We’re honored to have Victor Hwang join us for this Q&A. Victor is a venture capitalist and entrepreneur. His firm, T2 Venture Capital, specializes in building both startup companies and the ecosystems that grow them, on which he co-authored the book The Rainforest: The Secret to Building the Next Silicon Valley. Another book,The Rainforest Blueprint: How to Design Your Own Silicon Valley has just been released on May 20. Here you could download its draft. Victor is a regular blogger on Forbes. Victor is also Executive Director of an international conference on building innovation ecosystems, the Global Innovation Summit. The next one is on Feb. 17-19 2014. T2 has a special program, Rainforest Architect Program, which helps organizations build their own rainforests.

Today, our conversation will be around the Rainforest theory, how it influences Victor’s decision making and the daily management, rainforest in China, and else.

Justin: What dots lead you to becoming a venture capitalist?

Victor: I started in government policy because I thought that was a great lever to change the world. Being unsatisfied, I left to practice law because I thought private sector could be more effective. Also unsatisfied with that, I ended up running a non-profit organization, Larta Institute, which works with the government on commercializing new technologies. I helped lead their growth and was able to see lots of cutting-edge technologies. I wanted to bring these technologies into market more efficiently but the system was so flawed. So I picked a couple of companies and launched T2, to try to both solve this problem and to build some successful companies.

Justin: How does rainforest theory influence and differentiate T2?

Victor: When rainforests are functioning well, they make companies easier to succeed. So when you look at a company, you have to make sure all the vital pieces are there. For instance, one company that I’m mentoring now operates in is a very difficult sector. The company didn’t have anybody from that sector before. So I brought people into the company having real deep sector expertise. So the abilities to cross barriers and to create companies that have their arms in different parts of the ecosystem is important.

Rainforest also means taking a wholistic approach instead of only a technological approach. So when you look at startup companies, you cannot just look at whether these people are good and smart people, or do they have exceptional technology, you have to look at the whole chemistry of the team, or does that company have the ability to get the people, knowledge and resources it needs very quickly when it needs to. If they don’t then how can you bring the capability onto the team.

Justin: Rainforest is sometimes chaotic, how do you find a species that has the gene to bloom?

Victor: There are two levels you operate on. One is quantifiable things, for example, you have to have a large market, a defensible technology, people that can bring product to the market. Another level is those intangible stuff that VC considers, for example, is this something you are willing to work with, are these people you are willing to be very close with for the next ten years.

There’s a saying among VC’s that you don’t have to do every good deal, but every deal you do has to be a good one. I’m interested in things with huge technological potential and less interested in things like advertising and the latest social media phenomenal. I’m not saying that you cannot make a lot of money on that. It’s just VC’s usually work with things they are personally passionate about.

Justin: So what industries are these technology companies in?

Victor: It has a pretty broad range. Companies we deal with range from water purification to biomedical devices to copper production to some hardware and software, to materials.

Justin: Does T2 use any technology in your decision making?

Victor: No. But one firm you might be interested in is Correlation Ventures.

Justin: Do you treat T2 itself as a rainforest? How do you manage to build a vital, open and inspirational organization?

Victor: It’s very active management — building teams across different parts of the organization; keeping people motivated, excited about something bigger than just doing a day-to-day job; giving people both emotional and financial incentives. It’s a tricky balance and takes lots of care.

Justin: Other than Silicon Valley, where else do you think also have such rainforests? How about Hong Kong and Shanghai? 

Victor: They exist everywhere. It’s just there scales and sizes are different.

I was just in Hong Kong in Jan.. The government had invited me to come. The culture there is built on 
banking and trading. That’s very much a zero-sum competition culture.  I met a very successful entrepreneur in Hong Kong and he said the number one obstacle of entrepreneurship in Hong Kong was the parents, who usually stood in the way when he tried to recruit kids to his startups because the parents thought the kid should go working for a bank or a consulting firm, with a larger name.

As for Shanghai, I haven’t spent much of time there. I think Shanghai might has better culture than the rest of mainland China, where there is a deficit of trust. People don’t trust each other and they don’t believe in the system.

Justin: How do you build trust? Maybe you could talk a little about your trust building program?

Victor: We run a workshop (Rainforest Architect Program) now on how to build a rainforest. There are many levels. One is designing human experiences. People bond over experience. So when you have a group of people, instead having meetings at the same place all the time, you really build bonds by taking them somewhere else. It also helps to build a shared language. We’ve developed some techniques for helping people writing social contracts. It’s quite helpful because what’s invisible now becomes visible. When rules are written down, they are easier to follow.

Jackson: Do you see any change of the VC industry?

Victor: One shift is the globalization of venture capital because of the globalization of the startup community. And you’ll continue to see its growth. However, VC is a very hands-on activity. Unlike investment banking like Goldman Sachs which can have high level executives fly into China and be very successful because their resources are all over the world, not every VC firm can pull that off because it’s very expensive.

The growth will be bottom-up. It means that it may grow somewhere well and somewhere not so well. The trick will be to see how well it grows and can the culture grow with it. In many places around the world, they often don’t have the value set to be successful. VC has to be attuned to the entrepreneurial process and respectful of it. It can’t try to control it or diminish it. That’s sometimes difficult for people who have lots of financial resources in many parts of the world.

Dear fellow Chinese students, this article shares with you an inspirational story that will make you so proud. It is a true American Dream story of a Chinese immigrant who worked in a restaurant when he just arrived at the US at 17 and worked all his way up to the real estate king of NYC if not the US. It is the legend of Mr. John Lam, CEO of the Lam Group, which is one of the largest US real estate companies, and one of the most successful hotel developers. We are lucky to do the interview with Mr. Lam and take a peek of what make him so successful. It’s a longer article than what we usually do but I assure you it’s worth it.

Mr. Lam was born in Taishan, Guangdong and started helping with the family business since a kid. At 17, his family moved to NYC. He got a job in a restaurant. At that time, it was a job sought after by lots of Chinese immigrant because there were too little choices. The career path would be working hard to be a cook and then perhaps opening his own restaurant one day. In 2 weeks, Mr. Lam decided that this was not his career because he’s not particular about food hence wouldn’t make a good cook. And the investment would be too high to learn the business because it would require him to try each restaurant.

Meanwhile, garment industry was booming in NYC. With no background, Mr. Lam walked into a factory and asked for a job. Impressed by his courage, the owner employed him. Shortly, Mr. Lam got himself familiar with the garment business inside out. Although he was promoted quickly, he figured he wouldn’t be able to support his family if he kept working as an employee. So he decided to start his own garment factory.

Mr. Lam managed to gather $5000 from his own saving and his family’s, and got a $5000 bank loan. With this $10,000, Mr. Lam started his own garment factory. Not long after he started his own business, his former boss got sick and wanted Mr. Lam to go back help manage his business. Grateful to his former boss who brought him into the industry, Mr. Lam accepted the request. By enhancing the manufacturing procedure, Mr. Lam was able to greatly increase the productivity. After his boss recovered from illness, Mr. Lam had already doubled the profit of the factory. The boss hoped Mr. Lam to stay but Mr. Lam was determined to start his own business. The boss then offered to sell his factory to Mr. Lam. This was an opportunity that Mr. Lam had to obtain. So he made an offer that people couldn’t reject. Instead of negotiating with the boss on the quote, Mr. Lam doubled the quote. I believe this was also how Mr. Lam say thank you to the boss.

In order to compete, Mr. Lam worked hard on developing new fabric by himself. He flew around the world to source materials. He also spent a lot of time reverse engineered fabric from Europe. In each season, he could come up with new product or marketing ideas. Later on he created his own clothing brand. Within less than 10 years, his company became the largest garment company in NYC. At its height in the garment industry, the Lam Group employed over 2,000 employees. At the age of 27, he was elected president of Greater Blouse, Skirt & Undergarment Association. As president, Mr Lam represented owners that employed over 30,000 people. He still remains as the honorary president. This position was dominated by Jewish people until Mr. Lam came.

Later China opened up and lots of clothing business went to China. Sniffing out such market change, Mr. Lam started entering into other businesses like banking (He’s the cofounder of the EastBank NA), fast-food chain, and real estate. Mr. Lam went into the real estate business in the 80s, when the real estate in NYC was low. Unlike the garment industry, Mr. Lam didn’t have a boss to work for and gain experience. But he never failed to learn a new industry. He started by purchasing buildings that have already been built. But like when conquering the garment business, Mr. Lam grew his real estate business extremely quickly using a so called “Chain Strategy”, which involved in purchasing a building and use this building to get a bank loan which was used to buy the next one. In 1988, Mr. Lam already had 12 buildings and felt that the market was too hot and he sold half of his portfolio. The next year, the real estate market crashed.

Before the market crashed, in 1987, Mr. Lam bought a troubled hotel in Philadelphia and managed to turn it around. It’s legendary. Moral was at the low point when Mr. Lam purchased the hotel because business was bad. In order to evoke the passion of his employees, Mr. Lam invited all the family members of the employee’s to stay at the hotel for one night on a holiday. Of course all the employees work hard and happy to impress their families. And the families now understand what their moms, dads, wives, and husbands were doing and felt proud of them. Moral was at the peak after this event. But moral don’t last long if there’s no rewards. Mr. Lam then told the employee to treat each customer the way they treat their families and their salaries would increase if the occupancy rate went up. Not only did he manage to double the occupancy rate in a few months, Mr. Lam brought this hotel to Top 10 from the lowest ranking in the local area.

In order to enhance quality, Mr. Lam had to know what customers want. During the interview, he asked us “What do you think people come to NYC for?” “Tourism?” asked Gary. “Fashion!” said Mr. Lam. (The difference in the two answers is that “Fashion” better described those long-term customers.) Lot’s of people who came to NYC are those who want to experience the boutique hotels but couldn’t afford them. So Mr. Lam decided to give them affordable boutique rooms.

Because Mr. Lam uses brand like Hilton and Sheraton, giving what customers want sometimes meant to break the standard of the franchise. Mr. Lam was not afraid to do it even if it could cost him the license. The hotel rates in NYC was much higher than elsewhere so Mr. Lam wanted to offer the guest the best experience at the lowest possible price. As a result, he upgraded the standard of his franchised hotel. Sheraton’s CEO once threatened Mr. Lam not giving him the license because Mr. Lam didn’t follow their standard unless he could be persuaded. Mr. Lam invited him to stay in the hotel for one night to experience the service and chat with customers. After that night, the CEO not only gave Mr. Lam the license, but booked hundreds of rooms there and asked owners from other Sheraton hotels to experience and told them not to be afraid to make small changes if they enhance quality.

Other than good quality, Mr. Lam attributed to “Buy low and sell high” as the other reason of rapid growth. This is of course easier said than done. After the market crash in 1988 mentioned earlier, because Mr. Lam have already sold 50% of his portfolio, he not only was not greatly affected by the crisis, but also had the money to buy more when the price was cheaper and when competitors have hard time obtaining bank loans.

Another example was after the 9/11, people feared that no one would come to NYC for tourism. So lots of hotel developers changed their hotel rooms to condo apartments and sold them. Mr. Lam saw opportunities again. He confirmed the worried tourism bureau that he would fill in the hotel rooms and started to heavily invest in the hotel industry. Everyone thought that he’s crazy. But Mr. Lam looked at history and said there were all kinds of crisis to NYC but the occupancy rate had remained 85%-90%. Even at the low time, people used to be pushed out to hotels in NJ came back to live in the city. In less than 3 years, all the tourists came back. Mr. Lam not only expanded his business but also strengthened the connection with the bureau.

Of course, opportunities like these didn’t appear all the time. Most of the time, there were competitions. Mr. Lam’s strategy is making sure that your proposal is better than the competitors and always prepare enough cash. Sometimes there’s extortion from the sellers. Some seller would increase the price when they learned that Mr. Lam wanted to buy the property. Mr. Lam’s strategy is never over-pay and only develop what he can obtain.

Being asked about future plan, Mr. Lam said he would still focus on NYC, which is still No.1 in the global hotel industry. Flying 6 hours to CA for a 5 minutes conversation didn’t make sense to him. Also, his connections are all in NYC. So only after building a team in another target city will Mr. Lam consider entering that market. However, this does not mean that Mr. Lam will be waiting and doing nothing. He already built a shopping mall in CA. The Lam Group is also talking with NJ according to information on its official website. More over, the new entity Lam Generation allows Mr. Lam to bringing in management team first before bringing in the investment. This is a genius strategy, which allows Mr. Lam to learn the new market and establish connections.

Of course China is also in Mr. Lam’s plan. But Mr. Lam thought that although it’s fun to do business in China, unless you have strong “Guanxi” there, about 80% of the people lose money. He said and I quote: “No matter how rich you are, you are going to lose them all before you can come back”. To Mr. Lam, in 10 years, maybe it will be a good time. But again, he is already planning for this opportunity, mainly through two channels. One is bringing in management before investment. The second is the EB5 program.

For those who are not familiar with the EB5 program, it allows non-US investors to invest in the US and get green cards. Here’s an article on EB5 with a local lawyer. The Lam Group is serious about the EB5 program. Mr. Lam and his team went to Shanghai, Beijing, Guangzhou and Hong Kong to promote their EB-5 project. The picture on the right is Mr. Lam making a keynote speech taken at the “Invest in America Summit” last December in Beijing. This program will bring the Lam Group safe and cheap money with no doubt. This is also a great channel to build “Guanxi” with those Chinese high net worth individuals. The 3^rd reason for doing the EB5 program is that Mr. Lam has always been supportive to the Chinese community. He wants local business to hire more Chinese immigrants and he fights for their rights. After those high net worth individuals get their green cards, they’ll start their own businesses in the US. Lots of the businesses might differ from what traditional Chinese immigrant did, such as restaurants and convenient stores. This will bring diversity to the Chinese community and guess who would these Chinese companies hire? Chinese immigrant and Chinese students!

Fellow Chinese students, our story ends here but the thinking has just started. During the interview, Mr. Lam told us that he would find out the top 10 most successful people in the industry he enters in and learn a little from each of them. Here’s what I’ve learnt from Mr. Lam.

1 Be ambitious and confident

That might sound cliché but Mr. Lam wouldn’t have quit his jobs so quickly and grown his businesses so quickly without being ambitious. Ambition needs to be specific and requires a process to support it. For us students, it might be knowing which company or who we want to work for, which graduate school or professor we want to work with. Confidence comes from achievements. But more importantly, it comes from knowledge. The reason why Mr. Lam is not afraid of his competitors is because he knows what makes them successful. So always learn from the best.

2 Make sure you know what value your customers care about

Knowing what customers want is one important reason of Mr. Lam’s success in both the garment and the real estate industry. Later we chatted about other businesses. Mr. Lam asked us “Why people buy Starbucks? Why M&M can afford a demo house in Time Square?” He said that people buy Starbucks because that’s the luxury they can afford. By holding a Starbucks cup, the customers can show that they are better than others. As for the reason for the M&M demo house? Because they target the children. According to Mr. Lam, when starting a new business, don’t be afraid to raise money as long as you bring unique values to the customer. And you only need 5% to start. Later the number will grow. For us students, if we have an idea who we want to work for, let’s ask that person what qualities he values.

3 Don’t make decisions based on emotions like hope or fear

Why only Mr. Lam seized the opportunity in the hotel industry after 911? He based his decision on history not fear. Why the market crash didn’t affect the Lam Group? Because he didn’t hope that this year would be different and the price would go higher. We may keep ourselves busy and hoping we are doing something that our “customers” care. That might not be the case. Meanwhile, for us non-US students, in order to stay in the US, visa and green card might be a big consideration and we might act simply out of fear or pressure of these reasons. But don’t let these emotions mess with your decision.

4 Have a system, which is long-termly safe and short-termly prepared

The strategy of selling half of the portfolio when the market became hot gave Mr. Lam a safety net. Moreover, Mr. Lam was prepared in cash when the market was low. Also, by maintaining a portfolio of businesses which some part always generates profits gave Mr. Lam the luxury of being patient. Mr. Lam used the same concept in fashion design. He would invest in a fashion only if it would remain fashionable.

5 Build the Snowball

The name is borrowed from Warren Buffett’s book: the Snowball. When Mr. Lam does something, he always tends to build a positive cycle. He can magically find the attack point to break the chicken egg dilemma. The way he turned around the hotel in Philadelphia, and his idea of EB5 program are both good examples.

6 Take bold risks

When Mr. Lam first started his garment business, it was a big risk to him, or rather a gamble. His entire family was “all-in”. But at that time he had no choice. When we asked him what if he failed. He was like “I would work for free for three years to pay off the debt. Not a big deal.” Later Mr. Lam took all kinds of risks, breaking the Sheraton standard and heavily investing in the hotel industry when everyone thought him crazy. When you are confident of the results and have a system which allows you patience, it’s not gamble anymore. It’s only a matter of time. We are still young. Let’s find something we are passionate and long-term rewarding and go all in!

7 Build your connections

One reason of Mr. Lam’s EB5 project is to establish Chinese connections. For us, it means networking. Networking is a topic people write a book about so I’m not going to discuss it. Your connections also include your family. Jewish people have strong family connections and they help each other. Mr. Lam learned from them. His family helped him started his business and now is playing a very important role in his company. Connections also mean your friends. Surround yourselves with friends who will make you a better person.

8 Your personal brand matters

Mr. Lam told us that sometimes he would do something just to show that he’s crazy. I believe such an image helped making his competitors confused of his strategies. Also, Mr. Lam’s strategy of only building what he gets and don’t overpay helped him gain negotiation power. Each of us has a personal brand. Try to find a brand in you and establish it.

9 Stay focused

Honestly, I was a little surprised learning that Mr. Lam still focuses his business in NYC but is growing in a very fast speed. He didn’t go here and there and grab whatever seems cheap. Mr. Lam is building a monopoly in a region before focusing on another. Also, it’s not any region. It’s NYC. So it’s not good enough to stay you stay focused in the real estate industry. It’s mainly hotel industry in NYC.

10 Be generous

Mr. Lam cares a lot about the local Chinese community. As mentioned, he wants more Chinese businesses to come to the US and more Chinese employees to be hired. And the fact that he spent one hour with two students was a perfect example. I will be grateful and try to be generous to others as well. We hope this story could be one way for us to say thanks.

Also we appreciate your time finishing this article. Please let us know if it’s helpful to you.

Awards and Recognitions

• 1990, John Lam, All-Star by Crain’s New York Business Magazine.

• 1997, John Lam, Ellis Island Medal of Honor Award for exemplifying the ideal of living a life dedicated to the American way while preserving the values of Chinese heritage.

• 2006, John Lam, Man of the Year Award 2006 presented by the Chinese-American Planning Council for his grassroots social services towards his community.

• 2009, John Lam, Top 10 Most Influential Outstanding Chinese Businessman by the China Association for International Economic Cooperation under the Ministry of Commerce of the People’s Republic of China.

• 2012, the Lam Group, Developer of the Year from Starwood Hotels & Resorts for Select Service.

• 2012, the Lam Group, Best Newly Built Select Service Hotel of the Year from Starwood Hotels & Resorts for Aloft Brooklyn.

• 2012, the Lam Group, Developer of the Year for Upscale Hotel from InterContinental Hotels Group for Indigo Brooklyn.

Current Positions

• Chairman & CEO, the Lam Group

• Member of the Board of Directors, Real Hospitality Group

• Member of the Board of Directors, East Bank

• Honorary President, Greater Blouse, Skirt & Undergarment Association

Acknowledgment: Special thanks to Letian Xia, EB-5 Coordinator and Executive Assistant at Lam Group, for arranging the meeting and the help with this article.

Increasingly, our alumni ask our club questions regarding the EB-5 visa, or Immigrant Investors, program. We were lucky to have Ms. Kimberly Finnigan, an attorney from Cooper Erving & Savage LLP, giving us a brief introduction of the EB-5 program. Cooper Erving & Savage LLP is a prestigious Law firm in Albany with a history of nearly 200 years. Here are some excerpts from the meeting.

In order to obtain the green card, an investor has to invest $500,000 in a “Targeted Employment Area” or $1,000,000 in a “Non-Targeted Employment Area”. Targeted Employment Areas are regions with high unemployment. Investors can invest either through a Regional Center, which is a 3^rd party managed investment vehicle, or through Direct Invest, where the investor has to actively manage the business, which basically can be any legal business.

After the investor identifies a regional center or a business he/she wants to actively manage, he needs to file an I-526 to obtain a Conditional Green Card. This application takes 6-8 months. The success of the application is greatly dependent on the source of the investing money because the last thing the US government wants is giving green cards to money-laundering criminals.

After getting the Conditional Green Card, the investor cannot withdraw the money for at least two years. And you have to stay in the US for the minimum amount of time the green card holders are required. During the two years period, the investment have to create 10 full time employment positions. For Direct Invest, the 10 full time employment positions must all be direct-employment. While for Regional Centers, the 10 positions can be in-direct employees. For example, the Regional Center manages a commercial building business, the employees from the companies, which rent offices in the commercial building also count as employees. An algorithm is used to determine how much such indirect employee count in the 10 employment positions.

At the end of the two-year period, the investor needs to file an I-829 application to remove the “Conditional” from the Conditional Green Card. The success of getting a Green Card is highly dependent on whether the investment creates the 10 employment positions during the two years, and whether the business plan has been changed.

However, there is no guarantee that you can get a Green Card. There is even possibility of losing money. Hence, the quality of the Regional Center, if the investor choose this channel, is very important for the success of getting the Green Card. Although the Immigration Law is a federal law, which means it has no difference among states, the quality between different Regional Centers can change dramatically. A lawyer is not allowed by law to suggest Regional Center. Those agents who suggest EB-5 projects in China are mainly brokers of Regional Centers. So the investors have to be careful.

For more information, Kimberly suggested visiting the official USCIS website and search for “EB-5”. Please contact us or Kimberly if you have other questions.

Gary: Why did Enterproid start an office in Hong Kong?

 David: We, at Enterproid, have offices in London, New York, and Hong Kong. Hong Kong was actually our first office to start hiring people. It is also our biggest office by headcount. We hire a lot of local Hong Kongese, which works out well for us. One less well known fact about Hong Kong is that when looking at university rankings in Asia, Hong Kong have got some of the best schools – better than Japan, Australia, or China. Looking at pure computer science and programming talent, the Hong Kong teams were very competitive in the ACM (Association for Computing Machinery) International Collegiate programming Contest, when comparing to teams from top notch CS programs in the US (e.g. MIT, Harvard or Stanford).

China is very different culturally. While Hong Kong on the other hand due to the colonial history, the English speakers over here is much better. The university medium of instruction is still in English, which translates to a better level of English proficiency for a globally company like us. A lot of people asked why set up shop in Hong Kong, seems quite random? Or why not go an hour North to Shenzhen? To me it is a cultural thing. Hong Kong is a very interesting and unique blend of East and West.

Gary: Wouldn’t it be much more cost efficient to start shop in Shenzhen as oppose to Hong Kong?

David: Certainly real estate would a lot cheaper. In terms of payroll, possibly. Bigger cities like Beijing or Shanghai, which are also entrepreneurial hubs, competition for talent there is very tough. Employee churn is very high in those places. In some ways we are lucky because Hong Kong is not known to be a technology hub. People don’t think when starting a startup that Hong Kong is the place – so not a lot of competition. On the other hand, if you graduated from the top-notch schools here in HK, and decided to pursue a startup – you actually don’t have much choice. Because there is less competition, there is also lower churn.

Gary: What is the entrepreniual scene like in HK right now?

David: From what I seen in the last 3 years, it’s getting better.  As a phenomena, entreprenership, innovation, and the whole startup culture has been sweeping the entire globe. And HK definitely got caught up a little bit in that. But comparing to New York, Silicon Valley, Boston, Seattle, Austin or any tech hubs in the US, HK is still very nascent and early stage. There are Startup Weekends, Bar Camp, and Incubators getting set up, but the growth is a little organic and very slow to some extent. There is not a lot of money going into the startup ecosystem. Angels and seed funding are difficult to come by. There are no VC firms that target HK, and even the firms in HK will invest in traditional HK businesses like real estate, shipping, or look elsewhere to China or greater APAC region.

Money is going to flow where the ideas are. A lot of VCs don’t spend a lot of time investing in HK because there aren’t that many deals. I am hoping that will change but it will not happen over night.

I am optimistic, and I think the entrepreneurial bug is catching on globally. Even Hong Kong, people are getting bitten but it is going to take some time before the ecosystem fully develops.

Gary: Nowadays, it requires very little capital to begin a startup. Why aren’t there more startups because it is just so tough getting a job in metropolitans like HK? With nothing to lose, a technology startup should be the way to go.

David: Exactly. The cost of doing a startup is hugely lower than what it is used to be. Everyone is using Amazon Web Services or other computing infrastructure services to build a startup. Culturally, HK is still very risk-adverse.

We go to campus and get involved with the computer science department – very similar to the US recruiting style. In the US for example, if you received a job offer at an established technology company or from a hot new startup, I think most people would take the job from the startup. That startup job is associated with innovation, that’s where I will be challenged, and I will get a lot of responsibilities and difficult problems to solve. Startups are a very positive thing and great place to start your career.

In HK, if you say “startup”, it’s like a bad word. If you go to a university campus, kids would run away.

Gary: Because they are contrasting startups as a very unknown unsuccessful little company.

David: One of the reasons they do not take that risk, because there is enormous societal pressure to not take risk. If you tell your parents you are doing startup, their responses would be “What’s wrong with you? Why can’t you get a real job? Why can’t you do something responsible with your life? Why can’t you … ?”

I know when I started recruiting and I gave someone an offer and they had an offer from HSBC. It would be very difficult for them to go home and say, “hey mom, hey dad, one offer from this company you heard of, very respectable, and the other one is a startup and you have no idea what they do.” It’s very tough for them to make that decision.

For the university candidates we recruit, we’ll ask for their resumes as well as their academic transcripts. A lot of people who are interested in technology will also double major in something else, for example, risk management or operations research together with a computer science or another technical degree. They mostly get good grades in their programming courses as oppose to their other courses. Clearly, they are much more interested in doing better in their CS studies than the other major.  So why not take more CS classes? Typically, family pressures these young adults to focus more on business studies in order to get jobs in banks or other financial services industry. That’s still the conventional wisdom and I think this would change but it definitely takes time.

Gary: Do you think there is a compromise? For me, if I am really interested in the startup, I would try to do both because I don’t think I would want to walk away from that opportunity while still retain the full-time approach. More like the “sleep-less” approach.

David: I do agree that some people should do that. Right now, there are a handful of HK startups that I believe are credible, scalable businesses.  Or you can use another metric such as a startup’s ability to raise external venture investment. In general, there’s not a lot of role models or prior examples showing this is working to people. In the US for example, if you want to do a startup, there are much better support systems from mentors to startup lecture programs.  In HK, you can still find the same like-minded people but not in the same abundance. Plus at home, yes, the vast majority of HK young people live at home, you get extra family pressure. If you want to do it, you have to be really willing to do it – while being stubborn, and go against the crowd.

Gary: But do you think HK have a large enough market to have a profitable HK-born application? If not, then local college students won’t see that demand.

David: The city has 7 million people. If talking about something purely for HK, there could be. For example like Openrice.com, a HK version of Yelp and they do well. If you do a business focusing on HK, I believe it could be very profitable and definitely be successful. But HK as the entire market is certainly not enough to attract to Venture backing because the market itself is not big enough and also the opportunity is not big enough. If you want to start a traditional venture backed business, then you have to look bigger. But if you want a life-style or non-VC funded business that could still be hugely profitable, I believe HK is big enough to sustain that kind of thing.

Gary: Is the HK mentality to build an application to compete with markets in China or in the US?

David: I think a lot of people make the fallacy of thinking China and HK are the same, or think of HK as a test bed or stepping stone for China. If you want to do China, start in China.

The businesses in HK that had been successful actually focused more towards the West. There are a number of gaming companies, which are successful if you take a look at the Amazon app store or Google Play. They are in the top 5 spot as freemium games. With HK’s English heritage, its much more suited to market to the West. China is just a totally different environment.

Gary: How was it to build an enterprise B2B application in Asia? B2B is relatively unheard of in Asia except data storage, which houses all the consumer and entertainment applications.  

David: We have some interesting learning experience. First, we actually have not focused enterprise sales in China or the greater China region.  Today, we are still very much focused on North America and Europe – largely because that’s where most of our network and our relationship and past experience have helped us. We have a lot of existing contacts and we understand how those markets work.

China has been very fascinating because we did work with Dell very early on and the Divide software bundled with the Dell tablets were sold in China. Our vision at Divide is to enable you take a single device and have 2 modes, one personal and one professional – to separate work from your personal life. In the US, this is very common and it’s a concept many people can understand. People care about the double privacy.

Gary: Is that the case in Europe?

David: Absolutely. If you are looking at Europe, they have the most stringent privacy laws in the world. Much more so than the US.

In the early 90s, most people were using AOL to go on the Internet. Many businesses then had an email that used AOL as a domain (for ex: flowershop001@aol.com) to handle business affairs. Unlike today, they would purchase their own business name domain and have its own web presence.

In China, many of the indigenous businesses would still use company@QQ.com (Yahoo or Hotmail alternative email domain). It was a new concept to have separate environments for company data and for personal emails. Traditional non-high tech businesses are still very unfamiliar with modern IT.

Only Chinese businesses that might have international relationships would have a real Internet domain and are more concern about information security. Before companies try to get listed, they need to look at the regulatory, and audit requirements before going public.

I think part of it is culture, and the way they work. Chinese actually used SMS long before email was introduced. So email never became as mission critical as part of their business as it did in the West.

If you want to do business in China, you must work in China, and not in HK. You really need to be in the market to learn about the customer.

Gary: Are HK companies adopting Divide?

David: A little bit. We do not currently have a sales team in HK and our HK office is primarily focused on product development and engineering. We sell to a lot of multinational companies that are typically headquartered either in NA or EU and HQ would push Divide out for us globally. The HK branch of a multinational brand would use Divide.

Gary: How is like to have an international team?

David: It is not uncommon these days. For a startup, I would only recommended if you can have founders in each location.

For Enterpoid, we were international from day one. Each of our founders, Andrew Toy, Alexander Trewby, and myself are based in NYC, London and HK. Also that worked because the three of us worked together previously at Morgan Stanley. During that time, we were already working together remotely and have a remote working relationship. We were very comfortable with that. I would not recommend it in general starting out so don’t do it unless you already have a good idea of what it would be like. In our case, we have that past working history, so we were relatively comfortable with it. That said, you would still have challenges as you grow.

For our HK team, it is very different for them because we tailored our office very much like a US startup – with snacks, games, and more laidback atmosphere. They really enjoy it.

Our company basically runs on Hipchat, Skype, and Gmail – we are constantly communicating. Conference calls in the middle of the night are the norm – it’s very much 24/7 and a global company. Our HK team would have to talk to sales guy or a product guy on the other side of the world. I think most people do enjoy it because the opportunity to interact with others who you would never be able to work with otherwise.

Gary: How do you as a CTO push the boundary of the technology? Can you explain the decision making process?

David: The most distributed functional role within Enterproid I believe is the product group. We have product managers in each location. Products to us are very important because we are a technology product company after all. We “live and die” by our product.

On one hand, you want to sit the product folks as close as possible to your customer. We have to truly understand and what is the problem we are trying to solve. On the other hand, you want your product managers to sit close to your engineers to make sure that they are building a ‘toaster’ and not a ‘coffee maker’ – you want to build the right product and make sure nothing is lost in the translation.

I think we are very lucky that all the founders of Enteproid are very technical. I worked with both of them for a decade. In terms of the vision of the original product, we were very closely aligned – so thus there wasn’t much friction or argument about that.

We focus on building the product through Agile methodology. A lot of iterations and learning. We do a two-week sprint then a release which everyone dog foods.  On top of that we have nightly builds for engineering which is the absolute bleeding edge.

If you look our product, Divide, we serve two ‘masters’. One is the individual user, any working professional who needs to access his or her work on the go. On the other side would be the IT admin that would want to manage and secure the platform.

I would always ask people if you are a product company and you yourself do not like the product then how can the customer like it. So we really value and work hard in establishing the need of our user.

In terms of pushing the boundary, ultimately our backend would need to scale. But one mistake I see a lot of people make is that a lot of the engineering problems do not need to be solve on Day One. What are the odds that you get a million customers on the first day? As long as you are able to get a few steps ahead of it then you can employ just-in-time optimization. As long as the overall architecture is clean enough, we can scale on an evolving process.

Gary: What would be your advice for enterprise entrepreneurs?

David: Really take the time understanding the problem you are trying to solve. Understand the problem space.

For Divide, our founding team had been in the enterprise mobility space for over a decade. We worked on every major mobile platforms and operating systems for the last 10 years. The idea of Enterpoid came about because we were so frustrated with the existing ecosystem. We felt there had to be a better way of doing things.

At first when we started, we bounced ideas off and got validation with our old bosses from Morgan Stanley — those who knew a lot about the space.

For enterprise because the sales cycle is very long – and to be profitable early on, you really need to understand you value proposition clearly from day one. For enterprise, you can always make product pivot and tweaks but since the sales is much longer – to pivot the business is much harder.

But it is really – to truly understand what you are solving.

A Partner at GGV Capital, Jenny joined the firm in 2005 and was instrumental in setting up the GGV presence in China. Jenny focuses on the Software/Business Services and Internet/Digital Media sectors, and currently sits on the boards of hiSoft (NASDAQ: HSFT), 21Vianet (NASDAQ: VNET), China Talent Group (CTG), China Data Group (CDG), SocialTouch, Duowan (YY), UC Web, 7k7k and Arcas Entertainment. Jenny is also actively involved in Buddy Media (acquired by Salesforce.com), Glu Mobile (NASDAQ: GLUU) and Wild Tangent.  Jenny was recently voted by Forbes as one of the five most powerful female venture capitalists in 2012.

Gary: Congratulation on being one of the most prestigious Venture Capitalist in China. Can you talk a little about yourself and GGV? As well as what strategy GGV uses and how it differentiates from other VC firms?

Jenny: I received my Undergraduate and my Masters degree in Electrical Engineering at Cornell University, NY. I started my career working as a Systems Engineer at Singapore Technologies Aerospace; working on fighter jet upgrades. It was a very challenging technical discipline, which I stayed in for about 5 years. I received my MBA with a Finance and Marketing background at Kellogg School of Management, Northwestern University. After graduation, I essentially make the change from engineering to finance. I did a year at investment banking back in Hong Kong. At that time, the Venture Capital market in China had just started to take form and so in 2002, I joined JAFCO Asia to focus on early stage VC investing in China. In 2005, I moved to shanghai to set up the china operations for GGV Capital. In a nutshell, my 16 years work experience in Asia spanned engineering, banking and finance sectors.

At GGV, we manage 1.6 billion USD in funding, which we started in 2000. At the time of formation, the vision of the fund was to integrate US-China cross border venture capital.

The GGV vision is unique – the world is converging – and the guys who can win the market are the ones who can think on a global basis. Our team manages one global fund operating locally. To the entrepreneurs, it is the key differentiation. Since 2010, we have brought 15 companies public on 6 different exchanges, US, Europe, Hong Kong and in China. We also helped to create 8 different outcomes through mergers and acquisitions. We were able to accomplish this despite the 2009-2010 financial crises.

Gary: What kind of role did GGV play in these portfolio companies? As one of the shareholders, was it to steer the power of management, or become a partner, or an advisor to these companies?

Jenny: The roles will vary depending on what the company is doing. In the case of a company that is growing very quickly, we would be looking at where they should get listed, in the US or in Hong Kong. Our team has a lot of capital market knowledge, so we are able to help them think about positioning, valuation and where the team would feel most comfortable operating as a listed company going forward. We also prepare the company with the offshore presentation and helping them make the right decision throughout the process.

In some case in M&A, we had a portfolio company that was looking for acquisition targets in the US. My US team can help them with the due diligence and find out locally the target company’s performance. We do not take majority stakes of the company – it’s usually a minority stake. Depending on where we come in, our ownership could go from 5% all the way to 30%. The role of our team is to help companies grow to become leading market leaders post investment.

For earlier-stage startups, it is about building the team. When do they get the right CFO on board? When do they get the right marketing staff? In China, you would also need a GR, government relations. In the early phases of a company growth, its about team-building, organization, and building the right company culture. As companies progress, market expansion beyond their home markets become important. Should they go to the US market?  Or for US companies, should they come to Asia Pacific or to China?

Overall, we view ourselves as partners with the management team and would like to work with them as they figure out growing pains for the company.

Gary: You invested in Buddy Media. How do VCs invest globally and how do they manage their US investments? What is the GGV strategy in the Sino-US cross border investment?

Jenny: In GGV, every company that we invest in, we usually have 1 partner in the US and 1 partner in China working on it. The lead on Buddy Media is my US partner Jeff Richards. From the get go, the senior  team at Buddy Media felt that the company  won’t just be a US company, but has the aspiration to be a global company. The CEO felt that the China market will be equally attractive over time. When they chose to work with GGV, it was our global presence, and our Chinese presence as well as the knowledge of the home market that was the key.

Buddy Media’s biggest customers in the US are mainly on Facebook. In China, however, we have many different SNS platforms including Weibo, Tencent, Weixin, Renren, Kaixin, YY etc. We spent time with the management team, educating them and walking them through some of the changes and differences between the US and China. The knowledge transfer and the discussion helped Buddy think about how they should position themselves if they should one day consider the China market. Market entry ideas can vary from hiring a local dedicated team, local M&A or redesigning a set of new products suitable for the china market.

This was an especially interesting case because the social networks in both the US and China has such different SNS networks and user behaviors.

Gary:  Recently, Buddy Media was reported at a lost. As an investor, are you affected even though Salesforce.com now acquires Buddy Media?

Jenny: No, in a typical M&A situation, the shareholders have been brought out by the acquirers. From the VC perspective, there are 2 ways to exit: either by bringing the company to the public and overtime by selling your share holdings on the public market; or in M&A, where the share holdings are brought 100% on the day of closing.

Gary: Your team was advising Buddy Media in China, and now that they have been acquired by Salesforce, and now that you no longer work with them; if they want to continue, would they come to you with a new contract?

Jenny: We do not do contract-for-hire, but whenever Buddy is ready we would be happy to sit down with them and advise them in areas that may be relevant for them.

We invest around ecosystems and what we want to do is not just one deal. As one company grows and expands, subsequently it will create other investment opportunities for us. For VCs, that’s what we think about constantly – how do we create profiles and reviews, and how do we invest in them that make sense for us. Once the company becomes part of the GGV family, we focus how we can help it to grow.

Gary: That’s very interesting. Can you elaborate regarding GGV’s strategy on investing in ecosystems?

Jenny: We are very proactive in selecting the areas we want to invest. For example, we have developed an ecosystem in the mobile component space. The mobile industry is large; what we do is take a smartphone, and break it apart and take a look at the entire components set. For example, an iPhone would include optical components, acoustic components, sensor components, flashlight, and etc. Each phone becomes smart because of the sensors; and behind the sensors are software, applications, and hardware. We find the highest value player in each of these ecosystems and invest and build around it.

In 2004, we invested in AAC Technologies, number 2 in China in providing acoustic components. Company went public in Hong Kong and as shareholders, GGV continued to help them with the international and the IRstrategies. With AAC, we made other investments in private companies like optical sensors and flashlights within the entire smartphone component sector.

Partnering with AAC will accelerate our new investment opportunities with other smartphone component companies and the whole ecosystem. AAC is a very strong player and thus helps us create ties with manufacturers like Samsung, LG, Apple, and etc.

If a sensor company comes along, together with AAC, GGV can advise the company on how to work with the ecosystem – that’s how we create value. In the mobile component sector, many of the technology are founded in Europe or in the US. The manufacturing is done in Asia – in Taiwan or in China. When the product is done, it is resold back to the world – US, Korea, China etc– so it’s a global project. A VC who is only focused in one region will not be able to capitalize on such opportunities or understand how to leverage the right global relationships to help these companies.

The above is a good example of how GGV think about investing and our ecosystem approach. When the flywheel of this ecosystem starts to turn, it would generate this really interesting energy within this investment arena. And CEO who works with GGV gets to know us and understand we can add value, and refer other companies in the ecosystems to us as well. That’s one way to get quality referrals, and also recommendations, and we do due diligence check with the CEOs within those ecosystems.

Gary: What are some challenges student studied in the US coming back to China to build a startup? Any advice on overcoming these challenges?

Jenny: There would always be exception to the rules. I have seen excellent students graduated in America, comes back to China to start a startup on day 1  and do extremely well. My advice would be if you spend a lot of time (5-10 years) in the US before coming back to China, the first thing to do is not to start a company but spend a year or two trying to understand the dynamics in China first. Reestablish your former networks before starting a company.

China moves very quickly; regulations changes like nobody’s business. Yesterday, we were talking to an audit firm about how new regulations on taxes will affect how entrepreneurs structure their business. In China, in addition to putting together an idea, and the team around it, you also have to figure out legal and regulation constraints. Due to the changes on a regular basis, and being away for a long time,  taking some time to learn about these issues would give your startup more tractions and background.

The more consumer Internet centric the business idea, the more you need to spend time on the incumbents, the big ones and the small ones. In this sector, it moves very fast.

On the more business-focused startups, it depends on the execution and the business context as well as the technology. In this case, you might have a longer time window in terms of new business changes and new business models coming up. It is slightly better but it means finding a very experienced management team.

Gary: What kind of advice would you give to young women entrepreneurs? And how is it slightly different?

Jenny: There is no difference. I encourage all entrepreneurs, women and men. Being an entrepreneur is not easy and it requires the level of passion, commitment, and authority to give up the usual comfort zone.

My advice is don’t do it (startup) because it sounds cool, or it sounds fun. But do it because you really truly believe what you have, your idea truly can address the issue in the industry.

Don’t do it if you are alone or haven’t figure out who you going to do it with. I advise that the best startup configuration is a 3-person team. I believe a 2-person team is too small, sometimes you will have disagreements, and it tends to be very difficult to resolve. Four or five becomes too big of a group; the share holding might become an issue. Three is a good combination we seen so far. It varies, but usually having 3 partners to start a startup would the best.

Gary: How can engineering schools like RPI encourage entrepreneurship?

Jenny: From what I believe, RPI is doing pretty good; with alumni like yourself working to help increase the knowledge base. What you are doing is exactly what schools should be focusing on. A lot of times in engineering-based schools, there are manygreat technical ideas out there. But it’s about how do you take these ideas and develop it into a successful company.

I would encourage schools to widen the knowledge base, and bringing in guest speakers from the industry to talk about convergence of ideas for business, marketfinancial and management issues. A good combination is to have joint programs between engineering and business schools to increase the awareness and the possibilities. Without these events, there might be too much of a groupthink where everybody would have a similar background and similar network – which is not very helpful. It would be extremely beneficial to network and get to know other people from other disciplines.

It would help to widen your network while you are still in school. Finding the right combination of partners will go a long way.

Today we are lucky to have Peggy Liu, Chairperson and co-founder of JUCCCE (Joint US-China Collaboration on Clean Energy), to tell us what great things they are working on in China and discuss the possible areas of collaboration with RPI. JUCCCE is a NGO dedicated to accelerating the greening of China. They were the hand giving the China Smart Grid the initial push. Peggy has received various awards and media coverage, among which are 2012 Hillary Step Award Winner and Forbes 2010 “Woman to Watch in Asia”.

JUCCCE has a unique model called the Stone Soup Leadership, which was explained by Peggy in this video. The basic idea is that if each stakeholder shares one ingredient, together they can make a difference. JUCCCE now has four main programs: Sustainable Urbanization, Sustainable Industry, Sustainable Consumption, and Sustainable Collaboration. Universities certainly are one important stakeholder in this formula.

JUCCCE has various collaborations with universities on a global base. For example, MIT worked with JUCCCE on the GreenGen project, which was a clean coal project in Tianjin. Recently, Tongji University and JUCCCE organized a Creative Workshop as one part of JUCCCE’s ongoing flagship project named “China Dream”–one project under sustainable consumption. JUCCCE is helping China reimagine a “China Dream”, or a new sustainable lifestyle for the emergent middle class in China, which is different from the “America Dream”. Thomas Friedman, author of the World is Flat, shared some good insights on his NYTimes column.

So where does RPI and our club fit into this mega picture? In fact, RPI already has some cooperation with Peggy through the International Industry Experts Program. But we felt that we can do more. The brainstorm with the MIT graduate generated 3 potential areas.

1. Visually demonstrating how future technology can help realize this “China Dream”.
2. Promoting the “China Dream” within RPI and beyond. Such a “China Dream”, for instance, our healthier diets, can be a soft power of our nation.
3. Conducting Technology Transfer Market Research. China is now facing different kinds of challenges and is thirsty for technology. Such market research on what China needs can be useful for JUCCCE in determining what technology to import. And at the same time, it also helps companies to make better R&D decisions, which fits perfectly well in RPI’s bandwagon.

We plan to collaborate with the research centers in RPI to re-imagine how their research will make China a better place. We plan to record videos of Chinese students talking about their research and explaining how it solves a challenging problem in China. We will also form an interdisciplinary market research group, consisted of students, professors, as well as professional consultants as mentors. One thing that needs to be said before anything is carried out is that everything will be strictly under the export control law.

China is only going to become an increasingly important player in the world. It’s our RPI Chinese students’ responsibility and opportunity to make it a better place. Moreover, it’s an unmissable opportunity for RPI to utilize its industry connection and technology mind power.

At last, we need two clicks from you. Please click the like button on JUCCCE’s Facebook page to support them. And please contact us, letting us know your interests and ideas in any of the three collaboration areas. Thank you.

We are lucky to have Mr. John Tu, President/CEO and co-founder of Kingston Technology, a Chinese-born American entrepreneur and philanthropist, with us today talking about what makes Kingston special. It turns out to be all about people and culture. Surprisingly, John views Kingston as a service business. Maybe not so surprising after you read the article.

Jackson: How does the recent economical crisis affect Kingston?

John: Although I don’t think any company can escape from this global crisis, the impact on us is actually minor. We positioned ourselves early in those emerging countries. That helped us a lot. While Europe was still in recession, lots of these regions have come alive. Being global and diversified is very important. You cannot only rely on one market.

However, this is not by design, we have a good feeling of the market by reading, watching, and talking with other industry players to get a sense of the market. Kingston started from garage and the mentality of Kingston is still very entrepreneurial. We tell ourselves that whatever it takes, let’s just do it and see what happens, without really worrying too much on the preparation.

Jackson: How do you keep this mentality even though Kingston is a big company now?

John: It’s all about culture and people. It takes time but once it’s there, it will reinforce itself. We have a very encouraging culture. We allow our employees to make mistakes. They can do anything they want, as long as it is out of good will and won’t lead to huge trouble. So everybody feels encouraged to try something new without the worry of being fired.

Jackson: Was this how AVL (Advanced Validation Lab, Inc.) spun off?

John: Yes. AVL actually has an interesting story. We wanted to be seen as an authority by our customers and other semiconducer companies. Although we didn’t make semiconducers we were still in the industry. We asked ourselves how to reinforce this image as a serious player. Some employee came up with the idea that if we wanted to work with these semiconducer guys and make sure the compatibility among them. No one wanted to miss the window if their product would not be compatible with others. But some company might say that they had the compatibility but in fact they were not ready. So AVL served as an independent agent doing nothing but verifying such compatibility. We suggested this to those semiconducer guys and they all viewed it a good idea. So that’s how we started AVL. The employee coming up with this idea was very creative.

Jackson: So people are indeed important. What are you looking for when you do hiring?

John: I’m not very into the method of evaluating people by a formal interview. I’m looking for, of course, the knowhow. But that’s not the most important. For me, the No. 1 issue is passion and people skills. Without passion it won’t work for too long. People skills are how you get along in the team. And I always try to get a feeling of these two aspects.

Jackson: What are your challenges? Were there any difficult years for Kingston and how did you overcome them?

John: We are in a very volatile market due to the nature of the product of semiconductor chips. You really have to have a good sense of the market. Sometimes it’s almost like the stock market. It’s the volume, quality, and price goes up and down. It’s less and less predictable of the price of the chips. In order to make good judgment, it comes with the experience and relationship with your partners. So you cannot always look after yourself, you also have to look after your partners. Definitely, you also need luck.

During these 25 years, it’s all like that. Luckily, because Kingston’s culture has passion, the can-do mentality, and family-like environment, we are very flexible. For example, people just work longer hours when they need to. This allows us react quickly in this volatile market. This also allows us to make mistakes and recover quickly. We trust each other, and we trust in ourselves. We don’t ask why this and why that, we just deal with it. That is our strength. This helped us continuously grow in the past 25 years.

Jackson: It’s interesting that you mentioned flexibility and speed because Kingston didn’t start with a high-tech product. How did you guys survive when Kingston was still a startup?

John: Good question. We started by providing memory modules using existing technology and this to me had no entry-barrier. But we found our unique niche. Our niche lies in providing good service to our customers by making their lives very easy and flexible while the other players didn’t give customers very much choice.

Looking back, the flash technology really hasn’t had too many changes. This makes us easy to transform. And by not being a technology leader but follower and not having a R&D department, it lowers our costs. This was also one reason that we could grow continuously 25 years without too much financial help.

Jackson: Talking about financial help, could you talk about your being part of Softbank?

John: We were approached by Softbank in 1996. They saw the potential of IT. But they were not a technology company but rather a software distribution company. They wanted to be part of the IT future. At that time they’ve already bought several IT infrastructure providers, for example, a very big IT publisher, an IT tradeshow company in Las Vegas. They saw us also as an infrastructure provider. Although we didn’t have high-tech R&D, we were very good at manufacturing, logistics, and global distribution channels.

So they told us that they wanted to buy us. We said no. This went back and forth several times. We told them not to buy us because it’s not worth it. We were humble and didn’t feel like we need to sell. But at the other hand, if they came with a fat check, we couldn’t turn it down. They still insisted. Then after 2 years, they realized that the Internet was the future. So they started to get out of the infrastructure business. And they told us they had to sell us back the company.

Jackson: What do you think is the limit of data density?

John: As I mentioned, I view Kingston as a service company. Technology is not our expertise. So I don’t know.

Jackson: Is there any difference from the Chinese and the US market.

John: Every market is different due to regulations, culture, etc.. But in general, they are the same. You need good product, availability, and low cost. You don’t need a super product to start with. But if you make your customers lives easier, they are willing to work with you and you’ll have time to improve. It works better than a company that has a super product but is being arrogant to the customers.

Jackson: What questions do you ask yourself very often as a CEO?

John: Recognizing your and people’s strength and weakness is important to me. Care and respect to the employees in how they feel and see themselves in the company is, among all other things, the most important. Because this way you really don’t need to act the role to force things.

Jackson: Any advice on how to succeed in the US as an Asian?

John: I went to Germany to study and I didn’t speak too much English when I first came to the US. So I would say don’t make excuses of the mistreatment. This is, most of the time, not the case. You can interpret whatever direction you want. So control your interpretation and be confident in yourself.

Jackson: You have a good collection of cars. What’s your favorite one?

John: Each car has strength and weakness. This gives different cars different souls. You cannot have a perfect car. And it is up to the people who drive it to feel it. I collect them because I enjoy driving them. I’m also a big fan of sharing. I’ll invite my friends to do a test-drive. If there’s a scratch or a bump, I won’t mind.

Next time when you come to LA, stop by and drive my cars.

What’s the easiest way to break into China? With such a question we talked with Frank Lavin, CEO of Export Now, once US ambassador to Singapore and undersecretary of US Department of Commerce. Frank and Export Now were featured by the recent Businessweek as a Rainmaker for the Small Fry. The answer turned out to be a combination of a “bus service” and e-commerce.

Export Now runs a “bus service” from California to Shanghai. The “bus” (or container ship) operates twice a month. The passengers are US companies selling to China. Because of the many clients Export Now has, they can have better pricing and volume than any one US company could have.  This allows them taking small orders, according to Frank, even “one cubic meter”, which gives the companies great flexibility executing their strategies.

The goods shipped to China goes to a store on the largest Chinese e-commerce site –Tmall (similar to Amazon in the US).  The Chinese customers buy from this store just like from any other Chinese e-commerce stores. The US suppliers don’t need to deal with a single Chinese, but only Export Now, who also do marketing, advertising, and social media support for those US companies.

Such a “bus” e-commerce service has a unique model tackling the logistics and user experience challenge of selling to China. The platform is so easy to use that people start wondering why they haven’t heard of such a thing before. So, want to sell to China? Stop wondering, export now!

William Bean Bao is the Managing Director at Singtel Innov8, a strategic investment fund backed by Singtel Group and focused on the technology, media and telecom sectors. Most recently he was a partner at Softbank China & India Holdings, an early stage venture capital firm backed by Softbank of Japan and Cisco. William began his investment career 16 years ago as a technology analyst in Taiwan, and worked for companies like Deutsche Bank, Bank of America, Bear Stearns, where he was ranked several times as top-level analyst by various media. Today, William shares with us his insights on startups in China and his career lessons.

Jackson: Could you please tell us about yourself? You studied East Asian History and International Relations during your university years. How did that led you to equity research and later becoming a venture capitalist? 

William: I grew up in the US on the East Coast. I didn’t grow up speaking Chinese. When I went to college, I studied Chinese but they only had a two-year program so I decided to go to Taiwan during my junior semester. Back in 1993, the economy was taking off; hardware technology in Taiwan became a major driver of the economy. There was starting to be some serious players in the lower-end hardware industry, such as desktop mouse, keyboards, and monitors market. I had a great time and learned a lot.

I returned to Taiwan between my junior and senior year. I was always interested in joining the Foreign Service because one of my relatives was in the US State Department. So after graduation, when I went back to Taiwan, I cold called the US Commerce Department and offered to work for free, in the afternoon five days a week for four hours a day, while studying Chinese in the morning. And in the nights and weekends I taught test prep at Princeton Review to pay for living expenses. The overall experience was good. We brought in people, such as NGOs, the US Export Import Bank, etc., together. The issue for me was to get people to sit down. Once we successfully got them to sit down, generally our role was over and was followed-up by the industry.  I was more interested in continuing on with the process of what happened and what was discussed in the boardroom once everybody sat down.

So after a year, I switched over to equity research. At that time, there was three ways to get a work permit in Taiwan: you either worked for the government, taught English, or worked for an investment bank either as a broker or as an English editor. I’d had enough working with the government and as a teacher, so I got into finance through a position editing English paid by the hour. This opportunity started my career in finance.

Jackson: What’s the “Aha” moment in your finance career? What made you excited?

William: I was a stock analyst for 11 years. Being a stock analyst, I had amazing fun.  You had to do a couple of different things – not only predicting the future but also understanding the market perception of what the future will be. I started out in Taiwan, which was not the place to learn how to be a stock analyst at that time. So I went back to the US and got a job on Wall Street at Bear Stearns. I worked for a senior Institutional Investor Magazine ranked analyst named Andy Neff. He had a very good teaching methodology in which he would let you do the work and then edit it to his liking.  You got a chance to develop your own opinion and thought process and then compare it to his more experienced perspective. We understood his view while learning to develop a view of our own. It’s very important to have mentors especially early on in your career.

We were covering the consumer side of the computer hardware on companies like HP, Dell, Compaq, Apple, and Gateway. Around 1999, I started to write thought pieces and white papers on the confluence of hardware and connectivity. Today you might take it for granted but back in 1999, it mostly was just a dream connecting mobile devices to the Internet. Blackberry was actually quite revolutionary. We were the first two or three people to become Blackberry users at Bear Stearns and it changed the way we worked. I also worked on sectors such as the digital home market, and at that time it was quite early, the concept of the connected consumer.

After the Internet bubble popped I came back to Asia with Deutsche Bank and built up their tech franchise on the equity research side. By the end of 2006, we were ranked top 3 for software and IT services in Asia.   I was most well known for my coverage of the China Internet companies starting from the end of 2003 and of 2004.

I got in very early on the Internet boom in China. And while I was doing that I started doing angel investing. I’d done a small amount of angel investing with entrepreneurs I met in Silicon Valley back in 1999. By 2004, I was ready to go back into angel investing. When you have a lot of friends doing interesting things, sometimes you want take part. So I started with investing small amounts of money into private companies.

I think one of the “Aha” moments came while I was covering the Internet.  At the start in 2004, the entire market capital of the Internet sector was a couple billion USD. And by the time I left in early 2007, it became 14 billion USD. The market, although there were winners and losers, expanded massively. My job as an equity research analyst was to help folks make money. It was called the sell-side.  Basically you just needed to buy Tencent and Baidu for your clients. At that time, I was still young at 33 and decided that was the time for a change to the buy-side to take advantage of the growth in the market.

I took my interest in angel investing and I joined with two other colleagues from Deutsche Bank who got backing from Softbank. Together with another partner in India, we created a firm called Softbank China & India Holdings. We got US$50 million from Softbank, US$50 million from Cisco, and US$5 million from Deutsche Bank. With that I tried to make the very difficult transition from a sell-side public equity analyst to early stage VC.

Jackson: You focus on technology, media, and telecom. What are the exiting areas combining this three aspects in China? Could you name a few companies if you are allowed to?  

William: China has some unique characteristics. It is a developing market. In some sense, it’s a very rich market but in some sense very poor. Their experience with technology is different than that in the US, where most of the people grew up with a PC first then a smart phone. But here in China, the majority of the market has never used a PC or email.

So one area I focused on was mobile. But the mobile market in China was horrible. No one was doing any investment in the mobile market until the end of 2010. The reason was because that the telecom operators in China were trying to control distribution of software and services. It was a very closed market. It was true in most of the markets around the world but especially true in China. If you can’t get your services paid for, you won’t make money.

But the power of mobile and the power of innovation to move around obstacles finally won out. On a global basis, the folks that tried to control things have lost out or are losing out. And innovative companies, like Apple and Google, are creating a new environment and a new ecosystem. This is one of the biggest investment trends in the last year and a half. I was lucky because I’d been investing in mobile pretty heavily for the last 5 years. And because there was not a lot investment in the sector until more than a year ago, there aren’t too many people familiar with the traditional mobile market. You’ve got a lot of people moving from the Internet space but sometimes the assumptions you use to make an Internet product doesn’t always hold true in mobile. So I got a really good opportunity.

In China, the Internet is dominated by really big players, like Tencent and Baidu. They always tend to offer every product. But these guys don’t have a clue about mobile. Because of the difficulty operating in the previous tough regulatory environment, they had basically pulled out of mobile and they were right to do that. But when mobile came back, they didn’t have a sense of how to deliver good mobile product and that created an opening for startups.

Jackson: Could you name a few companies who you think have a clue on mobile?

William: One company is called guanxi.me. The product is not there yet, but I think that the company has an opportunity because they do understand mobile industry and its users. They have the ability to do mobile billing and messaging because they have a mobile license, while most Internet companies do not. Mobile licenses were once numerous but today there are only a few because nobody could make money in this space; they were expensive to keep up, and the government stopped giving them out. But those who have them could potentially put them into good use. Now that the mobile market is more open, there is a better monetization with online purchasing and advertising.

Another company is called Lekan. Chinese have been trained not to pay for content. However, the market for content here is huge. We have made the assumption that the market is segmented between people who never will pay for content and some small group of people who are willing to pay content in order to get convenience, control, and access. Lekan is similar to Netflix in that you pay per month and you receive content. They launched a mobile online kids’ channel platform. They have probably the best kids’ library in the world. They offer the parents a unique proposition where the parents can feel safe of what type of content their kids are seeing. So you are bringing a common US model of paying for content to China, whereas China in the past was leading the global video market. For example, Tudou was founded before Youtube. Now it’s changing. But when we bring in the US business models, we tweak it. Lekan has a social component that Netflix doesn’t have.

This leads to another company. When parents give iPads or iPhones to their kids so that they can keep them quiet during lunchtime – they feel guilty for not engaging with their children. A company called Smartots created a platform for parents to engage with the education content their children are learning on the pad or on the phone. Smartots integrates with the apps kids are using and reports to parents what are their kids are doing, where are they doing well, and what they are interested in. Then Smartots gives the parents offline opportunities to engage with their kids. Smartots also recommends new contents because kids tend to move around a lot. So this is really a non-intrusive way to re-engage with their children. The kid’s education market in China is  is quite niche because, different than in the US, Chinese customers are not willing to pay for education software and it doesn’t make sense to run ads to the kids. They are bringing US developed apps to developing markets where people are not used to pay and monetizing for the app developers through the parents. The company Smartots is the Number 1 education app in the US and in China. They found a unique way to monetize education apps.

Jackson: You’ve dealt with lots of companies. And I guess there are also a lot of failures involved. What is the biggest lesson you’ve learned? 

William: I read an article recently about startup failure. The single most popular mistake for companies is that they try to scale too early. They run out of money and then they die. Money can only help you get things done quicker or stay in the game longer but it cannot bring you success. In fact it can hurt you. For example you might hire extra 20 people and start marketing before you actually have a good product ready for the market.

There’s a guy named Eric Ries who created something called Lean Startup Machine. We just hosted a Lean Startup Machine event in China. The Lean Startup methodology is something Chinese Internet companies have been doing for a long time. They go out and test their assumptions by showing something to their customers and ask whether they like this or that. Based on what your consumers think, you iterate and iterate. The reason for this is because they have a lot of labour but little idea of what the market wants. So they build it off the cheap labour and test it. It’s like throwing something against the wall and seeing whether it sticks. In America, the preferred methodology is “ready, aim, fire.” Ready is strategy, aim is planning, and fire is execution. In China, it’s ready, or planning, and fire and see what they hit. If they hit something they go that way, otherwise they fire again. I think that might be one reason there are no US Internet companies, like Yahoo!, EBay, Google, which are successful in China.

Jackson: What do you think of the copycatting model and what the Samwer brothers are doing?

William: I would put what the German brothers are doing in a different category with what the Chinese are doing. As I mentioned, the way the Chinese use and interact with the Internet is quite different than in the US.

Like online video, Tudou innovated their way away from UGC towards licensed content because advertisers are not interested in paying for ads next to UGC. And that happened one and a half two years before Youtube started focusing on licensed content. I wouldn’t say it’s a copycat market.

You’ve got Kaixin001.com who created a farm game. They basically took single player farm game and made it social. They were the first to do that globally. Because the social networks like Kaixin001 are closed in China but Facebook is open, another social game company in China called Five Minutes copied the farm game and put it on Facebook.  They made a good amount of money. Then you’ve got a company called Zynga who copied Five Minutes and made a large amount of money. This is a great example of US companies copying Chinese innovation but making it better. One thing great about Zynga is their business intelligence and analytics. Their ability to tweak their games is institionalized.

Another example is that the Sina Weibo has a way better user interface than Twitter right now. So I would call it iterative development rather than copycatting.

What Rocket Internet is doing is actually quite innovative in a different and important way. It’s both an execution innovation and a financial innovation. The world is increasingly connected. You have entrepreneurs constantly reading what entrepreneurs in other countries are doing. And generally Rocket doesn’t start those companies from scratch, but they are finding the people in other markets who are already doing the idea and supporting them. The interesting thing about Rocket is that they are one of the biggest supporters of entrepreneurship on a global scale in the world.

Just because you invented the idea and because you are in the US doesn’t mean you are in the forefront any more.

You’ve got more smart phones in China than in the US. You’ve got twice as many Internet users here than the US population. And it’s not only China. It’s a global market. Every month, the app usage in the US shrinks as a percentage of global app usage. It’s only going to continue that way.

Jackson: How to clone a US company in China? 

William: There are incubators and funds in China that are doing that. One has a team of analysts who figure out what’s going on in Silicon Valley and they study whether it’s viable in China. If it looks good they form a team and launch it. Come to China if you have a good idea. Remember it’s “ready, fire.”

To name a few incubators or accelerators, they are Innovation Works, Transist, Chinaccelerator, and HAXLR8R, and Beijing Tech Hive. And then there are hundreds of local government backed groups.  On the angel side, I helped organize something called Angelvest. They are the largest angel investor group in China. They have 53 angels in Beijing and Shanghai, and in Hong Kong/Shenzhen soon. They are doing about one deal a month.

Jackson:  What do you consider as a good team? 

William: The answer is quite standard. You need a team that complements itself. You need a team where people have good give-and-take but at the same time only one decision maker. It’s also better to have a team where they know each other pretty well and worked together before. Investors want a team they can get along with because its harder to divorce your investors than your husband or wife.

Something different here than in the US is teams are usually built based on the members’ relationships rather than skill sets. So teams might be tighter but less balanced. Although we will help them, it’s hard to bring in talent to a founding team.

Jackson:  How to do a good pitch? 

William: We don’t usually criticize the pitch but rather give them tools so that they can improve their pitch.  The issue is that for many by the end of the pitch you still don’t know what the guys want to do. It could be that they don’t know what they want to do. It could also be due to a communication problem. Presentation is not something you learn in school here. So we generally don’t count the pitches against you but we do also have limited amount of time. Frankly, we are more interested in the team and their ability to execute and the space they are attacking.

Jackson: What advice would you give to those entrepreneurs wanna-be’s who have newly graduated or are still in school?

William: Do what I did– go out to some city, get a job. If you need to work free, work a year, do that. I organize my college’s alumni to offer about 20 jobs and internships each year to students and recent graduates. Often times the hardest part about coming to Asia is not building a successful career but the landing when you first get there. I also had that challenge and that’s why I try and help folks coming over as much as possible.

Acknowledgement: special thanks should give to William Beam Bao, Gary Chan, and Dan Powell, who helped on the editing.  

George Koo came to the U.S. as a child from China, grew up in Seattle and educated at MIT, Stevens Institute and Santa Clara Univ. Dr. Koo has recently retired from a world leading advisory services firm where he advised clients on their China strategies and business operations. He is founder and former managing director of International Strategic Alliances. He is a member of the board of directors of Las Vegas Sands and New America Media. Dr. Koo is a frequent speaker in various public forums on China and U.S. China bilateral relations. He writes for Pacific News Service (New America Media) on issues relating to Chinese Americans and to U.S.-China relations. He is a member of Committee of 100 and Pacific Council for International Policy.

Gary: What was your role and expertise for China Service Group at Deloitte?

George: Mainly my role in Deloitte was the last job before I retired. I became a member of the Committee of 100 in 1997. The members are all prominent in their own right but all are concern two issues: how Chinese Americans are treated in the US and how to promote US-China relationship. There, I met with Dennis Wu, a senior partner at Deloitte and he recommended me to join Deloitte because China at that time have become increasingly important and could use my experience and expertise and meanwhile mentor young Asian American professionals in the firm.

I don’t have an accounting or a tax background. I came in as an odd duck but due to the common interest Dennis and I had for China, I became a resource for him at the China Service Group that he started at Deloitte.

I was involved with explaining China to clients at Deloitte. This was during 1999, when the importance of China was not obvious to a lot of businesses. I spent time explaining the importance of China and how to do business in China.

My first case was to assist Palm, a pioneer personal assistant. Palm was very interested in China at that point, and we help them develop a strategy to go about it. By the time we identified the market in China, they were doing so well in other markets that they decided to ignore the Chinese market. They believed there were too many “low-hanging-fruits” elsewhere. Then all of the sudden, a couple months later, their market hit the wall and they needed to sell to China. They had truckloads of products and came back to us to restart entering China. Of course, it was not that easy to do because Palm did not have Chinese operating system, which they gave up on earlier. Now that they are ready to address the market, they were completely unprepared. Basically Palm went out of business before they were able to address the China market.

I became part of Deloitte when I was involved working with China since 1978. During ’78, I joined Chase Manhattan bank when they were starting a non-banking advisory service to help businesses in difficult parts of the world, Middle-East, Russia, and China.  I had a consulting experience, technical experience, and a bilingual background – so they recruited to me to be the co-leader of this service.

I quickly realized that helping companies do business in China needed to in be on a different basis than at a commercial bank. Commercial banks tend to be very risk-averse. Thus I joined Bear Stearns because they had a relationship with Sun Hung Kai Securities, the biggest brokerage house in Hong Kong. Their transactions in the US securities that originated in Hong Kong were cleared by Bear Stearns, thus the two firms enjoyed a very close partnership. I started the China Advisory Service Group at Bear-Stearns to partner with Sun Hung Kai.

In 1979, I worked with a company in Waltham, Massachusetts who had the world leading technology in automotive thermostat. At the time, thermostats were 5 dollars items that plugged into the engine of the car. Its function is similar to the heart valve to the heart as the thermostat is to the engine. Without a proper thermostat, the engine works very inefficiently, which was the situation in China. I helped my client negotiate a technology licensing deal with Second Automotive Works in Hubei, which became known as the Dong Feng Company. My client wanted a joint venture, however the Chinese laws on joint ventures were not ready in 1979. We started a technology licensing deal with the understanding that we would convert into to a JV as soon as the law would allow. The relationship eventually became a joint venture in 1985. The American side had a 40% minority interest, and the Chinese side had a 60% majority interest. China had 3 board members including the chairman of the board, the American side had 2 members on the board including the vice chairman of the board and I was the second member of the board. From 1985 on, I was continuously involved with China by virtually being a member on this board even when I was otherwise not actively doing business in China.

Gary: So what was your background and your studies in? It seems like business management and consulting, but on your LinkedIn you studied Chemistry and Engineering then received an MBA.

George: I started out in the R&D and material testing – I had a polymer materials background, a doctorate degree from Steven Institute of Technology. Then, I was working for a company called Allied Chemical, the predecessor company to today’s Honeywell. Then I was involved with a biotech device startup in Palo Alto. I then joined SRI international where I had time to pursue an MBA part time in the evenings.  At SRI I was involved in Industrial Economics, providing consulting to the management of companies in the chemical industry. What DataQuest and Gartner did for the electronic industry, we did for the chemical industry at SRI.

When Chase recruited me, they were looking for someone who has consulting experience, know how to communicate with senior executives of American corporations, and has a technical background. During that time and even now, China was always interested in technology-based businesses. In addition, I was bilingual and can read Chinese.

Gary: What was your takeaway from being part of engineering to a consultant to becoming an advisor?

George: I highly recommended a technical training because in consulting, you need to grasp the complexity of this world we live in.  As an example, I might not be a software programmer, and I do not know how to program, but I know enough to appreciate what programming can do and will do; what the impact technology can have on society.

The consulting background trained me to think a couple of steps ahead of my clients, anticipating their questions, their issues, and where they are coming from. To help my clients in China I have to be able to think simultaneously as an American and as a Chinese. When I am talking with my American client, I am thinking about how do I make him understand what the Chinese is saying. When I am talking to the Chinese, how do I make them understand where my American clients are coming from. Making sure both sides are on the same page, and each sides see how the other see the issues of common interest was the most important of my function, because that was the basis for a durable cooperation. I felt that my most important role was to make sure they end up on the same page.

Gary: Not only do you help US companies go into China, you also support Chinese companies coming into the US.

George: Most of my work had been with American companies and helping them into China. The trend of Chinese companies coming into the US was just beginning when I retired. Other than volunteering a lot of free advices upon meeting with delegations from China, I haven’t had the pleasure of taking them on as a client. They move so much faster now, I don’t think I will have the opportunities to help them but I certainly would be open to it.

Gary: How would it be different, having Chinese companies finding an American partner?

George: In the old days, when I was first involved, US companies have to have Chinese partners. The laws in China regulation did not permit wholly foreign owned operations. Now you look for a local partner for strategic reasons not because of any requirement by law.
Similarly for China coming in the US, it is not necessary for them to have a partner. However, it is necessary for the Chinese company to understand the regulatory environment and business culture and how they differ from their home. A frequently made mistake is to assume how things were done at home could be applied in a new country without modification. Not taking into consideration of how things are different and not attempting to localize, that’s the biggest cause for failure.

Gary: What are you constantly read up on and follow regarding China? What is your main focus?

George: One of the subjects I have been very interested in involves accusations of Chinese American espionage. Unfortunately in America, too many Chinese-Americans have been racially profiled by our law enforcement agencies and wrongly accused of espionage solely based on their ethnicity.

One such case was Wen Ho Lee in 1999. He was a scientist at Los Alamos and got in a political crossfire between the Republicans and the Democratic President Clinton. There was a concern that China was stealing our national secrets. The Clinton administration immediately said it was coming from Wen Ho Lee, a scientist from Los Alamos. Dr. Lee became the suspect for leaking secrets to China that included the designs of multiple-headed missiles. If you go back and read about the case, you would find that Wen Ho Lee didn’t have any access to the secrets he was accused of leaking. He was wrongly accused and he was not given the due process he was entitled according to law. The government put him in jail for 10 months hoping to force a confession from him. In the end, the presiding federal judge apologized to him for the gross miscarriage of justice. This was a very shocking case to me that it could happen in America. But unfortunately this is not an isolated case.

Even now today, most of you, who are ethically Chinese working the in the high technology field in the US, have to be extra careful and extra clean or else you could be in crosshair of the FBI surveillance.

Few years ago, the FBI Special Agent in charge of the Silicon Valley was interviewed on BBC and he said Silicon Valley was crawling with Chinese and all were potential spies for China. There was a case of a Chinese national, Bill Chen, working for a Silicon Valley company in charge of sales to Asia. He sold vibration/shaker tables to a locomotive engine factory in China. The government pounced on him and said he actually sold to some missile-building factory belonging to the PLA. The company initially defended him, but the US Air Force and the government said if the company continued to defend this guy, they would get no more orders from the US. The company had to let Bill Chen go. Nine months later, the government dropped the case because they had no evidence. Bill Chen said “Hey, my career, my future had have been totally ruined in the country.” He ended up going back to China.

Thus, I spend time monitoring and reading about incidences when ethnic Chinese professionals are accused of spying. I am aware that the US government is still racially biased and Chinese Americans can become victims of racial profiling at any time.

Gary: Why was this a major concern of yours? Have you personally had an experience like this yourself?

George: It is totally unfair. It is totally undemocratic. It is a contradiction to what America is all about. The law enforcement single out ethnic Chinese as a target. We are still victims of racial bias in this country. My goal is to do what I can to neutralize this kind of bias. It is an important issue. This is also our goal in the Committee of 100. We want to see Chinese American citizens participate fully, I emphasize fully, in the American society, enjoy every rights they are entitled as citizens of this country and not be subject to racial profiling.

I do not have anything personal at stake. It is an issue that I am very passionate about because it is so unfair.

Gary: This is one of your many passions of course. You are also in various network and associations. How did you get involved so many of these organizations?

George: My involvements tend to be more sequential.  I had the luxury of working for myself and thus I had the option to pick and choose how I spend my time. One of my early involvements was the AAMA, Asian American Manufacturing Association. In 1990, I chaired the first multi-national Asian conference on cross-border financing and cross-border cooperation. This helped established AAMA as the nexus organization in Silicon Valley with Asia.

I also got involved with the New America Media. They represent all the ethnic minority media and press in this country. Added together, all ethnic minorities will soon become the majority voice in America. Their views frequently differ from the mainstream and it is important for America to know of these voices.

I felt I was making a contribution. I gained some prominence while participating in various pro bono activities, but fame was not my intention. In the end, I was invited to become a member of the Committee of 100 which I am sure was one reason I was invited to become a board member at Las Vegas Sands. They were looking for someone knowledgeable about Asia to join the board and they found me.

Gary: Why did they want to understand about the Asia market?

George: They were having trouble understanding how doing business in Asia differ from the West, how to communicate with the government officials as well as how policies in Beijing might affect Macau. When they first went into Macau, they didn’t anticipate encountering the complexity with doing business in that part of the world. Since Asia represents roughly 90% of the company’s revenue, it is important that they has a better handle on Asia.

Gary: What about the Private Equity and Venture Capitalist environment?

George: Based on my observation, venture capital didn’t appear in China until about 12 years ago. Even venture capital firms in Silicon Valley didn’t have many ethnic Asian partners until about that time. But as more Silicon Valley companies are founded by Asians, whether South Asians from India or East Asians from China, we begin to see ethnic Asian partners in the venture capitalist firms.

Then as the VCs begin to see start-ups like Baidu, they begin to realize that they need to establish a presence in China as well. They sent associates and set up branch offices in China to make sure they can take in deals from both side.

American VCs, when they started to invest in China, concentrated on the returnees going back to China. On the other hand, local VC firms were focusing on homegrown firms in China. Today, the RMB denominated, locally raised VC firms far outnumbered the Silicon Valley or American-based VC firms operating in China.

On the Private Equity side, sometimes it is hard to catch the difference between the PE and the VC because some of the PE firms would do very early deals and qualify them to be VC deals. Zero2IPO is currently tracking this industry.

Gary: You mentioned you started doing entrepreneurship of your own?

George: I left Chase to go to Bear-Stearns and I was kind of being an entrepreneur because I started the group for Bear-Stearns. I also started a quasi VC firm with capital backing from Taiwan whose mission was to look for deals with technology transfer potential to Taiwan.

I also established a company called International Strategic Alliance for the purpose of forming cross-border deals between the US and Asia. I had that company for about 10 years during which time I had small and large companies as my clients.

Gary: You are very knowledgeable individual. It was difficult for me to categorize you within one industry.

George: With China consulting, in the case of clients I took to China, the first thing I had to do was to learn their business. It could be a company in scientific instrument, mining engineering, semiconductor equipment or anything. They have to explain their business to me, in order that I can communicate what they wanted to accomplish in China. I had to understand enough to help my client explain their objectives to the Chinese. I was getting paid while enjoying a continuous education – a very board opportunity to learn a lot of things.

In my mind, there are two approaches to becoming successful in one’s career.  One way is to be really good in a well-defined area and become an expert in depth, in other words become a specialist. Not all of us can become very good at that – it takes a lot of discipline, talent, and dedication.  The other approach is to be broadly knowledgeable and know how to put disparate ideas and information into coherent action, or in other words become an effective generalist.

Please visit George Koo’s blog at http://georgekoo.blogspot.com/