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FACTS AND MYTHS IN THE
GLOBALIZATION DEBATE
VIVEK
WADHWA
Visiting Scholar, UC-Berkeley
Director of Research, CERC Duke University
Senior Research Associate, Harvard Law School
Distinguished Visiting Scholar, Emory University
Faculty and Advisor, Singularity University
Columnist: Washington Post, BusinessWeek
1. We’re falling behind in graduating engineers (and scientists)
2. Companies are going where the skills are
3. Strong math and science education = Global Competitiveness
4. More investment in research = more innovation
5. Skilled immigrants fuel the economy: so more H1-B visas
6. Young college dropouts: typical Silicon Valley entrepreneurs
7. America world leader in workforce development
8. Clusters provide the magic formula for innovation
8 Myths In Global Competitiveness
UNIVERSITY RESEARCH
Untapped Goldmine
of knowledge and
Innovation
$48.8 billion invested every year in U.S. university research
with very few spinoffs and less than $2 billion in license revenue.
European university investment is much lower than the U.S.,
but generates 3 times as many startups and far fewer patents
• INCOMPLETE SYSTEM -- legal and finance in place, but corporate development, marketing,
and sales are missing
• CULTURAL ISSUES -- academics want to disseminate knowledge and publish papers rather
than inhibit it’s use.
• WHAT COMES FIRST -- students or commercialization? What about the conflicts of interest?
• UNIVERSITY TECHNOLOGY IS HALF-BAKED -- proof of concept not funded
COMMON PROBLEMS
Entrepreneurship
Research
BASED ON 3 PROJECTS:
• Survey of 652 CEO’s/CTO’s of 502 tech companies
• Interviews with 144 Immigrant tech company founders
• Detailed survey of 549+ founders of companies in 12 high-growth
industries
COMMON MYTHS:
• Tech entrepreneurs: unmarried, rich, college-dropouts obsessed with
making money
• Ivy-league education provides huge advantage
• Venture Capital prerequisite for economic growth
2.5%
10.5%
34.1%
37.5%
14.2%
1.2%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
60 - 69
50 - 59
40 - 49
30 - 39
20 - 29
0 - 19
Percentage of all Respondents
Fou
nd
er
Age
US Tech Founder Age at the Time of Startup Establishment
Tech Entrepreneurs:
Not Young!
Married with Children
24.9%
69.9%
4.5%
0.7%
Single Married Divorced/Separated Widowed
40.3%
16.4%
28.0%
11.0%
3.4%
0.9%
0 1 2 3 4 5
Average Number of Children
Entrepreneurs: Not from
Rich Families
0.7%
36.9%
5.4%
21.8%
34.6%
0.6%
LOWER-LOWER CLASS LOWER-MIDDLE CLASS LOWER-UPPER CLASS UPPER-LOWER CLASS UPPER-MIDDLE CLASS UPPER-UPPER CLASS
Tech Entrepreneurs:
Not College Dropouts
High School Diploma or
Lower, 5.9%
Bachelors, 44.0%
Masters, 31.0%
PhD, 10.0%
Associates Degree,
Certification, Some
College, 2.3%
MD, 3.8%
JD, 3.5%
Highest Completed Degree
Applied Sciences*,
9.0%
Engineering 27.6%
Mathematics 1.5%
Computer Science,
Information Technology
9.0%
Business, Accounting,
Finance, 33.4%
Healthcare, 5.5%
Arts, Humanities and Social Sciences,
2.8%
Economics, 1.8%
Law, 4.2%
Other, 4.6%
Fields of Highest Degree
STEM Fields 46.5%
Education Counts, Not
necessarily Ivy League
0
10
20
30
40
50
$0
$1
$2
$3
$4
$5
$6
$7
$8
All Startups Startups w/ an Ivy-Leauge Founder Startups w/ a High School Founder
Ave
rage
20
05
To
tal E
mp
loye
es
Ave
rage
20
05
Sal
es
(Mill
ion
s o
f U
SD)
Average 2005 Sales Average 2005 Employment
What makes the difference is higher education: not the degree or school.
Entrepreneurs:
Highly Experienced
Approximately how many years did you work for another employer prior to starting your first business?
24.6%
27.6%
23.3%
14.3%
10.3%
0-5 years 6-10 years 11-15 years 16-20 years 20+ years
Approximately how many years did you work for another
employer prior to starting your first business?
Entrepreneurship wasn’t necessarily
in Genes or Pre-planned
Which Members of Your Family Started a Business
Before You Did?
51.9%
38.8%
6.9%
15.2%
I was the first inmy immediate
family to start abusiness
Father Mother Siblings
How interested were you in becoming an
entrepreneur while you were completing your
higher education?
7.2% 6.1%
34.7%
27.5%
24.5%
Not at allinterested
Not veryinterested
Didn't thinkabout it
Somewhatinterested
Extremelyinterested
Reasons for becoming
an Entrepreneur
1.2
2.9
3.2
1.7
3.1
1.4
3.0
3.1
2.1
Couldn't find traditional employment
Working for someone else didn't appeal
Wanted to build wealth
Co-founder encouraged to start company
Wanted to capitalize on a business idea
Developed a technology in lab
Startup company culture appealing
Always wanted own company
Entepreneurial friend or family role model
1= Not important factor, 5 = Extremely important factor
Bootstrapping is the Norm,
Not VC-Funding
10.0%
13.8%
70.0%
15.4%
10.8%
9.2%
14.6%
6.2%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
Other
Friends and family
Personal savings
Business partner(s)
Venture capital
Private/angel investor(s)
Bank loan(s)
Corporate investment
Success Factors
1.3
1.7
2.2
2.5
3.0
3.2
3.2
3.3
3.3
3.8
4.0
4.1
4.4
Assistance provided by the state/region
University/alumni contacts/networks
Advice/assistance provided by company investors
Location
Personal/social networks
Your university education
Availability of financing/capital
Professional/business networks
Good fortune
Company's management team
Lessons you learned from your previous failures
Lessons you learned from your previous successes
Your prior industry/work experience
What stops others from
becoming Entrepreneurs?
4.3
4.0
3.8
3.6
3.4
3.3
3.2
2.7
2.5
1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
Willingness or lack of ability to take risks
Amount of time and effort required
Difficulties in raising capital/financing
Lack of business management skills
Knowledge about the industry and markets
Knowledge about how to start a business
Family or financial pressures to keep a traditional,steady job
Availability of health insurance/risk of losing existingcoverage
Difficulties in recruiting co-founders
Common formula for Regional Innovation
• Pick a hot industry
• Build a magnificent tech park next to a research university
• provide incentives for chosen businesses to locate there
• add some venture capital
• …And watch the magic happen
As prescribed by management consultants touting the "cluster theory" developed by Harvard
Business School's Michael E. Porter.
Every such experiment in the world has failed…
…or is on life-support, every single project!
What about Silicon Valley and RTP?
• Silicon Valley has reinvented itself many times since WWII
Govt. investments in aerospace and electronics research
• Raced ahead of Rt. 128 because of its high rates of
job-hopping, new company formation, and culture of
information exchange and risk-taking
• Silicon valley is one giant –diverse--network
• Research Triangle Park is a 50-year-old project
that achieved success decades ago but lost
momentum in the Internet era.
Babson Professor Daniel Isenberg:
Zebras are beautiful. They are powerful.
They exist in nature. But if someone told you
that you could paint a white jackass with
black stripes and call it a zebra, you would
send them packing.
Economic clusters are effective. They are
powerful. They exist in nature. So why do
most economic policy makers think they can
take some real estate, paint it with an anchor
tenant and a name, and call it a cluster?
Ideas for boosting regional entrepreneurship
• Remove bureaucracy/obstacles to entrepreneurship
• Remove stigma associated with failure. Teach experimentation/risk taking
paths to success, preceded by failures.
• Teach entrepreneurship to university students/experienced workers
• Encourage diversity/immigration
• Improve education. Focus on quality/freedom of thought/expression
• Create mentor networks. Successful entrepreneurs usually mentor
others/give back by providing advice and connections.
• Bring together entrepreneurs and connect with other networks.
• Provide global business connections for local entrepreneurs
• Facilitate seed financing. VC will follow innovation
Ideas for U.S.
Competitiveness
• Move workforce up the ladder rather than just graduate more
• Bring and keep the worlds best and brightest
• Make our investments in research more effective
• Foster entrepreneurship at its source – the workforce
• Understand globalization and create new business models
which leverage innovation abroad
• Compete on American strengths -- In other words, let’s do what
we do better
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