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Yasheng Huang on the Chinese conundrum
Techies are hurting
Dear Dad
January 16, 2024
Where to find monetizable truths

Good morning,


In his book Zero to One, Peter Thiel says he liked to ask the following question in his interviews: “What important truth do very few people agree with you on?”


He goes on to explain why. “It’s intellectually difficult because the knowledge that everyone is taught in school is by definition agreed upon. And it’s psychologically difficult because anyone trying to answer must say something she knows to be unpopular.”


Balaji Srinivasan, entrepreneur and investor, who is known for such contrarian views, has explained his own method of arriving at them, which is captured in The Anthology of Balaji by Eric Jorgenson. 


Balaji says: “The newest technical papers and the oldest books are the best sources of arbitrage. They contain the least popular facts and the most monetizable truths. What do you know to be true that others cannot or will not bring themselves to admit? There is your competitive advantage.


I read a lot of old books and new technical journals. I’m less focused on the contemporaneous and more focused on finding things that are true but that most people don’t know.


Brian Chesky, founder of Airbnb, learned from a bunch of articles written in the late 1800s about rooming houses. Room sharing was much more popular around 1900 than in 1950. He saw solutions in a sharing economy from a hundred years ago. Then he modernized, transplanted, and used those ideas today. Reading books about societal arrangements at other times and places is a very useful thing.


“Technical journals are another source of underappreciated truths. In biomedical papers, you will see that life extension and youth extension for mice is much more advanced than people think. Brain-machine interfaces are also much more advanced than the general public realizes. We have mice telepathically controlling devices. We can do fantastic things with tissue regeneration as well. The technology is here, being held back by the FDA or a lack of distribution.


Technical journals and old books are what I read with intent, as opposed to tech news, which I get in my peripheral vision.”


Have a great day!

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Yasheng Huang on the Chinese conundrum

There are many who continue to believe that Chinese entrepreneurship has flourished under a magical formula of statism. In his book The Rise and Fall of the EAST: How Exams, Autocracy, Stability, and Technology Brought China Success, and Why They Might Lead to Its Decline, Professor Yasheng Huang, leading China scholar and Professor at MIT Sloan, argues, “Among commentators and scholars, there is a deeply rooted view that China has discovered and crafted “a third way” to foster dynamic innovation: a development model that harnesses the efficiency of the market economy and the power of the state without having to rely on the institutional prerequisites of capitalism, such as rule of law and market finance. I disagree.”


Starting 1978, the tipping point was China’s post-reform era, when it began to move in an entirely new direction from its imperial past. 


Professor Huang writes: “As the reforms took root and blossomed, China began to develop a large, dynamic private sector with many entrepreneurs who were highly motivated and capable of bringing technologies to scale. More importantly for China’s economy, they were regularly deployed to generate growth, employment, and the tax revenues that helped keep the Communist Party of China (CPC) in power.


Under the reformist CPC, China became such an innovation machine. Yet China’s vibrant high-tech sector remains puzzling to many. Especially since China remained top-down, hierarchical, and repressive, stifling individual initiative. So how did China become a startup nation? Chinese entrepreneurship flourished even without rule of law and market-based finance, and even though autocracy is widely assumed to be antithetical to innovation.


“It ignores the role that Hong Kong played in providing the conventional pillars of market finance and the rule of law. Without this escape valve, China’s great economic success story never would have happened. Though mainland China does not have rule of law and market finance, it effectively outsourced those functions to Hong Kong.” It helped Chinese high tech entrepreneurs gain access to large pools of Western capital and provided a safe harbour that promised rule of law. As the mainland continues to control and swamp Hong Kong, Western capital is now actively seeking out safe harbours in Singapore.


Professor Huang will be speaking at the Founding Fuel Masterclass on The World in 2024 on January 19. 


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Techies are hurting

What hits the headlines most are news of layoffs in Big Tech. But what isn’t making the headlines enough is how bad Indian tech workers are hurting. Sanghamitra Kar P reports on this in Rest of World. It isn’t a pretty read.


“More than 200,000 tech workers have been laid off in the U.S. between November 2022 and January 2023, according to Bloomberg, of whom 30%–40% were Indian IT professionals. Around 80,000 Indian IT professionals on H-1B and L-1 visas have faced job losses in the U.S. since late 2022, with the tech industry experiencing a significant impact,” Krishna Vij, business head of IT staffing company Teamlease Digital, told Rest of World. “After the pandemic, the overall startup ecosystem hired aggressively,’ Vij said. ‘Now, what we’re also seeing is that because of overall macroeconomic conditions, the startups are not hiring.”


Meanwhile, India’s tech industry has had over 30,000 workers laid off since 2022. Prominent startups including Paytm, Byju’s, Unacademy, Meesho, and Sharechat have cut jobs in the last year, and the bigger tech companies have announced hiring freezes in India.


The primary reason potential employers are sceptical about hiring from the pool of workers who have returned from the U.S. is trust deficit, Kamal Karanth, co-founder of HR firm Xpheno, told Rest of World. “Employers find it difficult to trust this cohort as there is always an inclination to return to the U.S. So, they are hesitant about hiring these people,” he said.


“[This talent] comes with hefty salaries … so either they are over-qualified for the role or they are not able to take up their offered compensation,” Vij said. “Even if they want to take a pay cut of 10%–20%, Indian companies … are offering about 40%–50% less.”

Dear Dad
(Via WhatsApp)

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