Train people well enough so they can leave. Treat them well enough so they don’t want to. - Sir Richard Branson
In these next few memos I’d like to build on the three pillars to a modern deregulatory campaign I set forward in last week’s Memo 6: The Rules are the Rules – Immigration, Energy, and Land Use regulation. The goal is to identify reforms that will spur productivity in our labor, commodity, and housing markets and solve our shortages across these now scarce resources. So let’s dive into Immigration policy and our labor markets.
We have 5 million more job openings than we have unemployed people, and our aging demographic means that these jobs are not obviously filled by the next generation. If we’re speaking candidly, widespread immigration carries meaningful cultural, social, and particularly electoral implications. We still need to find meaningful ways to open up the country, but it will require significantly more thought. The low-hanging immigration reform that we could effectuate tomorrow, is with high-skilled, college-educated immigrants. In my two years since graduating, I’ve watched my classmates – quants, engineers, doctors-in-the-making - pick and switch jobs to maximize their H1-B lottery odds. Not uncommonly, they leave our country when the dice don’t fall their way. Sad for them, yes, but maybe sadder for our country when we lose our top talent to Canada the UK, EU, and yup most common… China.
Everyone has their own story, and the one I find particularly moving is Eric Yuan’s:
When Eric Yuan was a university student in China, he grew tired of taking 10-hour train rides to visit his girlfriend. He came up with the idea of a video conferencing application.
Said application was Zoom: $2.7bn of revenues, 6,800 employees, a $166bn $32bn market cap in October of 2020 Today (not his fault his investors don’t know how to value a business).
After attending university, Yuan wanted to work in America but encountered a problem – he couldn’t get a visa. “I decided to come to the U.S. in the mid ’90’s because of the Internet, which I knew was the wave of the future,” he said. “It was red hot here, but hadn’t yet taken off in China. The first time I applied for a U.S. visa, I was rejected. I continued to apply again and again over the course of two years and finally received my visa on the ninth try.”
In the United States, he worked for WebEx. When Cisco acquired the company in 2007, Yuan was appointed vice president of engineering at Cisco. In 2012, he left Cisco to start Zoom, putting together a team of 40 engineers.
The United States does not have a startup visa for foreign-born entrepreneurs. However, a National Foundation for American Policy report found the federal startup program in Canada has helped create jobs, as has a program run by the province of Quebec. The United Kingdom has improved its program to compete with Silicon Valley for entrepreneurs. Australia and New Zealand both have startup visa categories and through experimentation their governments are attempting to find the best policy mix to attract foreign-born business founders.
9 rejected visa attempts later, Eric made it to US after we did nearly everything we could to try to stop him. This is likewise not a one-off:
Immigrants have started more than half (50 of 91, or 55%) of America’s startup companies valued at $1 billion or more
I would add – this might feel anecdotal, but so is modern American prosperity – consider the 2020 stock market “recovery” below:
Or consider that over the past 5 years, 41% of the S&P 500’s gain came from FAAMG stocks – 5 companies. To me this speaks to the power of one individual or one organization to make a difference in both wealth creation and hiring within the world’s largest economy. This is the world we live in today, where connectivity and scale have enabled 5 people to build teams around their visions to create enterprises.
We’ll never know about Erics that didn’t make it to the US, stayed in China, and have lent their tech ingenuity to the CCP, but can we all appreciate the irony of the Department of Homeland Security enforcing policy that sends top cyber minds back to China, our nation’s largest security threat.
My best answer is the following proposal: if you graduate from a top [3]00 American University – can we agree you’ve earned the opportunity build a career in the US? I’ve been preaching this for the last two years after watching some of my high achieving friends struggle to navigate securing an American visa. The UK just adopted a similar framework for students that didn’t study in the UK: 37 top universities globally, whose degrees now automatically entitle graduates to a visa. 2 years for undergrads and 3 years for PhDs – why not longer?
Here, you get a year for graduating an American university (3 for STEM majors), and after that you need to win an H1B lottery. You get four draws over the 3 years, and your odds on any given one is ~20% so ~60% cumulatively. The odds aren’t terrible, but the lottery leaves grads fully dependent on a large company to apply on their behalf, the odds are still too low, and most importantly it just sends the wrong message – that they need us more than we need them.
My roommate’s story is one of an ivy-league Computer Science major, who started as a quant at Morgan Stanley, lost the first H1B draw, and now is a software engineer at Facebook. He has 2 shots left at the lottery, but we’re going to take matters into our own hands and make our own luck. We are looking for New York’s most eligible American bachelorettes seeking a Croatian catch. 25 years old, 5’11” and when he’s not killing it coding for America’s most evil company, you can find him producing music and DJing. Serious inquiries only – reply to this email.