The US government announced dramatic changes to the H1B visa which is used by over 85K individuals each year to work in the US. By some estimates there are over 500K workers using the H1B visa in the US.

Now, the estimate is to cut these by a third with new rules that change how much employers pay H1B employees.

Below is the list of the top 20 H1B employers in 2020 (to date) and the average salaries they have paid H1B employees.

Rank	H1B Visa Sponsor	Number of LCA *	Average Salary
1	Cognizant Technology Solutions	28,526	$86,456
2	Infosys	21,473	$87,248
3	Tata Consultancy Services	11,868	$86,453
4	Google	10,577	$143,373
5	Ernst & Young	8,893	$122,887
6	Capgemini	8,411	$89,750
7	Deloitte & Touche	8,258	$91,413
8	Amazon.Com Services	7,705	$134,117
9	IBM	7,237	$107,449
10	Microsoft	6,041	$142,132
11	Accenture	5,654	$120,461
12	Hcl America	4,688	$92,901
13	Wipro	4,291	$77,533
14	Tech Mahindra (Americas)	4,175	$85,711
15	Larsen & Toubro Infotech	3,625	$93,122
16	Facebook	3,212	$166,068
17	Wal-Mart Associates	2,277	$121,993
18	L&T Technology Services	2,117	$83,366
19	Syntel	1,893	$80,899
20	Jpmorgan Chase	1,796	$122,750

While the Indian outsourcing companies pay about $85K, the US multinationals pay about $115K on average.

Under the new rule, which is due to be published later this week and which will take effect immediately, H1B applicants will need to be earning a salary equivalent to the 45th percentile of their profession’s salary if they’re an entry-level worker, rising to 95th percentile for higher-skilled workers. 

In the past, the boundaries were set at the 17th and 67th percentiles respectively. 

So what will these employers have to pay?

Depending on where they are hired (city in the US) and their role, the average increase in salary to get an H1B approval for a outsourcing company goes to $115K and for a multinational to $130K.

While it is an increase, it won’t be that dramatic in terms of the pay.

The other changes are the qualifications for the H1B. As outlined by Quartz and the WSJ:

The Department of Homeland Security’s rule would narrow who qualifies for H-1B visas based on their specific education. Currently, foreigners with a college degree or the equivalent amount of experience can apply to work in what is known as a specialty occupation. Under the changes, an applicant must have a college degree in the specific field in which he or she is looking to work. A software developer, for example, wouldn’t be awarded an H-1B visa if that person has a degree in electrical engineering.

WSJ https://www.wsj.com/articles/trump-administration-announces-overhaul-of-h-1b-visa-program-11602017434

This is the major change. If you look at the filings of H1B visas at MyVisaJobs, then you will see that over 80% of the H1B visas awarded were for software developers who did not have educational background in computer science.

The US Radio advertising market is about $18 B according and the Podcasting market is about $1B.

The PWC report on podcasting talks in more detail about podcast advertising and the formats of advertising (length of ads, type, industry, topic, etc).

Nearly 115 Million adults listen to radio each month, with Country music, News/Talk and Adult contemporary being the top formats.

104 Million adults listen to a podcast every month, with News, Politics, Sports and Humor being the top formats.

Not surprisingly, the car tended to be where most people listened to radio, while podcasts were listened to while walking, working out or at home.

If you want to compare apples to apples, there are 1700 talk radio stations in the US alone. There are over 850K podcasts, with 120K of them active monthly.

In terms of time spent, because of Covid and reduction in commute hours, the # of radio listeners and hours listened should have gone down, but the numbers indicate otherwise.

According to the BBC, the time spend listening to radio post March 2020 has increased 15%.

The main trends in podcasting are the rise of programmatic advertising and use of location data to personalize ads.

Hatching Twitter, 321 pages, published Nov 2013

I just finished reading the book Hatching Twitter. A little late, since the book was published in 2013. In my defense, this book was more “gossip” than “insightful”, so I deferred reading it until I had time.

At the outset, it was a good read. If this were a work of fiction I would believe it. As a narrative, it was a quick, fast paced read. I would recommend reading it, if you want a quick weekend break. 4/5 is my rating. Here are my top questions and answers.

Does the book tell you anything you did not know?

The founding story of Twitter with the 3 founders (Biz, Ev, and Jack) + 1 (Noah) is pretty well known. It was interesting to know that Noah was one of the founders who got sidelined. It is typical of many startups I know of. There are issues among founders that derail the startup as much as customer traction and growth.

Does the story make you feel any different about Venture Capitalists?

The 3 key VCs in the story are Fred Wilson, Bijan Sabet and Pete Fenton (Benchmark). They invested early with Fred in Series A, Bijan in Series B and Peter in Series C. During all these 3 rounds, Twitter had no revenues. They invested nonetheless.

They were ruthless however, in getting removing Jack from the post of CEO first, followed by the removal of Ev from the post of CEO.

One can say they were trying to protect their investment. However, the other part is that most founders should know that the VC is not your friend.

Why did Ev get removed from the post of CEO even though he was the largest individual shareholder?

Even though Ev financed Twitter with his own money (from his sale of Blogger to Google), by the time it was series C, he had only 1 vote on the board. The board comprised of the investors and Jack, who had more votes, even though Ev was the largest individual shareholder.

This is the main reason who companies such as Palantir, Facebook and others have multiple classes of stock with different voting right.

Who is the hero and who is the villain in this story?

Reading this book, it was hard not to feel sorry for Ev and Noah Glass. Even though Ev had many faults (slow in decision making, avoiding conflict at all times), I felt most sorry for his treatment towards the end.

I oscillated between Jack Dorsey, Peter Fenton and Bill Campbell as the key villains, but Jack was clearly the main villain, plotting to bring down his “friend” Ev after he was ousted as CEO himself.

What role did Dick Costello play in the removal of Ev?

Even though his “friend” Ev, brought Dick into Twitter, I get a sense that Dick was more interested in becoming the CEO after he got there. Since he came at the the phase of “growing revenues”, I believe he would have felt best suited for the role, compared to the more cerebral Ev. He certainly colluded with Jack during the period when Ev was oblivious to the decision to remove him from the post of CEO.

What is the one big takeaway from this story?

Pivots work – sometimes.

Twitter started as a podcasting (voice notes) app, then transformed into a “status update) app, then a microblogging platform. While they had a hard time explaining “what” Twitter was, users were adopting it for different use cases. Traction beats all else.

While unicorns (434 as of Oct 2020) are private companies with $1 Billion in valuation, the public companies with $1 Trillion in market capitalization are only 4 – Apple, Microsoft, Google and Amazon.

If we were to predict the next trillion $ in market capitalization companies, the obvious ones are Alibaba ($BABA), Tencent ($TCEHY) and Facebook ($FB).

Beyond these if we look over the next 10 years the companies with the highest potential to be $1 trillion are likely companies with fast growth and incredibly large market potentials.

There are 5 sectors that I believe are large enough to support the next trillion dollar companies.

1. Finance (Square, Paypal, Visa, Mastercard)
2. Technology (Salesforce, Adobe, Nvidia)
3. Retail and commerce (Shopify, Mercardo Libre, Etsy)
4. Pharma and health (None I believe yet can get there in the next 5 years)
5. Automobile & Media (Tesla, Netflix)

In each of these segments there are established companies such as JP Morgan, Goldman Sachs, Intel, Walmart, J&J, Pfizer, Merck, GM, Toyota.

I don’t think any of these companies (except Walmart) have any chance of being a trillion $ company, unless they actively acquire other companies in their space – which will invite antitrust concerns.

As of Oct 2020, here is the market cap of these companies.

Company	Ticker Symbol	Market Cap
Square		$80B
Paypal		$229B
Mastercard		$345B
VISA		$448B
Salesforce		$230B
Nvidia		$344B
Shopify		$129B
Mercado Libre		$54B
Etsy		$17B
Tesla		$387B
Netflix		$225B
Alibaba		$803B
Tencent		$652B
Facebook		$774B

In the early part of the 20th century, startups were funded largely by wealthy families and individuals. Today, we would call them “angel” investors. Examples include firms such as Pan American World Airways, Eastman Kodak, and Ford Motor Company.

The formation of American Research and Development Corporation (ARD) is often associated with the birth of the venture capital industry as we know it today. Founded in Boston, Massachusets by prominent bankers, academics, and businessmen, ARD raised $3.5 million for a closed-end fund in the fall of 1946, with more than one-half coming from institutional investors.

One of the founders of ARD was General Georges Doriot, then a professor at Harvard Business School. He taught a course called manufacturing that was really “all about starting companies and technology.” A number of his students and disciples went on to be prominent venture capitalists, including Tom Perkins (Kleiner Perkins), Don Valentine (Sequoia), Bill Elfers (Greylock Partners), Arthur Rock and Dick Karmlich (Arthur Rock & Company), and Bill Draper and Pitch Johnson (Draper & Johnson Investment).

The venture capital industry then went through its greatest period ever starting in the mid-1990s. This was in part fueled by the adoption of the Internet, ushered in by the meteoric rise of Netscape, an Internet browser, following its IPO in August 1995.

The fee structure for venture capital funds is similar to that of buyouts. The management fee is typically 2 percent of the total amount raised by the fund, and the incentive fee is commonly 20 percent of profits. But venture capital and buyouts differ in their ability to scale. In buyouts, doing large deals is not materially different than small deals. As a result, buyout firms can grow their AUM with less degradation of expected returns than can venture firms.

Exits. The return for any fund is a function of the difference between the purchase and subsequent sale of investments. From the beginning of the venture industry through the mid-1990s, an IPO was the most common way to profitably exit a venture investment. In the late 1990s through 2000, both IPOs and a sale of the business were popular. But since 2000, IPOs have declined substantially, and a sale, either to a strategic buyer or a buyout fund, has become the preferred vehicle for exit.

There are a number of drivers behind the trend of fewer exits through IPOs.

First, because the cost to list has risen in recent decades, only larger and typically older companies are in a position to list. The age of a company doing an IPO has risen as a result.

Second, the motivation to go public has shifted. Young companies today don’t need to raise capital from the public market because they are generally less capital intensive than their predecessors.

Third, even those companies that are in very competitive industries have been able to stay private because there is a huge amount of capital available via late-stage funds.

Finally, there are now ways for employees who are compensated in equity to sell shares. In some cases, funding rounds give employees a chance to cash out.

These drivers have important consequences for investors.

There is now a sizeable population of companies that are very valuable on paper. For example, CB Insights, a platform that tracks market intelligence in the technology industry, counts 225 “unicorns” in the U.S. worth a combined $662 billion as of July 2020.

Another consequence of staying private longer is that more wealth is created in the private market and less in the public market.

Despite the decline and delay of IPOs, many venture capitalists view an exit into the public market as attractive due to the accountability and transparency associated with being a listed company. At the same time, it has become more common for entrepreneurs and investors to consider a sale to a special purpose acquisition company (SPAC) or a direct listing as alternatives to a traditional IPO.

A SPAC is a company that goes public with the goal of using the offering proceeds to make an acquisition. In an IPO, a SPAC offers a unit that includes a common share at a set price and warrants. SPACs are sometimes referred to as “blank-check” companies and can provide public market investors access to private companies.

With a direct listing, a stock exchange builds an order book, whereby buyers and sellers express their interests in terms of price and volume. The exchanges do this every day for every stock. The opening price reflects the intersection of supply and demand. Buyers include any investor, and sellers include shareholders, such as employees and early-stage investors. Neither buyer nor seller has an obligation to transact.

A final consequence of staying private longer is that the combination of steady flows of capital into venture and later exits means a much larger share of the industry’s total investment is late-stage. For example, in 1980 around 10 percent of investments were late stage. By 2006, roughly 20 percent of dollars went to investments of $50 million or more, and that figure was closer to 60 percent in 2019.

In 40 years through 2019, the S&P 500 Index had a total return of 11.8 percent.

We now examine three considerations that are relevant for the multi-decade shift from public to private firms, as well as the composition of the firms that remain public.

The first is the rise of intangible assets. Paul Romer, an economist who won the Nobel Prize in Economics in 2018 for his work on endogenous growth theory, poses a basic question:

“How can it be that we’re wealthier today than people were 100 years ago?”

The underlying quantity of raw materials has not changed over time.

The answer is we can now arrange resources in ways that are more valuable than before.

Traditional models of economic growth are based on inputs of capital and labor and treat technology as exogenous. Robert Solow, also a Nobel Laureate, created a model that made technology endogenous. Romer’s contribution was to make technology “partially excludable,” or a private good.

This allows firms to benefit from their investments. Romer emphasizes the importance of intangible assets, including instructions, formulas, recipes, and methods of doing things. He argues that “growth takes place when companies and individuals discover and implement these formulas and recipes.”

What’s important is that these intangible assets have characteristics that are different from physical capital or labor. Economists call them “non-rival” goods, which means that more than one person can use the good at a time. A physical book is a rival good that only one person can read at a time. A digital book is a non-rival good that can be read by many simultaneously. Under certain conditions, intangible-based companies can defy the conventional economic concept of diminishing marginal returns and in fact realize increasing returns.

This shift has a few implications for our discussion. To begin, companies need less capital because they need fewer physical assets. For example, sales per employee for Facebook, Inc. were nearly double those of Ford Motor Company in 2019. From 1956 to 1976 the number of public companies grew fivefold, as many companies needed to finance “their mass production and mass distribution.”

Today, companies simply do not require as much capital as they once did. This, along with freer access to private capital, allows private companies to remain private longer.

Second, implication is that the rate of change, which we can measure by longevity, appears to be speeding up. The idea is that if longevity is decreasing, the rate of change is increasing. About 1,500 companies went public during the 1970s, 3,000 in the 1980s, 3,900 in the 1990s, and 2,100 in the 2000s. Companies that had listed before 1970 had a 92 percent probability of surviving the next five years, and those listed in the 2000s had a probability of only 63 percent. The chance of survival has dropped in each successive decade.

Third, the main reason companies delist is that they are acquired. This contributes to the last implication. In corporate America, the strong are getting stronger. This is giving rise to “superstar” firms.

For example, the gap in return on invested capital between a U.S. company in the top 10 percent and the median has risen sharply in recent decades.52 Consolidation explains a large part of this. Measures of concentration, such as the Herfindahl-Hirschman Index, have shown a substantial increase for many industries since the mid-1990s. These include industries that rely on tangible assets.

M&A is by far the leading explanation for delisting.

First, the companies that are public now are on average much larger and older than companies in the past. Vibrant M&A has led to more concentration in most industries, and a handful of very large technology companies have attained strong market positions. As a result of where they are in the industry lifecycle and the profitability they enjoy, listed companies also have a high proclivity to
pay out capital.

Following the introduction of a safe harbor provision for buying back stock in 1982, the preferred means to return capital to shareholders has shifted from dividends to share buybacks. Second, buyout and venture capital funds have not included many Main Street investors. This could change with the Department of Labor’s instruction letter, written in 2020, that may allow private equity as an option for defined contribution plans.

Finally, there has been a large shift away from actively-managed equity funds to funds that track indexes or are rules-based.

U.S. domestic equity mutual funds manage about $8.4 trillion, with active funds controlling $5.6 trillion and index funds $2.8 trillion at year-end 2019.

Buyout funds in the U.S. have $1.4 trillion in assets under management (AUM), including $560 billion in “dry powder.”

Venture capital funds have AUM of approximately $455 billion, which includes dry powder of $120 billion.

The equity capitalization of the U.S stock market is roughly 27 times the size of AUM for buyout funds and more than 80 times the size of venture capital funds.

There are about 3,600 public companies in the U.S. today, about one-half as many as there were in 1996 and three-quarters as many as there were in 1976. The drop reflects active M&A activity and a low level of initial public offerings (IPOs). More than 90 percent of the stocks that have disappeared since 1996 were those of small- and micro-capitalization companies.

Drivers

1. Less need for money – fewer capital investments. As a consequence, companies need less capital to fund their operations and hence the demand to raise capital through public markets has diminished.
2. Sophisticated investors, including pension funds and endowments, have moved their asset allocation toward private markets in search of higher returns.

1. Companies have raised more money in private markets than in public markets in each year since 2009. For example, companies raised $3.0 trillion in private markets and $1.5 trillion in public markets in 2017.
2. Regulation and legislation have also played an important role in the evolution of capital markets. A company’s propensity to go public can be framed as a cost-benefit analysis, and the costs have risen since the 1990s.
3. Finally, the tendency of executives to mindlessly imitate the behavior of their peers, no matter how foolish it may be to do so.”

As of year-end 2019, there were approximately 3,640 listed companies in the U.S. employing 42 million people, roughly 7,200 firms owned by private equity buyout funds employing 5.4 million, and 18,400 companies backed by venture capital firms employing 1.1 million. The average market capitalization for a public company today is roughly $10.4 billion, up from about $700 million in 1976, adjusted for inflation.

Investors have been taking money out of public equities in the U.S., with net outflows of about $500 billion from domestic equity mutual funds and ETFs over the past 5 years.

Investor commitments to U.S. buyout funds have increased steadily in recent years and in 2019 surpassed the peak preceding the financial crisis. Commitments to venture capital funds are also near record levels excluding the extraordinary inflow in 2000, which remains almost twice as large as any other year. Combined, the commitments to U.S. buyout and venture funds were about $315 billion in 2019.

I got a chance to borrow Why we sleep from the library last week. There were multiple recommendations from others on a Telegram group I am a part of.

I would give this book a 4.5/5. Terrifically researched, well written and actionable. It does go into a lot of theory, so if you are the person looking for quick advice on how to sleep better, skip to the end of the book.

The twelve tips for better sleep he recommends are:

Twelve Tips for Healthy Sleep

1. Stick to a sleep schedule
2. Exercise is great, but not too late in the day. Try to exercise at least thirty minutes on most days but not later than two to three hours before your bedtime.
3. Avoid caffeine and nicotine.
4. Avoid alcoholic drinks before bed.
5. Avoid large meals and beverages late at night.
6. If possible, avoid medicines that delay or disrupt your sleep.
7. Don’t take naps after 3 p.m.
8. Relax before bed. Don’t overschedule your day so that no time is left for unwinding. A relaxing activity, such as reading or listening to music, should be part of your bedtime ritual.
9. Take a hot bath before bed.
10. Dark bedroom, cool bedroom, gadget-free bedroom.
11. Have the right sunlight exposure. Daylight is key to regulating daily sleep patterns. Try to get outside in natural sunlight for at least thirty minutes each day. If possible, wake up with the sun or use very bright lights in the morning.
12. Don’t lie in bed awake.

‍The book itself is divided into 16 chapters focusing on defining sleep, naps, how should we sleep, why sleep is important, dreams and their significance, and finally the benefits of sleep.

Here are my top 10 questions and answers:

Why is sleep important?

Sleep is a memory aid, it helps to cement memories and prevent forgetting. It helps your brain as much as your body. It helps motor-skill enhancement and helps with physical recovery – muscle repair and cellular energy.

How much sleep is required?

The book suggests most adults need to sleep in a biphasic pattern (having two phases). One in the night for 6-8 hours and another nap in the afternoon for 30-60 minutes. Younger teenagers might need more sleep in the night.

How are some people able to get away with little (<6 hours) of sleep?

While it does not address this question, there has a gene that has been identified in people who can sleep less. The book says it is rare that people can function with less sleep.

True low-sleepers (chronically < 6 hours of sleep/night without impairment of function) are incredibly rare, less than 1% of the population. Everyone else is disguising their sleep deprivation with caffeine and sleeping pills.

When should I sleep?

Having a consistent sleep rhythm is important – sleep at about the same time daily is suggested by the book. The time itself is not given (so if you sleep at 10 pm daily or 1 am that’s your pattern).

Why do we sleep less as we age?

Older adults need as much sleep as younger. It is just that the sleep efficiency drops as you age. As you enter your fourth decade of life, there is a palpable reduction in the electrical quantity and quality of that deep NREM sleep. The second hallmark of altered sleep as we age, and one that older adults are more conscious of, is fragmentation. The older we get, the more frequently we wake up throughout the night.

Do naps help as a substitute?

No matter what you may have heard or read in the popular media, there is no scientific evidence we have suggesting that a drug, a device, or any amount of psychological willpower can replace sleep. Power naps may momentarily increase basic concentration under conditions of sleep deprivation, as can caffeine up to a certain dose. Neither naps nor caffeine can salvage more complex functions of the brain, including learning, memory, emotional stability, complex reasoning, or decision-making.

How and why do we dream?

Dreaming essentially is a time when we all become flagrantly psychotic. 

First you started to see things which were not there, so you were hallucinating.

Second, you believe things that couldn’t possibly be true, so you were delusional.

Third, you became confused about time, place, and person, so you’re suffering from disorientation.

Fourth, you had wildly fluctuating emotions like a pendulum, something that we call being affectively labile. And then, how wonderful?

You woke up this morning and you forgot most if not all of that dream experience, so you’re suffering from amnesia.

The second benefit of dream sleep is essentially a form of overnight therapy. It’s during dream sleep where we start to actually take the sting out of difficult, even traumatic, emotional experiences that we’ve been having. And sleep almost divorces that emotional, bitter rind from the memorable experiences that we’ve had during the day. And so that we wake up the next morning feeling better about those experiences. So you can think of dream sleep as emotional first aid and it sort of offers this nocturnal soothing balm that smoothes those painful stinging edges of difficult experiences. So it’s not time that heals all wounds, but it’s time during dream sleep that provides you with emotional convalescence.

Can you control your dreams?

Techniques to control, or at least influence, our dreams have been shown to work in sleep experiments. We can strategize to dream about a particular subject, solve a problem or end a recurring nightmare. 

What stops a person from sleeping?

Alcohol and caffeine are the two biggest contributors. Not surprisingly if you have a lot of activity to the brain (iPad, Phone), you might take longer to fall asleep.

Should one take sleep aids? E.g. sleeping pills, a hot shower or a “night cap”?

Hot showers help, but night cap (alcohol) and pills dont much.

 Alcohol is a class of drugs that we call, “the sedatives.” And what you’re doing is just knocking your brain out. You’re not putting it into natural sleep.

One of my top 10 posts is one about how to get a job as a Venture Capitalist. It is worth a read, but much has changed since 2012.

What has changed?

1. There are a ton of micro funds (<$25 Million) now. In fact, 652 funds are now listed across US, Europe and Asia. There were < 1000 funds in 2012, so there has been at least a 60% increase in # of venture funds

2. There are now over 100 Venture funds with Scout programs. What is a Scout program? Scouts are individuals who are empowered to invest small check sizes ($25K – $50K) in very early stage companies. They are funded by the venture fund. There are in fact over 50 Scout programs specifically aimed at college students.

3. There are so many angels and angel groups. In 2012 there were 30K worldwide. Now China alone has 25K active angels who have invested in the last year.

If you are interested in getting a job as a Venture investor, then there are 5 paths now compared to 2-3.

1. Bring your own money (assuming you have money to invest on your own).
2. Start an early stage micro fund focused on a niche.
3. Be a VC Scout (there are a lot of resources on how this works).
4. Start an angel group or fund with others
5. Join a VC program as an analyst

If you look at the profile of venture capitalists across the world now, the Silicon Valley used to be where 65% of investors were in 2010.

Now in 2020, there are more funds outside the US, although the funded $ are still more in the US.

Lets look at each of these paths in detail:

1. Bring your own money. Most investors who go this route have 3 paths – a) They have family money – inherited, b) They have worked at an early stage startup or struck it rich early (many crypto currency investors are now VCs), or c) They have worked at Google, Facebook, etc., and decided after X years to invest in early stage startups.
2. Start a Micro fund. Most investors who go this route, have 3 paths as well. a) they were at a large VC fund and decided to strike it on their own, b) they were keen to start a fund and have friends and family who are willing to invest, or c) they started small, had 1-2 great investments early and grew from there.
3. Be a VC Scout. Investors who were scouts and then became a VC are few, but most are interested in learning and sharing more than making money.
4. Angel groups: Investors who started an angel group are typically helping their friends or alumni raise money and then they start to get some deal flow. Others get their colleagues from work to invest in a startup as a first step.
5. The VC Analyst program. These tend to be the most sought after, but far and few between in terms of opportunities. Many have terrific backgrounds from the top schools or had some success at a VC funded startup.