The Talent Magnet

Kai-Fu Lee was waiting serenely at the upscale sushi and seafood buffet he had selected for our meeting in Redmond, Washington. One thing about Lee: Friends let him choose the restaurant. He keeps copious notes on scores of establishments, so dining out with him is pretty much a sure bet.

Over the eatery's din, Lee spoke eloquently about two of his favorite subjects: China and its students. The nation, he observed, was hungry to transform itself from an outpost of low-cost manufacturing to a hub of technology creation--and it boasted an enormous and growing reservoir of newly graduated engineers and scientists. The challenge for foreign companies was to help those new technologists leaven their traditional Asian values with a more Western mind-set. "What it is going to take for success in the 21st century is a combination of both," Lee explained. "How you adjust the humility with confidence, the perseverance with self-criticalness, the courage with the serenity."

It was May 31, 2005, and Lee was still a vice president at Microsoft. Although he was working in Redmond then, few knew China better. Microsoft had hired him in 1998 to open its research lab in Beijing. The lab attracted top Chinese computer-science graduates, and it has since made its presence felt in just about every Microsoft business, contributing key algorithms for MSN's new search engine and developing ever more realistic graphics for Xbox games.

Lee was promoted to Microsoft's headquarters after just two years in Beijing, but he returned often to China, giving scores of lectures aimed at helping university students learn how to prosper in a modern, internationally competitive world. He was becoming, in fact, an A-list celebrity on Chinese campuses, a Brad Pitt-meets-Albert Einstein blend of movie star and scientific statesman. His Mandarin-language book, Be Your Personal Best, sold more than 400,000 copies within six months of its debut last September. And his Web site--www.kaifulee.com--draws tens of thousands of Chinese seeking advice on education and work.

All of which was why Microsoft's archrival, Google, was at that moment dangling a package worth at least $10 million to lure him away.

Google wanted Lee to help it conquer the search market in China--a meager $278 million in 2005 but growing at a dizzying pace--where it currently trails homegrown Baidu. Even more important is the market for talent. In 2004, roughly 350,000 computer scientists, information technologists, and engineers graduated from Chinese institutions of higher education, compared to 140,000 in the United States, according to a study by the U.S. National Academies, the nation's top science advisory body.

Soon after our dinner, to Microsoft's utter dismay, Lee would accept Google's offer. His new job, which comes with the title vice president for engineering and president of Google Greater China, is to create a talent magnet, building an R&D center that will tap into the nation's trajectory and mining the best and brightest from Chinese universities to feed Google's own growth. His story speaks volumes about the global race to apply talent to innovation--and what it will take to win.

The Guanxi Imperative

The fact that Lee, who was raised in Taiwan and the United States, has found such an audience in China underscores the importance there of role models who can thrive in both Asian and Western cultures. He was born in Taiwan in 1961, the youngest of seven children. Both his parents came from mainland China. His father, a Nationalist Party legislator during the 1949 communist revolution, fled to Taiwan for safety; it took a year for Lee's mother to escape with their then five children.

Lee's oldest brother moved to the United States and took in Kai-Fu, who was 11 at the time. Lee eventually earned his bachelor's degree with highest honors from Columbia and a PhD in computer science at Carnegie Mellon, where he pioneered an approach to speech recognition based on statistics and machine learning. After a brief stint on the CMU faculty, Lee joined Apple Computer, where he helped develop QuickTime into a standard multimedia format, and then Silicon Graphics. In 1998, he was already a minor Silicon Valley legend when Microsoft came knocking, asking him to open a China research lab.

Lee had three key goals in founding the Microsoft lab. One was obvious: to do great research that would feed new products. The second, which in 1998 put Microsoft far ahead of its competition, was to open a novel conduit for attracting the untapped talent in Chinese universities. The third and most ambitious was to help create the innovation infrastructure--starting with world-class education and training for students--that would enable China to become a more integral part of the modern world.