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In 2014, Chinese-born tech entrepreneur Hao Zhong founded ScaleFlux, a California-based company that is pioneering a new way to optimise digital data storage. Having worked and studied in the United States for over 20 years, Hao has experienced several benefits and drawbacks as a Chinese entrepreneur in the Silicon Valley ecosystem.
Here, Hao speaks to Sheffield Haworth Director Jing-Jing Lui about what drives his passion for innovation, the challenges of being a Chinese tech entrepreneur in the US, and the implications of tense US-Sino relations and the ‘Micro-Chip War’ for the future of tech investments and innovation in the US and Asia.
Q: Can you tell us more about your company ScaleFlux and what it does?
In all major areas of data centres, data generation and use are increasing rapidly. How to store and process this data has become a major problem.
In a traditional server, when a computing task occurs, the data enters the memory from storage and then returns to storage through the CPU calculation. When a large amount of data enters the memory, it needs to wait for the CPU to read and calculate one by one. Using this process, you can only increase the computing power of the CPU by continuously stacking servers.
ScaleFlux offloads fast storage (flash memory) and heavy-duty computing that CPUs are not good at offloading to storage hardware. This reduces the consumption of CPU computing resources and improves overall application performance.
It has three major advantages. First, the data no longer needs to pass through the memory, which can reduce the movement of data. Second, the high computing efficiency of the dedicated circuit is used to reduce the load of the CPU. Third, it maximises the computational parallelism of the server.
Our company has the potential to become the leader in computing storage or computable storage, as we are the first to introduce this concept to the market.
Q: What’s the reason for your willingness to stand out among your peers and become the first commercial computing storage product company?
We Chinese like to talk about the right timing, right place, and right people, and in the spirit of this saying I think there are several reasons.
It has a lot to do with timing, I think. In the first place, chips and especially storage-related technologies have done well in recent years. At this point it its development, the industry needs a change to cope with the extreme velocity and volume of data. Solid state drives are now going to hard drive acceleration and hard drive storage.
But alongside good timing, long-term persistence has also been important. There are no shortcuts in the chip industry. It has to be honed step by step through repeated trial and error. There are not many people in this industry who can persist and endure. Having that commitment and drive has resulted in us standing out, simply by surviving where others may have given up.
Lastly, we’ve also had a lot of support from good people from supply chain partners in my business ecosystem to the strategic investors who have supported our growth over the years. Companies such as SK, AMD, and MediaTek have repeatedly invested in us through multiple rounds, which in turn has given some financial investors the confidence to invest in us too.
So having the support of far-sighted partners and investors has been invaluable, and we have had some luck in the way that a lot of these factors have fallen into place.
Q: Your company has branches in Silicon Valley, India, Shanghai, Beijing, and Hangzhou. You are also the chairman of the Kunpeng Club Silicon Valley Summit. How has being Chinese impacted your experience of founding and growing a global tech company?
Because we started in 2014, before Sino-US relations became tense, Chinese private equity and venture capital firms gradually invested more and more overseas, and some early Chinese financing at that time was quite helpful to us.
It’s not easy for Chinese people to start a business overseas. Traditional investment banks in the US invest in very few Chinese companies. Successful Silicon Valley startups end up listing in the US, and the main talent in terms of nationality that gets invested in is US, Indian, and Israeli.
On top of that, we Chinese are more conservative when we are overseas, and less willing on average to take on the risk of starting and growing a tech company. As a result of these factors, Chinese people in Silicon Valley are generally seen as very good engineers and a safe pair of hands, but not as the risk-taking entrepreneurs. That Chinese funding was really very important for us to get started in business.
The second thing that is helpful to Chinese companies is that, due to the current Sino-US economic war, China’s domestic chip industry is growing faster and faster. Everyone thinks that everything is inseparable from chips, and so the demand for chips is increasing This has led to what we call a ‘Renaissance of Silicon’ in recent years.
This means that the investment community in Asia is very keen on the chip industry. And investments are becoming more strategic now that all the main players are becoming more political when it comes to semiconductors, whether in Europe, the US, South Korea, Taiwan, or mainland China.
Investments are now tens or even hundreds of billions of dollars, and that means rapid growth and development for our industry in China as a matter of domestic strategic policy.
Q: Has the China-US chip war affected you?
Every challenge also offers opportunity. The relationship between countries is not something we can control. We can only focus on our advantages.
For my generation of Chinese who started businesses in the United States, we have a good understanding of Chinese and US business models. We have access to the world’s best research and development. And we can also access the best tech talent in the world. Some of that talent may be in China or the US. And now we have also established a site in India, we have access to some of the talent that is difficult to source in the US or China.
We still have access to a lot of what we did before in terms of technology, research, and talent, and those are some great advantages to have when building a business.
Q: Your company employs talent in the US, China, and India, and you attract many employees from big firms in Silicon Valley. Is there a difference in the working methods of top talent from these different places and how you use them?
Each has its own advantages. When we need senior engineers and architects who are very experienced in the industry, Silicon Valley is the best. On the other hand, manufacturing and supply chain management also requires software engineers and quality control.
Roles like this account for perhaps 70% – 80% of the entire productization process. The US is fairly inefficient and expensive in this area. Chinese engineers are very diligent and smart, with the ability to learn fast, so that’s where Chinese talent might be more appealing to us.
Q: In your career you’ve gone from PhD student to architect to CEO. What kept you inspired through all these career changes?
When I studied for my PhD I wanted to find a job after graduation. I didn’t think any further than finding a reliable job with a decent income, so I joined a big company. The lucky thing for me was that the company gave me the opportunity to convert my doctoral dissertation into a large-scale commercial product.
The theoretical productization of my doctoral dissertation gave me a lot of confidence early in my career. I felt that I could make some of the world’s top products with large-scale commercial value.
Later, I joined a startup company by chance. I thought it was a bit crazy but worth trying. I didn’t realise until afterwards that dozens of smaller US companies are able to make products that are technically better than those made by established industry players like Intel or Samsung. For a while, Intel were using chips made by the startup in their solid-state drives.
It’s interesting that a company with more than 100,000 employees can’t be as good as a small company with 180 people. Later, I realised the importance of specialisation. If we really drill deep into a given field, there’s a high probability of doing better than a larger organisation without that same deep focus. In this way, startups can do things that impact the entire industry.
So I kept learning throughout my career, and this was one the things that motivated me. There are always new things to learn, no matter how chaotic things can get. I have worked in recruiting, team building, legal affairs, finance, even the front desk at my own company. It is important to learn as much as you can about how a business works – not just on the technology level, but everything else too.
When you reach a certain level, you have more and more responsibility. Employees rely on you. Investors rely on you. You have to be worthy of that trust and that responsibility. You do that by developing yourself and then one day you realise there’s no way back.
