Tuesday, December 8, 2009

Programmers Guild response to the guy who calls us "Xenophobes Who Need To Go Back Into Their Caves"

On December 5, 2009 Vivek Wadhwa posted "The Startup Visa And Why The Xenophobes Need To Go Back Into Their Caves."

The new “Startup visa” is sketched out here: http://startupvisa.com/about/ .

Vivek claims that this Startup visa "is about creating American jobs and moving innovation here which would otherwise happen in other countries. We can boost the economy without any cost to taxpayers. It’s not about admitting H-1B visa holders who sometimes make Americans compete for high-paying jobs, but bringing in entrepreneurs who expand the pie for everyone."

Vivek believes that everyone should see the benefit of his idea - and those who don't are "xenophobes": “I was convinced that my last BusinessWeek column on the Startup visa presented such a compelling argument that even these poor souls [aka American tech workers] would support it.”

He refers back to his December 2, 2009 commentary in BusinessWeek, where he makes the case:

"Here's how it would work. Suppose a talented engineer who is not a U.S. citizen has a great idea for a new type of search engine and wants to start a company. This entrepreneur wants to start that company in the U.S., where venture capital markets are the most mature, intellectual property laws are strong, and the talent level is high. It turns out that the would-be founder's search engine idea is actually very good. So a qualified U.S. investor decides to put real money—say, $250,000 to $500,000—into the startup. That investor could nominate the potential founder for a Founders Visa while also making a formal commitment to fund his or her company."

“The idea and the founder's résumé would then need to pass muster with a government or industry-appointed board of venture capitalists, financiers, or technology experts. After passing, the founder would be granted a permanent resident visa.”

“To open up visa slots, Ries, Feld and others propose altering an existing visa known as the EB-5, now for immigrant investors.”

Why Programmers Guild opposes the Startup Visa

1) The new visa category is not necessary. A startup company can already hire foreign talent to their venture via the H-1b and other visa categories. U.S. investors could form Yeehaw Search Engine venture and sponsor the “talented engineer who has the great idea.” (Programmers Guild opposes the H-1b lottery. Instead we advocate that priority be given to the highest skilled workers – with salary being the best proxy for skill.) Currently the H-1b cap has not been reached, so nothing is stopping a startup from using the H-1b to accomplish the intent of Vivek’s proposal.

2) The vast majority of start-ups fail. "A new type of search engine" is a great example - what are the odds that would succeed against the current search engine leaders? Most likely they would burn through the capital within a year. Then what? Vivek grants him a “permanent resident visa” – a green card. So, in spite of being an entrepreneurial failure, he will remain in the U.S. and search for a day-job, competing with 12 percent unemployed Americans.

3) Often founders of ventures prefer to hire people that they already know. A "Founder" from another country is likely to want to bring over his buddies from the homeland. Currently there is no provision that any of the workers hired must be Americans. We already see thousands of cases of Indians starting companies and hiring exclusively Indian immigrants – from Infosys down to the smallest bodyshop.

4) The Programmers Guild does not trust “government or industry-appointed board of venture capitalists, financiers, or technology experts.” We don’t want “unlimited H-1b” Bill Gates or “send the work offshore” http://www.carlyforcalifornia.info/ making immigration decisions. It’s unclear whether the public would be allowed to review and comment on the actions of this board – or whether U.S. immigration decisions would be done by secret panels.

5) The EB-5 Visa has been discredited as full of fraud and abuse, as reported by The Baltimore Sun “INS insiders profit on immigrant dreams,” February 20, 2000. At least the EB-5 required the person obtaining the visa to put up the funds. Under the Startup Visa the sponsored parties would have nothing vested. We believe that fraud and "shell ventures" would be rampant.