On Saturday I had the honour of moderating my first panel discussion for iWeekend on the topic of Silicon Valley and Beijing Tech Startup Ecosystem. The event was held at Venture Cinema in SOHO Mordent City in Beijing, a cinema that hosts many panels and networking events for investors and start-ups.  After the panel, the classic movie, “Pirates of Silicon Valley” was screened to show the birth of Apple and Microsoft in the Silicon Valley glory days.

In front of a packed room of around 200 guests, there were four speakers. They included Tyr Chen, CTO and Co-founder of TukeQ, an online social travel organization tool and two time iWeekend team who went on to become incubated in the famous Innovation Works. Another was Edward Liu who is currently the CEO of Beijing Fastweb Technology, a CDN service provider. Edward also has a strong entrepreneurial background with three past start-ups in America. Another was Mikko Puhakka, who is the head of International Relation & Board Member at China Open Source Base. Originally from Finland, Mikko is also an investor and had his biggest success by being an early investor in mySQL which also originated from Finland. Lastly there was Dennis Zhang, an Operating Partner of CDH Investment and former President of Yahoo China.

Since the topic centred on the similarities and differences between Silicon Valley and Beijing I was keen to ask the panel their opinion on how Beijing became a second world hub for tech start-ups. Since Edward started his entrepreneurial career in Silicon Valley and returned to Beijing in 2005, he gave the most insight into this question. He talked about how some of the world-class educational institutions are based in the Silicon Valley, such as Stanford and Berkely. He noted famous companies such as Sun Microsytems which actually stands for Stanford University Network. Likewise, Beijing is home to some of China’s best universities such as Tsinghua, Peking University and Beijing Technology University. These schools are producing the next wave of tech entrepreneurs because they are all congregate in close proximity and have the intelligence to break out on their own and challenge the status quo of joining a big company. Similar insights were given by Calvin Chin, in one of my very first interviews for TechNode.

I also questioned the panel about how they viewed the difference in culture between the Silicon Valley and Beijing. More specifically I asked how creativity, risk appetite and start-up knowledge differed. The panel generally agreed that Silicon Valley is far ahead of Beijing across all measures but to be fair, China is still relatively young in its start-up cycle. Culturally China has a very different perception of risk and failure. Mikko told of a story where a young Chinese entrepreneur refused to take further money from investors after he failed the first time. The investors wanted to give him more money as they knew the investment was naturally risky; but to save face and respect the relationship, the Chinese entrepreneur could not accept the money. He saw his failure as inexcusable. In stark contrast, entrepreneurs and risk-takers are celebrated in America. People are proud to say they tried and failed and many large companies or employers also respect such tenacity. Risk is such a big part of entrepreneurship it really effects so many other things. The risk of leaving a stable job to do a start-up in the first place, the risk of trying a new idea and model which plays into how creative a start-up will be. Recently I wrote about how CEO and Founder of Qihoo 360 believes that many Chinese companies clone proven business models from America, not simply because they lack creativity, but because they are scared of failure.

Another topic that I raised was how stock options are used to incentivize employees in each country. In America, the competitive nature of the tech industry means that high salaries are often paid even in start-ups to attract the best talent. However stock is also used to attract talent, even sometimes down to the personal assistant. Often people will ask for options when joining a start-up to sweeten the deal. However, China is a very different place. From what I have observed, many people working in start-ups don’t get stock options for a combination of reasons. One being, they don’t know understand what they are so they don’t ask. The other reason, paradoxically because they don’t want them. Instead they favour higher salary that is a guaranteed payout, rather than risk compensation based on a hypothetical outcome. After being incubated in Innovation Works, Tyr shared that stock options are given to all his employees, although he tells them that they mean nothing until real financial can be attached to the company. Ultimately I think it is important for employees in start-ups to at least understand what stock options are and that is largely a responsibility of the management team. If they really don’t want it, that is their decision. If Chinese employees valued stock options as much as they do in America, perhaps the issue of employee loyalty would not be such a big problem.

Since the event was meant to be held in English (although some argued differently), there were some foreign entrepreneurs in the audience. I asked the panel for any advice they could give foreign entrepreneurs trying to target the local Chinese market. Mikko spoke about the need to be humble and really understand the local culture and adapt to it. This resonates with comments made by Peng T. Ong, a Partner at GSR Ventures who spoke at the TechNode Ideas MeshUp Workshop. In a related question, I asked the panel what American start-ups can learn from Chinese start-ups. Dennis said that they can learn about how to monetize quicker. He gave the example of Mogujie, who took the concept of Pinterest and was immediately able to monetize from selling leads to Taobao for women’s products.  Meanwhile Pinterest is yet to flick on any revenue switches.

Overall I enjoyed moderating the panel and it was a nice change from writing to talking. Initially I believed the time allocated to the panel was very long, but I had so many more questions to ask. The organizers of iWeekend pulled off another great event and if you are interested in getting involved, you should definitely get in touch with them.

Jason is an Australian born Chinese living in Beijing, specializing in entrepreneurship, start-ups and the investment eco-system in China, especially in the tech and social area.

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