Startup hopes to hack the immigration system with a floating incubator

By Timothy B. Lee
 
Some of the Silicon Valley's most important companies, including Intel, Google, and Yahoo, were cofounded by immigrants. Yet America's creaky immigration system makes it difficult for talented young people born outside of the United States to come to the Bay Area. There have been various proposals to make it easier for immigrant entrepreneurs to come to the United States, but they've made no progress in Congress.

So a new company called Blueseed is seeking to bypass the political process and solve the problem directly. Blueseed plans to buy a ship and turn it into a floating incubator anchored in international waters off the coast of California.

Ars talked to Blueseed founder Max Marty. He acknowledged that it would be better for America to reform immigration laws and thereby make his company unnecessary. But in the meantime, Marty and his team are hard at work tackling the practical obstacles to making their vision of a floating, year-round hack-a-thon a reality. Within the next year, they're hoping to raise a venture capital round large enough to lease or buy a ship with space for around a thousand passengers. If Blueseed's audacious hack of the immigration system is successful, it will not only open up Silicon Valley to a broader range of entrepreneurs, it will also shine a spotlight on the barriers American law places in the way of immigrants seeking to start businesses in the United States.

For everything else there's the B-1 visa

Blueseed is trying to overcome the limitations of American immigration law, but its business model also depends crucially on the goodwill of American immigration officials. That's because a key part of the Blueseed sales pitch is that residents will be able to make regular trips to the mainland.

Immigration law makes it difficult for many would-be immigrants to get permission to work in the United States. For example, there's an annual cap on the number of H1-B visas available for American employers to hire skilled immigrant workers. However, permission to travel to the United States for business or tourism is much easier to get.

Marty pointed to the B-1 business visa as a key part of his company's strategy. With a B-1 visa, visitors can freely travel to the United States for meetings, conferences, and even training seminars. B-1 visas are relatively easy to get, and can be valid for as long as 10 years.

Blueseed plans to provide regular ferry service between the ship to the United States. While Blueseed residents would need to do their actual work—such as writing code—on the ship, Marty envisions them making regular trips to Silicon Valley to meet with clients, investors, and business partners.

With the ship only 12 miles offshore, it should be practical to make a day trip to the mainland and return in the evening. A B-1 visa also permits overnight stays.

"A little bit of uncertainty every time"

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.

Marty tells us that getting permission to enter the United States permanently becomes much easier once a firm grows. "If you have a $5 million-10 million company, there are several avenues and channels you can use to be in the country," he said. So the Blueseed ship would provide temporary lodgings until a startup grew large enough to move to the mainland.

Seasteading light

Marty met his cofounder, Dario Mutabdzija when both were employees of the Seasteading Institute, a nonprofit we covered back in 2008. The Institute promotes a long-term vision of autonomous floating city-states on the open ocean. Institute founder Patri Friedman hopes that the emergence of seasteads could make it possible for people to experiment with new political systems.

Obviously, it's a grandiose vision, and the handful of past efforts to create new nations at sea have been unsuccessful. We asked Marty what makes his company different.

"A lot of seasteading projects in the past lacked a business model that made what they're doing work," he said. "We're solving a very specific and very big problem."

He also expressed a desire to avoid antagonizing the US government. Some past seasteading proposals involved activities, such as gambling and prostitution, that are not permitted in most of the United States and "would not be seen favorably" here. Marty says Blueseed will be different, and will discourage such activities from occurring onboard. "Everyone who comes on board will have to be checked," he said. "There are certain things we don't want on board." He hopes that such policies will earn the company goodwill with government officials and help with any immigration issues that may arise.

Bootstrapping

Of course, none of these concerns will matter if Blueseed can't get its unusually ambitious business plan off the ground. A typical Silicon Valley startup needs an office, servers, and enough capital to pay salaries for a handful of employees until the company's product gains traction. Blueseed will need a lot more than that before it gets its first paying customer.

The firm is currently conducting an environmental impact study. When that's completed, the firm will need to acquire or lease a large ship. Then they'll need to retrofit it for use as a floating apartment and office complex. They'll need to hire a crew with a variety of skills—cooks, doctors, psychologists, lawyers, security officers, and many more. The company estimates they'll need 200-300 crew members in total.

Planned Blueseed location

The firm must arrange for regular ferry service; it hopes to offer two or three trips per day. And obviously, Internet service will be essential. They're still researching options, but the tentative plan is for a high-speed fixed wireless connection with a satellite backup.

Then they'll need to attract paying customers. Marty envisions the Blueseed ship as a floating incubator. They'll charge rent, but also take a small equity stake in each startup that comes on board. He hopes to cultivate a network of investors to help identify promising entrepreneurs. Blueseed will also accept applications directly from would-be entrepreneurs. Marty says they've already had expressions of interest from around the world.

The firm will also need considerable legal advice to navigate these uncharted waters of immigration law. Blueseed has already begun consulting with a few immigration attorneys as they plan their venture (the lawyers they're working with get high marks from Siskind) but they'll presumably need a small army of legal advisors to advise hundreds of would-be entrepreneurs as they make plans to join the vessel. It's likely the firm will need the services of lobbyists and PR professionals to make sure it stays on the US government's good side.

Needless to say, this is too much for Blueseed's three-member staff to handle by itself. Marty says the company plans to delegate as much of the work as possible to more knowledgeable third parties. He plans to draw heavily on established maritime firms to handle the logistical details.

"There are people out there who do the management and operations of maritime businesses," Marty said. "They manage bringing in supplies. They'll even manage the cooking staff on board, manage the maintenance of the ship, and insurance issues."

Blueseed estimates that rents will range from $1,200 per month for the smallest rooms to $3,000 for the largest—figures Marty says are comparable to what entrepreneurs would pay for an apartment and office in Silicon Valley.

"A real shame"

Blueseed's business model seems like a long shot. Buying, outfitting, staffing, and filling a 1,000-person ship seems like a tall order for even the most talented three-person team. But most startups are long shots, and we'd love to be proven wrong.

Still, Siskind argues the real problem is that such a project is even necessary. He believes that our immigration system has been costing Americans jobs for years. He pointed to Microsoft's decision to open a new Vancouver office in 2007 as an example. He said the decision to open the facility, which could eventually have as many as 5,000 employees, was motivated by the difficulty of getting visas for foreign workers.

"They chose Vancouver because they wanted to be relatively close to Seattle," Siskind says. The decision to locate in Vancouver "was a real shame because out of those 5,000 jobs, at least 4,000 were going to be for American workers." Now most of those jobs will go to Canadians, and Microsoft will be able to bring in non-Canadian workers under Canada's less onerous immigration system.

Whether it succeeds or not, Blueseed is going to spark a conversation about America's flawed immigration system. Perhaps a decade from now, international waters near the California coastline will be dotted with floating incubators. But we'd rather see Congress put Blueseed out of business by allowing anyone who wants to start a business in Silicon Valley to do so.