Monday, August 5, 2002

Chinese Americans Contributing to Silicon Valley

Current economic malaise notwithstanding, Silicon Valley has earned universal recognition as the Mecca of high technology. After all, Silicon Valley was where semiconductors were reduced to commercial practice, leading to the development of integrated circuits and microprocessors, which in turn created the personal computer revolution and followed by the proliferation of the use of Internet. Many of the leaders of the high tech industry call Silicon Valley home including such household names as Hewlett Packard, Intel, Apple Computer, Cisco, Netscape, 3Com, Oracle, and Sun Microsystems to name a few. Much of the biotechnology revolution also took place in and around Silicon Valley with such industry leaders as Genentech, Chiron and numerous others. Government and business leaders from all over the world wishing to replicate the success of Silicon Valley have made the obligatory trek to Silicon Valley to see and observe and hopefully capture some of the magic to take home.

The one magic ingredient that is surely unique to Silicon Valley is the diversity of the people living and working there. Nowhere else epitomizes America, a place that has room for everybody, better than Silicon Valley. The one distinction between the America as symbolized by the Statue of Liberty and Silicon Valley is that Silicon Valley attracted very few of the downtrodden but many of the best and brightest from Taiwan, China, Hong Kong, Singapore, Malaysia, India, Pakistan, Iran, Russia, Israel, Palestine, Slovenia, Hungary, Czech Republic and not a few from developed economies such as France, Germany, UK and Canada.

Today of all the people working and living in Silicon Valley, one out of four is an Asian and nearly one third of those are ethnic Chinese, and more than one sixth is a South Asian from India or Pakistan. If all the ethnic Asians were to suddenly disappear from Silicon Valley, most of the high tech companies would implode and the economic shock wave would be felt worldwide.

Annalee Saxenian, a UC Berkeley professor, whose research interests include the contribution of immigrants on America’s technology concludes that in Silicon Valley, IC stands not for integrated circuits but for Indians and Chinese. Indeed her study showed that by 1998, the last year of her study, one out of five high tech start-ups in Silicon Valley were led by Chinese Americans. My guess is that today, 5 years later, the number of companies started by Chinese Americans would make up an even higher ratio. I don’t have hard numbers but my reasoning is based on the following considerations:

(1) There are more Chinese Americans in Silicon Valley now than ever. It is not unusual for any of the many professional associations formed by Chinese Americans to hold a conference on a Saturday and get a room full of people, anywhere from 500 to over 1000 in attendance. I don’t have an exact count, but my guess is that in Silicon Valley there are at least 2 to 3 dozen Chinese American organizations according to professional interests each with at least 100 members. By the way, even though mainstream associations such as the American Electronics Association have many more members, they would be hard pressed to routinely turn out 500 for a conference on a Saturday.

(2) There are also many more venture investors willing to invest in start-up companies headed by Chinese Americans now than ever before. Taiwan capitalists have found lucrative deal flows by investing in Silicon Valley and more than 100 of these venture capital firms have set up branch offices in Silicon Valley. Mainstream venture capitalists that used to not look at deals with Chinese American CEOs now realize that they are missing out. They even have Chinese American partners in their firms and now they do not hesitate to invest in start-ups headed by Asians.

The Silicon Valley today is far different from the San Francisco Bay Area I moved to in 1971. In the old days, Santa Clara valley south of San Francisco was a valley of vanishing fruit orchards waiting for the high tech revolution to be recognized and for someone to coin the term, Silicon Valley. Today, every town and city in the bay area tries to lay claim to being part of the mythical Silicon Valley. Then we planned our Sundays for a trek to San Francisco Chinatown to enjoy a dim sum lunch and a load of Chinese groceries to cart home. Today we don’t go to San Francisco for food anymore, just about every city in the greater bay area has at least one shopping mall, developed and owned by Chinese Americans, full of Chinese restaurants and one major grocery store that carries goods from greater China. Thirty years ago, venture capital was just getting started as an investment vehicle and venture capitalist recognized as a profession. Today, anywhere between $20 to 60 billion of venture capital are invested annually in the U.S. and 35 to 40% of all that risk capital have been invested in the San Francisco bay area, an area representing less than 2% of the total U.S. population. For some time now, Silicon Valley has been soaking up more than ten times their fair share of risk capital.

The status of Chinese Americans in Silicon Valley has also changed dramatically over this period of three decades. At Deloitte & Touche, every year we conduct a survey of 50 fastest growing companies in Silicon Valley. In one recent year, 5 of the 8 fastest growing companies had Chinese American as the CEO except for Yahoo, whose Jerry Yang was a founder but not a CEO. If I remember correctly, his title then was “chief proselytizer.” In the old days, Chinese Americans were automatically presumed to be excellent scientists and engineers but incapable of being a manager much less a senior executive. Today not only do we have Chinese CEOs in small to medium size companies, but we have senior executives in major multinationals such as Applied Material, Hewlett Packard, Intel and others. John Chen has a graduate degree from Caltech so you would expect him to be smart and head some R&D lab. But he is the Chairman and CEO of Sybase, a major software company he is credited with pulling it out of a death spiral and restoring to strong financial health.

Silicon Valley today is about as level a playing field irrespective of race or national origin as one can find anywhere. It rightly should be considered a model for the rest of America to emulate. But, it was not always this way and it didn’t change overnight. John Chen and other young successful executives owe a debt to those that blaze the trail for them. I am fortunate to be living in Silicon Valley during this time and privileged to being an eyewitness as some of the Chinese American pioneers made history and changed basic attitudes toward Asian immigrants.

Without a doubt, the first pioneer to come to mind is David S. Lee. David started his first company in 1969 called Diablo Systems, a company that made daisywheel printers. He sold the company to Xerox in 1972 for $28 million. One of the first things Xerox did was to replace David as the executive in charge, so David resigned and started Qume the following year. Qume continued to make refinements in the daisywheel printer and the company was sold to ITT in 1978 for $165 million. This sale returned 93 times original investment for the investors. David made his first million in 1972 when he was 34 and his sale of Qume was the first Silicon Valley company to be sold for over $100 million.

When David was raising venture funding for Qume, despite his track record with Diablo Systems, the investors insisted on the right to put in a CEO over David as a condition for their investment. When ITT bought the company, they made David the number one executive and then later made him a corporate vice president in charge of three divisions. At that time, ITT was in the top ten of Fortune 500 companies and David was undoubtedly the highest ranking Chinese American executive in Corporate America from Silicon Valley. He repaid ITT for their confidence in his management ability by staying with ITT until his division was sold to Alcatel, the French telecomm equipment company.

By the time David left ITT in 1984 he was already a legend in Silicon Valley. While he continued to acquire and run high tech businesses, he also began to think about –as he put it—working for future generations. He became politically active as a fundraiser. Being a Republican he supported most Republican candidates at all levels but he also supported Asian American candidates regardless of political affiliation. He encouraged Asian Americans that were Democrats to be active and support their candidates. To David, participating in the political process and having a place at the table was more important than the political affiliation. When Bill Bradley ran for the Democratic nomination for president, he was a visiting scholar at Stanford. David was among the first to host a dinner party for the senator so that some of the notable Chinese Americans in Silicon Valley can meet him.

David has served on presidential commissions for three successive presidents from George Bush Sr. to Bill Clinton to George W. He has been on the board of regent for the University of California system since 1995. He is very aware of his responsibility as the only Chinese American regent to serve in a system where Asian American students represent 40% of the enrollment. He has been president of Chinese American associations, visible supporter of many Asian American causes and a tireless speaker at functions to encourage others. He makes a difference by example.

Pauline Lo Alker was born in China and grew up in Hong Kong. She came from a “traditional” Chinese family where she was told that her mission in life was to support her brothers. Her parents enter her to school a year early so that she could keep an eye on her older brother. Her dream was to attend Northwestern University, but her parents kept the acceptance letter and scholarship notification from her. In the end she and her brother left Hong Kong to attend Arizona State where Pauline took on double major of music and mathematics. During her senior year she was introduced to the computer, which she took on with total enthusiasm. After graduation in 1964, to her chagrin the only job open to her was to be a bookkeeper at Sears & Roebuck.

Pauline’s first break came a year after graduation when she met someone in the computer department of General Electric who offered her a job as a manuscript typist. Not the plum job but at least it was in the right department. She rented an IBM Selectric, learned to type on it and took the job. A month a half later, a programming job opened and she applied and was selected over four others. Her high tech career was finally launched. By 1972, Pauline had moved to Silicon Valley to become the 37th employee of Amdahl Corporation, then a start-up computer company. She then moved on to mid-level management positions at Four Phase Systems and Intel.

Pauline came to prominence in 1980 when she joined Convergent Technologies, a computer workstation company, as their vice president of marketing. In four years she oversaw sales of half a billion dollars worth of workstations. Convergent was an early high flyer and she was the frequent spokesperson for the company. In 1984, Pauline started Counterpoint Computers, a builder of high performance computers, which was sold to Acer of Taiwan in 1987. She stayed on to run the U.S. business for Acer for a while. In 1990, she was recruited to run and turn around a small company, Network Peripherals, which she did turn around and got it ready for public offering in 1994. The company won the recognition as the most successful IPO from Silicon Valley in 1994. Since 1998 Pauline has been the CEO of, a privately held company in Silicon Valley.

In recent fifteen years or so, Pauline received many honors and awards. She wasn’t just the most visible Asian American women in Silicon Valley but was one of few pioneering women executives who have established their credentials in a mostly male high-tech industry. She was a popular and widely admired role model and she relished her position and took her responsibility seriously. She became the first woman to become the president of AAMA, then standing for Asian American Manufacturers Association. AAMA was and continues to be one of the best-known professional organizations for Asian Americans in Silicon Valley. When it was first formed, it was to serve as a networking and mutual aid organization for Asian Americans. Today, the organization is known in China, Hong Kong and Taiwan as the bridge to Silicon Valley. When Pauline stepped in to lead this organization, the energy level of the entire organization went up, there were more programs put together by more volunteers and attended by more people. Pauline called herself the “self-appointed champion of the young.” She organized and led workshops to teach young engineers about leadership and communication skills and other attributes necessary in order to become successful managers and executives. It was invariably the most popular and best-attended event.

David and Pauline were among the first wave of Chinese Americans that not only helped built Silicon Valley but made the statement that Chinese Americans were not just good technicians but can also be successful entrepreneurs and business executives. Others during the early days of Silicon Valley included David Lam, Lester Lee, Stanley Wang and Ken Fong. David Lam was working at H-P when the white engineer he was training suddenly became his boss. He left to form Lam Research, which became one of the major equipment companies for the semiconductor industry. Subsequently, he went on to lead and/or founded a series of high tech companies. David also served as president of AAMA and on a presidential commission during the Bush Sr. administration.

Lester Lee started a company based on his magnetic media expertise which later evolved to become a supplier of ruggedized industrial PC’s, a profitable and not hotly competitive niche market so that he can devote his energy to social activism. He was involved in the founding of several professional Asian American organizations including AAMA. His opinions and letters to editors are particularly noticeable in the ethnic Chinese newspapers. He and David Lee and Stanley Wang were active Republicans behind many fundraisers in Silicon Valley. In fact he was the first Chinese American to be appointed to the University of California board of regent and he was also the first to serve for a year and then did not get confirmation to serve out the term. He was a victim of political battle between a Democratic legislature and a Republican governor. This failed confirmation was so extraordinary and raised such a stink from the Chinese American community that when David Lee’s nomination came up for confirmation, no one thought to use him as a political football.

Stanley Wang along with his brother started Pantronix, a small company providing the service of assembling and packaging integrated circuits with emphasis on serving companies that supply devices to the military and space agencies. This company has been growing steadily over nearly 30 years and now has plants in Philippines and Kunshan, China as well as Silicon Valley. At Stanley’s company conference room on prominent display are photos of him with every U.S. president from Reagan to the current one. Stanley serves on the board of trustee of the California State University system. The UC system has more glamour and prestige but the state university system serves more students. Stanley has personally made a number of $1 million dollar contributions to the state universities to encourage the improvement in the quality of higher education.

Ken Fong founded Clontech, a biotech company, which he sold to Becton Dickenson in 1999 for undisclosed hundreds of millions. Ken and his wife Pam are known for their generosity to philanthropic causes including endowed chairs and scholarships and for their unfailing support to Asian American political candidates and Asian American issues in need to financial support. Ken has opened a venture investment firm and travels frequently to China to look at developments of biotechnology there.

David Lee, Pauline Lo Alker, David Lam, Lester Lee, Stanley Wang, and Ken Fong are arguably the most prominent of the first wave to grow and prosper and contribute to Silicon Valley becoming a modern legend. At the same time other Chinese Americans also made in roads in Corporate America. Bob Lee was an executive vice president at PacBell, Albert Yu a Sr. VP who led the microprocessor development at Intel and Lee Ting a corporate VP of global logistics for H-P. This group paved the way for others to follow by being role models, community leaders and by giving back to society.

When the Committee of 100 decided to hold the conference in Silicon Valley this year, we felt that it was important to talk about giving back. We wanted to correct any impression that Chinese Americans only take and not give back and we also wanted to stress to our young people the importance of giving back. At the conference, we organized panels to discuss giving back via philanthropy, via not-for-profits and via public service. At our gala banquet, we asked Charles Wang, Chairman and CEO of Computer Associates to talk about his personal approach to giving. Charles is a member of C100 but Computer Associates is based on Long Island in New York and not from Silicon Valley, an easy concession to the recognition that Silicon Valley has no monopoly on giving back.

Charles Wang talked about “The Circle of Giving.” He believes in giving back not only for himself but to involve those around him. To encourage the employees of his company to give, his company matches $2 to every $1 dollar the employees donate to a worthy cause. He personally supports the National Center for Missing and Exploited Children. The Center uses the software provided by Computer Associates to track and quickly retrieves files of missing children and software to help predict facial changes of a missing child, as the child remains missing over years. Charles funds the Smile Train that operates on children with cleft mouths so that they can smile and take on a normal life. The train operates on 25,000 kids per year and has helped 40,000 children in China in just the last 3 years.

On the one hand, we Chinese Americans need to be vigilant over situations where we are being treated as foreigners and where our citizen’s rights are withheld from us. On the other, we need to show that we belong and that we are as American as the next. Americans are famous for their big heart and generosity of spirit; the Chinese Americans can do no less.

I would like to conclude my presentation with a little story about Su Dongpo, arguably one of the best known and best loved poets of China. I did a little research in preparation for the C100 conference and found out that this Song Dynasty poet/government official also started a charity for the specific purpose of helping peasant parents bond with newborn girl babies to reduce infanticide in the countryside. This showed that the Chinese cultural bias favoring male heirs ran deep and hard to overcome. More importantly, I found out that giving back has always been a part of the Chinese culture for those that enjoyed privileged lives.

Based on the keynote address given at the 20th anniversary banquet of Chinese American Forum, 8/3/02, in St. Louis, Mo. Dr. Koo is Director of Chinese Services Group, Deloitte & Touche, a member of Committee of 100 and a board member of Chinese American Forum.