Why the startup visa is a good idea

by on April 2, 2010 · 4 comments

This is a hot topic in the Valley at the moment, and for good reason.  Here’s an excerpt from my column on the issue:

Silicon Valley is known for innovative ideas in technology, and now some of the area’s greatest minds have come up with a new way to solve one of their biggest operational problems: securing foreign talent. It’s called the “startup visa” and it’s getting a lot of attention in both California and D.C., because it would help create new jobs.

The idea is to issue a work visa to foreign entrepreneurs who start a company in the U.S., provided that they raise at least US$250,000 from qualified U.S. investors. Then, within two years, the startup must create five new jobs, raise at least $1 million, or generate at least $1 million in revenue. If one of those goals is achieved, the founder gets a green card. If not, the entrepreneur must leave the country. Anyone who knows what it’s like to be an immigrant understands that such a scenario would provide a serious incentive to work hard at making the new company grow.

For years, the tech industry has struggled with caps on H-1B visas, but this new idea has sparked hope for a better reception. Far from “stealing jobs” from Americans, the visas would require the creation of new jobs that stimulate the economy.

  • mdb002

    Of course this ignores the many of the laws passed in the last 10 years, that make starting a business harder, and if Dodd gets his reform bill through – it will only make worse. Visas are only one part of this issue – I don't think this will make much of a difference. One of the main reasons, a government bureaucrat will be picking the entrepreneurs to award with visas.

  • Jardinero1

    Such a VISA already exists. It is called EB-5. The terms are similar to what you propose, though not as draconian as yours if you fail.

  • Michael Yuri

    This article left me absolutely disgusted.

    Tim Lee has made the case that the Startup Visa relies heavily on xenophobic, anti-immigrant sentiments for its appeal: http://timothyblee.com/2010/02/25/founders-visa

    I was hoping to read a well-reasoned counterargument, but instead Ms. Arrison actually celebrates the ugliest effects of this proposal, confirming Mr. Lee's impression of the attitudes behind it.

    Here's a nice paragraph from the article:

    “For instance, the Programmers Guild argues that 'the vast majority of start-ups fail,' so visas shouldn't be granted to foreign entrepreneurs because they might not leave the country when their businesses go under. This is a weak argument, since the entrepreneurs will have to leave the country if they want to work at a legitimate job, which these professionals will certainly want to do.”

    The Programmers Guild is a fiercely anti-immigrant organization. They oppose the startup visa, but they also argue that high tech visas should be cut back across the board. But Ms. Arrison is quick to reassure them. Don't worry — this bill really is anti-immigrant enough for you.

    The vast majority of startups do fail. Some fail because they are incompetently run or mismanaged, but a great, great many of them fail for much more typical reasons: they misjudged the direction of the market or the technology, another company beat them to market, the funds ran out before the company could find its niche, the technological hurdles were more difficult to overcome than expected, etc. The real problem is that when one of these startups fails for reasons that are largely beyond its control, the hard-working, intelligent, entrepreneurial immigrant who founded it will be forced out of the country.

    I worked in several tech startups from 2000-2005, some of which failed. I have had several immigrant co-workers and good friends over the years who have lost their jobs and then were forced to leave the country as a result. While the rest of us were worrying about landing on our feet and finding another job that was a good fit, they were scrambling to quickly find a job – any job – that would sponsor their visas to let them stay in the country. And if they couldn't, they had to pack up everything and leave their homes, friends, and community behind. It's a brutal and dehumanizing process.

    It's one thing to defend this kind of result as a necessary evil to have a functioning high tech visa program. But to revel in it and characterize it as a “serious incentive to work hard” is just sick.

    Ms. Arrison also cites Gobry's article, but focuses only on a single point he made in a bulleted list and ignores the more fully developed arguments that are the focus of his piece. Read it and see what she ignored: http://www.businessinsider.com/why-the-startup-

    Two more quick points:

    1) The “five new jobs” success criterion is pure populism, not good economics. A small, lean company operating with a skeleton staff can create an enormous amount of wealth for the economy through the benefits and efficiencies it generates to its customers and other third parties. Looking only at the jobs created *internally* is another variation on the classic seen-vs-unseen fallacy.

    2) The whole scheme looks to me like entrepreneurship as viewed by a central planner. The brilliant capitalist hand picks the industrious immigrant, funds him, and in two years we have jobs and profits. Voila – Innovation! This is a fantasy of tamed and domesticated entrepreneurship, designed to appeal to politicians in Washington. In the real world, dynamic markets are the result of thousands or millions of people going in countless directions, with most failing, and a few, through a combination of luck and talent, succeeding spectacularly.

    The more I look at this startup visa idea, the worse it looks. I encourage readers to take a look at the Tim Lee and Pascal-Emmanuel Gobry essays mentioned above.

  • Michael Yuri

    This article left me absolutely disgusted.

    Tim Lee has made the case that the Startup Visa relies heavily on xenophobic, anti-immigrant sentiments for its appeal: http://timothyblee.com/2010/02/25/founders-visa

    I was hoping to read a well-reasoned counterargument, but instead Ms. Arrison actually celebrates the ugliest effects of this proposal, confirming Mr. Lee's impression of the attitudes behind it.

    Here's a nice paragraph from the article:

    “For instance, the Programmers Guild argues that 'the vast majority of start-ups fail,' so visas shouldn't be granted to foreign entrepreneurs because they might not leave the country when their businesses go under. This is a weak argument, since the entrepreneurs will have to leave the country if they want to work at a legitimate job, which these professionals will certainly want to do.”

    The Programmers Guild is a fiercely anti-immigrant organization. They oppose the startup visa, but they also argue that high tech visas should be cut back across the board. But Ms. Arrison is quick to reassure them. Don't worry — this bill really is anti-immigrant enough for you.

    The vast majority of startups do fail. Some fail because they are incompetently run or mismanaged, but a great, great many of them fail for much more typical reasons: they misjudged the direction of the market or the technology, another company beat them to market, the funds ran out before the company could find its niche, the technological hurdles were more difficult to overcome than expected, etc. The real problem is that when one of these startups fails for reasons that are largely beyond its control, the hard-working, intelligent, entrepreneurial immigrant who founded it will be forced out of the country.

    I worked in several tech startups from 2000-2005, some of which failed. I have had several immigrant co-workers and good friends over the years who have lost their jobs and then were forced to leave the country as a result. While the rest of us were worrying about landing on our feet and finding another job that was a good fit, they were scrambling to quickly find a job – any job – that would sponsor their visas to let them stay in the country. And if they couldn't, they had to pack up everything and leave their homes, friends, and community behind. It's a brutal and dehumanizing process.

    It's one thing to defend this kind of result as a necessary evil to have a functioning high tech visa program. But to revel in it and characterize it as a “serious incentive to work hard” is just sick.

    Ms. Arrison also cites Gobry's article, but focuses only on a single point he made in a bulleted list and ignores the more fully developed arguments that are the focus of his piece. Read it and see what she ignored: http://www.businessinsider.com/why-the-startup-

    Two more quick points:

    1) The “five new jobs” success criterion is pure populism, not good economics. A small, lean company operating with a skeleton staff can create an enormous amount of wealth for the economy through the benefits and efficiencies it generates to its customers and other third parties. Looking only at the jobs created *internally* is another variation on the classic seen-vs-unseen fallacy.

    2) The whole scheme looks to me like entrepreneurship as viewed by a central planner. The brilliant capitalist hand picks the industrious immigrant, funds him, and in two years we have jobs and profits. Voila – Innovation! This is a fantasy of tamed and domesticated entrepreneurship, designed to appeal to politicians in Washington. In the real world, dynamic markets are the result of thousands or millions of people going in countless directions, with most failing, and a few, through a combination of luck and talent, succeeding spectacularly.

    The more I look at this startup visa idea, the worse it looks. I encourage readers to take a look at the Tim Lee and Pascal-Emmanuel Gobry essays mentioned above.

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