Kai-Fu Lee, the chairman and CEO of Innovation Works, explained the latest development of his Innovation Works in an exclusive interview with chinadaily.com.cn after giving a keynote speech at the TMT China 2010 Internet & Mobile Forum held in Beijing on Monday.
After resigned from Google China, Lee established his own venture Innovation Works in September, 2009. The company is intended to be something of an incubator to help Chinese entrepreneurs start up companies in mobile computing, e-commerce, and cloud computing while also seeks external projects in these areas to invest in.
Here is an edited excerpt:
Q: Could you briefly introduce the latest development at Innovation Works?
A: We've built a very strong team and we've brought in 100 engineers. They are very topnotch, new graduates from industry. We funded nine companies. Some were internally generating ideas, others were entrepreneurs approaching us. The nine companies and 100 engineers are getting started in building interesting products. Some of the products will be ready this year. The areas are mobile Internet and e-commerce.
Q: As far as I know, Innovation Works will develop projects mainly in three areas: e-commerce, mobile computing, and cloud computing. Does your team put equal energy on these three aspects or have any preferences?
Kai-Fu Lee, chairman and CEO of Innovation Works, talks about his company in an exclusive interview with chinadaily.com.cn, May 31, 2010. [chinadaily.com.cn]
Q: Is it because the security problem is people's greatest concern about cloud computing?
A: There are many parts of cloud computing in terms of building a technical infrastructure and having websites build electric services. I think the market is not quite ready for that. Technical work is very substantial.
In terms of building outsourcing for companies to move their enterprise services into hosted solutions, as you said, security is a problem. Enterprises are afraid they will lose their data. Well, we do see opportunities in the applications area, where an existing software application might be moved to become a hosted service. In the past you have to buy software, pay license fees, now you just go on the website and it's all there. So that kind of application cloud computing, we are still optimistic (about). But again, it's not as urgent as the other two.
Q: So far what is the biggest challenge or difficulty you have come cross since the establishment of Innovation Works?
A: We found no difficulty. Everything is going very smoothly. But if you ask me what area was maybe a little bit surprising, I think we found incubating projects internally takes a lot more time than we thought. So we need to grow the organization to accommodate more projects but also shift our focus to external projects. So we are talking a lot more to external entrepreneurs. I think over time, our external projects will significantly outnumber our internal projects. That's one difference.
The second difference is that the best entrepreneurs are often hidden, because they might be low profile. They might be very successful. They might not want the limelight. They might not come to you. Many of them, maybe half of the best entrepreneurs, you have to go find them and dig up yourself. You can't just open the door and say, send me your resumes, send me your business plan. A lot of the very best ones will have their own fixed way of doing things. They will contact you at home when they feel like it. If you want to become their investor, you have to find them. You can't wait for them to come to you.
So we're doing a lot more. Basically we have a team of people. We tell them, don't ever come into the office, go out there and meet all the entrepreneurs in the areas that are promising, listening to people we trust, and get referrals and get to meet everybody, and go meet the best people. Go to events like this and say, send me your business plan.
What we want is in 10 years, when you look back, there was the Baidu (and) Tencent of the last decade – companies X, Y and Z. We do not want to miss out. We want to at least capture a few of them, hopefully most of them, but at least a few of them. If you look at the history of Chinese Internet, the biggest home runs, the big successes...There are only a few. Alibaba, Baidu and Tencent are the huge home runs. If we sit here and wait, we might or might not get the next Robin Li, or Jack Ma, or Pony Ma come to us. But if we go out, basically, look everywhere for talents, we increase our chances of finding the next Pony or Jack.
So last year, for example, we went to campus and hired 30 people. They are all now working on these startup companies. This year, we will probably hire 150. So we are very optimistic that great engineers will be a great fit for us. If you come to visit us, you will see and feel the energy in the place. It's amazing.
Q: Do you think the Innovation Works model is workable in China?
Q: If you have expansion plans, will they cost a lot more money?
A: Yes, we are also going to need to increase our funding, but for now we have enough money. But there are many people wanting to invest in us.
An investor (left) talks with Kai-Fu Lee during a visit to Innovation Works. [provided for chinadaily.com.cn]
Q: What is the short-term goal and long-term goal of Innovation Works?
A: Our business objective is just to create valuable companies. That's what we have to focus on, because that's what investors expect us to do. But at the same time, I also see that there are additional important outcomes that we will create.
One is by being immersed in the Innovation Works culture, these entrepreneurs and engineers can and will become the next generation of entrepreneurs and leaders in China. Some will go into business, some will succeed and become the next big CEOs. Others will fail but eventually succeed. Some will find that maybe they should go to a larger company, others might go to government, and so on and so forth. I feel that my largest contribution may be the environment of the culture.
My legacy at Microsoft and Google is not so much the products or the technology, but the people that I've been able to influence and coach and help. And that they would have a more successful life, and lead a life of integrity and become part of the company that was built to last. And also they might contribute to the future of China. So I think that's really the largest legacy I hope to leave. But I can't focus all my time on that, because I have to go to create great companies.