Page 91 - How China Is Winning the Tech Race

Saint Joseph, Missouri, as a tech support manager at the family-owned Altec
Industries, an old-line manufacturer that made hydraulic cherry pickers for
utility trucks. “My wife and I were the only Chinese the town had ever seen
who were not working in the restaurant or laundry business,” he recalls. Altec
soon sent him to China, where Chen designed products and then gravitated to
sales, rising within two years to the position of a regional business manager.

Stanford tech elite
On a vacation in California, he visited the sunny campus Stanford University
in Palo Alto, fell in love with the place, and made up his mind to apply to
business school there. He was accepted and credits that to two strong hand-
written recommendation letters from his bosses at Altec.
For Chen, going to Stanford was a dream come true in a place where the
sky was the limit. He had saved nearly two years and used gains from lucky
stock market picks to pay the tuition. The Web was taking off, and seemingly
every Stanford student had a business plan in his or her back pocket,
including Jerry Yang, who founded the Internet portal Yahoo! on campus in
1995. Chen decided that he had to have an idea for a business start-up too.
He launched an alumni networking site for Chinese students called
Chinaren.com with two classmates, Nick Yang and Yunfan Zhou, who today
run the Nasdaq-listed Chinese gaming company KongZhong Corp. Working
his connections in the elite Stanford tech world, CEO Chen and his
cofounders raised about $300,000 from 10 classmates. He also got intro-
ductions to blue-chip investors and succeeded in nabbing $2 million from
private equity titan Henry Kravis and $10 million from Goldman Sachs.
Chinaren.com became a leading Chinese portal within a year but burned
through cash quickly. In late 2000, after Chen’s 1999 graduation from
Stanford, Charles Zhang, founder and CEO of the Nasdaq-listed Chinese
portal Sohu.com and an acquaintance of Chen’s from MIT, acquired
Chinaren.com for $33 million. Chinaren.com was merged into Sohu.com
right before the dot-com party ended early the next year. At Sohu, Chen was
made vice president of strategy in China, but he bailed in March 2001, before
his one-year contract was up. At his wife’s urging, he held onto his Sohu
shares, which were trading at $7. He cashed out three years later at $30 a
share. He still thanks her for that advice.

Oak Pacific Interactive—W eb 2.0 on Steroids 65