Steve Mushero is an executive and senior technologist with an exceptionally broad and deep background in both business and technology, spanning from early-stage to multi-national companies and the United Nations.
Also a serial entrepreneur at over a dozen startups, focused on building technology, products, and companies. Also an author of “Off-Shoring the Middle-Class” about Globalization.
Gary: How did you end up in China?
Steve: In a roundabout way, I actually came to China 20 years ago when I was still at RPI. I was a MBA student so I did an exchange program in Japan in 1989. I was in Asia then and towards the end I visited Mainland China and many other places like Hong Kong, Taiwan, Thailand, and Korea. After that, I was back and forth between the US and Japan, and was undecided on where to stay. Someone suggested, ‘why not do something in China?’ After 30 minutes of thinking, I thought ‘gee can I sell everything and move to China and do something new? Yeah I could!’ I started studying Chinese and within 9 months I was here in China, part-time at least.
I started consulting and networking from Silicon Valley and in China. Why? Well there are many opportunities, huge industries, huge market, and growing very fast. Also China is very important economically, and politically around the future; so it was important to understand China and the Chinese cultural map. And it was transforming, so you really get to see first hand how a country goes from 19th century to 21st century in 10-20 years. Every 5 years is a different generation here comparing to 10-20 years in the US. You see a lot of culture, society, and anthropology changes all at once. It’s a very exciting place to be.
Gary: What was your first career opportunity in China?
Steve: I was doing a variety of things, spending my time here and Silicon Valley. I started technical consulting work and helping Chinese startups, on infrastructure and helping them build many other things.
Gary: Although you market yourself as a technology advisor, you must know other aspects of business of a start-up. What do you think makes and breaks a start-up business, especially Chinese start-ups?
Steve: The number one thing investors invest in, is people. It’s always the people, the founders. In real estate and restaurants, it’s all location, location, and location. And in the startups, its all people, people, and people. Then following that, what’s the market, what’s the product, and so on.
China makes this a little more interesting, because it’s much more chaotic and moves much faster here. In the US, you have Silicon Valley time, which is 10x faster than the rest of the world. In China, you are 10x faster than that. You can get a company started and an office built out in a week. There are no 1-year product cycles and no planning. Foreign companies are not geared for that, so they often don’t do so well.
Gary: Were you able to adapt to the speed of China’s progress?
Steve: Yes, probably because what we do is more infrastructure and not quite so hectic in the front-end. If you are half as fast as local companies, but with 3x the planning in a hybrid approach, I argue you are able to get a better outcome. We try to be more organized, planned, and focus on quality, partly because that’s the type of service we sell.
There are many successful startups and foreign run business here in China, as long as they are prepared for the market.
Gary: What kind of startups did you think were successful in China recently? What about the team or the technology?
Steve: There was a company called, Qunar, who was started by an American and sold to Baidu for $300 million dollars recently. Identify a market and a need, nothing too different from the rest of the world. They didn’t even have much technology; it was mostly being in the right place at the right time.
There a lot of successful Chinese companies, like Tudou.com, which I use to be part of. There are also Youku,com, and a lot of gaming, because China has the largest online gaming market.
Gary: Can you talk about ChinaNetCloud?
Steve: We are infrastructure operators and run the backend systems for Chinese Internet companies, essentially we outsource system operations and IT for Internet companies. We manage the servers, data structure, database, and pieces and parts 24/7. Our job is to fix everything in backend, so you don’t have to.
This is a pretty big deal in China because there aren’t enough train professionals in almost every area in China, if that’s accountant, lawyer, or even people who makes great coffee at Starbucks. So on the Internet side, it’s even worse. We really work to solve that problem for Internet companies
Gary: We really like ChinaNetCloud’s business model simply because Chinese customers are willing to pay for this service. However, Chinese customers don’t want to pay for software and piracy is still a problem, what advice would you give to these entrepreneurs in this field?
Steve: Chinese often don’t want to pay for anything. They don’t normally pay for service especially its quite rare, unless it’s really good or it’s very compelling.
But it really depends on the product or services, for example what people pay in games, where they pay for items like special t-shirts that might help them spike the volleyball faster. There is plenty of money out there in gaming, you just need to find out what people would pay for. They pay for experiences, ‘blings’, or going to clubs. You have to find out what make sense here culturally.
People here are buying iPhones, and iPhones apps, which are a huge market. You just have to connect with the buyers. Now there are more middle class, people demand more information and more luxury, whether it’s to go travel, or purchase high end products. It’s a developing economy but there is still massive amount of stuff that can be build and done. We have a billion people all moving and buying real estates, gaming, dating, etc.… all hugely untapped.
Gary: Well these are the opportunities for cloud computing in China, what are the challenges for the cloud then?
Steve: Cloud computing in China is really just starting. We are really one the oldest companies here doing that. There aren’t that many challenges, it’s getting the technology, the people, and the money together to do it. The government is putting a lot of money into cloud computing but not always in-sync with what the market wants. It getting there slowly, there are variety of issues like structural, and geographical reasons. And they are slowly being overcome. As for technical expertise, a cloud is hard to run. But it’s making progress.
Gary: Do you see cloud computing entering the usage of enterprise software or being implemented by big companies in China?
Steve: In the US that is where a lot of the money comes from. And in China, it’s nearly non-existent. They lag in the US also in the issue of security and trust. And in China also the security and trust issue is more important because there is a perceived sense of risk there. Technology is still new so there is resistant to it. It took 5 years for the large US companies to start using it and even then not very much. Amazon works very hard at that. So China is going to be another 5 years behind that because you start with the simple and easy stuff and that’s where we are now with little guys and small Internet companies who just want to launch a website before a bank or other large companies start putting their stuff onto the cloud.
It’s going to be a long way from here. But they have start experimenting with it, data processing, data analytics, some backend stuff, and things needed for big enterprises. Right now you don’t really see that, but in the upcoming few years, you will see that for sure. The secondary low-priority and elastic data can be put in the cloud rather than allocating hardware for them. This is very typical in the US, and the Chinese will follow that very quickly once they can get it.
Gary: Before working at Tuduo.com and founding ChinaNetCloud, you were the CIO and CTO for various startups. Were they different type of businesses or had a consistent theme?
Steve: I left RPI and worked at Albany International for a number of years. Some of my first startups I did were in the Albany area. Some were in Seattle where I also lived for awhile, and most of my other startup experience is from Silicon Valley and San Francisco.
I also did some work in United Nations for the World Health Organization, plus Indian Microfinance, and various large company things around the world.
Gary: Can you highlight a few lessons learned throughout your career in startups?
Steve: What make startups different and special? Startups are not big companies so you have to do everything yourself, do every job there is. Work very hard and often you will fail to be successful, some times many times. A lot of startups failed while others have succeeded. It’s the classic Abraham Lincoln quote where he won the election but he lost 5 times and went bankrupt twice. It’s the people who preserve and go through all of this and have the spirit will succeed.
Startups are very chaotic. Everything you do today changes tomorrow. You change and you get better and then you have change it all again. We don’t hire people from large companies because they don’t fit very well within these requirements, the chaos and the lack of money – so how do you do things cheaply while getting growth. The ideas of take responsibility and ownership – there no room for mediocrity.
The lesson is hire slowly and fire fast, which is totally true and everyone agrees but almost nobody does it because you are desperate for time, you got to get launch and keep going. Those are the things that differentiate startups.
Jackson: what are your criteria in picking companies to work for?
Steve: Of course it’s important for them to be successful. When I was a consultant, I wanted money because it was during the time of Dot Com crash, so whoever can pay me was good. It depends who is calling you, what they are doing, how can I help, will it be successful, do I like the people; its very similar anywhere you go. Consulting is a little better, because you can have multiple clients, a little more risk, you can do 1 or 2 things long term and then something a little different like non-profit or a high-risk project. This is very difficult if you only had one job.
I was consulting with 4 or 5 companies at a time so I can always do some other side job and weird things for free. Definitely depends on how you can help and the upside of things.
Gary: How do you hire good people? Especially when you are busy refining your product or service or even networking. How do you find time to hire and go through the process of iteration to retain the good people?
Steve: There are many levels of that and in China its much more difficult. Finding good people here is substantially more difficult than in the west. Although its much cheaper, for example, we can get an English speaking senior in college intern for 4 to 5 days a week for about $200 a month – that’s great, and a starting full time engineer is about $500 a month. And more experience would be about $1000 a month. Howeer, you do get what you pay for. There are a lot of talented individuals out there but they are hard to find and you have to go through a lot of them to find the best.
The younger individuals don’t have much experience, so how do you even test them? So we test various issues how they identify problem, paying attention, quality, troubleshooting, logical thinking on process, and we constantly evolving that in our HR level. At the senior level, we look into cultural fit, because 10 – 20 years ago, nobody were really even working on the Internet in China. So some you want to hire based on whether its attitude, skills, culture, and etc. In the US, this would be much better.
Gary: Can you talk about Off-Shoring the Middle Class? The book was written in 2007. Do you see things happen as you argued or things have changed?
Steve: Some of them, such a jobs leaving, as you see the engineering still going overseas while some are coming back because of quality on tackling the same problem. Then gets into how do you recruit good people overseas and then the communication / time-delay is still there.
For example, if you read articles like why Apple are manufactured overseas. The entire manufacturing ecosystem except the actual design work and the apps are all done overseas. That is where the employees, engineers, and factories are, this is true in all electronics. And those jobs have gone. Well you can say it doesn’t matter, because when you have applications and there is real money to be make in iPad apps and all these add-ons stuff. But some of the hottest iPad games in the US are Chinese or made by foreigners in China, and exporting to the US; we are run some of these.
We do see wage depression and globalization. You do see jobs being moved around from the little engineering shop in Albany or in Kansas to places like India. At the same time, some issues have become better, involving the government working on better visas, improving the patent system, tax initiatives for startups, work on languages, etc.
Gary: Looking back, what did the RPI education give you? Any advice for graduating students at RPI?
Steve: I think location is important and choosing where to go when leaving Troy is important. I actually lived in Troy about all together 12 years, a long time. So don’t do that!
So what is RPI good at? A lot of things. Classes are important and it matters what discipline you are in. It helps prepare you. Fundamentally, engineering education is extremely useful and powerful, almost the best type of education to have, where you can think logically, structurally, systems, trade-offs, design, integration, and cross disciplinary.
The trick is to get the engineers who are geeky to be able to read and write well. Get them to be able to communicate and think about different things and be multidisciplinary. This always been the case, and is even more important now. Learn to read and write well, now.
It’s the internship experience, and cross-disciplinary, cross cultural. And RPI have done a pretty good job at that. RPI folks always seems very practical and its really difficult school. So if you cannot get stuff done, build teams, and get organized and find ways to get the answers; and if you cannot do that, then you cannot easily get through the school.
As a student and a graduating student, experience is important. I tell people all the time: your starting salary and your starting job are not important. Go where you can learn.
The Chinese are good at this. They take stuff that would help their career later. They always career thinking. Think about where you are going in 5 to 10 years. Or take a year off and spend some time and travel, gain some new experience and outlook. And if the economy is bad, intern or work for free if you have to be at good places.
Or start your company. It’s good when you are young, it’s better when you have more experience. Join a startup is the best of both worlds. Even if it fails, it doesn’t matter. I started out at startups rather than big companies because I was able to do more things, take on responsibilities, and get promoted fast.
If you want to start a company, and you are passionate, go do it. If it implodes, it implodes, and it doesn’t matter. Move on to the next thing. And then move to Silicon Valley, and investors would ask you ‘what you learn from your failure?’ As long you learn the right thing and not do it again, they will give you money.
I think the days of just graduating and go to a big company and working there for 20 years is over. Spend the time to travel, study a new language, volunteer, etc.… Get out and really go see the world!
