I was invited for a panel on cross-border A.I. along with Lu Gang, Founder of Techcrunch China and Sophie Yao at Fenox Ventures. We discussed many topics, including how over-valued A.I companies have been due to the hype of the space. It quite predictable to see all of us agreed that investors need to very cautious in investing in today’s AI companies.
However, it’s worthwhile to point out that we are at a unique time and space where A.I. is packaged just right for its commercial applications. And the packaging is everything.
Mobile internet was talked about and being invested in as early as the late 90’s but none was viable until the wireless speed caught up and the iPhone showed up in the late 2000s. Similarly, A.I. is not a new thing. It was talked about roughly 40 years ago as an academic topic. But not until decades later when a) data accumulated to a high volume for A.I. training and b) cloud/ AI computing advanced further, it is now possible to have A.I. “package ready.” Ready to be efficient, accurate and invisible for the main applications.
I often say that the startup ecosystems in China and the US are very much like Yin and Yan. They are parts of the global innovation hub but they provide different flavors. It’s the same with A.I. innovations.
The US’s A.I. companies often come from top universities such as M.I.T, CMU, Stanford and Berkeley. We have seen some incredible innovations coming from these campuses/ labs. These companies are backed by well-known VCs, doing frontier A.I. researches and related breakthrough tech.
On the other side of the world, China’s A.I. companies are good at figuring out business applications for A.I tech. Look at SenseTime (TCL Capital is an investor), Face++ and Bytedance — all three companies utilize AI in true commercial use cases and gain business traction because of it. More importantly, China, being a huge market it is, seems to be more willing and quicker to adopt newer tech and bring it to scale. Another factor is the speed to gain data cost-effectively and at scale. Due to regulation and culture differences, China’s A.I. companies seem to have a leg up here too.
China is in at a unique crossroad of the history in that — on one side, China still craves for top talents and deep researches to fuel such tech needs; on the other side, China is experiencing a societal upgrade where the economy is shifting from labor-heavy production economy to a high-tech economy.
As cross-border investors, we are at a very unique timing in the global tech evolution. The US and Silicon Valley will continue to be the center of gravity of tech innovation, as it always has been. However, just perhaps, the next Google and Facebook will be more global, more AI-driven, and may be created in China. YC made its bet in China by convincing Lu Qi to found and run YC China. I think that’s a brilliant move.
The optimistic side of me is very intrigued to see how the next iconic A.I. companies are founded in this new era global economy. That will be the topic of the next post…