Following are my notes on the LEVIN Institutes Innovate NY Series panel on Global Innovation and Entrepreneurship, on April 1. A clear theme of the panel: our immigration policy is counter-productive and hurts our economy. This is particularly apparent in NY, where 37% of the city are immigrants.
The panel:
Matt Nimetz, General Atlantic
Jonathan Bowles, Center for an Urban Future
Vivek Wadhwa, Harvard, Duke, Entrepreneur
Amar Bhide, Columbia (and my former professor in business school)
Garrick Utley, Levin Institute, Moderator
Matt Nimetz, General Atlantic
We invested $1.5b last year, about half in the US.
Were neutral as to geography, and very focused on value.
Were big investors in outsourcing, since 1997. Were not apologetic about it.
Right now, were not that active. But that will change.
Theres $1trillion of dry powder in our industry.
I dont think NY will lose its dominance. We used to have only a CT office, but 1.5 years ago we set up a NY office. No one would visit us in CT. People didnt want to work there. CEOs who fly in want to see people in Manhattan, for four meetings in one day; they dont want to go to CT.
Vivek Wadhwa–Harvard, Duke, Entrepreneur
I formerly ran a startup that moved from NY to NC, for cost reasons.
Im now an academic, focused on studying immigration. 52% of Silicon Valley startups were founded by immigrants. A quarter of all global patents filed by US were foreign nationals (not including immigrants who got US citizenship, like me).
We found these immigrants were very highly educated. They felt like 2nd class citizens in the US and wanted to start their own firms.
There are over 1m skilled immigrants in the US waiting for green cards. But there are only 120,000 visas available per year. Indians only get 8,000 visas/year.
H1B is a horrible program; it ties people to one employer.
We predicted a massive brain drain in our last report, and its happening now.
Historically, 80-90% of immigrants stayed 5 years or longer. Now, they want to go home.
NY is ground zero of immigrant unemployment. You get laid off on an H1b, you have to buy a one-way ticket home.
37% of NY is foreign-born.
Jonathan Bowles, Center for an Urban Future
Non-immigrants start businesses less, and they dont grow their businesses as fast.
There are very few micro-lending organizations in the US. Accions total loan budget is less than the budget of one Citi branch office in Queens.
We dont have an angel system of entrepreneurial investors who are focused on immigrant population.
Amar Bhide, Columbia
Question from moderator: can entrepreneurship save NY?
Karl Marx said technological progress is the critical feature of the capitalist system.
We have a romanticized view of technological progress: the heroic entrepreneur. Silicon Valley envy.
However: technological progress is not worth very much unless it raises local productivity.
Rochester, NY has more patents per capita than anywhere else in the US, but its not a strong economy.
I moved to MA in mid-70s, when it dominated computer industry. It was not a strong economy at the time.
Silicon Valley unemployment is 2% above national levels.
Reason: the production of high-tech can only account for a small fraction of the total employment in a region. Even in Silicon Valley, only 10% of population work in tech.
Unless you personally engage in the innovative process, there cant be widespread progress.
So tech innovation has to be a massively multiplayer game.
The use of tech is far more important than the development of tech.
NY and Chicago are prosperous because theyre heavy users of tech.
The challenge for NY is not: how to emulate Silicon Valley. Its: how do we weave these new technologies into all of our processes?
Bowles
Natural assets of NY: growing immigrant population, Also, academic research institutions
But: our universities were typically not as entrepreneurially minded as others.
Nimetz
We have to pay a lot more for our own staff in NY even than in CT. The recession will alleviate this issue a bit.
When I was a kid, there were a lot of ethnic focused banks, e.g., a Chinese bank where the staff didnt necessarily speak English. These were a source of capital for entrepreneurs in the community. Those banks have since been rolled up.
Vivek
We moved out of NY because we couldnt afford team.
Amar
I am very skeptical that the great NY universities can have an economic impact, because of the size and workforce of NY. It wont have much more impact than a great ballet.
Even MIT has not had a meaningful impact on the economy of MA.
Bowles
One of the reasons downtown became Silicon Alley : cheap office space
DUMBO is the only other area that attracted cheap startups, because it had amenities that the sort of people who run startups find attractive.
Teten
What is being done/should be done to promote pro-immigration policy change?
Bowles
This has happened before. In the 70s, immigrants saved communities like Flushing that were empty.
We may see NY political leadership suddenly hungry to diversify out of Wall Street. NY hasnt been serious about that for a long time.
Bhide
Know-how of a chip manufacturing organization is at multiple levels: how to run a semiconductor plant, how to design it, how to clean a clean room.
Universities build the high-level know-how, but its the least rooted type of know-how.
The other types of know-how are typically much more rooted.
Very little of Apples products draw on know-how from Stanford.
The integrative ability creates prosperity
Vivek
Quick fixes: open-source all of universitys IP to startups that use the tech locally. The licensing revenue the universities get is trivial. Any startup that stays in NY for 5 years should be able to use Columbias IP to start a startup for free.
Question
Silicon Alley is the wrong name. Where is the nearest silicon wafer fab?
Bowles
The VCs who specialize in tech/biotech tend not to be based here.
