That doesn't surprise me in the least. Immigrants have one leg up over the competition: they have generally very little to lose and everything to gain. They have also already self-selected for being people that are not risk adverse (they just left everything behind to start a new life) and they are executing on their dreams.
I often see people that rant against immigrants in general and I always wonder how they would react if you explained to them that their old age pension likely depends on some not yet born immigrant and his or her children.
I think there are some close cousins of "nothing to lose" that are at work too. As an immigrant your out of your own system and its expectations.
Say you come from a background where your reference group mostly follows a path of: go to high school, go to 3 year Uni, travel for a year, then either start climbing corporate ladders or more Uni, etc. Obviously, not everyone follows the exact same path, but there is a lot of similarity. This peers group might be people your own age that you know. Older siblings, parents or even mostly theoretical. Most people have something like it and it is how they create their expectations for themselves.
Taking a year "off" after high school would put you "behind" your peer group. Figuring out a way of finishing Uni a year early would put you ahead. People with strong peer groups cluster around the median. This applies to performance as well as choices. I don't know how well the psychological mechanisms are understood, but I guess our self expectations are both very important determinant of performance and choices and very influenced by peer groups.
Derek Sivers wrote a good article called There is no speed limit.^ In a nutshell, a cool musician called Kimo Williams taught him 2 years with of Berkley music curriculum in five lessons when he was 17. He set an intense pace and expected him to keep up. Just because it takes 2 years in a college context doesn't mean it needs to take 2 years.
Immigrants are islands, relatively. They are on a path with few peers. Taking a few years to do something won't put you behind because there is nothing to put you behind of. There are fewer safe choices that an immigrant is hesitant to deviate from. This is good for making outliers.
Would be interesting to see the income distribution of the families of these VC backed founders. Most if not all of these founders will be exceptionally well-to-do. The cost of going to an elite university program outside of their home country is staggering without financial aid. In any event, not (by any means) a sample from which to extrapolate from.
That being said, more power to them for overcoming the still very large risks and challenges it takes to make it even that far. I know from personal experience how hard it is for many of these people to contribute to US society/economy after they finish their programs. The red tape is obnoxious (without institutional support or sponsorship).
I like how they picked Arianna Huffington as one of the immigrants. She came from well-to-do family, studied in England. By the 70s, she was already some kind of elite person in London, came over here, married a wealthy politician, became a well known right-wing pundit, divorced when he came out as gay, changed political direction to liberal and started the HuffPo.
These entrepreneurs all appear to be legal immigrants. Most of the "ranting" in the U.S. is towards the law-breaking immigrants who now want amnesty. There is a consensus in America in favor of legal immigration, the political fight is over the inability of America to secure its borders and how to assimilate the millions of people who entered the country illegally.
There is a lot of political support for "amnesty" or legalizing those who came over illegally. They want to give them citizenship eventually.
As the reform law looms, and people really think hard about what it means to keep millions of people "illegal" and then not allow them to become citizens, they really start to think about the consequences, which aren't pretty. It would lead to a two-status society, and when they think about people they know or work with stuck in second-class status, they don't like it.
The fight is between the politicians who want to extract more money or favors from the legislative process, or want to prevent adding more Democrat voters to the rolls in ten years.
So they bring up this border fence and security plan. It's an expensive boondoggle that won't stop half of the illegal immigration, because many "illegal" immigrants had legal visas when they arrived here. They had a passport and a travel visa, and overstayed the visa intentionally.
And, guess what - the government knows it, but they don't do much about it. The reason is because the opposition to these people is minimal. The small businesses employ them. So, there's your support base right there. If they really enforced the law, a lot of relatively wealthy Republicans and Democrats would be upset.
H-1B is specifically not an immigration visa. I realize I'm being somewhat pedantic, but the nominal purpose of the program is to provide specialists to constrained labor markets on a temporary basis.
Immigrants have plenty to lose. Take my own example. Living in America for a few years (first as a graduate student and then as a software developer), I have made strong connections and a social life here. I lose everything if I don't make it.
There are two big problems for immigrants:
The Green Card process takes ~10 years. Imagine staying put in one company for 10 years. The legal immigration system is so haplessly broken that if I lose my job (say, late in the GC process), I get kicked out. My wife can't work. I cannot have kids without them confusing nationalities. I cannot buy a house. Immigrants are living on a thin strand, sacrificing a lot.
Motivated immigrants, who wish to start a company, cannot do so either because there are no visas to do so easily. Until we get a Green Card, we cannot quit our jobs and go on a road trip of the US, like my colleagues do. Realize that there is an opportunity cost, a small window, in which we all are highly motivated to start something. We immigrants typically waste that window in simply waiting for the Green Card to arrive (all-the-while, hoping we don't get laid-off).
The loss of this opportunity is one of the biggest reasons why many choose to head back to their own countries to start companies.
In summary, Immigrants have A LOT to lose. Grass is not green on this side either.
Source: Me. An Immigrant working in SV who's not allowed to start a company because of the ridiculous immigration system.
This seems a bit of a generalization, or dare I say, a romanticization. It's supposing you know the motivations driving a group of people whose only shared characteristic is that they weren't born in the United States. In many ways, it's as much a generalization as the "people that rant against immigrants in general".
In my personal experience, designers tend to wear more thick plastic "hipster" style glasses than the general public. Therefore, hipster glasses make you a better designer.
I'd submit that it's not about "more to lose", but rather, it's a move of safety. You see a lot of the same businesses operated by the same types of people. Why? Is that group of people in a caste system that requires them to operate that type of business? No. There's safety in numbers, and birds of a feather flock together (and may work to protect the hatchlings as well).
Perhaps VCs have found that there's a certain profile they like for a company. If I was founding a company and thought having an immigrant co-founder could make the funding process easier, you'd better believe it would affect my choices of co-founders. Are there also tax incentives? I know in Oklahoma, there's a ton of businesses "owned" by Native Americans, even though the company is usually run by someone else. Keep in mind that you only need one immigrant founder to make it an immigrant founded company. (What would the % be like if 100% were the requirement?) Is Barack Obama considered black or white?
If you look at the profiles of these companies, I think you'll find a lot of the good ole business practices in place. (tongue planted in cheek here) Immigrants? yes. American minorities? less so. Women? less so.
I'd love to see a breakdown of bootstrapped companies as well. I suspect it's a different story.
I think it is much simpler than that. Over and beyond not having a safety net and not having a high aversion to risk once you've immigrated to somewhere assuming you didn't do that to go to work for some specific company you're behind the rest of the pack when it comes to applying for jobs. So immigrants have a strong incentive to found a company, they won't have a gap in their CV if they do, they already have the largest gap possible. Nothing to lose is an excellent position to be in when you're confronted with the choice to start a company or not.
This isn't the first time I've read a sweeping generalization from yourself based on "personal experience". I have no doubt you have a lot of personal experiences and don't disagree with your viewpoint (in fact my personal experience dictates the same) however, it is still a generalization. You're talking about a cohort that you (and I for that matter) have no formal analysis to back up.
I'm American and I've immigrated to the UK. I know hundreds of Americans who have done the same. I don't know a single one of them who "has nothing to lose". So I could also conclude the exact opposite conjecture.
The reason I mention all of this is not because I think you or I are right or wrong, but because I think is disingenuous to provide arguments (from either side) without any formal analysis.
Anyway, let's get back on topic. So if it 33% of immigrants are co-founding big businesses in the US that are helping the US economy, then surely we should be letting in more right? X * Z% = Y, increase Z% and we get more Y, right? There's a couple things at work here:
- The fact that 33% are actually making it into the US and creating businesses perhaps speaks the nature of the people who "stop at nothing" to live their dreams. The US immigration system is painful, but perhaps it's this painful barrier that filters out all of the immigrants who don't create jobs for the US and does identify the people that do.
- What is the ideal % for founders? Is it 90%? Is it 50%? If it becomes 90% then why shouldn't it become 100%? Perhaps we could create an analogy to a silly american football argument and say "85% of all NFL Pro-bowl players are African-Americans. Let's get more African-Americans playing football!"
- I have yet to see a reasonable argument for a system that correctly attributes the probability of creating a successful business by an immigrant to the US. For one, it is not a specific country. The article clearly dictates this.
- I believe the massive proponents for immigration reform stems mainly from high-net worth individuals that are complaining because they want to bring highly talented people from abroad to the US so that they can personally benefit from it. Equally, potential immigrants are complaining because they don't have an opportunity to move to the US. If this is such a big problem, why not find a country that supports both? Surely there is an island in the Caribbean that could cater to this?
- I think you are right in that the mentality of the successful business creator is someone with "nothing to lose". This is how America became so prosperous and heck it was built by immigrants 200 odd years ago. But surely there are people in the US with "nothing to lose"? I think it would be beneficial to understand more about the character traits of these massively successful business founders, rather than simply the country they come from. Otherwise, we're using the same exact basis the the opposition is using - that this cohort's characteristic is simply that it was born in a country outside of the US.
- I've emigrated myself (to Canada, founded a company there)
- I know quite a few people who have done the same thing
- I'm generalizing across my personal experience because I am me. Feel free to do the same thing, this is a comment on a forum, not a peer-reviewed study on the subject matter. Funny enough, your experience seems to be the same, which strengthens my 'not being surprised' by this.
- People in the US with 'nothing to lose' don't typically decide to have nothing to lose. An immigrant is deciding to go onto a risky path in life fairly consciously which would explain the difference in outcome.
I, nor the person before you, weren't questioning your ability to empathize with the original story. I'm not sure why you chose to highlight facts that back that up.
Feel free to do the same thing
I don't want to. You have influence on this site and it's very likely someone will read your original comment and take your conclusion to be true because "someone influential said it on the internet". Your generalization is consistent with mine, but the conclusion is unfounded.
An immigrant is deciding to go onto a risky path in life fairly consciously which would explain the difference in outcome.
But immigration in of itself, does not constitute a risky path. Hence my example of Americans in the UK.
I agree with you that an American moving to the UK is not taking a risky path. But that is not the general case for immigration, it is rather an outlier.
> perhaps it's this painful barrier that filters out all of the immigrants who don't create jobs for the US and does identify the people that do.
I don't buy it. If 'painful barriers' were a good thing, you'd see the world's best capitalists in North Korea and Cuba, no? The US has fewer painful barriers to creating companies, and a lot of good infrastructure, and so a lot of the world's largest, biggest, most important companies are there. Not all of them, of course, but I don't think that barriers really do much good.
> correctly attributes the probability of creating a successful business by an immigrant to the US.
Predicting the future is often difficult.
Don't have time for the other points, I have some barbecue to attend to:-)
> I don't buy it. If 'painful barriers' were a good thing, you'd see the world's best capitalists in North Korea and Cuba, no?
You wouldn't expect that, because there are high barriers to starting successful companies there, and few that would want to go there to start companies.
What he is suggesting is that, GIVEN that there's a lot of people that want to move to the US to work or start businesses, it is possible that the barrier to immigrate legally serves as a filter so that those who make it through are people who are more likely than the average of those who would like to immigrate to the US to be successful.
If that is the case, then by increasing immigration, you might not increase the amount of successful businesses nearly as much as you might hope.
How much to hope for is not really all that important, the fact is that with 0 immigration there are no immigrant founders and with lots of immigration there will be more of them.
Therefore increasing the number of immigrants will lead to a higher number of immigrant founders. Barriers are silly and counterproductive.
If 'painful barriers' were a good thing, you'd see the world's best capitalists in North Korea and Cuba, no?
There's a difference between impossible barriers and painful barriers. Just because a wall exist doesn't mean you can't climb over it. My point is a psychological one - that perhaps it's the personality and characteristic of a person who is willing to circumvent government barriers that makes them so appealing to start a successful business. Honestly, I don't know, it's just food for thought.
Predicting the future is often difficult.
So who are we to judge who should be allowed in not allowed in?
Don't have time for the other points, I have some barbecue to attend to:-)
Hehe, no worries. I appreciate the fruitful discussion.
I think that immigrants face more barriers. Some of these startup folks, I think, probably faced some barriers into entering the elite societies in the US. For example, if you attend college at any of the top 20 colleges in the country, you're going to meet the elite, but an upper-middle class person, especially an immigrant, is going to face difficulties marrying into, or being accepted by these elites.
However, to use the language of the typical undocumented immigrant, of having "nothing to lose", doesn't accurately convey the truth. It's just going to confuse things. There are poor immigrants who start businesses, but by and large, they aren't venture backed startups; more like mom-and-pop stores, food trucks, or swap-meet businesses.
Why is this not news to me? Every immigrant I know is harder working than every us born person I know. America - wealth has made us lazy/complacent and loss of morals has made us unfocused, entitlement minded busybodies.
They also work harder than most of the people where they are from - it's being an immigrant that's associated with being a hard worker, not being from a place other than the US.
Americans work harder than almost every other nationality in the world. New Americans generally work even harder than that.
One thing I always find, even when dealing with USCIS, or press, or really anyone regarding this matter, is that only very few people truly wish to make it difficult for immigrant founders to stay in the country. In fact, I have never met anyone that gave me the impression that they didn't want me around. The problem is that immigration law is slow moving and the adjudicators at the USCIS need to follow it to the dot, even if it was written before a lot of the technology we use today was invented and the world was a much less global place. And now they are rolling the issue of startup founders and high skilled labor into the massive immigration reform, where it is likely to fall through the cracks or even be used as a bipartisan bargaining chip/concession.
Personally, I think a great way to level the playing field wrt starting businesses for immigrant founders would be to allow all holders of employment visas a grace period during which they can stay in the country after they quit their job. This grace period could depend on the type of visa, your degree, your income (read taxes), the time you spent in the US, whatever. Then you can start a business without first having to secure your own presence, which is very difficult (because you don't yet have a real company) and expensive to do. A similar arrangement exists for study visas and is extremely effective in keeping college and grad school graduates in the country after school.
Uh look, this is a false equivalency. Nobody is complaining about the brilliant immigrants who are founding companies.
People are upset about using immigrant labor as price competition to depress wages and capture middle class income to be transferred to the wealthy.
We all see this all the time--companies hire legal immigrant labor or import H1B's to pay 80% of the prevailing wage, meanwhile a massive and unnecessary management structure compensates itself lavishly.
This is a classic "commons" problem. It's advantageous for any individual company, but when everyone does it, it leads to the tragedy of the commons. In this case that tragedy is the collapse of the American consumer. He's being attack by high health costs, food costs, energy costs, regulatory burden, grift from financial institutions, education costs and he has no more money to spend at Waltmart-- the guys who caused the problem in the first place.
That says very little. There are such a wide range of immigrants: young immigrants, older immigrants, poor immigrants, wealthy immigrants, undocumented immigrants, documented with a green card. If someone relatively wealthy immigrates here and uses the "millionaire's visa" and invests in a business, they get a green card. Well, that counts toward the statistic.
Also, the article has it TOTALLY WRONG about immigration history. Immigration was relatively loose until the Civil War, and then it was slowly closed until in the late 1800s, restrictions really increased substantially until the 1940s, particularly for Asians. Then, after WW2 it eased up, and in 1965 racial discrimination in immigration quotas was made illegal by the Civil Rights Act.
That created a new phase of global immigration, and things stayed the same until 1986 with the IRCA. That closed off some forms of immigration, specifically affecting illegal immigration. In the same time frame, it became easier for wealthy entrepreneurs to immigrate (mainly the ones from Hong Kong), and then H1B started, and it became easier for technically skilled workers to get worker visas and later green cards.
So it's not as the article said, that the doors were wide open, and then they have slowly been closing. That is at best an error, and at worst, a total deception. After reading that, I stopped, because if the writer can't get that basic history correct, they don't know squat.
(I should add that I am in favor of increasing immigration, but opposed to the current trend of expanding guest worker quotas.)
I wonder how many more are founded by children of immigrant parents. My YC batch felt 1/3 immigrant founder, 1/3 child of immigrant founder. Quite the overrepresentation since they each comprise just over 10% of the population: http://www.census.gov/newsroom/releases/archives/foreignborn...
It appears that most of these entrepreneurs are documented immigrants, which may be an argument in favor of keeping the current US immigration system. However, it's important to keep a few things in mind:
a) Some of these entrepreneurs were able to stay in the US because they got married to an American citizen (that's my case, BTW).
b) Many would-be-entrepreneurs that tried to migrate to the US end up setting shops somewhere else because they couldn't stay legally.
c) Most entrepreneurs that are undocumented immigrants in the US (I know many that own small businesses) have major issues scaling their businesses and won't ever show up in articles like that one. For example: its extremely difficult for them to get credit lines. Additionally, they won't ever talk to the press because they are afraid, and legitimately so, of becoming a deportation target.
The current immigration system in the US is broken. Ignorance and political-driven xenophobia are not helping. I really wonder how long it will take for most Americans to realize that although it used to be a privilege to migrate to the US, the global dynamics have shifted. It's now a privilege for the US the welcome many immigrants, specially technology and entrepreneurship-oriented ones. Many other countries already figured that out and have adapted their laws.
There's nothing shocking about this - increase the time frame to 20/50/100 years and the numbers will stay more or less the same...
It's just that in the US, you've got favorable laws and culture, existing infrastructure, lots of investors willing to take a risk and a huge market to begin with... it's the perfect starting ground for pretty much any business.
As to the innovation centers of the tech industry, I'd like to see some more decentralization of the hubs. As it evolved, the auto industry benefited greatly from stuff that came out of Europe and Asia. Same cant be said of tech.
Immigrants aren't homogeneous. What is the distribution of countries-of-origin for these founders? Why does this imply that we should increase immigration for groups not disproportionately likely to found successful companies?
I often see people that rant against immigrants in general and I always wonder how they would react if you explained to them that their old age pension likely depends on some not yet born immigrant and his or her children.