From Silicon Valley to BAT, how do talents flow and influence these companies?

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This article started with a small gathering with a friend. Because I like to read history, I always like to look at things from the perspective of the industry as a whole. The complex information fragments together can always make people see the trend of world development. My friend is a headhunter. During the conversation, we happened to talk about the capital winter. From this friend, I learned that there are currently a large number of high-tech talents who were laid off or resigned from Chinese technology giants looking for jobs.

Recently, in a news report by Mao Qiying about Huawei's large-scale layoffs, Huawei Vice President Lin Ruiqi said that the number of Huawei employees is "not bloated and it is still a long way from large-scale layoffs" relative to the future of the industry it faces. Although it is a denial of the news, it is not difficult to smell from a few words that Huawei, a leader among Chinese technology giants, cannot withstand the trend of layoffs in the world today, even if it is not a large-scale layoff. Recalling that some time ago, Baidu stopped social recruitment, Alibaba reduced the number of campus recruitment places, and Tencent also reported that it stopped outsourcing recruitment. In addition, there are rumors that Phoenix, the former Internet portal giant, laid off employees and Sina stopped social recruitment. From many aspects, it can be seen that even if the current Internet industry is not as difficult as the media exaggerates, these rumors of layoffs involving such a wide range are definitely not simply groundless.

However, contrary to the general pessimism, I think this is an opportunity for China's industrial upgrading, whether it is layoffs or voluntary resignation. These talents who have come out of the technology giants have their own qualities and insights, and they can either be independent or have outstanding skills in certain areas. The role played by these people in small and medium-sized enterprises cannot be underestimated. It can be said that these talents from BAT, Huawei, Phoenix, and Sina must be a rare talent reserve at the historical node of China's industrial upgrading. If they can really make the best use of them, the seemingly pessimistic trend may bring good results.

The talents of Silicon Valley and Wall Street create half of the wealth in the United States

At an entrepreneurial summit, Zhang Jun, a partner of Cybernaut Investment Group and former vice president of Huawei Technologies Co., Ltd., who had spent a long time in Silicon Valley, shared a piece of information at the meeting: the wealth created by Silicon Valley and Wall Street in the United States accounts for half of the entire country. Wall Street, needless to say, relies on a mature financial system to influence the direction of the global economy. This street gathers financial institutions such as the New York Stock Exchange and the Federal Reserve Bank, as well as banks, insurance, railways, shipping and other large companies opened by major American conglomerates such as Rockefeller, Morgan, and DuPont.

Another economic pillar of the United States is Silicon Valley, where almost all the world's leading technology giants gather. Silicon Valley is the kingdom of today's electronics and computer industries, with more than 1,500 computer companies in the Valley. In addition to old giants such as HP, Intel, Apple, Cisco, Nvidia, and Lucent, there are also many small and medium-sized technology companies, and new unicorns are constantly growing. Relying on its strong technological strength, Silicon Valley and Wall Street form the two major economic sources of the United States.

But what really drives the development of Silicon Valley IT companies is a variety of talents. Overall, about 45% of the Silicon Valley population has at least a bachelor's degree, while this proportion is 28% of the total US population. Nearly 20% of Silicon Valley people hold graduate or other professional degrees. Silicon Valley attracts talent from all over the world: more than 60% of graduates working in Silicon Valley's technology and engineering fields were born outside the United States. This diverse culture inspires a variety of different creative ideas.

Unlike Chinese high-tech talents who like to gather in giant companies, the most iconic feature of Silicon Valley is the entrepreneurial culture. Another feature is that Silicon Valley people are ready to change jobs at any time, including talents who have accumulated a lot of experience from HP, Intel, and Apple. LinkedIn also relies on deep cultivation in the workplace due to the flow of Silicon Valley talents, and now has a valuation of US$29.867 billion (data on November 14). Silicon Valley people are more like free contractors, switching between different jobs. This makes Silicon Valley a highly mobile talent pool. Compared with other regions, Silicon Valley professionals are more willing to accept invitations from other companies.

For example, Dropbox, founded in 2007, is a company that mainly provides cloud storage applications. In January 2014, Dropbox's valuation was still $10 billion; this year, its valuation has doubled to $20 billion. The reason why Dropbox has been able to grow so fast is that many of its employees came from Facebook and Google. Talent flow between giants is also common. Musk's statement that Apple is a "Tesla garbage dump" is a complaint about Apple's crazy "poaching". In addition to employees of large companies often looking for suitable development opportunities between giants and small and medium-sized enterprises, the founders of some unicorn companies have also held important positions in large technology companies. They either worked in small companies with deep connections, or have had successful entrepreneurial experience, or graduated from one of the three famous universities: Stanford, Harvard and MIT. For example, the "PayPal Mafia" that is well-known to the public because of the book "From 0 to 1", people who left the PayPal team created LinkedIn, YuoTube, Yelp Dianping, Yammer and other 7 companies with a market value of more than $1 billion. The list of emerging companies like Dropbox is long, and without these employees from mature technology giants, it is questionable whether these companies can quickly become unicorns.

Have the three giants of BAT overwhelmed startups?

In China, the phenomenon is the opposite. It is not that giant companies provide a steady pool of talent for small and medium-sized enterprises. On the contrary, when China's economy is booming, giant companies like to recruit and reserve talent. As one entrepreneur complained, once a business is valued by a giant, if it does not submit to being acquired or accepting a stake, the giant (I will not mention specific companies for consideration of the impact) may even poach the entire startup team except the founder, causing these startups with good future prospects to die due to talent issues.

On the other hand, the reason why the giants can poach the entire team after offering an olive branch is also related to the fact that Chinese high-tech talents like to gather with giants. Although China's business model is simple and crude, it is difficult for giants to poach the entire team if it is not voluntary. If this trend continues, I am afraid that the worry that only BAT will dominate the Chinese Internet in the future is not just a fantasy. How serious is this phenomenon?

At Alibaba Cloud's 2015 Yunqi Conference in October, Jack Ma said that the three Internet giants would not hinder the development of entrepreneurs, which attracted great attention in the industry. The original words were: "Some people say that with three big mountains like BAT, how can ordinary people have a chance? I tell you, it is not until the landlords in the village are killed that the farmers will become rich. Whether there are three big mountains or seven big mountains, BAT will continue to develop, but you have a chance to win, because today's entrepreneurial environment and financing status are much better than before."

If there had not been a surge of criticism or a subconscious consensus in society, Jack Ma, who is good at manipulating society, would not have made such a statement. In addition, China's current economic status has reached a historical stage where it has to change. On December 28, 2014, the Shanghai Free Trade Zone was approved, with an area of ​​120.72 square kilometers. On March 24, 2015, the overall plans for the Shenzhen Shekou Free Trade Zone (three major areas: Guangzhou Nansha Free Trade Zone, Shenzhen Shekou Free Trade Zone, Zhuhai Hengqin Free Trade Zone), Tianjin, and Fujian Free Trade Zones were also approved one after another.

Bai Ming, deputy director of the International Market Research Department of the Ministry of Commerce Research Institute, once commented on the emergence of the free trade zone, saying that the formal approval of the Shanghai Free Trade Zone marks a new step in China's reform and opening up, and its significance is no less than the establishment of the Shenzhen Special Economic Zone and the Shanghai Pudong New Area. Imagine the crisis that the Chinese economy encountered decades ago before the approval of the Shenzhen Special Economic Zone and the Shanghai Pudong New Area, and the chain reaction that followed. The urgency of China's industrial upgrading does not need to be elaborated too much.

However, if during the reform and opening-up period, China lacked capital, equipment, technology and labor, now that China's old economy has developed to the current stage, the worst thing is talent. Take Apple as an example, Chinese companies such as Foxconn have undertaken almost all manufacturing tasks, but only accounted for 2% of the profits. If China can give birth to high-tech companies like Apple, it will activate an industrial chain involving countless people, which seems to have not appeared in China at present.

Attracting talent starts with retaining talent

Nothing in the world can be completely copied, and the same is true for Silicon Valley. Silicon Valley cannot be copied, and the same is true for Silicon Valley's talent system. Hundreds of regions around the world have tried to spend huge sums of money to build their own Silicon Valleys, but none of them have succeeded. This reminds me of an old Chinese saying: You can't make a fat man in one bite. Since 1990, when Michael Porter, a professor at Harvard Business School, proposed a plan to establish regional innovation centers, Silicon Valley, which was born in barren land, has now become one of the two major economic pillars in the United States. Decades of accumulation and the turning point of historical opportunities at that time are difficult to reproduce, and it is not easy to clone just from the surface.

We know that more than 60% of graduates working in the technology and engineering fields of Silicon Valley were born outside the United States. Attracting outstanding talents from around the world has become one of Silicon Valley's core competitiveness. In China today, whether it is Beijing, Shanghai, Guangzhou or Shenzhen, it does not have such a strong attraction. However, since China's development, a large number of talents have been produced. If we cannot retain them when layoffs or resignations occur, it will be even more wishful to attract talents in the future.

As for how to retain existing talents. Referring to the talent system in Silicon Valley, I think it is most urgent to establish a sound stock option reward mechanism. The recent disbanding of the chief entertainment officer is an example in front of us. This is the case for a startup team that makes content, not to mention the high-tech field that involves the future development of the entire country. A mature stock option reward mechanism plays a very important role in retaining talents. In addition to official promotion, it is also very important for entrepreneurs to spontaneously recognize stock option rewards. Take Xiaomi as an example. Lei Jun once responded that he holds nearly 78% of Xiaomi’s shares. Although this may be a strategic choice in development, if this is the case in general, the phenomenon of 87% of Chinese government-sponsored overseas students not returning will continue. I am afraid that China will continue to be the world's number one in talent loss.

Secondly, considering the abnormal cost of living in China's current cities, the household registration incentive system and real estate allocation are also effective means. At present, many places have implemented them, such as Shenzhen's "Overseas High-level Talent Aggregation Project" and "Young Eagles Returning to the Nest" plan, and Shanghai's local "Foreign Experts Thousands Plan", which are very attractive to talents interested in developing in China. In addition, it is important to optimize the living environment of small and medium-sized enterprises, increase protection for small and medium-sized enterprises, and give talents confidence to enter small and medium-sized enterprises, so that a large number of talents who have left the giants will join the historical process of China's industrial upgrading without distraction. At present, in addition to criticizing that Chinese talents like to gather in giants, the small and medium-sized enterprises behind them are difficult to grow, and even once they start to improve, they are suppressed.