Internet Opportunities Knocking Across the Pacific for New MBAs?
I had the pleasure of being part of a panel on the business aspects of the Internet industry in China on Friday during the Wilber K. Woo Greater China Business Conference at UCLA Anderson. I was a last minute sub for Sage Brennan of Enovate, and shared the panel with Bobby Chao of DFJ Dragonfund (seed investors in Baidu) and Eddie Chen, CEO of THQ*ICE (a gaming joint venture between THQ and Shanghai’s ICE) moderated by Richard Colback. It was a fun conversation in a lecture hall setting, and was mainly attended by Anderson students and a few China enthusiasts from around Los Angeles.
One of the more interesting parts of the discussion was the question of whether Mainland Chinese MBA students (of which there were a good many in the room) would – and should – go back to China once they get their US degrees to be Internet entrepreneurs.
Eddie Chen – a class of ’04 Anderson graduate – did just that – kind of. He originally went back to China as an employee of AIG (he repeatedly said “it was fine when I was there!”) and then after awhile he said he couldn’t resist the temptation of the Internet any longer and started ICE with a few other partners.
When I said that running an Internet company in China is becoming increasingly difficult with all the self-policing going on, and that there are other, lower-profile, but highly profitable tech sectors to get into in China in addition to the Internet, Eddie said (paraphrasing), “well, I don’t have the skills to run a biotech company or anything, and the Internet is something I could do.” Of course, this is true for many Internet entrepreneurs around the world, not just in China. But Eddie started his company a few years ago, and as a gaming company, and I assume that it hasn’t been that difficult to stay out of the last six plus months of increasingly pain-in-the-ass self-censorship going on for more communications-focused web services. So the question I’ve been asking myself is: if I’m from Mainland China and just got my MBA from Anderson, would I jump on a plane at LAX right back to China to run an Internet startup?
Before I answer that, I think I’ll paraphrase what Bobby Chao said about how they invest in Internet startups in China (I’m paraphrasing so much because I was on the panel and didn’t have time to take notes). Bobby said, “We don’t care about censorship or any of that stuff. We focus on whether it is something completely new and on the commitment of the founders.” I regret not asking Bobby whether or not the last year or so has changed the first part of this investment strategy, but from his attitude, I doubt it. Regardless of the short-term impact, I suspect that as a long-term strategy this is completely correct (and hard to argue with a guy that put $13 million into Baidu that turned into $2 billion on the day search engine had its IPO).
We also had a bit of a discussion about whether Internet innovation was happening in China vis-a-vis Silicon Valley, and I have to agree with Eddie when he said, “there is business-model innovation” going on in China but that Silicon Valley still far outstrips anywhere in China in technological innovation. This of course led to a discussion about whether/how foreign Internet companies should enter and compete in China. Christine Lu, who is organizing rethink Shanghai in May, said from the audience, “you can’t out Chinese the Chinese” and this was generally agreed upon, especially when a multinational tries to just impose their will onto the China market, which almost never works. However, as I said on the panel, I think that there are plenty of Internet back-end technologies that can have success in China – it’s the web services and sites that can be easily cloned that have little chance of being successful in China.
So would I go back and set up shop in Zhongguancun or wherever and start throwing up a website? Well, yes and no. I’d go back, but personally I wouldn’t put up a website-based service, I’d focus on Android and possibly iPhone development (though Android probably has the better chance right now). Looking out into the crowd and watching the hands go up when we asked whether they’d go back, and regardless of the present challenges of running an Internet company in China, just as it is everywhere else (and quite possibly even more so) the Internet in China is still a huge opportunity for any entrepreneur, especially one that is a native speaker with a UCLA MBA. So to all those students there on Friday, thank you for listening for 90 minutes, and good luck not matter which side of the Pacific you end up on!