America has always been a nation of immigrants. Ever since the first colonists came over from Europe, wave after wave of people from foreign lands have moved here in search of a better life. But today, we are turning away the best and the brightest among them, and that is hurting the competitiveness of the United States.
Wadhwa, an Indian who lived in the United States as a child and returned as a young man to become a citizen, has already had a successful career as an entrepreneur, having founded two software companies. Today, he works as an academic, writer, and gadfly. He has posts at several universities, including Duke, Singularity, Stanford, and Emory. In the book, he argues that a combination of misguided US immigration policies and growing opportunities in other parts of the world has created a brain drain of innovative immigrants.
He has compiled some convincing evidence of the contribution immigrants make to the high-tech industry in the United States. Among the statistics:
First-generation immigrants or their children had founder roles in more than 40 percent of the Fortune 500, according to a 2011 study by the Partnership for a New American Economy.
A 2012 report by the same organization found that immigrants were responsible for more than one quarter of all new US businesses founded in 2011, even though they make up only 13 percent of the population.
In 2011, immigrants started nearly half of America's top 50 venture-funded companies and are key members of management or product development teams at more than 75 percent of those companies, according to a study by the National Foundation for American Policy. The same study also found that 25 percent of the publicly traded companies created between 1990 and 2005 that received VC funding had immigrant founders.
At the same time, Wadhwa is worried that the talent has begun to flow the other direction. He tells the stories of talented immigrants being forced to go back to their home countries because they can't get green cards or visas. Anand Chhatpar, for example, came to the States from India to get a degree in computer engineering and, in the process, launched two companies. He and his wife applied for citizenship but were denied, even though Chhatpar had been featured in BusinessWeek as one of the "Best Entrepreneurs Under 25."
He is now trying to run both companies, which are located in the US, from Bangalore and starting to hire programmers there instead of in the United States.
While some people in this country complain about US companies moving jobs offshore, here is a talented entrepreneur who would rather have his companies in America, providing jobs here. But this country won't let him.
At the same time, globalization has changed the balance of opportunity in the world. More countries are competing for talent. Developing nations like China are making tempting offers to keep, or lure back, their most talented people. And it's working. Wadhwa describes a trend of Chinese expats who come to the States for education, spend a few years working in high tech, and then return to China to found their own companies. The Chinese call them "sea turtles." They see plenty of economic opportunity, and often a better quality of life, back home. These are talented people who are going East, not West, in search of opportunities.
America is starting to feel the effects. Wadhwa's latest research shows that the proportion of immigrant-founded companies in the United States is declining. In Silicon Valley, it has dropped from 52.4 percent in 2007 to 43.9 percent today.
Wadhwa offers a prescription for fixing the problem, including increasing the number of green cards for skilled immigrants, changing the H1B program, and instituting a visa program for immigrants who want to start companies in the United States. But I doubt that Congress or the administration, whoever ends up winning the election, will have the political will to do much about the problem. Our leaders pay lip service to some of these ideas, but nothing ever gets done.
The so-called "startup visa," which would allow foreign entrepreneurs to found companies in the United States if they could attract a certain amount of venture capital and create a certain number of US jobs, has languished in Congress for two years. Most recently, a bill that would have increased the number of green cards available to foreign students who graduate from a US university with advanced degrees in science and engineering fell victim to partisan bickering, despite bipartisan support. (See: Partisan Quibbling Kills Green Card Bill.)
And with the fiscal cliff looming immediately after the election, there's no reason to think that Congress will be focusing on these issues anytime soon. Even if they do, it may already be too late.
Do you think America is in danger of falling behind in innovation because of the loss of skilled immigrants? What should we do about it?
Eighty percent, or 40 out of 50, of the country's Top 50 Venture-Funded companies had one or more American born founders. No, I didn't make up the statistic, I found the data and reversed the spin that the pro-immigration faction is trying to promote.
Curiously, the NFAP document, "Immigrant Founders and Key Personnel in Americas Top Venture Funded Companies", has a table with the names and birthplace of the foreign-born founders. However, after finding another source for the "Top 50" data, I found that NFAP removed the names of the U.S. born founders and eliminated the companies that did not have a foreign-born founder.
Considering both tables - the one in the NFAP document and the one provided by the WSJ (in the sources below) - I have found the following:
23 of the 50 companies selected did have one or more foreign-born (co)founders; however, 13 of those 23 companies also had one or more American born cofounders. Only 10 of the Top 50 companies did not have an American born cofounder.
Companies "Without a Foreign Born Founder" have employment levels 26% higher than the Top 50 average employment levels.
Companies "Without a American Born Founder" have employment levels 25% lower than the Top 50 average employment levels.
The benefit of employment growth in foreign born cofounded companies is muted by a substantially higher application rate for temporary foreign workers and below average employment levels. Companies with foreign born (co)founders (23 of 50) are almost twice as likely to apply for H-1B temporary guestworker visas.
Most of the Top 50 companies (36) are located in California, which has 34.9% population of foreign-born employed in the labor force, so the 31.9% foreign-born (co)founders basically represents the population -- the data shows nothing statistically remarkable about foreign-born founders.
Source Data:
National Foundation for American Policy (NFAP) "Immigrant Founders and Key Personnel In America's Top Venture-Funded Companies"
Wall Street Journal Top 50 Venture-Funded Companies WSJ.com (This source provided founder data omitted from tables presented by NFAP publication) http://online.wsj.com/article/SB10001424052748704132204576190644237905576.html
Foreign Born Employed in the Labor Force:
Employed Civilian Foreign-Born Labor Force by State: 2007 Appendix Table A.
www.census.gov/prod/2008pubs/acs-09.pdf
Foreign Labor Certification - H-1B Program Data: http://flcdatacenter.com/CaseH1B.aspx
Good information. Do you think the companies with foreign-born founders would still have been launched without the foreign-born entrepreneurs? The point is that foreigners are interested in founding companies here, and that we lose talent, and jobs, if they take their talents and found companies elsewhere. Even if those startups don't hire as many Americans (which your data seem to suggest), they do create some American jobs. Also, if even one of them grows to become the next Google or anything even close, it's a huge gain in jobs and innovation.
With the cost of labour in the U.S. do you think that foreign-born founders are still willing to create their companies in the country when they can make more profit in low labour cost areas such as the countries in the asian region?
When I lived in the US about 25 years ago most electronics high tech companies were predominantly fuelled by US born workers. There was significantly fewer Asian, Indian or Latin American employees in leadership roles. Nowadays the picture is much more varied. As such there are many highly trained non-USA workers and it is only to be expected that a higher number of them will want to leave the USA at some point, for instance to return to their homeland. Also the world is a lot smaller these days and work practices more flexible.
Education and knowledge is the key. This is quite known and most think tank and parents are aware of this. But America is doing very little in education, early chilhood to school and university. Amerca has to do lots of work in this direction. Obama has dream for this, but unable do much. Along with education at home, immigrants do help keep America leader in technology.
In today's Internet driven work environment, A skilled professional need not leave his home country to work for a US company. He can contribute to the innovation projects of US companies sitting right at home in his home country.
So the immigration laws are soon going to loose their sheen as the talented people no more need to beg for Visas or Green cards to be able to work for US companies.
US companies are opening their R & D centers in developing countries where abundant talent and skilled workforce is available and many of these companies have work from culture
Prabhakar, What can I add? You made the case simply and succintly. Several decades from now many would review current events and wonder why our generation made so much hoopla about a lot of things. One of these is likely to be all of the gatekeeping we are doing in immigration, employment and work patterns.
I don't think that labor is necessarily the issue here. At the startup phase, we're looking at a group of talented people finding funding and starting a business. Sure, they might outsource some of the design and - if they are making a hardware product - all of the manufacturing. But if they company grows, they will still expand the number of U.S. employees for finance, marketing, etc.
Qualcomm has launched a big push to spread its cellular technology, and thus increase its royalty income, not to mention chip sales, beyond mobile phones.
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Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
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