Legend Silicon, once a red-hot China-U.S. startup focused on DTV chips, closed its U.S. operation in late 2011. What went wrong and what did we learn?
MOUNTAIN VIEW, Calif. – Last week I had a chance to sit down with Raj Karamchedu, author of a book entitled, "The Disconnect Patterns: Notes for Managing a U.S.-China High Technology Company."
After reviewing the book earlier this month, I was eager for a face-to-face meeting with the author--for two reasons. First, I wanted to learn more about whatever happened to Legend Silicon (Karamchedu’s last employer). Second, I wanted to hear more about Karamchedu’s personal experience working at Legend Silicon. My thinking was that Karamchedu left a lot unsaid in his book.
I understood that nobody wants to burn bridges with a former employer. So, I didn’t exactly expect a tell-all story. But our conversation revealed a few clues about what might have led to the closure of Legend Silicon in the United States, and subsequently a few things anyone working in a China-U.S. company ought to know.
Legend Silicon, focused on digital TV chips, was once a red-hot start-up based in Fremont, Calif. It appeared to have come up with all the right ingredients--including the Tsinghua University pedigree (even a Tsinghua professor) of its founders, along with on-the-ground intelligence, procedural knowledge and close ties with Chinese government agencies, and a U.S. management team.
Legend Silicon, deeply involved in the development of digital TV standards in China, also looked like it was emerging at the right time in the right place, since China was getting ready for the Beijing Olympics in 2008. What better timing could anyone ask for showcasing digital TV technology?
In spring 2007, Intel Capital, the investment arm of chipmaker Intel Corp., led a series D private equity investment round worth up to $40 million in Legend Silicon.
Legend Silicon's booth at CCBN (China Content Broadcasting Network) exhibition in 2011.
Fast forward to the end of 2011, Legend Silicon decided to close its U.S. headquarters, with its U.S. management team laying off everyone in the U.S. including themselves. Legend Silicon’s Chinese subsidiary still exists to serve existing customers, but there appears to be no new product development going on. Legend Silicon’s website still exists both in English and Chinese, but the page that lists its management team is no longer available.
So where did Legend Silicon go wrong, and what lessons did Karamchedu learn from having been COO?
Perhaps. But I'd like to point out that I didn't make up this list -- out of thin air.
This jives well with what I've heard over and over with a number of people I talked to (who work at China-U.S. companies)over the last few years.
While the labor cost issue becomes the first thing every U.S. company pays attention to when it forms partnerships with Chinese colleagues and customers, in the end, I think the cultural gap (in terms of business practices) is much bigger than we all realize.
I welcome anyone's first-hand experience working at a U.S.-China company.
typically, China doesn't have big players in the semiconductor industry. Although they host plenty without the characteristics you describe.
Of course, smaller unknown manufactures will seek niche's in the market. It is expected they will be more creative and less open due to high risk products. I don't think this has anything to do with the Chinese per se.
I agree, the dual-SIM card phone is a uniquely Chinese "innovation." Those who ignored (read Nokia) the trend initially missed out on the opportunity big time.
So, here's my question. If you are not getting any feedback from your Chinese colleagues or customers, what steps would you have to take?
How do you get used to that? Is there any way to remedy that?
Hi Junko. My role in China was mostly limited to core R&D activities, so I had little interaction with customers. Regarding feedback from colleagues, I had to study/adapt. This included:
1. Learning to speak/read the language well enough to bridge the communication gaps.
2. Learning how and when to allow my colleagues to save face in potentially awkward situations.
3. Significant time spent socializing and building guanxi through activities such as basketball, badminton, karaoke, company trips, etc.
4. Adjusting my management style to a more 'traditional Chinese' one on a tactical basis.
5. Regular forced progress reports both in group meetings (8am sharp on Mondays, no exceptions) and written format.
6. For people I wasn't managing and who weren't forthcoming, I would take alternate paths, such as sending someone else to ask.
7. Rewarding people who gave good feedback.
There are others, but most of the items on this list are not necessarily China-specific. What really took getting used to was the reticence in speaking up to begin with, especially if someone was stuck or behind on their task.
In the US, where I started my career, speaking out is received much better than in China. In the end, patience and persistence won out.
Karamchedu's understanding of "innovation" is quite different from mine. I understand "invention" to be the creation of a new idea (a patent) but "innovation" is the complete process of identifying a need, inventing a solution, and carrying that to market. I see innovation as broader than invention. Adding bells and whistles to an existing concept is neither innovation nor invention, it is product improvement or market expansion.
DrQuine, I like your definition of "innovation." That's very clear.
In defense of Mr. Karamchedu, however, I would like to point out that it wasn't Karamchedu but me who wrote the sentence on innovation. I wanted to illustrate how the original definition of "innovation" has gotten dilluted so much (mostly by the marketing machines) to the point that almost everyone today, even in the U.S., uses the word "innovation" very lightly.
And the author Karamchedu's point was that Chinese are now taking advantage of the very dilluted meaning of "innovation" and they are now saying that they, too, are innovating...