The antivirus king

Trend Micro’s CEO Steve Chang ’78G has been called a hacker's worst nightmare.

Hamburgers and snow are among Steve Chang’s fondest Lehigh memories.
Oh, and a top-notch master’s program in computer science that helped propel him to the pinnacle of global high-tech success—that, too.
Chang ’78G had just earned his bachelor’s degree in applied mathematics from Fu-Jen Catholic University in 1977 when he made his first trip to the United States, visiting his brother-in-law in the Allentown area. He’d planned to seek a master’s degree from some other U.S. university, but his relatives told him about Lehigh, so he visited campus just a few weeks before a semester’s start.
He soon enrolled, allured by the offer of a teaching assistant’s job in the math department and even more so by the promise of being “allowed to access the mainframe computer 24/7 without any restriction … That was a big thing at that time.”
When not glued to the mainframe in Christmas Saucon Hall’s basement, Chang found Lehigh’s dining-hall fare cheap, plentiful, and tasty. And Bethlehem’s climate, although alien, brought unexpected joy.
“I never saw snow before because I’m from Taiwan,” Chang recalls fondly. “One day, I finished my project and walked out of the basement and was shocked because everything had turned to white, just like that.”
Today, Lehigh’s hamburgers and snow might seem passe to Chang, who jet-sets between Tokyo, Taipei, and California as founder of Trend Micro, one of the world’s leading antivirus and internet security companies.
By the time Chang stepped back from being Trend Micro’s CEO in late 2004, he’d built the company into a global presence with 25 business units worldwide and 2,600 employees, on track to make record consolidated net sales of about $622 million in 2005—an 18 percent annual growth rate.
Becoming a global force
Now 52, he remains as full-time chairman of the company’s board, a capacity in which he says he’s trying to help the new CEO—Eva Chen, his sister-in-law and a Trend Micro officer from the start—“transition our company into a really global company.”
Part of accomplishing that is identifying long-term business opportunities and building alliances, such as the partnership Trend Micro expanded in 2004 with Cisco Systems, the worldwide leader in networking for the Internet.
But part of accomplishing global success means sticking to the precepts and principles Trend Micro held from its start—including some Chang says he sees reflected at Lehigh.
In the late 1970s, computer science at Lehigh—or anywhere else, for that matter—was a different ball of wax from what we take for granted today.
The Lehigh mainframe to which Chang craved unlimited access “was probably at least a thousand times slower than today’s desktop,” says Edwin Kay, professor and co-chair of Lehigh’s computer science and engineering department. “That one machine represented essentially all the computing resources available at Lehigh. Today, surely there are at least 8,000 PCs on campus, each substantially more powerful” than that old mainframe.
And, of course, the Internet as we know it didn’t exist yet.
After finishing his degree, Chang worked as a software engineer before returning to Taiwan so he and his wife, Jenny—who’d come with him to the United States and taken some graduate-level information science courses at Lehigh—could go to work for Hewlett-Packard.
In 1984, they went into business for themselves to found AsiaTek, a Taiwan-based UNIX software design company. Two years later, they sold the firm and moved to Los Angeles, where in 1988 they incorporated Trend Micro with a $5,000 initial investment to sell a software antipiracy lock that combined hardware and software.
This was their first truly international business: A Los Angeles software company bought the devices from them and handled U.S. sales and marketing, but the devices were designed and made under Chen’s supervision in Taiwan, where labor costs were lower.
Trend Micro sold the rights to its devices to its U.S. vendor in 1989, by which time Chang was engrossed in a new hobby. He’d come across a Pakistani company using software that would destroy a hard disk as a means of copy protection; it turned out to be something called C-brain, a primordial computer virus.
“An e-epidemiologist”
So Chang began collecting computer viruses the way some people collect butterflies. He has half-jokingly called his collection, which now numbers in the tens of thousands, a “Center for Disease Control” of the computer world, and has referred to himself as “an e-epidemiologist.”
In 1990, Trend Micro offered PC-cillin, its first antivirus software. It caught on faster in Japan than in the U.S., but doggedness and relatives’ investments in the company helped carry it through the lean times.
Things began looking up in 1992 when Silicon Valley giant Intel licensed five years of exclusive U.S. and European rights to a Trend Micro antivirus program for local area networks, giving the smaller company 17 percent royalties—about $4 million a year.
Meanwhile, Trend Micro was free to market this and other products under its own name in Asia, so Chang and his wife moved to Japan to set up shop in the continent’s biggest computer market.
By 1996, when Trend Micro had 165 employees and $20 million in revenues, Fortune magazine was hailing Chang as “a global force.” But the best was yet to come.
In August 1998, soon after its Intel partnership ended, Trend Micro went about proving it could stand on its own two feet by becoming the first Taiwanese-founded software company to be listed on the Tokyo Stock Exchange. The following year, it was listed on NASDAQ.
When the “Melissa virus” was unleashed in 1999, wreaking hundreds of millions of dollars in damage upon corporate networks by forwarding itself via e-mail, Trend Micro rose to the challenge. The company offered free advice and software for killing Melissa, and saw its stock price double as a result.
BusinessWeek that year called Chang “a hacker’s worst nightmare.” The company got similar boosts for doing battle with the “love bug” of 2000 and the “Nimda” virus of 2001, establishing itself as a go-to guy of the computer security software world.
Through it all, Chang strove to keep Trend Micro’s focus on what it did best—stopping viruses—rather than branching out into other software ventures. Second-best would never be enough in the high-tech security realm, Chang always believed, and because no company could excel in every area, specialization was the key.
So while bigger competitors such as Symantec went after the retail market, high-end corporate customers helped push Trend Micro’s net margin higher. About 78 percent of the company’s enormous revenues in fiscal 2005 were sales to enterprise, mid-sized, and small business customers, with the remainder from consumer products.
In 2000, Chang told Asiaweek that his competitors were like department stores offering a wide variety of products, while he wanted Trend Micro to be “the Kentucky Fried Chicken of the Internet antivirus business. We want to have a very focused—or, as Kentucky people will tell you, ‘best of breed’—antivirus solution.”
His high-energy, ebullient personality also has played a role in Trend Micro’s success, and perhaps earned him a degree of notoriety.
Software Business magazine opened its 2004 profile of Chang by describing the stereotype-busting way in which he chose to “emphasize the coming of Trend Micro’s new age and the need to seek change and originality” way back at Trend Micro’s 1998 IPO celebration at the Grand Hyatt Hotel in Taipei.
Among hundreds of formally attired well-wishers, the magazine reported, Chang arrived “regaled head-to-foot in a London punk outfit: hair dyed pink; earrings and a nose ring; sleeveless T-shirt; a newly applied tattoo on his shoulder; a white iron chain around his waist; riding pants; and mountain climbing boots. Quite a sight.”
Chang in 2004 confessed to Tokyo Newsline his penchant for learning and performing magic tricks. “Magic is a form of international communication that relaxes people. People love it because it challenges their assumptions, and I like to have fun with people. I also like to do magic in business. We develop a lot of business deals, and that’s magic!”
The magic continues. MSN’s Hotmail service, with almost 200 million users around the world, in December 2004 replaced longtime antivirus partner McAfee with Trend Micro. In May 2005, Trend Micro announced it was buying Massachusetts-based InterMute Inc. to expand its anti-spyware capacity; the following month it bought California’s Kelkea Inc. to beef up its anti-spam offerings.
And in August 2005, leading computer maker Dell began offering its North American customers Trend Micro’s PC-cillin Internet Security pre-installed on its new desktops and notebooks.
Jenny Chang was Trend Micro’s chief marketing officer for many years and is now its senior executive vice president, supervising the CEO’s office and in charge of internal communications and corporate culture. Perhaps just as importantly, she long has been a sounding board for her husband’s management decisions.
“We used her as cheap labor in the beginning—you don’t have to pay much to your wife,” Chang jokes, before praising her “un-engineering type of logic” and strong business acumen that serve as foils to his technical know-how.
The Asia Business Leader Awards honored him in 2004 as “Innovator of the Year,” a distinction he has credited to his willingness to take risks and encourage creativity so that Trend Micro can approach its challenges in unconventional ways.
At the same time, he always has struggled to keep the company’s watchwords of change, communication, and creativity as more than just lip service as his workforce has ballooned and his market has gone worldwide. Being a transnational corporation, he said then and says now, isn’t just about selling your product in many languages. Trend Micro’s leadership team is as international as its market, allowing the company to identify unique competitive advantages in each nation and making itself truly at home wherever it has an office.
Though never a business student at Lehigh, Chang says he sees the university’s appreciation for this international business model.
“Lehigh is not a regional university anymore,” he says, citing efforts such as the Global Village for Future Leaders of Business and Industry, a summer internship program that unites people from around the world in Bethlehem to learn from and network with each other.
Also, Lehigh’s Computer Science and Business (CSB) degree program—co-directed by Kay, and developed in 2001 after a survey of dozens of nationally recognized consulting companies, software development organizations, and public accounting firms—has become the nation’s first and only undergraduate interdisciplinary program offering accredited degrees in both fields.
Chang says Lehigh seems to fully grasp, and is prepared to handle, the competition its students will face from well-trained peers from up-and-coming educational, scientific, and economic powers such as India and China.
“They’re moving toward being a true global university,” he says.
Chang visited Lehigh in early 2006 for the first time in many years, and later said he was struck both by how much had changed, and by how little.
“They’ve kept the beauty and the environment very much untouched in appearance. Yet internally, everything, like the library, has been remodeled,” he says.
“And the hamburgers in the dining hall are still good.”
--Josh Richman
Lehigh Alumni Bulletin Online
June 2006