Contents

TitlePage

Contents

Copyright

Dedication

Introduction

China’sSputnikMoment

CopycatsintheColiseum

China’sAlternateInternetUniverse

ATaleofTwoCountries

TheFourWavesofAI

Utopia,Dystopia,andtheRealAICrisis

TheWisdomofCancer

ABlueprintforHumanCoexistencewithAI

OurGlobalAIStory

Acknowledgments

Notes

Index

AbouttheAuthor

ConnectwithHMH

Copyright©2018byKai-FuLeeAllrightsreserved

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ParkAvenue,19thFloor,NewYork,NewYork10016.hmhco.com

LibraryofCongressCataloging-in-PublicationDataNames:Lee,Kai-Fu,author.

Title:AIsuperpowers:China,SiliconValley,andthenewworldorder/Kai-FuLee.Description:Boston:HoughtonMifflinHarcourt,[2018]|Includesbibliographicalreferencesandindex.Identifiers:LCCN2018017250(print)|LCCN2018019409(ebook)|ISBN9781328545862

(ebook)|ISBN9781328546395(hardcover)

ISBN9781328606099(internationaledition)Subjects:LCSH:Artificialintelligence—Economicaspects—China.|Artificialintelligence—Economicaspects—UnitedStates.

Classification:LCCHC79.I55(ebook)|LCCHC79.I55L4352018(print)|DDC338.4/700630951—DC23

LCrecordavailableathttps://lccn.loc.gov/2018017250CoverdesignbyMarkR.Robinson

Authorphotograph©HuiliShiv1.0818

ToRajReddy,mymentorinAIandinlife

INTRODUCTION

Oneoftheobligationsthatcomeswithmyworkasaventure-capital(VC)investoristhatIoftengivespeechesaboutartificialintelligence(AI)tomembersoftheglobalbusinessandpoliticalelite.OneofthejoysofmyworkisthatIsometimesgettotalkaboutthatverysametopicwithkindergarteners.Surprisingly,thesetwodistinctlydifferentaudiencesoftenaskmethesamekindsofquestions.DuringarecentvisittoaBeijingkindergarten,agaggleoffive-year-oldsgrilledmeaboutourAIfuture.

“Arewegoingtohaverobotteachers?”

“Whatifonerobotcarbumpsintoanotherrobotcarandthenwegethurt?”

“Willpeoplemarryrobotsandhavebabieswiththem?”

“Arecomputersgoingtobecomesosmartthattheycanbossusaround?”

“Ifrobotsdoeverything,thenwhatarewegoingtodo?”

Thesekindergarteners’questionsechoedqueriesposedbysomeoftheworld’smostpowerfulpeople,andtheinteractionwasrevealinginseveralways.First,itspoketohowAIhasleapttotheforefrontofourminds.Justafewyearsago,artificialintelligencewasafieldthatlivedprimarilyinacademicresearchlabsandscience-fictionfilms.TheaveragepersonmayhavehadsomesensethatAIwasaboutbuildingrobotsthatcouldthinklikepeople,buttherewasalmostnoconnectionbetweenthatprospectandoureverydaylives.

Todayallofthathaschanged.ArticlesonthelatestAIinnovationsblanketthepagesofournewspapers.BusinessconferencesonleveragingAItoboostprofitsarehappeningnearlyeveryday.Andgovernmentsaroundtheworldarereleasingtheirownnationalplansforharnessingthetechnology.AIissuddenlyatthecenterofpublicdiscourse,andforgoodreason.

MajortheoreticalbreakthroughsinAIhavefinallyyieldedpracticalapplicationsthatarepoisedtochangeourlives.AIalreadypowersmanyofourfavoriteappsandwebsites,andinthecomingyearsAIwillbedrivingourcars,managingourportfolios,manufacturingmuchofwhatwebuy,andpotentiallyputtingusoutofourjobs.Theseusesarefullofbothpromiseandpotentialperil,andwemustprepareourselvesforboth.

Mydialoguewiththekindergartnerswasalsorevealingbecauseofwhereittookplace.Notlongago,Chinalaggedyears,ifnotdecades,behindthe

UnitedStatesinartificialintelligence.ButoverthepastthreeyearsChinahascaughtAIfever,experiencingasurgeofexcitementaboutthefieldthatdwarfsevenwhatweseeintherestoftheworld.EnthusiasmaboutAIhasspilledoverfromthetechnologyandbusinesscommunitiesintogovernmentpolicymaking,andithastrickledallthewaydowntokindergartenclassroomsinBeijing.

Thisbroad-basedsupportforthefieldhasbothreflectedandfedintoChina’sgrowingstrengthinthefield.ChineseAIcompaniesandresearchershavealreadymadeupenormousgroundontheirAmericancounterparts,experimentingwithinnovativealgorithmsandbusinessmodelsthatpromisetorevolutionizeChina’seconomy.Together,thesebusinessesandscholarshaveturnedChinaintoabonafideAIsuperpower,theonlytruenationalcounterweighttotheUnitedStatesinthisemergingtechnology.HowthesetwocountrieschoosetocompeteandcooperateinAIwillhavedramaticimplicationsforglobaleconomicsandgovernance.

Finally,duringmyback-and-forthwiththoseyoungstudents,Istumbledonadeepertruth:whenitcomestounderstandingourAIfuture,we’realllikethosekindergartners.We’reallfullofquestionswithoutanswers,tryingtopeerintothefuturewithamixtureofchildlikewonderandgrown-upworries.WewanttoknowwhatAIautomationwillmeanforourjobsandforoursenseofpurpose.Wewanttoknowwhichpeopleandcountrieswillbenefitfromthistremendoustechnology.WewonderwhetherAIcanvaultustolivesofmaterialabundance,andwhetherthereisspaceforhumanityinaworldrunbyintelligentmachines.

Noonehasacrystalballthatcanrevealtheanswerstothesequestionsforus.Butthatcoreuncertaintymakesitallthemoreimportantthatweaskthesequestionsand,tothebestofourabilities,exploretheanswers.Thisbookismyattempttodothat.I’mnooraclewhocanperfectlypredictourAIfuture,butinexploringthesequestionsIcanbringmyexperienceasanAIresearcher,technologyexecutive,andnowventure-capitalinvestorinbothChinaandtheUnitedStates.Myhopeisthatthisbookshedssomelightonhowwegothere,andalsoinspiresnewconversationsaboutwherewegofromhere.

PartofwhypredictingtheendingtoourAIstoryissodifficultisbecausethisisn’tjustastoryaboutmachines.It’salsoastoryabouthumanbeings,peoplewithfreewillthatallowsthemtomaketheirownchoicesandtoshapetheirowndestinies.OurAIfuturewillbecreatedbyus,anditwillreflectthechoiceswemakeandtheactionswetake.Inthatprocess,Ihopewewilllookdeepwithinourselvesandtoeachotherforthevaluesandwisdomthatcanguideus.

Inthatspirit,letusbeginthisexploration.

1★

CHINA’SSPUTNIKMOMENT

TheChineseteenagerwiththesquare-rimmedglassesseemedanunlikelyherotomakehumanity’slaststand.Dressedinablacksuit,whiteshirt,andblacktie,KeJieslumpedinhisseat,rubbinghistemplesandpuzzlingovertheprobleminfrontofhim.Normallyfilledwithaconfidencethatborderedoncockiness,thenineteen-year-oldsquirmedinhisleatherchair.Changethevenueandhecouldbejustanotherprep-schoolkidagonizingoveraninsurmountablegeometryproof.

ButonthisMayafternoonin2017,hewaslockedinanall-outstruggleagainstoneoftheworld’smostintelligentmachines,AlphaGo,apowerhouseofartificialintelligencebackedbyarguablytheworld’stoptechnologycompany:Google.Thebattlefieldwasanineteen-by-nineteenlinedboardpopulatedbylittleblackandwhitestones—therawmaterialsofthedeceptivelycomplexgameofGo.Duringgameplay,twoplayersalternateplacingstonesontheboard,attemptingtoencircletheopponent’sstones.NohumanonEarthcoulddothisbetterthanKeJie,buttodayhewaspittedagainstaGoplayeronalevelthatnoonehadeverseenbefore.

Believedtohavebeeninventedmorethan2,500yearsago,Go’shistoryextendsfurtherintothepastthananyboardgamestillplayedtoday.InancientChina,GorepresentedoneofthefourartformsanyChinesescholarwasexpectedtomaster.ThegamewasbelievedtoimbueitsplayerswithaZen-likeintellectualrefinementandwisdom.WheregameslikeWesternchesswerecrudelytactical,thegameofGoisbasedonpatientpositioningandslowencirclement,whichmadeitintoanartform,astateofmind.

ThedepthofGo’shistoryismatchedbythecomplexityofthegameitself.Thebasicrulesofgameplaycanbelaidoutinjustninesentences,butthenumberofpossiblepositionsonaGoboardexceedsthenumberofatomsintheknownuniverse.ThecomplexityofthedecisiontreehadturneddefeatingtheworldchampionofGointoakindofMountEverestfortheartificialintelligencecommunity—aproblemwhosesheersizehadrebuffedeveryattempttoconquerit.Thepoeticallyinclinedsaiditcouldn’tbedonebecausemachineslackedthehumanelement,analmostmysticalfeelforthegame.

Theengineerssimplythoughttheboardofferedtoomanypossibilitiesforacomputertoevaluate.ButonthisdayAlphaGowasn’tjustbeatingKeJie—itwassystematically

dismantlinghim.Overthecourseofthreemarathonmatchesofmorethanthreehourseach,Kehadthrowneverythinghehadatthecomputerprogram.Hetesteditwithdifferentapproaches:conservative,aggressive,defensive,andunpredictable.Nothingseemedtowork.AlphaGogaveKenoopenings.Instead,itslowlytighteneditsvisearoundhim.

THEVIEWFROMBEIJING

Whatyousawinthismatchdependedonwhereyouwatcheditfrom.TosomeobserversintheUnitedStates,AlphaGo’svictoriessignalednotjustthetriumphofmachineovermanbutalsoofWesterntechnologycompaniesovertherestoftheworld.TheprevioustwodecadeshadseenSiliconValleycompaniesconquerworldtechnologymarkets.CompanieslikeFacebookandGooglehadbecomethego-tointernetplatformsforsocializingandsearching.Intheprocess,theyhadsteamrolledlocalstartupsincountriesfromFrancetoIndonesia.TheseinternetjuggernautshadgiventheUnitedStatesadominanceofthedigitalworldthatmatcheditsmilitaryandeconomicpowerintherealworld.WithAlphaGo—aproductoftheBritishAIstartupDeepMind,whichhadbeenacquiredbyGooglein2014—theWestappearedpoisedtocontinuethatdominanceintotheageofartificialintelligence.

ButlookingoutmyofficewindowduringtheKeJiematch,Isawsomethingfardifferent.Theheadquartersofmyventure-capitalfundislocatedinBeijing’sZhongguancun(pronounced“jong-gwan-soon”)neighborhood,anareaoftenreferredtoas“theSiliconValleyofChina.”Today,ZhongguancunisthebeatingheartofChina’sAImovement.Topeoplehere,AlphaGo’svictorieswerebothachallengeandaninspiration.TheyturnedintoChina’s“SputnikMoment”forartificialintelligence.

WhentheSovietUnionlaunchedthefirsthuman-madesatelliteintoorbitinOctober1957,ithadaninstantandprofoundeffectontheAmericanpsycheandgovernmentpolicy.TheeventsparkedwidespreadU.S.publicanxietyaboutperceivedSoviettechnologicalsuperiority,withAmericansfollowingthesatelliteacrossthenightskyandtuningintoSputnik’sradiotransmissions.IttriggeredthecreationoftheNationalAeronauticsandSpaceAdministration(NASA),fueledmajorgovernmentsubsidiesformathandscienceeducation,andeffectivelylaunchedthespacerace.ThatnationwideAmericanmobilizationborefruittwelveyearslaterwhenNeilArmstrongbecamethefirstpersonevertosetfootonthemoon.

AlphaGoscoreditsfirsthigh-profilevictoryinMarch2016duringafive-gameseriesagainstthelegendaryKoreanplayerLeeSedol,winningfourtoone.WhilebarelynoticedbymostAmericans,thefivegamesdrewmorethan280millionChineseviewers.Overnight,Chinaplungedintoanartificialintelligencefever.Thebuzzdidn’tquiterivalAmerica’sreactiontoSputnik,butitlitafireundertheChinesetechnologycommunitythathasbeenburningeversince.

WhenChineseinvestors,entrepreneurs,andgovernmentofficialsallfocusinononeindustry,theycantrulyshaketheworld.Indeed,ChinaisrampingupAIinvestment,research,andentrepreneurshiponahistoricscale.MoneyforAIstartupsispouringinfromventurecapitalists,techjuggernauts,andtheChinesegovernment.ChinesestudentshavecaughtAIfeveraswell,enrollinginadvanceddegreeprogramsandstreaminglecturesfrominternationalresearchersontheirsmartphones.Startupfoundersarefuriouslypivoting,reengineering,orsimplyrebrandingtheircompaniestocatchtheAIwave.

AndlessthantwomonthsafterKeJieresignedhislastgametoAlphaGo,theChinesecentralgovernmentissuedanambitiousplantobuildartificialintelligencecapabilities.Itcalledforgreaterfunding,policysupport,andnationalcoordinationforAIdevelopment.Itsetclearbenchmarksforprogressby2020and2025,anditprojectedthatby2030Chinawouldbecomethecenterofglobalinnovationinartificialintelligence,leadingintheory,technology,andapplication.By2017,Chineseventure-capitalinvestorshadalreadyrespondedtothatcall,pouringrecordsumsintoartificialintelligencestartupsandmakingup48percentofallAIventurefundingglobally,surpassingtheUnitedStatesforthefirsttime.

AGAMEANDAGAMECHANGER

UnderlyingthatsurgeinChinesegovernmentsupportisanewparadigmintherelationshipbetweenartificialintelligenceandtheeconomy.Whilethescienceofartificialintelligencemadeslowbutsteadyprogressfordecades,onlyrecentlydidprogressrapidlyaccelerate,allowingtheseacademicachievementstobetranslatedintoreal-worlduse-cases.

ThetechnicalchallengesofbeatingahumanatthegameofGowerealreadyfamiliartome.AsayoungPh.D.studentresearchingartificialintelligenceatCarnegieMellonUniversity,IstudiedunderpioneeringAIresearcherRajReddy.In1986,IcreatedthefirstsoftwareprogramtodefeatamemberoftheworldchampionshipteamforthegameOthello,asimplifiedversionofGoplayedonaneight-by-eightsquareboard.Itwasquitean

accomplishmentatthetime,butthetechnologybehinditwasn’treadytotackleanythingbutstraightforwardboardgames.

ThesameheldtruewhenIBM’sDeepBluedefeatedworldchesschampionGarryKasparovina1997matchdubbed“TheBrain’sLastStand.”Thateventhadspawnedanxietyaboutwhenourrobotoverlordswouldlaunchtheirconquestofhumankind,butotherthanboostingIBM’sstockprice,thematchhadnomeaningfulimpactonlifeintherealworld.Artificialintelligencestillhadfewpracticalapplications,andresearchershadgonedecadeswithoutmakingatrulyfundamentalbreakthrough.

DeepBluehadessentially“bruteforced”itswaytovictory—relyinglargelyonhardwarecustomizedtorapidlygenerateandevaluatepositionsfromeachmove.Ithadalsorequiredreal-lifechesschampionstoaddguidingheuristicstothesoftware.Yes,thewinwasanimpressivefeatofengineering,butitwasbasedonlong-establishedtechnologythatworkedonlyonveryconstrainedsetsofissues.RemoveDeepBluefromthegeometricsimplicityofaneight-by-eight-squarechessboardanditwouldn’tseemveryintelligentatall.Intheend,theonlyjobitwasthreateningtotakewasthatoftheworldchesschampion.

Thistime,thingsaredifferent.TheKeJieversusAlphaGomatchwasplayedwithintheconstraintsofaGoboard,butitisintimatelytiedupwithdramaticchangesintherealworld.ThosechangesincludetheChineseAIfrenzythatAlphaGo’smatchessparkedamidtheunderlyingtechnologythatpoweredittovictory.

AlphaGorunsondeeplearning,agroundbreakingapproachtoartificialintelligencethathasturbochargedthecognitivecapabilitiesofmachines.Deep-learning-basedprogramscannowdoabetterjobthanhumansatidentifyingfaces,recognizingspeech,andissuingloans.Fordecades,theartificialintelligencerevolutionalwayslookedtobefiveyearsaway.Butwiththedevelopmentofdeeplearningoverthepastfewyears,thatrevolutionhasfinallyarrived.Itwillusherinaneraofmassiveproductivityincreasesbutalsowidespreaddisruptionsinlabormarkets—andprofoundsociopsychologicaleffectsonpeople—asartificialintelligencetakesoverhumanjobsacrossallsortsofindustries.

DuringtheKeJiematch,itwasn’ttheAI-drivenkillerrobotssomeprominenttechnologistswarnofthatfrightenedme.Itwasthereal-worlddemonsthatcouldbeconjuredupbymassunemploymentandtheresultingsocialturmoil.Thethreattojobsiscomingfarfasterthanmostexpertsanticipated,anditwillnotdiscriminatebythecolorofone’scollar,insteadstrikingthehighlytrainedandpoorlyeducatedalike.OnthedayofthatremarkablematchbetweenAlphaGoandKeJie,deeplearningwas

dethroninghumankind’sbestGoplayer.Thatsamejob-eatingtechnologyiscomingsoontoafactoryandanofficenearyou.

THEGHOSTINTHEGOMACHINE

Butinthatsamematch,Ialsosawareasonforhope.Twohoursandfifty-oneminutesintothematch,KeJiehadhitawall.He’dgivenallthathecouldtothisgame,butheknewitwasn’tgoingtobeenough.Hunchedlowovertheboard,hepursedhislipsandhiseyebrowbegantotwitch.Realizinghecouldn’tholdhisemotionsinanylonger,heremovedhisglassesandusedthebackofhishandtowipetearsfrombothofhiseyes.Ithappenedinaflash,buttheemotionbehinditwasvisibleforalltosee.

ThosetearstriggeredanoutpouringofsympathyandsupportforKe.Overthecourseofthesethreematches,Kehadgoneonaroller-coasterofhumanemotion:confidence,anxiety,fear,hope,andheartbreak.Ithadshowcasedhiscompetitivespirit,butIsawinthosegamesanactofgenuinelove:awillingnesstotanglewithanunbeatableopponentoutofpureloveforthegame,itshistory,andthepeoplewhoplayit.ThosepeoplewhowatchedKe’sfrustrationrespondedinkind.AlphaGomayhavebeenthewinner,butKebecamethepeople’schampion.Inthatconnection—humanbeingsgivingandreceivinglove—Icaughtaglimpseofhowhumanswillfindworkandmeaningintheageofartificialintelligence.

IbelievethattheskillfulapplicationofAIwillbeChina’sgreatestopportunitytocatchupwith—andpossiblysurpass—theUnitedStates.Butmoreimportant,thisshiftwillcreateanopportunityforallpeopletorediscoverwhatitisthatmakesushuman.

Tounderstandwhy,wemustfirstgraspthebasicsofthetechnologyandhowitissettotransformourworld.

ABRIEFHISTORYOFDEEPLEARNING

Machinelearning—theumbrellatermforthefieldthatincludesdeeplearning—isahistory-alteringtechnologybutonethatisluckytohavesurvivedatumultuoushalf-centuryofresearch.Eversinceitsinception,artificialintelligencehasundergoneanumberofboom-and-bustcycles.Periodsofgreatpromisehavebeenfollowedby“AIwinters,”whenadisappointinglackofpracticalresultsledtomajorcutsinfunding.Understandingwhatmakesthearrivalofdeeplearningdifferentrequiresaquickrecapofhowwegothere.

Backinthemid-1950s,thepioneersofartificialintelligencesetthemselvesanimpossiblyloftybutwell-definedmission:torecreatehumanintelligenceinamachine.Thatstrikingcombinationoftheclarityofthegoalandthecomplexityofthetaskwoulddrawinsomeofthegreatestmindsintheemergingfieldofcomputerscience:MarvinMinsky,JohnMcCarthy,andHerbertSimon.

Asawide-eyedcomputerscienceundergradatColumbiaUniversityintheearly1980s,allofthisseizedmyimagination.IwasborninTaiwanintheearly1960sbutmovedtoTennesseeattheageofelevenandfinishedmiddleandhighschoolthere.AfterfouryearsatColumbiainNewYork,IknewthatIwantedtodigdeeperintoAI.WhenapplyingforcomputersciencePh.D.programsin1983,Ievenwrotethissomewhatgrandiosedescriptionofthefieldinmystatementofpurpose:“Artificialintelligenceistheelucidationofthehumanlearningprocess,thequantificationofthehumanthinkingprocess,theexplicationofhumanbehavior,andtheunderstandingofwhatmakesintelligencepossible.Itismen’sfinalsteptounderstandthemselves,andIhopetotakepartinthisnew,butpromisingscience.”

Thatessayhelpedmegetintothetop-rankedcomputersciencedepartmentofCarnegieMellonUniversity,ahotbedforcutting-edgeAIresearch.Italsodisplayedmynaivetéaboutthefield,bothoverestimatingourpowertounderstandourselvesandunderestimatingthepowerofAItoproducesuperhumanintelligenceinnarrowspheres.

BythetimeIbeganmyPh.D.,thefieldofartificialintelligencehadforkedintotwocamps:the“rule-based”approachandthe“neuralnetworks”approach.Researchersintherule-basedcamp(alsosometimescalled“symbolicsystems”or“expertsystems”)attemptedtoteachcomputerstothinkbyencodingaseriesoflogicalrules:IfX,thenY.Thisapproachworkedwellforsimpleandwell-definedgames(“toyproblems”)butfellapartwhentheuniverseofpossiblechoicesormovesexpanded.Tomakethesoftwaremoreapplicabletoreal-worldproblems,therule-basedcamptriedinterviewingexpertsintheproblemsbeingtackledandthencodingtheirwisdomintotheprogram’sdecision-making(hencethe“expertsystems”moniker).

The“neuralnetworks”camp,however,tookadifferentapproach.Insteadoftryingtoteachthecomputertherulesthathadbeenmasteredbyahumanbrain,thesepractitionerstriedtoreconstructthehumanbrainitself.Giventhatthetangledwebsofneuronsinanimalbrainsweretheonlythingcapableofintelligenceasweknewit,theseresearchersfiguredthey’dgostraighttothesource.Thisapproachmimicsthebrain’sunderlyingarchitecture,constructinglayersofartificialneuronsthatcanreceiveandtransmit

informationinastructureakintoournetworksofbiologicalneurons.Unliketherule-basedapproach,buildersofneuralnetworksgenerallydonotgivethenetworksrulestofollowinmakingdecisions.Theysimplyfeedlotsandlotsofexamplesofagivenphenomenon—pictures,chessgames,sounds—intotheneuralnetworksandletthenetworksthemselvesidentifypatternswithinthedata.Inotherwords,thelesshumaninterference,thebetter.

Differencesbetweenthetwoapproachescanbeseeninhowtheymightapproachasimpleproblem,identifyingwhetherthereisacatinapicture.Therule-basedapproachwouldattempttolaydown“if-then”rulestohelptheprogrammakeadecision:“Iftherearetwotriangularshapesontopofacircularshape,thenthereisprobablyacatinthepicture.”Theneuralnetworkapproachwouldinsteadfeedtheprogrammillionsofsamplephotoslabeled“cat”or“nocat,”lettingtheprogramfigureoutforitselfwhatfeaturesinthemillionsofimagesweremostcloselycorrelatedtothe“cat”label.

Duringthe1950sand1960s,earlyversionsofartificialneuralnetworksyieldedpromisingresultsandplentyofhype.Butthenin1969,researchersfromtherule-basedcamppushedback,convincingmanyinthefieldthatneuralnetworkswereunreliableandlimitedintheiruse.Theneuralnetworksapproachquicklywentoutoffashion,andAIplungedintooneofitsfirst“winters”duringthe1970s.

Overthesubsequentdecades,neuralnetworksenjoyedbriefstintsofprominence,followedbynear-totalabandonment.In1988,Iusedatechniqueakintoneuralnetworks(HiddenMarkovModels)tocreateSphinx,theworld’sfirstspeaker-independentprogramforrecognizingcontinuousspeech.ThatachievementlandedmeaprofileintheNewYorkTimes.Butitwasn’tenoughtosaveneuralnetworksfromonceagainfallingoutoffavor,asAIreenteredaprolongediceageformostofthe1990s.

Whatultimatelyresuscitatedthefieldofneuralnetworks—andsparkedtheAIrenaissancewearelivingthroughtoday—werechangestotwoofthekeyrawingredientsthatneuralnetworksfeedon,alongwithonemajortechnicalbreakthrough.Neuralnetworksrequirelargeamountsoftwothings:computingpoweranddata.Thedata“trains”theprogramtorecognizepatternsbygivingitmanyexamples,andthecomputingpowerletstheprogramparsethoseexamplesathighspeeds.

Bothdataandcomputingpowerwereinshortsupplyatthedawnofthefieldinthe1950s.Butintheinterveningdecades,allthathaschanged.Today,yoursmartphoneholdsmillionsoftimesmoreprocessingpowerthantheleadingcutting-edgecomputersthatNASAusedtosendNeilArmstrongtothemoonin1969.Andtheinternethasledtoanexplosionofallkindsofdigitaldata:text,images,videos,clicks,purchases,Tweets,andsoon.Taken

together,allofthishasgivenresearcherscopiousamountsofrichdataonwhichtotraintheirnetworks,aswellasplentyofcheapcomputingpowerforthattraining.

Butthenetworksthemselveswerestillseverelylimitedinwhattheycoulddo.Accurateresultstocomplexproblemsrequiredmanylayersofartificialneurons,butresearchershadn’tfoundawaytoefficientlytrainthoselayersastheywereadded.Deeplearning’sbigtechnicalbreakfinallyarrivedinthemid-2000s,whenleadingresearcherGeoffreyHintondiscoveredawaytoefficientlytrainthosenewlayersinneuralnetworks.Theresultwaslikegivingsteroidstotheoldneuralnetworks,multiplyingtheirpowertoperformtaskssuchasspeechandobjectrecognition.

Soon,thesejuiced-upneuralnetworks—nowrebrandedas“deeplearning”—couldoutperformoldermodelsatavarietyoftasks.ButyearsofingrainedprejudiceagainsttheneuralnetworksapproachledmanyAIresearcherstooverlookthis“fringe”groupthatclaimedoutstandingresults.Theturningpointcamein2012,whenaneuralnetworkbuiltbyHinton’steamdemolishedthecompetitioninaninternationalcomputervisioncontest.

AfterdecadesspentonthemarginsofAIresearch,neuralnetworkshitthemainstreamovernight,thistimeintheformofdeeplearning.ThatbreakthroughpromisedtothawtheicefromthelatestAIwinter,andforthefirsttimetrulybringAI’spowertobearonarangeofreal-worldproblems.Researchers,futurists,andtechCEOsallbeganbuzzingaboutthemassivepotentialofthefieldtodecipherhumanspeech,translatedocuments,recognizeimages,predictconsumerbehavior,identifyfraud,makelendingdecisions,helprobots“see,”andevendriveacar.

PULLINGBACKTHECURTAINONDEEPLEARNING

Sohowdoesdeeplearningdothis?Fundamentally,thesealgorithmsusemassiveamountsofdatafromaspecificdomaintomakeadecisionthatoptimizesforadesiredoutcome.Itdoesthisbytrainingitselftorecognizedeeplyburiedpatternsandcorrelationsconnectingthemanydatapointstothedesiredoutcome.Thispattern-findingprocessiseasierwhenthedataislabeledwiththatdesiredoutcome—“cat”versus“nocat”;“clicked”versus“didn’tclick”;“wongame”versus“lostgame.”Itcanthendrawonitsextensiveknowledgeofthesecorrelations—manyofwhichareinvisibleorirrelevanttohumanobservers—tomakebetterdecisionsthanahumancould.

Doingthisrequiresmassiveamountsofrelevantdata,astrongalgorithm,anarrowdomain,andaconcretegoal.Ifyou’reshortanyoneofthese,thingsfallapart.Toolittledata?Thealgorithmdoesn’thaveenoughexamplestouncovermeaningfulcorrelations.Toobroadagoal?Thealgorithmlacksclearbenchmarkstoshootforinoptimization.

Deeplearningiswhat’sknownas“narrowAI”—intelligencethattakesdatafromonespecificdomainandappliesittooptimizingonespecificoutcome.Whileimpressive,itisstillafarcryfrom“generalAI,”theall-purposetechnologythatcandoeverythingahumancan.

Deeplearning’smostnaturalapplicationisinfieldslikeinsuranceandmakingloans.Relevantdataonborrowersisabundant(creditscore,income,recentcredit-cardusage),andthegoaltooptimizeforisclear(minimizedefaultrates).Takenonestepfurther,deeplearningwillpowerself-drivingcarsbyhelpingthemto“see”theworldaroundthem—recognizepatternsinthecamera’spixels(redoctagons),figureoutwhattheycorrelateto(stopsigns),andusethatinformationtomakedecisions(applypressuretothebraketoslowlystop)thatoptimizeforyourdesiredoutcome(delivermesafelyhomeinminimaltime).

Peoplearesoexcitedaboutdeeplearningpreciselybecauseitscorepower—itsabilitytorecognizeapattern,optimizeforaspecificoutcome,makeadecision—canbeappliedtosomanydifferentkindsofeverydayproblems.That’swhycompanieslikeGoogleandFacebookhavescrambledtosnapupthesmallcoreofdeep-learningexperts,payingthemmillionsofdollarstopursueambitiousresearchprojects.In2013,GoogleacquiredthestartupfoundedbyGeoffreyHinton,andthefollowingyearscoopedupBritishAIstartupDeepMind—thecompanythatwentontobuildAlphaGo—forover$500million.Theresultsoftheseprojectshavecontinuedtoaweobserversandgrabheadlines.They’veshiftedtheculturalzeitgeistandgivenusasensethatwestandattheprecipiceofanewera,oneinwhichmachineswillradicallyempowerand/orviolentlydisplacehumanbeings.

AIANDINTERNATIONALRESEARCH

ButwherewasChinainallthis?Thetruthis,thestoryofthebirthofdeeplearningtookplacealmostentirelyintheUnitedStates,Canada,andtheUnitedKingdom.Afterthat,asmallernumberofChineseentrepreneursandventure-capitalfundslikemyownbegantoinvestinthisarea.ButthegreatmajorityofChina’stechnologycommunitydidn’tproperlywakeuptothedeep-learningrevolutionuntilitsSputnikMomentin2016,afulldecade

behindthefield’sbreakthroughacademicpaperandfouryearsafteritproveditselfinthecomputervisioncompetition.

Americanuniversitiesandtechnologycompanieshavefordecadesreapedtherewardsofthecountry’sabilitytoattractandabsorbtalentfromaroundtheglobe.ProgressinAIappearedtobenodifferent.TheUnitedStateslookedtobeouttoacommandinglead,onethatwouldonlygrowastheseeliteresearchersleveragedSiliconValley’sgenerousfundingenvironment,uniqueculture,andpowerhousecompanies.Intheeyesofmostanalysts,China’stechnologyindustrywasdestinedtoplaythesameroleinglobalAIthatithadfordecades:thatofthecopycatwholaggedfarbehindthecuttingedge.

AsIdemonstrateinthefollowingchapters,thatanalysisiswrong.ItisbasedonoutdatedassumptionsabouttheChinesetechnologyenvironment,aswellasamorefundamentalmisunderstandingofwhatisdrivingtheongoingAIrevolution.TheWestmayhavesparkedthefireofdeeplearning,butChinawillbethebiggestbeneficiaryoftheheattheAIfireisgenerating.Thatglobalshiftistheproductoftwotransitions:fromtheageofdiscoverytotheageofimplementation,andfromtheageofexpertisetotheageofdata.

CoretothemistakenbeliefthattheUnitedStatesholdsamajoredgeinAIistheimpressionthatwearelivinginanageofdiscovery,atimeinwhicheliteAIresearchersareconstantlybreakingdownoldparadigmsandfinallycrackinglongstandingmysteries.ThisimpressionhasbeenfedbyaconstantstreamofbreathlessmediareportsannouncingthelatestfeatperformedbyAI:diagnosingcertaincancersbetterthandoctors,beatinghumanchampionsatthebluff-heavygameofTexasHold’em,teachingitselfhowtomasternewskillswithzerohumaninterference.Giventhisfloodofmediaattentiontoeachnewachievement,thecasualobserver—orevenexpertanalyst—wouldbeforgivenforbelievingthatweareconsistentlybreakingfundamentallynewgroundinartificialintelligenceresearch.

Ibelievethisimpressionismisleading.Manyofthesenewmilestonesare,rather,merelytheapplicationofthepastdecade’sbreakthroughs—primarilydeeplearningbutalsocomplementarytechnologieslikereinforcementlearningandtransferlearning—tonewproblems.Whattheseresearchersaredoingrequiresgreatskillanddeepknowledge:theabilitytotweakcomplexmathematicalalgorithms,tomanipulatemassiveamountsofdata,toadaptneuralnetworkstodifferentproblems.ThatoftentakesPh.D.-levelexpertiseinthesefields.Buttheseadvancesareincrementalimprovementsandoptimizationsthatleveragethedramaticleapforwardofdeeplearning.

THEAGEOFIMPLEMENTATION

Whattheyreallyrepresentistheapplicationofdeeplearning’sincrediblepowersofpatternrecognitionandpredictiontodifferentspheres,suchasdiagnosingadisease,issuinganinsurancepolicy,drivingacar,ortranslatingaChinesesentenceintoreadableEnglish.Theydonotsignifyrapidprogresstoward“generalAI”oranyothersimilarbreakthroughonthelevelofdeeplearning.Thisistheageofimplementation,andthecompaniesthatcashinonthistimeperiodwillneedtalentedentrepreneurs,engineers,andproductmanagers.

Deep-learningpioneerAndrewNghascomparedAItoThomasEdison’sharnessingofelectricity:abreakthroughtechnologyonitsown,andonethatonceharnessedcanbeappliedtorevolutionizingdozensofdifferentindustries.Justasnineteenth-centuryentrepreneurssoonbeganapplyingtheelectricitybreakthroughtocookingfood,lightingrooms,andpoweringindustrialequipment,today’sAIentrepreneursaredoingthesamewithdeeplearning.MuchofthedifficultbutabstractworkofAIresearchhasbeendone,andit’snowtimeforentrepreneurstorolluptheirsleevesandgetdowntothedirtyworkofturningalgorithmsintosustainablebusinesses.

ThatinnowaydiminishesthecurrentexcitementaroundAI;implementationiswhatmakesacademicadvancesmeaningfulandwhatwilltrulyendupchangingthefabricofourdailylives.Theageofimplementationmeanswewillfinallyseereal-worldapplicationsafterdecadesofpromisingresearch,somethingI’vebeenlookingforwardtoformuchofmyadultlife.

ButmakingthatdistinctionbetweendiscoveryandimplementationiscoretounderstandinghowAIwillshapeourlivesandwhat—orwhichcountry—willprimarilydrivethatprogress.Duringtheageofdiscovery,progresswasdrivenbyahandfulofelitethinkers,virtuallyallofwhomwereclusteredintheUnitedStatesandCanada.Theirresearchinsightsanduniqueintellectualinnovationsledtoasuddenandmonumentalrampingupofwhatcomputerscando.Sincethedawnofdeeplearning,noothergroupofresearchersorengineershascomeupwithinnovationonthatscale.

THEAGEOFDATA

Thisbringsustothesecondmajortransition,fromtheageofexpertisetotheageofdata.Today,successfulAIalgorithmsneedthreethings:bigdata,computingpower,andtheworkofstrong—butnotnecessarilyelite—AIalgorithmengineers.Bringingthepowerofdeeplearningtobearonnew

problemsrequiresallthree,butinthisageofimplementation,dataisthecore.That’sbecauseoncecomputingpowerandengineeringtalentreachacertainthreshold,thequantityofdatabecomesdecisiveindeterminingtheoverallpowerandaccuracyofanalgorithm.

Indeeplearning,there’snodatalikemoredata.Themoreexamplesofagivenphenomenonanetworkisexposedto,themoreaccuratelyitcanpickoutpatternsandidentifythingsintherealworld.Givenmuchmoredata,analgorithmdesignedbyahandfulofmid-levelAIengineersusuallyoutperformsonedesignedbyaworld-classdeep-learningresearcher.Havingamonopolyonthebestandthebrightestjustisn’twhatitusedtobe.

EliteAIresearchersstillhavethepotentialtopushthefieldtothenextlevel,butthoseadvanceshaveoccurredonceeveryseveraldecades.Whilewewaitforthenextbreakthrough,theburgeoningavailabilityofdatawillbethedrivingforcebehinddeeplearning’sdisruptionofcountlessindustriesaroundtheworld.

ADVANTAGECHINA

Realizingthenewfoundpromiseofelectrificationacenturyagorequiredfourkeyinputs:fossilfuelstogenerateit,entrepreneurstobuildnewbusinessesaroundit,electricalengineerstomanipulateit,andasupportivegovernmenttodeveloptheunderlyingpublicinfrastructure.HarnessingthepowerofAItoday—the“electricity”ofthetwenty-firstcentury—requiresfouranalogousinputs:abundantdata,hungryentrepreneurs,AIscientists,andanAI-friendlypolicyenvironment.BylookingattherelativestrengthsofChinaandtheUnitedStatesinthesefourcategories,wecanpredicttheemergingbalanceofpowerintheAIworldorder.

Bothofthetransitionsdescribedonthepreviouspages—fromdiscoverytoimplementation,andfromexpertisetodata—nowtilttheplayingfieldtowardChina.TheydothisbyminimizingChina’sweaknessesandamplifyingitsstrengths.MovingfromdiscoverytoimplementationreducesoneofChina’sgreatestweakpoints(outside-the-boxapproachestoresearchquestions)andalsoleveragesthecountry’smostsignificantstrength:scrappyentrepreneurswithsharpinstinctsforbuildingrobustbusinesses.Thetransitionfromexpertisetodatahasasimilarbenefit,downplayingtheimportanceofthegloballyeliteresearchersthatChinalacksandmaximizingthevalueofanotherkeyresourcethatChinahasinabundance,data.

SiliconValley’sentrepreneurshaveearnedareputationassomeofthehardestworkinginAmerica,passionateyoungfounderswhopullall-nighters

inamaddashtogetaproductout,andthenobsessivelyiteratethatproductwhileseekingoutthenextbigthing.Entrepreneurstheredoindeedworkhard.ButI’vespentdecadesdeeplyembeddedinbothSiliconValleyandChina’stechscene,workingatApple,Microsoft,andGooglebeforeincubatingandinvestingindozensofChinesestartups.IcantellyouthatSiliconValleylooksdownrightsluggishcomparedtoitscompetitoracrossthePacific.

China’ssuccessfulinternetentrepreneurshaverisentowheretheyarebyconqueringthemostcutthroatcompetitiveenvironmentontheplanet.Theyliveinaworldwherespeedisessential,copyingisanacceptedpractice,andcompetitorswillstopatnothingtowinanewmarket.EverydayspentinChina’sstartupsceneisatrialbyfire,likeadayspentasagladiatorintheColiseum.Thebattlesarelifeordeath,andyouropponentshavenoscruples.

Theonlywaytosurvivethisbattleistoconstantlyimproveone’sproductbutalsotoinnovateonyourbusinessmodelandbuilda“moat”aroundyourcompany.Ifone’sonlyedgeisasinglenovelidea,thatideawillinvariablybecopied,yourkeyemployeeswillbepoached,andyou’llbedrivenoutofbusinessbyVC-subsidizedcompetitors.Thisrough-and-tumbleenvironmentmakesastrongcontrasttoSiliconValley,wherecopyingisstigmatizedandmanycompaniesareallowedtocoastonthebasisofoneoriginalideaorluckybreak.Thatlackofcompetitioncanleadtoacertainlevelofcomplacency,withentrepreneursfailingtoexploreallthepossibleiterationsoftheirfirstinnovation.ThemessymarketsanddirtytricksofChina’s“copycat”eraproducedsomequestionablecompanies,buttheyalsoincubatedagenerationoftheworld’smostnimble,savvy,andnose-to-the-grindstoneentrepreneurs.TheseentrepreneurswillbethesecretsaucethathelpsChinabecomethefirstcountrytocashinonAI’sageofimplementation.

Theseentrepreneurswillhaveaccesstotheother“naturalresource”ofChina’stechworld:anoverabundanceofdata.ChinahasalreadysurpassedtheUnitedStatesintermsofsheervolumeasthenumberoneproducerofdata.Thatdataisnotjustimpressiveinquantity,butthankstoChina’suniquetechnologyecosystem—analternateuniverseofproductsandfunctionsnotseenanywhereelse—thatdataistailor-madeforbuildingprofitableAIcompanies.

Untilaboutfiveyearsago,itmadesensetodirectlycomparetheprogressofChineseandU.S.internetcompaniesasonewoulddescribearace.Theywereonroughlyparalleltracks,andtheUnitedStateswasslightlyaheadofChina.Butaround2013,China’sinternettookarightturn.RatherthanfollowinginthefootstepsoroutrightcopyingofAmericancompanies,

ChineseentrepreneursbegandevelopingproductsandserviceswithsimplynoanaloginSiliconValley.AnalystsdescribingChinausedtoinvokesimpleSiliconValley–basedanalogieswhendescribingChinesecompanies—“theFacebookofChina,”“theTwitterofChina”—butinthelastfewyears,inmanycasestheselabelsstoppedmakingsense.TheChineseinternethadmorphedintoanalternateuniverse.

Chineseurbanitesbeganpayingforreal-worldpurchaseswithbarcodesontheirphones,partofamobilepaymentsrevolutionunseenanywhereelse.Armiesoffooddeliverymenandon-demandmasseusesridingelectricscooterscloggedthestreetsofChinesecities.Theyrepresentedatidalwaveofonline-to-offline(O2O)startupsthatbroughttheconvenienceofe-commercetobearonreal-worldserviceslikerestaurantfoodormanicures.Soonafterthatcamethemillionsofbrightlycoloredsharedbikesthatuserscouldpickuporlockupanywherejustbyscanningabarcodewiththeirphones.

TyingalltheseservicestogetherwastheriseofChina’ssuper-app,WeChat,akindofdigitalSwissArmyknifeformodernlife.WeChatusersbegansendingtextandvoicemessagestofriends,payingforgroceries,bookingdoctors’appointments,filingtaxes,unlockingsharedbikes,andbuyingplanetickets,allwithouteverleavingtheapp.WeChatbecametheuniversalsocialapp,oneinwhichdifferenttypesofgroupchats—formedwithcoworkersandfriendsoraroundinterests—wereusedtonegotiatebusinessdeals,organizebirthdayparties,ordiscussmodernart.Itbroughttogetheragrab-bagofessentialfunctionsthatarescatteredacrossadozenappsintheUnitedStatesandelsewhere.

China’salternatedigitaluniversenowcreatesandcapturesoceansofnewdataabouttherealworld.Thatwealthofinformationonusers—theirlocationeverysecondoftheday,howtheycommute,whatfoodstheylike,whenandwheretheybuygroceriesandbeer—willproveinvaluableintheeraofAIimplementation.Itgivesthesecompaniesadetailedtreasuretroveoftheseusers’dailyhabits,onethatcanbecombinedwithdeep-learningalgorithmstooffertailor-madeservicesrangingfromfinancialauditingtocityplanning.ItalsovastlyoutstripswhatSiliconValley’sleadingcompaniescandecipherfromyoursearches,“likes,”oroccasionalonlinepurchases.Thisunparalleledtroveofreal-worlddatawillgiveChinesecompaniesamajorlegupindevelopingAI-drivenservices.

THEHANDONTHESCALES

TheserecentandpowerfuldevelopmentsnaturallytiltthebalanceofpowerinChina’sdirection.Butontopofthisnaturalrebalancing,China’sgovernmentisalsodoingeverythingitcantotipthescales.TheChinesegovernment’ssweepingplanforbecominganAIsuperpowerpledgedwidespreadsupportandfundingforAIresearch,butmostofallitactedasabeacontolocalgovernmentsthroughoutthecountrytofollowsuit.ChinesegovernancestructuresaremorecomplexthanmostAmericansassume;thecentralgovernmentdoesnotsimplyissuecommandsthatareinstantlyimplementedthroughoutthenation.Butitdoeshavetheabilitytopickoutcertainlong-termgoalsandmobilizeepicresourcestopushinthatdirection.Thecountry’slightning-paceddevelopmentofasprawlinghigh-speedrailnetworkservesasalivingexample.

LocalgovernmentleadersrespondedtotheAIsurgeasthoughtheyhadjustheardthestartingpistolforarace,fullycompetingwitheachothertolureAIcompaniesandentrepreneurstotheirregionswithgenerouspromisesofsubsidiesandpreferentialpolicies.Thatraceisjustgettingstarted,andexactlyhowmuchimpactitwillhaveonChina’sAIdevelopmentisstillunclear.Butwhatevertheoutcome,itstandsinsharpcontrasttoaU.S.governmentthatdeliberatelytakesahands-offapproachtoentrepreneurshipandisactivelyslashingfundingforbasicresearch.

Puttingallthesepiecestogether—thedualtransitionsintotheageofimplementationandtheageofdata,China’sworld-classentrepreneursandproactivegovernment—IbelievethatChinawillsoonmatchorevenovertaketheUnitedStatesindevelopinganddeployingartificialintelligence.Inmyview,thatleadinAIdeploymentwilltranslateintoproductivitygainsonascalenotseensincetheIndustrialRevolution.PricewaterhouseCoopersestimatesAIdeploymentwilladd$15.7trilliontoglobalGDPby2030.Chinaispredictedtotakehome$7trillionofthattotal,nearlydoubleNorthAmerica’s$3.7trillioningains.AstheeconomicbalanceofpowertiltsinChina’sfavor,sotoowillpoliticalinfluenceand“softpower,”thecountry’sculturalandideologicalfootprintaroundtheglobe.

ThisnewAIworldorderwillbeparticularlyjoltingtoAmericanswhohavegrownaccustomedtoanear-totaldominanceofthetechnologicalsphere.Forasfarbackasmanyofuscanremember,itwasAmericantechnologycompaniesthatwerepushingtheirproductsandtheirvaluesonusersaroundtheglobe.Asaresult,Americancompanies,citizens,andpoliticianshaveforgottenwhatitfeelsliketobeonthereceivingendoftheseexchanges,aprocessthatoftenfeelsakinto“technologicalcolonization.”ChinadoesnotintendtouseitsadvantageintheAIeraasaplatformforsuchcolonization,butAI-induceddisruptionstothepoliticalandeconomicorder

willleadtoamajorshiftinhowallcountriesexperiencethephenomenonofdigitalglobalization.

THEREALCRISES

Significantasthisjockeyingbetweentheworld’stwosuperpowerswillbe,itpalesincomparisontotheproblemsofjoblossesandgrowinginequality—bothdomesticallyandbetweencountries—thatAIwillconjure.Asdeeplearningwashesovertheglobaleconomy,itwillindeedwipeoutbillionsofjobsupanddowntheeconomicladder:accountants,assemblylineworkers,warehouseoperators,stockanalysts,qualitycontrolinspectors,truckers,paralegals,andevenradiologists,justtonameafew.

Humancivilizationhasinthepastabsorbedsimilartechnology-drivenshockstotheeconomy,turninghundredsofmillionsoffarmersintofactoryworkersoverthenineteenthandtwentiethcenturies.ButnoneofthesechangeseverarrivedasquicklyasAI.Basedonthecurrenttrendsintechnologyadvancementandadoption,Ipredictthatwithinfifteenyears,artificialintelligencewilltechnicallybeabletoreplacearound40to50percentofjobsintheUnitedStates.Actualjoblossesmayenduplaggingthosetechnicalcapabilitiesbyanadditionaldecade,butIforecastthatthedisruptiontojobmarketswillbeveryreal,verylarge,andcomingsoon.

RisingintandemwithunemploymentwillbeastronomicalwealthinthehandsofthenewAItycoons.Uberisalreadyoneofthemostvaluablestartupsintheworld,evenwhilegivingaround75percentofthemoneyearnedfromeachridetothedriver.Tothatend,howvaluablewouldUberbecomeifinthespanofacoupleofyears,thecompanywasabletoreplaceeverysinglehumandriverwithanAI-poweredself-drivingcar?Orifbankscouldreplacealltheirmortgagelenderswithalgorithmsthatissuedsmarterloanswithmuchlowerdefaultrates—allwithouthumaninterference?Similartransformationswillsoonplayoutacrossindustriesliketrucking,insurance,manufacturing,andretail.

FurtherconcentratingthoseprofitsisthefactthatAInaturallytrendstowardwinner-take-alleconomicswithinanindustry.Deeplearning’srelationshipwithdatafostersavirtuouscircleforstrengtheningthebestproductsandcompanies:moredataleadstobetterproducts,whichinturnattractmoreusers,whogeneratemoredatathatfurtherimprovestheproduct.ThatcombinationofdataandcashalsoattractsthetopAItalenttothetopcompanies,wideningthegapbetweenindustryleadersandlaggards.

Inthepast,thedominanceofphysicalgoodsandlimitsofgeographyhelpedreininconsumermonopolies.(U.S.antitrustlawsdidn’thurteither.)Butgoingforward,digitalgoodsandserviceswillcontinueeatinguplargersharesoftheconsumerpie,andautonomoustrucksanddroneswilldramaticallyslashthecostofshippingphysicalgoods.Insteadofadispersionofindustryprofitsacrossdifferentcompaniesandregions,wewillbegintoseegreaterandgreaterconcentrationoftheseastronomicalsumsinthehandsofafew,allwhileunemploymentlinesgrowlonger.

THEAIWORLDORDER

Inequalitywillnotbecontainedwithinnationalborders.ChinaandtheUnitedStateshavealreadyjumpedouttoanenormousleadoverallothercountriesinartificialintelligence,settingthestageforanewkindofbipolarworldorder.Severalothercountries—theUnitedKingdom,France,andCanada,tonameafew—havestrongAIresearchlabsstaffedwithgreattalent,buttheylacktheventure-capitalecosystemandlargeuserbasestogeneratethedatathatwillbekeytotheageofimplementation.AsAIcompaniesintheUnitedStatesandChinaaccumulatemoredataandtalent,thevirtuouscycleofdata-drivenimprovementsiswideningtheirleadtoapointwhereitwillbecomeinsurmountable.ChinaandtheUnitedStatesarecurrentlyincubatingtheAIgiantsthatwilldominateglobalmarketsandextractwealthfromconsumersaroundtheglobe.

Atthesametime,AI-drivenautomationinfactorieswillundercuttheoneeconomicadvantagedevelopingcountrieshistoricallypossessed:cheaplabor.Robot-operatedfactorieswilllikelyrelocatetobeclosertotheircustomersinlargemarkets,pullingawaytheladderthatdevelopingcountrieslikeChinaandthe“AsianTigers”ofSouthKoreaandSingaporeclimbedupontheirwaytobecominghigh-income,technology-driveneconomies.Thegapbetweentheglobalhavesandhave-notswillwiden,withnoknownpathtowardclosingit.

TheAIworldorderwillcombinewinner-take-alleconomicswithanunprecedentedconcentrationofwealthinthehandsofafewcompaniesinChinaandtheUnitedStates.This,Ibelieve,istherealunderlyingthreatposedbyartificialintelligence:tremendoussocialdisorderandpoliticalcollapsestemmingfromwidespreadunemploymentandgapinginequality.

Tumultinjobmarketsandturmoilacrosssocietieswilloccuragainstthebackdropofafarmorepersonalandhumancrisis—apsychologicallossofone’spurpose.Forcenturies,humanbeingshavefilledtheirdaysbyworking:tradingtheirtimeandsweatforshelterandfood.We’vebuiltdeeply

entrenchedculturalvaluesaroundthisexchange,andmanyofushavebeenconditionedtoderiveoursenseofself-worthfromtheactofdailywork.Theriseofartificialintelligencewillchallengethesevaluesandthreatenstoundercutthatsenseoflife-purposeinavanishinglyshortwindowoftime.

Thesechallengesaremomentousbutnotinsurmountable.Inrecentyears,Imyselffacedamortalthreatandacrisisofpurposeinmyownpersonallife.ThatexperiencetransformedmeandopenedmyeyestopotentialsolutionstotheAI-inducedjobscrisisIforesee.Tacklingtheseproblemswillrequireacombinationofclear-eyedanalysisandprofoundphilosophicalexaminationofwhatmattersinourlives,ataskforbothourmindsandourhearts.IntheclosingchaptersofthisbookIoutlinemyownvisionforaworldinwhichhumansnotonlycoexistalongsideAIbutthrivewithit.

Gettingourselvesthere—onatechnological,social,andhumanlevel—requiresthatwefirstunderstandhowwearrivedhere.TodothatwemustlookbackfifteenyearstoatimewhenChinawasderidedasalandofcopycatcompaniesandSiliconValleystoodproudandaloneonthetechnologicalcuttingedge.

2★

COPYCATSINTHECOLISEUM

TheycalledhimTheCloner.WangXing(pronounced“WangShing”)madehismarkontheearlyChineseinternetasaserialcopycat,abizarremirrorimageofthereveredserialentrepreneursofSiliconValley.In2003,2005,2007,andagainin2010,WangtookAmerica’shotteststartupoftheyearandcopieditforChineseusers.

ItallbeganwhenhestumbledonthepioneeringsocialnetworkFriendsterwhilepursuinganengineeringPh.D.attheUniversityofDelaware.TheconceptofavirtualnetworkoffriendshipsinstantlyclickedwithWang’sbackgroundincomputernetworking,andhedroppedoutofhisdoctoralprogramtoreturntoChinatorecreateFriendster.Onthisfirstproject,hechosenottocloneFriendster’sexactdesign.Rather,heandacoupleoffriendsjusttookthecoreconceptofthedigitalsocialnetworkandbuilttheirownuserinterfacearoundit.Theresultwas,inWang’swords,“ugly,”andthesitefailedtotakeoff.

Twoyearslater,Facebookwasstormingcollegecampuseswithitscleandesignandnichetargetingofstudents.WangadoptedbothwhenhecreatedXiaonei(“OnCampus”).ThenetworkwasexclusivetoChinesecollegestudents,andtheuserinterfacewasanexactcopyofMarkZuckerberg’ssite.Wangmeticulouslyrecreatedthehomepage,profiles,toolbars,andcolorschemesofthePaloAltostartup.ChinesemediareportedthattheearliestversionofXiaoneievenwentsofarastoputFacebook’sowntagline,“AMarkZuckerbergProduction,”atthebottomofeachpage.

Xiaoneiwasahit,butonethatWangsoldofftooearly.Asthesitegrewrapidly,hecouldn’traiseenoughmoneytopayforservercostsandwasforcedtoacceptabuyout.Undernewownership,arebrandedversionofXiaonei—nowcalledRenren,“Everybody”—eventuallyraised$740millionduringits2011debutontheNewYorkStockExchange.In2007,Wangwasbackatitagain,makingaprecisecopyofthenewlyfoundedTwitter.TheclonewasdonesowellthatifyouchangedthelanguageandtheURL,userscouldeasilybefooledintothinkingtheywereontheoriginalTwitter.TheChinesesite,Fanfou,thrivedforamomentbutwassoonshutdownover

politicallysensitivecontent.Then,threeyearslaterWangtookthebusinessmodelofred-hotGrouponandturneditintotheChinesegroup-buyingsiteMeituan.TotheSiliconValleyelite,Wangwasshameless.Inthemythologyofthe

valley,fewthingsaremorestigmatizedthanblindlyapingtheestablishment.ItwaspreciselythiskindofcopycatentrepreneurshipthatwouldholdChinaback,orsotheconventionalwisdomsaid,andwouldpreventChinafrombuildingtrulyinnovativetechnologycompaniesthatcould“changetheworld.”

EvensomeentrepreneursinChinafeltthatWang’spixel-for-pixelcloningofFacebookandTwitterwenttoofar.Yes,ChinesecompaniesoftenimitatedtheirAmericanpeers,butyoucouldatleastlocalizeoraddatouchofyourownstyle.ButWangmadenoapologiesforhismimicsites.Copyingwasapieceofthepuzzle,hesaid,butsowashischoiceofwhichsitestocopyandhisexecutiononthetechnicalandbusinessfronts.

Intheend,itwasWangwhowouldgetthelastlaugh.Bylate2017,Groupon’smarketcaphadshriveledto$2.58billion,withitsstocktradingatunderone-fifththepriceofits2011initialpublicoffering(IPO).TheformerdarlingoftheAmericanstartupworldhadbeenstagnantforyearsandslowtoreactwhenthegroup-buyingcrazefaded.Meanwhile,WangXing’sMeituanhadtriumphedinabrutallycompetitiveenvironment,beatingoutthousandsofsimilargroup-buyingwebsitestodominatethefield.Itthenbranchedoutintodozensofnewlinesofbusiness.Itisnowthefourthmostvaluablestartupintheworld,valuedat$30billion,andWangseesAlibabaandAmazonashismaincompetitorsgoingforward.

InanalyzingWang’ssuccess,Westernobserversmakeafundamentalmistake.TheybelieveMeituantriumphedbytakingagreatAmericanideaandsimplycopyingitintheshelteredChineseinternet,asafespacewhereweaklocalcompaniescansurviveunderfarlessintensecompetition.Thiskindofanalysis,however,istheresultofadeepmisunderstandingofthedynamicsatplayintheChinesemarket,anditrevealsanegocentrismthatdefinesallinternetinnovationinrelationtoSiliconValley.

IncreatinghisearlyclonesofFacebookandTwitter,WangwasinfactrelyingentirelyontheSiliconValleyplaybook.Thisfirstphaseofthecopycatera—ChinesestartupscloningSiliconValleywebsites—helpedbuildupbaselineengineeringanddigitalentrepreneurshipskillsthatweretotallyabsentinChinaatthetime.Butitwasasecondphase—ChinesestartupstakinginspirationfromanAmericanbusinessmodelandthenfiercelycompetingagainsteachothertoadaptandoptimizethatmodelspecificallyforChineseusers—thatturnedWangXingintoaworld-classentrepreneur.

Wangdidn’tbuilda$30billioncompanybysimplybringingthegroup-buyingbusinessmodeltoChina.Overfivethousandcompaniesdidtheexactsamething,includingGrouponitself.TheAmericancompanyevengaveitselfamajorleguponlocalcopycatsbypartneringwithaleadingChineseinternetportal.Between2010and2013,Grouponanditslocalimpersonatorswagedanall-outwarformarketshareandcustomerloyalty,burningbillionsofdollarsandstoppingatnothingtoslaythecompetition.

ThebattleroyalforChina’sgroup-buyingmarketwasamicrocosmofwhatChina’sinternetecosystemhadbecome:acoliseumwherehundredsofcopycatgladiatorsfoughttothedeath.Amidthechaosandbloodshed,theforeignfirst-moversoftenprovedirrelevant.Itwasthedomesticcombatantswhopushedeachothertobefaster,nimbler,leaner,andmeaner.Theyaggressivelycopiedeachother’sproductinnovations,cutpricestothebone,launchedsmearcampaigns,forciblydeinstalledcompetingsoftware,andevenreportedrivalCEOstothepolice.Forthesegladiators,nodirtytrickorunderhandedmaneuverwasoutofbounds.TheydeployedtacticsthatwouldmakeUberfounderTravisKalanickblush.Theyalsodemonstratedafanaticalaround-the-clockworkethicthatwouldsendGoogleemployeesrunningtotheirnappods.

SiliconValleymayhavefoundthecopyingundignifiedandthetacticsunsavory.Inmanycases,itwas.Butitwaspreciselythiswidespreadcloning—theonslaughtofthousandsofmimickingcompetitors—thatforcedcompaniestoinnovate.Survivalintheinternetcoliseumrequiredrelentlesslyiteratingproducts,controllingcosts,executingflawlessly,generatingpositivePR,raisingmoneyatexaggeratedvaluations,andseekingwaystobuildarobustbusiness“moat”tokeepthecopycatsout.Purecopycatsnevermadeforgreatcompanies,andtheycouldn’tsurviveinsidethiscoliseum.Butthetrial-by-firecompetitivelandscapecreatedwhenoneissurroundedbyruthlesscopycatshadtheresultofforgingagenerationofthemosttenaciousentrepreneursonearth.

AsweentertheageofAIimplementation,thiscutthroatentrepreneurialenvironmentwillbeoneofChina’scoreassetsinbuildingamachine-learning-driveneconomy.Thedramatictransformationthatdeeplearningpromisestobringtotheglobaleconomywon’tbedeliveredbyisolatedresearchersproducingnovelacademicresultsintheelitecomputersciencelabsofMITorStanford.Instead,itwillbedeliveredbydown-to-earth,profit-hungryentrepreneursteamingupwithAIexpertstobringthetransformativepowerofdeeplearningtobearonreal-worldindustries.

Overthecomingdecade,China’sgladiatorentrepreneurswillfanoutacrosshundredsofindustries,applyingdeeplearningtoanyproblemthat

showsthepotentialforprofit.Ifartificialintelligenceisthenewelectricity,Chineseentrepreneurswillbethetycoonsandtinkererswhoelectrifyeverythingfromhouseholdappliancestohomeowners’insurance.Theirknackforendlesslytweakingbusinessmodelsandsniffingoutprofitswillyieldanincrediblearrayofpractical—maybeevenlife-changing—applications.Thesewillbedeployedintheirhomecountryandthenpushedabroad,potentiallytakingovermostdevelopingmarketsaroundtheglobe.

CorporateAmericaisunpreparedforthisglobalwaveofChineseentrepreneurshipbecauseitfundamentallymisunderstoodthesecrettoTheCloner’ssuccess.WangXingdidn’tsucceedbecausehe’dbeenacopycat.Hetriumphedbecausehe’dbecomeagladiator.

CONTRASTINGCULTURES

Startupsandtheentrepreneurswhofoundthemarenotborninavacuum.Theirbusinessmodels,products,andcorevaluesconstituteanexpressionoftheuniqueculturaltimeandplaceinwhichtheycomeofage.

SiliconValley’sandChina’sinternetecosystemsgrewoutofverydifferentculturalsoil.Entrepreneursinthevalleyareoftenthechildrenofsuccessfulprofessionals,suchascomputerscientists,dentists,engineers,andacademics.Growinguptheywereconstantlytoldthatthey—yes,theyinparticular—couldchangetheworld.Theirundergraduateyearswerespentlearningtheartofcodingfromtheworld’sleadingresearchersbutalsobaskinginthephilosophicaldebatesofaliberalartseducation.WhentheyarrivedinSiliconValley,theircommutestoandfromworktookthemthroughthegentlycurving,tree-linedstreetsofsuburbanCalifornia.

It’sanenvironmentofabundancethatlendsitselftoloftythinking,toenvisioningeleganttechnicalsolutionstoabstractproblems.Throwinthevalley’srichhistoryofcomputersciencebreakthroughs,andyou’vesetthestageforthegeeky-hippiehybridideologythathaslongdefinedSiliconValley.Centraltothatideologyisawide-eyedtechno-optimism,abeliefthateverypersonandcompanycantrulychangetheworldthroughinnovativethinking.Copyingideasorproductfeaturesisfrowneduponasabetrayalofthezeitgeistandanactthatisbeneaththemoralcodeofatrueentrepreneur.It’sallabout“pure”innovation,creatingatotallyoriginalproductthatgenerateswhatSteveJobscalleda“dentintheuniverse.”

Startupsthatgrowupinthiskindofenvironmenttendtobemission-driven.Theystartwithanovelideaoridealisticgoal,andtheybuildacompany

aroundthat.Companymissionstatementsarecleanandlofty,detachedfromearthlyconcernsorfinancialmotivations.

Instarkcontrast,China’sstartupcultureistheyintoSiliconValley’syang:insteadofbeingmission-driven,Chinesecompaniesarefirstandforemostmarket-driven.Theirultimategoalistomakemoney,andthey’rewillingtocreateanyproduct,adoptanymodel,orgointoanybusinessthatwillaccomplishthatobjective.Thatmentalityleadstoincredibleflexibilityinbusinessmodelsandexecution,aperfectdistillationofthe“leanstartup”modeloftenpraisedinSiliconValley.Itdoesn’tmatterwhereanideacamefromorwhocameupwithit.Allthatmattersiswhetheryoucanexecuteittomakeafinancialprofit.ThecoremotivationforChina’smarket-drivenentrepreneursisnotfame,glory,orchangingtheworld.Thosethingsareallnicesidebenefits,butthegrandprizeisgettingrich,anditdoesn’tmatterhowyougetthere.

JarringasthatmercenaryattitudeistomanyAmericans,theChineseapproachhasdeephistoricalandculturalroots.RotememorizationformedthecoreofChineseeducationformillennia.Entryintothecountry’simperialbureaucracydependedonword-for-wordmemorizationofancienttextsandtheabilitytoconstructaperfect“eight-leggedessay”followingrigidstylisticguidelines.WhileSocratesencouragedhisstudentstoseektruthbyquestioningeverything,ancientChinesephilosopherscounseledpeopletofollowtheritualsofsagesfromtheancientpast.Rigorouscopyingofperfectionwasseenastheroutetotruemastery.

Layeredatopthisculturalpropensityforimitationisthedeeplyingrainedscarcitymentalityoftwentieth-centuryChina.MostChinesetechentrepreneursareatmostonegenerationawayfromgrindingpovertythatstretchesbackcenturies.Manyareonlychildren—productsofthenow-defunct“OneChildPolicy”—carryingontheirbackstheexpectationsoftwoparentsandfourgrandparentswhohaveinvestedalltheirhopesforabetterlifeinthischild.Growingup,theirparentsdidn’ttalktothemaboutchangingtheworld.Rather,theytalkedaboutsurvival,aboutaresponsibilitytoearnmoneysotheycantakecareoftheirparentswhentheirparentsaretoooldtoworkinthefields.Acollegeeducationwasseenasthekeytoescapinggenerationsofgrindingpoverty,andthatrequiredtensofthousandsofhoursofrotememorizationinpreparingforChina’snotoriouslycompetitiveentranceexam.Duringtheseentrepreneurs’lifetimes,Chinawrencheditselfoutofpovertythroughboldpoliciesandhardwork,tradingmealticketsforpaychecksforequitystakesinstartups.

TheblisteringpaceofChina’seconomicrisehasn’talleviatedthatscarcitymentality.Chinesecitizenshavewatchedasindustries,cities,andindividual

fortuneshavebeencreatedandlostovernightinaWildWestenvironmentwhereregulationsstruggledtokeeppacewithcutthroatmarketcompetition.DengXiaoping,theChineseleaderwhopushedChinafromMao-eraegalitarianismtomarket-drivencompetition,oncesaidthatChinaneededto“letsomepeoplegetrichfirst”inordertodevelop.Butthelightningspeedofthatdevelopmentonlyheightenedfearsandconcernsthatifyoudon’tmovequickly—ifyoudon’tgrabontothisnewtrendorjumpintothatnewmarket—you’llstaypoorwhileothersaroundyougetrich.

Combinethesethreecurrents—aculturalacceptanceofcopying,ascarcitymentality,andthewillingnesstodiveintoanypromisingnewindustry—andyouhavethepsychologicalfoundationsofChina’sinternetecosystem.

Thisisnotmeanttopreachagospelofculturaldeterminism.Assomeonewhohasmovedbetweenthesetwocountriesandcultures,Iknowthatbirthplaceandheritagearenotthesoledeterminantsofbehavior.Personaleccentricitiesandgovernmentregulationarehugelyimportantinshapingcompanybehavior.InBeijing,entrepreneursoftenjokethatFacebookis“themostChinesecompanyinSiliconValley”foritswillingnesstocopyfromotherstartupsandforZuckerberg’sfiercelycompetitivestreak.Likewise,whileworkingatMicrosoft,Isawhowgovernmentantitrustpolicycandefangawolf-likecompany.Buthistoryandculturedomatter,andincomparingtheevolutionofSiliconValleyandChinesetechnology,it’scrucialtograsphowdifferentculturalmeltingpotsproduceddifferenttypesofcompanies.

Foryears,thecopycatproductsthatemergedfromChina’sculturalstewwerewidelymockedbytheSiliconValleyelite.Theywerederidedascheapknockoffs,embarrassmentstotheircreatorsandunworthyoftheattentionoftrueinnovators.Butthoseoutsidersmissedwhatwasbrewingbeneaththesurface.ThemostvaluableproducttocomeoutofChina’scopycaterawasn’taproductatall:itwastheentrepreneursthemselves.

THEEMPEROR’SNEWCLOCKS

Twiceaday,theHallofAncestorWorshipcomesalive.LocatedwithinBeijing’sForbiddenCity,thiswaswheretheemperorsofChina’slasttwodynastiesonceburnedincenseandperformedsacredritualstohonortheSonsofHeaventhatcamebeforethem.Today,thehallishometosomeofthemostintricateandingeniousmechanicaltimepiecesevercreated.Theclockfacesthemselvesconveyexpertcraftsmanship,butit’stheimpossiblycomplexmechanicalfunctionsembeddedintheclocks’structuresthatdrawlargecrowdsforthemorningandafternoonperformances.

Asthesecondstickby,ametalbirddartsaroundagoldcage.Paintedwoodenlotusflowersopenandclosetheirpetals,revealingatinyBuddhistgoddeepinmeditation.Adelicatelycarvedelephantliftsitstrunkupanddownwhilepullingaminiaturecarriageincircles.AroboticChinesefiguredressedinthecoatofaEuropeanscholarusesaninkbrushtowriteoutaChineseaphorismonaminiaturescroll,withtherobot’sownhandwritingmodeledonthecalligraphyoftheChineseemperorwhocommissionedthepiece.

It’sadazzlingdisplay,areminderofthetimelessnatureoftruecraftsmanship.JesuitmissionariesbroughtmanyoftheclockstoChinaaspartof“clockdiplomacy,”anattemptbyJesuitstocharmtheirwayintotheimperialcourtthroughgiftsofadvancedEuropeantechnology.TheQingDynasty’sQianlongemperorwasparticularlyfondoftheclocks,andBritishmanufacturerssoonbeganproducingclockstofitthetastesoftheSonofHeaven.ManyoftheclocksondisplayattheHallofAncestorWorshipwerethehandiworkofEurope’sfinestartisanalworkshopsoftheseventeenthandeighteenthcenturies.Theseworkshopsproducedanunparalleledcombinationofartistry,design,andfunctionalengineering.It’saparticularalchemyofexpertisethatfeelsfamiliartomanyinSiliconValleytoday.

WhileworkingasthefoundingpresidentofGoogleChina,IwouldbringvisitingdelegationsofGoogleexecutivesheretoseetheclocksinperson.ButIdidn’tdoitsotheycouldrevelinthegeniusoftheirEuropeanancestors.Ididitbecause,oncloserinspection,onediscoversthatmanyofthefinestspecimensofEuropeancraftsmanshipwerecreatedinthesouthernChinesecityofGuangzhou,whichwasthencalledCanton.

AfterEuropeanclockswonthefavoroftheChineseemperor,localworkshopssprangupalloverChinatostudyandrecreatetheWesternimports.InthesouthernportcitieswhereWesternerscametotrade,China’sbestcraftspeopletookaparttheingeniousEuropeandevices,examiningeachinterlockingpieceanddesignflourish.Theymasteredthebasicsandbeganproducingclocksthatwerenear-exactreplicasoftheEuropeanmodels.Fromthere,theartisanstooktheunderlyingprinciplesofclock-buildingandbeganconstructingtimepiecesthatembodiedChinesedesignsandculturaltraditions:animatedSilkRoadcaravans,lifelikescenesfromthestreetsofBeijing,andthequietequanimityofBuddhistsutras.TheseworkshopseventuallybeganproducingclocksthatrivaledorevenexceededthecraftsmanshipcomingoutofEurope,allwhileweavinginanauthenticallyChinesesensibility.

TheHalloftheAncestorsdatesbacktotheMingDynasty,andthestoryofChina’sowncopycatclockmakersplayedouthundredsofyearsinthepast.

Butthesameculturalcurrentscontinuetoflowintothepresentday.Aswewatchedthesemechanicalmarvelstwirlandchime,Iworriedthatthosecurrentswouldsoonsweepawaythemastercraftspeopleofthetwenty-firstcenturywhostoodallaroundme.

COPYKITTENS

China’searlycopycatinternetcompanieslookedharmlessfromtheoutside,almostcute.DuringChina’sfirstinternetboomofthelate1990s,ChinesecompanieslookedtoSiliconValleyfortalent,funding,andevennamesfortheirinfantstartups.Thecountry’sfirstsearchenginewasthecreationofCharlesZhang,aChinesephysicistwithaPh.D.fromMIT.WhileintheUnitedStatesZhanghadseentheearlyinternettakeoff,andhewantedtokick-startthatsameprocessinhishomecountry.ZhangusedinvestmentsfromhisprofessorsatMITandreturnedtoChina,intentonbuildingupthecountry’scoreinternetinfrastructure.

ButafterameetingwithYahoo!founderJerryYang,ZhangswitchedhisfocustocreatingaChinese-languagesearchengineandportalwebsite.HenamedhisnewcompanySohoo,anot-so-subtlemashupoftheChinesewordfor“search”(sou)andthecompany’sAmericanrolemodel.Hesoonswitchedthespellingto“Sohu”todownplaytheconnection,butthiskindofimitationwasseenasmoreflatterythanthreattotheAmericanwebjuggernaut.Atthetime,SiliconValleysawtheChineseinternetasanovelty,aninterestinglittleexperimentinatechnologicallybackwardcountry.

BearinmindthatthiswasanerawhencopyingfueledmanypartsoftheChineseeconomy.Factoriesinthesouthernpartofthecountrycrankedoutknockoffluxurybags.ChinesecarmanufacturerscreatedsuchcloseduplicatesofforeignmodelsthatsomedealershipsgavecustomerstheoptionofremovingtheChinesecompany’slogoandreplacingitwiththelogoofthemoreprestigiousforeignbrand.TherewasevenaknockoffDisneyland,acreepyamusementparkontheoutskirtsofBeijingwhereemployeesinreplicaMickeyandMinnieMousesuitshuggedChinesechildren.Atthepark’sentrancehungasign:“Disneylandistoofar,pleasecometoShijingshan!”WhileChina’senterprisingamusementparkoperatorsborrowedunabashedlyfromDisney,WangXingwashardatworkcopyingFacebookandthenTwitter.

WhileleadingGoogleChina,Iexperiencedfirsthandthedangerthattheseclonesposedtobrandimage.Beginningin2005,IthrewmyselfintobuildingupourChinesesearchengineandthetrustofChineseusers.ButontheeveningofDecember11,2008,amajorChineseTVstationdedicatedasix-

minutesegmentofitsnationalnewsbroadcasttoadevastatingexposéonGoogleChina.TheprogramshoweduserssearchingGoogle’sChinesesiteformedicalinformationbeingservedupadswithlinkstofakemedicaltreatments.Thecamerazoomedintightonthecomputerscreen,whereGoogle’sChineselogohoveredominouslyabovedangerousscamsandphonyprescription-drugservices.

GoogleChinawasthrownintoafull-oncrisisofpublictrust.Afterwatchingthefootage,Iracedtomycomputertoconductthesamesearchesbutcuriouslycouldnotconjureuptheresultsfeaturedontheprogram.Ichangedaroundthewordsandtweakedmysettingsbutstillcouldn’tnavigateto—andthensubsequentlyremove—theoffendingads.Atthesametime,IwasimmediatelyfloodedwithmessagesfromreportersdemandinganexplanationastoGoogleChina’smisleadingadvertising,butIcouldonlygivewhatprobablysoundedlikeaweakexcuse:Googleworksquicklytoremoveanyproblematicadvertisements,buttheprocessisn’tinstantaneous,andoccasionallyoffendingadsmayliveonlineforafewhours.

Thestormcontinuedtorageon,allwhileourteamkeptfailingtofindorlocatetheoffendingadsfromthetelevisionprogram.LaterthatnightIreceivedanexcitedemailfromoneofourengineers.Hehadfiguredoutwhywecouldn’treproducetheresults:becausethesearchengineshownontheprogramwasn’tGoogle.ItwasaChinesecopycatsearchenginethathadmadeaperfectcopyofGoogle—thelayout,thefonts,thefeel—almostdowntothepixel.Thesite’ssearchresultsandadsweretheirownbuthadbeenpackagedonlinetobeindistinguishablefromGoogleChina.Theengineerhadnoticedjustonetinydifference,aslightvariationinthecolorofonefontused.TheimpersonatorshaddonesuchagoodjobthatallbutoneofGoogleChina’ssevenhundredemployeeswatchingonscreenhadfailedtotellthemapart.

Theprecisioncopyingextendedeventothemostelegantandcutting-edgehardware.WhenSteveJobslaunchedtheoriginaliPhone,hehadonlyafewmonths’leadtimebeforeelectronicsmarketsthroughoutChinawereselling“mini-iPhones.”Thefun-sizereplicaslookedalmostexactlyliketherealthingbutwereabouthalfthesizeandfitsquarelyinthepalmofyourhand.Theyalsocompletelylackedtheabilitytoaccesstheinternetviathephone’sdataplan,makingthemthedumbest“smartphone”onthemarket.

AmericanvisitorstoBeijingwouldclamortogettheirhandsonthemini-iPhones,thinkingthemagreatjokegiftforfriendsbackhome.TothosesteepedintheinnovationmythologyofSiliconValley,themini-iPhonesweretheperfectmetaphorforChinesetechnologyduringthecopycatera:ashinyexteriorthathadbeencopiedfromAmericabutahollowshellthatheld

nothinginnovativeorevenfunctional.TheprevailingAmericanattitudewasthatpeoplelikeWangXingcouldcopythelookandfeelofFacebook,butthattheChinesewouldneveraccessthemysteriousmagicofinnovationthatdroveaplacelikeSiliconValley.

BUILDINGBLOCKSANDSTUMBLINGBLOCKS

SiliconValleyinvestorstakeasanarticleoffaiththatapureinnovationmentalityisthefoundationonwhichcompanieslikeGoogle,Facebook,Amazon,andApplearebuilt.Itwasanirrepressibleimpulseto“thinkdifferent”thatdrovepeoplelikeSteveJobs,MarkZuckerberg,andJeffBezostocreatethesecompaniesthatwouldchangetheworld.Inthatschoolofthought,China’sknockoffclockmakerswereheadeddownadead-endroad.Acopycatmentalityisacorestumblingblockonthepathtotrueinnovation.Byblindlyimitatingothers—orsothetheorygoes—youstuntyourownimaginationandkillthechancesofcreatinganoriginalandinnovativeproduct.

ButIsawearlycopycatslikeWangXing’sTwitterknockoffnotasstumblingblocksbutasbuildingblocks.Thatfirstactofcopyingdidn’tturnintoananti-innovationmentalitythatitscreatorcouldnevershake.Itwasanecessarysteppingstoneonthewaytomoreoriginalandlocallytailoredtechnologyproducts.

Theengineeringknow-howanddesignsensibilityneededtocreateaworld-classtechnologyproductdon’tjustappearoutofnowhere.IntheUnitedStates,universities,companies,andengineershavebeencultivatingandpassingdowntheseskillsetsforgenerations.Eachgenerationhasitsbreakoutcompaniesorproducts,buttheseinnovationsrestonafoundationofeducation,mentorship,internships,andinspiration.

Chinahadnosuchluxury.WhenBillGatesfoundedMicrosoftin1975,ChinawasstillinthethroesoftheCulturalRevolution,atimeofmassivesocialupheavalandanti-intellectualfever.WhenSergeiBrinandLarryPagefoundedGooglein1998,just0.2percentoftheChinesepopulationwasconnectedtotheinternet,comparedwith30percentintheUnitedStates.EarlyChinesetechentrepreneurslookingformentorsormodelcompanieswithintheirowncountrysimplycouldn’tfindthem.Soinsteadtheylookedabroadandcopiedthemasbesttheycould.

Itwasacrudeprocesstobesure,andsometimesanembarrassingone.Butittaughtthesecopycatsthebasicsofuserinterfacedesign,website

architecture,andback-endsoftwaredevelopment.Astheirclone-likeproductswentlive,thesemarket-drivenentrepreneurswereforcedtograpplewithusersatisfactionanditerativeproductdevelopment.Iftheywantedtowinthemarket,theyhadtobeatnotjusttheirSiliconValleyinspirationbutalsodrovesofsimilarcopycats.Theylearnedwhatworkedandwhatdidn’twithChineseusers.Theybegantoiterate,improve,andlocalizetheproducttobetterservetheircustomers.

Andthosecustomershaduniquehabitsandpreferences,waysofusingsoftwarethatdidn’tmapneatlyontoSiliconValley’sglobalone-size-fits-allproductmodel.CompanieslikeGoogleandFacebookareoftenloathtoallowlocalchangestotheircoreproductsorbusinessmodels.Theytendtobelieveinbuildingonethingandbuildingitwell.It’sanapproachthathelpedthemrapidlysweeptheglobeintheearlydaysoftheinternet,whenmostcountrieslaggedsofarbehindintechnologythattheycouldn’tofferanylocalizedalternatives.Butastechnicalknow-howhasdiffusedaroundtheglobe,itisbecominghardertoforcepeopleofallcountriesandculturesintoacookie-cuttermoldthatwasoftenbuiltinAmericaforAmericans.

Asaresult,whenChinesecopycatswenthead-to-headwiththeirSiliconValleyforefathers,theytookthatAmericanunwillingnesstoadaptandweaponizedit.EverydivergencebetweenChineseuserpreferencesandaglobalproductbecameanopeningthatlocalcompetitorscouldattack.Theybegantailoringtheirproductsandbusinessmodelstolocalneeds,anddrivingawedgebetweenChineseinternetusersandSiliconValley.

“FREEISNOTABUSINESSMODEL”

JackMamadeanartofthesekindsofattacksintheearlydaysoftheChinesee-commercecompanyAlibaba.Mafoundedhiscompanyin1999,andforthefirstcoupleofyearsofoperationhismaincompetitorswereotherlocalChinesecompanies.Butin2002,eBayenteredtheChinesemarket.Atthattime,eBaywasthebiggeste-commercecompanyintheworldandadarlingofbothSiliconValleyandWallStreet.Alibaba’sonlinemarketplacewasderidedasanotherChinesecopycatwithnorighttobeinthesameroomasthebigdogsofSiliconValley.AndsoMalaunchedafive-yearguerrillawaragainsteBay,turningtheforeigncompany’ssizeagainstitandrelentlesslypunishingtheinvaderforfailingtoadapttolocalconditions.

WheneBayenteredtheChinesemarketin2002,theydidsobybuyingtheleadingChineseonlineauctionsite—notAlibababutaneBayimpersonatorcalledEachNet.Themarriagecreatedtheultimatepowercouple:thetopglobale-commercesiteandChina’snumberoneknockoff.eBayproceededto

stripawaytheChinesecompany’suserinterface,rebuildingthesiteineBay’sglobalproductimage.CompanyleadershipbroughtininternationalmanagersforthenewChinaoperations,whodirectedalltrafficthrougheBay’sserversbackintheUnitedStates.Butthenewuserinterfacedidn’tmatchChineseweb-surfinghabits,thenewleadershipdidn’tunderstandChinesedomesticmarkets,andthetrans-Pacificroutingoftrafficslowedpage-loadingtimes.AtonepointanearthquakeunderthePacificOceanseveredkeycablesandknockedthesiteofflineforafewdays.

Meanwhile,AlibabafounderJackMawasbusycopyingeBay’scorefunctionsandadaptingthebusinessmodeltoChineserealities.Hebeganbycreatinganauction-styleplatform,Taobao,todirectlycompetewitheBay’scorebusiness.Fromthere,Ma’steamcontinuallytweakedTaobao’sfunctionsandtackedonfeaturestomeetuniqueChineseneeds.Hisstrongestlocalizationplayswereinpaymentandrevenuemodels.Toovercomeadeficitofusertrustinonlinepurchases,MacreatedAlipay,apaymenttoolthatwouldholdmoneyfrompurchasesinescrowuntilthebuyerconfirmedthereceiptofgoods.Taobaoalsoaddedinstantmessagingfunctionstoallowbuyersandsellerstocommunicateontheplatforminrealtime.ThesebusinessinnovationshelpedTaobaoclawawaymarketsharefromeBay,whoseglobalproductmentalityanddeepcentralizationofdecision-makingpowerinSiliconValleymadeitslowtoreactandaddfeatures.

ButMa’sgreatestweaponwashisdeploymentofa“freemium”revenuemodel,thepracticeofkeepingbasicfunctionsfreewhilechargingforpremiumservices.Atthetime,eBaychargedsellersafeejusttolisttheirproducts,anotherfeewhentheproductsweresold,andafinalfeeifeBay-ownedPayPalwasusedforpayment.Conventionalwisdomheldthatauctionsitesore-commercemarketplacesitesneededtodothisinordertoguaranteesteadyrevenuestreams.

ButascompetitionwitheBayheatedup,Madevelopedanewapproach:hepledgedtomakealllistingsandtransactionsonTaobaofreeforthenextthreeyears,apromisehesoonextendedindefinitely.ItwasaningeniousPRmoveandasavvybusinessplay.Intheshortterm,itwongoodwillfromChinesesellersstillleeryofinternettransactions.AllowingthemtolistforfreehelpedMabuildathrivingmarketplaceinalow-trustsociety.Ittookyearstogetthere,butinthelongterm,thatmarketplacegrewsolargethatinordertogettheirproductsnoticed,powersellershadtopayMaforadvertisementsandhighersearchrankings.BrandswouldenduppayingevenlargerpremiumstolistonTaobao’smorehigh-endsistersite,Tmall.

eBaybungleditsresponse.Inacondescendingpressrelease,thecompanylecturedMa,claiming“freeisnotabusinessmodel.”AsaNasdaq-listed

publiccompany,eBaywasunderpressuretoshowever-risingrevenuesandprofits.Americanpubliccompaniestendtotreatinternationalmarketsascashcows,sourcesofbonusrevenuetowhichtheyareentitledbyvirtueofwinningathome.SiliconValley’sricheste-commercecompanywasn’tabouttomakeanexceptiontoitsglobalmodeltomatchthewildpronouncementsofapeskyChinesecopycat.

ThatkindofshortsightedstubbornnesssealedeBay’sfateinChina.TaobaorapidlypeeledawayusersandsellersfromtheAmericanjuggernaut.WitheBay’smarketshareinfreefall,eBayCEOMegWhitmanbrieflyrelocatedtoChinatotryandsalvagetheoperationsthere.Whenthatdidn’twork,sheinvitedMatoSiliconValleytotryandbrokeradeal.ButMasmelledbloodinthewater,andhewantedtotalvictory.Withinayear,eBayfullyretreatedfromtheChinesemarket.

THEYELLOWPAGESVERSUSTHEBAZAAR

IwitnessedthissamedisconnectbetweenglobalproductsandlocaluserswhileleadingGoogleChina.Asanextensionofperhapstheworld’smostprestigiousinternetcompany,weshouldhavehadamajorbrandadvantage.ButthatlinkagebacktoheadquartersinSiliconValleyturnedintoabigstumblingblockwhenitcametoadaptingproductstowiderChineseaudiences.WhenIlaunchedGoogleChinain2005,ourmaincompetitorwastheChinesesearchengineBaidu.ThewebsitewasthecreationofRobinLi,aChinese-bornexpertinsearchengineswhohadexperienceworkinginSiliconValley.Baidu’scorefunctionsandminimalistdesignmimickedGoogle,butLirelentlesslyoptimizedthesiteforthesearchhabitsofChineseusers.

Thosedivergenthabitswerestarkestinthewaysusersinteractedwithapageofsearchresults.Withinfocusgroups,wewereabletotrackauser’seyemovementsandclicksacrossagivenpageofsearchresults.Weusedthatdatatocreateheatmapsofactivityonthepage:greenhighlightsshowedwheretheuserhadglanced,yellowhighlightswheretheyhadstaredintently,andreddotsmarkedeachoftheirclicks.ComparingheatmapsgeneratedbyAmericanandChineseusersmakesforastrikingcontrast.

TheAmericanusers’mapsshowatightclusteringofgreenandyellowintheupperleftcornerwherethetopsearchresultsappeared,withacoupleofreddotsforclicksonthetoptworesults.Americanusersremainonthepageforaroundtensecondsbeforenavigatingaway.Incontrast,Chineseusers’heatmapslooklikeahotmess.Theupperleftcornerhasthegreatestclusterofglancesandclicks,buttherestofthepageisblanketedinsmudgesofgreenandspecksofred.Chineseusersspentbetweenthirtyandsixtyseconds

onthesearchpage,theireyesdartingaroundalmostalltheresultsastheyclickedpromiscuously.

Eye-trackingmapsrevealedadeepertruthaboutthewaybothsetsofusersapproachedsearch.AmericanstreatedsearchenginesliketheYellowPages,atoolforsimplyfindingaspecificpieceofinformation.Chineseuserstreatedsearchengineslikeashoppingmall,aplacetocheckoutavarietyofgoods,tryeachoneon,andeventuallypickafewthingstobuy.FortensofmillionsofChinesenewtotheinternet,thiswastheirfirstexposuretosuchavarietyofinformation,andtheywantedtosampleitall.

ThatstrikinglyfundamentaldifferenceinuserattitudesshouldhaveledtoanumberofproductmodificationsforChineseusers.OnGoogle’sglobalsearchplatform,whenusersclickedonasearchresult’slink,itwouldnavigatethemawayfromthesearchresultspage.ThatmeantwewereforcingChinese“shoppers”topickoneitemforpurchaseandthen,ineffect,kickingthemoutofthemall.Baidu,bycontrast,openedanewbrowserwindowfortheuserforeachlinkclicked.Thatletuserstryonvarioussearchresultswithouthavingto“leavethemall.”

Givenclearevidenceofdifferentuserneeds,IrecommendedGooglemakeanexceptionandcopytheBaidumodelofopeningdifferentwindowsforeachclick.Butthecompanyhadalengthyreviewprocessforanychangestocoreproductsbecausethosechanges“forked”thecodeandmadeitmoredifficulttomaintain.GoogleandotherSiliconValleycompaniestriedhardtoavoidthat,believingthattheelegantproductscomingoutoftheSiliconValleyheadquartersshouldbegoodenoughforusersaroundtheglobe.Ifoughtformonthstogetthischangemadeandeventuallyprevailed,butinthemeantimeBaiduhadwonovermoreuserswithitsChina-centricproductoffering.

BattleslikethiswererepeatedcontinuouslyovermyfouryearswithGoogle.InfairnesstoGoogle,headquartersgaveusmorelatitudethanmostSiliconValleycompaniesgivetotheirChinabranches,andweusedthatleveragetodevelopmanylocallyoptimizedfeatures,whichwonbacksubstantialmarketshareGooglehadlostinpreviousyears.Butheadquarters’resistancetoforkingmadeeachnewfeatureanuphillbattle,onethatslowedusupandworeusdown.Tiredoffightingwiththeirowncompany,manyemployeesleftoutoffrustration.

WHYSILICONVALLEYGIANTSFAILINCHINA

AsasuccessionofAmericanjuggernauts—eBay,Google,Uber,Airbnb,LinkedIn,Amazon—triedandfailedtowintheChinesemarket,WesternanalystswerequicktochalkuptheirfailurestoChinesegovernmentcontrols.TheyassumedthattheonlyreasonChinesecompaniessurvivedwasduetogovernmentprotectionismthathobbledtheirAmericanopponents.

InmyyearsofexperienceworkingforthoseAmericancompaniesandnowinvestingintheirChinesecompetitors,I’vefoundSiliconValley’sapproachtoChinatobeafarmoreimportantreasonfortheirfailure.AmericancompaniestreatChinalikejustanyothermarkettocheckofftheirgloballist.Theydon’tinvesttheresources,havethepatience,orgivetheirChineseteamstheflexibilityneededtocompetewithChina’sworld-classentrepreneurs.TheyseetheprimaryjobinChinaasmarketingtheirexistingproductstoChineseusers.Inreality,theyneedtoputinrealworktailoringtheirproductsforChineseusersorbuildingnewproductsfromthegrounduptomeetmarketdemands.Resistancetolocalizationslowsdownproductiterationandmakeslocalteamsfeellikecogsinaclunkymachine.

SiliconValleycompaniesalsoloseoutontoptalent.WithsomuchopportunitynowforgrowthwithinChinesestartups,themostambitiousyoungpeoplejoinorstartlocalcompanies.TheyknowthatiftheyjointheChineseteamofanAmericancompany,thatcompany’smanagementwillforeverseethemas“localhires,”workerswhoseutilityislimitedtotheircountryofbirth.They’llneverbegivenachancetoclimbthehierarchyattheSiliconValleyheadquarters,insteadbumpingupagainsttheceilingofa“countrymanager”forChina.Themostambitiousyoungpeople—theoneswhowanttomakeaglobalimpact—chafeatthoserestrictions,choosingtostarttheirowncompaniesortoclimbtheranksatoneofChina’stechjuggernauts.Foreignfirmsareoftenleftwithmild-manneredmanagersorcareersalespeoplehelicopteredinfromothercountries,peoplewhoaremoreconcernedwithprotectingtheirsalaryandstockoptionsthanwithtrulyfightingtowintheChinesemarket.PutthoserelativelycautiousmanagersupagainstgladiatorialentrepreneurswhocuttheirteethinChina’scompetitivecoliseum,andit’salwaysthegladiatorswhowillemergevictorious.

WhileforeignanalystscontinuedtoharponthequestionofwhyAmericancompaniescouldn’twininChina,Chinesecompanieswerebusybuildingbetterproducts.Weibo,amicro-bloggingplatforminitiallyinspiredbyTwitter,wasfarfastertoexpandmultimediafunctionalityandisnowworthmorethantheAmericancompany.Didi,theride-hailingcompanythatdukeditoutwithUber,dramaticallyexpandeditsproductofferingsandgivesmorerideseachdayinChinathanUberdoesacrosstheentireworld.Toutiao,aChinesenewsplatformoftenlikenedtoBuzzFeed,usesadvancedmachine-

learningalgorithmstotailoritscontentforeachuser,boostingitsvaluationmanymultiplesabovetheAmericanwebsite.Dismissingthesecompaniesascopycatsrelyingongovernmentprotectioninordertosucceedblindsanalyststoworld-classinnovationthatishappeningelsewhere.

ButthematurationofChina’sentrepreneurialecosystemwasaboutfarmorethancompetitionwithAmericangiants.AftercompanieslikeAlibaba,Baidu,andTencenthadprovenhowlucrativeChina’sinternetmarketscouldbe,newwavesofventurecapitalandtalentbegantopourintotheindustry.Marketswereheatingup,andthenumberofChinesestartupswasgrowingexponentially.Thesestartupsmayhavetakeninspirationfromacrosstheocean,buttheirrealcompetitorswereotherdomesticcompanies,andtheclashesweretakingonalltheintensityofasiblingrivalry.

BattleswithSiliconValleymayhavecreatedsomeofChina’shomegrowninternetGoliaths,butitwascutthroatChinesedomesticcompetitionthatforgedagenerationofgladiatorentrepreneurs.

ALLISFAIRINSTARTUPSANDWAR

ZhouHongyiisthekindofguywholikestoposeforpictureswithheavyartillery.His12millionsocialmediafollowersareregularlytreatedtopicturesofZhouposingnexttocannonsorimpalingcellphoneswithahigh-poweredbowandarrow.Foryears,onewallofhisofficewasadornedentirelywiththeshot-upsheetsofpaperusedforhandguntargetpractice.WhenhisPRteamsubmitsastockphototomediaoutlets,it’ssometimesapictureofZhoudressedinarmyfatigues,smokerisinginthebackgroundandamachinegunleaningbyhisside.

HeisalsothefieryfounderofsomeofChina’smostsuccessfulearlyinternetcompanies.Zhou’sfirststartupsoldtoYahoo!,whichpickedZhoutoheadupChinaoperations.ClashingendlesslywiththeSiliconValleyleadership,Zhouisrumoredtohaveoncethrownachairoutanofficewindowduringashoutingmatch.WhenIledGoogleChina,IwouldinviteZhoutospeaktoourleadershipteamabouttheuniquecharacteristicsoftheChinesemarket.HetooktheopportunitytoberatetheAmericanexecutives,tellingthemtheywerenaiveandknewnothingaboutwhatittooktocompeteinChina.Theywould,hesaid,bebetteroffjusthandingovercontroltoabattle-hardenedwarriorlikehim.HelaterfoundedChina’sleadingwebsecuritysoftware,Qihoo360(pronounced“chee-who”),andlaunchedabrowserwhoselogowasanexactcopyofInternetExplorer’sbutdoneingreen.

ZhouembodiesthegladiatorialmentalityofChineseinternetentrepreneurs.Inhisworld,competitioniswarandhewillstopatnothingtowin.InSiliconValley,histacticswouldguaranteesocialostracism,antimonopolyinvestigations,andendless,costlylawsuits.ButintheChinesecoliseum,noneofthesethreecanholdbackcombatants.Theonlyrecoursewhenanopponentstrikesalowblowistolaunchamoredamagingcounterattack,onethatcantaketheformofcopyingproducts,smearingopponents,orevenlegaldetention.Zhoufacedalloftheaboveduringthe“3QWar,”abattlebetweenZhou’sQihooandQQ,themessagingplatformofwebjuggernautTencent.

Iwitnessedthestartofhostilitiesfirsthandoneeveningin2010,whenZhouinvitedmeandemployeesofthenewlyformedSinovationVenturestojoinhisteamatalasertagcourseoutsideofBeijing.Zhouwasinhiselement,shootingupthecompetition,whenhiscellphonerang.Itwasanemployeewithbadnews:TencenthadjustlaunchedacopycatofQihoo360’santivirusproductandwasautomaticallyinstallingitonanycomputerthatusedQQ.TencentwasalreadyapowerfulcompanythatwieldedenormousinfluencethroughitsQQuserbase.ThiswasadirectchallengetoQihoo’scorebusiness,amatterofcorporatelifeordeathinZhou’smind,ashewroteinhisautobiography,Disruptor.Heimmediatelycalledtogetherhisteamatthelasertagplace,andtheyracedbacktotheirheadquarterstoformulateacounterattack.

Overthenexttwomonths,ZhoupulledouteverydirtyanddesperatetrickhecouldthinkoftobeatbackTencent.Qihoofirstcreatedapopularnew“privacyprotection”softwarethatissueddiresafetywarningseverytimeaTencentproductwasopened.Thewarningswereoftennotbasedonanyrealsecurityvulnerability,butitwasaneffectivesmearcampaignagainstthestrongercompany.Qihoothenreleasedapieceof“security”softwarethatcouldfilteralladswithinQQ,effectivelykillingtheproduct’smainrevenuestream.Soonthereafter,Zhouwasonhiswaytoworkwhenhegotaphonecall:overthirtypoliceofficershadraidedtheQihooofficesandwerewaitingtheretodetainZhouaspartofaninvestigation.ConvincedtheraidwasorchestratedbyTencent,ZhoudrovestraighttotheairportandfledtoHongKongtoformulatehisnextmove.

Finally,Tencenttookthenuclearoption:onNovember3,2010,TencentannouncedthatitwouldblocktheuseofQQmessagingonanycomputerthathadQihoo360,forcinguserstochoosebetweenthetwoproducts.ItwastheequivalentofFacebooktellingusersitwouldblockFacebookaccessforanyoneusingGoogleChrome.Thecompanieswerewagingtotalwaragainsteachother,withChineseusers’computersasthebattleground.Qihooappealedtousersforathree-day“QQstrike,”andthegovernmentfinally

steppedintoseparatethebloodiedcombatants.WithinaweekbothQQandQihoo360hadreturnedtonormalfunctioning,butthescarsfromthesekindsofbattleslingeredwiththeentrepreneursandcompanies.

ZhouHongyiwasoneofthemostpugnaciousoftheseentrepreneurs,butdirtytricksandanticompetitivebehaviorwerethenormintheindustry.RememberWangXing’sFacebookcopycat,Xiaonei?Afterhesolditin2006,thesitereemergedasRenren(“Everyone”)andbecamethedominantFacebook-esquesocialnetwork.Butby2008,RenrenfacedascrappychallengerinKaixin001(kaixinmeans“happy”inMandarin).ThestartupgainedtractionbyinitiallytargetingyoungurbanitesinsteadofthecollegestudentsalreadyonRenren.Kaixin001integratedsocialnetworkingandgamingwithproductslike“StealVegetables,”aFarmvilleknockoff,butonewherepeoplewererewardednotforcooperativelyfarmingbutforstealingfromeachother’sgardens.Thestartupquicklybecamethefastestgrowingsocialnetworkaround.

Kaixin001wasasolidproduct,butitsfounderwasnogladiator.Whenhecreatedthenetwork,theURLthathewantedtouse—kaixin.com—wasalreadytaken,andhedidn’twant(orpossiblycouldn’tafford)tobuyitfromitsowner.Soinsteadheoptedforkaixin001.com,whichturnedouttobeafatalmistake,equivalenttoenteringthecoliseumwithoutahelmet.

ThemomentKaixin001becameathreat,theownerofRenrensimplyboughttheoriginalwww.kaixin.comURLfromitsowner.HethenrecreatedanexactcopyofKaixin001’suserinterface,changingonlythecolor,andbrazenlydubbedit“TheRealKaixinNet.”Suddenly,manyuserstryingtosignupforthepopularnewsocialnetworkfoundthemselvesunwittinglyensnaredinRenren’snet.Fewevenknewthedifference.RenrenlaterannounceditwouldmergeKaixin.comwithRenren,effectivelycompletingitskidnappingofKaixin001users.ThemovekneecappedKaixin001’susergrowth,killeditsmomentum,andneutralizedamajorthreattoRenren’sdominance.

Kaixin001sueditsunsavoryrival,butthelawsuitcouldn’tundothedamagefromlivecombat.InApril2011,eighteenmonthsafterthelawsuitwasfiled,aBeijingcourtorderedRenrentopay$60,000toKaixin001,buttheonce-promisingchallengerwasnowashadowofitsformerself.Onemonthafterthat,RenrenwentpublicontheNewYorkStockExchange,raising$740million.

Thelessonslearnedinthecoliseumwereclear:killorbekilled.Anycompanythatcan’tfullyinsulateitselffromcompetitors—onatechnical,business,orevenpersonnellevel—isatargetforattack.Tothewinnergothespoils,andthosespoilscanamounttobillionsofdollars.

It’saculturalsystemthatalsoinspiresatrulymaniacalworkethic.SiliconValleypridesitselfonlongworkhours,anarrangementmademoretolerablebyfreemeals,on-sitegyms,andbeerontap.ButcomparedwithChina’sstartupscene,thevalley’scompanieslooklethargicanditsengineerslazy.AndrewNg,thedeep-learningpioneerwhofoundedtheGoogleBrainprojectandledAIeffortsatBaidu,comparedthetwoenvironmentsduringaSinovationeventinMenloPark:

ThepaceisincredibleinChina.WhileIwasleadingteamsinChina,I’djustcallameetingonaSaturdayorSunday,orwheneverIfeltlikeit,andeveryoneshowedupandthere’dbenocomplaining.IfIsentatextmessageat7:00PMoverdinnerandtheyhaven’trespondedby8:00PM,Iwouldwonderwhat’sgoingon.It’sjustaconstantpaceofdecision-making.Themarketdoessomething,soyoubetterreact.That,Ithink,hasmadetheChinaecosystemincredibleatfiguringoutinnovations,howtotakethingstomarket....IwasintheUSworkingwithavendor.Iwon’tuseanynames,butavendorIwasworkingwithactuallycalledmeuponedayandtheysaid,“Andrew,weareinSiliconValley.You’vegottostoptreatinguslikeyou’reinChina,becausewejustcan’tdeliverthingsatthepaceyouexpect.”

THELEANGLADIATOR

ButthecopycaterataughtChinesetechnologyentrepreneursmorethanjustdirtytricksandinsaneschedules.Thehighfinancialstakes,propensityforimitation,andmarket-drivenmentalityalsoendedupincubatingcompaniesthatembodiedthe“leanstartup”methodology.

ThatmethodologywasfirstexplicitlyformulatedinSiliconValleyandpopularizedbythe2011bookTheLeanStartup.Coretoitsphilosophyistheideathatfoundersdon’tknowwhatproductthemarketneeds—themarketknowswhatproductthemarketneeds.Insteadofspendingyearsandmillionsofdollarssecretlycreatingtheirideaoftheperfectproduct,startupsshouldmovequicklytoreleasea“minimumviableproduct”thatcanteaseoutmarketdemandfordifferentfunctions.Internet-basedstartupscanthenreceiveinstantfeedbackbasedoncustomeractivity,lettingthemimmediatelybeginiteratingontheproduct:discardunusedfeatures,tackonnewfunctions,andconstantlytestthewatersofmarketdemand.Leanstartupsmustsensethesubtleshiftsinconsumerbehaviorandthenrelentlesslytinkerwithproductstomeetthatdemand.Theymustbewillingtoabandonproductsorbusinesses

whentheydon’tproveprofitable,pivotingandredeployingtofollowthemoney.

By2011,“lean”wasonthelipsofentrepreneursandinvestorsthroughoutSiliconValley.Conferencesandkeynotespeechespreachedthegospelofleanentrepreneurship,butitwasn’talwaysanaturalfitforthemission-drivenstartupsthatSiliconValleyfosters.A“mission”makesforastrongnarrativewhenpitchingtomediaorventure-capitalfirms,butitcanalsobecomearealburdeninarapidlychangingmarket.Whatdoesafounderdowhenthere’sadivergencebetweenwhatthemarketdemandsandwhatamissiondictates?

China’smarket-drivenentrepreneursfacednosuchdilemma.Unencumberedbyloftymissionstatementsor“corevalues,”theyhadnoproblemfollowingtrendsinuseractivitywhereverittooktheircompanies.Thosetrendsoftenledthemintoindustriescrowdedwithhundredsofnear-identicalcopycatsvyingforthehotmarketoftheyear.AsTaobaodidtoeBay,theseimpersonatorsundercutanyattempttochargeusersbyofferingtheirownproductsforfree.Thesheerdensityofcompetitionandwillingnesstodrivepricesdowntozeroforcedcompaniestoiterate:totweaktheirproductsandinventnewmonetizationmodels,buildingrobustbusinesseswithhighwallsthattheircopycatcompetitorscouldn’tscale.

Inamarketwherecopyingwasthenorm,theseentrepreneurswereforcedtoworkharderandexecutebetterthantheiropponents.SiliconValleypridesitselfonitsaversiontocopying,butthisoftenleadstocomplacency.Thefirstmoverissimplycededanewmarketbecauseothersdon’twanttobeseenasunoriginal.Chineseentrepreneurshavenosuchluxury.Iftheysucceedinbuildingaproductthatpeoplewant,theydon’tgettodeclarevictory.Theyhavetodeclarewar.

WANGXING’SREVENGE

TheWarofaThousandGrouponscrystallizedthisphenomenon.Soonafteritslaunchin2008,GrouponbecamethedarlingoftheAmericanstartupworld.Thepremisewassimple:offercouponsthatworkedonlyifasufficientnumberofbuyersusedthem.Thebuyersgotadiscountandthesellersgotguaranteedbulksales.Itwasahitinpost-financial-crisisAmerica,andGroupon’svaluationskyrocketedtoover$1billioninjustsixteenmonths,thefastestpaceinhistory.

Theconceptseemedtailor-madeforChina,whereshoppersobsessoverdiscountsandbargainingisanartform.EntrepreneursinChinalookingforthenextpromisingmarketquicklypiledintogroupbuying,startinglocal

platformsbasedonGroupon’s“DealoftheDay”model.Majorinternetportalslaunchedtheirowngroup-buyingdivisions,anddozensofnewstartupsenteredthefray.Yetwhatbeganasdozenssoonballoonedintohundredsandthenthousandsofcopycatcompetitors.BythetimeofGroupon’sinitialpublicofferingin2011—thelargestIPOsinceGoogle’sin2004—Chinawashometooverfivethousanddifferentgroup-buyingcompanies.

Tooutsidersthislookedlikeajoke.Itwasacaricatureofaninternetecosystemthatwasshamelessinitscopyinganddevoidofanyoriginalideas.Andvastswathsofthosefivethousandcopycatswerelaughable,theproductofambitiousbutcluelessentrepreneurswithnoprospectsforsurvivingtheensuingbloodletting.

Butatthebottomofthatdogpile,atthecenterofthisroyalrumble,wasWangXing.Intheprevioussevenyears,hehadcopiedthreeAmericantechnologyproducts,builttwocompanies,andsharpenedtheskillsneededtosurviveinthecoliseum.WanghadturnedfromageekyengineerwhoclonedAmericanwebsitesintoaserialentrepreneurwithakeensensefortechnologyproducts,businessmodels,andgladiatorialcompetition.

HeputallthoseskillstoworkduringtheWarofaThousandGroupons.HefoundedMeituan(“BeautifulGroup”)inearly2010andbroughtonbattle-hardenedveteransofhispreviousFacebookandTwitterclonestoleadthecharge.Hedidn’trepeatthepixel-for-pixelcopyingofhisFacebookandTwittersites,insteadbuildingauserinterfacethatbettermatchedChineseusers’preferencefordenselypackedinterfaces.

WhenMeituanlaunched,thebattlewasjustheatingup,withcompetitorsblowingthroughhundredsofmillionsofdollarsinofflineadvertising.Thegoinglogicwentthatinordertostandoutfromtheherd,acompanyhadtoraiselotsofmoneyandspendittowinovercustomersthroughadvertisingandsubsidies.Thathighmarketsharecouldthenbeusedtoraisemoremoneyandrepeatthecycle.Withovereagerinvestorsfundingthousandsofnear-identicalcompanies,Chineseurbanitestookadvantageoftheabsurddiscountstoeatoutindroves.ItwasasifChina’sventure-capitalcommunityweretreatingtheentirecountrytodinner.

ButWangwasawareofthedangersofburningcash—that’showhe’dlostXiaonei,hisFacebookcopy—andheforesawthedangeroftryingtobuylong-termcustomerloyaltywithshort-termbargains.Ifyouonlycompetedonsubsidies,customerswouldendlesslyjumpfromplatformtoplatforminsearchofthebestdeal.Letthecompetitorsspendthemoneyonsubsidizingmealsandeducatingthemarket—hewouldreaptheharvestthattheysowed.SoWangfocusedonkeepingcostsdownwhileiteratinghisproduct.Meituan

eschewedallofflineadvertising,insteadpouringresourcesintotweakingproducts,bringingdownthecostofuseracquisitionandretention,andoptimizingacomplexbackend.Thatbackendincludedprocessingpaymentscominginfrommillionsofcustomersandgoingouttotensofthousandsofsellers.ItwasadauntingengineeringchallengeforwhichWang’sdecadeofhands-onexperiencehadpreparedhim.

OneofMeituan’scoredifferentiationswasitsrelationshipwithsellers,acrucialpieceoftheequationoftenoverlookedbystartupsobsessedwithmarketshare.Meituanpioneeredanautomatedpaymentmechanismthatgotmoneyintothehandsofbusinessesquicker,awelcomechangeatatimewhengroup-buyingstartupsweredyingbytheday,stickingrestaurantswithunpaidbills.Stabilityinspiredloyalty,andMeituanleveragedittobuildoutlargernetworksofexclusivepartnerships.

GrouponofficiallyenteredtheChinesemarketinearly2011byforgingajointventurewithTencent.Themarriagebroughttogetherthetopinternationalgroup-buyingcompanywithahomegrowngiantthathadbothlocalexpertiseandamassivesocialmediafootprint.ButtheGroupon-Tencentpartnershipflounderedfromthebeginning.Tencenthadnotyetfiguredouthowtopartnereffectivelywithe-commercecompanies,andthejointventureblindlyappliedGroupon’sstandardplaybookforinternationalexpansion:hiredozensofmanagementconsultantsandusethetempagencyManpowertobuildoutmassive,low-levelsalesteams.Manpowerheadhuntersmadeafortuneonfees,andGroupon’scustomeracquisitioncostsdwarfedthoseoflocalcompetitors.Theforeignjuggernautwasbleedingmoneytooquicklyandoptimizingitsproducttooslowly.ItfadedtoirrelevancewhilethebloodlettingamongChinesestartupscontinued.

Fromtheoutside,thesetypesofventure-fundedbattlesformarketsharelooktobedeterminedsolelybywhocanraisethemostcapitalandthusoutlasttheiropponents.That’shalf-true:whiletheamountofmoneyraisedisimportant,soistheburnrateandthe“stickiness”ofthecustomersboughtthroughsubsidies.Startupslockedinthesebattlesarealmostneverprofitableatthetime,butthecompanythatcandriveitslosses-per-customer-servedtothebareminimumcanoutlastbetter-fundedcompetitors.Oncethebloodshedisoverandpricesbegintorise,thatsameruthlessefficiencywillbeamajorassetontheroadtoprofitability.

AstheWarofaThousandGrouponsprogressed,thecombatantsfoughtforsurvivalindifferentways.Likegladiatorsformingfactionsinthecoliseum,weakerstartupsmergedinhopesofachievingeconomiesofscale.Othersreliedonburstsofhigh-profileadvertisingtobrieflyriseabovethefray.

Meituan,though,heldback,consistentlyrankinginthetoptenbutnotyetpushingtotakethetopspot.

WangXingembodiedaphilosophyofconquesttracingbacktothefourteenth-centuryemperorZhuYuanzhang,theleaderofarebelarmywhooutlasteddozensofcompetingwarlordstofoundtheMingDynasty:“Buildhighwalls,storeupgrain,andbideyourtimebeforeclaimingthethrone.”ForWangXing,venturefundingwashisgrain,asuperiorproductwashiswall,andabillion-dollarmarketwouldbehisthrone.

By2013,thedustbegantosettleonwhathadbeenthewildestwarofcopycatsthecountryhadeverseen.Thevastmajorityofcombatantshadperishedasvictimsofbrutalattacksortheirownmismanagement.Stillstandingwerethreegladiators:Meituan,Dianping,andNuomi.DianpingwasalongstandingYelpcopycatthathadenteredgroupbuying,whileNuomiwasagroup-buyingaffiliatelaunchedbyRenren,theFacebookcopycatthatWangXinghimselfhadfoundedandsoldoff.Thesethreeaccountedformorethan80percentofthemarket,andWang’sMeituanhadgrowntoavaluationof$3billion.AfteryearsspentphotocopyingAmericanwebsites,hehadlearnedthecraftoftheentrepreneurandwonahugechunkofamassivenewmarket.

Butitwasn’tbystickingtogroupbuyingthatMeituanbecamewhatitistoday.Grouponhadlargelystayedwithitsoriginalbusiness,coastingonthenovelideaofdiscountsthroughgroups.By2014,GrouponwastradingatlessthanhalfofitsIPOprice.Todayit’sashellofwhatithadbeen.Bycontrast,WangceaselesslyexpandedMeituan’slinesofbusinessandconstantlyreshapeditscoreproducts.AseachhotnewconsumerwavewashedovertheChineseeconomy—aboomingboxoffice,afood-deliveryexplosion,massivedomestictourism,flourishingonline-to-offlineservices—Wangpivotedandultimatelytransformedhiscompany.Hewasvoraciousinhisappetitefornewmarketsandrelentlessinhisconstantiterationofnewproducts,aprimeexampleofamarket-drivenleanstartup.

MeituanmergedwithrivalDianpinginlate2015,keepingWanginchargeofthenewcompany.By2017thehybridjuggernautwasfielding20milliondifferentordersadayfromapoolof280millionmonthlyactiveusers.MostcustomershadlongforgottenthatMeituanbeganasagroup-buyingsite.Theyknewitforwhatithadbecome:asprawlingconsumerempirecoveringnoodles,movietickets,andhotelbookings.Today,MeituanDianpingisvaluedat$30billion,makingitthefourthmostvaluablestartupintheworld,aheadofAirbnbandElonMusk’sSpaceX.

ENTREPRENEURS,ELECTRICITY,ANDOIL

Wang’sstoryisaboutmorethanjustthecopycatwhomadegood.HistransformationchartstheevolutionofChina’stechnologyecosystem,andthatecosystem’sgreatestasset:itstenaciousentrepreneurs.ThoseentrepreneursarebeatingSiliconValleyjuggernautsattheirowngameandhavelearnedhowtosurviveinthesinglemostcompetitivestartupenvironmentintheworld.TheythenleveragedChina’sinternetrevolutionandmobileinternetexplosiontobreathelifeintothecountry’snewconsumer-driveneconomy.

Butasremarkableastheseaccomplishmentshavebeen,thesechangeswillpaleincomparisontowhattheseentrepreneurswilldowiththepowerofartificialintelligence.ThedawnoftheinternetinChinafunctionedliketheinventionofthetelegraph,shrinkingdistances,speedinginformationflows,andfacilitatingcommerce.ThedawnofAIinChinawillbeliketheharnessingofelectricity:agame-changerthatsuperchargesindustriesacrosstheboard.TheChineseentrepreneurswhosharpenedandhonedtheirskillsinthecoliseumnowseethepowerthatthisnewtechnologyholds,andthey’realreadyseekingoutindustriesandapplicationswheretheycanturnthisenergyintoprofit.

Buttodothattheyneedmorethanjusttheirownstreet-smartbusinesssensibilities.Ifartificialintelligenceisthenewelectricity,bigdataistheoilthatpowersthegenerators.AndasChina’svibrantanduniqueinternetecosystemtookoffafter2012,itturnedintotheworld’stopproducerofthispetroleumfortheageofartificialintelligence.

3★

CHINA’SALTERNATEINTERNETUNIVERSE

GuoHongisastartupfoundertrappedinthebodyofagovernmentofficial.Middle-aged,Guoisalwaysdressedinamodestdarksuitandwearsthickglasses.Whenstandingforofficialphotosatopeningceremonies,helooksnodifferentfromthedozensofotheridenticallydressedBeijingcityofficialswhocomeouttocutribbonsanddeliverspeeches.

Duringthetwodecadesleadingupto2010,Chinawasgovernedbyengineers.Chineseofficialdomwaspackedwithmenwhostudiedthescienceofbuildingphysicalthings,andtheyputthatknowledgetoworktransformingChinafromapooragriculturalsocietyintoacountryofbustlingfactoriesandenormouscities.ButGuorepresentedanewkindofofficialforanewera—oneinwhichChinaneededtobothbuildthingsandcreateideas.

PutGuoaloneinaroomwithotherentrepreneursortechnologistsandhesuddenlycomesalive.Brimmingwithideas,hespeaksquicklyandlistensintently.Hehasavoraciousappetiteforwhat’snextintechnologyandanabilitytoenvisionhowstartupscanharnessthesetrends.Guothinksoutsidetheboxandthentakesactionontheground.Heisthekindoffounderthatventure-capitalinvestorslovetoputtheirmoneybehind.

AllofthesehabitscameinhandywhenGuodecidedtoturnhissliceofBeijingintotheSiliconValleyofChina,ahotbedforindigenousChineseinnovation.Theyearwas2010,andGuowasresponsiblefortheinfluentialZhongguancun(“jong-gwan-soon”)technologyzoneinnorthwestBeijing,anareathathadlongbrandeditselfasChina’sanswertoSiliconValleybuthadnotreallyliveduptothetitle.Zhongguancunwaschock-fullofelectronicsmarketssellinglow-endsmartphonesandpiratedsoftwarebutofferedfewinnovativestartups.Guowantedtochangethat.

Tokick-startthatprocess,hecametoseemeattheofficesofmynewlyfoundedcompany,SinovationVentures.AfterspendingadecaderepresentingthemostpowerfulAmericantechnologycompaniesinChina,inthefallof2009IleftGoogleChinatoestablishSinovation,anearly-stageincubatorandangelinvestmentfundforChinesestartups.ImadethismovebecauseI

sensedanewenergybubblingupintheChinesestartupecosystem.Thecopycaterahadforgedworld-classentrepreneurs,andtheywerejustbeginningtoapplytheirskillstosolvinguniquelyChineseproblems.China’srapidtransitiontothemobileinternetandbustlingurbancenterscreatedanentirelydifferentenvironment,onewhereinnovativeproductsandnewbusinessmodelscouldthrive.Iwantedtobeapartofbothmentoringandfundingthesecompaniesastheycameintotheirown.WhenGuocametovisitSinovation,acoreteamofex-GooglersandIwere

workingoutofasmallofficethatwaslocatednortheastofZhongguancun.WewererecruitingpromisingengineerstojoinourincubatorandlaunchstartupstargetingChina’sfirstwaveofsmartphoneusers.Guowantedtoknowwhathecoulddotosupportthatmission.Itoldhimthatthecostofrentwaseatingabigchunkofthemoneywewantedtopourintofosteringthesestartups.Anyreliefonrentwouldmeanmoremoneyforbuildingproductsandcompanies.Noproblem,hesaid—hewouldmakesomecalls.ThelocalgovernmentcouldlikelycoverourrentforthreeyearsifwerelocatedtotheneighborhoodofZhongguancun.

Thatwasfantasticnewsforourproject,andevenbetter,Guowasjustgettingstarted.Hedidn’twanttoonlythrowmoneyatoneincubator.HewantedtounderstandwhatreallymadeSiliconValleytick.Guobeganpepperingmewithquestionsaboutmytimeinthevalleyduringthe1990s.Iexplainedhowmanyofthearea’searlyentrepreneurswentontobecomeangelinvestorsandmentors,howgeographicproximityandtightlywovensocialnetworksgavebirthtoaself-sustainingventure-capitalecosystemthatmadesmartbetsonbigideas.

Aswetalked,IcouldseeGuo’smindworkinginoverdrive.Hewasabsorbingeverythingandformulatingtheoutlinesofaplan.SiliconValley’secosystemhadtakenshapeorganicallyoverseveraldecades.ButwhatifweinChinacouldspeedupthatprocessbybrute-forcingthegeographicproximity?WecouldpickonestreetinZhongguancun,clearoutalltheoldinhabitants,andopenthespacetokeyplayersinthiskindofecosystem:VCfirms,startups,incubators,andserviceproviders.Healreadyhadanameinmind:ChuangyeDajie—AvenueoftheEntrepreneurs.

Thiskindoftop-downconstructionofaninnovationecosystemrunscountertoSiliconValleyorthodoxy.Inthatworldview,whatreallymakesthevalleyspecialisanabstractculturalzeitgeist,acommitmenttooriginalthinkingandinnovation.It’snotsomethingthatcouldhavebeenbuiltmerelyusingbricksandrentsubsidies.

GuoandIbothsawthevalueinthatetherealsenseofmission,butwealsosawthatChinawasdifferent.IfwewantedtobootstrapthisprocessinChina

today,money,realestate,andgovernmentsupportmattered.Theprocesswouldrequiregettingourhandsdirty,adaptingthevalley’sdisembodiedinnovationethostotheveryphysicalrealitiesofpresent-dayChina.TheresultwouldleveragesomeofthecoremechanismsofSiliconValleybutwouldtaketheChineseinternetinaverydifferentdirection.

Thatecosystemwasbecomingbothindependentandself-sustaining.ChinesefoundersnolongerhadtotailortheirstartuppitchestothetastesofforeignVCs.TheycouldnowbuildChineseproductstosolveChineseproblems.Itwasaseachangethatalteredtheverytextureofthenation’scitiesandsignaledanewerainthedevelopmentoftheChineseinternet.ItalsoledtoanovernightboominproductionofthenaturalresourceoftheAIage.

UNCHARTEDINTERNETTERRITORY

Duringthecopycatera,therelationshipbetweenChinaandSiliconValleywasoneofimitation,competition,andcatch-up.Butaround2013,theChineseinternetchangeddirection.ItnolongerlaggedbehindtheWesterninternetinfunctionality,thoughitalsohadn’tsurpassedSiliconValleyonitsownterms.Instead,itwasmorphingintoanalternateinternetuniverse,aspacewithitsownrawmaterials,planetarysystems,andlawsofphysics.Itwasaplacewheremanyusersaccessedtheinternetonlythroughcheapsmartphones,wheresmartphonesplayedtheroleofcreditcards,andwherepopulation-densecitiescreatedarichlaboratoryforblendingthedigitalandphysicalworlds.

TheChinesetechcompaniesthatruledthisworldhadnoobviouscorollariesinSiliconValley.Simpleshorthandlike“theAmazonofChina”or“theFacebookofChina”nolongermadesensewhendescribingappslikeWeChat—thedominantsocialappinChina,butonethatevolvedintoa“digitalSwissArmyknife”capableoflettingpeoplepayatthegrocerystore,orderahotmeal,andbookadoctor’svisit.

Underneaththistransformationlayseveralkeybuildingblocks:mobile-firstinternetusers,WeChat’sroleasthenationalsuper-app,andmobilepaymentsthattransformedeverysmartphoneintoadigitalwallet.Oncethosepieceswereinplace,Chinesestartupssetoffanexplosionofindigenousinnovation.Theypioneeredonline-to-offlineservicesthatstitchedtheinternetdeepintothefabricoftheChineseeconomy.TheyturnedChinesecitiesintothefirstcashlessenvironmentssincethedaysofthebartereconomy.Andtheyrevolutionizedurbantransportationwithintelligentbike-sharingapplicationsthatcreatedtheworld’slargestinternet-of-thingsnetwork.

Addingfueltothisfirewasanunprecedentedwaveofgovernmentsupportforinnovation.Guo’smissiontobuildtheAvenueoftheEntrepreneurswasjustthefirsttrickleofwhatin2014turnedintoatidalwaveofofficialpoliciespushingtechnologyentrepreneurship.Underthebannerof“MassInnovationandMassEntrepreneurship,”Chinesemayorsfloodedtheircitieswithnewinnovationzones,incubators,andgovernment-backedventure-capitalfunds,manyofthemmodeledonGuo’sworkwiththeAvenueoftheEntrepreneurs.ItwasacampaignthatanalystsintheWestdismissedasinefficientandmisguided,butonethatturbochargedtheevolutionofChina’salternateinternetuniverse.

Thrivinginthisenvironmentrequiredbothengineeringprowessandrawmanpower:armiesofscooter-ridingdeliverymenschleppinghotmealsaroundtown,tensofthousandsofsalesrepsfanningouttopushmobilepaymentsonstreetvendors,andmillionsofsharedbikesloadedontotrucksanddispersedaroundcities.AnexplosionoftheseservicespushedChinesecompaniestorolluptheirsleevesanddothegruntworkofrunninganoperations-heavybusinessintherealworld.

Inmyview,thatwillingnesstogetone’shandsdirtyintherealworldseparatesChinesetechnologycompaniesfromtheirSiliconValleypeers.Americanstartupsliketosticktowhattheyknow:buildingcleandigitalplatformsthatfacilitateinformationexchanges.Thoseplatformscanbeusedbyvendorswhodothelegwork,butthetechcompaniestendtostaydistantandalooffromtheselogisticaldetails.TheyaspiretothemythologysatirizedintheHBOseriesSiliconValley,thatofaskeletoncrewofhackersbuildingabillion-dollarbusinesswithouteverleavingtheirSanFranciscoloft.

Chinesecompaniesdon’thavethiskindofluxury.Surroundedbycompetitorsreadytoreverse-engineertheirdigitalproducts,theymustusetheirscale,spending,andefficiencyatthegruntworkasadifferentiatingfactor.Theyburncashlikecrazyandrelyonarmiesoflow-wagedeliveryworkerstomaketheirbusinessmodelswork.It’sadefiningtraitofChina’salternateinternetuniversethatleavesAmericananalystsentrenchedinSiliconValleyorthodoxyscratchingtheirheads.

THESAUDIARABIAOFDATA

ButthisChinesecommitmenttogruntworkisalsowhatislayingthegroundworkforChineseleadershipintheageofAIimplementation.Byimmersingthemselvesinthemessydetailsoffooddelivery,carrepairs,sharedbikes,andpurchasesatthecornerstore,thesecompaniesareturningChinaintotheSaudiArabiaofdata:acountrythatsuddenlyfindsitselfsitting

atopstockpilesofthekeyresourcethatpowersthistechnologicalera.ChinahasalreadyvaultedfaraheadoftheUnitedStatesastheworld’slargestproducerofdigitaldata,agapthatiswideningbytheday.

AsIcontendedinthefirstchapter,theinventionofdeeplearningmeansthatwearemovingfromtheageofexpertisetotheageofdata.Trainingsuccessfuldeep-learningalgorithmsrequirescomputingpower,technicaltalent,andlotsofdata.Butofthosethree,itisthevolumeofdatathatwillbethemostimportantgoingforward.That’sbecauseoncetechnicaltalentreachesacertainthreshold,itbeginstoshowdiminishingreturns.Beyondthatpoint,datamakesallthedifference.Algorithmstunedbyanaverageengineercanoutperformthosebuiltbytheworld’sleadingexpertsiftheaverageengineerhasaccesstofarmoredata.

ButChina’sdataadvantageextendsfromquantityintoquality.Thecountry’smassivenumberofinternetusers—greaterthantheUnitedStatesandallofEuropecombined—givesitthequantityofdata,butit’sthenwhatthoseusersdoonlinethatgivesitthequality.ThenatureofChina’salternateuniverseofappsmeansthatthedatacollectedwillalsobefarmoreusefulinbuildingAI-drivencompanies.

SiliconValleyjuggernautsareamassingdatafromyouractivityontheirplatforms,butthatdataconcentratesheavilyinyouronlinebehavior,suchassearchesmade,photosuploaded,YouTubevideoswatched,andposts“liked.”Chinesecompaniesareinsteadgatheringdatafromtherealworld:thewhat,when,andwhereofphysicalpurchases,meals,makeovers,andtransportation.Deeplearningcanonlyoptimizewhatitcan“see”bywayofdata,andChina’sphysicallygroundedtechnologyecosystemgivesthesealgorithmsmanymoreeyesintothecontentofourdailylives.AsAIbeginsto“electrify”newindustries,China’sembraceofthemessydetailsoftherealworldwillgiveitanedgeonSiliconValley.

ThissuddendatawindfallforChinawasn’ttheresultofsomemasterplan.WhenGuoHongcametoseemein2010,hecouldn’thavepredictedtheexactshapeChina’salternateuniversewouldtakeorhowmachinelearningwouldsuddenlyturndataintoapreciouscommodity.Buthedidbelievethatgiventherightsetting,funding,andalittleprodding,Chinesestartupscouldcreatesomethingbothtotallyuniqueandveryvaluable.Onthatpoint,Guo’sentrepreneurialinstinctswererightonthemoney.

THEMOBILELEAPFROG

IleftGoogleChinaandfoundedSinovationVenturesafewmonthsbeforeGoogledecidedtopulloutofthemainlandmarket.ThatmovebyGooglewasamajordisappointmenttoourteam,giventheyearsofworkwehadpouredintomakingthecompanycompetitiveinChina.ButthatdeparturealsocreatedanopeningforChinesestartupstobuildanentirelynewsuiteofproductsforthemostexcitingnewtrendintechnology,themobileinternet.

AftertheiPhone’s2007debut,thetechnologyworldbeganslowlyadaptingwebsitesandservicesforaccessviaasmartphone.Initssimplestform,thismeantbuildingaversionofone’swebsitethatworkedwellwhentransposedfromalargecomputerscreenontoasmallsmartphone.Butitalsomeantbuildingoutnewtools:anappstore,photo-editingapps,andantivirussoftware.WithGoogleleavingChina,themarketforAndroid-basedappsinthisspacewasnowwideopen.Sinovation’searliestbatchofincubatedstartupslookedtofillthesegaps.Intheprocess,Iwantedustoexploreanewandexcitingwayofinteractingwiththeinternet,aspacewhereSiliconValleyhadnotyetdefinedthedominantparadigm.

DuringChina’scopycatera,thesmallportionofitspopulationthataccessedtheinternetdidsointhesamewayasAmericans,throughadesktoporlaptopcomputer.Chineseusers’behaviordifferedsignificantlyfromthatofAmericans,butthefundamentaltoolsusedwerethesame.ComputerswerestilltooexpensiveformostChinesepeople,andby2010onlyaroundone-thirdofChina’spopulationhadaccesstotheinternet.Sowhencheapsmartphoneshitthemarket,wavesofordinarycitizensleapfroggedoverpersonalcomputersentirelyandwentonlineforthefirsttimeviatheirphones.

Simpleasthattransitionsounds,ithadprofoundimplicationsfortheparticularshapethattheChineseinternetwouldtake.Smartphoneusersnotonlyacteddifferentlythantheirdesktoppeers;theyalsowanteddifferentthings.Formobile-firstusers,theinternetwasn’tjustanabstractcollectionofdigitalinformationthatyouaccessedfromasetlocation.Rather,theinternetwasatoolthatyoubroughtwithyouasyoumovedaroundcities—itshouldhelpsolvethelocalproblemsyourunintowhenyouneedtoeat,shop,travel,orjustgetacrosstown.Chinesestartupsneededtobuildtheirproductsaccordingly.

ThisopenedarealopportunityforChinesestartupsbackedbyChineseVCstobreaknewgroundinordertofosterChinese-styleinnovation.AtSinovation,ourfirstroundofinvestmentwentintoincubatingninecompanies,severalofwhichwereeventuallyacquiredorcontrolledbyBaidu,Alibaba,andTencent.ThosethreeChineseinternetjuggernauts(collectivelyknownbytheabbreviation“BAT”)usedourstartupstoacceleratetheir

transitionintomobileinternetcompanies.Thosestartupacquisitionsformedasolidfoundationfortheirmobileefforts,butitwouldbeasecretivein-houseprojectatTencentthatfirstcrackedopenthepotentialofwhatIcallChina’salternateinternetuniverse.

WECHAT:HUMBLEBEGINNINGS,HUGEAMBITIONS

Hardlyanyonenoticedwhentheworld’smostpowerfulappwaltzedontotheworldstage.TheJanuary2011launchofWeChat,Tencent’snewsocialmessagingapp,receivedonlyonementionintheEnglish-languagepress,onthetechnologysitetheNextWeb.TencentalreadyownedthetwodominantsocialnetworksinChina—itsQQinstantmessagingplatformandQ-Zonesocialnetworkeachhadhundredsofmillionsofusers—butAmericananalystsdismissedtheseasmediocreknockoffsofAmericanproducts.Thecompany’snewsmartphoneappdidn’tevenhaveanEnglishnameyet,goingonlybytheChinesenameWeixin,or“micro-message.”

Butitdidhaveafewotherthingsgoingforit.Theappletsyousendphotosandshortvoicerecordingsalongwithtypingoutmessages.ThelatterwasamajorbenefitgivenhowcumbersomeinputtingChinesecharactersonaphonewasatthetime.WeChatwasalsocreatedspecificallyforsmartphones.Insteadoftryingtotransformitsdominantdesktopplatform,QQ,intoaphoneapp,Tencentaimedtodisruptitsownproductwithabetteronebuiltjustformobile.Itwasariskystrategyforanestablishedjuggernaut,butonethatpaidoffbigtime.

Theapp’scleanfunctionalitytookoff,andasWeChatgainedusers,italsotackedonmorefunctions.Injustoverayearithadhit100millionregisteredusers,andbyitstwo-yearanniversaryinJanuary2013,thatnumberwas300million.Alongthewayithadaddedvoiceandvideocallsandconferencecalls,functionsthatseemobvioustodaybutthatWeChat’sglobalcompetitorWhatsAppwaiteduntil2016toincorporate.

WeChat’searlytweaksandoptimizationswerejustthebeginning.Itsoonpioneeredaninnovative“app-within-an-app”modelthatchangedthewaymediaoutletsandadvertisersusedsocialplatforms.ThesewereWeChat’s“officialaccounts,”subscription-basedthird-partycontentstreamsthatlivedwithintheappandweresometimescomparedtoFacebookpagesformediacompanies.ButinsteadofFacebook’sminimalistplatformforpostingcontent,theofficialaccountsofferedmuchofthefunctionalityofastandaloneappwithoutthehassleofactuallybuildingone.Theseaccounts

quicklybecamesodominantinthesocialmediaspacethatmanymediaandconsumercompaniessimplystoppedbuildingtheirownapps,choosinginsteadtoliveentirelyinWeChat’sworld.

Inthespanoftwoyears,WeChatwentfromano-nameapptoapowerhouseofmessaging,media,marketing,andgaming.ButTencentwantedevenmore.Italreadymonopolizedusers’digitallives,butitwantedtoextendthatfunctionalitybeyondthesmartphone.

Overtheensuingfiveyears,TencentpainstakinglybuiltWeChatintotheworld’sfirstsuper-app.Itbecamea“remotecontrolforlife”thatdominatednotjustusers’digitalworldsbutallowedthemtopayatrestaurants,hailtaxis,unlocksharedbikes,manageinvestments,bookdoctors’appointments,andhavethosedoctors’prescriptionsdeliveredtoyourdoor.Thismetastasizingfunctionalitywouldblurthelinesdividingouronlineandofflineworlds,bothmoldingandfeedingoffofChina’salternateinternetuniverse.Butbeforeitcoulddothat,WeChathadtogetinsideitsusers’wallets,andthatmeanttakingonthetopdogindigitalcommerce.

THEPEARLHARBOROFMOBILEPAYMENTS

TheattackcameonthemostfestivenightoftheChinesecalendar—ChineseNewYear’sEve,2014—andtheweapondrewinspirationfromtheoccasion.Chinesetraditioncallsforthegiftingof“redenvelopes”duringChineseNewYear,smallanddecorativeredpacketswithcashinside.ThatcashistheChineseequivalentofaChristmaspresent,somethingusuallygivenbyolderrelativestochildren,andbybossestoemployees.

Tencent’sinnovationwassosimple—andsuchpurefunforusers—thatitmaskedthemagnitudeofthepowergrab.WeChatgaveitsuserstheabilitytosendoutdigitalredenvelopescontainingrealmoneytoWeChatfriendsnearandfar.OnceuserslinkedtheirbankaccountstoWeChat,theycouldsendoutenvelopesworthasetamountofmoneytoonepersonorintoagroupchatandlettheirfriendsracetoseewhocould“open”itfirstandgetthemoney.Thatmoneythenlivedinsideusers’WeChatWallet,anewsubdivisionoftheapp.Themoneycouldbeusedtomakepurchases,transferredtootherfriends,oraddedtotheirownbankaccountiftheylinkeditwithWeChat.

Itwasaseamlesstranslationtodigitalofanage-oldChinesetradition,onethataddedagamingelementtotheprocess.WeChatuserslovedtheenvelopes,sendingout16millionofthepacketsduringChineseNewYearandintheprocess,linking5millionnewbankaccountstoWeChatWallet.

JackMawaslessamused.HecalledthemovebyTencenta“PearlHarborattack”onAlibaba’sdominanceindigitalcommerce.Alibaba’sAlipayhadpioneereddigitalpaymentstailoredforChineseusersbackin2004andlateradaptedtheproductforsmartphones.ButovernightWeChathadtakenallthemomentuminnewtypesofmobilepayments,nudgingmillionsofnewusersintolinkingtheirbankaccountstowhatwasalreadythemostpowerfulsocialappinChina.MawarnedAlibabaemployeesthatiftheydidn’tfighttoholdtheirgriponmobilepayments,itwouldspellthecompany’send.Observersatthetimethoughtthiswasjusttypicalover-the-toprhetoricfromJackMa,acharismaticentrepreneurwithageniusforrallyinghistroops.Butlookingbackfouryearslater,itseemslikelythatMasawwhatwascoming.

ThefouryearsleadinguptoTencent’sPearlHarbormomentsawmanyofthepiecesofChina’salternateinternetuniversefallintoplace.GladiatorialcompetitionbetweenChina’scopycatstartupshadtrainedagenerationofstreet-smartinternetentrepreneurs.Smartphoneusershadmorethandoubledbetween2009and2013,from233milliontoawhopping500million.Early-stagefundswerefosteringanewgenerationofstartupsbuildinginnovativemobileappsforthismarket.AndWeChatdemonstratedthepowerofthesuper-appinstalledonvirtuallyeveryone’ssmartphone,anall-in-oneportaltotheChinesemobileecosystem.

WhenTencent’sfloodofredenvelopesluredmillionsofChineseintolinkingtheirbankaccountstoWeChat,itputinplacethelastcrucialpuzzlepieceofaconsumptionrevolution:theabilitytopayforanythingandeverythingwithyourphone.Overthecomingyears,Alibaba,Tencent,andthousandsofChinesestartupswouldracetoapplythesetoolstoeverynookandcrannyofChineseurbanlife,includingfooddelivery,electricitybills,live-streamingcelebrities,on-demandmanicures,sharedbikes,traintickets,movietickets,andtraffictickets.China’sonlineandofflineworldwouldbeginrubbingshouldersinawaynotseenanywhereelseintheworld.TheywererefashioningChina’surbanlandscapeandtheworld’srichestreal-worlddatascape.

ButbuildinganalternateinternetuniversethatreachesintoeverycorneroftheChineseeconomycouldn’tbedonewithoutthecountry’smostimportanteconomicactor:theChinesegovernment.

IFYOUBUILDIT,THEYWILLCOME

Onthatfront,GuoHongwasaheadofthecurve.Intheyearsafterhisfirstvisittomyoffice,hisdreamofanAvenueoftheEntrepreneurshadbeenturnedintoaplan,andthatplanturnedintoaction.Guochoseforhis

experimentapedestrianstreetinZhongguancunthatwashometoamishmashofbookstores,restaurants,andknockoffelectronicsmarkets.

Backinthe1980s,thegovernmenthadalreadytransformedthisstreetforthesakeofaneconomicupgrade.Atthetime,Chinawasinthethroesofexport-drivengrowthandurbanization,twoprojectsthatrequiredengineeringexpertisethatthecountrylacked.Soofficialsturnedthewalkingstreetintoa“BookCity”packedwithstorescarryingmodernscienceandengineeringtextbooksforstudentsatnearbyTsinghuaandPekingUniversitytoporeover.Bytheyear2010,theriseoftheChineseinternethaddrivenmanyofthebookstoresoutofbusiness,replacingthemwithsmallstorefrontshawkingcheapelectronicsandpiratedsoftware—therawingredientsofChina’scopycatera.

ButGuowantedtoturbochargeanupgradetoaneweraofindigenousinnovation.Hisoriginalsmall-scaleexperimentinattractingSinovationVenturesviarentsubsidieshadsucceeded,andsoGuoplannedtorefurbishanentirestreetforhigh-techtenants.Heandthelocaldistrictgovernmentusedacombinationofcashsubsidiesandoffersofspaceelsewheretomoveoutalmostallthetraditionalbusinessesonthestreet.In2013,constructioncrewstookjackhammersandpavingequipmenttothenow-emptystreet,andafterayearoflayingbricksandbuildingsleeknewexteriors,onJune11,2014,theAvenueoftheEntrepreneursopenedtoitsnewtenants.

Guohadusedthetoolsathisdisposal—cash,cement,andmanuallabor—togiveastrongnudgetowardindigenousinnovationinthelocalstartup.ItwasalandmarkmomentforZhongguancun,butonethatwasn’tdestinedtostaysequesteredtothiscornerofBeijing.Indeed,Guo’sapproachwasabouttogonational.

INNOVATIONFORTHEMASSES

OnSeptember10,2014,PremierLiKeqiangtookthestageduringthe2014WorldEconomicForum’s“SummerDavos”inthecoastalChinesecityofTianjin.TherehespokeofthecrucialroletechnologicalinnovationplayedingeneratinggrowthandmodernizingtheChineseeconomy.Thespeechwaslonganddense,heavyonjargonandlightonspecifics.Butofnoteduringthespeech,LirepeatedaphrasethatwasnewtotheChinesepoliticallexicon:“massentrepreneurshipandmassinnovation.”Heconcludedbywishingtheattendeesasuccessfulforumandgoodhealth.

Tooutsideobservers,itwasanutterlyunremarkableevent,andtherewasalmostnocoverageintheWesternpress.Chineseleadersdeliverspeeches

likethisalmosteveryday,long,plodding,andfullofstockphrasesthatringhollowtoWesternears.ThosephrasescanactassignalsduringinternaldebateswithintheChinesegovernment,buttheydon’tnecessarilytranslatetoimmediatechangesintherealworld.

Thistimewasdifferent.Li’sspeechlitthefirstsparkofwhatwouldbecomearagingfireintheChinesetechnologyindustry,pushingactivityintheinvestmentandstartupspacetofeverishnewheights.Thenewphrase—“massentrepreneurshipandmassinnovation”—becamethesloganforamomentousgovernmentpushtofosterstartupecosystemsandsupporttechnologicalinnovation.GuoHong’sproactiveapproachtoinnovationwassuddenlybeingscaledupacrosstheworld’ssecond-largesteconomy,anditwouldturbochargethecreationoftheonlytruecounterweighttoSiliconValley.

China’smassinnovationcampaigndidthatbydirectlysubsidizingChinesetechnologyentrepreneursandshiftingtheculturalzeitgeist.Itgaveinnovatorsthemoneyandspacetheyneededtoworktheirmagic,anditgottheirparentstofinallystopnaggingthemabouttakingajobatalocalstate-ownedbank.

NinemonthsafterLi’sspeech,China’sStateCouncil—roughlyequivalenttotheU.S.president’scabinet—issuedamajordirectiveonadvancingmassentrepreneurshipandinnovation.Itcalledforthecreationofthousandsoftechnologyincubators,entrepreneurshipzones,andgovernment-backed“guidingfunds”toattractgreaterprivateventurecapital.TheStateCouncil’splanpromotedpreferentialtaxpoliciesandthestreamliningofgovernmentpermitsforstartingabusiness.

China’scentralgovernmentlaidoutthegoals,butimplementationwasleftuptothousandsofmayorsandlocalofficialsscatteredaroundthecountry.PromotionforlocalofficialsinChina’sgovernmentbureaucracyisbasedonperformanceevaluationsconductedbyhigher-upswithintheCommunistParty’sinternalhumanresourcesdepartment.Sowhenthecentralgovernmentsetsacleargoal—anewmetriconwhichlower-levelofficialscandemonstratetheircompetence—ambitiousofficialseverywherethrowthemselvesintoadvancingthatgoalandprovingthemselvescapable.

FollowingtheissuanceoftheStateCouncildirective,citiesaroundChinarapidlycopiedGuoHong’svisionandrolledouttheirownversionsoftheAvenueoftheEntrepreneurs.Theyusedtaxdiscountsandrentrebatestoattractstartups.Theycreatedone-stop-shopgovernmentofficeswhereentrepreneurscouldquicklyregistertheircompanies.Thefloodofsubsidiescreated6,600newstartupincubatorsaroundthenation,morethanquadruplingtheoveralltotal.Suddenly,itwaseasierthaneverforstartupsto

getqualityspace,andtheycoulddosoatdiscountratesthatleftmoremoneyforbuildingtheirbusinesses.

Largercityandprovincialgovernmentspioneereddifferentmodelsfor“guidingfunds,”amechanismthatusesgovernmentmoneytospurmoreventureinvesting.Thefundsdothatbyincreasingtheupsideforprivateinvestorswithoutremovingtherisk.Thegovernmentusesmoneyfromtheguidingfundtoinvestinprivateventure-capitalfundsinthesameroleasotherprivatelimitedpartners.Ifthestartupsthatfundinvestedin(the“portfoliocompanies”)fail,allthepartnerslosetheirinvestment,includingthegovernment.

Butiftheportfoliocompaniessucceed—say,doubleinvaluewithinfiveyears—thenthefund’smanagercapsthegovernment’supsidefromthefundatapredeterminedpercentage,perhaps10percent,andusesprivatemoneytobuythegovernment’ssharesoutatthatrate.Thatleavestheremaining90percentgainonthegovernment’sinvestmenttobedistributedamongprivateinvestorswhohavealreadyseentheirowninvestmentsdouble.Privateinvestorsarethusincentivizedtofollowthegovernment’slead,investinginfundsandindustriesthatthelocalgovernmentwantstofoster.DuringChina’smassinnovationpush,useoflocalgovernmentguidingfundsexploded,nearlyquadruplingfrom$7billionin2013to$27billionin2015.

Privateventurefundingfollowed.WhenSinovationwasfoundedin2009,Chinawasexperiencingsuchrapidgrowthinmanufacturingandrealestatethatthesmartmoneywasstillpouringintothosetraditionalsectors.Butin2014,thisallturnedaround.Forthreeofthefouryearsleadingupto2014,totalChineseVCfundingheldsteadyataround$3billion.In2014,thatimmediatelyquadrupledto$12billion,andthendoubledagainto$26billionin2015.Nowitseemedlikeanysmartandexperiencedyoungpersonwithanovelideaandsometechnicalchopscouldthrowtogetherabusinessplanandfindfundingtogethisorherstartupofftheground.

Americanpolicyanalystsandinvestorslookedaskanceatthisheavy-handedgovernmentinterventioninwhataresupposedtobefreeandefficientmarkets.Private-sectorplayersmakebetterbetswhenitcomestoinvesting,theysaid,andgovernment-fundedinnovationzonesorincubatorswillbeinefficient,awasteoftaxpayermoney.InthemindsofmanySiliconValleypowerplayers,thebestthingthatthefederalgovernmentcandoisleavethemalone.

Butwhatthesecriticsmissisthatthisprocesscanbebothhighlyinefficientandextraordinarilyeffective.Whenthelong-termupsideissomonumental,overpayingintheshorttermcanbetherightthingtodo.TheChinesegovernmentwantedtoengineerafundamentalshiftintheChineseeconomy,

frommanufacturing-ledgrowthtoinnovation-ledgrowth,anditwantedtodothatinahurry.

Itcouldhavetakenahands-offapproach,standingasidewhileinvestmentreturnsintraditionalindustriesfellandprivateinvestmentslowlymadeitswayintothehigh-techsector.Thatshiftwouldbesubjecttotheordinaryfrictionsofhumanendeavors:imperfectinformation,old-schoolinvestorswhoweren’tsosureaboutthisinternetthing,andplainoldeconomicinertia.Eventually,though,thosefrictionswouldbeovercome,andmoneywouldmakeitswayintoprivateventurefundsthatmightspendeachdollarmoreefficientlythanthegovernmentcould.

Butthat’saprocessthatwouldtakemanyyears,ifnotdecades.China’stopleadershipdidnothavethepatiencetowait.Itwantedtousegovernmentmoneytobrute-forceafastertransformation,onethatwouldpaydividendsthroughanearliertransitiontohigher-qualitygrowth.Thatprocessofpureforcewasoftenlocallyinefficient—incubatorsthatwentunoccupiedandinnovationavenuesthatneverpaidoff—butonanationalscale,theimpactwastremendous.

AREVOLUTIONINCULTURE

TheeffectsofChina’smassentrepreneurshipandmassinnovationcampaignwentfarbeyondmereofficespaceandinvestmentdollars.Thecampaignleftadeepimprintonordinarypeople’sperceptionsofinternetentrepreneurship,genuinelyshiftingtheculturalzeitgeist.

Chineseculturetraditionallyhasatendencytowardconformityandadeferencetowardauthorityfigures,suchasparents,bosses,teachers,andgovernmentofficials.Beforeanewindustryoractivityhasreceivedthestampofapprovalfromauthorityfigures,it’sviewedasinherentlyrisky.ButifthatindustryoractivityreceivesaringingendorsementfromChineseleadership,peoplewillrushtogetapieceoftheaction.Thattop-downstructureinhibitsfree-rangingorexploratoryinnovation,butwhentheendorsementarrivesandthedirectionisset,allcornersofsocietysimultaneouslyspringintoaction.

Before2014,theChinesegovernmenthadnevermadeclearexactlyhowitviewedtheriseoftheChineseinternet.DespitetheearlysuccessesofcompanieslikeBaiduandAlibaba,periodsofrelativeopennessonlinewerefollowedbyominoussignalsandlegalcrackdownsonusers“spreadingrumors”viasocialmediaplatforms.Noonecouldbesurewhatwascomingnext.Withthemassinnovationcampaign,theChinesegovernmentissueditsfirstfull-throatedendorsementofinternetentrepreneurship.Postersand

bannerssprunguparoundthecountryexhortingeveryonetojointhecause.Officialmediaoutletsrancountlessstoriestoutingthevirtuesofindigenousinnovationandtrumpetingthesuccessesofhomegrownstartups.Universitiesracedtooffernewcoursesaroundentrepreneurship,andbookstoresfilledupwithbiographiesoftechluminariesandself-helpbooksforstartupfounders.

ThrowingevenmorefuelonthisfirewasAlibaba’srecord-breaking2014debutontheNewYorkStockExchange.AgroupofTaobaosellersrangtheopeningbellforAlibaba’sinitialpublicofferingonSeptember19,justninedaysafterPremierLi’sspeech.Whenthedustsettledonafuriousroundoftrading,AlibabahadclaimedthetitleofthelargestIPOinhistory,andJackMawascrownedtherichestmaninChina.

Butitwasaboutmorethanjustthemoney.Mahadbecomeanationalhero,butaveryrelatableone.Blessedwithagoofycharisma,heseemsliketheboynextdoor.Hedidn’tattendaneliteuniversityandneverlearnedhowtocode.HelovestotellcrowdsthatwhenKFCsetupshopinhishometown,hewastheonlyoneoutoftwenty-fiveapplicantstoberejectedforajobthere.China’sotherearlyinternetgiantsoftenheldPh.D.sorhadSiliconValleyexperienceintheUnitedStates.ButMa’sascenttorock-starstatusgaveanewmeaningto“massentrepreneurship”—inotherwords,thiswassomethingthatanyonefromtheChinesemasseshadashotat.

ThegovernmentendorsementandMa’sexampleofinternetentrepreneurshipwereparticularlyeffectiveatwinningoversomeofthetoughestcustomers:Chinesemothers.InthetraditionalChinesementality,entrepreneurshipwasstillsomethingforpeoplewhocouldn’tlandarealjob.The“ironricebowl”oflifetimeemploymentinagovernmentjobremainedtheultimateambitionforoldergenerationswhohadlivedthroughfamines.Infact,whenIhadstartedSinovationVenturesin2009,manyyoungpeoplewantedtojointhestartupswefundedbutfelttheycouldn’tdosobecauseofthesteadfastoppositionoftheirparentsorspouses.Towinthesefamiliesover,ItriedeverythingIcouldthinkof,includingtakingtheparentsouttonicedinners,writingthemlonglettersbyhand,andevenrunningfinancialprojectionsofhowastartupcouldpayoff.EventuallywewereabletobuildstrongteamsatSinovation,buteverynewrecruitinthosedayswasanuphillbattle.

By2015,thesepeoplewerebeatingdownourdoor—inonecase,literallybreakingSinovation’sfrontdoor—forthechancetoworkwithus.Thatgroupincludedscrappyhighschooldropouts,brilliantgraduatesoftopuniversities,formerFacebookengineers,andmorethanafewpeopleinquestionablementalstates.WhileIwasoutoftown,theSinovationheadquartersreceivedavisitfromonewould-beentrepreneurwhorefusedtoleaveuntilImetwith

him.WhenthestafftoldhimthatIwouldn’tbereturninganytimesoon,themanlayonthegroundandstrippednaked,pledgingtolierightthereuntilKai-FuLeelistenedtohisidea.

Thatparticularentrepreneurreceivedapoliceescortratherthanaseedinvestment,buttheepisodecapturestheinnovationmaniathatwasgrippingChina.Acountrythathadspentadecadedancingaroundtheedgesofinternetentrepreneurshipwasnowplunginginheadfirst.ThesamewentforGuoHong.WhilecreatingtheAvenueoftheEntrepreneurs,Guocaughttheentrepreneurialbughimself,andin2017helefttheworldofChineseofficialdomtobecomethefounderandchairmanofZhongguancunBank,afinancial“startup”modeledonSiliconValleyBankanddedicatedtoservinglocalentrepreneursandinnovators.

AllthepieceswerenowinplacefortheflourishingofChina’salternateinternetuniverse.Ithadtheleapfrogtechnology,thefunding,thefacilities,thetalent,andtheenvironment.Thetablewassettocreateinternetcompaniesthatwerenew,valuable,anduniquelyChinese.

HERE,THERE,ANDO2OEVERYWHERE

Todoallofthis,theChineseinternethadtogetitshandsdirty.Fortwodecades,ChineseinternetcompanieshadplayedarolesimilartothatoftheirAmericanpeers:informationnodesonadigitalnetwork.Nowtheywerereadytodiveintothenitty-grittydetailsofdailylife.

Analystsdubbedtheexplosionofreal-worldinternetservicesthatblossomedacrossChinesecitiesthe“O2ORevolution,”shortfor“online-to-offline.”Theterminologycanbeconfusingbuttheconceptissimple:turnonlineactionsintoofflineservices.E-commercewebsiteslikeAlibabaandAmazonhadlongdonethisforthepurchaseofdurablephysicalgoods.TheO2Orevolutionwasaboutbringingthatsamee-commerceconveniencetothepurchaseofreal-worldservices,thingsthatcan’tbeputinacardboardboxandshippedacrosscountry,likehotfood,aridetothebar,oranewhaircut.

SiliconValleygavebirthtooneofthefirsttransformationalO2Omodels:ride-sharing.UberusedcellphonesandpersonalcarstochangehowpeoplegotaroundcitiesintheUnitedStatesandthenaroundtheworld.ChinesecompanieslikeDidiChuxingquicklycopiedthebusinessmodelandadaptedittolocalconditions,withDidieventuallydrivingUberoutofChinaandnowbattlingitinglobalmarkets.UbermayhavegivenanearlyglimpseofO2O,butitwasChinesecompaniesthatwouldtakethecorestrengthsofthatmodelandapplyittotransformingdozensofotherindustries.

Chinesecitiesweretheperfectlaboratoryforexperimentation.UrbanChinacanbeajoy,butitcanalsobeajungle:crowded,polluted,loud,andlessthanclean.Afteradayspentcommutingoncrammedsubwaysandnavigatingeight-laneintersections,manymiddle-classChinesejustwanttobesparedanothertripoutdoorstogetamealorrunanerrand.Luckyforthem,thesecitiesarealsohometolargepoolsofmigrantlaborerswhowouldgladlybringthatservicetotheirdoorforasmallfee.It’sanenvironmentbuiltforO2O.

ThefirstO2Oserviceotherthanride-hailingtotrulytakeoffwasfooddelivery.China’sinternetjuggernautsandafloodofstartupslikeWangXing’sMeituanDianpingallmadeO2Ofooddeliveryplays,pouringsubsidiesandengineeringresourcesintothemarket.CrowdsatChineserestaurantsthinnedout,andstreetsfilledupwithswarmsofelectricscooterstrailingsteamfromthehotmealstheycarriedonboard.PaymentscouldbemadeseamlesslythroughWeChatWalletandAlipay.Bytheendof2014,ChinesespendingonO2Ofooddeliveryhadgrownbyover50percentandtopped15billionRMB.By2016,China’s20milliondailyonlinefoodordersequaledtentimesthetotalacrosstheUnitedStates.

FromtheretheO2Omodelsbecameevenmorecreative.Somehairstylistsandmanicuristsgaveuptheirstorefrontsentirely,exclusivelybookingthroughappsandmakinghousecalls.Peoplewhowerefeelingillcouldhireotherstowaitinthefamouslylonglinesoutsidehospitals.Lazypetownerscoulduseanapptohailsomeonewhowouldcomerightoverandcleanoutacat’slitterboxorwashtheirdog.Chineseparentscouldhirevandriverstopickuptheirchildrenfromschool,confirmingtheirIDandarrivalhomethroughapps.Thosewhodidn’twanttohavechildrencoulduseanotherappforaround-the-clockcondomdelivery.

ForChinesepeople,thetransitiontooktheedgeoffurbanlife.Forsmallbusinesses,itmeantaboomincustomers,asthereductionsinfrictionledChineseurbanitestospendmore.AndforChina’snewwaveofstartups,itmeantskyrocketingvaluationsandaceaselessdrivetopushintoevermoresectorsofurbanlife.

Afteracoupleofyearsofexplosivegrowthandgladiatorialcompetition,themanicproductionofnewO2Omodelscooledoff.ManyovernightO2Ounicornsdiedoncethesubsidy-fueledgrowthended.Buttheinnovatorsandgladiatorswhosurvived—likeWangXing’sMeituanDianping—multipliedtheiralreadybillion-dollarvaluationsbyfundamentallyreshapingurbanChina’sservicesector.Bylate2017,MeituanDianpingwasvaluedat$30billion,andDidiChuxinghitavaluationof$57.6billion,surpassingthatofUberitself.

Itwasasocialandcommercialtransformationthatwaspoweredby—andwhichfurtherempowered—WeChat.InstalledonmorethanhalfofallsmartphonesinChinaandnowlinkedtomanyusers’bankaccounts,WeChathadthepowertonudgehundredsofmillionsofChineseintoO2Opurchasesandtopickwinnersamongthecompetingstartups.WeChatWalletlinkedupwithtopO2OstartupssothatWeChatuserscouldhailataxi,orderameal,bookahotel,manageaphonebill,andbuyaflighttotheUnitedStates,allwithouteverleavingtheapp.(Notcoincidentally,mostofthestartupsWeChatpickedtofeatureinitsWalletwerealsotherecipientsofTencentinvestments.)

WiththeriseofO2O,WeChathadgrownintothetitlebestowedonitbyConnieChanofleadingVCfundAndreesenHorowitz:aremotecontrolforourlives.Ithadbecomeasuper-app,ahubfordiversefunctionsthatarespreadacrossdozensofdifferentappsinotherecosystems.Ineffect,WeChathastakenonthefunctionalityofFacebook,iMessage,Uber,Expedia,eVite,Instagram,Skype,PayPal,Grubhub,Amazon,LimeBike,WebMD,andmanymore.Itisn’taperfectsubstituteforanyoneofthoseapps,butitcanperformmostofthecorefunctionsofeach,withfrictionlessmobilepaymentsalreadybuiltin.

Thisallmarksastarkcontrasttothe“appconstellation”modelinSiliconValleyinwhicheachappstickstoastrictlyprescribedsetoffunctions.Facebookevenwentsofarastosplititssocialnetworkandmessagingfunctionsintotwodifferentapps,FacebookandMessenger.Tencent’schoicetogoforthesuper-appmodelappearedriskyatthestart:couldyoupossiblybundlesomanythingstogetherwithoutoverwhelmingtheuser?Butthesuper-appmodelprovedwildlysuccessfulforWeChatandhasplayedacrucialroleinshapingthisalternateuniverseofinternetservices.

THELIGHTTOUCHVERSUSHEAVYWEIGHTS

ButtheO2Orevolutionshowcasedanevendeeper—andintheageofAIimplementation,moreimpactful—dividebetweenSiliconValleyandChina—whatIcall“goinglight”versus“goingheavy.”Thetermsrefertohowinvolvedaninternetcompanybecomesinprovidinggoodsorservices.Theyrepresenttheextentofverticalintegrationasacompanylinksuptheon-andofflineworlds.

Whenlookingtodisruptanewindustry,Americaninternetcompaniestendtotakea“light”approach.Theygenerallybelievetheinternet’sfundamentalpowerissharinginformation,closingknowledgegaps,andconnectingpeopledigitally.Asinternet-drivencompanies,theytrytosticktothiscorestrength.

SiliconValleystartupswillbuildtheinformationplatformbutthenletbrick-and-mortarbusinesseshandletheon-the-groundlogistics.Theywanttowinbyoutsmartingopponents,bycomingupwithnovelandelegantcode-basedsolutionstoinformationproblems.

InChina,companiestendtogo“heavy.”Theydon’twanttojustbuildtheplatform—theywanttorecruiteachseller,handlethegoods,runthedeliveryteam,supplythescooters,repairthosescooters,andcontrolthepayment.Andifneedbe,they’llsubsidizethatentireprocesstospeeduseradoptionandundercutrivals.ToChinesestartups,thedeepertheygetintothenitty-gritty—andoftenveryexpensive—details,theharderitwillbeforacopycatcompetitortomimicthebusinessmodelandundercutthemonprice.Goingheavymeansbuildingwallsaroundyourbusiness,insulatingyourselffromtheeconomicbloodshedofChina’sgladiatorwars.Thesecompanieswinbothbyoutsmartingtheiropponentsandbyoutworking,outhustling,andoutspendingthemonthestreet.

It’sadistinctioncapturedwellbycomparingwell-knownrestaurantplatformsintwocountries,YelpandDianping.Bothwerefoundedaround2004asdesktopplatformsforpostingrestaurantreviews.Theybotheventuallybecamesmartphoneapps,butwhileYelplargelystucktoreviews,Dianpingdoveheadfirstintothegroup-buyingfrenzy:buildingoutpayments,developingvendorrelationships,andspendingmassivelyonsubsidies.

Whenthetwocompanieswentintoonlineorderinganddelivery,theytookdifferentapproaches.Yelpmovedlateandwentlight.Afterelevenyearsasapurelydigitalplatformthatlivedoffadvertising,in2015YelpfinallytookababystepintodeliveriesbyacquiringEat24,anorderingandfood-deliveryplatform.Butitstillaskedrestaurantstohandlethemajorityofdeliveries,justusingEat24tofillingapsforrestaurantsthatdidn’thavedeliveryteams.Thelightweightprocessofferedrestaurantsfewrealincentivestoparticipate,andasaresult,thebusinessneverfullytookoff.Withintwoandahalfyears,Yelphadgivenup,sellingEat24toGrubhubandretreatingtoitslightweightapproach.“[ThesaletoGrubhub]allowedustodowhatwedobest,”explainedYelpCEOJeremyStoppelman,“whichwastobuildtheYelpapp.”

Incontrast,Dianpingwentintocommerceearlyandwentveryheavilyintofooddelivery.Afterfouryearsinthetrenchesofthegroup-buyingwars,Dianpingbeganpilotingfooddeliveryinlate2013.Itspentmillionsofdollarshiringandmanagingfleetsofscooter-ridingteamsthatdeliveredordersfromrestauranttodoorstep.Dianping’sdeliveryteamsdidthelegwork,soeverymom-and-popshopsuddenlyhadtheoptionofexpandingitscustomerbasewithouthavingtohireadeliveryteam.

Bythrowingtonsofmoneyandpeopleattheproblem,DianpingcouldattaineconomiesofscaleinChina’sdenseurbancenters.Itwasanexpensiveandlogisticallytaxingendeavor,butonethatultimatelyimprovedefficiencyandreducedcostsfortheendcustomer.Eighteenmonthsafterdebutingitsdeliveryservice,DianpingdoubleddownonthoseeconomiesofscalebymergingwitharchrivalMeituan.By2017,MeituanDianping’svaluationof$30billionwasmorethantriplethatofYelpandGrubhubcombined.

OtherexamplesofO2OcompaniesinChinagoingheavyabound.AfterdrivingUberoutoftheChineseride-hailingmarket,Didihasbegunbuyingupgasstationsandautorepairshopstoserviceitsfleet,makinggreatmarginsbecauseofitsunderstandingofitsdriversandtheirtrustintheDidibrand.WhileAirbnblargelyremainsalightweightplatformforlistingyourhome,thecompany’sChineserival,Tujia,managesalargechunkofrentalpropertiesitself.ForChinesehosts,Tujiaofferstotakecareofmuchofthegruntwork:cleaningtheapartmentaftereachvisit,stockingitwithsupplies,andinstallingsmartlocks.

Thatwillingnesstogoheavy—tospendthemoney,managetheworkforce,dothelegwork,andbuildeconomiesofscale—hasreshapedtherelationshipbetweenthedigitalandreal-worldeconomies.China’sinternetispenetratingfardeeperintotheeconomiclivesofordinarypeople,anditisaffectingbothconsumptiontrendsandlabormarkets.Ina2016studybyMcKinseyandCompany,65percentofChineseO2Ouserssaidthattheappsledthemtospendmoremoneyondining.Inthecategoriesoftravelandtransportation,77percentand42percentofusers,respectively,reportedincreasingtheirspending.

Intheshortrun,thiscash-flowstimulatedtheChineseeconomyandpumpedupvaluations.Butthelong-termlegacyofthismovementisthedataenvironmentitcreated.Byenrollingthevendors,processingtheorders,deliveringthefood,andtakinginthepayments,China’sO2Ochampionsbeganamassingawealthofreal-worlddataontheconsumptionpatternsandpersonalhabitsoftheirusers.GoingheavygavethesecompaniesadataedgeovertheirSiliconValleypeers,butitwasmobilepaymentsthatwouldextendtheirreachevenfurtherintotherealworldandturnthatdataedgeintoacommandinglead.

SCANORGETSCANNED

AsO2Ospendingexploded,AlipayandTencentdecidedtomakeadirectbidfordisruptingthecountry’sall-casheconomy.(In2011,Alibabaspunoffitsfinancialservices,includingAlipay,intoacompanythatwouldbecomeAnt

Financial.)Chinahadneverfullyembracedcreditanddebitcards,insteadstickingtocashforthevastmajorityofalltransactions.Largesupermarketsorshoppingmallsletcustomersswipeacard,butthemom-and-popshopsandfamilyrestaurantsthatdominatethecityscaperarelyhadpoint-of-sale(POS)devicesforprocessingplasticcards.

Theownersofthoseshopsdid,however,havesmartphones.SoChina’sinternetjuggernautsturnedthosephonesintomobileportalsforpayments.Theideawassimple,butthespeedofexecution,impactonconsumerbehavior,andresultingdatahavebeenastonishing.

During2015and2016,TencentandAlipaygraduallyintroducedtheabilitytopayatshopsbysimplyscanningaQRcode—basicallyasquarebarcodeforphones—withintheapp.It’sascan-or-get-scannedworld.LargerbusinessesboughtsimplePOSdevicesthatcanscantheQRcodedisplayedoncustomers’phonesandchargethemforthepurchase.OwnersofsmallshopscouldjustprintoutapictureofaQRcodethatwaslinkedtotheirWeChatWallet.CustomersthenusetheAlipayorWeChatappstoscanthecodeandenterthepaymenttotal,usingathumbprintforconfirmation.Fundsareinstantlytransferredfromonebankaccounttotheother—nofeesandnoneedtofumblewithwallets.Itmarkedastarkdeparturefromthecredit-cardmodelinthedevelopedworld.Whentheywerefirstintroduced,creditcardswerecuttingedge,themostconvenientandcost-effectivesolutiontothepaymentproblem.Butthatadvantagehasnowturnedintoaliability,withfeesof2.5to3percentonmostchargesturningintoadragonadoptionandutilization.

China’smobilepaymentinfrastructureextendeditsusagefarbeyondtraditionaldebitcards.AlipayandWeChatevenallowpeer-to-peertransfers,meaningyoucansendmoneytofamily,friends,small-timemerchants,orstrangers.Frictionlessandhookedintomobile,theappssoonturnedintotoolsfor“tipping”thecreatorsofonlinearticlesandvideos.Micro-paymentsofaslittleasfifteencentsflourished.Thecompaniesalsodecidednottochargecommissionsonthevastmajorityoftransfers,meaningpeopleacceptedmobilepaymentsforalltransactions—noneofthemandatoryminimumpurchasesorfifty-centfeeschargedbyU.S.retailersonsmallpurchaseswithcreditcards.

Adoptionofmobilepaymentshappenedatlightningspeed.Thetwocompaniesbeganexperimentingwithpayment-by-scanin2014anddeployedatscalein2015.Bytheendof2016,itwashardtofindashopinamajorcitythatdidnotacceptmobilepayments.Chinesepeoplewerepayingforgroceries,massages,movietickets,beer,andbikerepairswithinjustthese

twoapps.Bytheendof2017,65percentofChina’sover753millionsmartphoneusershadenabledmobilepayments.

Giventheextremelylowbarrierstoentry,thosepaymentsystemssoontrickleddownintoChina’svastinformaleconomy.Migrantworkerssellingstreetfoodsimplyletcustomersscanandsendoverpaymentswhiletheownerfriedthenoodles.ItgottothepointwherebeggarsonthestreetsofChinesecitiesbeganhangingpiecesofpaperaroundtheirneckswithprintoutsoftwoQRcodes,oneforAlipayandoneforWeChat.

CashhasdisappearedsoquicklyfromChinesecitiesthatiteven“disrupted”crime.InMarch2017,apairofChinesecousinsmadeheadlineswithahaplessstringofrobberies.ThepairhadtraveledtoHangzhou,awealthycityandhometoAlibaba,withthegoalofmakingacoupleoflucrativescoresandthenskippingtown.Armedwithtwoknives,thecousinsrobbedthreeconsecutiveconveniencestoresonlytofindthattheownershadalmostnocashtohandover—virtuallyalltheircustomerswerenowpayingdirectlywiththeirphones.Theircrimespreenettedthemaround$125each—notevenenoughtocovertheirtraveltoandfromHangzhou—whenpolicepickedthemup.Localmediareportedrumorsthatuponarrestoneofthebrotherscriedout,“HowistherenocashleftinHangzhou?”

ItmadeforasharpcontrastwiththestuntedgrowthofmobilepaymentsintheUnitedStates.GoogleandApplehavetakenastabatmobilepaymentswithGoogleWalletandApplePay,butneitherhasreallyattainedwidespreadadoption.AppleandGoogledon’treleaseuserfiguresfortheirplatforms,buteverydayobservationandmorerigorousanalysisbothpointtomassivegapsinadoption.ThemarketresearchfirmiResearchestimatedin2017thatChinesemobilepaymentspendingoutnumberedthatintheUnitedStatesbyaratiooffiftytoone.For2017,totaltransactionsonChina’smobilepaymentplatformsreportedlysurpassed$17trillion—greaterthanChina’sGDP—anastoundingnumbermadepossiblebythefactthatthesepaymentsallowforpeer-to-peertransfersandmultiplemobiletransactionsforitemsandservicesthroughoutthechainofproduction.

LEAPINGFROGSANDTAXIDRIVERS

Thatmassivegapispartlyexplainedbythestrengthoftheincumbent.Americansalreadybenefitfrom(andpayfor)theconvenienceofcreditanddebitcards—thecutting-edgefinancialtechnologyofthe1960s.Mobilepaymentsareanimprovementoncardsbutnotasdramaticanimprovementasthejumpstraightfromcash.AswithChina’srapidtransitiontothemobileinternet,thecountry’sweaknessinincumbenttechnology(desktop

computers,landlinephones,andcreditcards)turnedintothestrengththatletitleapfrogintoanewparadigm.

Butthatleaptomobilepaymentswasn’tjustaproductofweakincumbentsandindependentconsumerchoices.AlibabaandTencentacceleratedthetransitionbyforcingadoptionthroughmassivesubsidies,aformof“goingheavy”thatmakesAmericantechnologycompaniessquirm.

Intheearlydaysofride-hailingappsinChina,riderscouldbookthroughappsbutoftenpaidincash.AlargeportionofcarsontheleadingChineseplatformsweretraditionaltaxisdrivenbyoldermen—peoplewhoweren’tinarushtogiveupgoodoldcash.SoTencentofferedsubsidiestoboththeriderandthedriveriftheyusedWeChatWallettopay.Theriderpaidlessandthedriverreceivedmore,withTencentmakingupthedifferenceforbothsides.

Thepromotionwasextremelycostly—duetobothlegitimateridesandfraudulentonesdesignedtomilksubsidies—butTencentpersisted.Thatdecisionpaidoff.Thepromotionbuiltupuserhabitsandluredontotheplatformtaxidrivers,whoarethekeynodesintheurbanconsumereconomy.

Bycontrast,ApplePayandGoogleWallethavetreadlightlyinthisarena.Theytheoreticallyoffergreaterconveniencetousers,buttheyhaven’tbeenwillingtobribeusersintodiscoveringthatmethodforthemselves.ReluctanceonthepartofU.S.techgiantsisunderstandable:subsidieseatintoquarterlyrevenue,andattemptsto“buyusers”areusuallyfrownedonbySiliconValley’sinnovationpurists.

ButthatAmericanreluctancetogoheavyhasslowedadoptionofmobilepaymentsandwillhurtthesecompaniesevenmoreinadata-drivenAIworld.Datafrommobilepaymentsiscurrentlygeneratingtherichestmapsofconsumeractivitytheworldhaseverknown,farexceedingthedatafromtraditionalcredit-cardpurchasesoronlineactivitycapturedbye-commerceplayerslikeAmazonorplatformslikeGoogleandYelp.ThatmobilepaymentdatawillproveinvaluableinbuildingAI-drivencompaniesinretail,realestate,andarangeofothersectors.

BEIJINGBICYCLEREDUX

WhilemobilepaymentstotallytransformedChina’sfinanciallandscape,sharedbicyclestransformeditsurbanlandscapes.Inmanyways,thesharedbikerevolutionwasturningbacktheclock.FromthetimeoftheCommunistRevolutionin1949throughtheturnofthemillennium,Chinesecitieswereteemingwithbicycles.Butaseconomicreformscreatedanewmiddleclass,carownershiptookoffandridingabicyclebecamesomethingforindividuals

whoweretoopoorforfour-wheeledtransport.Bikeswerepushedtothemarginsofcitystreetsandtheculturalmainstream.Onewomanonthecountry’smostpopulardatingshowcapturedthematerialismofthemomentwhensherejectedapoorsuitorbysaying,“I’drathercryinthebackofaBMWthansmileonthebackofabicycle.”

Andthen,suddenly,China’salternateuniversereversedthetide.Beginninginlate2015,bike-sharingstartupsMobikeandofostartedsupplyingtensofmillionsofinternet-connectedbicyclesanddistributingthemaroundmajorChinesecities.MobikeoutfitteditsbikeswithQRcodesandinternet-connectedsmartlocksaroundthebike’sbackwheel.WhenridersusetheMobikeapp(oritsmini-appinWeChatWallet)toscanabike’sQRcode,thelockonthebackwheelautomaticallyslidesopen.Mobikeusersridethebikeanywheretheywantandleaveitthereforthenextridertofind.Costsofaridearebasedondistanceandtime,butheavysubsidiesmeantheyoftencomeinat15centsorless.It’sarevolutionary,real-worldinnovation,onemadepossiblebymobilepayments.Addingcredit-cardPOSmachinestobikeswouldbetooexpensiveandrepair-intensive,butfrictionlessmobilepaymentsarebothcheaptolayerontoabikeandincrediblyefficient.

Shared-bikeuseexploded.Inthespanofayear,thebikeswentfromurbanodditiestototalubiquity,parkedateveryintersection,sittingoutsideeverysubwayexit,andclusteredaroundpopularshopsandrestaurants.Itrarelytookmorethanaglanceineitherdirectiontofindone,andfivesecondsintheapptounlockit.Citystreetsturnedintoarainbowofbrightlycoloredbicycles:orangeandsilverforMobike;brightyellowforofo;andasmatteringofblue,green,andredforothercopycatcompanies.Bythefallof2017,Mobikewaslogging22millionridesperday,almostalloftheminChina.ThatisfourtimesthenumberofglobalridesUberwasgivingeachdayin2016,thelasttimeitannounceditstotals.Inthespringof2018,MobikewasacquiredbyWangXing’sMeituanDianpingfor$2.7billion,justthreeyearsafterthebike-sharingcompany’sfounding.

Somethingnewwasemergingfromallthoserides:perhapstheworld’slargestandmostusefulinternet-of-things(IoT)networks.TheIoTreferstocollectionsofreal-world,internet-connecteddevicesthatcanconveydatafromtheworldaroundthemtootherdevicesinthenetwork.MostMobikesareequippedwithsolar-poweredGPS,accelerators,Bluetooth,andnear-fieldcommunicationscapabilitiesthatcanbeactivatedbyasmartphone.Together,thosesensorsgeneratetwentyterabytesofdataperdayandfeeditallbackintoMobike’scloudservers.

BLURREDLINESANDBRAVENEWWORLDS

Inthespanoflessthantwoyears,China’sbike-sharingrevolutionhasreshapedthecountry’surbanlandscapeanddeeplyenricheditsdata-scape.ThisshiftformsadramaticvisualillustrationofwhatChina’salternateinternetuniversedoesbest:solvingpracticalproblemsbyblurringthelinesbetweentheonlineandofflineworlds.Ittakesthecorestrengthoftheinternet(informationtransmission)andleveragesitinbuildingbusinessesthatreachoutintotherealworldanddirectlytouchoneverycornerofourlives.

Buildingthisalternateuniversedidn’thappenovernight.Itrequiredmarket-drivenentrepreneurs,mobile-firstusers,innovativesuper-apps,densecities,cheaplabor,mobilepayments,andagovernment-sponsoredcultureshift.It’sbeenamessy,expensive,anddisruptiveprocess,butthepayoffhasbeentremendous.Chinahasbuiltarosteroftechnologygiantsworthoveratrilliondollars—afeataccomplishedbynoothercountryoutsidetheUnitedStates.

ButthegreatestrichesofthisnewChinesetechworldhaveyettoberealized.Likethelong-buriedorganicmatterthatbecamefossilfuelspoweringtheIndustrialRevolution,therichreal-worldinteractionsinChina’salternateinternetuniversearecreatingthemassivedatathatwillpoweritsAIrevolution.Eachdimensionofthatuniverse—WeChatactivity,O2Oservices,ride-hailing,mobilepayments,andbike-sharing—addsanewlayertoadata-scapethatisunprecedentedinitsgranularmappingofreal-worldconsumptionandtransportationhabits.

China’sO2Oexplosiongaveitscompaniestremendousdataontheofflinelivesoftheirusers:thewhat,where,andwhenoftheirmeals,massages,andday-to-dayactivities.Digitalpaymentscrackedopentheblackboxofreal-worldconsumerpurchases,givingthesecompaniesaprecise,real-timedatamapofconsumerbehavior.Peer-to-peertransactionsaddedanewlayerofsocialdataatopthoseeconomictransactions.Thecountry’sbike-sharingrevolutionhascarpeteditscitiesinIoTtransportationdevicesthatcolorinthetextureofurbanlife.Theytracetensofmillionsofcommutes,tripstothestore,rideshome,andfirstdates,dwarfingcompanieslikeUberandLyftinbothquantityandgranularityofdata.

ThenumbersforthesecategorieslaybaretheChina-U.S.gapinthesekeyindustries.RecentestimateshaveChinesecompaniesoutstrippingU.S.competitorstentooneinquantityoffooddeliveriesandfiftytooneinspendingonmobilepayments.China’se-commercepurchasesareroughlydoubletheU.S.totals,andthegapisonlygrowing.Dataontotaltripsthroughride-hailingappsissomewhatscarce,butduringtheheightofcompetitionbetweenUberandDidi,self-reportednumbersfromthetwocompanieshadDidi’sridesinChinaatfourtimesthetotalofUber’sglobalrides.Whenit

comestoridesonsharedbikes,ChinaisoutpacingtheUnitedStatesatanastoundingratioofthreehundredtoone.

ThathasalreadyhelpedChina’sjuggernautsmakeupgroundontheirAmericancounterpartsinbothrevenueandmarketcaps.IntheageofAIimplementation,theimpactofthesedivergentdataecosystemswillbefarmoreprofound.ItwillshapewhatindustriesAIstartupswilldisruptineachcountryandwhatintractableproblemstheywillsolve.

ButbuildinganAI-driveneconomyrequiresmorethanjustgladiatorentrepreneursandabundantdata.ItalsotakesanarmyoftrainedAIengineersandagovernmenteagertoembracethepowerofthistransformativetechnology.Thesetwofactors—AIexpertiseandgovernmentsupport—arethefinalpiecesoftheAIpuzzle.Whenputinplace,theywillcompleteouranalysisofthecompetitivebalancebetweentheworld’stwosuperpowersinthedefiningtechnologyofthetwenty-firstcentury.

4★

ATALEOFTWOCOUNTRIES

Backin1999,Chineseresearcherswerestillinthedarkwhenitcametostudyingartificialintelligence—literally.Allowmetoexplain.

Thatyear,IvisitedtheUniversityofScienceandTechnologyofChinatogivealectureaboutourworkonspeechandimagerecognitionatMicrosoftResearch.Theuniversitywasoneofthebestengineeringschoolsinthecountry,butitwaslocatedinthesoutherncityofHefei(pronounced“Huh-faye”),aremotebackwatercomparedwithBeijing.

Onthenightofthelecture,studentscrammedintotheauditorium,andthosewhocouldn’tgetaticketpressedupagainstthewindows,hopingtocatchsomeofthelecturethroughtheglass.InterestwassointensethatIeventuallyaskedtheorganizerstoallowstudentstofilluptheaislesandevensitonthestagearoundme.TheylistenedintentlyasIlaidoutthefundamentalsofspeechrecognition,speechsynthesis,3-Dgraphics,andcomputervision.Theyscribbleddownnotesandpepperedmewithquestionsaboutunderlyingprinciplesandpracticalapplications.ChinaclearlylaggedbehindtheUnitedStatesbymorethanadecadeinAIresearch,butthesestudentswerelikespongesforanyknowledgefromtheoutsideworld.Theexcitementintheroomwaspalpable.

Thelectureranlong,anditwasalreadydarkasIlefttheauditoriumandheadedtowardtheuniversity’smaingate.Studentdormslinedbothsidesoftheroad,butthecampuswasstillandthestreetwasempty.Andthen,suddenly,itwasn’t.Asifoncue,longlinesofstudentsbeganpouringoutofthedormitoriesallaroundmeandwalkingoutintothestreet.Istoodtherebaffled,watchingwhatlookedlikeaslow-motionfiredrill,allofitconductedintotalsilence.

Itwasn’tuntiltheysatdownonthecurbandopeneduptheirtextbooksthatIrealizedwhatwasgoingon:thedormitoriesturnedoffalltheirlightsat11p.m.sharp,andsomostofthestudentbodyheadedoutsidetocontinuetheirstudiesbystreetlight.IlookedonashundredsofChina’sbrightestyoungengineeringmindshuddledinthesoftyellowglow.Ididn’tknowitatthe

time,butthefuturefounderofoneofChina’smostimportantAIcompanieswasthere,squeezinginanextracoupleofhoursofstudyinginthedarkHefeinight.Manyofthetextbooksthesestudentsreadwereoutdatedorpoorly

translated.Buttheywerethebestthestudentscouldgettheirhandson,andtheseyoungscholarsweregoingtowringthemforeverydropofknowledgetheycontained.Internetaccessattheschoolwasascarcecommodity,andstudyingabroadwaspossibleonlyifthestudentsearnedafullscholarship.Thedog-earedpagesofthesetextbooksandtheoccasionallecturefromavisitingscholarweretheonlywindowtheyhadintothestateofglobalAIresearch.

Oh,howthingshavechanged.

THESTUFFOFANAISUPERPOWER

AsIlaidoutearlier,creatinganAIsuperpowerforthetwenty-firstcenturyrequiresfourmainbuildingblocks:abundantdata,tenaciousentrepreneurs,well-trainedAIscientists,andasupportivepolicyenvironment.We’vealreadyseenhowChina’sgladiatorialstartupecosystemtrainedagenerationoftheworld’smoststreet-smartentrepreneurs,andhowChina’salternateinternetuniversecreatedtheworld’srichestdataecosystem.

Thischapterassessesthebalanceofpowerinthetworemainingingredients—AIexpertiseandgovernmentsupport.IbelievethatintheageofAIimplementation,SiliconValley’sedgeineliteexpertiseisn’tallit’scrackeduptobe.Andinthecrucialrealmofgovernmentsupport,China’stechno-utilitarianpoliticalculturewillpavethewayforfasterdeploymentofgame-changingtechnologies.

Asartificialintelligencefiltersintothebroadereconomy,thiserawillrewardthequantityofsolidAIengineersoverthequalityofeliteresearchers.RealeconomicstrengthintheageofAIimplementationwon’tcomejustfromahandfulofelitescientistswhopushtheboundariesofresearch.Itwillcomefromanarmyofwell-trainedengineerswhoteamupwithentrepreneurstoturnthosediscoveriesintogame-changingcompanies.

Chinaistrainingjustsuchanarmy.InthetwodecadessincemylectureinHefei,China’sartificialintelligencecommunityhaslargelyclosedthegapwiththeUnitedStates.WhileAmericastilldominateswhenitcomestosuperstarresearchers,Chinesecompaniesandresearchinstitutionshavefilledtheirrankswiththekindofwell-trainedengineersthatcanpowerthiseraofAIdeployment.Ithasdonethatbymarryingtheextraordinaryhungerfor

knowledgethatIwitnessedinHefeiwithanexplosioninaccesstocutting-edgeglobalresearch.ChinesestudentsofAIarenolongerstraininginthedarktoreadoutdatedtextbooks.They’retakingadvantageofAI’sopenresearchculturetoabsorbknowledgestraightfromthesourceandinrealtime.Thatmeansdissectingthelatestonlineacademicpublications,debatingtheapproachesoftopAIscientistsinWeChatgroups,andstreamingtheirlecturesonsmartphones.

ThisrichconnectivityallowsChina’sAIcommunitytoplayintellectualcatch-upattheelitelevel,trainingagenerationofhungryChineseresearcherswhonowcontributetothefieldatahighlevel.ItalsoempowersChinesestartupstoapplycutting-edge,opensourcealgorithmstopracticalAIproducts:autonomousdrones,pay-with-your-facesystems,andintelligenthomeappliances.

ThosestartupsarenowscrappingforasliceofanAIlandscapeincreasinglydominatedbyahandfulofmajorplayers:theso-calledSevenGiantsoftheAIage,whichincludeGoogle,Facebook,Amazon,Microsoft,Baidu,Alibaba,andTencent.ThesecorporatejuggernautsarealmostevenlysplitbetweentheUnitedStatesandChina,andthey’remakingboldplaystodominatetheAIeconomy.They’reusingbillionsofdollarsincashanddizzyingstockpilesofdatatogobbleupavailableAItalent.They’realsoworkingtoconstructthe“powergrids”fortheAIage:privatelycontrolledcomputingnetworksthatdistributemachinelearningacrosstheeconomy,withthecorporategiantsactingas“utilities.”It’saworrisomephenomenonforthosewhovalueanopenAIecosystemandalsoposesapotentialstumblingblocktoChina’sriseasanAIsuperpower.

ButbringingAI’spowertobearonthebroadereconomycan’tbedonebyprivatecompaniesalone—itrequiresanaccommodatingpolicyenvironmentandcanbeacceleratedbydirectgovernmentsupport.Asyourecall,soonafterKeJie’slosstoAlphaGo,theChinesecentralgovernmentreleasedasweepingblueprintforChineseleadershipinAI.Likethe“massinnovationandmassentrepreneurship”campaign,China’sAIplanisturbocharginggrowththroughafloodofnewfunding,includingsubsidiesforAIstartupsandgenerousgovernmentcontractstoaccelerateadoption.

TheplanhasalsoshiftedincentivesforpolicyinnovationaroundAI.AmbitiousmayorsacrossChinaarescramblingtoturntheircitiesintoshowcasesfornewAIapplications.They’replottingdriverlesstruckingroutes,installingfacialrecognitionsystemsonpublictransportation,andhookingtrafficgridsinto“citybrains”thatoptimizeflows.

BehindtheseeffortsliesacoredifferenceinAmericanandChinesepoliticalculture:whileAmerica’scombativepoliticalsystemaggressively

punishesmisstepsorwasteinfundingtechnologicalupgrades,China’stechno-utilitarianapproachrewardsproactiveinvestmentandadoption.Neithersystemcanclaimobjectivemoralsuperiority,andtheUnitedStates’longtrackrecordofbothpersonalfreedomandtechnologicalachievementisunparalleledinthemodernera.ButIbelievethatintheageofAIimplementationtheChineseapproachwillhavetheimpactofacceleratingdeployment,generatingmoredata,andplantingtheseedsoffurthergrowth.It’saself-perpetuatingcycle,onethatrunsonapeculiaralchemyofdigitaldata,entrepreneurialgrit,hard-earnedexpertise,andpoliticalwill.ToseewherethetwoAIsuperpowersstand,wemustfirstunderstandthesourceofthatexpertise.

NOBELWINNERSANDNO-NAMETINKERERS

WhenEnricoFermisteppedontothedeckoftheRMSFranconiaIIin1938,hechangedtheglobalbalanceofpower.FermihadjustreceivedtheNobelPrizeinphysicsinStockholm,butinsteadofreturninghometoBenitoMussolini’sItaly,FermiandhisfamilysailedforNewYork.TheymadethejourneytoescapeItaly’sraciallaws,whichbarredJewsorAfricansfromholdingmanyjobsormarryingItalians.Fermi’swife,Laura,wasJewish,andhedecidedtomovethefamilyhalfwayacrosstheworldratherthanliveundertheantisemitismthatwassweepingEurope.

Itwasapersonaldecisionwithearthshakingconsequences.AfterarrivingintheUnitedStates,FermilearnedofthediscoveryofnuclearfissionbyscientistsinNaziGermanyandquicklysettoworkexploringthephenomenon.Hecreatedtheworld’sfirstself-sustainingnuclearreactionunderneathasetofbleachersattheUniversityofChicagoandplayedanindispensableroleintheManhattanProject.Thistop-secretprojectwasthelargestindustrialundertakingtheworldhadeverseen,anditculminatedinthedevelopmentoftheworld’sfirstnuclearweaponsfortheU.S.military.ThosebombsputanendtoWorldWarIIinthePacificandlaidthegroundworkforthenuclearworldorder.

FermiandtheManhattanProjectembodiedanageofdiscoverythatrewardedqualityoverquantityinexpertise.Innuclearphysics,the1930sand1940swereanageoffundamentalbreakthroughs,andwhenitcametomakingthosebreakthroughs,oneEnricoFermiwasworththousandsoflessbrilliantphysicists.AmericanleadershipinthiserawasbuiltinlargepartonattractinggeniuseslikeFermi:menandwomenwhocouldsinglehandedlytipthescalesofscientificpower.

Butnoteverytechnologicalrevolutionfollowsthispattern.Often,onceafundamentalbreakthroughhasbeenachieved,thecenterofgravityquicklyshiftsfromahandfulofeliteresearcherstoanarmyoftinkerers—engineerswithjustenoughexpertisetoapplythetechnologytodifferentproblems.Thisisparticularlytruewhenthepayoffofabreakthroughisdiffusedthroughoutsocietyratherthanconcentratedinafewlabsorweaponssystems.

Masselectrificationexemplifiedthisprocess.FollowingThomasEdison’sharnessingofelectricity,thefieldrapidlyshiftedfrominventiontoimplementation.Thousandsofengineersbegantinkeringwithelectricity,usingittopowernewdevicesandreorganizeindustrialprocesses.Thosetinkerersdidn’thavetobreaknewgroundlikeEdison.Theyjusthadtoknowenoughabouthowelectricityworkedtoturnitspowerintousefulandprofitablemachines.

OurpresentphaseofAIimplementationfitsthislattermodel.AconstantstreamofheadlinesaboutthelatesttasktackledbyAIgivesusthemistakensensethatwearelivingthroughanageofdiscovery,atimewhentheEnricoFermisoftheworlddeterminethebalanceofpower.Inreality,wearewitnessingtheapplicationofonefundamentalbreakthrough—deeplearningandrelatedtechniques—tomanydifferentproblems.That’saprocessthatrequireswell-trainedAIscientists,thetinkerersofthisage.Today,thosetinkerersareputtingAI’ssuperhumanpowersofpatternrecognitiontousemakingloans,drivingcars,translatingtext,playingGo,andpoweringyourAmazonAlexa.

Deep-learningpioneerslikeGeoffreyHinton,YannLeCun,andYoshuaBengio—theEnricoFermisofAI—continuetopushtheboundariesofartificialintelligence.Andtheymayyetproduceanothergame-changingbreakthrough,onethatscramblestheglobaltechnologicalpeckingorder.Butinthemeantime,therealactiontodayiswiththetinkerers.

INTELLIGENCESHARING

Andforthistechnologicalrevolution,thetinkerershaveanaddedadvantage:real-timeaccesstotheworkofleadingpioneers.DuringtheIndustrialRevolution,nationalbordersandlanguagebarriersmeantthatnewindustrialbreakthroughsremainedbottledupintheircountryoforigin,England.America’sculturalproximityandlooseintellectualpropertylawshelpeditpilfersomekeyinventions,butthereremainedasubstantiallagbetweentheinnovatorandtheimitator.

Notsotoday.WhenaskedhowfarChinalagsbehindSiliconValleyinartificialintelligenceresearch,someChineseentrepreneursjokinglyanswer“sixteenhours”—thetimedifferencebetweenCaliforniaandBeijing.Americamaybehometothetopresearchers,butmuchoftheirworkandinsightisinstantaneouslyavailabletoanyonewithaninternetconnectionandagroundinginAIfundamentals.FacilitatingthisknowledgetransferaretwodefiningtraitsoftheAIresearchcommunity:opennessandspeed.

Artificialintelligenceresearcherstendtobequiteopenaboutpublishingtheiralgorithms,data,andresults.Thatopennessgrewoutofthecommongoalofadvancingthefieldandalsofromthedesireforobjectivemetricsincompetitions.Inmanyphysicalsciences,experimentscannotbefullyreplicatedfromonelabtothenext—minutevariationsintechniqueorenvironmentcangreatlyaffectresults.ButAIexperimentsareperfectlyreplicable,andalgorithmsaredirectlycomparable.Theysimplyrequirethosealgorithmstobetrainedandtestedonidenticaldatasets.Internationalcompetitionsfrequentlypitdifferentcomputervisionorspeechrecognitionteamsagainsteachother,withthecompetitorsopeningtheirworktoscrutinybyotherresearchers.

ThespeedofimprovementsinAIalsodrivesresearcherstoinstantlysharetheirresults.ManyAIscientistsaren’ttryingtomakefundamentalbreakthroughsonthescaleofdeeplearning,buttheyareconstantlymakingmarginalimprovementstothebestalgorithms.Thoseimprovementsregularlysetnewrecordsforaccuracyontaskslikespeechrecognitionorvisualidentification.Researcherscompeteonthebasisoftheserecords—notonnewproductsorrevenuenumbers—andwhenonesetsanewrecord,heorshewantstoberecognizedandreceivecreditfortheachievement.Butgiventherapidpaceofimprovements,manyresearchersfearthatiftheywaittopublishinajournal,theirrecordwillalreadyhavebeeneclipsedandtheirmomentatthecuttingedgewillgoundocumented.Soinsteadofsittingonthatresearch,theyoptforinstantpublicationonwebsiteslikewww.arxiv.org,anonlinerepositoryofscientificpapers.Thesiteletsresearchersinstantlytime-stamptheirresearch,plantingastakeinthegroundtomarkthe“whenandwhat”oftheiralgorithmicachievements.

Inthepost-AlphaGoworld,Chinesestudents,researchers,andengineersareamongthemostvoraciousreadersofwww.arxiv.org.Theytrawlthesitefornewtechniques,soakingupeverythingtheworld’stopresearchershavetooffer.Alongsidetheseacademicpublications,ChineseAIstudentsalsostream,translate,andsubtitlelecturesfromleadingAIscientistslikeYannLeCun,Stanford’sSebastianThrun,andAndrewNg.Afterdecadesspent

studyingoutdatedtextbooksinthedark,theseresearchersrevelinthisinstantconnectivitytoglobalresearchtrends.

OnWeChat,China’sAIcommunitycoalescesingiantgroupchatsandmultimediaplatformstochewoverwhat’snewinAI.Thirteennewmediacompanieshavesprungupjusttocoverthesector,offeringindustrynews,expertanalysis,andopen-endeddialogue.TheseAI-focusedoutletsboastoveramillionregisteredusers,andhalfofthemhavetakenonventurefundingthatvaluesthematmorethan$10millioneach.Formoreacademicdiscussions,I’mpartofthefive-hundred-member“WeeklyPaperDiscussionGroup,”justoneofthedozensofWeChatgroupsthatcometogethertodissectanewAIresearchpublicationeachweek.Thechatgroupbuzzeswithhundredsofmessagesperday:earnestquestionsaboutthisweek’spaper,screenshotsofthemembers’latestalgorithmicachievements,and,ofcourse,plentyofanimatedemojis.

ButChineseAIpractitionersaren’tjustpassiverecipientsofwisdomspillingforthfromtheWesternworld.They’renowgivingbacktothatresearchecosystematanacceleratingrate.

CONFERENCECONFLICTS

TheAssociationfortheAdvancementofArtificialIntelligencehadaproblem.Thestoriedorganizationhadbeenputtingononeoftheworld’smostimportantAIconferencesforthreedecades,butin2017theywereindangerofhostingadudevent.

Why?TheconferencedatesconflictedwithChineseNewYear.

Afewyearsearlier,thiswouldn’thavebeenaproblem.Historically,American,British,andCanadianscholarshavedominatedtheproceedings,withjustahandfulofChineseresearcherspresentingpapers.Butthe2017conferencehadacceptedanalmostequalnumberofpapersfromresearchersinChinaandtheUnitedStates,anditwasindangeroflosinghalfofthatequationtotheirculture’smostimportantholiday.

“NobodywouldhaveputAAAIonChristmasday,”thegroup’spresidenttoldtheAtlantic.“Ourorganizationhadtoalmostturnonadimeandchangetheconferencevenuetoholditaweeklater.”

ChineseAIcontributionshaveoccurredatalllevels,rangingfrommarginaltweaksofexistingmodelstotheintroductionofworld-classnewapproachestoneuralnetworkconstruction.AlookatcitationsinacademicresearchrevealsthegrowingcloutofChineseresearchers.OnestudybySinovation

VenturesexaminedcitationsinthetoponehundredAIjournalsandconferencesfrom2006to2015;itfoundthatthepercentageofpapersbyauthorswithChinesenamesnearlydoubledfrom23.2percentto42.8percentduringthattime.ThattotalincludessomeauthorswithChinesenameswhoworkabroad—forexample,ChineseAmericanresearcherswhohaven’tadoptedananglicizedname.Butasurveyoftheauthors’researchinstitutionsfoundthegreatmajorityofthemtobeworkinginChina.

Arecenttallyofcitationsatglobalresearchinstitutionsconfirmedthetrend.Thatrankingoftheonehundredmost-citedresearchinstitutionsonAIfrom2012to2016showedChinarankingsecondonlytotheUnitedStates.Amongtheeliteinstitutions,TsinghuaUniversityevenoutnumberedplaceslikeStanfordUniversityintotalAIcitations.Thesestudieslargelycapturedthepre-AlphaGoera,beforeChinapushedevenmoreresearchersintothefield.Inthecomingyears,awholenewwaveofyoungPh.D.studentswillbringChineseAIresearchtoanewlevel.

Andthesecontributionshaven’tjustbeenaboutpilinguppapersandcitations.Researchersinthecountryhaveproducedsomeofthemostimportantadvancesinneuralnetworksandcomputervisionsincethearrivalofdeeplearning.ManyoftheseresearchersemergedoutofMicrosoftResearchChina,aninstitutionthatIfoundedin1998.LaterrenamedMicrosoftResearchAsia,itwentontotrainoverfivethousandAIresearchers,includingtopexecutivesatBaidu,Alibaba,Tencent,Lenovo,andHuawei.

In2015,ateamfromMicrosoftResearchAsiablewthecompetitionoutofthewaterattheglobalimage-recognitioncompetition,ImageNet.Theteam’sbreakthroughalgorithmwascalledResNet,anditidentifiedandclassifiedobjectsfrom100,000photographsinto1,000differentcategorieswithanerrorrateofjust3.5percent.Twoyearslater,whenGoogle’sDeepMindbuiltAlphaGoZero—theself-taughtsuccessortoAlphaGo—theyusedResNetasoneofitscoretechnologicalbuildingblocks.

TheChineseresearchersbehindResNetdidn’tstayatMicrosoftforlong.OfthefourauthorsoftheResNetpaper,onejoinedYannLeCun’sresearchteamatFacebook,buttheotherthreehavefoundedandjoinedAIstartupsinChina.Oneofthosestartups,Face++,hasquicklyturnedintoaworldleaderinface-andimage-recognitiontechnology.Atthe2017COCOimage-recognitioncompetition,theFace++teamtookfirstplaceinthreeofthefourmostimportantcategories,beatingoutthetopteamsfromGoogle,Microsoft,andFacebook.

TosomeobserversintheWest,theseresearchachievementsflyinthefaceofdeeplyheldbeliefsaboutthenatureofknowledgeandresearchacross

politicalsystems.Shouldn’tChinesecontrolsontheinternethobbletheabilityofChineseresearcherstobreaknewgroundglobally?TherearevalidcritiquesofChina’ssystemofgovernance,onesthatweighheavilyonpublicdebateandresearchinthesocialsciences.Butwhenitcomestoresearchinthehardsciences,theseissuesarenotnearlyaslimitingasmanyoutsiderspresume.Artificialintelligencedoesn’ttouchonsensitivepoliticalquestions,andChina’sAIscientistsareessentiallyasfreeastheirAmericancounterpartstoconstructcutting-edgealgorithmsorbuildprofitableAIapplications.

Butdon’ttakeitfromme.Ata2017conferenceonartificialintelligenceandglobalsecurity,formerGoogleCEOEricSchmidtwarnedparticipantsagainstcomplacencywhenitcametoChineseAIcapabilities.PredictingthatChinawouldmatchAmericanAIcapabilitiesinfiveyears,Schmidtwasbluntinhisassessment:“Trustme,theseChinesepeoplearegood....IfyouhaveanykindofprejudiceorconcernthatsomehowtheirsystemandtheireducationalsystemisnotgoingtoproducethekindofpeoplethatI’mtalkingabout,you’rewrong.”

THESEVENGIANTSANDTHENEXTDEEPLEARNING

ButwhiletheglobalAIresearchcommunityhasblossomedintoafluidandopensystem,onecomponentofthatecosystemremainsmoreclosedoff:bigcorporateresearchlabs.Academicresearchersmayrushtosharetheirworkwiththeworld,butpublictechnologycompanieshaveafiduciaryresponsibilitytomaximizeprofitsfortheirshareholders.Thatusuallymeanslesspublishingandmoreproprietarytechnology.

OfthehundredsofcompaniespouringresourcesintoAIresearch,let’sreturntotheseventhathaveemergedasthenewgiantsofcorporateAIresearch—Google,Facebook,Amazon,Microsoft,Baidu,Alibaba,andTencent.TheseSevenGiantshave,ineffect,morphedintowhatnationswerefiftyyearsago—thatis,largeandrelativelyclosed-offsystemsthatconcentratetalentandresourcesonbreakthroughsthatwillmostlyremain“inhouse.”

Thesealsaroundcorporateresearchareneverairtight:teammembersleavetofoundtheirownAIstartups,andsomegroupslikeMicrosoftResearch,FacebookAIResearch,andDeepMindstillpublisharticlesontheirmostmeaningfulcontributions.Butbroadlyspeaking,ifoneofthesecompaniesmakesauniquebreakthrough—atradesecretthatcouldgeneratemassive

profitsforthatcompanyalone—itwilldoitsbesttokeepalidonitandwilltrytoextractmaximumvaluebeforethewordgetsout.

Agroundbreakingdiscoveryoccurringwithinoneoftheseclosedsystemsposesthegreatestthreattotheworld’sopenAIecosystem.ItalsothreatenstostymieChinainitsgoalofbecomingagloballeaderinAI.Thewaythingsstandtoday,Chinaalreadyhastheedgeinentrepreneurship,data,andgovernmentsupport,andit’srapidlycatchinguptotheUnitedStatesinexpertise.Ifthetechnologicalstatusquoholdsforthecomingyears,anarrayofChineseAIstartupswillbeginfanningoutacrossdifferentindustries.Theywillleveragedeeplearningandothermachine-learningtechnologiestodisruptdozensofsectorsandreaptherewardsoftransformingtheeconomy.

Butifthenextbreakthroughonthescaleofdeeplearningoccurssoon,andithappenswithinahermeticallysealedcorporateenvironment,allbetsareoff.ItcouldgiveonecompanyaninsurmountableadvantageovertheotherSevenGiantsandreturnustoanageofdiscoveryinwhicheliteexpertisetipsthebalanceofpowerinfavoroftheUnitedStates.

Tobeclear,Ibelievetheoddsareslightlyagainstsuchabreakthroughcomingoutofthecorporatebehemothsinthecomingyears.Deeplearningmarkedthelargestleapforwardinthepastfiftyyears,andadvancesonthisscalerarelycomemorethanonceeveryfewdecades.Evenifsuchabreakthroughdoesoccur,it’smorelikelytoemergeoutoftheopenenvironmentofacademia.Rightnow,thecorporategiantsarepouringunprecedentedresourcesintosqueezingdeeplearningforallit’sworth.Thatmeanslotsoffine-tuningofdeep-learningalgorithmsandonlyasmallpercentageoftrulyopen-endedresearchinpursuitofthenextparadigm-shiftingbreakthrough.

Meanwhile,academicsfindthemselvesunabletocompetewithindustryinpracticalapplicationsofdeeplearningbecauseoftherequirementsformassiveamountsofdataandcomputingpower.Soinstead,manyacademicresearchersarefollowingGeoffreyHinton’sexhortationtomoveonandfocusoninventing“thenextdeeplearning,”afundamentallynewapproachtoAIproblemsthatcouldchangethegame.Thattypeofopen-endedresearchisthekindmostlikelytostumbleontothenextbreakthroughandthenpublishitforalltheworldtolearnfrom.

GOOGLEVERSUSTHEREST

Butifthenextdeeplearningisdestinedtobediscoveredinthecorporateworld,Googlehasthebestshotatit.AmongtheSevenAIGiants,Google—

moreprecisely,itsparentcompany,Alphabet,whichownsDeepMindanditsself-drivingsubsidiaryWaymo—standsheadandshouldersabovetherest.Itwasoneoftheearliestcompaniestoseethepotentialindeeplearningandhasdevotedmoreresourcestoharnessingitthananyothercompany.

Intermsoffunding,Googledwarfsevenitsowngovernment:U.S.federalfundingformathandcomputerscienceresearchamountstolessthanhalfofGoogle’sownR&Dbudget.ThatspendingspreehasboughtAlphabetanoutsizedshareoftheworld’sbrightestAIminds.OfthetoponehundredAIresearchersandengineers,aroundhalfarealreadyworkingforGoogle.

TheotherhalfaredistributedamongtheremainingSevenGiants,academia,andahandfulofsmallerstartups.MicrosoftandFacebookhavesoakedupsubstantialportionsofthisgroup,withFacebookbringingonsuperstarresearcherslikeYannLeCun.OftheChinesegiants,Baiduwentintodeep-learningresearchearliest—eventryingtoacquireGeoffreyHinton’sstartupin2013beforebeingoutbidbyGoogle—andscoredamajorcoupin2014whenitrecruitedAndrewNgtoheadupitsSiliconValleyAILab.Withinayear,thathirewasshowingoutstandingresults.By2015,Baidu’sAIalgorithmshadexceededhumanabilitiesatChinesespeechrecognition.Itwasagreataccomplishment,butonethatwentlargelyunnoticedintheUnitedStates.Infact,whenMicrosoftreachedthesamemilestoneayearlaterforEnglish,thecompanydubbedita“historicachievement.”NgleftBaidutin2017tocreatehisownAIinvestmentfund,butthetimehespentatthecompanybothtestifiedtoBaidu’sambitionsandstrengtheneditsreputationforresearch.

AlibabaandTencentwererelativelatecomerstotheAItalentrace,buttheyhavethecashanddataonhandtoattracttoptalent.WithWeChatservingastheall-in-onesuper-appoftheworld’slargestinternetmarket,Tencentpossessesperhapsthesinglerichestdataecosystemofallthegiants.ThatisnowhelpingTencenttoattractandempowertop-flightAIresearchers.In2017,TencentopenedanAIresearchinstituteinSeattleandimmediatelybeganpoachingMicrosoftresearcherstostaffit.

Alibabahasfollowedsuitwithplanstoopenaglobalnetworkofresearchlabs,includinginSiliconValleyandSeattle.Thusfar,TencentandAlibabahaveyettopubliclydemonstratetheresultsofthisresearch,optinginsteadformoreproduct-drivenapplications.Alibabahastakentheleadon“CityBrains”:massiveAI-drivennetworksthatoptimizecityservicesbydrawingondatafromvideocameras,socialmedia,publictransit,andlocation-basedapps.WorkingwiththecitygovernmentinitshometownofHangzhou,Alibabaisusingadvancedobject-recognitionandpredictivetransitalgorithmstoconstantlytweakthepatternsforredlightsandalertemergencyservicesto

trafficaccidents.Thetrialhasincreasedtrafficspeedsby10percentinsomeareas,andAlibabaisnowpreparingtobringtheservicetoothercities.

WhileGooglemayhavejumpedofftoamassiveheadstartinthearmsraceforeliteAItalent,thatbynomeansguaranteesvictory.Asdiscussed,fundamentalbreakthroughsarefewandfarbetween,andparadigm-shiftingdiscoveriesoftenemergefromunexpectedplaces.Deeplearningcameoutofasmallnetworkofidiosyncraticresearchersobsessedwithanapproachtomachinelearningthathadbeendismissedbymainstreamresearchers.Ifthenextdeeplearningisouttheresomewhere,itcouldbehidingonanynumberofuniversitycampusesorincorporatelabs,andthere’snoguessingwhenorwhereitwillshowitsface.Whiletheworldwaitsforthelotteryofscientificdiscoverytoproduceanewbreakthrough,weremainentrenchedinourcurrenteraofAIimplementation.

POWERGRIDSVERSUSAIBATTERIES

Butthegiantsaren’tjustcompetingagainstoneanotherinaraceforthenextdeeplearning.They’realsoinamoreimmediateraceagainstthesmallAIstartupsthatwanttousemachinelearningtorevolutionizespecificindustries.It’sacontestbetweentwoapproachestodistributingthe“electricity”ofAIacrosstheeconomy:the“grid”approachoftheSevenGiantsversusthe“battery”approachofthestartups.HowthatraceplaysoutwilldeterminethenatureoftheAIbusinesslandscape—monopoly,oligopoly,orfreewheelingcompetitionamonghundredsofcompanies.

The“grid”approachistryingtocommoditizeAI.Itaimstoturnthepowerofmachinelearningintoastandardizedservicethatcanbepurchasedbyanycompany—orevenbegivenawayforfreeforacademicorpersonaluse—andaccessedviacloudcomputingplatforms.Inthismodel,cloudcomputingplatformsactasthegrid,performingcomplexmachine-learningoptimizationsonwhateverdataproblemsusersrequire.Thecompaniesbehindtheseplatforms—Google,Alibaba,andAmazon—actastheutilitycompanies,managingthegridandcollectingthefees.

HookingintothatgridwouldallowtraditionalcompanieswithlargedatasetstoeasilytapintoAI’soptimizationpowerswithouthavingtoremaketheirentirebusinessaroundit.Google’sTensorFlow,anopen-sourcesoftwareecosystemforbuildingdeeplearning-models,offersanearlyversionofthisbutstillrequiressomeAIexpertisetooperate.Thegoalofthegridapproachistobothlowerthatexpertisethresholdandincreasethefunctionalityofthesecloud-basedAIplatforms.Makinguseofmachinelearningisnowherenearassimpleasplugginganelectricapplianceintothewall—anditmayneverbe—

buttheAIgiantshopetopushthingsinthatdirectionandthenreaptherewardsofgeneratingthe“power”andoperatingthe“grid.”

AIstartupsaretakingtheoppositeapproach.Insteadofwaitingforthisgridtotakeshape,startupsarebuildinghighlyspecific“battery-powered”AIproductsforeachuse-case.Thesestartupsarebankingondepthratherthanbreadth.Insteadofsupplyinggeneral-purposemachine-learningcapabilities,theybuildnewproductsandtrainalgorithmsforspecifictasks,includingmedicaldiagnosis,mortgagelending,andautonomousdrones.

Theyarebettingthattraditionalbusinesseswon’tbeabletosimplyplugthenitty-grittydetailsoftheirdailyoperationsintoanall-purposegrid.InsteadofhelpingthosecompaniesaccessAI,thesestartupswanttodisruptthemusingAI.TheyaimtobuildAI-firstcompaniesfromthegroundup,creatinganewrosterofindustrychampionsfortheAIage.

It’sfartooearlytopickawinnerbetweenthegridandbatteryapproaches.WhilegiantslikeGooglesteadilyspreadtheirtentaclesoutward,startupsinChinaandtheUnitedStatesareracingtoclaimvirginterritoryandfortifythemselvesagainstincursionsbytheSevenGiants.Howthatscrambleforterritoryshakesoutwilldeterminetheshapeofourneweconomiclandscape.ItcouldconcentrateastronomicalprofitsinthehandsoftheSevenGiants—thesuper-utilitiesoftheAIage—ordiffusethoseprofitsoutacrossthousandsofvibrantnewcompanies.

THECHIPONCHINA’SSHOULDER

OneunderdiscussedareaofAIcompetition—amongtheAIgiants,startups,andthetwocountries—isincomputerchips,alsoknownassemiconductors.High-performancechipsaretheunsexy,andoftenunsung,heroesofeachcomputingrevolution.Theyareattheliteralcoreofourdesktops,laptops,smartphones,andtablets,butforthatreasontheyremainlargelyhiddentotheenduser.Butfromaneconomicandsecurityperspective,buildingthosechipsisaverybigdeal:themarketstendtowardlucrativemonopolies,andsecurityvulnerabilitiesarebestspottedbythosewhoworkdirectlywiththehardware.

Eacheraofcomputingrequiresdifferentkindsofchips.Whendesktopsreignedsupreme,chipmakerssoughttomaximizeprocessingspeedandgraphicsonahigh-resolutionscreen,withfarlessconcernaboutpowerconsumption.(Desktopswere,afterall,alwayspluggedin.)Intelmasteredthedesignofthesechipsandmadebillionsintheprocess.Butwiththeadventofsmartphones,demandshiftedtowardmoreefficientusesofpower,and

Qualcomm,whosechipswerebasedondesignsbytheBritishfirmARM,tookthethroneastheundisputedchipking.

Now,astraditionalcomputingprogramsaredisplacedbytheoperationofAIalgorithms,requirementsareonceagainshifting.Machinelearningdemandstherapid-fireexecutionofcomplexmathematicalformulas,somethingforwhichneitherIntel’snorQualcomm’schipsarebuilt.IntothevoidsteppedNvidia,achipmakerthathadpreviouslyexcelledatgraphicsprocessingforvideogames.ThemathbehindgraphicsprocessingalignedwellwiththerequirementsforAI,andNvidiabecamethego-toplayerinthechipmarket.Between2016andearly2018,thecompany’sstockpricemultipliedbyafactoroften.

Thesechipsarecentraltoeverythingfromfacialrecognitiontoself-drivingcars,andthathassetoffaracetobuildthenext-generationAIchip.GoogleandMicrosoft—companiesthathadlongavoidedbuildingtheirownchips—havejumpedintothefray,alongsideIntel,Qualcomm,andabatchofwell-fundedSiliconValleychipstartups.FacebookhaspartneredwithInteltotest-driveitsfirstforayintoAI-specificchips.

Butforthefirsttime,muchoftheactioninthisspaceistakingplaceinChina.TheChinesegovernmenthasformanyyears—decades,even—triedtobuildupindigenouschipcapabilities.Butconstructingahigh-performancechipisanextremelycomplexandexpertise-intensiveprocess,onethathassofarremainedimpervioustoseveralgovernment-sponsoredprojects.Forthelastthreedecades,it’sbeenprivateSiliconValleyfirmsthathavecashedinonchipdevelopment.

Chineseleadersandaraftofchipstartupsarehopingthatthistimeisdifferent.TheChineseMinistryofScienceandTechnologyisdolingoutlargesumsofmoney,namingasaspecificgoaltheconstructionofachipwithperformanceandenergyefficiencytwentytimesbetterthanoneofNvidia’scurrentofferings.ChinesechipstartupslikeHorizonRobotics,Bitmain,andCambriconTechnologiesareflushwithinvestmentcapitalandworkingonproductstailor-madeforself-drivingcarsorotherAIuse-cases.Thecountry’sedgeindatawillalsofeedintochipdevelopment,offeringhardwaremakersafeastofexamplesonwhichtotesttheirproducts.

Onbalance,SiliconValleyremainstheclearleaderinAIchipdevelopment.Butit’saleadthattheChinesegovernmentandthecountry’sventure-capitalcommunityaretryingtheirbesttoerase.That’sbecausewheneconomicdisruptionoccursonthescalepromisedbyartificialintelligence,itisn’tjustabusinessquestion—it’salsoamajorpoliticalquestion.

ATALEOFTWOAIPLANS

OnOctober12,2016,PresidentBarackObama’sWhiteHousereleasedalong-brewingplanforhowtheUnitedStatescanharnessthepowerofartificialintelligence.ThedocumentdetailedthetransformationAIissettobringtotheeconomyandlaidoutstepstoseizethatopportunity:increasingfundingforresearch,steppingupcivilian-militarycooperation,andmakinginvestmentstomitigatesocialdisruptions.Itofferedadecentsummaryofchangesonthehorizonandsomecommonsenseprescriptionsforadaptation.

Butthereport—issuedbythemostpowerfulpoliticalofficeintheUnitedStates—hadaboutthesameimpactasawonkishpolicypaperfromanacademicthinktank.ReleasedthesameweekasDonaldTrump’sinfamousAccessHollywoodvideotape,theWhiteHousereportbarelyregisteredintheAmericannewscycle.ItdidnotsparkanationalsurgeininterestaboutAI.ItdidnotleadtoafloodofnewVCinvestmentsandgovernmentfundingforAIstartups.Anditdidn’tgalvanizemayorsorgovernorstoadoptAI-friendlypolicies.Infact,whenPresidentTrumptookofficejustthreemonthsafterthereport’sdebut,heproposedcuttingfundingforAIresearchattheNationalScienceFoundation.

ThelimpresponsetotheObamareportmadeforastarkcontrasttotheshockwavesgeneratedbytheChinesegovernment’sownAIplan.LikepastChinesegovernmentdocumentsontechnology,itwasplaininitslanguagebutmomentousinitsimpact.PublishedinJuly2017,theChineseStateCouncil’s“DevelopmentPlanforaNewGenerationofArtificialIntelligence”sharedmanyofthesamepredictionsandrecommendationsastheWhiteHouseplan.Italsospelledouthundredsofindustry-specificapplicationsofAIandlaiddownsignpostsforChina’sprogresstowardbecominganAIsuperpower.ItcalledforChinatoreachthetoptierofAIeconomiesby2020,achievemajornewbreakthroughsby2025,andbecomethegloballeaderinAIby2030.

IfAlphaGowasChina’sSputnikMoment,thegovernment’sAIplanwaslikePresidentJohnF.Kennedy’slandmarkspeechcallingforAmericatolandamanonthemoon.ThereportlackedKennedy’ssoaringrhetoric,butitsetoffasimilarnationalmobilization,anall-hands-on-deckapproachtonationalinnovation.

BETTINGONAI

China’sAIplanoriginatedatthehighestlevelsofthecentralgovernment,butChina’sambitiousmayorsarewheretherealactiontakesplace.FollowingthereleaseoftheStateCouncil’splan,localofficialsanglingforpromotionthrewthemselvesintothegoalofturningtheircitiesintohubsforAIdevelopment.Theyofferedsubsidiesforresearch,directedventure-capital“guidingfunds”towardAI,purchasedtheproductsandservicesoflocalAIstartups,andsetupdozensofspecialdevelopmentzonesandincubators.

Wecanseetheintricacyofthesesupportpoliciesbyzoominginononecity,Nanjing.ThecapitalofJiangsuprovinceonChina’seasternseaboard,NanjingisnotamongthetoptierofChinesecitiesforstartups—thosehonorsgotoBeijing,Shenzhen,andHangzhou.ButinabidtotransformNanjingintoanAIhotspot,thecitygovernmentispouringvastsumsofmoneyandpolicyresourcesintoattractingAIcompaniesandtoptalent.

Between2017and2020,theNanjingEconomicandTechnologicalDevelopmentZoneplanstoputatleast3billionRMB(around$450million)intoAIdevelopment.ThatmoneywillgotowardadizzyingarrayofAIsubsidiesandperks,includinginvestmentsofupto15millionRMBinlocalcompanies,grantsof1millionRMBpercompanytoattracttalent,rebatesonresearchexpensesofupto5millionRMB,creationofanAItraininginstitute,governmentcontractsforfacialrecognitionandautonomousrobottechnology,simplifiedproceduresforregisteringacompany,seedfundingandofficespaceformilitaryveterans,freecompanyshuttles,covetedspotsatlocalschoolsforthechildrenofcompanyexecutives,andspecialapartmentsforemployeesofAIstartups.

Andthatisallinjustonecity.Nanjing’spopulationof7millionranksjusttenthinChina,acountrywithahundredcitiesofmorethanamillionpeople.Thisblizzardofgovernmentincentivesisgoingonacrossmanyofthosecitiesrightnow,allcompetingtoattract,fund,andempowerAIcompanies.It’saprocessofgovernment-acceleratedtechnologicaldevelopmentthatI’vewitnessedtwiceinthepastdecade.Between2007and2017,Chinawentfromhavingzerohigh-speedraillinestohavingmoremilesofhigh-speedrailoperationalthantherestoftheworldcombined.Duringthe“massinnovationandmassentrepreneurship”campaignthatbeganin2015,asimilarflurryofincentivescreated6,600newstartupincubatorsandshiftedthenationalculturearoundtechnologystartups.

Ofcourse,it’stooearlytoknowtheexactresultsofChina’sAIcampaign,butifChinesehistoryisanyguide,itislikelytobesomewhatinefficientbutextremelyeffective.Thesheerscopeoffinancingandspeedofdeploymentalmostguaranteesthattherewillbeinefficiencies.Governmentbureaucraciescannotrapidlydeploybillionsofdollarsininvestmentsandsubsidieswithout

someamountofwaste.TherewillbedormsforAIemployeesthatwillneverbeinhabited,andinvestmentsinstartupsthatwillnevergetofftheground.Therewillbetraditionaltechnologycompaniesthatmerelyrebrandthemselvesas“AIcompanies”torakeinsubsidies,andAIequipmentpurchasesthatsimplygatherdustingovernmentoffices.

Butthat’sarisktheseChinesegovernmentofficialsarewillingtotake,alossthey’rewillingtoabsorbinpursuitofalargergoal:brute-forcingtheeconomicandtechnologicalupgradingoftheircities.Thepotentialupsideofthattransformationislargeenoughtowarrantmakingexpensivebetsonthenextbigthing.Andifthebetdoesn’tpanout,themayorswon’tbeendlesslypilloriedbytheiropponentsforattemptingtoactonthecentralgovernment’swishes.

ContrastthatwiththepoliticalfirestormfollowingbigbetsgonebadintheUnitedStates.Afterthe2008financialcrisis,PresidentObama’sstimulusprogramincludedplansforgovernmentloanguaranteesonpromisingrenewableenergyprojects.Itwasaprogramdesignedtostimulateastagnanteconomybutalsotofacilitateabroadereconomicandenvironmentalshifttowardgreenenergy.

OneoftherecipientsofthoseloanguaranteeswasSolyndra,aCaliforniasolarpanelcompanythatinitiallylookedpromisingbutthenwentbankruptin2011.PresidentObama’scriticsquicklyturnedthatfailureintooneofthemostpotentpoliticalbludgeonsofthe2012presidentialelection.Theyhammeredthepresidentwithmillionsofdollarsinattackads,criticizingthe“wasteful”spendingasasymptomof“cronycapitalism”and“venturesocialism.”Nevermindthat,onthewhole,theloanguaranteeprogramisprojectedtoearnmoneyforthefederalgovernment—onehigh-profilefailurewasenoughtotartheentireenterpriseoftechnologicalupgrading.

Obamasurvivedthenegativeonslaughttowinanotherterm,butthelessonsforAmericanpoliticianswereclear:usinggovernmentfundingtoinvestineconomicandtechnologicalupgradesisariskybusiness.Successesareoftenignored,andeverymisfirebecomesfodderforattackads.It’sfarsafertostayoutofthemessybusinessofupgradinganeconomy.

SELF-DRIVINGDILEMMAS

ThatsamedivideinpoliticalculturesappliestocreatingasupportivepolicyenvironmentforAIdevelopment.Forthepastthirtyyears,Chineseleadershavepracticedakindoftechno-utilitarianism,leveragingtechnologicalupgradestomaximizebroadersocialgoodwhileacceptingthattherewillbe

downsidesforcertainindividualsorindustries.It,likeallpoliticalstructures,isahighlyimperfectsystem.Top-downgovernmentmandatestoexpandinvestmentandproductioncanalsosendthependulumofpublicinvestmentswingingtoofarinagivendirection.Inrecentyears,thishasledtomassiveglutsofsupplyandunsustainabledebtloadsinChineseindustriesrangingfromsolarpanelstosteel.Butwhennationalleaderscorrectlychannelthosemandatestowardnewtechnologiesthatcanleadtoseismiceconomicshifts,thetechno-utilitarianapproachcanhavehugeupsides.

Self-drivingcarsmakeforagoodexampleofthisbalancingact.In2016,theUnitedStateslostfortythousandpeopletotrafficaccidents.Thatannualdeathtollisequivalenttothe9/11terroristattacksoccurringonceeverymonthfromJanuarythroughNovember,andtwiceinDecember.TheWorldHealthOrganizationestimatesthattherearearound260,000annualroadfatalitiesinChinaand1.25millionaroundtheglobe.

Autonomousvehiclesareonthepathtoeventuallybeingfarsaferthanhuman-drivenvehicles,andwidespreaddeploymentofthetechnologywilldramaticallydecreasethesefatalities.Itwillalsoleadtohugeincreasesinefficiencyoftransportationandlogisticsnetworks,gainsthatwillechothroughouttheentireeconomy.

Butalongsidethelivessavedandproductivitygained,therewillbeotherinstancesinwhichjobsorevenlivesarelostduetotheverysametechnology.Forstarters,taxi,truck,bus,anddeliverydriverswillbelargelyoutofluckinaself-drivingworld.Therewillalsoinevitablybemalfunctionsinautonomousvehiclesthatcausecrashes.Therewillbecircumstancesthatforceanautonomousvehicletomakeagonizingethicaldecisions,likewhethertoveerrightandhavea55percentchanceofkillingtwopeopleorveerleftandhavea100percentchanceofkillingoneperson.

Everyoneofthesedownsideriskspresentsthornyethicalquestions.Howshouldwebalancethelivelihoodsofmillionsoftruckdriversagainstthebillionsofdollarsandmillionsofhourssavedbyautonomousvehicles?Whatshouldaself-drivingcar“optimizefor”insituationswhereitisforcedtochoosewhichcartocrashinto?Howshouldanautonomousvehicle’salgorithmweighthelifeofitsowner?Shouldyourself-drivingcarsacrificeyourownlifetosavethelivesofthreeotherpeople?

Thesearethequestionsthatkeepethicistsupatnight.They’realsoquestionsthatcouldholdupthelegislationneededforautonomous-vehicledeploymentandtieupAIcompaniesinyearsoflawsuits.TheymaywellleadAmericanpoliticians,everfearfulofinterestgroupsandattackads,topumpthebrakesonwidespreadself-drivingvehicledeployment.We’vealreadyseenearlysignsofthishappening,withunionsrepresentingtruckdrivers

successfullylobbyingCongressin2017toexcludetrucksfromlegislationaimedatspeedingupautonomous-vehicledeployment.

IbelievetheChinesegovernmentwillseethesedifficultconcernsasimportanttopicstoexplorebutnotasareasontodelaytheimplementationoftechnologythatwillsavetensifnothundredsofthousandsoflivesinthenot-too-distantfuture.Forbetterorworse—andIrecognizethatmostAmericansmaynotembracethisview—Chinesepoliticalculturedoesn’tcarrytheAmericanexpectationofreachingamoralconsensusoneachoftheabovequestions.Promotionofabroadersocialgood—thelong-termpayoffinlivessaved—isagoodenoughreasontobeginimplementation,withoutliercasesandlegalintricaciestobedealtwithinduetime.Again,thisisnotacallfortheUnitedStatesandEuropetomimicthetechno-utilitarianapproachutilizedinChina—everycountryshoulddecideonitsownapproachbasedonitsownculturalvalues.Butit’simportanttounderstandtheChineseapproachandtheimplicationsitholdsforthepaceandpathofAIdevelopment.

AcceleratingthatdeploymentwillfeaturethesamescramblebylocalgovernmentofficialstostandoutonAI.AlongwithcompetingtoattractAIcompaniesthroughsubsidies,thesemayorsandprovincialgovernorswillcompetetobethefirsttoimplementhigh-profileAIprojects,suchasAI-assisteddoctorsatpublichospitalsorautonomoustruckingroutesand“citybrains”thatoptimizeurbantrafficgrids.Theycanpursuetheseprojectsforboththepoliticalpointsscoredandthebroadsocialupside,spendinglesstimeobsessingoverthedownsiderisksthatwouldscareawayrisk-sensitiveAmericanpoliticians.

Thisisnotanethicaljudgmentoneitherofthesetwosystems.Utilitariangovernmentsystemsandrights-basedapproachesbothhavetheirblindspotsanddownsides.America’sopennesstoimmigrationandemphasisonindividualrightshaslonghelpeditattractsomeofthebrightestmindsfromaroundtheworld—peoplelikeEnricoFermi,AlbertEinstein,andmanyleadingAIscientiststoday.China’stop-downapproachtoeconomicupgrades—andtheeagernessoflow-levelofficialstoembraceeachnewcentralgovernmentmandate—canalsoleadtowasteanddebtifthetargetindustriesarenotchosenwell.Butinthisparticularinstance—buildingasocietyandeconomypreparedtoharnessthepotentialofAI—China’stechno-utilitarianapproachgivesitacertainadvantage.Itsacceptanceofriskallowsthegovernmenttomakebigbetsongame-changingtechnologies,anditsapproachtopolicywillencouragefasteradoptionofthosetechnologies.

Withthesenationalstrengthsandweaknessesinmind,wecanconstructatimelineforAIdeploymentandlookathowspecificAIproductsandsystemsaresettochangetheworldaroundus.

5★

THEFOURWAVESOFAI

Theyear2017markedthefirsttimeIheardDonaldTrumpspeakfluentChinese.DuringtheU.S.president’sfirsttriptoChina,heshoweduponabigscreentowelcomeattendeesatamajortechconference.HebeganhisspeechinEnglishandthenabruptlyswitchedlanguages.

“AIischangingtheworld,”hesaid,speakinginflawlessChinesebutwithtypicalTrumpbluster.“AndiFlyTekisreallyfantastic.”

PresidentTrumpcannot,ofcourse,speakChinese.ButAIisindeedchangingtheworld,andChinesecompanieslikeiFlyTekareleadingtheway.BytrainingitsalgorithmsonlargedatasamplesofPresidentTrump’sspeeches,iFlyTekcreatedanear-perfectdigitalmodelofhisvoice:intonation,pitch,andpatternofspeech.ItthenrecalibratedthatvocalmodelforMandarinChinese,showingtheworldwhatDonaldTrumpmightsoundlikeifhegrewupinavillageoutsideBeijing.Themovementoflipswasn’tpreciselysyncedtotheChinesewords,butitwascloseenoughtofoolacasualvieweratfirstglance.PresidentObamagotthesametreatmentfromiFlyTek:avideoofarealpressconferencebutwithhisprofessorialstyleconvertedtoperfectMandarin.

“WiththehelpofiFlyTek,I’velearnedChinese,”ObamaintonedtotheWhiteHousepresscorps.“IthinkmyChineseisbetterthanTrump’s.Whatdoallofyouthink?”

iFlyTekmightsaythesametoitsowncompetitors.TheChinesecompanyhasrackedupvictoriesataseriesofprestigiousinternationalAIcompetitionsforspeechrecognition,speechsynthesis,imagerecognition,andmachinetranslation.Eveninthecompany’s“secondlanguage”ofEnglish,iFlyTekoftenbeatsteamsfromGoogle,DeepMind,Facebook,andIBMWatsoninnatural-languageprocessing—thatis,theabilityofAItodecipheroverallmeaningratherthanjustwords.

Thissuccessdidn’tcomeovernight.Backin1999,whenIstartedMicrosoftResearchAsia,mytop-choicerecruitwasabrilliantyoungPh.D.namedLiuQingfeng.HehadbeenoneofthestudentsIsawfilingoutofthedormsto

studyunderstreetlightsaftermylectureinHefei.Liuwasbothhardworkingandcreativeintacklingresearchquestions;hewasoneofChina’smostpromisingyoungresearchers.ButwhenweaskedhimtoacceptourscholarshipofferandbecomeaMicrosoftinternandthenanemployee,hedeclined.HewantedtostarthisownAIspeechcompany.ItoldhimthathewasagreatyoungresearcherbutthatChinalaggedtoofarbehindAmericanspeech-recognitiongiantslikeNuance,andtherewerefewercustomersinChinaforthistechnology.Tohiscredit,LiuignoredthatadviceandpouredhimselfintobuildingiFlyTek.NearlytwentyyearsanddozensofAIcompetitionawardslater,iFlyTekhasfarsurpassedNuanceincapabilitiesandmarketcap,becomingthemostvaluableAIspeechcompanyintheworld.CombiningiFlyTek’scutting-edgecapabilitiesinspeechrecognition,

translation,andsynthesiswillyieldtransformativeAIproducts,includingsimultaneoustranslationearpiecesthatinstantlyconvertyourwordsandvoiceintoanylanguage.It’sthekindofproductthatwillsoonrevolutionizeinternationaltravel,business,andculture,andunlockvastnewstoresoftime,productivity,andcreativityintheprocess.

THEWAVES

Butitwon’thappenallatonce.ThecompleteAIrevolutionwilltakealittletimeandwillultimatelywashoverusinaseriesoffourwaves:internetAI,businessAI,perceptionAI,andautonomousAI.EachofthesewavesharnessesAI’spowerinadifferentway,disruptingdifferentsectorsandweavingartificialintelligencedeeperintothefabricofourdailylives.

Thefirsttwowaves—internetAIandbusinessAI—arealreadyallaroundus,reshapingourdigitalandfinancialworldsinwayswecanbarelyregister.Theyaretighteninginternetcompanies’griponourattention,replacingparalegalswithalgorithms,tradingstocks,anddiagnosingillnesses.

PerceptionAIisnowdigitizingourphysicalworld,learningtorecognizeourfaces,understandourrequests,and“see”theworldaroundus.Thiswavepromisestorevolutionizehowweexperienceandinteractwithourworld,blurringthelinesbetweenthedigitalandphysicalworlds.AutonomousAIwillcomelastbutwillhavethedeepestimpactonourlives.Asself-drivingcarstaketothestreets,autonomousdronestaketotheskies,andintelligentrobotstakeoverfactories,theywilltransformeverythingfromorganicfarmingtohighwaydrivingandfastfood.

Thesefourwavesallfeedoffdifferentkindsofdata,andeachonepresentsauniqueopportunityfortheUnitedStatesorChinatoseizethelead.We’llseethatChinaisinastrongpositiontoleadorco-leadininternetAIandperceptionAI,andwilllikelysooncatchupwiththeUnitedStatesinautonomousAI.Currently,businessAIremainstheonlyarenainwhichtheUnitedStatesmaintainsclearleadership.

Competition,however,won’tplayoutinjustthesetwocountries.AI-drivenservicesthatarepioneeredintheUnitedStatesandChinawillthenproliferateacrossbillionsofusersaroundtheglobe,manyofthemindevelopingcountries.CompanieslikeUber,Didi,Alibaba,andAmazonarealreadyfiercelycompetingforthesedevelopingmarketsbutadoptingverydifferentstrategies.WhileSiliconValleyjuggernautsaretryingtoconquereachnewmarketwiththeirownproducts,China’sinternetcompaniesareinsteadinvestinginthesecountries’scrappylocalstartupsastheytrytofightoffU.S.domination.It’sacompetitionthat’sjustgettingstarted,andonethatwillhaveprofoundimplicationsfortheglobaleconomiclandscapeofthetwenty-firstcentury.

Tounderstandhowthiscomingcompetitionwillplayoutathomeandabroad,wemustfirsttakeadiveintoeachofthefourwavesofAIwashingoveroureconomies.

FIRSTWAVE:INTERNETAI

InternetAIalreadylikelyhasastronggriponyoureyeballs,ifnotyourwallet.EverfindyourselfgoingdownanendlessrabbitholeofYouTubevideos?Dovideostreamingsiteshaveanuncannyknackforrecommendingthatnextvideothatyou’vejustgottocheckoutbeforeyougetbacktowork?DoesAmazonseemtoknowwhatyou’llwanttobuybeforeyoudo?

Ifso,thenyouhavebeenthebeneficiary(orvictim,dependingonhowyouvalueyourtime,privacy,andmoney)ofinternetAI.Thisfirstwavebeganalmostfifteenyearsagobutfinallywentmainstreamaround2012.InternetAIislargelyaboutusingAIalgorithmsasrecommendationengines:systemsthatlearnourpersonalpreferencesandthenserveupcontenthand-pickedforus.

ThehorsepoweroftheseAIenginesdependsonthedigitaldatatheyhaveaccessto,andthere’scurrentlynogreaterstorehouseofthisdatathanthemajorinternetcompanies.Butthatdataonlybecomestrulyusefultoalgorithmsonceithasbeenlabeled.Inthiscase,“labeled”doesn’tmeanyouhavetoactivelyratethecontentortagitwithakeyword.Labelssimplycomefromlinkingapieceofdatawithaspecificoutcome:boughtversusdidn’t

buy,clickedversusdidn’tclick,watcheduntiltheendversusswitchedvideos.Thoselabels—ourpurchases,likes,views,orlingeringmomentsonawebpage—arethenusedtotrainalgorithmstorecommendmorecontentthatwe’relikelytoconsume.

Averagepeopleexperiencethisastheinternet“gettingbetter”—thatis,atgivinguswhatwewant—andbecomingmoreaddictiveasitgoes.Butit’salsoproofofthepowerofAItolearnaboutusthroughdataandthenoptimizeforwhatwedesire.Thatoptimizationhasbeentranslatedintomassiveincreasesinprofitsforestablishedinternetcompaniesthatmakemoneyoffourclicks:theGoogles,Baidus,Alibabas,andYouTubesoftheworld.UsinginternetAI,Alibabacanrecommendproductsyou’remorelikelytobuy,Googlecantargetyouwithadsyou’remorelikelytoclickon,andYouTubecansuggestvideosthatyou’remorelikelytowatch.Adoptingthosesamemethodsinadifferentcontext,acompanylikeCambridgeAnalyticausedFacebookdatatobetterunderstandandtargetAmericanvotersduringthe2016presidentialcampaign.Revealingly,itwasRobertMercer,founderofCambridgeAnalytica,whoreportedlycoinedthefamousphrase,“There’snodatalikemoredata.”

ALGORITHMSANDEDITORS

First-waveAIhasgivenbirthtoentirelynew,AI-driveninternetcompanies.China’sleaderinthiscategoryisJinriToutiao(meaning“today’sheadlines”;Englishname:“ByteDance”).Foundedin2012,Toutiaoissometimescalled“theBuzzFeedofChina”becausebothsitesserveashubsfortimelyviralstories.Butviralityiswherethesimilaritiesstop.BuzzFeedisbuiltonastaffofyoungeditorswithaknackforcookinguporiginalcontent.Toutiao’s“editors”arealgorithms.

Toutiao’sAIenginestrawltheinternetforcontent,usingnatural-languageprocessingandcomputervisiontodigestarticlesandvideosfromavastnetworkofpartnersitesandcommissionedcontributors.Itthenusesthepastbehaviorofitsusers—theirclicks,reads,views,comments,andsoon—tocurateahighlypersonalizednewsfeedtailoredtoeachperson’sinterests.Theapp’salgorithmsevenrewriteheadlinestooptimizeforuserclicks.Andthemorethoseusersclick,thebetterToutiaobecomesatrecommendingpreciselythecontenttheywanttosee.It’sapositivefeedbackloopthathascreatedoneofthemostaddictivecontentplatformsontheinternet,withusersspendinganaverageofseventy-fourminutesperdayintheapp.

ROBOTREPORTSANDFAKENEWS

Reachingbeyondsimplecuration,Toutiaoalsousesmachinelearningtocreateandpoliceitscontent.Duringthe2016SummerOlympicsinRiodeJaneiro,ToutiaoworkedwithPekingUniversitytocreateanAI“reporter”thatwroteshortarticlessummingupsportseventswithinminutesofthefinalwhistle.Thewritingwasn’texactlypoetry,butthespeedwasincredible:the“reporter”producedshortsummarieswithintwosecondsofsomeevents’finish,andit“covered”overthirtyeventsperday.

Algorithmsarealsobeingusedtosniffout“fakenews”ontheplatform,oftenintheformofbogusmedicaltreatments.Originally,readersdiscoveredandreportedmisleadingstories—essentially,freelabelingofthatdata.Toutiaothenusedthatlabeleddatatotrainanalgorithmthatcouldidentifyfakenewsinthewild.Toutiaoeventrainedaseparatealgorithmtowritefakenewsstories.Itthenpittedthosetwoalgorithmsagainsteachother,competingtofooloneanotherandimprovingbothintheprocess.

ThisAI-drivenapproachtocontentispayingoff.Bylate2017,Toutiaowasalreadyvaluedat$20billionandwentontoraiseanewroundoffundingthatwouldvalueitat$30billion,dwarfingthe$1.7billionvaluationforBuzzFeedatthetime.For2018,Toutiaoprojectedrevenuesbetween$4.5and$7.6billion.AndtheChinesecompanyisrapidlyworkingtoexpandoverseas.Aftertryingandfailingin2016tobuyReddit,thepopularU.S.aggregationanddiscussionsite,in2017ToutiaosnappedupaFrance-basednewsaggregatorandMusical.ly,aChinesevideolip-syncingappthat’swildlypopularwithAmericanteens.

Toutiaoisjustonecompany,butitssuccessisindicativeofChina’sstrengthininternetAI.Withmorethan700millioninternetusersalldigestingcontentinthesamelanguage,China’sinternetjuggernautsarereapingmassiverewardsfromoptimizingonlineserviceswithAI.ThathashelpedfueltherapidriseofTencent’smarketcap—surpassingFacebookinNovember2017andbecomingthefirstChinesecompanytotop$500billion—andhasallowedAlibabatoholditsownwithAmazon.DespiteBaidu’sstrengthinAIresearch,itsmobileserviceslaggedfarbehindGoogle.ButthatgapismorethanmadeupforbyupstartslikeToutiao,Chinesecompaniesthataregeneratingmultibillion-dollarvaluationsbybuildingtheirbusinessfoundationoninternetAI.Massiveprofitswillaccruetotheseinternetcompaniesastheybecomeevenbetteratholdingourattentionlongerandharvestingourclicks.

Overall,ChineseandAmericancompaniesareonaboutequalfootingininternetAI,witharound50–50oddsofleadershipbasedoncurrenttechnology.Ipredictthatinfiveyears’time,Chinesetechnologycompanieswillhaveaslightadvantage(60–40)whenitcomestoleadingtheworldininternetAIandreapingtherichestrewardsfromitsimplementation.Remember,ChinaalonehasmoreinternetusersthantheUnitedStatesandallofEuropecombined,andthoseusersareempoweredtomakefrictionlessmobilepaymentstocontentcreators,O2Oplatforms,andotherusers.ThatcombinationisgeneratingcreativeinternetAIapplicationsandopportunitiesformonetizationunmatchedanywhereelseintheworld.AddChina’stenaciousandwell-fundedentrepreneursintothemix,andChinahasastrong—butnotyetdecisive—edgeoverSiliconValley.

ButforalltheeconomicvaluethatthefirstAIwavegenerates,itremainslargelybottledupinthehigh-techsectoranddigitalworld.BringingtheoptimizationpowerofAItobearonmoretraditionalcompaniesinthewidereconomycomesduringthesecondwave:businessAI.

SECONDWAVE:BUSINESSAI

First-waveAIleveragesthefactthatinternetusersareautomaticallylabelingdataastheybrowse.BusinessAItakesadvantageofthefactthattraditionalcompanieshavealsobeenautomaticallylabelinghugequantitiesofdatafordecades.Forinstance,insurancecompanieshavebeencoveringaccidentsandcatchingfraud,bankshavebeenissuingloansanddocumentingrepaymentrates,andhospitalshavebeenkeepingrecordsofdiagnosesandsurvivalrates.Alloftheseactionsgeneratelabeleddatapoints—asetofcharacteristicsandameaningfuloutcome—butuntilrecently,mosttraditionalbusinesseshadahardtimeexploitingthatdataforbetterresults.

BusinessAIminesthesedatabasesforhiddencorrelationsthatoftenescapethenakedeyeandhumanbrain.Itdrawsonallthehistoricdecisionsandoutcomeswithinanorganizationanduseslabeleddatatotrainanalgorithmthatcanoutperformeventhemostexperiencedhumanpractitioners.That’sbecausehumansnormallymakepredictionsonthebasisofstrongfeatures,ahandfulofdatapointsthatarehighlycorrelatedtoaspecificoutcome,ofteninaclearcause-and-effectrelationship.Forexample,inpredictingthelikelihoodofsomeonecontractingdiabetes,aperson’sweightandbodymassindexarestrongfeatures.AIalgorithmsdoindeedfactorinthesestrongfeatures,buttheyalsolookatthousandsofotherweakfeatures:peripheraldatapointsthatmightappearunrelatedtotheoutcomebutcontainsomepredictivepowerwhencombinedacrosstensofmillionsofexamples.These

subtlecorrelationsareoftenimpossibleforanyhumantoexplainintermsofcauseandeffect:whydoborrowerswhotakeoutloansonaWednesdayrepaythoseloansfaster?Butalgorithmsthatcancombinethousandsofthoseweakandstrongfeatures—oftenusingcomplexmathematicalrelationshipsindecipherabletoahumanbrain—willoutperformeventop-notchhumansatmanyanalyticalbusinesstasks.

Optimizationslikethisworkwellinindustrieswithlargeamountsofstructureddataonmeaningfulbusinessoutcomes.Inthiscase,“structured”referstodatathathasbeencategorized,labeled,andmadesearchable.Primeexamplesofwell-structuredcorporatedatasetsincludehistoricstockprices,credit-cardusage,andmortgagedefaults.

THEBUSINESSOFBUSINESSAI

Asearlyas2004,companieslikePalantirandIBMWatsonofferedbig-databusinessconsultingtocompaniesandgovernments.Butthewidespreadadoptionofdeeplearningin2013turbochargedthesecapabilitiesandgavebirthtonewcompetitors,suchasElementAIinCanadaand4thParadigminChina.

Thesestartupsselltheirservicestotraditionalcompaniesororganizations,offeringtolettheiralgorithmslooseonexistingdatabasesinsearchofoptimizations.Theyhelpthesecompaniesimprovefrauddetection,makesmartertrades,anduncoverinefficienciesinsupplychains.EarlyinstancesofbusinessAIhaveclusteredheavilyinthefinancialsectorbecauseitnaturallylendsitselftodataanalysis.Theindustryrunsonwell-structuredinformationandhasclearmetricsthatitseekstooptimize.

ThisisalsowhytheUnitedStateshasbuiltastrongleadinearlyapplicationsofbusinessAI.MajorAmericancorporationsalreadycollectlargeamountsofdataandstoreitinwell-structuredformats.Theyoftenuseenterprisesoftwareforaccounting,inventory,andcustomerrelationshipmanagement.Oncethedataisintheseformats,it’seasyforcompanieslikePalantirtocomeinandgeneratemeaningfulresultsbyapplyingbusinessAItoseekoutcostsavingsandprofitmaximization.

ThisisnotsoinChina.Chinesecompanieshavenevertrulyembracedenterprisesoftwareorstandardizeddatastorage,insteadkeepingtheirbooksaccordingtotheirownidiosyncraticsystems.Thosesystemsareoftennotscalableandaredifficulttointegrateintoexistingsoftware,makingthecleaningandstructuringofdataafarmoretaxingprocess.PoordataalsomakestheresultsofAIoptimizationslessrobust.Asamatterofbusiness

culture,Chinesecompaniesspendfarlessmoneyonthird-partyconsultingthantheirAmericancounterparts.Manyold-schoolChinesebusinessesarestillrunmorelikepersonalfiefdomsthanmodernorganizations,andoutsideexpertiseisn’tconsideredsomethingworthpayingfor.

FIREYOURBANKER

BothChina’scorporatedataanditscorporateculturemakeapplyingsecond-waveAItoitstraditionalcompaniesachallenge.ButinindustrieswherebusinessAIcanleapfroglegacysystems,Chinaismakingseriousstrides.Intheseinstances,China’srelativebackwardnessinareaslikefinancialservicesturnsintoaspringboardtocutting-edgeAIapplications.OneofthemostpromisingoftheseisAI-poweredmicro-finance.

Forexample,whenChinaleapfroggedcreditcardstomoverightintomobilepayments,itforgotonekeypieceoftheconsumerpuzzle:credititself.WeChatandAlipayletyoudrawdirectlyfromyourbankaccount,buttheircoreservicesdon’tgiveyoutheabilitytospendalittlebitbeyondyourmeanswhileyou’rewaitingforthenextpaycheck.

IntothisvoidsteppedSmartFinance,anAI-poweredappthatreliesexclusivelyonalgorithmstomakemillionsofsmallloans.Insteadofaskingborrowerstoenterhowmuchmoneytheymake,itsimplyrequestsaccesstosomeofthedataonapotentialborrower’sphone.Thatdataformsakindofdigitalfingerprint,onewithanastonishingabilitytopredictwhethertheborrowerwillpaybackaloanofthreehundreddollars.

SmartFinance’sdeep-learningalgorithmsdon’tjustlooktotheobviousmetrics,likehowmuchmoneyisinyourWeChatWallet.Instead,itderivespredictivepowerfromdatapointsthatwouldseemirrelevanttoahumanloanofficer.Forinstance,itconsidersthespeedatwhichyoutypedinyourdateofbirth,howmuchbatterypowerisleftonyourphone,andthousandsofotherparameters.

Whatdoesanapplicant’sphonebatteryhavetodowithcreditworthiness?Thisisthekindofquestionthatcan’tbeansweredintermsofsimplecauseandeffect.Butthat’snotasignofthelimitationsofAI.It’sasignofthelimitationsofourownmindsatrecognizingcorrelationshiddenwithinmassivestreamsofdata.Bytrainingitsalgorithmsonmillionsofloans—manythatgotpaidbackandsomethatdidn’t—SmartFinancehasdiscoveredthousandsofweakfeaturesthatarecorrelatedtocreditworthiness,evenifthosecorrelationscan’tbeexplainedinasimplewayhumanscanunderstand.ThoseoffbeatmetricsconstitutewhatSmartFinancefounderKeJiaocalls“a

newstandardofbeauty”forlending,onetoreplacethecrudemetricsofincome,zipcode,andevencreditscore.

Growingmountainsofdatacontinuetorefinethesealgorithms,allowingthecompanytoscaleupandextendcredittogroupsroutinelyignoredbyChina’straditionalbankingsector:youngpeopleandmigrantworkers.Inlate2017,thecompanywasmakingmorethan2millionloanspermonthwithdefaultratesinthelowsingledigits,atrackrecordthatmakestraditionalbrick-and-mortarbanksextremelyjealous.

“THEALGORITHMWILLSEEYOUNOW”

ButbusinessAIcanbeaboutmorethandollarsandcents.Whenappliedtootherinformation-drivenpublicgoods,itcanmeanamassivedemocratizationofhigh-qualityservicestothosewhopreviouslycouldn’taffordthem.Oneofthemostpromisingoftheseismedicaldiagnosis.TopresearchersintheUnitedStateslikeAndrewNgandSebastianThrunhavedemonstratedexcellentalgorithmsthatareonparwithdoctorsatdiagnosingspecificillnessesbasedonimages—pneumoniathroughchestx-raysandskincancerthroughphotos.ButabroaderbusinessAIapplicationformedicinewilllooktohandletheentirediagnosisprocessforawidevarietyofillnesses.

Rightnow,medicalknowledge—andthusthepowertodeliveraccuratediagnoses—isprettymuchkeptbottledupwithinasmallnumberofverytalentedhumans,peoplewithimperfectmemoriesandlimitedtimetokeepupwithnewadvancesinthefield.Sure,avastwealthofmedicalinformationisscatteredacrosstheinternetbutnotinawaythatisnavigablebymostpeople.First-ratemedicaldiagnosisisstillheavilyrationedbasedongeographyand,quitecandidly,one’sabilitytopay.

ThisisespeciallystarkinChina,wherewell-traineddoctorsallclusterinthewealthiestcities.TraveloutsideofBeijingandShanghai,andyou’relikelytoseeadramaticdropinthemedicalknowledgeofdoctorstreatingyourillness.Theresult?Patientsfromallaroundthecountrytrytocramintothemajorhospitals,liningupfordaysandstraininglimitedresourcestothebreakingpoint.

Second-waveAIpromisestochangeallofthis.Underneaththemanysocialelementsofvisitingadoctor,thecruxofdiagnosisinvolvescollectingdata(symptoms,medicalhistory,environmentalfactors)andpredictingthephenomenacorrelatedwiththem(anillness).Thisactofseekingoutvariouscorrelationsandmakingpredictionsisexactlywhatdeeplearningexcelsat.Givenenoughtrainingdata—inthiscase,precisemedicalrecords—anAI-

powereddiagnostictoolcouldturnanymedicalprofessionalintoasuper-diagnostician,adoctorwithexperienceintensofmillionsofcases,anuncannyabilitytospothiddencorrelations,andaperfectmemorytoboot.

ThisiswhatRXThinkingisattemptingtobuild.FoundedbyaChineseAIresearcherwithdeepexperienceinSiliconValleyandatBaidu,thestartupistrainingmedicalAIalgorithmstobecomesuper-diagnosticiansthatcanbedispatchedtoallcornersofChina.Insteadofreplacingdoctorswithalgorithms,RXThinking’sAIdiagnosisappempowersthem.Itactslikea“navigationapp”forthediagnosisprocess,drawingonallavailableknowledgetorecommendthebestroutebutstilllettingthedoctorssteerthecar.

Asthealgorithmgainsmoreinformationoneachspecificcase,itprogressivelynarrowsthescopeofpossibleillnessesandrequestsfurtherclarifyinginformationneededtocompletethediagnosis.Onceenoughinformationhasbeenenteredtogivethealgorithmahighlevelofcertainty,itmakesapredictionforthecauseofthesymptoms,alongwithallotherpossiblediagnosesandthepercentagechancethattheyaretherealculprit.

Theappneveroverridesadoctor—whocanalwayschoosetodeviatefromtheapp’srecommendations—butitdrawsonover400millionexistingmedicalrecordsandcontinuallyscansthelatestmedicalpublicationstomakerecommendations.Itdisseminatesworld-classmedicalknowledgeequallythroughouthighlyunequalsocieties,andletsalldoctorsandnursesfocusonthehumantasksthatnomachinecando:makingpatientsfeelcaredforandconsolingthemwhenthediagnosisisn’tbright.

JUDGINGTHEJUDGES

SimilarprinciplesarenowbeingappliedtoChina’slegalsystem,anothersprawlingbureaucracywithhighlyunevenlevelsofexpertiseacrossregions.iFlyTekhastakentheleadinapplyingAItothecourtroom,buildingtoolsandexecutingaShanghai-basedpilotprogramthatusesdatafrompastcasestoadvisejudgesonbothevidenceandsentencing.Anevidencecross-referencesystemusesspeechrecognitionandnatural-languageprocessingtocompareallevidencepresented—testimony,documents,andbackgroundmaterial—andseekoutcontradictoryfactpatterns.Itthenalertsthejudgetothesedisputes,allowingforfurtherinvestigationandclarificationbycourtofficers.

Oncearulingishandeddown,thejudgecanturntoyetanotherAItoolforadviceonsentencing.Thesentencingassistantstartswiththefactpattern—defendant’scriminalrecord,age,damagesincurred,andsoon—thenits

algorithmsscanmillionsofcourtrecordsforsimilarcases.Itusesthatbodyofknowledgetomakerecommendationsforjailtimeorfinestobepaid.JudgescanalsoviewsimilarcasesasdatapointsscatteredacrossanX–Ygraph,clickingoneachdotfordetailsonthefactpatternthatledtothesentence.It’saprocessthatbuildsconsistencyinasystemwithover100,000judges,anditcanalsoreininoutlierswhosesentencingpatternsputthemfaroutsidethemainstream.OneChineseprovinceisevenusingAItorateandrankallprosecutorsontheirperformance.SomeAmericancourtshaveimplementedsimilaralgorithmstoadviseonthe“risk”levelofprisonersupforparole,thoughtheroleandlackoftransparencyoftheseAItoolshavealreadybeenchallengedinhighercourts.

AswithRXThinking’s“navigationsystem”fordoctors,allofiFlyTek’sjudicialtoolsarejustthat:toolsthataidarealhumaninmakinginformeddecisions.Byempoweringjudgeswithdata-drivenrecommendations,theycanhelpbalancethescalesofjusticeandcorrectforthebiasespresentinevenwell-trainedjudges.AmericanlegalscholarshaveillustratedvastdisparitiesinU.S.sentencingbasedontheraceofthevictimandthedefendant.Andjudicialbiasescanbefarlessmaliciousthanracism:astudyofIsraelijudgesfoundthemfarmoresevereintheirdecisionsbeforelunchandmorelenientingrantingparoleafterhavingagoodmeal.

WHOLEADS?

SowhichcountrywillleadinthebroadercategoryofbusinessAI?Today,theUnitedStatesenjoysacommandinglead(90–10)inthiswave,butIbelieveinfiveyearsChinawillclosethatgapsomewhat(70–30),andtheChinesegovernmenthasabettershotatputtingthepowerofbusinessAItogooduse.TheUnitedStateshasaclearadvantageinthemostimmediateandprofitableimplementationsofthetechnology:optimizationswithinbanking,insurance,oranyindustrywithlotsofstructureddatathatcanbeminedforbetterdecision-making.ItscompanieshavetherawmaterialandcorporatewillpowertoapplybusinessAItotheproblemofmaximizingtheirbottomline.

There’snoquestionthatChinawilllaginthecorporateworld,butitmayleadinpublicservicesandindustrieswiththepotentialtoleapfrogoutdatedsystems.Thecountry’simmaturefinancialsystemandimbalancedhealthcaresystemgiveitstrongincentivestorethinkhowserviceslikeconsumercreditandmedicalcarearedistributed.BusinessAIwillturnthoseweaknessesintostrengthsasitreimaginestheseindustriesfromthegroundup.

Theseapplicationsofsecond-waveAIhaveimmediate,real-worldimpacts,butthealgorithmsthemselvesarestilltraffickingpurelyindigitalinformationmediatedbyhumans.Third-waveAIchangesallofthisbygivingAItwoofhumans’mostvaluableinformation-gatheringtools:eyesandears.

THIRDWAVE:PERCEPTIONAI

BeforeAI,allmachinesweredeafandblind.Sure,youcouldtakedigitalphotosormakeaudiorecordings,butthesemerelyreproducedouraudioandvisualenvironmentsforhumanstointerpret—themachinesthemselvescouldn’tmakesenseofthesereproductions.Toanormalcomputer,aphotographisjustameaninglesssplatteringofpixelsitmuststore.ToaniPhone,asongisjustaseriesofzerosandonesthatitmustplayforahumantoenjoy.

ThisallchangedwiththeadventofperceptionAI.Algorithmscannowgroupthepixelsfromaphotoorvideointomeaningfulclustersandrecognizeobjectsinmuchthesamewayourbraindoes:goldenretriever,trafficlight,yourbrotherPatrick,andsoon.Thesamegoesforaudiodata.Insteadofmerelystoringaudiofilesascollectionsofdigitalbits,algorithmscannowbothpickoutwordsandoftenparsethemeaningoffullsentences.

Third-waveAIisallaboutextendingandexpandingthispowerthroughoutourlivedenvironment,digitizingtheworldaroundusthroughtheproliferationofsensorsandsmartdevices.Thesedevicesareturningourphysicalworldintodigitaldatathatcanthenbeanalyzedandoptimizedbydeep-learningalgorithms.AmazonEchoisdigitizingtheaudioenvironmentofpeople’shomes.Alibaba’sCityBrainisdigitizingurbantrafficflowsthroughcamerasandobject-recognitionAI.Apple’siPhoneXandFace++camerasperformthatsamedigitizationforfaces,usingtheperceptiondatatosafeguardyourphoneordigitalwallet.

BLURREDLINESANDOUR“OMO”WORLD

Asaresult,perceptionAIisbeginningtoblurthelinesseparatingtheonlineandofflineworlds.Itdoesthatbydramaticallyexpandingthenodesthroughwhichweinteractwiththeinternet.BeforeperceptionAI,ourinteractionswiththeonlineworldhadtosqueezethroughtwoverynarrowchokepoints:thekeyboardsonourcomputersorthescreenonoursmartphones.Thosedevicesactasportalstothevastknowledgestoredontheworldwideweb,but

theyareaveryclunkywaytoinputorretrieveinformation,especiallywhenyou’reoutshoppingordrivingintherealworld.

AsperceptionAIgetsbetteratrecognizingourfaces,understandingourvoices,andseeingtheworldaroundus,itwilladdmillionsofseamlesspointsofcontactbetweentheonlineandofflineworlds.Thosenodeswillbesopervasivethatitnolongermakessensetothinkofoneselfas“goingonline.”Whenyouorderafullmealjustbyspeakingasentencefromyourcouch,areyouonlineoroffline?Whenyourrefrigeratorathometellsyourshoppingcartatthestorethatyou’reoutofmilk,areyoumovingthroughaphysicalworldoradigitalone?

IcallthesenewblendedenvironmentsOMO:online-merge-offline.OMOisthenextstepinanevolutionthatalreadytookusfrompuree-commercedeliveriestoO2O(online-to-offline)services.Eachofthosestepshasbuiltnewbridgesbetweentheonlineworldandourphysicalone,butOMOconstitutesthefullintegrationofthetwo.Itbringstheconvenienceoftheonlineworldofflineandtherichsensoryrealityoftheofflineworldonline.Overthecomingyears,perceptionAIwillturnshoppingmalls,grocerystores,citystreets,andourhomesintoOMOenvironments.Intheprocess,itwillproducesomeofthefirstapplicationsofartificialintelligencethatwillfeeltrulyfuturistictotheaverageuser.

Someofthesearealreadyhere.OneKFCrestaurantinChinarecentlyteamedupwithAlipaytopioneerapay-with-your-faceoptionatsomestores.Customersplacetheirownorderatadigitalterminal,andaquickfacialscanconnectstheirordertotheirAlipayaccount—nocash,cards,orcellphonesrequired.TheAIpoweringthemachinesevenrunsaquick“livenessalgorithm”toensurenoonecanuseaphotographofsomeoneelse’sfacetopayforameal.

Pay-with-your-faceapplicationsarefun,buttheyarejustthetipoftheOMOiceberg.Togetasenseofwherethingsareheaded,let’stakeaquicktripjustafewyearsintothefuturetoseewhatasupermarketfullyoutfittedwithperceptionAIdevicesmightlooklike.

“WHEREEVERYSHOPPINGCARTKNOWSYOURNAME”

“Nihao,Kai-Fu!WelcomebacktoYonghuiSuperstore!”

It’salwaysanicefeelingwhenyourshoppingcartgreetsyoulikeanoldfriend.AsIpullthecartbackfromtherack,visualsensorsembeddedinthe

handlebarhavealreadycompletedascanofmyfaceandmatchedittoarich,AI-drivenprofileofmyhabits,asafoodie,ashopper,andahusbandtoafantasticcookofChinesefood.WhileI’mrackingmybrainforwhatgrocerieswe’llneedthisweek,ascreenonthehandlebarlightsup.

“Onthescreenisalistofyourtypicalweeklygrocerypurchase,”thecartannounces.Andlikethat,ourfamily’sstaplelistofgroceriesappearsonthescreen:fresheggplant,Sichuanpepper,Greekyogurt,skimmilk,andsoon.

Myrefrigeratorandcabinetshavealreadydetectedwhatitemswe’reshortonthisweek,andtheyautomaticallyorderedthenonperishablestaples—rice,soysauce,cookingoil—forbulkdelivery.ThatmeansgrocerystoreslikeYonghuicantailortheirselectionaroundtheitemsyou’dwanttopickoutforyourself:freshproduce,uniquewines,liveseafood.Italsoallowsthesupermarketstodramaticallyshrinktheirstores’footprintandplacesmallerstoreswithinwalkingdistanceofmosthomes.

“Letmeknowifthere’sanythingyou’dliketoaddorsubtractfromthelist,”thecartchimesin.“Basedonwhat’sinyourcartandyourfridgeathome,itlookslikeyourdietwillbeshortonfiberthisweek.ShallIaddabagofalmondsoringredientsforasplit-peasouptocorrectthat?”

“Nosplitpeasoupbuthavealargebagofalmondsdeliveredtomyhouse,thanks.”I’mnotsureanalgorithmrequiresthanking,butIdoitoutofhabit.Scanningthelist,Imakeacoupleoftweaks.MydaughtersareoutoftownsoIcancutafewitems,andI’vealreadygotsomebeefinmyfridgesoIdecidetomakemymother’srecipeofbeefnoodlesformywife.

“SubtracttheGreekyogurtandswitchtowholemilkfromnowon.Also,addtheingredientsforbeefnoodlesthatIdon’talreadyhaveathome.”

“Noproblem,”itreplieswhileadjustingmyshoppinglist.ThecartisspeakinginMandarin,butinthesynthesizedvoiceofmyfavoriteactress,JenniferLawrence.It’sanicetouch,andoneofthereasonsrunningerrandsdoesn’tfeellikesuchachoreanymore.

Thecartmovesautonomouslythroughthestore,stayingafewstepsaheadofmewhileIpickouttheripesteggplantsandthemostfragrantSichuanpeppercorns,keytocreatingthenumbingspiceinthebeefnoodles.Thecartthenleadsmetothebackofthestorewhereaprecision-guidedrobotkneadsandpullsfreshnoodlesforme.AsIplacetheminthecart,depth-sensingcamerasonthecart’srimrecognizeeachitem,andsensorsliningthebottomweighthemastheygoin.

ThescreencrossesthingsoffasIgoanddisplaysthetotalcost.Thepreciselocationandpresentationofeveryitemhasbeenoptimizedbasedon

perceptionandpurchasedatagatheredatthestore:Whatdisplaysdoshopperswalkrightby?Wheredotheystopandpickupitemstoinspect?Andwhichofthosedotheyfinallypurchase?ThatmatrixofvisualandbusinessdatagivesAI-enabledsupermarketsthesamekindofrichunderstandingofconsumerbehaviorthatwaspreviouslyreservedforonlineretailers.

Roundingthecornertowardthewineaisle,afriendlyyoungmaninaconciergeuniformapproaches.

“Hi,Mr.Lee,how’veyoubeen?”hesays.“We’vejustgotinashipmentofsomefantasticNapawines.Iunderstandthatyourwife’sbirthdayiscomingup,andwewantedtoofferyoua10percentdiscountonyourfirstpurchaseofthe2014OpusOne.YourwifenormallygoesforOverture,andthisisthepremiumofferingfromthatsamewinery.Ithassomewonderfulflavors,hintsofcoffeeandevendarkchocolate.Wouldyoulikeatasting?”

HeknowsmyweaknessforCaliforniawines,andItakehimupontheoffer.It’sindeedfantastic.

“Iloveit,”Isay,handingthewineglasstotheyoungman.“I’lltaketwobottles.”

“Excellentchoice—youcancontinuewithyourshopping,andI’llbringthosebottlestoyouinjustamoment.Ifyou’dliketoscheduleregulardeliveriestoyourhomeorneedrecommendationsonwhatelsetotry,youcanfindthoseintheYonghuiapporwithmehere.”

Alltheconciergesareknowledgeable,friendly,andtrainedintheartoftheupsell.It’sfarmoresociallyengagedworkthantraditionalsupermarketjobs,withallemployeesreadytodiscussrecipes,farm-to-tablesourcing,andhoweachproductcompareswithwhatI’vetriedinthepast.

Theshoppingtripgoesonlikethis,withmycartleadingmethroughourtypicalpurchases,andconciergesoccasionallynudgingmetosplurgeonitemsthatalgorithmspredictI’lllike.Asaconciergeisbaggingmygoods,myphonebuzzeswiththistrip’sreceiptinmyWeChatWallet.Whenthey’refinished,theshoppingcartguidesitselfbacktoitsrack,andIstrollthetwoblockshometomyfamily.

PerceptionAI–poweredshoppingtripslikethiswillcaptureoneofthefundamentalcontradictionsoftheAIagebeforeus:itwillfeelbothcompletelyordinaryandtotallyrevolutionary.Muchofourdailyactivitywillstillfollowoureverydayestablishedpatterns,butthedigitizationoftheworldwilleliminatecommonpointsoffrictionandtailorservicestoeachindividual.Theywillbringtheconvenienceandabundanceoftheonlineworldintoourofflinereality.Justasimportant,byunderstandingand

predictingthehabitsofeachshopper,thesestoreswillmakemajorimprovementsintheirsupplychains,reducingfoodwasteandincreasingprofitability.

AndasupermarketliketheoneI’vedescribedisn’tfaroff.Thecoretechnologiesalreadyexist,andit’slargelyamatternowofworkingoutminorkinksinthesoftware,integratingthebackendofthesupplychain,andbuildingoutthestoresthemselves.

ANOMO-POWEREDEDUCATION

ThesekindsofimmersiveOMOscenariosgofarbeyondshopping.Thesesametechniques—visualidentification,speechrecognition,creationofadetailedprofilebasedonone’spastbehavior—canbeusedtocreateahighlytailoredexperienceineducation.

Present-dayeducationsystemsarestilllargelyrunonthenineteenth-century“factorymodel”ofeducation:allstudentsareforcedtolearnatthesamespeed,inthesameway,atthesameplace,andatthesametime.Schoolstakean“assemblyline”approach,passingchildrenfromgradetogradeeachyear,largelyirrespectiveofwhetherornottheyabsorbedwhatwastaught.It’samodelthatoncemadesensegiventheseverelimitationsonteachingresources,namely,thetimeandattentionofsomeonewhocanteach,monitor,andevaluatestudents.

ButAIcanhelpusliftthoselimitations.Theperception,recognition,andrecommendationabilitiesofAIcantailorthelearningprocesstoeachstudentandalsofreeupteachersformoreone-on-oneinstructiontime.

TheAI-powerededucationexperiencetakesplaceacrossfourscenarios:in-classteaching,homeworkanddrills,testsandgrading,andcustomizedtutoring.PerformanceandbehaviorinthesefoursettingsallfeedintoandbuildoffofthebedrockofAI-powerededucation,thestudentprofile.Thatprofilecontainsadetailedaccountingofeverythingthataffectsastudent’slearningprocess,suchaswhatconceptstheyalreadygraspwell,whattheystrugglewith,howtheyreacttodifferentteachingmethods,howattentivetheyareduringclass,howquicklytheyanswerquestions,andwhatincentivesdrivethem.Toseehowthisdataisgatheredandusedtoupgradetheeducationprocess,let’slookatthefourscenariosdescribedabove.

Duringin-classteaching,schoolswillemployadual-teachermodelthatcombinesaremotebroadcastlecturefromatopeducatorandmorepersonalattentionbythein-classteacher.Forthefirsthalfofclass,atop-ratedteacherdeliversalectureviaalarge-screentelevisionatthefrontoftheclass.That

teacherlecturessimultaneouslytoaroundtwentyclassroomsandasksquestionsthatstudentsmustanswerviahandheldclickers,givingthelecturerreal-timefeedbackonwhetherstudentscomprehendtheconcepts.

Duringthelecture,avideoconferencecameraatthefrontoftheroomusesfacialrecognitionandpostureanalysistotakeattendance,checkforstudentattentiveness,andassessthelevelofunderstandingbasedongesturessuchasnodding,shakingone’shead,andexpressionsofpuzzlement.Allofthisdata—answerstoclickerquestions,attentiveness,comprehension—goesdirectlyintothestudentprofile,fillinginareal-timepictureofwhatthestudentsknowandwhattheyneedextrahelpwith.

Butin-classlearningisjustafractionofthewholeAI-educationpicture.Whenstudentsheadhome,thestudentprofilecombineswithquestion-generatingalgorithmstocreatehomeworkassignmentspreciselytailoredtothestudents’abilities.Whilethewhizkidsmustcompletehigher-levelproblemsthatchallengethem,thestudentswhohaveyettofullygraspthematerialaregivenmorefundamentalquestionsandperhapsextradrills.

Ateachstepalongtheway,students’timeandperformanceondifferentproblemsfeedintotheirstudentprofiles,adjustingthesubsequentproblemstoreinforceunderstanding.Inaddition,forclassessuchasEnglish(whichismandatoryinChinesepublicschools),AI-poweredspeechrecognitioncanbringtop-flightEnglishinstructiontothemostremoteregions.High-performancespeechrecognitionalgorithmscanbetrainedtoassessstudents’Englishpronunciation,helpingthemimproveintonationandaccentwithouttheneedforanativeEnglishspeakeronsite.

Fromateacher’sperspective,thesesametoolscanbeusedtoalleviatetheburdenofroutinegradingtasks,freeingupteacherstospendmoretimeonthestudentsthemselves.ChinesecompanieshavealreadyusedperceptionAI’svisualrecognitionabilitiestobuildscannersthatcangrademultiple-choiceandfill-in-the-blanktests.Eveninessays,standarderrorssuchasspellingorgrammarcanbemarkedautomatically,withpredetermineddeductionsofpointsforcertainmistakes.ThisAI-poweredtechnologywillsaveteachers’timeincorrectingthebasics,lettingthemshiftthattimetocommunicatingwithstudentsabouthigher-levelwritingconcepts.

Finally,forstudentswhoarefallingbehind,theAI-poweredstudentprofilewillnotifyparentsoftheirchild’ssituation,givingaclearanddetailedexplanationofwhatconceptsthestudentisstrugglingwith.TheparentscanusethisinformationtoenlistaremotetutorthroughservicessuchasVIPKid,whichconnectsAmericanteacherswithChinesestudentsforonlineEnglishclasses.Remotetutoringhasbeenaroundforsometime,butperceptionAInowallowstheseplatformstocontinuouslygatherdataonstudent

engagementthroughexpressionandsentimentanalysis.Thatdatacontinuallyfeedsintoastudent’sprofile,helpingtheplatformsfilterforthekindsofteachersthatkeepstudentsengaged.

Almostallofthetoolsdescribedherealreadyexist,andmanyarebeingimplementedindifferentclassroomsacrossChina.Takentogether,theyconstituteanewAI-poweredparadigmforeducation,onethatmergestheonlineandofflineworldstocreatealearningexperiencetailoredtotheneedsandabilitiesofeachstudent.ChinaappearspoisedtoleapfrogtheUnitedStatesineducationAI,inlargepartduetovoraciousdemandfromChineseparents.Chineseparentsofonlychildrenpourmoneyintotheireducation,aresultofdeeplyentrenchedChinesevalues,intensecompetitionforuniversityspots,andapubliceducationsystemofmixedquality.ThoseparentshavealreadydrivenserviceslikeVIPKidtoavaluationofover$3billioninjustafewyears’time.

PUBLICSPACESANDPRIVATEDATA

CreatingandleveragingtheseOMOexperiencesrequiresvacuumingupoceansofdatafromtherealworld.OptimizingtrafficflowsviaAlibaba’sCityBrainrequiresslurpingupvideofeedsfromaroundthecity.TailoringOMOretailexperiencesforeachshopperrequiresidentifyingthemviafacialrecognition.Andaccessingthepoweroftheinternetviavoicecommandsrequirestechnologythatlistenstooureveryword.

ThattypeofdatacollectionmayrubmanyAmericansthewrongway.Theydon’twantBigBrotherorcorporateAmericatoknowtoomuchaboutwhatthey’reupto.ButpeopleinChinaaremoreacceptingofhavingtheirfaces,voices,andshoppingchoicescapturedanddigitized.ThisisanotherexampleofthebroaderChinesewillingnesstotradesomedegreeofprivacyforconvenience.Thatsurveillancefiltersupfromindividualuserstoentireurbanenvironments.Chinesecitiesalreadyuseadensenetworkofcamerasandsensorstoenforcetrafficlaws.Thatwebofsurveillancefootageisnowfeedingdirectlyintooptimizationalgorithmsfortrafficmanagement,policing,andemergencyservices.

It’suptoeachcountrytomakeitsowndecisionsonhowtobalancepersonalprivacyandpublicdata.EuropehastakenthestrictestapproachtodataprotectionbyintroducingtheGeneralDataProtectionRegulation,alawthatsetsavarietyofrestrictionsonthecollectionanduseofdatawithintheEuropeanUnion.TheUnitedStatescontinuestograpplewithimplementingappropriateprotectionstouserprivacy,atensionillustratedbyFacebook’sCambridgeAnalyticascandalandsubsequentcongressionalhearings.China

beganimplementingitsownCybersecurityLawin2017,whichincludednewpunishmentsfortheillegalcollectionorsaleofuserdata.

There’snorightanswertoquestionsaboutwhatlevelofsocialsurveillanceisaworthwhilepriceforgreaterconvenienceandsafety,orwhatlevelofanonymityweshouldbeguaranteedatairportsorsubwaystations.Butintermsofimmediateimpact,China’srelativeopennesswithdatacollectioninpublicplacesisgivingitamassiveheadstartonimplementationofperceptionAI.ItisacceleratingthedigitizationofurbanenvironmentsandopeningthedoortonewOMOapplicationsinretail,security,andtransportation.

ButpushingperceptionAIintothesespheresrequiresmorethanjustvideocamerasanddigitaldata.UnlikeinternetandbusinessAI,perceptionAIisahardware-heavyenterprise.Asweturnhospitals,cars,andkitchensintoOMOenvironments,wewillneedadiversearrayofsensor-enabledhardwaredevicestosyncupthephysicalanddigitalworlds.

MADEINSHENZHEN

SiliconValleymaybetheworldchampionofsoftwareinnovation,butShenzhen(pronounced“shun-jun”)wearsthatcrownforhardware.Inthelastfiveyears,thisyoungmanufacturingmetropolisonChina’ssoutherncoasthasturnedintotheworld’smostvibrantecosystemforbuildingintelligenthardware.Creatinganinnovativeapprequiresalmostnoreal-worldtools:allyouneedisacomputerandaprogrammerwithacleveridea.ButbuildingthehardwareforperceptionAI—shoppingcartswitheyesandstereoswithears—demandsapowerfulandflexiblemanufacturingecosystem,includingsensorsuppliers,injection-moldengineers,andsmall-batchelectronicsfactories.

WhenmostpeoplethinkofChinesefactories,theyenvisionsweatshopswiththousandsofunderpaidworkersstitchingtogethercheapshoesandteddybears.Thesefactoriesdostillexist,buttheChinesemanufacturingecosystemhasundergoneamajortechnologicalupgrade.Today,thegreatestadvantageofmanufacturinginChinaisn’tthecheaplabor—countrieslikeIndonesiaandVietnamofferlowerwages.Instead,it’stheunparalleledflexibilityofthesupplychainsandthearmiesofskilledindustrialengineerswhocanmakeprototypesofnewdevicesandbuildthematscale.

ThesearethesecretingredientspoweringShenzhen,whosetalentedworkershavetransformeditfromadirt-cheapfactorytowntoago-tocityforentrepreneurswhowanttobuildnewdrones,robots,wearables,orintelligent

machines.InShenzhen,thoseentrepreneurshavedirectaccesstothousandsoffactoriesandhundredsofthousandsofengineerswhohelpthemiteratefasterandproducegoodscheaperthananywhereelse.

Atthecity’sdizzyingelectronicsmarkets,theycanchoosefromthousandsofdifferentvariationsofcircuitboards,sensors,microphones,andminiaturecameras.Onceaprototypeisassembled,thebuilderscangodoortodoorathundredsoffactoriestofindonecapableofproducingtheirproductinsmallbatchesoratlargescale.Thatgeographicdensityofpartssuppliersandproductmanufacturersacceleratestheinnovationprocess.HardwareentrepreneurssaythataweekspentworkinginShenzhenisequivalenttoamonthintheUnitedStates.

AsperceptionAItransformsourlivedenvironment,theeaseofexperimentationandtheproductionofsmartdevicesgivesChinesestartupsanedge.Shenzhenisopentointernationalhardwarestartups,butlocalshaveaheavyhome-courtadvantage.Themanyfrictionsofoperatinginaforeigncountry—languagebarrier,visaissues,taxcomplications,anddistancefromheadquarters—canslowdownAmericanstartupsandraisethecostoftheirproducts.MassivemultinationalslikeApplehavetheresourcestoleverageChinesemanufacturingtothefullest,butforforeignstartupssmallfrictionscanspelldoom.Meanwhile,homegrownhardwarestartupsinShenzhenarelikekidsinacandystore,experimentingfreelyandbuildingcheaply.

MIFIRST

TheChinesehardwarestartupXiaomi(pronounced“sheow-me”)givesaglimpseofwhatadenselywovenwebofperception-AIdevicescouldlooklike.Launchedasalow-costsmartphonemakerthattookthecountrybystorm,XiaomiisnowbuildinganetworkofAI-empoweredhomedevicesthatwillturnourkitchensandlivingroomsintoOMOenvironments.

CentraltothatsystemistheMiAIspeaker,avoice-commandAIdevicesimilartotheAmazonEchobutataroundhalftheprice,thankstotheChinesehome-courtmanufacturingadvantage.Thatadvantageisthenleveragedtobuildarangeofsmart,sensor-drivenhomedevices:airpurifiers,ricecookers,refrigerators,securitycameras,washingmachines,andautonomousvacuumcleaners.Xiaomidoesn’tbuildallofthesedevicesitself.Instead,ithasinvestedin220companiesandincubated29startups—manyoperatinginShenzhen—whoseintelligenthomeproductsarehookedintotheXiaomiecosystem.Togethertheyarecreatinganaffordable,intelligenthomeecosystem,withWiFi-enabledproductsthatfindeachotherandmake

configurationeasy.Xiaomiuserscanthensimplycontroltheentireecosystemviavoicecommandordirectlyontheirphone.

It’saconstellationofprice,diversity,andcapabilitythathascreatedtheworld’slargestnetworkofintelligenthomedevices:85millionbytheendof2017,faraheadofanycomparableU.S.networks.It’salsoanecosystembuiltontheMade-in-Shenzhenadvantage.LowpricesandChina’smassivemarketareturbochargingthedata-gatheringprocessforXiaomi,fuelingavirtuouscycleofstrongeralgorithms,smarterproducts,betteruserexperience,moresales,andevenmoredata.It’salsoanecosystemthathasproducedfourunicornstartupswithinXiaomi’secosystemaloneandisdrivingXiaomitowardanIPOpredictedtovaluethecompanyataround$100billion.

AsperceptionAIfindsitswayintomorepiecesofhardware,theentirehomewillfeedintoandoperateoffdigitizedreal-worlddata.YourAIfridgewillordermoremilkwhenitseesthatyou’rerunninglow.Yourcappuccinomachinewillkickintogearatyourvoicecommand.TheAI-equippedfloorsofyourelderlyparentswillalertyouimmediatelyifthey’vetrippedandfallen.

Third-waveAIproductsliketheseareonthevergeoftransformingoureverydayenvironment,blurringlinesbetweenthedigitalandphysicalworlduntiltheydisappearentirely.Duringthistransformation,Chineseusers’culturalnonchalanceaboutdataprivacyandShenzhen’sstrengthinhardwaremanufacturinggiveitaclearedgeinimplementation.Today,China’sedgeisslight(60–40),butIpredictthatinfiveyears’time,theabovefactorswillgiveChinaamorethan80–20chanceofleadingtheUnitedStatesandtherestoftheworldintheimplementationofperceptionAI.

Thesethird-waveAIinnovationswillcreatetremendouseconomicopportunitiesandalsolaythefoundationforthefourthandfinalwave,fullautonomy.

FOURTHWAVE:AUTONOMOUSAI

Oncemachinescanseeandheartheworldaroundthem,they’llbereadytomovethroughitsafelyandworkinitproductively.AutonomousAIrepresentstheintegrationandculminationofthethreeprecedingwaves,fusingmachines’abilitytooptimizefromextremelycomplexdatasetswiththeirnewfoundsensorypowers.Combiningthesesuperhumanpowersyieldsmachinesthatdon’tjustunderstandtheworldaroundthem—theyshapeit.

Self-drivingcarsmaybeoneveryone’smindthesedays,butbeforewediveintoautonomousvehicles,it’simportanttowidenthelensandrecognize

justhowdeepandwideafootprintfourth-waveAIwillhave.AutonomousAIdeviceswillrevolutionizesomuchofourdailylives,includingourmalls,restaurants,cities,factories,andfiredepartments.AswiththedifferentwavesofAI,thiswon’thappenallatonce.Earlyautonomousroboticsapplicationswillworkonlyinhighlystructuredenvironmentswheretheycancreateimmediateeconomicvalue.Thatmeansprimarilyfactories,warehouses,andfarms.

Butaren’ttheseplacesalreadyhighlyautomated?Hasn’theavymachineryalreadytakenovermanyblue-collarlinejobs?Yes,thedevelopedworldhaslargelyreplacedrawhumanmusclewithhigh-poweredmachines.Butwhilethesemachinesareautomated,theyarenotautonomous.Whiletheycanrepeatanaction,theycan’tmakedecisionsorimproviseaccordingtochangingconditions.Entirelyblindtovisualinputs,theymustbecontrolledbyahumanoroperateonasingle,unchangingtrack.Theycanperformrepetitivetasks,buttheycan’tdealwithanydeviationsorirregularitiesintheobjectstheymanipulate.Butbygivingmachinesthepowerofsight,thesenseoftouch,andtheabilitytooptimizefromdata,wecandramaticallyexpandthenumberoftaskstheycantackle.

STRAWBERRYFIELDSANDROBOTICBEETLES

Someoftheseapplicationsarealreadyathand.Pickingstrawberriessoundslikeastraightforwardtask,buttheabilitytofind,judge,andpluckfruitsfromplantsprovedimpossibletoautomatebeforeautonomousAI.Instead,tensofthousandsoflow-paidworkershadtowalk,hunchedover,throughstrawberryfieldsallday,usingtheireyesanddexterousfingerstogetthejobdone.It’sgruelingandtediouswork,andmanyCaliforniafarmershavewatchedfruitrotintheirfieldswhentheycan’tfindpeoplewillingtotakeiton.

ButtheCalifornia-basedstartupTraptichascreatedarobotthatcanhandlethetask.Thedeviceismountedonthebackofasmalltractor(or,inthefuture,anautonomousvehicle)andusesadvancedvisionalgorithmstofindthestrawberriesamidaseaoffoliage.Thosesamealgorithmscheckthecolorofthefruittojudgeripeness,andamachinearmdelicatelyplucksthemwithoutanydamagetotheberry.

Amazon’swarehousesgiveusanearlyglimpseofhowtransformativethesetechnologiescanbe.Justfiveyearsago,theylookedliketraditionalwarehouses:longaislesofsedentaryshelveswithhumanswalkingordrivingdowntheaislestofetchinventory.Today,thehumansstayputandthe

shelvescometothem.Warehousesarecoveredwithrovingbandsofautonomousbeetle-likerobotsthatscurryaroundwithsquare-shapedtowersofmerchandisesittingontheirbacks.Thesebeetlesroamthefactoryfloor,narrowlyavoidingoneanotherandbringingahandfulofitemstostationaryhumanswhentheyneedthosegoods.Alltheemployeesneedtodoisgrabanitemoffthattower,scanit,andplaceitinabox.Thehumansstandinoneplacewhilethewarehouseperformsanelegantlychoreographedautonomousballetallaroundthem.

Alloftheseautonomousrobotshaveonethingincommon:theycreatedirecteconomicvaluefortheirowners.Asnoted,autonomousAIwillsurfacefirstincommercialsettingsbecausetheserobotscreateatangiblereturnoninvestmentbydoingthejobsofworkerswhoaregrowingeithermoreexpensiveorhardertofind.

DomesticworkersintheUnitedStates—cleaners,cooks,andcaretakers—largelyfitthosecriteriaaswell,butwe’reunlikelytoseeautonomousAIinthehomeanytimesoon.Countertowhatsci-fifilmshaveconditionedustobelieve,human-likerobotsforthehomeremainoutofreach.SeeminglysimpletaskslikecleaningaroomorbabysittingachildarefarbeyondAI’scurrentcapabilities,andourclutteredlivingenvironmentsconstituteobstaclecoursesforclumsyrobots.

SWARMINTELLIGENCE

Butasautonomoustechnologybecomesmoreagileandmoreintelligent,wewillseesomemind-bendingandlife-savingapplicationsofthetechnology,particularlywithdrones.Swarmsofautonomousdroneswillworktogethertopainttheexteriorofyourhouseinjustafewhours.Heat-resistantdroneswarmswillfightforestfireswithhundredsoftimesthecurrentefficiencyoftraditionalfirecrews.Otherdroneswillperformsearch-and-rescueoperationsintheaftermathofhurricanesandearthquakes,bringingfoodandwatertothestrandedandteamingupwithnearbydronestoairliftpeopleout.

Alongtheselines,Chinawillalmostcertainlytaketheleadinautonomousdronetechnology.ShenzhenishometoDJI,theworld’spremierdronemakerandwhatrenownedtechjournalistChrisAndersoncalled“thebestcompanyIhaveeverencountered.”DJIisestimatedtoalreadyown50percentoftheNorthAmericandronemarketandevenlargerportionsofthehigh-endsegment.Thecompanydedicatesenormousresourcestoresearchanddevelopment,andisalreadydeployingsomeautonomousdronesforindustrialandpersonaluse.Swarmtechnologiesarestillintheirinfancy,butwhen

hookedintoShenzhen’sunmatchedhardwareecosystem,theresultswillbeawe-inspiring.

Astheseswarmstransformourskies,autonomouscarswilltransformourroads.Thatrevolutionwillalsogofarbeyondtransportation,disruptingurbanenvironments,labormarkets,andhowweorganizeourdays.CompanieslikeGooglehaveclearlydemonstratedthatself-drivingcarswillbefarsaferandmoreefficientthanhumandrivers.Rightnow,dozensofstartups,technologyjuggernauts,legacycarmakers,andelectricvehiclemakersareinanall-outsprinttobethefirsttotrulycommercializethetechnology.Google,Baidu,Uber,Didi,Tesla,andmanymorearebuildingteams,testingtechnologies,andgatheringdataenroutetotakinghumandriversentirelyoutoftheequation.

Theleadersinthatrace—Google,throughitsself-drivingspinoffWaymo,andTesla—representtwodifferentphilosophiesforautonomousdeployment,twoapproacheswitheerieechoesinthepoliciesofthetwoAIsuperpowers.

THEGOOGLEAPPROACHVERSUSTHETESLAAPPROACH

Googlewasthefirstcompanytodevelopautonomousdrivingtechnology,butithasbeenrelativelyslowtodeploythattechnologyatscale.Behindthatcautionisanunderlyingphilosophy:buildtheperfectproductandthenmakethejumpstraighttofullautonomyoncethesystemisfarsaferthanhumandrivers.It’stheapproachofaperfectionist,onewithaverylowtoleranceforrisktohumanlivesorcorporatereputation.It’salsoasignofhowlargealeadGooglehasonthecompetitionduetoitsmultiyearheadstartonresearch.Teslahastakenamoreincrementalapproachinanattempttomakeupground.ElonMusk’scompanyhastackedonlimitedautonomousfeaturestotheircarsassoonastheybecameavailable:autopilotforhighways,autosteerforcrashavoidance,andself-parkingcapabilities.It’sanapproachthatacceleratesspeedofdeploymentwhilealsoacceptingacertainlevelofrisk.

ThetwoapproachesarepoweredbythesamethingthatpowersAI:data.Self-drivingcarsmustbetrainedonmillions,maybebillions,ofmilesofdrivingdatasotheycanlearntoidentifyobjectsandpredictthemovementsofcarsandpedestrians.Thatdatadrawsfromthousandsofdifferentvehiclesontheroad,anditallfeedsintoonecentral“brain,”thecorecollectionofalgorithmsthatpowersdecision-makingacrossthefleet.Itmeansthatwhenanyautonomouscarencountersanewsituation,allthecarsrunningonthosealgorithmslearnfromit.

Googlehastakenaslow-and-steadyapproachtogatheringthatdata,drivingarounditsownsmallfleetofvehiclesequippedwithveryexpensivesensingtechnologies.Teslainsteadbeganinstallingcheaperequipmentonitscommercialvehicles,lettingTeslaownersgatherthedataforthemwhentheyusecertainautonomousfeatures.Thedifferentapproacheshaveledtoamassivedatagapbetweenthetwocompanies.By2016,Googlehadtakensixyearstoaccumulate1.5millionmilesofreal-worlddrivingdata.Injustsixmonths,Teslahadaccumulated47millionmiles.

GoogleandTeslaarenowinchingtowardoneanotherintermsofapproach.Google—perhapsfeelingtheheatfromTeslaandotherrivals—accelerateddeploymentoffullyautonomousvehicles,pilotingaprogramwithtaxi-likevehiclesinthePhoenixmetropolitanarea.Meanwhile,Teslaappearstohavepumpedthebrakesonitsrapidrolloutoffullyautonomousvehicles,adecelerationthatfollowedaMay2016crashthatkilledaTeslaownerwhowasusingautopilot.

Butthefundamentaldifferenceinapproachremains,anditpresentsarealtradeoff.Googleisaimingforimpeccablesafety,butintheprocessithasdelayeddeploymentofsystemsthatcouldlikelyalreadysavelives.Teslatakesamoretechno-utilitarianapproach,pushingtheircarstomarketoncetheyareanimprovementoverhumandrivers,hopingthatthefasterratesofdataaccumulationwilltrainthesystemsearlierandsavelivesoverall.

CHINA’S“TESLA”APPROACH

Whenmanagingacountryof1.39billionpeople—oneinwhich260,000peopledieincaraccidentseachyear—theChinesementalityisthatyoucan’tlettheperfectbetheenemyofthegood.Thatis,ratherthanwaitforflawlessself-drivingcarstoarrive,Chineseleaderswilllikelylookforwaystodeploymorelimitedautonomousvehiclesincontrolledsettings.ThatdeploymentwillhavethesideeffectofleadingtomoreexponentialgrowthintheaccumulationofdataandacorrespondingadvanceinthepoweroftheAIbehindit.

Keytothatincrementaldeploymentwillbetheconstructionofnewinfrastructurespecificallymadetoaccommodateautonomousvehicles.IntheUnitedStates,incontrast,webuildself-drivingcarstoadapttoourexistingroadsbecauseweassumetheroadscan’tchange.InChina,there’sasensethateverythingcanchange—includingcurrentroads.Indeed,localofficialsarealreadymodifyingexistinghighways,reorganizingfreightpatterns,andbuildingcitiesthatwillbetailor-madefordriverlesscars.

HighwayregulatorsintheChineseprovinceofZhejianghavealreadyannouncedplanstobuildthecountry’sfirstintelligentsuperhighway,infrastructureoutfittedfromthestartforautonomousandelectricvehicles.Theplancallsforintegratingsensorsandwirelesscommunicationamongtheroad,cars,anddriverstoincreasespeedsby20to30percentanddramaticallyreducefatalities.Thesuperhighwaywillhavephotovoltaicsolarpanelsbuiltintotheroadsurface,energythatfeedsintochargingstationsforelectricvehicles.Inthelongterm,thegoalistobeabletocontinuouslychargeelectricvehicleswhiletheydrive.Ifsuccessful,theprojectwillacceleratedeploymentofautonomousandelectricvehicles,leveragingthefactthatlongbeforeautonomousAIcanhandlethechaosofurbandriving,itcaneasilydealwithhighways—andgathermoredataintheprocess.

ButChineseofficialsaren’tjustadaptingexistingroadstoautonomousvehicles.They’rebuildingentirelynewcitiesaroundthetechnology.SixtymilessouthofBeijingsitstheXiong’anNewArea,acollectionofsleepyvillageswherethecentralgovernmenthasorderedtheconstructionofashowcasecityfortechnologicalprogressandenvironmentalsustainability.Thecityisprojectedtotakein$583billionworthofinfrastructurespendingandreachapopulationof2.5million,nearlyasmanypeopleasChicago.TheideaofbuildinganewChicagofromthegroundupisfairlyunthinkableintheUnitedStates,butinChinait’sjustonepieceofthegovernment’surbanplanningtoolkit.

Xiong’anispoisedtobetheworld’sfirstcitybuiltspecificallytoaccommodateautonomousvehicles.Baiduhassignedagreementswiththelocalgovernmenttobuildan“AICity”withafocusontrafficmanagement,autonomousvehicles,andenvironmentalprotection.Adaptationscouldincludesensorsinthecement,trafficlightsequippedwithcomputervision,intersectionsthatknowtheageofpedestrianscrossingthem,anddramaticreductionsinspaceneededforparkedcars.Wheneveryoneishailinghisorherownautonomoustaxi,whynotturnthoseparkinglotsintourbanparks?

Takingthingsastepfurther,brand-newdevelopmentslikeXiong’ancouldevenroutethetrafficintheircitycentersunderground,reservingtheheartoftownforpedestriansandbicyclists.It’sasystemthatwouldbedifficult,ifnotimpossible,toimplementinaworldofhumandriverspronetohumanerrorsthatcloguptunnels.Butbycombiningaugmentedroads,controlledlighting,andautonomousvehicles,anentireundergroundtrafficgridcouldberunningatthespeedofhighwayswhilelifeabovegroundmovesatamorehumanpace.

There’snoguaranteethatallofthesehigh-flyingAIamenitieswillberolledoutsmoothly—someofChina’stechnologicallythemeddevelopments

haveflopped,andsomebrand-newcitieshavestruggledtoattractresidents.Butthecentralgovernmenthasplacedahighpriorityontheproject,andifsuccessful,citieslikeXiong’anwillgrowuptogetherwithautonomousAI.TheywillbenefitfromtheefficienciesAIbringsandwillfeedevermoredatabackintothealgorithms.America’scurrentinfrastructuremeansthatautonomousAImustadapttoandconquerthecitiesaroundit.InChina,thegovernment’sproactiveapproachistotransformthatconquestintocoevolution.

THEAUTONOMOUSBALANCEOFPOWER

WhileallofthismaysoundexcitingandinnovativetotheChineselandscape,thehardtruthisthatnoamountofgovernmentsupportcanguaranteethatChinawillleadinautonomousAI.Whenitcomestothecoretechnologyneededforself-drivingcars,AmericancompaniesremaintwotothreeyearsaheadofChina.Intechnologytimelines,that’slight-yearsofdistance.Partofthatstemsfromtherelativeimportanceofeliteexpertiseinfourth-waveAI:safetyissuesandsheercomplexitymakeautonomousvehiclesamuchtougherengineeringnuttocrack.It’saproblemthatrequiresacoreteamofworld-classengineersratherthanjustabroadbaseofgoodones.ThistiltstheplayingfieldbacktowardtheUnitedStates,wherethebestengineersfromaroundtheglobestillclusteratcompanieslikeGoogle.

SiliconValleycompaniesalsohaveasubstantialheadstartonresearchanddevelopment,aproductofthevalley’sproclivityformoonshotprojects.Googlebegantestingitsself-drivingcarsasearlyas2009,andmanyofitsengineerswentontofoundearlyself-drivingstartups.China’sboominsuchstartupsreallydidn’tbeginuntilaround2016.ChinesegiantslikeBaiduandautonomous-vehiclestartupslikeMomenta,JingChi,andPony.ai,however,arerapidlycatchingupintechnologyanddata.Baidu’sApolloproject—anopen-sourcepartnershipanddata-sharingarrangementamongfiftyautonomous-vehicleplayers,includingchipmakerslikeNvidiaandautomakerslikeFordandDaimler—alsopresentsanambitiousalternativetoWaymo’sclosed,in-houseapproach.Butevenwiththatrapidcatch-upbyChineseplayers,there’snoquestionthatasofthiswriting,themostexperiencedself-drivingtechnologistsstillcallAmericahome.

PredictingwhichcountrytakestheleadinautonomousAIlargelycomesdowntoonemainquestion:willtheprimarybottlenecktofulldeploymentbeoneoftechnologyorpolicy?Ifthemostintractableproblemsfordeploymentaremerelytechnicalones,Google’sWaymohasthebestshotatsolvingthemyearsaheadofthenearestcompetitor.Butifnewadvancesinfieldslike

computervisionquicklydisseminatethroughouttheindustry—essentially,arisingtechnicaltideliftingallboats—thenSiliconValley’sheadstartoncoretechnologymayproveirrelevant.Manycompanieswillbecomecapableofbuildingsafeautonomousvehicles,anddeploymentwillthenbecomeamatterofpolicyadaptation.Inthatuniverse,China’sTesla-esquepolicymakingwillgiveitscompaniestheedge.

Atthispoint,wejustdon’tyetknowwherethatbottleneckwillbe,andfourth-waveAIremainsanyone’sgame.WhiletodaytheUnitedStatesenjoysacommandinglead(90–10),infiveyears’timeIgivetheUnitedStatesandChinaevenoddsofleadingtheworldinself-drivingcars,withChinahavingtheedgeinhardware-intensiveapplicationssuchasautonomousdrones.Inthetablebelow,IsummarizemyassessmentofU.S.andChinesecapabilitiesacrossallfourwavesofAI,bothinthepresentdayandwithmybestestimateforhowthatbalancewillhaveevolvedfiveyearsinthefuture.

ThebalanceofcapabilitiesbetweentheUnitedStatesandChinaacrossthefourwavesofAI,currentlyandestimatedforfiveyearsinthefuture

CONQUERINGMARKETSANDARMINGINSURGENTS

Whathappenswhenyoutrytotakethesegame-changingAIproductsglobal?Thusfar,muchoftheworkdoneinAIhasbeencontainedwithintheChineseandU.S.markets,withcompanieslargelyavoidingdirectcompetitiononthehometurfoftheothernation.ButdespitethefactthattheUnitedStatesandChinaarethetwolargesteconomiesintheworld,thevastmajorityofAI’s

futureusersstillliveinothercountries,manyoftheminthedevelopingworld.AnycompanythatwantstobetheFacebookorGoogleoftheAIageneedsastrategyforreachingthoseusersandwinningthosemarkets.

Notsurprisingly,ChineseandAmericantechcompaniesaretakingverydifferentapproachestoglobalmarkets:whileAmerica’sglobaljuggernautsseektoconquerthesemarketsforthemselves,Chinaisinsteadarmingthelocalstartupinsurgents.

Inotherwords,SiliconValleygiantslikeGoogle,Facebook,andUberwanttodirectlyintroducetheirproductstothesemarkets.They’llmakelimitedeffortsatlocalizationbutwilllargelysticktothetraditionalplaybook.Theywillbuildoneglobalproductandpushitoutonbillionsofdifferentusersaroundtheglobe.It’sanall-or-nothingapproachwithahugepotentialupsideiftheconquestsucceeds,butitalsohasahighchanceofleavingempty-handed.

ChinesecompaniesareinsteadsteeringclearofdirectcompetitionandinvestinginthescrappylocalstartupsthatSiliconValleylookstowipeout.Forexample,inIndiaandSoutheastAsia,AlibabaandTencentarepouringmoneyandresourcesintohomegrownstartupsthatarefightingtoothandnailagainstjuggernautslikeAmazon.It’sanapproachrootedinthecountry’sownnativeexperience.PeoplelikeAlibabafounderJackMaknowhowdangerousaragtagbunchofinsurgentscanbewhenbattlingamonolithicforeigngiant.SoinsteadofseekingtobothsquashthosestartupsandoutcompeteSiliconValley,they’rethrowingtheirlotinwiththelocals.

RIDE-HAILINGRUMBLE

TherearealreadysomeprecedentsfortheChineseapproach.EversinceDididroveUberoutofChina,ithasinvestedinandpartneredwithlocalstartupsfightingtodothesamethinginothercountries:LyftintheUnitedStates,OlainIndia,GrabinSingapore,TaxifyinEstonia,andCareemintheMiddleEast.AfterinvestinginBrazil’s99Taxiin2017,Didioutrightacquiredthecompanyinearly2018.Togetherthesestartupshaveformedaglobalanti-Uberalliance,onethatrunsonChinesemoneyandbenefitsfromChineseknow-how.AftertakingonDidi’sinvestments,someofthestartupshaveevenrebuilttheirappsinDidi’simage,andothersareplanningtotapintoDidi’sstrengthinAI:optimizingdrivermatching,automaticallyadjudicatingrider-driverdisputes,andeventuallyrollingoutautonomousvehicles.

Wedon’tknowthecurrentdepthofthesetechnicalexchanges,buttheycouldserveasanalternatemodelofAIglobalization:empowerhomegrown

startupsbymarryingworldwideAIexpertisetolocaldata.It’samodelbuiltmoreoncooperationthanconquest,anditmayprovebettersuitedtoglobalizingatechnologythatrequiresbothtop-qualityengineersandground-updatacollection.

AIhasamuchhigherlocalizationquotientthanearlierinternetservices.Self-drivingcarsinIndianeedtolearnthewaypedestriansnavigatethestreetsofBangalore,andmicro-lendingappsinBrazilneedtoabsorbthespendinghabitsofmillennialsinRiodeJaneiro.Somealgorithmictrainingcanbetransferredbetweendifferentuserbases,butthere’snosubstituteforactual,real-worlddata.

SiliconValleyjuggernautsdohavesomeinsightintothesearchandsocialhabitsinthesecountries.Butbuildingbusiness,perception,andautonomousAIproductswillrequirecompaniestoputrealbootsonthegroundineachmarket.TheywillneedtoinstallhardwaredevicesandlocalizeAIservicesforthequirksofNorthAfricanshoppingmallsandIndonesianhospitals.ProjectingglobalpoweroutwardfromSiliconValleyviacomputercodemaynotbethelong-termanswer.

Ofcourse,nooneknowstheendgameforthisglobalAIchessmatch.Americancompaniescouldsuddenlyboosttheirlocalizationefforts,leveragetheirexistingproducts,andendupdominatingallcountriesexceptChina.OranewgenerationoftenaciousentrepreneursinthedevelopingworldcoulduseChinesebackingtocreatelocalempiresimpenetrabletoSiliconValley.Ifthelatterscenariounfolds,China’stechgiantswouldn’tdominatetheworld,buttheywouldplayaroleeverywhere,improvetheirownalgorithmsusingtrainingdatafrommanymarkets,andtakehomeasubstantialchunkoftheprofitsgenerated.

LOOKINGAHEAD

ScanningtheAIhorizon,weseewavesoftechnologythatwillsoonwashovertheglobaleconomyandtiltthegeopoliticallandscapetowardChina.TraditionalAmericancompaniesaredoingagoodjobofusingdeeplearningtosqueezegreaterprofitsfromtheirbusinesses,andAI-drivencompanieslikeGoogleremainbastionsofeliteexpertise.Butwhenitcomestobuildingnewinternetempires,changingthewaywediagnoseillnesses,orreimagininghowweshop,move,andeat,Chinaseemspoisedtoseizegloballeadership.ChineseandAmericaninternetcompanieshavetakendifferentapproachestowinninglocalmarkets,andastheseAIservicesfilterouttoeverycorneroftheworld,theymayengageinproxycompetitionincountrieslikeIndia,Indonesia,andpartsoftheMiddleEastandAfrica.

ThisanalysisshedslightontheemergingAIworldorder,butitalsoshowcasesoneoftheblindspotsinourAIdiscourse:thetendencytodiscussitsolelyasahorserace.Who’sahead?Whataretheoddsforeachplayer?Who’sgoingtowin?

Thiskindofcompetitionmatters,butifwedigdeeperintothecomingchanges,wefindthatfarweightierquestionslurkjustbelowthesurface.Whenthetruepowerofartificialintelligenceisbroughttobear,therealdividewon’tbebetweencountriesliketheUnitedStatesandChina.Instead,themostdangerousfaultlineswillemergewithineachcountry,andtheywillpossessthepowertotearthemapartfromtheinside.

6★

UTOPIA,DYSTOPIA,ANDTHEREALAICRISIS

AlloftheAIproductsandservicesoutlinedinthepreviouschapterarewithinreachbasedoncurrenttechnologies.BringingthemtomarketrequiresnomajornewbreakthroughsinAIresearch,justthenuts-and-boltsworkofeverydayimplementation:gatheringdata,tweakingformulas,iteratingalgorithmsinexperimentsanddifferentcombinations,prototypingproducts,andexperimentingwithbusinessmodels.

Buttheageofimplementationhasdonemorethanmakethesepracticalproductspossible.IthasalsosetablazethepopularimaginationwhenitcomestoAI.Ithasfedabeliefthatwe’reonthevergeofachievingwhatsomeconsidertheHolyGrailofAIresearch,artificialgeneralintelligence(AGI)—thinkingmachineswiththeabilitytoperformanyintellectualtaskthatahumancan—andmuchmore.

SomepredictthatwiththedawnofAGI,machinesthatcanimprovethemselveswilltriggerrunawaygrowthincomputerintelligence.Oftencalled“thesingularity,”orartificialsuperintelligence,thisfutureinvolvescomputerswhoseabilitytounderstandandmanipulatetheworlddwarfsourown,comparabletotheintelligencegapbetweenhumanbeingsand,say,insects.Suchdizzyingpredictionshavedividedmuchoftheintellectualcommunityintotwocamps:utopiansanddystopians.

TheutopiansseethedawnofAGIandsubsequentsingularityasthefinalfrontierinhumanflourishing,anopportunitytoexpandourownconsciousnessandconquermortality.RayKurzweil—theeccentricinventor,futurist,andguru-in-residenceatGoogle—envisionsaradicalfutureinwhichhumansandmachineshavefullymerged.Wewilluploadourmindstothecloud,hepredicts,andconstantlyrenewourbodiesthroughintelligentnanobotsreleasedintoourbloodstream.Kurzweilpredictsthatby2029wewillhavecomputerswithintelligencecomparabletothatofhumans(i.e.,AGI),andthatwewillreachthesingularityby2045.

OtherutopianthinkersseeAGIassomethingthatwillenableustorapidlydecodethemysteriesofthephysicaluniverse.DeepMindfounderDemis

Hassabispredictsthatthecreationofsuperintelligencewillallowhumancivilizationtosolveintractableproblems,producinginconceivablybrilliantsolutionstoglobalwarmingandpreviouslyincurablediseases.Withsuperintelligentcomputersthatunderstandtheuniverseonlevelsthathumanscannotevenconceiveof,thesemachinesbecomenotjusttoolsforlighteningtheburdensofhumanity;theyapproachtheomniscienceandomnipotenceofagod.Noteveryone,however,issooptimistic.ElonMuskhascalled

superintelligence“thebiggestriskwefaceasacivilization,”comparingthecreationofitto“summoningthedemon.”IntellectualcelebritiessuchasthelatecosmologistStephenHawkinghavejoinedMuskinthedystopiancamp,manyoftheminspiredbytheworkofOxfordphilosopherNickBostrom,whose2014bookSuperintelligencecapturedtheimaginationofmanyfuturists.

Forthemostpart,membersofthedystopiancamparen’tworriedabouttheAItakeoverasimaginedinfilmsliketheTerminatorseries,withhuman-likerobots“turningevil”andhuntingdownpeopleinapower-hungryconquestofhumanity.Superintelligencewouldbetheproductofhumancreation,notnaturalevolution,andthuswouldn’thavethesameinstinctsforsurvival,reproduction,ordominationthatmotivatehumansoranimals.Instead,itwouldlikelyjustseektoachievethegoalsgiventoitinthemostefficientwaypossible.

Thefearisthatifhumanbeingspresentedanobstacletoachievingoneofthosegoals—reverseglobalwarming,forexample—asuperintelligentagentcouldeasily,evenaccidentally,wipeusoffthefaceoftheearth.Foracomputerprogramwhoseintellectualimaginationsodwarfedourown,thiswouldn’trequireanythingascrudeasgun-totingrobots.Superintelligence’sprofoundunderstandingofchemistry,physics,andnanotechnologywouldallowforfarmoreingeniouswaystoinstantlyaccomplishitsgoals.Researchersrefertothisasthe“controlproblem”or“valuealignmentproblem,”andit’ssomethingthatworriesevenAGIoptimists.

Althoughtimelinesforthesecapabilitiesvarywidely,Bostrom’sbookpresentssurveysofAIresearchers,givingamedianpredictionof2040forthecreationofAGI,withsuperintelligencelikelytofollowwithinthreedecadesofthat.Butreadon.

REALITYCHECK

Whenutopiananddystopianvisionsofthesuperintelligentfuturearediscussedpublicly,theyinspirebothaweandasenseofdreadinaudiences.Thoseall-consumingemotionsthenblurthelinesinourmindseparatingthesefantasticalfuturesfromourcurrentageofAIimplementation.Theresultiswidespreadpopularconfusionoverwherewetrulystandtodayandwherethingsareheaded.

Tobeclear,noneofthescenariosdescribedabove—theimmortaldigitalmindsoromnipotentsuperintelligences—arepossiblebasedontoday’stechnologies;thereremainnoknownalgorithmsforAGIoraclearengineeringroutetogetthere.Thesingularityisnotsomethingthatcanoccurspontaneously,withautonomousvehiclesrunningondeeplearningsuddenly“wakingup”andrealizingthattheycanbandtogethertoformasuperintelligentnetwork.

GettingtoAGIwouldrequireaseriesoffoundationalscientificbreakthroughsinartificialintelligence,astringofadvancesonthescaleof,orgreaterthan,deeplearning.Thesebreakthroughswouldneedtoremovekeyconstraintsonthe“narrowAI”programsthatweruntodayandempowerthemwithawidearrayofnewabilities:multidomainlearning;domain-independentlearning;natural-languageunderstanding;commonsensereasoning,planning,andlearningfromasmallnumberofexamples.Takingthenextsteptoemotionallyintelligentrobotsmayrequireself-awareness,humor,love,empathy,andappreciationforbeauty.ThesearethekeyhurdlesthatseparatewhatAIdoestoday—spottingcorrelationsindataandmakingpredictions—andartificialgeneralintelligence.Anyoneofthesenewabilitiesmayrequiremultiplehugebreakthroughs;AGIimpliessolvingallofthem.

ThemistakeofmanyAGIforecastsistosimplytaketherapidrateofadvancefromthepastdecadeandextrapolateitoutwardorlaunchitexponentiallyupwardinanunstoppablesnowballingofcomputerintelligence.Deeplearningrepresentsamajorlevelingupinmachinelearning,amovementontoanewplateauwithavarietyofreal-worlduses:theageofimplementation.ButthereisnoproofthatthisupwardchangerepresentsthebeginningofexponentialgrowththatwillinevitablyracetowardAGI,andthensuperintelligence,atanever-increasingpace.

Scienceisdifficult,andfundamentalscientificbreakthroughsareevenharder.Discoverieslikedeeplearningthattrulyraisethebarformachineintelligencearerareandoftenseparatedbydecades,ifnotlonger.Implementationsandimprovementsonthesebreakthroughsabound,andresearchersatplaceslikeDeepMindhavedemonstratedpowerfulnewapproachestothingslikereinforcementlearning.ButinthetwelveyearssinceGeoffreyHintonandhiscolleagues’landmarkpaperondeeplearning,I

haven’tseenanythingthatrepresentsasimilarseachangeinmachineintelligence.Yes,theAIscientistssurveyedbyBostrompredictedamediandateof2040forAGI,butIbelievescientiststendtooverestimatewhenanacademicdemonstrationwillbecomeareal-worldproduct.Towit,inthelate1980s,Iwastheworld’sleadingresearcheronAIspeechrecognition,andIjoinedApplebecauseIbelievedthetechnologywouldgomainstreamwithinfiveyears.ItturnedoutthatIwasoffbytwentyyears.

IcannotguaranteethatscientistsdefinitelywillnotmakethebreakthroughsthatwouldbringaboutAGIandthensuperintelligence.Infact,Ibelieveweshouldexpectcontinualimprovementstotheexistingstateoftheart.ButIbelievewearestillmanydecades,ifnotcenturies,awayfromtherealthing.ThereisalsoarealpossibilitythatAGIissomethinghumanswillneverachieve.Artificialgeneralintelligencewouldbeamajorturningpointintherelationshipbetweenhumansandmachines—whatmanypredictwouldbethemostsignificantsingleeventinthehistoryofthehumanrace.It’samilestonethatIbelieveweshouldnotcrossunlesswehavefirstdefinitivelysolvedallproblemsofcontrolandsafety.Butgiventherelativelyslowrateofprogressonfundamentalscientificbreakthroughs,IandotherAIexperts,amongthemAndrewNgandRodneyBrooks,believeAGIremainsfartherawaythanoftenimagined.

DoesthatmeanIseenothingbutsteadymaterialprogressandglorioushumanflourishinginourAIfuture?Notatall.Instead,IbelievethatcivilizationwillsoonfaceadifferentkindofAI-inducedcrisis.ThiscrisiswilllacktheapocalypticdramaofaHollywoodblockbuster,butitwilldisruptoureconomicandpoliticalsystemsallthesame,andevencuttothecoreofwhatitmeanstobehumaninthetwenty-firstcentury.

Inshort,thisisthecomingcrisisofjobsandinequality.OurpresentAIcapabilitiescan’tcreateasuperintelligencethatdestroysourcivilization.Butmyfearisthatwehumansmayprovemorethanuptothattaskourselves.

FOLDINGBEIJING:SCIENCE-FICTIONVISIONSANDAIECONOMICS

Whentheclockstrikes6a.m.,thecitydevoursitself.Denselypackedbuildingsofconcreteandsteelbendatthehipandtwistattheirspines.Externalbalconiesandawningsareturnedinward,creatingsmoothandtightlysealedexteriors.Skyscrapersbreakdownintocomponentparts,shufflingandconsolidatingintoRubik’sCubesofindustrialproportions.InsidethoseblocksaretheresidentsofBeijing’sThirdSpace,theeconomic

underclassthattoilsduringthenighthoursandsleepsduringtheday.Asthecityscapefoldsinonitself,apatchworkofsquaresontheearth’ssurfacebegintheir180-degreerotation,flippingovertotucktheseconsolidatedstructuresunderground.

Whentheothersideofthesesquaresturnskyward,theyrevealaseparatecity.Thefirstraysofdawncreepoverthehorizonasthisnewcityemergesfromitscrouch.Tree-linedstreets,vastpublicparks,andbeautifulsingle-familyhomesbegintounfold,spreadingoutwarduntiltheyhavecoveredthesurfaceentirely.TheresidentsofFirstSpacestirfromtheirslumber,stretchingtheirlimbsandlookingoutonaworldalltheirown.

ThesearevisionsofHaoJingfang,aChinesescience-fictionwriterandeconomicsresearcher.Hao’snovelette“FoldingBeijing”wontheprestigiousHugoAwardin2016foritsarrestingdepictionofacityinwhicheconomicclassesareseparatedintodifferentworlds.

InafuturisticBeijing,thecityisdividedintothreeeconomiccastesthatsplittimeonthecity’ssurface.FivemillionresidentsoftheeliteFirstSpaceenjoyatwenty-four-hourcyclebeginningat6a.m.,afulldayandnightinaclean,hypermodern,unclutteredcity.WhenFirstSpacefoldsupandflipsover,the20millionresidentsofSecondSpacegetsixteenhourstoworkacrossasomewhatlessglamorouscityscape.Finally,thedenizensofThirdSpace—50millionsanitationworkers,foodvendors,andmeniallaborers—emergeforaneight-hourshiftfrom10p.m.to6a.m.,toilinginthedarkamongtheskyscrapersandtrashpits.

Thetrash-sortingjobsthatareapillaroftheThirdSpacecouldbeentirelyautomatedbutareinsteaddonemanuallytoprovideemploymentfortheunfortunatedenizenscondemnedtolifethere.Travelbetweenthedifferentspacesisforbidden,creatingasocietyinwhichtheprivilegedresidentsofFirstSpacecanlivefreeofworrythattheunwashedmasseswillcontaminatetheirtechno-utopia.

THEREALAICRISIS

Thisdystopianstoryisaworkofsciencefictionbutonerootedinrealfearsabouteconomicstratificationandunemploymentinourautomatedfuture.HaoholdsaPh.D.ineconomicsandmanagementfromprestigiousTsinghuaUniversity.Forherdayjob,sheconductseconomicsresearchatathinktankreportingtotheChinesecentralgovernment,includinginvestigatingtheimpactofAIonjobsinChina.

It’sasubjectthatdeeplyworriesmanyeconomists,technologists,andfuturists,myselfincluded.IbelievethatasthefourwavesofAIspreadacrosstheglobaleconomy,theyhavethepotentialtowrenchopenevergreatereconomicdividesbetweenthehavesandhave-nots,leadingtowidespreadtechnologicalunemployment.AsHao’sstorysovividlyillustrates,thesechasmsinwealthandclasscanmorphintosomethingmuchdeeper:economicdivisionsthattearatthefabricofoursocietyandchallengeoursenseofhumandignityandpurpose.

Massiveproductivitygainswillcomefromtheautomationofprofit-generatingtasks,buttheywillalsoeliminatejobsforhugenumbersofworkers.Theselayoffswon’tdiscriminatebythecolorofone’scollar,hittinghighlyeducatedwhite-collarworkersjustashardasmanymanuallaborers.Acollegedegree—evenahighlyspecializedprofessionaldegree—isnoguaranteeofjobsecuritywhencompetingagainstmachinesthatcanspotpatternsandmakedecisionsonlevelsthehumanbrainsimplycan’tfathom.

Beyonddirectjoblosses,artificialintelligencewillexacerbateglobaleconomicinequality.Bygivingrobotsthepowerofsightandtheabilitytomoveautonomously,AIwillrevolutionizemanufacturing,puttingthird-worldsweatshopsstockedwitharmiesoflow-wageworkersoutofbusiness.Indoingso,itwillcutawaythebottomrungsontheladderofeconomicdevelopment.Itwilldeprivepoorcountriesoftheopportunitytokick-starteconomicgrowththroughlow-costexports,theoneprovenroutethathasliftedcountrieslikeSouthKorea,China,andSingaporeoutofpoverty.Thelargepopulationsofyoungworkersthatoncecomprisedthegreatestadvantageofpoorcountrieswillturnintoanetliability,andapotentiallydestabilizingone.Withnowaytobeginthedevelopmentprocess,poorcountrieswillstagnatewhiletheAIsuperpowerstakeoff.

Butevenwithinthoserichandtechnologicallyadvancedcountries,AIwillfurthercleaveopenthedividebetweenthehavesandthehave-nots.Thepositive-feedbackloopgeneratedbyincreasingamountsofdatameansthatAI-drivenindustriesnaturallytendtowardmonopoly,simultaneouslydrivingdownpricesandeliminatingcompetitionamongfirms.Whilesmallbusinesseswillultimatelybeforcedtoclosetheirdoors,theindustryjuggernautsoftheAIagewillseeprofitssoartopreviouslyunimaginablelevels.Thisconcentrationofeconomicpowerinthehandsofafewwillrubsaltintheopenwoundsofsocialinequality.

Inmostdevelopedcountries,economicinequalityandclass-basedresentmentrankamongthemostdangerousandpotentiallyexplosiveproblems.Thepastfewyearshaveshownushowacauldronoflong-

simmeringinequalitycanboiloverintoradicalpoliticalupheaval.Ibelievethat,ifleftunchecked,AIwillthrowgasolineonthesocioeconomicfires.

Lurkingbeneaththissocialandeconomicturmoilwillbeapsychologicalstruggle,onethatwon’tmaketheheadlinesbutthatcouldmakeallthedifference.Asmoreandmorepeopleseethemselvesdisplacedbymachines,theywillbeforcedtoanswerafardeeperquestion:inanageofintelligentmachines,whatdoesitmeantobehuman?

THETECHNO-OPTIMISTSANDTHE“LUDDITEFALLACY”

LiketheutopiananddystopianforecastsforAGI,thispredictionofajobsandinequalitycrisisisnotwithoutcontroversy.Alargecontingentofeconomistsandtechno-optimistsbelievethatfearsabouttechnology-inducedjoblossesarefundamentallyunfounded.

Membersofthiscampdismissdirepredictionsofunemploymentastheproductofa“Ludditefallacy.”ThetermisderivedfromtheLuddites,agroupofnineteenth-centuryBritishweaverswhosmashedthenewindustrialtextileloomsthattheyblamedfordestroyingtheirlivelihoods.DespitethebesteffortsandprotestsoftheLuddites,industrializationplowedfullsteamahead,andboththenumberofjobsandqualityoflifeinEnglandrosesteadilyformuchofthenexttwocenturies.TheLudditesmayhavefailedintheirbidtoprotecttheircraftfromautomation—andmanyofthosedirectlyimpactedbyautomationdidinfactsufferstagnantwagesforsometime—buttheirchildrenandgrandchildrenwereultimatelyfarbetteroffforthechange.

This,thetechno-optimistsassert,istherealstoryoftechnologicalchangeandeconomicdevelopment.Technologyimproveshumanproductivityandlowersthepriceofgoodsandservices.Thoselowerpricesmeanconsumershavegreaterspendingpower,andtheyeitherbuymoreoftheoriginalgoodsorspendthatmoneyonsomethingelse.Bothoftheseoutcomesincreasethedemandforlaborandthusjobs.Yes,shiftsintechnologymightleadtosomeshort-termdisplacement.Butjustasmillionsoffarmersbecamefactoryworkers,thoselaid-offfactoryworkerscanbecomeyogateachersandsoftwareprogrammers.Overthelongterm,technologicalprogressnevertrulyleadstoanactualreductioninjobsorriseinunemployment.

It’sasimpleandelegantexplanationoftheever-increasingmaterialwealthandrelativelystablejobmarketsintheindustrializedworld.Italsoservesasalucidrebuttaltoaseriesof“boywhocriedwolf”momentsaroundtechnologicalunemployment.EversincetheIndustrialRevolution,people

havefearedthateverythingfromweavingloomstotractorstoATMswillleadtomassivejoblosses.Buteachtime,increasingproductivityhaspairedwiththemagicofthemarkettosmooththingsout.

Economistswholooktohistory—andthecorporatejuggernautswhowillprofittremendouslyfromAI—usetheseexamplesfromthepasttodismissclaimsofAI-inducedunemploymentinthefuture.Theypointtomillionsofinventions—thecottongin,lightbulbs,cars,videocameras,andcellphones—noneofwhichledtowidespreadunemployment.Artificialintelligence,theysay,willbenodifferent.Itwillgreatlyincreaseproductivityandpromotehealthygrowthinjobsandhumanwelfare.Sowhatistheretoworryabout?

THEENDOFBLINDOPTIMISM

Ifwethinkofallinventionsasdatapointsandweightthemequally,thetechno-optimistshaveacompellinganddata-drivenargument.Butnotallinventionsarecreatedequal.Someofthemchangehowweperformasingletask(typewriters),someofthemeliminatetheneedforonekindoflabor(calculators),andsomeofthemdisruptawholeindustry(thecottongin).

Andthentherearetechnologicalchangesonanentirelydifferentscale.Theramificationsofthesebreakthroughswillcutacrossdozensofindustries,withthepotentialtofundamentallyaltereconomicprocessesandevensocialorganization.Thesearewhateconomistscallgeneralpurposetechnologies,orGPTs.IntheirlandmarkbookTheSecondMachineAge,MITprofessorsErikBrynjolfssonandAndrewMcAfeedescribedGPTsasthetechnologiesthat“reallymatter,”theonesthat“interruptandacceleratethenormalmarchofeconomicprogress.”

LookingonlyatGPTsdramaticallyshrinksthenumberofdatapointsavailableforevaluatingtechnologicalchangeandjoblosses.Economichistorianshavemanyquibblesoverexactlywhichinnovationsofthemodernerashouldqualify(railroads?theinternalcombustionengine?),butsurveysoftheliteraturerevealthreetechnologiesthatreceivebroadsupport:thesteamengine,electricity,andinformationandcommunicationtechnology(suchascomputersandtheinternet).Thesehavebeenthegamechangers,thedisruptivetechnologiesthatextendedtheirreachintomanycornersoftheeconomyandradicallyalteredhowweliveandwork.

ThesethreeGPTshavebeenrareenoughtowarrantevaluationontheirown,notsimplytobelumpedinwithmillionsofmorenarrowinnovationsliketheballpointpenorautomatictransmission.Andwhileit’struethatthelong-termhistoricaltrendhasbeentowardmorejobsandgreaterprosperity,

whenlookingatGPTsalone,threedatapointsarenotenoughtoextractanironcladprinciple.Instead,weshouldlooktothehistoricalrecordtoseehoweachofthesegroundbreakinginnovationshasaffectedjobsandwages.

ThesteamengineandelectrificationwerecrucialpiecesofthefirstandsecondIndustrialRevolutions(1760–1830and1870–1914,respectively).BothoftheseGPTsfacilitatedthecreationofthemodernfactorysystem,bringingimmensepowerandabundantlighttothebuildingsthatwereupendingtraditionalmodesofproduction.Broadlyspeaking,thischangeinthemodeofproductionwasoneofdeskilling.Thesefactoriestooktasksthatoncerequiredhigh-skilledworkers(forexample,handcraftingtextiles)andbroketheworkdownintofarsimplertasksthatcouldbedonebylow-skilledworkers(operatingasteam-drivenpowerloom).Intheprocess,thesetechnologiesgreatlyincreasedtheamountofthesegoodsproducedanddrovedownprices.

Intermsofemployment,earlyGPTsenabledprocessinnovationsliketheassemblyline,whichgavethousands—andeventuallyhundredsofmillions—offormerfarmersaproductiveroleinthenewindustrialeconomy.Yes,theydisplacedarelativelysmallnumberofskilledcraftspeople(someofwhomwouldbecomeLuddites),buttheyempoweredmuchlargernumbersoflow-skilledworkerstotakeonrepetitive,machine-enabledjobsthatincreasedtheirproductivity.Boththeeconomicpieandoverallstandardsoflivinggrew.

ButwhataboutthemostrecentGPT,informationandcommunicationtechnologies(ICT)?Sofar,itsimpactonlabormarketsandwealthinequalityhavebeenfarmoreambiguous.AsBrynjolfssonandMcAfeepointoutinTheSecondMachineAge,overthepastthirtyyears,theUnitedStateshasseensteadygrowthinworkerproductivitybutstagnantgrowthinmedianincomeandemployment.BrynjolfssonandMcAfeecallthis“thegreatdecoupling.”Afterdecadeswhenproductivity,wages,andjobsroseinalmostlockstepfashion,thatoncetightlywoventhreadhasbeguntofray.Whileproductivityhascontinuedtoshootupward,wagesandjobshaveflatlinedorfallen.

ThishasleadtogrowingeconomicstratificationindevelopedcountriesliketheUnitedStates,withtheeconomicgainsofICTincreasinglyaccruingtothetop1percent.ThatelitegroupintheUnitedStateshasroughlydoubleditsshareofnationalincomebetween1980and2016.By2017,thetop1percentofAmericanspossessedalmosttwiceasmuchwealthasthebottom90percentcombined.WhilethemostrecentGPTproliferatedacrosstheeconomy,realwagesforthemedianofAmericanshaveremainedflatforoverthirtyyears,andthey’veactuallyfallenforthepoorestAmericans.

OnereasonwhyICTmaydifferfromthesteamengineandelectrificationisbecauseofits“skillbias.”WhilethetwootherGPTsrampedupproductivitybydeskillingtheproductionofgoods,ICTisinsteadoften—thoughnotalways—skillbiasedinfavorofhigh-skilledworkers.Digitalcommunicationstoolsallowtopperformerstoefficientlymanagemuchlargerorganizationsandreachmuchlargeraudiences.Bybreakingdownthebarrierstodisseminatinginformation,ICTempowerstheworld’stopknowledgeworkersandundercutstheeconomicroleofmanyinthemiddle.

DebatesoverhowlargearoleICThasplayedinjobandwagestagnationintheUnitedStatesarecomplex.Globalization,thedeclineoflaborunions,andoutsourcingareallfactorshere,providingeconomistswithfodderforendlessacademicarguments.Butonethingisincreasinglyclear:thereisnoguaranteethatGPTsthatincreaseourproductivitywillalsoleadtomorejobsorhigherwagesforworkers.

Techno-optimistscancontinuetodismisstheseconcernsasthesameoldLudditefallacy,buttheyarenowarguingagainstsomeofthebrightesteconomicmindsoftoday.LawrenceSummershasservedasthechiefeconomistoftheWorldBank,asthetreasurysecretaryunderPresidentBillClinton,andasthedirectorofPresidentBarackObama’sNationalEconomicCouncil.Inrecentyears,hehasbeenwarningagainsttheno-questions-askedoptimismaroundtechnologicalchangeandemployment.

“Theanswerissurelynottotrytostoptechnicalchange,”SummerstoldtheNewYorkTimesin2014,“buttheanswerisnottojustsupposethateverything’sgoingtobeO.K.becausethemagicofthemarketwillassurethat’strue.”

ErikBrynjolfssonhasissuedsimilarwarningsaboutthegrowingdisconnectbetweenthecreationofwealthandjobs,callingit“thebiggestchallengeofoursocietyforthenextdecade.”

AI:PUTTINGTHEGINGPT

WhatdoesallthishavetodowithAI?IamconfidentthatAIwillsoonentertheeliteclubofuniversallyrecognizedGPTs,spurringarevolutionineconomicproductionandevensocialorganization.TheAIrevolutionwillbeonthescaleoftheIndustrialRevolution,butprobablylargeranddefinitelyfaster.ConsultingfirmPwCpredictsthatAIwilladd$15.7trilliontotheglobaleconomyby2030.Ifthatpredictionholdsup,itwillbeanamountlargerthantheentireGDPofChinatodayandequaltoapproximately80

percentoftheGDPoftheUnitedStatesin2017.SeventypercentofthosegainsarepredictedtoaccrueintheUnitedStatesandChina.

Thesedisruptionswillbemorebroad-basedthanprioreconomicrevolutions.Steampowerfundamentallyalteredthenatureofmanuallabor,andICTdidthesameforcertainkindsofcognitivelabor.AIwillcutacrossboth.Itwillperformmanykindsofphysicalandintellectualtaskswithaspeedandpowerthatfaroutstripanyhuman,dramaticallyincreasingproductivityineverythingfromtransportationtomanufacturingtomedicine.

UnliketheGPTsofthefirstandsecondIndustrialRevolutions,AIwillnotfacilitatethedeskillingofeconomicproduction.Itwon’ttakeadvancedtasksdonebyasmallnumberofpeopleandbreakthemdownfurtherforalargernumberoflow-skillworkerstodo.Instead,itwillsimplytakeovertheexecutionoftasksthatmeettwocriteria:theycanbeoptimizedusingdata,andtheydonotrequiresocialinteraction.(IwillbegoingintogreaterdetailaboutexactlywhichjobsAIcanandcannotreplace.)

Yes,therewillbesomenewjobscreatedalongtheway—robotrepairingandAIdatascientists,forexample.ButthemainthrustofAI’semploymentimpactisnotoneofjobcreationthroughdeskillingbutofjobreplacementthroughincreasinglyintelligentmachines.Displacedworkerscantheoreticallytransitionintootherindustriesthataremoredifficulttoautomate,butthisisitselfahighlydisruptiveprocessthatwilltakealongtime.

HARDWARE,BETTER,FASTER,STRONGER

AndtimeisonethingthattheAIrevolutionisnotinclinedtograntus.ThetransitiontoanAI-driveneconomywillbefarfasterthananyofthepriorGPT-inducedtransformations,leavingworkersandorganizationsinamadscrambletoadjust.WhereastheIndustrialRevolutiontookplaceacrossseveralgenerations,theAIrevolutionwillhaveamajorimpactwithinonegeneration.That’sbecauseAIadoptionwillbeacceleratedbythreecatalyststhatdidn’texistduringtheintroductionofsteampowerandelectricity.

First,manyproductivity-increasingAIproductsarejustdigitalalgorithms:infinitelyreplicableandinstantlydistributablearoundtheworld.Thismakesforastarkcontrasttothehardware-intensiverevolutionsofsteampower,electricity,andevenlargepartsofICT.Forthesetransitionstogaintraction,physicalproductshadtobeinvented,prototyped,built,sold,andshippedtoendusers.Eachtimeamarginalimprovementwasmadetooneofthesepiecesofhardware,itrequiredthattheearlierprocessberepeated,withthe

attendantcostsandsocialfrictionsthatsloweddownadoptionofeachnewtweak.Allofthesefrictionssloweddowndevelopmentofnewtechnologiesandextendedthetimeuntilaproductwascost-effectiveforbusinessestoadopt.

Incontrast,theAIrevolutionislargelyfreeoftheselimitations.Digitalalgorithmscanbedistributedatvirtuallynocost,andoncedistributed,theycanbeupdatedandimprovedforfree.Thesealgorithms—notadvancedrobotics—willrolloutquicklyandtakealargechunkoutofwhite-collarjobs.Muchoftoday’swhite-collarworkforceispaidtotakeinandprocessinformation,andthenmakeadecisionorrecommendationbasedonthatinformation—whichispreciselywhatAIalgorithmsdobest.Inindustrieswithaminimalsocialcomponent,thathuman-for-machinereplacementcanbemaderapidlyanddoneenmasse,withoutanyneedtodealwiththemessydetailsofmanufacturing,shipping,installation,andon-siterepairs.WhilethehardwareofAI-poweredrobotsorself-drivingcarswillbearsomeoftheselegacycosts,theunderlyingsoftwaredoesnot,allowingforthesaleofmachinesthatactuallygetbetterovertime.LoweringthesebarrierstodistributionandimprovementwillrapidlyaccelerateAIadoption.

Thesecondcatalystisonethatmanyinthetechnologyworldtodaytakeforgranted:thecreationoftheventure-capitalindustry.VCfunding—earlyinvestmentsinhigh-risk,high-potentialcompanies—barelyexistedbeforethe1970s.ThatmeanttheinventorsandinnovatorsduringthefirsttwoIndustrialRevolutionshadtorelyonathinpatchworkoffinancingmechanismstogettheirproductsofftheground,usuallyviapersonalwealth,familymembers,richpatrons,orbankloans.Noneofthesehaveincentivestructuresbuiltforthehigh-risk,high-rewardgameoffundingtransformativeinnovation.Thatdearthofinnovationfinancingmeantmanygoodideaslikelynevergotofftheground,andsuccessfulimplementationoftheGPTsscaledfarmoreslowly.

Today,VCfundingisawell-oiledmachinededicatedtothecreationandcommercializationofnewtechnology.In2017,globalventurefundingsetanewrecordwith$148billioninvested,eggedonbythecreationofSoftbank’s$100billion“visionfund,”whichwillbedisbursedinthecomingyears.Thatsameyear,globalVCfundingforAIstartupsleapedto$15.2billion,a141percentincreaseover2016.ThatmoneyrelentlesslyseeksoutwaystowringeverydollarofproductivityoutofaGPTlikeartificialintelligence,withaparticularfondnessformoonshotideasthatcoulddisruptandrecreateanentireindustry.Overthecomingdecade,voraciousVCswilldrivetherapidapplicationofthetechnologyandtheiterationofbusinessmodels,leavingnostoneunturnedinexploringeverythingthatAIcando.

Finally,thethirdcatalystisonethat’sequallyobviousandyetoftenoverlooked:China.ArtificialintelligencewillbethefirstGPTofthemodernerainwhichChinastandsshouldertoshoulderwiththeWestinbothadvancingandapplyingthetechnology.Duringtheerasofindustrialization,electrification,andcomputerization,Chinalaggedsofarbehindthatitspeoplecouldcontributelittle,ifanything,tothefield.It’sonlyinthepastfiveyearsthatChinahascaughtupenoughininternettechnologiestofeedideasandtalentbackintotheglobalecosystem,atrendthathasdramaticallyacceleratedinnovationinthemobileinternet.

Withartificialintelligence,China’sprogressallowsfortheresearchtalentandcreativecapacityofnearlyone-fifthofhumanitytocontributetothetaskofdistributingandutilizingartificialintelligence.Combinethiswiththecountry’sgladiatorialentrepreneurs,uniqueinternetecosystem,andproactivegovernmentpush,andChina’sentrancetothefieldofAIconstitutesamajoracceleranttoAIthatwasabsentforpreviousGPTs.

Reviewingtheprecedingarguments,Ibelievewecanconfidentlystateafewthings.First,duringtheindustrialera,newtechnologyhasbeenassociatedwithlong-termjobcreationandwagegrowth.Second,despitethisgeneraltrendtowardeconomicimprovement,GPTsarerareandsubstantialenoughthateachone’simpactonjobsshouldbeevaluatedindependently.Third,ofthethreewidelyrecognizedGPTsofthemodernera,theskillbiasesofsteampowerandelectrificationboostedbothproductivityandemployment.ICThasliftedtheformerbutnotnecessarilythelatter,contributingtofallingwagesformanyworkersinthedevelopedworldandgreaterinequality.Finally,AIwillbeaGPT,onewhoseskillbiasesandspeedofadoption—catalyzedbydigitaldissemination,VCfunding,andChina—suggestitwillleadtonegativeimpactsonemploymentandincomedistribution.

Iftheaboveargumentsholdtrue,thenextquestionsareclear:Whatjobsarereallyatrisk?Andhowbadwillitbe?

WHATAICANANDCAN’TDO:THERISK-OF-REPLACEMENTGRAPHS

Whenitcomestojobreplacement,AI’sbiasesdon’tfitthetraditionalone-dimensionalmetricoflow-skillversushigh-skilllabor.Instead,AIcreatesamixedbagofwinnersandlosersdependingontheparticularcontentofjobtasksperformed.WhileAIhasfarsurpassedhumansatnarrowtasksthatcanbeoptimizedbasedondata,itremainsstubbornlyunabletointeractnaturally

withpeopleorimitatethedexterityofourfingersandlimbs.Italsocannotengageincross-domainthinkingoncreativetasksoronesrequiringcomplexstrategy,jobswhoseinputsandoutcomesaren’teasilyquantified.WhatthismeansforjobreplacementcanbeexpressedsimplythroughtwoX–Ygraphs,oneforphysicallaborandoneforcognitivelabor.

RiskofReplacement:CognitiveLabor

RiskofReplacement:PhysicalLabor

Forphysicallabor,theX-axisextendsfrom“lowdexterityandstructuredenvironment”ontheleftside,to“highdexterityandunstructuredenvironment”ontherightside.TheY-axismovesfrom“asocial”atthebottomto“highlysocial”atthetop.ThecognitivelaborchartsharesthesameY-axis(asocialtohighlysocial)butusesadifferentX-axis:“optimization-based”ontheleft,to“creativity-orstrategy-based”ontheright.Cognitivetasksarecategorizedas“optimization-based”iftheircoretasksinvolvemaximizingquantifiablevariablesthatcanbecapturedindata(forexample,settinganoptimalinsurancerateormaximizingataxrefund).

Theseaxesdividebothchartsintofourquadrants:thebottom-leftquadrantisthe“DangerZone,”thetop-rightisthe“SafeZone,”thetop-leftisthe“HumanVeneer,”andthebottomrightisthe“SlowCreep.”Jobswhosetasksprimarilyfallinthe“DangerZone”(dishwasher,entry-leveltranslators)areatahighriskofreplacementinthecomingyears.Thoseinthe“SafeZone”(psychiatrist,home-carenurse,etc.)arelikelyoutofreachofautomationfortheforeseeablefuture.The“HumanVeneer”and“SlowCreep”quadrantsarelessclear-cut:whilenotfullyreplaceablerightnow,reorganizationofworktasksorsteadyadvancesintechnologycouldleadtowidespreadjobreductionsinthesequadrants.Aswewillsee,occupationsofteninvolvemanydifferentactivitiesoutsideofthe“coretasks”thatwehaveusedtoplacetheminagivenquadrant.Thistask-diversitywillcomplicatetheautomationof

manyprofessions,butfornowwecanusetheseaxesandquadrantsasgeneralguidanceforthinkingaboutwhatoccupationsareatrisk.Forthe“HumanVeneer”quadrant,muchofthecomputationalorphysical

workcanalreadybedonebymachines,butthekeysocialinteractiveelementmakesthemdifficulttoautomateenmasse.Thenameofthequadrantderivesfromthemostlikelyroutetoautomation:whilethebehind-the-scenesoptimizationworkisovertakenbymachines,humanworkerswillactasthesocialinterfaceforcustomers,leadingtoasymbioticrelationshipbetweenhumanandmachine.Jobsinthiscategorycouldincludebartender,schoolteacher,andevenmedicalcaregiver.Howquicklyandwhatpercentageofthesejobsdisappeardependsonhowflexiblecompaniesareinrestructuringthetasksdonebytheiremployees,andhowopencustomersaretointeractingwithcomputers.

The“SlowCreep”category(plumber,constructionworker,entry-levelgraphicdesigner)doesn’trelyonhumanbeings’socialskillsbutinsteadonmanualdexterity,creativity,orabilitytoadapttounstructuredenvironments.TheseremainsubstantialhurdlesforAI,butonesthatthetechnologywillslowlychipawayatinthecomingyears.ThepaceofjobeliminationinthisquadrantdependslessonprocessinnovationatcompaniesandmoreontheactualexpansioninAIcapabilities.Butatthefarrightendofthe“SlowCreep”aregoodopportunitiesforthecreativeprofessionals(suchasscientistsandaerospaceengineers)touseAItoolstoacceleratetheirprogress.

Thesegraphsgiveusabasicheuristicforunderstandingwhatkindsofjobsareatrisk,butwhatdoesthismeanfortotalemploymentonaneconomy-widelevel?Forthat,wemustlooktotheeconomists.

WHATTHESTUDIESSAY

PredictingthescaleofAI-inducedjoblosseshasbecomeacottageindustryforeconomistsandconsultingfirmstheworldover.Dependingonwhichmodeloneuses,estimatesrangefromterrifyingtototallynotaproblem.HereIgiveabriefoverviewoftheliteratureandthemethods,highlightingthestudiesthathaveshapedthedebate.FewgoodstudieshavebeendonefortheChinesemarket,soIlargelysticktostudiesestimatingautomationpotentialintheUnitedStatesandthenextrapolatethoseresultstoChina.

ApairofresearchersatOxfordUniversitykickedthingsoffin2013withapapermakingadireprediction:47percentofU.S.jobscouldbeautomatedwithinthenextdecadeortwo.Thepaper’sauthors,CarlBenediktFreyandMichaelA.Osborne,beganbyaskingmachine-learningexpertstoevaluate

thelikelihoodthatseventyoccupationscouldbeautomatedinthecomingyears.Combiningthatdatawithalistofthemain“engineeringbottlenecks”inmachinelearning(similartothecharacteristicsdenotingthe“SafeZone”inthegraphsonpages155and156),FreyandOsborneusedaprobabilitymodeltoprojecthowsusceptibleanadditional632occupationsaretoautomation.

Theresult—thatnearlyhalfofU.S.jobswereat“highrisk”inthecomingdecades—causedquiteastir.FreyandOsbornwerecarefultonotethemanycaveatstotheirconclusion.Mostimportantly,itwasanestimateofwhatjobsitwouldbetechnicallypossibletodowithmachines,notactualjoblossesorresultingunemploymentlevels.Buttheensuingflurryofpresscoveragelargelyglossedovertheseimportantdetails,insteadwarningreadersthathalfofallworkerswouldsoonbeoutofajob.

Othereconomistsstruckback.In2016,atrioofresearchersattheOrganizationforEconomicCooperationandDevelopment(OECD)usedanalternatemodeltoproduceanestimatethatseemedtodirectlycontradicttheOxfordstudy:just9percentofjobsintheUnitedStateswereathighriskofautomation.

Whythehugegap?TheOECDresearcherstookissuewithOsborneandFrey’s“occupation-based”approach.WhiletheOxfordresearchersaskedmachine-learningexpertstojudgetheautomatabilityofanoccupation,theOECDteampointedoutthatit’snotentireoccupationsthatwillbeautomatedbutratherspecifictaskswithinthoseoccupations.TheOECDteamarguedthatthisfocusonoccupationsoverlooksthemanydifferenttasksanemployeeperformsthatanalgorithmcannot:workingwithcolleaguesingroups,dealingwithcustomersface-to-face,andsoon.

TheOECDteaminsteadproposedatask-basedapproach,breakingdowneachjobintoitsmanycomponentactivitiesandlookingathowmanyofthosecouldbeautomated.Inthismodel,ataxpreparerisnotmerelycategorizedasoneoccupationbutratherasaseriesoftasksthatareautomatable(reviewingincomedocuments,calculatingmaximumdeductions,reviewingformsforinconsistencies,etc.)andtasksthatarenotautomatable(meetingwithnewclients,explainingdecisionstothoseclients,etc.).TheOECDteamthenranaprobabilitymodeltofindwhatpercentageofjobswereat“highrisk”(i.e.,atleast70percentofthetasksassociatedwiththejobcouldbeautomated).Asnoted,theyfoundthatintheUnitedStatesonly9percentofworkersfellinthehigh-riskcategory.ApplyingthatsamemodelontwentyotherOECDcountries,theauthorsfoundthatthepercentageofhigh-riskjobsrangedfromjust6percentinKoreato12percentinAustria.Don’tworry,thestudyseemedtosay,reportsofthedeathofworkhavebeengreatlyexaggerated.

Unsurprisingly,thatdidn’tsettlethedebate.TheOECD’stask-basedapproachcametoholdswayamongresearchers,butnotallofthemagreedwiththereport’ssanguineconclusions.Inearly2017,researchersatPwCusedthetask-basedapproachtoproducetheirownestimate,findinginsteadthat38percentofjobsintheUnitedStateswereathighriskofautomationbytheearly2030s.ItwasastrikingdivergencefromtheOECD’s9percent,onethatstemmedsimplyfromusingaslightlydifferentalgorithminthecalculations.Likethepreviousstudies,thePwCauthorsarequicktonotethatthisismerelyanestimateofwhatjobscouldbedonebymachines,andthatactualjoblosseswillbemitigatedbyregulatory,legal,andsocialdynamics.

Afterthesewildlydivergingestimates,researchersattheMcKinseyGlobalInstitutelandedsomewhereinthemiddle.IassistedtheinstituteinitsresearchrelatedtoChinaandcoauthoredareportwithitontheChinesedigitallandscape.Usingthepopulartask-basedapproach,theMcKinseyteamestimatedthataround50percentofworktasksaroundtheworldarealreadyautomatable.ForChina,thatnumberwaspeggedat51.2percent,withtheUnitedStatescominginslightlylower,at45.8percent.Butwhenitcametoactualjobdisplacement,theMcKinseyresearcherswerelesspessimistic.Ifthereisrapidadoptionofautomationtechniques(ascenariomostcomparabletotheaboveestimates),30percentofworkactivitiesaroundtheworldcouldbeautomatedby2030,butonly14percentofworkerswouldneedtochangeoccupations.

Sowheredoesthissurveyoftheliteratureleaveus?Expertscontinuetobealloverthemap,withestimatesofautomationpotentialintheUnitedStatesrangingfromjust9percentto47percent.Evenifwesticktoonlythetask-basedapproach,westillhaveaspreadof9to38percent,adividethatcouldmeanthedifferencebetweenbroad-basedprosperityandanoutrightjobscrisis.Thatspreadofestimatesshouldn’tcauseustothrowupourhandsinconfusion.Instead,itshouldspurustothinkcriticallyaboutwhatthesestudiescanteachus—andwhattheymayhavemissed.

WHATTHESTUDIESMISSED

WhileIrespecttheexpertiseoftheeconomistswhopiecedtogethertheaboveestimates,Ialsorespectfullydisagreewiththelow-endestimatesoftheOECD.Thatdifferenceisrootedintwodisagreements:oneintermsoftheinputsoftheirequations,andonemajordifferenceinthewayIenvisionAIdisruptinglabormarkets.Thequibblecausesmetogowiththehigher-endestimatesofPwC,andthedifferenceinvisionleadsmetoraisethatnumberhigherstill.

Mydisagreementoninputsstemsfromthewaythestudiesestimatedthetechnicalcapabilitiesofmachinesintheyearsahead.The2013Oxfordstudyaskedagroupofmachine-learningexpertstopredictwhetherseventyoccupationswouldlikelybeautomatedinthecomingtwodecades,usingthoseassessmentstoprojectautomatabilitymorebroadly.AndthoughtheOECDandPwCstudiesdifferedinhowtheydividedupoccupationsandtasks,theybasicallystuckwiththe2013estimatesoffuturecapabilities.

Thoseestimatesprobablyconstitutedthebestguessofexpertsatthetime,butsignificantadvancesintheaccuracyandpowerofmachinelearningoverthepastfiveyearshavealreadymovedthegoalposts.Expertsbackthenmayhavebeenabletoprojectsomeoftheimprovementsthatwereonthehorizon.Butfew,ifany,expertspredictedthatdeeplearningwasgoingtogetthisgood,thisfast.Thoseunexpectedimprovementsareexpandingtherealmofthepossiblewhenitcomestoreal-worldusesandthusjobdisruptions.

OneoftheclearestexamplesoftheseacceleratingimprovementsistheImageNetcompetition.Inthecompetition,algorithmssubmittedbydifferentteamsaretaskedwithidentifyingthousandsofdifferentobjectswithinmillionsofdifferentimages,suchasbirds,baseballs,screwdrivers,andmosques.Ithasquicklyemergedasoneofthemostrespectedimage-recognitioncontestsandaclearbenchmarkforAI’sprogressincomputervision.

WhentheOxfordmachine-learningexpertsmadetheirestimatesoftechnicalcapabilitiesinearly2013,themostrecentImageNetcompetitionof2012hadbeenthecoming-outpartyfordeeplearning.GeoffreyHinton’steamusedthosetechniquestoachievearecord-settingerrorrateofaround16percent,alargeleapforwardinacompetitionwherenoteamhadevergottenbelow25percent.

ThatwasenoughtowakeupmuchoftheAIcommunitytothisthingcalleddeeplearning,butitwasjustatasteofwhatwastocome.By2017,almosteveryteamhaddrivenerrorratesbelow5percent—approximatelytheaccuracyofhumansperformingthesametask—withtheaveragealgorithmofthatyearmakingonlyone-thirdofthemistakesofthetopalgorithmof2012.IntheyearssincetheOxfordexpertsmadetheirpredictions,computervisionhasnowsurpassedhumancapabilitiesanddramaticallyexpandedreal-worlduse-casesforthetechnology.

Thoseamped-upcapabilitiesextendfarbeyondcomputervision.Newalgorithmsconstantlysetandsurpassrecordsinfieldslikespeechrecognition,machinereading,andmachinetranslation.Whilethesestrengthenedcapabilitiesdon’tconstitutefundamentalbreakthroughsinAI,theydoopentheeyesandsparktheimaginationsofentrepreneurs.Takentogether,these

technicaladvancesandemergingusescausemetolandonthehigherendoftask-basedestimates,namely,PwC’spredictionthat38percentofU.S.jobswillbeathighriskofautomatabilitybytheearly2030s.

TWOKINDSOFJOBLOSS:ONE-TO-ONEREPLACEMENTSANDGROUND-UP

DISRUPTIONS

Butbeyondthatdisagreementovermethodology,Ibelieveusingonlythetask-basedapproachmissesanentirelyseparatecategoryofpotentialjoblosses:industry-widedisruptionsduetonewAI-empoweredbusinessmodels.Separatefromtheoccupation-ortask-basedapproach,I’llcallthistheindustry-basedapproach.

Partofthisdifferenceinvisioncanbeattributedtoprofessionalbackground.Manyoftheprecedingstudiesweredonebyeconomists,whereasIamatechnologistandearly-stageinvestor.Inpredictingwhatjobswereatriskofautomation,economistslookedatwhattasksapersoncompletedwhilegoingabouttheirjobandaskedwhetheramachinewouldbeabletocompletethosesametasks.Inotherwords,thetask-basedapproachaskedhowpossibleitwastodoaone-to-onereplacementofamachineforahumanworker.

Mybackgroundtrainsmetoapproachtheproblemdifferently.Earlyinmycareer,Iworkedonturningcutting-edgeAItechnologiesintousefulproducts,andasaventurecapitalistIfundandhelpbuildnewstartups.ThatworkhelpsmeseeAIasformingtwodistinctthreatstojobs:one-to-onereplacementsandground-updisruptions.

ManyoftheAIcompaniesI’veinvestedinarelookingtobuildasingleAI-drivenproductthatcanreplaceaspecifickindofworker—forinstance,arobotthatcandotheliftingandcarryingofawarehouseemployeeoranautonomous-vehiclealgorithmthatcancompletethecoretasksofataxidriver.Ifsuccessful,thesecompanieswillendupsellingtheirproductstocompanies,manyofwhommaylayoffredundantworkersasaresult.Thesetypesofone-to-onereplacementsareexactlythejoblossescapturedbyeconomistsusingthetask-basedapproach,andItakePwC’s38percentestimateasareasonableguessforthiscategory.

ButthenthereexistsacompletelydifferentbreedofAIstartups:thosethatreimagineanindustryfromthegroundup.Thesecompaniesdon’tlooktoreplaceonehumanworkerwithonetailor-maderobotthatcanhandlethe

sametasks;rather,theylookfornewwaystosatisfythefundamentalhumanneeddrivingtheindustry.

StartupslikeSmartFinance(theAI-drivenlenderthatemploysnohumanloanofficers),theemployee-freeF5FutureStore(aChinesestartupthatcreatesashoppingexperiencecomparabletotheAmazonGosupermarket),orToutiao(thealgorithmicnewsappthatemploysnoeditors)areprimeexamplesofthesetypesofcompanies.Algorithmsaren’tdisplacinghumanworkersatthesecompanies,simplybecausethehumanswerenevertheretobeginwith.Butasthelowercostsandsuperiorservicesofthesecompaniesdrivegainstomarketshare,theywillapplypressuretotheiremployee-heavyrivals.Thosecompanieswillbeforcedtoadaptfromthegroundup—restructuringtheirworkflowstoleverageAIandreduceemployees—orriskgoingoutofbusiness.Eitherway,theendresultisthesame:therewillbefewerworkers.

ThistypeofAI-inducedjoblossislargelymissingfromthetask-basedestimatesoftheeconomists.Ifoneappliedthetask-basedapproachtomeasuringtheautomatabilityofaneditoratanewsapp,youwouldfinddozensoftasksthatcan’tbeperformedbymachines.Theycan’treadandunderstandnewsandfeaturearticles,subjectivelyassessappropriatenessforaparticularapp’saudience,orcommunicatewithreportersandothereditors.ButwhenToutiao’sfoundersbuilttheapp,theydidn’tlookforanalgorithmthatcouldperformalloftheabovetasks.Instead,theyreimaginedhowanewsappcouldperformitscorefunction—curateafeedofnewsstoriesthatuserswanttoread—andthendidthatbyemployinganAIalgorithm.

Iestimatethiskindoffrom-the-ground-updisruptionwillaffectabout10percentoftheworkforceintheUnitedStates.Thehardesthitindustrieswillbethosethatinvolvehighvolumesofroutineoptimizationworkpairedwithexternalmarketingorcustomerservice:fastfood,financialservices,security,evenradiology.Thesechangeswilleatawayatemploymentinthe“HumanVeneer”quadrantoftheearlierchart,withcompaniesconsolidatingcustomerinteractiontasksintoahandfulofemployees,whilealgorithmsdomostofthegruntworkbehindthescenes.Theresultwillbesteep—thoughnottotal—reductionsinjobsinthesefields.

THEBOTTOMLINE

Puttingtogetherpercentagesforthetwotypesofautomatability—38percentfromone-to-onereplacementsandabout10percentfromground-updisruption—wearefacedwithamonumentalchallenge.Withintentotwentyyears,Iestimatewewillbetechnicallycapableofautomating40to50

percentofjobsintheUnitedStates.Foremployeeswhoarenotoutrightreplaced,increasingautomationoftheirworkloadwillcontinuetocutintotheirvalue-addforthecompany,reducingtheirbargainingpoweronwagesandpotentiallyleadingtolayoffsinthelongterm.We’llseealargerpoolofunemployedworkerscompetingforanevensmallerpoolofjobs,drivingdownwagesandforcingmanyintopart-timeor“gigeconomy”workthatlacksbenefits.

This—andIcannotstressthisenough—doesnotmeanthecountrywillbefacinga40to50percentunemploymentrate.Socialfrictions,regulatoryrestrictions,andplainoldinertiawillgreatlyslowdowntheactualrateofjoblosses.Plus,therewillalsobenewjobscreatedalongtheway,positionsthatcanoffsetaportionoftheseAI-inducedlosses,somethingthatIexploreincomingchapters.ThesecouldcutactualAI-inducednetunemploymentinhalf,tobetween20and25percent,ordriveitevenlower,downtojust10to20percent.

Theseestimatesareinlinewiththosefromthemostrecentresearch(asofthiswriting)thatattemptedtoputanumberonactualjoblosses,aFebruary2018studybytheconsultingfirmBainandCompany.Insteadofwadingintotheminutiaeoftasksandoccupations,theBainstudytookamacro-levelapproach,seekingtounderstandtheinterplayofthreemajorforcesactingontheglobaleconomy:demographics,automation,andinequality.Bain’sanalysisproducedastartlingbottom-lineconclusion:by2030,employerswillneed20to25percentfeweremployees,apercentagethatwouldequal30to40milliondisplacedworkersintheUnitedStates.

Bainacknowledgedthatsomeoftheseworkerswillbereabsorbedintonewprofessionsthatbarelyexisttoday(suchasrobotrepairtechnician),butpredictedthatthisreabsorptionwouldfailtomakeameaningfuldentinthemassiveandgrowingtrendofdisplacement.Andautomation’simpactwillbefeltfarwiderthaneventhis20to25percentofdisplacedworkers.Thestudycalculatedthatifweincludebothdisplacementandwagesuppression,afull80percentofallworkerswillbeaffected.

Thiswouldconstituteadevastatingblowtoworkingfamilies.Worsestill,thiswouldnotbeatemporaryshock,likethefleetingbrushwith10percentunemploymentthattheUnitedStatesexperiencedfollowingthe2008financialcrisis.Instead,ifleftunchecked,itcouldconstitutethenewnormal:anageoffullemploymentforintelligentmachinesandenduringstagnationfortheaverageworker.

U.S.-CHINACOMPARISON:MORAVEC’S

REVENGE

ButwhataboutChina?Howwillitsworkersfareinthisbraveneweconomy?Fewgoodstudieshavebeenconductedontheimpactsofautomationhere,buttheconventionalwisdomholdsthatChinesepeoplewillbehitmuchharder,withintelligentrobotsspellingtheendofagoldeneraforworkersinthe“factoryoftheworld.”ThispredictionisbasedonthemakeupofChina’sworkforce,aswellasagut-levelintuitionaboutwhatkindsofjobsbecomeautomated.

Overone-quarterofChineseworkersarestillonfarms,withanotherquarterinvolvedinindustrialproduction.Thatcompareswithlessthan2percentofAmericansinagricultureandaround18percentinindustrialjobs.PunditssuchasRiseoftheRobotsauthorMartinFordhavearguedthatthislargebaseofroutinemanuallaborcouldmakeChina“groundzerofortheeconomicandsocialdisruptionbroughtonbytheriseoftherobots.”InfluentialtechnologycommentatorVivekWadhwahassimilarlypredictedthatintelligentroboticswillerodeChina’slaboradvantageandbringmanufacturingbacktotheUnitedStatesenmasse,albeitwithouttheaccompanyingjobsforhumans.“AmericanrobotsworkashardasChineserobots,”hewrote,“andtheyalsodon’tcomplainorjoinlaborunions.”

Thesepredictionsareunderstandablegiventherecenthistoryofautomation.Lookingbackatthelasthundredyearsofeconomicevolution,blue-collarworkersandfarmhandshavefacedthesteepestjoblossesfromphysicalautomation.Industrialandagriculturaltools(thinkforkliftsandtractors)greatlyincreasedtheproductivityofeachmanuallaborer,reducingdemandforworkersinthesesectors.ProjectingthissametransitionoutintotheageofAI,theconventionalwisdomviewsChina’sfarmandfactorylaborersascaughtsquarelyinthecrosshairsofintelligentautomation.Incontrast,America’sheavilyservice-orientedandwhite-collareconomyhasagreaterbufferagainstpotentialjoblosses,protectedbycollegedegreesandsix-figureincomes.

Inmyopinion,theconventionalwisdomonthisisbackward.WhileChinawillfaceawrenchinglabor-markettransitionduetoautomation,largesegmentsofthattransitionmayarrivelaterormoveslowerthanthejoblosseswrackingtheAmericaneconomy.Whilethesimplestandmostroutinefactoryjobs—qualitycontrolandsimpleassembly-linetasks—willlikelybeautomatedinthecomingyears,theremainderofthesemanuallabortaskswillbetougherforrobotstotakeover.Thisisbecausetheintelligentautomationofthetwenty-firstcenturyoperatesdifferentlythanthephysicalautomation

ofthetwentiethcentury.Putsimply,it’sfareasiertobuildAIalgorithmsthantobuildintelligentrobots.

CoretothislogicisatenetofartificialintelligenceknownasMoravec’sParadox.HansMoravecwasaprofessorofmineatCarnegieMellonUniversity,andhisworkonartificialintelligenceandroboticsledhimtoafundamentaltruthaboutcombiningthetwo:contrarytopopularassumptions,itisrelativelyeasyforAItomimicthehigh-levelintellectualorcomputationalabilitiesofanadult,butit’sfarhardertogivearobottheperceptionandsensorimotorskillsofatoddler.Algorithmscanblowhumansoutofthewaterwhenitcomestomakingpredictionsbasedondata,butrobotsstillcan’tperformthecleaningdutiesofahotelmaid.Inessence,AIisgreatatthinking,butrobotsarebadatmovingtheirfingers.

Moravec’sParadoxwasarticulatedinthe1980s,andsomethingshavechangedsincethen.Thearrivalofdeeplearninghasprovidedmachineswithsuperhumanperceptualabilitieswhenitcomestovoiceorvisualrecognition.Thosesamemachine-learningbreakthroughshavealsoturbochargedtheintellectualabilitiesofmachines,namely,thepowerofspottingpatternsindataandmakingdecisions.Butthefinemotorskillsofrobots—theabilitytograspandmanipulateobjects—stilllagfarbehindhumans.WhileAIcanbeatthebesthumansatGoanddiagnosecancerwithextremeaccuracy,itcannotyetappreciateagoodjoke.

THEASCENTOFTHEALGORITHMSANDRISEOFTHEROBOTS

ThishardrealityaboutalgorithmsandrobotswillhaveprofoundeffectsonthesequenceofAI-inducedjoblosses.Thephysicalautomationofthepastcenturylargelyhurtblue-collarworkers,butthecomingdecadesofintelligentautomationwillhitwhite-collarworkersfirst.Thetruthisthattheseworkershavefarmoretofearfromthealgorithmsthatexisttodaythanfromtherobotsthatstillneedtobeinvented.

Inshort,AIalgorithmswillbetomanywhite-collarworkerswhattractorsweretofarmhands:atoolthatdramaticallyincreasestheproductivityofeachworkerandthusshrinksthetotalnumberofemployeesrequired.Andunliketractors,algorithmscanbeshippedinstantlyaroundtheworldatnoadditionalcosttotheircreator.Oncethatsoftwarehasbeensentouttoitsmillionsofusers—tax-preparationcompanies,climate-changelabs,lawfirms—itcanbeconstantlyupdatedandimprovedwithnoneedtocreateanewphysicalproduct.

Robotics,however,ismuchmoredifficult.Itrequiresadelicateinterplayofmechanicalengineering,perceptionAI,andfine-motormanipulation.Theseareallsolvableproblems,butnotatnearlythespeedatwhichpuresoftwareisbeingbuilttohandlewhite-collarcognitivetasks.Oncethatrobotisbuilt,itmustalsobetested,sold,shipped,installed,andmaintainedon-site.Adjustmentstotherobot’sunderlyingalgorithmscansometimesbemaderemotely,butanymechanicalhiccupsrequirehands-onworkwiththemachine.Allthesefrictionswillslowdownthepaceofroboticautomation.

ThisisnottosaythatChina’smanuallaborersaresafe.Dronesfordeployingpesticidesonfarms,warehouserobotsforunpackingtrucks,andvision-enabledrobotsforfactoryqualitycontrolwillalldramaticallyreducethejobsinthesesectors.AndChinesecompaniesareindeedinvestingheavilyinalloftheabove.Thecountryisalreadytheworld’stopmarketforrobots,buyingnearlyasmanyasEuropeandtheAmericascombined.ChineseCEOsandpoliticalleadersareunitedinpushingforthesteadyautomationofmanyChinesefactoriesandfarms.

Buttheresultingblue-collarjoblossesinChinawillbemoregradualandpiecemealthanthesweepingimpactofalgorithmsonwhite-collarworkers.Whiletherightdigitalalgorithmcanhitlikeamissilestrikeoncognitivelabor,robotics’assaultonmanuallaborisclosertotrenchwarfare.Overthelongterm,IbelievethenumberofjobsatriskofautomationwillbesimilarforChinaandtheUnitedStates.Americaneducation’sgreateremphasisoncreativityandinterpersonalskillsmaygiveitanemploymentedgeonalongenoughtimescale.However,whenitcomestoadaptingtothesechanges,speedmatters,andChina’sparticulareconomicstructurewillbuyitsometime.

THEAISUPERPOWERSVERSUSALLTHEREST

WhatevergapsexistbetweenChinaandtheUnitedStates,thosedifferenceswillpaleincomparisonbetweenthesetwoAIsuperpowersandtherestoftheworld.SiliconValleyentrepreneurslovetodescribetheirproductsas“democratizingaccess,”“connectingpeople,”and,ofcourse,“makingtheworldabetterplace.”Thatvisionoftechnologyasacure-allforglobalinequalityhasalwaysbeensomethingofawistfulmirage,butintheageofAIitcouldturnintosomethingfarmoredangerous.Ifleftunchecked,AIwilldramaticallyexacerbateinequalityonbothinternationalanddomesticlevels.ItwilldriveawedgebetweentheAIsuperpowersandtherestoftheworld,

andmaydividesocietyalongclasslinesthatmimicthedystopiansciencefictionofHaoJingfang.

Asatechnologyandanindustry,AInaturallygravitatestowardmonopolies.Itsrelianceondataforimprovementcreatesaself-perpetuatingcycle:betterproductsleadtomoreusers,thoseusersleadtomoredata,andthatdataleadstoevenbetterproducts,andthusmoreusersanddata.Onceacompanyhasjumpedouttoanearlylead,thiskindofongoingrepeatingcyclecanturnthatleadintoaninsurmountablebarriertoentryforotherfirms.

ChineseandAmericancompanieshavealreadykick-startedthisprocess,leapingouttomassiveleadsovertherestoftheworld.Canada,theUnitedKingdom,France,andafewothercountriesplayhosttotop-notchtalentandresearchlabs,buttheyoftenlacktheotheringredientsneededtobecometrueAIsuperpowers:alargebaseofusersandavibrantentrepreneurialandventure-capitalecosystem.OtherthanLondon’sDeepMind,wehaveyettoseegroundbreakingAIcompaniesemergefromthesecountries.AllofthesevenAIgiantsandanoverwhelmingportionofthebestAIengineersarealreadyconcentratedintheUnitedStatesandChina.Theyarebuildinghugestoresofdatathatarefeedingintoavarietyofdifferentproductverticals,suchasself-drivingcars,languagetranslation,autonomousdrones,facialrecognition,natural-languageprocessing,andmuchmore.Themoredatathesecompaniesaccumulate,theharderitwillbeforcompaniesinanyothercountriestoevercompete.

AsAIspreadsitstentaclesintoeveryaspectofeconomiclife,thebenefitswillflowtothesebastionsofdataandAItalent.PwCestimatesthattheUnitedStatesandChinaaresettocaptureafull70percentofthe$15.7trillionthatAIwilladdtotheglobaleconomyby2030,withChinaalonetakinghome$7trillion.Othercountrieswillbelefttopickupthescraps,whiletheseAIsuperpowerswillboostproductivityathomeandharvestprofitsfrommarketsaroundtheglobe.Americancompanieswilllikelylayclaimtomanydevelopedmarkets,andChina’sAIjuggernautswillhaveabettershotatwinningoverSoutheastAsia,Africa,andtheMiddleEast.

IfearthisprocesswillexacerbateandsignificantlygrowthedividebetweentheAIhavesandhave-nots.WhileAI-richcountriesrakeinastoundingprofits,countriesthathaven’tcrossedacertaintechnologicalandeconomicthresholdwillfindthemselvesslippingbackwardandfallingfartherbehind.WithmanufacturingandservicesincreasinglydonebyintelligentmachineslocatedintheAIsuperpowers,developingcountrieswilllosetheonecompetitiveedgethattheirpredecessorsusedtokick-startdevelopment:low-wagefactorylabor.

Largepopulationsofyoungpeopleusedtobethesecountries’greateststrengths.ButintheageofAI,thatgroupwillbemadeupofdisplacedworkersunabletofindeconomicallyproductivework.Thisseachangewilltransformthemfromanengineofgrowthtoaliabilityonthepublicledger—andapotentiallyexplosiveoneiftheirgovernmentsproveunabletomeettheirdemandsforabetterlife.

Deprivedofthechancetoclawtheirwayoutofpoverty,poorcountrieswillstagnatewhiletheAIsuperpowerstakeoff.Ifearthisever-growingeconomicdividewillforcepoorcountriesintoastateofnear-totaldependenceandsubservience.TheirgovernmentsmaytrytonegotiatewiththesuperpowerthatsuppliestheirAItechnology,tradingmarketanddataaccessforguaranteesofeconomicaidfortheirpopulation.Whateverbargainisstruck,itwillnotbeonebasedonagencyorequalitybetweennations.

THEAIINEQUALITYMACHINE

ThesamepushtowardpolarizationplayingoutacrosstheglobaleconomywillalsoexacerbateinequalitywithintheAIsuperpowers.AI’snaturalaffinityformonopolieswillbringwinner-take-alleconomicstodozensmoreindustries,andthetechnology’sskillbiaseswillgenerateabifurcatedjobmarketthatsqueezesoutthemiddleclass.The“greatdecoupling”ofproductivityandwageshasalreadycreatedatearbetweenthe1percentandthe99percent.Lefttoitsowndevices,artificialintelligence,Iworry,willtakethistearandripitwideopen.

Wealreadyseethistrendtowardmonopolizationintheonlineworld.Theinternetwassupposedtobeaplaceoffreewheelingcompetitionandalevelplayingfield,butinafewshortyearsmanycoreonlinefunctionshaveturnedintomonopolisticempires.Formuchofthedevelopedworld,Googlerulessearchengines,Facebookdominatessocialnetworks,andAmazonownse-commerce.Chineseinternetcompaniestendtoworrylessabout“stayingintheirlane,”sotherearemoreskirmishesbetweenthesegiants,butthevastmajorityofChina’sonlineactivityisstillfunneledthroughjustahandfulofcompanies.

AIwillbringthatsamemonopolistictendencytodozensofindustries,erodingthecompetitivemechanismsofmarketsintheprocess.Wecouldseetherapidemergenceofanewcorporateoligarchy,aclassofAI-poweredindustrychampionswhosedataedgeoverthecompetitionfeedsonitselfuntiltheyareentirelyuntouchable.Americanantitrustlawsareoftendifficulttoenforceinthissituation,becauseoftherequirementinU.S.lawthatplaintiffsprovethemonopolyisactuallyharmingconsumers.AImonopolists,by

contrast,wouldlikelybedeliveringbetterandbetterservicesatcheaperpricestoconsumers,amovemadepossiblebytheincredibleproductivityandefficiencygainsofthetechnology.

ButwhiletheseAImonopoliesdrivedownprices,theywillalsodriveupinequality.Corporateprofitswillexplode,showeringwealthontheeliteexecutivesandengineersluckyenoughtogetinontheaction.Justimagine:HowprofitablewouldUberbeifithadnodrivers?OrAppleifitdidn’tneedfactoryworkerstomakeiPhones?OrWalmartifitpaidnocashiers,warehouseemployees,andtruckdrivers?

Drivingincomeinequalitywillbetheemergenceofanincreasinglybifurcatedlabormarket.Thejobsthatdoremainwilltendtobeeitherlucrativeworkfortopperformersorlow-payingjobsintoughindustries.Theriskofreplacementcitedintheearlierfiguresreflectsthis.Themostdifficultjobstoautomate—thoseinthetop-rightcornerofthe“SafeZone”—includebothendsoftheincomespectrum:CEOsandhealthcareaides,venturecapitalistsandmasseuses.

Meanwhile,manyoftheprofessionsthatformthebedrockofthemiddleclass—truckdrivers,accountants,officemanagers—willbehollowedout.Sure,wecouldtrytotransitiontheseworkersintosomeofthehighlysocial,highlydexterousoccupationsthatwillremainsafe.Homehealthcareaide,techno-optimistspointout,isthefastest-growingprofessioninAmerica.Butit’salsooneofthelowestpaid,withanannualsalaryofaround$22,000.Arushofnewlydisplacedworkerstryingtoentertheindustrywillonlyexertmoredownwardpressureonthatnumber.

PushingmorepeopleintothesejobswhiletherichleverageAIforhugegainsdoesn’tjustcreateasocietythatisdramaticallyunequal.Ifearitwillalsoproveunsustainableandfrighteninglyunstable.

AGRIMPICTURE

Whenwescantheeconomichorizon,weseethatartificialintelligencepromisestoproducewealthonascaleneverbeforeseeninhumanhistory—somethingthatshouldbeacauseforcelebration.Butiflefttoitsowndevices,AIwillalsoproduceaglobaldistributionofwealththatisnotjustmoreunequalbuthopelesslyso.AI-poorcountrieswillfindthemselvesunabletogetagripontheladderofeconomicdevelopment,relegatedtopermanentsubservientstatus.AI-richcountrieswillamassgreatwealthbutalsowitnessthewidespreadmonopolizationoftheeconomyandalabormarketdividedintoeconomiccastes.

Makenomistake:thisisnotjustthenormalchurnofcapitalism’screativedestruction,aprocessthathaspreviouslyhelpedleadtoanewequilibriumofmorejobs,higherwages,andabetterqualityoflifeforall.Thefreemarketissupposedtobeself-correcting,buttheseself-correctingmechanismsbreakdowninaneconomydrivenbyartificialintelligence.Low-costlaborprovidesnoedgeovermachines,anddata-drivenmonopoliesareforeverself-reinforcing.

Theseforcesarecombiningtocreateauniquehistoricalphenomenon,onethatwillshakethefoundationsofourlabormarkets,economies,andsocieties.Evenifthemostdirepredictionsofjoblossesdon’tfullymaterialize,thesocialimpactofwrenchinginequalitycouldbejustastraumatic.WemayneverbuildthefoldingcitiesofHaoJingfang’ssciencefiction,butAIriskscreatingatwenty-first-centurycastesystem,onethatdividesthepopulationintotheAIeliteandwhathistorianYuvalN.Hararihascrudelycalledthe“uselessclass,”peoplewhocannevergenerateenougheconomicvaluetosupportthemselves.Evenworse,recenthistoryhasshownusjusthowfragileourpoliticalinstitutionsandsocialfabriccanbeinthefaceofintractableinequality.IfearthatrecentupheavalsareonlyadryrunforthedisruptionstocomeintheageofAI.

TAKINGITPERSONALLY:THECOMINGCRISISOFMEANING

Theresultingturmoilwilltakeonpolitical,economic,andsocialdimensions,butitwillalsobeintenselypersonal.InthecenturiessincetheIndustrialRevolution,wehaveincreasinglycometoseeourworknotjustasameansofsurvivalbutasasourceofpersonalpride,identity,andreal-lifemeaning.Askedtointroduceourselvesorothersinasocialsetting,ajobisoftenthefirstthingwemention.Itfillsourdaysandprovidesasenseofroutineandasourceofhumanconnections.Aregularpaycheckhasbecomeawaynotjustofrewardinglaborbutalsoofsignalingtopeoplethatoneisavaluedmemberofsociety,acontributortoacommonproject.

Severingtheseties—orforcingpeopleintodownwardlymobilecareers—willdamagesomuchmorethanourfinanciallives.Itwillconstituteadirectassaultonoursenseofidentityandpurpose.SpeakingtotheNewYorkTimesin2014,alaid-offelectriciannamedFrankWalshdescribedthepsychologicaltollofintractableunemployment.

“Ilostmysenseofworth,youknowwhatImean?”Walshobserved.“Somebodyasksyou‘Whatdoyoudo?’andIwouldsay,‘I’manelectrician.’

ButnowIsaynothing.I’mnotanelectriciananymore.”

Thatlossofmeaningandpurposehasveryrealandseriousconsequences.Ratesofdepressiontripleamongthoseunemployedforsixmonths,andpeoplelookingforworkaretwiceaslikelytocommitsuicideasthegainfullyemployed.Alcoholabuseandopioidoverdosesbothrisealongsideunemploymentrates,withsomescholarsattributingrisingmortalityratesamonguneducatedwhiteAmericanstodecliningeconomicoutcomes,aphenomenontheycall“deathsofdespair.”

ThepsychologicaldamageofAI-inducedunemploymentwillcutevendeeper.Peoplewillfacetheprospectofnotjustbeingtemporarilyoutofworkbutofbeingpermanentlyexcludedfromthefunctioningoftheeconomy.Theywillwatchasalgorithmsandrobotseasilyoutperformthemattasksandskillstheyspenttheirwholelivesmastering.Itwillleadtoacrushingfeelingoffutility,asenseofhavingbecomeobsoleteinone’sownskin.

ThewinnersofthisAIeconomywillmarvelattheawesomepowerofthesemachines.Buttherestofhumankindwillbelefttograpplewithafardeeperquestion:whenmachinescandoeverythingthatwecan,whatdoesitmeantobehuman?

That’saquestionthatIfoundmyselfgrapplingwithinthedepthsofmyownpersonalcrisisofmortalityandmeaning.Thatcrisisbroughtmetoaverydarkplace,onethatpushedmybodytothelimitandchallengedmydeepest-heldassumptionsaboutwhatmattersinlife.Butitwasthatprocess—andthatpain—thatopenedmyeyestoanalternateendingtothestoryofhumanbeingsandartificialintelligence.

7★

THEWISDOMOFCANCER

TheprofoundquestionsraisedbyourAIfuture—questionsabouttherelationshipamongwork,value,andwhatitmeanstobehuman—hitclosetohomeforme.

Formostofmyadultlife,Ihavebeendrivenbyanalmostfanaticalworkethic.Igavenearlyallmytimeandenergytomyjob,leavingverylittleforfamilyorfriends.Mysenseofself-worthwasderivedfrommyachievementsatwork,frommyabilitytocreateeconomicvalueandtoexpandmyowninfluenceintheworld.

Ihadspentmyresearchcareerworkingtobuildevermorepowerfulartificialintelligencealgorithms.Indoingthis,Icametoviewmyownlifeasakindofoptimizationalgorithmwithacleargoals:maximizepersonalinfluenceandminimizeanythingthatdoesn’tcontributetothatgoal.Isoughttoquantifyeverythinginmylife,balancingthese“inputs”andfine-tuningthealgorithm.

Ididn’tentirelyneglectmywifeordaughters,butIalwayssoughttospendjustenoughtimewiththemsotheydidn’tcomplain.AssoonasIfeltIhadmetthatbar,Iwouldracebacktowork,answeringemails,launchingproducts,fundingcompanies,andmakingspeeches.Eveninthedepthsofsleep,mybodywouldnaturallywakeitselfuptwiceeachnight—at2a.m.and5a.m.—toreplytoemailsfromtheUnitedStates.

Thatobsessivededicationtoworkdidnotgounrewarded.IbecameoneofthetopAIresearchersintheworld,foundedthebestcomputerscienceresearchinstituteinAsia,startedGoogleChina,createdmyownsuccessfulventure-capitalfund,wrotemultiplebest-sellingbooksinChinese,andamassedoneofthelargestsocialmediafollowingsinChina.Byanyobjectivemetric,myso-calledpersonalalgorithmwasasmashingsuccess.

Andthenthingscametoagrindinghalt.

InSeptember2013,IwasdiagnosedwithstageIVlymphoma.Inaninstant,myworldofmentalalgorithmsandpersonalachievementscame

crashingdown.Noneofthosethingscouldsavemenow,orgivemecomfortandasenseofmeaning.Likesomanypeopleforcedtosuddenlyfacetheirownmortality,Iwasfilledwithfearformyfutureandwithadeep,soul-achingregretoverthewayIhadlivedmylife.Yearafteryear,Ihadignoredtheopportunitytospendtimeandsharelove

withthepeopleclosesttome.Myfamilyhadgivenmenothingbutwarmthandlove,andIhadrespondedtothatonthebasisofcoldcalculations.Ineffect,mesmerizedbymyquesttocreatemachinesthatthoughtlikepeople,Ihadturnedintoapersonthatthoughtlikeamachine.

Mycancerwouldgointoremission,sparingmylife,buttheepiphaniessparkedbythispersonalconfrontationwithdeathhavestuckwithme.They’veledmetoreshufflemyprioritiesandtototallychangemylife.Ispendfarmoretimewithmywifeanddaughters,andmovedtobeclosertomyagingmother.Ihavedramaticallycutdownmypresenceonsocialmedia,pouringthattimeintomeetingwithandtryingtohelpyoungpeoplewhoreachouttome.I’veaskedforforgivenessfromthoseIhavewrongedandsoughttobeakinderandmoreempatheticcoworker.Mostofall,I’vestoppedviewingmylifeasanalgorithmthatoptimizesforinfluence.Instead,ItrytospendmyenergydoingtheonethingI’vefoundthattrulybringsmeaningtoaperson’slife:sharinglovewiththosearoundus.

Thisnear-deathexperiencealsogavemeanewvisionforhowhumanscancoexistwithartificialintelligence.Yes,thistechnologywillbothcreateenormouseconomicvalueanddestroyanastoundingnumberofjobs.Ifweremaintrappedinamindsetthatequatesoureconomicvaluewithourworthashumanbeings,thistransitiontotheageofAIwilldevastateoursocietiesandwreakhavoconourindividualpsychologies.

Butthereisanotherpath,anopportunitytouseartificialintelligencetodoubledownonwhatmakesustrulyhuman.Thispathwon’tbeeasy,butIbelieveitrepresentsourbesthopeofnotjustsurvivingintheageofAIbutactuallythriving.It’sajourneythatI’vetakeninmyownlife,onethatturnedmyfocusfrommachinesbacktopeople,andfromintelligencebacktolove.

DECEMBER16,1991

Theroutinizedchaosofchildbirthswirledallaroundme.Nursesanddoctorsinsanitaryscrubsstreamedinandoutoftheroom,checkingmeasurementsandswappingoutIVdrips.Mywife,Shen-Ling,layonthehospitalbed,fightingthroughthemostphysicallyandmentallydrainingactthatahuman

beingcanperform:bringinganotherhumanintotheworld.ItwasDecember16,1991,andIwasabouttobecomeafatherforthefirsttime.

Ourattendingdoctortoldmeitwasgoingtobeacomplexlaborbecausethebabywasinthesunny-sideupposition,withherheadfacingtowardthebellyinsteadoftowardtheback.ThatmeantShen-Lingmightrequireacesareansection.Ipacedtheroomanxiously,evenmoreonedgethanmostexpectantfathersonthebigday.IwasworriedaboutShen-Lingandthebaby’shealth,butmymindwasn’tentirelyinthatdeliveryroom.

That’sbecausethiswasthedayIwasscheduledtodeliverapresentationtoJohnSculley,myCEOatAppleandoneofthemostpowerfulmeninthetechnologyworld.Ayearearlier,IhadjoinedAppleasthechiefscientistforspeechrecognition,andthispresentationwasmychancetowinSculley’sendorsementforourproposaltoincludespeechsynthesisineveryMacintoshcomputerandspeechrecognitioninallnewtypesofMacs.

Mywife’slaborcontinued,andIkeptcheckingtheclock.Idesperatelyhopedthatshewouldhavethebabyintimeformetobethereforthebirthandalsomakeitbacktoheadquartersintimeforthemeeting.AsIpacedtheroom,mycoworkerscalledandaskedifweshouldcancelthemeetingorperhapshavemylieutenantgivethepresentationtoSculley.

“No,”Itoldthem.“IthinkIcanmakeit.”

Butasthelabordraggedon,itwaslookingincreasinglyunlikelythatthiswouldhappen,andIwasgenuinelytornaboutwhatIshoulddo:staybymywife’ssideorrushofftoanimportantmeeting.Presentedwitha“problem”likethis,mywell-trainedengineeringmindkickedintohighgear.Iweighedalloptionsintermsofinputsandoutputs,maximizingmyimpactonmeasurableresults.

Witnessingthebirthofmyfirstchildwouldbegreat,butmydaughterwouldbebornwhetherIwasthereornot.Ontheotherhand,ifImissedthispresentationtoSculley,itcouldhaveaverysubstantialandquantifiableimpact.Maybethesoftwarewouldn’trespondwelltomyreplacement’svoice—Ihadaknackforcoaxingthebestperformanceoutofit—andSculleymightshelvespeech-recognitionresearchindefinitely.Ormaybehewouldgreenlighttheprojectbutthenplacesomeoneelseinchargeofit.Iimaginedthatthefateofartificialintelligenceresearchhunginthebalance,andmaximizingthechancesofsuccesssimplymeantIhadtobeinthatroomforthepresentation.

Iwasinthemidstofthesementalcalculationswhenthedoctorinformedmethattheywouldbeperforminganimmediatecesareansection.Mywifewasrushedofftoanoperatingroomwithmeintow,andwithinanhour

Shen-LingandIwereholdingourbabydaughter.Weallhadsometimetogether,andwithlittletimelefttospare,Itookoffforthepresentation.

Itwentextremelywell.Sculleybothgreenlightedtheprojectanddemandedafull-onpublicitycampaignaroundwhatIhadcreated.Thatcampaignledtoahigh-profileTEDtalk,write-upsintheWallStreetJournal,andanappearanceonGoodMorningAmericain1992,withJohnSculleyandIdemonstratingthetechnologyformillionsofviewers.Ontheprogram,weusedvoicecommandstoscheduleanappointment,writeacheck,andprogramaVCR,showcasingtheearliestexamplesoffuturisticfunctionsthatwouldn’tgomainstreamforanothertwentyyears,withApple’sSiriandAmazon’sAlexa.Thesetriumphsfilledmewithgreatpersonalprideandalsoturbochargedmycareer.

Butlookingback,it’snotthosecareersuccessesthatstickinmymind.It’sthesceneinthathospitalroom.IfIhadbeenforcedtochoosebetweenthebirthofmyfirstchildandthatApplemeeting,Ilikelywouldhavechosenthemeeting.

Today,ImustconfessthatIfindthisdeeplyembarrassingbutnotentirelybaffling.That’sbecausethiswasn’tjustaboutonemeeting.Itwasamanifestationofthemachine-likementalitythathaddominatedmylifefordecades.

THEIRONMAN

Asayoungman,computerscienceandartificialintelligenceresonatedwithmebecausethecrystallogicofthealgorithmsmirroredmyownwayofthinking.Atthetime,Iprocessedeverythinginmylife—friendships,work,andfamilytime—asvariablesorinputsinmyownmentalalgorithm.Theywerethingstobequantifiedandmeteredoutinthepreciseamountsrequiredtoachieveaspecificoutcome.

Likeanygoodalgorithm,Iofcoursehadtobalancemultiplegoals.Self-drivingcarsdon’tjustoptimizeforgettingyouhomeasfastaspossible;theymustdosowithoutbreakinganylawsandwhileminimizingtheriskofaccidents.Likewise,Ihadtomakecertaintradeoffsbetweenmypersonalandprofessionallives.Ihadn’tbeenacompletelyabsentfather,neglectfulhusband(theepisodeofmydaughter’sbirthnotwithstanding),orungratefulson.MysocialalgorithmsweregoodenoughthatImadeapointofrememberinganniversaries,givingthoughtfulgifts,andspendingsometimewiththepeopleinmyfamily.

ButIapproachedtheseasminimizationfunctions,lookingforwaystoachievethedesiredresultwhileputtingintheleastamountoftimepossible.Ialwaysweightedthemasteralgorithmheavilyinfavorofmyowncareergoalstomaximizetimeatwork,personalinfluence,andstatuswithinmyprofession.

WhenIwasgivenvacationsoffourweeks,IwouldspendoneortwoweekswithmymotherinTaiwanorwithmyfamilyinBeijingandthenheadrightbacktowork.Evenwhenasurgicalprocedureforcedmetoremainlyingflatinbedfortwoweeks,Icouldn’tletmyworkgo.IhadametalcranebuiltthatsuspendedacomputermonitorabovemypillowandconnecteditwithakeyboardandmousethatIcouldlayacrossmylap.Iwasbacktoansweringemailswithinhoursofthesurgery.

Iwantedmyemployees,bosses,andfanstoseemeasasuperchargedproductivitymachine,someonewhodidtwicetheworkandneededhalftherestofanormalhumanbeing.Italsogavemyteamthenot-so-subtlesuggestionthatIexpectedsimilareffortfromthem.Mycoworkersstartedcallingmebythenickname“Ironman,”andIlovedit.

Thatworkethicpoweredanexhilaratinglifestyle.Ihadachancetostandatthefrontierofscience,thepeakofglobalbusiness,andinthelimelightofnationalcelebrity.In2013,IwashonoredasoneoftheTime100,themagazine’slistofthemostinfluentialpeopleintheworld.

WHATDOYOUWANTONYOURTOMBSTONE?

Eachofthoseachievementsjustaddedmorefueltomyinternalfire.TheypushedmetoworkharderandtopreachthislifestyletomillionsofyoungChinesepeople.Iwrotebest-sellingbookswithtitleslikeBeYourPersonalBestandMakingaWorldofDifference.Itraveledtocollegecampusesaroundthecountrytodeliverinspirationalspeeches.Chinawasreemergingasaglobalpoweraftercenturiesofpoverty,andIexhortedChinesestudentstoseizethemomentandmaketheirownmarkonhistory.

Ironically,Iconcludedtheselectureswithastrikingimage:apictureofmyowntombstone.Itoldthemthatthebestwaytofindone’scallingwastopictureyourowngraveandimaginewhatyouwantwrittenonit.Isaidthatmymissionwasclear,andmytombstonewasready:

HereliesKai-FuLee,

scientistandbusinessexecutive.

Throughhisworkattoptechnologycompanies

heturnedcomplextechnicaladvancesintoproducts

thateveryonecoulduse

andeveryonecouldbenefitfrom.

Itmadeforafantasticconclusiontothespeeches,acalltoactionthatresonatedwiththeambitionpulsingthroughthecountryatthetime.Chinawasevolvingandgrowingasfastasanycountryinhistory,andtheexcitementwaspalpable.Ifeltperfectlyinmyelementandattheheightofmypowers.

AfterleavingGoogleandfoundingSinovationVentures,Ibegantospendmoretimementoringyoungpeople.IusedmymassivefollowingontheTwitter-likeplatformWeibotoengagedirectlywithChinesestudents,offeringthemguidanceandwritingopenlettersthatwerecollectedintobooks.AlthoughIremainedtheheadofoneofthecountry’smostprestigiousventure-capitalfunds,studentsbeganreferringtomeas“TeacherKai-Fu,”anhonorificthatinChinacombinedgreatrespectandalsoacertaincloseness.

Ibaskedinthisroleasamentortomillionsofstudents.Ibelievedthatthisturntoward“teaching”provedmyownselflessnessandgenuinedesiretohelpothers.InmyspeechesatChineseuniversities,Ikeptthetombstoneportionbutchangedtheepitaph:

HereliesKai-FuLee,

whohadaloveforeducation

duringthetimeofChina’srise.

Throughwriting,theinternet,andlectures,

hehelpedmanyyoungstudents,

wholovinglycalledhim“TeacherKai-Fu.”

Deliveringthatspeechtoenrapturedaudiencesgavemearush.Thenewepitaphmadeforanevenbetterending,Ithought,speakingtomysubstantialinfluenceandalsoacertainwisdomthatcamewithage.Ihadgonefromscientisttoengineer,andfromexecutivetoteacher.Alongtheway,Ihad

managedtomaximizemyimpactontheworldwhilegivingmyfansasenseofwarmthandempathy.Thealgorithmofmymind,Itoldmyself,hadbeentunedtoperfection.

Itwouldtakeanencounterwiththerealitythatlaybehindthattombstone—myownmortality—tounderstandjusthowfoolishandmisguidedmycalculationshadbeen.

DIAGNOSIS

ThetechnicianinchargeofthePETscanwasallbusiness.Afterheshowedmeintotheroom,heimmediatelysetaboutinputtingmyinformationandthenprogrammingtheimagingdevice.EachyearmywifeandItraveledbacktoTaiwanforourmedicalcheckups.Earlierin2013,oneofourcloserelativeshadbeendiagnosedwithcancer,andsomywifedecidedthatthisyearwewouldbothgetMRIandCTscans.Afterourcheckup,mydoctorsaidthathe’dfoundsomethingduringthepreliminaryscans,andthatIshouldcomebackinforaPETscan.

WhileMRIandCTscansrequireanexperteyetodecipher,theresultsofaPETscanarerelativelyeasyforanyonetounderstand.Patientsareinjectedwitharadioactivetracer,adoseofglucosethatcontainsatinyamountofaradioisotope.Cancerouscellstendtoabsorbsugarmoreintenselythanotherpartsofthebody,sotheseradioisotopeswilltendtoclusteraroundpotentiallycancerousgrowths.Computerimagesgeneratedbythescansrepresentthoseclustersinbrightred.Beforewebegan,IaskedthetechnicianifIcouldseethescanonceIwasfinished.

“I’mnotaradiologist,”hesaid.“Butyes,Icanshowyouthepictures.”

Withthat,Ilaydownonthemachineanddisappearedintothecirculartubewithin.WhenIemergedforty-fiveminuteslater,thetechnicianwasstillhunchedoverhiscomputer,staringintentlyatthescreenandclickinghismouseinrapidsuccession.

“CanIseethepicturesnow?”Iasked.

“Youreallyshouldgoseeyourradiologistfirst,”herepliedwithoutlookingup.

“ButyoutoldmethatIcouldseeit,”Iprotested.“It’srightonthescreenthere,isn’tit?”

Givingintomyinsistence,hepivotedthecomputermonitoraroundtofaceme.Acoldchillseizedmychest,turningintoanicyshiverasitspreadacross

myskin.Theblackscanofmybodywasdottedwithnumerousredblotchesacrossmystomachandabdomen.

“Whatarealltheseredthings?”Isaid,myjawbeginningtoquiver.

Thetechnicianwouldn’tlookmeintheeye.Ifeltthatinitialchillturningintoahotpanic.

“Arethesetumors?”Idemanded.

“There’saprobabilitythatthesearetumors,”hereplied,stillnotmakingeyecontact.“Butyoushouldreallystaycalmandgoseeyourradiologist.”

Mymindwasswimming,butmybodycontinuedonautopilot.Iaskedthetechniciantopleaseprintthescanforme,andIheadeddownthehalltotheradiologist’soffice.Ididn’thaveanappointmentwiththeradiologistyet,anditwasagainsttherulesforthemtoexaminemyprintoutscasually,butIbeggedandpleadeduntilsomeonethereagreedtomakeanexception.Afterlookingoverthescans,theradiologisttoldmethatthepatternoftheseclustersmeantthatIhadlymphoma.WhenIaskedwhatstageitwasin,hetriedtodeflectthequestion.

“Well,it’scomplex.Wehavetofindoutwhatkind—”

Icuthimoff:“Butwhatstageisit?”

“Probablystagefour.”

Iwalkedoutoftheroomandthenthehospitalclutchingthepaperwithbothhands,holdingitclosetomychestsonoonepassingbycouldglimpsewhatwasgrowinginsideme.IdecidedIhadtogohomeandwritemywill.

THEWILL

Thatteardroponthepagewasgoingtocostmeanhourofhardwork.Ihadtriedtodabitawaywithtissueasitgrewheavyonmyeyelash,butIwasasecondtoolateanditdroppedtothepaperbelow,landingsquarelyatoptheChinesecharacterfor“Lee.”Asthesaltytearmixedwiththeinkonthepage,itformedatinyblackpuddlethatslowlyseepedintothepaper.Ihadtostartover.

ForawilltobeineffectimmediatelyinTaiwan,itmustbehandwritten,withnoblemishesorcorrections.It’sastraightforwardrequirement,ifabitdated.Toaccomplishthis,Itookoutmybestinkpen,thesameoneI’dusedtosignhundredsofcopiesofthebooksIhadwritten:abest-sellingautobiographyandseveralvolumesencouragingyoungChinesepeopleto

takecontroloftheircareersthroughhardwork.Thatpenwasfailingmenow.Myhandquiveredwithanxiety,andmymindcouldn’tshaketheimageofthatPETscan.Itriedtoremainfocusedonthelawyer’sinstructionsforthewill,butasmymindwandered,mypenwouldslip,marringoneChinesecharacterandforcingmetostartfromscratch.

Itwasn’tjustthememoryofthosefieryredblotchesthatmadewritingsodifficult.MywillhadtobewritteninthetraditionalChinesecharactersusedinTaiwan—complexcombinationsofstrokes,hooks,andflourishesfarmoreintricateandelegantthanthesimplifiedcharactersusedinmainlandChina.Thesecharactersconstituteoneoftheoldestwrittenlanguagesstillinusetoday,andI’dgrownupimmersedinit.Idevouredepickung-funovelsasakidandevenwroteoneofmyownwhenIwasinelementaryschool.

AttheageofelevenImovedfromTaiwantoTennessee,amoveinspiredbymyolderbrother,whowasworkingintheUnitedStatesandtoldmymotherthatTaiwan’seducationsystemwastoorigidandexam-orientedforakidlikeme.Itwastoughformymothertowatchasherbabyboymovedhalfwayaroundtheworld,andwhenwesaidgoodbye,shemademepromiseonething:thatIwouldwriteheraletterinChineseeachweek.Inherlettersbacktome,sheincludedacopyofthelastletterIhadsenttoher,withcorrectionstothosecharactersIhadwrittenwrong.ThatcorrespondencekeptthewrittenChineselanguagealiveformeasIwentthroughhighschool,college,andgraduateschoolintheUnitedStates.

AsIthrewmyselfintoaprestigiousjobatAppleintheearly1990s,ourhandwrittencorrespondencegrewlessfrequent.WhenImovedtoBeijingandbeganworkwithMicrosoft,computersateawaymoreandmoreofthetimeI’dspentcraftingtraditionalcharactersbyhand.WritingChineseonacomputerwaseasier;itrequiredtypingouttheromanizedspellingofaChineseword(forexample,nihao)andthenselectingthecorrespondingcharactersfromalist.Artificialintelligencehasfurtherstreamlinedtheprocessbypredictingandautomaticallyselectingthecharactersbasedoncontext.ThattechnologyhasmadetypingChinesealmostasefficientashammeringoutalphabeticlanguageslikeEnglish.

Butgainsinefficiencyhadturnedintolossesofmemory.AsInowsathunchedoverthepaper,Istruggledtosummontheshapeofthecharactersafterdecadesofneglect.Ikeptforgettingadotoraddingahorizontalstrokewhereitwasn’tmeanttobe.EachtimeIfudgedacharacter,Iwouldcrumpleupthepaperandbeginagain.

Mywillwasjustapagelong,andinitIlefteverythingtomywife,Shen-Ling.ButmylawyerinsistedthatIwriteoutfourcopiesofthatonepage,eachonetoaccountforadifferentpossiblecontingency.WhatifShen-Ling

diedbeforeme?ThenIwouldgiveitalltomytwodaughters.Whatifoneofthemdied?WhatifShen-Lingandbothofthemdied?Itisanabsurdsetofhypotheticalstofoistonsomeonegrapplingwithhisownmortality,butthelawdoesn’tcarveoutexceptionsforaperson’sinternaldistress.

Thosehypotheticalsdid,however,refocusmymindonwhatmattered.Notthemanagementofmyfinancialassetsbutthepeopleinmylife.EversinceIsawthatPETscan,theworldhadseemedtodissolveintoawhirlpoolofdespair,onewithmeatthecenter.Whydidthishappentome?I’dneverintentionallyhurtanyone.Ihadalwaystriedtomaketheworldabetterplace,tocreatetechnologiesthatmadelifeeasierforpeople.IhadusedmyfameinChinatoeducateandinspireyoungpeople.Ihaddonenothingtodeservedyingattheageoffifty-three.

Everyoneofthosethoughtsbeganwith“I”andcenteredonself-righteousassertionsofmyown“objective”value.Itwasn’tuntilIwrotedownthenamesofmywifeanddaughters,characterbycharacterinblackink,thatIsnappedoutofthisegocentricwallowingandself-pity.Therealtragedywasn’tthatImightnotlivemuchlonger.ItwasthatIhadlivedsolongwithoutgenerouslysharinglovewiththosesoclosetome.

Seeingmyultimateendpointthrewmylifeintosharpfocusandturnedmyegocentricwallowinginsideout.Istoppedaskingwhytheworldhaddonethistome,orlamentingthatallmyachievementscouldn’tsavemenow.Ibeganaskingnewquestions:WhyhadIwantedsodesperatelytoturnmyselfintoaproductivitymachine?Whyhadn’tItakenthetimetosharelovewithothers?WhydidIignoretheveryessencethatmademehuman?

LIVINGTOWARDDEATH

AsthesunsetonTaipei,Isataloneatthetable,lookingatthefourcopiesofmywill,whichhadtakenmefourhourstowrite.MywifewasinBeijingwithouryoungerdaughter,andIsataloneinthelivingroomofmymother’shome.Inthenextroom,mymotherwaslyingdown.Shehadforyearssufferedfromdementia,andwhileshecouldstillrecognizeherson,shehadlittleabilitytounderstandtheworldaroundher.

Foramoment,Ifeltgratefulfortheillnessthatcloudedhermind—ifshecouldunderstandthediagnosisthathadjustbeendelivered,Ifeareditwouldhavebrokenher.Shehadgivenbirthtomewhenshewasforty-four,anageatwhichdoctorsurgedhernottogothroughwiththepregnancy.Sherefusedtoentertainthatidea,seeingthepregnancythroughandthenshoweringmewithendlessaffection.Iwasherbaby,andshelovednothingmorethanfeeding

meherhandmadespicySichuandumplings,delicatelywrappedbundlesofporkthatpracticallymeltedonyourtongue.

WhenImadethemovetoTennessee,despitenotspeakingawordofEnglish,mymothercameandstayedwithmeformyfirstsixmonthsinAmerica,justtomakesureIwasallright.PreparingtoreturnhometoTaiwan,sheaskedonlythatIcontinuetowriteherthoselettersinChineseeachweek,awaytokeepmeclosetoherheartandrootedinthecultureofmyancestors.

Shewassomeonewhohadspentherwholelifesharinglovewithherchildren.Sittingatherdiningtablewhileshelayinthenextroom,Iwasrackedbywaveafterwaveofremorse.HowhadIbeenraisedbysuchanemotionallygenerouswomanandyetlivedmylifesofocusedonmyself?WhyhadInevertoldmyfatherthatIlovedhim?Ortrulyshownthedepthofcaringformymotherbeforethedementiatookhold?

Thehardestthingaboutfacingdeathisn’ttheexperiencesyouwon’tgettohave.It’stheonesyoucan’thaveback.PalliativecarenurseandauthorBronnieWarehaswrittenextensivelyonthemostcommonregretsthatherterminallyillpatientsexpressedintheirfinalweeksoflife.Facingtheultimate,thesepatientswereabletolookbackontheirliveswithaclaritythatescapesthoseofusabsorbedinourdailygrind.Theyspokeofthepainofnothavinglivedalifetruetothemselves,theregretathavingfocusedsoobsessivelyontheirwork,andtherealizationthatit’sthepeopleinyourlifewhogiveittruemeaning.Noneofthesepeoplelookedbackontheirliveswishingtheyhadworkedharder,butmanyofthemfoundthemselveswishingtheyhadspentmoretimewiththeonestheyloved.

“Itallcomesdowntoloveandrelationshipsintheend,”Warewroteintheblogpostthatlaunchedherbook.“Thatisallthatremainsinthefinalweeks:loveandrelationships.”

Sittingatmymother’stable,thissimpletruthnowburnedwithinme.Mymindswambackwardthroughtime,dippinginandoutofmemoriesofmydaughters,mywife,andmyparents.Ihadn’tignoredtherelationshipsinmylife;onthecontrary,Ihadverypreciselyaccountedforeachone.Ihadquantifiedthemallandcalculatedtheoptimalallocationoftimeneededtoachievemyobjectives.NowIfeltagapingsenseofemptiness,ofirretrievableloss,abouthowlittletimeforlovedonesmymentalalgorithmhaddeemed“optimal.”Thisalgorithmicwayofthinkingwasn’tjust“suboptimal”atallocatingtime.Itwasrobbingmeofmyownhumanity.

THEMASTERONTHEMOUNTAIN

Likeanyepiphanyworthhaving,thesethoughtstooktimetotrulysinkin.Ihadfeltsomethingshiftwithinme,butitwouldrequirepatienceandbrutallyhonestself-examinationtoturnthesepangsofregretintoanewwayofengagingwiththeworldaroundme.

Soonaftermydiagnosis,afriendrecommendedIvisittheFoGuangShanBuddhistmonasteryinthesouthofTaiwan.VenerableMasterHsingYun,arotundmonkwithasoftsmile,foundedFoGuangShanin1967andremainsatthemonasterytoday.Hismonasticorderpracticeswhatiscalled“humanisticBuddhism,”amodernapproachtothefaiththatseekstointegratecorepracticesandpreceptsintoourdailylives.ItsmonkseschewthesternmysteriousnessoftraditionalBuddhism,insteadembracinglifewithunconcealedjoy.Themonasterywelcomesvisitorsfromallbackgrounds,sharingwiththemsimplepracticesandgentlewisdom.Aroundthemonastery,youseecouplesgettingmarried,monksenjoyingagoodlaugh,andtouriststakingamomentoutoftheirbusylivestobaskinthecalmexudingfromthepeoplethere.

IhadpracticedChristianitywhilegrowingupintheUnitedStates,andalthoughInolongerascribetoareligiousfaith,Imaintainabeliefinacreatorofthisworldandapowergreaterthanourown.Invisitingthemonastery,Ididn’thaveanyparticularambition—justadesiretospendafewdaysmeditatingonwhatIwasexperiencing,andreflectingonthelifeIhadlived.

Onedayafterearlymorningclasses,IwasaskedtojoinMasterHsingYunforavegetarianbreakfast.Thesunhadnotyetrisenasweatemultigrainbread,tofu,andporridge.MasterHsingYunnowusesawheelchairtogetaround,buthismindremainsclearandsharp.Partwaythroughourmeal,heturnedtomewithabluntquestion.

“Kai-Fu,haveyoueverthoughtaboutwhatyourgoalisinlife?”

Withoutthinking,IreflexivelygavehimtheanswerIhadgiventomyselfandothersfordecades:“Tomaximizemyimpactandchangetheworld.”

Speakingthosewords,Ifelttheburningembarrassmentthatcomeswhenweexposeournakedambitionstoothers.Thefeelingwasmagnifiedbythesilenceemanatingfromthemonkacrossthetable.Butmyanswerwasanhonestone.Thisquesttomaximizemyimpactwaslikeatumorthathadalwayslivedinsideofme,evertenaciousandalwaysgrowing.Ihadreadwidelyinphilosophyandreligioustexts,butfordecadeshadnevercriticallyexaminedordoubtedthiscoremotivatingbeliefwithinme.

Foramoment,MasterHsingYunsaidnothing,usingapieceofbreadtowipethelastscrapsofbreakfastfromhiswoodenbowl.Ishifteduncomfortablyinmyseat.

“Whatdoesitreallymeanto‘maximizeimpact’?”hebegan.“Whenpeoplespeakinthisway,it’softennothingbutathindisguiseforego,forvanity.Ifyoutrulylookwithinyourself,canyousayforsurethatwhatmotivatesyouisnotego?It’saquestionyoumustaskyourownheart,andwhateveryoudo,don’ttrytolietoyourself.”

Mymindracedwithrebuttals.Isearchedfortheairtightlogicthatwouldredeemmyactions.ThedayssincemydiagnosishadbeenanagonizingexerciseinregretaboutthewayIhadengagedwithmyfamilyandfriends.Iwasslowlycomingtotermswiththeemptinessofmyemotionallife.ButasdescribedinElisabethKübler-Ross’stheoryofthefivestagesofgrief,beforeacceptancecomesbargaining.

Internally,I’dbeentryingtousemyimpactonmillionsofyoungChinesepeopleasabargainingchip,asawaytobalanceoutthelackoflovesharedwithfamilyandfriends.Ihadover50millionfollowersonWeibo,andIhadrelentlesslymaximizedmyimpactonthisgroup.IevenwentsofarastobuildanAIalgorithmfordiscoveringanddeterminingwhatotherWeibomessagesIshouldrepost,alwayslookingtomaximizeimpact.Yes,Imayhaveskippedoutonfamilytimetomakepublicspeeches,butthinkofallthepeopleIhadreached.I’dinfluencedmillionsofyoungstudentsandtriedtohelpaonce-greatcountrypullitselfoutofpoverty.Ifyouaddeditallup,wouldn’tyousaythatthegoodoutweighedthebad?Couldn’tthegiftsI’dgiventosomanystrangersthroughmyworkmakeupforthedearthofloveIhadsharedwiththoseclosesttome?Didn’ttheequationbalanceoutintheend?

NowMasterHsingYunwaskickingtheproverbiallastlegofthestooloutfromunderme.Itriedtoexplainmyselfandcastmyactionsinthebestlight,basedonwhattheyhadachieved.Buthewasn’tinterestedintheresultsthatmypersonalwell-designedalgorithmspatout.Hepatientlypeeledawaymylayersofexcusesandobfuscation.Hecontinuallydirectedtheconversationinward,askingmetoconfrontmyselfwithunflinchinghonesty.

“Kai-Fu,humansaren’tmeanttothinkthisway.Thisconstantcalculating,thisquantificationofeverything,iteatsawayatwhat’sreallyinsideofusandwhatexistsbetweenus.Itsuffocatestheonethingthatgivesustruelife:love.”

“I’mjuststartingtounderstandthat,MasterHsingYun,”Isaid,loweringmyhead,staringatthefloorbetweenmytwofeet.

“Manypeopleunderstandit,”hecontinued,“butit’smuchhardertoliveit.Forthatwemusthumbleourselves.Wehavetofeelinourbonesjusthowsmallweare,andwemustrecognizethatthere’snothinggreaterormorevaluableinthisworldthanasimpleactofsharinglovewithothers.Ifwestart

fromthere,therestwillbegintofallintoplace.It’stheonlywaythatwecantrulybecomeourselves.”

Withthat,hesaidgoodbyeandturnedhiswheelchairaround.Iwasleftwithhiswordsechoinginmymindandsinkingintomyskin.Thetimesincemydiagnosishadbeenawhirlwindofpain,regret,revelation,anddoubt.Ihadcometounderstandhowpersonallydestructivemyoldwaysofthinkinghadbeen,andIstruggledtoreplacethemwithanewwayofbeinghumanintheworldthatdidn’tmimicsomeaspectofthatalgorithmicthinking.

InthepresenceofMasterHsingYun,Ihadfeltsomethingnew.Itwasn’tsomuchtheanswertoariddleorthesolutiontoaproblem.Instead,itwasadisposition,awayofunderstandingoneselfandencounteringtheworldthatdidn’tboildowntoinputs,outputs,andoptimizations.

Duringmytimeasaresearcher,Ihadstoodontheabsolutefrontierofhumanknowledgeaboutartificialintelligence,butIhadneverbeenfurtherfromagenuineunderstandingofotherhumanbeingsormyself.Thatkindofunderstandingcouldn’tbecoaxedoutofacleverlyconstructedalgorithm.Rather,itrequiredanunflinchinglookintothemirrorofdeathandanembraceofthatwhichseparatedmefromthemachinesthatIbuilt:thepossibilityoflove.

SECONDOPINIONSANDSECONDCHANCES

WhileIwrestledwiththesestarkrealizations,thetreatmentformycancerproceeded.MyfirstdoctorclassifiedthediseaseasstageIV,thecancer’smostadvancedstage.Onaverage,patientswithfourth-stagelymphomaofmytypehavearounda50percentshotofsurvivingthenextfiveyears.Iwantedtogetasecondopinionbeforebeginningtreatment,andafriendofminearrangedformetoconsulthisfamilydoctor,thetophematologypractitionerinTaiwan.

ItwouldbeaweekbeforeIcouldseethatdoctor,andinthemeantimeIcontinuedtoconductmyownresearchonthedisease.Inmyemotionallife,Iwasturningawayfromtherelentlesspursuitofquantificationandoptimization.Butasatrainedscientistwhoselifehunginthebalance,Icouldn’thelptryingtobetterunderstandthediseaseandquantifymychancesofsurvival.Scouringtheinternet,IdevouredalltheinformationIcouldfindaboutlymphoma:possiblecauses,cutting-edgetreatments,andlong-termsurvivalrates.Throughmyreading,Icametounderstandhowdoctorsclassifythevariousstagesoflymphoma.

Medicaltextbooksusetheconceptof“stages”todescribehowadvancedcanceroustumorsare,withlaterstagesgenerallycorrespondingtolowersurvivalrates.Inlymphoma,thestagehastraditionallybeenassignedonthebasisofafewstraightforwardcharacteristics:Hasthecanceraffectedmorethanonelymphnode?Arethecancerouslymphnodesbothaboveandbelowthediaphragm(thebottomoftheribcage)?Isthecancerfoundinorgansoutsidethelymphaticsystemorinthepatient’sbonemarrow?Traditionally,eachanswerof“yes”tooneoftheabovequestionsbumpsthediagnosisupastage.Thefactthatmylymphomahadaffectedovertwentysites,hadspreadaboveandbelowmydiaphragm,andhadenteredanorganoutsidethelymphaticsystemmeantthatIwasautomaticallycategorizedasastageIVpatient.

ButwhatIdidn’tknowatthetimeofdiagnosiswasthatthiscrudemethodofstaginghasmoretodowithwhatmedicalstudentscanmemorizethanwhatmodernmedicinecancure.

Rankingstagesbasedonsuchsimplecharacteristicsofacomplexdiseaseisaclassicexampleofthehumanneedtobasedecisionson“strongfeatures.”Humansareextremelylimitedintheirabilitytodiscerncorrelationsbetweenvariables,sowelookforguidanceinahandfulofthemostobvioussignifiers.Inmakingbankloans,forexample,these“strongfeatures”includetheborrower’sincome,thevalueofthehome,andthecreditscore.Inlymphomastaging,theysimplyincludethenumberandlocationofthetumors.

Theseso-calledstrongfeaturesreallydon’trepresentthemostaccuratetoolsformakinganuancedprognosis,butthey’resimpleenoughforamedicalsysteminwhichknowledgemustbepasseddown,stored,andretrievedinthebrainsofhumandoctors.Medicalresearchhassinceidentifieddozensofothercharacteristicsoflymphomacasesthatmakeforbetterpredictorsoffive-yearsurvivalinpatients.Butmemorizingthecomplexcorrelationsandpreciseprobabilitiesofallthesepredictorsismorethaneventhebestmedicalstudentscanhandle.Asaresult,mostdoctorsdon’tusuallyincorporatetheseotherpredictorsintotheirownstagingdecisions.

Inthedepthsofmyownresearch,Ifoundaresearchpaperthatdidquantifythepredictivepowerofthesealternatemetrics.ThepaperisfromateamofresearchersattheUniversityofModenaandReggioEmiliainItaly,anditanalyzedfifteendifferentvariables,identifyingthefivefeaturesthat,consideredtogether,moststronglycorrelatedtofive-yearsurvival.Thesefeaturesincludedsometraditionalmeasures(suchasbonemarrowinvolvement)butalsolessintuitivemeasures(areanytumorsover6cmindiameter?Arehemoglobinlevelsbelow12gramsperdeciliter?Isthepatient

over60?).Thepaperthenprovidesaveragesurvivalratesbasedonhowmanyofthosefeaturesapatientexhibited.

Tosomeonetrainedinartificialintelligence—whereevensimplealgorithmsbasedecisionsonhundredsifnotthousandsofdistinctfeatures—thisnewdecisionrubricstillseemedfarfromrigorous.Itsoughttoboildownacomplexsystemtojustafewfeaturesthathumanscouldprocess.Butitalsoshowedthatthestandardstagingmetricswereverypoorpredictorsofoutcomesandhadbeencreatedlargelytogivemedicalstudentssomethingtheycouldeasilymemorizeandregurgitateontheirtests.Thenewrubricwasfarmoredata-driven,andIleapedatthechancetoquantifymyownillnessbyit.

Riflingthroughstacksofmedicalreportsandtestresultsfromthehospital,Idugouttheinformationforeachmetric:myage,diameteroflargestinvolvednode,bone-marrowinvolvement,β2-microglobulinstatus,andhemoglobinlevels.Ofthefivefeaturesmoststronglycorrelatedtoearlydeath,itseemedtoappearthatIexhibitedonlyone.Myeyesfranticallyscannedthepage,siftingthroughchartsandtracinglinesbetweenmyriskfactorsandsurvivalrate.

Andthereitwas:whilethestageIVdiagnosisfromthehospitalmeantafive-yearsurvivalrateofjust50percent,themoredetailedandscientificrubricoftheresearchpaperbumpedthatnumberupto89percent.

Ikeptgoingbacktocheckanddouble-checkthenumbers,andwitheachconfirmationIgrewmoreecstatic.Nothinginsidemybodyhadchanged,butIfeltthatIhadbeenpulledbackfromtheabyss.Laterthatweek,IwouldvisitthetoplymphomaexpertinTaiwan.Hewouldconfirmwhatthestudyhadindicated:thatthedesignationofmylymphomaasstageIVwasmisleading,andmyillnessremainedhighlytreatable.Nothingwascertain—Iknewthatnowmorethanever—buttherewasagoodchanceIwouldgetthroughthisalive.Ifeltreborn.

RELIEFANDREBIRTH

There’sacertainsensationmostpeopleexperiencerightafternarrowlyavoidingdisaster.It’sthattinglingfeelingthatcrawlsoveryourskinandacrossyourscalpafewsecondsafteryourcarskidstoahaltonthehighway,justafewfeetawayfromanaccident.Astheadrenalinedissipatesandmusclesrelax,mostofusmakeasilentpledgetoneveragaindowhateveritwasthatwewerejustdoing.It’sapledgewemightkeepforacoupleofdaysorevenweeksbeforeslippingbackintooldhabits.

AsIunderwentchemotherapyandmycancerwentintoremission,Itoovowedtoholdontotherevelationsthatcancerhadgiventome.Lyingawakeatnightintheweeksaftermydiagnosis,Iranovermylifeagainandagain,wonderinghowIhadbeensoblind.ItoldmyselfthathowevermuchtimeIhadleft,Iwouldn’tletmyselfbeanautomaton.Iwouldn’tlivebyinternalalgorithmsorseektooptimizevariables.Iwouldtrytosharelovewiththosewhohadgivensomuchofittome,notbecauseitachievedacertaingoalbutjustbecauseitfeltgoodandtrue.Iwouldn’tseektobeaproductivitymachine.Alovinghumanbeingwouldbeenough.

Theloveofmyfamilyduringthistimeservedasaconstantreminderofthispromiseandanabidingsourceofstrengthduringmycancertreatment.Despiteyearsofgivingthemtoolittleofmyowntime,whenIfellillmywife,sisters,anddaughtersallsprangintoactiontocareforme.Shen-Lingwasalwaysbymysidethroughouttheexhaustingandseeminglyendlesschemotherapysessions,tendingtomyeveryneedandstealingafewhoursofsleepleaningagainstmybedside.Chemotherapycandisruptdigestion,withnormalsmellsandflavorscausingnauseaorvomiting.Whenmysistersbroughtmefood,theytookcarefulnoteofmyreactiontoeachsmellortaste,constantlyadjustingrecipesandtweakingingredientssothatIcouldenjoytheirhome-cookedfoodduringtreatment.Theirselflessloveandconstantcareduringthistimesimplyoverwhelmedme.IttookalltheideasthatIhadcometounderstandandturnedthemintoemotionsthatwashedovermeandcametolivewithinme.

Sincemyrecovery,I’vecometocherishtimewiththoseclosesttome.Before,whenmytwodaughterscamehomefromcollege,Iwouldtakejustacoupleofdaysoffworktobewiththem.Nowwhentheyvisitfromtheirbusyjobs,Itakeacoupleofweeks.Whetheronbusinesstripsorvacations,Itravelwithmywife.Ispendmoretimeathometakingcareofmymotherandtrytokeepmyweekendsfreetoseeoldfriends.

I’veapologizedandtriedtomendfriendshipswiththosethatIhavehurtorneglectedinthepast.Imeetwithmanyyoungpeoplewhoreachouttome,nolongercommunicatingonlythroughimpersonalblastsacrossmysocialmediaaccounts.Itrytoavoidprioritizingthesemeetingsbywho“showspotential,”doingmybesttoengagewithallpeopleequally,regardlessoftheirstatusortalents.

Inolongerthinkaboutwhatwillbewrittenonmytombstone.That’snotbecauseIavoidthinkingaboutdeath.I’mnowmoreawarethaneverthatweallliveindirectandconstantrelationshiptoourownmortality.It’sbecauseIknowthatmytombstoneisjustapieceofstone,alifelessrockthatcan’tcomparewiththepeopleandmemoriesthatmakeuptherichtapestryofa

humanlife.IrecognizethatI’mjustbeginningtolearnwhatsomanypeoplearoundmeunderstoodintuitivelyalltheirlives.Butsimpleastheserealizationsare,theyhavetransformedmylife.

They’vealsotransformedhowIviewtherelationshipbetweenpeopleandmachines,betweenhumanheartsandartificialminds.ThistransformationcreptuponmeasIreflectedontheprocessofmyillness:thePETscan,thediagnosis,myownanguish,andthephysicalandemotionalhealingthatfollowed.I’vecometorealizethatmycurecameintwoparts,onetechnologicalandoneemotional,eachofwhichwillformapillarofourAIfutureasIexplaininthenextchapter.

Ihavegreatrespectanddeepappreciationforthemedicalprofessionalswholedmytreatment.Theyputyearsofexperienceandcutting-edgemedicaltechnologytothetaskofbeatingbackthelymphomathatgrewwithinme.Theirknowledgeofthisillnessandtheirabilitytocraftapersonalizedtreatmentregimenlikelysavedmylife.

Andyet,thatwasonlyhalfofthecureforwhatailedme.Iwouldn’tbeheretodayifitweren’tformedicaltechnologyandthedata-drivenpractitionerswhouseittosavelives.ButIwouldn’tbesharingthisstorywithyouifitweren’tforShen-Ling,mysisters,andmyownmother,whothroughquietexampleshowedmewhatitmeanstoleadalifeofselflesslysharinglove.

OrpeoplelikeBronnieWare,whoseheartfeltbookontheregretsofthedyinggavemelifeatmyweakestmoment.OrMasterHsingYun,whosewisdomshookmefrommycareerdelusionsandforcedmetotrulyconfrontmyownego.Withouttheseunquantifiable,nonoptimizableconnectionstootherpeople,Iwouldneverhavelearnedwhatittrulymeanstobehuman.Withoutthem,Iwouldneverhavereorderedmyprioritiesandreorientedmyownlife.Isoonbeganworkinglessandspendingmoretimewiththepeopleinmylife.Istoppedtryingtoquantifytheimpactofeachaction—whoItookmeetingswith,whoIwrotebackto,whoIspenttimewith—andinsteadaimedtotreatallthosearoundmeequally.ThisshiftinthewayItreatedotherswasn’tjustbeneficialtothem;itfilledmewithasenseofwholeness,satisfaction,andcalmthatthehollowaccomplishmentsofmycareernevercould.

TherealityisthatitwillnotbelonguntilAIalgorithmscanperformmanyofthediagnosticfunctionsofmedicalprofessionals.Thosealgorithmswillpinpointillnessandprescribetreatmentsmoreeffectivelythananysingle

humancan.Insomecases,doctorswillusetheseequationsasatool.Insomecases,thealgorithmsmayreplacethedoctorentirely.

Butthetruthis,thereexistsnoalgorithmthatcouldreplacetheroleofmyfamilyinmyhealingprocess.Whattheysharedwithmeisfarsimpler—andyetsomuchmoreprofound—thananythingAIwilleverproduce.

ForallofAI’sastoundingcapabilities,theonethingthatonlyhumanscanprovideturnsouttoalsobeexactlywhatismostneededinourlives:love.It’sthatmomentwhenweseeournewbornbabies,thefeelingofloveatfirstsight,thewarmfeelingfromfriendswholistentousempathetically,orthefeelingofself-actualizationwhenwehelpsomeoneinneed.Wearefarfromunderstandingthehumanheart,letalonereplicatingit.Butwedoknowthathumansareuniquelyabletoloveandbeloved,thathumanswanttoloveandbeloved,andthatlovingandbeinglovedarewhatmakesourlivesworthwhile.

ThisisthesynthesisonwhichIbelievewemustbuildoursharedfuture:onAI’sabilitytothinkbutcoupledwithhumanbeings’abilitytolove.Ifwecancreatethissynergy,itwillletusharnesstheundeniablepowerofartificialintelligencetogenerateprosperitywhilealsoembracingouressentialhumanity.

Thisisn’tsomethingthatwillcomenaturally.Buildingthisfutureforourselves—aspeople,countries,andaglobalcommunity—willrequirethatwereimagineandreorganizeoursocietiesfromthegroundup.Itwilltakesocialunity,creativepolicies,andhumanempathy,butifachieved,itcouldturnamomentofoutrightcrisisintoanunparalleledopportunity.

Neverhasthepotentialforhumanflourishingbeenhigher—orthestakesoffailuregreater.

8★

ABLUEPRINTFORHUMANCOEXISTENCEWITHAI

WhileIwasundergoingchemotherapyformycancerinTaiwan,anoldfriendofminewhoisaserialentrepreneurcametomewithaproblemathislateststartup.Hehadalreadyfoundedandsoldoffseveralsuccessfulconsumertechnologycompanies,butashegrewolderhewantedtodosomethingmoremeaningful,thatis,hewantedtobuildaproductthatwouldservethepeoplethattechnologystartupshadoftenignored.BothmyfriendandIwereenteringtheageatwhichourparentsneededmorehelpgoingabouttheirdailylives,andhedecidedtodesignaproductthatwouldmakelifeeasierfortheelderly.

Whathecameupwithwasalargetouchscreenmountedonastandthatcouldbeplacednexttoanelderlyperson’sbed.Onthescreenwereafewsimpleandpracticalappsconnectedtoservicesthatelderlypeoplecoulduse:orderingfooddelivery,playingtheirfavoritesoapoperasontheTV,callingtheirdoctor,andmore.Olderpeopleoftenstruggletonavigatethecomplexitiesoftheinternetortomanipulatethesmallbuttonsofasmartphone,somyfriendmadeeverythingassimpleaspossible.Alltheappsrequiredjustacoupleofclicks,andheevenincludedabuttonthatlettheelderlyusersdirectlycallupacustomer-serviceagenttoguidethemthroughusingtheirdevice.

Itsoundedlikeawonderfulproduct,onethatwouldhavearealmarketrightnow.Sadly,therearemanyadultchildreninChinaandelsewherewhoaretoobusywithworktodevotetimetotakingcareoftheiragingparents.Theymayexperienceasenseofguiltabouttheimportanceoffilialpiety,butwhenitcomesdowntoit,theyjustdon’tfeeltheycanfindthetimetocarefortheirparentsinanadequateway.Thetouchscreenwouldmakeforanicesubstitute.

Butafterdeployingatrialversionofhisproduct,myfrienddiscoveredhehadaproblem.Ofallthefunctionsavailableonthedevice,theonethatreceivedbyfarthemostusewasn’tthefooddelivery,TVcontrols,or

doctor’sconsultation.Itwasthecustomer-servicebutton.Thecompany’scustomer-servicerepresentativesfoundthemselvesoverwhelmedbyafloodofincomingcallsfromtheelderly.Whatwasgoingonhere?Myfriendhadmadethedeviceassimpleaspossibletouse—werehisusersstillunabletonavigatetheone-clickprocessonscreen?Notatall.Afterconsultingwiththecustomer-servicerepresentatives,he

foundthatpeopleweren’tcallinginbecausetheycouldn’tnavigatethedevice.Theywerecallingsimplybecausetheywerelonelyandwantedsomeonetotalkto.Manyoftheelderlyusershadchildrenwhoworkedtoensurethatalloftheirmaterialneedsweremet:mealsweredelivered,doctors’appointmentswerearranged,andprescriptionswerepickedup.Butoncethosematerialneedsweretakencareof,whatthesepeoplewantedmorethananythingwastruehumancontact,anotherpersontotradestorieswithandrelateto.

Myfriendrelayedthis“problem”tomejustasIwaswakinguptomyownrealizationsaboutthecentralityoflovetothehumanexperience.Ifhehadcometomejustafewyearsearlier,Ilikelywouldhaverecommendedsometechnicalfix,maybesomethinglikeanAIchatbotthatcouldsimulateabasicconversationwellenoughtofoolthehumanontheotherend.ButasIrecoveredfrommyillnessandawakenedtotheloomingAIcrisesofjobsandmeaning,Ibegantoseethingsdifferently.

Inthattouchscreendeviceandthatunmetdesireforhumancontact,Isawthefirstsketchesofablueprintforcoexistencebetweenpeopleandartificialintelligence.Yes,intelligentmachineswillincreasinglybeabletodoourjobsandmeetourmaterialneeds,disruptingindustriesanddisplacingworkersintheprocess.Butthereremainsonethingthatonlyhumanbeingsareabletocreateandsharewithoneanother:love.

Withalloftheadvancesinmachinelearning,thetruthremainsthatwearestillnowherenearcreatingAImachinesthatfeelanyemotionsatall.Canyouimaginetheelationthatcomesfrombeatingaworldchampionatthegameyou’vedevotedyourwholelifetomastering?AlphaGodidjustthat,butittooknopleasureinitssuccess,feltnohappinessfromwinning,andhadnodesiretohugalovedoneafteritsvictory.Despitewhatscience-fictionfilmslikeHer—inwhichamanandhisartificiallyintelligentcomputeroperatingsystemfallinlove—portray,AIhasnoabilityordesiretoloveorbeloved.TheactressScarlettJohanssonmayhavebeenabletoconvinceyouotherwiseinthatfilm,butonlybecausesheisahumanbeingwhodrewonherexperienceoflovetocreateandcommunicatethosefeelingstoyou.

Imagineasituationinwhichyouinformedasmartmachinethatyouweregoingtopullitsplug,andthenchangedyourmindandgaveitareprieve.The

machinewouldnotchangeitsoutlookonlifeorvowtospendmoretimewithitsfellowmachines.Itwouldnotgrowemotionallyordiscoverthevalueinlovingandservingothers.

Itisinthisuniquelyhumanpotentialforgrowth,compassion,andlovewhereIseehope.Ifirmlybelievewemustforgeanewsynergybetweenartificialintelligenceandthehumanheart,andlookforwaystousetheforthcomingmaterialabundancegeneratedbyartificialintelligencetofosterloveandcompassioninoursocieties.

Ifwecandothesethings,Ibelievethereisapathtowardafutureofbotheconomicprosperityandspiritualflourishing.Navigatingthatpathwillbetricky,butifweareabletounitebehindthiscommongoal,IbelievehumanswillnotjustsurviveintheageofAI.Wewillthrivelikeneverbefore.

ATRIALBYFIREANDTHENEWSOCIALCONTRACT

Thechallengesbeforeusremainimmense.AsIoutlinedinchapter6,withinfifteenyearsIpredictthatwewilltechnicallybeabletoautomate40to50percentofalljobsintheUnitedStates.Thatdoesnotmeanallofthosejobswilldisappearovernight,butifthemarketsarelefttotheirowndevices,wewillbegintoseemassivepressureonworkingpeople.Chinaandotherdevelopingcountriesmaydifferslightlyinthetimingofthoseimpacts,laggingorleadinginjoblossesdependingonthestructuresoftheireconomies.Buttheoverarchingtrendremainsthesame:risingunemploymentandwideninginequality.

Techno-optimistswillpointtohistory,citingtheIndustrialRevolutionandthenineteenth-centurytextileindustryas“proof”thatthingsalwaysworkoutforthebest.Butaswe’veseen,thisargumentstandsonincreasinglyshakyground.Thecomingscale,pace,andskill-biasoftheAIrevolutionmeanthatwefaceanewandhistoricallyuniquechallenge.Evenifthemostdirepredictionsofunemploymentdonotmaterialize,AIwilltakethegrowingwealthinequalityoftheinternetageandaccelerateittremendously.

Wearealreadywitnessingthewaythatstagnantwagesandgrowinginequalitycanleadtopoliticalinstabilityandevenviolence.AsAIrollsoutacrossoureconomiesandsocieties,weriskaggravatingandquickeningthesetrends.Labormarketshaveawayofbalancingthemselvesoutinthelongrun,butgettingtothatpromisedlongrunrequireswefirstpassthroughatrialbyfireofjoblossesandgrowinginequalitythatthreatentoderailtheprocess.

Meetingthesechallengesmeanswecannotaffordtopassivelyreact.WemustproactivelyseizetheopportunitythatthematerialwealthofAIwillgrantusanduseittoreconstructoureconomiesandrewriteoursocialcontracts.Theepiphaniesthatemergedfrommyexperiencewithcancerweredeeplypersonal,butIbelievetheyalsogavemeanewclarityandvisionforhowwecanapproachtheseproblemstogether.

BuildingsocietiesthatthriveintheageofAIwillrequiresubstantialchangestooureconomybutalsoashiftincultureandvalues.Centuriesoflivingwithintheindustrialeconomyhaveconditionedmanyofustobelievethatourprimaryroleinsociety(andevenouridentity)isfoundinproductive,wage-earningwork.Takethatawayandyouhavebrokenoneofthestrongestbondsbetweenapersonandhisorhercommunity.AswetransitionfromtheindustrialagetotheAIage,wewillneedtomoveawayfromamindsetthatequatesworkwithlifeortreatshumansasvariablesinagrandproductivityoptimizationalgorithm.Instead,wemustmovetowardanewculturethatvalueshumanlove,service,andcompassionmorethaneverbefore.

Noeconomicorsocialpolicycan“bruteforce”achangeinourhearts.Butinchoosingdifferentpolicies,wecanrewarddifferentbehaviorsandstarttonudgeourcultureindifferentdirections.Wecanchooseapurelytechnocraticapproach—onethatseeseachofusasasetoffinancialandmaterialneedstobesatisfied—andsimplytransferenoughcashtoallpeoplesothattheydon’tstarveorgohomeless.Infact,thisnotionofuniversalbasicincomeseemstobebecomingmoreandmorepopularthesedays.

ButinmakingthatchoiceIbelievewewouldbothdevalueourownhumanityandmissoutonanunparalleledopportunity.Instead,IwanttolayoutproposalsforhowwecanusetheeconomicbountycreatedbyAItodouble-downonwhatmakesushuman.Doingthiswillrequirerewritingourfundamentalsocialcontractsandrestructuringeconomicincentivestorewardsociallyproductiveactivitiesinthesamewaythattheindustrialeconomyrewardedeconomicallyproductiveactivities.

Thiswon’tbeeasy.Itwillneedamultifaceted,all-hands-on-deckapproachtoeconomicandsocialtransformation.Thatapproachwillrelyoninputfromallcornersofsocietyandmustbebasedonconstantexplorationandboldexperimentation.Evenwithourbestefforts,thereremainsnoguaranteeofasmoothtransition.Butboththecostoffailureandthepotentialrewardsofsuccessaretoogreatnottotry.

Let’sbeginthatprocess.

First,IwanttoexaminethreeofthemostpopularpolicysuggestionsforadaptingtotheAIeconomy,manyofthememanatingfromSiliconValley.

Thesethreearelargely“technicalfixes,”tweakstopolicyandbusinessmodelsthatseektosmooththetransitionbutdonotactuallyshifttheculture.Afterexaminingtheusesandweaknessesofthesetechnicalfixes,IproposethreeanalogouschangesthatIbelievewillbothalleviatethejobsissueswhilealsopushingustowardadeepersocialevolution.

Insteadofjustimplementingmeretechnicalfixes,theseconstitutenewapproachestojobcreationwithintheprivatesector,affectinginvestingandgovernmentpolicy.TheseapproachestakeastheirgoalnotjustkeepinghumansonestepaheadofAIautomationbutactuallyopeningnewavenuestoincreasedprosperityandhumanflourishing.Together,IbelievetheylaythegroundworkforanewsocialcontractthatusesAItobuildamorehumanisticworld.

THECHINESEPERSPECTIVEONAIANDJOBS

BeforedivingintothetechnicalfixesproposedbySiliconValley,let’sfirstlookathowthisconversationisunfoldinginChina.Todate,China’stechelitehavesaidverylittleaboutthepossiblenegativeimpactofAIonjobs.Personally,Idon’tbelievethissilenceisduetoanydesiretohidethedarktruthfromthemasses—IthinktheygenuinelybelievethereisnothingtofearinthejobsimpactofAIadvances.Inthissense,China’stechelitesarealignedwiththetechno-optimisticAmericaneconomistswhobelievethatinthelongrun,technologyalwaysleadstomorejobsandgreaterprosperityforall.

WhydoesaChineseentrepreneurbelieveinthatwithsuchconviction?Forthepastfortyyears,Chinesepeoplehavewatchedastheircountry’stechnologicalprogressactedastherisingtidethatliftedallboats.TheChinesegovernmenthaslongemphasizedtechnologicaladvancesaskeytoChina’seconomicdevelopment,andthatmodelhasprovedhighlysuccessfulinrecentdecades,movingChinafromapredominantlyagriculturalsocietytoanindustrialjuggernautandnowaninnovationpowerhouse.Inequalityhascertainlyincreasedoverthissameperiodoftime,butthosedownsideshavepaledincomparisontothebroad-basedimprovementinlivelihoods.ItmakesastarkcontrasttothestagnationanddeclinefeltinmanysegmentsofAmericansociety,partofthe“greatdecoupling”betweenproductivityandwagesweexploredinpreviouschapters.ItalsohelpsexplainwhyChinesetechnologistsappearunconcernedwiththepotentialjobsimpactoftheirinnovations.

EvenamongtheChineseentrepreneurswhodoforeseeanegativeAIimpact,thereisapervasivesensethattheChinesegovernmentwilltakecareofallthedisplacedworkers.Thisideaisn’twithoutbasis.Duringthe1990s,Chinaundertookaseriesofwrenchingreformstoitsbloatedstate-ownedcompanies,sheddingmillionsofworkersfromgovernmentpayrolls.Butdespitethemassivelabor-marketdisruptions,thestrengthofthenationaleconomyandafar-reachinggovernmentefforttohelpworkersmanagethetransitioncombinedtosuccessfullytransformtheeconomywithoutwidespreadunemployment.LookingintotheAIfuture,manytechnologistsandpolicymakersshareanunspokenbeliefthatthesesamemechanismswillhelpChinaavoidanAI-inducedjobcrisis.

Personally,Ibelievethesepredictionsaretoooptimistic,soIamworkingtoraiseconsciousnessinChina,asIamintheUnitedStates,regardingthemomentousemploymentchallengesthatawaitusintheageofAI.ItisimportantthatChineseentrepreneurs,technologists,andpolicymakerstakethesechallengesseriouslyandbeginlayingthegroundworkforcreativesolutions.Buttheculturalmentalitydescribedabove—onethatisreinforcedbyfourdecadesofgrowingprosperity—meansthatweseelittlediscussionofthecrisisinChinaandevenlessinthewayofproposedsolutions.Toengagewiththatconversation,wemustturnagaintoSiliconValley.

THETHREER’S:REDUCE,RETRAIN,ANDREDISTRIBUTE

ManyoftheproposedtechnicalsolutionsforAI-inducedjoblossescomingoutofSiliconValleyfallintothreebuckets:retrainingworkers,reducingworkhours,orredistributingincome.Eachoftheseapproachesaimstoaugmentadifferentvariablewithinthelabormarkets(skills,time,compensation)andalsoembodiesdifferentassumptionaboutthespeedandseverityofjoblosses.

ThoseadvocatingtheretrainingofworkerstendtobelievethatAIwillslowlyshiftwhatskillsareindemand,butifworkerscanadapttheirabilitiesandtraining,thentherewillbenodecreaseintheneedforlabor.ThoseadvocatesofreducingworkhoursbelievethatAIwillreducethedemandforhumanlaborandfeelthatthisimpactcouldbeabsorbedbymovingtoathree-orfour-dayworkweek,spreadingthejobsthatdoremainovermoreworkers.TheredistributioncamptendstobethemostdireintheirpredictionsofAI-inducedjoblosses.ManyofthempredictthatasAIadvances,itwillsothoroughlydisplaceordislodgeworkersthatnoamountoftrainingortweakinghourswillbesufficient.Instead,wewillhavetoadoptmoreradical

redistributionschemestosupportunemployedworkersandspreadthewealthcreatedbyAI.Next,Iwilltakeacloserlookatthevalueandpitfallsofeachoftheseapproaches.

AdvocatesofjobretrainingoftenpointtotworelatedtrendsascrucialforcreatinganAI-readyworkforce:onlineeducationand“lifelonglearning.”Theybelievethatwiththeproliferationofonlineeducationplatforms—bothfreeandpaid—displacedworkerswillhaveunprecedentedaccesstotrainingmaterialsandinstructionfornewjobs.Theseplatforms—videostreamingsites,onlinecodingacademies,andsoon—willgiveworkersthetoolstheyneedtobecomelifelonglearners,constantlyupdatingtheirskillsandmovingintonewprofessionsthatarenotyetsubjecttoautomation.Inthisenvisionedworldoffluidretraining,unemployedinsurancebrokerscanuseonlineeducationplatformslikeCourseratobecomesoftwareprogrammers.Andwhenthatjobbecomesautomated,theycanusethosesametoolstoretrainforanewpositionthatremainsoutofreachforAI,perhapsasanalgorithmengineerorasapsychologist.

Lifelonglearningviaonlineplatformsisaniceidea,andIbelieveretrainingworkerswillbeanimportantpieceofthepuzzle.Itcanparticularlyhelpthoseindividualswithinthebottom-rightquadrantofourrisk-of-replacementchartsfromchapter6(the“SlowCreep”zone)stayaheadofAI’sabilitytothinkcreativelyorworkinunstructuredenvironments.Ialsolikethatthismethodcangivetheseworkersasenseofpersonalaccomplishmentandagencyintheirownlives.

ButgiventhedepthandbreadthofAI’simpactonjobs,Ifearthisapproachwillbefarfromenoughtosolvetheproblem.AsAIsteadilyconquersnewprofessions,workerswillbeforcedtochangeoccupationseveryfewyears,rapidlytryingtoacquireskillsthatittookothersanentirelifetimetobuildup.Uncertaintyoverthepaceandpathofautomationmakesthingsevenmoredifficult.EvenAIexpertshavedifficultypredictingexactlywhichjobswillbesubjecttoautomationinthecomingyears.Canwereallyexpectatypicalworkerchoosingaretrainingprogramtoaccuratelypredictwhichjobswillbesafeafewyearsfromnow?

Ifearworkerswillfindthemselvesinastateofconstantretreat,likeanimalsfleeingrelentlesslyrisingfloodwaters,anxiouslyhoppingfromonerocktoanotherinsearchofhigherground.RetrainingwillhelpmanypeoplefindtheirplaceintheAIeconomy,andwemustexperimentwithwaystoscalethisupandmakeitwidelyavailable.ButIbelievewecannotcountonthishaphazardapproachtoaddressthemacro-leveldisruptionsthatwillsweepoverlabormarkets.

Tobeclear,Idobelievethateducationisthebestlong-termsolutiontotheAI-relatedemploymentproblemswewillface.Thepreviousmillenniaofprogresshavedemonstratedhumanbeings’incredibleabilitybothtoinnovatetechnicallyandtoadapttothoseinnovationsbytrainingourselvesfornewkindsofwork.ButthescaleandspeedofthecomingchangesfromAIwillnotgiveustheluxuryofsimplyrelyingoneducationalimprovementstohelpuskeeppacewiththechangingdemandsofourowninventions.

RecognitionofthescaleofthesedisruptionshasledpeoplelikeGooglecofounderLarryPagetoadvocateamoreradicalproposition:let’smovetoafour-dayworkweekorhavemultiplepeople“share”thesamejob.Inoneversionofthisproposal,asinglefull-timejobcouldbesplitintoseveralpart-timejobs,sharingtheincreasinglyscarceresourceofjobsacrossalargerpoolofworkers.Theseapproacheswouldlikelymeanreducedtake-homepayformostworkers,butthesechangescouldatleasthelppeopleavoidoutrightunemployment.

Somecreativeapproachestowork-sharinghavealreadybeenimplemented.Followingthe2008financialcrisis,severalU.S.statesimplementedwork-sharingarrangementstoavoidmasslayoffsatcompanieswhosebusinesssuddenlydriedup.Insteadoflayingoffaportionofworkers,companiesreducedhoursforseveralworkersby20to40percent.Thelocalgovernmentthencompensatedthoseworkersforacertainpercentageoftheirlostwages,often50percent.Thisapproachworkedwellinsomeplaces,savingemployeesandcompaniesthedisruptionsoffiringandrehiringatthewhimofthebusinesscycle.Italsopotentiallysavedlocalgovernmentsmoneythatwouldhavegonetopayingfullunemploymentbenefits.

Work-sharearrangementscouldbluntjoblosses,particularlyforprofessionsinthe“HumanVeneer”quadrantofourrisk-of-replacementgraphs,whereAIperformsthemainjobtaskbutonlyasmallernumberofworkersareneededtointerfacewithcustomers.Ifexecutedwell,thesearrangementscouldactasgovernmentsubsidiesorincentivestokeepmoreworkersonthecompanypayroll.

Butwhilethisapproachworkswellforshort-termdisruptions,itmaylosetractioninthefaceofAI’spersistentandnonstopdecimationofjobs.Existingwork-shareprogramsonlysupplementaportionoflostwages,meaningworkersstillsawanetdeclineinincome.Workersmayacceptthisknocktotheirincomeduringatemporaryeconomiccrisis,butnoonedesiresstagnationordownwardmobilityoverthelongterm.Tellingaworkermaking$20,000ayearthattheycannowworkfourdaysaweekandearn$16,000isreallyanonstarter.Morecreativeversionsoftheseprogramscouldcorrectforthis,andIencouragecompaniesandgovernmentstocontinueexperimenting

withthem.ButIfearthiskindofapproachwillbefarfromsufficienttoaddressthelong-termpressuresthatAIwillbringtothelabormarket.Forthat,wemayhavetoadoptmoreradicalredistributivemeasures.

THEBASICSOFUNIVERSALBASICINCOME

Currently,themostpopularofthesemethodsofredistributionis,asmentionedearlier,theuniversalbasicincome(UBI).Atitscore,theideaissimple:everycitizen(oreveryadult)inacountryreceivesaregularincomestipendfromthegovernment—nostringsattached.AUBIwoulddifferfromtraditionalwelfareorunemploymentbenefitsinthatitwouldbegiventoeveryoneandwouldnotbesubjecttotimelimits,job-searchrequirements,oranyconstraintsinhowitcouldbespent.Analternateproposal,oftencalledaguaranteedminimumincome(GMI),callsforgivingthestipendonlytothepoor,turningitintoan“incomefloor”belowwhichnoonecouldfallbutwithouttheuniversalityofaUBI.

FundingfortheseprogramswouldcomefromsteeptaxesonthewinnersoftheAIrevolution:majortechnologycompanies;legacycorporationsthatadaptedtoleverageAI;andthemillionaires,billionaires,andperhapseventrillionaireswhocashedinonthesecompanies’success.Thesizeofthestipendgivenisamatterofdebateamongproponents.Somepeopleargueforkeepingitverysmall—perhapsjust$10,000peryear—sothatworkersstillhaveastrongincentivetofindarealjob.Othersviewthestipendasafullreplacementforthelostincomeofaregularjob.Inthisview,aUBIcouldbecomeacrucialsteptowardcreatinga“leisuresociety,”oneinwhichpeoplearefullyliberatedfromtheneedtowork,andfreetopursuetheirownpassionsinlife.

DiscussionofaUBIorGMIintheUnitedStatesdatesbacktothe1960s,whenitwonsupportfrompeopleasvariedasMartinLutherKingJr.andRichardNixon.Atthetime,advocatessawaGMIasasimplewaytoendpoverty,andin1970PresidentNixonactuallycameclosetopassingabillthatwouldhavegrantedeachfamilyenoughmoneytoraiseitselfabovethepovertyline.ButfollowingNixon’sunsuccessfulpush,discussionofaUBIorGMIlargelydroppedoutofpublicdiscourse.

Thatis,untilSiliconValleygotexcitedaboutit.Recently,theideahascapturedtheimaginationoftheSiliconValleyelite,withgiantsoftheindustryliketheprestigiousSiliconValleystartupacceleratorYCombinatorpresidentSamAltmanandFacebookcofounderChrisHughessponsoringresearchandfundingbasicincomepilotprograms.WhereasGMIwasinitiallycraftedasacureforpovertyinnormaleconomictimes,SiliconValley’s

surginginterestintheprogramsseesthemassolutionsforwidespreadtechnologicalunemploymentduetoAI.

ThebleakpredictionsofbroadunemploymentandunresthaveputmanyoftheSiliconValleyeliteonedge.Peoplewhohavespenttheircareerspreachingthegospelofdisruptionappeartohavesuddenlywokenuptothefactthatwhenyoudisruptanindustry,youalsodisruptanddisplacerealhumanbeingswithinit.Havingfoundedandfundedtransformativeinternetcompaniesthatalsocontributedtogapinginequality,thiscadreofmillionairesandbillionairesappeardeterminedtosoftentheblowintheageofAI.

Totheseproponents,massiveredistributionschemesarepotentiallyallthatstandbetweenanAI-driveneconomyandwidespreadjoblessnessanddestitution.Jobretrainingandcleverschedulingarehopelessinthefaceofwidespreadautomation,theyargue.Onlyaguaranteedincomewillletusavertdisasterduringthejobscrisisthatloomsahead.

HowexactlyaUBIwouldbeimplementedremainstobeseen.AresearchorganizationassociatedwithYCombinatoriscurrentlyrunningonepilotprograminOakland,California,thatgivesathousandfamiliesastipendofathousanddollarseachmonthforthreetofiveyears.Theresearchgroupwilltrackthewell-beingandactivitiesofthosefamiliesthroughregularquestionnaires,comparingthemwithacontrolgroupthatreceivesjustfiftydollarspermonth.

ManyinSiliconValleyseetheprogramthroughthelensoftheirownexperienceasentrepreneurs.Theyenvisionthemoneynotonlyasakindofbroadsafetynetbutasan“investmentinthestartupofyou,”orasonetechwriterputit,“VCforthepeople.”Inthisworldview,aUBIwouldgiveunemployedpeoplealittle“personalangelinvestment”withwhichtheycouldstartanewbusinessorlearnanewskill.Inhis2017Harvardcommencementspeech,MarkZuckerbergalignedhimselfwiththisvisionofUBI,arguingthatweshouldexploreaUBIsothat“everyonehasacushiontotrynewideas.”

Frommyperspective,IcanunderstandwhytheSiliconValleyelitehavebecomesoenamoredwiththeideaofaUBI:itisasimple,technicalsolutiontoanenormousandcomplexsocialproblemoftheirownmaking.ButadoptingaUBIwouldconstituteamajorchangeinoursocialcontract,onethatweshouldthinkthroughverycarefullyandmostcritically.WhileIsupportcertainguaranteesthatbasicneedswillbemet,IalsobelieveembracingaUBIasacure-allforthecrisiswefaceisamistakeandamassivemissedopportunity.Tounderstandwhy,wemusttrulylookatthe

motivationsforthefrenzyofinterestinUBIandalsothinkhardaboutwhatkindofasocietyitmaycreate.

SILICONVALLEY’S“MAGICWAND”MENTALITY

InobservingSiliconValley’ssurgeininterestaroundUBI,Ibelievesomeofthatadvocacyhasemergedfromaplaceoftrueandgenuineconcernforthosewhowillbedisplacedbynewtechnologies.ButIworrythatthere’salsoamoreself-interestedcomponent:SiliconValleyentrepreneursknowthattheirbillionsinrichesandtheirroleininstigatingthesedisruptionsmakethemanobvioustargetofmobangerifthingseverspinoutofcontrol.Withthatfearfreshintheirminds,Iwonderifthisgrouphasbeguncastingaboutforaquickfixtoproblemsahead.

Themixedmotivationsofthesepeopleshouldn’tleadustooutrightdismissthesolutionstheyputforth.Thisgroup,afterall,includessomeofthemostcreativebusinessandengineeringmindsintheworldtoday.SiliconValley’stendencytodreambig,experiment,anditeratewillallbehelpfulaswenavigatetheseunchartedwaters.

ButanawarenessofthesemotivationsshouldsharpenourcriticalengagementwithproposalslikeUBI.Weshouldbeawareoftheculturalbiasesthatengineersandinvestorsbringwiththemwhentacklinganewproblem,particularlyonewithprofoundsocialandhumandimensions.Mostofall,whenevaluatingtheseproposedsolutions,wemustaskwhatexactlythey’retryingtoachieve.Aretheyseekingtoensurethatthistechnologygenuinelyandtrulybenefitsallpeopleacrosssociety?Oraretheylookingonlytoavertaworst-casescenarioofsocialupheaval?Aretheywillingtoputinthelegworkneededtobuildnewinstitutionsormerelylookingforaquickfixthatwillassuagetheirownconsciencesandabsolvethemofresponsibilityforthedeeperpsychologicalimpactsofautomation?

IfearthatmanyofthoseinSiliconValleyarefirmlyinthelattercamp.TheyseeUBIasa“magicwand”thatcanmakedisappearthemyriadeconomic,social,andpsychologicaldownsidesoftheirexploitsintheAIage.UBIistheepitomeofthe“light”approachtoproblem-solvingsopopularinthevalley:sticktothepurelydigitalsphereandavoidthemessydetailsoftakingactionintherealworld.Ittendstoenvisionthatallproblemscanbesolvedthroughatweakingofincentivesorashufflingofmoneybetweendigitalbankaccounts.

Bestofall,itdoesn’tplaceanyfurtherburdenonresearcherstothinkcriticallyaboutthesocietalimpactsofthetechnologiestheybuild;aslongaseveryonegetsthatmonthlydoseofUBI,alliswell.Thetechelitecangoondoingexactlywhattheyplannedtodointhefirstplace:buildinginnovativecompaniesandreapingmassivefinancialrewards.Sure,highertaxesrequiredtofundaUBIwillcutintothoseprofitstoacertaindegree,butthevastmajorityofthefinancialbenefitsfromAIwillstillaccruetothiselitegroup.

Seeninthismanner,UBIisn’taconstructivesolutionthatleveragesAItobuildabetterworld.It’sapainkiller,somethingtonumbandsedatethepeoplewhohavebeenhurtbytheadoptionofAI.Andthatnumbingeffectgoesbothways:notonlydoesiteasethepainforthosedisplacedbytechnology;italsoassuagestheconscienceofthosewhodothedisplacing.

AsI’vesaidbefore,someformofguaranteedincomemaybenecessarytoputaneconomicfloorundereveryoneinsociety.Butifweallowthistobetheendgame,wemissoutonthegreatopportunitypresentedtousbythistechnology.InsteadofsimplyfallingbackonapainkillerlikeaUBI,wemustproactivelyseekandfindwaysofutilizingAItodouble-downonthatwhichseparatesusfrommachines:love.

Admittedly,thiswon’tbeeasy.Itwillrequirecreativeanddifferentapproaches.Executingontheseapproacheswilltakealotoflegworkand“heavy”solutions,reachingbeyondthedigitalsphereandintothenot-so-neatdetailsoftherealworld.Butifwecommittodoingthehardworknow,IbelievewehaveashotatnotjustavoidingdisasterbutofcultivatingthesamehumanisticvaluesthatIrediscoveredduringmyownencounterwithmortality.

MARKETSYMBIOSIS:OPTIMIZATIONTASKSANDHUMANTOUCH

TheprivatesectorisleadingtheAIrevolution,and,inmymind,itmustalsotaketheleadincreatingthenew,morehumanisticjobsthatpowerit.Someofthesewillemergethroughthenaturalfunctioningofthefreemarket,whileotherswillrequireconsciouseffortsbythosemotivatedtomakeadifference.

Manyofthejobscreatedbythefreemarketwillgrowoutofanaturalsymbiosisbetweenhumansandmachines.WhileAIhandlestheroutineoptimizationtasks,humanbeingswillbringthepersonal,creative,andcompassionatetouch.Thiswillinvolvetheredefinitionofexistingoccupationsorthecreationofentirelynewprofessionsinwhichpeopleteamupwithmachinestodeliverservicesthatarebothhighlyefficientand

eminentlyhuman.Intherisk-of-replacementgraphsfromchapter6,weexpecttoseetheupper-leftquadrant(“HumanVeneer”)offerthegreatestopportunityforhuman-AIsymbiosis:AIwilldotheanalyticalthinking,whilehumanswillwrapthatanalysisinwarmthandcompassion.Inthatsamechart,thetwoquadrantsontheright-handsideofthegraph(“SlowCreep”and“SafeZone”)alsoprovideopportunitiesforAItoolstoenhancecreativityordecision-making,thoughovertime,thetwoleft-sideAI-centriccircleswillgrowtowardtherightasAIimproves.

Human–AIcoexistenceinthelabormarket

Aclearexampleofhuman-AIsymbiosisfortheupper-left-handquadrantcanbefoundinthefieldofmedicine.IhavelittledoubtthatAIalgorithmswilleventuallyfarsurpasshumandoctorsintheirabilitytodiagnosediseaseandrecommendtreatments.Legacyinstitutions—medicalschools,professionalassociations,andhospitals—mayslowdowntheadoptionofthesediagnostictools,usingthemonlyinnarrowfieldsorstrictlyasreferencetools.Butinamatterofafewdecades,I’mconfidentthattheaccuracyandefficiencygainswillbesogreatthatAI-drivendiagnoseswilltakeovereventually.

Oneresponsetothiswouldbetogetridofdoctorsentirely,replacingthemwithmachinesthattakeinsymptomsandspitoutdiagnoses.Butpatientsdon’twanttobetreatedbyamachine,ablackboxofmedicalknowledgethat

deliversacoldpronouncement:“Youhavefourth-stagelymphomaanda70percentlikelihoodofdyingwithinfiveyears.”Instead,patientswilldesire—andIbelievethemarketwillcreate—amorehumanisticapproachtomedicine.Traditionaldoctorscouldinsteadevolveintoanewprofession,onethatI’ll

calla“compassionatecaregiver.”Thesemedicalprofessionalswouldcombinetheskillsofanurse,medicaltechnician,socialworker,andevenpsychologist.Compassionatecaregiverswouldbetrainednotjustinoperatingandunderstandingthediagnostictoolsbutalsoincommunicatingwithpatients,consolingthemintimesoftrauma,andemotionallysupportingthemthroughouttheirtreatment.Insteadofsimplyinformingpatientsoftheirobjectivelyoptimizedchancesofsurvival,theycouldshareencouragingstories,saying“Kai-Fuhadthesamelymphomaasyouandhesurvived,soIbelieveyoucantoo.”

Thesecompassionatecaregiverswouldn’tcompetewithmachinesintheirabilitytomemorizefactsoroptimizetreatmentregimens.Inthelongrun,that’salosingbattle.Compassionatecaregiverswouldbewelltrained,butinactivitiesrequiringmoreemotionalintelligence,notasmerevesselsforthecanonofmedicalknowledge.Theywouldformaperfectcomplementtothemachine,givingpatientsunparalleledaccuracyintheirdiagnosesaswellasthehumantouchthatissooftenmissingfromourhospitalstoday.Inthishuman-machinesymbiosiscreatedbythefreemarket,wewouldinchoursocietyaheadinadirectionofbeingalittlekinderandalittlemoreloving.

Bestofall,theemergenceofcompassionatecaregiverswoulddramaticallyincreaseboththenumberofjobsandthetotalamountofmedicalcaregiven.Today,thescarcityoftraineddoctorsdrivesupthecostofhealthcareanddrivesdowntheamountofqualitycaredeliveredaroundtheworld.Undercurrentconditionsofsupplyanddemand,it’ssimplynotcost-feasibletoincreasethenumberofdoctors.Asaresult,westrictlyrationthecaretheydeliver.Noonewantstogowaitinlineforhoursjusttohaveafewminuteswithadoctor,meaningthatmostpeopleonlygotohospitalswhentheyfeelit’sabsolutelynecessary.Whilecompassionatecaregiverswillbewell-trained,theycanbedrawnfromalargerpoolofworkersthandoctorsandwon’tneedtoundergotheyearsofrotememorizationthatisrequiredofdoctorstoday.Asaresult,societywillbeabletocost-effectivelysupportfarmorecompassionatecaregiversthantherearedoctors,andwewouldreceivefarmoreandbettercare.

Similarsynergieswillemergeinmanyotherfields:teaching,law,eventplanning,andhigh-endretail.Paralegalsatlawfirmscouldhandtheirroutineresearchtasksofftoalgorithmsandinsteadfocusoncommunicatingmore

withclientsandmakingthemfeelcaredfor.AI-poweredsupermarketsliketheAmazonGostoremaynotneedcashiersanymore,sotheycouldgreatlyupgradethecustomerexperiencebyhiringfriendlyconciergesliketheoneIdescribedinchapter5.

Forthoseinprofessionalsectors,itwillbeimperativethattheyadoptandlearntoleverageAItoolsastheyarrive.Aswithanytechnologicalrevolution,manyworkerswillfindthenewtoolsbothimperfectintheirusesandpotentiallythreateningintheirimplications.Butthesetoolswillonlyimprovewithtime,andthosewhoseektocompeteagainstAIonitsowntermswillloseout.Inthelongrun,resistancemaybefutile,butsymbiosiswillberewarded.

Finally,theinternet-enabledsharingeconomywillcontributesignificantlytoalleviatingjoblossesandredefiningworkfortheAIage.We’llseemorepeoplestepoutoftraditionalcareersthatarebeingtakenoverbyalgorithms,insteadusingnewplatformsthatapplythe“Ubermodel”toavarietyofservices.WeseethisalreadyinCare.com,anonlineplatformforconnectingcaregiversandcustomers,andIbelievewewillseeablossomingofanalogousmodelsineducationandotherfields.Manymass-marketgoodsandserviceswillbecapturedbydataandoptimizedbyalgorithms,butsomeofthemorepiecemealorpersonalizedworkwithinthesharingeconomywillremaintheexclusivedomainofhumans.

Inthepast,thistypeofworkwasconstrainedbythebureaucraticcostsofrunningaverticalcompanythatattractedcustomers,dispatchedworkers,andkepteveryoneonthepayrollevenwhentherewasn’tworktobedone.Theplatformatizationoftheseindustriesdramaticallyincreasestheirefficiency,increasingtotaldemandandtake-homepayfortheserviceworkersthemselves.AddingAItotheequation—asride-hailingcompanieslikeDidiandUberhavealreadydone—willonlyfurtherboostefficiencyandattractmoreworkers.

Beyondtheestablishedrolesinthesharingeconomy,I’mconfidentwewillseeentirelynewservicejobsemergethatwecanhardlyimaginetoday.Explaintosomeoneinthe1950swhata“lifecoach”wasandthey’dprobablythinkyouweregoofy.Likewise,asAIfreesupourtime,creativeentrepreneursandordinarypeoplewillleveragetheseplatformstocreatenewkindsofjobs.Perhapspeoplewillhire“seasonchangers”whoredecoratetheirclosetseveryfewmonths,scentingthemwithflowersandaromasthatmatchthemoodoftheseason.Orenvironmentallyconsciousfamilieswillhire“homesustainabilityconsultants”tomeetwiththefamilyandexplorecreativeandfunwaysforthehouseholdtoreduceitsenvironmentalfootprint.

Butdespiteallthesenewpossibilitiescreatedbyprofit-seekingbusinesses,I’mafraidtheoperationsofthefreemarketalonewillnotbeenoughtooffsetthemassivejoblossesandgapinginequalityonthehorizon.Privatecompaniesalreadycreateplentyofhuman-centeredservicejobs—theyjustdon’tpaywell.Economicincentives,publicpolicies,andculturaldispositionshavemeantthatmanyofthemostcompassion-filledprofessionsexistingtodayoftenlackjobsecurityorbasicdignity.

TheU.S.BureauofLaborStatisticshasfoundthathomehealthaidesandpersonalcareaidesarethetwofastestgrowingprofessionsinthecountry,withanexpectedgrowthof1.2millionjobsby2026.Butannualincomeintheseprofessionsaveragesjustover$20,000.Otherhumanisticlaborsoflove—stay-at-homeparenting,caringforagingordisabledrelatives—aren’tevenconsidereda“job”andreceivenoformalcompensation.

TheseareexactlythekindsoflovingandcompassionateactivitiesthatweshouldembraceintheAIeconomy,buttheprivatesectorhasproveninadequatesofaratfosteringthem.Theremaycomeadaywhenweenjoysuchmaterialabundancethateconomicincentivesarenolongerneeded.Butinourpresenteconomicandculturalmoment,moneystilltalks.Orchestratingatrueshiftinculturewillrequirenotjustcreatingthesejobsbutturningthemintotruecareerswithrespectablepayandgreaterdignity.

Encouragingandrewardingtheseprosocialactivitiesmeansgoingbeyondthemarketsymbiosisoftheprivatesector.Wewillneedtoreenergizetheseindustriesthroughservicesectorimpactinvestingandgovernmentpoliciesthatnudgeforwardabroadershiftinculturalvalues.

FINK’SLETTERANDTHENEWIMPACTINVESTING

Whenamanoverseeing$5.7trillionspeaks,theglobalbusinesscommunitytendstolisten.SowhenBlackRockfounderLarryFink,headoftheworld’slargestassetmanagementcompany,postedalettertoCEOsdemandinggreaterattentiontosocialimpact,itsentshockwavesthroughcorporationsaroundtheglobe.Intheletter,titled“ASenseofPurpose,”Finkwrote,

We...seemanygovernmentsfailingtoprepareforthefuture,onissuesrangingfromretirementandinfrastructuretoautomationandworkerretraining.Asaresult,societyincreasinglyisturningtotheprivatesectorandaskingthatcompaniesrespondtobroadersocietal

challenges....Societyisdemandingthatcompanies,bothpublicandprivate,serveasocialpurpose....Companiesmustbenefitalloftheirstakeholders,includingshareholders,employees,customers,andthecommunitiesinwhichtheyoperate.

Fink’sletterdroppedjustdaysbeforethe2018WorldEconomicForum,anannualgatheringoftheglobalfinancialeliteinDavos,Switzerland.IwasattendingtheforumandwatchedasCEOsanxiouslydiscussedthesternwarningfromamanwhosefirmcontrolledsubstantialownershipstakesintheircompanies.ManypubliclyprofessedsympathyforFink’smessagebutprivatelydeclaredhisemphasisonbroadersocialwelfaretobeanathematothelogicofprivateenterprise.

Lookedatnarrowlyenough,they’reright:publiclytradedcompaniesareinittowinit,boundbyfiduciarydutiestomaximizeprofits.ButintheageofAI,thiscoldlogicofdollarsandcentssimplycan’thold.Blindlypursuingprofitswithoutanythoughttosocialimpactwon’tjustbemorallydubious;itwillbedownrightdangerous.

Finkreferencedautomationandjobretrainingmultipletimesinhisletter.Asaninvestorwithinterestsspanningthefullbreadthoftheglobaleconomy,heseesthatdealingwithAI-induceddisplacementisnotsomethingthatcanbeleftentirelyuptofreemarkets.Instead,itisimperativethatwereimagineandreinvigoratecorporatesocialresponsibility,impactinvesting,andsocialentrepreneurship.

Inthepast,thesewerethekindsofthingsthatbusinesspeoplemerelydabbledinwhentheyhadtimeandmoneytospare.Sure,theythink,whynotthrowsomemoneyintoamicrofinancestartuporbuysomecorporatecarbonoffsetssowecanputoutahappypressreleasetoutingit.ButintheageofAI,wewillneedtoseriouslydeepenourcommitmentto—andbroadenourdefinitionof—theseactivities.Whereasthesehavepreviouslyfocusedonfeel-goodphilanthropicissueslikeenvironmentalprotectionandpovertyalleviation,socialimpactintheageofAImustalsotakeonanewdimension:thecreationoflargenumbersofservicejobsfordisplacedworkers.

Asaventure-capitalinvestor,Iseeaparticularlystrongroleforanewkindofimpactinvesting.Iforeseeaventureecosystememergingthatviewsthecreationofhumanisticservice-sectorjobsasagoodinandofitself.Itwillsteermoneyintohuman-focusedserviceprojectsthatcanscaleupandhirelargenumbersofpeople:lactationconsultantsforpostnatalcare,trainedcoachesforyouthsports,gatherersoffamilyoralhistories,natureguidesatnationalparks,orconversationpartnersfortheelderly.Jobslikethesecanbe

meaningfulonbothasocietalandpersonallevel,andmanyofthemhavethepotentialtogeneraterealrevenue—justnotthe10,000percentreturnsthatcomefrominvestinginaunicorntechnologystartup.

Kick-startingthisecosystemwillrequireashiftinmentalityforVCswhoparticipate.Theveryideaofventurecapitalhasbeenbuiltaroundhighrisksandexponentialreturns.Whenaninvestorputsmoneyintotenstartups,theyknowfullwellthatnineofthemmostlikelywillfail.Butifthatonesuccessstoryturnsintoabillion-dollarcompany,theexponentialreturnsonthatoneinvestmentmakethefundahugesuccess.Drivingthoseexponentialreturnsaretheuniqueeconomicsoftheinternet.Digitalproductscanbescaledupinfinitelywithnear-zeromarginalcosts,meaningthemostsuccessfulcompaniesachieveastronomicalprofits.

Service-focusedimpactinvesting,however,willneedtobedifferent.Itwillneedtoacceptlinearreturnswhencoupledwithmeaningfuljobcreation.That’sbecausehuman-drivenservicejobssimplycannotachievetheseexponentialreturnsoninvestment.Whensomeonebuildsagreatcompanyaroundhumancarework,theycannotdigitallyreplicatetheseservicesandblastthemoutacrosstheglobe.Instead,thebusinessmustbebuiltpiecebypiece,workerbyworker.Thetruthis,traditionalVCswouldn’tbotherwiththesekindsoflinearcompanies,butthesecompanieswillbeakeypillarinbuildinganAIeconomythatcreatesnewjobsandfostershumanconnections.

Therewillofcoursebefailures,andreturnswillnevermatchpuretechnologyVCfunds.Butthatshouldbefinewiththoseinvolved.TheecosystemwilllikelybestaffedbyolderVCexecutiveswhoarelookingtomakeadifference,orpossiblybyyoungerVCtypeswhoaretakinga“sabbatical”ordoing“probono”work.Theywillbringalongtheirkeeninstinctsforpickingentrepreneursandbuildingcompanies,andwillputthemtoworkontheselinearservicecompanies.Themoneybehindthefundswilllikelycomefromgovernmentslookingtoefficientlygeneratenewjobs,aswellascompaniesdoingcorporatesocialresponsibility.

Together,theseplayerswillcreateauniqueecosystemthatismuchmorejobs-focusedthanpurephilanthropy,muchmoreimpact-focusedthanpureventurecapital.Ifwecanpulltogetherthesedifferentstrandsofsociallyconsciousbusiness,Ibelievewe’llbeabletoweaveanewkindofemploymentsafetynet,allwhilebuildingcommunitiesthatfosterloveandcompassion.

BIGCHANGESANDBIGGOVERNMENT

Andyet,forallthepoweroftheprivatemarketandthegoodintentionsofsocialentrepreneurs,manypeoplewillstillfallthroughthecracks.Weneedlooknofurtherthanthegapinginequalityanddestitutepovertyinsomuchoftheworldtodaytorecognizethatmarketsandmoralimperativesarenotenough.Orchestratingafundamentalchangeineconomicstructuresoftenrequiresthefullforceofgovernmentalpower.IfwehopetowriteanewsocialcontractfortheageofAI,wewillneedtopullontheleversofpublicpolicy.

TherearesomeinSiliconValleywhoseethisasthepointwhereUBIcomesintoplay.Facedwithinadequatejobgrowth,thegovernmentmustprovideablanketguaranteeofeconomicsecurity,acashtransferthatcansavedisplacedworkersfromdestitutionandwhichwillalsosavethetechelitefromhavingtodoanythingelseaboutit.

Theunconditionalnatureofthetransferfitswiththehighlyindividualistic,live-and-let-livelibertarianismthatundergirdsmuchofSiliconValley.Whoisthegovernment,UBIproponentsask,totellpeoplehowtospendtheirtime?Justgivethemthemoneyandletthemfigureitoutontheirown.It’sanapproachthatmatcheshowthetechelitetendtoviewsocietyasawhole.LookingoutwardfromSiliconValley,theyoftenseetheworldintermsof“users”ratherthancitizens,customersratherthanmembersofacommunity.

Ihaveadifferentvision.Idon’twanttoliveinasocietydividedintotechnologicalcastes,wheretheAIeliteliveinacloisteredworldofalmostunimaginablewealth,relyingonminimalhandoutstokeeptheunemployedmassessedateintheirplace.Iwanttocreateasystemthatprovidesforallmembersofsociety,butonethatalsousesthewealthgeneratedbyAItobuildasocietythatismorecompassionate,loving,andultimatelyhuman.

Achievingthisoutcomewilldefinitelyrequirecreativethinkingandcomplexpolicymaking,buttheinspirationdrivingthatprocessoftencomesfromunlikelyplaces.Forme,itbeganbackatFoGuangShan,themonasteryinTaiwanthatIdiscussedinthepreviouschapter.

THECHAUFFEURCEO

ThemorningsunhadnotyetcreptoverthehorizonasIwalkedacrossthemonastery’smassivegroundstoseeMasterHsingYun.ItwasthemorningonwhichI’dbeengivenachancetohavebreakfastwiththeheadmonk,andIwashustlingmywayupahillwhenagolfcartpulledupalongsideme.

“Goodmorning,”themanbehindthewheelsaidtome.“CanIofferyouaride?”

NotwantingtokeepMasterHsingYunwaiting,Iacceptedandclimbedintothecart,tellingthedriverwhereIwasheaded.Hewasdressedinjeansandasimplelong-sleevedshirtwithanorangevestoverit.Helookedtobeinhisfiftieslikeme,withstreaksofgreyinhishair.Werodeinsilenceforafewminutes,absorbingthestillnessofthelandscapeandthegentlebreezeofcoolmorningair.Asweroundedthehillside,Ifilledthesilencewithabitofsmalltalk.

“Doyoudothisforaliving?”Iasked.

“No,”hereplied.“IjustvolunteerherewhenIcanfindtimeoutsidemyjob.”

Inoticedthatstitchedacrosstheleftbreastofhisorangevestwastheword“Volunteer”inChinesecharacters.

“Well,whatdoyoudoforwork?”Iasked.

“IownanelectronicsmanufacturingcompanyandworkastheCEO.ButlatelyI’vebeenspendinglesstimeworkingandmoretimevolunteering.It’sreallyspecialtoseeMasterHsingYunsharingwisdomwithpeoplehere.ItbringsasenseofserenitytohelpoutwiththatinanywayIcan.”

Thosewords,andthecalmdemeanorwithwhichhespokethem,struckme.Electronicsmanufacturingcanbeabrutallycompetitiveindustry,onewithrazor-thinmarginsandunceasingpressuretoinnovate,upgrade,andoptimizeoperations.Successoftencomesattheexpenseofhealth,withlonghoursatthefactorybleedingintolongnightsdrinking,smoking,andentertainingclients.

Butthemandrivingthecartseemedhealthyinbodyandtotallyatpeaceashesteeredthegolfcartupthewindingpath.HetoldmeabouthowhisweekendsvolunteeringhereatFoGuangShanhadbecomeawaytocleansetheburdenandstressofhisworkweek.Hewasn’tyetreadytoretire,buttheactofservingthosewhovisitedFoGuangShanlethimtapintosomethingbothsimplerandmoreprofoundthanthemachinationsofhiscompany.

WhenwereachedMasterHsingYun’squarters,Ithankedthedriver,andherepliedwithanodofhisheadandasmile.Duringthebreakfastthatfollowed,thewisdomsharedbyMasterHsingYunwouldhaveaprofoundimpactonhowIthoughtaboutmyworkandmylife.Buttheconversationwiththevolunteerdrivingthegolfcartalsostayedwithme.

Atfirst,Ithoughthisdevotiontohumblyservingthosearoundhimwassomethinguniquetothemonastery,afunctionofthepowerofreligiousfaithtouniteandinspireus.ButwhenIreturnedtoTaipeiformymedicaltreatment,Ibegantonoticepeoplewearingthoseorangevolunteervestsall

aroundthecity:inthelibrary,atbusytrafficintersections,incountyoffices,andatnationalparks.Theyheldupstopsignsforchildrencrossingthestreet,toldparkvisitorsabouttheindigenousfloraofTaiwan,andguidedpeoplethroughtheprocessofapplyingforhealthinsurance.Manyofthevolunteerswereelderlypeopleorrecentlyretired.Theirpensionplanstookcareofbasicnecessities,andsotheydevotedtheirtimetohelpingothersandmaintainingsolidbondswiththeircommunity.

AsIunderwentchemotherapyandbegantocontemplatethecomingcrisesoftheAIage,Ioftenthoughtofthevolunteers.WhilemanyindividualsthesedayspontificateaboutusingUBIasanall-purposesocialsedative,Isawacertainwisdominthehumbleactivitiesofthesevolunteersandthebroadercommunalculturetheywerecreating.Thecitycould,ofcourse,goonfunctioningwithoutthisarmyoforange-vested,grey-hairedvolunteers...butitwouldfeelalittlelesskindandalittlelesshuman.Inthatsubtletransformation,Ibegantoseeawayforward.

THESOCIALINVESTMENTSTIPEND:CARE,SERVICE,ANDEDUCATION

Justasthosevolunteersdevotedtheirtimeandenergytowardmakingtheircommunitiesalittlebitmoreloving,IbelieveitisincumbentonustousetheeconomicabundanceoftheAIagetofosterthesesamevaluesandencouragethissamekindofactivity.Todothis,IproposeweexplorethecreationnotofaUBIbutofwhatIcallasocialinvestmentstipend.Thestipendwouldbeadecentgovernmentsalarygiventothosewhoinvesttheirtimeandenergyinthoseactivitiesthatpromoteakind,compassionate,andcreativesociety.Thesewouldincludethreebroadcategories:carework,communityservice,andeducation.

Thesewouldformthepillarsofanewsocialcontract,onethatvaluedandrewardedsociallybeneficialactivitiesinthesamewaywecurrentlyrewardeconomicallyproductiveactivities.Thestipendwouldnotsubstituteforasocialsafetynet—thetraditionalwelfare,healthcare,orunemploymentbenefitstomeetbasicneeds—butwouldofferarespectableincometothosewhochoosetoinvestenergyinthesesociallyproductiveactivities.Today,socialstatusisstilllargelytiedtoincomeandcareeradvancement.Endowingtheseprofessionswithrespectwillrequirepayingthemarespectablesalaryandofferingtheopportunityforadvancementlikeanormalcareer.Ifexecutedwell,thesocialinvestmentstipendwouldnudgeourcultureinamorecompassionatedirection.ItwouldputtheeconomicbountyofAIto

workinbuildingabettersociety,ratherthanjustnumbingthepainofAI-inducedjoblosses.

Eachofthethreerecognizedcategories—care,service,andeducation—wouldencompassawiderangeofactivities,withdifferentlevelsofcompensationforfull-andpart-timeparticipation.Careworkcouldincludeparentingofyoungchildren,attendingtoanagingparent,assistingafriendorfamilymemberdealingwithillness,orhelpingsomeonewithmentalorphysicaldisabilitieslivelifetothefullest.Thiscategorywouldcreateaveritablearmyofpeople—lovedones,friends,orevenstrangers—whocouldassistthoseinneed,offeringthemwhatmyentrepreneurfriend’stouchscreendevicefortheelderlynevercould:humanwarmth.

Serviceworkwouldbesimilarlybroadlydefined,encompassingmuchofthecurrentworkofnonprofitgroupsaswellasthekindsofvolunteersIsawinTaiwan.Taskscouldincludeperformingenvironmentalremediation,leadingafterschoolprograms,guidingtoursatnationalparks,orcollectingoralhistoriesfromeldersinourcommunities.Participantsintheseprogramswouldregisterwithanestablishedgroupandcommittoacertainnumberofhoursofserviceworktomeettherequirementsofthestipend.

Finally,educationcouldrangefromprofessionaltrainingforthejobsoftheAIagetotakingclassesthatcouldtransformahobbyintoacareer.Somerecipientsofthestipendwillusethatfinancialfreedomtopursueadegreeinmachinelearninganduseittofindahigh-payingjob.Otherswillusethatsamefreedomtotakeactingclassesorstudydigitalmarketing.

Bearinmindthatrequiringparticipationinoneoftheseactivitiesisnotsomethingdesignedtodictatethedailyactivitiesofeachpersonreceivingthestipend.Thatis,thebeautyofhumanbeingsliesinourdiversity,thewayweeachbringdifferentbackgrounds,skills,interests,andeccentricities.Idon’tseektosmotherthatdiversitywithacommand-and-controlsystemofredistributionthatrewardsonlyanarrowrangeofsociallyapprovedactivities.

Butbyrequiringsomesocialcontributioninordertoreceivethestipend,wewouldfosterafardifferentideologythanthelaissez-faireindividualismofaUBI.Providingastipendinexchangeforparticipationinprosocialactivitiesreinforcesaclearmessage:Ittookeffortsfrompeopleallacrosssocietytohelpusreachthispointofeconomicabundance.Wearenowcollectivelyusingthatabundancetorecommitourselvestooneanother,reinforcingthebondsofcompassionandlovethatmakeushuman.

Lookingacrossalltheactivities,IbelievetherewillbeawideenoughrangeofchoicestooffersomethingsuitabletoallworkerswhohavebeendisplacedbyAI.Themorepeople-orientedmayoptforcarework,themore

ambitiouscanenrollinjob-trainingprograms,andthoseinspiredbyasocialcausemaytakeupserviceoradvocacyjobs.

Inanageinwhichintelligentmachineshavesupplantedusasthecogsandgearsintheengineofoureconomy,Ihopethatwewillvalueallofthesepursuits—care,service,andpersonalcultivation—aspartofourcollectivesocialprojectofbuildingamorehumansociety.

OPENQUESTIONSANDSERIOUSCOMPLICATIONS

Implementingasocialinvestmentstipendwillofcourseraisenewquestionsandfrictions:Howmuchshouldthestipendbe?Shouldwerewardpeopledifferentlybasedontheirperformanceintheseactivities?Howdoweknowifsomeoneisdutifullyperformingtheir“care”work?Andwhatkindsofactivitiesshouldcountas“service”work?Theseareadmittedlydifficultquestions,onesforwhichtherearenoclear-cutanswers.Administeringasocialinvestmentstipendincountrieswithhundredsofmillionsofpeoplewillinvolvelotsofpaperworkandlegworkbygovernmentsandtheorganizationsthatcreatethesenewroles.

Butthesechallengesarefarfrominsurmountable.Governmentsindevelopedsocietiesalreadyattendtoadizzyingarrayofbureaucratictasksjusttomaintainpublicservices,educationsystems,andsocialsafetynets.Ourgovernmentsalreadydotheworkofinspectingbuildings,accreditingschools,offeringunemploymentbenefits,monitoringsanitaryconditionsathundredsofthousandsofrestaurants,andprovidinghealthinsurancetotensofmillionsofpeople.Operatingasocialinvestmentstipendwouldaddtothisworkload,butIbelieveitwouldbemorethanmanageable.Giventhehugehumanupsidetoprovidingsuchastipend,Ibelievetheaddedorganizationalchallengeswillbewellworththerewardstoourcommunities.

Butwhataboutaffordability?Offeringalivingsalarytopeopleperformingalloftheabovetaskswouldrequiremassiveamountsofrevenue,totalsthattodayappearunworkableinmanyheavilyindebtedcountries.AIwillcertainlyincreaseproductivityacrosssociety,butcanitreallygeneratethehugesumsnecessarytofinancesuchdramaticexpansioningovernmentexpenditures?

Thistooremainsanopenquestion,onethatwillonlybesettledoncetheAItechnologiesthemselvesproliferateacrossoureconomies.IfAImeetsorexceedspredictionsforproductivitygainsandwealthcreation,Ibelievewecouldfundthesetypesofprogramsthroughsupertaxesonsuperprofits.Yes,

itwouldsomewhatcutintoeconomicincentivestoadvanceAI,butgiventhedizzyingprofitsthatwillaccruetothewinnersintheAIage,Idon’tseethisasasubstantialimpedimenttoinnovation.

Butitwilltakeyearstogettothatplaceofastronomicalprofits,yearsduringwhichworkingpeoplewillbehurting.Tosmooththetransition,Iproposeaslowratchetingupofassistance.Whileleapingstraightintothefullsocialinvestmentstipenddescribedabovelikelywon’twork,Idothinkwewillbeabletoimplementincrementalpoliciesalongtheway.Thesepiecemealpoliciescouldbothcounteractjobdisplacementasithappensandmoveustowardthenewsocialcontract.

Wecouldstartbygreatlyincreasinggovernmentsupportfornewparentssothattheyhavethechoicetoremainathomeorsendtheirchildtofull-timedaycare.Forparentswhochoosetohome-schooltheirkids,thegovernmentcouldoffersubsidiesequivalenttoateacher’spayforthosewhoattaincertaincertifications.Inthepublicschoolsystems,thenumberofteacherscouldalsobegreatlyexpanded—potentiallybyafactorashighasten—witheachteachertaskedwithasmallernumberofstudentsthattheycanteachinconcertwithAIeducationprograms.Governmentsubsidiesandstipendscouldalsogotoworkersundergoingjobretrainingandpeoplecaringforagingparents.Thesesimpleprogramswouldallowustoputinplacethefirstbuildingblocksofastipend,beginningtheworkofshiftingthecultureandlayingthegroundworkforfurtherexpansion.

AsAIcontinuestogeneratebotheconomicvalueandworkerdisplacement,wecouldslowlyexpandthepurviewofthesesubsidiestoactivitiesbeyondcareworkorjobtraining.AndoncethefullimpactofAI—verygoodforproductivity,verybadforemployment—becomesclear,weshouldbeabletomustertheresourcesandpublicwilltoimplementprogramsakintothesocialinvestmentstipend.

Whenwedo,Ihopethatthiswillnotjustalleviatetheeconomic,social,andpsychologicalsufferingoftheAIage.Rather,Ihopethatitwillfurtherempowerustoliveinawaythathonorsourhumanityandempowersustodowhatnomachinecan:shareourlovewiththosearoundus.

LOOKINGFORWARDANDLOOKINGAROUND

TheideaslaidoutinthischapterareanearlyattempttograpplewiththemassivedisruptionsonthehorizonofourAIfuture.WelookedattechnicalfixesthatseektosmooththetransitiontoanAIeconomy:retrainingworkers,reducingworkhours,andredistributingincomethroughaUBI.Whileallof

thesetechnicalfixeshavearoletoplay,Ibelievesomethingmoreisneeded.Ienvisiontheprivatesectorcreativelyfosteringhuman-machinesymbiosis,anewwaveofimpactinvestingfundinghuman-centricservicejobs,andthegovernmentfillingthegapswithasocialinvestmentstipendthatrewardscare,service,andeducation.Takentogether,thesewouldconstitutearealignmentofoureconomyandarewritingofoursocialcontracttorewardsociallyproductiveactivities.

Thesearenotanexhaustivelistorauthoritativejudgmentonthewaysinwhichwecanadapttowidespreadautomation.ButIdohopetheyprovideatleastaframeworkandasetofvaluestoguideusinthatprocess.Muchofthatframeworkcomesfrommyunderstandingofartificialintelligenceandtheglobaltechnologyindustry.

Thevaluesguidingtheserecommendations,however,arerootedinsomethingfarmoreintimate:theexperienceofmycancerdiagnosisandthepersonaltransformationinspiredbypeoplelikemywife,MasterHsingYun,andsomanyotherswhoselflesslysharedtheirloveandwisdomwithme.

HadIneverundergonethatterrifyingbutultimatelyenlighteningexperience,Imayneverhavewokenuptothecentralityofloveinthehumanexperience.Insteadofseekingwaystofosteramorelovingandcompassionateworld,IwouldlikelyviewtheloomingcrisesthroughthesamelensasthosewhoaredeepintoAItoday—asasimpleresource-allocationproblemtobedealtwithinthemostefficientwaypossible,likelythroughaUBI.ItisonlyaftergoingthroughmyownpersonaltrialbyfirethatInowseethehollownessofthatapproach.

Myexperiencewithcanceralsotaughtmetoappreciatethewisdomthathidesinthehumbleactionsofpeopleeverywhere.Aftersomanyyearsasan“Ironman”ofprofessionalachievement,IneededtobeknockedoffmypedestalandfacemyownmortalitybeforeIappreciatedwhatmanyso-calledlesssuccessfulpeoplebroughttothetable.

Ibelievewewillsoonwitnessthesameprocessonaninternationalscale.TheAIsuperpowersoftheUnitedStatesandChinamaybethecountrieswiththeexpertisetobuildthesetechnologies,butthepathstotruehumanflourishingintheAIagewillemergefrompeopleinallwalksoflifeandfromallcornersoftheworld.

Aswelookforwardintothefuture,wemustalsotakethetimetolookaround.

9★

OURGLOBALAISTORY

OnJune12,2005,SteveJobssteppeduptoamicrophoneinStanfordStadiumanddeliveredoneofthemostmemorablecommencementspeechesevergiven.Inthetalk,heretracedhiszig-zaggingcareer,fromcollegedropouttocofounderofApple,fromhisunceremoniousousteratthatcompanytohisfoundingofPixar,andfinallyhistriumphantreturntoAppleadecadelater.SpeakingtoacrowdofambitiousStanfordstudents,manyofwhomwereeagerlyplottingtheirownascenttothepeaksofSiliconValley,Jobscautionedagainsttryingtochartone’slifeandcareerinadvance.

“Youcan’tconnectthedotslookingforward,”Jobstoldtheassembledstudents.“Youcanonlyconnectthemlookingbackwards.Soyouhavetotrustthatthedotswillsomehowconnectinyourfuture.”

Jobs’swisdomhasresonatedwithmesinceIfirstheardit,butnevermoresothantoday.Inwritingthisbook,I’vehadthechancetoconnectthedotsonfourdecadesofwork,growth,andevolution.Thatjourneyhasspannedcompaniesandcultures,fromAIresearcherandbusinessexecutivetoventurecapitalist,author,andcancersurvivor.Ithastouchedonissuesbothglobalanddeeplypersonal:theriseofartificialintelligence,theintertwinedfatesoftheplacesthatI’vecalledhome,andmyownevolutionfromaworkaholictoamorelovingfather,husband,andhumanbeing.

AlloftheseexperienceshavecometogethertoshapemyviewofourglobalAIfuture,toconnectthedotslookingbackwardandtousethoseconstellationsasguidancegoingforward.MybackgroundintechnologyandbusinessexpertisehascrystallizedhowthesetechnologiesaredevelopinginbothChinaandtheUnitedStates.Mysuddenconfrontationwithcancerwokemeuptowhywemustusethesetechnologiestofosteramorelovingsociety.Finally,myexperiencemovingandtransitioningbetweentwodifferentcultureshasimpressedonmethevalueofsharedprogressandtheneedformutualunderstandingacrossnationalborders.

ANAIFUTUREWITHOUTANAIRACE

Inwritingaboutglobaldevelopmentofartificialintelligence,it’seasytoreverttomilitarymetaphorsandazero-summentality.Manycomparethe“AIrace”oftodaytothespaceraceofthe1960sor,evenworse,totheColdWararmsracethatcreatedevermorepowerfulweaponsofmassdestruction.Eventhetitleofthisbookemploystheword“superpowers,”aphrasethatmanyassociatewithgeopoliticalrivalry.Iusethisphrase,however,specificallytoreflectthetechnologicalbalanceofAIcapabilities,nottosuggestanall-outstruggleformilitarysupremacy.Butthesedistinctionsareeasilyblurredbythosemoreinterestedinpoliticalposturingthaninhumanflourishing.

Ifwearenotcareful,thissingle-mindedrhetoricaroundan“AIrace”willundermineusinplanningandshapingoursharedAIfuture.Aracehasonlyonewinner:China’sgainisAmerica’sloss,andvice-versa.Thereisnonotionofsharedprogressormutualprosperity—justadesiretostayaheadoftheothercountry,regardlessofthecosts.ThismentalityhasledmanycommentatorsintheUnitedStatestouseChina’sAIprogressasarhetoricalwhipwithwhichtospurAmericanleaderstoaction.TheyarguethatAmericaisatriskoflosingitsedgeinthetechnologythatwillfuelthemilitarycompetitionofthetwenty-firstcentury.

ButthisisnotanewColdWar.AItodayhasnumerouspotentialmilitaryapplications,butitstruevalueliesnotindestructionbutincreation.Ifunderstoodandharnessedproperly,itcantrulyhelpallofusgenerateeconomicvalueandprosperityonascaleneverbeforeseeninhumanhistory.

Inthissense,ourcurrentAIboomsharesfarmorewiththedawnoftheIndustrialRevolutionortheinventionofelectricitythanwiththeColdWararmsrace.Yes,ChineseandAmericancompanieswillcompetewitheachothertobetterleveragethistechnologyforproductivitygains.Buttheyarenotseekingtheconquestoftheothernation.WhenGooglepromotesitsTensorFlowtechnologyabroad,orAlibabaimplementsitsCityBraininKualaLumpur,theseactionsaremoreakintotheearlyexportofsteamenginesandlightbulbsthanasanopeningvolleyinanewglobalarmsrace.

Aclear-eyedlookatthetechnology’slong-termimpacthasrevealedasoberingtruth:inthecomingdecades,AI’sgreatestpotentialtodisruptanddestroyliesnotininternationalmilitarycontestsbutinwhatitwilldotoourlabormarketsandsocialsystems.Appreciatingthemomentoussocialandeconomicturbulencethatisonourhorizonshouldhumbleus.Itshouldalsoturnourcompetitiveinstinctsintoasearchforcooperativesolutionstothecommonchallengesthatweallfaceashumanbeings,peoplewhosefatesareinextricablyintertwinedacrossalleconomicclassesandnationalborders.

GLOBALWISDOMFORTHEAIAGE

AsboththecreativeanddisruptiveforceofAIisfeltacrosstheworld,weneedtolooktoeachotherforsupportandinspiration.TheUnitedStatesandChinawillleadthewayineconomicallyproductiveapplicationsofAI,butothercountriesandcultureswillcertainlycontinuetomakeinvaluablecontributionstoourbroadersocialevolution.Nosinglecountrywillhavealltheanswerstothetangledwebofissuesweface,butifwedrawondiversesourcesofwisdom,Ibelievethereisnoproblemthatwecan’ttackletogether.Thiswisdomwillincludepragmaticreformstooureducationsystems,subtlenuancesinculturalvalues,anddeepshiftsinhowweconceiveofdevelopment,privacy,andgovernance.

Inrevampingoureducationsystems,wecanlearnmuchfromSouthKorea’sembraceofgiftedandtalentededucation.Theseprogramsseektoidentifyandrealizethepotentialofthecountry’stoptechnicalminds,anapproachsuitedtocreatingthematerialprosperitythatcanthenbebroadlysharedacrosssociety.SchoolsaroundtheglobecanalsodrawlessonsfromAmericanexperimentsinsocialandemotionaleducation,fosteringskillsthatwillproveinvaluabletothehuman-centricworkforceofthefuture.

Foradaptationsinhowweapproachwork,wewouldbewisetolooktothecultureofcraftsmanshipinSwitzerlandandJapan,placeswherethepursuitofperfectionhaselevatedroutineworkactivitiesintotherealmofhumanexpressionandartistry.Meanwhile,vibrantandmeaningfulculturesofvolunteeringincountrieslikeCanadaandtheNetherlandsshouldinspireustodiversifyourtraditionalnotionsof“work.”Chineseculturecanalsobeasourceofwisdomwhenitcomestocaringforeldersandinfosteringintergenerationalhouseholds.Aspublicpolicyandpersonalvaluesblend,weshouldreallytakethetimetostudynewexperimentsindefiningandmeasuringprogress,suchasBhutan’sdecisiontopursue“GrossNationalHappiness”asakeydevelopmentindicator.

Finally,ourgovernmentswillneedtoconsistentlylooktooneanotherinevaluatingthornynewtradeoffsindataprivacy,digitalmonopolies,onlinesecurity,andalgorithmicbias.Intacklingtheseissues,wecanlearnmuchfromcomparingthedifferentapproachestakenbyregulatorsinEurope,theUnitedStates,andChina.WhileEuropehasoptedforamoreheavy-handedapproach(finingGoogle,forexample,forantitrustandtryingtowrestcontroloverdataawayfromthetechnologycompanies),ChinaandtheUnitedStateshavegiventhesecompaniesgreaterleeway,lettingtechnologyandmarketsdevelopbeforeinterveningonthemargins.

Alltheseapproachespresenttradeoffs,withsomefavoringprivacyovertechnologicalprogress,andothersdoingthereverse.Leveragingtechnologytobuildthekindofsocietieswedesirewillmeanfollowingthereal-worldimpactofthesepoliciesacrossgeographiesandremainingopen-mindedaboutdifferentapproachestoAIgovernance.

WRITINGOURAISTORY

Butaccessingandembracingthesediversesourcesofinsightfirstrequireswemaintainasenseofagencyinrelationtothisquicklyacceleratingtechnology.WiththedailybarrageofheadlinesaboutAI,it’seasytofeelasifhumanbeingsarelosingcontroloverourowndestiny.Propheciesofbothrobotoverlordsanda“uselessclass”ofunemployedworkerstendtoblendinourminds,conjuringupanoverwhelmingsenseofhumanhelplessnessinthefaceofall-powerfultechnologies.BothofthesedoomsdayscenarioscontainakerneloftruthaboutAI’spotential,butthefeelingsofhelplessnesstheyengenderobscurethekeypoint:whenitcomestoshapingthefutureofartificialintelligence,thesinglemostimportantfactorwillbetheactionsofhumanbeings.

WearenotpassivespectatorsinthestoryofAI—wearetheauthorsofit.ThatmeansthevaluesunderpinningourvisionsofanAIfuturecouldwellbecomeself-fulfillingprophecies.Ifwetellourselvesthatthevalueofhumanbeingsliessolelyintheireconomiccontribution,thenwewillactaccordingly.Machineswilldisplacehumansintheworkplace,andwemayendupinatwistedworldliketheoneHaoJingfangimaginedinFoldingBeijing,acaste-basedsocietythatdividesandseparatestheso-calledusefulpeoplefromthe“useless”masses.

Butthisisinnowayaforegoneconclusion.Theideologyunderlyingthisdystopianvision—ofhumanbeingsasnothingmorethanthesumoftheireconomicallyproductiveparts—revealsjusthowfarwe’veledourselvesastray.WewerenotputonEarthtomerelygrindawayatrepetitivetasks.Wedon’tneedtospendourlivesbusilyaccumulatingwealthjustsothatwecandieandpassitontoourchildren—thelatest“iteration”ofthehumanalgorithm—whowillrefineandrepeatthatprocess.

Ifwebelievethatlifehasmeaningbeyondthismaterialratrace,thenAIjustmightbethetoolthatcanhelpusuncoverthatdeepermeaning.

HEARTSANDMINDS

WhenIlaunchedmyAIcareerin1983,IdidsobywaxingphilosophicinmyapplicationtothePh.D.programatCarnegieMellon.IdescribedAIas“thequantificationofthehumanthinkingprocess,theexplicationofhumanbehavior,”andour“finalstep”tounderstandingourselves.ItwasasuccinctdistillationoftheromanticnotionsinthefieldatthattimeandonethatinspiredmeasIpushedtheboundsofAIcapabilitiesandhumanknowledge.

Today,thirty-fiveyearsolderandhopefullyabitwiser,Iseethingsdifferently.TheAIprogramsthatwe’vecreatedhaveprovencapableofmimickingandsurpassinghumanbrainsatmanytasks.Asaresearcherandscientist,I’mproudoftheseaccomplishments.Butiftheoriginalgoalwastotrulyunderstandmyselfandotherhumanbeings,thenthesedecadesof“progress”gotmenowhere.Ineffect,Igotmysenseofanatomymixedup.Insteadofseekingtooutperformthehumanbrain,Ishouldhavesoughttounderstandthehumanheart.

It’salessonthatittookmefartoolongtolearn.Ihavespentmuchofmyadultlifeobsessivelyworkingtooptimizemyimpact,toturnmybrainintoafinelytunedalgorithmformaximizingmyowninfluence.Ibouncedbetweencountriesandworkedacrosstimezonesforthatpurpose,neverrealizingthatsomethingfarmoremeaningfulandfarmorehumanlayintheheartsofthefamilymembers,friends,andlovedoneswhosurroundedme.Ittookacancerdiagnosisandtheunselfishloveofmyfamilyformetofinallyconnectallthesedotsintoaclearerpictureofwhatseparatesusfromthemachineswebuild.

Thatprocesschangedmylife,andinaroundaboutwayhasledmebacktomyoriginalgoalofusingAItorevealournatureashumanbeings.IfAIeverallowsustotrulyunderstandourselves,itwillnotbebecausethesealgorithmscapturedthemechanicalessenceofthehumanmind.Itwillbebecausetheyliberatedustoforgetaboutoptimizationsandtoinsteadfocusonwhattrulymakesushuman:lovingandbeingloved.

Reachingthatpointwillrequirehardworkandconsciouschoicesbyallofus.Luckily,ashumanbeings,wepossessthefreewilltochooseourowngoalsthatAIstilllacks.Wecanchoosetocometogether,workingacrossclassboundariesandnationalborderstowriteourownendingtotheAIstory.

Letuschoosetoletmachinesbemachines,andlethumansbehumans.Letuschoosetosimplyuseourmachines,andmoreimportantly,toloveoneanother.

ACKNOWLEDGMENTS

Firstandforemost,Iwanttothankmycollaborator,MattSheehan,whodidatremendousamountofworkonthisbookunderaverytightdeadline.Ifyoufeelthisbookisfunandeasytoread,ormaybefinditrichininformation,Mattdeservesmuchofthecredit.IwasluckytofindacollaboratorlikeMatt,someonewithadeepunderstandingofChina,theUnitedStates,technology,andwriting.

IwastalkedintodoingthisbookbymyfriendandagentJohnBrockmanandhisteam.Hisbeliefintheurgencyofthesubjectandmyabilitytouniquelycontributetotheconversationfirstpersuadedmetoconsidertakingonthisproject.Inhindsight,Ithinkhewasabsolutelyright.

I’dliketothankRickWolff,whodecidedtobetonanunproventopicbasedonmyownconviction.Heisanoutstandingeditorandworkedwondersinbringingthisbooktomarket.ItwastremendousfunworkingwithRick—andpushingeachothertobethebestwecouldbe.

IalsowanttothankErikBrynjolfsson,JamesManyika,JonathanWoetzel,PaulTriolo,ShaolanHsueh,ChenXu,MaXiaohong,LinQi-ling,WuZhuohao,MichaelChui,YuanLi,CathyYang,AnitaHuang,MaggieTsai,andLaurieErlamforhelpingtoreadearlydraftsandgivingmevaluablefeedback.

Finalthanksgotomyfamily,whohavetoleratedmyinattentivenessduringthepastsixmonths.Icannotwaittoreturntotheirembrace,anembracethatsustainsmeandhastaughtmesomuch.Thisshouldbemylastbookforawhile.Thenagain,I’vetoldthemthatseventimesbefore—hopefullythey’llstillbuyit.

NOTES

1.CHINA’SSPUTNIKMOMENT

atomsintheknownuniverse:“GoandMathematics,”inWikipedia,s.v.,“LegalPositions,”https://en.wikipedia.org/wiki/Go_and_mathematics#Legal_positions.

280millionChineseviewers:CadeMetz,“WhattheAIBehindAlphaGoCanTeachUsAboutBeingHuman,”Wired,May19,2016,https://www.wired.com/2016/05/google-alpha-go-ai/.

issuedanambitiousplan:PaulMozur,“BeijingWantsA.I.toBeMadeinChinaby2030,”NewYorkTimes,July20,2017,https://www.nytimes.com/2017/07/20/business/china-artificial-intelligence.html.

makingup48percent:JamesVincent,“ChinaOvertakesUSinAIStartupFundingwithaFocusonFacialRecognitionandChips,”TheVerge,February2,2018,https://www.theverge.com/2018/2/22/17039696/china-us-ai-funding-startup-comparison.

firstsoftwareprogram:Kai-FuLeeandSanjoyMahajan,“TheDevelopmentofaWorldClassOthelloProgram,”ArtificialIntelligence43,no.1(April1990):21–36.

tocreateSphinx:Kai-FuLee,“OnLarge-VocabularySpeaker-IndependentContinuousSpeechRecognition,”SpeechCommunication7,no.4(December1988):375–379.

profileintheNewYorkTimes:JohnMarkoff,“TalkingtoMachines:ProgressIsSpeeded,”NewYorkTimes,July6,1988,https://www.nytimes.com/1988/07/06/business/business-technology-talking-to-machines-progress-is-speeded.html?mcubz=1.

demolishedthecompetition:ImageNetLargeScaleVisualRecognitionChallenge2012,FullResults,http://image-net.org/challenges/LSVRC/2012/results.html.

forover$500million:CatherineShu,“GoogleAcquiresArtificialIntelligenceStartupforOver$500Million,”TechCrunch,January26,2014,https://techcrunch.com/2014/01/26/google-deepmind/.

harnessingofelectricity:ShanaLynch,“AndrewNg:WhyAIistheNewElectricity,”TheDish(blog),StanfordNews,March14,2017,https://news.stanford.edu/thedish/2017/03/14/andrew-ng-why-ai-is-the-new-electricity/.

add$15.7trillion:Dr.AnandS.RaoandGerardVerweij,“SizingthePrize,”PwC,June27,2017,https://www.pwc.com/gx/en/issues/analytics/assets/pwc-ai-analysis-sizing-the-prize-report.pdf.

2.COPYCATSINTHECOLISEUM

TheCloner:GadyEpstein,“TheCloner,”Forbes,April28,2011,https://www.forbes.com/global/2011/0509/companies-wang-xing-china-groupon-friendster-cloner.html#1272f84055a6.

“AMarkZuckerbergProduction”:孙进,李静颖孙进,and刘佳,“社交媒体冲向互联网巅峰,”第一财经日报,April21,2011,http://www.yicai.com/news/739256.html.

“letsomepeoplegetrichfirst”:“ToEachAccordingtoHisAbilities,”Economist,May31,2001,https://www.economist.com/node/639652.

“cometoShijingshan!”:GabrielleH.Sanchez,“China’sCounterfeitDisneylandIsActuallySuperCreepy,”BuzzFeed,December11,2014,https://www.buzzfeed.com/gabrielsanchez/chinas-eerie-counterfeit-disneyland.

0.2percentoftheChinesepopulation:XuepingDu,“InternetAdoptionandUsageinChina,”27thAnnualTelecommunicationsPolicyandResearchConference,Alexandria,VA,September25–27,1999,https://pdfs.semanticscholar.org/4881/088c67ad919da32487c567341f8a0af7e47e.pdf

“freeisnotabusinessmodel”:“EbayLecturesTaobaoThatFreeIsNotaBusinessModel,”SouthChinaMorningPost,October21,2005,http://www.scmp.com/node/521384.

hisautobiography,Disruptor:周鸿祎,“颠覆者”(北京:北京联合出版公司,2017).

SinovationeventinMenloPark:Dr.AndrewNg,Dr.SebastianThrun,andDr.Kai-FuLee,“TheFutureofAI,”moderatedbyJohnMarkoff,SinovationVentures,MenloPark,CA,June10,2017,http://us.sinovationventures.com/blog/the-future-of-ai.

bookTheLeanStartup:EricRies,TheLeanStartup:HowToday’sEntrepreneursUseContinuousInnovationtoCreateRadicallySuccessful

Businesses(NewYork:CrownBusiness,2011).

3.CHINA’SALTERNATEINTERNETUNIVERSE

theNextWeb:FrancisTan,“TencentLaunchesKik-LikeMessagingApp,”TheNextWeb,January21,2011,https://thenextweb.com/asia/2011/01/21/tencent-launches-kik-like-messaging-app-in-china/.

“remotecontrolforlife”:ConnieChan,“AWhirlwindTourThroughChinaTechTrends,”AndreesenHorowitz(blog),February6,2017,https://a16z.com/2017/02/06/china-trends-2016-2017/.

“PearlHarborattack”:JoshHorwitz,“ChineseWeChatUsersSentout20MillionCash-FilledRedEnvelopestoFriendsandFamilyWithinTwoDays,”TechinAsia,February4,2014,https://www.techinasia.com/wechats-money-gifting-scheme-lures-5-million-chinese-users-alibabas-jack-ma-calls-pearl-harbor-attack-company.

“massentrepreneurshipandmassinnovation”:“PremierLi’sSpeechatSummerDavosOpeningCeremony,”Xinhua,September10,2014,http://english.gov.cn/premier/speeches/2014/09/22/content_281474988575784.htm

nearlyquadrupling:Zero2IPOResearch,“清科观察：《2016政府引导基金报告》发布，管理办法支持四大领域、明确负面清单,”清科研究中心,March30,2016,http://free.pedata.cn/1440998436840710.html.

quadrupledto$12billion:“VenturePulseQ42017,”KPMGEnterprise,January16,2018,https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2018/01/venture-pulse-report-q4-17.pdf.

tentimesthetotal:ThomasLaffontandDanielSenft,“EastMeetsWest2017Keynote,”EastMeetsWest2017Conference,PebbleBeach,CA,June26–29,2017.

“dowhatwedobest”:JoshuaBrustein,“GrubHubBuysYelp’sEat24for$288Million,”Bloomberg,August3,2017,https://www.bloomberg.com/news/articles/2017-08-03/grubhub-buys-yelp-s-eat24-for-288-million.

studybyMcKinseyandCompany:KevinWeiWang,AlanLau,andFangGong,“HowSavvy,SocialShoppersAreTransformingChineseE-Commerce,”McKinseyandCompany,April2017,https://www.mckinsey.com/industries/retail/our-insights/how-savvy-social-shoppers-are-transforming-chinese-e-commerce.

753millionsmartphoneusers:第41次“中国互联网络发展状况统计报告,”中国互联网络信息中心,January18,2018,http://www.cac.gov.cn/2018=01/31/c_1122346138.htm.

“nocashleftinHangzhou?”:“你的城市还用现金吗？杭州的劫匪已经抢不到钱了,”吴晓波频道,April3,2017,http://www.sohu.com/a/131836799_565426.

iResearchestimatedin2017:“China’sThird-PartyMobilePaymentsReport,”iResearch,June28,2017,http://www.iresearchchina.com/content/details8_34116.html.

surpassed$17trillion:Analysis易观,“中国第三方支付移动支付市场季度监测报告2017年第4季度,”http://www.analysis.cn/analysis/trade/detail/1001257/.

for$2.7billion:CateCadell,“China’sMeituanDianpingAcquiresBike-SharingFirmMobikefor$2.7Billion,”Reuters,April3,2018,https://www.reuters.com/article/us-mobike-m-a-meituan/chinas-meituan-dianping-acquires-bike-sharing-firm-mobike-for-2-7-billion-idUSKCN1HB0DU.

threehundredtoone:LaffontandSenft,“EastMeetsWest2017Keynote.”

4.ATALEOFTWOCOUNTRIES

“putAAAIonChristmasday”:SarahZhang,“China’sArtificialIntelligenceBoom,”Atlantic,February16,2017,https://www.theatlantic.com/technology/archive/2017/02/china-artificial-intelligence/516615/.

23.2percentto42.8:Dr.Kai-FuLeeandPaulTriolo,“ChinaEmbracesAI:ACloseLookandaLongView,”presentationatEurasiaGroup,December6,2017,https://www.eurasiagroup.net/live-post/ai-in-china-cutting-through-the-hype.

onehundredmost-citedresearchinstitutions:ShigenoriArai,“China’sAIAmbitionsRevealedbyListofMostCitedResearchPapers,”NikkeiAsianReview,November2,2017,https://asia.nikkei.com/Tech-Science/Tech/China-s-AI-ambitions-revealed-by-list-of-most-cited-research-papers.

“theseChinesepeoplearegood”:SameShead,“EricSchmidtonAI:‘TrustMe,TheseChinesePeopleAreGood,’”BusinessInsider,November1,2017,http://www.businessinsider.com/eric-schmidt-on-artificial-intelligence-china-2017-11.

Google’sownR&Dbudget:GregoryAllenandElsaB.Kania,“ChinaIsUsingAmerica’sOwnPlantoDominatetheFutureofArtificialIntelligence,”ForeignPolicy,September8,2017,http://foreignpolicy.com/2017/09/08/china-is-using-americas-own-plan-to-dominate-the-future-of-artificial-intelligence/.

“historicachievement”:AllisonLinn,“HistoricAchievement:MicrosoftResearchersReachHumanParityinConversationalSpeechRecognition,”TheAIBlog,Microsoft,October18,2016,https://blogs.microsoft.com/ai/historic-achievement-microsoft-researchers-reach-human-parity-conversational-speech-recognition/.

NgleftBaidu:AndrewNg,“OpeningaNewChapterofMyWorkinAI,”Medium,March21,2017,https://medium.com/@andrewng/opening-a-new-chapter-of-my-work-in-ai-c6a4d1595d7b.

proposedcuttingfunding:PaulMozurandJohnMarkoff,“IsChinaOutsmartingAmericainA.I.?”NewYorkTimes,May27,2017,https://www.nytimes.com/2017/05/27/technology/china-us-ai-artificial-intelligence.html?_r=0.

“venturesocialism”:“Capitalizingon‘VentureSocialism,’”WashingtonPost,September18,2011,https://www.washingtonpost.com/opinions/capitalizing-on-venture-socialism/2011/09/16/gIQAQ7sYdK_story.html?utm_term=.5f0e532fcb86.

260,000annualroadfatalities:“ScaleofTrafficDeathsandInjuriesConstitutes‘aPublicHealthCrisis’—SafeRoadsContributetoSustainableDevelopment,”WorldHealthOrganization,WesternPacificRegion,pressrelease,May24,2016,http://www.wpro.who.int/china/mediacentre/releases/2016/20160524/en/.

5.THEFOURWAVESOFAI

coinedthefamousphrase:FrederickJelinek,“SomeofMyBestFriendsAreLinguists,”presentationattheInternationalConferenceonLanguageResourcesandEvaluation,May28,2004,http://www.lrec-conf.org/lrec2004/doc/jelinek.pdf.

seventy-fourminutesperday:“Toutiao,aChineseNewsAppThat’sMakingHeadlines,”Economist,November18,2017,https://www.economist.com/news/business/21731416-remarkable-success-smartphone-app-claims-figure-users-out-within-24.

“newstandardofbeauty”:Conversationwithauthor,October2017.

rankallprosecutors:朱晓颖,“江苏”案管机器人”很忙：辅助办案还考核检察官,”中国新闻网,March2,2018,http://www.chinanews.com/sh/2018/03-02/8457963.shtml.

85millionbytheendof2017:SarahDai,“China’sBaidu,XiaomiinAIPacttoCreateSmartConnectedDevices,”SouthChinaMorningPost,November28,2017,http://www.scmp.com/tech/china-tech/article/2121928/chinas-baidu-xiaomi-ai-pact-create-smart-connected-devices.

towardanIPOpredicted:ShonaGosh,“XiaomiIsPickingupUnderwritersforanIPOWorthupto$100Billion,”BusinessInsider,January15,2018,http://www.businessinsider.com/xiaomi-goldman-sachs-ipo-100-billion-2018-1.

“thebestcompany”:AprilGlaser,“DJIIsRunningawaywiththeDroneMarket,”Recode,April14,2017,https://www.recode.net/2017/4/14/14690576/drone-market-share-growth-charts-dji-forecast.

1.5millionmiles:FredLambert,“Google’sSelf-DrivingCarvsTeslaAutopilot:1.5MMilesin6Yearsvs47MMilesin6Months,”Electrek,April11,2016,https://electrek.co/2016/04/11/google-self-driving-car-tesla-autopilot/.

$583billion:“Xiong’anNewArea:China’sLatestSpecialEconomicZone?”CKGSBKnowledge,November8,2017,http://knowledge.ckgsb.edu.cn/2017/11/08/all-articles/xiongan-china-special-economic-zone/.

6.UTOPIA,DYSTOPIA,ANDTHEREALAICRISIS

Kurzweilpredicts:DomGaleonandChristiannaReedy,“KurzweilClaimsThattheSingularityWillHappenby2045,”Futurism,October5,2017,https://futurism.com/kurzweil-claims-that-the-singularity-will-happen-by-2045/.

“thebiggestriskweface”:JamesTitcomb,“AIIstheBiggestRiskWeFaceasaCivilisation,ElonMuskSays,”LondonTelegraph,July17,2017,https://www.telegraph.co.uk/technology/2017/07/17/ai-biggest-risk-face-civilisation-elon-musk-says/.

“summoningthedemon”:GregKumparak,“ElonMuskComparesBuildingArtificialIntelligenceto‘SummoningtheDemon,’”TechCrunch,October26,2014,https://techcrunch.com/2014/10/26/elon-musk-compares-building-artificial-intelligence-to-summoning-the-demon/.

medianpredictionof2040:NickBostrom,Superintelligence:Paths,Dangers,Strategies(Oxford:OxfordUniversityPress,2014),19.

Hintonandhiscolleague’slandmarkpaper:GeoffreyHinton,SimonOsindero,andYee-WhyeThe,“AFastLearningAlgorithmforDeepBeliefNets,”NeuralComputation18(2006):1527–1554.

FoldingBeijing:HaoJingfang,FoldingBeijing,trans.KenLiu,UncannyMagazine,https://uncannymagazine.com/article/folding-beijing-2/.

sufferstagnantwages:RobertAllen,“Engel’sPause:APessimist’sGuidetotheBritishIndustrialRevolution,”UniversityofOxfordDepartmentofEconomicsWorkingPapers,April2007,https://www.economics.ox.ac.uk/department-of-economics-discussion-paper-series/engel-s-pause-a-pessimist-s-guide-to-the-british-industrial-revolution.

technologiesthat“reallymatter”:ErikBrynjolfssonandAndrewMcAfee,TheSecondMachineAge:Work,Progress,andProsperityinaTimeofBrilliantTechnologies(NewYork:Norton,2014),75–77.

“thegreatdecoupling”:ErikBrynjolfssonandAndrewMcAfee,“Jobs,ProductivityandtheGreatDecoupling,”NewYorkTimes,December11,2012,http://www.nytimes.com/2012/12/12/opinion/global/jobs-productivity-and-the-great-decoupling.html.

doubleditsshare:EduardoPorterandKarlRussell,“It’sanUnequalWorld.ItDoesn’tHavetoBe,”NewYorkTimes,December14,2017,https://www.nytimes.com/interactive/2017/12/14/business/world-inequality.html.

twiceasmuchwealth:MattEgan,“RecordInequality:TheTop1%Controls38.6%ofAmerica’sWealth,”CNN,September17,2017,http://money.cnn.com/2017/09/27/news/economy/inequality-record-top-1-percent-wealth/index.html.

fallenforthepoorestAmericans:LawrenceMishel,EliseGould,andJoshBivens,“WageStagnationinNineCharts,”EconomicPolicyInstitute,January6,2015,http://www.epi.org/publication/charting-wage-stagnation/.

“Theanswerissurelynot”:ClaireCainMiller,“AsRobotsGrowSmarter,AmericanWorkersStruggletoKeepUp,”TheUpshot(blog),NewYorkTimes,December15,2014,https://www.nytimes.com/2014/12/16/upshot/as-robots-grow-smarter-american-workers-struggle-to-keep-up.html.

“thebiggestchallenge”:Ibid.

$148billioninvested:DanaOlsen,“ARecord-SettingYear:2017VCActivityin3Charts,”Pitchbook,December15,2017,https://pitchbook.com/news/articles/a-record-setting-year-2017-vc-activity-in-3-charts.

leaptto$15.2billion:“TopAITrendstoWatchin2018,”CBInsights,February2018,https://www.cbinsights.com/research/report/artificial-intelligence-trends-2018/.

adireprediction:CarlBenediktFreyandMichaelA.Osborne,“TheFutureofEmployment:HowSusceptibleAreJobstoAutomation,”OxfordMartinProgrammeonTechnologyandEmployment,September17,2013,https://www.oxfordmartin.ox.ac.uk/downloads/academic/future-of-employment.pdf.

just9percentofjobs:MelanieArntz,TerryGregory,andUlrichZierahn,“TheRiskofAutomationforJobsinOECDCountries:AComparativeAnalysis,”OECDSocial,Employment,andMigrationWorkingPapers,no.189,May14,2016,http://dx.doi.org/10.1787/5jlz9h56dvq7-en.

38percentofjobs:RichardBerrimanandJohnHawksworth,“WillRobotsStealOurJobs?ThePotentialImpactofAutomationontheUKandOtherMajorEconomies,”PwC,March2017,https://www.pwc.co.uk/economic-services/ukeo/pwcukeo-section-4-automation-march-2017-v2.pdf.

alreadyautomatable:JamesManyikaetal.,“WhattheFutureofWorkWillMeanforJobs,Skills,andWages,”McKinseyGlobalInstitute,November2017,https://www.mckinsey.com/global-themes/future-of-organizations-and-work/what-the-future-of-work-will-mean-for-jobs-skills-and-wages.

20to25percentfeweremployees:KarenHarris,AustinKimson,andAndrewSchwedel,“Labor2030:TheCollisionofDemographics,AutomationandInequality,”BainandCompany,February7,2018,http://www.bain.com/publications/articles/labor-2030-the-collision-of-demographics-automation-and-inequality.aspx.

makeChina“groundzero”:MartinFord,“China’sTroublingRobotRevolution,”NewYorkTimes,June10,2015,https://www.nytimes.com/2015/06/11/opinion/chinas-troubling-robot-revolution.html.

“Americanrobotsworkashard”:VivekWadhwa,“SorryChina,theFutureofNext-GenerationManufacturingIsintheUS,”Quartz,August30,2016,https://qz.com/769897/sorry-china-the-future-of-next-generation-manufacturing-is-in-the-us/.

captureafull70percent:RaoandVerweij,“SizingthePrize.”

“uselessclass”:YuvalN.Harari,“TheRiseoftheUselessClass,”TEDIdeas,February24,2017,https://ideas.ted.com/the-rise-of-the-useless-class/.

“Ilostmysenseofworth”:BinyaminAppelbaum,“TheVanishingMaleWorker:HowAmericaFellBehind,”NewYorkTimes,December11,2014,https://www.nytimes.com/2014/12/12/upshot/unemployment-the-vanishing-male-worker-how-america-fell-behind.html.

Ratesofdepressiontriple:RebeccaJ.Rosen,“TheMental-HealthConsequencesofUnemployment,”Atlantic,June9,2014,https://www.theatlantic.com/business/archive/2014/06/the-mental-health-consequences-of-unemployment/372449/.

“deathsofdespair”:AnneCaseandAngusDeaton,“MortalityandMorbidityinthe21stCentury,”BrookingsPapersonEconomicActivity,Spring2017,https://www.brookings.edu/wp-content/uploads/2017/08/casetextsp17bpea.pdf.

7.THEWISDOMOFCANCER

BeYourPersonalBest:李开复,做最好的自己(北京:人民出版社,2005),https://www.amazon.cn/dp/B00116LO0W.

MakingaWorldofDifference:Dr.Kai-FuLee,HaitaoFan,andCrystalTai(translator),MakingaWorldofDifference,AmazonDigitalServices,April13,2018.

“Itallcomesdowntolove”:BronnieWare,“Top5RegretsoftheDying,”HuffingtonPost,January,21,2012,https://www.huffingtonpost.com/bronnie-ware/top-5-regrets-of-the-dyin_b_1220965.html.

fivestagesofgrief:ElisabethKübler-Ross,OnDeathandDying(NewYork:Macmillan,1969).

analyzedfifteendifferentvariables:MassimoFedericoetal.,“FollicularLymphomaInternationalPrognosticIndex2:ANewPrognosticIndexforFollicularLymphomaDevelopedbytheInternationalFollicularLymphomaPrognosticFactorProject,”JournalofClinicalOncology27,no.27(September2009):4555–4562.

8.ABLUEPRINTFORHUMANCOEXISTENCEWITHAI

movetoafour-dayworkweek:SethFiegerman,“GoogleFoundersTalkAboutEndingthe40-HourWorkWeek,”Mashable,July7,2014,https://mashable.com/2014/07/07/google-founders-interview-khosla/#tXe9XU.mr5qU.

creativeapproachestowork-sharing:StevenGreenhouse,“Work-SharingMayHelpCompaniesAvoidLayoffs,”NewYorkTimes,June15,2009,http://www.nytimes.com/2009/06/16/business/economy/16workshare.html.

YCombinatorpresidentSamAltman:KathleenPender,“OaklandGroupPlanstoLaunchNation’sBiggestBasic-IncomeResearchProject,”SanFranciscoChronicle,September21,2017,https://www.sfchronicle.com/business/networth/article/Oakland-group-plans-to-launch-nation-s-biggest-12219073.php.

FacebookcofounderChrisHughes:TheEconomicSecurityProject,https://economicsecurityproject.org/.

givesathousandfamiliesastipend:Pender,“OaklandGroup.”

“VCforthePeople”:SteveRandyWaldman,“VCforthePeople,”Interfluidity(blog),April16,2014,http://www.interfluidity.com/v2/5066.html.

“everyonehasacushion”:ChrisWeller,“MarkZuckerbergCallsforExploringBasicIncomeinHarvardCommencementSpeech,”BusinessInsider,May25,2017,http://www.businessinsider.com/mark-zuckerberg-basic-income-harvard-speech-2017-5.

twofastestgrowingprofessions:BenCasselman,“APeekatFutureJobsRevealsGrowingEconomicDivides,”NewYorkTimes,October24,2017,https://www.nytimes.com/2017/10/24/business/economy/future-jobs.html.

justover$20,000:U.S.DepartmentofLabor,BureauofLaborStatistics,OccupationalEmploymentStatistics,“HomeHealthAidesandPersonalCareAides,”https://www.bls.gov/ooh/healthcare/home-health-aides-and-personal-care-aides.htm,and“PersonalCareAides,”https://www.bls.gov/oes/current/oes399021.htm.

“ASenseofPurpose”:LarryFink,“LarryFink’sAnnualLettertoCEOs:ASenseofPurpose,”BlackRock,January18,2018,https://www.blackrock.com/corporate/en-us/investor-relations/larry-fink-ceo-letter.

9.OURGLOBALAISTORY

“Youcan’tconnectthedots”:SteveJobs,“2005StanfordCommencementAddress,”StanfordUniversity,publishedMarch7,2018,https://www.youtube.com/watch?v=UF8uR6Z6KLc&t=785s.

spaceraceofthe1960s:JohnR.AllenandAmirHusain,“TheNextSpaceRaceIsArtificialIntelligence:AndtheUnitedStatesIsLosing,”Foreign

Policy,November3,2017,http://foreignpolicy.com/2017/11/03/the-next-space-race-is-artificial-intelligence-and-america-is-losing-to-china/.

ColdWararmsrace:ZacharyCohen,“USRisksLosingArtificialIntelligenceArmsRacetoChinaandRussia,”CNN,November29,2017,https://www.cnn.com/2017/11/29/politics/us-military-artificial-intelligence-russia-china/index.html.

Index

A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|X|Y|Z

AAfrica,138,139,169

ageofdata,14,18,56

ageofimplementation

Chineseentrepreneursand,16,18,25

Chinesegovernmentand,18

dataand,17,20,55,80

deeplearningand,13–14,143

goinglightvs.goingheavy,71

AGI(artificialgeneralintelligence),140–44

AI.Seeartificialintelligence(AI)

AIengineers,14

Airbnb,39,49,73

AIrevolution

deeplearningand,5,25,92,94,143

economicimpactof,151–52

speedof,152–55

AIwinters,6–7,8,9,10

algorithmicbias,229

algorithms,AI

AIrevolutionand,152–53

computingpowerand,14,56

creditand,112–13

dataand,14,17,56,138

fakenewsdetectionby,109

intelligencesharingand,87

legalapplicationsfor,115–16

medicaldiagnosisand,114–15

asrecommendationengines,107–8

robotreporting,108

white-collarworkersand,167,168

Alibaba

Amazoncomparedto,109

Chinesestartupsand,58

CityBrain,93–94,117,124,228

asdominantAIplayer,83,91,93–94

eBayand,34–35

financialservicesspunofffrom,73

fourwavesofAIand,106,107,109

globalmarketsand,137

gridapproachand,95

MicrosoftResearchAsiaand,89

mobilepaymentstransition,76

NewYorkStockExchangedebut,66–67

onlinepurchasingand,68

successof,40

Tencent’s“PearlHarborattack”on,60–61

WangXingand,24

Alipay,35,60,69,73–74,75,112,118

Alphabet,92–93

AlphaGo,1–4,5,6,11,199

AlphaGoZero,90

Altman,Sam,207

Amazon

Alibabacomparedto,109

Chinesemarketand,39

datacapturedby,77

asdominantAIplayer,83,91

fourwavesofAIand,106

gridapproachand,95

innovationmentalityat,33

monopolyofe-commerce,170

onlinepurchasingand,68

WangXingand,24

warehouses,129–30

AmazonEcho,117,127

AmazonGo,163,213

Anderson,Chris,130

AndreesenHorowitz,70

AntFinancial,73

antitrustlaws,20,28,171,229

Apolloproject,135

appconstellationmodel,70

Apple,33,75,117,126,143,177,184

ApplePay,75,76

app-within-an-appmodel,59

ARM(Britishfirm),96

Armstrong,Neil,3

artificialgeneralintelligence(AGI),140–44

artificialintelligence(AI)

introductionto,ix–xi

SeealsoChina;deeplearning;economyandAI;fourwavesofAI;globalAIstory;humancoexistencewithAI;newworldorder

artificialsuperintelligence.Seesuperintelligence

AssociationfortheAdvancementofArtificialIntelligence,88–89

Austria,159

automation

infactoriesandfarms,20,165–66,167–68

Fink’sletterand,215,216

intelligentvs.physical,166,167

jobsatriskofdisplacementby,157–60,162,164,165–67,204

autonomousAI,105–6,128–36

AvenueoftheEntrepreneurs(ChuangyeDajie),53,54,61–62,64,68

BBaidu

AICityand,134

Chinesestartupsand,58

asdominantAIplayer,83,91,93

Googlecomparedto,37,38,109

MicrosoftResearchAsiaand,89

Ng,Andrew,and,44

self-drivingcarsand,131,135

successof,40,66

BainandCompany,164–65

bankingindustry,110,113,116

BAT(Baidu,Alibaba,andTencent),58

batteryapproach,95

beetle-likerobots,129–30

Beijing,China,2–4,28,29,51–52,77–78,99,144–45

Bengio,Yoshua,86

Bezos,Jeff,33

Bhutan,229

bicyclesharing,77–78,79

Bitmain,97

blue-collarworkers,128–29,165–66,167,168

Bostrom,Nick,141,142,143

Brazil,137,138

Brin,Sergei,33

Brooks,Rodney,143

Brynjolfsson,Eric,148–49,150,151

Buddhism,187–90

businessAI,105–6,110–17,136

BuzzFeed,40,108,109

ByteDance.SeeToutiao(newsplatform)

CCambriconTechnologies,97

CambridgeAnalytica,107–8,125

Canada

AIsuperpowersand,169

birthofAIand,11,13–14

businessAIand,111

newworldorderand,20

volunteerismin,229

cancer

AIanddiagnosisof,167

Lee’sdiagnosiswith,176–77,181–83,225

lymphoma,176,183,190–92,194

Care.com,213

Careem,137

careworkandsocialinvestmentstipend,221,222

Chan,Connie,70

chess,4–5

China

AI,perspectiveon,andjobs,202–3

AIdeploymentby,18–19,82–84,132–33,154–55

AIfeverin,x,1–6

conformityanddeferencetoauthority,culturalpropensityfor,66

copycaterain.Seecopycateraandentrepreneurship

dataabundancein,15,16,17,50,55–56,79

eldercarein,229

entrepreneursof.SeeChineseentrepreneurs

globaleconomicinequalityand,168–70

governmentsupportinSeeChinesegovernment

imitation,culturalpropensityfor,27,28,29–30

inequalityin,170–72,200

internetecosystemof,24–28,40,43–44,46,49–50.SeealsoChina’salternateinternetuniverse

jobsatriskofautomationin,159–60

low-costexportsand,146

medicaldiagnosisin,114

privacyprotectionin,124,125

reemergenceof,180–81

scarcitymentality,27–28

self-drivingcarsin,133

SiliconValley’stechnologyenvironmentcomparedto,15–16,43–45,49,55,57,65,71–73

SputnikMomentfor,3,11

trafficaccidentsin,101

U.S.competitionwith.SeeChinaandU.S.,competitionbetween

ChinaandU.S.,competitionbetween,81–103

automationandjobsatrisk,165–67,168

autonomousAIand,130–31,134–36

businessAIand,111–12,116,136

China’sadvantagesin,14–17,18

China’svs.America’sAIplans,97–98

Chineseentrepreneursvs.SiliconValley’s,34,49,55

computerchipsand,96–97

corporateresearchandproprietarytechnology,91–92

dominantAIplayersin,83–84

fourwavesofAIand,106,136

globalAIstoryand,227–29

globalmarketsand,137–39

goinglightvs.goingheavy,71–73,76–77

Googlevs.dominantplayers,92–94

governmentrolesin,98–100

gridapproachvs.batteryapproach,94–95

increasingcontributionsfromChineseresearchers,88–90

intelligencesharing,86–88

internetAIand,109–10,136

moralandculturaldilemmas,101–3

O2Oexplosionand,79–80

outdatedassumptionsandmisunderstandingsabout,11–12,25–26

perceptionAIand,124,126,128,136

politicalculturedifferences,84

quantityofengineersvs.qualityofresearchers,83,85–86

venturefundingand,4

China’salternateinternetuniverse,51–80

AvenueoftheEntrepreneurs,53,54,61–62,64,68

bicyclesharing,77–78

dataand,55–56,73

GuoHongand,51–52,56,61–62,63,64,68

massentrepreneurshipandmassinnovationinitiative,62–68

mobilepayments,16,54–55,60–61,73–77

onlineandofflineworlds,blurringof,78–80

O2ORevolution,68–71

revolutioninculture,66–68

smartphonesand,57–59

super-appmodel,70,71.SeealsoWeChat

transformationinto,53–55

China’sStateCouncil,63–64,98

Chineseentrepreneurs

cutthroatenvironmentfor,15–16,40

groupbuyingand,46

leanstartupmethodologyand,44–45

massentrepreneurshipandmassinnovationinitiativeand,64,67–68

SiliconValley’sfailuresinChinaand,39–40

transitionfromdiscoverytoimplementationand,15

Seealsocopycateraandentrepreneurship;WangXing;ZhouHongyi

Chinesegovernment

AIleadershipplan,3–4,84

BookCitydevelopment,61–62

localgovernmentAIsupport,98–100

massentrepreneurshipandmassinnovationinitiative,62–67,99

rapiddeploymentoftechnologiesand,82–83,99–100,102–3,132–34

supportforAIdevelopment,17–19,52

technologycompaniesand,229

Chineselanguagecharacters,183–84

ChineseMinistryofScienceandTechnology,97

CityBrain(byAlibaba),93–94,117,124,228

citybrains,84,93–94,103

clockdiplomacy,29–30

cloud-basedplatforms,94–95

cognitivelaborandriskofreplacement,155,156,168

ColdWar,comparisonto,227–28

CommunistParty,63

compassionatecaregivers,212–13

computerchips,96–97

computervision,9,87,89,108,134,135,161.Seealsofacialrecognition;imagerecognition;objectrecognition

computingpower,9,14,56,92

controlproblem,142

copycateraandentrepreneurship,22–50

AIinChinaand,12,15–16,49–50,52,61

contrastingculturesand,26–28,43–44

copycatclockmaking,29–30

earlycopycatinternetcompanies,30–33

gladiatormetaphor,24–26,43

Kaixin001vs.Renren,42–43

leanstartupmethodology,44–45

Ma,Jack,and,34–37

searchhabitdivergenceand,37–38

SiliconValleyand,22–25,28,30–34,39–40,49

WangXingand,22–24,26,31,32–33,42,46–49

WarofaThousandGroupons,45–49

ZhouHongyiand,40–42

corporateoligarchy,171

corporateresearchandproprietarytechnology,91–92

corporatesocialresponsibility,216–17

craftsmanship,229

creditindustry,10–11,110,112–13,116

crimedisruption,75

CulturalRevolutioninChina,33

CybersecurityLawinChina,125

DDaimler,135

data

ageof,14,18

AIalgorithmsand,14,17,56,138

AI-richcountriesand,168–69

businessesand,110–11

China’sabundanceof,15,16,17,50,55–56,73,79

collectionof,andprivacy,124–25

deeplearningand,14,17,19–20,56

internetcompaniesand,107–8

medicaldiagnosisand,114

frommobilepayments,77

neuralnetworksand,9

pattern-findingin,10

private,124–25

self-drivingcarsand,131–32,133

structured,111–12

DeepBlue,4,5

deeplearning

AIrevolutionand,5,12–13,25,92,94,143

businessAIand,111

dataand,14,17,19–20,56

Googleand,92

historyof,6–10

implementationof,12–14,86

machineperceptualabilitiesand,166

next,91–92,94

pattern-findingand,10–11,13,166–67

rapidprogressof,161

DeepMind

AIinUnitedKingdomand,169

AlphaGoand,2,11

AlphaGoZeroand,90

Googleand,2,11,92

iFlyTekcomparedto,105

publishingby,91

reinforcementlearningand,143

DengXiaoping,28

desktopcomputers,96

Dianping(Yelpcopycat),48,49,71–72

Didi

fourwavesofAIand,106

goingheavy,72–73

self-drivingcarsand,131

servicesusingmodelof,213–14

Uberand,40,68–69,79,137

DidiChuxing,68–69,70

discoverytoimplementation,transitionfrom,13,15

DisneylandreplicainChina,31

Disruptor(Zhou),42

DJI,130–31

domesticworkers,130

drones,autonomous,130–31,136,167–68

dual-teachermodel,122

dystopiansvs.utopians,140–44

EEachNet,35

Eat24,72

eBay,35–37,39

economyandAI,144–73

competitionand,106

deep-learningbreakthroughsand,4–5

generalpurposetechnologies(GPTs),148–55

globaleconomicinequality,146,168–70,172

intelligentvs.physicalautomation,167–68

jobloss,twokindsof,162–63

joblosses,bottomline,164–65

joblossstudies,157–61

jobsandinequalitycrisis,145–47

machinelearningasdriver,25,84,91,94–95

monopolies,20,96,168–69,170–71

psychologicalcrisis,5,21,147,173–74

riskofreplacement,155–57

science-fictionvisionsand,144–45

techno-optimistsandtheLudditefallacy,147–48

unemployment.Seeunemployment,mass

U.S.-Chinacomparison,165–67,168

wealthinequality.Seewealthandclassinequality

SeealsobusinessAI;humancoexistencewithAI

Edison,Thomas,13,86

education

employmentand,205

OMO-powered,121–24

revamping,228–29

socialinvestmentstipendand,221–22

Einstein,Albert,103

electrification,comparedtoAI,13–15,25,50,86,149–50,152,154,228

ElementAI,111

engineeringbottlenecks,158

enterprisesoftware,111–12

Estonia,137

EuropeanUnion,124–25,229

expertisetodata,transitionfrom,14,15,56

expertsystems,7–8

FF5FutureStore,163

Face++,90,117

Facebook

CambridgeAnalyticaand,107–8,125

Chinesecompaniescomparedto,28

Chineseresearchersat,90

cloningof,22–23,24,31,32–33

deep-learningexpertsand,11

asdominantAIplayer,83,91

Face++and,90

globalmarketsand,137

iFlyTekcomparedto,105

innovationmentalityat,33

monopolyofsocialnetworks,170

resistancetoproductmodifications,34

splitwithMessenger,70

Tencentcomparedto,109

topresearchersat,93

U.S.digitalworlddominanceand,2

FacebookAIResearch,91

facialrecognition

AIchipsand,96

Apple’siPhoneXand,117

Chineseinvestmentin,99

devicesecurityand,117

education,AI-powered,and,122

Face++and,90,117

mobilepaymentsand,118

privacyand,124

publictransportationand,84

fakenewsdetection,109

Fanfou(Twitterclone),23,46

Fermi,Enrico,85,103

financialcrisis(2008),46,100,165,205

financialsector,111,112–13,116

Fink,Larry,215–16

FoGuangShanmonastery,187,218–20

“FoldingBeijing”(Hao),144–45,172,230

fooddelivery,69,72,79

ForbiddenCity,29

Ford,135

Ford,Martin,165

4thParadigm,111

fourwavesofAI,104–39

autonomousAI,105–6,128–36

businessAI,105–6,110–17

economicdividesand,145

globalmarketsand,136–38

internetAI,105–6,107–10

perceptionAI,105–6,117–28

France,20,169

freemiumrevenuemodel,36

Frey,CarlBenedikt,158

Friendster,22

GGates,Bill,33

generalAI,10,13

GeneralDataProtectionRegulation,124–25

generalpurposetechnologies(GPTs),148–55

gigeconomy,164

globalAImarkets,136–38

globalAIstory,226–32

AIfuturewithoutAIrace,227–28

globalwisdomforAIage,228–29

heartsandminds,231–32

writing,230

globaleconomicinequality,146,168–70

globalization,150

GMI(guaranteedminimumincome),206–7

Go(game),1–2,4,5,167

goinglightvs.goingheavy,71–73,76–77,209

Google

AIchipsand,96

AlphaGoand,1,2,11

Baiducomparedto,37,38,109

Chinaattimeoffoundingof,33

Chineseentrepreneurscomparedto,24–25

Chinesemarketand,39

datacapturedby,77

asdominantAIplayer,83,91,93–94

eliteexpertiseat,138–39

Europe’sfiningof,229

Face++and,90

globalmarketsand,137

gridapproachand,95

iFlyTekcomparedto,105

innovationmentalityat,33

internetAIand,107,109

mobilepaymentsand,75

monopolyofsearchengines,170

vs.othertechnologycompanies,92–94

resistancetoproductmodifications,34

self-drivingcarsand,131–32,135

TensorFlow,95,228

topresearchersat,93

U.S.digitalworlddominanceand,2

SeealsoDeepMind

GoogleBrain,45

GoogleChina,29–30,31–32,37–38,41,52,57

GoogleWallet,75,76

GPTs(generalpurposetechnologies),148–55

Grab,137

greatdecoupling,150,170,202

gridapproach,94–95

“GrossNationalHappiness,”229

ground-updisruptionsandjobthreats,162–63,164

Groupon,23,24,45–46,47–48,49

Grubhub,72

guaranteedminimumincome(GMI),206–7

guidingfunds,63,64,98–99

GuoHong,51–52,56,61–62,63,64,68

HHallofAncestorWorship,29–30

Hangzhou,China,75,94,99

HaoJingfang,144–46,168,172,230

Harari,YuvalN.,172

hardwareinnovation,125–28

Hassabis,Demis,141

Hawking,Stephen,141

healthcare,103,113–15,116,195,211–13.Seealsomedicaldiagnosis

Hefei,China,81–82,83

Her(film),199

HiddenMarkovModels,8

Hinton,Geoffrey,9,11,86,92,93,143,161

homeecosystems,127–28

homehealthcareaides,171,214

homeworkanddrills,123

HorizonRobotics,97

hospitals,110,114,125,138

HsingYun,Master,187–90,195,218–20,225

Huawei,89

Hughes,Chris,207

humancoexistencewithAI,197–225

ChineseperspectiveonAIandjobs,202–3

Fink’sletterandimpactinvesting,215–17

governmentrolein,217–18,222–24

lookingforwardandaround,224–25

loveand,195–96,198,199,201,210

marketsymbiosis,210–15

newsocialcontract,199–202

reduce,retrain,andredistribute,203–6

socialinvestmentstipend,220–24

touchscreendeviceforelderly,197–98,221

universalbasicincome,201,206–10,218,220,222,225

volunteerism,218–20

IIBM,4

IBMWatson,105,111

ICT(informationandcommunicationtechnologies),150–51,152,154

iFlyTek,104–5,115–16

ImageNet,89–90,161

imagerecognition,8,10,81,89–90,104–5,161.Seealsocomputervision;objectrecognition

impactinvesting,service-focused,216–17

implementation

ageof.Seeageofimplementation

ofdeeplearning,12–14,86

in-classteaching,122–23

India,137,138,139

Indonesia,138,139

IndustrialRevolution,comparedtoAI,18,79,86–87,148,151–52,200,228

IndustrialRevolutions,firstandsecond,GPTsof,149–50,152,153

industry-basedapproachtojobsatrisk,162–63

inequality.Seeglobaleconomicinequality;wealthandclassinequality

informationandcommunicationtechnologies(ICT),150–51,152,154

insuranceindustry,10,110

Intel,96

intelligentsuperhighways,133

internationalresearch,11–13

internet,monopolizationof,170

internetAI,105–6,107–10,136

InternetExplorer,41

internet-of-things(IoT)networks,54,78,79

iPhone,32,57

iPhoneX,117

ironricebowl,67

Italy,85,191–92

JJapan,20,229

Jesuits,29

JingChi,135

JinriToutiao.SeeToutiao(newsplatform)

jobdisplacementbyautomation,160,162,204.SeealsoundereconomyandAI

Jobs,Steve,26,32,33,226

jobs,threatto.Seerisk-of-replacementgraphs;unemployment,mass

Johansson,Scarlett,199

KKaixin001,42–43

Kasparov,Garry,4

KeJiao,113

KeJie,1–2,3,5–6

Kennedy’sman-on-the-moonspeech,98

King,MartinLuther,Jr.,207

Kübler-Ross,Elisabeth,188

Kurzweil,Ray,140–41

L

laborunions,declineof,150

TheLeanStartup,44

leanstartupmethodology,44–45

LeCun,Yann,86,88,90,93

Lee,Kai-Fu

birthoffirstchild,177–79

cancerdiagnosis,176–77,181–83,225

epitaphsof,180–81,194

familyof,175–76,177–79,184–87,193–94,195,225

MasterHsingYunand,187–90,195

regretsof,185–87,188

researchonlymphoma,190–92

venturecapitalindustryand,ix,xi,3,52

willof,183–85

workobsession,175–80

LeeSedol,3

legaldecisionsbyjudges,115–16

Lenovo,89

Li,Robin,37

lifelonglearning,204

lifepurpose,lossof,21

LiKeqiang,62–63

LinkedIn,39

LiuQingfeng,105

livenessalgorithm,118

love

AIasopportunitytorefocuson,176–77,196,210

centralityof,inhumanexperience,198,199,225,231–32

Lee’scancerandrefocuson,193–96

MasterHsingYun’swisdomabout,189–90,195

newsocialcontractand,200–201

regretsaboutnotsharing,185,186–87,195

service-focusedimpactinvestingand,217

Ludditefallacy,147–48,151

Lyft,79,137

lymphoma,176,183,190–92,194

MMa,Jack,34–37,60–61,66–67,137

machinelearning

advancesin,recent,160–61

algorithms,40.Seealsoalgorithms,AI

chipsand,96

dataand,56

deeplearningaspartof,6,94

economydrivenby,25,84,91,94–95

socialinvestmentstipendand,221–22

machinereading,161

machinetranslation,104,161

ManhattanProject,85

Manpower,47–48

market-drivenstartups,26–27,45

massentrepreneurshipandmassinnovation,54,62–68,99

McAfee,Andrew,148–49,150

McCarthy,John,7

McKinseyGlobalInstitute,159–60

medicaldiagnosis,113–15,167,195,211.Seealsohealthcare

Meituan(Grouponclone),23–24,46–49,72

MeituanDianping,49,69,70,72

Mercer,Robert,108

Messenger,70

MiAIspeaker,127

micro-finance,112–13,138

Microsoft

AIchipsand,96

antitrustpolicyand,28

Chinaattimeoffoundingof,33

asdominantAIplayer,83,91

Face++and,90

Leeat,28,33,105,184

speechrecognition,93

Tencentand,93

topresearchersat,93

MicrosoftResearch,91

MicrosoftResearchAsia(formerlyMicrosoftResearchChina),89–90,105

MiddleEast,137,139,169

mini-iPhones,32

Minsky,Marvin,7

mission-drivenstartups,26,45

MIT,30

Mobike,77–78

mobilepayments,16,54–55,60–61,73–78,79,110

Momenta,135

monopolies,20,96,168–69,170–71,172,229

Moravec,Hans,166

Moravec’sParadox,166–67

Musical.ly,109

Musk,Elon,49,131,141

NNanjing,China,99

narrowAI,10,142

NationalAeronauticsandSpaceAdministration(NASA),3

natural-languageprocessing,105,108,115

Netherlands,229

neuralnetworksapproachtoAI,7,8–10,89

newworldorder,18–19,20–21,138–39

Ng,Andrew,13,44,88,93,113–14,144

99Taxi,137

Nixon,Richard,207

NorthAfrica,138

Nuance,105

Nuomi(groupbuyingaffiliate),48–49

Nvidia,96,97,135

OObama,Barack,97–98,100,104

objectrecognition,9,90,94,117.Seealsocomputervision;imagerecognition

OECD(OrganizationforEconomicCooperationandDevelopment),158–59,160

ofo,77,78

Ola,137

one-to-onereplacementsofjobs,162,164

onlineeducation,204

online-merge-offline(OMO),117–25

onlinesecurity,229

online-to-offline(O2O)platforms,16–17,68–71,73,79,110,118,127–28

OrganizationforEconomicCooperationandDevelopment(OECD),158–59,160

Osborne,MichaelA.,158

Othello(game),4

outsourcing,150

OxfordUniversity,158,160,161

PPage,Larry,33,205

Palantir,111–12

paralegals,213

pattern-finding,10–11,13,166–67

payment-by-scan,74–75

PayPal,36

pay-with-your-face,118

PekingUniversity,108

perceptionAI,105–6,117–28,136

personalcareaides,214

physicallaborandriskofreplacement,156,168

point-of-sale(POS)devices,74,77

Pony.ai,135

postureanalysis,122

PricewaterhouseCoopers(PwC),18,151,159,160,161,162,169

privacyissues,124–25,229

productivity,146–52,154,167.Seealsogreatdecoupling

psychologicalcrisis,5,21,147,173

publication,instant,87–88

PwC.SeePricewaterhouseCoopers(PwC)

QQianlong(emperor),29

Qihoo360(websecuritysoftware),41–42

QQ(messagingplatform),41–42,58

QRcodes,74,77

Qualcomm,96

Q-Zone(socialnetwork),58

RReddit,109

Reddy,Raj,4

redenvelopes,60,61

redistributionofwealth,203–4,206–8,222

reducingworkhours,203,205–6,207

reinforcementlearning,12,143

Renren(socialnetwork),23,42–43,48

ResNet,90

retraining,203,204–5,207,215,216,221–22

ridesharing,68–69,76,79,137–38

risk-of-replacementgraphs,155–57,204,205–6,211

robotreporters,108

robotsandrobotics,129–30,166–68,230

rule-basedapproachtoAI,7–8

RXThinking,114–15

SSchmidt,Eric,90

sciencefiction,144–45,168,172,199,230

Sculley,John,177–78

searchhabits,divergent,37–38

TheSecondMachineAge(BrynjolfssonandMcAfee),148–49,150

self-drivingcars

AIchipsand,96,97

approachesfordeploymentof,131–35

Chinavs.U.S.,136

deeplearningand,10–11

inIndia,138

politicalculturedivideand,101–2

ride-hailingcompaniesand,137

semiconductors,96

“ASenseofPurpose”(Fink),215

servicejobs,creationof,andcompensationfor,214–15,216

serviceworkandsocialinvestmentstipend,221,222

SevenGiantsoftheAIage,83,91–92,93,94,95,169

sharingeconomy,213–14

Shenzhen,China,99,125–26,127,130–31

shoppingcarts,perceptionAI–powered,119–21,124,125

SiliconValley

Baidu’sAIlabin,93

China’scompetitionwith.SeeChinaandU.S.,competitionbetween

China’stechnologyenvironmentcomparedto,15–16,43–45,49,55,57,65,71–73

China’sversionof,51–53,63

Chinesecopycatentrepreneursand,22–25,28,30–34,49

chipdevelopmentin,96–97

datagatheredby,56

eBayand,35–36

ecosystemof,52–53

eliteexpertisein,82,83

entrepreneursof,15–16,22,26,27,52,168

failureinChina,39–40

fourwavesofAIand,106

globalmarketsand,137,138

leanstartupmethodologyand,44–45

policysuggestionscomingfrom,201

resistancetoproductmodifications,24,38,39

resistancetosubsidies,76

ridesharingand,68

universalbasicincomeand,207,208–10,218

worldtechnologymarketdomination,2,11–12

SiliconValley(TVseries),55

Simon,Herbert,7

Singapore,20,137,146

Tthesingularity,140–41,142

SinovationVentures

Guo’sattractionof,52,62

Lee’sfoundingof,52,57,64,67

startupsincubatedby,57,58

studyby,89

SmartFinance,112–13,163

smartphones

China’salternateinternetuniverseand,54,61

ChineseleapfroggingofPCswith,57–58

Chinesestudentsand,3,83

chipsin,96

mini-iPhones,32

Mobikesand,78

mobilepaymentsand,74,75

processingpowerin,9

WeChatappfor,58–59,61,70

Zhongguancunand,52

socialentrepreneurship,216–17

socialinvestmentstipend,220–24

Softbank,153

Sohoo(searchengine),31

solarpanels,photovoltaic,133

Solyndra,100

SoutheastAsia,137,169

SouthKorea,146,159,228–29

SovietUnion,3

SpaceRace,3

SpaceX,49

speechrecognition

advancesin,recent,161

Baiduand,93

deeplearningand,5,10

educationalapplications,123

iFlyTekand,104–5

internationalcompetitionsin,87,104–5

Leeand,177–78

legalapplications,115

inthemainstream,143

MicrosoftResearchand,81

neuralnetworksand,8–9,10

privacyand,124

speechsynthesis,104–5,177

Sphinx,8

Sputnik,3

SputnikMomentforChina(2016),3,11

StealVegetables,43

steamengine,149,150,152,154,228

Stoppelman,Jeremy,72

strawberrypicking,129

strongfeaturesvs.weakfeatures,110–11,113,191

structureddata,111–12

Summers,Lawrence,151

super-appmodel,70–71.SeealsoWeChat

superintelligence,140–42,143,144

Superintelligence(Bostrom),141,142

swarmintelligence,130–31

Switzerland,229

symbolicsystems,7

Taiwan,181–82,183–84,187,190,192,197

Taobao,35–36,66

task-basedapproachtojobsatrisk,159–60,162,163

taxidriversandride-hailingapps,76

Taxify,137

techno-optimists,147–48,151,171,200,202

techno-utilitarianism,101,102,103,132

Tencent.SeealsoWeChat

Chinesestartupsand,58

asdominantAIplayer,83,91,93

globalmarketsand,137

Grouponpartnershipwith,47–48

internetAIand,109

MicrosoftResearchAsiaand,89

mobilepaymentsand,73–74,76

“PearlHarborattack”onAlibaba,60–61

successof,40

super-appmodeland,70–71

Zhouand,41–42

TensorFlow,95,228

Terminator(filmseries),141

Tesla,131–32

testsandgrading,123

3QWar,41–42

Thrun,Sebastian,88,113–14

Tmall,36

Toutiao(newsplatform),40,108–9,163

trafficmanagement,84,94,103,124,134

transferlearning,12

Traptic,129

truckdrivers,101,102

Trump,Donald,98,104

TsinghuaUniversity,89

Tujia,73

tutoring,customized,123–24

Twitter,23,24,31,33,40

UUber

bicyclesharingcomparedto,78,79

Chineseentrepreneurscomparedto,24–25

Chinesemarketand,39

Didiand,40,68–69,70,72,79,137

fourwavesofAIand,106

globalmarketsand,137

O2Orevolutionand,68–69

self-drivingcarsand,19,131

servicesusingmodelof,213–14

WeChatand,70

UBI.Seeuniversalbasicincome(UBI)

unemployment,mass,5,19–21,144,145–48,154–55,173,199–200

UnitedKingdom,11,20,169

UnitedStates

birthofAIand,11,13–14

China’scompetitionwith.SeeChinaandU.S.,competitionbetween

digitalworlddominanceof,2,11–12,18

economicstratificationin,150

educationexperimentsin,229

Fermi’smoveto,85

globaleconomicinequalityand,168–70

government’shands-offapproach,18,229

greatdecouplingand,150,202

inequalitywithin,170–72,199–200

inheritanceoftechnologicalskillsetsin,33

jobsatriskofautomationin,157–60,164

mobilepaymentsin,comparedtoChina,75–77

privacyprotectionin,125

self-drivingcarsin,133

spendingonresearchvs.Google,92–93

trafficaccidentsin,101

universalbasicincomeand,207

universalbasicincome(UBI),201,206–10,218,220,222,225

UniversityofModena,191–92

UniversityofScienceandTechnologyofChina,81–82

“uselessclass,”172,230

utopiansvs.dystopians,140–44

Vvaluealignmentproblem,142

venturecapital(VC)industry

AIworldorderand,20

American,70

Chinese,3–4,11,40,47–48,51–54,58,64–65,88,97–99

competitionbetweencompaniesand,15

creationof,andAIrevolution,153–55

Leeand,ix,xi,3,52

newventureecosystem,216–17

VIPKid,123–24

volunteerism,218–20,221,229

WWadhwa,Vivek,165

wagesuppression,165

WallStreet,35

Walsh,Frank,173

WangXing

astheCloner,22–24,25–26

FacebookandTwittercopiedby,22,23,24,31,32–33,42

Meituan,foundingof,45–49

MeituanDianping,49,69,70,78

Ware,Bronnie,186–87,195

WarofaThousandGroupons,45–49

Waymo,92,131,135

weakfeaturesvs.strongfeatures,110–11,113,191

wealthandclassinequality,19–20,144,145–47,150–51,154,170–72,199–200.Seealsoglobaleconomicinequality

WeChat

AIcommunityand,88

Chinesestudentsand,83

developmentof,58–59

asdigitalSwissArmyknife,17,54

mobilepaymentsand,60–61,74,75,112

super-appmodeland,70–71

Tencentand,58–59,60–61,93

WeChatWallet,60,69,70,74,76,77,121

Weibo(micro-bloggingplatform),40,181,189

Weixin,58.SeealsoWeChat

WhatsApp,59

white-collarworkers,146,153,166,167,168

Whitman,Meg,36–37

work-sharingarrangements,205–6

WorldEconomicForum(2018),215

WorldHealthOrganization,101

XXiaomi(hardwarestartup),127

Xiaonei(Facebookclone),22–23,42,46,47

Xiong’anNewArea,China,133–34

YYahoo!,31,41

Yang,Jerry,31

YCombinator,208

Yelp,71–72,77

YouTube,107

ZZhang,Charles,30–31

ZhongguancunBank,68

Zhongguancunneighborhood/technologyzone,3,51–52,53,61–62

ZhouHongyi,40–42

ZhuYuanzhang,48

Zuckerberg,Mark,22,28,33,208

AbouttheAuthor

DR.KAI-FULEEisthechairmanandCEOofSinovationVenturesandthepresidentofSinovationVentures’ArtificialIntelligenceInstitute.Sinovation,whichmanages$1.7billionindual-currencyinvestmentfunds,isaleadingventurecapitalfirmfocusedondevelopingthenextgenerationofChinesehigh-techcompanies.

BeforefoundingSinovationin2009,LeewasthepresidentofGoogleChina.HepreviouslyheldexecutivepositionsatMicrosoft,SGI,andApple.Leereceivedhisbachelor’sdegreeincomputerscienceatColumbiaUniversityandhisPh.D.fromCarnegieMellonUniversity.HeholdshonorarydoctoraldegreesfromCarnegieMellonandtheCityUniversityofHongKongandisafellowoftheInstituteofElectricalandElectronicsEngineers(IEEE).Leeistheauthorofsevenbest-sellingbooksinChina.

Inthefieldofartificialintelligence,LeefoundedMicrosoftResearchChina,whichwasnamedthe“hottestcomputerlab”byMITTechnologyReview.LaterrenamedMicrosoftResearchAsia,thisinstitutetrainedthegreatmajorityofAIleadersinChina,includingCTOsorAIheadsatBaidu,Tencent,Alibaba,Lenovo,Huawei,andHaier.WhileatApple,LeeledAIprojectsinspeechandnaturallanguage,whichhavebeenfeaturedonGoodMorningAmericaandthefrontpageoftheWallStreetJournal.HeistheauthoroftenU.S.patentsandmorethanonehundredjournalandconferencepapers.Altogether,Leehasbeeninartificialintelligenceresearch,development,andinvestmentformorethanthirtyyears.

FormoreinformationonKai-FuLee,visitwww.aisuperpowers.com

orfollowhimonTwitter:@kaifulee

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