Business

Why 3 Google execs have left for Chinese companies in a year

Above: The main campus of the Googleplex has reflective-glass buildings.

Image Credit: Dean Takahashi/VentureBeat

Google executives seem to keep leaving for companies based in China.

Last August Hugo Barra left his post at Google as vice president of Android to become VP of cell phone maker Xiaomi Global. In May Baidu snatched up Deep learning guru Andrew Ng, who was leading Google’s Brain project. And last week Alibaba nabbed Jane Penner, who was heading up Google’s Investor Relations department. That’s three employees in a year to leave Google for China’s growing tech sector.

So why did these Googlers leave the pack? There was rumor that Barra might have left because Google founder Sergey Brin had taken up with the project manager’s former flame. But Barra said his move to Xiaomi was a long time in the making.

“To me, right away, it was a once-in-a-lifetime opportunity, truly a dream job, this idea of building a global company which could be as significant as Google, from the ground up,” Barra told AllthingsD.

Still, chances are it wasn’t just professional aspirations that inspired Barra’s move. There’s tremendous financial opportunity in signing on with Chinese tech giants — as well as opportunities for creative freedom and the chance to create new global brands.

Let’s look at each of these reasons.

Money

“You have to remember, large China tech firms have a huge premium from Wall Street banks when gearing for IPO in the U.S.,” said Jeffrey Paine, founder of Golden Gate Ventures, a Singapore-based venture capital firm looking to invest in the “Silicon Valley of the East.”

Increased funding from Wall Street means fat salary and stock options for prospective employees — especially high-profile ones. According to Paine, compensation and stock options at some of China’s massive tech companies are pretty generous.

Wall Street is interested in Chinese tech for two reasons. First, China has an incredibly large population of 1.35 billion people with a large upper middle class, meaning there’s a huge potential for profit there.

Just look at Baidu for example. The Chinese search engine company, considered the Google of China, captures 63 percent of the market in China. Though the company isn’t as profitable as Google, with a mere $1.9 billion in revenue compared with Google’s $15.96 billion, it is growing rapidly. Baidu’s most recent earnings report revealed a 58.5 percent growth in revenue; Google only grew 22 percent last quarter.

The same can be said for Xiaomi, which just saw a 240 percent increase in sales year over year in its second quarter, according to a study from Canalys. That growth allowed the company to capture 14 percent of China’s mobile market, unseating Samsung as the largest mobile phone vendor in the region.

World domination

With such rapid growth and investment, there’s enormous potential for many of these tech companies to expand their reach into other countries, becoming not just Chinese brands but global ones.

The potential for growth in U.S. and foreign markets is especially enticing to Wall Streeters, and the security of knowing that these companies can capitalize on China’s growing marketplace is reassuring. In that way, investing in Chinese tech is a win-win.

Already Baidu, China’s most popular search engine, has expanded to Thailand, Egypt, and most recently, Brazil. Xaomi and Alibaba have yet to grow internationally, but both companies have plans to expand.

Expansion into the U.S. economy is notoriously difficult. However, it may be easier to grow in the U.S. than in China, where the Chinese government is increasingly restricting foreign companies. So far this week, Chinese officials removed U.S. based anti-virus software maker Symantec from its list of approved vendors for government purchases. And China continues to launch anti-trust investigations — Microsoft is currently being probed.

China’s recent crackdown on outside companies has been partly fueled by U.S. spying practices. China has remained wary of foreign companies since former national security contractor Edward Snowden revealed the U.S. government’s use of back doors in various Internet company software that allow it to collect information outside the U.S.

But expansion into the U.S. market by China-based companies don’t see the same government restrictions. There is also more than one way to expand. Rather than just launch a product in the U.S., Alibaba is planning to make an initial public offering on the New York Stock Exchange after Labor Day in a move to make the company more global. With a possible IPO surpassing $16 million, it’s certainly a good way to get Americans, investors and otherwise, interested.

Paine predicts that Xiaomi will also go public, but within a time frame of three to five years. As of yet, the company hasn’t announced intentions to do so.

Creative freedom

There’s also the possibility that some of these Googlers were just bored with their jobs.

“Google’s business is still mostly search and selling ads,” Ben Joffee, General Partner of hardware-focused venture fund HAXLR8R, told me via Skype.

“I talk with many Googlers, and it is rare to find someone excited working there now,” he said. Of course, he’s not talking about “rank and file developers,” but upper management Googlers that travel for conferences.

“I thought the best place to advance the AI mission is at Baidu,” Ng said in a recent interview with VentureBeat about his departure from Google. Be it resources, freedom to hire at will, bigger budget, or faster product iterations, Chinese companies may just offer a more exciting experience.

It’s not impossible to imagine that Barra may have left Google to help a fast growing mobile company go global, nor is it unthinkable that Penner would want to join Alibaba ahead of what’s being hailed as the world’s largest IPO.

“It’s kind of like joining Facebook prior to their IPO,” said Paine: Great potential, lots of unknowns, and a challenge.

But for those that drink the Koolaid, the payoff could be immensely rewarding.

More information:

Google's innovative search technologies connect millions of people around the world with information every day. Founded in 1998 by Stanford Ph.D. students Larry Page and Sergey Brin, Google today is a top web property in all major glob... read more »

Alibaba.com is a B2B e-commerce company. Alibaba’s primary business is to serve as a directory of Chinese manufacturers connecting them to other companies around the world looking for suppliers. According to iResearch, it was the lar... read more »

Xiaomi Inc. is a privately owned company that designs, develops, and sells Internet services and consumer electronics. Xiaomi offers a suite of Internet services such as MiCloud, Xiaomi App Market, and Xiaomi Games Center. Its core lin... read more »

Baidu was founded in 2000 by Internet pioneer Robin Li, creator of visionary search technology Hyperlink Analysis, with the mission of providing the best way for people to find what they’re looking for online. Over the past decade we... read more »

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50 comments
Kate Gallagher
Kate Gallagher

 I think they mainly went for the money. The thing is sure the NSA spied on China, but are we to believe they aren't doing to same or at least trying? You can't be a world superpower these days and expect a 100% cooperation from countries with mass economies. I'm just not sure I buy the entire NSA thing here especially in a country that has a heavy involved government and many human rights violations under it's belt. Though I'd suspect that even China with it's vast resources can't stop the increase in globalization no matter how much they try to cut off the Western world. 

Kate Gallagher
Kate Gallagher

I was going to say what about China's censorship among many other human rights issues? Sure there is money there and they are bustling right now in terms of growth, but would it really be the NSA because it seems Chinas government is just as involved as well.

James Chicarie Houston
James Chicarie Houston

They are all now considered #EdwardSnowden copycats & must be captured before they leak critical information.

Dagmar Schnietz
Dagmar Schnietz

This is quite an eye opener. I thought China is always stealing our jobs, but now they're taking our best and brightest minds too.

Tyson Frederick
Tyson Frederick

Well there is a huge market. . Especially with the iot coming

Tim Dyson
Tim Dyson

No Google is getting big and has lots of talent it can lose. This says more about Google than China.

Victor C
Victor C

3 people out of 48,584 Stand-Alone employees go to 3 different companies in a country composed of 1.351 billion people.


From one of Fortune 500 top 5 companies in terms of turnover rate.


I'm surprised this isn't on the front page of CNN, BBC, and CCTV.


*yawn*

Dani Dani Dani
Dani Dani Dani

This is not new..... this has been happening in this and many other industries for YEARS

Travis Peres
Travis Peres

Of course, they going where the money is

Albert Lee
Albert Lee

All these companies are still in the growth stage of their business while Google, some may say, has plateaued in certain respects. Also, some of these businesses are still private and when they finally make their debut in the US stock market...ka-ching!!!

Chien-Yu Lin
Chien-Yu Lin

Simple ... (1) Cash is good. (2) Expectations are low. (3) Contributions could be significant. (4) Building for some is better than Care-Taking.

Rj Garbowicz
Rj Garbowicz

ATTN: Did you mean $16 Billion IPO and not $16 Million? Unless they plan to go public on the OTC I think that is a typo.

Amna Taha
Amna Taha

China is the biggest technology leader!!

Jeff Fall
Jeff Fall

China is the up and coming technology leader. It only makes sense.

Mattias Hansson
Mattias Hansson

Same in the telecom sector. The Chinese Huawei has headhunted a lot of top management people from Ericsson and also open up the R&D office in Sweden. Huawei get a lot of funding from the Chinese goverment and could easy winn deals against Ericsson, Nokia Siemens, Alcatel, Motorola and Cisco.

More and more advance R&D products from the ICT sector are now delivered from Chinese companies. The bad thing is still that they copy a lot of western product and don't care about patents.

Amit Dixit
Amit Dixit

Also its not gonna impact google. Baidu hired to keep its position as no1 and keep Google at bay. Xiaomi hired because they want to develop their own OS. It may also have to do with Chinese government , who is lil paranoid after snowden episode and news in past about how much data big companies giving to Gov. btw i only read first paragraph of yr article, so i might be wroung!

Stephen Jacob
Stephen Jacob

Because China is the future and the US is on borrowed time... Trillions of dollars worth of it.

Brian Singer
Brian Singer

I heard King Kong went to Hong Kong to play Ping Pong with his Ding Dong. How come you are not covering that?

Tag
Tag

Because they speak Chinese.

Amit Dixit
Amit Dixit

bigger market and big time Money!

Tyson Frederick
Tyson Frederick

Is it because the NSA is killing america's tech industry?

Donc Con
Donc Con

@Victor C They're not from lower rung in a corporate ladder. They established themselves an asset in their respective field. Getting them into your company is deemed as gaining the potential of those asset. 


I agree that this should be on the front page of CNN, Reuters, NYT. But they're not gonna report how America is turning into recession, not only for financial means, but also for reverse brain drains. 

Donc Con
Donc Con

@Mattias Hansson Maybe all countries that once had used papers and still using papers should pay loyalty fee to China so that China could have easily invested in R&D and led the world instead of getting plundered, pillaged, looted while those victor claimed they have contributed much to the world. 


Maybe Magnet, Printing, Umbrella, Toilet Paper, ...? while you guys used communal brush to wipe off your ass?