(Bloomberg) — As dawn breaks over the Gulf of Fonseca, southeast of El Salvador, Patri Friedman sets out for a jog. He trots past domed hothouses filled with fruit trees and feels the sidewalk sway gently underfoot as a tugboat chugs by with a floating apartment building in tow. The year is 2024, and Friedman lives on a so-called seastead, a waterbound city of some 1,000 people who produce their own food, their own energy and — most important — their own laws.

That’s the dream that Friedman, a libertarian software engineer at Google Inc. and the grandson of Nobel Memorial Prize–winning economist Milton Friedman, is working to make a reality. As Bloomberg Pursuits will report in its Summer 2014 issue, Friedman is chairman of The Seasteading Institute, an Oakland, California–based group financed with $1.2 million in seed money from PayPal Inc. billionaire Peter Thiel.

The five-year-old organization is pursuing an ambitious aquatic mission: to develop floating microcountries that will dwell in international waters with the same sovereign status enjoyed by cruise ships. Think secessionist, do-it-yourself nation building meets the 1995 post-apocalyptic science-fiction stinker ‘Waterworld.’

This isn’t the mother of all tax dodges. (Moving to Cyprus is a lot less of a lift than building your own Atlantis.) Friedman and fellow traveler Thiel are after something more audacious. Settling on the sea offers a way to opt out of an overregulated society, Friedman says, and invent new forms of governance that stoke innovation.

‘Startup Countries’

“We need startup countries,” says Friedman, 37, an elfin man with frenetic black hair. “Today’s governments work so poorly that the feeling we could do better is pretty broad. An entrepreneur would say, ‘Here is an industry that’s doing a horrible job, so let’s disrupt it with new technology.’ Seasteading is that technology.”

Self-styled seasteaders envision an archipelago of floating city-states.

“We want to show what a society run by Silicon Valley would look like,” said seasteading evangelist Balaji Srinivasan, a general partner at venture-capital firm Andreessen Horowitz, in a lecture last October in the Bay Area. Even longtime students of the Golden State’s freewheeling culture are dumbstruck at such grandiose plans.

“Those guys are crazy,” says Richard Walker, a professor emeritus of geography at the University of California at Berkeley who follows The Seasteading Institute. He says the seasteaders look a lot like the revolutionaries who took on Czar Nicholas II. “The communist ideal was that spontaneous uprisings would create a new world for workers,” Walker says. “To me, this looks like a right-wing version of that.”

Seasteading Movement

The immensity of the sea has long inspired visions of aquatic utopias. In Jules Verne’s 1895 novel, “Propeller Island,” millionaires withdraw to a massive vessel in the middle of the Pacific Ocean. However, there are signs that the seasteading movement may be more than just a sci-fi fantasy. The institute’s board of advisers includes experts in aquaculture, marine engineering and harnessing tidal energy. Last year, a crowd-funding campaign raised $27,000 from contributors around the world to finance a feasibility study by DeltaSync BV, a Dutch firm that designs water-based architecture to accommodate rising sea levels.

Floating Architecture

Forget funky houseboat communes: DeltaSync’s 85-page blueprint lays out a watery metropolis worthy of a Roger Moore–era Bond film. (“Live and Let Dive”?) Residential districts, hotels, aquaponic farms for vegetables and fish, and algae-based biofuel refineries would all float on 2,500-square- meter (27,000-square-foot) caissons — hollow platforms made of concrete, plastic and steel. Arranged in circular clusters, these square- and pentagon-shaped bases could be disassembled and towed to other seasteads, or to safety in the event of a storm. Indeed, the technology already exists. In 2011, DeltaSync designed a movable dome-shaped conference pavilion that currently floats in Rotterdam’s harbor.

“Floating architecture is rapidly becoming a realistic option and not just a crazy futuristic idea,” says Rutger de Graaf, DeltaSync’s director and managing partner.

Now, the search is on for a country willing to host a pilot seastead settlement close to shore for about 225 residents. Randy Hencken, The Seasteading Institute’s executive director, declines to identify the nations he’s negotiating with. But the Delta-Sync study highlighted the tranquil Gulf of Fonseca bordering El Salvador, Honduras and Nicaragua as an ideal spot.

Techie Libertarians

More than 500 would-be seasteaders are already jockeying to be charter residents. While their ranks are thick with techie libertarians, there are also environmentalists intrigued by the opportunity to produce food and biofuel on the water and others simply hungry for adventure.

“Everyone says this is a pipe dream, but I’m sure people told the Pilgrims they were crazy, too,” says Diana Bond, a 33- year-old legal secretary in Santa Monica, California, who’s ready to go. “I’m excited to be a pioneer in such a challenging environment. It’s a chance to make your own way of life.”

For Friedman, the remaining barrier isn’t technical know- how or even the price tag — $120 million to build the pilot, or about $530,000 a person. It’s persuading a nation to anchor a seastead in one of its inlets while granting it some degree of autonomy, before one day decamping for life on the open ocean.

“We are still years or decades away from this happening,” Friedman says. “But if I’m wrong and we can do it now, well, amazing! It will transform the world.”

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