Why is China’s tech talent flocking to web3 | Following the yuan
Why is China’s tech talent flocking to web3 | Following the yuan
The Big Tech crackdown, layoffs, and growing disillusionment with work had prompted an exodus of talent from China’s tech industry. Will they find what they want?
Writer’s note 📝:
I was in Hong Kong last week for the Web3 Festival, where some start-ups happily shared that they’d add a new office or move to HK with the government funding as the region vows to become Asia’s crypto hub with Beijing’s blessing.
For the topic of talent exodus to web3 from tech industry, I admit that there’s more anecdotal evidence than actual data. And that is perhaps due to the lack of self-reported data for compliance reasons, and no organization seems to find it interesting to tally up the numbers yet. I can see the latter changing pretty soon with HK’s stakeholders getting involved.
For now, let’s dive deep into some individuals’ stories, as the paradigm shift always starts at a personal level…
Jensen Chen once chose web2 over web3. Months after winning a blockchain hackathon in 2019, he received a job offer to work as a software engineer at Bytedance, the parent company of TikTok, the year it doubled its revenue to $34 billion. He accepted the offer and started in April 2020, optimistic about Bytedance’s prospects and pleased with the high salary and social prestige that came with working at a Big Tech company.
Two years later, Jensen had grown disillusioned with his job. He joined as a software engineer at Douyin Live, the livestream platform of Douyin that had just taken off along with other similar services during the peak of the pandemic. Seven months later, the Chinese government launched a sweeping regulatory crackdown on everything from Big Tech monopolies to fintech companies to the online gaming industry.
The crackdown did not directly affect his team but over time, he found that starting as someone in charge of a business module, the tasks grew smaller and more mundane over time. “When I could design a 500-story building, I felt a great sense of achievement,” he said. “But later on, my task [at Bytedance] became something like I was repairing a lock on the 38th floor.”
“You may look like that you live a very dignified life at ‘Big Factories’, they built an illusion for you,” said Chen, referring to the slang term for Big s as the employees half-jokingly called themselves as factory workers on the assembly line. “You see all kinds of company bonuses such as free gym, free meals and afternoon tea, but it’s like keeping animals in a zoo… you also imagine that your salary would always go up and your life always move forward, but the bubble can burst anytime.”
“The reality is that you are subject to orders, and there’s no personal growth in the long term,” he added.
The Big Tech crackdown, subsequent mass layoffs, and growing disillusionment in the tech sector had prompted an exodus of talent from China’s tech industry. Some tech workers have decided to “lie flat” - quitting their jobs and letting go of their professional aspirations. Some decided to “run” - to leave China and emigrate to other countries, to pursue better opportunities abroad. Others, like Chen, are part of a growing number of Chinese tech workers that have decided neither to “run” nor to “lie flat,” but to leave their Big Tech jobs for the uncharted terrain of the web3 industry, to build what they call “the next generation of the internet.”
“You see all kinds of company bonuses such as free gym, free meals and afternoon tea, but it’s like keeping animals in a zoo…” Jensen Chen, former Big Tech worker
On the company level, not only big companies but tech start-ups in China are hitting bottlenecks “in terms of business value, competitiveness, and growth,” said Richard Wang, an investor at Draper Dragon that described its positioning as “venture fund that connects Silicon Valley and Asia”, said that he’s not just seeing more Big Tech employees joining web3 in China but also more entrepreneurs that were previously focused on internet products pivot to web3 because of the growth potential. Last year, around 100 out of 1,000 entrepreneurs he talked to came from a China Big Tech background.
There also emerges a host of recruitment agencies for web3 companies including HypeConnect, BitJob, Biteye, and Block Job, which help connect Chinese-speaking candidates to Web3 companies around the world. The latter was founded by Uncle Seven, who speaks under his industry alias, and said that 30 per cent of around 100 successful candidates at his company are from the Big Techs.
The movement of Chinese talent to web3 came in three waves, according to Mike Li, the founder of GoPlus Security, a web3 security service platform. “The first [wave] were the early Bitcoin miners in 2013 and 2014, who were [pursuing] crypto mining in China to make money,” said Li. “When I came in the second wave [in 2017], what impressed me more was the future development of decentralized applications because I believe that issues in cyber security cannot be solved in a centralized way.”
While every wave has opportunists who want to get rich fast, Li is emblematic of a group of idealists who are willing to test the waters. His company provides permissionless and user-driven security services for all blockchain users through application programming interfaces.
The latest wave of talent exodus from web2 to web3 happened because “web3 has more applications now, everyone has a better idea of what it can do [compared to earlier times],” according to Li.
Corinne Zhao, an ex-Alibaba and ex-Bytedance employee, was part of the third wave. When she first heard of Bitcoin in 2012, when skateboard shops near her university in Wuhan accepted it as payment, she thought it was a scam. “I thought it was just a money game, and didn’t bring value to society,” she told Following the yuan.
That was until last year, when she discovered non-fungible tokens (NFTs), a unique digital asset based on the blockchain, are capable of protecting copyrights. She started a project called Digital ArtX that mints, distributes and runs NFT projects for artists. Although she eventually ended it because it wasn’t financially sustainable, she decided to work on web3 projects full time. This year, she joined a start-up called the Mind Network that builds a decentralized privacy-preserving data bank that will launch soon.
Jensen created an online community on WeChat called the 1.435 Club last summer along with nine other team members who more or less have experience at internet companies, that initially aimed to connect entrepreneurs with the investment world. But he realized that it does not require any Web3 technology nor does it provide much value.
Later, the team tested out three different business ideas: an on-chain data analytics tool similar to the likes of Messari and Dune Analytics that tracks money moves on blockchain, an NFT campaign agency, and a web3 social tool revolving around the idea of a decentralized identity but via WeChat’s Mini Program. In December, they decided to launch a fintech company, which they called the “Robinhood for web3”, inspired by the American stock trading and investment app.
Despite the influx of new talent, now may night be the best time to join the web3 industry, some professionals have said. The industry is in the midst of what has been called a “crypto winter,” with the price of Bitcoin plummeting over 66% from its peak in November 2021. The most recent bankruptcy of crypto fund FTX further dragged down the industry’s reputation. “We are not seeing a rosy picture in the [web3] job market,” said Uncle Seven, the founder of Block Job, a recruitment agency that hires talent for web3 companies, who speaks under his industry alias.
Not to mention, government regulations on the crypto industry make web3 initiatives especially difficult in China, according to a web3 investor who prefers to remain anonymous. Their team may have to move out of the Mainland, to Hong Kong and Singapore for example, because of looming regulatory risks.
The definition of web3 varies depending on whom you ask. First coined by decentralized public blockchain Ethereum’s co-founder Gavin Wood in 2014, web3 has blockchain as its underlying technology and cryptocurrency such as Bitcoin and Ethereum as one of its main applications. In mainland China, the term has an ambiguous definition as Beijing has been tenaciously cracking down on the financial nature of blockchain in recent years.
One key difference to draw China’s web3 from the rest of the world is its limitation of public, permissionless blockchain like Etherum. Aside from public blockchain Conflux, which has deep ties with the government, the vast majority of blockchains are either private or consortium, which can be centrally controlled. In 2021, China sees the most hard-hitting crackdown for the space that the central government firmly ruled out crypto mining and all crypto transactions to “prevent economic instability.”
In contrast to the Mainland, Hong Kong has not regulated cryptocurrencies, and has in fact pushed to become the region’s crypto hub. This February, Hong Kong introduced a plan that would allow individual investors to trade larger coins like Bitcoin on licensed exchanges in June.
Chen is still deciding whether he should move to Hong Kong or Thailand to build his fintech company. He aimed to benefit from a wealth of accelerator and incubator funds that Hong Kong offered to attract talent, for Thailand, he said he was interested because it was global, cost-friendly and compliant.
The future is less certain compared to his path at ByteDance, where he started with a 500,000 yuan (US$72,478) salary and left with 700,000 yuan per year.
Currently, he does not give himself a salary, and splits profit with the team on a project basis.
His life is full of uncertainties: with income, project launch time, location of residence, but he is full of hope.
“Web3 matched my expectations,” he said. This time, he firmly chooses web3.🔚