In just one week, Pillsbury Winthrop Shaw Pittman's Justin Hovey took calls from entrepreneurs in Guatemala, Ukraine and Iceland, all wanting to set up shop in Silicon Valley.
He had the same bad news for all of them: Getting to the United States is a long, arduous process. And there are no guarantees.
"On those initial calls, you're unfortunately dampening their enthusiasm," Hovey said.
So when Hovey, a corporate partner in San Francisco, heard late last year about a startup called Blueseed Inc. that wants to buy a cruise ship to house foreign entrepreneurs in a sort of floating incubator anchored 12 miles off the California coast, he immediately offered his services. The idea of parking a ship in international waters, where foreign entrepreneurs wouldn't be subject to U.S. immigration laws, may sound pie-in-the-sky to some, but not to Hovey.
"In many ways, it's no different than any other startup," Hovey said. "Except that it's capital intensive. It's not like you're setting up a software application."
But navigating the thicket of complicated legal issues, from financing to immigration, to turn the ambitious idea into a reality is one of the biggest challenges facing the one-year-old company, said Blueseed President Dario Mutabdzija, who emigrated from Yugoslavia.
"It's safe to say basically everything we're doing is connected with some kind of legal issue," he said.
Blueseed's goal is to bring startup founders within ferry distance of Silicon Valley so they can meet with venture capitalists and others to vet their ideas and get backing. Rather than wait a year or more for a work visa, entrepreneurs could work on the Blueseed ship and come ashore on either a tourist or business visa. In return, Blueseed would get equity in their startups.
The concept isn't new to the founders. Mutabdzija was director of legal strategy and Blueseed CEO Max Marty was director of business strategy at The Seasteading Institute, an organization that wants to create floating libertarian countries in international waters.
More than 200 companies have expressed interest in Blueseed, Mutabdzija said, but the project is still in the research and development stage. The company has the financial backing of former PayPal executive and early Facebook investor Peter Thiel, and it's currently trying to raise about half a million dollars to get up and running. If all goes as planned, they'll face the arduous task of trying to raise tens of millions of dollars to buy a ship, and then set up a floating city.
Ideally, the startups will already be incorporated in their home countries, but some may not have taken that step yet, Hovey said. The goal is to eventually help these companies either set up a U.S. subsidiary, or reincorporate in the U.S., mostly likely in Delaware, depending on what investors require.
Hovey is the only outside counsel Blueseed has hired, so far. He's been focused on helping Blueseed get organized as a company and secure financing, as well as drawing up contracts and other documents. He also gives the founders advice on their various pitches to potential investors. Company executives spoke recently at Adobe Systems Inc.'s headquarters at an event organized by the Commonwealth Club to raise interest and capital.
Hovey met Blueseed CEO Marty about a year ago when they were both speaking at a startup event called 800 Birds, sponsored by his law firm. He asked Marty what kind of startup he was working on, and Marty told him about Blueseed.
"I said, no really, what are you doing," Hovey said. "And he said, that's what I'm doing. And I said, that's the most incredible, bold idea I've ever heard at one of these events. It just resonated with me."
Several other attorneys are working as advisers. Ronald Rose, a founding partner at Rose Carson Kaplan Choi & White in Palo Alto, is helping with immigration issues and says one of the key issues will be getting people from San Francisco International Airport to the ship, legally.
"You can't take a 747 and land it on a ship," Rose said. "It's unclear at this point how cooperative the U.S. government will be in allowing people to travel back and forth."
There's also the question of how the government will characterize their onshore activities. Foreign entrepreneurs would be allowed to meet with venture capitalists and executives in Silicon Valley on a temporary tourist or business visa. But all the development activity required to get a company up and running will have to happen on the ship, under U.S. law.
"How suspicious is the government going to be?" Rose said. "We have to convince the government, and educate everyone, that the development activity has to be done outside the U.S. It's going to take a lot of education."
So far, there's been some initial communication with government officials, but nothing significant. And Rose says that's just fine, particularly in an election year when the rhetoric around hot-button issues like immigration can reach a fever pitch.
"You'd be naive to think there aren't significant groups on the other side of the equation who don't like the idea," Rose said. "There's going to be a fair amount of opposition."
Startup lawyers in Silicon Valley said they haven't heard much talk about the project yet among the companies they work for, although they didn't dismiss the idea completely.
"It feels like a short-term solution for an immigration-challenged person," said Fenwick & West corporate partner Mark Leahy.
But he said the biggest challenge may be the weather and dealing with the physical turbulence of living on a boat.
"They certainly couldn't go for a swim," Leahy said. "I believe that area is a breeding ground for white sharks."
