SM: What is your observation about Silicon Valley in the era in which China has become such a big factor in the world economy?
KX: In our space China is still a small market. Their IT assets are growing very quickly. In our space the key is to quickly do the innovation aspects of technology. I do see some change in their entrepreneurship and VC environments. However, it will still take more time to build it up. The country has really only been open for 20 years.
SM: And it has only really opened up in the past five to six years.
KX: Exactly. It still has a way to go. Sometimes they try to compare China and India. In China they build hardware infrastructure quickly, but they are slower with systems.
SM: The entrepreneur network in the Valley for Indians is very strong.
KX: Compared to the Chinese space, there are 30 or 40 different groups compared to a single strong organization for Indians.
SM: Why is it so segregated?
KX: It is complicated. First there are several different groups. There is Hong Kong, Mainland China, and Taiwan. There is more regional bias. People have only come over from Mainland in the past 20 years or so. There are also different cultural backgrounds.
SM: The network dynamics you had with your friends from Tsinghua University when you founded NetScreen is important. Is that type of entrepreneurship happening a lot in the Valley now?
KX: There is more of it. That is why I feel that they need to grow more on that stage. When I started my first company, I started it with my friends because of that network, not because of their skill sets alone. I see a lot of companies that start with close friends. They don’t take consideration of skill sets as much as they will in later companies. It can be difficult to grow bigger with a close friend. It is hard to match commitments.
SM: Who are some of the really successful entrepreneurs from Mainland China?
KX: I think there are two entrepreneurship waves. The first wave of Mainland entrepreneurs in Silicon Valley started companies from 1994 to 1996. That was the first wave, and those were folks who had been here for 10 years. There was some entrepreneurship but not a lot. I think there were 20 companies. Those companies had their IPO exits in 1999 to 2000. WebEx was in that time.
The second wave started companies in 2000 and 2001. There were 30 to 40 companies in that group. For whatever reason they are taking much longer this time. It is taking upwards of 10 years.
SM: The market is much more difficult. You have to be a real company.
KX: Exactly. Spreadtrum is in that group. They make 3G chips and focus on mobile phone applications. The second wave of companies are probably going to just start making their IPOs. Telegen and TeleNav was started by one of my classmates. I don’t see much other than those two waves.
SM: Your story is fantastic. Congratulations.