Page 92 - How China Is Winning the Tech Race

Chen tried his luck once more, this time in Dallas, a high-tech hotbed
loaded with engineers but not with entrepreneurs. He lent his business know-
how to three start-ups. Working with a professor from the University of Texas
(UT), he jumped into the hot fad of optical networking, or fiber for high-
speed efficient Internet connections. Chen wrote a business plan in a month
but didn’t find any backers in the overheated sector of a weakened tech
economy in the aftermath of the 9/11 terrorist attacks. Living off his savings
in a rental apartment, Chen started an Internet security software firm with a
local engineer but quit within three months when its customers didn’t pay. His
third start-up, which involved a low-cost chip designed by a UT prof for
medical imaging equipment, didn’t fly either.
The false starts convinced Chen that instead of depending on the product
ideas of other people, he should rely on his own vision. With his savings from
the buyout of his Stanford start-up depleted from $3 million to $200,000 in
less than a year, Chen left Dallas and moved back to China in mid-2002 with
a goal of building on what he knew best: social networking, which he learned
about when he launched Chinaren. Inspired by the majestic and long-lasting
trees on the golf course near his Dallas apartment, Chen originally called his
Chinese start-up 1,000 Oaks Inc. Three years later he renamed it Oak Pacific
Interactive to avoid confusion with a Los Angeles suburb and better reflect the
firm’s mission.
At the same time that Chen was pushing ahead, several other Chinese
entrepreneurs had returned home to do Internet start-ups. The list included his
Chinaren.com cofounders Zhou and Yang, who listed KongZhong on Nasdaq
in 2004 and became multimillionaires. Leaping in, Chen wrote a business plan
for a wireless version of an eBay auction site in China. In typical entrepre-
neurial fashion, he relied on a network of tech and venture contacts and friends
and family to start it. Chen raised $240,000 from three angel investors in
Dallas, $1 million from his former bosses at Altec, and $10,000 from his
mother. He put in $100,000 of his own money after cashing in a small portion
of his total shares in Sohu in early 2002; those shares had inched up $3 after
sinking to a low of $1 in the tech stock drop in spring 2001.
But his wireless eBay didn’t catch on among Chinese consumers, who pre-
ferred simpler services over the phone such as weather updates, news, and
ringtones. Chen’s mission seemed ill fated when his board vetoed his next idea:
an online gaming company. It was time for his next act: a wireless portal for

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