This will probably fail. But many if not most ambitious startups fail. However, it's something that must be tried at least for the sake of forcing a reconsideration of the US's draconian immigration restrictions on highly skilled workers.

There are a few criticisms that have popped up in regards to this project: 1) It will lead to the exploitation of workers. Nonsense. This only make economic sense of those non-US citizens who are skilled enough that it's worthwhile to be in proximity to SV. The "low-skilled" niche is already occupied by companies outsourcing to Bangalore et al. and entrepreneurs outsourcing to oDesk, eLance, etc.

2) Successful passage of the Startup Visa would undermine the business plan. Maybe, but once this gets underway, who knows what other opportunities could arise. The Startup Visa has some requirements: http://en.wikipedia.org/wiki/Startup_Visa#Requirements It could be possible for this project to actually help non-US entrepreneurs get the needed funding to qualify for a Startup Visa.

Overall, I think it's worth trying, just not with my money. If they do succeed, my bet is that it won't be with the business model proposed in the article (charge for rent + some equity), it will be with something nobody is predicting right now.