Give Me Your Tired, Your Poor, Your Startup Founders America can't be the world's tech leader without immigration reform.
By Farhad Manjoo
Posted Monday, Sept. 14, 2009, at 3:47 PM ET
Andy Grove, Intel's former chairman and CEO, was born in Hungary in 1936
and immigrated to the United States in his 20s. Jerry Yang, co-founder of
Yahoo, was born in Taipei, Taiwan, and moved to San Jose, Calif., with his
family as a child. Sergey Brin, who co-founded Google, came to the United
States from his native Russia when he was 6. They aren't special cases:
About one-quarter of American tech companies are founded in part or
entirely by foreigners. The proportion in Silicon Valley is even higher—a
recent survey (PDF) by Vivek Wadhwa, an engineering professor at Duke
University, showed that more than 52 percent of Valley startups were
founded or co-founded by people born outside of the United States.
According to Wadhwa's research, immigrant-founded firms produced $52
billion in sales and employed 450,000 workers in 2005.
Paul Graham insists that those numbers could be much higher. Graham, a
partner at Y Combinator, a venture-capital firm that provides early-stage
funding to startups, calls the U.S. government's immigration restrictions
"the biggest constraint on the number of new startups that get created in
the U.S." In May, Graham, whose essays on business and science are popular
in V.C. circles, floated a novel idea: He wants the government to create a
new immigration class for founders of new firms. Every year, Graham's "
Founder Visa" program would let in 10,000 immigrants who've shown a plan
for starting a new company. These people would be barred from working at
existing companies—in other words, they wouldn't be "taking American jobs."
Instead, Graham argues, they'd be creating jobs: "If we assume four people
per startup, which is probably an overestimate, that's 2,500 new companies.
Each year," Graham writes. "They wouldn't all grow as big as Google, but
out of 2,500 some would come close."
Graham's proposal has won approval from many of his fellow V.C.s, some of
whom have started a campaign to push the Founder Visa idea through
Congress. Here's hoping a forward-thinking lawmaker takes it up: There's
much to decry about U.S. immigration policy, but in the absence of
"comprehensive reform" (which President Obama says will be delayed until
next year—good luck!), loosening restrictions on tech entrepreneurs is a
sensible, easy fix. Graham's plan would create jobs, it wouldn't hurt
American workers, and it would ensure that Silicon Valley remains the
world's center of tech innovation. What's not to love?
The tech industry has long criticized the United States' byzantine
immigration restrictions. Every year, the government allows just 85,000
skilled workers to enter the country legally—far fewer than the industry
says is optimal. The program under which these people can work in the
United States—known as H1-B—is beset with bureaucratic restrictions,
creating long waiting times for workers that American companies say they
need to remain competitive. For instance, the plan imposes a cap of 10,000
immigrants per country of origin; this means that it's extraordinarily
difficult for firms to attract people from countries with many skilled
workers, like India and China. As the New York Times reported recently,
Google alone spends $4.5 million every year on "visa administration" to
help shepherd its foreign-born workers through the arduous process of
coming to America.
Why do American tech firms need so many immigrant employees? Because there
aren't enough native workers to fill the jobs tech companies need.
According to the National Science Foundation, about 60 percent of doctorate
degrees in engineering at American universities are awarded to foreign
students who are in the country on temporary visas (PDF). And foreign
workers are responsible for some of the tech world's signature innovations.
In April, the Times profiled Sanjay Mavinkurve, one of Google's most
respected engineers, who, among other things, came up with a brilliant way
of reducing the time that Google Maps takes to load on mobile phones. But
Mavinkurve—who was born in India, educated at Harvard, and would love to
live in America—is stuck working in Google's Toronto office, because the
United States won't let him bring his family into the country. Reflecting
on stories like Mavinkurve's, Intel Chairman Craig Barrett told the Times
that the immigration process here has reached a crisis point. "We are
watching the decline and fall of the United States as an economic power—not
hypothetically, but as we speak," he said. "With a snap of the fingers, you
can say, 'I'm going to make it such that those smart kids—and as many of
them as want to—can stay in the United States.' They're here today, they're
graduating today—and they're going home today."
The restrictive quotas aren't the only problem with the H1-B program. That
particular visa is open only to people who want to work for established
American companies; their visas would expire if they started their own
companies. Indeed, getting to the United States to start your own company
is very difficult. The E2 visa program, the most straightforward way for
founders to come to America, is closed off to many tech entrepreneurs. For
one thing, it often requires that the immigrants provide a huge outlay of
capital, sometimes hundreds of thousands of dollars. What's more, the
program is open to a select list of countries that have treaty agreements
with the United States. India is not among those nations, even though,
according to Wadhwa's research, one-quarter of all immigrant-founded tech
firms were started by Indians.
The tech world brims with stories of new companies that have failed or
decided to relocate elsewhere because of visa restrictions. Investor Brad
Feld wrote recently of two firms he funded that were co-founded by people
in Canada and the United Kingdom. These entrepreneurs have gone through the
final stages of starting up their companies, including raising capital. "It
should be trivial for them to stay in the U.S.," Feld wrote—but it wasn't.
After looking into a variety of risky and expensive ways to stay in the
country legally, both companies are looking to move back to their founders'
home countries.
To be sure, Graham's Founder Visa plan could use some fleshing out. How
would the government decide which immigrants really are serious founders of
companies? Graham and his fellow V.C.s argue that startup investors decide.
Feld, for instance, suggests that the government should set up a board of
investors, entrepreneurs, and tech lawyers who are used to vetting tech
ideas; they'd review applications and choose which ones are worthy of a
Founder Visa. That sounds a bit unwieldy, and it would seem to invite
corruption, giving a few select investors special access to new tech
talent. A better plan might be to have foreigners apply to V.C.s with their
best ideas, then let the V.C.s bid on each of the 10,000 slots—what folks
in the Valley would call a "market-based solution."
But there's time for the details to be ironed out; Graham's basic idea is
sound. As the Economist pointed out recently, the United States is the
world's most entrepreneurial nation, in part because it has long been
extremely hospitable to immigrants. Americans don't have a monopoly on good
ideas—but wouldn't it be best for America if everyone with a good idea were
free to implement it here?
Farhad Manjoo is Slate's technology columnist and the author of True
Enough: Learning To Live in a Post-Fact Society. You can e-mail him at
farhad.manjoo@slate.com and follow him on Twitter.
Article URL:
http://www.slate.com/id/2228258/
