The $10 Million Man

Kai-Fu Lee raised his hand and flashed the two-fingered “victory” salute. A judge in Seattle had just ruled that the former Microsoft executive could start work for Google and begin collecting his new $10 million salary. Thus Google won the first round in what is developing into a titanic struggle over the services of this highly valued Chinese-American computer engineer. That, in turn, is only one aspect of the fierce struggle between the two IT giants over China’s software market.

Microsoft sued to prevent Dr. Lee from jumping ship. It asserted that he violated the “noncompete” clause of his employment contract, which prevents him from working for a competitor for one year. While the judge ruled he could begin work for Google, Dr Lee cannot, for a year, work in his technical areas of expertise, search and speech technologies. Nor can he disclose proprietary information or recruit Microsoft employees to join Google.

Nonetheless, Dr Lee said he was happy to be getting down to work. His initial task is to establish and staff Google’s first R&D center in Beijing. He has done similar work for Microsoft in China and Apple in Singapore. Microsoft disparaged Dr. Lee as little more than a glorified college recruiter. Yet, both companies are competing fiercely for the cream of China’s universities.

Dr. Lee said he expected to build a Google research team of 50 by the end of the year with some 200 by end of 2006. Microsoft has about 1,200 employees in its various China operations. Both companies are moving in on each other’s territory. Microsoft is developing music, games and search engines. Google, synonymous with search engines, wants to develop other software.

He testified that growing frustration with Microsoft’s “bungling” of its operations in China led him to approach Google (see below) earlier this year about a job. In court Dr Lee described Microsoft’s China operations as being scattered, dysfunctional and unfocused. The company operates 18 facilities that report back to the seven major division heads in Redmond, a suburb of Seattle. They operate like “feudal barons,” to use Google’s words.

Said Dr. Lee: “I’ve been very frustrated that Microsoft wasn’t really getting it about China. Their attitude was, ‘We’re successful in 50 markets. Why should we do anything different in China’.”

Google’s lawyers sought to downplay Lee’s usefulness to Microsoft as a China expert, noting that he had no direct line responsibilities for China operations since 2000. Lawyers’ for Microsoft noted that he often advised Gates and CEO Steve Ballmer about China and was in charge of the company’s promise to outsource $100 million worth of software testing services to China.

Another trial is scheduled to begin in October for a counter suit that Google filed in California, which is said to have weaker “noncompete” laws. Trial is also scheduled to resume in Seattle in January over the main contention that Lee broke his contract with Microsoft.

Who is Kai-Fu Lee?

What makes Kai-Fu Lee such a hot commodity?

In short, he combines considerable expertise in cutting edge technology with vast experience and contacts in China, the world’s next great Internet market. See here.

He earned his doctorate in computer science from Carnegie Mellon University in Pittsburgh, Penn. His dissertation on speech recognition technology is said to have been a major breakthrough. After earning his degree in the late 1980s, Dr. Lee joined Apple Computer, where he worked on such hot products as QuickTime and other speech-related technologies. He also set up Apple’s R&D Center in Singapore in the mid 1990s.

After a stint at Silicon Graphics’ multimedia software unit, he joined Microsoft in 1998 and founded Microsoft’s Research Asia Center, turning it into what MIT’s Technology Review called, “the world’s hottest computer lab.” Born in Taipei and fluent in Mandarin Chinese, Dr. Lee used his time in China to develop extensive contacts in academia. He has made some 300 speeches on Chinese campuses and communicated with thousands of students through e-mail.

When his two-year contract expired in 2000, Dr. Lee secured a new executive position as vice-president of the Natural Interactive Services Division at Microsoft’s headquarters. He has even written a self-help book, “Be Your Personal Best” which is to be published in China later this year.

How to Get a $10 Million Job
Following is the text of the e-mail that Kai-Fu Lee sent to Google, initiating his first contact. Eric is Eric Schmidt, Google’s co-founder and chief executive. (source: court records).

Hi Eric,

It’s been over ten years since we last met – hope you still remember me (we were discussing the Sun-Apple collaboration on Java+QuickTime). Congratulations on your success at Google.

I have heard that Google is starting an effort in China. I thought I’d let you know that if Google has great ambitions for China, I would be interested in having a discussion with you. I am currently a Corporate VP at Microsoft, working in areas very related to Google.

Before this job I started Microsoft’s research and R&D efforts in China. My efforts in China has led to what MIT Technology Review calls “the World’s Hottest Computer Lab,” and the group I established is now the most desirable place to work for top CS graduates in China.

Please let me know if you would like to have a chat.

Thanks
Kai-Fu Lee