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Tight immigration rules divert high tech brains from Seattle to Santiago

October 19, 2013 at 12:00 AM EST
While U.S. immigration policy makes it difficult for immigrant entrepreneurs to get visas to set up shop in the United States, Chile is welcoming them with open arms. Through an initiative called Start-Up Chile, the country is aiming to be the high-tech hub of South America.
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PETER EISNER:   What draws a high tech furniture maker all the way from Ireland to Santiago, Chile? Or convinces a neuroscientist from the University of Michigan to set up business here?

It all started with a devastating earthquake in Chile in 2010 that killed more than 500 people. 

NICOLÁS SHEA:  We lost two family members.  And when we got the email, that email, immediately my wife and I– just said we’re going back home. 

PETER EISNER: At the time of the earthquake, Nicolás Shea was a graduate student at Stanford University. Shea wanted to help his country rebuild. But how could this budding entrepreneur help the recovery effort?  Inspiration came to him when he saw how foreign students attending Stanford were forced to leave the United States after graduation because of difficulties getting a visa.    

NICOLÁS SHEA:  Literally there were hundreds and thousands of, you know, to-be entrepreneurs that were not being and are not being welcomed in the U.S.

And I remember, you know, thinking, how much, if I were president or I had– I was in a position of power, how much would I pay each one of these individuals to come and spend some time in Chile?

PETER EISNER: Shay was thinking about people like James McBennett, of Dublin, Ireland.   McBennett’s company, Fabsie, uses computers to control woodworking tools like this.  The machine cuts a piece of furniture to exact specifications so it can fit in, say, a small New York City apartment. 

JAMES MCBENNETT:  What I want it to be is about downloadable files to make furniture.  And it’s, in a way, a combination between iTunes and Ikea.

PETER EISNER: The first that comes to mind, for a customizable furniture start-up, there’s a natural market in the United States.  Why not do this in the United States?

JAMES MCBENNETT:  For me to go there personally, I can’t do it for visa reasons.

PETER EISNER: McBennett would have liked to start his business in Brooklyn, New York, where he believes the best furniture designers are working.

JAMES MCBENNETT: If you want to get in ideas that are really early, you need to be able to move to the best place to do that and still remain at those low costs.

PETER EISNER: That’s where Nicolás Shea comes in. he realized that Chile could be that place.  So, the first thing he did was to conduct his own personal focus groups at Stanford University.

NICOLÁS SHEA:  I asked them… “So, what would– would I have to do for you to come to Chile for awhile?” 

PETER EISNER:  This young Chilean entrepreneur came back to the country from grad school in the United States with an idea. What if we re-imagined our country? Why can’t Chileans play with the big boys of technology?

Shea went straight to the Chilean government with a radical plan to attract prospective entrepreneurs.  He proposed the government give them 40 thousand dollars each to develop their ideas and the entrepreneurs wouldn’t have to pay it back.  In return, participants would be required to give back to Chilean society though, by giving lectures at local universities and mentoring would-be Chilean entrepreneurs, as James McBennett is doing here. 

JAMES MCBENNETT: What might fit San Francisco and New York just really might not suit Latin American culture.

PETER EISNER:  Nicolás Shea called it Start-Up Chile.  And from the beginning he had grand plans. 

NICOLÁS SHEA:  We asked for one million dollars to fund 25 start-ups.  And if that worked, I would– we would get $50 million more.  And we would fund the project for the next– four years– with the goal of bringing in 1,000 startups to Chile.

PETER EISNER: To his surprise the government bought into his plan and since the program started in 2010 Chile has given grants to 663 start-ups, worth more than 28 million dollars.

HERNAN CHEYRE: The culture in Chile is that if somebody fails in the business, he’s a loser, no.  So we want to bring people from abroad to say, “Hey.  Don’t be worried.  If you fail, you can– can start up again.”

PETER EISNER: Hernan Cheyre runs the Chilean Economic Development Agency, and overseas Start-Up Chile

HERNAN CHEYRE: What we want is that– that they get in touch with our local community of entrepreneurs, that they go and talk to the students.  We want to change our culture.  We want to be a country with a culture of entrepreneurs.

PETER EISNER: But Start-Up Chile only requires its young innovators to stay in Santiago for six months, free after that to move their company to anywhere in the world. 

PETER EISNER: Critics would say how in financial terms, has Chile benefited from somebody leaving and– and maybe not coming back?

HERNAN CHEYRE:  Maybe he’s not coming back.  But he’s in touch in this global network– of– of global entrepreneurs.  And they know that Chile is a place where they can start up a business. 

But the real effect of this program will be noticed in five, ten years when we’ll notice how our young people have changed the– the– the mindset. 

PETER EISNER: That cultural change is starting to take root.  More than 20 percent of applications for Start-up Chile now come from Chile itself, like Daniel Ibarra.  A couple years ago, Ibarra could dream of starting a multinational business.

DANIEL IBARRA: If you talk to someone that already made a internet company and was successful and he started from Chile or he started from Colombia or he started from Mexico, then you say, “Well, this not only happens in the States, I mean, it could happen also in Chile.”

PETER EISNER:  Ibarra has designed a website called GoPlaceIt, which helps renters and apartment buyers map out and locate exactly where they would like to live. It has been a big hit and he is expanding around Latin America.

DANIEL IBARRA: In the first month we had 10,000 users…And right now we have 150,000 users.

We have raised in total– $1.2 million. 

PETER EISNER:  The question, though, is how Chile measures the success of the program that gives seed money and support to its participants without asking for any stake in the company?  While the data is still being collected and the numbers still imprecise, Shay says that the investment has been net positive because the foreign entrepreneurs spend money in Santiago, friends and family visit from abroad, and on average two to four Chileans are hired for every start-up funded. 

NICOLÁS SHEA:  So two years or three years after the first group, I could tell you that the– the return on the Chilean taxpayers’ investment has been huge.

PETER EISNER:   Beyond the numbers, Start-up Chile has put Chilicon Valley on the map as a high tech hub in Latin America.  

JAMES MCBENNETT:  I think very few countries as governments have put themselves in the shoes of the entrepreneurs.

So I think it’s a very smart choice for what they’ve done in terms of how they’ve– organized the program.

PETER EISNER: As for Irish entrepreneur James McBennett, he’s grateful to Chile for the opportunity he’s been given. But like most foreign entrepreneurs that have gone through the program he’ll probably be hitting the road when the he graduates from Start-Up Chile.

PETER EISNER:  So what’s the next stop for you in developing your idea after Chile?        

JAMES MCBENNET:  After Chile, I’m still not sure.  There is the option to stay.  It’s not an option I completely ruled out.  There is the option to– take the large machine and move into my parents house and get the cost down to zero.

PETER EISNER: And eventually possibly find your dream in Brooklyn

JAMES MCBENNET: Well, I think to scale the company that Brooklyn is very much needed.  It’s almost jumping through loopholes to get there