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From: Biniam Tekle (biniamt@dehai.org)
Date: Sat Nov 20 2010 - 15:37:04 EST
http://online.wsj.com/article/SB10001424052748704104104575622930336614468.html
* NOVEMBER 18, 2010, 8:09 P.M. ET
Starting a Global Business, With No U.S. Employees
By MARK WHITEHOUSE
Efrem Meretab is bucking the trend and starting a business. The
Eritrean-born physics Ph.D. left his job as a stock analyst to launch
MCAP Research LLC, a Montclair, N.J., business aimed at helping
investors process reams of company earnings reports. Over the past two
years, he has developed the company from an idea to a working website
with paying customers.
But he hasn't hired a single U.S. employee or made any significant
capital investments in computer servers or other infrastructure. His
experience demonstrates how advances in technology and communications
are allowing some small companies to sell products world-wide without
creating many jobs in the U.S. or spending much money on things made
in the U.S.
When Mr. Meretab needed software developers to help him create the
company's core product, which can extract and display information from
myriad earnings presentations in a matter of seconds, he turned to a
global network of programmers he had consulted to solve problems in
the past. He has hired developers in Belarus, Ukraine and Pakistan,
all of whom tapped their own networks to complete the tasks he gave
them at a fraction of the cost of U.S.-based developers.
"You wouldn't be able to do this six years ago," he says. "I'm a
global company."
The ease with which people like Mr. Meretab can tap the global labor
market helps to explain one of the unique phenomena of the current
recovery: the small number of U.S. jobs created by start-ups. In 2009,
an average of about 340 of every 100,000 American adults said they had
started a business in the previous month, up 11% from 2007. But most
of those are zero-employee ventures that don't technically count as
new companies. Over the same period, the number of jobs created by
new-employer concerns fell 11%.
The 56-year-old Mr. Meretab also didn't have to solve one of the
trickiest questions facing any business: how much to invest in the
capacity needed to handle future sales. Instead of buying servers to
handle the website's traffic, he simply rents the computing capacity
he needs from Amazon, which sells its own extra capacity using "cloud
computing" technology. As a result, he doesn't need nearly as much
up-front capital, avoiding the problems many businesses face borrowing
money from banks or raising funds from investors.
"All that stuff that would cost tens of millions of dollars we do on a
usage basis," he says.
Write to Mark Whitehouse at mark.whitehouse@wsj.com
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