The Guy Who Ran Microsoft And Google In China Clones US Startups


Kai-Fu Lee is one of the most prominent internet executives in China: he used to run Microsoft and then Google there. He now has an incubator/seed fund called InnovationWorks, which raised $115 million.

What does InnovationWorks do? Invests in dozens of startups, including some that are clones of successful US companies.

When describing his incubator in the US press, Lee mostly talks about fostering a culture of innovation and encouraging traditionally risk-averse talented Chinese young people to strike out and do startups. He talks about getting on the phone with anxious parents of high-achieving students and explaining them that no, they’re not throwing away their life by going to a startup instead of a big company.

And InnovationWorks has been extremely busy on the investment side: It has invested in 28 startups and applied for 15 patents. The startups include a mobile-ad company like AdMob, an HTML-5 authoring tool, and an auto-air-sync tool for smartphones.

As entrepreneur Rakuraku Jyo writes on his blog, some of the startups funded by InnovationWorks are straight clones of US startups. For example, it funded DianDian, which is a carbon copy of Tumblr, and Zhihu, a Quora clone.

According to Jyo, InnovationWorks is so clone-heavy that it has become a meme among Chinese entrepreneurs. By a Chinese pun, his new nickname is now “Start-Copy Lee,” and a mischevious entrepreneur created a parody website called CopyWorks, which mimicks the design of InnovationWorks’ website.

A couple things should be pointed out here:

  • The “fast follower strategy” is a time-honored tradition in the business world. As long as you’re not doing anything illegal there’s nothing “wrong” with it. From consumers’ perspective it helps bring new products and business models to new markets faster. And from a business perspective, if the original comes in and whups you, too bad, and if you get a good exit, well, the money’s green. Good for you.
  • Almost all great Chinese companies started out as clones but then evolved into something original and innovative to fit the market. Tencent started out as an ICQ clone and evolved into a social network with games, whose social and virtual goods model was then imitated by Zynga. Tudou started as a YouTube clone and has now evolved into its own media company, producing original content and original formats. So maybe that’s what Lee is betting on.

Some people will grouse about such a talented executive isn’t using some of his resources this way. But China isn’t the only place where the clone business is lucrative. It’s also alive and well in Europe and other places. Including the US–where there are usually many companies that jump into exactly the same business as an industry leader.

Don’t Miss: HOW TO GET RICH IN EUROPEAN TECH: These Guys Clone US Startups In Europe And Then Sell Them To The US Companies →