CustomersAI CEO Larry Kim: The H-1B Program Has Become a Scam
Customers.ai CEO Larry Kim stated that after entering the U.S. on an H-1B visa about 20 years ago after graduating from the University of Waterloo with a degree in electrical engineering, he became a U.S. citizen through EB-1A in 2010. Over the past decade, he has employed more than 1,000 Americans, and his products have over 1 million users. He expressed frustration that the program is now regarded as a scam.
In a subsequent post, Kim claimed the program has been taken over by scammers and advocated for its immediate closure, stating that companies have shifted towards artificial intelligence rather than hiring entry-level positions. He acknowledged that his early experiences cannot be extrapolated as a baseline for the overall situation. After founding WordStream, he sold it for about $150 million to USA Today, and he also writes for Inc and Medium.
On September 18, the White House signed an executive order extending restrictions: some foreign H-1B entries must include a $100,000 fee, effective until September 21, 2027; the State Department, Labor Department, and Department of Homeland Security must review layoffs of similar positions by sponsoring companies over the past year and planned layoffs. The White House stated that from 2022 to 2026, the tech industry laid off approximately 800,000 to 1.3 million people while applying for hundreds of thousands of H-1B visas, with the largest outsourcing contractor registration dropping by 92%.
On the same day, Vice President JD Vance warned American companies that they would not be allowed to lay off domestic employees in favor of cheaper foreign labor. The number of qualified H-1B registrations for fiscal year 2026 has decreased by about 26.9% compared to the previous year; the fee pathway can reduce processing to about 15 days, while seeking exemptions takes about 7.5 months. In recent years, there has also been a gray market for paid ghostwriting of EB-1A applications and purchasing awards.
In market mechanisms, this is a policy repricing of foreign specialized labor. The buyers are employers willing to pay the $100,000 and compliance costs to secure high-paying positions; the sellers are outsourcing companies and mid-tier IT staffing relying on bulk H-1B visas. Funds are shifting from corporate salary budgets to government fees and legal compliance, with some job demand shifting towards local hiring or model replacements. The beneficiaries are founders and high-salary candidates who have already obtained citizenship and can directly hire Americans; the pressured parties are the outsourcing model and entry-level foreign candidates. Kim uses his own hiring record to hedge against the narrative that "the entire program is illegal," while accepting the judgment that "the current structure has been arbitraged."
ABAB AI Insight
Kim's path is a typical closed loop of North American engineering immigration: graduating from a public university in Canada, entering the U.S. tech sector on an H-1B, transitioning to EB-1A for outstanding talent, and becoming an employer after an entrepreneurial exit. After selling WordStream to USA Today, Customers.ai continues to focus on marketing technology, and his hiring scale serves as collateral for his statements. He is not criticizing the quotas from the outside but has transformed from a beneficiary of quotas to a critic, with the timing coinciding with the executive order that incorporates layoff records into approvals.
The capital path has stratified. The top tier remains EB-1A and high-paying H-1B, with the $100,000 fee turning cross-border mobility into a capital expenditure; the bottom tier of outsourcing registrations has collapsed, indicating that bulk low-cost specialized positions are no longer viable. Companies are reallocating budgets originally spent on visas and staffing, with part going to the government and part to models that can replace entry-level coding and customer service roles. The motivation is clear: after the policy raises the price of foreign labor per unit, only employers who can create verifiable American jobs are willing to pay.
Similar turning points were seen after the H-1B expansion in the 1990s with the rise of Indian IT outsourcing, and the loosening of constraints on "must be in the U.S." due to remote work in the 2020s. The current phase is shifting from lottery-based allocation to price and layoff review allocation. Staffing companies that still rely on volume to win quotas are shrinking; companies that can prove job salaries and local hiring increments treat visas as talent acquisition costs.
Structural judgments belong to regulatory changes. The pricing power of H-1B has shifted from "win a lottery to start working" to "pay fees plus layoff records." The mechanism is: when the same company lays off Americans while applying for foreign specialists, the approval authorities align the two accounts, and the arbitrage profit margin for outsourcing disappears. AI replacing entry-level positions reduces the demand for entry-level H-1B candidates from the demand side. The result is that the program no longer serves a large-scale labor intermediary function, retaining only high-priced, high-skilled supplementary valves.
ABAB News · Cognitive Laws
- The ladder you climbed does not mean the ladder still exists.
- Layoffs and visa applications written into the same account end arbitrage.
- Entry-level positions are first replaced by models, then priced out by policy.