Let’s just ban offshore outsourcing…

As a newly minted US immigrant (I got my green card last year), I have had some interesting experiences in the immigration realm. I’ve also developed some insights into immigration and the impact of offshore labour outsourcing on the US economy.

In case you have been sleeping under a rock for the past 3 years, Silicon Valley, with it’s deep well of engineering talent, is flat out of [decent] developers – which is creating wage inflation (source of infographic unknown) and startup inflation (I’ll write on this topic later).

Between Facebook, Google, Zynga, LinkedIn and some of the other behemoths, all the top engineering talent has been gobbled up and startups are find it hard to recruit. Luckily, with my background in founding technology companies in South Africa (Clicks2Customers, Yola) (now headquartered in San Francisco), we’ve been fortunate enough to able to source some of the top engineering talent in the country to work on building Gyft, which launches next month. It’s a common thread in Silicon Valley – most startups have at least a couple of offshore developers helping build their technology platforms.

Now, try bringing those developers into Silicon Valley to work and live – that’s a whole new discussion. While there are no legal restrictions on outsourcing, there are major restrictions on sponsoring work permits and visa’s for engineers to bring them here and let them live and work amongst us. There is a cap on H1B Visa’s which are routinely hit. Yes – none of this is news – so what’s my point?

My point is – as a startup & technology community in Silicon Valley – we spend billions of dollars outsourcing work to developers who live outside the USA – that money leaves the US economy. In most cases, these salaries are comparable with what we pay the local US developers (perhaps a slight discount here or there). The engineer gets paid in the foreign country, and then spends that money at their local grocer, takeaway, doctor, dentist, plumber, landlord, etc. Instead of allowing us to bring those employees to the USA to live and work, whilst allowing the money can circulate in the local economy and create more (non-tech) jobs here, we’re helping “train the competition” (to paraphrase President Obama – who is pushing for immigration reform in a big way), and building the foreign economies. Apart from the frustration that it’s creating for the Silicon Valley startup companies who are desperately trying to get the right skills to build their companies, there is a clear economic reason why we should allow uncapped immigration of people with specialized skills, provided there are companies here that need them and would rather pay the salary to a worker who could spend the money locally.

If you want to make the argument that no H1B cap would precipitate a decline in American jobs, then you also need to block outsourcing of any kind to offshore developers in order to facilitate that argument – what’s the point of not letting them work here, but then allowing us to send the dollars offshore which has no benefit to local businesses. Instead of bringing the engineers here and paying their salaries (and taxes!!) here and letting it recirculate in the local economy, we’re forcing them to continue to work offshore and build their local economies. So this is all a bit tongue in cheek – I’m really arguing about the merits of limiting H1B’s but then allowing offshore hiring – it does.not.make.sense.to.me. (although the airline and travel industry are probably enjoying the frequent trips that these engineers have to make to ensure sufficient face time with the local US teams on a regular basis).

That said, there are people who are doing a lot to try and spur on immigration reform in the US – and you can help them by signing this petition. So, although I’m not particularly interested in getting involved in the politics behind how these decisions and systems are put into place, I will say that someone needs to seriously rethink why things are the way they are. Either ban offshore development outright [terrible idea], or figure out how to get those dollars back onshore (along with much needed skills) – but let’s not create fake realities by trying to convince ourselves that a cap on US work visa’s for a highly specialized industry is going to create much needed jobs in the US and put the economy back on track!

Can Entrepreneurship Be Learned?

This is an age old discussion, which I think Alex Lawrence over at Forbes summarised very well.  I’m pretty sure you can teach entrepreneurship, but only to a point.  In the same way that it’s impossible for some people to become chess grandmasters, it is possible for almost every human to learn how to play the game at a basic level.

You should probably read this post, before continuing the rest of my blog post.

Can Entrepreneurship Be Learned? – Forbes 

I have my own thoughts on the issue, but they are pretty much well aligned with his categorical breakdown.  I do think that he has lumped the small business entrepreneur with the micro-entrepreneur.  They are very much two completely different segments of the market.

Micro-entrepreneurs are usually unskilled, survival focused entrepreneurs living from hand to mouth (think hawkers in african townships), compared with a photographer or an independent lawyer.  It’s really boils down to choice and skills – the micro-entrepreneur probably doesn’t have either, but the other does (even if they choose not to).  

The level of income is also vastly different within that category.   Africa in particular has what you can call the “missing middle” – millions of micro-entrepreneurs, but not enough SMB’s. This is the opportunity that’s ahead – finding a way to smooth the curve and help create skills.

Ideally, you want a well proportioned base of Micro’s, SBE’s (Small Business Entrepreneurs), ME’s (Mainstream Entrepreneurs) and then balance that out with the current staple of Growth Entrepreneurs and a sliver of Global Entrepreneurs.

It’s not just Africa that has this problem with unbalanced proportions of entrepreneurs. Changes in the capital and credit markets have damning repercussions on the entrepreneurial ecosystem – more so in established markets like the US, than in developing markets, where entrepreneurs are used to this type of volatility.

I suppose the real question is how do you create a balance of entrepreneurs (you different onces across the spectrum to drive job creation, economic growth and innovation) and financing for each class of entrepreneur…


Being helpful…

One of the unique things about living in Silicon Valley, is that people here feel part of a very big & very successful ecosystem. “You are not alone” is the feeling that you instantly get whilst living and working here. Over the course of building gyft, my new startup, I have really come across some amazing entrepreneurs, investors, marketers and technologists who are all willing to “be helpful”. In the midst of what is certainly the frothiest market in the valley since the late nineties, the question “How can I be helpful?” has never been more used. I’m finding it to be a phrase that I hear practically every single day, and each time I hear it, I am reminded of the fact that even if, during the conversation, both parties realize that there are no immediate ways to work together, there is still a camaraderie that surfaces when someone asks the question: “How can I be helpful?”.

The topic of discussion quickly changes from the original reason for the meeting (which may become moot as the conversation progresses), to brainstorming around other creative ideas to help one another. The most helpful interactions I’ve had have really been with other entrepreneurs – they’re in your shoes, walking your path and they know how hard it can be. They’re always the first to say “how can I be helpful?”. It’s generally because they don’t have spare cash to invest in your startup, but they like you and they want to help you be successful.

So, when people ask “How can I be helpful?”, what they are really saying is : Can I make introductions for you (to investors, partners, employees etc)? Do you need some advice with any part of your business? How can I support you in doing what you are doing and helping you become successful? How can I connect you with the people that can really help make a difference in your business? Are there people higher up in the food chain in your segment of the market that you need to know (CEO’s etc)?

This support structure is the strongest fabric that runs through Silicon Valley. The willingness to help build relationships and create connections is really a differentiating cultural facet of Silicon Valley which I don’t believe has permeated anywhere else. It’s the culture that binds startups together and it helps breed success. I’ve been to many places around the world and I have yet to see the same level of engagement and willingness to give back. It’s no wonder that LinkedIn was conceived and created here.

Entrepreneurs from halfway around the world have contact me on LinkedIn, asking for introductions to people who work literally down the road from them, and who their own investors and board members know, but who are not being very helpful with introductions. And I’m not making that up! The support offered by investors (angel and institutional) is unparalleled in the valley. Give and you shall receive.

So, as I begin my new journey with gyft, I just want to take this opportunity to thank everyone who has been helpful to me (too many to mention) in my journey!

This post was inspired by Arjun Sethi – thanks for being helpful today!

Global Game Changing Entrepreneurs

I spent yesterday in Los Angeles, speaking on a panel at the Milken Institute conference, on behalf of Endeavor.

It’s an hour long video session, but the audience rated it as one of the best sessions of the day! Here is the recording of the session: