How to Fix the Flawed Startup Visa Act | Hacker News Reader

How to Fix the Flawed Startup Visa Act

techcrunch.com

24 pointssammville17 comments

The mistake happens in these two sentences:

"The bill makes the wrong assumption that all startups raise angel or venture capital. As my team’s research has shown, nine out of 10 successful entrepreneurs don’t."

Entrepreneurs are not identical with startup founders. An entrepreneur is someone who starts a new business. Only a small fraction of new businesses are startups; most are unscalable service businesses like barbershops.

As of now, at least, nearly all successful startups have investors.

What's wrong with Vivek's suggestion that we concentrate on fixing the USCIS, which (nominally but not effectively) already has statutory authority to allow startup entrepreneurs to immigrate here? Doesn't that get us out of the business of encoding in laws what a "startup" is?

USCIS's main problem is that they are stretched too thin given the current resources. Adding a subjective approval process to their roster of duties without giving them more resources is only likely to lengthen the time it takes to get any kind of permit. Adding new resources at the scale required to fix it is impossible given the current budget crunch.

By adding the investor clause, the government is essentially 'outsourcing' the subjective qualification process to 'qualified investors'. I don't think it is a perfect solution but it seems like a practical approach given the constraints.

Paul: you are absolutely right. I think it is hard to find a better way to differentiate the barbershops from the startups short of having smart folks in the government who subjectively examine each application - and we all know how likely that is. Also, if we go that route, the startup visa will take years just like the current green card application which IIRC requires an in person interview.

Vivek does have a point as well though. Currently, employers who sponsor "green cards" have the power to get the sponsored employees and their families kicked out of the country simply by firing them. I don't think you'd want to replicate this with the startup visa. Using investors as an 'entrance requirement' may be o.k., but once someone qualifies for a startup visa, the path to a permanent residency should either be really short (months, not years) or independent of whether the investor continues to 'support' the entrepreneur.

I am in favor of strong filtering up front, but anyone who qualifies should then be treated just like an American citizen or permanent resident.

The VC investor is, I think, to stop the property loophole that used to apply here. To get a visa you had to invest $1M in a business, so people registered a company, bought a $1M house, leased it to themselves, employed all their family and moved in.

I assume you are referring to the way the government is constraining who they qualify as an 'investor' (someone who has made an investments of at least $50,000 every year for the past 3 years)? It does make sense to have some clause like that to avoid the loophole you mentioned.

It is still orthogonal to what I am saying though, which is that once an entrepreneur has raised the money from a qualified investor for a legitimate startup, they should essentially get a permanent residency permit.

Oh definitely agree - I would say that anybody graduating form a US uni with a science degree should get a green card.

in my own field, we train physics and comp-sci PhDs then throw them out of the country like itinerant fruit pickers.

"Vivek does have a point as well though. Currently, employers who sponsor "green cards" have the power to get the sponsored employees and their families kicked out of the country simply by firing them."

This is exactly right. While the PG does have a point, this is the most grave issue with the act. You will see the ugly when the bill passes and as more data gathers in subsequent years about how investors abuse it. Or you can just look at similar situations right now - how employees who are sponsored for green card are exploited by unscrupulous employers.

I think you're mistaken, Paul.

Most incubators including YCombinator softly exclude single-founder businesses and yet these probably constitute at least 50% of the pool of start-ups. Add to them all businesses which get profitable enough to avoid taking outside investment and those which never get funding at all and I'd be surprised if 2/10 startup founders raise outside money, even in California.

Just assuming people who aren't getting funded aren't pursuing scalable business models is myopic.

You are right, in that this act would exclude folks who want to quit their H1B jobs here and start a startup and are not yet at a stage where they can be funded, or do not want to raise funding.

However, if the startup visa act were to remove any filtering requirements for startups, the effect would be a huge spate of tens of thousands of folks who want to open shops, ebay stores or gardening businesses applying along with the single founders of scalable startups - and no one would get a visa in time. The only other 'right' way of fixing this is having the USCIS adjudicate the scalability of business for everyone that applies. That process is hard to scale.

Edit: Actually, I forgot - there may be another way. Some other countries have made the process objective instead which makes it scalable, but introduces other filters. For example, Canada uses a points based system where you get points for education, work experience in your field, fluency with languages etc. If you get past a threshold, you get a (relatively) quick interview and permit on the spot.

Note that a points based system may exclude a young, college dropout founder with no experience. In other words - a plurality of YC founders. May be you could make it either/or - raise investment, or get enough points based on your profile.

I'd also be surprised if 2/10 startup founders raise money. That's why I added the qualification "successful."

Pick any non-contrived criterion of startup success you want (going public, exits over a certain threshold, profits over a certain threshold, winning Crunchies, whatever), count the number with and without investors, and let us know what you find.

Vivek has already done the research, and that's where he gets his 90% non-funded figure. If you want details click through the link provided in the TechCrunch article. The methodology is described on page 7 and seems sensible:

http://www.kauffman.org/uploadedFiles/making-of-a-successful...

This isn't an attack on you or YCombinator. It just doesn't make sense to critique Vivek's points by saying that "nearly all successful startups have investors." Because apparently they don't.

This paper doesn't support your claim. All it says about the criteria they used to select companies is the industry they were in. E.g. "Aerospace." Is he talking about SpaceX, or someone's 10-person shop making some component for light aircraft? The distinguishing feature of startups is their growth rate, not the industry they're in.

Just look at the evidence in front of you. Think of famous startups you yourself know. Just name 10 well known startups, and see how many in your list haven't taken money from investors.

He's saying that "thinking of famous startups you yourself know" is a form of bias. He's just too nice to say it.

Who cares, by the way, whether a startup is going to "scale" past a 10-person shop? A 10-person shop started by an immigrant creates 9 jobs. That's past the threshold in the existing bill you're championing.

much of vivek's criticism focuses on how to optimize the Startup Visa bill. however, left unspoken is how to construct a bill such that opponents will allow it to pass. we spent over a year consulting a variety of folks on this issue (including vivek, who at the time offered much less feedback and a lot more support than recently when he appears to have had a change of heart).

while his feedback may be relevant, unfortunately it's not very helpful AFTER we have spent so much time getting bipartisan support for the current bill. in fact his rather late critiques may actually reduce the chance for ANY kind of bill to pass.

any bill we put together is best constructed with awareness of opponents, and an eye to compromise on getting SOMETHING done quickly, rather than nothing. we can always modify & improve, but if we miss the chance to pass a bill, thousands of startups will again he stuck waiting to create their businesses and jobs.

again I'm extremely frustrated vivek waited a year to voice his opinions, well after we asked for his input (and actually got it) and support (which he gave, and now is withdrawing).

if not for his "fixing", we might already be able to get the bill to the floor for a vote.

Why does the bill need fixing - it seems to function perfectly

The purpose is to make two politicians look good, to allow their respective parties to claim they are doing something while at the same time being able to reassure their supporters that nothing will change.

That's basically the point of politics since some greek guy stood up in the market place

The entire US visa system is flawed.

The H1B visa allows an entire family to be kicked out of the country with very little notice simply because an employer wants it done.

To extend a visitor visa the person needs to leave the country (further than Canada and Mexico) and return. Great for airlines.

Many companies have employees sitting in Canada who they bring down for meetings every now and then. They just have to stay away longer than 30 days at a time.

Many technology companies have complained, Bill Gates and Google included.

Hillary Clinton (immigration head) is not going to allow anything to improve under her watch. The only real hope is to see what happens with the next election. Hopefully Hillary will be shown the door.

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