I wrote the following piece after returning from a trip to India in 2004. This is as urgent an issue for Silicon Valley and the competitiveness of the US Economy today as it was then. While I wrote this about India, we need to be just as concerned about China and Eastern Europe.
February 23, 2004
Silicon Valley is suffering a brain drain that is just going to keep getting worse. Historically the valley has been the beneficiary of brain drains from around the world. The diasporas of China, India, Russia, etc, all came to sunny California to start their companies and make their fortunes. Companies like Juniper, Q-Logic, Exodus, and Silicon Labs are among the hundreds of companies that have generated billions in sales and wealth started by the best and brightest from around the world. Now some of those great minds are packing up and heading home.
I spent the first week of February in India with a TiE delegation of other venture capitalists and TiE Charter members. Everything you’ve heard about how exciting and dynamic things are in India today is true – if anything, it’s understated. Politicians and labor unions who are expressing concern about US call center and SI jobs going to India are focusing their energies on the wrong problem. The problem is not the inevitable transfer of certain business functions to where they can most efficiently be performed, but the migration of the entrepreneurs and experienced workers who create the companies (and the wealth) to their ancestral homelands.
We’ve all heard the stories about the quality of the Indian workforce. They’re smart, they’re well educated, and yes, compared to engineers in Silicon Valley, they’ll work for peanuts. But there are two critical pieces of human capital that India (and countries like it) lack that Silicon Valley has in spades. The first is years of relevant experience – each new generation of technology building on the successes and failures of the one that came before it. The second is the high-tech entrepreneurs – the people who have worked in an industry for long enough to know how things are done and to know where the problems are that are worth solving. But there’s nothing genetic that leads these shores to produce more entrepreneurs than anywhere else.
For the last 30+ years, the best and brightest from around the world came here. They first came here to get educated. That’s why the graduate programs at our top engineering schools are filled to overflowing with the best and brightest from India, China, Russia, and everywhere else around the world. The world’s Diaspora came to the US to get educated. And then once educated, they realized that the companies that would put all that good education to best use were companies right here in the good ole U-S of A. If they happened to be in an area where companies are started as fast and furious as they are in Silicon Valley, they may have gotten the idea and tried to start one themselves. They built up that critical experience and some even became one of our most treasured natural resources: the entrepreneur who innovates, creates jobs, and creates wealth.
Now some of those people are heading home. So now those bright engineers who graduate from IIT with arguably the best engineering education in the world won’t be forced to reinvent the wheel. They’ll have mentors who learned their trade through years of hard work in the valley and elsewhere. And some of those that head back will be the entrepreneurs with the ideas and the initiative to start high-tech companies that are ready to compete on a global scale.
We now have our own Silicon Valley Diaspora to moan about - the best and the brightest leaving these shores for bigger and better opportunities elsewhere. So watch out. While the first wave of Indian high-tech startups was dominated by call-center and IT outsourcing firms, the next wave is likely to be dominated by software and hardware companies that build their entire companies – not just their call-centers and back-office – somewhere other than Silicon Valley.