Why Forbes Says Immigrants Make Better Entrepreneurs

An anonymous reader writes "Romanian emigre Christian Gheorghe is running a Silicon Valley software company now (Tidemark Systems) after getting started in the U.S. hauling plywood on a construction site. Forbes summarizes his path to the top and sees a wider story about immigrants' edge as entrepreneurs."

Comments

How is this a representative sample?

[dorpus]

The story dwells on one person's story. There are any number of people (both Americans and immigrants) who take any available job and try to work their way up, but opportunities never appear.

Re:How is this a representative sample?

[smooth wombat]

who take any available job and try to work their way up, but opportunities never appear.

Yeah, this story shouldn't be used as representative of immigrants being better entrepreneurs. Had this guy come here and started the firm on his own, THAT would have been a good story.

Here, he happened to come into contact with someone who needed someone to help them and took a chance. This guy then used the money he earned there to parlay it into a business he most likely would not have been able to start otherwise.

It's a good story, not trying to knock this guy, but when hacks like Forbes try to show the spirit of entrepreneurship and capitalism is alive and well, they always seem to leave out the part where that person got a lucky break or windfall through no effort on their own.

Facebook, for as much as I detest it, is a good example of entrepreneurship. Zuckerberg might have had the inkling from the twins, but it was he who saw it through to the bitter end and made the company what it is.

Re:How is this a representative sample?

[jeffmeden]

The story dwells on one person's story. There are any number of people (both Americans and immigrants) who take any available job and try to work their way up, but opportunities never appear.

The story is a story? OMG! Let me spell this out for you, in case you missed the first paragraph of TFS: immigrants represent twice their share of the entrepreneurial population, and the path of Christian Gheorghe is at least slightly representative of the background that immigrants have that might cause them to become entrepreneurs.

The real "gotcha" here isn't that "oh well people in the US can do that too;" it's that unsuccessful would-be immigrants typically either never leave their home country (willingness to move internationally is a pretty obvious proxy for other ambitions) or they end up moving back to their native land if things don't go their way in the US. In other words, in order to make it as an immigrant you basically NEED to follow the entrepreneur's path.

Ultimately what this means is that there is a creaming effect on immigrants, the "best and brightest" of other nations seek out the US to make a life and name for themselves and the process of doing so separates the wheat from the chaff. This is a process that really should be encouraged (along with home-grown entrepreneurship) because what it ultimately means is that innovation is still strong(est) in the US leading to many obvious benefits.

Re:How is this a representative sample?

[NeutronCowboy]

On the other hand, it nicely illustrates the dangers of self-selected samples. The article focuses on smart people with a specialized body of knowledge who decide that anything is better than their shithole, and are willing to start from scratch in a better place. That decision alone requires guts, determination and a willingness to fight. In other words, successful immigrant entrepreneurs have a special personality profile and skillset that is less common in the general population. Shocking. Next, Forbes will tell us that immigrants arriving in the US with no special skills, no special education and a habit to segregate themselves in their ethnic community will be more likely to be and stay poor than the average American.

There's a reason Forbes isn't taken seriously in the business world, and it's articles like this.

Re:How is this a representative sample?

[kiwimate]

I think you nicely illustrate the poing of the post to which you're responding. Your post gives far more insight and interesting discussion about the reasons why immigrants make better entrepreneurs than does the Forbes article. The Forbes article says nothing of substance.

There's another post just below here, which also has way more salient commentary than is contained within the Forbes article:

People who are forced to learn a new language and culture are rewarded with a huge advantage in people skills. As most of us know, financial success is 90% people skills. (I recently saw a study reported by Forbes that concluded exactly that, even though I had assumed it for years.)

Some career executives are smart, and some not so smart, but they all have one thing in common: top-notch, world-class people skills. It is people skills that gets you to the top.

I bet you'd find drug dealers and others...

[Anonymous Coward]

... make excellent entrepeneurs as well. You know what they all have in common? They're willing to pursue their goals and prefer to beg forgiveness rather than ask permission. That's the #1 thing that all the current crop of silicon valley companies have in common. Not all of them following this formula still exist, but that's what they all have in common, questionable legal standing that they didn't allow to get in the way of making profits hand over fist, and low infrastructure costs to get in the way of rapid expansion.

And if I know this, why am I not rich? Something to do with not doing the crime if you're not willing to do the time. Also I'm lousy with people :)

They have it backwards

[timeOday]

Immigrants are a self-selecting group. It's quite obvious that an entrepreneurial individual would be more likely to do something risky and ambitious like immigrating to another country.

Micro vs Macroeconomics

[Baldrson]

The presumption that immigrants make "better" entrepreneurs has a lot of microeconomic evidence but the macroeconomic evidence against it is overwhelming.

Since the Immigration and Nationality Act of 1965 set in motion the process of electing a new people, there has been a collapse in the middle class. Since the ramp-up of "skilled" immigration, there has been a collapse of the economy itself.

This supports the theory that the older cultures that have been taking up positions of trust and authority in government, academia and business are, unsurprisingly, more sophisticated in playing the rent-seeking and zero-sum games required to gain access to resources necessary to "succeed". However, due to the kinds of games that must be played to acquire these resources, the effect on the overall human ecology has been to deprive the traditional American people -- the folks who invented the airplane, computer, transistor, planar integrated circuit, etc., -- of the resources to express their historic ingenuity. As a consequence, fundamental technological innovation hasn't occurred for decades.

success is contextual

[luis_a_espinal]

My own experience is that "lucky breaks" come to those who seek them out and are willing to take risks, and under the right conditions, can capitalize on them.

Colonel, if you feel you haven't gotten your share of "lucky breaks", maybe you ought to try harder. It's amazing what can be accomplished if you try.

TFTY. Not to knock your argument, I agree with it. But I think in the form you presented, it is incomplete. You need an innate talent, and a drive to seek the opportunity. And the lucky break (which in great part is a factor of society and government), and then being at the right economic period (up or down depending on the nature of the lucky break), to capitalize it.

Coming from a dirt-poor country that was plagued for much of its existence by warlords, generalissimos, nepotism and a lack of the rule of law, you can work your ass off and be the next Sergey Brin/Einstein and still never get anywhere (if you are lucky, or robbed/killed at worst.)

Being in a developed country where the combination of government, the rule of law, society with developed institutions and a robust economy (even when in a recession), that gives you a fair, fighting chance AND the ability to mingle with like-minded people, AAAAAAAAND the opportunity to reap benefits proportional or greater than the effort put behind the plow.

The combination of all that is what makes success (and recovery from failures) a possibility.

Plan and save.

[MaWeiTao]

Having family and a good number of friends as immigrants I've noticed two significant patterns:

1) Arrive in the US and take fairly menial work due to lack of education or language abilities. They're extremely frugal and manage to save a good deal of money. They work hard, but smartly moving up to the point that they start a small business which leads to further success. Many get involved in real estate investment further increasing income. By the time they're middle-aged they're living comfortably. They tend to pool resources with family members to increase odds of success.

2) Arrive in the US and take menial work for the same reasons. Never become motivated enough to move beyond low-paying employment. They manage to get by, some even to the point that they eventually buy their own home, but never really thrive.

This group tends to branch off into two subsets. There are those who are extremely frugal and manage to accumulate a little bit of money by the time they hit retirement. Then there's the other group that is less careful with money and becomes overly reliant on family members or social security in retirement. But a consistent theme with this group in general is that although they might live within communities comprised of the same ethnic group they tend to be more isolated and less likely to pool resources.

I've noticed another essential dynamic is how immigrant raise their kids. In both cases, but especially the first group, they stress education as essential. They don't tolerate anything less than excellence. This tends to lead to their children going good schools. And because their parents have instilled more pragmatic tendencies in them they tend to favor careers that lead to better employment and higher incomes. Nowadays that means finance, but when I was younger engineering, computer science and medicine tended to be popular. Those who don't end up in top schools still tend to have that work ethic instill in them and generally thrive, enjoying a higher standard of living than their parents.

Amongst the parents who didn't get involved in their children's education, who didn't instill that work ethic, their kids tend to struggle later in life not being any better off than the parents were. More often than not, they end up screwing themselves but not having clear long-term plans and goals.

The interesting thing is that I've generally found foreigners to be far more optimistic about opportunities in America than Americans themselves. They're a lot more willing to sacrifice than Americans are. I've been surprised many a time by friends and family who've manage to save so much money with such relatively low incomes.