Aboard the cluttered SS Vallejo, a turn-of-the-century ferryboat now docked in Sausalito, Calif., and serving as the floating home office for a couple of high-tech start-ups, Eric Gullichsen and Eric Lyons are explaining their latest scheme.
"What we're trying to do," proclaims the hyper-animated Gullichsen with a toss of his long, gnarled hair, "is help the Kingdom of Tonga skip the industrial revolution."
From anyone else it would sound ridiculous. But from Gullichsen, the brilliantly eccentric founder of two software start-ups, and Lyons, former director of research for graphics giant Autodesk Inc., it sounds almost plausible. And when they acknowledge the third member of their team, Tupout'a, the portly and genteel Oxford-educated Crown Prince of Tonga, the odds in their favor start to climb.
The sleepy South Pacific island nation of Tonga has about 100,000 inhabitants and a minuscule gross national product of about $20 million, which comes mostly from exporting squash to Japan. But Tonga also has an educated and literate populace, a fierce history of independence (it's the only Polynesian country in the South Pacific that was never colonized) and a firm grasp on international realpolitik.
As many countries move from a manufacturing economy to one revolving around intellectual property, these may be exactly the traits nations need to thrive.
The best example of how Tonga is about to shake things up is the country's plan to sell off some very valuable virtual real estate: Internet domain names. The scheme is a classic developing-nation stratagem. Think of Liberia allowing foreign tankers to fly the Liberian flag for a small fee or the Cayman Islands allowing investors to buy citizenship--updated for the 1990s.
As anyone who has been paying attention to Internet politics knows, there is a fierce and long-running battle over who owns domain names. These names, such as latimes.com or yahoo.com, are critical to a business because they are the "face" of that organization online. Having a catchy domain name can be the difference between a Web site's success and failure. But there are only so many domain names to go around, and companies are discovering that most of the best ones are taken. Worse, sometimes a company like McDonald's will discover that their own name is already taken.
Currently, the granter and ultimate arbitrator of all domain names is Network Solutions Inc., a Henderson, Va.-based company that runs the InterNIC domain name database. Depending on some combination of U.S. trademark law, company policy and the phase of the moon, Network Solutions doles out domain names as it sees fit. It's a sweet deal for Network Solutions: At $100 a pop to register a domain name for two years and $50 a year thereafter, the firm sees about $40 million in annual revenue. But the company's seemingly arbitrary policies, and its penchant for billing screw-ups, has unhappy customers looking for an alternative.
The first such alternative will be announced this week, thanks to the partnership between the two Erics and the Kingdom of Tonga.
One of the esoteric details behind the Internet domain system is that besides the well-known "top-level domains" such as .com and .edu, there are also unique top-level domains for every country. For example, .uk for the United Kingdom, .fj for Finland . . . and .to for Tonga.
Gullichsen and Lyons have created an automated system called Tonic that allows anyone to register names under Tonga's domain. Want to run a Web site called "hotsex" but can't get the rights to hotsex.com? Starting this week, point your browser to http://www.tonic.to, fill in a few simple questions along with your credit card number and hotsex.to is yours.
Tonic provides more choices, faster service and cheaper prices than its U.S. counterparts. But what may prove most intriguing to customers is that, in the jubilant words of Lyons, "the Kingdom of Tonga has no such damn thing as trademark law." Things are going to get interesting as companies rush to protect their offshore identity. One can imagine Tonga taking heat over this issue at the next United Nations meeting on intellectual property. But if the history of Tonga is clear on anything, it's the country's cagey ability to use its small size and international law to its advantage.
The real lesson of Tonga's domain name machinations is how technology levels the playing field and lets a small country, teamed up with a couple of bright people, compete in the international market. And the two Erics are also providing the technology necessary for Tonga to compete on the geopolitical stage.
Take, for instance, encryption. History is full of scandals involving the CIA and NSA reading the diplomatic correspondence of small South American countries. After all, those little countries don't have the money to buy encryption programs like the industrialized nations do.
That changed for Tonga this year, when Gullichsen helped the Tongan government adapt PGP, the public-domain encryption program the U.S. government tried to suppress. Today, all messages between Tongan embassies are encrypted with PGP and are safe from prying eyes.
Of course, all of this technology may have a price. One can imagine a worst-case scenario where idyllic Tonga is infected with the stressed-out, sped-up, technophilia vibe of the U.S. Fortunately, reports Gullichsen and Lyons, still tanned and relaxed from their last visit, that is just not very likely.
Steve G. Steinberg (email@example.com) is a contributing editor at Wired magazine and a technology consultant for a New York investment firm.