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Video: Immigration laws blocking economic potential?

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    >>> all this week here, as you may know, we've been taking a close look at the challenges for the changing american economy in our series we're calling " america at the crossroads ." one of the big questions for the u.s. is how to take advantage of the large number of foreigners who come here, get educated in our great colleges and universities and want to stay here but can't. it's causing an expensive brain drain . tom brokaw back tonight with more on this. tom?

    >> we hear a lot about immigration issues that involve workers who come here from mexico seeking low paying jobs, but in the high tech world, there's another kind of immigration controversy. it involves the h-s-b visa. that's a permit allowing a limited number of highly trained foreigners to stay here for just a few years even if they're successful entrepreneurs creating jobs. critics -- and there are many -- say that restriction penalizes america and helps our economic competitors. look around the offices of stat deal, an online coupon business, and it's not hard to see all the signs of a thriving venture. a young staff full of drive and ambition, a toteboard on the wall attracting new customers, one about every second. but snap deal isn't in silicon valley . it's in new delhi.

    >> we link up with vendors in each one of the cities.

    >> reporter: this man and his partner launched snap deal in february 2010 . they're already the number one e-commerce retailer in india .

    >> it's a simple concept. every day there's one very attractive deal. people come to the website, buy the deal, then go use it at the merchant.

    >> reporter: the company has created 300 jobs and counting, but he sometimes wonders what if, what if the country where he got his education, at the university of pennsylvania , where he helped start a company while he was still in business school , had let him stay in the united states ?

    >> i put my chips in the american basket and said that, let me try my hand here.

    >> reporter: but his visa ran out. and so he took his skills back to india . the united states issues only 85,000 of the so-called h-1-b visas for highly skilled workers every year. these visas expire after six year. the san francisco bay area , the home of the silicon valley , stanford and berkeley, this has always been a magnet for the best and brightest from foreign lands, but now many are wondering why do u.s. immigration officials make it so hard for them to stay?

    >> our competitors.

    >> reporter: this professor has been warning of a reverse brain drain for years.

    >> there's a lot of very good human beings who are unemployed, who lost their jobs. it is easy for them to blame foreigners. la they don't understand is that people like me, when i came to this country, i came here to study. my first company created a thousand job, my second company created 2,000 jobs.

    >> reporter: his research found between 1995 and 2005 , 25% of the start-ups in silicon valley had at least one immigrant founder. and those start-ups created almost a half million jobs. u.s. immigration rules are big roadblocks for the enterprising foreigners.

    >> everybody has stores to share. just how painful the visa process has been to quickly engage with customers, make sure that everything's developing and you've got this huge distraction on the side worrying whether you'll get kicked out of the country.

    >> reporter: a gathering of young silicon valley entrepreneurs center on their frustration over visas. how many of you think that you'll end up back in your home countries rather than staying here because of a visa issue? show me your hands. a number of you will go back and take the jobs with. you and immigration officials often don't even understand the technology business.

    >> in our case, we got a beautiful letter from the immigration service asking to prove that we had enough warehouse space to store our software inventory. we don't even have boxes of software. it's all on the internet.

    >> why deal with all this old school invasion system, just go where we are wanted?

    >> reporter: he went where he felt welcome, close to family and a newly vibrant india .

    >> there is no either/or relationship between the american dream and the indian dream. they can both exist. it's just that the guys who are building the indian dream right now could have been part of the american dream , too.

    >> reporter: almost everyone agrees that we do need immigration and visa reform, but that is a hot button issue in congress because of the undocumented workers at the bottom of the pay scale. meanwhile, the u.s. state department is encouraging foreign entrepreneurs at its outposts around the world. and that young indian who went back home? he's now thinking of opening a branch of his company in this country.

    >> powerful story. heartbreaking at times. tomorrow brokaw, thanks. our series will continue tomorrow night.

By Tom Brokaw Correspondent
NBC News
updated 3/3/2011 8:04:25 PM ET 2011-03-04T01:04:25

Editor’s Note: This week, NBC is taking a look at America's challenges and opportunities. As part of the series, "America at the Crossroads," NBC's Tom Brokaw addresses concerns that the nation is losing its best and brightest immigrants because of visa restrictions.

Look around the offices of SnapDeal, an online coupon business, and it's not hard to see all the signs of a thriving venture.

A young staff full of drive and ambition, a tote board on the wall tracking new customers, one about every second.

But SnapDeal isn't in Silicon Valley — it's in New Delhi, India.

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Kunal Bahl, 27, and his partner, Rohit Bansal, launched SnapDeal in February 2010. They're already the No. 1 e-commerce retailer in India.

“SnapDeal is a very simple concept,” Bahl said. “Every day there is one attractive deal and people come to the website, buy the deal and go use it at the merchant.”

Bahl's company has created 300 jobs — and counting. But he sometimes wonders "what if …?" What if the country where he got his education, where he helped start a company while still in business school, had let him stay?

“I put my chips in the American basket and said let me try my hand here,” said Bahl, who earned an engineering degree from the University of Pennsylvania and a business degree from its Wharton School.

But Bahl's visa ran out, and he took his skills back to India.

The United States issues only 85,000 of the so-called H1B visas for highly skilled workers each year. And these expire after six years.

There's broad agreement that the current immigration and visa system needs reform — that's going to need to come from Congress.

Still, the State Department does what it can to help encourage entrepreneurship around the world.

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Video: 'I didn't have an option' (on this page)

The San Francisco Bay Area — the home of Silicon Valley, Stanford University and the University of California, Berkeley — has always been a magnet for the best and brightest from foreign lands, but now many are wondering, why do U.S. immigration officials make it so hard for them to stay?

“We're strengthening our competitors, we're weakening ourselves,” said Vivek Wadhwa, a visiting professor at Berkeley and research associate with the Labor and Worklife Program at Harvard Law School. He has been warning of a "reverse brain drain" for years.

"There are a lot of very good human beings who are unemployed, who have lost their jobs,” Wadhwa said. “It's easy for them to blame foreigners. What they don't understand is people like me, when I came to this country, I came to study. My first company created 1,000 jobs. My second company created 200 jobs.

Wadhwa's research found that between 1995 and 2005, 25 percent of startups in Silicon Valley had at least one immigrant founder. And those startups created nearly a half-million jobs.  

U.S. immigration rules are big roadblocks for the enterprising foreigners.

Martin Kleppmann, German co-founder of San Francisco startup Rapportive, which shows users  everything about their contacts from inside their email inboxes, said everyone has stories to share about how painful the visa process has been.

“You're trying to quickly engage with customers — make sure that everything's developing, and at the same time, you've got this huge distraction — worrying whether you're going to get kicked out of the country,” said Kleppmann, who has a bachelor's in computer science from the University of Cambridge and studied music composition at the Royal Scottish Academy of Music and Drama.

Video: Immigration laws blocking economic potential? (on this page)

At a gathering of nearly a dozen young Silicon Valley entrepreneurs recently, more than half said they think they’ll end up back in their home countries rather than staying in the U.S. because of visa issues — and they would take jobs with them when they leave.

Immigration officials often don't even understand the technology business.

Kleppmann drew laughs from the group when he explained an example.

“In our case — we got a beautiful letter from the immigration service asking to prove that we had enough warehouse space to store our software inventory. We don't even have boxes of software, it's all on the Internet."

Sakina Arsiwala of India co-founded San Francisco-based Campfire Labs, a startup that wants to "change the way people think of social interactions in the real world and online."

“Why deal with all this, you know, old school immigration systems, just go where you're wanted, you know?” said Arsiwala, a software engineer who formerly headed YouTube's international business for Google. She studied at the University of Mumbai and San Francisco State University.

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Bahl went where he felt welcome. Close to family in a newly vibrant India.

“There is no ‘either or’ relationship between the American dream and the Indian dream, Bahl said. “They can both exist, it's just that the guys who are building the Indian dream right now could have been part of the American dream, too.”

In an interesting twist in Bahl's case, he's looking into launching SnapDeal internationally, including in the U.S., and hiring Americans to help him do it.

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