Nov 29 2016
For our start-up founders today, we have a treat! Our post is this awesome interview with Steven Hoffman, a serial entrepreneur, investor, and the Captain and Chairman of Founders Space, ranked one of the Top 10 incubators by Inc. Magazine and the number 1 accelerator for foreign startups by Forbes Magazine.
Q: Steve, you travel the world and have met start-up founders from all over. Aside from the passion to take huge risks on their ventures, what are a few similarities you have observed between these founders that have crossed cultural boundaries and contributed to their overall success?
Startup founders in practically every country tend to be enthusiastic, young at heart, and open to new things. They believe they can make a difference. They are also optimistic–sometimes to a fault. They believe in their ideas and their ability to do whatever it takes to succeed. Whenever you generalize, you run the risk of stereotyping, but the differences are sometimes more interesting than the similarities. Startup founders in China tend to be born entrepreneurs. They see an opportunity and lunge at it, while Europeans tend to be more cautious and analytical. While Chinese want the quickest path to riches, Europeans tend to move more slowly and think carefully about every aspect, sometimes to their own detriment. Americans tend to be the most idealistic and dreamy. Americans love to think anything is possible. In Taiwan, they have the opposite problem. They tend to think small, believing they have a better chance of succeeding if their idea isn’t too big. Koreans are in the middle. And most Japanese still prefer to work for big companies than take the risk.
Q: What are some worldwide trends in entrepreneurship that you think the U.S. hasn’t seen yet, but would benefit from the trends?
QR codes are huge in China. Everyone uses them to promote their businesses, make purchases, and share events and information. I used to think QR codes were silly, but now I’m a believer. They are a major driver of commerce and information sharing.
Payment and commerce through chat applications is another big opportunity that Asia has taken the lead on. The US is just realizing the potential but has a long way to go.
Cleantech is moving faster outside the US than inside. Our government isn’t nearly as supportive as those of other countries.
Q: Founders Space is rated as one of the Top 10 incubators in the U.S. as ranked by Forbes. Your organization provides a variety of resources to founders. If you were to focus on just the videos posted on your website as a starting point, which video is the most popular with founders and why do you think it is so popular?
My most popular video is Hunting Unicorns: http://www.foundersspace.com/investing/. Startups love the practical advice. Every entrepreneur wants to know exactly what smart investors are looking for in a startup.
Q: There is this myth that it’s easy for founders to raise capital from investors if they simply come to the Bay Area and do a few pitches or demo their product/service. There are multiple workshops, incubators and programs targeting and tailored to founders. For founders who experience multiple rounds of rejections from investors, it can be demoralizing. Under these circumstances, successful founders who have exited from their companies have advised these founders to “bootstrap it” and refine the product/service until there is enough traction to attract new investors. Would you agree with this advice? What additional motivational tips would you give to these founders?
My biggest tip is not to waste time trying to raise money before you’ve figured out your business. If you have the data to back up your assumptions and prove that there’s a real business, it’s not hard to raise capital. The problem is that most founders don’t have much more than an idea or an app with very few users. That’s not enough to get funded, and it’s better to hold off until you have something solid.
Q: For foreign founders coming to the U.S., sometimes a difference in culture may contribute to unknowingly offending certain cultural norms in the U.S. For example, speaking too quickly during a pitch with a heavy foreign accent might unnecessary create confusion, making it difficult for investors to understand what was being presented. What are some effective resources foreign founders may find helpful in becoming aware of and managing some of these cultural challenges?
I tell all foreign startup founders to speak slowly, especially if they have an accent. Also, the problem isn’t usually the accent. The problem is that their pitches tend to be convoluted. They need to simplify their pitches and focus on clearly explaining their product. This sounds easy, but it’s not. Explaining something as complex as a new business idea in simple, clear language can be a challenge, and we work with our overseas entrepreneurs to help them surmount this challenge.
Q: How do investors view a previously failed attempt at a startup by a founder currently pitching to them?
It used to be a real stigma. But now it’s just accepted as a fact of doing business. Most startups fail. That’s part of the process. Of course, it’s always better to have a success story, but failure isn’t looked down upon like it used to be. Most investors actually like to see entrepreneurs who have had past experience, even if that experience wasn’t successful.
Thanks to Steve for his words of wisdom and taking a Visa Pit Stop with us! If you enjoyed this article, please share it with your friends and subscribe to our blog!
Nov 09 2016
There’s been a lot of forceful soundbites from Donald Trump on immigration during his Presidential campaign but it’s yet to be determined how much of that rhetoric will transform into actual policy.
From a logistical perspective, the Department of Homeland Security, who issues immigration benefits and enforces immigration rules, may be faced with changing course on how they evaluate immigration cases. It’s not uncommon for Presidents to issue guidance and directives to federal agencies, including the Department of Homeland Security, on what priorities to focus. While a President can issue executive orders, executive orders that unilaterally alter existing federal regulations might be challenged in court as an abuse of power.
- Immigration laws require Congressional approval to amend
- Immigration regulations issued from federal agencies require public notice and comment before being finalized as regulations. Any regulatory reversals would also require public notice and comment before being finalized.
As of today, November 9th, here’s what we do know in terms of where Trump stands on immigration that would significantly impact U.S. employers and foreign entrepreneurs based on his August 31, 2016 10-Point Speech on Immigration. (Keeping in mind that these policies were largely crafted by conservative-leaning immigration reform groups.)
NAFTA and TN Visas
Trump has lambasted NAFTA as a terrible trade agreement that hurts the U.S. and has promised to renegotiate better terms for the U.S. or otherwise withdraw if those new terms aren’t met.
Under the North American Free Trade Agreement entered into by Canada, Mexico and the U.S., in 1994, a new professional visa category (TN visa) was created to enable Canadians and Mexicans to enter the U.S. and fulfill certain occupational work here. The Agreements allows for any party to withdraw under Article 2205, by providing written notice six months in advance to all parties.
Impact to Employers: If the U.S. pulls out of NAFTA, it is possible employers may have to find alternative work options for TN employees in the U.S. (and for U.S. employees working in Canada or Mexico in TN status). The timeline could be as early as 2017Q3 but more will be revealed….
As I previously indicated here, Trump wants to impose new requirements for all immigration-related visas, particular for the H-1B, by requiring employers to first test the labor market by 1) attempting to fill any open positions with U.S. workers first before hiring foreign workers and 2) by requiring employers to pay a certain prevailing wage level. This is consistent with the 10th point of his 10-Point Ideal discussed in his August 31, 2016 speech:
We will reform legal immigration to serve the best interests of America and its workers
…The time has come for a new immigration commission to develop a new set of reforms to our legal immigration system in order to achieve the following goals:
- To keep immigration levels, measured by population share, within historical norms
- To select immigrants based on their likelihood of success in U.S. society, and their ability to be financially self-sufficient. We need a system that serves our needs – remember, it’s America First.
- To choose immigrants based on merit, skill and proficiency
- And to establish new immigration controls to boost wages and to ensure that open jobs are offered to American workers first.
Employers currently already must meet prevailing wage standards in order to be approved for an H-1B visa for an employee. While this new labor market test would be an added requirement, it must first jump through a few hurdles. It’s unknown exactly how the labor market test will be structured, but if it’s anything like the current process for PERM, the Department of Labor may have to get involved in evaluating the sufficiency of each employer’s labor market test. In this scenario, we’re talking months of delay due to increased backlogs and more work for any federal agency will likely mean more funding will have to be diverted to fund those operations.
It would be interesting to see, logistically, how these new requirements would be implemented; either via federal regulatory change (requiring public notice and comment) or congressional amendment to the Immigration and Nationality Act.
Impact to Employers: If Congress gets involved and passes an amendment to the law, then employers may have to follow these new requirements very quickly. New requirement to meet certain wage requirements may actually end up producing a law that would pay foreign workers more than actual U.S. workers! Additionally, the requirement to advertise for U.S. workers before being able to apply for the H-1B petition may delay innovation and corporate expansion. As a result, multinational companies may consider offshoring jobs if the burden to hire qualified workers in the U.S. is too high.
Update 11/10/2016: H-4 Spousal EADs
Part of President Obama’s Execution Action involved enabling spouses of certain H-1B visa workers to apply for work authorization. H-4 spouses, as they are called, could receive employment authorization documents (EADs) that would enable them to work for any U.S. employers of their choosing. At that time, USCIS had proposed a change in regulations, made the rule available for public notice and comment, reviewed the comments and then issued a final rule as required by the Administrative Procedures Act. In May 26, 2015, the rule went into effect.
President-Elect Trump has stated he would “cancel every unconstitutional executive action, memorandum and order issued by President Obama” within his first 100 days in office. If he orders USCIS to reverse course on EADs for H-4 spouses, then USCIS would have to follow the same procedures it did two years ago in notifying the public, requesting comment, reviewing comment and therefore issuing a final rule. This may take time and likely any rule eliminated the EAD category for H-4 spouses may likely be prospective and not retroactive.
Impact to Employers: Workers who hold an EAD based on their qualified H-4 status may possible lose the ability to continue to work after their EAD expires. Employers may have to evaluate staffing needs in the next six – eight months, in preparation for this potential outcome.
Trump has not been shy about wanting to reverse much of President Obama’s executive actions, including the Deferred Action for Childhood Arrivals (DACA) program that enabled eligible undocumented children who entered the U.S. before their 16th birthday to apply for work authorization.
It would be within a new President’s powers to reverse the previous Executive Action as quickly as January 20, 2017, when the new President is sworn into office.
Impact to Employers: Employers who currently employ DACA workers may find themselves short-staffed as early as late January 2017 if DACA is rescinded by President-Elect Trump. This is particularly alarming, as U.S. Citizenship & Immigration Service has received more than 1.54 million applications since the inception of the DACA program in 2012 and has approved more than 1.45 applications since then. It’s unclear how many U.S. employers would be impacted by this policy change but data will likely reveal itself in the upcoming months.
Startup Visa for Entrepreneurs
President-Elect Trump has voiced little about a start-up visa for entrepreneurs. As a serial entrepreneur himself, one would imagine he would appreciate the values and benefits that entrepreneurship carries with it. Not so, as it appears at odds with his stance on isolation and populism. Further, even if entrepreneurs were allowed to enter the U.S. via a special visa, if the entrepreneur stems from a country that has been historically (or is now) affected by terrorism, that that entrepreneur might now be subject to aggressive “vetting” despite their efforts, desires or ability to create U.S. jobs.
As an aside, the U.S. Citizenship & Immigration Service had announced on September 1, 2016, the Parole for Entrepreneurs as a means to allow certain eligible, high-growth entrepreneurs to enter the U.S. to operate their business. Comments had closed on October 17, 2016 and it’s still up in the air whether USCIS can review the public comments quickly enough to enact a final rule for the regulation to go into effect before January 20, 2017. If the regulation were to go into effect that quickly (although unlikely), the regulation could still be reversed in the future, but not without first having to go through various administrative hurdles.
Impact to Entrepreneurs: We won’t know if the Parole for Entrepreneurs will go into effect, only to be later reversed, or if it will go into effect at all. We also won’t know if the President-Elect will push forward a startup visa bill for Congress to pass that would jump-start innovation. We’ll have to have wait and see what the next administration brings.
As a general aside, the rhetoric from Trump about deporting millions of undocumented immigrants in the U.S. is not typically a topic that is discussed on this website. However, it’s important to understand that a policy of this magnitude and impact would require significant taxpayer funding; funding that would need to be appropriated by Congress to support and execute. It’s yet to be seen if the U.S. has room in its budget to finance this policy endeavor.
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