Immigrant Founders -- The Rest of the Story

Eighty percent, or 40 out of 50, of the country’s Top 50 Venture-Funded companies had one or more American born founders. No, I didn’t make up the statistic, I found the data and reversed the spin that the pro-immigration faction is trying to promote.

Updated:

Due to a data sorting error, I originally overstated the percentage of U.S. born cofounders in the Top 50 Venture Backed companies. This error has been corrected. See Footnote.

Other Findings:

Companies "Without a Foreign Born Founder" have employment levels 26% higher than the Top 50 average employment levels.

Companies "Without a American Born Founder" have employment levels 25% lower than the Top 50 average employment levels.

Companies with foreign born founders/cofounders (23 of 50) are almost twice as likely to apply for H-1B temporary guestworker visas.

Stuart Anderson’s organization, the National Foundation for American Policy (NFAP), may be doing more harm to his cause than good. Whenever someone throws out a percentage and does not provide a divisor, you can be assured that they are hiding something.

This paper’s topic:

"Immigrant Founders and Key Personnel In America’s Top Venture-Funded Companies,"

By: Stuart Anderson

The NFAP study states: "The research finds that 46 percent, or 23 out of 50, of the country’s top venture-funded companies had at least one immigrant founder. This illustrates the increasing importance and contributions of immigrants to the U.S. economy."

Mathematically, the NFAP statement makes no sense, how do you divide a variant number of founders by the number of companies? I was taught that you have to divide by "like" terms, cofounders and companies are not like terms. Curiously, the NFAP document has a Table with the names and birthplace of the foreign-born founders. However, after finding another source for the "Top 50" data, I find that the NFAP has removed the names of the U.S. born founders and eliminated the companies that did not have a foreign-born founder from the Table included in the NFAP Study.

After combining the two sources of data, I (also) found that 23 of the 50 companies selected did have one or more foreign-born founders/cofounders; however, 13 of those 23 companies also had one or more American born cofounders. Only 10 of the Top 50 companies did not have an American born cofounder.

Most of the Top 50 companies (36) are located in California, which has 34.9% population of foreign-born employed in the labor force, so the 31.9% foreign-born founders/cofounders (found in the table below) basically represents the population.

Top 50 Venture Backed Companies
Total Employees	10,314
Avg. Employees	206.28
	Number	Percent
Total Founders	119	100%
Foreign Born Founders	39	32.8%
American Born Founders	80	67.2%
With a Foreign Born Founder
Number of Companies	23	46.0%
Number of Employees	3,289	31.9%
Avg. Employees	143.0
*H-1B Work Visa Applications (LCA)	362	11.0%
Avg. Ranking (1 to 50)	23.09
**Avg. Year Founded	2004.9
Without a Foreign Born Founder
Number of Companies	27	54.0%
Number of Employees	7,025	68.1%
Avg. Employees	260.2
***H-1B Work Visa Applications (LCA)	445	6.3%
Avg. Ranking (1 to 50)	27.56
**Avg. Year Founded	2003.5
Without an American Born Founder
Number of Companies	10	20.0%
Number of Employees	1,295	12.6%
Avg. Employees	129.5
*H-1B Work Visa Applications (LCA)	154	11.9%
Avg. Ranking (1 to 50)	25.70
**Avg. Year Founded	2005.2

* (H-1B) Number of Visa Applications -- Percent of Number of Employees
** Avg. Year Founded is decimal
***Appia Inc., (with an employee roster of 51), applied for 214 of the 445 H-1B Work Visa Applications in "Without a Foreign Born Founder".
 

If Appia Inc. 51 employees and 445 H-1B applications are removed from the sample, the percent of  H-1B applications would be 3.3% in the "Without a Foreign Born Founder" group of companies.

From the table above, I notice that the Top 50, Avg. Ranking for each group is similar, each segregated group is near the middle of the Top 50 Avg. Ranking. The two groups of companies with foreign born cofounders appear to have a slightly more viable ranking, but the foreign born founded/cofounded companies seriously under-perform in the" Number of Employees" category. Additionally, companies with foreign born founders and cofounders are almost twice as likely to apply for H-1B temporary guestworker visas.

The NFAP study trumpets that immigrants are crucial to employment growth. Conversely, the table above demonstrates that the "Without a Foreign Born Founder" group of companies employ 68% of the personnel while this group consists of only 54% of the Top 50 companies.

Key Positions Held By Foreign Born: The NFAP study also contains a table of key positions held by foreign-born employees, but here-again the NFAP does not include the universe of key positions. The NFAP uses the following statement to describe key positions:

Table 2: Immigrant Key Member of Management or Product Development Team in Top VC-Backed Companies

While it would be interesting to see if these companies have a preference for foreign-born employees, we would also have to take into consideration the percentage of employed foreign-born in each state’s labor force.

The following table examines the foreign born founder data in relation to location, and the prevalence of the population of foreign born employed within the specified states (from Census data).

	Founders		Foreign Born			Companies
Company Location	Foreign Born	U.S. Born	Aggregate	Percent	*Census Employed	Number
CA	31	56	31 of 87	35.6%	34.9%	36
CO	0	1	0 of 1	0.0%		1
GA	1	0	1 of 1	100.0%	12.1%	1
IL	0	2	0 of 2	0.0%		1
IN	0	3	0 of 3	0.0%		1
MA	0	2	0 of 2	0.0%		1
NC	0	1	0 of 1	0.0%		1
NJ	3	0	3 of 3	100.0%	25.6%	1
NY	3	6	3 of 9	33.3%	27.0%	3
TX	0	7	0 of 7	0.0%		2
UT	0	2	0 of 2	0.0%		1
WA	1	0	1 of 1	100.0%	14.3%	1
Total	39	80	39 of 119	32.8%	27.6%	50

*Census Employed is based upon the combined population of the five states of interest -- 2007 Census data An Unemployment rate of 5.2 percent would suggest that the foreign born Labor Force for this combined population would also be 32.8%

In closing, the majority of the Top 50 Venture-Funded companies are located in states with extremely high populations of foreign-born in the labor force -- the data shows nothing statistically remarkable about foreign-born founders. Moreover, the benefit of employment growth in foreign born cofounded companies is muted by a substantially higher application rate for temporary foreign workers and below average employment levels. In fact, companies Without a Foreign Born Founder" have employment levels 26% higher than the Top 50 average, while companies "Without a American Born Founder" have employment levels 25% lower than the Top 50 average employment levels.

Footnote:
I originally used a single data table to contain the cofounder data and manually sorted the single table to select the desired values for the Average and Sum spreadsheet functions. I must have inadvertently sorted the table an additional time, which in turn provided incorrect values for the Average and Sum calculations.

The corrected error:

Ninety-two percent, or 46 out of 50, of the country’s top venture-funded companies had one or more American born founders.

This error has been corrected, and learning from my mistake, I de-normalized the single data table into three separate data tables, which can be sorted without affecting the Average and Sum calculations.

I’ve updated the tables above this section to reflect the correct values for each table. I apologize for any inconvenience this may have caused, and I want to ensure to everyone that I have the utmost respect for providing true and correct data regarding this important debate.

Source Data:

National Foundation for American Policy (NFAP)
"Immigrant Founders and Key Personnel In America’s Top Venture-Funded Companies,"
http://www.nfap.com/pdf/NFAPPolicyBriefImmigrantFoundersandKeyPersonnelinAmericasTopVentureFundedCompanies.pdf

Wall Street Journal
Top 50 Venture-Funded Companies WSJ.com
(This source provided founder data omitted from tables presented by NFAP publication)
http://online.wsj.com/article/SB10001424052748704132204576190644237905576.html

Foreign Born Employed in the Labor Force:

Employed Civilian Foreign-Born Labor Force by State: 2007
Appendix Table A.

www.census.gov/prod/2008pubs/acs-09.pdf

H-1B LCA Application Data
http://www.h1bistro.com/

Appendix:

Data

Rank	Name	Location	Industry	All Founders	Employees	Year Founded	Immigrant founders	H-1B LCA
1	Castlight Health Inc.	San Francisco	Health Care	Giovanni Colella, Todd Park	100	2008	Giovanni Colella (Italy)	4
2	Xirrus Inc.	Thousand Oaks, Calif.	Information Technology	Steven DeGennaro, Dirk Gates, Patrick Parker	170	2003		0
3	Xactly Corp.	San Jose, Calif.	Business and Financial Services	Christopher Cabrera, Satish Palvai	140	2005	Satish Palvai (India)	13
4	Recycle Rewards Inc.	New York	Business and Financial Services	Patrick FitzGerald, Ron Gonen	150	2004		5
5	ExteNet Systems Inc.	Lisle, Ill.	Information Technology	Ross Manire, Eric Lekacz	86	2002		2
6	Cyan Optics Inc.	Petaluma, Calif.	Information Technology	Michael Hatfield, Rick Johnston, Steve West, Eric Clelland	102	2006	Steve West (South Africa)	16
7	Aster Data Systems Inc.	San Carlos, Calif.	Information Technology	Tasso Argyros, Mayank Bawa, George Candea	102	2005	Tasso Argyros (Greece) Mayank Bawa (India)	55
8	Glam Media Inc.	Brisbane, Calif.	Consumer Services	Samir Arora, Rebecca Bogle Arora, Ernie Cicogna, Susan Kare, Dianna Mullins, Raj Narayan, Fernando Ruarte, Vic Zaud	300	2004	Samir Arora (India) Raj Narayan (India)	6
9	Carrier IQ Inc.	Mountain View, Calif.	Information Technology	Bruce Lacey, Steve Roskowski	75	2005		16
10	Imperva Inc.	Redwood Shores, Calif.	Information Technology	Mickey Boodaei, Shlomo Kramer, Amichai Shulman	350	2002	Mickey Boodaei (Israel) Shlomo Kramer (Israel) Amichai Shulman (Israel)	14
11	Vidyo Inc.	Hackensack, N.J.	Information Technology	Alex Eleftheriadis, Avery More, Ofer Shapiro	140	2005	Ofer Shapiro (Israel) Alex Eleftheriadis (Greece) Avery More (Israel)	22
12	Etsy Inc.	Brooklyn, N.Y.	Consumer Services	Robert Kalin, Chris Maguire, Haim Schoppik, Jared Tarbell	185	2005	Haim Schoppik (Switzerland)	1
13	RGB Networks Inc.	Sunnyvale, Calif.	Information Technology	Edward Krause, Peter Monta, Adam Tom	175	2003	Edward Krause (Canada)	37
14	IronKey Inc.	Sunnyvale, Calif.	Information Technology	David Jevans	100	2005		8
15	Appia Inc.	Durham, N.C.	Information Technology	Jud Bowman	51	2008		214
16	The Active Network Inc.	San Diego	Business and Financial Services	James Woodman	2,500	1998		58
17	Nimble Storage Inc.	San Jose, Calif.	Information Technology	Umesh Maheshwari, Varun Mehta	55	2008	Umesh Maheshwari (India) Varun Mehta (India)	7
18	PatientSafe Solutions Inc.	San Diego	Health Care	Kim Rubin, David Swenson	80	2002		0
19	Glaukos Corp.	Laguna Hills, Calif.	Health Care	Olav Bergheim, Richard Hill, Morteza Gharib	40	2001	Olav Bergheim (Norway) Morteza Gharib (Iran)	0
20	Fusion-io Inc.	Salt Lake City	Information Technology	David Flynn, Rick White	370	2006		4
21	Achaogen Inc.	South San Francisco, Calif.	Health Care	Nathaniel David, J. Kevin Judice, Floyd Romesberg, Peter Schultz	64	2004		3
22	NeuroPace Inc.	Mountain View, Calif.	Health Care	Robert Fischell, David Fischell	90	1997		4
23	Xoom Corp.	San Francisco	Business and Financial Services	Alan Braverman, Kevin Hartz	70	2001		19
24	Workday Inc.	Pleasanton, Calif.	Business and Financial Services	Aneel Bhusri, David Duffield	650	2005		21
25	SpiderCloud Wireless Inc.	Santa Clara, Calif.	Information Technology	Peter Wexler	60	2008		20
26	Jive Software Inc.	Palo Alto, Calif.	Information Technology	Bill Lynch, Matt Tucker	336	2001		6
27	Federated Media Publishing	San Francisco	Consumer Services	John Batelle	165	2005		2
28	Boku Inc.	San Francisco	Business and Financial Services	Mark Britto, Ron Hirson, Erich Ringewald	65	2009	Mark Britto (Singapore) Ron Hirson (South Africa)	7
29	Zoosk Inc.	San Francisco	Consumer Services	Shayan Zadeh, Alexander Mehr	80	2007	Shayan Zadeh (Iran) Alexander Mehr (Iran)	8
30	EndoGastric Solutions Inc.	Redmond, Wash.	Health Care	Stefan Kraemer	120	2003	Stefan Kraemer (Germany)	0
31	Chegg Inc.	Santa Clara, Calif.	Consumer Services	Aayush Phumbhra, Osman Rashid	150	2007	Aayush Phumbhra (India) Osman Rashid (U.K.)	34
32	Everyday Health Inc.	New York	Consumer Services	Michael Keriakos, Benjamin Wolin	400	2002	Michael Keriakos (Canada)	26
33	Xsigo Systems Inc.	San Jose, Calif.	Business and Financial Services	R.K. Anand, Ashok Krishnamurthi, S.K. Vinod	110	2004	R.K. Anand (India) Ashok Krishnamurthi (India) S.K. Vinod (India)	36
34	Soasta Inc.	Mountain View, Calif.	Information Technology	Kenneth Gardner, Tom Lounibos	100	2006		3
35	Rally Software Development Corp.	Boulder, Colo.	Information Technology	Ryan Martens	241	2002		2
36	Prosper Marketplace Inc.	San Francisco	Business and Financial Services	Christian Larsen, John Witchel	38	2005		11
37	Pivot3 Inc.	Houston	Information Technology	Ryan Callison, Lee Caswell, Bill Galloway, Alan Skidmore	78	2003		3
38	Suniva Inc.	Norcross, Ga.	Energy and Utilities	Ajeet Rohatgi	190	2007	Ajeet Rohatgi (India)	4
39	Veracyte Inc.	South San Francisco, Calif.	Health Care	Bonnie Anderson	40	2008		0
40	ExactTarget Inc.	Indianapolis	Business and Financial Services	Chris Baggott, Scott Dorsey, Peter McCormick	850	2000		14
41	OncoMed Pharmaceuticals Inc.	Redwood City, Calif.	Health Care	Michael Clarke, Max Wicha	76	2004		5
42	ExaGrid Systems Inc.	Westborough, Mass.	Information Technology	James Pownell, Dave Therrien	145	2002		1
43	SeeSaw Networks Inc.	San Francisco	Business and Financial Services	Peter Bowen, Jeff Dickey, Rocky Gunderson, Scott Hines, Monte Zweben	20	2006		0
44	Silver Peak Systems Inc.	Santa Clara, Calif.	Information Technology	David Hughes	150	2004	David Hughes (New Zealand)	21
45	Zilliant Inc.	Austin, Texas	Information Technology	Alex Chien, Deborah Vollmer Dahlke, Peter Zandan	120	1999		25
46	Yammer Inc.	San Francisco	Business and Financial Services	Adam Pisoni, David Sacks	100	2008		5
47	Bivio Networks Inc.	Pleasanton, Calif.	Information Technology	Junaid Islam, Jeff Payne, Homayoun Valizadeh	60	2000	Junaid Islam (Canada) Homayoun Valizadeh (Australia)	6
48	TxVia Inc.	New York	Business and Financial Services	Carl Ansley, Colin Fleming, Aaron Tay	150	2006	Aaron Tay (New Zealand) Colin Fleming (New Zealand)	27
49	Service-now.com Inc.	Del Mar, Calif.	Information Technology	Fred Luddy	300	2003		2
50	Aprius Inc.	Sunnyvale, Calif.	Information Technology	Marc Epitaux, Peter Kirkpatrick, Jean-Marc Verdiell	25	2007	Marc Epitaux (Switzerland) Jean-Marc Verdiell (France)	10

Census: Three New Immigrants for Every New Job

For the decade, 6.9 million immigrants found employment while only 2 million jobs were created. There isn't really much to say except that people who are advocating more immigration must also be barking mad. 

Taken from Census CPS and BLS CPS data.

Occupation		Newly Employed Immigrants -- Percent of Emp. Level Gain	Employment Level Loss/Gain
		Arrived 2000 or later(2)	(Avg. yr. 2010 - 2000)
.Management, professional, and related occupations	Major	1,629,000  (30%)	5,442,000
..Management, business, and financial		494,000	1,347,000
..Professional and related		1,135,000	4,095,000
.Service occupations	Major	2,106,000  (55%)	3,857,000
.Sales and office occupations	Major	985,000  (100%)+	(2,736,000)
..Sales and related		600,000	(335,000)
..Office and administrative		385,000	(2,401,000)
.Farming, fishing, and forestry occupations	Major	149,000  (100%)+	(181,000)
.Construction, extraction, and maintenance occupations	Major	977,000  (100%)+	(534,000)
..Construction and extraction		817,000	(445,000)
..Installation, maintenance, and repair		160,000	93,000
.Production, transportation, and material moving occupations	Major	1,068,000  (100%)+	(3,857,000)
..Production		597,000	(3,465,000)
..Transportation and material moving		471,000	(392,000)
Total (Employed) Immigrant Gain and Employment Level Gain	Total	6,914,000	1,991,000
Percent of Employment Level Gain to New Arrival Immigrants	%	347%

Maybe Stuart Anderson's, National Foundation for American Policy would like to respond to these numbers.

About the Data:
"Employment Level Loss/Gain" is BLS-CPS data where year 2000 avg. employment levels are subtracted from year 2010 avg. employment levels.

"Employed Immigrants" is the Census-CPS employment status of immigrants arriving after the year 2000.  
(2) The category 'Arrived 2000 or later' includes 2000-2010





Data:
Occupation of Employed Foreign-Born Civilian Workers 16 Years and Over by Sex and Year of Entry: 2010
Source: U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement, 2010.
Internet release date: 9/2011
http://www.census.gov/population/foreign/files/cps2010/T2.7.xls

Labor Force Statistics from the Current Population Survey
Data extracted on: December 12, 2011 (11:55:42 AM) 

Series Id:           LNU02032201
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Management, Professional, and Related Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Management, professional, and related occupations (0008-3540)

Series Id:           LNU02032202
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Management, Business, and Financial Operations Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Management, business, and financial operations occupations (0009-0950)

Series Id:           LNU02032203
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Professional and Related Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Professional and related occupations (0999-3540)

Series Id:           LNU02032204
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Service Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Service occupations (3598-4650)

Series Id:           LNU02032205
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Sales and Office Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Sales and office occupations (4699-5930)

Series Id:           LNU02032206
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Sales and Related Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Sales and related occupations (4700-4960)


Series Id:           LNU02032207
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Office and Administrative Support Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Office and administrative support occupations (5000-5930)

Series Id:           LNU02032208
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Natural Resources, Construction, and Maintenance Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Natural resources, construction, and maintenance occupations (5999-7620)


Series Id:           LNU02032209
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Farming, Fishing, and Forestry Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Farming, fishing, and forestry occupations (6000-6130)


Series Id:           LNU02032210
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Construction and Extraction Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Construction and extraction occupations (6200-6940)

Series Id:           LNU02032211
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Installation, Maintenance, and Repair Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Installation, maintenance, and repair occupations (7000-7620)

Series Id:           LNU02032212
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Production, Transportation and Material Moving Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Production, transportation, and material moving occupations (7699-9750)

Series Id:           LNU02032213
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Production Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Production occupations (7700-8960)

Series Id:           LNU02032214
Not Seasonally Adjusted
Series title:        (Unadj) Employment Level - Transportation and Material Moving Occupations
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Occupation:          Transportation and material moving occupations (9000-9750)

Myth: High-skill Vacant Jobs

There will always be some flux in staffing levels, an unfilled jobs level of 8,000 in a corporation of 80,000 employees shouldn't be surprising.  Employees  change jobs for a myriad of different reasons; corporations also may also find the need to create new positions.

This analysis got buried in an earlier blog.

Here are some Vacancy Rates for IT related firms from the 2006 - 2007 era.

Hewlett Packard = 0.81
IBM = 0.58%
Microsoft = 4.85%
EDS = 0.97%
Google Internet = 8.44%
Cisco = 2.33%

In fact, the average of 30 companies with supposedly large Vacancy Rates averaged 2.27%.  Two vacancies in one hundred seems reasonable to me, especially from my experience of sitting on hiring committees, filling a position can easily take six months. Paralyses by analysis tends to prevail on hiring committees.

30 U.S. Companies With Job Most Openings for Skilled Positions
(click image to enlarge)

The "job opening" source data for the table above came from the pro-immigration think "Nationational foundation for American Policy" (NFAP).  I went to Yahoo Finance to find the size of each corporation, and then simply found the Vacany Rate for each Corporation.

The NFAP source data (published Jan 2008) was collected over 2006 and 2007 found 140,233 open jobs in a 13 page list of S&P 500 companies.  The following Unemployment rates and levels are included below for those with Bachelor's degrees and above.


Unemployed College Graduates for the period in question:

December 2007 = 2.2% (972,000)

January 2008 = 2.1% (953,000)
February 2008 = 2.1% (944,000)

Series Id: LNS14027662

Seasonal Adjusted
Series title: (Seas)
Unemployment Rate – Bachelor’s degree and higher, 25 yrs. & over
Labor force status: Unemployment rate
Type of data: Percent
Age: 25 years and over Educational attainment: College graduates

When the H-1B immigration pundits throw-out tidbits of data in the media, they always seem to leave out information required to make an infomed opinion.  In this case, the number of employes per open position.