The following is a conversation with Kai-fu Lee. He is the chairman and CEO of Sinovation Ventures, managing a $2 billion dual-currency investment fund with a focus on developing the next generation of Chinese high-tech companies. He's the former president of Google China and the founder of what is now called Microsoft Research Asia, an institute that trained many of the AI leaders in China, including CTOs and AI execs at Baidu, Tencent, Alibaba, Lenovo, and Huawei. He was named one of the 100 most influential people in the world by Time magazine. He's the author of seven bestselling books in Chinese and most recently the New York Times bestseller AI Superpowers: China, Silicon Valley, and the New World Order. He has unparalleled experience working across major tech companies and governments on AI applications, giving him a unique perspective on global innovation and the future of AI. This is the Artificial Intelligence Podcast. If you enjoy it, subscribe on YouTube and iTunes, support it on Patreon, or connect with me on Twitter at Lex Fridman. And now, here's my conversation with Kai-fu Lee.
I immigrated from Russia to the US when I was 13. You immigrated to the US at about the same age. The Russian people, the American people, the Chinese people each have a certain soul, a spirit that permeates throughout the generations.
So maybe it's a poetic question, but could you describe your sense of what defines the Chinese soul?
I think the Chinese soul of people today is shaped by centuries of burden due to poverty the country has gone through, and suddenly shining with hope of prosperity in the past 40 years as China opened up and embraced a market economy. There are two sets of pressures: tradition, facing difficult situations, and the hope of wanting to be the first to become successful and wealthy. That creates a very strong hunger, desire, and work ethic that drives China forward.
And is there something deeper, rooted in older generations, that's unique to China beyond the new economic developments?
Yeah. The Chinese tradition is about excellence, dedication, and results. Chinese education starts with memorizing 10,000 characters, then historic philosophers, literature, poetry. It's a strong rote learning mechanism that builds good memory but also suppresses breakthrough innovation while enhancing speed and execution. That characterizes the historic basis of China.
That's interesting. There are echoes of that in Russian education as well with rote memorization of poetry.
An emphasis on perfection in all forms.
That's not conducive to creativity. Do you think that kind of education holds back the innovative spirit you see in the United States?
It holds back the breakthrough innovative spirit seen in the US, but it does not hold back the valuable execution-oriented, result-oriented value-creating engines that make China very successful.
So is there a difference between a Chinese AI engineer today and an American AI engineer, rooted in culture or education? What advice would you give to each?
There's a lot that's similar. AI requires mastering sciences and tuning parameters. The American strength is trying new things and using technology to solve problems despite imperfect data. The Chinese approach enumerates through all possible ways, uses many machines, and spends resources cleaning data. The Chinese engineer relies on more data and cleansing, while the American thinks of new algorithms to overcome data issues.
Where do you think the biggest impact in the next 10 years lies? In breakthrough algorithms or in rigorous data cleaning at scale?
In a company delivering results with known techniques, enhancing data is more expedient, low risk, and likely to generate better results. That's why the Chinese approach has done well. But for challenging problems like autonomous vehicles and medical diagnosis, existing algorithms may not solve them, so the Chinese approach is more challenged, and breakthrough innovation has an edge.
Let me talk to that a bit more. My intuition is that data can take us extremely far. You brought up autonomous vehicles and medical diagnosis. So your intuition is that huge amounts of data might not solve those problems. Breaking that down, in autonomous vehicles, huge amounts of data probably will solve trucks on highways, which China will lead. But full L5 autonomy likely requires new technology.
Where they are full steam ahead into L5 autonomy, trying to solve it purely with data. So the same thing you're saying for highway, a lot of people share your intuition. Do you think it's possible for them to achieve success with just huge amounts of training on edge cases in urban environments?
They're trying to solve with data. Just to linger on that further, do you think it's possible?
I think it would be very hard. Tesla's approach is kind of a Chinese strength approach: gather all data and hope it overcomes problems. But in autonomous driving, many decisions aren't solved by aggregating data and feedback loops. There are things more akin to human thinking, and integrating expert systems with machine learning hasn't been demonstrated yet. Tesla also lacks lidar, which is a valuable source of input.
And how would those elements be integrated? There hasn't been much success integrating human intelligence with machine learning. The question is how much you can push a purely machine learning approach. Tesla also has the constraint of not using all sensors.
The advantage is capturing data no one has seen. In some cases, Chinese companies have accumulated data not seen in the West and delivered superior results. But speech and object recognition are suitable for deep learning and don't need the analytical planning elements.
And on speech recognition, your intuition is that machine learning approaches won't take us to a conversational system that can pass the Turing test, which is akin to driving. It needs something more than simple language understanding and generation.
Roughly right. Based on purely machine learning, it's hard to imagine leading to full conversational experience across arbitrary domains, which is akin to L5. I'm hesitant to use the word Turing test because the original definition was probably too easy. We probably already do that.
The spirit of the Turing test.
That's what I was referring to.
Of course. So you've had major leadership research positions at Apple, Microsoft, Google. Continuing on the discussion of culture, what is the culture of Silicon Valley in contrast to China, and the unique culture of each of these three companies?
In aggregate, Silicon Valley companies dream big, have visionary goals, believe technology will conquer all, and have a self-confidence that the world should use their products. That's exemplified by Steve Jobs' quote about not needing focus groups. But it also leads to a belief that companies shouldn't tread on each other's territory. The Chinese approach is to do whatever it takes to win, with a winner-take-all mentality. They are flexible, fast, and execution-oriented. Apple represents pleasing the user with design and brand. Microsoft represents a platform approach. Google is a value-oriented company with heart and soul, wanting to do great things for the world.
But I think the Chinese approach is do whatever it takes to win. It's a winner-take-all market. The market leader extracts all the value, and the system gets broader and broader. That develops a practical, ultra-ambitious, gladiatorial mentality. If it takes copying, they'll do it without infringing laws. The flexibility and speed have helped the Chinese approach. The Silicon Valley approach is challenged if Chinese entrepreneurs learn from the whole world while American entrepreneurs only look internally and write off China as a copycat.
Yes, and the second part about the three companies: Apple represents pleasing the user with design and brand. Microsoft represents a platform approach that builds giant products by efficiently delegating work. Google is a genuinely value-oriented company with a heart and soul that wants to do great things for the world.
The unique elements of the three companies perhaps.
Yeah, I think Apple represents pleasing the user, design, brand. Microsoft represents a platform approach. Google is value-oriented with heart and soul.
And the whole process of doing that is kind of a differentiation that competitors can't easily repeat. Are there elements of the Chinese approach in the way Microsoft assembled those pieces and dominated the market?
I think there are elements that are the same. The three American companies that have Chinese characteristics are Microsoft, Facebook, and Amazon. They tenaciously go after adjacent markets, build strong product offerings, and extract greater value from an ever-increasing sphere. Google is different; it's genuinely value-oriented.
If we look at Google, you mentioned heart and soul. There seems to be an element of making the world better. They had the slogan 'Don't be evil.' Facebook has a more negative tint in perception of privacy. Do you have a sense of how these companies can achieve heart and soul and trust?
It's really hard. The 'Don't be evil' mantra is dangerous because everyone's definition of evil is different. But watching Google's parent company Alphabet do things like healthcare and eradicating mosquitoes shows a heart and soul. But it's difficult to balance shareholder profit with doing good. You mentioned concern about too few companies controlling our data.
You've mentioned concern about a future where too few companies like Google, Facebook, Amazon control too much of our digital lives. Can you elaborate? Do you have a better way forward?
I think I'm hardly the most vocal complainer. Having a lot of data perpetuates their strength and limits competition. But AI is much broader than the internet space. Entrepreneurial opportunity still exists in using AI to empower finance, retail, manufacturing, education. I don't think it's full monopolistic dominance that stifles innovation. The best solution is to let the entrepreneurial VC ecosystem work well and find the next Google, next Facebook. China as an environment may be more interesting for emergence of mid-sized companies.
You've mentioned the fascinating world of entrepreneurship in China, the fearless nature of entrepreneurs. Can you talk about what it takes to be an entrepreneur in China, the strategies, the dynamic of VC funding, and how the government helps?
Many listeners would still brand Chinese entrepreneurs as copycats. 10 years ago, that wasn't inaccurate. An entrepreneur couldn't get funding without describing what product they were copying from the US. That was understandable because China had lower internet penetration and lacked indigenous experience. The lean startup methodology allowed copying as a starting point, then tweaking. Silicon Valley views that as not honorable, but it's not morally wrong. The Chinese approach has evolved: from copying to building better products, then innovating new products like mobile payment, TikTok, and Pinduoduo. The ecosystem is supported by VCs in a virtuous cycle. The government supports infrastructure like incubators and smart highways, and uses guiding funds that act as passive LPs, giving profit to GPS and other LPs.
Where let me put it this way: there's no such government-driven large-scale support of entrepreneurship in Russia, and probably the same is true in the US. How did the Chinese government arrive to be so supportive? How can we copy it?
