Kaufmann Study - Immigrant Entrepreneurship Has Stalled | Hacker News Reader

Kaufmann Study - Immigrant Entrepreneurship Has Stalled

kauffman.org

36 pointsjfaucett9 comments

The underlying study

http://www.kauffman.org//uploadedFiles/Then_and_now_americas...

is written by Vivek Wadhwa. His pet issue, often discussed here on HN, is policy incentives for increased immigration to the United States by persons he identifies as likely future successful entrepreneus. The key statistic from the report is this: "The proportion of immigrant-founded companies nationwide has dropped from 25.3 percent to 24.3 percent since 2005. While the margins of error of these numbers overlap, they nonetheless indicate that immigrant-founded companies’ dynamic period of expansion has come to an end."

Okay, so the change in percentage is within the standard error of measurement; a percentage change of that kind would be seen even if there were more immigrant-founded companies than ever, as long as more native-born Americans than ever found companies; and there is NO indication that Silicon Valley's flood of innovation has ceased. What is the problem here? Quantitatively, what is the proof that any policy change is needed?

Why did you leave out what was stated just before and after what you have quoted from the study? You seem to be misrepresenting what they intended to show with those numbers. The point of that number was not to show a decline, but rather to show stagnation.

"The study found that, for the first time in decades, the growth rate of immigrant-founded companies has stagnated, if not declined. In comparison with previous decades of increasing immigrant-led entrepreneurism, the last seven years has witnessed a flattening out of this trend. The proportion of immigrant-founded companies nationwide has dropped from 25.3 percent to 24.3 percent since 2005. While the margins of error of these numbers overlap, they nonetheless indicate that immigrant-founded companies’ dynamic period of expansion has come to an end.

We also performed a special analysis of Silicon Valley, which is widely known as the international hub for technological development and innovation. The findings indicate that 43.9 percent of Silicon Valley startups founded in the last seven years had at least one key founder who was an immigrant. This represents a notable drop in immigrant-founded companies since 2005, when 52.4 percent of Silicon Valley startups were immigrant-founded."

Also, some people are starting to notice that innovation is slowly stopping: http://www.wired.com/opinion/2012/04/opinion-fox-net-innovat...

I will also let the Economist argue for me:

http://www.economist.com/node/21564589

While I'm no fan of the current policy, important to note that most of new US businesses are tied to the construction sector. They're founded usually by non-immigrants and incorporated to limit liability on a given construction project. As US real estate market recovers, more construction-related LLCs will pop up, thereby lowering the share of tech, dry cleaning, restaurant and other companies with large immigrant founder base.

Source on new businesses and construction sector: http://www.hudson.org/files/publications/Kane--TheCollapseof...

>> "there is NO indication that Silicon Valley's flood of innovation has ceased." Any research to support this claim?

Let me try and answer the last question, though just like you, I am not in a position to provide sufficient research to support my views:

"Quantitatively, what is the proof that any policy change is needed?"

Compare the "American entrepreneurship/immigration policy + equivalent policies of other start-up favoring nations" five years ago with the most recent mash-up of "American entrepreneurship/immigration policy + equivalent policies of other start-up favoring nations".

Do you see a difference in how policy changes in UK, Canada, Chile, Singapore, China, India, Israel and other nations leapfrog over status-quo immigration policies (may still be better) of America?

Also is it not a big risk by letting Silicon Valley wane away like Hollywood, while we wait and see a booming film industry coming up elsewhere (a possible outcome). Just a few thoughts, but not deep enough though, I confess.

"Quantitatively, what is the proof that any policy change is needed?"

Well, this subject in general (the US loosing its draw and appeal in the globalized marketplace), is something that IS not just coming up as it has in the past but seems to be becoming a serious problem. Here are some quantitative reports and recent news having to deal with the us specific issues, http://globalpublicsquare.blogs.cnn.com/2012/10/03/why-silic... http://www.fastcompany.com/3000410/silicon-valleys-world-asi... http://online.wsj.com/article/SB1000087239639044349330457803... http://venturebeat.com/2012/09/18/silicon-valley-is-in-dange...

EDIT: I just wanted to add I'm watching the developments as a non-us developer and entrepreneur, where some countries I'm familiar with (germany, estonia, singapore) are actively making policy changes to support startups and foreign investors / immigrants, specifically in the tech sector. Whereas from what I'm reading in the US this seems to be increasingly not the case. Obviously, I would be very interested in stats and news to counter what I'm reading, and have been watching the "the startup act 2.0" to see where it goes.

>(germany, estonia, singapore)

I'm very interested in Estonia. If you're in Berlin, may I ask you for some chitchat over a coffee?

Agree, as real data point here: Indian entrepreneur, with graduate degree from a top US univ, with 6 years experience at a top valley behemoth, working on their core infrastructure. Now raised seed funding for so-far bootstrapped business from a top US VC firm. But due to visa issues, having to move most of the company operations overseas. As a founder, it sucks that there is no visa which I can get to run this startup! My H1 visa prohibits me from running a company where I have significant equity. This is just a f*ing stupid immigration policy !

I don't understand HN sometimes. There is a saying in statistics: if you torture the data long enough, it will admit to anything.

The point being ... if you get a statistically significant result, you're not done. Vice versa, if the data disagrees with your intuition, it doesn't necessarily mean your intuition is wrong.

My theory on this is that entrepreneurship has become more accessible in recent years. This means more Americans are starting companies thus reducing the proportion of startups founded by immigrants. Of course foreigners can do the same from anywhere in the world; a startup based in India can serve US-based customers just as easily.

Many tech startups from the 80s and 90s were started by founders with advanced engineering degrees, many of whom were foreign-born. But times have changed and now you can found a tech startup right after high school.

Tech startups are also not as risky as they used to be, and they've become more glamorous and fashionable in recent times. I've heard the number of American kids enrolling in CS programs has also grown in recent years.

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