Since the 1990s we've heard that the successful startup companies of the future will be "born global," pursuing business and growth internationally from day one. That future has arrived. For entrepreneurs in the United States, and for all of us who support them, a wake-up call is in order. We need to work harder at learning and practicing the global game than we've done so far.
Although the American startup community is still seen as the world's foremost, recent events may favor countries where new firms are inherently more apt to think globally. Let me explain what limits us -- and how we can transcend it.
The U.S. is by nature more insular than other countries with respect to new ventures. One reason has been the size of our domestic market. For years, an American startup could thrive just by targeting some segment of the country's hundreds of millions of prolific consumers or its booming domestic industries -- whereas in smaller countries such as Denmark and Sweden, or in large but poorer countries, firms with high ambitions have long had to look to international markets to remain competitive, as their domestic markets couldn't sustain them.
Today the big U.S. domestic market is no longer a surefire haven. With tepid growth, consumers and firms have tightened their spending, while government procurement is decimated by budget cuts. A lot of the action now is in places like the BRIC countries, Brazil Russia-India-China, which have big populations plus growing middle classes and industries, coupled with sovereign wealth that allows them to build competitive infrastructure. And, even entrepreneurs from the so-called PIIGs (Portugal, Italy, Greece and Spain) are courting the BRICs. A number of Portuguese high-tech firms are building footholds in Brazil, aided in part by the fact that Portugal and its onetime colony share a history and a language.
This brings us to another factor that can make American entrepreneurs less globally minded: the relative geographic and cultural isolation of the U.S. We don't have a wide assortment of nearby neighbors, as nations in, say, Europe do. And while people from other countries are eager to learn the ways of the U.S., we don't always match that eagerness in return. In more senses than the literal one, others speak our language more than we speak theirs.
It's not as if Americans live in a bubble. Many of our startups have immigrant founders, as my friend Vivek Wadhwa points out, who can leverage contacts in their countries of origin. Many software and Internet-based firms, in particular, go global early. Increasing numbers of young Americans go abroad -- to study, to do research or charitable work, or just to travel -- and they have online friends in other countries from childhood. You could say the new generation is growing up more global than any in the country's past.
The challenge is to build on this international exposure and turn it into new globally oriented businesses across multiple industries. And for that we'll need to stretch ourselves and learn to have a global mindset in all aspects of new-firm formation.
A global mindset entails much more than trying to sell U.S. goods into foreign countries. It also entails more than learning the rules and customs of those countries, so as not to shoot oneself in the foot when opening an office overseas. A true global mindset requires moving beyond the simplistic starting point of taking an American idea and trying to transplant it "over there."
Truly global entrepreneurs might start from the other direction, building businesses around ideas and opportunities they discover elsewhere. One example is Amazon Millworks, founded by Andrew Sloop while he served on a Mormon mission to Peru. While there, Sloop met Peruvian carpenters who made exquisite furniture by hand. Today his North Carolina firm draws on these artisans to provide custom woodwork and furnishings for homes in the premium segment. Amazon Millworks was born global.
Entrepreneurs in technology fields must also learn the subtleties involved in tapping international markets and supply chains. Business researchers such as Erica Fuchs at Carnegie Mellon are finding, for instance, that the common practice of designing a product and then having it made in another country -- whether to save cost, or to get close to an emerging market -- may not play out so simply if the product is a highly innovative one like a new type of optoelectronics chip. Outsourcing can change the dynamics to the point where a given innovation is not as viable as it had seemed.
To quote from the title of one of Fuchs's papers, product innovators may have to think in terms of "design for location." Similarly, business models conceived for the U.S. market may not be scalable or even adaptable globally. Thus a key question is: what could help Americans get better attuned to both the opportunities and pitfalls of going global?
One template might be the Kauffman Foundation's Global Scholars program. Started in 2007 through a collaboration with Gordon Brown, then chancellor of the Exchequer of the United Kingdom, the program enables countries to send aspiring entrepreneurs here to the U.S. for 21 weeks of intensive learning from experts at our universities and innovative companies.
Along with learning to build new firms that can function well internally, Global Scholars have their outlooks and their networks expanded. They see how American business operates. Scholars from diverse countries in Europe and Asia learn from each other. Then they go home to propagate their global lessons, like the former Global Scholar who's now helping to foster cross-border entrepreneurship in adjoining areas of the Netherlands, Germany and Belgium.
Could such a program produce the same benefits for fledgling U.S. entrepreneurs? We think so. The Global Scholars program is now taking applicants from its home country for the first time. Next year, about 10 of America's best young prospects will learn in concert with a roughly equal number of the rest of the world's best.
So that's one approach. Many more possibilities exist. (Here's one: can the U.S. diplomatic corps help bring American entrepreneurs into other countries?) But above all, every American who dreams of building a great company has to know that being global is neither an option nor an add-on. It's the new reality. America's best exports are the talents of our entrepreneurial leaders unleashed in a global marketplace. Are American entrepreneurs born global? For our sake, I hope so.