Lex Fridman PodcastKai-Fu Lee: AI Superpowers - China and Silicon Valley | Lex Fridman Podcast #27
EVERY SPOKEN WORD
130 min read · 25,751 words- 0:00 – 15:00
The following is a…
- LFLex Fridman
The following is a conversation with Kai-Fu Lee. He's the chairman and CEO of Sinovation Ventures that manages 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 artificial intelligence leaders in China, including CTOs or 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 best-selling books in Chinese, and most recently, the New York Times best-seller called AI Superpowers: China, Silicon Valley, and the New World Order. He has unparalleled experience in working across major tech companies and governments on applications of AI, and so he has a unique perspective on global innovation and the future of AI that I think is important to listen to and think about. This is the Artificial Intelligence podcast. If you enjoy it, subscribe on YouTube and iTunes, support it on Patreon, or simply connect with me on Twitter @lexfridman. And now, here's my conversation with Kai-Fu Lee. I immigrated from Russia to US when I was 13. You immigrated to 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.
- KLKai-Fu Lee
Mm-hmm.
- LFLex Fridman
So maybe it's a little bit of a poetic question, but could you, uh, describe your sense of what defines the Chinese soul?
- KLKai-Fu Lee
I think the Chinese soul of people today, right, we're talking about, people who have had, um, centuries of burden because of the poverty that the country has gone through, and suddenly shined with hope of prosperity in the past 40 years as China opened up and embraced market economy. And, um, undoubtedly, there are two sets of pressures on the people, that of the tradition, um, that of, um, facing, uh, difficult situations, and that of hope of wanting to be the first to become successful and wealthy, so that, that's a very strong, uh, hunger and a strong desire and strong work ethic that drives China forward.
- LFLex Fridman
And is there roots to not just this generation but before, that's- that's deeper than just the new economic developments? Is there something that's unique to China that you could speak to that's in the people?
- KLKai-Fu Lee
Yeah. Well, the Chinese, um, tradition is about excellence, dedication, and results, and the Chinese exams and, uh, study subjects in schools have traditionally, uh, started from memorizing 10,000 characters. Not an easy task to start with. And further by memorizing his- historic, um, philosophers, literature, poetry. So it really is the- probably the strongest rote learning mechanism created to make sure people had good memory and remembered things extremely well. Um, that, I think at the same time, uh, suppresses the breakthrough innovation, um, and also enhances the speed execution, get results, and that, I think characterizes the historic basis of, uh, China.
- LFLex Fridman
That's interesting 'cause there's echoes of that in Russian education as well is rote memorization.
- KLKai-Fu Lee
Mm-hmm.
- LFLex Fridman
So you have to memorize a lot of poet- I mean there's-
- KLKai-Fu Lee
Mm-hmm.
- LFLex Fridman
... just the- an emphasis on perfection in all forms.
- KLKai-Fu Lee
Mm-hmm.
- LFLex Fridman
That's not conducive to perhaps what you're speaking to which is creativity. But you- y- and you think that kind of education holds back the innovative spirit that you might see in the United States?
- KLKai-Fu Lee
Well, it holds back the breakthrough innovative spirit that we see in the United States, but it does hold back the valuable execution-oriented, result-oriented, uh, value creating engines which we see China being very successful.
- LFLex Fridman
So is there a difference between a Chinese AI engineer today and an American AI engineer, perhaps rooted in the culture that we just talked about, or the education, or the very soul of the people? Or no? And what would your advice be to each if there's a difference?
- KLKai-Fu Lee
Well, there's a lot that's similar because AI is about, um, mastering sciences, about using known technologies and trying new things, but it's also about, um, picking from many parts of possible networks to use and different types of parameters to tune, and that part is somewhat rote, and it is also, as anyone who's built AI products can tell you, a lot about cleansing the data, because AI runs better with more data, and data is generally, um, unstructured, error- er- error-full and, um, uh, unclean, and the effort to clean the data is- is immense. So I think the better part of American engineering- AI engineering process is, uh, to try new things, to do things people haven't done before, and, um, to use technology to solve most if not all problems. Um, so to make the algorithm work despite not so great data, find, you know, error-tolerant ways to deal with the data. The Chinese way would be to, um, basically enumerate to the fullest extent all the possible ways by a lot of machines, try lots of different ways to get it to work, and, um, spend a lot of resources and money and time cleaning up data. That mean- that means the AI engineer may be writing data cleansing algorithms working with-... thousands of people who label or correct or, uh, do things with the data. That is the incredible hard work that might lead to better results. So the Chinese engineer would rely on and ask for more and more and more data, and find ways to cleanse them and make them work in the system, and probably less time thinking about new algorithms that can overcome data or other issues.
- LFLex Fridman
So where's your intuition? Where do you think the biggest impact in the next 10 years lies? Is it in some breakthrough algorithms, or is it in just this s- at scale rigor-
- KLKai-Fu Lee
(clears throat)
- LFLex Fridman
... a rigorous approach to data, cleaning data, organizing data unto the same algorithms? What do you think the big impact in the applied world is?
- KLKai-Fu Lee
Well, if you're really in the company and you have to deliver results, using known techniques and enhancing data seems like the more expedient approach that's very, uh, low risk and, uh, likely to generate better and better results. And that's why the Chinese approach has done quite well. Now, there are a lot of more challenging startups and problems, such as autonomous vehicles, medical diagnosis, that existing algorithms may- probably won't solve. Um, and that would put the Chinese approach more challenged, and give the more breakthrough innovation approach, um, more- more- more of an edge on those kinds of problems.
- LFLex Fridman
So let me, uh, talk to that a little more. So, you know, my intuition, personally-
- KLKai-Fu Lee
Mm-hmm.
- LFLex Fridman
... is, uh, that data can take us extremely far. Uh, so you brought up autonomous vehicles and medical diagnosis. So your intuition is that huge amounts of data might not be able to completely help us solve that problem?
- KLKai-Fu Lee
Right. So breaking that down further, in autonomous vehicle, I think huge amounts of data probably will solve trucks driving on highways, which will deliver significant value, and China will probably lead in that. Um, and, um, full L5 autonomous is likely to require new technologies we don't yet know, and that might require academia and great industrial research both innovating and working together. And in that case, US has an advantage.
- LFLex Fridman
So the interesting question, uh, there is... I don't know if you're familiar on the autonomous vehicle space and the developments with Tesla and Elon Musk-
- KLKai-Fu Lee
I am.
- LFLex Fridman
... where they are in fact, uh, full steam ahead-
- KLKai-Fu Lee
Mm-hmm.
- LFLex Fridman
... into this mysterious complex world of full autonomy, L5, L4, L5, and they're trying to solve that purely with data. So the same kind of thing that you're saying is just for highway, which is what a lot of people share your intuition-
- KLKai-Fu Lee
Yeah.
- 15:00 – 30:00
Mm-hmm. …
- KLKai-Fu Lee
gets broader and broader. So, it's amazing ambition for, uh, success and, uh, domination of increasingly larger product categories leading to, um, clear market winner status and the opportunity to extract tremendous value, and that develops a practical result-oriented, ultra ambitious winner take all gladiatorial mentality. And, um, if what it takes is to build what their competitors built, essentially a copycat, that can be done-
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
... without infringing laws.
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
If what it takes is to satisfy a foreign co- a foreign country's need by forking the code base and building something that looks really ugly and different, they'll do it. So, it's contrasted very sharply with the Silicon Valley approach, and I think the flexibility and the speed and execution has helped the Chinese approach. And I think the Silicon Valley approach, um, is potentially challenged if every Chinese entrepreneur is learning from the whole world, US and China, and the American entrepreneurs only look internally and write off China as a copycat. And the second part of your question about the three companies.
- LFLex Fridman
The unique elements of the three companies, perhaps.
- KLKai-Fu Lee
Yeah. I think Apple represents wow the user, please the user, and, um, the essence of design and brand and, um, it's the one company and perhaps the only tech company that draws people with a s- a, um, s- strong serious desire for the product-
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
... and the ne- and the willingness to pay a premium because of the halo effect of the brand, which came from the attention to detail and great respect for user needs. Microsoft represents a platform approach that builds giant products-
- LFLex Fridman
Mm.
- KLKai-Fu Lee
... that become very strong moats that others can't do because it's well-architected at the bottom level and the work is efficiently delegated to individuals and then the, the, the whole product is built by adding small parts that sum together. So, it's probably the most, um, effective high-tech assembly line-
- LFLex Fridman
Hmm.
- KLKai-Fu Lee
... that builds a very difficult product that... and the whole process of doing that is kind of a, um, um, differentiation and something competitors can't easily repeat.
- LFLex Fridman
Are there elements to the, of the Chinese approach in the way Microsoft went about assembling those little pieces and dominating the m- uh, essentially dominating the market for a long time? Or do you see those as distinct?
- KLKai-Fu Lee
I think there are elements that are the same. I think the three American companies that had or have Chinese characteristics-
- LFLex Fridman
Mm.
- KLKai-Fu Lee
... and obviously as well as American characteristics, are Microsoft, Facebook, and Amazon.
- LFLex Fridman
Yes, that's right, Amazon, yes.
- KLKai-Fu Lee
Because these are companies that will, um, uh, tenaciously go after adjacent markets, build up strong, um, product offering, and, and find ways to, uh-... to extract greater value from a, uh, sphere that's ever increasing. And, uh, they understand the value of the platforms, so that's the similarity. And then with Google, I think it's a, uh, genuinely value-oriented company that does have a heart and soul, and that wants to do great things for the world e- by connecting information, and that has, um, uh, also very strong technology genes and, um, wants to use t- technology and has found, uh, out of the box ways to use technology to deliver inc- incredible value to the, uh, end user.
- LFLex Fridman
If we can look at Google, for example, you mentioned heart and soul, uh, there seems to be an element where Google is after making the world better. There's a more positive view, I mean-
- KLKai-Fu Lee
Yeah.
- LFLex Fridman
... they used to have the slogan, "Don't be evil."
- KLKai-Fu Lee
Yeah.
- LFLex Fridman
And, uh, and Facebook a little bit more has a negative tint to it, at least in the perception of privacy and so on.
- KLKai-Fu Lee
Mm-hmm.
- LFLex Fridman
Do you have a sense of, um, how these different companies can achieve? Because you've talked about how much we can make the world better in all these kinds of ways with AI, what is it about a company that can make... give it a heart and soul, uh, gain the trust of the public, and just, actually just not be evil and do good for the world?
- KLKai-Fu Lee
It's really hard and I think Google has, uh, struggled with that. Um, first the don't do evil, um, mantra is very dangerous because every employee's definition of evil is different.
- LFLex Fridman
Right.
- KLKai-Fu Lee
And that has led to some difficult employee situations for them, so I don't necessarily think that's a good, um, value statement. But just watching the kinds of things Google or its parent company Alphabet does, uh, in new areas like healthcare, like, you know, eradicating mosquitoes, (laughs) things that are really not in the business of a internet tech company-
- LFLex Fridman
(laughs)
- 30:00 – 45:00
Mm-hmm. …
- KLKai-Fu Lee
ride-sharing, Mobike. These are all Chinese, um, innovated products that now are being copied elsewhere. So, and an int- and an additional interesting observation is some of these products are built on unique Chinese demographics-
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
... which may not work in the US, but may work very well in Southeast Asia, Africa, and other developing worlds that are a few years behind China. And a few of these products maybe are universal and are getting traction even in the United States, such as TikTok. So, this whole ecosystem is supported by VCs-
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
... as a virtuous cycle, because a large market with, with, uh, innovative entrepreneurs will draw a lot of money and then invest in these companies. As the market gets larger and larger, US mark- China market is easily three, four times larger than the US, um, they will create greater value and greater returns for the VCs, thereby raising even more money. Um, so at Sinovation Ventures, our first fund was 15 million. Our last fund was 500 million. So the, it reflects, uh, the valuation of the companies, and our, us going multi-stage and things like that. It also has government support, uh, but not in the way most Americans would think of it. The government actually leaves the entrepreneurial space as a private enterprise, sort of self-regulating, and the government would build infrastructures that would, um, around it to make it work better. For example, the Mass Entrepreneur, Mass Innovation Plan, uh, built 8,000 incubators. So the pipeline is very strong (laughs) to the VCs. Uh, for autonomous vehicles, the Chinese government is building-
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
... uh, smart highways with sensors, smart cities that separate pedestrians from cars that may allow initially an inferior autonomous vehicle company to launch a car without increasing... with lower casualty, uh, because the roads or the city is, uh, is smart. And the Chinese government at local levels would have these guiding funds acting as LPs, passive LPs to funds, and when the fund makes money, part of the money made is given back to the GPs and potentially other LPs to ret-, increase everybody's return at the expense of the government's return. So that's, uh, interesting incentive that entrusts the task of choosing entrepreneurs to VCs who are better at it than the government by letting some of the profit, uh, move that way.
- LFLex Fridman
So this is really fascinating, right? So I, I look at the Russian government as a case study-
- KLKai-Fu Lee
Mm-hmm.
- LFLex Fridman
... where, let me put it this way, there's no such government-driven large scale support of entrepreneurship, and probably the same is true in the United States, but the entrepreneurs themselves kind of, uh, find a way.
- KLKai-Fu Lee
Yeah.
- LFLex Fridman
So, uh, maybe in a form of advice or explanation, how did the Chinese government, uh, arrive to be this way, so supportive on entrepreneurship to be in this particular way so forward-thinking at such a large scale? And also perhaps how can we copy it in other countries-
- KLKai-Fu Lee
Yeah.
- LFLex Fridman
... uh, that c- how can we encourage other governments-
- KLKai-Fu Lee
Yeah.
- LFLex Fridman
... like even the United States government to support infrastructure for autonomous vehicles in that same kind of way, perhaps?
- KLKai-Fu Lee
Yes. So these, um, techniques are the result of several key things, some of which may be learnable, some of which may be very hard.
- LFLex Fridman
(laughs)
- KLKai-Fu Lee
Uh, one is just trial and error and watching what everyone else is doing. I think it's important to be humble and not feel like you know all the answers. The guiding funds idea came from Singapore, which came from Israel, and China made a few tweaks and, um, turned it into a, uh... Because the Chinese cities and government officials kind of compete with each other-
- LFLex Fridman
Mm.
- KLKai-Fu Lee
... 'cause they all want to make their city more successful so they can get the next level, um, in their care- you know, polit- in their political career.
- LFLex Fridman
That's right.
- KLKai-Fu Lee
And, um, it's somewhat competitive, so the central government made it a bit of a competition. Everybody has a budget. They can put it on AI or they can put it on bio or they can put it on energy, and then whoever gets the results, the city shines, the people are better off, the mayor gets a promotion. So the tools, this is kind of almost like an entrepreneurial environment for s- uh, local governments to see who can do a better job, and also, uh, many of them try different experiments. Uh, some have given award to very smart, um, uh, researchers, just give them money and hope they'll start a company. Some have given money to academic, um, uh, research labs, maybe government research labs, to see if they can spin off some companies-
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
... from the science lab or something like that. Uh, some have tried to recruit overseas Chinese to come back and start companies, and they've had mixed results. The one that worked the best was the guiding funds.
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
So it's almost like a lean startup idea (laughs) where people try different things and what works sticks and everybody copies.
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
So now every city has a guiding fund. So that's how that came about. Uh, the autonomous vehicle, uh, and the massive spending in highways and smart cities, that's a Chinese way. It's about building infrastructure, uh, to facilitate. It's a clear division of the government's responsibility from the, uh, market. The market should do everything, uh, in a private, uh, free way, but there are things the market can't afford to do, like infrastructure. So the government, um, always, um, appropriates large amounts of money for infrastructure building. This happened, um, happens with not only, uh, autonomous vehicle and AI, but happened with the, uh, 3G and 4G. Uh, you'll find that the Chinese, uh, uh, uh, wireless, uh, reception is better than the US because massive spending that tries to cover the whole country. Uh, whereas in the US it may be a little spotty. Um, it's a government driven because I think they view the, uh, coverage of s- of, um, of, uh, cell access and 3G, 4G access to be a governmental infrastructure spending.... uh, as opposed to, as opposed to capitalistic. So that's, of course they're state-owned enterprises also publicly traded, but they also carry a government responsibility to deliver infrastructure to all. So it's a different way of thinking that may be very hard to inject into Western countries, to say, "Starting tomorrow, bandwidth infrastructure and highways are gonna be, um, governmental spending, uh, with some characteristics."
- LFLex Fridman
What's your sense, and sorry to interrupt but, uh-
- 45:00 – 1:00:00
Yes, I am. …
- LFLex Fridman
jobs that are in danger and the gradual loss of jobs, uh, I'm not sure if you're familiar with Andrew Yang?
- KLKai-Fu Lee
Yes, I am.
- LFLex Fridman
Uh, so there's a candidate for President of the United States whose platform, Andrew Yang, is based, uh, around- in part around job loss due to automation, and also in addition, the need perhaps of universal basic income to support, uh, jobs that our, uh, folks who lose their job due to automation, and so on, and in general support people under complex, unstable job market. So what are your thoughts about his concerns, him as a candidate, his ideas in general?
- KLKai-Fu Lee
I think his thinking is generally in the right direction... but his, uh, approach as a presidential candidate may be a little bit ahead of the time.
- LFLex Fridman
Mm.
- KLKai-Fu Lee
Um, I think the displacements will happen, um, but will they happen soon enough for people to agree to vote for him? Uh, the unemployment nu- numbers are not very high yet, and I think, you know, he and I have the same challenge. If I want to, uh, theoretically convince people this is an issue, and he wants to become the president, um, people have to see, um, how can this be the case when unemployment numbers are low, so that is the challenge. And I think, um, I think we do- I do agree with him on the displacement issue. Uh, on universal basic income, um, at- at a very vanilla level, I don't agree with it because I think the main issue is retraining. So people need to be incented, uh, not by just giving a monthly $2,000 check or $1,000 check and do whatever they want because they don't have the knowhow to know what to retrain to go into what, um, type of a job, and guidance is needed. And retraining is needed because historically in technology revolutions when routine jobs were displaced, new routine jobs came up-
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
... so they- there was always room for that. But with AI and automation, the whole point is replacing all routine jobs eventually so there will be fewer and fewer routine jobs. And, and AI will create jobs but it won't create routine jobs because if it creates routine jobs, why wouldn't AI just do it? So therefore, the people who are losing the jobs are losing routine jobs. The jobs that are becoming available are non-routine jobs, so the social stipend needs to be put in place is for the routine workers who lost their jobs to be retrained maybe in six months, maybe in three years, uh, it takes a while to retrain on a non-routine job, and then take on a job that will last for that person's lifetime. Now, uh, having said that, if you look deeply into Andrew's document, he does cater for that, so I'm not-
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
... um, disagreeing with, uh, where- what he's trying to do, but for simplification sometimes-
- LFLex Fridman
Yeah.
- KLKai-Fu Lee
... he just says UBI, but simple UBI wouldn't work.
- LFLex Fridman
And I think you've- you've mentioned elsewhere that, I mean, the goal isn't necessarily to give people enough money to survive, or live, or even to prosper. The point is to, uh, give them a job that gives them meaning, that meaning is extremely important, uh-
- KLKai-Fu Lee
Yes.
- LFLex Fridman
... uh, that our employment, at least in the United States and perhaps it carries across the world, provides something that's, forgive me for saying, greater than money. It provides meaning. So now, what kind of jobs do you think can't be automated? You talk a little bit about creativity and compassion in your book. What aspects do you think it's difficult to automate for an AI system?
- KLKai-Fu Lee
Because an AI system is, um, currently merely optimizing. It's not able to reason, plan, or think creatively or strategically, it's not able to deal with complex problems, it can't come up with a new problem and solve it. A human needs to find the problem and, uh, pose it as an optimization problem, then have the AI work at it. So an AI would have a very hard time discovering a new drug, or discovering a new style of painting, or dealing with complex tasks that... such as managing a company, that isn't just about optimizing the bottom line, but also about employee satisfaction, c- corporate brand, and many, many other things. So, that is one category of things. And because these things are challenging, creative, complex, doing them creates a higher- high degree of satisfaction, and therefore appealing to our desire for working, which isn't just to make the money, make the ends meet, but also that we've accomplished something that others maybe can't do or can do as well. Um, another type of job that is much numerous would be compassionate jobs, jobs that require compassion, empathy, human touch, human trust. AI can't do that because AI is cold, calculating. And, um, even if it can fake that to some extent, um, it will make errors and that will make it look very silly. And also, I think even if AI did okay, people would want to interact with a peop- another person, whether it's for some kind of a service, or a teacher, or a doctor, or a concierge, or a masseuse, or a bartender. Uh, there are so many jobs where people just don't want to interact with a cold robot or software. Um, I've had an entrepreneur who built an elderly care robot, and they found that the elderly really only used it for customer service.
- LFLex Fridman
(laughs)
- KLKai-Fu Lee
And not... but not to service the product, but they click on v- customer service and the video of a person comes up, and then the person says, "Uh, h- how come my daughter didn't call me?"
- LFLex Fridman
(laughs)
- KLKai-Fu Lee
"Let me show you a picture of her grandkids." So, people yearn for that people-to-people interaction.
- LFLex Fridman
Yeah.
- KLKai-Fu Lee
So, even if robots improved, people just don't want it. And those jobs are going to be increasing because AI will create a lot of value, $16 trillion to the world in the next 11 years according to PwC, and that will give people money to enjoy ser- services, whether it's, um, eating a gourmet meal, or tourism and traveling, or having concierge services. The, the services revolving around, you know, every dollar of that $16 trillion will be tremendous. It will create more opportunities that are to, to service the people who did well through AI, um, with, with, with things. But even... at the same time, the entire society is, uh, very much short in need of many service-oriented, compassionate-oriented jobs. The best example is probably in healthcare services.
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
There's going to be, uh, two million new jobs, um, not counting replacement, just brand new incremental jobs in the next six years in healthcare services. That includes nurses, uh, orderly in the hospital, uh, elderly care, um, and, um, uh, and also at-home care is particularly lacking. And those jobs, uh, are not likely to be filled, so there's likely to be a shortage. And the reason they're not filled is simply because they don't pay very well, and that the social status of these jobs are n- not very good. So, they pay about half as much as a heavy equipment operator-
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
... which will be re- replaced a lot sooner. Um, and they prob- pay probably comparably to someone on the assembly line. And if... so, if we... ignoring all the other issues and just think about satisfaction from one's job, someone repetitively doing the same manual action at an assembly line, that can't create a lot of job satisfaction. But someone taking care of a sick person, and, and getting a hug and thank you from that person and the, and the family, I think is, is quite satisfying. So, if only we could fix the pay for service jobs, there are plenty of jobs, um, that require some training or a lot of training for the people coming off the routine jobs to take. We can easily imagine, uh, someone who was maybe a cashier at the grocery store, as stores become automated, uh, learns to become a nurse or a, at-home care. Uh, also do want to point out, the blue-collar jobs are going to stay around a bit longer.
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
Some of them quite a bit longer. Um, you know, AI cannot be told, "Go clean a- an arbitrary home." That's incredibly hard. Arguably is an L5 level of difficulty.
- LFLex Fridman
(laughs)
- KLKai-Fu Lee
Right?
- 1:00:00 – 1:15:00
And Russia. …
- KLKai-Fu Lee
war mentality would be very dangerous because should two countries rely on AI to make certain decisions and, um, they don't e- talk to each other, they do their own scenario planning, then something could easily go wrong. Um, I think engagement, interaction, some protocols, um, to avoid, um, inadvertent disasters is actually needed. So it's natural for each country to want to be the best whether it's in nuclear technologies or, um, AI or bio, but I think it's important to realize if each country has a black box AI and, uh, don't talk to each other, that probably presents greater challenges to humanity, uh, than if they interacted. Uh, I think there can still be competition, but with some degree of protocol for in- interaction. Just like when there was, um, um, a, a nuclear competition, um, there were some protocol for deterrents among US-... Russia and China, and I think that engagement is needed. So of course, we're still far from AI presenting that kind of danger, but, uh, what I worry the most about is the level of engagement seems to be coming down. The level of distrust seems to be going up, especially from the US towards other large countries such as China (laughs) and of course-
- LFLex Fridman
And Russia.
- KLKai-Fu Lee
... and Russia, yes.
- LFLex Fridman
Is there a way to make that better? So that's beautifully put. Level of engagement and even just basic trust and communication as opposed to, uh, sort of, um, uh, you know, making artificial enemies, uh, out of particular, um, out of particular countries. Do- do you have a- do you have a sense how we can make it better?
- KLKai-Fu Lee
Mm-hmm. (laughs)
- LFLex Fridman
Actionable items that, as- as a society we can take on?
- KLKai-Fu Lee
I'm not an expert at, uh, geopolitics.
- LFLex Fridman
(laughs)
- KLKai-Fu Lee
But I would say that we look pretty foolish as humankind when we are faced with the opportunity to create $16 trillion, uh, for- for- for- for human- humanity and, um, we- we're i- yet we're not solving fundamental problems with parts of the world still in poverty. And for the first time, we have the resources to overcome poverty and hunger. We're not using it on that, but we're fueling competition among superpowers, and that's a very, uh, unfortunate thing. If we become utopian for a moment, imagine a- a benevolent world government that has this $16 trillion, uh, and maybe some AI to figure out how to use it to deal with diseases and, um, problems and hate and things like that. World would be a lot better off. So what is wrong (laughs) with the current world? I think the people with more skill than- than I should- should- should think about this. And then the geopolitics issue with superpower competition is one side of the issue. There's another side which I worry maybe even- e- even- even more, which is as the $16 trillion all gets made by US and China and a few of the developed, other developed countries, the poorer country will get nothing because they don't have technology, um, and, uh, the- the wealth disparity and ino- inequality will increase. So a poorer country with a large population will not only benefit from the AI boom or other technology booms, but they will have their workers who previously had hoped they could do the China model and do outsource manufacturing, or the India model so they could do the outsource, um, process or call center. Well all those jobs are gonna be gone in 10 or 15 years. So the- the individual citizen may be a net liability, I mean financially speaking, to a poorer country, and not an asset to- to- to claw itself out of poverty. So in that kind of situation, these, um, large countries with- with not much tech are going to be facing a, um, downward spiral.
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
And it's unclear what could be done, um, and- and then when we look back and say there's $16 trillion being created and it's all being kept by US, China, and other developed countries, it just doesn't feel right. So I hope people who know about geopolitics can find solutions. That's beyond my expertise.
- LFLex Fridman
So different countries that we've talked about have different value systems. Uh, if you look at the United States to an almost extreme degree, there is, uh, an absolute desire for freedom of speech. If you look at a country where I was raised, that desire just amongst the people is not that, uh, s- uh, not as elevated as it is in the, uh, to basically fundamental level to the essence of what it means to be America, right? And the same is true with China. There's different value systems. Uh, there's some censorship of internet content that China and Russia and many other countries undertake. Do you see that having effects on innovation, other aspects of some of the tech stuff, AI development we talked about, and maybe from another angle do you see that changing in different ways over the next 10 years, 20 years, 50 years as, uh, China continues to grow as it does now in the, in its tech innovation?
- KLKai-Fu Lee
Uh, there's a common belief that full freedom of speech and expression is correlated with creativity which is correlated with, um, entrepreneurial success. I think empirically we have seen that is not true and China has been successful. That's not to say the fundamental values are not right or not the best, but it's just that- that- that perfect correlation isn't- isn't there. It's hard to read the tea leaves on an opening up or not in any country and I've not been very good at that in my past predictions, but I- I do believe, uh, every country shares some fundamental value, a lot of fundamental values for the long term. Uh, so you know, China is drafting its, uh, privacy policy for individual citizens and they don't look that different from the American or European ones, so people do want to protect their privacy and, uh, have the opportunity to express and um, um, I think the fundamental values are there. The question is in the execution and timing, how soon or when will that start to open up?... so, so a- so as long as each government knows ultimately people want that kind of protection, there should be a plan to move towards that, um, as to when or how, again, I'm not an expert.
- LFLex Fridman
On the point of privacy, to me it's really interesting. Uh, so AI needs data to create a personalized awesome experience.
- KLKai-Fu Lee
Yeah.
- LFLex Fridman
Right? I'm just speaking generally in terms of products. Uh, and then we have currently depending on the age and depending on the demographics of who we're talking about, some people are more or less concerned about the amount of data they hand over. So, in your view, how do we get this balance right that we provide an amazing experience to-
- KLKai-Fu Lee
Mm-hmm.
- LFLex Fridman
... people that use products? You look at Facebook, uh, you know, the more Facebook knows about you, yes, it's scary to say, the better it can probably, uh, th- a better experience it can probably create. So in your view how do we get that balance right?
- KLKai-Fu Lee
Yes. I think (sighs) a lot of people have a misunderstanding that it's okay and possible to just rip all the data out from a provider and give it back to you so you can deny them access to further data and still enjoy the services we have.
- LFLex Fridman
Right.
- KLKai-Fu Lee
If we take back all the data, all the services will give us nonsense.
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
We'll no longer be able to, uh, use products that function well in terms of, you know, uh, right ranking, right products, right user experience. So, so yet I do understand we- we don't want, uh, to permit misuse of the data.
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
Uh, from legal policy standpoint, I think there can be severe punishment for those who have, um, uh, egregious misuse of the data. That's, I think, a g- good first step. Actually China in this side, uh, on this aspect has very strong laws about people who sell or give data to other companies and- and that over the past few years since the, um, that la- law came- came into effect pretty much, um, eradicated the, um, um, uh, illegal distribution sharing of data. Uh, additionally, I think giving, um, I- I think in technology is often a very good way to solve technology misuse. So can we come up with new technologies that will let us have our cake and eat it too? People are looking into homomorphic encryption which is letting you keep the data, have it encrypted, and train on encrypted data. Of course, we haven't solved that one yet, but that kind of direction may be worth pursuing. Um, also federated learning which would allow one hospital to train on its hospital's patient data fully because they have a license for that and then hospitals would then share their models, not data but models to create a super AI and that also maybe has some promise. So I would want to encourage us to be open-minded and think this as- think of this as not just the policy binary, yes/no, but letting the technologists try to find solutions to let us have our cake and eat it too or have most of our cake and eat most of it too. Uh, finally, I think giving each end user a choice is important and having transparency is important. Also, I think that's universal but the choice you give to the user should not be at a granular level that the user cannot understand. Uh, GDPR today, uh, causes all these pop-ups of yes/no where you give this site this right to use this part of your data. I don't think any user understands what they're saying yes or no to, and I suspect most are just saying yes because they don't understand it. So while GDPR in its current implementation has lived up to its promise of transparency and user choice, it implemented it in such a way that really didn't deliver the- the, um, spirit of GDPR It fit the letter, but not the spirit. So again, I think we need to think about, is there a way to fit the spirit of GDPR by using some kind of technology? So can we have a slider that's an AI trying to figure out how much you want to slide between perfect protection secure- security of your personal data versus a high degree of convenience with some risks of not having full privacy? Um, each user should have some preference and that gives you the user choice, but maybe we should turn the problem on its head and ask, can there be an AI algorithm that can customize this? Because we can understand the slider, but we sure cannot understand every pop-up, uh, question.
- LFLex Fridman
And I think getting that right requires getting the balance between what we talked about earlier which is he- heart and soul versus profit driven dec- decisions and strategy. I think from my perspective, uh, the best way to make a lot of money in the long term is to keep your heart and soul intact. I think, uh, getting that slider right in the short term may feel like you'll be sacrificing profit, uh, but in the long term you'll be gaining user trust and providing a great experience. Do you share that kind of view in general?
- KLKai-Fu Lee
Yes. Absolutely. I- I would- I sure would hope there is a way we can do long term projects that really do the right thing. I think a lot of the people who embrace GDPR, their heart's in the right place. I think they just need to figure out how to build a solution. I've heard utopians talk about solutions that get me excited but, um, not sure how in the current funding environment they can get started, right? People talk about imagine this, um-... crowdsourced, uh, data collection that we all trust and then we have these, um, agents that we ask them to ask the trusted agent to, we, uh, that agent only, that platform. It's a trusted joint platform that, that we all believe is, uh, trustworthy that can give us all the, um, uh, uh, closed-loop personal suggestions by the new social network, new search engine, new e-commerce engine that has access to even more of our data but not directly, but indirectly. So I think that general concept of, um, license using through some trusted engine and finding a way to trust that engine seems like a great idea, but if you think how long it's gonna take to implement and tweak and develop it right, as well as to collect all the trusts and the data from the people, it's beyond the current cycle of venture capital.
- LFLex Fridman
Right. (laughs)
- KLKai-Fu Lee
So how do you do that is a big question.
- LFLex Fridman
You've recently had a fight with cancer, stage four lymphoma and, uh, in a sort of deep personal level, what did it feel like in the darker moments to face your own mortality?
- 1:15:00 – 1:26:10
Mm-hmm. …
- KLKai-Fu Lee
worked nine-nine-six, 9:00 AM to 9:00 PM six days a week, roughly. And, um, I didn't really pay a lot of attention to my family, friends, and people who loved me, and my life revolved around optimizing for work. While my work was not routine, my optimization, (laughs) um, really what made my life, um, basically very mechanical process. But I, I got a lot of highs out of it because of, um, accomplishments that I thought were, uh, really important and dear and the highest priority to me. Uh, but when I faced, um, mortality and the possible death in matter of months, I suddenly realized that this really meant nothing to me, that I didn't feel like working for another minute, that if I had six months left in my life, I would spend it all with my loved ones and, um, you know, thanking them, giving them love back and apologizing to them that I lived my life the wrong way. So, so that moment of reckoning caused me to really rethink that why we exist in this world is, is something that we might be too much shaped by the society to think that success and accomplishments is why we live. But, um, while that can get you, uh, periodic successes and satisfaction, it's, uh, really in the facing death you see what's truly important to you. So as a result of, um, going through the, um, the challenges with cancer, I've resolved to live a more balanced lifestyle. I'm now, uh, in remission, knock on wood, (laughs) and, um, I'm, uh, spending more time with my family. My wife travels with me. Uh, when my kids need me, I spend more time with them. And, uh, before I used to prioritize everything around work. When I had a little bit of time, I would dole it out to my family. Now (clears throat) when my family needs something, really needs something, I drop everything at work and go to them. And then in the time remaining, I allocate to work. But one's family is very understanding. It's not like they will take 50 weeks - uh, 50 hours a week from me.
- LFLex Fridman
Mm-hmm.
- KLKai-Fu Lee
So I'm actually able to still work pretty hard, maybe 10 hours less per week. So I realized the most important thing in my life is really love and the people I love and, uh, give that the highest priority. It isn't the only thing I do, but when that is needed, I put that at a, at the top priority and I feel much better and I feel much more balanced. And I think this also gives a hint as to, uh, a life of routine work, a life of pursuit of numbers. While my job was not routine, uh, it was a pursuit of numbers, pursuit of can I make more money? Can I fund more great companies? Can I raise more money? Can I make sure our VC is ranked higher and higher every year? This competitive s- nature of driving for bigger numbers, uh, and better numbers became a, um, endless pursuit of, um, that's mechanical. And, uh, bigger numbers doesn't really, didn't make me happier. And faced with death, I realized big- bigger numbers really meant nothing, and what was important is that people who have given their heart and their love to me deserved for me to do the same.
- LFLex Fridman
There's deep profound truth in that, that everyone should hear and internalize and that's really powerful for you to say that. I have to ask sort of a difficult question here. So I've competed in sports my whole life. Looking historically, I'd like to challenge some aspect of that a little bit on the point of hard work, that it feels that there are certain aspects that is the greatest, the most beautiful aspects of human nature, is the ability to become obsessed, uh, becoming extremely passionate to the point where, yes, flaws are revealed.... and just giving yourself fully to a task. I- that is, w- in another sense, you mentioned love being important, but in another sense this kind of obsession, this pure exhibition of passion and hard work is truly what it means to be human. What lesson should we take as deeper? Because you've accomplished incredible things. You say it, chasing numbers, but really there's some incredible work there. So, how do you think about that when you look back in your 20s, in your 30s, what was, what would you do differently? Would you really take back some of the incredible hard work?
- KLKai-Fu Lee
Uh, I would, but it's, it's in percentages, right? We're both now computer scientists-
- LFLex Fridman
(laughs)
- KLKai-Fu Lee
... (laughs) so I think when one balances one's life when, when one is younger, you, you might give a smaller percentage to family, but you would still give them high priority. And when you get older, you would give a larger percentage to them and still the high priority. And, and when you're near retirement, you give most of it to them-
- LFLex Fridman
(laughs) .
- KLKai-Fu Lee
... a- and the highest priority. So I think the key point is not that we would work 20 hours less for the whole life and just spend it aimlessly with the family, but that when the family has a need, when, um, your wife is having a baby, when your daughter has a birthday, or when they're depressed, or when they're celebrating something, or when they have a get-together, or we have family time, that it's important for us to put down our phone and PC and be 100% with them. And that priority on the things that really matter isn't going to be so taxing that it would, um, eliminate or even dramatically reduce our accomplishments. It might have some impact, um, but it might also have other impact, because if you have a happier family, (laughs) maybe you fight less. If you fight less, you don't spend time, (laughs) -
- LFLex Fridman
Yep.
- KLKai-Fu Lee
... taking care of all the aftermath of a fight.
- LFLex Fridman
That's right.
- KLKai-Fu Lee
So it's unclear that it would take more time, and if it did, uh, I'd be willing to, um, uh, to take that reduction, and it's not a dramatic number, but it's a number that I think would give me a greater degree of happiness, um, in knowing that I've done the right thing and still have plenty of hours f- to, a- to, to get the success that I want to get.
- LFLex Fridman
So given the many successful companies that you've launched and much success throughout your career, uh, what advice would you give to, uh, young people today looking, or doesn't have to be young, but people today looking to launch and to create the next $1 billion tech startup, or even AI-based startup?
- KLKai-Fu Lee
I would suggest that people understand, uh, technology waves move quickly. What worked two years ago may not work today, and that is very much case in point for AI. I think two years ago or maybe three years ago you certainly could say, "I have a couple of super smart PhDs and, um, we're not sure what we're gonna do, but here's wh- how we're gonna start and get funding for a very high valuation." Those days are over because AI is going from rocket science towards mainstream, not yet commodity, but more mainstream. So first, the creation of any company to a venture capitalist has to be creation of business value and monetary value, and, um, when you have a very scarce commodity, VCs may be willing to, um, accept greater uncertainty. But now the number of people who have the equivalent of a PhD three years ago, uh, because that can be learned more quickly, platforms are emerging, uh, the cost to become a- AI engineer is much lower and there are many more AI engineers, so the market is different. So I would suggest someone who wants to build an AI company be thinking about, uh, the normal business questions. What customer cases are you trying to address? What kind of pain are you trying to address? How does that translate to value? How will you extract value and, um, get paid, through what channel? And how much business value will get created? That today needs to be thought about much earlier upfront than it did three years ago. The scarcity question of AI talent has changed. The number of AI talent has changed. So now you need not just AI, but also, um, understanding of business customer and, and the marketplace. So I also think you should have a more reasonable valuation expectation-
- LFLex Fridman
(laughs) Yes.
- KLKai-Fu Lee
... and a growth expectation. There's gonna be more competition. But the good news though is that AI technologies are now more available in open source. TensorFlow, um, Pytorch and such tools are much easier to use, so you should be able to, um, experiment and get results iteratively faster than before. So take more of a business mindset to this. Think less of this as a laboratory taken into a company, because we've gone beyond that stage. The only exception is if you truly have a breakthrough in some technology that really no one has, then, then the old way still works, but I think that's harder and harder now.
- LFLex Fridman
So I know you believe, as many do, that we're far from creating an artificial general intelligence system. But, say, once we do and you get to ask her one question, what would that question be?
- KLKai-Fu Lee
What is it that differentiates you and me? (laughs)
- LFLex Fridman
Beautifully put. Kai-Fu, thank you so much for your time today. It was wonderful.
- KLKai-Fu Lee
Thank you.
Episode duration: 1:26:26
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