Riding Unicorns: Venture Capital | Entrepreneurship | Technology
00:06:38 · James Pringle, Yaron Valler
[00:06:38] S0: Absolutely fascinating. So tell us a little bit about what you discovered in the research and the benefits of new ideas, new energy are obviously massive. But how can nations harness that in the best way? Because it's not always harnessed in the best way and it could be improved. You know, governments have a responsibility to not only welcome immigration, but also to harness that new energy. So what have you kind of discovered through your research around that topic? [00:07:08] S1: I think there are several identifiable traits that we're seeing with immigrant entrepreneurs. Some of them are very trivial. You know, people that don't have a safety net work harder. It's very clear. But some are less evident. For example, the fact that people see things from the outside, this gives them a fresh perspective. You know, one of the examples that I give in the book is Wise, where the founders were horrified by the cost of transferring money. And this is something that they saw because they were outsiders, because they had to use this service. So many times it comes from a need. It comes from a need that you see as an immigrant. And this is something that is identifiable and you can show it with research and you can show how this fresh perspective is driving lots of the unicorns or lots of the successful stories in in entrepreneurship and tech, particularly in tech. You asked me about what governments can do, and I think that's the... [00:08:03] S0: Yeah. What can governments do? Yeah. Because it's a... Obviously, it's quite a topical kind of conversation.
00:08:08 · Yaron Valler
[00:08:08] S1: First of all, let's understand why people are resisting immigration. They're resisting immigration because of imagined fears and real fears. One of the fears is that immigrants are gonna take their jobs, and clearly, that's not the case because the jobs that immigrants are going after usually are not competing so much with the local population. The other thing that they're afraid of, and this is much more tangible, they're afraid of the cultural change that their country is going through. And this needs to be addressed. First of all, disregarding it and telling people that they are wrong, that what they are seeing and what they're feeling is wrong is not gonna go a long way towards fixing the problem. It's going to drive them towards voting for parties that are offering instant solutions. Forget, you know, for a second, the moral argument, whether these methods are moral or not, they're just not practical. And these instant solutions are not going cheer and result. So in order to address these issues and not avoid them and not push these people, not push the people that are concerned or afraid of immigration, not push them towards the extremes of the political map, the key thing that governments need to do is integration. Integration is the key for everything, and this needs to be a two way street and an agreement with the immigrant, and it needs to be both provided and supported and enforced. I'll give you a few examples. One of the things that I'm talking about in the book is generations of immigrants that live in a country and don't speak the language. You can see that, for example, in Germany, where second generation immigrants sometimes still don't speak the language or don't speak the topic, and they live inside the ghetto. And you can't blame the immigrants for congregating into a certain area because they want the support system. They want to create the same support systems that they had in their original countries. What you can do is encourage them by providing support, by providing financial incentives to not congregate and integrate and learn the language. Some of it is really simple, like being able to transfer skills. You know, one of the stories that I'm talking about is about a doctor that moved to The UK from Afghanistan and had to work as cleaner in many years.
00:10:18 · Yaron Valler, James Pringle
Given the shortage of doctors that The UK is facing, I don't think that benefited either her or The UK. So dealing with credential recognition, but mostly providing and insisting on cultural and legal integration. We shouldn't tolerate separate education systems, for example, because separate education systems are just making the problem worse. They are creating separate national narratives within one nation, and having separate national narratives is the beginning of fragmenting the nation. That's just one example. [00:10:47] S0: Absolutely fascinating. So you're saying that immigration is this massive, powerful regeneration of ideas and energy into a society. However, it's most maximized when there's integration and support for those new entrants so that they can take advantage of the existing system, but with a fresh perspective to hopefully improve that system. And if you end up with no integration, you don't get that same benefit because you just get two sides entrenching into their own preexisting world rather than analyzing the one world and making it better. Is that is that a fair summary? Absolutely. I love that. That's so interesting. And just because people might be thinking about it, how does sort of illegal immigration fit into this? How do you try and accommodate for that entry route into the the hopefully net benefit of new ideas, new energy, new people?
00:11:48 · Yaron Valler
[00:11:48] S1: I think there are two aspects to it. One aspect is that we have a responsibility as human beings, being human, and to proliferate our success and our prosperity in the rest of the world. And that's a responsibility that we have. And being one of the main geographies in the Western world, I think Europe has a responsibility as well. However, that ideology can be mixed with a financial and economic agenda, and a responsible country has to take care of both. So yes, you should have programs that bring in a certain number of refugees, but having uncontrolled illegal immigration, which is uncontrolled mainly because of laziness, not because of anything else, because of lack of resources or lack of assignment of resources or laziness or political pressures, That's irresponsible. Milton Friedman is saying something really interesting about immigration into The US. Until 1917, anyone that came to The US became a citizen. It was free, open borders, and open immigration. 1917, as World War I was drawing to a close, they started integrating a social safety net. You cannot have a social safety net and open borders. It doesn't work. So a responsible government can't just shrug its shoulders. One aspect is yes, EU Maine have a certain number of refugees that come into the country. Two, anyone that comes into the country has to go through an integration program in order for them to be productive citizens for them and for the society that they're integrating with. Not all of these integration programs will be successful, but it will be better than than it is today or some sort of discipline in borders. Just not doing it out of laziness is eventually going to bring exactly the result that the people that support immigration don't want to happen.
00:13:31 · James Pringle
[00:13:31] S0: Absolutely fascinating. And thank you so much for sharing this insight because I think it's a really important topic that is difficult to talk about, but is really fascinating. If I bring it slightly back to venture capital, how should the industry view investing in immigrants and how do they maximize this opportunity of sort of, you know, these refreshing perspectives and doing things 10 x better rather than 10% better because you're taking a completely novel first principle approach to a problem. How does the industry try to adapt and make the most of that fresh perspective?
00:14:10 · Yaron Valler
[00:14:10] S1: Traditional venture capital was a very clicky thing. Right? It was about who you knew and where you came from, and that was detrimental to immigrants that were trying to raise money. But this hasn't been the case for the last twenty years or more. We see an understanding with all venture capital funds. Opportunities are not local. We see a cultural understanding. So I think that venture capital funds are doing it. Where there is a bigger problem is later when a company is trying to raise institutional capital, sovereign capital, or in some cases, private equity. These are more local plays and sometimes immigrant entrepreneurs don't have as much access to it. Usually by the point that they need the access, they would have already made the networks and connections and this would have been solved. But generally, I think the venture capital industry has been leading the charge when you look at immigration. I think me and my colleagues have been really thinking about this right and not favouring local entrepreneurs.