Blue Mars / Jim Sink is the CEO of Avatar Reality, a locally–based gaming company. Its first game is Blue Mars, a 3D virtual world that will remind you of Second Life at first glance but aims to be the next generation of virtual worlds. Before working with Avatar Reality, Sink worked at Microsoft’s Xbox Live division and managed business development at Foundation9, the world’s largest producer of independent video games. Honolulu Weekly sat down with Sink to talk about some of his projects and the state of the high-tech industry in Hawaii. In short: things are not heading in the right direction.

How is Blue Mars different enough from Second Life to attract new players?

The development of Second Life has been stagnant for a while now. We’re making a massively scalable secure world that other software developers can build off of. No one else is doing this right now. Currently, you can only have 60 players in one area in Second Life… in Blue Mars, you can have thousands of players together, which is great for virtual conferences, music concerts or rallies.

How are you guys doing, how’s the company growing?

We currently have less than 100,000 registered players but we’re growing that base at 10 percent a month.

I downloaded and played Blue Mars before we met up. The game was beautiful but really slow on my PC.

The current version of the game is slow on older PCs. We’re adopting a new technology called the Cloud Fusion Server this summer though that will allow anyone to play Blue Mars online.

Wow, that will really open you up to a new audience.

That’s right, and allow us to put Blue Mars on Facebook so you can play with your friends in our 3D virtual reality world. Most of the growth in the gaming industry is in social gaming right now.

How has it been, running a high-tech company in Hawaii?

It’s a challenge. CNBC placed Hawaii 49 out of 50 in its Top States for Business 2009 rankings. We have the second highest cost of living in the country, fifth highest personal tax rate and a very challenging business climate. Our office space is expensive. Actually, everything about doing business here is massively expensive. I recruited an attorney from Seattle and she needed a 30 percent raise, just to remain even.

Do you hire locally or recruit from the contiguous United States?

We’ve hired several candidates directly from UH. There have been talented candidates from the journalism department and the MBA program. When it comes to software engineers, we recruit from the mainland.

So why did Avatar choose Hawaii as the home base to create Blue Mars?

The company’s founders, Kaz Hashimoto and Henk Rogers, both have roots in Hawaii and wanted to build the firm here. Also, when we launched in 2006, there were financial incentives provided by Act 221, [which] offered tax credits for anyone who invested in an approved high-tech project in Hawaii.

Act 221 was repealed last year. How has this affected your business?

Every time we speak with investors from the mainland, the first question they ask us is, “what are you doing in Hawaii?” for a lot of the reasons we’ve been talking about. In the past, we’ve been able to say that we’re here because of the excellent tax incentives the government offers high tech business. I can no longer say that. The money being spent on tax credits was drawing high paying jobs to the state. The average salary in the software industry is a lot higher than in other industries, and the money we make gets spent here.

There’s now a bill, Senate Bill 2401, working its way through the state Legislature that would defraud people out of the credits they’ve already invested in under Act 221 [Editor’s note: SB 2401 proposes to delay payment of tax incentives until 2013]. Not only is this probably Constitutionally illegal, it’s also really, really stupid.

Doing business in Hawaii is hard, and they’re making it harder. The tech community here is small and it makes it difficult to share best practices and cross-pollinate ideas. Then, Furlough Friday made Hawaii a laughing stock. Shutting down the SuperFerry really damaged investor confidence.

Then they killed the 221 program. If they pass this thing about the credits, it’s like they want us to leave. Firms are going to leave and they’re not going to come back.

Do you plan to move then if they pass this law?

No, we don’t have any plans to leave. But I’ll tell you, I got a call from the Austin Chamber of Commerce last week. They offer very attractive incentive packages for software companies, there’s a critical mass of software engineers, it’s an excellent place to live, they have a great university and the cost of living is way cheaper then here. My company doesn’t have a factory. We have desks and an Internet connection; we can work from anywhere. We want to work here, I’m willing to pay my employees more to work here, but I’m getting clear signals from the Legislature that they don’t want us.

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