America, pain, fact, and wake up!

A reflection time

This article is inspired by the Techcrunch’s post written by Professor Vivek Wadh, visiting scholar at the School of Information at UC-Berkeley, director of research for the Center for Entrepreneurship and Research Commercialization at the Pratt School of Engineering at Duke University.

US economy is shattered and shows no signals of full recover. Many people have lost houses and jobs since 2007. It is still unclear for when or how our economy can be recovered.

Meanwhile, the number of startups dropped 24% in 2009. The data in 2010 is still not available. It is already known the US job loss rate is 9.5%, with 131,000 loss by July of 2010. Startups contribute to most of fresh employment annually. This implies some plunge or very slight increase of the number of startups in 2010.

Does this seriously mean US has already lost its innovation and the startup momenta?

First let us scan who and what are behind of these startups. Reports showed immigrants are one main force of US startups, source 1, source 2, source 3. Since 1990, immigrants have founded 25% venture-capital-backed startups in US, source. These startups are mainly in information technology (24%) and high tech manufacturing (42%) areas. Silicon Valley’s innovation has been constantly driven by immigrants. From 1995 to 2005, 52% of Silicon Valley’s startups were founded by foreign-born workers, source. The number of immigrants staying in US however dropped about 1 million in 2009 due to the financial crisis started from 2007. In 2008, the number of immigrants in US were 11.6 million. In 2009, the number was decreased to 10.8 million. Such drop has actually already started from late 2007. The trend might continue in 2010 or even in 2011.

Then we continue to look at the fact of graduate students entering US and staying in US, who are probably the most promising candidates to create startups. In 2009, there is a 1% decline of international graduate students entering US. In 2010, the plunge was reversed. The number of international graduate students increased 3% from 2009, source. Good news indeed!

It comes to the question whether they can get jobs after graduation. Until 2010, the H1B visa application process is still painful. It is unknown whether the application can be approved. The US government is very wise for dealing with this by creating the H1B visa quota policy. The quota specifies the number of 65,000 for each fiscal year. Until present, it is still unclear for how the US government comes up with this quota number. For many international students, the process to get the H1B visa is very similar to win a gamble. Considering there were 671,616 international students in US in 2008 – 2009, source, it is likely that many of these students can not get luck among the H1B lottery process. What this means to those who can get the job offer from companies but can not win the H1B lottery? It simply means you are not very needed to work for US. Please go somewhere else to get a job.

H1B visa is a quite strict policy. It very rigidly specifies that you are only eligible staying in US for three years, extendable to six years, with possible another one year extension. Is it possible for an international graduate (undergraduate) students to create a startups within 3 or maximum 6 years? The answer is it is very challenging to even get it started. First, for most of international students, even they are intelligent, they still have culture, language barriers. If you even can not speak English fluently, how come you can convince people to invest you. Second, during these 3 or 6 years, you must work as full time in order to keep the H1B visa valid. You do not have time to spend on starting up your business. After working a 40 or probably even more than 40 hours per week, you are fatigued, exhausted. Third, international students have very few social network available. They are only able to get the very minimum help as they need.

How about you are exceptionally smart, energetic, and social, and finally great God offers you a gift, somehow you get a startup. Hold, you still have trouble. H1B visa has explicitly specifies that anyone who is under this visa category can not get even a single dollar reward beside the income from the official job under the H1B visa. This might be confusing for many ones who do not know H1B. It is actually simple. For example, you have a job, the company helps you to apply for the H1B visa. That is called the job under the H1B. You are only allowed to be paid from this job, not from anywhere else. You are simply a volunteer for your startup or you have to figure out the way to get some illegal ‘dark cash’.

Even you really enjoy this struggling process, working as a volunteered CEO/CTO to pursue the dream of innovation, the road in front of you is still very undetermined. Your H1B visa is only valid for six years. You have to apply for the Green card in order to stay in US. There are several categories for applying for a Green card, which are EB1, EB2, and EB3. EB1 is designed for international famous scientists and scholars. Most of people are only qualified under the EB2 category. It takes about 5 to 6 years in average before you can be issued the Green card. During this period of time, you have to have a legal job, for example H1B visa job in order to be qualified for getting the Green card.

How much time is granted for an international student to get a successful startup in US?

Visa application (1 year) + work to impress boss in order to keep the H1B visa job (2 – 3 years) + start to apply for the Green card (typically requires 5 -6 years)

It is apparent H1B visa workers have to wait for about 10 years before they can do anything about startups. If they are ambitious and want to start early, for example, working as full time in a company, making use of the late night time to work on the startups, in total they need to work at least 80 hours per week in order to start some business. The truth is the H1B workers probably are risking their personal health and the H1B visa job satisfaction. What this really means to H1B visa workers? It means (1) They can really be aging early and fast. (2) In reality, they very often do not have time or over-pressured for starting the startup before the H1B visa gets expired. (3) The job is essentially their life. If the job is lost, they likely have to leave US. (4) How many people want to risk the whole family becoming illegal to pursue the dream of startups?

Economy is not just simply the number. It is about fact, policy, and enthusiasms of people. Hope this article can help US government policy makers reflect on the H1B and Green card polices with a single goal in mind, which is to make US a better place to live and to thrive.