Home' Technology Review : September October 2013 Contents 88
MIT TECHNOLOGY REVIEW
VOL. 116 |NO. 5
From 1995 to 2005, 52 percent of
Silicon Valley startups had one or more
people born outside the U.S. as founders,
twice the rate in the U.S. as a whole. Immi-
grants like me were able to learn the rules
of engagement, create our own networks,
and participate as equals. These days, the
campuses of companies such as Google
resemble the United Nations. Their caf-
eterias don’t serve hot dogs; they serve
Chinese dishes, and curries from both
northern and southern India.
This is the diversity—a kind of free-
dom, really—in which innovation thrives.
The understanding of global markets that
immigrants bring with them and the links
to their home countries have given the
Valley an unassailable advantage as it’s
evolved from radios and computer chips
to search engines, social media, medical
devices, and energy technology.
The Valley is a meritocracy that’s
far from perfect, however. Some of its
flaws tear at the very fabric that makes it
unique. Women and minorities are largely
absent from the ranks of company found-
ers and boards. Venture capitalists tend
to fund startups that produce short-term
results—leading to a preponderance of
social-media and photo-sharing apps.
Real-estate prices are so high that most
Americans can’t afford to relocate there.
All these things slow the Valley down,
but they won’t stop it. The only serious
challenge I see to Silicon Valley is, ironi-
cally, from the same government that once
catalyzed its development. Silicon Valley
is starved for talent. Restrictions on work
visas prevent foreigners from filling its
openings. There are more than one mil-
lion foreign workers on temporary work
permits now waiting to become perma-
nent residents. The visa shortage means
some will have to leave, and others are
getting frustrated and returning home.
This brain drain could bleed the life
out of Silicon Valley’s companies. Then
we will have real competitors emerging in
places like New Delhi and Shanghai. But
it won’t be because they discovered some
recipe for innovation clusters that finally
works. It will be because we exported the
magic ingredient: smart people.
Kai-Fu Lee trained an army of Chinese
engineers. Now they’re turning Beijing
into a technology powerhouse.
● Cities all over the world have tried to
duplicate Silicon Valley. But only one has
emerged as a serious contender: Beijing.
China’s political, financial, and cul-
tural capital has been on a startup tear
in recent years. In 2011, Chinese venture
capital firms invested $13 billion, half
as much as their U.S. counterparts—30
percent of it in Beijing. (The total invest-
ment dipped sharply in 2012 in the face of
a national economic slowdown.) Beijing
hosts rare concentrations of wealth and
some 70 institutions of higher learning,
including China’s best computer science
departments. Like New York, it’s a magnet
for ambitious young people. Like Washing-
ton, D.C., it’s the center of the national gov-
ernment. Beijing produces what few other
places can—giant, fast-growing tech com-
panies, like Baidu (now worth $31 billion),
Lenovo, and smartphone maker Xiaomi,
which sold $2 billion in handsets last year.
Among the city’s 20 million residents,
probably none can take more credit for
Beijing’s trajectory from backwater to
startup factory than Kai-Fu Lee. As the
founder of Microsoft Research Asia and
Google China, the U.S.-educated computer
scientist not only became one of China’s
first tech celebrities but personally trained
a generation of engineers whose busi-
ness ventures have turned Beijing into a
dynamic technology center. More recently,
Lee founded Innovation Works, a Beijing-
based incubator and venture capital firm
dedicated to nurturing Chinese startups.
Beijing now is not just competent
in software and gadgets. It has its own
brands that are bound to lead in their
own directions. “I’ve seen startup clusters
all over the world,” says Steve Blank, an
entrepreneur and business school profes-
sor who recently returned from a visit to
China. “But Beijing blew me away. They’ve
built an ecosystem on a scale that puts
Boston or Seattle to shame. Beijing com-
pressed 30 years of startup learning into
Lee, who is 51, was born in Taiwan and
moved with his family to the U.S. in 1973.
As a PhD candidate at Carnegie Mellon,
in Pittsburgh, he was struck by the tech-
nological gap between the U.S. and China.
While he wrote and debugged his code at
a computer, a classmate from the People’s
Republic executed those tasks on paper.
“ That opened my eyes about the back-
wardness of Chinese computing in gen-
eral, not to mention innovation,” he says.
At that time, China’s government had
set in motion ambitious plans to break
into high-tech and electronics manufac-
turing. In the 1980s it opened the Zhong-
guancun technology hub in Beijing (now
home to Lenovo), the first of 54 similar
science and innovation parks that took
Silicon Valley as their inspiration.
Lee’s chance to play a role came in
1997, after Bill Gates visited China and
decided to gain a stronger Asian foothold
for Microsoft’s products. The following
year, Gates sent Lee to Beijing to launch
what became Microsoft Research Asia.
Already a veteran of Silicon Graphics
and Apple, Lee quickly realized that given
the lack of experienced managers and the
authoritarian bent of Chinese society, he
“The pace is faster here. Companies iterate,
build things, and grow faster than their U.S.
BUSINESS REPORT — THE NEXT SILICON VA LLEY
8/5/13 1:39 PM
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