Kai-Fu Lee has confirmed reports that he’s leaving his post as head of Google China to start something called Innovation Works, a mix between an incubator, a development lab and an angel investing firm. The plan is to hire 100-150 smart young Chinese engineers, help nurture their ideas, then spin off 50-75 of them a year, with seed funding from Innovation Works. He’ll hire up another 50-75 more smart, scrappy kids to fill that gap and keep the cycle going.
Incubators have certainly had mixed records in the U.S. Idealab flamed out in the Internet bust along with some of its once-brightest companies. Even incubators that spawn successes– like Max Levchin’s MRL Ventures that spawned Slide and Yelp or Evan Williams’ Obvious that was an early home to Twitter—frequently dissolve once a hot idea is found. Y Combinator and TechStars have been lauded as launch pads for the Web 2.0 generation, but it’s too early to tell if any truly huge home runs will emerge from them.
But in China, things are different and Lee sees a much greater need for something like Innovation Works. He says the country is at an inflection point in entrepreneurship, thanks to cultural changes encouraging people to be more risk adverse, huge market opportunities in mobile, ecommerce and cloud computing and billions of later stage venture capital in the country.
The trouble is there’s a dearth of angel capital and early stage coaching, Lee says. In other words, smart would-be entrepreneurs need both a push and a helping hand. “In terms of maturity start-ups and companies in China are 15 years or more behind the Valley, but it won’t take that long to catch up,” Lee says. Indeed, Lee says this new company is playing a transitional role in China—one that may not be needed in another ten years.
The $115 million investment funds came from WI Harper Group, YouTube founder Steve Chen, Foxconn Technology Group, Legend Group and New Oriental Education & Technology Group.
Chinese market opportunities are certainly there, and we’ve written before about the $20 billion in capital chasing Chinese high-growth ideas. So the biggest gamble in Lee’s analysis is whether or not that culture of risk taking is indeed changing in China. The question isn’t whether he’ll find 100-150 kids to employ, it’s whether he’ll be able to pull the best ones.
In the past, it was a no-brainer that the smartest kids would go to Google, Microsoft or another big multinational because of the prestige and the comparatively outsized paycheck, Lee said. Indeed, he enjoyed those magnets as a vice president of Microsoft and head of Google China.
With the new venture, Lee doesn’t expect the bulk of people he’s hired in the past would come work for him now, nor does he necessarily want them to. “Employees from the multinationals are good at working on global problems, but they’re not necessarily entrepreneurial or scrappy because they’re not in a Darwinian environment,” Lee said in an interview earlier this weekend. “I’m not going to offer Google salaries. If a smart engineer trusts me, he should come join me. We’ll do an idea and if it fails, we’ll do the next idea.”
**uno** …> chuckle
Please don’t believe him, KF Lee is a serial backstabber and a job leaver, he stabs the company who helped him what he is today.
I had a bet when he joined Google that he will leave the company within five years when he gets enough contacts and a Google stamp to work around his contacts.
American’s are so naive sometimes, they believe all that a nerdy Asian kid has to say.
I’m an Asian i know how things work here, he never achieved the goals he was set out to be with Google, baidu is still the search king and Google haven’t made any progress with any applications in China.
Is Techcrunch so naive to think, he woke yesterday and decided to start incubator funds…..please read behind the headlines?
Now, he will go around Chinatown and ask investors to invest in his company cos he is from America and worked with Microsoft and Google…foolish investors will give him money. thinking he indeed worked with those big company and sites like TechCrunch gave him free publicity…all he did was built his own resume for this day to fool more people around.
If he couldnt even increase a percent share of Google search in the largest market in the world, how on earth is he going to make unknown companies world class is beyond me.
Can’t you guys read his con game…
I worked for two years in China in the internet space (not naming names), and I have to say, your comment is the first thing I thought as well.
Plus, the rumours of his demise at Google were swirling almost from the moment he joined. I’m surprised he even lasted this long, probably gutted it out in order to save face, since deserted Microsoft for Google became such a public spectacle.
Kai Fu Lee is a computer interface specialist who’s focus is on speech interaction with computers- this has been his specialty for the past ten years and has resulted in zero progress in this area for apple/microsoft/google. I have to hand it to him though he is a god at marketing, relationship management, and resume building. And he has delivered millions in commitments from American multinationals to China’s tech progress. Truely awesome. He has also read a lot of self help books from the U.S. which he has translated into his own personal life and on kaifulee.com. Again it’s remarkable bc he is able to combine western ideas with eastern implementation. Don’t hate the player, hate the game! He’s rich biaatttchhh!
Dam dude, you a friggin cold :)
Kai-fu Lee is my joss, he work hard and have enthusiasm, he also is a teacher to us that are Chinese young blood. I benefit from him…I love u Kaifu Lee :)
Hey I think that what he has for a plan is a good one. We need a few of thoes ideas around here, there are
more and more younger people coming up and wanting to be young entrepreneurs yet don’t have the funding or the push for it. It’s a great idea, wish I could be a part of it!
ummm
sarah…. idealab is still going….
it hasn’t flamed out… in fact… it did quite ok. yeah, a number ot the ventures flamed.. bur the lab itself made a good bit of change…
please do your research a little better next time..
peace..
it actually did flame out and recap, but you’re right it was recapitalized and is supposedly doing ok now.
one thing though sarah: “Even incubators that spawn successes– like Max Levchin’s MRL Ventures that spawned Slide and Yelp”
which one was a success? both are private companies and as far as i know nowhere near profitability…little early to call either one a win.
also, idealab spawned overture, which was bought by yahoo and revolutionized search monetization.
why chuckle? Is that a joke ??? ;(
I think you meant “less risk-averse” no “more risk adverse” in the third paragraph.
Sorry, I tried to move past it but my eye kept gravitating back. I needed to post so I can read the rest of the article :)
everything seems to have mad typos/errors these days. including places like the new york times website.
hire this dude.
If China’s history for the love/addiction of gambling is any indicator, he should have no problem finding risk takers.
From China For China ;) Good luck Innovation Works!
If China’s 5000 history of the innovation is any indicator, he should not have a problem
you need immigrants and diversity in order to thrive and innovate on a different level. that’s my opinion.
china is full of chinese, and some ethnic minorities.
if there’s any innovation in china, it’s probably going to be in taiwan or hong kong.
Yes, of course.
Kai Fu, you took my idea for China which I was going to present it to one of my rich friend. Dude, you sure are moving ahead.
China needs you.
Hiring young kids still won’t stop the C2C (copy to china) syndrome. It’s the cultures and education system there which prevent any innovation.
“more risk adverse”?
I think you mean “less risk averse”
Adverse is correct technically but not quite idiomatically and you want to say Less not More.
An Idealab for China? I have a few ideas: DemocracyAlpha.exe, AntiCorruptionBeta.exe, or maybe just Law.exe.
These apps would be a hit in China!
Forget China, those apps would be a hit in the US!
ROFL,
This was a good one!
The strength of incubators isn’t their small seed investments but the doors which the principals can open for founders. Paul Graham has done a good job of this with YC and I believe Kaifu Lee will also have success with it given his status. Kaifu Lee will be able to pull top people. Chinese are risk takers and who wouldn’t want a chance to work closely with him? Regardless of outcome, it’s a chance to stand out.
“Chinese are risk takers”
A great many would take exception with that based on their observations from the outside and perhaps their age brackets…
Can you characterize how China might view risk as opposed to how US or European markets view risk or weigh this into probabilistic views?
It would be quite interesting to follow the company that he starts and all the spin offs to see how many great technology companies can be created with this kind of development effort.
I think it is a good idea to fund startups. I’m sure there are ton of enthusiastic people in China trying to build websites. Obviously the government censorship to a certain degree won’t help but I’m sure they can build a website that solves everyday problems. Terrific to start your own business and hopefully make some money.
India is also ready for this.
Hope someone is planing for the same in India
Yeah Sarah you should probably do your research on IdeaLab. Come on – you are better than that.
I love how idiots take China as some 3rd world country.
Learn some history americans.
And pay your debts to Japanese/Chinese while you are at it
Well, for a start, how about some freedom of speech? Did you ever wonder why your bookstores are some empty? ;)
If Taiwan made it, I am sure you can do, too.
dmacks,
this whole world is shit. it could be so much better.
it could be better if we focus on our own problems first of all.
instead of saying “free tibet”, we could focus on the improvement of education and lives of native americans, giving them a portion of their land back so that they can have their own country.
we could set aside money for all blacks for reparations for slavery.
remember, china is not perfect, but neither are we. we just came out of “separate but equal.” are you too young to remember? I have video footage of my grandfather screaming his lungs out like a lunatic because a 15 year old black girl wanted to attend his school.
instead of complaining about other people’s shitty countries, we can look at our own pile of shit and think about how to make it better.
come to newark new jerse and volunteer for a while if you really care about strangers’ lives.
That’s the silliest comment I’ve ever seen on TC. Even if I give it leeway as being tongue in cheek, it doesn’t make sense and is stupid.
Chinese bookstores are the most crowded bookstores I have visited on the planet. And they are FULL of books including just about every classic English novel you can think of. The Chinese love to learn way more than Americans now do.
And Taiwan came through a dictatorial nightmare of its own. It doesn’t have a pretty post-WWII history.
You are not serious are u? Of course the Chines book store would be the busiest on the planet DUH!
You need education.
Uhhh, no she’s not. To wit – China has “smart young engineers”? really? Where is the cool software they’ve written then? Probably in the same place all those smart young Indian engineers keep their killer applications…
China, like India, is a factory. Innovation comes from advanced societies not teaming masses…
heh. that’s what the romans thought. thankfully, we have immigrants here.
Indians will be more ….
Indian will be more than china at the event
all about slogan and jokes
What a guy… Google must be outraged.
This is a brilliant idea, not only is Kai-Fu lending a helping hand to young Chinese entrepreneurs, but he’s also supporting the next generation of Internet, mobile Internet, and cloud computing technology advancements! Great things could come of this…
The innovation is a culture problem, you can’t just try to change it in short.
Interesting to me that one of the funding sources for his venture is New Oriental–a cram school that is widely known for stealing its materials from ETS testing service. Innovative stuff, huh?
Foxconn is also a funding source. They have an enviable human rights and worker protection record. Just ask the family of their last Apple related suicide. It is scary that Chinese above would lionize this guy.
Brilliant ideas do not have to come from the best coders. He will need a more diversified group with talents, drive and entrepreneural spirits.
We were funded through AlphaLab, which is a startup program run by Innovation Works – which by the way is a Pittsburgh-based organization that is the single largest investor in seed-stage companies in this region and one of the most active in the country.
It’s another country, but the name is already taken.
kung fu what ?
Undress-on what?
Incubator is quite good model but it’s depend on execution
lets go to China!!
well, awesome idea, but the real problem is not going to be finding the dev talent – it will be finding the product and management talent to take ideas into the market…assuming most interesting ideas will relo to the valley to spawn….
Not sure I get this. If this incubator does nothing but build out successful ideas for the China market, I’m sure it will be viewed as a success, as the Chinese market is brutally competitive.
problem with incubators is that they blur the line between investor and management. as a consequence they flame out.
the need for separation is well understood in the world of sports where the same temptation exists. in some sports its a foul if the coach steps on the field during play….
I think this is promising.
Kai-Fu already tried this actually at Microsoft with a Beijing-based Advanced Technology Group (”Incubator”) that was supposed to bridge the gap between Microsoft Research Beijing and the Redmond product units. They were an abject failure and never shipped a product. Redmond teams saw this group as third-class Engineering talent who also were suspect in terms of their intellectual property. As a former Microsoft executive who has worked closely with Kai-Fu’s former MSR teams, I can say that while he is a brilliant scientist in his own right, he is unfortunately neither an operator nor someone who has ever built successful businesses even in a consultative/VC capacity. It seems that China is enamored purely with his self-burnished image.
Also interesting is his comment: “Employees from the multinationals are good at working on global problems, but they’re not necessarily entrepreneurial or scrappy…” Uh, Kai-Fu has never been in a startup either, so this is a bit of the blind leading the blind.
Another: “We’ll do an idea and if it fails, we’ll do the next idea.” Unlike Idealab, which created separate (some largely entirely unrelated) holding companies under the Idealab umbrella (e.g., Internet search engines, solar panels, robotics, oh my!), Kai-Fu appears to expect to hire generalized engineering talent who can easily move from one domain/startup to another. That model has never worked and Kai-Fu’s self-aggrandizing image won’t make a lick of difference in this regard. Better to just follow the Y Combinator approach instead where Kai-Fu becomes the Chinese Paul Graham (or wannabe).
>>>Uh, Kai-Fu has never been in a startup either, so this is a bit of the blind leading the blind.
Mr. ex-MSFT executive, he built microsoft research asia and Google China, single handed, attracting (arguably) two armies of top notch coders
There’s a big difference between building successful seed-stage startups and building sub-divisions of multi-billion dollar corporations. MSR China’s own former VP mentioned to internal MSFT execs that “an average MSR China Ph.D. is 3-4 years behind Western-educated Ph.D’s”. Google China is a bit of a mystery since I’m not sure if they’ve actually built products that have launched in China or not, but the fact remains building MSR China – a subset of MSR mind you – while important and inclusive of some strong prospects is nothing like proof of launching successful startups.
There are lots of things like getting hold of the registered capital to handling e-commerce registrations that effectively limit competition in the web space to larger players. If this organization can provide an umbrella for smaller firms that would be a useful role.
It would be interesting to hear why the New Oriental Group is getting involved.
> Michael Arrington (@arrington) – September 6th, 2009 at 4:17 pm CDT
> i don’t think you have to worry about anyone from techcrunch trying to visit brazil ever again.
LOL … It’s really funny how easy you lose your motivation. What about resilience? Brazil will always be the country who welcome people from ANY country. Take your toughs and spread this idea on some places where it will obviously make a good difference.
Funny to see so many people attacking Kai-Fu Lee, if you don’t personally know him or have been involved in his dealings I have no idea how you’d speculate such negative things.
Google is big in the world.. China is not the world:) Having personally lived in Asia and having studied Chinese I can attest to that. Baidu is a Chinese company, also Baidu focuses only on working well for the Chinese language which Google does not handle well. Google’s market share went up while he was there but of course it never surpassed Baidu. Realize the Chinese want to be the new #1 in the World, why would they support Google when there is a Chinese company that caters to only their needs?
It sounds like Kai-Fu Lee is a very intelligent man and the fact that he left what likely was an impossible battle to start a much needed incubator in China is likely a move to net him some significant profits as well as enriching the lives of entrepreneurs in China who are brilliant and just needed a chance.
-Nathan Lands
The most sensible comment I have read here so far.
But lucky those guys. Unfortunately in my neck of the swamp, people do not read that much, music is king, dancers are queens, and tech entrepreneurs and programmers are losers.
So besides relishing in all the success of others on this blog. That is the closest to seeing what it may feel like. I am so happy for all the start ups, techies, and entrepreneurs who are able to benefit from investors and great press from TC. Count all your blessings.
the $64m dollar question is how can one build something over a billion people will want to buy? Thats why everyone is trying to get into business with China inc. Its all about getting in on the ground floor, because trust me China is building for the future. I live in Shanghai and see society changing, there still isn’t enough middle class so to speak but they will emerge and when they start spending like the indian middle class is now then watch out!
Innovation technology wise does stem from the West today, I really don’t know when Chinese will be creative enough to contribute meaningfully. They can copy like no one else though!
I think in general society will catc up to western social norms in about a generations time at the earliest, I don’t see changes happening that quickly the young today 18-35 year olds are still hung up on the iron rice bowl and care only for themselves rather any greater good theory, their children will likely be the same unelss they get exposed to more democratic/free’ness I dunno how to put that without being shot down but I’m sure you get what i mean.
Any hard charing busnes minded person with some capital to invest should take a trip out here and check out the posibilities for themsevles.
Regret for your mistakes Sarah.
We will not forget you… you won’t find peace in this blog and in your life, we’ll find you.
You have 1 week.
from 201.68.240.147
I read your stupid article on my country (Brazil). And I noticed that you don’t know anything of history.
Brazil was colonized originally for Portuguese and Spanish. Spain and Portugal were already part
of the Roman Empire to hundreds of years when the Britain was invaded by Julio Caesar. Unlike what it happened in Portugal and Spain, the Roman colonization in Britain it was never total or totally well happened.
Us Brazilian we spoke a Latin language (Portuguese has origin in Latin). You Americans, descending of British speak a language without grammar that arose in the barbaric tribes that occupied Britain.
Therefore, my dear stupid American, you should have more respect for herself and stop speaking nonsenses. While our ancestors read Virgílio in Latin, your ancestors live at caves and they painted the face of blue to go for the war.
Technically we Brazilian are more civilized than you Americans. You, my dear barbaric American, are just barbaric, but we not used to say this because we are civilized. But we are tired to be.
Therefore, care. When it comes to Brazil you will have a surprise. But I don’t know if you will like it.
Come from armor and accompanied of soldiers, but doesn’t think that armors and soldiers go
to protect you of your fucking barbarism.
I think people are worried that Kai-Fu won’t be hands-on enough to incubate, but I think the only way to make this a true experiement is to have the all of Innovation Works projects be fully transparent with lots of media coverage. What’s missing in China is not innovation, effort, failures etc. it’s lack of coverage.
Because there’s a lack of coverage, you don’t have enough data points to say whether startups are succeeding. To Michael’s point, at least with Yelp and Slide we can point back to all the TC and other blog coverage, with China the stories aren’t public enough to create an innovation timeline.