Brain Drain: Americans Leaving To Be Entrepreneurs Elsewhere

Several decades ago, it was fashionable for developing countries to worry about the "brain drain" of their best and brightest leaving to come to the United States. India certainly as proved that concern to be misplaced. Successful Indian venture capitalists like Vinod Khosla are now funding new companies in their home country. Other Indians are returning home to work there or found new companies.

But, as a recent US News article (http://www.usnews.com/articles/news/2008/07/28/a-growing-trend-of-leaving-america.html) highlights, the "brain drain" is now on the other foot, as it were. Up to 3 million Americans already have left to seek their entrepreneurial fortunes in other countries.

I have mixed views about this. On the one hand, it's great that we are exporting the virtues entrepreneurship through living examples -- entrepreneurs themselves. This will help transform the destination countries, providing entrepreneurial role models for the residents -- and the governments there.

On the other hand, as the article suggests, the Americans who are leaving are among our most creative. Doesn't it say something about the future of this country when many of our most talented people not only believe than do better by living and opening businesses elsewhere than by staying here? I think it does, and I'm uncomfortable with the implications.

Do readers have the same mixed reactions?

Comments

[Michael F. Martin]

When I was in grad school in the physical sciences at a top research university now almost a decade ago, most of the grad students were foreigners. At that time, for the first time ever, a handful for electing to return home after receiving their Ph.D.s Now I hear this is by far the norm, with only a handful remaining in the U.S. Same mixed feelings for the same reasons.

Netted out, I think the U.S. is still a great place to start companies. The network of finance and service professionals in technology corridors make a huge difference to the success of companies that need financing.

...but there are lots of companies that don't really need serious financing. And these types of companies have little or no reason to be in the U.S. anymore. Some of the best programming and design work is being done in Europe now. And I think that trend will continue.

If there were one thing that I would pick out as helpful in making the U.S. more hospitable for entrepreneurs, I would say make patents stronger. For the businesses that do not take VC funds in order to grow (effectively, on steroids), they need strong property rights as leverage in negotiating for licenses or sales of their technology to potential acquirers. The current dynamics of litigation in the secondary market for patent rights would largely be solved by stronger patent rights and a healthy IP-driven financing as a happy medium between bootstrapping/consulting and VC-backed hockey-stick growth.

[Charles Johnson]

On the contrary, I find most of patent law stifling of innovation, rather than a necessary precondition of it.

I'm not saying we eliminate patent protection -- only that the current backlog and patenting of obvious items need to change.

[Michael F. Martin]

Charles,

Changes have already been put into place. For example, the ratio of filed to granted patents has dropped by almost half in the last five years. There is a delicate balance between too much and too little protection. Remember the biggest corporations get more of a voice in public debates. We should correct a little for that bias in thinking about where we are in balancing things now.

[Graydon]

Bob, I realize I'm late to this thread but wanted to chime in because it's relevant to many young tech, science and engineering grads in the USA-- the market for us is God-awful miserable across the board whatever we do. Entry-level programming job, getting VC help for a company, franchising, whatever-- it just stinks now. And tech grads get particularly hosed-- we're deluged by student loans and we have no means of earning enough, above inflation, to pay them back.

It's tough for anybody but it's extremely frustrating for those of us who've slaved away in tech careers, interested in entrepreneurship. There are too many reasons to enumerate, though the outsourcing-to-India and H1B trend really has hurt enormously, no matter how much some vested interests try to play it down. Tech grads in India don't have student loans whereas we do, so there's absolutely no way we can compete on compensation. Without this basic training of course, nobody gets enough of a background to start a business.

To my surprise, if there's one "hot destination" for tech grads and US-based business-starters, it's Germany, or more generally the German-speaking region around the Alps. They're #1 in tech, especially the really innovative technologies and green tech.

The only hassle is learning enough German to get by, and from a practical perspective, I guess the ancestral links a lot of Americans have with Germany, Austria and Switzerland help (even remotely-- Dutch and English ancestry are considered German, i.e. Anglo-Saxons from NW Germany). But even with their economic difficulties, that region is a real magnet for talent. The labor union issue isn't as bad as I thought, and corporate taxes are actually less than in the USA.

Also, France and northern Italy, as well as Denmark and Finland seem to attract bright minds. (Britain OTOH, seems to be almost intolerable, I haven't encountered anyone going there-- even Australia seems to be getting a thumbs-down.)

Once you learn the relevant language (and German is big for tech anywhere in Europe), it's not too difficult to get set up around there. But the US economy has become very miserable for tech workers and innovative, small businesses in general.

[Mara]

The actual number is three million Americans leave per year. I am on my way out myself. The U.S. has been a police state since at least 1995. I found that the vast majority of managers and administrators willingly turned fascistic with the slightest provocation. They are the ones who obeyed the Patriot Act and threw away the Constitution, habeas corpus, and posse commitatus. They are the ones who became secret judges, juries, and executioners when no criminal charges could be filled against totally innocent, intelligent, creative, and beautiful Americans. No place on earth could be worse than America in my opinion. I waited to see if Obama was going to do something positive. Haha

[Victor]

The smart rats are leaving the ship early. The United States is header for a complete meltdown in the next decade as people wake up to the fact that they have been sold out by the both government and business. When that happens this multicultural nightmare will erupt into violence as various factions in the US attempt to protect their share of a shrinking pie.

[Richard Shapiro]

Interesting posts. I am in music promotions.
Having learned my craft here as a pianist I find my reading, arranging ,transposing, sight reading conducting skills are not needed here anymore.
Since these skills have been replaced by computers here, there are countries that still favor live music and need my skills. I have chosen to set up a music promotion business in ecuador. Renting a big warehouse is very inexpensive there. Musicians are respected in ecuador musch more than in the US.

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