The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent

The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent

Vivek Wadhwa with Alex Salkever
Wharton Digital Press, The Wharton School, University of Pennsylvania , 2012
ISBN: 978-1-61363-020-4

Introduction & Chapter 1
Pages 16 to 28

Introduction
The Immigrant Exodus

….When I immigrated here, America was the only viable destination for serious technology entrepreneurs. Standouts in science, engineering, technology, and mathematics research flocked here, too. Now more than ever before, the United States needs immigrant entrepreneurs to retain its competitive edge.

But now these entrepreneurs need America less than ever before. The trend has become so common that it has a name: the reverse brain drain. At almost every entrepreneurship event in Silicon Valley, I meet skilled immigrants on temporary visas who have great ideas but can’t start companies because of their visa restrictions. Visit Bangalore, Shanghai, São Paulo, or any other big city in India, China, or Brazil, and you will find hundreds of innovative startups founded by people trained in US schools and companies.

In addition, the competition has gotten stiffer. Many countries, including Australia, Canada, Chile, China, and Singapore, recognize the opportunity in attracting entrepreneurs, technologists, and other skilled workers. These countries are offering stipends, labor subsidies for employees, expedited visa processes, and other inducements to bring in startups. As a result of these aggressive recruitment policies, hundreds, if not thousands, of startup companies that might have launched in America are now taking root elsewhere….

Immigrants Anand and Shikha Chhatpar built a burgeoning Facebook games company in the United States. Immigration officials unexpectedly forced them out in 2010. They hired programmers in India instead of in Silicon Valley to build their next startup. Despite this rough treatment they, too, wish to return to the United States, and they have engaged a US attorney to help their chances with USCIS.

This shows that the United States can quickly halt the Immigrant Exodus. Simple, direct, and obvious changes to our existing immigration laws and policies can stop the entrepreneur and talent shift and secure America’s place as the world leader in innovation. And it wouldn’t cost US taxpayers a dime. It would deliver billions of dollars in taxes into the US Treasury, drive a renewal in US hegemony over global patent filings, and create new jobs at the scale we need in order to revive our economy….

CHAPTER 1

As an undergraduate studying at Government Polytechnic, Mumbai, Anand Chhatpar launched his first software company, Pyxoft Infotech. After graduating at the top of his class with a degree in computer engineering, Chhatpar entered the University of Wisconsin–Madison in 2001. At his new school, he immersed himself in the culture of startups, entering business plan competitions and collaborating with fellow students and professors to brainstorm business ideas. He interned with Pitney Bowes and other organizations, garnering eight utility patents from the US Patent and Trademark Office.

During his junior year, Chhatpar founded BrainReactions with two other students. The company provided a platform to harness undergraduate insights to help large corporations solve problems and innovate. The business served dozens of notable clients such as Bank of America, Black & Decker, BMW, General Mills, Intuit, Kellogg’s, Procter & Gamble, and the United Nations. Chhatpar ran the business while pulling a 3.978 GPA in computer engineering.

Anand met Shikha at the University of Wisconsin–Madison and married her in November 2008. Just after she graduated, the Chhatpars launched another business, Fame Express, in order to build Facebook game applications. The company’s apps were played online by 20 million people around the world and garnered 900,000 fans. In the first two years alone, Fame Express grossed about $1 million, and the Chhatpars paid more than $250,000 in taxes. Anand carved out a media profile, appearing in numerous media outlets including CNBC, US News & World Report, and the Los Angeles Times. In September 2010, the Chhatpars returned to India for a legally mandated period, while awaiting paperwork from the US Citizenship and Immigration Service (USCIS) that would clear a path to citizenship….

The Innovation Impact

Sophie Vandebroek is the chief technology officer and president of the Innovation Group at Xerox. She was born in Leuven, Belgium, earned a master’s degree in electromechanical engineering from Katholieke Universiteit Leuven, and immigrated to the United States in 1986. Her husband, who accompanied her, had also earned a master’s degree in electromechanical engineering from the same university and later completed a master of business administration (MBA) at Cornell University.

His company, a medium-size firm in Rochester, New York, wanted to sponsor him for a green card but couldn’t because he didn’t have a PhD.

In 1990, as she was completing her PhD in electrical engineering from Cornell, Vandebroek joined a large multinational near New York City. She commuted 300 miles to work even though she had two children at home. But she became frustrated that the company would not file for her green card.Vandebroek explains, “The approach my company took with foreign students was to wait as long as possible to get them their green card.” So she resigned and joined Xerox in 1991. As it did for me, Xerox immediately sponsored her for a green card, and she received it within 18 months.

Two decades later, Vandebroek is head of all of Xerox’s research laboratories around the globe. She has received 12 patents, been inducted into the Women in Technology Hall of Fame, and become a fellow at the Institute of Electrical and Electronics Engineers (IEEE).

At companies such as Xerox, the most prized employees in research and development (R&D) provide breakthroughs that are so unique and defensible that they merit patent awards.

For the past 60 years, the United States has dominated global patent filings. Skilled immigrants, often on H-1B visas, have contributed mightily to this supremacy. Patent filing statistics provide the proof. Patent filings are a generally accepted proxy for science and technology innovation, which is why my team decided to perform an analysis of the World Intellectual Property Organization (WIPO) database in 2007 for what would become our initial report, “America’s New Immigrant Entrepreneurs.”

We found that the number of international patent applications filed by noncitizen immigrants increased from 7.3% in 1998 to 24.2% in 2006. (11) Among foreign-born patent holders, those from China (Mainland and Taiwan) made up the largest group. Indian nationals were second, followed by Canadians and the British, respectively.(12)

Even that tally likely understates the contributions of immigrants….

What would the world look like if more and more foreign nationals and foreign residents who in the past might have filed patents in the United States instead were filing patents in India or China on behalf of Indian or Chinese companies? How long would it take for the global balance of technology power to shift?

How long would it take for those contributions to elevate China and India to the same status as the United States? We don’t know the answers to these questions, but we may be perilously close to finding out as these innovators and entrepreneurs leave at a hastening clip.

So for all intents and purposes, the debate about whether immigrants drive company formation and job growth in America is over. The evidence is overwhelming. We need immigrants to drive job growth. We need skilled immigrants to drive technology job growth. We need immigrants to drive technology innovation in America and maintain this country’s lead in the global race for technological supremacy.

The Shifting Tide

Two months after the Chhatpars returned to India for the legally mandated period, their petition for EB-1 status was denied, despite the fact that they already had employees in the United States, were paying considerable taxes in the United States, had a clear track record of starting companies, and BusinessWeek.com had once featured Anand as one of the “Best Entrepreneurs Under 25.” (18)

Obviously, this type of purgatory is bad for business. Says Anand, “Now, after returning to India because of the denial of both our petitions, running our companies (both registered in the United States) has become extremely difficult. As a result, our companies are suffering. Our tax returns can prove that we weren’t able to make profits since moving to India and haven’t contributed a single dollar to the IRS since then.” (Full disclosure—I brought his situation to the attention of Alejandro Mayorkas in May 2012, and he said he would “forward this communication to the appropriate individuals in our agency for consideration as to how best to proceed.”)

Today, the Chhatpars are living in Bangalore running both Fame Express and BrainReactions. They have hired four computer programmers to develop India-focused websites. They would rather be working on products for the US market, but given their immigration uncertainties, they feel they have no other choice. And, in all likelihood, some of those jobs would have gone to US-based programmers had the United States not ousted the Chhatpars.

For her part, Vandebroek says she can’t imagine leaving the United States. But she sees other top researchers packing up. Recently, two of her top PhDs resigned from the Xerox research center in Webster, New York, to take academic positions in South Korea. One is married to another PhD researcher at the Webster research lab, so that totals three losses for Xerox. These are just the most recent losses. Vandebroek says that over the past five years there have been many others. America’s loss has been the gain of countries such as India, China, and Korea.

Vandebroek says, “Clearly the attraction the United States had on people like myself two to three decades ago is very different now. Countries all over the globe now have successful and growing research universities and labs. It is critical that the US figure out how to encourage bright and passionate scientists and engineers to immigrate to the US and contribute to a better future for all of us.” And, in truth, Vandebroek, too, might have left those many years ago had she been forced to wait longer for a green card and put her family through continued stress and uncertainty.

Notes:

(11) Wadhwa, Vivek, AnnaLee Saxenian, Ben Rissing, and Gary Gereffi. “America’s New Immigrant Entrepreneurs, Part 1.” Duke Science, Technology & Innovation Paper No. 23 (2007). Social Science Research Network (SSRN). http://ssrn.com/abstract=990152 (accessed July 31, 2012).

(12) Ibid.

(18) “Entrepreneurs: Cream of the Young Crop.” BusinessWeek. http://images.businessweek.com/ss/05/10/young_entrepreneur/source/4.htm (accessed July 31, 2012).

Excerpted from The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent, by Vivek Wadhwa. Copyright by the author. By permission of Wharton Digital Press.

 

 

© 2012 by Vivek Wadhwa

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