Chile’s highly innovative (and successful) approach to innovative industries
Fascinating article by Vivek Wadhwa in the Washington Post:
Chile launched a grand innovation experiment in 2010: it paid foreign entrepreneurs to come and visit for six months. It offered them $40,000 plus free office space, Internet access, mentoring, and networking. And, by the way, they would get to live in one of the most beautiful places on this planet, where housing was relatively cheap and corruption and crime were almost nonexistent. All Chile asked in return was that the foreigners interact with local entrepreneurs and consider making the country their permanent home.
It seems too good to be true, doesn’t it? Indeed, many people thought that the idea was crazy. But Chile was making a bet — that the foreign entrepreneurs would transform its entrepreneurial culture by teaching the locals how to take risks, help each other, and form global connections.
Santiago is today buzzing with entrepreneurial activity; university students often look to join start-ups rather than big companies; Start-Up Chile has gained brand recognition in innovation circles worldwide; and local entrepreneurs are becoming more ambitious and looking for opportunities abroad. This is what I have personally observed during my trips there.
Start-Up Chile has also been flooded with applications—more than 12,268, from 112 countries. According to Start-Up Chile’s executive director, Sebastian Vidal, 810 startups from 65 countries have so far been admitted into the program. The first 199 companies that visited Chile and returned home reported that they had raised a total of $72 million in funding. A batch of 132 companies that chose to stay there reported that they had raised $26 million. Several start-ups have had successful exits, and hundreds of others expect to make it big.
This is pretty good by entrepreneurial standards, considering that Chile has invested only about $35 million in this experiment. Other countries have spent hundreds of millions — even billions — of dollars in their efforts to create technology hubs.
Legions of consultants have been advising regions to build science parks next to research universities and to offer financial incentives to selected industries to locate there, touting Harvard professor Michael Porter’s cluster theory. Porter had observed that geographic concentrations of interconnected companies, specialized suppliers, and service providers gave certain industries a productivity and cost advantage. His followers postulated that by bringing these ingredients together into a “cluster,” regions could artificially foment innovation.
They couldn’t. The formula doesn’t work. The top-down industry cluster is a modern-day snake oil. Chile proved that it is people, not industry, who power innovation.
Tens of billions of dollars have collectively been invested by hundreds of regions all over the world in top-down cluster-development efforts. Consultants have reaped hundreds of millions of dollars in fees. Yet there is not one proven success anywhere in the world. Clusters form naturally on a basis of a region’s inherent geographical and economic advantages — and of entrepreneurs’ hard work. Innovation springs not from industry but from motivated risk-takers — from people. The Start-Up Chile experiment’s purpose was to learn whether a technology hub would follow from importing entrepreneurs and providing them with the right networking support and mentorship.
I helped design the Start-Up Chile program and serve on its advisory board. . .
Later in the article, and worth noting:
The challenge Chile faced, however, was that — like most regions other than Silicon Valley — it didn’t have an entrepreneurial culture that tolerated failure and encouraged information-sharing and experimentation. So I suggested that the country import what it needed; that it take advantage of America’s foolishness in turning away the world’s most innovative entrepreneurs. Because of flawed immigration policies, the U.S. is experiencing an exodus of highly skilled entrepreneurial talent.
And, of course, the GOP is determined that no immigration reform will be passed. The GOP is destroying this country.