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These Modern-Day Marco Polos Sell to the Lands They Left Behind These Modern-Day Marco Polos Sell to the Lands They Left Behind

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The Next Economy / The Next Economy: Cover Story

These Modern-Day Marco Polos Sell to the Lands They Left Behind

June 2, 2011

It was love that drew Saskia Chiesa, a native of the Netherlands, to the United States in 1998. But when her relationship fell apart, the former model—she starred in Milli Vanilli’s “Blame it on the Rain” music video—decided to stay. To support herself and her child, she managed a dude ranch in Topanga Canyon, Calif., and worked odd jobs.

The idea of starting her own business came later, after she noticed a pattern: Her European friends kept phoning and asking if she could send them shoes and clothes from American retailers they couldn’t patronize on their own. It seems that retailers in Europe carry fewer colors and sizes of, say, Converse sneakers than their American counterparts. But many U.S. vendors won’t ship online orders to foreign countries because of customs rules and other hurdles.

Chiesa comes from a business-savvy family: Her father ran several restaurants, and her mother owned a couple of hair salons. So with her experience in shipping to friends, she felt comfortable launching a concierge-style business based in Santa Monica, Calif., in 2002. Her company, International Checkout, ships products made by around 450 retailers—such as Jockey, Dr. Martens, and bebe.com—to Holland and just about every other country in the world. The business recorded more than $11 million in sales last year and recently moved its 45 employees into a 16,000-square-foot warehouse in Los Angeles.

 

“I’ve really leveraged my ties back home to build this successful business,” the 42-year-old entrepreneur said. “If I had been an American, I would not have started this company.”

For a nation built by immigrants, of course, the economy has long profited from foreign-born entrepreneurs. Contrary to a widespread belief, immigrant entrepreneurs “deliver more than they take,” said Edward Rogoff, a professor at Baruch College in New York City who has extensively studied these merchants. More than a fourth of all U.S. technology firms, he pointed out, boast at least one foreign-born founder—think of Google cofounder Sergey Brin, an immigrant from Russia. According to the Kauffman Foundation, American companies started by immigrants accounted for some $52 billion in revenue in 2005 and employed more than 450,000 workers.

Immigrants are starting businesses at a faster rate than native-born Americans, the Small Business Administration reported last year. Immigrant-run companies now account for nearly 4.6 million small companies, an estimated 16.7 percent of all U.S. businesses with fewer than 500 employees.

Many immigrant entrepreneurs have found success by exploiting one edge they have over their U.S.-born counterparts: their connections to markets back home. They have become what Rogoff and others describe as “gateway” entrepreneurs. “Immigrants have an advantage because they understand global markets better than [native-born Americans] do,” said Vivek Wadhwa, an immigrant from India who started two successful software companies and now teaches business and engineering classes at Harvard and Duke universities and the University of California (Berkeley). “They help us compete.”

Consider the story of 39-year-old David Kalsang, another gateway entrepreneur. His parents fled Tibet in 1959 for India, where he grew up, and he immigrated to the United States in 1996. In 2005, he started a company in New York City called Malamal, reselling Apple’s iPhones to American customers. But after checking with friends back in India, he saw where his best prospects lay.

“My friends would call me up,” he recounted, “and tell me, ‘The party’s down here in New Delhi and Mumbai. You’re missing out!’ ” India is expected to surpass China, he noted, as the world’s largest market for smartphones and other wireless devices by 2013 (the United States currently ranks third). Another immigrant-run business, Biz2Credit, has helped Kalsang secure $300,000 in loans, which he spends on 3G smartphones in the United States that he resells into the burgeoning Indian retail marketplace. His revenues total $1 million a year.

“We are seeing a growing trend where immigrants from Asia and Latin America are coming to us to get credit so that they can tap into the markets where they came from,” said Biz2Credit founder Rohit Arora, a native of India. His New York City-based firm has helped secure more than $400 million in loans since 1997 for some 7,000 small businesses—80 percent of them run by immigrants. “Not only are they creating jobs here,” he said, “they are growing faster than those businesses that just focus on their local markets.”

The impact of immigrants on the U.S. economy isn’t limited to small businesses, however. Many multinational corporations, such as Wal-Mart, General Motors, and Pepsi, hire immigrants to help them develop strategies to peddle their products and services in faraway places. Nowadays, companies see value in foreign-born employees who understand their “home market, such as what a consumer wants and how the supply chain operates,” according to Scott Cooper, an immigration attorney in the Michigan office of Fragomen, Del Rey, Bernsen & Loewy, a law firm with offices in 15 countries. “Companies need to have that kind of knowledge here in their headquarters to make smarter decisions about markets around the world.”

Victoria Negrete is a case in point. Since emigrating from Mexico in 1990, she has built two San Antonio-based marketing companies that help corporations sell into expanding markets in Central and South America. “After 25 years of studying Latino consumers from all backgrounds and economic levels in the U.S. and Latin America,” Negrete said, “it’s important to use what I’ve learned to help those who want to effectively reach the new marketplace, which is dramatically changing the face of America’s marketplace.”

There is an obstacle, however, that constrains the economic boost that foreign-born entrepreneurs might bring to their adopted homeland: U.S. immigration policy. Because of the strict limits on the number of permanent-resident visas—or “green cards”—that Washington hands out each year, thousands of foreigners who have attended American universities and worked for U.S. corporations wind up taking the knowledge they’ve gained back to their native lands.

“People that come here on temporary visas can’t start companies,” Wadhwa pointed out, noting that more than 1 million foreigners are currently waiting for green cards. “After a while, they get frustrated and decide that there are better opportunities for them back home,” he said. “The people who could be creating the next Google are becoming our competitors.”

The Dutch-born Chiesa, for one, possesses a green card. She recently married an immigrant from Italy and plans to apply for U.S. citizenship. In the meantime, she watches the political furor over immigration, illegal and otherwise, and wonders why a country built by immigrants would want to close its doors to them now, when a flailing economy could use them the most.

“Millions of immigrants like me have come to see America as the land of opportunity,” she said. “I couldn’t do what I’m doing anywhere else in the world. I’m living the American Dream.”

_____________

The author is a contributing editor at Inc. magazine.

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