Invest Like the Best with Patrick O'Shaughnessy
· Dan Wang, Patrick O'Shaughnessy
Not in a financial bubble sense, but in the sense of a bubble that pops very easily. I think there are various strands of Chinese science fiction that could also be really worth exploring too. [00:00:00] S0: What feels like the very bleeding-edge frontier? If I were to take a month and travel around China—and maybe you could pick the four cities I would go visit—to learn the most and really see the bleeding-edge frontier of everything you just described, what does that feel like today that people might not fully appreciate? [00:00:00] S1: Shanghai is my favorite city in China—maybe my favorite city in the world. [00:00:00] S0: Why?
· Dan Wang
[00:00:00] S1: It feels a lot like New York. Both have been port cities with an industrial past that has significantly moved away from them. Shanghai has a ton of Art Deco buildings because the time of its great boom in the 1920s and 1930s was also a time when Art Deco really boomed. There's a river that runs through both cities, and there's a sense of hustle and ambition that one can see. It is really comfortable. It's a little bit like New York if the French managed significant parts of it and put in a lot of beautiful plane trees as well as cafés. I think it's perhaps not the bleeding edge of technology as such, but I think Shanghai represents a bleeding edge of some element of consumption. You can just order food really easily in Shanghai. Most of the Uber-like Didi taxis that you would get into—almost all of them—are electric. There are parts of the city that are superbly well managed in terms of traffic flows. You can always tell how much time a red light is going to be on, and you can see this in the apps. There are all sorts of ways in which the city is very well managed. It has a subway system that doesn't screech with that metallic noise like in New York City. As a place for consumption, Shanghai is really wonderful. I would then hop on the high-speed rail from Shanghai to go to the city of Hefei in the province of Anhui, which is pretty close by. Hefei is probably, let's say, two hours away by train from Shanghai. Historically, Hefei has been significantly poorer—it is much more mountainous. But now Hefei is the center of China's electric vehicle industry, and several big EV makers are headquartered there or have operations there. As a city, it has been growing pretty consistently. There are a lot of Chinese first-tier cities that have not been growing quite as fast anymore, but there are plenty of these second-tier cities that are growing really well. And then I think it is always worthwhile going to Shenzhen, which is in the south, pretty close to Hong Kong. I find Shenzhen probably the most boring city in China. It's a lot of big office parks; a lot of it is meant for driving. The city layout has several big hubs connected by highways that are pretty distant from each other. Not that much interesting culture going on. People are there to hustle and to work.
· Dan Wang, Patrick O'Shaughnessy
But it is the headquarters of companies like Huawei, Tencent, and DJI—many of China's most innovative companies. You can find a lot of really interesting electronics there. And you asked for four cities, so I guess the fourth one that I'll offer is Chongqing, which is also in the southwest. Chongqing, I've learned, is really big among TikTok influencers. You can see a lot of these very futuristic structures carved essentially into cliffs. There are shimmering lights and this really well-known subway station that goes through the bottom of an apartment building on one side and then out the other. That creates really wonderful imagery. It's in the southwest, which is where my family is from. I like Southwesterners—they have, I think, the best sense of humor in China. People there tend to just sit over tea and chat. They have great food; it's often very spicy, and it is also really dramatic. So what else could you want—great food, great people? [00:00:00] S0: Of all these places or in a different city, if you were to send an envoy of U.S. technology entrepreneurs somewhere—where, when they emerged from this trip, they would be the most inspired to come back and do things differently than they were planning to—where would you send them?
· Dan Wang
[00:00:00] S1: I think maybe the places to visit are not necessarily in these big cities. I think it would be better to try to go to a few factories and anchor your trip around them. These factories might be electric vehicle manufacturers in Hefei or battery manufacturers in Shenzhen. But wherever you can go to find sophisticated factories making advanced manufacturing products, just go there—and drop by the cities along the way to see how consumers live. I'm aware of several teams of envoys that have been traveling to China in the recent past. There’s been a bunch of European clean-tech investors who've just gone to China and California. I know of something like two trips that have already gone on this year and three more that are being planned. So people are visiting. I think there are these marvels out there, and it's only on us that we're not going out to discover them. If you have the chance to visit, if you have the chance to go inside a factory—definitely take it. I strongly believe that it doesn't matter what a factory is making; it is always fascinating. Whatever it is. It could be the most boring products—it could be making brake pads—and I've visited a superbly interesting brake pad factory. I had no idea how these things were made when I was in China. Every time I had the chance to do a factory tour, to perhaps eat with the workers, I always took it. I'd tell the factory managers, “I'll put away all my electronic devices, I'll sign whatever you need me to sign, but just walk me through the factory floor.” And that's always a ravishing experience.
· Patrick O'Shaughnessy
[00:00:00] S0: Can you compare and contrast the work ethics of the two countries? I'm especially curious at the very highest end. If you took America's most productive people—maybe in the technology sector, working all the time to build AI companies or whatever—and compared them to a similar set in China, how do the two compare and contrast, especially at the very high end?
· Dan Wang
[00:00:00] S1: Yeah. So if we're taking a look at, let's say, the top 0.01% of entrepreneurs, I feel like there's a lot of similarities. When I chat with people who interact with their counterparts—Silicon Valley folks chatting with their counterparts in Beijing—they tend to respect each other and look upon each other as peers. I think there are some ways in which the Silicon Valley folks are a little bit more philosophical; they're a little bit more engaged with policy and trends, and with the impacts their companies and technologies have on society—often because the employees make them. Maybe the Chinese entrepreneurs are a little bit more involved with thinking about political trends, often because the Communist Party makes them. But at a work ethic level, I think they’re probably pretty comparable. If we broaden it out a little bit more—let’s say the top 10% of workers—maybe here again, there are more similarities than dissimilarities. I would suspect that the Chinese are putting in more hours and just trying to work harder. And if we take a look at the median engineer or median worker between the U.S. and China, I strongly suspect the Chinese are putting in much, much more time relative to the median in the U.S. In California, we love to make fun of the Google offices, which clear out by 3 p.m. on a Friday. Everyone’s at the yoga studios again and not working super hard, in particular because it’s Google. That sort of thing is pretty unimaginable in China, which invented this phrase “996”—working from 9 a.m. to 9 p.m., six days a week. I think inspiration is really important. Working smart is really important. But I think working hard is also very, very important. According to statistics that are out there, it takes an automaker from the U.S., Japan, or Germany roughly six years to conceptualize a new model and actually get it on the road. In China, it’s something more like 18 months to two years. So, at a first approximation, they’re probably working at least three times faster than the Americans. There’s some founding mythos of companies like Meituan. I visited Meituan with my friend Yujin Wei, who is also a big fan and who has been on this show. We went to visit their offices in Beijing in 2018.