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Modernizing the American Dream for Software Companies in a Global Economy

By October 24, 2011Article

Thoughts and perspectives after an interaction with President Obama …
I was fortunate enough recently to take part in one of President Obama’s speaking tour stops as he tries to drive support for his all-encompassing American Jobs Act. As I stood behind the President during his address and listened to his remarks, I could not help but reflect on my own company, 6fusion, and my own professional career in the context of the current state of the American economy and policies directed at improving it.
In a strange way, they are related.
First, let me state that I am not an American citizen. This affords me a unique political position. My opinion doesn’t matter and cannot be counted by a ballot, but I do have a truly and purely objective viewpoint. So, take my commentary for what it is worth.
President Obama roused the audience in North Carolina with a passionate address laced with a powerful dose of patriotism and the “rah-rah” “yes we can” rhetorical theme that helped win him his current job. He spoke of how it is not in America’s nature to finish second place. He spoke about “getting back” to the roots of what built the world’s greatest economy – arguably of all time: a strong and powerful middle class.
I wholeheartedly agree with the President’s logic. A strong middle class means consumer spending, which in turn fuels more growth, more innovation and more hiring. It is the self-fulfilling economic engine. And I further agree that growth and innovation is most aptly derived from the small-business sector of the economy.
It seems to make sense then to drive tax incentives for hiring and making technological investments within this sector while plowing money into improving a faltering education system, which is supposed to feed skills into the small business machine.
But here’s the thing.
The world is flat and the economy is global.
We no longer live in a reality where borders matter much. The most powerful companies in the world deliver their products across a global workforce. Manufacturing in Asia. Software development and customer service call centers in India. Management and specialty skills are in a G7 nation. Finance and tax reporting is moving offshore. Powerful companies do this not because America is not a good place to do business. They do this because it is allows them to grow their profit margin and return more value to their shareholders.

There is no such thing as a small business owner that aspires to be a small business owner. There are only sole proprietors that appreciate not having a boss, and there are the rest of us. And the rest of us all aspire to be the next Apple, Google or Procter & Gamble of our respective industries.

This means that I, too, will one day attempt to find cheaper labor, less regulation and a global tax strategy.
Interestingly, the Age of Information is making this possible faster and to businesses of all sizes. We are in a period of upheaval and disruption in the market. As Nicholas Carr argues, just like the electricity grid leveled the playing field for small businesses during the latter stages of the Industrial Revolution, the Internet and cloud computing are doing the same thing in the Age of Information. The tools of profit that were once reserved for the “titans of industry” are again becoming commoditized and democratized.
Driver for meaningful, lasting jobs
These new dynamics are rewriting the recipe book for business success. And American domestic policy needs to fall into line or risk potentially irreparable harm.
Plowing tax money into supporting education may not create jobs the way the President’s advisors think they do. Investing in education really only enables mobility in the flat world and global economy. I am living proof of this.
I leveraged interest-free, government-backed student loans to get a post-secondary education that would have been impossible otherwise (for a kid with five older siblings in a very modest single income household). I then proceeded to work a grand total of eight months in my “home and native land” before leaving the country to take advantage of a better opportunity produced by the global economy. The government helped me. But it did not help the country. Brain drain is an epidemic.
In my view, tax breaks for existing businesses do not create jobs. They merely extend the stay of existing jobs. Any business owner that tells you if they paid less tax they would be able to hire more employees is not being entirely truthful. Paying fewer taxes, to my further point, merely allows a business owner to make more money and return more value to their shareholders (of which I am obviously a fan).
Ingenuity and intellectual property are what creates meaningful and lasting employment in the modern era. My company – 6fusion – like many others in the Information Age, is proof positive. Over the span of 18 months on the ground in the United States, my company created 20 brand new jobs in the American economy. And I have room for many, many more. There are not many legacy businesses (the ones that benefit from tax breaks, by the way) that can make that claim of employment growth rate nowadays. And while 20 employees doesn’t necessarily move the needle in terms of helping the President keep his job, stories like mine represent the microcosm of a better plan.
Software entrepreneurs need pre-plan before migrating to U.S.A.
I moved my company, its intellectual property, and myself to the United States because of American venture capital. The world is flat and the economy is global. As a citizen of the world, I could have put 6fusion almost anywhere. But I chose America. I’m not even American, and that is probably the most patriotic American thing I can think of in the business world.
I lived to tell the story of migrating to the United States, but many entrepreneurs are not so lucky. American immigration policy today primarily supports large enterprise intercompany employment transfer or the importation of specific domain experts to perform “niche” jobs.
As we reflect on the recent death of Steve Jobs, it is worth noting that if he were not American born the chances he would have built the Apple dynasty in the United States would have been dramatically reduced. Mr. Jobs did not have a specialized university degree, requisite years of experience or the umbrella of an established foreign entity under which his little project in Cupertino could have taken root.
The reality is that for entrepreneurs who do not carefully and cautiously execute a two-year pre-plan to come to the United States, their chances of enriching this country with their ideas and innovation are slim.
Private and institutional investment fuels innovation, spurs creativity and supports the development of new companies so they can employ people – not tax breaks for existing businesses.
My view is that American domestic policy would be better served with a more modern approach to the American Dream. Entrepreneurial risk and reward is what defines American capitalism.
Enabling entrepreneurs to take risks
Tell me more about policies that encourage the wealthiest Americans and foreigners alike to make long-term investment in American-based startup companies. Make it easier for entrepreneurs to follow their dreams and allow their ideas and innovations the time to properly distill and take root in the American economy.
Competition is good for everyone. What about programs to support the growth and proliferation of new and aggressive investment funds?
American workers now and in the future would be better served with policies designed to support not just getting a higher education, but sticking around to use their skills in America. Further still, foreign students that come to American schools need to be incented to stay after they graduate.
Show me trade policy that removes more barriers for American companies to sell products and services on a global market. Why do politicians insist on trying put up walls around the American economy?
Immigrants built a considerable portion of the modern American middle class; and they will again. Show me ways to make it easier (yes, easier) for foreigners with ideas that attract American investment capital to come to America, stay in America and spend their money in America. And conversely, make it easier and less painful for Americans emigrants to repatriate wealth they have created abroad.
Modernizing the American Dream is definitely not a prescription. It is a process that will require patience. And it will take a generation of political collaboration in a time when personal political ambition sacrifices the common good all too often.
As I stood behind the President during his address I could not help but feel the weight of his burden. The odds are against him and the sharks are most definitely circling. Maybe that will make it impossible. But then, again, maybe the sense of defiance in the face of adversity is exactly what might catalyze meaningful change.
John D. Cowan is Chief Executive Officer of 6fusion. He is also a 6fusion founder and co-inventor of 6fusion’s WAC algorithm. He is regarded as the company’s business model visionary. In addition to 6fusion’s day-to-day management responsibilities, John is responsible for the overall strategic vision and commercial direction of 6fusion. A 12-year veteran of business and product development within the IT and telecommunications sectors, his tenure includes success creating new business during the period of telecommunications deregulation as well as developing and launching new technology products and services globally.

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