Big Ambitions for Yuguang’s ’OnStar’ for Online Computer Repair
Liren Ji was a 22-year-old college graduate with a degree in mechanical engineering when he moved to the U.S. for advanced study in 1984, shortly after China reopened to the world. He credits his parents for his intellectual curiosity. During the Cultural Revolution, his mother and father, both engineers, were sent from Beijing to the countryside for reeducation through labor. They refused to let tough times extinguish their passion for discovery.
Ji demonstrated similar drive and inventiveness in America. After he graduated from Bradley University with a master’s in mechanical engineering, he worked for Omega Research, a provider of investment analysis software, for five years. Then he joined the elite Win-OS/2 department at IBM in 1992 and worked there until 1996. As the relationship between Microsoft and IBM deteriorated, Ji developed the idea of a virtual machine for PCs, a software program that would enable users to run various operating systems at once. When IBM didn’t bite, Ji brought his idea back to China, where he launched the company Yuguang, which has conducted research and development of virtual machine software and services since 1998 -- mostly on Ji’s dime.
Yuguang’s virtual machine technology took its trial run last year and generated $300,000 in revenue. Jeff Smith, formerly the chief product manager at Landmark Research, which published Ji’s bestselling memory compression software, MagnaRAM, in 1995, calls Yuguang’s online remote repair product “OnStar for computers” and says “it will save big companies millions of dollars.” In 2011, Ji says he plans to expand his staff from 80 to 500, to increase revenue dramatically to $30 million, and to list an IPO on Nasdaq. Ji, 49, spoke recently with Bloomberg.com contributor Megan Shank for this as-told-to Entrepreneur’s Journal:
When I joined the Win-OS/2 department at IBM, IBM and Microsoft had a source code exchange agreement, so I was fortunate enough to read both. My team came out with great solutions to run Windows applications on top of the OS/2 platform, until Microsoft made computer users choose between Windows and OS/2 by discontinuing compatibility between the two. I believed there was a solution to this problem. In 1995, I wrote a prototype based on a very slow 386 processor [all PCs in the early 1990s used Intel 386 processors] and presented a proposal to IBM for the virtual machine.
What’s a virtual machine, and how did it work? Computers are composed of hardware, an operating system, middleware, and various software, such as application software and database software. Hardware includes the physical components of the machine, like CPU and memory chips. Traditionally, an operating system is the most fundamental software that runs on top of the hardware. A virtual machine, which is also software, comes in between the operating system and the hardware. This allows the user to run multiple operating systems or to run multiple versions of one operating system on one computer at the same time. In the traditional architecture, you either ran Windows or shut it down to run another operating system, like Linux. Or a user might also want to run multiple versions of Windows at once -- one to view sensitive information where you’d like to prohibit viruses or Trojan horses from peeking in, and another for e-mailing, chatting, and twittering. The virtual machine idea wasn’t new. Since the 1960s, mainframe computers used it. But it wasn’t introduced to the PC world until the late 1990s.
Unfortunately my proposal didn’t get approved, because I think even back then Louis Gerstner [IBM’s former chairman and chief executive] already wanted IBM to turn in a different direction, away from technology and toward a focus on business and services.
While at IBM, I wrote an innovative memory compression software called MagnaRAM published by Landmark Research, which was soon after acquired by Quarterdeck. MagnaRAM sold more than 6 million copies. I made quite a bit of money -- more than I’d ever made at IBM -- so I decided to set out on my own.
Back then I was young and proud. I passed up a few opportunities I regret now. Quarterdeck offered me a $2 million signing bonus and told me to come up with my own salary, but I said no. I did sign an agreement with them to give right of first refusal on every new piece of software I wrote, for which I was given $75,000 per year from 1995 to 2000. With some old friends from Landmark Research, I started a small software publishing company, but my heart wasn’t in it. We shut down.
By 1998, China had caught my attention. I’d achieved a great deal in the States and possessed material comforts beyond my wildest imagination, but my dream to build a virtual machine for PCs had eluded me. I thought maybe China would be the place to create a virtual machine that would ultimately become a standard layer or component of future computers’ architecture. I returned in 1998 and set up an office in Shanghai with 10 recent Chinese graduates. I called the company Yuguang -- which translates roughly to “the universe’s light.” My goal was to set up a team of engineers and teach them how to do system-level programming, come up with a product, and market and sell it back in the U.S. I came equipped with textbooks. I knew that in addition to being a boss, I’d have to be a teacher. I lived my American dream. I wanted to share it with my Chinese brothers and sisters.
Our product would be different from other virtualization software, like VMware’s, which consumed a lot of resources and had a complex and cumbersome installation process. I wanted to create a lightweight virtual machine that everybody could use. But I wanted my product to mature and receive acceptance from Chinese consumers before making an international debut. I could be patient, and I was willing to take a risk on the company. I put every dollar I earned in America into it. We conducted research for more than a decade, increased our Shanghai team, and expanded to three additional city branches: Zhengzhou in 2005, Dalian in 2008, and Harbin in 2010.
Today, about 70 percent of Yuguang’s revenue comes from online maintenance and repair in China. Now, if your computer is broken, no matter how broken it is, as long as it’s not a hardware problem, we can fix it through the Internet. Even if you can’t turn on your computer or connect to the Internet because of a software problem, with the virtual machine installed, you can turn on your PC and connect to the Internet in “maintenance mode.” So let’s say your operating system is toast -- you can’t get anything to run, you can’t get online. When you reboot, the virtual machine will prompt you into maintenance mode. Once you boot into maintenance mode, a help request will be sent to the remote help center. The next available engineer will be assigned to respond to the request. The engineer will ask permission to fix the PC via a popup dialogue box. The user must click O.K. to accept the fix request. This is to safeguard privacy. From this point on, the user can chat with the engineer by text, voice -- or even through video. I hope my product will create more high-tech jobs in the U.S. and China.
Good partnerships have been key to our success. In 2008, after we could demonstrate we had a great product, we began working with Intel, which provides equipment, software, marketing, and branding support. For example, Intel allows us to print its logo on our product packaging and website as a business partner. Intel will eventually integrate our technology into its platform. In 2010, we began selling virtual machine-based online services through partnerships with China Unicom and China Telecom. These companies set up and service broadband and dial- up in China. Now, when they install Internet function in Chinese homes in such provinces as Heilongjiang, Jilin, and Shandong, they also install my virtual machine software. Previously, these companies were forced into the business of fixing PCs, because most Chinese users couldn’t distinguish between network and PC problems. With Yuguang’s software and services, users can contact our technicians remotely to fix the problem, rather than calling in one of the telecom companies. Because each provincial office of these telecoms has its own decision-making power, some provinces have been slower coming around to the idea than others. To speed up the process with China Unicom, we’re working with the company’s headquarters in Beijing to develop a “national standard” based on our blueprint.
National standards are a barrier to innovation in China. If you want to sell your product to a big player, like a bank or a state-owned enterprise, you need a certificate from a government bureau verifying that you meet the national standard from an existing list of products. Of course, if you don’t neatly fit into one of the national standards, it can be somewhat problematic. When I originally went to register Yuguang, I said, “I’ve developed a new creation in China.” They replied, “There are no national standards for that. Say you’re a firewall.” It’s recently improved. The office is starting to be more flexible. Now I’m listed in the auditing and security system category. It’s still not what I want, but I am making progress in advocating for a category for virtual machines in which my company will set the bar. When that happens, China Unicom headquarters will put pressure on the provincial companies to move forward with my technology on a nationwide basis.
Yuguang’s most exciting new development is our blossoming relationship with Beijing Federal Software, one of the largest distributors of Microsoft, Adobe, and Symantec products in China and a legend in the IT industry here. It has offices throughout the country, a highly recognizable brand, a loyal customer base, and is shifting to become a full IT service provider. They approached me, because they want to build their entire corporate strategy around Yuguang virtual machine technology. We’ve been working together for about six months now, and Beijing Federal helped improve my product a lot. We have big plans for these two companies in 2011. Combined, we have strong management, technology, and sales teams. I have no doubt Yuguang will make $30 million this year, up from our $300,000 trial run in 2010.
I hope I can make believers of my employees. I’ve said I want to build a Silicon Valley in China, but I also want to revolutionize corporate culture here. Chinese society is a society of disbelief. There are fake products. There are people who cheat to get ahead. Chinese have learned to be overly protective and cynical. I’d like to build dreaming big into our corporate culture. I’d like to demonstrate that it’s not about working harder, it’s about working smarter and believing in your ability to make your life and other peoples’ lives better.
To contact the reporter on this story: Megan Shank at firstname.lastname@example.org
To contact the editor responsible for this story: Nick Leiber at email@example.com
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.