

Why are entrepreneurs leaving the U.S.? - mchafkin
http://www.inc.com/magazine/201112/the-returnees.html

======
alecco
Anecdotal evidence and a lot of narrative. What a poor article. Reminds me the
also poorly researched bashing piece on Argentina a few months ago. They
missed the point completely as business is booming here. A recent startup
conference registered _hundreds_ of projects. INC is junk reporting.

Edit: Same reporter! This is hilarious.

[http://www.inc.com/magazine/201106/doing-business-in-
argenti...](http://www.inc.com/magazine/201106/doing-business-in-
argentina.html)

------
hello_moto
There are gazzilion reasons why people opted to do business back home as
opposed to the U.S. and all of them are probably similar decision-making as to
choosing your next programming languages: there's no one reason to rule them
all.

I'm an immigrant. I'm considering heavily to go back home and start a business
there (online, offline, doesn't matter). Reasons? cheaper workforce, more
power, more connections, cherry picking, bigger pond, more people (consumers),
etc.

I'll be using North America to include both US and Canada for the rest of my
comment.

Here are a few more detailed examples (all of them are of course anecdotes to
me):

Managing westerners that believe that they're entitled for everything such as
perks, private offices, their choice of programming languages, their choice of
best practices are often a time consuming activity. Back home, I can drive the
workforce to do the best practices that I believe without having to have long
discussions. Give them laptop, give them work, they're happy. This is because
their mindset, perspective, and standard are different than here in North
America. They're also cheaper.

After working with many programmers throughout my careers, I kind of grow a
belief that I can train the less "creative" developers back home to be at the
same level at most of the programmers in North America. They might not reach
the level of superstar engineers, but they will reach the level of more than
good enough at where I will be.

Connection is a big thing. It's harder to have a connection in N.A.,
especially when you're an immigrant (maybe it's just me). Where I come from,
hooking up with people who have excess money is very easy. Especially when you
graduate from a pretty good N.A. university (doesn't have to be Wharton or
Harvard, UC Berkeley, UC Irvine is enough). They look at you as someone who
has something "more" (whatever more that is).

In Iowa, you're nobody. In the [Capital City of your ancestor's land], you're
something. Imagine that.

Overall, I find that the majority of large Asian cities are probably more
alive than some well-known (but not necessarily large) N.A. cities.

Again, all of these are anecdotes.

~~~
moocow01
"Back home, I can drive the workforce to do the best practices that I believe
without having to have long discussions"

But this where you may be missing out on the value of a worker. In this day in
age, someone who just cranks out something to a mold or specification is not
as valuable to an organization. I'd much rather pay someone 5 times as much if
they can think on their feet and not always have to rely on me to figure out
how they should be working. Constantly having to define practices for a team
of lemmings is a typically exhausting full time gig when you're the only one
to take initiative and guide. The other problem is that we all make bad
decisions from time to time and it is important to make sure we have competent
people around us to correct our course when that occurs rather than a bunch of
yes-men.

~~~
hello_moto
It's not as bad as you'd think.

These best practices are just the foundation, not necessary the long-term
solutions. Once you have a set of standard, there's always room for
improvement or changes.

The biggest problem with N.A. workers is that they can be categorized into 3
types when it comes to "Do Things":

\- Do as they pleased (cause they think they know it all)

\- Follow the best practice

\- Follow the latest and greatest best practice and create some sort of work
revolution in the middle of directing the ship toward the goal

You kind of need a "Yes-Man" if you're on early stage of startup inventing
your own dream (I'm sure this is going to open a can of worm but hey... it's
your startup).

I'm not discussing whether this is the best way or the worst way. I'm focusing
on the "why" people chose culture that prefer "Yes-Man". It could be a way for
them to exploit human psychology for all I know.

That's the thing. You need to be there to see how things are
happening/working. It's totally different in there (Asia) than in here (US).

Ramsay's Kitchen Nightmare advises won't work in Asia while it may work in US
or UK.

~~~
quanticle
>You kind of need a "Yes-Man" if you're on early stage of startup inventing
your own dream (I'm sure this is going to open a can of worm but hey... it's
your startup).

Nonsense. You are not smart enough to run your company. That bears repeating:
You are not smart enough to run your company.

In other words, you will face unexpected challenges and problems that you
aren't smart enough to solve on your own. In a situation like this, being
surrounded by "yes men" is the worst possible place to be. Employees that
can't or won't think for themselves won't be able to help you get out of a
jam. They won't be able to tell you that you're going in the wrong direction.
Instead, your own workload will grow exponentially as you find yourself having
to tell your employees what to do as opposed to having them figure it out for
themselves.

Even worse, you'll find yourself cut off from vital information. You'll find
that you don't receive news unless you specifically ask for it. In other words
you'll be flying blind with faulty instruments. That's not a situation I'd
like to find myself in as an entrepreneur. I would much rather have employees
who can take initiative to fix problems and pounce on new business
opportunities. I would much rather have employees who tell me that things are
going badly without having to be prodded. A "yes-man" is the very antithesis
of this.

~~~
hello_moto
It's hard to argue because I've seen many companies/businesses that start that
way back home or in Asia.

Only later on when they're stable enough to hire smarter people then they
start to delegate.

YMMV. As I said it before, it's one of the reason why people want to go back
regardless whether I'm wrong or you're right.

It's the worst place for you but not necessary for other people.

Different culture but I haven't seen China nor South Korea fail so far :).

UPDATE: Since I can't reply any more (for whatever reason). Sure, innovation
might be lacking, but meh, most people come back because they want to create a
company/business. This isn't a debate about USA vs the rest of the world in
terms of innovation. It's about "why" people left US.

~~~
quanticle
>Different culture but I haven't seen China nor South Korea fail so far :).

It's also the reason they haven't made any major inventions or advances. The
yes-man culture is positively noxious to innovative thought, and if you look
at Korea right now, they're trying to loosen up that culture so that they can
innovate and don't get stuck in a role of constantly receiving secondhand
innovation from the US/Europe.

------
geebee
Yeah, it's worrisome to see immigrants or (especially) naturalized or native-
born citizens with strong ties overseas leave the US to start companies. But
not necessarily a bad thing.

If they are leaving because the US has become an unfriendly place to new
businesses, especially in high tech, that's bad.

If they are leaving because opportunities overseas are exceptional, and it's
easier to capitalize on those opportunities for people with strong cultural or
linguistic ties to a particular region, that's not necessarily bad. Having
grown up in SF, I see the tech boom as a mixed bag. It's of course phenomenal
to have so much wealth here. But I've also seen a lot of displacement. It's
hardly a crisis that we can't cram every single tech startup in to this small
peninsula, and I don't think it's a bad thing that people might actually want
to live somewhere else either, in the US (Austin, Seattle, Boulder...) or
overseas (Seoul, Bangalore, Copenhagen...).

That said, I do think these sort of stories do underscore why it's so
important for the US to have a steady and reliable stream of STEM graduates
come up through our own educational system. It's great to be open to talent
from the rest of the world, but becoming excessively reliant on it long-term
seems like folly to me.

~~~
mikemarotti
It seems to be a case of the latter. These entrepreneurs identified a gap in a
foreign market and exploited it. It's mutually beneficial - benefits them
because they are now a leader in their market, and it benefits us as there is
now one less social-fucking-coupon website that we have to hear about.

------
sounds
This is just one anecdote. I don't see a broader trend of entrepreneurs
fleeing the U.S. It's true, entrepreneurs are outside-the-box thinkers, so
they may do unexpected things. Though the U.S. has plenty of troubles, I don't
believe it's any better anywhere else.

(Except maybe Canada :-) I'm not from there, though, so I wouldn't know.)

~~~
randomdata
> Except maybe Canada

Canada is generally regarded as a terrible place for startups, unfortunately.
The laws are pretty restrictive towards "disruptive" technologies and the
government always bends in favour of the existing players.

~~~
OmarIsmail
> Canada is generally regarded as a terrible place for startups,
> unfortunately. The laws are pretty restrictive towards "disruptive"
> technologies and the government always bends in favour of the existing
> players.

What the heck are you talking about? Can you please provide some sources for
this? Other than telecom and media I can't think of any space in the tech
industry that the government is "restrictive" towards. In fact the Government
has amazing programs for tech startups like SR&ED and IRAP, and you have
amazing support systems like MaRS and Communitech in Ontario, with analogs in
practically every province.

The thing that makes Canada tough for startups is the lack of an established
VC ecosystem. This is why you see quite a few bootstrapped Canadian startups,
and only a few Canadian startups that go really big. But labour is
significantly cheaper than in the US (especially when you factor in free
healthcare), labour in Canada often has a more worldwide mix (because of a
large immigrant population), you get awesome tax credits and incentives, and
quality of life is near the top of the world.

I'm not usually so jingoistic, but this one-off comment was really quite
strange.

~~~
potatolicious
Canadian expat here. You missed one thing: a dramatically smaller talent pool.

The brain drain for coders from Canada to the USA is _immense_. It's not a
trickle, it's a full-on broken dam. I'm making easily _double_ here what I
would in Canada, even if you account for tax and cost of living. Software
engineers, in general, simply don't get paid well in Canada. The ease of
securing a TN visa also means that there is effectively very little barrier to
anyone who wants to bail to the south side of the border.

I can't speak for everyone - but amongst myself and my other Canadian expat
colleagues, a _very large_ portion of the Canadian coder population that
_have_ the chops to get hired have left. What does this say about the talent
pool that remains?

That's not a great position to work from.

Disclaimer: I am not at all claiming there aren't masterful coders in Canada,
but rather that a lot of the wheat has left the country, leaving an extra
heaping serving of chaff.

The funny thing is, among my Canadian colleagues here in the US, it's almost
universal to want to return to Canada. The health care is sane, society is
more peaceful, and the quality of life is noticeably higher than just about
any US city I've been to.

Those conversations inevitably, and always, turn into us sitting around
nursing beers, and wondering where in the hell we'd work in Canada that'd
satisfy us professionally.

Biggest software names in Canada? EA? SAP? RIM?!

This is somewhat OT from the entrepreneurial side of the question, but also
relevant. The job market in Canada has a _lot_ of code monkey jobs, and _not_
a lot of meaty software jobs that hackers crave. Much of the reason why
there's such a huge drain of programmers from Canada to the US is not just the
pay difference, but also professional satisfaction. I can't move home because
almost nothing in Canada will present the level of challenge, the level of
impact, that I can have here.

~~~
geebee
Do you have any idea why coders are paid so much less? Is it because all
professionals are paid less (ie., are lawyers, physicians, etc all paid less
in Canada)? Or is this more of a regional pattern combined with a cost of
living (ie., coders are paid less in Wisconsin than in California, but might
live better on what they do earn)? Or is it maybe related to productivity,
that coders in these concentrated areas are able to be so much more productive
than they are elsewhere that they're simply creating more wealth...

Anyway, would be interested in hearing the thoughts of a Canadian expat on
this one.

~~~
kerryfalk
I can't answer this question with a very high level of confidence for all of
Canada (I'm based out of the prairies) but my current feeling is simply that
the quality of the positions are lacking, as the parent has pointed out.

There's a view that programmers are code monkeys. If looked at from the
perspective of a manager within the manufacturing industry (Many of Canada's
high net worth individuals, especially in my city, have some sort of
manufacturing/hard goods background) programmers are high level production
staff.

As a result the jobs generally aren't very exciting and don't pay much.
Mechanical Engineers are more sought after in my city, at least.

Six figure jobs seem to be within smaller boutique firms and a few of the big
companies but it is far from the norm and there aren't many of those to choose
from. Programmers earning more than $150k are virtually unheard of, as far as
I know. My knowledge could be inaccurate here though so please take it with a
grain of salt.

To change it would mean more jobs of a different nature. Startups are the only
solution I currently see to change that long-term. And we have many other
issues to contend with beyond a smaller talent pool and scarce funding.

I think it'll take a few big wins by a few entrepreneurs with, as my lawyer
likes to put it: "balls of steel", to be willing to stay in their local
Canadian markets for there to be progress in making this a better place for
software engineers and in turn, other startups.

I am starting to notice a slight change and some locals urging me to stay
local. Perhaps there's hope for the future.

So to try and succinctly answer the question, I think the pay reflects how
interesting the jobs are, unfortunately.

~~~
mwd_
I've chosen to stay in Vancouver for personal reasons. I like it here but it's
not much fun to see friends find only mediocre opportunities locally and then
end up in Mountain View making ~six figures. Unfortunately as mentioned above
this creates a sorting process where the best and brightest leave.

There is a growing startup scene here, but the cost of living hurts -- this is
the land of $60-70K salaries and million dollar houses. Real estate costs are
such that the startups mostly seem to end up around the drug-addled Downtown
Eastside, which can be interesting to say the least. Vancouver's a nice city
but it's also kind of crazy.

------
tomkarlo
Amazingly, if you have thousands of entrepreneurs, some of them will go to
other countries. I'm sure there's also some examples of South Korean
entrepreneurs coming to the US and starting businesses here. I've worked with
some guys who came from Taiwan and started multi-billion-dollar US ecommerce
businesses.

Are either of those necessarily trends? Not unless you can come up with some
numbers to support the anecdotes, which this story doesn't seem to have. We
don't know if entrepreneurs are leaving at a greater rate than before, or even
if there's a net loss (lots of people come to the US and end up starting small
businesses.) If it's in the story, I missed it.

------
protez
It’s true that South Korean start-up scene is getting better from the interest
of institutional funds, which got up from the apparent success of the
Grouponzi-style businesses, esp. TicketMonster. But it’s a whole lot different
story that the Americans return here because Seoul is a better place for
start-ups. The M&A market for Internet start-ups in Seoul is almost non-
existent, except few cases like TM, and TNC, the only acquisition Google made
in South Korea. I don’t understand how this ecosystem would persist without
deals any longer.

As a side note, the Shin in the article is a family member of the “big
brother” Chaebol, Samsung Group, which has close knots with big conglomerates
such as CJ Group, Joongang Ilbo, Shinsegae, and more, almost to the extent of
their aggregate revenue reaching almost a half of South Korea GDP, so he
earned attractive deals from big local brands so easily. Shin wan’t irrational
enough not to exploit his family connections to build a business based on a
totally unprofitable model, a feat only possible at the right moment and right
place. Definitely, he’s a smart guy, smart enough being ready to return if he
no longer sees his advantages here in Seoul, which I think would be quite
unlikely though, due to his superb “Zuck status” in S. Korea.

------
8bitpal
I'm really interested in what compels entrepreneurs to leave a country or area
that was formerly a hub for startups.

I posted before in the context of SOPA:
<http://news.ycombinator.com/item?id=3265961>

What would it take for you to leave the place you are based now and try your
luck somewhere else?

~~~
polyfractal
I can think of a number of reasons.

-If you make hard-goods, being closer to your manufacturing may be helpful

-Cheaper staffing/skilled labor in non-US countries

-Cheaper cost of living elsewhere

-More corporation-friendly tax regulations

~~~
8bitpal
Rationally those are compelling reasons for a business to leave.

But I think personal reasons play a huge role in this decision. A majority of
the people tend to only leave when the situation becomes unbearable (or not
even then).

What would it take for you to leave your home country/area?

I guess it's hard to say until it actually happens. One reason for me to leave
would be an oppressive government, I guess.

------
bryanlarsen
Sure, there are entrepreneurs leaving. But there are still lots of people
moving to the States to become entrepreneurs. YC is one of many factors.
What's the ratio of coming to going? I suspect that it's still quite a bit
higher than 1.0...

------
beefman
Yet another article written for the pleasure of its author. Just tell us what
data you have and how they answer the question in your (leading) headline.
Three sentences and a table; done.

~~~
mchafkin
I take exception to this point--You want a table? Make a table--But so you
know: There are very few stats on reverse migration because the U.S.
government stopped tracking it in 1957. There have been some really great
studies academic studies, if you're interested in checking them out.

[http://www.kauffman.org/research-and-policy/immigration-
and-...](http://www.kauffman.org/research-and-policy/immigration-and-the-
american-economy.aspx)

But even these studies are pretty small and fairly limited. Definitely more
research is needed into this area.

~~~
beefman
Your comment would have been an excellent alternative to the article; I'm not
sure why you're taking exception.

------
PLejeck
If SOPA passes, imagine how much worse the situation will get D:

------
nirvana
In several of the comments, people have asked why entrepreneurs might want to
leave the USA, given the common perception that the USA is a great place to do
a business. I'm making this comment in response to those questions as an
example of an entrepreneur whose left the USA. My reasons for doing this are
obviously going to be different than those who would choose not to, so don't
get mad. I'm not trying to persuade you, just explaining.

I was born in the USA, and worked for startups for nearly 2 decades in the
USA, but when it came time to do my own startup, I left the USA. There are
many reasons for this, and further, when I come back to the USA, I'm reminded
of some of the nice things we've given up.

The biggest reason we left is that the cost of living is high in the west
coast of the USA, compared to most of the rest of the world. If we could
travel around the world and actually save money while getting to do something
we've always enjoyed doing, then that's great. Going to europe is more
expensive than the USA, but not that much, well worth it. In fact, berlin was
such cool city, that if germans were more supportive of the idea that we might
want to stay there for an extended period we'd be working on residency
permits.

But behind this reason is another one- The USA is going in the wrong
direction. Pick whatever examples work best for you- SOPA, domain seizures, an
increasingly baroque tax code, increasing regulations all over that, even
though they don't yet effect small businesses much, would be a burden if we
are at all successful, even dealing with the TSA when I want to fly, and the
thought that my tax money is being used to kill afghani, iraqi, pakistani and
other children.

When I was young, I was brought up to believe that the USA was great because
it believed in human rights. That the bill of rights protected us from an out
of control government. Over the years, I've seen those rights be violated, one
by one, and the supreme court claim that it was "legal" in their rulings. I've
come to believe that there is no effective restraint on the US government by
the legal system, and I've been shocked to see, how rapidly these
transgressions are accelerating.

For instance, I still can't wrap my mind around the fact that at ever airport
adults and children have a choice between being photographed nude by
government agents and being molested by same. This is a violation of state
laws in probably all 50 states, yet no charges have been filed. Worse, while
many americans protest, there has been no action. I take this as evidence that
americans will put up with any rights violations. Many of them will get mad,
but they have no method to resolve the situation. While Obama was president
when these scanners were put in, only a couple of the people wanting to run
against him want them out. And while Bush was president when the TSA was
created and the PATRIOT act was passed, Obama has expanded both. Despite the
majority of people opposing various bits of legislation (like the bank
bailouts) they still get passed. So, I see no way for things to turn around
until things get bad enough to make people really unformfortable.

Also, I've studied economics and been watching the economic situation. I've
come to understand the real nature of the federal reserve and the fiat
currency of the USA. The USA benefited greatly from Bretton Woods alls these
decades, but a side effect of that is that the inflation that has existed in
the dollar supply has been exported to other countries, giving americans an
artificially better standard of living. This in itself is not bad, but it and
our debtor economy are dependent on that money being kept out of the system by
being locked up in vaults and pocketbooks and accounts of foreigners who want
it because they think the dollar is a strong currency. Given the fact that our
economy is faltering, but more importantly our government is spending like
crazy (obama is worse than bush who was worse than clinton who was worse than
bush who was worse than the very bad reagan who was worse than carter, it just
goes on...) eventually they are going to be inflating so fast that the dollar
loses its reserve status, and at that point, it won't matter that the US
government is inflating because people will start dumping their dollars. We'll
start seeing the effect of all those previous years inflation that was
exported realized in the dollars in a rather short time. This is not a black
swan event, it happens regularly, just not often enough that people remember
its possible. But because of bretton woods, it will be much worse for the usa
than, say, argentina.

Its pretty much impossible to do business in the USA and not be tied up in the
dollar economy.

Meanwhile, because I have been a traveller, I've been to other countries and
seen how in some ways at least many of them are better than the USA. Chile for
instance, has a culture that is more instinctively capitalist. New Zealand,
while its more socialist on the surface has a much less corrupt government. So
the question becomes, of all these countries, which provides the best
protections of the rights I care most about and is also going in the right
direction? I've not yet decided, I'm still traveling.

There's a lot to commend the USA. One surprising thing is how convenient
having amazon and walmart is. Especially compared to europe. You can just
order anything you want from amazon or go to a walmart and buy most anything
you want. In europe, the retail stores are generally very tiny, and with the
exception of an astounding chain of 3 story electronics shops we found in
berlin, its often very hard to find obscure things. And when you do, of
course, the prices are often almost doublet the USA due to tariffs and on top
of that you've got %20 VAT.

One downside of running a startup this way is that traveling involves spending
a fair bit of time on the traveling part. This gets in the way of the startup
part, and it is also a bit disruptive. Each time we go to the next country we
have a bit of time figuring out where the grocery store is, arranging the
apartment to suit our needs, etc. We're staying in AirBnB places almost
exclusively and AirBnB has totally solved a lot of the hassles of having to
find apartments. But we're going to try staying linger- getting permits to
stay a year or so in each country.

Finally, its a hell of a lot of fun to run a startup this way.

So, I'm sure most on hacker news disagree with at least something I've said,
and this post is by its nature political because it is a questions whose
answers, for me, are politically motivated. I'm not looking for a debate. If
you disagree with my perspective on any of these things, that's fine, but I
took a long time to reach them, and a lot of consideration, and there's really
not much point in trying to persuade me (nor am I trying to pursuade you. I'm
just answering the question.)

I am up for answering followup questions if anyone's concerned about mechanics
etc.

~~~
davidw
> Pick whatever examples work best for you

We have a black guy as president. That simply would not have happened even 20
years ago. At protests, even relatively minor nastiness by police is filmed
and broadcast immediately. Look up what the police did in some places in the
60ies as a comparison. We have the internet to get information out about
various things.

It's easy to see and complain about the bad things, and right to do so, or
else they wouldn't improve. It's also worth considering though, that things
have improved in many ways.

> Chile for instance, has a culture that is more instinctively capitalist.

I don't know much about Chile, but didn't they vote in a guy who was more or
less a communist in the 70ies? Who was then murdered, along with many people,
by a brutal dictator, who put in place many capitalist institutions? Which do
turn out to work better than the alternative in many cases, so they've been
kept? I don't know what the average 'man on the street's view of the whole
thing is though. Is it possible the capitalism was kind of foisted on the
country and has stuck because it more or less works, but that it's not all
that ingrained into the culture? I have no idea, honestly, but do think the
Startup Chile thing is pretty cool even if they didn't accept me.

~~~
rdouble
Maybe everyone's a capitalist there out of residual cultural fear of being
targeted by a caravan of death for having an alternative viewpoint.

~~~
davidw
They actually have seemed to pick fairly sensible, middle of the road type of
people after having ditched Pinochet, rather than lurching to the other
extreme.

It seems like a country that's doing pretty well, but I honestly have no idea
what things are like 'on the ground'.

~~~
rdouble
My comment was tongue in cheek. However, I did think the GP's comment about
Chile being "instinctively capitalist" was a bit ridiculous considering the
country's history.

------
billpatrianakos
There may be a few stories like this but this is the exception, not the rule.
As much as we have problems here in the states, it's still one of the easiest
places to start and run a business (#4 in the world).

I didn't quite get _why_ the guy in the story left for Korea though. It was
just a story of an entrepreneur who left the states and is now S. Korea's
Zuckerberg. So? I mean, it's impressive but so what if he left? Maybe his
particular business would fair better there but again this the exception and
not the rule.

There are other countries like China and India that have exploding GDP but the
great thing about the U.S. is that while we are decently regulated those
regulations don't do much to Hirt the founding of a business and allow
businesses to expand easily. For example, India until recently has been chock
full of mom and pop shops but not many larger, expanding businesses. This is
because they didn't allow you to open a store in more than 2 location until
just recently. That means no corporate franchises and the like. Over here you
can pretty much do what you please within reason. Not sure why I got off track
with the India anecdote but I just learned about it and thought it was very
intriguing.

~~~
CWuestefeld
_while we are decently regulated those regulations don't do much to Hirt the
founding of a business and allow businesses to expand easily._

On the contrary, consider:

[beginquote] In the wake of Sarbanes-Oxley legislation ..., "the psychology of
the entrepreneur has changed dramatically," say Mark Heesen, president of the
National Venture Capital Association. The basic reason is that in a world with
Sarbanes-Oxley, everyone who wants to take their company public has to deal
with extra paperwork and hoops to jump through. Those costs can add up and
sometimes make going public simply not worth it. [1] [endquote]

For further details on this, see also [2]

[1] [http://money.usnews.com/money/blogs/risky-
business/2008/07/1...](http://money.usnews.com/money/blogs/risky-
business/2008/07/17/sarbanes-oxley-a-chilling-effect-on-venture-capital)

[2] <http://www.nysscpa.org/cpajournal/2006/606/infocus/p14.htm>

~~~
wtvanhest
If your concern is going public then you have successfully grown a business to
a gigantic and reasonably stable level and have beat all the odds. You have
therefore picked the correct country.

While Sarbanes-Oxely does pose a financial burden on companies which is still
too high (typically $1M to $3M/year), it does provide a level of protection
for employees of those companies, bond holders and mutual funds which hold
most of America's retirement money.

Paperwork and hoops for going public are handled by accountants and attorneys.

Sarbanes effectively removed corporate governance issues which cause huge
problems (like having a captured board or having the audit firm also being
paid for consulting etc.

The citations you cited are written by The National Venture Capital
Association who lobbies against Sarbanes because it affects their returns. In
fact, 69% of NCVA dues go to lobbying.

"We estimate that 69% of your dues will be used for lobbying and is not
deductible because of recent changes in federal tax law."
[http://www.nvca.org/index.php?option=com_content&view=ar...](http://www.nvca.org/index.php?option=com_content&view=article&id=85&Itemid=111)

The second article you cite has the following quote: "Despite the many
chilling headlines and reported cases where companies have cited SOX as the
reason to shelve plans for an IPO, the evidence to date that SOX is sufficient
cause for companies to stay private has been largely anecdotal or limited in
scale."

\--- All that said, SOX is too expensive and the D&O insurance should be
reduced to increase public company valuations and IPO valuations. It does
represent an unintended burden on shareholders, CEOs, Bond Holders etc. but
SOX is overall positive in the sense that it minimizes fraud and reduces risk
for all stakeholders including non management employees.

