Inc.: The Face of Success, Part I: How the Indians Conquered Silicon Valley

The Indians are Silicon Valley’s most successful immigrants. What have they done right, and what can women and other races learn from them? Part 1 of 5.

Visit any Silicon Valley technology company, and you’ll notice that it looks like the United Nations—with people from all over the world working together toward a common goal. It wasn’t always like this. Back when Silicon Valley was still developing semiconductors, it was largely white in complexion. As the Valley evolved and grew, it started attracting the best and brightest from all over the world. At first it was the Europeans, and then the Taiwanese. Then the whole world came.

But in many important ways, things haven’t changed all that much. Indians have done amazingly well as entrepreneurs in the Valley, but other groups—African Americans and women, to name two—remain largely out of sight. As an Indian-born immigrant and tech entrepreneur myself, I have first-hand experience of some modes of thinking that, frankly, shocked me and rocked my belief in the Valley’s story of its own openness. It appears to me that despite the success of Indians, meritocracy in the tech industry may be a mirage.

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I came to the U.S. in 1980 and observed the evolution of the Valley’s leadership first-hand while founding two technology companies. The tech CEOs you read about then didn’t fit the old stereotypes. The people on the covers of tech magazines were incredibly diverse. When I became an academic and joined Duke University in 2005, it was this diversity that inspired me to take a look at the impact of skilled immigrants on U.S. competitiveness.

The seminal research on immigrants and diversity in Silicon Valley was conducted by University of California-Berkeley professor AnnaLee Saxenian, who published a paper titled “Silicon Valley’s New Immigrant Entrepreneurs” in 1999. Saxenian found that immigrants accounted for one-third of the scientific and engineering workforce in Silicon Valley, and that Indian or Chinese CEOs were running a quarter of its high-technology firms. Saxenian analyzed data on firms founded in Silicon Valley from 1980 to 1998. Some 17% of the tech firms were run by Chinese immigrants (including Taiwanese) and 7% by Indians.

In 2006, my research team collaborated with Saxenian to update her work. The trend she’d seen in Silicon Valley had become a nationwide phenomenon. Among U.S. tech companies founded between 1995 and 2005, 25.3% had a chief executive or lead technologist who was foreign-born. These companies generated $52 billion in revenue and employed 450,000 workers in 2005. In some industries, such as semiconductors, the percentages were much higher: Immigrants founded 35.2% of startups.

In Silicon Valley, the percentage of immigrant-founded startups had increased to 52.4%. Silicon Valley’s entrepreneurship ecosystem included people from almost every nation in the world—from Australia to Zimbabwe.

Indians were the most numerous of the immigrant tech-company founders. They had founded more startups than the next four groups (from Britain, China, Taiwan, and Japan) combined. The proportion of Indian-founded startups in Silicon Valley startups had increased from 7% to 15.5%, even though Indians make up just 6% of the Valley’s working population. Indian immigrants were standing shoulder-to-shoulder with the world’s most innovative tech workers, and were matching them in entrepreneurship.

Why were Indians so successful?

  • The first few who cracked the glass ceiling had open discussions about the hurdles they had faced.
  • They agreed that the key to uplifting their community, and fostering more entrepreneurship in general, was to teach and mentor the next generation of entrepreneurs.
  • They formed networking organizations to teach others about starting businesses, and to bring people together. These organizations helped to mobilize the information, knowhow, skill, and capital needed to start technology companies. Even the newer associations had several hundred members each, and the more established associations had more than a thousand members.
  • The first generation of successful entrepreneurs—people like Sun Microsystems co-founder Vinod Khosla–served as visible, vocal, role models and mentors.  They also provided seed funding to members of their community.

The Indian networking organizations learned the rules of engagement of Silicon Valley and mastered these.  For a while, these were the most vibrant and active professional associations in the region.

I concluded that Silicon Valley is the world’s greatest meritocracy—in which all talented people can succeed on the basis of their achievement.  That skin color, accent, and background didn’t matter there. And that by emulating the Indians’ tactics, women and racial minorities could achieve a similar success.

At least, that’s what I thought until I actually moved to the Valley.

The Face of Success is a five part series by Vivek Wadhwa. Part II will examine the absence of women in Silicon Valley startups