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This model has led to success for other immigrant groups in other industries. > Many followed his advice. “They would give each other handshake loans—no collat
by stephengillie 8y ago
This model has led to success for other immigrant groups in other industries.
> Many followed his advice. “They would give each other handshake loans—no collateral, no payment schedule, just pay when you can,” Doshi explains. Once a family purchased a motel, they would live there, and the family members would do all the tasks needed to run it, from cleaning rooms to checking in guests. That helped keep costs down, and profits went toward acquiring new motels. By the 1980s Gujaratis had come to dominate the industry.
The "killer app" here appears to be a lack of resources beyond established relationships. Because of this, whole families were willing to spend their time doing work that most Americans feel is not worth their time.
- bytematic 8y agoCould this apply, or have applied, to farms? I bet that would have a lot of interesting social effects.
- dbcurtis 8y agoCould you elaborate on your question? I don’t understand what you are asking.
- tomrod 8y agoIn my area it already does. My Indian colleagues informed me that grocery stores that cater to their culture typically have exclusive agreements with local Indian farmers, which results in significantly reduced prices. I thought that was wonderful--I'm a fan of frugality. I'm curious if this is common in the US in other immigrant communities.
- fermienrico 8y agoMy dad's friend is an Indian farmer in Valdosta, GA. He has 10k acres of land, has his own private plane and flies Indian groceries to Houston once a week. He immigrated to the US back in the 60's. I had a chance to meet him and he had an extraordinary character. He had no formalities and greeted us at his farm house without a shirt on. He was old but fit and you can tell what he has gone through in his life to make a living. He spoke fluent spanish and everyone loved him in Valdosta. We spent 3 days there and went to restaurants in the evening. Everyone greeted him as if he was some kind of a hero in the town. It was really an amazing experience to have met him and his family - just shows how immigrants assimilate in the most remote places in the US, especially in a hostile place such as south Georgia in the 60's. Edit: This story is from 2002.
- vram22 8y agoWow, cool story. I wonder under what visa or work permit scheme he went there. I had two uncles and an aunt who went to the US and stayed there, but they all went via the traditional grad student then H1-B then green card then citizen route, and were all white collar workers (an engineer turned entrepreneur and two academics), not farmers. Didn't know there were schemes for farmers and such, then or now, for the US, although I think there might be for Canada.
- HeyLaughingBoy 8y agoAt least in the late 70's - early 80's, if you could find an employer to "sponsor" you (basically agree to give you a job for a certain amount of time), then you could immigrate with a green card immediately. There was no specific "scheme" for particular occupations: many of the people who did this were low-wage workers doing housekeeping, janitorial work, construction, etc. I'd assume something similar was already in place during the 60's.
- vram22 8y agoInteresting, thanks.
- vram22 8y ago>then H1-B Sorry, that should be H-1B. https://en.wikipedia.org/wiki/H-1B_visa https://en.wikipedia.org/wiki/H-1B_visa
- tathougies 8y ago> I'm curious if this is common in the US in other immigrant communities. Yes absolutely. As an Indian American, I'm familiar with the Indian grocery store model. However, I grew up in a majority vietnamese area of Southern California, and most of my friends growing up were vietnamese. They had a few interesting hustles going on: 1. A few families were involved in growing produce in their backyards, and grocery stores would source these fruits. Many of the fruits (certainly not all) popular in Vietnam would grow in the heat of SoCal, but they were not farmed commercially. 2. My mom's friend told her that many vietnamese restaurants sourced their egg rolls from various aunties scattered around the community. The egg roll they made was very standardized, and they would sell many trays a day to the restaurants for cents on the dollar.
- ams6110 8y agoAssuming these fruits were not native to SoCal, how did they get the plants/seedlings there? Under the table? I think it would be very difficult to bring Vietnamese flora into the USA through legitimate channels.
- tathougies 8y agoThe fruit I was talking about is dragon fruit: https://en.wikipedia.org/wiki/Pitaya https://en.wikipedia.org/wiki/Pitaya Which, while popular and does incredibly well in Asia, is also apparently native to the Americas up to Mexico, so it wouldn't be a far leap to grow it in SoCal But I mean, as someone whose family is from Asia, it is not particularly difficult to sneak things in to the United States.
- Spooky23 8y agoNo. Hotels work because they require capital and low overhead — they also have a limited scope of competition. farming is a business in the middle of a consolidation wave. Small farmers are being starved out and losing access to capital as small banks go away. I don’t thing that the gujarati model works for fringe agriculture. The big players in the agriculture business are global now, and a farmer in Ohio or New York will have a hard time making money, as the big companies just need to outbid you for one harvest season, and make up the difference with their weekly harvests in California, Chile, etc. There are players (people serving Chinese restaurants and the Amish) doing well, but those markets are limited.
- jessaustin 8y agoThe model doesn't work in commodity ag, but no model really works for that in the long term. It always takes more capital. Farms have been failing (or "consolidating", if you prefer) for 150 years. The bogeyman didn't shutter those banks. The nonviability of buying a bigger combine and renting more land every couple of years shuttered those banks. Such a bank could have stayed open if at least once every few years its county was the only one in the Great Plains to get rain. That would have been a lucky bank... I'm not sure what will disrupt commodity ag, but it sucks, and the sooner it transforms into something else the better. The most successful farmers I know now are raising goats for halal butchers. I'm going to start crossing my cattle with "wagyu" bulls. Don't sell commodities.
- monocasa 8y agoReally? The killer app here seems to be access to capital on amazing terms. > They would give each other handshake loans—no collateral, no payment schedule, just pay when you can
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- wdewind 8y agoAlso access to cheap/free labor, also perhaps underaged labor?
- rohan404 8y agoYou could make the argument that startup founders who aren't taking a salary from their early stage startup are also performing "free, illegally so" labor.
- bena 8y agoI think in that case, you can't work for yourself illegally.
- HeyLaughingBoy 8y agoIf the startup is incorporated, then you're working for the corporation, not for "yourself."
- reaperducer 8y agoYes, having family members work for you for free is legal. My accountant once encouraged me to try to get my family members involved in a business I ran just for that reason.
- lolsal 8y agoI think the question of age comes into play though.
- justaguyhere 8y agoI recently learned about oulipo (https://en.wikipedia.org/wiki/Oulipo https://en.wikipedia.org/wiki/Oulipo) who create works with constraints (sometimes severe) and the results are quite amazing. Lack of resources can be sometimes a blessing in disguise whether it is literature or hard business. I wonder why Americans don't do this (maybe they do, I don't know) - why borrow from banks (or VCs etc) with strict strings attached, instead of supporting one another based on trust? Obviously this won't work for millions of dollars, but this should work for 5/6 figure loans?
- dv_dt 8y agoThere has been a long term decline of community banks, which might be the more American equivalent of this kind of lending. https://www.stlouisfed.org/Publications/Central-Banker/Fall-2010/The-Changing-Landscape-of-Community-Banking https://www.stlouisfed.org/Publications/Central-Banker/Fall-... The Small Business Administration also helps with loan guarantees. So the support is sort of there, but takes a different form, and maybe one could say the impersonal nature of it is both a strength and a weakness in comparison. Numbers of small businesses and their starts have been in decline too. I suspect this has to do with the difficulty of more and more Americans in attaining any savings from their wages (let alone enough to set aside to help capitalize a small business).
- justaguyhere 8y agoI suspect this has to do with the difficulty of more and more Americans in attaining any savings from their wages All the more important to support one another. Although, if everyone in a person's trust circle is more or less in the same boat, then tough luck :( With no meaningful support from gov/banks etc, people banding together to help each other might be an alternative. Some non profits are working in this space too. After Sandy, some orgs in NY were giving interest free loans to small biz people who lost their trucks etc.
- jessaustin 8y agoAmericans are forced by law and convention into living a very specific kind of life. Lots of things they do and "own" require substantial investment of money and time. A regular (not minimum) wage is calibrated to just barely take care of all that, and modern marketing specializes in "educating" our tastes so that we can really tell the difference between e.g. $18k and $28k automobiles, to keep us on that treadmill even when we have plenty. Although on average they are poorer, residents of India have a great deal more freedom with respect to the costs of everyday life. No matter how basic their housing, transport, clothing, food, education, safety, etc. may be, they can always trade down if their situation or preference changes. Many lives lived happily in India would be largely illegal in USA.
- sidlls 8y agoIt's not (just) that most Americans feel these jobs aren't worth their time. There is a very strong individualist streak in American culture and a very strong taboo against lending friends or family members money for any reason. There are plenty of American families who have relations who could easily help bootstrap a profitable small business in the way described here. It just doesn't happen that way very often. Instead the typical means to wealth is inheritance or luck of birth providing access to investment capital (not loans) and business connections. For every WhatsApp there's a dozen or more Microsofts and Facebooks (Gates and Zuckerberg both benefitted from the immense social and financial capital their families could provide).
- sumeetjain 8y ago> There is a very strong individualist streak in American culture and a very strong taboo against lending friends or family members money I think the individualist streak in American culture is better shown by people being unwilling to seek help from friends/family. I might call an unwillingness to help others (assuming one can afford to do so) selfishness -- not individualism. But what I have seen in American is, as you said, individualism: People are prideful and want to create wealth without help. An interesting clarification: People will more readily accept help from strangers -- e.g. a Kickstarter campaign, bank loan, or VC investment doesn't diminish one's pride in the way that the same support from someone's parents might. There's talk elsewhere in this article's comments here about the "killer feature" that these Indian Americans have. I would argue that the true killer feature is not even access to zero-interest capital. It's a culture that actively fights against pride and individualism. There are surely tradeoffs, but it's hard to deny the power that can come from children and adults alike all looking to family for help... and seeing that help not as something which diminishes their power but rather as something that bolsters it.
- 80386 8y ago> I think the individualist streak in American culture is better shown by people being unwilling to seek help from friends/family. And our families are, cross-culturally, unusually small. I talk to my parents every few weeks. Not so much my aunts and uncles. I have a few cousins who I see every fifth Christmas or so, and anyone more distant than that may as well be unrelated. This seems to be common within American culture, but it leads to weak social networks - unless you go to the right college and can network there.
- iguy 8y agoThere's an interesting ancient pattern of small minority groups dominating certain businesses, often ones which need trust -- here "handshake loans", but traditionally also simply payment for goods shipped long-distances. e.g. The Greek trader in one little Egyptian town could be more confident in dealing with another Greek trader somewhere in Italy, a week's sail away, because while he might be tempted to run off with the money, word would get around, and soon no other Greek would trust the guy, nobody would marry his sons... he'd be ruined by expulsion from his community. This mechanism didn't work for people from the majority community, because they weren't so specialised, could do other business, could find another priest... Thus the Greeks could ship things cheaper, and won the business. The Patels, and related Gujarati groups, have been in this kind of trust-heavy long-distance trade for centuries. They spread all over East Africa in the 19th C, and did very well.
- vram22 8y agoIt's sort of common knowledge in India that Gujaratis, Sindhis, Punjabis and Malayalis (Keralites) are generally pretty enterprising and are often businessmen, both within India and abroad. There can be other such Indian communities too, of course. These are just the ones I have heard of (from childhood) as tending to be more so. For example, the Patels in the US are the topic of this thread; then there are lots of Punjabis (which includes Sikhs) in Canada; Sindhis, I've heard, are many in Hong Kong; and many Keralites in the Gulf. Again, I don't mean to rule out other places where these or other Indians could have gone, these are just the ones I am more familiar with, and may have relatively high concentrations. Be interesting to know if there are other places where particular groups have gone and done well. Of course, lots of Indians went to Fiji and Malaysia too, I've read, although those may have mostly gone as plantation labor initially (and some to Trinidad and Tobago, Guyana, etc.), during British colonial times. Don't know how those are doing now. On a side note, when I visited Kuala Lumpur once, I tried out some Malaysian (South) Indian food; it was both similar and in some ways different to South Indian food in India. I guess it is both because they use some different local Malaysian ingredients, and because of the long time of separation from India must have made their cuisine evolved to be somewhat different. It was interesting stuff, though.
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- vkou 8y ago> The "killer app" here appears to be a lack of resources beyond established relationships. Because of this, whole families were willing to spend their time doing work that most Americans feel is not worth their time. I really dislike this argument. It makes middle-class Americans sound like a bunch of ungrateful churls, because they think that <some job> is beneath them (at the price the employer is willing to pay, but that part is always left unsaid). I don't call my landlord an ungrateful churl, because he thinks that my <sub-market-price-offer> for his apartment is beneath him. Yet, this is a consistent argument whenever an employer-employee relationship comes up. No shit, I don't want to pick strawberries for $5/hour, when my rent is $2250/month. That's not because manual labour is beneath me. The thing is - at a low enough price point, no work is worth anyone's time. Those family members were probably working for below minimum wage. Surprise - their business was successful, compared to one where you have to hire employees, and pay them a minimum/living wage, and have an inflexible schedule of interest payments to whomever fronted the money for you to start the business, etc, etc. It's not culture. It's economics.
- holymoly1 8y ago>> I don't want to pick strawberries for $5/hour, when my rent is $2250/month. That's not because manual labour is beneath me. It is about economics and expectations. No, it is because a $1000 apartment is apparently beneath you. It is the same reason there is a "shortage" in technology yet thousands of Indians applying for those jobs -- because most American students dont want to live in outer San Jose, San Martin, or Rucker and commute for 4hrs or live in nasty apartments. Most Americans also dont want to be tied on Production Support getting calls all night for crap wages. And frankly, I dont blame you. I'm a computer science grad in the US. The bay area wages, even while inflated, are not living wages for families, certainly nothing given my excellent education...and alternatives. I'm in management. I work half the hours, and earn a good pay.
- vkou 8y ago> It is about economics and expectations. No, it is because a $1000 apartment is apparently beneath you. And yet, letting my apartment out for $1000 is apparently beneath my landlord (Look at how entitled he is, to be asking $2250! It's almost like that's the price the market is willing to bear!) Yet, we only use this sort of judgmental language to express outrage at employees, unwilling to work at a price below what the market is willing to bear.
- skookumchuck 8y agoFamily members are pretty much exempt from labor laws. Hence the cost structure can be a lot lower by using family labor.
- seppin 8y ago> The "killer app" here appears to be a lack of resources beyond established relationships. Because of this, whole families were willing to spend their time doing work that most Americans feel is not worth their time. Most restaurants in Europe are run by immigrant families, they couldn't turn a profit otherwise.
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