Panning for gold
Xu Lan

ZHANG Fan is an outstanding venture capitalist. He is astute and smart, vastly knowledgeable and very friendly,” said Li Likai, Managing Partner of IIC Capital, who has cooperated with Zhang several times on investments. “A venture capitalist would usually quiz the entrepreneur about the indicators that were of particular interest. But Zhang is different. He always listens patiently to the ‘story’ of the entrepreneur.”
Zhang, the 35-year-old founding partner of Sequoia Capital China Fund, is a representative figure among China’s young venture capital (VC) investors. Until now, Zhang has participated in more than 50 investment projects, of which Baidu brought him the most recognition.
“Originally, Baidu was only a small company with about 20 employees, but I believe a search engine represents the proper use as well as the core technology of the Internet,” said Zhang. “The most important thing about ‘search’ is that it is not a flash in the pan. It will still be widely used in 10 years, 50 years or longer. I have complete confidence in the development of this business.”
Frenetic and rational workaholic
“Actually, I’m not the workaholic everyone thinks I am,” Zhang said. “I frenetically work in a rational fashion. I truly like this VC job. In fact, I enjoy this lifestyle.”
Zhang officially entered the VC industry in 2000 when he became a member of Draper Fisher Jurvetson (DFJ) ePlanet Ventures, jointly founded by Asad Jamal and Draper Fisher Jurvetson.
In 2002, after working in the VC market in the United States for two years, Zhang returned to China as vice president of DFJ ePlanet Ventures and Chief China representative. In the three years that followed, people were attracted by every move he made, from Kong.net, to Focus Media, to Baidu.
Today, the market value of Baidu has reached $4 billion and Focus Media, $3 billion. “The performance of Baidu and Focus Media has proved that my passion and stubbornness toward them at the beginning were correct,” recalled Zhang. “But initially, I had to do a lot of work.”
Never give up Zhang’s passion for work is 100 percent. Once he targets a project, he will never give up until the goal is achieved. This was fully exemplified in the Kong.net case.
In the summer of 2002, Zhang met Zhou Yunfan and Yang Ning, who were in the process of a second business venture. After hearing their story, Zhang decided to help them. But, because of the Internet bubble, many investors did not favor Kong.net, including the partners of DFJ. However, this did not affect Zhang’s determination to proceed. He insisted on his judgment and traveled twice to DFJ’s U.S. headquarters. He updated them repeatedly and submitted a report analyzing in detail the potential of the Internet market in China, the successes of Japan and Korea, and convincing cases.
Finally, after much analysis, DFJ’s Chairman and Board of Directors came to the conclusion to invest in Kong.net. This investment eventually rewarded them with a 25-fold return.
Zhang has a very “picky” investment vision and believes an entrepreneur must also pay special attention to “practical value,” apart from possessing the four basic qualities-passion, patience, in-depth knowledge of the industry and a strong implementation team.
“My investment principles and strategies did not get full recognition and implementation at DFJ, however,” explained Zhang. “As a global fund interested in projects in China, DFJ must follow its global deployment. As a result, we missed some hot projects.”
Zhang resigned from DFJ in June 2005. Strongly supported by Sequoia Capital, Zhang and another partner, Shen Nanpeng, completed the financing of Sequoia Capital China with a scale of $200 million within two months.
Practical value of product
“The strategy of Sequoia China is to get hold of good seedlings in sectors with high growth potential and promote their products to the world,” explained Zhang.
Although Sequoia Capital is a VC company from Silicon Valley, it doesn’t exactly follow the way things are done overseas. “We focus on China’s macroeconomic environment and national development stages, and invest in products with practical value,” Zheng said.
The practical value of the product of an enterprise is not the sales volume of the product, said Zhang. “It is the confidence index of customers toward the product-whether the product will still have practical value in 10 or 20 years? Our objective is to create great enterprises and not to focus on how to exit them. We hope to create more companies like Asia Media.”
Asia Media is a professional technology company specializing in TV program listings. It was the first investment project of the Sequoia Capital China Fund. Asia Media was successfully listed on the Tokyo Stock Exchange on April 26, 2007, and became the first Chinese mainland company to go public on the Japanese stock market.
“The product of Asia Media is very forward-looking and compliant with the characteristics of its market development stage,” Zhang said. “The space for market development is enormous. Going public was only the beginning of its long-term growth. In the next several decades, it will achieve extraordinary performance.”
“I have always believed that instead of focusing on the short-term profitability of an enterprise, we should look for long-term development. We can create long-lasting enterprises only by doing this. And only this kind of investment can bring the best returns.”
Apart from Asia Media, Zhang believes 51.com is a product with high practical value. 51.com provides users with safe and stable personal space on the Internet and an excellent exchange platform among users. Registered 51.com users can enjoy photo storage, blog publishing, and music upload services, as well as making friends among 51.com users all over the world. As of the end of June, 51.com had more than 70 million registered users and is growing at a high rate of 160,000 new users per day.
Casting a wide net
“There are products with practical value in all industries, the key is whether you can accurately predict the future development of the enterprise,” Zhang said.
Zhang became serious when talking about the overall deployment in China. He gave an example: Investing is like panning for gold in the desert. It depends on your insight in finding the lustrous gold. Sequoia is determined to find gold-at least 10 pieces per year. But, it won’t trade investment standard for speed. Sequoia focuses on the future development of an enterprise, not its fleeting glory.
“In the United States, Sequoia Capital mainly invests in the components, systems and software sectors and each partner only focuses on two-to-three domains,” said Zhang. “But in China I don’t plan to do it this way. We’ll focus on all high-growth industries. Sequoia China will cast a wide net.”
Zhang is completely confident about expanding his business to cover all sectors. This requires the venture capitalist to fully comprehend the current status, market space, consumer groups and development trends of each industry.
Facilitate enterprise development
Zhang likes to learn and he shows curiosity for many things. All kinds of books pile up in his office.
In particular, Zhang enjoys biographies, as well as Chinese and foreign history. “When I read something that is crucial or emotional, I always think, if I were him, what would I do at that moment?” said Zhang. “In reality, in my work, I hope to become the participant in the most crucial moment of an enterprise-someone who can make a difference in its development.”
Similar philosophies brought Zhang and Shen together. They said unanimously, “the philosophy of Sequoia China is to be the supporter behind the entrepreneur. Our goal is not only to provide capital to the enterprises, but also value-added services such as financing and strategies for development so that they may stand out in the industry.”
And that is what they have done. Each of the 30 or more enterprises invested in by Sequoia China have shown promising growth momentum. Greatdreams Cartoon has become the biggest animation production company in China. Asia Media successfully went public. Fujian Linong has transformed into a renowned tea seedling base. Sequoia was instrumental in the growth of these enterprises and Zhang was the person with the biggest influence.
At present, there are two funds under Sequoia China: Sequoia Capital China Venture Fund II-$250 million, and Sequoia Capital China Growth Fund I-$500 million. The lifecycle of both funds is 10 years. From the names of the funds we can see that one invests in enterprises in the early stages and the other in enterprises in the mid-and-late stages.
“The two funds have different evaluation standards and investment principles in order to better leverage the effect of Sequoia in the development process of the enterprises,” said Zhang.

(The Daily Mail-Beijing Review Articles Exchange Item)

A critical litmus test for Pak-Saudi ties
Dr N Janardhan

WHEN the Saudi Intelligence Chief, Prince Muqrin bin Abdulaziz, addressed a press conference in Islamabad last month, it appeared to raise more eyebrows in Pakistan and the Gulf than the news of former Pakistani prime minister Nawaz Sharif’s deportation to Saudi Arabia. Following a meeting with President General Pervez Musharraf, just ahead of Sharif’s return, Prince Muqrin — brother and special envoy of King Abdullah bin Abdulaziz of Saudi Arabia — and Lebanese politician Saad Hariri showed a document which mentioned that Sharif should not return from his exile for 10 years.
It is now seven years since the “deal” was struck to spare the former Pakistani premier from life imprisonment after he was overthrown in a military coup by Musharraf in 1999. Sharif spent most of these years in the kingdom, where he was forbidden from any political activity, and then moved to London, from where he plotted his comeback, which ended within a few hours with another exile on September 10.
An official Saudi statement tersely said: “Nawaz Sharif will stay in the Kingdom as a guest. The Kingdom welcomes him again after his return to Islamabad, disregarding his pledge that he will stay away from Pakistan and politics.” Analysts opine that the unprecedented support to the Pakistan government by the Saudi leadership in Sharif’s deportation has been a “major shock”. Some claim that this was “a major deviation from the Saudi government’s policy to stay away from controversial political matters especially those which relate to the internal political affairs of other countries.” In recent years, however, Saudi Arabia has used its status as an Islamic and economic powerhouse to play a proactive role in a number of domestic political crises in the Muslim world — Palestinian territories, Iraq, Lebanon, Sudan and Somalia — as well as engaged in dousing the tension between Iran and the West.
All these actions could be attributed to possible benefits both for Saudi Arabia and the Gulf region, and the stability of the Middle East and Muslim world at large. The kingdom’s mediatory roles in the Muslim world have, indeed, brought Saudi Arabia back into the centre of Middle East and world politics, especially with Egypt nowhere on the diplomatic radar. This was reflective in Saudi Ambassador to Pakistan Ali Awadh Asseri’s assertion that the Muslim world was confronted with unprecedented challenges and was struggling for its very survival against ever-increasing threats. “This calls for unity amongst our ranks, both intra-state as well as inter-state,” he said, adding that Riyadh had consistently strived to forge unity among all Muslims.
Riyadh’s real intention in mediating in the Pakistani political crisis could well be about stability in a country of great importance to the region and a frontline nation in the war against terror, and not about favouring any particular leader. Further, Pakistan has witnessed an upsurge of extremist activity in recent years and has the potential to further contribute to the resurgence of the Taleban and Al Qaeda in Afghanistan. Such a situation would not only affect Pakistan and Afghanistan , but all the Gulf countries, chiefly Saudi Arabia, the birthplace of Al Qaeda leader Osama bin Laden. More importantly, Saudi Arabia is also concerned about the possibility of Pakistani-Afghan extremists and Al Qaeda taking advantage of any political instability to gain access to Pakistan’s nuclear weapons, putting the entire region in danger. Following a week of Saudi bashing in Pakistan, Riyadh defended the kingdom’s role by saying that his country got involved because the Sharif issue was likely to threaten Pakistan’s peace and unity. Saudi Arabia extended its help to Pakistan because it was requested to, and did so after getting complete support of all parties concerned.
“This support has been extended not as a favour to another country, but as a fulfillment of responsibility towards a friend and a brother. Pakistan’s unity, integrity and sovereignty are as important to Saudi Arabia as its own. We have always stood by the side of Pakistan whenever it has been threatened from outside. Pakistan’s strength has been our strength and Pakistan’s problems our problems,” the Saudi ambassador to Pakistan said. Pakistan and Saudi Arabia share a multi-faceted strategic relationship spanning political, defence, security, energy, religious, cultural and economic realms. Over a million Pakistanis reside and work in Saudi Arabia and another 600,000 visit the kingdom to perform the Haj and Umrah pilgrimages every year.
Bilateral trade stood at $2.83 billion in 2005, and Pakistan has benefited a great deal from the kingdom’s relief, rehabilitation and reconstruction activities during natural calamities, as well as remittances and investments. In the military sphere, Pakistan — the only Muslim country possessing nuclear weapons — has been special and a great source of strength to Saudi Arabia. Pakistan’s military has a history of performing security duties in the kingdom and training Saudi military personnel, apart from advanced negotiations for the possible first purchase of Pakistani-assembled ‘Al Khalid’ tanks by the Saudis. The intelligence agencies of the two countries have regularly exchanged information on the movements of key Al Qaeda suspects.
All these strategic considerations and relations, however, didn’t cut much ice with critics after Sharif’s deportation. “It makes one wonder whether Saudi Arabia would allow a Pakistani intelligence chief to address a press conference in Riyadh and pass judgment on an internal political issue concerning the Saudi kingdom?”One Pakistani analyst questioned Prince Muqrin’s role in the political drama. While such harsh words against Saudi Arabia are unprecedented in Pakistan, the kingdom was also accused of colluding with the United States in determining the future of Pakistani politics.
“If he (Sharif) just wanted to go to Saudi Arabia, he could have bought a ticket to Jeddah instead of Lahore, (the) deportation is in accordance with the agenda of America (and Saudi Arabia),” another Pakistani analyst vented. The United States wants a “liberal” leader in Pakistan and Saudi Arabia is always at the US’s “beck and call. That the most sacred country of the Muslims should be used this way is most unfortunate.” ce of Islam’s two holiest shrines, Saudi Arabia has a special place in the Muslim world. But many in Pakistan now feel that following the Sharif deportation incident, Pakistanis are unlikely to ignore the alleged “exploitation of Pakistani workers in Saudi Arabia or the uninhibited hunting sprees of Saudi princes in Pakistan,” thereby affecting bilateral relations.
Sharif’s party has indicated that the Saudi government has conveyed to Islamabad that it will have nothing to do with the former premier after Eid, especially if it may damage the reputation of Saudi Arabia among Pakistanis. Whether this happens or not isn’t as important as what is likely to happen in the years ahead. The political course is yet to crystallise in Pakistan. But, with Pakistan certain to return to full-fledged democracy sooner or later, allowing all aspiring politicians to contest in elections thereafter, Sharif’s return to the top job at some point could make the strain with Saudi Arabia manifest in one form or another.

—Khaleej Times



US domestic politics behind solicitude for Armenians
Gwynne Dyer

NOTHING much will happen right away. The Turkish ambassador to Washington has gone home for “consultations” after the Foreign Affairs Committee of the House of Representatives approved a bill declaring that the mass killing of Armenians in the Ottoman Empire during World War I was a genocide. But he will come back to Washington, and it will be weeks before the full House passes the bill. This will be a slow-motion disaster.
The White House tried hard to stop this bill. President George W. Bush declared that “This resolution is not the right response to these historic mass killings,” and all eight living former US secretaries of state, both Democratic and Republican, signed a joint letter to the Foreign Affairs Committee urging it not to approve the bill. But it did, by a 27-21 vote, and next month the full House will do the same: More than half the members have signed up as co-sponsors of the bill.
Bush promises that it will die in the Senate, but by then the damage will be done. The US-Turkish alliance will be gravely damaged, and American use of Turkey as a major supply line for its troops in Iraq — 70 percent of US air cargo for Iraq goes through Turkey — will be at an end. Turkey may also send its troops into northern (Kurdish) Iraq, thus destabilizing the one stable and moderately prosperous part of that country.
The United States will be the 23rd country to fall to the Armenian campaign to link the Ottoman Turkey of 90 years ago with the Nazi Germany of 60 years ago — and, by extension, to implicate the current Republic of Turkey in the crime of premeditated genocide.
Once such a law is passed, to question the Armenian take on what happened is to become the equivalent of a denier of the (Jewish) Holocaust. The Armenian desire to have their national tragedy given the same status as the Jewish Holocaust is understandable, but it is mistaken. The facts of the case are horrifying, and certainly justify calling the events in eastern Turkey in 1915-16 a genocide, but the key elements of prior intent and systematic planning that distinguish the Nazi Holocaust are absent. When I was a young graduate student in Middle Eastern history, as a translation exercise I was given the hand-written diary of a Turkish soldier who was killed during the retreat from Baghdad in 1917. “Mehmet Cavus” (Sergeant Mehmet) was a youthful village school teacher who had been called up in 1914. At first he had a safe billet guarding the Black Sea entrance to the Bosphorus, but in 1915 his unit was suddenly ordered to march east to deal with a Russian invasion and an Armenian rebellion.
And then, in the diary of this pleasant, rather naive young man, I read the phrase “iyi katliam etmistik.” Loosely translated, that means: “We really massacred them” — and he wasn’t making a sporting analogy. The diary was written in the old Ottoman rika, a version of handwritten Arabic script that never really served Turkish well, so I asked my teacher if it really said what I thought it did. “Oh yes,” he said. “Those were different times.”
That excuses nothing, but it explains much. The foolish young officers who led the Ottoman Empire into the war panicked when they realized that the Russians were invading from the east and the British were about to land somewhere on the Mediterranean coast. And just at that point, Armenian revolutionaries (Dashnaks and Hnchaks) who had been plotting with the Russians and the British to carve out an Armenian state from the wreckage of the empire launched feeble, futile revolts to assist the invaders.
The Turks responded by slaughtering many Armenians in what is now eastern Turkey and deporting the rest to Syria in long marching columns. Huge numbers were murdered along the way: At least 600,000 died, and perhaps as many as 1.5 million. It was certainly genocide, but it was not premeditated, nor was it systematic. Armenians living in other parts of the empire were largely left alone, and even in the war zone those with money to travel by rail mostly reached Syria safely.
So why is the US Congress “recognizing” the Armenian genocide, but not the rather more recent genocide of the Tutsis in Rwanda? Because there are not many voters of Tutsi descent in key Congressional districts. This is all about domestic politics: Alienating the Turks doesn’t cost much politically.
Today’s Armenian activists aren’t looking for “justice”. They want to drive the Turks into extreme reactions that will isolate them and derail the domestic changes (including a gradual public acceptance of Turkey’s responsibility for the atrocities) that are turning that country into a modern, tolerant democracy. They do not want Turkey to succeed. And Western countries are falling for it.

—Arab News