Book summary of AI Superpowers: China, Silicon Valley, and the New World Order by Kai-Fu Lee
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In “AI Superpowers,” author Kai-Fu Lee explains why he thinks China will be the next tech innovator, thanks to a confluence of factors.
The U.S. currently hold’s the title as world leader in AI, but Lee says it is already slipping behind its competitors. This is largely because it is going through some of the same growing pains that slowed Japan and South Korea in their paths to becoming tech powerhouses.
Meanwhile, Lee is confident about China’s chances in the AI race, despite the U.S.’ present lead. He believes Chinese AI firms are well-positioned, driven by its wealth of data. The more data a system has, the better it will function. Moreover, the central government is aiming to make China an AI superpower. As a result, the U.S.’ lead in the elite AI race appears less significant than previously thought.
Lee also disproves the widely held idea that Chinese entrepreneurs lack originality. On the contrary, he believes China’s entrepreneurs are more innovative. In fact, he argues Western entrepreneurs have been less willing to take risks since the 2008 financial crisis.
Lee also explores the negative aspects of AI and its potential to harm humanity. He points out there is no guarantee an AI system will work as intended, especially when it comes to weapon technology. Lee also warnds the possibility for governments and companies to use technologies in unethical ways.
Below we compiled the key ideas presented in the book.
Kai-Fu Lee’s Perspective
Kai-Fu Lee is a prominent computer scientist who worked at Apple, Microsoft, and Google. He then founded Sinovation Ventures, a fund management firm focusing on China Internet businesses.
Lee was born in Taiwan to Chinese parents. Born in Taiwan, he emigrated to and studied in America. He earned a PhD in Computer Science from Columbia and Carnegie Mellon.
When he was CEO of Google, between 2005 and 2009, the American corporation had a brief success in China. Its market share rose from 9% to 24%.
He left in September 2009 to found Sinovation Ventures. A few months later, Google closed its China headquarters. Lee feels that if only Google had stayed focused on the Chinese market, it could have gotten its own piece of the pie.
Lee, a researcher and a practitioner, offers a unique perspective on the AI revolution. As a corporate executive, he mused on the two tech giant forces of the 21st century.
StoryShot #1: China Is Well Positioned For AI’s Deployment Era
According to Lee, we’ve passed the discovery phase of AI and are now in the implementation phase. He believes China has an advantage in execution.
US’ cutting-edge AI researchers no longer produce substantial AI gains. It’s now about applying prior study findings to businesses and sectors.
Lee argues China has everything it needs to become a global leader in AI. It has an unwavering entrepreneurial spirit and government regulations that encourage innovation. It also has a pool of highly qualified AI researchers and more data than any other country.
He says it’s increasingly harder for Silicon Valley to maintain its lead. China now has access to vastly greater amounts of finance, data, and people resources. It has surpassed the West in terms of internet use and online payments.
The Asian country now also dominates other aspects of digital infrastructure. In China, the online and offline worlds are intertwined. This creates opportunities and services that seem science fiction to many.
StoryShot #2 China’s Data Advantage Will Be Crucial In AI
Successful AI algorithms need a lot of data, computers, and skilled AI developers. Yet, having more data becomes critical once you have a sufficient number of engineers. It becomes even more crucial when you have more capacity at your disposal. In short, you gain by having more data. And China has an abundance of data, particularly on the consumer side.
Digital china and the consumer side are what matter most. Digital China’s business sector is underdeveloped and progresses at a glacial pace. In contrast, on the consumer side (Alibaba and Tencent), things move quickly and there is a lot of data.
Currently, China possesses more data than the US. Yet, the quality of the data is also better than ever before. Chinese consumers are increasingly using their mobile phones through WeChat to pay for real-world items. This includes food delivery, massages, bicycling, bus tickets, and pretty much anything else.
Knowing that most Chinese people use mobile phones instead of PCs explains the WeChat phenomenon. So WeChat has evolved into a mobile app that can accomplish everything a computer can do.
Mobile payments create data on what customers buy and consume, where they are, and how they get there. Likes, clicks, and video views on the internet are nothing compared to real-world data.
StoryShot #3: China’s Greatest AI Weapon Is The Entrepreneurial Spirit Of The Chinese People
The size of China’s markets is not what makes the country unique. It’s the ruthless competition that breeds battle-tested businesses.
Many times, Dr. Lee mentions the tenacious spirit of China’s businesspeople. They have “keen instincts for developing successful companies.” In this sense, he says that Silicon Valley is lagging behind its rivals across the Pacific.
Due to intense competition in China’s market, U.S. firms have had to improve their game. Chinese tech firms are more anchored and operational than mission-driven Silicon Valley startups. They are founded by people who actually care about fixing a problem. A greater grasp of market demands and competitors also has benefited them.
As a reminder, China’s digital giants Alibaba, Tencent, and Didi are now the market leaders. They defeated tens or perhaps hundreds of competitors. Moreover, they excel not just in competitions but also in coding. They can also navigate murky markets and recognize and counteract dishonest methods.
StoryShot #4: An Example Of Digital China Can Be Found In Meituan Discount Business
China began replicating Silicon Valley items at the turn of the millennium. As a result, many in the West discounted China’s potential as a rival. Skeptics, on the other hand, missed the point. Lee argues Chinese businesses were actually mimicking their American counterparts to make world-class items.
Wang Xing’s cloned Friendster, Facebook, Twitter, and Groupon sites stand out. Because of his perseverance, Wang not only learned how to create seamless goods. He also learned to compete in the competitive Chinese market. His Meituan discount business was poised to take on Groupon when he shifted his attention to it.
As Dr. Lee puts it, Meituan won over a thousand Groupon-like businesses when it comes to group buying and food delivery services.
When the battle among discount businesses began, the focus was on having to raise the most funds. It required outlasting your competition in venture capital-funded battles. In essence, there was a sea of imitators, and the strategy was to raise money to get new customers. Then the company with the most market share would be able to raise the most money. It was also important to keep customers happy and build long-term ties.
After then, they grew quickly, reorganized and deepened their primary business. This was done by increasing data and stickiness with customers. During the “money wars” second phase, Meituan rapidly expanded into new businesses. That includes bike-sharing, dining reservations, and hotel bookings.
StoryShot #5: AI Arrival Comes In Four Waves
Kai-Fu Lee examines in the book the driving forces behind AI and the route he thinks AI revolution will take. He describes four waves of AI arrival and which country dominated.
Internet AI has most likely reached everyone in the world at this point. Amazon and Google enhancing the customer experience through their access to vast quantities of data is a good example of this. Using the algorithms that collect data from the services they provide, they are able to identify trends in user’s activity. As such, they create customized content for each user based on their interests and preferences. Most of the time, it is a result of user engagement.
In this first wave, China and the U.S. are tied on a national scale. However, China market has more web users than the U.S. and Europed combined which Lee says is a good news for China’s future dominance. Moreover, the country already has a mobile-first infrastructure that facilitates the creation of of financially viable digital apps.
During the second wave “Business AI,” conventional enterprises used historical data to produce immense leverage. The book, for example, features how Chinese financial services company Smart Finance used an AI-powered software in issuing millions of micro-loans. At this stage, Lee also states how AI was used by hospitals to archive diagnoses and read imaging data from scans.
The U.S., according to Lee, dominated the Business AI with 90-10 advantage over China. Yet he argues that this is no surprise considering that China’s mobile expenditure dwarfs that of the U.S. Lee expects that China will make up some distance at 70-30 in the next five years, thanks to the use of AI in public services. He also sees China dominating in some industries where legacy systems remain in use.
During this wave, AI moved into the sensor ecosystem, paving the way for online-merge-offline technologies.
AI Superpowers Quotes
“China’s startup culture is the yin to Silicon Valley’s yang: instead of being mission-driven, Chinese companies are first and foremost market-driven.”
“Of the hundreds of companies pouring resources into AI research, let’s return to the seven that have emerged as the new giants of corporate AI research—Google, Facebook, Amazon, Microsoft, Baidu, Alibaba, and Tencent.”
― Kai-Fu Lee #aisuperpowers
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“In stark contrast, China’s startup culture is the yin to Silicon Valley’s yang: instead of being mission-driven, Chinese companies are first and foremost market-driven. Their ultimate goal is to make money, and they’re willing to create any product, adopt any model, or go into any business that will accomplish that objective. That mentality leads to incredible flexibility in business models and execution, a perfect distillation of the “lean startup” model often praised in Silicon Valley. It doesn’t matter where an idea came from or who came up with it. All that matters is whether you can execute it to make a financial profit. The core motivation for China’s market-driven entrepreneurs is not fame, glory, or changing the world. Those things are all nice side benefits, but the grand prize is getting rich, and it doesn’t matter how you get there.”
“In deep learning, there’s no data like more data. The more examples of a given phenomenon a network is exposed to, the more accurately it can pick out patterns and identify things in the real world.”
“AI ever allows us to truly understand ourselves, it will not be because these algorithms captured the mechanical essence of the human mind. It will be because they liberated us to forget about optimizations and to instead focus on what truly makes us human: loving and being loved.”
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