"Meanwhile, on stage is a symbol of a new era of Chinese industry, a rare and daring entrepreneur in a country that has struggled to rekindle its centuries-old romance with innovation. A man who dares to dream big in a country accustomed to low expectations and factory reprints. He is 43 years old, his name is Lei Jun, and he is the closest thing China has to Steve Jobs.

Under that baggy white T-shirt, Lei is even dressed like Jobs, in blue jeans and a black long-sleeved shirt. Wearing a headpiece, he slowly and deliberately articulates Xiaomi’s early success, boasting that it has become one of the most recognizable handset brands in China in the space of just a few months. Every so often his voice raises into a shout and the orange-shirted army roars so that a din fills the cavernous space.

Today is Xiaomi’s second birthday. The Mi1 is a high-end device that competes with the iPhone on every metric but is modeled after the Android and costs $470 less. It has only been on the market eight months, but it has already inspired a fan club that numbers more than 2 million. Like Apple, Xiaomi designs and controls the software that runs on the phone, creating a seamless end-to-end experience that places usability on a pedestal. Two months from now, having sold 3 million units, Xiaomi will close a Series C funding round of $216 million that values the company at a staggering $4 billion. Its investors include Russian tycoon Yuri Milner, the Singapore government-backed Temasek and GIC, IDG Capital, and Qualcomm.

The startup is marking its anniversary with the release of another order of Mi1 phones, which it has been selling primarily through its Web site, and only in batches of a few hundred thousand at a time. Every couple of months, a new batch becomes available, stoking excitement among prospective customers and lending the product an air of scarcity that imbues it with the high status that is so important to many Chinese consumers.

Thirty minutes into the presentation, Lei is joined on stage by a livewire Xiaomi product manager called Xu Fei. She and Lei will together count down the sale of the next 100,000 smartphones. A massive “0” is projected on the orange slide behind them, ready to start ticking over as online orders open.

In the crowd, a sea of Xiaomi phones rises to record the moment. There is a giddiness to the scene, a sense of pride. Our phone. Our company. Our success. The party begins a collective countdown: Five! Four! Three! Two! One! For a few uneasy seconds, that giant “0” hangs there, staring everyone down. But then the ticker starts moving. The numbers begin counting upwards fast, accelerating at the speed of a bullet train.

5. 10. 18. 33. 77. 120.

Then faster. 159. 290. 352. 420.

The first 1,000 phones are gone within 30 seconds. Within a couple of minutes, the 20,000 mark is passed, a moment accompanied by fevered whoops from the crowd. The number rises to 30,000 seconds later, and soon the increments of 10,000 seem unexceptional. The crowd saves its cheers for more significant milestones.

In the background, generic instrumental rock music plays on a loop, while sales keep crashing through the thousands. It takes three minutes to plow through 50,000 phones. More flashes and lighted screens. As the final minutes tick by and the magic number approaches, the cheers from the crowd grow ever louder.

Raucous voices urge the ticker on as it speeds round the corner into the 90,000s. Then, at the very moment it rolls over the 100,000 mark, Lei springs back on stage with both arms raised high above his head. He lets out a victory cry and punches the air.

Behind that punch is not just the exultation of another record-time sellout, but also the energy of an emerging high-tech success story written entirely in Chinese characters. The Mi1 is not merely another phone that has been “Made In China,” but a remarkable technological achievement that has been conceived, designed, and delivered in China. It is a near-perfect blend of hardware and software that captures a new strain of innovative culture that has the potential to complement and challenge the best the US has to offer.

Once regarded as a land of copycats, China is now primed for an era of Internet innovation, and Xiaomi is leading the charge. Today is a vivid illustration of the startup’s potential to reshape the consumer tech landscape in the world’s biggest Internet market."

Funny, Marc Andreessen says no:

http://techcrunch.com/2013/06/27/andreessen-beijing/

Andreesen has a deep understanding of the challenges faced by Chinese innovators and the problems with global markets.  From your link above:

"It’s a common complaint I’ve heard in the Beijing-based community myself. There isn’t the same practice or habit of ‘acq-hires’ in China. Instead, the major powers like Tencent may go in and directly copy small startups instead of trying to acquire or lure them in first. As controversial as the process of ‘talent acquisitions’ may be in the West, they also form a safety net for talent product managers or engineers to try new ideas.

At the same time, the Chinese government has erected a massive ‘Great Firewall’ of surveillance and censorship over online discourse in the country. While Andreessen says this might not be sustainable over the long-term, the effort has actually helped domestic companies so far, with protections enabling products like Baidu’s search engine to succeed at Google’s loss or market share or monitored social networking platforms like Tencent’s WeChat or Sina Weibo to grow while U.S. products like Facebook and Twitter are unable to enter the market."

Perhaps this is a short-term strategy to help Chinese companies gain a toe-hold.

"Andreessen was also tempered in his outlook for startup hubs in the rest of the world. “I am bullish on the global development. I am bullish on billions of people getting out of poverty,” he said.

He added, “I would like for there to be 50 or 100 Silicon Valleys all over the world. But I think it’s harder to create another Silicon Valley. Attempts to do that have not gone well over a multi-decade ability. I think it is a pretty difficult formula to re-create.”

With that tempered outlook, he also said that he’s skeptical the venture firms can scale geographically and operate successfully in multiple regions of the world. He hinted that firms should stick to the geographic regions that they know best: European firms will be able to source the European deals while Chinese firms will be able to source the best deals in China."

I'm not even sure Silicon Valley IS a formula. It took 100+ years to become what it is:

100 years ago Stanford University became known for its excellence.

75 years ago Hewlett Packard started just outside Stanford and Venrock started investing venture capital.

50 years ago the silicon revolution was on us: Fairchild Semiconductor led to Intel founding in 1969.

25 years ago the PC revolution made Apple, Microsoft, and Oracle household names.

15 years ago the dot com boom of Cisco, Netscape, eBay, Amazon, Yahoo, and Google made a lot of people wealthy. Golden Era for venture capital.

Now venture capital is in crisis. It has underperformed as an asset class for the last decade.

Venture capital needs to prove it can make outsized returns again.

Facebook, LinkedIn, Twitter, and Dropbox helped that but we need more wins.