Growthology

The "Entrepreneur Subculture"

Noah Smith wrote a post over the weekend where he expresses concerns over what he terms the Entrepreneur Subculture:

Well, in the past few years, I've been reading - and hearing - a lot about the Entrepreneurship Subculture. You all know what this is. It's mostly young people, mostly in urban areas (especially SF and NYC). It's mostly (but not exclusively) made up of entrepreneurs in the fields of technology and media. It includes media outlets like TechCrunch, books like The Lean Startup, "incubators" like YCombinator, forums like Quora, and other outlets like the TED and TEDx talks.

First, I'd like to address this above description Smith offers before I talk about his concerns.

Smith qualifies by using the word "mostly" three times, but this still to me looks like he's talking about the idea that the average entrepreneur is a twenty something, in Silicon Valley, and working on an internet startup.

Even if this is not what Smith intends to convey, this is a common perception. And it is simply not true. As we have covered here before on Growthology, entrepreneurs are not, on average, young, and we've talked about how they are not mostly located in San Francisco and New York City, and do not work only on tech and media (see our Inc. 500 research here). Concerning geography, here is the map of the Inc. 500 firms over time (an interactive version is available at the previous link):

And here is a relevant excerpt with statistics on the industry question (from this paper in the Inc. series):

At the nationwide level, only a quarter of Inc. firms are in conventional high-tech sectors, such as IT and Health and Drugs, and the industrial sector distribution is extremely wide, including Business Services (10.2 percent), Advertising and Marketing (8.6 percent), Government Services (7.3 percent), Construction (3.8 percent), and the rest. At the metropolitan level, we observed regional variations and specializations. Government Services in Washington, D.C., was the best example; other cases include Advertising and Marketing in New York City and Los Angeles, Business Services in Chicago and Atlanta, and Health and Drug firms in Dallas.

I note discussion in another part of Smith's post and in the comments about the relevance of venture capital--we've covered that here too, many times, and it bears repeating, most entrepreneurs never receive venture capital (or angel) investment.

Returning to Smith's main message--he asks if we have an entrepreneurship groupthink problem. Dane has wondered about this previously as well. Does the Entrepreneur Subculture insulate?  If policy makers and the media focus on entrepreneurs, and if entrepreneurs are more and more in close collaboration with one another, will the same ideas end up being recirculated and groundbreaking innovations become even more rare? The potential for problems is definitely there.

I think Smith is right on the mark when he advises that entrepreneurs should take breaks from this Subculture experience. I have an illustrative story that squares directly with this idea. I attended the Inc. 500|5000 annual conference in Phoenix earlier this month. One of the presentations was from GoPro (the durable, hi-def, and compact camera) founder Nick Woodman, who came up with the two big innovations for GoPro while pursuing his passions. He came up with the idea for the first camera (not able to record video at first) when he thought about capturing his experiences on a surfing tour vacation--the first GoPro was a camera you strapped to your wrist. Later after the company had developed rudimentary video cameras, he was learning to drive a race car and realized that a camera that could be strapped to your wrist could just as easily be mounted to a roll bar. Take a break; discover big ideas while having fun.

Aside from vacations, there are ways to take quick breaks too. There's a popular concept in computer programming concerning rubber ducks. When troubleshooting code, put a rubber duck next to your keyboard and force yourself to explain the problem to the rubber duck. Talking it out to an uniformed thing is helpful. Entrepreneurs might find rubber ducks helpful too as a quick break. But more generally I'm thinking about real life rubber ducks. Rid yourself of the name dropping, the "do you know/have you heard of __ ?" question banks, and forget all the acronyms by talking and explaining things to non-entrepreneurs (I include myself in this camp), and frequently don't talk about entrepreneurship at all. Talk about e.g. the unfathomably good Homeland.

It will also be up to us--organizations like the Kauffman Foundation and others that support entrepreneurs--to speak up, present research-backed evidence, and provide feedback surrounding policies and practices concerning entrepreneurship. Maybe we should start handing out rubber ducks and be sure to use them in our own work.

Keeping Tabs on Entrepreneurship and Tax Rates

I've written about entrepeneurship and taxes previously. There is some pertinent new research in this area.

Growth

Dylan Matthews over at Wonkblog has a nice summary of a new NBER working paper about taxes, entrepreneurship, and growth--marginal personal income tax rates and corporate tax rates are only found to be significant deterrents to growth when they are exceedingly high (once they get too high, high-ability entrepreneurs exit their paths to entrepreneurship).

Business Friendliness

My colleagues Yasuyuki Motoyama and Kate Maxwell have a new paper out that Kate mentioned yesterday that I think provides a very clear analysis of how small businessses interpret and respond to questions concerning taxes and business friendliness (hint: rate levels don't matter as much as (i) the presence of any tax whatsoever and (ii) the complexity of the tax code).

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It is still unclear to me how exactly tax rates affect incentives for investors who have to decide between young firms and large, established firms.

Dealing With the Changing Facts Around Us

We're surrounded by changing knowledge. From what's nutritious and what's not, to the current state of our scientific knowledge, to even facts about the world, such as what is state-of-the-art technology and even how many billions of people there are on the planet, there is a great deal of change in the facts around. But beneath all of this flux and change there are certain rules and regularities. And I explore how to understand this in my new book The Half-Life of Facts. And as I discuss in a short essay, there are lessons in this for the entrepreneur:

When trying to break into a new market, develop a new product and grow a company, you can’t operate with outdated statistics. It's fine to quote an obsolete population size for a city at dinner, or reference an overturned research study to impress someone at a party. But when your business is dependent on understanding the facts, you can't rely on outdated knowledge.

So what can business owners do to be prepared for the changing facts around us? Well, simply put, don’t view education as a stage of our lives, relevant only when we are young. Rather, education is a stance we must take toward the world, along with a recognition that what we know is constantly changing. As the world continues to change rapidly, and generate exponentially growing information, view learning as an integral part of your life, rather than a youthful indiscretion.

Medical schools now teach their students that a significant portion of what they learn will be obsolete soon after they graduate. My grandfather, who learned the wrong number of human chromosomes in school, could have been served well by this information. And the same sort of advice should be given to entrepreneurs: that you must constantly be ready to change, because the facts you are operating with are changing around you.

The rest can be read here. And don't forget to check out my book!

Follow the Rules...Or Not

The issue of occupational licensing has been a topic on this blog previously (here, here, and here).It is a topic that received due attention from bloggers and economists alike.

Using new data from a Thumbtack.com survey of small business owners we once again confirm the difficulty occupational licensing presents for entrepreneurs. However, instead of objecting to enforcement of regulation, many business owners actually complained there wasn’t any enforcement at all.

State and local governments have laws on the books they are not enforcing and in doing so they are actively encouraging moral hazard. Feedback from individual business owners across the country indicates that those individuals who do not adhere to regulatory standards are promptly allowed to keep operating while business owners who have crossed their t’s and dotted their i’s are left out the cost and time of a license, potentially disadvantaging them. A system that provides incentives to skirt the law is one that creates inefficiency. State and local governments would be better off slashing any requirements they are not fully ready to enforce.

Full paper here.

High-Skill Immigration: A Resource (Part 2)

Last week, in response to Adam Ozimek’s call for more blogging about high-skilled immigration (HSI), I gave you a summary of Kauffman Foundation research on the topic. This week for Practically Friday we look at research, legislation, and resources by others in the same space that we find interesting: supporting the idea of an urgent need for immigration policy reform regarding HSI.

There’s a ton out there, so dig in:

Legislation/Policy
(Bill summaries from the American Immigration Lawyers Association unless otherwise noted)

• Department of Homeland Security Reforms January 31, 2012 and August 12, 2011 (one year and six month anniversaries of Startup America) to “attract and retain highly skilled immigrants.”
  
  
• U.S. Citizenship and Immigration Services’ (USCIS) Entrepreneurs in Residence program to “utilize industry expertise to strengthen USCIS policies and practices surrounding immigrant investors, entrepreneurs and workers with specialized skills, knowledge, or abilities.”
  
  
• BRAINS Act (S. 3553) - Introduced by Sen. Schumer (D-NY) on 9/19/12 - Provides for immigrants visas for certain advanced STEM graduates, student visa reform, age-out protections for children, retention of priority dates, and family reunifications for high-skilled workers.
  
  
• Attracting the Best and Brightest Act of 2012 (H.R. 6412) - Introduced by Rep. Lofgren (D-CA) on 9/14/12 - Provides up to 50,000 visas available to immigrations who 1) possess a graduate degree in STEM fields from qualifying U.S. research institution; 2) have an employment offer from a U.S. employer in field related to degree; 3) are the subject of an approved labor certification; 4) will receive a wage that is at least the actual wage paid by employer to all other individuals with similar experience/qualifications. Makes unused STEM visas available for other employment-based visa categories.
  
  
• American Investment and Job Creation Act of 2012 (H.R. 6210) - Introduced by Rep. Conyers (D-MI) on 7/26/12 - Provides an employment-based immigrant visa for an alien entrepreneur who has engaged in a new commercial enterprise that has 1) within the four years prior to the filing of a petition, created full-time employment for at least five U.S. workers, or in the case of a Distressed Area Development Zone, for at least three U.S. workers; and 2) received enough investment or revenue during this period to support employment creation requirements.
  
  
• Fairness for High-Skilled Immigrants Act (H.R. 3012) - Passed by the House on 11/29/11, released from hold by the Senate on 7/11/12 with additional H1-B enforcement provisions - Introduced by Rep. Chaffetz (R-UT) on 9/22/11 - Eliminates the employment-based per-country cap entirely by fiscal year 2015 and raises the family-sponsored per-country cap from 7% to 15%.
  
  
• SMART Jobs Act (S. 3192) - Introduced by Senators Alexander (R-TN) and Coons (D-DE) on 5/16/12 - Would establish an F-4 nonimmigrant visa for students pursuing an advanced degree in mathematics, engineering technology, or the physical sciences in the United States. It would also authorize those students, after obtaining employment related to their field of study, to become permanent residents.
  
  
• The STAR Act (S. 3185) - Introduced by Sen. Cornyn (R-TX) on 5/15/12 - Would allocate 55,000 immigrant visas for eligible STEM graduates of qualifying U.S. research institutions who have job offers in related fields. The visas will be offset by the elimination of the diversity visa program.
  
  
• STAPLE Act (H.R. 399) - Introduced by Rep. Jeff Flake (R-AZ) on 1/24/11 - To amend the Immigration and Nationality Act to authorize certain aliens who have earned a Ph.D. degree from a United States institution of higher education in a field of science, technology, engineering, or mathematics to be admitted for permanent residence and to be exempted from the numerical limitations on H-1B nonimmigrants. (from govtrack.us)
  
  
• STEM Jobs Act (H.R. 6429)* - Introduced by Rep. Smith (R-TX) on 9/18/12 - Voted on in the House on 9/20/12 and failed by a vote of 257 to 158 - Creates new visa categories for foreign PhD and masters graduates in the fields of science, technology, engineering and math (STEM) and eliminates the diversity immigrant program.
  
  
• Startup Act 2.0 (H.R. 5893 and S. 3217) - House: Introduced by Rep. Grimm (R-NY) on 6/5/12 - Senate: Introduced by Sen. Moran (R-KS) on 5/22/12 - Partially-based on a Kauffman Foundation research report entitled “The Startup Act” - see Part 1 for more details.
  
  *Bill Failed 

Research Papers
(See also: http://www.immigrationresearch-info.org/research)

• Investing in the Human Capital of Immigrants, Strengthening Regional Economies by Audrey Singer - Brookings Institution - September 20, 2012
  
  
• The Search for Skills: Demand for H-1B Immigrant Workers in U.S. Metropolitan Areas by Neil G. Ruiz, Jill H. Wilson, and Shyamali Choudhury - Brookings Institution - July 18, 2012
  
  
• Patent Pending: How Immigrants Are Reinventing the American Economy - Partnership for a New American Economy - June 2012
  
  
• Immigrant Small Business Owners: A Significant and Growing Part of the Economy by David Dyssegaard Kallick - Fiscal Policy Institute - June 2012
  
  
• Immigrant Contributions to Entrepreneurship and Innovation by Mario Kranjac - 4% Growth Project, George W. Bush Institute - Summer 2012
  
  
• Immigrant Entrepreneurs and Small Business Owners, and their Access to Financial Capital by Robert W. Fairlie - U.S. Small Business Administration - May 2012
  
  
• The U.S. Immigration System: Potential Benefits of Reform by Michael Greenstone and Adam Looney - The Hamilton Project, Brookings Institution - May 2012
  
  
• Immigration and American Jobs by Madeline Zavodn - American Enterprise Institute for Public Policy Research and Partnership for a New American Economy - December 2011
  
  
• The “New American” Fortune 500 - Partnership for a New American Economy - June 2011
  
  
• Which Immigrants Are Most Innovative and Entrepreneurial? Distinctions by Entry Visa by Jennifer Hunt - NBER - April 2009
  
  
• How Much Does Immigration Boost Innovation? by Jennifer Hunt and Marjolaine Gauthier-Loiselle - NBER - September 2008
  
  
• Brain Circulation: How High-Skill Immigration Makes Everyone Better Off by AnnaLee Saxenian - The Brookings Institution - Winter 2002

Video

• A Global View of High-Skilled Laborers by Neil G. Ruiz, Senior Policy Analyst and Associate Fellow, Metropolitan Policy Program, July 6, 2012:
  
  

• Foreigners Welcome? The Economics of High-Skilled Immigration by Dr. Antony Davies, Associate Professor of Economics, Duquesne University - Presentation at the Mercatus Center at George Mason University, Marcy 31, 2009:
  
  

Books

• Beside the Golden Door: U.S. Immigration Reform in a New Era of Globalization by Pia Orrenius and Madeline Zavodny
  
  
• Brain Gain: Rethinking U.S. Immigration Policy by Darrell M. West
  
  
• Ethnic Entrepreneurs: Immigrant Business in Industrial Societies by Roger Waldinger, Howard Aldrich, and Robin Ward
  
  
• Immigrant, Inc.: Why Immigrant Entrepreneurs Are Driving the New Economy (and how they will save the American worker) by Richard Herman and Robert L. Smith
  
  
• Transnational and Immigrant Entrepreneurship in a Globalized World edited by Benson Honig, Israel Drori, and Barbara Carmichael

Blogs

• Brookings Immigration by the Brookings Institution
  
  
• 4% Growth Project by the George W. Bush Institute
  
  
• Immigration Blog by the Center for Immigration Studies
  
  
• ImmigrationProf Blog by Kevin R. Johnson, Bill O. Hing, and Rose Cuison Villazor
  
  
• Noahpinion by Noah Smith
  
  
• Open Borders by Bryan Caplan

Recent Articles/Op-Eds

• Bloggers and Economists are Failing on Immigration by Adam Ozimek - Forbes - October 7, 2012
  
  
• Immigrants Needed by Adam Ozimek - Forbes - October 4, 2012
  
  
• Immigration: The Forgotten Issue by Matthew Yglesias - Slate.com - Moneybox - October 4, 2012
  
  
• The Secret to U.S. Growth in the 21st Century: More Asians by Noah Smith - The Atlantic -October 2, 2012
  
  
• Washington's New Twist on Human Sacrifice by L. Gordon Crovitz - Wall Street Journal -September 30, 2012
  
  
• Fixing the capitalist machine: Some sensible ideas for reviving America’s entrepreneurial spirit - The Economist (Schumpeter) - September 29, 2012
  
  
• The U.S. Needs More Immigrants to Grow the Economy and Create Jobs by Matthew Denhart - Huffington Post - September 26, 2012
  
  
• Should high-skilled immigrants get special treatment? by David Grant - Christian Science Monitor - September 16, 2012
  
  
• Incubating Ideas in the U.S., Hatching Them Elsewhere by Alexandra Starr - Wall Street Journal - September 11, 2012
  
  
• If You Want More Jobs, You Should Want More Immigrants by Steve Case - The Atlantic - September 11, 2012
  
  
• America’s Irrational Immigration Fear by Vivek Wadhwa - The Washington Post - July 30, 2012
  
  
• Answers to Your Questions on Skilled Immigration by Catherine Rampell - Economix, New York Times - July 25, 2012
  
  
• Is America falling behind in the skilled worker race? by Neil Ruiz and Shyamali Choudhury - CNN - July 19, 2012
  
  
• America’s other immigration problem: Report outlines contributions from highly-skilled immigrants by Emi Kolawole - Ideas @ Innovations, The Washington Post - June 26, 2012
  
  
• H1-B Visa Quotas Greatly Restrain Small Business Expansion by David Bier - Forbes - June 17, 2012
  
  
• Give Us Your Geniuses: Why Seeking Smart Immigrants is a No-Brainer by Adam Ozimek and Noah Smith - The Atlantic - June 2012
  
  
• Why does the government halt skilled immigration? by Alex Nowrasteh - The Hill’s Congress Blog - June 22, 2012
  
  
• Positive New Steps to Reform High-Skilled Immigration by Alex Nowrasteh - Forbes - June 3, 2012
  
  
• Immigration Reform Is Key to Job Creation by David Park - Economic Intelligence, USA Today - March 23, 2012
  
  
• The Hub Nation - The Economist - April 22, 2010

Ah, but there’s more - so much more - out there on the subject, and lots of opinions about the proposed legislation. I’d love to hear your thoughts on key research I might have missed (or blogs, books, etc.), and would also love to see more blog posts on the high-skill immigration as a result of these two resources.

A Couple of New Sketchbooks

First, there is this sketchbook featuring narration from Brad Feld, who draws from his experiences and new book, Startup Communities: Building an Entrepreneurial Ecosystem in Your City, to talk about how you can support your local entrepreneurial community.

 

Second, there is this sketchbook featuring narration from Jonathan Ortmans concerning Global Entrepreneurship Week (GEW). GEW this year is the week of November 12, though there are some kickoff events starting November 9. For more information about GEW and events near you, check out http://www.unleashingideas.org/.

High-Skill Immigration: A Resource (Part 1)

Earlier this week in his post on Forbes.com Adam Ozimek challenged bloggers and economists to write more on the subject of high-skill immigration as an economic policy lever. Ozimek is frustrated because this is an issue of extreme importance and urgency on a national scale (we agree), but it doesn’t get blogged about much because it’s really not that controversial. Most people are of the opinion that allowing more highly skilled and highly educated immigrants to stay in the United States is a good thing, but national policies on the matter have yet to change.

To add fuel to the blogging fire and to provide something of practical use for Practically Friday, I present you with a wealth of research on the topic. This is part one of two posts: the first is specifically Kauffman-funded research and resources, the second will be outside research and resources.

The Kauffman Foundation has funded a great deal of research regarding immigrant entrepreneurs since 2007, primarily written by Vivek Wadhwa and company. The latest report, America’s New Immigrant Entrepreneurs: Then and Now, is Part VII in Wadhwa’s Immigration and the American Economy series, which examines “the economic contributions of skilled legal immigrants in the United States, what is different about them, what obstacles they face with the U.S. immigration system and why tens of thousands of skilled immigrants and would-be immigrants are heading back to their home countries and what the implications are for the United States.”

Tom Brokaw highlighted some of Wadhwa et al.’s research for NBC Nightly News in 2011 as a part of its “America at the Crossroads” series, interviewing some of these young foreign entrepreneurs, most of who will be forced to return to their home countries once their temporary visas expire, taking the jobs they created with them.

You can check out the entire research paper series through the links below:

• Part I: America’s New Immigrant Entrepreneurs
• Part II: Education, Entrepreneurship and Immigration
• Part III: Intellectual Property, the Immigration Backlog, and a Reverse Brain-Drain
• Part IV: America’s Loss is the World’s Gain
• Part V: Losing the World’s Best and Brightest
• Part VI: The Grass is Indeed Greener in India and China for Returnee Entrepreneurs
• Part VII: America’s New Immigrant Entrepreneurs: Then and Now

Wadhwa has also written a new book based on this research, The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent, and created a website as a resource for journalists and a voice for immigrant entrepreneurs: ImmigrantExodus.com. The book argues that with increased global competition, current U.S. immigration policies leave foreign-born entrepreneurs no choice but to take their innovations to other countries, as shown by the unprecedented drop in the number of immigrant-founded, high-growth startups (see Part VII). This exodus creates a multi-trillion dollar loss for the United States and an economic gain for countries such as India and China.

Other entrepreneurship and immigration research from the Foundation includes:

• The Kauffman-designed Startup Act, which gave rise to the Startup Act 2.0 (S. 3217 and H.R. 5893), currently being sponsored by Senators Marco Rubio (R-Fla.), Chris Coons (D-Del.), Jerry Moran (R-Kan.), and Mark Warner (D-Va.). The bill includes language to create new visas for immigrant entrepreneurs (Sections 3, 4, and 5).
  
  
  
  
• Reforming Immigration Law to Allow More Foreign Student Entrepreneurs to Launch Job-Creating Ventures in the United States by Anthony Luppino, John Norton, and Malika Simmons outlines specific measures to modify immigration law in the United States to attract and encourage talented international students to start job-creating businesses in the U.S.
  
  
• A chapter in Better Capitalism: Renewing the Entrepreneurial Strength of the American Economy by Robert E. Litan and Carl J. Schramm entitled “Importing Entrepreneurs” discussing immigration policy regarding highly skilled entrepreneurs. “Welcoming and even recruiting skilled immigrants, especially those wanting to launch a business in the United States, can be – and is – both good economics and good politics.”
  
  
• Two Kauffman-funded policy briefs by the National Foundation for American Policy:
  
  • Keeping Talent in America argues that international STEM graduates (science, technology, engineering, or math) from advanced universities should be handed a green card along with their diplomas to encourage them to stay in the United States and start a business.
  • Still Waiting: Green Card Problems Persist for High Skill Immigrants points out that the increased wait times for highly-skilled immigrant entrepreneurs to get green cards (up to 70 years!) is a threat that could “deprive the country of talented individuals who will choose to develop innovations, make their careers and raise their families in other nations” and offers solutions to remedy the backlog.
• A Fordham Urban Law Journal article, “Making the Case for Changing U.S. Policy Regarding Highly Skilled Immigrants,” by John E. Tyler and Peter H. Schuck, that highlights the importance of highly skilled immigrant entrepreneurs to the economy, stating that these entrepreneurs in STEM fields “have disproportionately catalyzed and expanded U.S. innovation, jobs, wealth creation and resulting advances in human welfare.” A version of this article was also a chapter in the Kauffman Foundation book Rules for Growth (chapter 4).
  
  
• Knowledge Economy Immigration: A Priority for U.S. Growth Policy by Robert E. Litan and Tim Kane, states that the “single most important policy reform that will boost long term growth in the United States is to reduce the barriers facing highly skilled and highly educated immigrants. At least 50,000 workers with advanced degrees are sent out of the United States each year, although they have already passed security tests and become part of the productive fabric of the U.S. economy. In a world where the knowledge economy adds more value to national incomes than physical labor, the current U.S. stance of exiling many of the smartest people in the world imposes self-inflicted wounds on our currently troubled economy.” [emphasis mine]
  
  
• The Budgetary Effects of High-Skilled Immigration Reform by Arlene Holen at the Technology Policy Institute. Through a grant from the Kauffman Foundation, Holen examined the fiscal effects of immigrant entrepreneurs and concluded that “legislation considered by Congress during the last few years to loosen green card and H-1B caps could reduce the federal deficit on the order of $100 billion over ten years.” [emphasis mine]
  
  
• America’s Great Job Creators: Immigrant Entrepreneurs – a Kauffman-produced video featuring entrepreneurs from India, Russia, Korea, and other countries about the potential benefits from increasing the number of green cards so that foreign entrepreneurs can start businesses and create jobs in the U.S.
  
  

The major takeaway from all this research is that America loses big – and I mean big –when highly skilled immigrant entrepreneurs return to their native countries if they can’t start a business in the United States. In order to have a vibrant, flourishing economy, create jobs on the scale this country needs, and help reduce the federal deficit, the U.S. needs to recognize the contributions of these skilled immigrants and encourage them to stay and continue to create businesses. In order to do that, our visa system needs to change, and quickly.

And that, as Ozimek points out, is absolutely worth blogging about. As he puts it, “It’s the most important economic issue of our time, far more important than tax reform, and it is a lever that could help improve a lot of problems we have in this country. We should be shouting this from the rooftops daily.”

The Entrepreneurship Thing in Turkey

I spent part of last week visiting with angel investors and entrepreneurs in Istanbul, Turkey. It was fascinating (not least because there was some active shelling going on between Syria and Turkey, albeit a thousand kilometers away in the south of the country). 

In my presentation there, here are some of the things I argued Turkey has going for it:

1. Youth

In 2010 Turkey's median age was 28.1 vs an OECD average of 40, and a U.S. median age of 37. Entrepreneurship isn't entirely a young person's game, but it definitely helps to be young, energetic, and still have the capacity to take very risky bets with one's career. Turkey has that going for it with its young median age, and it is a hugely important attribute.

Granted, other countries in MENA (Middle East and North Africa) have even younger median ages -- almost all of the youngest countries in the world are in that general region -- but most lack some of the other factors that Turkey has below.

2. Education

The education system is improving rapidly in Turkey, but still has a long way to go. Having said that, the country currently has the fastest growth in the OECD of people continuing on from high school to university or college, at around 8% per year, a remarkable statistic. Similarly, it has strong and improving universities, especially in sciences and engineering, which is hugely important to growing technical entrepreneurs.  Relatedly, there is a great deal of flow back and forth at the graduate level, with top Turkish students attending the best schools elsewhere in the world, but increasingly coming back to Turkey afterward to work and create companies.

3. Language

With a population of 74m and English widely taught in the school system, Turkey has among the larger populations in MENA of young people capable of carrying on a conversation in English. This improves considerably, of course, among students who spend time overseas, but it is noteworthy that English has widespread support as a second language in the Turkish curriculum. Given the importance of English in commerce, and in fund-raising and entrepreneurship in general, this is a significant advantage.

4. Government

The situation is complex, but Turkey has progressed to being a stable, democratic society, albeit one that still shows signs of the ancient ethnic and religious components that make up this society. The country carries on peaceful elections, however, and continues to make reforms as it seeks to become a full EU member state. These are all, of course, hugely important in any attempt to become a modern economy with an entrepreneurial core, as entrepreneurs take on enough risk themselves without wanting to deal with political and religious complexities that make their lives even more difficult.

A quick check of the DoingBusiness indicators shows that Turkey ranks well in MENA, with only Israel and Saudi Arabia much easier countries in which to do business. Having said that, there are major issues doing business in Turkey, especially with respect to permissions and dealing with insolvency, and the latter is particularly important to entrepreneurs who face insolvency all too regularly. 

5. Capital

Access to risk capital is improving rapidly in Turkey. There is increasing awareness among investors, large and small, of the entrepreneurial talent in the region, and recent financings have helped reinforce that realization. We have seen a number of major private equity and venture capital firms make investments in the country in the last year, and there are now a half dozen venture capital firms that either have offices in Istanbul or visit regularly. Similarly, an increasing number of angel investors are becoming more sophisticated about sharing deal flow, structuring deals, and comparing best practices as they seek out the best local entrepreneurs.

6. Entrepreneurs

Finally, and entirely anecdotally, I was impressed with the many entrepreneurs I met in Istanbul. They were smart, plugged in, and they just plain got it with respect to what they were trying to do. The pitch session I attended could have happened anywhere in the world -- it just so happened to be at an Istanbul hotel. (I wished more of those pitches were aimed at global markets, rather than regional ones, but it's only a matter of time before that is the case.)

Social Business: Not Merely Still Viable, Its Ascent Is Only Logical

I’ve recently been working through the book of one of my longtime role models, Muhammad Yunus, founder of Grameen Bank. Because the book is five years old, I wasn’t sure how the framework of “social business” that Yunus laid forth has held up to the test of time, but sure enough I caught a video interview of the Nobel Peace Prize winner on The Economist just the other day. Although beset by political attacks on the independence of his famous Bank, Professor Yunus still espouses his belief that social businesses, like his own Grameen Danone (a partnership with French bottled-water giant Danone, better known here as Dannon), are the companies of the future.

The basic premise of a social business is one in which the focus is not on profit-making for the shareholder, but instead the explicit goal is maximizing a specified social impact. While the employees are still paid competitive wages and salaries, and products are manufactured and marketed as we’re used to, the difference is in the overarching objective and the responsibility of the CEO. Crucially, a social business operates unlike a government or non-profit in that it relies solely on its own performance in the marketplace for revenue, as opposed to taxation or donation. Growth, expansion, and competition are still essential to a successful social business, but excess profits are not paid as dividends to shareholders, but rather that extra cash is used to improve the business’s social impact (e.g. by passing on savings to consumers in the form of, say, healthy foods at a lower cost than profit-taking competitors).

As Professor Yunus notes, social businesses fall under the broader umbrella of social entrepreneurship – these companies are naturally innovative, creative ventures, and of course can be new establishments (and not just branches of existing multinationals like Grameen Danone). Although there has not yet been an explosion of social businesses as predicted, the premise remains sound in 2012, and it would be inspiring to see a new fleet of these enterprises leading the inextricable dual charges of economic and social recovery as we exit the final stages of the Great Recession. At a time when rising economic inequality (and the resulting frustrations over it) dominates headlines, it makes perfect sense to pursue this fresh tack of social business – at once spurring worker churn (a positive, natural consequence of new firm creation) as well as helping lift folks out of dire economic straits. In doing so we not only create wealth for the social business owners, but instead of shareholders seeing the ultimate benefit of highly successful companies, social business can help in breaking down the longstanding pre-market discrimination that has plagued America’s poor and stifled the great American dream of opportunity and upward mobility.

Updated and New Research on Immigration and Entrepreneurship

A 2007 study by Vivek Wadhwa et al. looked at the proportion of high-tech startups founded from 1995 to 2005 that had at least one key immigrant founder. The methodology has been replicated to look at high-tech startups founded between 2006 and 2012 and has resulted in a new report released today (report here; press release summary here). I'm travelling at the moment and have not had much time to review but the key finding is a slight drop. 25.3 of high-tech startups had at least one key immigrant founder in high-tech startups from 1995 to 2005; the stat is now 24.2 percent for startups founded from 2006 to 2012. This is more pronounced in Silicon Valley, where the drop went from 52.4 to 43.9 percent, which I imagine will be big news, but I'll part with the reminder to everyone that entrepreneurial activity does happen outside of California.

If you check out the press release, you'll see that Vivek Wadhwa also has a new book with an online resource, http://immigrantexodus.com/.

To quote a couple of colleagues at Kauffman, it appears as though 2013 will be a year of (deservedly) heightened focus on high-skill immigration and entrepreneurship.