Daniel Shin and the Virtues of Brain Circulation

by Reihan Salam

The idea of “brain drain” has been increasingly supplanted by “brain circulation,” i.e., the notion that migration can enrich the sending and receiving country, particularly the migration of skilled individuals who can accelerate the diffusion of valuable ideas and practices. This came to mind as I read Max Chafkin’s excellent new article on Korean Americans who’ve launched start-ups in South Korea. Chafkin leads with the story of Daniel Shin, a 26-year-old serial entrepreneur who built a successful Seoul-based Groupon clone. Shin has become a minor celebrity in Korea, where he was invited to dine with the country’s right-of-center president, Lee Myung-bak:

Last December, [Daniel] Shin was summoned to South Korea’s version of the White House—the Blue House—for a meeting with the country’s president, a former Hyundai executive named Lee Myung-bak. In attendance were the CEOs of many of the country’s largest companies—LG, Samsung, SK, and half a dozen others. “It was the conglomerates and me,” says Shin. “They were saying, ‘We have X billion in revenue, and we’re in X number of countries.’ I’m like, ‘We didn’t exist a few months ago.’” Shin laughs—a sheepish, nervous laugh—as he tells me this story and shakes his head. It’s been a crazy year and a half. “I think it was the first time the president had learned an entrepreneur’s name,” he says. A few weeks later, President Lee gave a radio address in which he sang Shin’s praises and urged the youth of South Korea to follow his example. (In Korean, family names come before given names. Throughout the rest of this story, I’ve used the Western convention, as do most Korean business people.)

At the end of last summer, I traveled to Seoul, an ultra-modern city of 25 million, because I wanted to know how a twentysomething kid with limited money and limited language skills could become this country’s great economic hope. I wanted to know what in the world was going on in Seoul—and also, what in the world was going on inside the head of Daniel Shin of Wharton and McKinsey and McLean, Virginia. Why would a guy who could have just as easily written his own ticket in the U.S. decide to do so on the other side of the world?

The answer isn’t too difficult too discern. Korea is an increasingly affluent country with a high level of broadband penetration, and it’s been home to a number of innovative consumer internet businesses, particularly in the MMOG and citizen journalism spaces. If you’re looking to clone a successful U.S. business model, it’s a good place to go. But reverse innovation is also possible: new business models have arisen in Korea that could flourish in the U.S.

So should we fret about the fact that young Americans are leaving the country to launch new businesses? Not in the slightest. It gives them valuable experience that they can bring back home:

He isn’t the only entrepreneur who talks about coming to the United States. “I know for sure that I want one more stint in the States,” says [Daniel] Shin. He is curious to find out if he can replicate his success in America’s larger, more competitive market; and even though he now speaks passable Korean, he has never stopped thinking of himself as an American. “I don’t know when, and it’s too early to think about ideas, but I know I’ll probably end up going back and forth,” he says. “I think it’s possible to do stuff in both places.”

Earlier on, Chafkin referenced a Korean entrepreneur who was hoping to raise enough money to secure an investor visa that would allow him to work and settle in the U.S. If the U.S. plays its cards right, start-ups overseas could prove “farm teams” for the American market. This already happens to an extent, though it is flummoxed by our non-territorial tax system. And it might be undermined by the populist backlash against wage dispersion: while some of us think it is obviously beneficial for highly successful entrepreneurs to work and settle in the U.S., others will condemn them as members of the 1%. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.