Immigrants made America successful; can we remain strong while driving them away?
- Feb 20
- 7 min read
Updated: Feb 20
What is the cultural framework we must retain or rebuild if we want to remain successful as a nation and how much of that same cultural framework should individual businesses be adopting?
Empirical evidence shows that immigrants and immigrant-native founder teams are disproportionately represented across high-growth, venture-backed companies and are associated with higher rates of innovation and patent filings. The very same “startup culture” that characterized the coming together of 50-states as individual experiments bound together into a stronger democratic whole is why regional clusters of startup companies frequently outperform their older, larger and better funded predecessors. A study done by the National Foundation for American Policy in 2022 showed that immigrants started more than half of America’s unicorn (Billion-Dollar-valuation) startups; nearly two-thirds (64%) of these companies being founded or cofounded by immigrants or the children of immigrants; and almost 80% of them had an immigrant founder or an immigrant in a key leadership role, such as CEO or vice president of engineering. (1)(2)(3)
It therefore shouldn’t surprise us the same type of cultural environment that characterized a nascent United States – individualism, diversity, low status hierarchies, risk-taking, and a sense of limitless upside – maps well onto corporate entrepreneurial success. In addition, because over time immigrants to the U.S. have come from a broad range of different countries, the immigrant culture is, by definition, diverse (even if an individual new startup may reflect a bias toward a particular culture or ethnic background). Collectively, they represent the diversity and cultural framework that companies will need to survive in a transformative AI world and this country will need to thrive in a world that is increasingly volatile economically, politically and climate-wise.
The passage of time and success tend to mute individualism, drive out diversity, create false status, enable beliefs of entitlement, reduce risk taking and limit perceptions of what is possible. All of which are as accurate a description of our nation today as it is of many Fortune 500 companies (including the Magnificent 7). Described as “organizational inertia” by scholars and practitioners, our misplaced entrenchment and comfort with the status quo only makes us vulnerable to the inevitable forces of change. (4)(5)
The very factors enabling stability, scale and success over one decade become limits on success in future decades. New markets and disruptive opportunities tend to be seized more quickly by entrepreneurial startups precisely because they retain the cultural traits incumbents lose: a willingness to take asymmetric risks, a tolerance for failure, flatter status structures, and a diversity of perspectives that fuels creative problem solving. Large numbers of small, hungry entrants create a marketplace of ideas and approaches that incumbents rarely replicate from within. As a nation, that means even if we decide we want to limit immigration, we must continue to embrace diversity. (2)
Startups’ advantages are not mystical; they are structural and cultural. Starting from zero means the upside seems limitless. In addition, the diversity they typically represent provides statistically relevant upsides: “Companies in the top quartile of gender diversity were 15 percent more likely to have financial returns that were above their national industry median. Companies in the top quartile of racial/ethnic diversity were 35 percent more likely to have financial returns above their national industry median.” Specifically, in the US, ethnic/racial diversity has a stronger impact on financial performance than gender diversity. (10)
A group of startups provides a natural environment for diversity, and the harsh realities of startup life tend to weed out status and entitlement. Founders and early teams operate with high expectations, low legacy baggage, intense mission focus, and a tolerance for rule breaking that accelerates iteration. When combined with a founding CEO who privileges speed over process, a “ask forgiveness, not permission” ethos, and the stark reality of limited cash runways, these elements produce rapid learning cycles and fast product market fit experiments.
These same “success factors” often also breed natural market paranoia, internal competition, and burnout. At a national level, they provide the fodder for retaining the status quo, maintaining existing entitlements, and an environment in which current wealth is ever more disproportionately distributed but less new wealth is formed. (6)
We tend to treat transformation as a technical problem — a matter of product roadmaps, scaling plans, and process optimization — and underinvest in the cultural work required to behave like a startup. Mature companies struggle with the leadership dictates of a single-minded focus on entrepreneurial success. The result is predictable: pilots that fail to scale because the organization’s incentives, status systems, and risk tolerances remain unchanged. At the same time, a recent Russell Reynolds research study of transformational leadership found that nearly three in four business executives believe their organizations will cease to exist in the next decade without fundamental transformation. (4)
Achieving such fundamental transformation requires deliberate cultural design, not just structural reorganization. In the corporate world we refer to the process as “creative destruction” – change or die, either internally build new businesses that inherently embrace the necessary culture – or face the reality that an entrepreneurial newcomer will outdo you, sooner or later. This is obviously a process that is far more difficult to do as a nation, but one where individual states’ rule and independence can allow for important forward progress. An interesting quote from the Russell Reynolds work, refers to the Dutch company, Royal Philips, but seems equally true of where both U.S. political parties are struggling mightily: “People will cling onto what they have or had. A lot of our people were survivors in the company—they had mastered the art of surviving previous leaders and restructurings. This creates a layer of passive resistance that must be tackled to succeed with transformation.” (4)
Some large firms have intentionally institutionalized elements of an “immigrant” or startup culture and show how it can be done. Cisco’s Innovate Everywhere program and similar company- wide initiatives at places like Apple, IBM, and Microsoft create sanctioned spaces for entrepreneurial behavior, cross functional teaming, and rapid experimentation. They have made it clear internal efforts must always compete with the external startup world and that the internal can and will be replaced by the external. They have created spaces for risk taking, embraced newcomers (immigrants) and especially what we call “round-trippers” (former employees who left to create new startups and then sold them back to the parent, thereby temporarily “coming home”). Google’s long standing emphasis on employee autonomy and internal incubation (the spirit behind 20% time and Area 120) illustrates how distributed experimentation can be scaled into formal innovation channels. These are exactly the types of innovation that can be practiced differentially at a state level. These programs do not eliminate the tensions of scale, but they provide repeatable mechanisms for surfacing and funding high risk, high reward ideas. (6)(7)
If an incumbent decides to adopt this approach, there are practical design principles that increase the odds of success. First, creating a protected autonomy: a new division, incubator, or legally separate entity with its own funding runway, hiring rules, and decision rights reduces the friction between startup speed and corporate controls. Second, codify re-entry and alumni pathways: intentional “boomerang” policies that welcome former employees back — and track alumni networks — turn departures into a talent pipeline and preserve institutional knowledge; empirical studies show boomerangs often onboard faster and can outperform external hires in relational roles. Third, measure different KPIs: use learning velocity, validated experiments, and customer adoption metrics rather than only quarterly revenue to judge early ventures. Fourth, protect psychological safety while encouraging competition: celebrate individual initiative and tolerate failure, but pair that with clear guardrails to limit destructive internal rivalry. (8)(9)
These are not necessarily “easy” cultures, as they tend toward market paranoia, internal competition, toward “what have you done for me lately,” toward high levels of internal competition and the type of work ethic that typifies a startup more than a large corporation. All of which can lead to attrition if leaders do not balance entrepreneurial freedom with humane workload expectations and career pathways (or, what often becomes the decisive factor in startups – high levels of stock compensation and potential wealth formation, something much harder to do in a large corporate culture. Larger companies can somewhat compensate by celebrating individualism, allowing for greater flexibility of work styles, maintaining the possibility of rapid advancement and acknowledging that some will want to pursue richer pastures outside the corporation. To mitigate these risks, pair startup units with rotational leadership, explicit re-integration plans for employees who return to core business roles, and a small set of non- negotiable corporate values that anchor behavior across units. (8)
Understanding these cultural aspects and being willing to adopt some or all of them, is often the single most difficult challenge faced by a market incumbent – and being under the stresses of market change and a risk to dominance makes adopting such change all the more challenging. All of that is multiple times more difficult if you try to practice it on a national level as a country facing an ever more volatile, climatologically, resource challenged and politically volatile world.
At a corporate level, the evidence base for making these cultural changes is robust and growing. Work by the National Bureau of Economic Research documents immigrant entrepreneurship and patenting advantages. Work by the National Foundation for American Policy documents the share of unicorns and high growth firms with immigrant founders. McKinsey’s diversity reports highlight the correlation between diverse leadership and financial performance. Case studies from Cisco and Google highlight practical programs that institutionalize startup behaviors inside large firms. (1)(2)(6)(10)
As a nation, all of these are more challenging structural and cultural features to implement. The easy logic is that we should defer to stronger, more centralized leadership to force the needed changes; however, the large corporate world has repeatedly shown us that even the strongest of big corporate leaders do this poorly. A better path is to refocus ourselves on the fact that we are a nation of states – 50 more startup-like structures that can each choose their own path and allow others to follow where success occurs. Let’s let each of those states enable the ethnic and cultural diversities, immigrants included that can show us the pathway to a better future.
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