silicon Valley?
According to the survey at blueseed.co, the proximity to Silicon Valley is another critical reason for this project, with 39.2% identifying this as a critical reason for their interest in Blueseed and a further 29.2% saying proximity was of high importance. In fact, while space maybe the key selling point for “seasteads” for the native populations of Asian countries such as Singapore, or even the Maldives, for Blueseed to fulfill its role as an IT incubator, Silicon Valley is a key selling point.
As per a presentation linked to blueseed.co, Silicon Valley has been responsible for 65,000 new technology patents filed in the US between 2006 and 2010, more than twice that of the New York / Long Island / New Jersey IT corridor, the site of the next big patent hub (25,000). It also indicated that, according to Price Waterhouse Cooper, US$ 11.93 billion, or 41%, of all venture capital invested in the US in 2011 was attributable to this area.
But perhaps the most telling of all numbers is that Internet search giant Google has bought a new company every week over the last two years.
Will Blueseed actually happen?
While there are many media reports deeply skeptical about this idea, a few have also embraced it in some small way.
Maybe because it does not offer up a utopia in the sea, away from big government and taxation, but rather serves an immediate purpose. For example, economist.com says; “The technical challenges are daunting enough. The legal questions that seasteads would face are no less tricky, and call into question whether it would really be possible to create genuinely self-governing mini-states on the oceans”. At the same time, it also adds that “countries short of available land, or whose leaders are struggling to pass liberalising reforms against resistance from vested interests, may tolerate limited experiments in low-tax, rule- free self-government. So the seasteaders may be in with a chance”.
Meanwhile, Casey Newton of sfgate.com, in May 20, 2012, wrote; “To make it happen, Blueseed will have to raise tens of millions of dollars, attract hundreds of high-quality entrepreneurs and negotiate complicated legal issues. (For starters: determining what nation’s flag to fly under.) And that’s before it builds a small floating city in international waters”.
Rituparna Chatterjee of India’s Economic Times states; “Blueseed is working on building relationships in Washington DC with immigration- related government agencies such as the United States Citizen and Immigration Services (USCIS). If these work out, immigration authorities at US airports would be informed in advance about the arrival of Blueseed entrepreneurs, who could then enter the country almost in quasi-diplomat style, unlike the masses”.
However, newswire Associated Press quotes Christopher S. Bentley, a spokesman with the U.S. Citizenship and Immigration Services, as saying his agency “has not seen the proposal and it’s premature to comment”.
Continuing on Associated Press also highlights maritime experts as indicating that this idea is “feasible, but very costly”. Says the Associated Press story in question; “‘A good single point mooring costs in the millions of dollars but it could restrain a ship-shape vessel in quite severe storms and in deep water,’ said Bill Stewart, CEO of Houston-based Stewart Technology Associates, an engineering consultancy specializing in offshore and marine structures. ‘But it would be prudent if the vessel had its own propulsion if you had a Pacific hurricane come along,’ Stewart added.”
Interestingly, tech news website Ars Technica offers up completely different perspective:
Ars asked Greg Siskind, an immigration attorney with a national employment practice, to evaluate Blueseed’s legal strategy. “What they’re proposing seems consistent with the law,” he told us. “They rightly have bypassed the most difficult part of the process, which is getting a work visa to come to the US. By moving all of the productive work offshore, it increases the odds that people will be able to do business in Silicon Valley.”
But he said the uncertainties of the immigration system could cause headaches for Blueseed residents. One source of uncertainty is in getting the B-1 visa in the first place—though potential entrepreneurs should be able to get that sorted out before moving to the ship. The more serious problem is the risk of being turned away during each trip from the boat to California.
There will be “a little bit of uncertainty every time they come in,” Siskind said. Each trip to the mainland would require an inspection by an immigration official who would have discretion to decide who to let into the country. “Depending on what that person had for breakfast may determine the future of your business,” he said.
However, Siskind said that the political environment has gotten better for a project like Blueseed. Entrepreneurs are popular among voters, and Siskind says that immigration officials have been “somewhat on the defensive” due to a perception that the immigration system is insufficiently welcoming of potential job-creators. “I think they’ll be the poster child to demonstrate what’s wrong with the system,” he said, which would make immigration officials reluctant to give Blueseed residents too much trouble when they arrive on American soil for business meetings.
Either way, what may scuttle this ship of dreams may not be the obvious fantastical, technical challenges of a long term community at sea, but the more down-to-earth legal problems that could crop up by countries increasingly hell bent on protecting their borders from perceived threats. Economic or otherwise.