Note: my personal blog doesn’t get a whole lot of traffic, so I’m trying an experiment. If you’re here and reading this, you’re a friend and I’d love your feedback and opinion on something. So, while we haven’t launched and this is all still secret, consider yourself inside the tent.
Brian Chen writes today in the NY Times about much cheaper it is to be on prepaid here in the US than go onto a post-paid plan. He lays out the numbers starkly:
The iPhone with a two-year contract on AT&T, for example, costs $200 for the handset and then upward of $90 a month for the plan; over two years, including the cost of the phone, customers pay at least $2,360. With a prepaid plan on Virgin Mobile, which is owned by Sprint, the iPhone costs $650 for the handset, and then $30 a month, including unlimited data (the type of data plan that people are happier with, according to J.D. Power). Over two years, that would cost about $1,370.
As my friend MG says over on his blog, “it’s still pretty jarring to see it laid out in such simple terms: if you’re willing to pay $450 more upfront, you’ll save about $1,000 over the next couple years”.
Moving to the US from Australia a year ago, I initially didn’t have the option for a post-paid plan: no social security number, no credit rating, no fixed address. Until recently, I didn’t realize that post-paid plans in the US were so expensive. Thinking that post-paid would have to be better value (as it is everywhere else in the world), I asked a bunch of friends what they pay per month.
And each time I asked, I was shocked, and so were they – they’re paying about twice as much for the same product, and they’re locked in for two years.
For example, my housemate pays $155/month for his iPhone plan on AT&T, and another friend pays north of $200/month for he and his wife to have a family plan – but with his oldest daughter only 2 years old, there’s only two phones on the plan.
If you want to make the switch when you’re out of contract seriously save more than $1000, here’s a few tips and lessons learned.
T-Mobile’s $50 Unlimited plan
T-Mobile have a range of pre-paid plans, and the best bet for most people is the $50/month plan. It includes unlimited calls, text and data. They do something kinda sneaky with their marketing though – while the data is unlimited for $50/month, they market the 100MB cap/limit of 4G data and try and get you to spend an additional $10 or $20 to get more 4G data included.
The problem with 4G on GSM is that it is a mess. Different places, different handsets, different “standards”. My Galaxy Nexus isn’t compatible with T-Mobile’s idea of 4G, and if you’re planning on buying your handset online when you go pre-paid, be careful and read up on the different frequencies and standards.
If want to play it safe, I can strongly recommend the Galaxy Nexus, which you can buy unlocked and directly from Google for only $349 in HSPA+ mode (which is what T-Mobile call 4G). Also, you don’t need to buy the $15/month mobile hotspot part of the plan – tethering works just fine (since it is just data and data is unlimited).
Aside from their more limited coverage than AT&T, there’s just one drawback with T-Mobile. In another case of the “why won’t you just be a dumb fucking pipe, carrier”, T-Mobile have “forbidden” Google Wallet from working on their network. Yep, my phone, which I’ve bought outright, and they won’t let me install Google Wallet. WTF? This was the only reason I (temporarily) moved to AT&T, so hopefully they get out of the way soon.
AT&T’s Bullshit $50 Unlimited Go-Phone
While they don’t have the best network (Verizon is widely regarded to be the best), AT&T are at least GSM so if you’re travelling you’ll actually be able to use your phone outside the US of A.
Unfortunately though, AT&T screwed me last month with a “bait and switch”, where they advertised an unlimited calls, sms and data plan for $50/month, only to then turn off my data half way through the month.
When I called customer support to see what was going on, they told me that the unlimited data is only supported on “Feature Phones”. I then asked what my options were with my Galaxy Nexus, and they told me I don’t get any data included at all – zero – and I’d have to buy data bundles – $5 for 50MB, or $25 for 1GB. While $25 for 1GB should be enough for most folks, I really resented the bait and switch, and a really really really resent carriers not just being a dumb fucking pipe. I almost feel like getting an old Nokia, buying the AT&T plan, and then hooking it up to a spare machine and streaming YouTube all day every day just to fuck them.
So, needless to say, I went straight into T-Mobile and got back on their stuff.
Note for iPhone 4 users: if you try and get a Go Phone plan from AT&T for your iPhone, they’ll tell you it won’t work. It used to work – and they just lied to you to try and up-sell you – but with iPhone 4 it really doesn’t work. In a deplorable move, Apple have made it really hard to change the APN settings (which define how your phone connects to data on a cell network) in their latest handsets – another case of fuck the customer in cahoot with the carriers. Android, on the other hand works out of the box, but as I discovered they’ll eventually cut you off if they guess you’re using a smartphone.
Virgin Doesn’t Travel
As pointed out by Brian in his times piece, Virgin have a very compelling deal at $30/month for unlimited data and pretty generous minutes (who talks actually on phones now, anyway?)
Unfortunately, though, this deal uses Sprint’s CDMA network. This network technology is actually a lot better for speeds and getting signal than GSM, but unfortunately CDMA is hardly used anywhere outside the US. So, unless you’re likely to stay completely US based, I’d steer away from it.
I spent a few hours yesterday afternoon with the 2012 class of StartMate companies in our Sydney incubator. As someone who’s spent their career working in business to business technology, I was excited to see 3 of the 8 companies focusing very strongly on solving real pain points for businesses. Smart teams, real problems, solid technology – full of win.
While their target markets – property, film and IT management – were all very different, the common challenge faced by all enterprised focused startups who want to get big was the same – distribution. I know this only too well, as this is the thing we spend more time thinking about withAffinityLive right now than anything else.
One of the tempting ways to try and ramp up distribution is freemium. The theory goes, if I make my product free, I’ll remove a big barrier to adoption, word of mouth will have a stronger effect in driving user volume, and we’ll be able to show VCs a nice hockey stick graph that goes up and to the right.
My concern is that for almost all of the SaaS companies that target businesses, those who try freemium realize it was a mistake, hopefully before they kill their business. Freemium is almost always a very very bad strategy for selling to businesses.
In planning our AffinityLive sales and marketing model, I spent a lot of time talking to people who’ve been there and done that. Most of the conversations were very off the record, but one source I always point entrepreneurs to is the experience of the guys from Chargify. They originally had a freemium model, and the reasons they abandoned it – and the backlash they sustained in the process – were blogged about extensively and very honestly by founder David Hauser. It should be compulsory reading for any entrepreneur targeting the business market.
There’s a lot that has been written by people with a lot more experience in the matter, but just telling you not to do something as trendy as freemium isn’t going to cut it. We all want to see our products used, and most engineers start solving a problem for ulturistic reasons, which explains why freemium has so much appeal.
So, rather than just saying don’t do it, I’ve listed the four attributes that can make freemium a successful strategy for your business focused online service. You don’t need all 4, but you’ll want to have most of them baked into your product and business model to have any hope of making freemium work.
As I see it, here are the criteria to required to make freemium work for business (ie, non-consumer) facing product:
- You need to have a land and expand distribution model. This means you use freemium as the thin end of the wedge and use the early adopter as your sales team, evangelising it to colleagues to eventually get the business to buy in financially for features like security, administrative control. Box does this very well, as does Yammer. Note though that these two business put a lot of money into their enterprise sales teams doing traditional enterprise sales things – small and medium guys are crumbs comparatively from what I understand.
- You need the ability to deliver benefit independently of core business processes. If you can solve a problem that doesn’t require any connection to the rest of the business – ie, no need to access any customer, accounting, HR, production or other data – then this can work a treat. This is why tools like Balsamiq or Prezzi for individuals that are used primarily in a workplace context work as a freemium product if you have the other attributes. However, being an occassionally used tool that isn’t tied into the core business processes comes with its own risks around poor revenue and high churn. Higher revenues generally require a stronger connection in the core business processes (otherwise you risk becoming a feature and see high churn), which is difficult to get if you’re delivering benefits to the individual without touching the business.
- Natural increased use model that pushes users inextricably to paid. Freemium is a marketing strategy, so you want to make sure whatever your product does, you have a conversion lever that “just happens” as users use the product normally. Dropbox have this nailed – you use it, you keep using it, and one day they say “you need to pay now” – it is a cumulative use lever. Remember the Milk have a different lever focused around urgency, which itself is tied to the utility you get from the product – their mobile apps only sync once a day unless you pay, at which point it will sync in real time – which means when you care about the app, you’ll pay for it. Find your driver, but make sure that users who actually use the app will be compelled to pay.
- Volume is more important than revenue. This only works for some business focused companies (see Wave Accounting and Spiceworksfor two examples of firms betting everyting on this model), and means you’re making money in an indirect way, either through advertising or transactional revenue. Assistly implemented it too, but only to drive their acquisition price to SalesForce higher when they already knew they would either get acquired or raise a big round (their decision wasn’t based on revenue). While venture backed companies have the luxury of not needing revenue to survive today, they need to be able to show how they’re going to see big revenue later to justify the investment risk, and pursuing this strategy to make yourself appealing to investors is pretty damn risky. The key is to make sure you’re sureof your revenue model; the number of ideas I’ve seen where folks say “and we’ll have all this data and that has to be valuable to someone” is about as much of a strategy as the Underpants Gnomes.
When I was 14, I joined the Junior Air Force in Australia, known as the Air Cadets. The first night I went along, I saw them marching around and calling orders and having their uniforms inspected. As as teenager, I thought it was the stupidest thing ever.
I vowed not to go back.
Fortunately, when I wasn’t looking, my mother paid the $60 annual membership fee, and to give you a sense of how tight finances were at home, I knew that wasting $60 was a hanging offence. So, I went back to Air Cadets and after making it through the first couple of confusing months, it was one of the most formative things I’ve ever done.
I learned a lot from my experience, as I rose up from the rank of “Cadet” (a mirror of “Private” or “Sailor” or “Airman”) to become the equivalent of Staff Sergeant. But there’s only one of those experiences that came to mind tonight as I mentored one of the latest batch of StartMate companies – it is always easier to be the Drill Instructor than to be the guy marching.
While folks with some appreciation of the military will think this is because seniority bestows privileges (it does), what I’m talking about is the benefit that some distance and perspective provide. From a short distance away, you can see the whole squad/company. You can see how they’re moving, what they’re doing wrong, who is out of time. You get a perspective that the people in the parade, who can only see the person beside them out the corner of their eye, can’t possibly see. They’re focused on what they’re in the thick of, but you, as the Drill Instructor, or DI, you get the benefit of distance and the space of relection.
I believe the same thing is true of many fields. My personal experience, beyond being a DI, is of being an adviser and mentor to startups. It is common to have someone, completely focused on the challenge in front of them, engrossed and committed to it 110%, come to you with a very very long and crappy description of what they’re doing.
This is where the Drill Instructor comes in. One of our companies recently sent a 220 word “quick blurb”, and unfortunately it didn’t really say much. My tips on a format (along with making it shorter) were:
- [ Problem ] – have folks in the industry nodding their heads & identifying with the pain you describe. Two sentences at most.
- [ Solution ] – very very skinny description. you’re not trying to get laid here – just get a first date.
- [ WIIFT ] – why they should give you their time.
- [ Close ] – how to give you their time
The example for these guys, who are in the film production sector, was edited to be:
The irony in all of this is that as quickly as I was able to dispense this advice – probably 15 mins, and just re-reading it I can see lots of room for improvement – I’ve struggled mightly over weeks and weeks to get our own messaging for AffinityLive right. Why? Because with the story above, I’m the drill instructor, but with my main focus, I’m living, breathing and all too close to the subject.
So, if you’re an entrepreneur and you’re having trouble getting is tight, short, sweet, relevant and focused, don’t feel inadequate. We all struggle with it.
Of course, the key in all of this is that its the people marching, the people focusing, driving, continuously improving who live and breathe this stuff that actually star. The Drill Instructors never change the world, they never stand in the arena, take the credit or take the fall, which is appropriate – because it is always easier being the Drill Instructor.
Eric Ries, the author of “The Lean Startup”, defines a startup as “a human institution designed to create a new product or service under conditions of extreme uncertainty”. Implicitly, a startup entrepreneur is someone who chooses, willingly, to embrace extreme uncertainty.
Most people think uncertainty=high risk, but it doesn’t have to. Malcolm Gladwell, in his New Yorker piece “The Sure Thing“, wrote about the ability of successful entrepreneurs not to be extreme risk takers at all. Risk and uncertainty aren’t equivalent.
Entrepreneurs get up every day not knowing if they will, but believing that they can. And where this lack of certainty would paralyze most other people, entrepreneurs are instead attracted to it, energized by it.
The problem is, no one succeeds in anything worthy on their own. In business, you need to have strong support from family, friends, clients, staff, investors and more. Odds are, these folks are likely to have a much lower appetite for uncertainty than the entrepreneur. They want to know if something will work before they buy in. To build support, raise funds, win clients entrepreneurs need to make these people believe in their vision and their ability. And while they believe they can, entrepreneurs don’t know – after all, they’re operating with extreme uncertainty, remember?
This sets up the biggest moral conflict in entrepreneurship – it is all about uncertainty, and yet to succeed you need to convince key people all around you that the future is bright and successful!
How do we as entrepreneurs reconcile this? We often don’t. We are torn – and if we’re not careful, our whole lives can feel like a big charade.
To succeed, we need to exude the confidence of someone who knows they’re going to change the world. We read about & admire those who have – the Zucks, the Pages and Brins, the Jobs and the Gates and so many more. But the thing you’re not told is that they weren’t confident & always self assured.
Joe Kraus, the founder of Excite and later Jotspot, and now Google Ventures partner (and incidentally a really really nice guy with great family and a wicked collection of cool cars like this one) spoke really candidly in the book Founders at Work about how this conflict feels from the entrepreneurs perspective:
No, it was never clear we were onto something huge. You never know anything. The hardest part in a startup is that you wake up one morning, and you feel great about the day, and you think, “we’re kicking ass.” And then you wake up the next morning, and you think “We’re dead.” And literally nothing has changed… I really wanted to get to the point where I’d say, “OK, I know we’re onto something huge.”
Remember, Joe and his 5 college buddies built one of the world’s first search engines. Two years after he experienced the feelings described above, they’d gone public. He goes onto say:
On some level it feels like you’re fooling people – like, are we really doing this? It’s the whole sausage and sausage factory problem: when you’re outside and you only see the sausage coming out you think, “That’s pretty tasty.” When you’re on the inside, and you know how its made, it’s terrifying.
This is a guy who grew his business from number 17 out of 17 to number one or two in a 1996, just one year. He’s the guy who big $3M to win the prized position in Netscape’s toolbar when they only had $1M in the bank. Clearly, there is a lot of belief here, but there’s even more uncertainty.
One of my favourite bloggers and VCs and general commentators in our sector is Mark Suster. While most of the talent at TechCruch Disrupt in San Francisco this year would come and go via the VIP entrance, Mark waded out the front and mingled for at least an hour with hordes of entrepreneurs, taking questions, meeting people and being super humble. He also happens to be a cracking writer. One of Mark’s best posts was his “Start-ups are all Naked in the Mirror” article about growing his company, a B2B ecommerce play, in the tough times post the dot com crash.
These were stressful times. My staff kept asking me about these competitor moves and I didn’t have answers. I could tell some of my best people were losing confidence. One of my closest friends (our CFO) left the company.
And then it dawned on him. They were seeing their competitors through the perspective of their press releases. Their confident, puffed-out-chests, spruiking everything good while hiding their flaws. And yet they saw themselves naked in the mirror, with no nice clothes and makeup to mask the blemishes.
But one comment Mark made in his blog post stood out to me more than the others. It wasn’t that it was a lie, or hypocritical, but it highlights the very real challenge that we face as entrepreneurs. His advice was stark:
Be careful about not over expressing your deepest concerns to your team. You need to be open but not instill panic. It’s OK to talk about fund raising challenges or customer losses. You should. But most people aren’t wired to deal with the nerve racking daily grind of life as a CEO. If you shared every deep seated fear (that I know you have) and over hyped every victory (that never pays off as much as you had hoped) you’ll have people on your roller coaster ride. Remember that most people aren’t wired this way.
I agree with Mark – and it is handling this conflict between the need to show confidence and belief when the smart, analytical, honest self is dealing with extreme uncertainty is really, really hard.
Why we should let the air out
Is the solution then to just get better at faking it? We need to convince our friends, our team, our investors that they’re on a good thing. We need to create belief. When someone asks as how we’re going, we say “great, things are awesome”. If you practice it a lot, you might even get good at it. Why should we quit puffing out our chests – perhaps we should just be better actors? What’s wrong with that?
The answer is simple really. The only way to successfully fake it in this world is to believe you’re not faking it. To drink your own Kool Aid. To get sucked into your own PR. And that is when you will fail. Because you won’t be improving, you won’t be learning, and you won’t be continually testing your beliefs, sharpening them and making them even better.
A personal perspective
At the moment we’re transitioning AffinityLive from a development focused company in beta to commercially focused company with revenue targets.
To stay sharp, I’m reading a lot, and at the moment I’m reading a book on business models, the excellent and attractive Business Model Generation.
The content is great, and it is challenging. But to make any use of it at all, I need to admit I don’t have the answers.
To learn, we need to let the air out, be humble, and not be confident about our opinions. Our beliefs should stand up to challenge of open, rigorous intellectual challenge, and not be held with the confidence of a fundamentalist who blocks their ears lest the real world threaten the imaginary fantasy.
Learning requires humility
You can’t climb a mountain with a puffed out chest. You can’t learn and infuse new ideas if you pretend to know all the answers. And yet, the more I interact with entrepreneurs, the more I see it – they’ve become so dependent on projecting success and certainty to make sure everyone believes in what they’re doing that they’ve lost that ability to be real with themselves – and this is a real worry for them and their businesses.
Like going out on a date, you don’t show up at your worst. You put your best foot forward. So when you’re courting – investment, key hires, press – by all means puff your chest out.
But don’t fall for the trap of trying to learn, grow and sleep with your chest puffed out. Cause there’s only so long you can hold your stomach in.
A few weeks ago, I finally bit the bullet and moved our AffinityLive.com marketing website to a US hosting provider. There were lots of reasons for making the move, not the least of which is that more than half of our new signups are coming from the US, a market that is used to very low latency connections. Crossing the Pacific to get to our (at the time) Australian shared host wasn’t good enough.
Our requirements were pretty run of the mill – the new host needed to support PHP 5.2 and MySQL so we could run SilverStripe, the CMS we use to drive our marketing website. While our engineers spend their time and energy working on the main AffinityLive product – which has nothing at all to do with our marketing website from a technical perspective – the fact our team are hard core meant that we also wanted to have SSH access and the ability to maintain our site using the technology all the cool kids use – no FTP for us.
Of course, going to Google and typing in “LAMP web hosting” is like going to Google and typing in “mortgage” – you get inundated with options, all of which make big claims and look much the same. The things you care about the most are the quality of the human support, that the hosting company supports the technology you’re using “out of the box”, and that they don’t cost you the earth.
I got in touch with one of my friends who’s a founder at SilverStripe, and asked him if there were any web hosts out there that he knew of which make an effort to specialise or fit in with the SilverStripe CMS. You know, that have the right PHP modules ready to go, that keep PHP up to date but not too bleeding edge, etc. He told me he couldn’t recommend anyone, but one of their partners who were doing good things was Arvixe. As anyone who faces a daunting comparison process of a thousand options knows, being suggested to “just do this” is a godsend.
Knowing that human tech competence in support is the hardest thing for a hosting company to get right – anyone can rent racks and install the standard kit on them – I started to ask a bunch of pre-sales questions using the online support directly from the homepage of Arvixe. The support was prompt and knowledgeable. This was on a Saturday in the early afternoon in California – not the graveyard shift, but close to it. I was impressed.
So, I pulled the trigger, signed up, and got underway.
The whole process was pretty good. The cPanel did things a bit differently, but again, the live support was great. I migrated the site across with a mixture of SVN and Rsync; the only small hiccup was their version of SVN not supporting svn:externals that were located on an SSL host. Not a huge deal, and before long I had www.affinitylive.com, help.affinitylive.com and www.hiivesystems.com migrated across to the new hosting platform.
Then the trouble began.
My staff started to complain that logging in to update the site was proving really flaky. The site would appear “down” or offline quite a bit. Updating our blog with the weekly updates on the new version of AffinityLive being pushed proved very frustrating. Initially I thought it might have been the change of hosting to the other side of the pacific from what the office team in Australia were used to, but Hugh, who’s our only non-developer on the staff set up a trial account with WebSite Pulse, which showed clear problems.
I then set up monitoring with the main outfit we use to monitor all of our other AffinityLive platforms, wormly.com, and was horrified by what I saw.
Now, I knew that I was on a cheap shared hosting plan. I wasn’t expecting 99.999% uptime and for the system to be bulletproof, but I was expecting it to work most of the time.
I really didn’t want to go through the process of moving servers again. So, I called the sales office at Arvixe on the 20th of September, and explained the problems I was experiencing. I had details of packet loss, the load the server was under when I was occassionally able to log in via SSH (15 minute load was above 3).
The guy from the sales team told me that this was not uncommon, because new users get put on new servers, and a decent percentage of new users are actually abusers who they need to weed out and remove as clients. He offered to move me to a different underlying host, and I said, “Sure, I’ll do anything, I’ll pay a bunch more if I’m on a class of plan that is too low – I just need this to be fixed.”
From here, I got into a week long debate with their tech support team. They wanted evidence of the packet loss reports, which I sent them. They then told me they couldn’t read them, probably because their helpdesk software strips all formatting from emails. Then I provided attached reports in CSV format and a bunch more info. Remember, this is at a time when they said they’d just move my account to a different server. I’ve already told them I’d pay more to go up a tier. And instead of just making it happen, they were having an argument and were then technically unable to listen to my comments on the other side of the debate.
After suffering through this problem for more than 10 days across two continents, I finally got the time on the ground early last week to up and move hosting companies. I’ve selected Dreamhost, and so far things are going really well. Of course, the process of moving cost me a bunch of time and energy which I didn’t really have to spare – what with jetlag and making the best use of the face-time I have with my engineering team here in Australia – but on the 30th I managed to flick the switch across to Dreamhost. As you can see from the Wormly report dashboard above, we’ve had zero failures since moving the site to Dreamhost compared to when we were with Arvixe.
The sad thing is, I really wanted to like Arvixe. Their people were friendly and professional and delivered a great human service, usually the hardest thing to do in a tech business. But, their core product was just so completely horrible and terrible that I just couldn’t stick with them, which is a real shame. Hopefully they’ll get their act together in the future, but in the mean time, if you’re using SilverStripe, I’d suggest you go with Dreamhost.
About two months ago I moved to Silicon Valley from my home town of Wollongong in Australia. While the process of moving was fraught with a lot of personal logistical issues, the act of getting to the US was pretty easy – I was able to just get on a plane and fly to San Francisco and get through customs without a visa.
This is because, like many countries, Australia is on the 90 day Visa Waiver program, which allows you to spend up to 90 days in the US for a range of purposes, including business (attending meetings, conferences, etc) and pleasure (tourism, etc) without any paperwork or hassle (except for having a valid ESTA – but the form is all online and it is super easy to complete).
However, this situation has a bunch of limitations.
- You can’t get a social security number. This is a big deal – a “social” is how pretty much everyone in the US identifies you, and is central to how credit checks are run. If you want a credit card, you need a social. If you want to process credit card payments online – even though it is through your company entity – you need a social. Thinking of signing a lease for somewhere to live? It is possible, but they’ll want a social too to run a credit check. The list goes on and on and on.
- You’re limited to 90 days at a time, and things can get tricky. So, you’re going to be spending at least $10K per year in airfares leaving every 90 days. You don’t want to go right to the edge of the 90 day limit since over-staying can result in a later visa request getting refused (even if over-staying was the fault of the weather and cancelled flights). You also need to be gone for a meaningful period to reset the 90 day clock – 24 hours in Vancouver or Mexico doesn’t count if you’re an Australian from what I’ve been told. And, if you come back in for another 90 days a fortnight after leaving last, and this is the 5th time you’ve done it, there’s every chance the guys at the border will think you’re up to something suss and deny you entry, sending you back on the next flight. Aside from the uncertainty around this and grief if it happens, you also have the problem that being denied entry into the US puts you in a difficult place if you want a visa – red flags go up.
So, I needed to get a Visa, and if you’re doing this, you will to.
The good news is, it was actually really easy. You don’t need to pay a lawyer $2000 to what amounts to filling in a few online forms. You do, however, have to navigate some arcane, acronym laden systems that took me a bit of trial and error to get through.
Hopefully this how-to guide will help you with your application.
The E-3 Visa is a 2 year visa that is available to Australians who are offered employment in the United States by a US company. The short version is this:
- Make sure you’ve got a Bachelors degree or better (Graduate Diploma, Masters, Doctorate, etc).
- Find a company willing to hire you, or set up your own company in the US
- If you set up your own company, get your FEIN online (also known as an EIN or a TIN)
- The company will need to apply for an Labor Condition Application (LCA) for Nonimmigrant Workers (9035 form, online)
- Book an appointment with the US Consulate in Sydney, Melbourne or Perth (there’s a charge associated with this). Leave yourself at least 2 weeks from when you submit your LCA application, since you’ll need this to be processed & certified to take to the appointment.
- Actually complete your DS-160 online (it takes about an hour). Note you’ll need to have a digital photo of yourself where the lighting is good, the background is a white/bone wall, and you’re not smiling or having too much fun.
- Pay the fee for the visa application of US$390 to Australia Post. While you’re there, pick up a 500g Express Post Platinum satchel.
- Go to your interview, take your passport, your letter of offer from the company to yourself (I know, it sounds silly, but this is a big deal) and the other paperwork they ask you to have, and hopefully they’ll approve you.
- Your passport should be back to you in the Platinum Express Post satchel within a week.
- You’re now good to live and work in the US for 2 years and travel in and out of the country without restriction.
1. Finding a company or setting up your own
The E-3 visa requires you to be employed/sponsored by a company. It basically ties your right to live and work in the US to the company that makes you the offer and completes what is known as the LCA process. If you find someone who will sponsor you, they’ll need to complete Step 3 below, and once they’ve got you an LCA, you can then head to Step 4.
However, if you’re an entrepreneur doing a startup, you’ll instead want to get your own US entity. Keep reading.
The decision about which entity is right for you is a bigger issue than I can cover in this post. Generally speaking though, you’ve got two options:
- Register an LLC, probably in Delaware. This is like the Australian equivalent of a trust – all profits made by this entity “pass through” to the “shareholders” or members of the LLC, and are paid at their own tax rate. It is a “lightweight” company, and can be flipped up to a C-Corp later. This will set you back a few hundred bucks, and you can easily do it yourself.
- Register a C-Corp, probably in Delaware. This is the Australian equivalent of a Pty Ltd company, which can have shareholders, the ability to retain (and thus pay company income tax on) profits and has higher costs of setup, more paperwork (need for office-holders, etc) and other hassles. However, if you’re going to the US to raise capital (seek investment), this is the vehicle you’re going to want).
You can register for these entities online – there are lots of options you’ll get when you do a Google Search for “Delaware LLC registration” or “Delaware C-Corp registration”.
The registration process will take up to a week to happen. You won’t need a US address to do it, and you can change the papers after you set up an office and you’ve moved to the US, so don’t worry too much.
A note about relocating/flipping up
If you already have a business in Australia, then things are more complicated than just registering a new entity in Delaware via an online broker. Moving your business to the US is known as “flipping up”, and there are a lot of reasons why you would want to do it.
For one, few US investors will be prepared to invest in your Australia Pty Ltd company. You can make the LLC a subsidiary of your Australian company easily enough – and this is the best approach for tax reasons too thanks to US tax treaties – but investors will want to make sure their investment is in the parent company or eventual owner of the intellectual property. Even if you manage to grow the business without needing external investment, you might find that potential acquirers will have difficulties working between US and Australian law in an acquisition.
The other big reason why flipping up is a good idea is that capital gains tax rates are also lower in the US (so you’ll pay less tax if you are successful and sell the company, either to an acquirer or to the public through an IPO).
If you decide to flip up, if you’re not careful, the act of moving the company to the US or flipping up will likely trigger a “Capital Gains Tax Event”, where the Australian Taxation Office see you as selling your Australian company to a new, US company, and demand you pay tax to the ATO (which can be as high as 50%) even though the movement was all just on paper (and you don’t have a fat bank balance).
Get good advice on this – unless you don’t have anything in the form of a company in Australia already, spend the money – $3000-$10,000 depending on how complex your
mess situation is here in Australia – and do it right.
2. Registering for your Federal Employer Identification Number (FEIN)
Once you have your entity – either an LLC or a C-Corp – registered you’ll want to apply for a Federal Employee Identification Number, often called simply an EIN. This is basically the same sort of thing as a Tax File Number but for a company, and we can think of it as being an equivalent government identifier as an ABN (although you never need to put it on invoices!)
If you flipped up your company, your lawyers will likely have applied for one of these for you – ask them for it.
If you created your own C-Corp and you’re just a stock holder, you can apply for your EIN online at http://www.irs.gov/businesses/small/article/0,,id=102767,00.html
If you registered an LLC which is “owned” or a subsidiary of your Australian company, or held in your own name, you’ll need to register for the EIN by calling the IRS. The phone number is +1 267-941-1099.
This process is exceptionally simple – the government *want* you on their database so they can track you and the taxes that you and your employees will owe them.
Once you’ve got your EIN, you’re ready to ask for permission to hire yourself from the US Department of Labor, step 3 below.
3. Submitting your ETA Form 9035E for Labor Condition Application (LCA)
The next part of the process is the most time consuming – your employing company needs to ask the US Department of Labor for permission to employ you.
In this sense, the US is no different to many other advanced economies – they don’t want employers bringing in cheaper international workers which put downward pressure on wages for their citizens and they don’t want employers take advantage of employees by paying them low wages. Whether this form of protection is inherently fair or is actually a manifestation of racism and xenophobia, it is a fact of life, so we’ve all got to live with it.
The process of asking permission to hire a foreign worker is actually one of the less shit online processes followed by the US Government. The system is relatively straight forward, the form is smart, and while the instructions and acronyms are confusing, the instructions below should help you through it. Remember, this is the bit that you normally pay a lawyer $2000 to do for you – if these instructions help and save you some coin, then feel free to buy me beers when you see me or offer to make a donation to a charity.
Before you create your account
The first step is to create an account on the Department of Labor’s iCert system. This is free and relatively easy, but you’re going to need to get some bits ready ahead of time.
Remember, at this point, you’re applying as a business which is going to hire you – this is where physical presence starts to matter. This means the business is going to need to have an address and a phone number.
You can get an address with Earth Class Mail, or use the address of your Attorneys as an interim measure. If you have friends there who don’t mind you putting down their address, then that can work too. The LCA process is very specifically tied to the location you’re going to be working from – since the rate for a programmer is much higher in San Francisco than North Dakota – so put some thought into this.
There are lots of ways to get a phone number. If you’re already in the US and you’ve got a pre-paid number, do yourself a favour and get Google Voice set up ASAP, and use that number (since the prepaid ones go back into the mix if you don’t keep renewing them, and US portability sucks compared to here in Australia). If you’re not in the US, get yourself a Skype In number and get it for the city and area code where you say your office is going to be. That means, for San Francisco, make sure the number starts with 415. Alternatively, you can go to GrassHopper and get an 800 or an 877 number. As I said, there are lots of options here – just get it set up before you try and do this bit.
Creating your Account
Once you have an address and a phone number, head over to http://icert.doleta.gov/ and click on the “Create Your Portal Account Today” link, then after accepting the terms click on the “Create Employer Account”.
Once there, you’ve got a 3 page form to work through. Most of it is self explanatory, but some is a bit tricky.
- For the E-3 visa, you’ll want to tick the LCA box.
- The FEIN is the number you got in step 2 above.
- The NAICS code (stands for North American Industry Classification System) is like the Aussie ANZIC code. It is a standardised category of business types. You can search for them from the iCert form, or from the US Census office, but the easiest way to find them is to drill down into them so you don’t have outliers which match a keyword confusing you. You can drill down into them using this page, and then on the iCert page just search for the specific code.
- DBA means “doing business as”. It is equivalent as “trading as” here in Australia.
Once you’ve registered, you’ll get an email from email@example.com with your temporary password in it. Make sure you check your spam for this email, and whitelist that address (everything comes from there from here on in, including certification and denial notifications.
Applying for the E-3 LCA
The LCA application itself is a bunch more work, but thankfully it is a really good online form. To access it, simply log in, Click on “LCA” on the top, and then down the bottom click on “Begin New ETA Form 9035″.
Page 1 – Preconditions
This page is about undertakings – they basically want you to warrant that you’re going to make the LCA available to the staff member you hire, that you’re going to tell the truth, and explain how you’ll provide it to the person you hire.
Since you’re hiring yourself, it is pretty much a non issue ;-)
Answer Yes to A, Yes to B and select the first option for C
Page 2 – The Visa type and job classification
The visa type is easy -E-3.
The position is harder. Basically, you need to find the best approximation for your position, and enter this. The effect of the value you choose is significant – it will determine the minimum salary you need to pay yourself to satisfy the conditions of the visa.
Step 1 – Find Your Position
Finding your position can be a bit tricky, particularly if you’re a founder – you do everything in your company, right?! You can search the database at http://www.onetcodeconnector.org but for what it is worth, I did a bit of searching to find something legitimate/accurate and not too highly priced (as per the next step). I found that “General and Operations Managers”, which has a SOC code of 11-1021 was pretty good, as it was both accurate and not too expensive (CEO on the other hand is expensive. You could also go for 15-1131 which is computer programmer, which has a lower minimum ($63K vs $73K). I’ve also heard of people putting their title as “Administrative Officer, CEO”, which allows a lower prevailing wage ($36K).
Step 2 – Work out Prevailing Wage
The second step is where you determine the prevailing (read: minimum for a foreigner) wage, which you can work out by going to http://www.flcdatacenter.com/. The process is pretty easy, and geography plays a big part. Do not lie about your geography though – the E-3 visa is only valid for you working for the company that gets the LCA for you in the place where they specify.
Page 3 – Employer information
This is easy – it just gets copied from the info you already entered when you registered. Win.
Page 4 – Attorney information
If you’re doing this yourself, you just need to say you don’t have an attorney. Easy. Win.
Page 5 – Pay information
This is where you tell the Department of Labor what you’re going to pay yourself. Remember, this is important, and it needs to be more that the minimums set out on the http://www.flcdatacenter.com/ website for the SOC code you’ve selected.
In section F, rate of pay, enter your annual salary. Leave the “to” empty, and select annually.
In section G, they’re looking for you to tell them why this is a fair rate (ie, is greater than the minimum). There are other places to get the minimum than the FLC Data Center website, however, it is normally only for more unionised types of blue-collar roles. Since this probably isn’t you, just stick with the OES wage. Stick to the Level 1 pay scale for the role you’re doing, and put in the value from the FLC Data Center search and tick the “OES” box. Also make sure you reference the FLC Data Center website as the source for the OES data.
Page 6 and 7 – Declarations
You don’t need to fill in the bit about being H1B dependent since this is an E-3.
The rest of the form is just standard commitment stuff. Once you’re done, you can submit it.
Common speed bumps
There are a few speed bumps that can get you. Here a couple.
- They decline your application because the Employer doesn’t have a valid 9-digit FEIN.
This is because the databases that sync between the IRS applications for an EIN and the database the Department of Labor use have lag/delays in them. If this happens, you can just reply with a scanned or PDF version of the EIN confirmation from the IRS.
- You enter the wrong prevailing wage info.
This is where I got stuck initially. The FLC Data Center is your friend – use it. I initially didn’t know about that site, and tried going through government agencies to find “award” type information, but it was only applicable for blue collar roles so I thought it didn’t apply to me and I could use a job search for “office manager” on Monster.com to find my prevailing wage. As it turns out, that isn’t good enough ;-)
When I submitted my application, it took them about 3 business days to reject it if there was something wrong with it. Of course, I was learning as I went so I had two rejected applications before I got one accepted, so you’ll want to leave yourself some time here.
I was lucky and got my approval through in 4 business days, but they say that you should expect 7 to 10 business days. Keep this in mind when you book your appointment with the US consulate in Step 4 below.
4. Booking a Visa Appointment
Once you’ve submitted your LCA application – and ideally, you should wait until you’ve had your LCA granted – you need to make an appointment to the US consulate. This process is surprisingly straight forward, even if the wording is a bit weird.
- You pay for a PIN, which is the right to book an appointment, it is only $14, and they don’t accept American Express ;-) (Visa and Mastercard only)
- The system will show you available booking slots. My advice – get in as early in the day as you can, as the place is a bit like a doctor’s surgery – the later you book, the longer the backlog will be if they’re running behind time. When you book an appointment, you can move it a maximum number of times.
- You can only move the appointment more than 2 business days before the appointment date. So, if the appointment is on Monday, you only have until midnight on Thursday night of the week before to move it. This is in the time zone of the appointment, so if you come in on Thursday morning in the US and realize your LCA still hasn’t come through yet, bad luck – you have to pay for a new PIN.
5. The DS-160 Application
The DS-160 Application is a form that forms the basis of your actual visa request – the LCA is just one of the supporting documents you need.
The application is actually the sharpest thing I’ve seen the US government do online. The form is smart and high quality. You can come back to it any time using the Application ID in the top right and the security question you enter just after you start.
The application is started from https://ceac.state.gov/genniv/.
A few notes:
- You’ll need to upload a digital photo. Their system for handling these uploads is very clever. It will tell you if your head is too small or too big in shot. It will tell you if the background isn’t plain and boring. It will tell you if the light isn’t good enough. It will tell you if it can’t see your eyes (so make sure the flash is on). You can, however, take the shot using a smart phone camera, since they don’t need it to be super huge in pixels or filesize. More info at http://travel.state.gov/visa/visaphotoreq/digitalimagereq/digitalimagereq_5327.html.
- You’ll want to have your passport on you. Unless you know not only the number, but also the issue date and expiry date. Since Australian passports don’t specify the location of issue, I just said “Canberra” and all was good.
- You’ll need to know the data and place of birth of both of your parents. Since you’re probably doing this in a hurry, ask them first.
- They’ll want you to list all the countries you’ve visited in the last 5 years. I don’t think this is a big deal, but if you have been to somewhere America doesn’t like – like Iran or North Korea or Syria – this might be a problem. I don’t know how they can check this though, other than looking at the stamps in your passport.
- There are lots of crazy questions about things like moving to the US to be a prostitute, or having an army of child soldiers. As far as I can tell, the reason they do this isn’t because you’ll admit to those things, but because it makes it very easy for them to cancel your visa if they have reason to believe you lied on your application. Much easier than having to prosecute you in an American court for having an army of child soldiers in your past in another jurisdiction.
Once you’ve submitted the DS-160, you’ll get a confirmation page with your photo, a summary of key information and a barcode. Print this and take it with you on the appointment day.
6. Visa Appointment Day
The visa appointment day is pretty interesting. A few notes and tips.
- Make sure you bring all the documents and evidence they want. I won’t list it here because the appointment confirmation in Step 4 will tell you, and I don’ t want to get you in trouble if you rely on this blog post and they change something. I was super prepared, and took the following:
- My passport. Very important.
- The full print out of the LCA. They only took a couple of pages from it, and gave me back the rest of it. Suggest you take it all too.
- The confirmation page for the DS-160. This was critical – they needed it, and it became the anchor for all their other paperwork.
- The receipt from Australia Post where I paid the $390 fee. No pay, no play – make sure you have this.
- A Platinum Express Post Envelope (cost about about $13). Fill in your own address details on the “to” section. Leave the “Sender” bit blank as they’ll put a sticker with their postal address on it. Peel off the orange tracking number and keep it somewhere safe.
- My actual degree. They didn’t need it.
- My transcript. They didn’t need it.
- A print out of the P&L of my company to prove I could afford to live in the US. They didn’t need it.
The rest of this is specific for my experience in Sydney. Hopefully knowing what you’re in for will make it a bit easier and you’ll be a bit more confident. Remember, this is an interview – they’re deciding at this point if you can get your visa.
- For Sydney, the reception area is on Level 10 of the MLC building, which is just above the food court and near a bunch of doctor’s surgeries. This reception area is just used for screening you, and your bags stay down in this area. They have a dedicated lift that goes to the super-secure consulate on Level 59 after you clear screening, and you’ll be escorted up there. It is all pretty serious really.
- The screening process is hard core, with you going through a metal detector and your bag going through a screening process too. Bring the barest of stuff in any bag. You not only have to take out your laptop, but also any “wires” in your bag. If you bring a laptop bag with lots of cables like I did, be prepared to have them rib you – where’s the kitchen sink? – and also realize you’re slowing down everyone else in the line.
- You can’t take your mobile phone upstairs, so when they say to turn it off, turn if off. Same with laptops – sleep isn’t good enough, but hibernate would be (they just want to make sure they’re not seeing flashing lights).
- Take a book to read. These are still allowed when you go upstairs, and since you’ll be waiting for around an hour all told, take a book.
- After you pass screening, there will be some staff who check that you’ve got the key things you need, outlined above. They will combine the key things – your passport, your DS-160 confirmation, your express post envelope and your receipt from Australia Post and your LCA – and put a rubber band around it. If there’s a problem here, they’ll send you on your way.
- When this is done, you’ll wait for a trip up to Level 59 in the lift.
- When you get to Level 59, a security person behind very bullet proof glass will check you first and allow you through the heaviest bullet proof glass door I’ve every seen to your right hand side. Have a look at the security console while the guard is checking your paperwork wad – it looks like something from a James Bond flick.
- After you go through the door on Level 59, get a ticket from the machine just to your right after pressing “non immigrant visa”. Then line up and you’ll be called by this number to windows 2, 3 or 4.
- They’ll check your rubber band collection of papers, and hold onto them, leaving you your number. Grab a seat to the room on the right of the big heavy door you walked in through and take a seat in the waiting room. This is where the book comes in handy – you’ll probably be waiting half an hour or so.
- Wait for your number to come up. You’ll be called to windows 6 or 7, where someone will talk to you on the other side of bullet proof glass through a microphone and speaker system. Everyone in the waiting room will hear your conversation. If you ticked the box in the DS-160 saying you have a sexually transmitted disease, everyone will now know. If you have a criminal record, expect to be asked about it in detail, and expect everyone waiting to hear. Suck it up – you don’t know any of these people (probably), and if your time waiting was like mine, you’ll hear plenty of stories of woe from weirdos and freaks that will make you seem much more normal. I don’t know if my favourite was the 65 year old cooking teacher/missionary who ticked yes to being arrested even though she was just cautioned 25 years ago when her friend shoplifted a bottle of lemonade, or the guy who was an unemployed musician having a lot of difficulty answering the question about what he does for work.
- I was asked by everyone if it was my first E-3 visa. I don’t know if things were smoother or more difficult because of it, but everyone official wanted to know.
Expect to get questions about your company, why you’re moving there, what your company does, how many staff you have here in Australia. If you’re well prepared, confident and make a compelling reason why you’re going to be a good visitor – and remember, the E-3 is a visitor or non-immigrant visa – then you should get through smoothly. If you’re lucky, the interview will go for 5 minutes maximum, and you’ll be told then your visa is approved.
When you leave, head down to Level 10, get your stuff from the guards, and be on your way.
They’ll then stick the visa into your passport, and send it back to you. My appointment was on a Monday morning, and I got my passport back on a Wednesday morning (in Wollongong), but your mileage might vary.
Fallacies (in my case at least)
As with all things that relate to governments, laws and other black-boxes which you’re desperate to have a good outcome from, there are a lot of things I heard from people that didn’t bear out in my case. Just because they didn’t happen to be issues for me doesn’t mean they’re not ever true, but they just didn’t happen to be issues in my case.
- “You need to have a board of directors in your company who can ‘fire you’ otherwise they won’t see you as being in an employment relationship and won’t grant you an LCA”. This wasn’t the case for me – hell, the people at the LCA assessment centre didn’t even have up to date records on the EIN. Delaware has a very strong corporate veil, and I don’t think you even have to disclose outside Delaware who your company directors are. Basically, this was a non issue – I submitted my LCA in my own name, saying I wanted to hire myself, for a C-Corp which had just been formed. And they gave it an approval in under 4 days.
- You have to go to Australia to get your first E-3 Visa. While this used to be the case, I’ve got friends who’ve gotten their first E-3 Visa in Toronto, for example. My understanding is that any consulate outside the US will do, BUT, this is still such an unknown visa class that you’ll probably be out of luck most places. I have a friend who WAS turned away from Mexico City, and others who’ve successfully gotten them in Canada – not sure how to check in advance, but just letting my East Coast friends know they can avoid LAX hell and get one from the friendly Canadians just north of the border.
- A three year degree in Australia doesn’t count as a Degree (since in the US a bachelors degree is 4 years). This sounds like bullshit immigration lawyer advice earned legitimately through getting people through the nightmare paperwork associated with H1B and Green Card applications. I’ve never heard of it applying AT ALL to the E-3 process; the paperwork in general is a LOT lower and the decision is made by an officer in the consular office while they’re talking to you for a period normally no more than 3 minutes.