chileSilicon Valley’s vitality depends on a constant influx of bright people who challenge its inhabitants to work harder and think smarter. And, as I noted in my last post, America’s economy depends on startups to create jobs and innovation. Skilled immigrants have provided both. So, given the miserable state of the economy, we should be laying out the welcome mat for the world’s best and brightest.  Yet we’re doing the exact opposite. Meanwhile other countries have figured out the secret of the Valley’s success and are laying out their red carpets and welcome mats, not only for the foreign skilled workers we’re turning away but also for our techies.

Fifty-two percent of Silicon Valley’s startups from 1995 to 2005 were founded by foreign-born workers. And in 2006, 26% of America’s global patents—including 40% of those filed by the U.S. government, 72% of Qualcomm’s, 65% of Merck & Co.’s, and 64% of General Electric’s—were invented wholly or partly by foreign nationals residing in the U.S. You would think that we would develop policies to bring in more of these people. Yet, sadly, the only immigration legislation our political leaders have been able to agree on, unanimously, is to hire 1000 more border-patrol agents and to fly drones on the Mexico border—like the ones we use to kill terrorists in Pakistan—to keep the nannies, gardeners, and farm workers out. Ironically, to pay for all this, the new border-security law levies taxes on companies that the bill’s sponsor, Senator Schumer (D-NY), calls “chop shops”—because they bring in tech workers who compete with Americans and supposedly “take their jobs away”. These “chop shops” are Indian companies such as Infosys, Tata Consulting Services, and Wipro—which have the best employee-training and -development programs, and are amongst the best-managed companies, in the world. They compete head to head with American “chop shops” such as IBM Global Services and Accenture, and increasingly with management consultants such as McKinsey & Co and The Boston Consulting Group.

I am opposed to illegal immigration and believe that H1-B visas should be abolished. (If we need skilled workers, bring them in as permanent residents, so that they have the same rights as Americans and can switch jobs if an employer underpays them.) But the political debate has degenerated into nothing but racism and xenophobia. Some politicians are simply pandering to uninformed sectors of their electorates.

Meanwhile, countries such as Russia, Singapore, and Chile are doing what they can to build their own Silicon Valleys. Russian President Dmitri Medvedev visited Silicon Valley last month, to let American techies know that they are welcome to move to his new science park. Singapore has long been offering visas and incentives to any skilled worker who moves there. And Chile has launched the most ambitious program of all.

In addition to the incentives that Chile has been offering established tech companies, it took my advice and announced an ambitious new program for bootstrappers, called Startup Chile.  In return for hanging out in one of the most beautiful places on this planet, Chile will provide fledgling entrepreneurs with a grant of $40,000 to help them cover expenses for six months ($40,000 goes a long way in South America, by the way). As well, they’ll provide the entrepreneurs free temporary office space; connect them with mentors, VCs, and angels; and help them settle in. They are also pumping money into local VC funds to ensure that the capital is there for the most promising companies.

A handful of entrepreneurs have already signed up for the program, and Chile’s  minister of Economy, Juan Andres Fontaine, is coming to Silicon Valley on Sept 21 to meet two dozen more entrepreneurs who he hopes will return to Chile with him. (Here is the link to apply.) Chile wants to lure hundreds of entrepreneurs, eventually.

Seems too good to be true, doesn’t it? No obligation to stay; no equity ownership in return for the money; no onerous contracts that promise a pound of flesh—as VCs typically demand. Why would Chile do this? Because they’re betting that if they get enough smart, talented people there, three things will happen: first, many of the entrepreneurs going there will fall in love with the country and decide to stay; second, they will enrich the local ecosystem by teaching local entrepreneurs about global markets; and third, their tech community will develop stronger links to the world. Who knows, a couple of startups may also hit home runs. After all, isn’t this how Silicon Valley left tech centers like Boston in the dust and became the world’s tech leader?

Chile’s strategy of attracting skilled immigrants makes a lot of sense when you consider that it costs practically nothing compared with the billions that regions invest in creating industry clusters. The fact is that smart people, when given the education and means to innovate, make the magic happen. And that’s what makes the American immigration policies so troubling: we’re chasing away the highly educated and experienced workers who could be boosting our economy. They are instead turning countries like China and India into major tech centers.

America won’t always be the place to which the world’s best and brightest flock—they will go where they feel the most welcome. And it won’t be long before Senator Schumer or his successor has to sponsor legislation to offer “chop-shops” incentives, like those Chile is offering, to bring skilled workers to the U.S.

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  • kapil

    found this post on one h1b forum murthy.com
    ” I came to US and spent thousands of dollars towards my MS education. I went to US consulate for my first H1 B stamping. I don’t understand how consulate people can judge a person in 2 minutes of discussion. Finally they denied my visa under immigration and nationality act. I am pretty pissed off right now.

    I am from non IT background, now I have 15 lakhs of debt to clear. If I get a job in India I will get max 30k rupees per month. It is going to take atleast 10 years to clear the debt.I can’t even find a new employer bcoz it will cost me some money . My career got ruined for putting faith in USA . The whole system of visa interview is not that impressive . This is an example of a genuine candidate getting screwed.

    Best of luck to all of you fox out there looking for visa”

    With such frustrating process , how can one plan family and leave for long in US…This is reason why people thinking of other options before opting for US

    • vivek

      Kapil, really sad to read about this. This is happening much too often. Big loss for the U.S. also….Vivek

  • I agree with your article, your @vwadhwa is looking to develop it from outside Chile, this time from inside, you realize that it is feasible to better opportunities, at the time you wrote the article, today, many more opportunities are emerging and in all economic sectors, the coordination in large companies to comply with the recommendations of the OECD, but environmental guidelines will reference to Chile in a very different option, but in a positive state, which will enable it to have greater business flows, and its improvements, today is the base, but lack power to meet the expectations, the provision is,, such as mining, reportedly invest U.S. $ 45,000 million, but in case of accident of the 33 miners must improve the environment, this means of more investment should increase associated.

    Saludos de Chile @fquezada

  • hi Vivek!

    I couldn’t agree with you more. They are so short sighted about developing economies and societies. We provide emotionally intelligent interactive agents for self help on web and mobile. This is cutting edge technology play and involves a fair bit of artificial intelligence, semantics and sentiment analysis. So, this is far from a chop shop and for us major markets lie in US and Europe. We are looking to build a global corporation and have been thinking of relocating to San Francisco, but current attitude of US government is making us rethink our business strategy. We are changing to Software as a service and looking to sell US without needing a base in US. And yes, we think we would have to keep our development base in India,which is surprisingly very open in terms of visa and relocation.

    cheers,
    umakant

  • Hi Vivek,

    Thanks for the article, we are a start-up with innovative product offering for Wireless Telecom (Core and IP networks exclusively). We are in the process of filing patent for one of our product concept. We have applied for start-up Chile and as a product company (not betting on pure services model) we are quite excited about it.

    Best Regards, Anbu Ganesh.