I thought I would stay in China forever

How the end of the mobile app innovation cycle created the real entrepreneurial malaise in China and why it led me to leave

Evan Osnos’s piece in the New Yorker has been cause for a lot of conversation lately, for its elitist propositions or its pessimistic tale of China. I think his argument about a malaise being either Xi induced or Covid induced for elites has merit, but it is not, in my experience, what has led my peers at companies to become less certain about China and for me, in turn, to give up on what I thought would be my future.

Even after 70 days in quarantine, I assumed I would spend my life in China

About a year ago, I got out of centralized quarantine in China for the last time. Centralized quarantine was for those that flew into China from abroad, forced to take covid tests upon arrival and then directed by people in hazmat suits to disinfected buses that would take you to ghostly hotels. After more than 70 days of quarantine spread over two years, I became an expert at the art of entertaining myself.

I went from the quarantine hotel directly to the airport to fly to Beijing. Technically, Shanghai had a single case rendering my time in Shanghai reason enough to give me a dreaded star on my Chinese travel card. Even though I went from the quarantine hotel to the airport to Beijing without speaking or meeting with anyone in Shanghai, it didn’t matter.

In Beijing, I faced the persistent calls by the local CDC and my own community district hounding me to do another week of quarantine. My friends told me to push back, to say I never stepped foot in Shanghai, to argue against the absurdity of it all.

It was stressful. Exhausting. I am the kind of person that knows every single time I have ever broken a law, crossed the grey, or otherwise broken my own ethical boundaries. These failings live inside me like scars. I had never felt more uncomfortable in my life. And yet, if I had followed the rules to the letter, I probably would have spent 50% of 2022 in quarantine or otherwise locked in a single city without ever the thought to leave. I was encouraged and pushed by friends and colleagues to live in the grey.

Despite all of this, I returned to China mostly because the prevailing idea I had in my heart at that time was that I would stay in China forever. My partner is in China. My comparative advantage from a career perspective was in China. I felt that my prospects were brightest there.

Defining myself in the negative: how a sense of duty and practicality dominated my reason for staying in China

In the most simplistic version, China and East Asian countries emphasize the community over the individual. We have maybe all seen this simplistic formulation that seeks to overcome all the individual motivation, complexity, and paradoxical nature of humanity into something that can be readily understood. Of course, it has a kernel of truth. At vivo, our company motto was 本分, which is often translated as duty. Someone that comes from Latin America that has a similar clan perception of why to do things, China felt like home. It wasn’t a blind loyalty so much as it was thinking about what was in the best interest of the unit and not myself.

I would often say then that my decision to stay in China was not an active or selfish choice so much as it felt like it was the best selfless choice. I defined this in two ways: the first was what was best quality of life for my family; the second was where could I make the greatest impact on society.

The great bargain that many of us who lived in China made was in exchange for inconveniences we would have an affordable, dynamic, and safe life. Even today, China is one of the few places on Earth where you could walk around at the dead of night and never worry about threat to life. Sure, there were the scams that might rob you of money, but you never felt seriously threatened in any way. You also had access to anything you could want on Taobao or Meituan at prices a quarter of what it would be in the US. And most importantly, for a time there was no place on earth that was more dynamic and energetic than China. You felt like you could live a million lives in a year.

On the other hand, I also made this calculated decision because I knew that my partner felt at home in the city where he was born and operating in the culture he knew best. I never doubted my ability to adapt or live in China, but I wondered how would he adapt to life in the States or Latin America. To stay was the easiest option of all.

The second was more a question about purpose in global society. Pretty early into my time in China, I developed an operating thesis about the world. I felt that China offered the world a competing choice not in terms of governance but in terms of business models. Chinese business models were heavier, lower margin, but more adaptive to developing markets. These firms, however, had great difficulty understanding and engaging with the rest of the world. The talent bench in China is not very deep, especially when it comes to developing fellowship with people from other parts of the world. Usually those chosen for overseas postings were not the most qualified. At times it was even a punishment. It was then that I developed a singular thought. I wanted to be a broker: the individual who could help Chinese companies adapt to global operating norms while still retaining some of the unique characteristics that make Chinese firms special.

Chinese business culture, especially in the internet industry, is something that ought to be appreciated on its own. This is perhaps something that is not as well understood and I will most likely write a longer piece on the topic. I was in New York recently, regaling a friend about the concepts at the core of the organizations I worked at in China: humility, comprehension, blood level, and survival. I rattled these off with a degree of pride at how China works, but also how it appealed to me as a Catholic that had always grown up with equal parts guilt and a sense of duty.

That I was able to adapt to such a culture and thrive was the icing on the cake. It no longer was that I had an intellectual disposition on shepherding Chinese companies into overseas markets. I was that guy. I was invited to rooms where no other foreigner was present and given the ability to decide how large public firms approached the world outside of China. I made an impact.

As I grew in my career, I began to imagine being the first foreigner, with my primary school Chinese and all, to become a VP at a Chinese tech company. It was in a sense not extremely ambitious but it was something that had never happened. No one had grown organically within the business world of China. There were those that helicoptered into China, often trading their reputation outside for a seat at the table, but invariably they would discover that the real place of doing business in China (over hot pot or in late night meetings) were places that they had no say. I grew up as a wolf. I was sufficiently cunning and authoritative enough to impact business. And I believed that I could continue to grow.

Postlapsarian: the end of the internet dream and the beginning collapse of the bargain with China

A year ago when I returned, the conversation amongst entrepreneurs in China went from pessimistic to fatalistic. Some of this is brought on by concerns about governance and the belief that common prosperity would knee-cap any entrepreneurial venture. But to be honest, a lot of this was specific to the industry itself. For some time, entrepreneurs had been grumbling not about the loss of opportunity in the face of regulation, but since at least the end of 2021 the conversation I had with entrepreneurs was about the end of innovation itself.

China from 2011-2021 was the beating heart of innovation in consumer technology. Fascinating new business models developed out of China. Many of these, forced to iterate more quickly than American big tech ventures, demonstrated that the student had surpassed the master. China was no longer the place of copycatting. Indeed, content and commerce platforms in China are significantly more advanced than those in the West.

But as we all sat around plugging around talking about business, we came to a scary conclusion. There was nothing new for the last two years. It felt in some ways like the realization in Children of Men that there were no more babies being born. Of course, the previous generation business models have not lived out their lifecycles. There is still a lot of money to be made, including taking these models overseas. There are more experimental opportunities in Deep Tech and now AI. But the kind of fast-cash opportunities that led VCs to invest, that led entrepreneurs to build, that led employees to dream, and was the flywheel that built the entire innovation economy, was gone.

The existential malaise was less something that Xi did or Covid did. It was the very realization that also began to infect Silicon Valley. Mobile apps are now a mature industry no longer deserving the kinds of multiples that they once commanded. The innovation tied to mobile apps is over. Now what?

As someone that had jumped into the tail end of this innovation cycle and hitched my wagon entirely to the potential that it would explode further, it shook the foundation of the bargain I had made to live in China. With less money and less upside, companies reassessed the carefree spending that dominated most of their fast growth efforts. Chinese companies that had perfected the blitzscale could no longer be so heavy. This was earth-shattering, but it still was not quite enough. It was when coupled with the deterioration in US-China relations that these twin challenges led me (and others) to lose faith in the future growth of Chinese consumer tech and what would come next.

The straw that broke the camels back: the end of the allure of Chinese companies

It was always difficult to work as a broker for Chinese companies. You need to call up a vendor to tell them the company wouldn’t pay. This was worse because Chinese firms are notoriously cheap, usually you needed to use your personal relationships to get a deal in the first place. I justified it under the adage that it was “not personal, just business.” I also tried to put things together in a way that it would minimize the impact on my team, my business partners, and on the company I worked for. I used to negotiate favorable terms for ending contracts because I knew how likely it was that we would do this. I slow-rolled signing things because I knew it was possible a boss would have second thoughts and end up doing an about face; or we would have a reorg and no longer prioritize a business direction. I took a few reputational hits but nothing that I couldn’t recover, and I often won brownie points in China for being adept at managing the situation.

I realized that the real bargain I always had was not so much, as I noted above, with the inconveniences of China but rather it was with the idea of a ‘right to return.’ I was willing to do what I had to do to grow in Chinese organizations because I believed that if I wanted to move on from my life in China, I could. I could do this so long as the currency of my experience in China was fungible.

US-China decoupling significantly changes this calculus.

Over the last few years, things have shifted from an awe at Chinese companies to appreciation for the hardwork of its employees to now a moment where the shine of working at Chinese companies has completely faded. I recently talked to someone who said, “you should have come back a few years ago. Right now, working in China is a liability.” The chorus has become deafening.

It isn’t that I blame the US for its approach to Chinese firms. They are a huge competition to American firms. If left to a fair fight, most consumer tech industries in the US would be highly threatened by the sheer aggressiveness of Chinese firms. This attempt to control Chinese firms makes the experience of working in China no longer fungible. If you are not able to raise US dollars. If you are shut out of the ability to move to global firms. The risk becomes extremely high

This is something that many friends of mine in the entrepreneurial class feel. The general consensus is that the lack of long term opportunities coupled with a lower upside in working for Chinese firms renders it necessary to diversify risk. Some folks have posted up in big internet companies where they plan to 躺平 for some time, lying flat and barely working. Others will use this time to seek permanent residencies abroad, if not for themselves than for their children. Still others will try to raise foreign money by moving abroad. Everyone knows the previous boom cycle is over, it just depends how one chooses to hedge.

But no one is really ready to say goodbye to China forever. There is a belief that as some of the experimental technologies begin to hit a point of implementation, there might be a new boom cycle that will make living in China as dynamic as it was before. China is still the largest market besides the US and the only global market that can sustain billion dollar businesses.

But where I differ from my colleagues is that as a foreigner living in China has become a political choice. As the drumbeat in US becomes more persistent, my decision matrix is much smaller. If I stay even one more year more, it is possible that I may never be able to return to the United States, that is how bad the rhetoric feels right now. The situation for me and my family is clearer.

I need to make a break.

Re-defining my identity: Coach Campbell and the virtue of second acts.

I recently read Bill Campbell’s biography. Coach was someone that I was lucky enough to have met a few times because we both were Columbia alums. I regret that Coach isn’t alive now because he might be, of all people, the perfect person to help center me on my new journey. But I am reminded that at age 39, the age I approach next year, Coach quit as the football coach of Columbia to begin a career in advertising that took him to Kodak and then eventually Apple. By the 1990s, when he was in his 50s, he became the most revered advisor and friend in Silicon Valley.

Campbell is proof that we all can create a second act in life.

It is hard to move on. It is why I have often described leaving China as an act of mourning. Not for China itself but the version of China that is no more.

Each time I am asked to explain the scale of the companies that I worked at or the sheer unlikelihood that I would have had such authority, I become nostalgic for what I had back when. Every time I see on social media a Chinese meme, I am pulled back into the cultural milieu that I called home for so long. It reminds me that for a moment I wasn’t stateless but rather I was one of them.

To think of this as a process of grief is a way to move on and allow myself to find a second act.

It will depend on the charity of others, on people who will do more than is wise or necessary but will find in me a kindred spirit as friends thought about Coach Campbell and gave him opportunity. I don’t know who you are at this point, but I would like to make your acquaintance.