Silicon Valley reeling as Trump chokes off a critical source of tech talent

  • President Donald Trump's stance on Iran and immigration has hurt the pipeline of Iranian talent for Silicon Valley and the U.S. tech industry.
  • Visas for students and highly skilled workers from Iran dropped to 19,801 in 2017, down from 29,404 in 2016.
  • The U.S. tech industry has fought the travel ban, and it is still being challenged in court.
President Donald Trump signs a revised executive order in September at the Pentagon in Washington, D.C., taking Iraq off the U.S. travel ban list.
Carlos Barria | Reuters
President Donald Trump signs a revised executive order in September at the Pentagon in Washington, D.C., taking Iraq off the U.S. travel ban list.

Donald Trump has taken a tougher stance toward Iran in the past year, including more sanctions, a travel ban and amped-up rhetoric. Mike Pompeo, the CIA director set to be nominated as Secretary of State, is an Iran hardliner.

But there's been collateral damage from these actions: sharply reduced flow in the pipeline of Iranian talent, a hidden but crucial source of talent for the U.S. high tech industry.

The number of non-immigrant visas, which includes student visas and those for highly skilled workers, given to Iranians was 19,801 in 2017, down from 29,404 in 2016, according to an analysis of U.S. Citizenship and Immigration Services data by the Public Affairs Alliance of Iranian Americans. The tech industry had fought the travel ban, and it is still being challenged in court. But in December the U.S. Supreme Court allowed the newest version of the ban to stand.

Iran, a country of 80 million, is home to several major universities, including Sharif University in Tehran, sometimes called the MIT of Iran, and the University of Tehran. Top-tier science and math students have long found their way to the United States — making their mark in Silicon Valley and other high-tech areas, including NASA. Companies including eBay, Google, Twitter, Uber — and the venture capital industry, in general — have had Iranian-American executives playing a key role.

They are also particularly vulnerable, because of the lack of formal diplomatic ties between the United States and Iran.

What's happening to them may be the tip of a growing iceberg. The numbers suggest Silicon Valley's worst fear could be coming true: that the government would make it harder to recruit and retain top talent. That's particularly troublesome for America's high-tech hub, since about 71 percent of tech employees in Silicon Valley are foreign-born.

In legal briefs filed against the travel ban, tech companies have argued that their employees would be hurt by the ban, which will eventually make it more difficult for them to recruit from around the world. Silicon Valley executives also worry that reducing the free flow of people means reducing the free flow of ideas.

Panoramic Images | Getty Images

They've been losing the case. In December the U.S. Supreme Court allowed the newest version of the ban to stand, and in the world of high-end business travelers, many took note of the attitude projected when the administration removed "nation of immigrants" from the U.S. Citizenship and Immigration Services' website.

"There's a real feeling that the government is trying to keep people out," David Leopold, past president of the American Immigrant Lawyers Association and a partner at Midwestern law firm Ulmer & Berne LLP.

The overall number of H1-B visas, which are given to highly skilled workers, has remained the same — 85,000 a year — which is the statutory cap, he said. The process typically takes between six and 18 months, so the administration's stricter standards for American companies hiring foreign workers might not show up for a while. But anecdotal evidence suggests that the process has slowed considerably, said Leopold.

Why Silicon Valley is worried

In the economic race between large, cutting-edge companies around the world, talent is the crucial issue. While the United States is seen as closing the door, other cities and countries are opening theirs wider.

Shortly after Trump announced the travel ban on people from seven majority-Muslim countries, Dubai's ruler announced it would seek to attract more Iranians. Meanwhile, this year at South by Southwest, London's mayor, Sadiq Khan, is giving a talk about inclusivity in the tech sector.

The lower numbers are likely the result of fewer approvals and few applications in a more hostile environment, said Leila Austin, executive director of the Public Affairs Alliance of Iranian Americans.

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"The community feels under threat," said Pirooz Parvarandeh, a former tech executive who established an organization, the Iranian American Contributions' Project, to quantify the number of Iranian-Americans and their contributions to the United States. It estimated at $2.7 billion GDP contribution in health care alone. "The kind of dialogue that is permitted … taps into anger and fear. Being brutal, being cruel, is OK."

The list of prominent Iranian-American entrepreneurs and executives is long. Pierre Omidyar, founder of eBay, is the son of Iranian immigrants who first went to Paris and then the United States. The new CEO of Uber, Dara Khosrowshahi, was born in Iran. His cousin, Amir Khosrowshahi, co-founded an artificial intelligence company called Nervana that Intel acquired for $400 million; he's now an Intel executive. Farhad Mohit founded Bizrate.com and Shopzilla and is now working on another start-up. Then there's Omid Kordestani, the current executive chairman of Twitter, who was Google's 11th employee and its first business executive, responsible for all revenue and partnerships.

Pierre Omidyar, founder and chairman of eBay
James Leynse | Getty Images
Pierre Omidyar, founder and chairman of eBay

"Among the many flaws of (the idea of a ban) is the reality of people's beliefs and faiths irrespective of where they are born. For example, I actually went to an Italian Catholic school in Iran. I respect all religions but do not practice any and only believe in science!" Kordestani wrote in an email to CNBC last year.

Statistics tell the story 

More than 12,000 Iranians are students in the United States — more than from any other country covered by the the ban, according to the Institute of International Education. Iranians have often faced visa issues under other administrations, too, but the numbers now suggest the barriers are higher under the Trump administration.

They are students like Makan Karegar. "I have been stuck outside the U.S. for more than two and a half years due to extensive U.S. visa administrative processing. I am from Iran and have been a Ph.D. student in geosciences at the University of South Florida since 2012," he wrote by email. The University of South Florida recently received special permission to give him his degree remotely, he said.

Because of the issues, he's now working in Germany.

The rhetoric is also straining the long ties between the American and Iranian business elite. The Iranian Revolution brought thousands of educated Iranians to the States, and the community has multiplied.

Hundreds of thousands of Iranian-Americans have become professionals in the United States, too, in the fields of medicine, law and others. Parvarandeh's project found more than 9,000 physicians and more than 7,000 small businesses run by people with Iranian names, and more than 40,000 patents filed -- a number that shot up after 1980, when the revolution took place in Iran.

The administration is also choking off the nascent connections between Silicon Valley and the tech industry inside Iran, which outside of politics is seen as one of the world's most promising economies because of its educated population and natural resources.

Though sanctions were in place under President Barack Obama, a slight loosening in them and the prospect that they would eventually be lifted had given both Iranians and Iranian-Americans hope. The sanctions mean companies like GoDaddy and Amazon Web Services can't operate inside Iran.

"After President Trump came, all the hopes came to an end," said Nasser Ghanemzadeh, an Iranian entrepreneur. "The worse part of all these activities is that it's targeted the Iranian people, not the government."

He'd been able to travel to Silicon Valley during the Obama administration. But he's since applied several times and been rejected.

Where the American tech community can't go, others are.

Venture capitalist Christopher M. Schroeder has visited Iran twice and written the first book on the tech community across the Middle East, Startup Rising. "What is happening in Iran is happening everywhere — a new generation has access to mobile and smart devices, sees what is going on around the world and wants to build great enterprises at home and globally."

He paused and added, "The two biggest differences I saw was, the caliber of engineering talent is among the best I've seen in any growth market. And while we are unable to engage," he said, "China, Germany, Scandinavia are there building relationships and investing in them."

— Elizabeth MacBride, special to CNBC.com