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IN THIS ISSUE Yasheng Huang on the Chinese conundrum Techies are hurting Dear Dad
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Where to find monetizable truths
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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
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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.
To join, register here: https://lu.ma/WI24 . Can't make it to the live session on 19th Friday, 5:30 PM IST?
It will still pay to sign up
📺 Get a video recording of the masterclass 📃 Get access to curated pre-reads 🎙️ Listen to reflections by experts on the Masterclass ➕ more
Register today.
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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.”
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