Immigration and the $33 billion problem

Immigration and the $33 billion problem

I’ve talked many times about the importance of hiring great people and the long term implications of not doing so.

It’s rather simple. Great talent attracts great talent at all levels – country, city, community, or company – because great talent wants to work with other great talent.

Here’s an excerpt from my Estonia deep-dive a few months ago, discussing Gresham’s Law applied to Talent Markets.

Gresham’s Law applied to Talent Markets makes it so that you are either growing (and attracting talent) or decaying (and pushing talent out). Talent follows talent of a similar caliber, and when Good Talent is concentrated on a single geo area, money and opportunities gravitate towards that point as well.

In short, the talent market is a loop.

They tweet about it, tell their friends and Great talent tweets about your company. Great talent tells their friends, who most likely are also great talent, how cool working for Company Inc. is.

Zack Kanter, CEO at Stedi, said it better than I ever could:

"Talent density matters more than absolute number of people.... Eventually you reach this inflection point where you have a bunch of people who can seat around the table and everybody can say: “This is the best group that I’ve ever worked with.” And all of a sudden, when they can say that, an engineer will go out to the previous people they worked with and say “Hey, this is the best people I ever worked with.” And they can say that with no caveats. And all of a suddenly, this flywheel starts to turn.”

But since the talent market is a loop, it can also go the other way. From the same Estonia post:

On the contrary, if Good Talent is hoarded somewhere else, Bad Talent will be given more movement and circulation within the Talent Market. As more and more Bad Talent starts to circulate within a market, companies will start hiring that Bad Talent, mostly because this is the only currency being traded.

If Bad Talent is rewarded with a job and power, word will spread and Good Talent will move while Bad Talent will notify gravitates towards whatever they can get.

So in short – hiring the best is critical, particularly in early stage, high-growth startups. We all know it. The problem is that by definition, the best don’t live within a 10-kilometer radius from your office.

Funny thing is that companies spend hundreds of thousands of euros per year building complex HR teams, only to allow them to hire from only around the corner. That is RIDICULOUS. But there is a reason for that.

Relocating talent is excruciatingly painful

I lived in 5 different countries, so trust me when I tell you that immigration is a painful black box of madness. This insanity manifests in hiring, adding unnecessary friction to an already difficult process.

For businesses, the legal process is long, expensive, obscure and complex. You add an input (a case for someone), and you have zero feedback on that input for months. It’s a binary outcome on which you have zero control. Your Head of Product can’t wait 9 months until Spanish bureaucracy wakes up from their “siesta” and processes that chilean Data Scientist with 15 years of experience.

For talent, the relocation process is equally obscure, but on top of that, it’s scary and uncomfortable. You are uprooting your life (and maybe your family), leaving the comfort of your country, and moving to a place where you might not even speak the language.

Once you arrive, you need to deal with the least-English speaking industries of all time: banking (open a bank account), real estate (rent an apartment) and government (register locally, get medical insurance, etc.).

As a result, many companies settle for whoever lives a few metro stops away. Not great.

Companies are stuck with shitty choices

As a result of those inefficiencies (I’m being polite calling them inefficiencies, it’s just insanity) companies who want to build great teams are stuck with four poor choices:

  • Not hire from abroad. Unless you have some kind of local edge (i.e. being the top company in a small ecosystem paying above market rate) then this is not a great idea.
  • Hire from abroad, handle the process internally. This is expensive, distracting and often longer than it should because HR teams don’t have global mobility expertise.
  • Hire from abroad, use a Big Four firm or a local agency to handle the process. Equally as expensive, and you are often left at the mercy (and speed) of slow, legacy providers.
  • Open an office somewhere else. Yes, this is real. Companies are considering opening offices in, say, Ciudad de Mexico just to avoid dealing with immigration. We all like sun and taquitos, but come on. And this problem is BIG. How big? Despite the insanity, the employee relocation management market is going to reach $33.5 billion by 2020, and is forecasted to grow 3-4% every year. 1.8 million first time resident permits for employment were issued by the EU in 2018 alone.

Hiring from abroad should be as easy as hiring locally

For the sake of building great companies, it's not. But the way to fix it is to make immigration ridiculously easy.

Tallinn-based Jobbatical started four years as a talent marketplace. It connected international talent with tech companies around the world, and took care of the entire process for them – from recruitment to relocation.

After working with hundreds of companies, they realized that the biggest pain point wasn’t recruitment, but the last mile of the process: immigration and relocation.

So in July, Jobbatical’s focus shifted to fixing that problem by building a SaaS immigration platform to help businesses relocate their employees seamlessly.

  • On one hand, it helps companies create new relocation cases, track existing ones, centralize sensitive documentation, and...
  • On the other hand, it helps talent get an overview of the entire process, submit information and documents securely, get access to contextual information and manage the process for their family.

Today, this entire relocation process happens offline and via email.

If a company wants to start a new relocation process, they need to ask for dozens of forms and documents to the talent via email, store them in Google Drive and pass them along to an agency.

If an engineer relocating to Berlin wants to know how their process is doing, they need to email the HR manager, the HR manager needs to email the agency, the agency needs to phone the government office, the agency needs to respond to the HR team and the HR team needs to pass that message along.

This adds unnecessary time to an already long process.

The key thing about Jobbatical is that it shaves key time from every step of the process by automating tedious, repetitive tasks (data collection, form filling, etc.) and enables visibility and communication where before there was none.

Building a better future

Here’s a heuristic for thinking about markets: when you significantly improve an offering (by making it better and/or more affordable) you generate new uses cases and expand the market in the process.

The perfect example is Uber and the taxi industry. Uber made it cheaper, more secure and more accessible to go from A to B. People started considering Uber (and Uber-like services) to do stuff that they wouldn’t have done before with taxis (like going to work everyday.) The taxi industry was $X billions, but Uber made it bigger just because people started using Uber to do more stuff than with taxis.

The real game is building a better future by making immigration so easy, frictionless and affordable that companies will consider relocation simply because Jobbatical exists and can do it for them.

This will increase the rate of mobility and generate new use cases, expanding the market in the process and alerting governments that immigration is a problem worth fixing. Otherwise companies and talent will move to Mexico.

Full disclosure: on top of living in 5 different countries, my "day job" is Head of Growth at Jobbatical. This means I’m extremely familiar with this problem. If you want to chat more about the space, or need some help with talent, let me know.