US Senate: Don’t Punish the Startup for the Sins of the Outsourcer

Great engineering talent is the life-blood of the innovation economy. Startups across the nation, from New York to Silicon Valley, are in an all-out war for the workers they need for their ideas to thrive. Over the next decade, we believe there will be one million more technical jobs than the domestic workforce can fill. Comprehensive immigration reform is an opportunity for our nation to invest in her innovation engine.

Current immigration policy already stacks the deck against small, innovative companies who don’t have the resources and hiring flexibility of corporate behemoths or offshore outsourcers. Today’s paper-choked H1-B system only accepts visa applications once a year in April, and, if you are lucky enough to win one, finally lets you hire the candidate six months later. (If you aren’t, tough luck. Wait a year to restart the process, pushing out the earliest start date 18 months.) That level of inflexibility and delay is simply not an option for startups, for whom every hire is mission-critical and every day counts. Perhaps as a result, less than two percent of H1-B visas currently go to employees of young venture capital-backed technology companies.

Unfortunately, the Senate’s current reform proposals would create new hurdles for startups without addressing the fundamental process flaws in the current system. Although increasing the number of H1-Bs is a step in the right direction, the new accompanying red tape all but ensures that startups will be squeezed out entirely. Startups have to be lean and nimble to survive. Forcing them to prove they’ve exhausted domestic options before making a foreign hire, or limiting their subsequent ability to make staffing changes, will further hamper their ability to compete. So will requiring them to meet minimum salary levels set for large corporations, since startup employees often happily accept lower salaries in return for equity upside.

Regulations embedded in current reform proposals punish startups for the sins of the outsourcer. Our young technology companies are hiring as many Americans as they can, not pushing valuable jobs offshore or replacing U.S citizens with lower-paid non-citizens. According to a Silicon Valley Bank survey earlier this year, nine out of ten employers in consumer internet and enterprise software said it was a challenge to find qualified workers to fill open positions. Similarly, a recent analysis by the Brookings Institution found 46 percent of job openings that go unfilled for one month or longer require science or technology expertise. Moreover, growth in the tech sector means hundreds of thousands of new, high-paying jobs for Americans. A recent study by the Bay Area Council Economic Institute finds that for every new high-tech job, 4.3 others are created in the local economy.

Rather than reinforcing a broken system, here are some concrete proposals that will level the playing field and turbocharge American innovation:

First, exempt startups (defined as companies less than five years old with fewer than 500 employees) from the H1-B cap, or at a minimum allocate a separate quota to allow them to compete fairly for talent.

Second, allow startups to apply for and use H1-Bs throughout the year to reflect their need for agility.

Third, eliminate requirements for “recruitment” or “non-displacement” attestations or minimum pay levels for startups.

Fourth, create a new “Startup Visa” that allows foreign-born-born entrepreneurs who raise at least, say, $250,000 of funding from qualified U.S. investors to live and start their business here.

And finally, simplify and bring the entire H1-B process online for everyone. (I’m sure there are plenty of startups that would jump at the chance to help with that last objective.)

As the Gang of Eight’s immigration package winds its way through committee, let’s not miss a once-in-a-lifetime opportunity to accelerate American innovation, by funneling the world’s best and brightest to our country’s best and brightest young companies.

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, Andreessen Horowitz.

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