China, China, China. Breaking Down China’s Tech Surge | BG2 w/ Bill Gurley and Brad Gerstner

00:00:00.000 | over lunch this individual told me you know every founder and every vc in china studies the west

00:00:08.720 | at a nauseating level so they listen to all the podcasts they read everything they possibly can

00:00:16.080 | they study any speech they look at the financials and he said the west doesn't do that of china

00:00:22.480 | and you know maybe we should be maybe we should be studying the best and the brightest over there

00:00:29.280 | hey bill great to see you good to see you brian summer has just blown past it's all it's almost

00:00:48.400 | football season yes uh how are the longhorns looking this year um they rank pretty high

00:00:52.960 | what's that mean come on give me the scoop i know i know you're all over that people that know know

00:00:58.560 | but they they have the dangerous starting position of being ranked number one in the country oh wow

00:01:04.960 | wow any big games coming up they uh play the number two team in the country this saturday and so we're

00:01:11.680 | gonna find out we're gonna find out we're gonna find out oh it gets real fast back to buckeye country

00:01:16.320 | yeah exactly it's been really incredible uh you know i just i just got back to silicon valley um after

00:01:25.040 | you know being away for a few weeks these you know the open ai deal the anthropic deal i was just

00:01:29.200 | looking at these i think these are bigger private ipos than any public ipo uh done in the last five

00:01:36.640 | years in the tech market right you had sam say the other day sam altman say you know two two things can

00:01:42.960 | be simultaneously true um one that this is the biggest thing to have ever happened in technology

00:01:48.560 | but number two uh that in the short run things become overheated and people are can get a little

00:01:53.520 | bit ahead of themselves where are you on that look there's just no denying that the amount of capital

00:01:59.280 | that is going into these companies earlier in their life and the scale of hiring and their willingness to

00:02:07.920 | take on risk which i think you can use cash burn as just a proxy for risk because you get further away

00:02:14.640 | from knowing unit economics and and you're more threatening you know i i think what those numbers

00:02:21.760 | are unprecedented like even against you know the uber doordash wars and all this they're bigger than that

00:02:28.640 | and so i think it's part of we've talked about it i think it's part of a systematic trend where investors

00:02:34.960 | are aware of network effects they've watched companies that get the initial conditions

00:02:40.080 | right go on to really big outcomes and they're willing to bet ahead of the curve and as the more

00:02:46.000 | confident they get over more time the more they're willing to make that bet ahead of time and um and so

00:02:52.640 | you know it is what it is we're seeing you know massive numbers well i'd say it's it's a combination of

00:02:59.280 | two things extraordinary scaling we've never seen two companies in the case of open ai scale

00:03:04.880 | uh users and scale revenue as fast as they are but definitely you're absolutely right the private

00:03:09.600 | markets are there to meet them um and we're seeing the depth and the breadth of capital and investment

00:03:15.520 | in the private markets i think unlike anything we've ever seen but you know we're going to save that for

00:03:20.080 | yeah save it right let's save it we're gonna save it let's save that for another day we're gonna do

00:03:25.280 | something a little different today um you know one topic that i think um we we've hit on time and time

00:03:32.400 | again but we're gonna we're really just try dedicate the show to it today and that's china you know you

00:03:37.280 | just got back from china it's one of the hottest in many ways most consequential and also most

00:03:43.760 | controversial debates i think in silicon valley and in washington you know on the one hand you have

00:03:50.240 | i think national security economic hawks you know who are in this camp that we should decouple it's a

00:03:56.400 | a little bit more cold war 2.0 yeah a great power struggle this is the meersheimer perspective you

00:04:02.560 | know maybe in the middle you have you know tech pragmatists i guess i i might call them you know

00:04:07.920 | like jensen wang or tim cook i'd probably put myself in this camp who thinks we we have to compete we have

00:04:14.240 | to re-onshore industry you probably should have some tariffs in order to achieve that but you you definitely

00:04:20.000 | can't decouple or ignore or or antagonize and then maybe on the other end you have kind of the globalists

00:04:26.560 | i don't know jeff sacks jeffrey sacks is probably in this camp it's free trade open science collaboration

00:04:32.160 | and you know there's this is of tremendous consequence to issues around tariffs and trade issues

00:04:39.760 | around military issues around ai and there's this new book out by dan wang that i want to talk about

00:04:47.360 | um you know uh where where he really takes on the differences between the two countries but why

00:04:52.800 | don't we start with you know this trip that you recently took you know you you just got back from

00:04:58.400 | china why did why did you go you know and frankly especially given all the you know blowback

00:05:04.240 | you've gotten personally benchmarks gotten uh with respect to china maybe for having too soft of you on china

00:05:11.200 | give me your inspiration for wanting to go and spend as much time as you did studying china

00:05:16.000 | yeah so i i've probably been four or five times before this trip but i hadn't been since um covet and

00:05:23.280 | i've been reading you know about everyone that's been going we talked about thomas friedman's comments

00:05:29.600 | um from his last trip and you hear about all the things that are different um you know personally my

00:05:36.080 | my daughter's an asian studies major so she went on the trip with with myself and my wife and so you know

00:05:42.400 | you know with her studying that topic this is i thought it'd be a great chance for her to see

00:05:48.160 | things too um much younger than us but i wanted her to go around and the fact that she speaks mandarin was

00:05:54.560 | helpful on on the trip as well but you you know you just said something right you said this is probably the

00:06:01.680 | most consequential you know other nation when it comes to thinking about america or thinking about

00:06:08.320 | our stock markets or thinking about how technology companies are evolving and so i just wanted to

00:06:14.400 | learn like like like why wouldn't you want to know more i don't understand how you if it is the most

00:06:22.160 | consequential relationship for our country why you'd want to know less right and so um i've always enjoyed

00:06:29.280 | going over there i've always enjoyed learning things that i don't know um and i really wanted

00:06:35.200 | to see it up close and personal um one thing that was super helpful was uh dan wang who you just

00:06:42.640 | mentioned gave me a early copy of his book so i read it on the way over there tell us tell us a little

00:06:48.720 | bit who is dan wang so um it's a gentleman that lived over there he lived over there during covid

00:06:54.640 | um you know he's a he's a policy analyst um and he recently moved back to the u.s um he's at the hoover

00:07:02.480 | institute yeah been studying china for a long time looks at it through the lens of technology and

00:07:07.040 | innovation and the book's titled breakneck and it's really talking about some of the acceleration um that

00:07:14.320 | we've seen in in building you know inside of china but but it i would suggest the two things about the

00:07:21.440 | book that are really interesting one he kind of uses as a mirror back on the u.s so it's really about both

00:07:27.440 | countries it's not just about china um and then two he's balanced like he talks about the pros you know and

00:07:35.040 | the cons of what have happened over there he starts with with this chapter that was recently republished

00:07:41.840 | in the atlantic where he highlights that the vast majority of the political borough are former engineers

00:07:49.280 | so this is the the ruling party within china and that the vast majority of the people in washington dc

00:07:55.920 | are former lawyers and you know that he uses that lens to say this is why they're great at building

00:08:03.200 | things and maybe why they're not so great at social things i think he gives the edge to having the

00:08:08.400 | lawyers to protecting free speech and personal rights he did not enjoy the lockdown in shanghai which was

00:08:15.600 | fairly abrupt um he's very negative on the one child policy and for those people that don't know

00:08:22.800 | the the chinese government's now trying to encourage people to have three children

00:08:27.120 | not successfully but that's the new program um so they've completely flipped from where they were

00:08:33.360 | um but but it's a fascinating read it's a very personal read you can tell that you know his life

00:08:38.720 | journey his parents were born there and left you know and went to canada and that's how he grew up in

00:08:45.200 | the west and then he went back and so he has it's i think it's a really interesting lens but it's very very

00:08:51.200 | current one of the things he really dives into and this is something that that people that i've talked to

00:08:57.120 | you that know china have known this for some time but i don't think the general people understand this

00:09:02.160 | so one of the things that's led to the vast build out so we've read about high speed trains we've read

00:09:08.880 | about overnight cities we've read about their number of companies in the solar space in the ev space one

00:09:15.520 | of the reasons that happens is the provincial leaders compete with each other so the provinces are very

00:09:22.400 | competitive with one another not in the same way the states are really um one of the reasons this

00:09:28.720 | is true is if you run a province and do well you put yourself in really good standings to move up in

00:09:34.800 | the federal government but wouldn't you say that's it i mean that seems to me like gavin newsom competing

00:09:40.480 | you know with desantis in florida on you know who is more business friendly who is tougher on immigration

00:09:47.120 | it seems a little bit the same way i think it's a little bit the same way but the difference is

00:09:51.200 | that because there's a singular government that's going to make choices like like in the u.s if you do

00:09:57.840 | well as a governor you might get elected got it but in this case it's more like divisions of a company

00:10:04.480 | and if you run one well you might get the ceo job and and so that competition you know leads to

00:10:12.240 | overbuild in certain cases so there's several ghost cities um that that are buildings that are empty you

00:10:20.080 | know where they've built too fast they are now facing problems even though they're the world leader in evs

00:10:26.000 | and the world leader in solar panels where some of these companies need to go bankrupt and a province

00:10:32.240 | may not want them to because of employment issues right and so the the those are the those are flip

00:10:39.920 | you know two sides of a coin you get one benefit you get hyper competition we talked about the thousand

00:10:45.600 | flowers bloom so this the the federal government publishes every five years this this mandate of the

00:10:52.320 | things these are the things that are important and you need to go work on and then the provinces you

00:10:57.760 | know go go at it like they go right against those initiatives and that's that's how they've got taken

00:11:04.480 | a lead in those things we mentioned and energy production right you wonder we talk about all the

00:11:09.760 | number of nuclear plants that they have new nuclear starts solar farms wind farms i'm going to dig into

00:11:15.760 | that bill i think there's this general view that china's good at building things building iphones but

00:11:21.600 | perhaps not at innovating right and then you know jensen huang reminded us recently that 50 percent

00:11:27.840 | of the world's ai researchers are in china and they're indeed innovating and not copying you know

00:11:33.760 | on the ground when you look at the things happening in auto when you look at the things happening in

00:11:39.040 | ai when you look at that things happening in space or energy etc um how would you compare contrast as a

00:11:47.760 | venture capitalist the level of rigor and innovation and excitement enthusiasm um and investment i guess

00:11:56.800 | going on against these you know critical future industries well if you're over there

00:12:01.600 | you you know that the bite dance founder is just remarkably unique you know leijun at jami

00:12:10.720 | is remarkably unique and if you spend time um studying those people i just i don't know how you would

00:12:18.000 | possibly think that they can't innovate i mean tick tock was there first right and then it came here and

00:12:24.720 | then reels copied tick tock one thing that doesn't seem like innovation but i was surprised by pop mart is a

00:12:31.680 | uh 40 50 billion dollar public company which is a children's toy company that started in china and is

00:12:39.600 | everywhere over there but like just the idea that that there is no innovation you know one one of my

00:12:46.320 | favorite meetings and i promised i would protect the innocent so i'm not going to share who it was with

00:12:51.440 | but over lunch this individual told me you know every founder and every vc in china studies the west

00:13:01.120 | at a nauseating level so they listen to all the podcasts they read everything they possibly can they

00:13:08.720 | study any speech they look at the financials and he said the west doesn't do that of china

00:13:16.080 | and you know maybe this goes back to my main motivation for going over there to learn but that

00:13:21.600 | i thought that was a very provocative statement that he made you know and um maybe we should be

00:13:27.920 | maybe we should be studying the best and the brightest over there well let's say let's dive into

00:13:33.680 | you know maybe one industry i i guess as a lens yeah i know you spent a bunch of time uh in the auto

00:13:40.000 | industry yeah right looking at all of these new entrants and i would help us understand the

00:13:45.440 | innovation that's happening there are two dimensions one on uh you know just electric vehicles number two

00:13:51.680 | on you know maybe autonomy and then number three i'm just curious like how tesla is able to compete so

00:13:58.320 | effectively you know in a market where you have this hyper competition uh for electric vehicles yeah so i i i had

00:14:07.120 | a number of auto experiences when i was over there first of all i i was invited to um visit byd this

00:14:14.560 | is my they gave me a nice coat i um i met with stella lee who is their number one executive i think

00:14:22.800 | facing outside of china um she runs all their europe initiatives for those people that don't know byd is

00:14:28.560 | the largest ev manufacturer in the world at about four million vehicles um they started in batteries

00:14:36.880 | they they you know they compete in with uh foxconn to build mobile phones they bought jabel circuit you

00:14:44.400 | remember that old company i do and they make lots of things they make buses and subways and all kinds of

00:14:51.840 | different things but they got into cars uh over i don't know about five to ten years ago um they have

00:14:58.880 | a number of models they gave me this one this is you know a very kind of high-end sports car in fact i

00:15:05.520 | met a public company ceo that was proudly showing me this was his favorite car that he drives around

00:15:11.440 | they make an suv you can drive into the water wait i don't i don't know exactly why you'd want to do that

00:15:17.200 | but we rode it into the water drove around in the water and drove out um they have cars at 10 to 15

00:15:24.480 | grand price point on the entry side they've hired a european designer it's just how they're building

00:15:30.480 | stuff like this um on the higher end um and um they're very aggressive from a cost perspective

00:15:39.600 | yeah i think byd more than anyone on the cost side it's not preventing them from building higher

00:15:45.840 | in cars as well um so that's byd i also had a chance to visit xiaomi they also gave me a car the uh the

00:15:56.240 | xiaomi is a super interesting story if people don't know so i i would i was fortunate enough to meet

00:16:01.680 | leijun back in 03-04 um but about 13 10 to 13 years ago he started a phone company and that's what xiaomi is

00:16:11.360 | and that company's now third i think around the globe and handsets sold heavy in europe heavy in

00:16:17.840 | south america not just china um and three to four years ago i think around 2021 he decided to build a

00:16:25.520 | car and it was about the same time apple said they were going to build a car and and mind you this guy

00:16:30.800 | was back in 03 ran an e-commerce company called joio like like he's he wasn't i there's no reason he

00:16:38.880 | he should be able to build a phone and then build a car so what do you attribute that to bill like why

00:16:45.520 | you know when you see that you know again going back to dan wang's book he's like this is an

00:16:50.480 | engineering culture that has built these technological ecosystems that gives rise to a higher velocity of

00:16:56.960 | innovation uh you know than we see in the united states that dan would argue is bogged down by

00:17:02.720 | you know regulatory capture and lawyers etc why do you think uh you know xiaomi is so successful

00:17:10.320 | and by the way let me just share with you some numbers so so they're making uh a thousand of these

00:17:16.560 | a day they just came out with a kind of a kind of a thousand cars a day yeah in in this in the factory

00:17:22.720 | that i went to um it it it they're sold out they have like a 30 to 40 week backlog um you have to

00:17:29.680 | pay five grand to get on the waiting list the factory this is an interesting data point the factory

00:17:35.200 | makes a thousand cars a day with two thousand employees um it was highly automated like really

00:17:41.360 | highly automated i imagine that they plan to improve that number over the next five years let's say they

00:17:48.320 | took it to a thousand employees for a thousand cars that'd be employed per car per day that number is

00:17:54.000 | like at six in the u.s and that's super interesting for a number of things like if you want to bring

00:18:00.320 | the jobs back there by the time you get the jobs back there may not be any jobs like like at one because

00:18:06.480 | of automation the entire global you know potential for car manufacturing in five or ten years from now

00:18:14.800 | could be like 400k total and so you know we we we just need to be really thoughtful about those things

00:18:21.360 | but but back to lejun he gave a talk in 2024 we're talking about maybe people should be watching and

00:18:28.560 | learning in both directions that i would encourage people to watch it's on youtube it's his state of the

00:18:33.360 | union from 2024 and he spends about an hour talking about his approach to building a car and it sounded

00:18:41.120 | like so ridiculously i don't like like you ask about entrepreneurial he he he decided that he hadn't

00:18:49.840 | been driving a car for 10 years because he had had a driver so he immediately switched seats with his

00:18:54.880 | driver and then he um he went through the parking lot at his company and if there was ever a car he had

00:19:02.560 | not driven he'd leave a note on it and ask to borrow it and then he would have the uh the owner of the car

00:19:08.880 | tell him what they liked and didn't like so he claimed he drove 170 cars that way um and then he

00:19:15.280 | also like byd they hired a european designer um that came in and helped him out but for an entrepreneur

00:19:22.080 | who had never been in a car business to build a factory in a three-year window and look the same

00:19:30.320 | thing was true our friend omid built a factory in texas you know you know under 40 like just spectacular that

00:19:38.000 | that that these entrepreneurs are capable of doing these things but it just kind of blows my mind

00:19:44.000 | like when i was being driven in this golf cart through this factory just thinking that this person

00:19:49.600 | wasn't in the business three or four years ago and for for people that don't know i'd encourage you to go

00:19:54.560 | online and and so uh the ceo of ford farley he went over there and i think had the exact same tour i did

00:20:02.400 | and he insisted they ship him one back to chicago and he's been driving it around and he's made some

00:20:09.520 | pretty extreme statements um after having experienced john me this car sells for about 40k

00:20:17.520 | but he said it's the most humbling thing i've ever seen and he says even beyond that their cost

00:20:22.560 | their quality of vehicles is far superior to what i see in the west we are in a global competition with

00:20:28.480 | china and it's not just evs if we do not if we lose this we do not have a future at ford you know that

00:20:36.240 | that's farley at ford you know and and i by the way i would take a pause after mentioning that to the

00:20:42.800 | people that are gonna um accuse just because i went over there to learn accused me of somehow being

00:20:49.520 | like a an agent for the ccp is that also true of the ceo of ford you know like why is he saying these

00:20:57.040 | things like we're just witnessing what's happening on the ground one of my observations is and you hear

00:21:03.120 | this from elon you hear this from jensen huang you hear this from tim cook you hear it from farley

00:21:09.120 | it's extreme respect for the for the level of innovation um for the focus for the engineering

00:21:16.880 | led culture that exists in china and that to me one of the reasons i wanted to do this pod

00:21:23.360 | on china is because i think it's as much a reflection about what the united states

00:21:27.680 | needs to do to re-engineer its own society right it's not enough to say that we want to re-onshore

00:21:35.040 | critical manufacturing it really is about you know this movement around american exceptionalism america

00:21:40.640 | builds it's about making the reforms necessary whether it's regulatory capture whether it's the

00:21:48.000 | you know tort reform legal reform required to frankly allow uh uh you know this level of innovation and

00:21:55.600 | recognize that we're in this global competition you know and there are two ways in which you can you can

00:22:00.400 | approach this bill one is we can build barriers we can try to decouple and we can pretend the rest of

00:22:07.680 | the world somehow won't buy china's goods you know but if you look at it today the u.s only represents

00:22:14.160 | about 14 percent of china's exports the u.s only represents about three percent of china's gdp yeah

00:22:22.320 | right so like we're just not that important to china i don't want to understate like you know

00:22:29.920 | we're still very significant but china has found a market in europe they found a market in africa they

00:22:36.240 | found a market in south america right and it it seems to me that the harder pill for the us to swallow

00:22:44.560 | and this is where i think that you know i i'm in the camp of of those in the middle who say we need

00:22:50.800 | to engage we need to compete there is a competition we want to win the competition but this is about

00:22:56.640 | focusing on us and winning and running a faster race we have a lot of reforms i think a lot are occurring

00:23:02.880 | now i think we're doing the type of things that we need to be doing um in order to get more globally

00:23:08.720 | competitive there are industries that are critical to our national security um you know

00:23:14.880 | things like rare earth magnets things like uh you know steel productions things like pharmaceuticals

00:23:20.960 | where i think it is appropriate to have both an industrial policy and a tariff policy that's going

00:23:25.840 | to provide the incentives to those industries um but it it's you know to me uh you know the reflection on

00:23:33.920 | what i hear you saying about china when i read dan's book is that china is putting the accelerator to the

00:23:41.920 | floor in terms of innovation and it's in every single industry it's powered by you know the this provincial

00:23:50.320 | competition you talked about is powered by people who are just you know naturally entrepreneurial and

00:23:55.840 | hard-working um and there's no escaping that and there's no putting that genie back in the box would

00:24:01.360 | you know what are your thoughts on that yeah no i think it's exactly right i mean byd has um a big

00:24:08.000 | presence in hungary and they have a fact they're building a factory in or already have one in mexico and

00:24:15.040 | why if you're mexico would you not buy the 10 to 20 grand ev why would you buy the 50 grand one from

00:24:23.440 | america it just doesn't make any sense right like you're if for any country around the world and i could

00:24:30.160 | reflect this on the us as well if you're not gonna buy you know domestically you you should certainly buy

00:24:37.440 | from the low-cost producer right it goes back to to comparative advantage right if you if you

00:24:44.320 | can't produce a globally competitive product and you close your import border your people are forced

00:24:51.760 | to buy a product that is overpriced and and and not and and so from a from a standard of living

00:25:00.560 | perspective they're worse off than they would be if you had opened the import door and so i don't you

00:25:06.480 | know i'll give you another example of this so this is the the byd this is the apollo um competitor to waymo so

00:25:14.160 | we we've we've seen the waymos around austin and san francisco we've ridden in them this is i've

00:25:19.520 | ridden in this now um it's a little bigger i think a little roomier than than than the jaguar for sure

00:25:26.000 | um it's more of an suv um but this is on the streets you know and apollo is kind of interesting

00:25:32.560 | it's inside of baidu which is a search engine company um while people are simultaneously what people

00:25:38.000 | are saying that that the waymos should be worth 170 billion inside of of google you can buy shares of

00:25:45.600 | baidu for zero enterprise value it's a 30 billion market cap 30 billion in cash on the books um and

00:25:53.200 | from a global perspective i don't know why if this is 30k why you'd want to deploy waymos which people

00:26:00.720 | say are over 150k partially due to the to the mem solid state lidar advantage that china has which

00:26:07.360 | we've talked about previously so yeah i think rest of world is a really interesting thing to think about

00:26:15.040 | you know when you compare the two countries because i don't think that i i personally and i i don't have

00:26:21.920 | a ton of data on this but i i personally don't think all the other countries in the world share the same

00:26:28.240 | level of hawkishness that at least part of the members of our national government have and so i

00:26:36.320 | don't think they're going to be as afraid of their technologies let's think about this in the context

00:26:42.720 | of you know uh uh uh what you've seen if you were giving advice to trump uh on export controls for

00:26:51.600 | example bill um you know whether it's on you know ai chips or other things um you know would you be

00:27:01.200 | uh you know what would your advice be well i mean i think you hit on some of it around the red tape

00:27:07.760 | and you know there's a couple different things in certain industries where we're really behind

00:27:13.680 | i would be very open-minded to jvs coming towards us you know for the past 50 years you know european

00:27:21.600 | car manufacturers u.s car manufacturers they opened facilities in china some of them were forced to be

00:27:28.320 | 49 owned 51 owned i'd be very open to that kind of thing um there was some positive news out this past

00:27:36.240 | week um following trump's engagement with korea around nuclear which we have talked about before

00:27:42.560 | korea can build a nuclear plant for one-fourth the price that we can why don't you invite them to come

00:27:48.000 | help us build a few in the u.s and see what we can learn and i wonder if we should allow for there's

00:27:53.840 | going to be there are so many ev companies i didn't even mention you know neo and zeeker and

00:28:00.000 | some of these other things they're all innovating in different ways but some of those are going to

00:28:04.080 | have financial trouble neo's public you can see that that the stock's not doing all that well but

00:28:09.600 | would we let a ford or a gm buy one of those companies right maybe we should i don't know if

00:28:15.600 | the china government would let them would we let one of those companies open a jv with ford or gm in

00:28:22.000 | the u.s i think we should if we'd learn from it and you could say the same thing about solar

00:28:27.680 | or any of these technologies where they have a lead solar nuclear so i would be open-minded to

00:28:32.560 | those types of things um i would be really big on trying to get regulation out of the way and recognizing

00:28:38.960 | that that an autocratic country that has specific goals can move so much faster

00:28:47.040 | um in any industry than you ever could in the u.s because we've created so many people whose jobs that

00:28:53.680 | are to block things um and we're seeing i think we're seeing that type of behavior in certain states

00:28:59.840 | which is why tsmc's in arizona which is why tesla's in texas i would give governor shapiro a lot of credit

00:29:08.240 | um for reopening three mile island and what he did with i-95 like like all those things are signs of

00:29:15.440 | recognizing that we've built mud you know in in our system um that prevents building and how do you how

00:29:24.160 | do you get how do you start to remove that and move in the opposite direction specifically uh you know

00:29:31.200 | thinking about the tariff so you know i think that the president uh tweeted yesterday morning if you know

00:29:38.080 | if we don't get it was appearing that we're on a glide path and making a lot of progress with china

00:29:43.200 | we may very well be i think he tweeted yesterday morning that if we don't get rare earth magnets

00:29:48.000 | from china he could raise the tariff rate to 200 percent there was some talk that he was going to

00:29:52.720 | visit china in the first week of september so that's you know right around the corner um i said on a couple

00:29:59.120 | pods ago i thought that you know the way to understand uh this president is that he's a self-described

00:30:06.000 | deal junkie he's a pragmatist he's not an ideologue it seems to me that when he's talking with jensen

00:30:12.400 | huang and others he falls in that kind of pragmatic centrist category um he certainly wants to rebuild

00:30:19.120 | stuff in the united states but at the same time it appears to me he wants to get a big deal done on

00:30:24.400 | china where do you come down again if you were advisor on the tariff side of things bill um do you

00:30:31.760 | think he's going to get a big deal done with china do you think that's the right thing uh to do and

00:30:37.280 | how do you think that influences uh some of the building that you're talking about okay this is i have

00:30:44.400 | zero insight like i didn't i didn't i didn't meet with anyone in the in the ccp or the government so i

00:30:50.800 | have no idea what with their mindset this is pure speculation on my my point my part um you already

00:30:58.800 | brought up the fact that that we're a much smaller percentage of their exports than people realize and

00:31:07.280 | people think about and as a result you know i think that they're going to be china is going to be far

00:31:15.920 | more um biased by what they view as as fair and and face-saving than they are necessarily like numeric

00:31:27.280 | and so i think if we if someone were to approach them in a pragmatic way i think a pragmatic deal could

00:31:34.080 | easily get done i you know if they are engineers as dan wang said i it's not like you know that they

00:31:41.200 | wouldn't accept a pragmatic outcome i think they would but if we um if we're intent on being derogatory

00:31:49.520 | in our language and and by the way that's the thing that i just really don't understand um that you

00:31:56.080 | see in washington you see it on that select committee of the ccp and you see it from some of the the the

00:32:02.800 | people in silicon valley i just don't understand the value of being uh belligerent and but but many people

00:32:10.080 | clearly are i mean they have four times the number of citizens on this earth than we do and um none

00:32:16.560 | everybody's you know country of birth is something that happens to them outside of their control so i i just

00:32:23.920 | don't know why vilifying uh a billion people is a good idea um so i think it's possible i think

00:32:30.160 | there's a i think they would do a deal um and i just don't know if uh if we get caught up in a silly

00:32:37.840 | tit-for-tat verbal war what the benefit of that is and anything like that and this is one of the points

00:32:45.840 | sacks makes um jeffrey sax not david you you you might provoke world war three so what do you what

00:32:53.600 | what do you what's how do you put that into your mpv calculation is it fair to say that you know i think

00:33:01.680 | if you look at tariffs um heading into this year they basically doubled on china but if we put tariffs on

00:33:09.840 | you know particular industries in order to incent uh building and industries in the united states

00:33:15.840 | imagine it was a deal a bit like japan bill where we also you know cut a deal with the chinese that

00:33:22.800 | they had a trillion dollars of investment the way we have with other companies that go into the u.s

00:33:28.720 | into some of these uh you know industries and that we perhaps get some reciprocity and

00:33:34.880 | reduction of barriers to some chinese goods into into china where how would you handicap that did you

00:33:40.480 | get any sense um uh or or or you know do you get any sense from the uh the stuff you read in the united

00:33:49.200 | states as to the the probability that i think it's one of the biggest influences as we look at growth in

00:33:54.400 | the back half of this year as we look at market sentiment in the back half of this year

00:33:58.240 | just curious where you stand on that ironically one of the things that i mean like i said i met with

00:34:03.200 | i met with companies and founders and and and a few academicians but i did and some journalists but i

00:34:09.920 | didn't meet with with the government but in general there's just not any hostility from their side from

00:34:16.160 | that group of people that i met with in fact most of those um most of those people look up to the u.s

00:34:23.040 | founders that have done great things the jobs and the elons and most of them aspire to compete

00:34:29.280 | globally the same way a founder in the u.s would like and so they would like to see all this rhetoric

00:34:36.640 | die down and they would like to have the opportunity to come to the u.s market they'd like the opportunity

00:34:41.840 | to compete in europe and south america many are xiaomi and byd already are and so i think like i

00:34:48.800 | said i think there's a pragmatic deal to do um to the extent and and if if that um led to the types of

00:34:57.600 | programs that i just talked about this kind of jv thing where there's a market there a leader in and we

00:35:03.680 | you know have that company come to the u.s and help us understand um how to compete in some of these

00:35:09.760 | technologies and get to lower price points i think that'd be fantastic do you feel like over the last

00:35:15.360 | 20 years who do you think's gotten the best out of the relationship bill you know i haven't read this uh

00:35:21.600 | apple china book um yes it a lot of people have been talking about it and i aim to um it it

00:35:31.600 | i think the problem with looking at it that way is you know you and i've talked about this finite

00:35:37.040 | versus infinite game is you know where are we in the time of the planet and what do you think the

00:35:44.240 | planet's going to look like you know 15 20 30 years from now i mean i think it'd be very easy to say

00:35:51.280 | you know using your framing to say the u.s took advantage of europe post-world war ii and a lot of the

00:35:57.760 | manufacturing that existed prior to world war ii shifted to america um and so you could then with

00:36:03.760 | that same frame say yeah china you know grew on the back of america and and you know from from that time

00:36:12.240 | but i kind of look at it another way which is there have been different periods where these different

00:36:18.080 | countries have industrialized you know we were a huge beneficiary post-world war ii because most of asia and

00:36:24.320 | in europe had been blown up and there was no production capability whatsoever and a lot of the

00:36:29.360 | kind of glory day mindset that we have about what life and generational change should be like in the

00:36:36.080 | u.s come from that time um which is a bit unfair i think from a global perspective but there's a ton of

00:36:43.600 | hard-working people over there you know denxiaoping brought capitalism underneath the uh the chinese

00:36:50.560 | government and led to the biggest you know um increase in standard of living of any it's like 500

00:36:59.520 | million people came out of poverty as a result of that and you know when people say oh we should have

00:37:05.280 | never let the jobs go over there i'd i don't think they really want to say well we shouldn't have let 500

00:37:10.160 | million people out of poverty uh you know it's the same people that that uh want to talk about aid in

00:37:16.320 | africa and whatnot so a lot of people benefited in china um but they're also hard-working people and and

00:37:24.480 | and we we talk a lot about meritocracies right and some of the same people that talk about meritocracies

00:37:31.840 | are anti-china and so that that's a hard thing to square because if someone's willing to work twice

00:37:39.040 | as hard you know as you and you know willing to study harder and and all that kind of stuff are they

00:37:46.800 | do they not deserve a chance at a life like you have i think the bigger complaint is that um we were

00:37:54.720 | naive in our trade policy and therefore we allowed huge advantages to flow to other areas

00:38:02.800 | and you know by the way as dan says in his book at the same time we were actually moving to more of a

00:38:10.240 | regulatory state in the united states so you know like our companies were getting less competitive at

00:38:15.760 | the same time we were helping their companies get more competitive and there was a lot of collateral damage in the united states

00:38:22.560 | in the united states during that period of time and i think right now people are saying okay we're moving

00:38:27.440 | into this age of ai but we have to get back to driving reform in the united states that levels that playing

00:38:33.760 | field a bit um and so you know you can't you can't undo the past um but i do think there's a recognition

00:38:41.680 | that um you know we need to do the things in order to incentivize u.s industry to compete more effectively

00:38:48.960 | in a lot of these different categories um i think it is going i think it is going to be tricky though

00:38:54.400 | you know if you say you know you've got a hundred competitors in the ev industry in china they're all

00:39:02.480 | willing to work on razor thin margins and they're willing to sell cars into europe at twenty thousand

00:39:08.720 | dollars or twenty five thousand dollars today as farley said there is not a u.s manufacturer sans

00:39:15.360 | perhaps tesla that comes anywhere close to being able to compete in that way on a global basis correct

00:39:22.160 | one thing i've been studying a bit is i i do think that the chinese government's more has more

00:39:29.600 | scrutinous of monopolies you know i don't think that they i think they would consider it a negative if there

00:39:36.560 | were seven companies worth three trillion dollars or whatever like i don't think they care about

00:39:41.440 | market cap i think they care more about employment and global competitiveness which would cause you to

00:39:47.280 | support low margin companies um and and you know they they get to choose to make that choice i'm not

00:39:53.600 | judging it but it would result in this outcome you know there's in addition to the farley quote the

00:39:59.120 | mercedes ceo said we need a reality check um when he was talking about chinese evs and then

00:40:06.000 | stelantis i guess is the new name who uh who rolled up a bunch of other car companies uh they said chinese

00:40:14.080 | evs are quote possibly the biggest risk facing his car maker and tesla um and uh he criticized this is

00:40:23.280 | carlos tavares he publicly criticized eu tariffs on chinese electric vehicles calling them a major trap

00:40:30.880 | for automakers and this is this is you know you talk about what policy would fix things i'll tell

00:40:37.200 | you what policy will make things worse you know you start protecting us industries by putting export

00:40:43.280 | tariffs on the most competitive products around the world which i talked about earlier now your consumers

00:40:48.960 | don't have access to those price points and so you're buying inferior goods at inflated prices

00:40:55.280 | and that's going to lead to inflation and prosperity and standard of living levels dropping in the us so

00:41:02.720 | there's a lot of variables i would say that's generally true i think if there's a moment you know if there

00:41:08.080 | was a national strategy to improve competitiveness in an industry that had been you know um uh uh let's just say

00:41:16.720 | had an unfair playing field for a period of time like i could see a national strategy for example

00:41:23.600 | we talked about pharmaceutical manufacturing we talked about chip manufacturing we talked about rare

00:41:28.640 | earths where you would say okay we're going to actually impose a tariff because these other goods

00:41:34.240 | are flooding and it deprives us of the ability to build our own domestic industry but i think we have

00:41:40.160 | to be very careful when you do that bill to your point we know that unfettered competition will lead to

00:41:46.160 | uh you know is going to lead to much better products much lower prices and when you start protecting these industries

00:41:53.040 | what i worry about is you protect the regulatory grift and the the the the over lawyering that dan talks about in

00:42:02.080 | his book right we got to face up to this fact that we have to reform some of these uh you know basic things in the united states

00:42:09.040 | and that's why you see companies like tesla moving to texas where those reforms are moving forward and i think

00:42:15.040 | you know i think we are making progress on that but i you know i think you there is a rationale uh for those

00:42:22.320 | critical national industries but i generally agree with you that if we move to high levels of protection

00:42:27.920 | because we simply can't compete because it takes you know us uh you know 10 people uh in an auto

00:42:35.200 | plant to do what they do with one person in an auto plant i think that's unsustainable you and i think

00:42:40.080 | we need to be careful with the rhetoric we throw around so so i'll give an example so um if you read

00:42:46.720 | what comes out of the biggest talks they say well everyone in china just steals things and the government

00:42:52.000 | subsidizes everything so when i i brought that up with uh i brought up the subsidization with

00:42:58.320 | stella lee at byd and she said she said if i'm getting all this government subsidy money can you

00:43:03.680 | please find it and show it to me we're we're a public company come show me the money i'm getting from

00:43:09.120 | the government she's like say i'm getting nothing and um and and then you know you look at the u.s like

00:43:15.920 | we give companies subsidies all the time to build factories we've had ev credits for the past 10

00:43:21.840 | years both at a state and a federal level um intel's getting money from the u.s government like i don't

00:43:28.080 | understand where we're saying like like it's very unclear to me like what we're pointing at and

00:43:34.000 | accusing and why it doesn't it isn't the same thing here and then lastly you know elon's published all

00:43:41.200 | the tesla patents okay so there's free ip for ford and gm and i would ask you with that free ip if we gave

00:43:50.240 | ford and gm subsidies do you think they'd immediately be competitive with china no sir

00:43:56.480 | okay and if i ask a hundred smart investors that question what would they say i think they'd agree

00:44:02.640 | with me yeah so so so so the thing we're accusing them of being the reason they're succeeding

00:44:08.880 | if you flipped and gave that to the u.s companies none of us have confidence that would work

00:44:14.400 | so that's what i'm saying just gotta try and get as much information as you can learn as much as you

00:44:19.840 | can um so that you i i just want people to have a pragmatic view and an accurate view as they make

00:44:26.880 | decisions i i did a deep dive on on your favorite product chat gbt uh 300 version deep research and on

00:44:35.680 | the 24 members of the select committee for the ccp and i think all but four have never been to china

00:44:42.240 | all right and the ones that went it was seven years ago i just encourage them to go visit if they're

00:44:48.560 | going to sit there and have um such strong opinions it'd be good if they were educated i wouldn't want

00:44:54.400 | if you were putting together a committee inside of your corporation um that's going to be in charge of

00:44:59.600 | something wouldn't you want the most educated people on that committee i can already hear the criticism

00:45:05.520 | oh yeah um you know of course people would say well we don't expect the ceo of byd to tell you the truth

00:45:15.600 | necessarily about government subsidies or or things like that um but here's the one thing i want to get

00:45:21.600 | across in you know kind of this pragmatist camp we do have to be self-reflective right i mean if we have

00:45:30.320 | this if we have this view the only reason china's competitive or winning is because they're they're

00:45:36.480 | stealing or they're subsidized i think what that view does is it allows us to delude ourselves into

00:45:43.920 | believing we don't need to get better ourselves yeah like it's like if you're playing a competition

00:45:50.080 | and you know your your kids out there playing in a football game or a swimming race and they lose

00:45:55.680 | the race and they come back to you and they say well the only reason that person won was you know they

00:46:00.400 | cheated you know like your advice i think is no you've got to get better yourself we've got to get

00:46:06.240 | better how can we get better and i think that's why cultivating this balanced and realistic view of china

00:46:14.160 | what's actually happening on the ground how hard right folks are working what the level of innovation

00:46:20.560 | is the fact that the united states is is is a diminishing part of their trade of their gdp

00:46:26.480 | etc i think that should cause us to look a little bit inward about how the hell do we accelerate how do

00:46:34.160 | we build more how do we invest more how do we you know get more globally competitive why does it cost us

00:46:40.080 | four to five times to build a fission reactor in this country why are we building no nuclear reactors

00:46:45.120 | in this country and so the good news is this i feel like there's a lot of momentum under this

00:46:50.720 | administration that was building before this administration around investing in america

00:46:55.360 | getting more globally competitive right a lot of people want to build things here again you know and

00:47:01.120 | and and you got you have somebody like jensen huang who says both can be true we need to sell h20s and

00:47:07.440 | b30s into china we need to stay relevant in their ecosystem but at the same time we need to build

00:47:13.440 | plants in arizona and we need to rehabilitate and invest aggressively in our own domestic chip program

00:47:19.120 | those things can be simultaneously true um and it it's interesting that all of those ceos who spend the

00:47:27.040 | most time competing in china you know they all fall in that pragmatist realist camp

00:47:32.480 | um you know in the center about you know the united states needs to get serious about the work that it

00:47:39.200 | needs to do if it wants to remain globally competitive with that said bill can we shift for a second i want

00:47:44.880 | to i want to you know look at this through the lens of kind of just what's going on in ai

00:47:49.040 | you know um i know you spent a bunch of time over there looking at the key players on the model side on

00:47:55.520 | the you know thinking about the chip side etc um so maybe just round out that other conversation and

00:48:01.600 | then shift there yeah so so um one thing one thing to note that um that isn't in the dan wing book but i

00:48:10.480 | i think that we can infer from it the government every five years publishes this five-year plan

00:48:16.720 | the last one was the 14th and i think the next one will be coming out soon i would encourage everyone to

00:48:22.960 | read that because that's where they tell the provinces what's important to work on

00:48:28.160 | and that historically has led to these areas where they're investing heavily and they might make a

00:48:34.320 | mistake in what they say to focus on but when they've gotten it right it's led to a lot of global

00:48:39.840 | competitiveness so i would watch that but in the in the last one in the 14th they literally talked about

00:48:45.920 | open source um and so you know i i'll put a link in i found a document that covers all the history of

00:48:53.280 | chinese open source but it goes back 20 years this isn't an overnight thing um and our government

00:48:59.200 | recently said they were pro open source in this new ai executive order but but but this was kind of

00:49:04.960 | pushed out to the provinces and so two two things i would say about the ai market there first of all

00:49:11.920 | no one's particularly concerned about there being a monopolist because there's so many open models so

00:49:18.960 | there's in general i think from the entrepreneur's perspective um a more relaxed you know opinion

00:49:26.000 | because they can work on products and they can take in all these different models i think i think deep seek

00:49:32.320 | has the most kind of intellectual brand because of how that arrived and and and almost the the the

00:49:39.200 | national pride that came along with it um quinn um is a really important player mainly because

00:49:46.320 | uh alibaba leads in the cloud market over there they're about us you you may you and your team may

00:49:52.640 | know more of these stats than me brad but i think they're like a 70 player in the cloud market and so that

00:49:58.800 | just gives them a natural place to deliver models from that makes them important and then on the

00:50:03.920 | consumer side you know byte dance it seems to be the company to watch on anything consumer and they

00:50:10.640 | already have an app if someone said whose app is closest to open ais in china it's already an app from

00:50:17.280 | byte dance um that's out there people on the watch list people are very curious if 10 cents gonna do

00:50:23.600 | something you know obviously they wechat still extremely um important in china and so that's a

00:50:30.080 | great asset if they were to bring something but they haven't been particularly aggressive and then jami

00:50:35.120 | because of leijun everybody wonders what he might do and you know owning the phone and that big a

00:50:41.840 | market share might give you some advantages we've talked about that with the us players so that's kind

00:50:46.480 | of that's what i would say is the state of affairs over there on and when it comes to ai on the model

00:50:52.400 | layer um is it do you think there's an acknowledgement or a belief uh that they're basically they have the

00:51:02.640 | tools they have the chips you know with huawei etc to be competitive like is there a sense in china

00:51:08.800 | that you know quinco is going to be competitive with clod code um you know we know they're all open

00:51:14.960 | source do you think there is a sense that they all stay at the frontier like i had that since before i

00:51:20.960 | went just because of the number of competitive open source models and the way they can trade train each

00:51:26.880 | other you just have a much more natural environment to have this kind of hyper competition that we talked

00:51:33.840 | about in evs or solar like having that many open source providers gives you that i would say even

00:51:40.000 | maybe more because of the way the models can help one another at least in the ev case like you can't

00:51:46.800 | take someone else's ev and make yours better but here you can can we talk about that just open for a

00:51:52.000 | second let me double click on this you know obviously we saw open ai open source you know a model a few

00:51:59.360 | weeks back now we have comments this week out of elon uh they're they're getting back to more

00:52:05.120 | aggressively open sourcing um you've obviously got meta already uh uh you know with llama out there on

00:52:11.920 | the open source front and i saw you had a tweet yesterday maybe bill just on you were surprised that

00:52:18.240 | google had not taken a more aggressive position with respect to open sourcing gemini um do you think

00:52:24.560 | they will why do you think they haven't and why do you think it would be the right thing for them to do that

00:52:29.200 | well i i had some replies to that tweet to get into this but this goes back to where you started the

00:52:34.320 | podcast i don't think public companies understand or i don't think they've internalized um and and really

00:52:44.000 | come to terms with the fact that the private markets are willing to bet so aggressively on these new

00:52:50.400 | players and i you know we're talking about ai today but this could be true of any new disruption in

00:52:56.240 | the future when i was going through the the uber lift wars and you know we'd be in board meetings

00:53:01.680 | and look at these burn rates and all this money we're spending you talk about whether or not to

00:53:05.120 | raise another round and certainly thought about doing what sam did and trying to talk capital out of the

00:53:10.000 | market which never seems to work um but you get frustrated with that game and you want to you know but

00:53:17.840 | but you're dealing with business decisions that you would never see in another industry and so

00:53:24.000 | getting back to the question you asked you know i just don't know like if everything's at stake for

00:53:30.880 | google should they be willing to lose five or ten billion dollars because the startup that's attacking

00:53:36.960 | their space is willing to lose that amount of money and i think it's it's it's an ironic situation we're in

00:53:43.520 | where the private markets and the startups are willing to be more aggressive perhaps and more

00:53:49.280 | risk-seeking than the public incumbents are and i think you know our friend rich barton took a lot of

00:53:57.200 | heat at zillow when he when he chased opendoor but he was faced with a situation where a private company was

00:54:04.080 | claiming it was gonna out innovate him and disrupt his game and and some of wall street had come to believe

00:54:10.400 | that and so he engaged and he played that game on the field now that eventually turned out to not be

00:54:15.920 | true um and and maybe if he hadn't engaged competitively with opendoor maybe they wouldn't

00:54:22.080 | have have kind of tripped and fallen but but it was probably the right thing to do and i don't think a lot

00:54:27.600 | of public companies think that way now google historically when it came to aws open source kubernetes

00:54:34.240 | and went after him when it came to apple they open sourced android and certainly some of their their lower

00:54:39.600 | models are open sourced and competitive on open router but maybe they should be more aggressive

00:54:45.600 | even still because of what's at stake that was that was my point okay shifting back real quick and you

00:54:51.360 | know we'll round up here on china um you know the vc market in china we just rewind the clock you know not

00:54:59.920 | it was not that long ago bill um and you know there was a lot of us enthusiasm there were a lot of us

00:55:06.480 | firms investing directly in china um right from sequoia to ggv a lot of those firms either shut down or

00:55:14.960 | spun off their operations uh you know in china benchmark has taken a lot of you know heat for doing an

00:55:23.200 | investment manis that you know i've i've read benchmark explain really isn't even you know

00:55:29.200 | based in china what do you see you know when you were there do you see a lot of us investors actively

00:55:34.800 | investing on the venture side in china and then what is the chinese venture ecosystem look like so

00:55:40.960 | a couple different things so first of all um there's a real lack of westerners for all my trips this was

00:55:47.520 | the the fewest westerners that i've ever seen and the high-end hotels and the high-end restaurants were

00:55:53.680 | fairly empty um and i think that it just has to do with the thawing of the relationship um that's caused

00:56:01.040 | less travel from westerners um the vc market um is in a bit of a lull because when when these policies all

00:56:11.040 | changed and when you know the jack ma thing happened when dd got pulled back from the u.s markets when

00:56:18.960 | the for-profit education companies got taken out and when uh you know wechat went i mean tencent went

00:56:25.680 | flat for a couple years because of games reforms all those things um took a lot of air out of the system

00:56:32.960 | and caused a lot of people to reconsider and then you also had and i don't even know if this was more

00:56:38.560 | led by the u.s government or the china government you had the splitting of the venture capital firms

00:56:43.360 | sequoia split in half ggv split in half and and so there are much fewer western dollars available to

00:56:50.960 | invest in china and so you know there are a few firms that have stayed you know neil shin at hongshan

00:56:57.040 | had raised a ton of money right before all this happened he's very active has a huge staff of people

00:57:02.480 | um anafang and zen fun which is a angel group are very active and idg is highly present and has been

00:57:11.680 | active but that's only three firms you know and compared to where things were six years ago when

00:57:18.320 | every one of our um competitors in the venture industry were making an annual trip it's it's kind

00:57:24.480 | of night and day um and then there's not that many um r b dollars available to the venture market a lot of

00:57:32.880 | the you don't have the foundations in and university endowments that you do here and the billionaires

00:57:40.480 | that have made wealth typically are looking to diversify offshore and so you just don't have a lot of

00:57:47.600 | r b dollars seeking a home and now you have the provinces entering the investment space which is

00:57:54.240 | an uncomfortable reality for some of the vcs they're asked i hear they're asking for terms that you and

00:58:00.560 | i would consider um non-starters you know um and so that's it's all a little bit messy um it's funny

00:58:09.680 | because it's simultaneously with some of these markets evs uh autonomous uh robotics where they're where the

00:58:17.360 | country is doing extremely well so i found those things off a little bit and it's very everyone's

00:58:23.280 | very aware that if the government decides um your company is doing something that's not in the best

00:58:29.920 | interest of the uh citizenry that that's going to get corrected and so there's a phrase i don't know

00:58:35.760 | if it was in dan's book or i read somewhere else called don't be the tallest tree that's a problem for

00:58:42.240 | you yeah exactly um yeah is it in that regard do you think you know that's what i was i was wondering

00:58:52.720 | you know there seems to be a ton of entrepreneurial activity despite the fact that you know vcs have

00:59:00.960 | retreated that you have companies that are not going public and have been shut down you have entrepreneurs

00:59:06.560 | that have gone missing it doesn't really seem to have diminished you know the activity around uh

00:59:13.840 | you know around ai as we're talking about clearly or startups or entrepreneurism and in fact a lot of

00:59:19.760 | the locals heavily dispute that financial times graph that was going around about the number of startups

00:59:25.760 | they said it just mismeasured the whole thing and so no i i don't sense that there's any lack of

00:59:31.840 | enthusiasm from entrepreneurs and towns like shenzhen um where where dgi and byd and huawei are all

00:59:40.480 | located i mean that town is a new young 20 million people a highly energetic you know town with lots of

00:59:49.360 | stuff happening you know lots of stuff you said something to me um well before before we wrapped is

00:59:56.640 | there anything else anything else that we we didn't cover that you wanna you wanna hit on there's two

01:00:02.320 | there's two things i would hit on you know you talked about innovation one thing one thing that you

01:00:07.440 | notice very quickly as a westerner is no one takes credit cards yeah they used to like the last time i went

01:00:14.480 | but it's almost a hundred percent uh wechat pay and alipay and if you can't get those to work on your phone

01:00:22.240 | you're screwed man you can't pay for anything um what's what's the government's position on crypto

01:00:28.080 | i don't know the answer to that question okay i don't but but because they've been using these apps

01:00:34.800 | for so long um you've started to see incremental innovation around that so

01:00:39.760 | most restaurants you go to not to very high-end ones there's a qr code on your table that qr code not

01:00:46.800 | only represents the restaurant but it represents the table and you can order from that you can pay

01:00:52.240 | from that like like so if you are done eating and want to pay and leave you just scan and pay and go

01:00:57.920 | you walk right out and um you know we we're far away from that in the us that amount of of automation

01:01:05.280 | around payment um and it's just interesting and and that goes from you know the high-end hotel and

01:01:11.440 | restaurant will take wechat pay and the street vendor will take it right it's it's it's universal

01:01:17.680 | so that's one thing the other thing that i would just mention um very recently china announced something

01:01:24.560 | called the k visa and one of the um one of the things that's happened recently because of i'd say an

01:01:33.120 | increased um agitation between the two countries is there have been a number of very recent policies

01:01:40.880 | in america that are impacting skilled immigration especially at the university level and i did hear

01:01:48.880 | stories over there of groups of 50 or 100 phd students who had been admitted into a university and

01:01:56.000 | we're now being told they can't attend and you and i and everyone have talked about skilled immigration

01:02:02.560 | and how that's been kept flat in the u.s um and now you know at least with regard to china we're starting

01:02:09.920 | to put up blockers and on top of that you've seen these other charts where like 50 percent of the ai

01:02:16.720 | researchers in america are chinese and so that that's something that's super interesting to watch and

01:02:23.440 | this k visa thing which they've never done before says if you are studying um technology you know i

01:02:31.600 | don't know the exact rules you don't even have to have a job so this isn't like a in the u.s you need

01:02:36.480 | a you're welcome to come they're going to give you a visa so china's basically inviting everyone to come

01:02:42.720 | to their university systems from around the globe i don't know how successful they'll be i don't know if

01:02:48.000 | europeans will go there um but it's an interesting thing to see again it's just a reminder to me like

01:02:56.400 | i i continue to think that uh the u.s is in an incredible position on a global basis an incredible

01:03:03.200 | position vis-a-vis china but decisions matter and you know we talked about stapling a green card to every

01:03:10.000 | you know uh every diploma as uh you know the the president did as part of the the the presidential

01:03:17.040 | race um and certainly i think there's ample opportunity uh for upside to accelerate to attract

01:03:25.440 | to build in the u.s and i hope that one of the takeaways of this conversation the many conversations

01:03:32.880 | we ought to have and it's why i think being overly dogmatic leads us astray is we got to reflect on

01:03:38.960 | the things that we can be doing better to run a faster race ourselves right and i've heard you say

01:03:43.840 | this before you know the old quote from the godfather never hate your enemy enemies you know it clouds it

01:03:50.000 | affects your judgment yep and i think there's a lot of that going on in silicon valley and other places

01:03:55.440 | that um you know we're going to be a lot better off if we're very pragmatic about uh there's no slowing

01:04:03.200 | down in china they're going to be there in ai they're going to build chips at huawei they're going

01:04:08.160 | to build models at deep seek and the the way to beat them is not to you you know try to cut them off

01:04:14.880 | at the knees we don't need to make it easy on them but the united states needs to accelerate our race

01:04:20.320 | and i think by if we focus too much on how do we slow down china we take the eye off the ball on how

01:04:26.640 | to accelerate our own race so it's fun spending one of these just digging deep on a on a particular

01:04:32.000 | topic sounds like an incredible trip yeah and i would just echo what you said like like on especially

01:04:38.080 | just on learning like my my main point to anyone that's interested in this topic would be just make

01:04:44.960 | sure you have the exact right information as you then go to make decisions especially around policy

01:04:52.640 | um and you know talk read read what these uh global uh car ceos are telling you they've been over there

01:05:00.640 | they're seeing it with their own eyes they they don't they don't have a reason to be as candid as

01:05:05.440 | they're being necessarily but they are um and then read dan wang's book i think it's fabulous like

01:05:11.200 | tyler kyle said it might be one it might be the best book of the year it's very well written and

01:05:17.040 | and a joy to read and i would uh encourage everyone to go pick it up it's called breakneck i think it's

01:05:22.560 | out now today now you literally can go on chat gpt and just ask it you know uh what your favorite ceo

01:05:31.600 | you know what's jensen wang think about uh the level of competition in china what's tim cook think

01:05:36.880 | what's elon musk think um the reality is the people who spend the most time on the ground in china

01:05:42.880 | have the most respect for you know the innate uh you know capabilities and ongoing competition that

01:05:50.720 | we're going to see with china and you know and and i thought that dan had a really balanced view at the

01:05:57.120 | end which is you know we shouldn't go out of our way to make it really easy on china but at the same

01:06:02.560 | time we got to engage we got to be you know pragmatic we can't stick our head in the sand

01:06:08.400 | and we have to know that we got to reform ourselves we got to run a faster race ourselves bill it's great

01:06:13.520 | seeing you i'm glad we're kind of getting back in the swing of things and uh look forward to uh

01:06:18.560 | continuing the conversation as a reminder to everybody just our opinions not investment advice

China, China, China. Breaking Down China’s Tech Surge | BG2 w/ Bill Gurley and Brad Gerstner

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