The young programmer had an idea, and everyone thought it was nuts. Just out of college, he'd gotten a job writing software for YY. More than 100 million users every month stream themselves, or tune in to broadcasts of others, singing, playing videogames, or hosting talk shows from their Beijing apartments. The audience chats back, prolifically, via voice or text.
The programmer thought YY should try something new: use its proven streaming technology to run a dating service, which would operate kind of like a TV dating show. A host would set up an online lounge, then invite in some lonely singles and coax them to ask each other questions and maybe find a partner.
Company executives were dubious. "The CEO almost killed it," says Eric Ho, chief financial officer. But the programmer was hungry and persistent, so they waved him on: Give it a try.
In China, this type of employee didn't used to exist. Ten years ago, high tech observers complained that the nation didn't have enough bold innovators. There were, of course, wildly profitable high tech firms, but they rarely took creative risks and mostly just mimicked Silicon Valley: Baidu was a replica of Google, JD a version of Amazon. Young Chinese coders had programming chops that were second to none, but they lacked the drive of a Mark Zuckerberg or Steve Jobs. Graduates craved jobs at big, solid firms. The goal was stability. Better to keep your head down and stay safe.
That attitude is vanishing now. It's been swept aside by a surge in prosperity, bringing with it a new level of confidence and boldness in the country's young urban techies. The result is a generation both creative and comfortable with risk-taking. "We're seeing people in their early twenties starting companies—people just out of school, and there are even some dropouts," says Kai-Fu Lee, a Chinese venture capitalist. Now major cities are crowded with ambitious inventors and entrepreneurs. They no longer want jobs at Google or Apple; like their counterparts in San Francisco, they want to build the next Google or Apple.
Anyone with a promising idea and some experience can find money. Venture capitalists pumped a record $15.5 billion into Chinese startups last year, so entrepreneurs are being showered in funding, as well as crucial advice and mentoring. With the economy's growth slowing after two decades of breakneck expansion, the Chinese government is worriedly seeking new sources of good jobs. Tech fits the bill.
The new boom encompasses both online services and the hardware arena. Recent local-kid-makes-good models like Xiaomi, the fast-rising Beijing mobile phone firm, or WeChat, Tencent's globe-conquering social networking app, are leading the way forward. Homegrown firms have distinct advantages, namely familiarity with local tastes, the ability to plug into a first-class manufacturing system built for Western companies, and proximity to the world's fastest-growing markets in India and Southeast Asia. The combination of factors is putting them in a position to beat the West at its own game. Xiaomi, for example, was the fourth-highest seller of mobile phones worldwide last year, behind Samsung, Apple, and Huawei.
As for YY, it turns out it was good. The dating show launched last year and became a hit. It also generated serious profits. YY has no advertising; it earns revenue when users fork over real Chinese currency to buy virtual items they give as gifts to each other or to the "broadcasters" streaming their own lives online. Money is flying around as male and female guests give each other—and the host—virtual presents: rings (worth $1.55), kisses (16 cents), and love letters (5 cents). Some items are pricier yet; for about $1,000, you can buy someone a virtual Lamborghini. Three years after going public on the Nasdaq, its market cap tops $3 billion.
The next Silicon Valley has emerged—and it's in the East.