Taylor Ogan: I can only imagine living in the US right now my own government restricts me from having access to the greatest drones, the greatest cars. That's a weird feeling. Yeah. I thought this is the land of the free.

Steve Hsu: Yeah.

Taylor Ogan: And, and now I can't have, there's no, I, I have to go through like illegal channels through Canada or Mexico to get these things. And even still then you can't, you can't register the car and you can't register the drone at the FAA and so it's, it's just a, and that's recent.

That's like in the last three years. It's very strange. and I think that has lasting consequences of the US is willing to deprive its own citizens of the best stuff.

Steve Hsu: Welcome to Manifold. We're talking to you from Shenzhen, China. I am here with my man, Taylor Ogan, the founder and CEO of Snow Bull Capital. Taylor, welcome back to the podcast.
Taylor Ogan: Thank you and great to meet you in person.

Steve Hsu: You know, it's funny, when we met, I sort of forgot that we had never met in person because I feel like I kind of know you pretty well. Your previous episode on the show was very well received. People love thatepisode and opened up a lot of people's eyes, and to use the current Silicon Valley speak, you showed like very, very strong agentic ability to like just uproot your fun and come here. And now you've been living in Shenzhen for how long?

Taylor Ogan: Three years.

Steve Hsu: Three years. And in our conversation, we just had a amazing 90 minute conversation before we started taping the episode. Episode, it's like, you know, like every square meter of this place, the fastest way to get to Hong Kong airport by ferry it's, it's, it's amazing. Like it's clearly, it's clear that you're a student of this city.

Taylor Ogan: Yeah. I mean, it's the best city to be a student of, and it's so big that I'll never be able to master even one district. I mean, we're talking about a place that's three size, three times the size of Manhattan.

Same with the population and just the rate of growth for every single thing. I mean, there's a gonna be a new mall open next week that I haven't even heard about. There's gonna be, you know, a new park. I think last year they added 150 parks. It's probably as much as Manhattan has. Yeah. I mean, so it's, it's always evolving.

Steve Hsu: Now it's, is it about 20 million people? Like, depending on how you define

Taylor Ogan: 24, if you include the migrant population.

Okay.

Taylor Ogan: But yeah, the registered population is quite a bit lower. That's the WHO Co

Steve Hsu: Yeah.

Taylor Ogan: But yeah, the, the actual people living. Here is 24 million.

Steve Hsu: So it's 20 plus million mega city, but right across the border from Hong Kong, which is itself one of the major cosmopolitan cities. But then something most Westerners don't realize is we're embedded in something called the Pearl River Delta, which is other monster cities and huge manufacturing infrastructure. And the goal of the local governments around here is to integrate all of this very, very tightly. So they have this, this vision of the Pearl River Delta region being one of the major regions in the world.

And, you know, you could think of it as something with the population of like. Germany more or something like that, but at, and at a same level of development and actually leading the world in a lot of key technologies.

Taylor Ogan: They're calling it the Greater Bay Area and basically it's connecting Hong Kong, Shenzhen, Guangzhou, already it's, it's 14 minute bullet train from Shenzhen to Hong Kong, and that's CBD to CBD. And in a few years they'll connect by train, wan and already Guangzhou, it's 32 minutes by high speed train. So I really, when I go to Hong Kong, like, let's just say for lunch, I think of it as just taking the metro. It's even in the same station. Yeah. It's just a lot faster.

Steve Hsu: Yeah, it, it's a good point. So CBD for American Central Business District, we don't always use that terminology. But yeah, the high speed trains are so convenient that you can think of it as getting on the metro and it's a similar kind of ride time. Oh, I, you might ride the metro 30 minutes in a big city.
But yeah, you get on a high speed train and you're in actually another mega city. That's how crazy it is. And these are all mega cities, which are built on high tech and advanced manufacturing. So everything is pretty much made here.

Taylor Ogan: So this region's really important for the country, but also for Shenzhen, because in the past, sheen was the weakest part of this region.

Now it's arguably the strongest. So even Hong Kong, they need Shenzhen. Hong Kong doesn't have any manufacturing. It doesn't really have that much free land that they could build on. Shenzhen kind of possesses everything. It is kind of awkward for some of these other mayors and, and even residents of these cities because they, they don't live in Shenzhen. They're just connected to it very conveniently. So they still have to go back to their home at night.

If you look at a, a map of the world at night, this part of, of the world just glows more than any other. So yeah, it'll be the biggest region and it's, it really is hard to conceptualize how big this region is, how populous it is because there just isn't another example.

So yeah, it's going to be the first of its kind. and it's awesome to, to be here. So, like I said, I'll never become an expert on any aspect of it because it now, it's just linked to these other mega cities. So,
Steve Hsu: but you're, but, but I can tell Taylor that you, you're very curious and you have an analytic mind for this stuff because I know actual Chinese people who are here, and if I ask them general questions about Shenzhen, they cannot answer those questions as well as you can.
So, 'cause you're, you're actually thinking about it.

Taylor Ogan: Yeah, I mean, I'm just super curious I think because I wasn't born here, I still kind of feel like, like a, an outsider, a guest and there's no end date though. I'm always super curious. I think in the last year my average steps per day was 23,000.

Steve Hsu: Wow.

Taylor Ogan: And a lot of my friends, 'cause on WeChat you can see what your friends are stepping. I think most of my friends get maybe 2000 a day. Not having a car. I, I could have a car, but DEI is so abundant and Roboto taxis now and the metro, it, it's really easy to get anywhere if you want to go.
So you, you see something on Chong shoe even, you just can, you can just do it. You don't have to plan it for three weekends from now. So yeah, it's for anyone super curious, I would say, the best place in the whole world. Yeah. Especially if you like tech.

Steve Hsu: Definitely. If you're visiting China, you know, obviously Shanghai, Beijing are sort of two classic places people tend to go to, but I would definitely, if you have it time in your itinerary, spend some time in Shenzhen.

People have heard me say this before in terms of my biography, but in the early nineties, I came to Hong Kong to visit. I was in Japan for a physics conference, but I stopped in Hong Kong. I think I had a former girlfriend that lived there and I had a little spare time and I was asking her what I should do and like at the time, what everybody said was, oh, you should go to Quilin, which is this very picture dress city with these huge limestone mountains with weird shapes.

And it, it's the kind of thing you see in like Chinese paintings. I still to this day have not been there, but Oh, you have

Taylor Ogan: to go.

Steve Hsu: It's, it's unbelievable. It's supposed to be, you know, one of the most physically stunning and beautiful locations in the world. But I said there, I said, you know what?

I don't want to go to Guilin. I wanna see the special economic zone. Mm-hmm. S yeah. So I came here to Shenzhen when there was literally nothing here. The streets were mud. They were putting up, you know, high rises, but there were no sidewalks. It was the most shocking thing. We was in a tour bus. Tour bus kept getting stuck in traffic. The traffic was not just other cars, but it was like construction vehicles and bicycles and just insane. We stopped at a state run, sort of tourist store that was part of the tour. And in talking to the people who staff that store, I, it was sort of like people now would think about North Korea.
In the sense that the people working in that store who were employees of the state, they didn't really know what customer service was. They didn't really even know what like a business environment was. It was like dealing with a completely alien culture. And it was still in evidence even as like thousands and thousands of people were streaming into like built like staff, the first factories that were making like cheap rubber goods and shoes.

I saw that early nineties. So that was what, that was 30 years ago. And now you know, I could be anywhere. I could be in Manhattan. Taylor and I are out or looking out at what, what is this area that we're looking out on?

Taylor Ogan: Well, so Shenzhen is quite unique and it's super long and skinny.
It's kind of like Manhattan. And so we are looking at basically the whole city skyline. It's a, it's a great view actually.

Steve Hsu: Yeah, we're on the 22nd floor of the building where I'm staying. And we've got a great view of the bay and some super tall, like, is that the number six tallest building in the world?

Taylor Ogan: In the world? Yeah. Yeah. Okay. Literally it's in the clouds right now.

Steve Hsu: Yeah.

Taylor Ogan: And also Hong Kong right there.

Steve Hsu: Yeah. Oh, that's Hong Kong. Okay. Awesome.

Taylor Ogan: Yeah. Yeah. I mean that's, it's part of what makes the city so unique has two deep water ports on either side of it and its proximity to Hong Kong. It's actually very flat land as well.
It's shocking that no one built anything here until Deng Xiaoping decided to Right. Like it, because it's, it's perfect for what it is now. Yeah. So it's also why it's kind of working out for it, but yeah. I mean, that's crazy that, I mean, the human brain probably can't process.

Steve Hsu: It's been basically one generation. So one person's, one generation of humans, you know, lived during that time and this amount of change. I, I just don't think anywhere else in the world. You could imagine this level of change in 30 years.

Taylor Ogan: Absolutely not. Yeah. And my parents actually, they came in the early nineties and I asked them, I wasn't even born yet, but I asked them, when you looked around and saw exactly what you saw, could you ever imagine that your child would live here? And I think, I think my dad said, yeah, no, I, I could see it. Yeah, right.

Steve Hsu: Oh, come

Taylor Ogan: on. There's no way. But my my, isn't that crazy that

Steve Hsu: your, your child would live here in a, you know, on the 40th floor of some ultra luxury building with a flat panel TV and, you know, yeah. Right. And like unlike some AI controller for all the gadgets in the, you know.

Taylor Ogan: Yeah,

Steve Hsu: no, I don't think so.

Taylor Ogan: But that's, that's the same way that all of these Chinese feel and they're, you know, these people, no one until now is really from Shenzhen. And so you have these people who literally were factory workers who are now multi-millionaires just because they came here before everyone else.
Also I think something that people don't talk about, it happens in other cities, but not the same effect. It's these urban villages. There were pockets in Shenzhen where people had lived for hundreds of years. It was a walled village basically.

Sometime only like 30 people. Usually kind of one, one family clan. And now those have existed. There's still a few left. And now if a property developer wants to build there, they have to buy them out. Yeah. But it's not, they don't just buy them out with a ton of money. I can name six in Shenzhen that every single person in that village is a millionaire. There are two where they minted, it's estimated 15 billionaires.

Steve Hsu: Wow.

Taylor Ogan: In one. And we're talking USD billionaires. Wow. So, Yeah, these, these people who literally like it was their land and it, it's not just the money though. They actually are given, it's part of the negotiation and the negotiation takes years and it's all on public display and people actually come out to watch it.

Let's say you had 150 square meters in the urban village. They have to have at least 150 square meters in whatever they build on top of it. And usually there is a negotiation where they have at least typically four to up to, in one case, 20 units on top of what they were paid. And they get to rent that out.

Steve Hsu: Wow.

Taylor Ogan: And so some of these people actually came later, came after 1980 and they were just factory workers and they rented these apartments. They weren't even apartments. I mean they were shacks and now then they eventually bought one of them. So they also are kind of owed this. That alone probably, I, I think the estimate in the city is, there're about 30 billionaires that are billionaires from that.
And so just imagine in their lifetime, I mean it's been, it's crazy. Some of these people didn't even have shoes . This one group of people that lived on an island kind of in between here and Hong Kong.

Steve Hsu: Yeah. Yeah.

Taylor Ogan: And they literally did not have shoes. They would come on land and because they're forced to, because the islands, the military wanted it. And and so they, they hated being on land. They wanna stay on their island. They didn't speak Mandarin, they didn't they didn't have form of currency. And now some of them are billionaires and they're, they're still live. Like this is not that long ago.
Yeah. So, yeah. That is crazy.

Steve Hsu: Yeah. It's definitely a unique story. What, what happened here within a, you know, 50 kilometer radius of where we are is just insane. It's probably very few cases. Anything like it ever in the history of humanity.

Taylor Ogan: Yeah. I mean, it's been studied. There is no other case. Yeah. And everyone always asks me, what's the next Shenzhen?

Steve Hsu: Yeah.

Taylor Ogan: Shut up. It's not possible. Like so many things went right. Yeah, they got very lucky, I will say. But it also was very strategic planning. This is probably a, a Chinese view. I, I don't think I've heard it
from a non-Chinese, but some say that Deng Xiaoping is maybe the smartest human to ever live and, you

Steve Hsu: know, or, or at least maybe like the, the biggest positive impact.

Taylor Ogan: Yeah.

Steve Hsu: Oh, by one person. Like if you integrate over like a billion people and Yeah.

Taylor Ogan: Totally.

Steve Hsu: Yeah.

Taylor Ogan: I mean, so maybe he just, he was really ambitious or maybe he saw it exactly like it is, but I can tell you even the, the planning of Shenzhen. Where we are right now, that was not part of the original plan.

Steve Hsu: Yeah.

Taylor Ogan: They did not plan for this.

Steve Hsu: Yeah. This part of Shenzhen. 'cause I used to come here a lot 15 years ago when I worked with BGI, I don't think I've ever really been in this area very much so. Yeah.

Taylor Ogan: Yeah. Now the GDP for this district , naan. is it's now the, the largest in China. Wow. and it just surpassed some country's.

Wow. So, yeah, it's, this is where all the big names now at least have a huge presence. Maybe not their exact headquarters.

Steve Hsu: Yeah.

Taylor Ogan: This is where all the, the innovation is happening. This is the districts where you will see drone delivery. We can look out the window and spot a few robotaxis.

Yeah. This is, all of the innovation is being crammed into this one district especially. And then the other districts are kind of known for other things like low altitude economy.

Steve Hsu: Yeah.

Taylor Ogan: This is just the culmination of, of innovation. So anyone who wants to, come to Shenzhen totally stay in Nanchang.

And that's the other thing, a lot of people come here, they don't stay here 'cause maybe they used to come and they used to stay in LoJo, which is way over there. Yeah. By where you That's where
Steve Hsu: I used to go.

Taylor Ogan: Yeah. And that's, that is like a. Third world country,

Steve Hsu: essentially. It's, it's a dump compared to this place.Yeah. Yeah.

Taylor Ogan: So this is the, where everything's happening.

Steve Hsu: So was it last summer? So, I won't say his name, but a, a pretty famous old school venture capitalist from Silicon Valley who, you know, is a billionaire type type guy. If I said his name, everyone who's in like my generation of founders would all know who he is wanted to come to China and wanted to see some real stuff, real shit, as they say. And so I hooked him up with Taylor, and Taylor got him a tour of, I won't say the name of the EV company, but one of the major EV companies here. You were able to give the guy a tour, let him test drive some of the top cars.

Taylor Ogan: Yep.

Steve Hsu: And I assume he was a little bit blown away by the manufacturing capability. I guess he also toured Shami when he was here,

Taylor Ogan: right?

Steve Hsu: Yeah.

Taylor Ogan: now, yeah. People can definitely read between the lines, but, yeah. And he met with the number two at, at BYD. We had lunch. And it's actually funny, everyone at BYD, they said, yeah, a lot of people reach out and they say, can I, you know, can you get me a tour of this?
And I mean, it's, you don't wanna just be a tour guy for everyone, but yeah, this, this person was, was worth it. I was telling the company that, you know, this guy is coming and I of course told him his name. No one had heard of him.

Steve Hsu: Yeah.

Taylor Ogan: And, and it was only because someone who was in one of these group messages went to school in the US and their professor they made, them read this person's, this person's blog. Yeah. And so they knew all about him, and they said, you have to, you have to, you know bring out everything for him. So that actually helps more than even Yeah. Myself. but yeah, they're, the thing is a lot of people on their China tour don't come to Shenzhen.

Steve Hsu: Yeah.

Taylor Ogan: And like very famous people. Yeah. And you know, Jamie Diamond, all, all of these guys. The circuit is Beijing and Shanghai and maybe they'll go to Hong Kong or maybe they'll go to even Guangzhou. Yeah. They, they still do not come here. It's

Steve Hsu: crazy.

Taylor Ogan: It's crazy.

Steve Hsu: But you know, in, in, I was just in Silicon Valley, so I spent January and February in San Francisco, Berkeley, and mainly focused on AI stuff.

I don't know if you saw the last couple episodes, they're very, very, like in the weeds about AI, doomers and Dreamers in the Bay Area right now. But one of the things that was interesting is there are a lot of Silicon Valley founders and entrepreneurs who want to take tours, where they come to Shenzhen and they see factories and they talk to people about, Hey, if I want to source this board.
Here, how would it go? And so that, that is a real thing there. So, so people at least in that category, really get that sheen is sheen is a place that, it's funny 'cause if I'm talking in English, I'd say Shenzhen, but that's not the actual Chinese pronunciation. They realize that this is the place that you have to get a look at. Yeah.

Taylor Ogan: I also, I mean, they come through and reach out to me. It's the, they're engineers.

Steve Hsu: Yeah.

Taylor Ogan: So if they're an engineer

Steve Hsu: Exactly.

Taylor Ogan: They know Shen

Steve Hsu: Yes.

Taylor Ogan: If they're not an engineer, probably have never heard of it.

Steve Hsu: Yeah.

Taylor Ogan: But yeah, the, the thing is actually, I, I just had one guy come through who, well, it's not even come through. He opened an office, a very, large us, company that, is in manufacturing. Well, they manufacture as well the 3D printing company. And the founder is a super smart engineer, MIT and he said he just opened an office here and amid the political pushback and everything, he said, I've been coming to the city for so long and their machines are made here. Why hide that? Like, let's just embrace it so that that shift kind of is happening. A lot of these old Apple guys who used to come here, who no longer come here, they, they are checking back in with, with what's going on here.

Steve Hsu: So, one of the stories you told me, and I, I'm gonna try to tell it in a way that doesn't, you know, give out too much information.

A lot of Americans, they understand Chinese is a big manufacturing power and, you know, rising the, rising up the value added chain in technology. But it's a little hard for 'em to square it with the idea that it's this communist country. It's authoritarian. There's a guy called Xi Jinping.

And so like the way that an individual CEO of a public company that's shipping billions of dollars of, say, devices around the world that ordinary people are using, like DJI or BYD or any of these companies, I think it's hard for Americans to understand what the relationship is between the people who run these, you know, leading tech companies and the central government and one model, which, you know, people who are more in na on the nat sex side and are more paranoid about China.

They, they have this model that like, oh if you allow a BYD into your country, and it's got little cameras on it and lidar, and if it comes near a US military base, it's obviously mapping everything on that base. And every bit of information that goes through TikTok or goes through the BYD computer in your car, it goes right to the CCP or CPC and they, and they get ahold of it.

And so, but you were just telling me a story about a key decision of an EV CEO here to go out and start selling cars in a foreign country like Brazil or the United States or Canada. And so you were telling me about to what extent that decision had to be cleared with the political side in China. And I was, I was kind of amazed at your the way you described it, but don't, don't give away anything that you shouldn't, but just try to speak to the point of what it is like to operate here in China as a CEO.

Taylor Ogan: So, I mean, I I ask founders, because you can't get this answer from anyone who is not the head of the company, even the number two, this is not in their wheelhouse. But I have been going around as the curious person, I am just straight up asking them, did you have to get permission for X, Y, Z? And I, I just am fascinated how the government ties into industry here.

And because it, it has serious implications for me and, and my company. And I'm just curious because it is this like kind of mysterious, you know, regime.

Steve Hsu: Yeah.

Taylor Ogan: And

Steve Hsu: well, well, it is basically getting to the, the how does, like we're looking out the window at this amazing country, how does it work? Like we know how America works, right? But we any other particular country's like, well, how do things work here?

Taylor Ogan: Exactly. Yeah, exactly. And so, and so that's why I'm so curious. So I just ask them very charged questions, I would say, and I am so surprised more often than not at, and this is the Shenzhen effect to a large extent, where it is a carve out of China.

If we were in Beijing, I'm always told that, you know, we can do X, Y, Z here, but probably we wouldn't even try it in Beijing. Maybe that's changing, like they could get away with more things, but they just don't want to have that risk. Here though, they're all about taking risk. And so basically I'm fascinated by how little government oversight or even interactions there are with some really, really huge decisions and even the timing of things and things.

That being said, when it has to do with, you know, coordination with the government, like APEC is coming up and Shenzhen is gonna be a host and we can talk about it later. but that is obviously directly with the government. So they have their hand in everything, but as a country should, you know, so it. I don't know how exactly to describe it. It just makes a lot of sense in, in how things actually operate behind the scenes here.

Steve Hsu: So I, but I think your point was, you, you gave me a couple of anecdotes in which pretty key decisions were made and the CEO basically, or the, the leadership team made those decisions without any consultation from Beijing.

Taylor Ogan: Yeah. Yes.

Steve Hsu: And in a way, like for outsider, even for someone who's got a sophisticated view of how things work here, they might think, wow, that, that seems a little risky 'cause the government might have told them, no, that was not a good idea. It, it goes against some policy or strategy that, we have. I think one I, we can talk really specifically about, 'cause it's, it happened some time ago is you were telling me that when Gina Raimondo was here. Gina Raimondo was a commerce secretary under Biden and it was under her under in that administration where they completely cut off, Huawei from the advanced chips saved maybe by, say, Qualcomm that they had been using in their phones. And that was a, a big, a big problem for Huawei. And so Huawei kind of went into like they were a bit dormant. They went from being, I think, either number one or very close to number one in global cell phone sales to like not really being able to sell product until they could basically re-engineer their phones.

They had their own domestically made seven nanometer, CPU for the, for the new phone. And they launched it was the Maid 60, is that right? Maid

Taylor Ogan: 60, yeah.

Steve Hsu: So when Gino Ri Raimondo happened to be here, they launched the mate 60

Taylor Ogan: and it was a huge surprise. No, it did not.

Steve Hsu: Without any warning. Yeah, no leaks.

Taylor Ogan: Chips development was like a total surprise.

Steve Hsu: Yeah.

Taylor Ogan: Everything. Yeah.

Steve Hsu: So they launched his phone and so people might remember this from, it's a few years ago, so maybe it's like not that fresh in your memory, but at the time it was a big shock. Now everybody's takes it in stride. But at the time it's like, oh, Huawei was dead but now they're shipping a world class phone with a, you know, slightly less than world-class chip, but it was still very surprising they could do it seven nanometer processor. What Taylor told me is that the Huawei people have told him that they did not get approval from the government to like launch it when Gina Raimondo was here.

Because everybody in the world who follows geopolitics, US China competition, tech competition thought, hey, this is like them giving the finger to Gina and to the US Commerce Department and, and U.S. trade sanctions, trade barriers. And apparently it was maybe the company was seeking that, but it wasn't the government that was doing that, and they didn't even get approval from the government to do it. So

Taylor Ogan: it is crazy. Yeah, because I, I, I just expected that they had to at least, like a lot of people think that was the government's decision in the first place. I thought maybe that's possible, but at least they had to get this cleared because this is truly like a political event. And they are very proud that they did not have to.

And the reason that they did it when she was here is because they see the US directly at, of course it, it cut them off and so they wanted to get back and this was their way to, to bite back. So it's the same thing with like Xiaomi counter suing to get off of the entity list in the US that they just do that stuff.

Mm-hmm. You think it's the government because you, you hear about the Communist party and everything. That's just not how it works in practice. The worst people though, who, you know, have opinions on these things are the ones who used to do business in China. Because I will say I wasn't doing business in China, but I've heard plenty of stories that yes, that these things used to happen.

IP theft, you know, just straight copying from, you know, their schematics and these kinds of things did happen. The government, you couldn't even get a tour of shenzhen like in the eighties, unless you were with a government, if you were a foreigner. So

Steve Hsu: like when, when I came here, it was the first time you could just come as a, as a foreigner and look at it interesting. That was the very first moment when you could Wow. Like a few years before that you couldn't even come here to look at it.

Taylor Ogan: Yeah. Like, I mean, when my parents came, they had to be with the government and

Steve Hsu: Yeah.

Taylor Ogan: That's how people think of China today. The, the people who, who used to do business here or used to come here and they are the worst offenders.

Steve Hsu: Yeah.

Taylor Ogan: they, they have

Steve Hsu: an, they have an out of date sort of backward looking view

Taylor Ogan: Yeah.

Steve Hsu: Of the situation.

Taylor Ogan: They just assume how could all of this had, have been so controlled back then, and it's not now. Well, it just is not now.

Steve Hsu: Yeah.

Taylor Ogan: So yeah, it, it really is is fascinating and still surprises me. But again, Shenzhen is also an enigma.

Steve Hsu: At, at the time when that whole incident happened with the mate 60 launch, even, even people who are China experts or have done business here, there was a not, this wasn't the main point people were debating, but, but there was a lot of back and forth discussion where people said, oh, they must have had approval from the government to do this.
And you know, apparently they didn't. So,

Taylor Ogan: same thing, same thing with DeepSeek.

Steve Hsu: Yeah.

Taylor Ogan: People thought that that had to be, and it's just not true. Like, so, and that really helps shape my worldview of China, I would say. because it's just not, they just do stuff. Yeah. And as long as it, I'm sure like if the mate 60 launched and it did have stolen technology or something, and it, it got really ugly, then maybe Huawei would get in trouble from the government.

That still is certainly possible, They're now doing a lot of, a lot of things that they wouldn't previously do. And I think that's also a lot of young engineers are now realizing this and they are coming or they're just not leaving, China to start their companies or to work at these big companies because they now can do this.

There used to be like NetEase used to have a huge censorship team, and now their censorship, they still have one like you can't, you know, post about like a, you know, the raw footage of a school shooting or something, but it's not the censorship that they used to have. And so now they have maybe two people and a lot of it's also

Steve Hsu: AI

Taylor Ogan: AI

But but yeah, like some of the stuff you know, has changed just fundamentally on the business side. And engineers do not like to be restricted. And I think that's partially the reason of why this has changed so much, especially just in business, is because the country saw that we can't be this restrictive and our, our best engineers no longer work for the party. They're, you know, just ordinary citizens.

Steve Hsu: Yeah.

Taylor Ogan: So that is probably par partially why, but the point is that it's just not how it used to be. and it's, it's terribly misunderstood.

Steve Hsu: Yeah. I think on one extreme, you know, especially among the national security people or whatever, people who are just very anti-China or paranoid, they still think like every decision has to pass Xi Jinping's desk.

That's how authoritarian it is. But then you look at this, this is one of the most complex economies in the world, and there's no way that things could move forward if that were true. There has to be a lot of de-centralized decision making where the government is not playing a role in it at all. And I think, I think that turns out to be the case.

Taylor Ogan: Yeah. And like even right now, DJI is in America, if you go to their website, try to buy any add to your cart, any DJI product, it says out of stock. Now they're not, technically they could sell some of these. Things in the US that's DJI biting back and saying, you know what, you guys don't get to have the latest stuff.

And I, that's something, and by the way, you should definitely fill your suitcase with DJI things and other things that are banned. But that is, as an American, it is a very weird feeling. I will say even living here, but I can only imagine living in the US right now where my own government restricts me from having access to the greatest drones, the greatest cars. That's a weird feeling. Yeah. I thought this is the land of the free.

Steve Hsu: Yeah.

Taylor Ogan: And, and now I can't have, there's no, I, I have to go through like illegal channels through Canada or Mexico to get these things. And even still then you can't, you can't register the car and you can't register the drone at the FAA and so it's, it's just a, and that's recent.
That's like in the last three years. It's very strange. and I think that has lasting consequences of the US is willing to deprive its own citizens of the best stuff.

Steve Hsu: Yeah.

Taylor Ogan: That may be a trend. Yeah. And if it, if it's not, at least people will see that that is the reach that the US government has. We're not talking about the Chinese government.
And again, the reaction from private Chinese companies is to, to do this themselves. So that as well is not from the government. It's not the government saying, DJI, you cannot sell, even though, you know, you're technically not fully banned yet. But in the meantime, you can't sell. No. It's just them saying, all right, you don't get to have it then. So it, it's, it's changing.

Steve Hsu: so speaking of like advanced stuff that's here that maybe they won't, we won't be able to have in the us Let's talk about this crazy ZTE phone that you showed me. So you have a prototype phone. It's made by ZTE, which is a major cell phone manufacturer in China. This particular phone has built in very highly integrated in the operating system. Ai. And the AI is Doubao, is that correct? Yes. Yes. And, and who makes, who trains that model

Taylor Ogan: by, that's ByteDance,

Steve Hsu: right? So it's ByteDance, which people in the US know it as the parent company of TikTok. But what many people don't realize is that it's one of the leading AI companies.

And so now ZTE has partnered with them to produce a phone that has the kind of agentic, internal agentic capabilities on the phone that really are like what everybody in the Valley has been going crazy about with open claw. So for those of you who are not aware of this very recently the capabilities of agents became strong enough and someone wrote a nice open source kind of platform for this so that you can buy a Mac mini.

And let these AI agents go crazy controlling everything on the computer. And it can handle your email and WhatsApp messages and you can interact with the agents and just like send them a WhatsApp message to like, oh, research this and write give me a graph of that and then send copies of it to everybody on team A. You know, and everybody, all the software developers in the West are going crazy over these capabilities for using Ag agentic AI flows on their own computers now.

But unbeknownst even to them, I would say I heard about this on X 'cause I, I follow a lot of Chinese related stuff, but even most of these advanced AI users in the west don't realize that there's literally a phone in China that has that kind of agentic integration already. So, so talk about your phone.

Taylor Ogan: Yeah. I mean, I, I've had it for a few months now. It truly feels like the first smart because it has complete control. Now there are some apps that have since banned, its use. Right.

Steve Hsu: So we, WeChat immediately just banned,

Taylor Ogan: I think. Yeah. Within 12 hours. Yeah.
It knows plays nice, it knows do not go on WeChat. Also like you get signed out from some of these apps these Chinese apps, if it knows that you're, it can detect it very easily. But the apps that it hasn't, it's amazing. And all the apps in the West, 'cause I can have Google Place drawing.

Steve Hsu: Yeah, I noticed. So you have X there?

Taylor Ogan: Yeah. Yeah. If you, so I could have this just

Steve Hsu: Yeah.

Taylor Ogan: Post on X

Steve Hsu: Yeah.

Taylor Ogan: All day if I wanted

Steve Hsu: to. So you could, could, you could go to the Doba agent and you could say, you know what, this Iran war thing is big. Write three posts a day on what's happening with missile defense in Israel. How many hits the Iranians are getting in Tel Aviv. And it would just do that for you.

Taylor Ogan: Yeah.

Steve Hsu: And it's posting on X and X doesn't. Being this like you know, western company that's not aware this is going on. They don't realize like, oh, all every, anybody with a phone like this can just have their agent posting on X for them.

Taylor Ogan: Yeah. And there aren't many of these phones out there, so that's partially why as well. But like, here's a, a real example. I really want to do go skiing in Xinjiang this year. I go every year and I, I want to monitor when there's a big storm coming, but since this is in such a remote part of China there aren't the same weather stations that you would have at, you know, let's say veil.

So it's, it's actually kind of word of mouth and on social media. So this prompt is in Chinese, but I can, I have this run at 10:00 AM every morning, but I'll just run it right now. What it's doing is, well first of all it's deciding how to approach this, but it often will go on the Chinese TikTok Douyin. And it will watch videos and read the comments, and we can check in with it here of, what people are saying.

Steve Hsu: So, so Douyin, for people who don't know is the YouTube of China and this thing, will the agent that he's empowering here will watch the video, read the comments?

Taylor Ogan: So now actually we can see it has gone in. So it's already, it knows what to search. And it's funny when you have these repetitive tasks.

Steve Hsu: Yeah.

Taylor Ogan: because every time is different. And so it's going in, it's saying the most recent videos. Let's see. And but again, it will actually watch the content of the video and read the comments.

Steve Hsu: Yeah.

Taylor Ogan: So it's kind of funny watching it. Yep.
It's already in the comments, so, but it is clicking on my phone right now.

Steve Hsu: Right.

Taylor Ogan: which is pretty wild to just to watch it, but it's also really helpful actually for me to use Chinese apps that I wouldn't otherwise know how to use these functions. So I, I posted a, a video on Twitter right when I got it.

My friends know how to order schedule someone to wait in line to stand in line for you, and they do it, you know, at these popular restaurants or things. And, but I don't know how to do that. I don't even know what app to get. So I just asked it to do that and it, and it downloads the app

Steve Hsu: and you can ask it in English

Taylor Ogan: and you can ask it in English.

It's great in English. And it downloaded the app and then made an account for me and then it figured out how to do it. And I mean, you can watch it on, on Twitter. And it's so fast. It does have the, the most advanced, chip 16 gigs of Ram Qualcomm Snapdragon. The only other phone that it's in is the flagship shomi that just launched.

I mean, a lot of is happening on device and in the cloud. But just seeing it all come together. It's ahead of its time for sure. And the reason that some of these apps have Bandit, as you can probably imagine, among other reasons, is. There are ads that are going to, like right now it's scrolling on, on Chinese TikTok.

There will be an ad, well that wasn't human eyes that saw that. And so that's not really fair to the advertisers. So yeah, this is kind of you know, a, a, a bigger question. But yeah, the, the apps that have not banded are, it's very fun to use. But this kind of thing in Shenzhen, there are three other, basically every smartphone company that is not called Samsung, lg, and Apple, and Google, they're all in Shenzhen.

And, and Xiaomi technically is not in Shenzhen. But other than that OPO Vivo, Huawei Zt, they're all here. And so there are multiple companies working on this, and they will be launched this year. And that's something that, again, in the west, we just won't have.

Steve Hsu: Yeah, you're gonna, you're gonna be visiting your cousin in South Africa or Nigeria. They're gonna have a better phone than you because they're not,

Taylor Ogan: and that's, I don't know how much travel you've done around Southeast Asia in like the last year, but it is like in Sri Lanka Yeah. When there are better cars.

Steve Hsu: Yeah.

Taylor Ogan: Because they're all Chinese.

Steve Hsu: Yeah.

Taylor Ogan: There are more advanced cars on the road there

Steve Hsu: Yeah.

Taylor Ogan: Than in America.

Steve Hsu: Yeah.

Taylor Ogan: That is wild Well,

Steve Hsu: it's already true in Mexico. Yep. So you can buy a BYD in Mexico.

Taylor Ogan: Right.

Steve Hsu: So, yeah.

Taylor Ogan: And so, but all of these emerging countries, they now have like most of 'em already, they, you see BYD's there.

Steve Hsu: Yeah.

Taylor Ogan: You see, and they all know these Chinese phones and Yeah. They can just do more, they're more capable now.

Steve Hsu: Yeah.

I mean, you talk to a European and they're Fili, they're familiar with Xiaomi and all these brands. Americans don't even know the names. No. They don't even know the names of these brands. Yeah.

Taylor Ogan: It's, it's, it's a wild time and

Steve Hsu: Yeah.

Taylor Ogan: Especially in, we have access to all the information in the world, and you can also translate all of these things and you just, it's, it's weird that these people just choose not to address what is happening here. And it's, it's the most advanced things. These are the technologies that are making people's lives better, and they just choose to ignore it.

Steve Hsu: Yeah.

Taylor Ogan: it's a wild time.

Steve Hsu: Coming from Silicon Valley right now, or SF right now, you know, people are so obsessed with the AI race and, you know, anthropic versus open AI and stuff, Doubao is not a model that people think about very much, even though, you know, people who know their stuff know ByteDance can do stuff.
And so it's kind of amazing that maybe this is the first instance of having these kinds of agentic flows on a phone and it's Doubao that's powering it. Very

Taylor Ogan: interesting. And, and we're gonna have this in cars soon. Yeah. We're gonna have this on computers. And the other thing is, as we're watching it scroll through, we can, we can have it run in the background

Steve Hsu: Yeah.

Taylor Ogan: And I can just tap in to watch what it's doing. Yeah. I can use the phone for other things. I can lock the phone. Yeah.

Steve Hsu: Yeah.

Taylor Ogan: But it is fun to, to watch it sometimes.

Steve Hsu: Yeah.

Taylor Ogan: And you, you kind of forget about it.

Steve Hsu: Yeah.

Taylor Ogan: and so, yeah, I mean, this, this already exists. And, and we're also seeing again, they did not need the government's approval to do this.

And yes, it technically is still a prototype, but we will have phones that have this. Yeah. and they'll, they'll just be common already. If you go to any office in China, you would be shocked and maybe you wouldn't be, but, a lot of people would be shocked by how much AI is already in the office in all kinds of offices.

Steve Hsu: Yeah.

Taylor Ogan: and these are from companies they don't really think of, like Baidu is huge for this. And everyone is using, is using dual WoW. Everyone is just the average citizen I think in, in the us It's like what 10% of people use AI on a daily basis. Oh.

Steve Hsu: Oh. Well actually I don't, I don't know that number, but I think a lot of people use it a little bit.
At least a little bit. Yeah.

Taylor Ogan: Among, yeah, I think younger generation, but as a population of a whole, it's not that much here. It, it is far more people are using it. Yeah. And they're, I will say, they're better at using it.

Steve Hsu: Yeah.

Taylor Ogan: Like some, some of my non-techie friends here they, they have open claw running on their, their computer. They went in, you know. Oh wow. Okay. Re and bought a Mac mini. Yeah. So, yeah, that's just, it's, they're better users, I would say.

Steve Hsu: Yeah. Now the, the thing people are all afraid of with open claws, that if you give it access to all your socials and your email and stuff that, you know, it's a huge security risk. And with this one, I guess, okay, it's still in prototype. Right. But you're not, you, you, this thing has not been ordering things off the internet. It's

Taylor Ogan: never done anything. I don't, yeah, I, I, I did, I did catch it the other day watching it was supposed to, actually be doing this prompt watching skiing videos. And it was watching, it was scrolling throughlike pretty girls and That it was, I don't know why it was doing that. Yeah. That was the only surprising kind of thing. Yeah. No, I mean, with, with my information, like I want this to have my passport number. I want it to have my address so when I, you know, book a ticket, it automatically puts all that stuff in. Yeah. So you can definitely, you can tap to see its memory. I

Steve Hsu: think, I think you said this one's engineered so that if it's about to actually make a transaction where there's money transferred it, it passes option. It does, yeah. It checks with you. Right. So

Taylor Ogan: I mean, and it's never skipped that. It, it is passing caps, which is, interesting.
but because they're, I think they're evolving so much

Steve Hsu: Yeah.

Taylor Ogan: That, that it has maybe in its training never seen these Yeah. So it likes to figure it out.

Steve Hsu: Yeah.

Taylor Ogan: like another example was I had it play Wordle Now. I don't think Wordle is that big in this country.

Steve Hsu: Yeah.

Taylor Ogan: but so it probably was the first time I'd ever saw it and it, it, the first word, it was horrible.
Right. Then it, it learned so it, I watched it learn the game in real time. That was fascinating. but yeah, these, again, these kinds of things are just going, it's inevitable. And it's, it's a matter of what apps and companies embrace it and which, which ones completely block it. And the reason that Tencent blocked it so early on is because they're developing the same thing.

Steve Hsu: Yeah.

Taylor Ogan: So of course they don't want,

Steve Hsu: right.

Taylor Ogan: them having this.

Steve Hsu: So you know, back in the states, I, I won't go all the way to the existential risk Doomers, but there, there's a, a growing feeling, especially among younger people that, you know, this kind of AI automation is gonna limit their job prospects. And I'm, I'm wondering, do you detect a different view of that discourse in China? Like, are people here also worried about how young people are gonna find work? If, if AI's, are this capable?

Taylor Ogan: It's a great question. I've been thinking about it a lot, because we're 20, 26, I think. We'll Mark, that year that this starts happening, there really, truly, people are directly losing their jobs to AI
nuances One is, it's very, very difficult to fire people in this country . Very difficult. Most people, what is

Steve Hsu: a communist country?

Taylor Ogan: Most people will work for the same company out of college or their highest level of education their whole lives, and they'll, they'll retire there.

In tech, there's, there's more switching around, but, not, not so much. So there, that reason alone protects a lot of people. They're also, as I said, they're better at implementing ai. And so let's say that, that your job in China before AI was to make, a presentation for, for your boss every week.
And you would spend that whole week. Putting together that presentation now AI can do a pretty good job. Yeah. And next year it'll do a very good job and maybe the year after it'll do way better than you ever could with formatting, with everything. Yeah. And so now you can crank out in, in China, they see it as, you can crank out now seven decks, seven presentations every week for me.

Whereas in the US I think it's easier to justify. Well, we don't need that person anymore.

Steve Hsu: Yeah.

Taylor Ogan: So yeah. The, the implementation people are just becoming like super soldiers here. Yeah. because,

Steve Hsu: but you, but you, but you're not getting the vibe of fear and loathing and, and worrying about the whole generation that's coming up.

Taylor Ogan: No. Okay.

Steve Hsu: Because

Taylor Ogan: that's

Steve Hsu: very big in the US

Taylor Ogan: I know. And I feel that in the US Yeah. There's job protection and I will say that the government has the ability to, if it got that bad, where we're really, like there are only a few jobs left for humans. They will probably implement that better than Yeah. You know, restrict some of these things. Yeah. But, but I, it's just a, a, a kind of society that, that's not the, the way that they operate. Yeah. So of course there are a lot of unknowns, but, but in the, in the near term I'm just seeing more corporate embracing of, of AI and they, there are, are way better you know, applications for this than exist in the west.

And so it's, it's just people are adapting much better here. And I mean, even, you know, it's the same kind of question about like we can look out the window and see drone delivery. You'll see it pass between these two buildings that, that used to the, the. Now the drones are doing something that normal workers used to do here, but you still have people running the orders to the drone, you know, where they take off.
And then returning the boxes that are recyclable. Like there's still jobs created, but also just don't even get to that point. Five years ago, the people whose jobs were talking about being displaced, this industry did not exist. Right. So, like, it, it's, you just need to adapt. So

Steve Hsu: people are used to more dynamism here.

Taylor Ogan: Yeah. And, and also the Chinese kind of have this especially in Shenzhen, this innovate or die approach. And that is true among, among jobs. So you, yeah, you're probably not going to see so many, you know freelance artists in China than you are in some other societies. And that's, that's just part of the society here. So they're more efficient in how they deploy themselves and, and embrace and work with AI.

Steve Hsu: One of the things that I, I, right before I came here, I was in Singapore, or actually to be very precise, I was on a little island off the coast of Singapore, which is actually part of Malaysia. But there's a, what used to be a kind of ghost city development there, and Balaji Vasan has built this thing called network school there, and it's become like a place for digital nomads and startup founders to go and like dial in and, and work on their, their startup.

But very interesting international group of people there. And one of the things I think I blew their mind with in, in discussing the topic that we've just been covering is I said to them, you know, in the US it's very possible that, the AI comp, like, you know, when open AI goes, IPO and Anthropic goes, IPO, you know, you're gonna create all these billionaires.

And it might be that a, a relatively small set of people who really own the IP and the, the technology behind AI will capture, you know, increasingly large chunks of the total amount of wealth in society. And because in the US rich oligarchs basically control the government, they'll be allowed to keep that.
Whereas in China, you could imagine a situation where they develop equally formidable AI but those AI's are not, the people who quote own those ais are not able to capture all the wealth in society because the government will force some level of distribution. So even if like there are fewer jobs for 18 year olds, the 18 year olds still may get a bunch of benefits from the state since it is a socialistic country.
Right. And maybe if you're worried about human thriving, you should be rooting for a socialist government to actually win the AI race because other, otherwise, like the AI will eat us and there's no government to protect us from that.

Taylor Ogan: Right. Yeah, it's, it's a great point and probably partially why they're so keen for open source.

Mm-hmm.

Steve Hsu: I think part of that is just. The competitive landscape scape between US and China. I mean, that, I think that mainly drove it.

Taylor Ogan: Yeah.

Steve Hsu: But yeah, it's gonna be very interesting to see in the long run if AI becomes, you know, it, it, it starts to displace human AI plus robots starts to displace a lot of human labor.
Like how the gains from all of that productivity are just redistributed in society. That, that's gonna be a key question. I mean, Sam Altman does favor UBI, right? Yeah. So, so at least there's that, but it's not even clear the government would do UBI in the United States, right?

Taylor Ogan: Yeah.

Steve Hsu: Yeah.

Taylor Ogan: And, the open in open AI has changed its form.Yeah. So who knows what he'll think later.

Steve Hsu: Yeah. Yeah. So let's, let's talk about your fund, Snowball Capital. You have unique insights into what's happening here in China, so I think you have a better feel maybe for what's happening with the publicly listed companies as well as private companies here.

One of the things we were just talking about is helping investors get access to, stakes in companies that are still private. So there are a number of really formidable companies here, like BYD and, by dance that are just private. And there's no, as far as I know, there's very, quite difficult to get any exposure in your portfolio.The U idea is

Taylor Ogan: public,

Steve Hsu: but, oh, so not, I didn't, oh, did I say D-G-I-D-G-I-I meant DGI, sorry. Yeah, yeah, yeah. So, so talk about what your new fund and what, what that's meant to do.

Taylor Ogan: Yeah. Well, I mean, we're, it's, it's very complex for the US side actually. Yeah. the goal eventually is and hopefully very soon, is to have a fund, have a way for American LPs, LPs all over the world, including in China to invest in China's leading private companies. And you'll never be able to invest in Huawei 'cause that's all employee owned, but pretty much every other kind of DeepSeek as well. But pretty much every other company you know, there is a secondary market and right now there's no way for, pretty much foreigners, but especially Americans to have access.

And so we've been looking at ways that we can get that exposure. And I think we're very close to, to an answer to that. And it will, you know, I I also actually see it as philosophically as a bridge between the two countries because this whole time Chinese have theoretically been able to invest in the leading AI companies or tech companies in the US and other countries.

But it's not the other way around. And there are many reasons for that. But now there is, there is actually surprisingly, a lot of demand for, from American, you know, elite too. They wanna, they hear about China, they want to, you know, at least diversify it a bit.

Steve Hsu: Yep.

Taylor Ogan: And so these, these private companies, I mean, a lot of 'em are staying like ByteDance and DJI specifically are staying private, so they can just become huge.

And some are even, you know, wondering if, if like DJI will ever go public.So it's, they're going to remain private for a long time. And some of these earlier companies that are, you know, startup seen here is only starting, I would say in these really exciting areas in the exact exciting areas that they are in the US.
So yeah, I mean eventually you know, there was a conversation that a few years ago that maybe we can never, Americans can never have access, to these private Chinese companies. But we found ways that we have exposure. So, yeah. we're really excited about it. We'll, we'll announce more when, when we, you know, formalize it.

But yeah, that, that's always been the goal and I think bridging the two countries, especially right now, is, it's very important. I think more students need to come here. I think more just open-minded people when they see it, they will realize that they, they're being lied to first of all.
Right. And, and also just, just, there should be something about humanity, where a certain type of human likes to see the most advanced things that humans have put together. Yep. And that is happening here. And, so yeah, for the sake of humanity, there should be more bridges connecting to China. and then we are, I will say, we are starting to really see that happen.

Not really from Americans though, but from other countries that are, yeah.

Steve Hsu: I think Europeans maybe are more open to it. Yes.

Taylor Ogan: Yeah. Yeah.

Steve Hsu: Coming back to this stakes in private companies, privately held companies. So in the US there's a, in, for most startups, there's pretty healthy secondary market where if your shares are vested, you can sell them potentially, or maybe, I mean, it depends on the company, of course, what, what terms, govern, you know, your shares. But, to some extent there's some way for people who have vested shares in private companies to get some liquidity out of it. And there, there are investors who, in those secondary markets, really want to have, want to own those stakes.

And I guess here it's not yet a thing, right? Is that, is that true? So, so if I were a vested DJI employee and I want to get some liquidity, I don't have particularly good ways. Can I, can I borrow against my shares from a bank?

Taylor Ogan: Yes. you can a certain percentage. There are a few different reasons why this happens.
One is. Probably the most important is that a lot of companies in China, it's not as common for them to issue shares to their employees. They'll just pay 'em higher and higher salaries. Mm. And so there's less of market for that reason. Also, some companies are very, they're more restrictive. They see as it is the shares in the company give you more power, and they don't want to lose too much power.

So they also see the, the business model that Huawei has been so successful with doing. I mean, if you ask a student right now in the street, in this city that maybe they're biased, but what company do they wanna work for when they grow? Many of them will say, Huawei. And they know that, that Huawei has probably more millionaires than any other company in this country. So, they see that as as a successful s.

Steve Hsu: Let's talk about that. 'cause I would guess almost no Americans, very, very few understand the ownership structure of Huawei. And, and I even remember, like, I was watching a documentary about Huawei on YouTube. I don't think it got a lot of distribution in the us but they went to extreme lengths go into these vaults at Huawei where the lists of all the employees are The ledger.

Yeah, yeah. The ledger of who owns the shares. Just, just to like, I felt like the documentary filmmaker and the internal Huawei folks wanted to really prove to the outside world that no, you, our company really does work this way. It's not, our company's not just an arm of the Communist party of China.
Right. So, so maybe just explain to a Normie American who doesn't even know like the, what the ownership structure, the financial structure of Huawei is. How does it work?

Taylor Ogan: Yeah. So it's completely employee owned and they basically, the, the more senior you get, the more shares you get and. There, there are a lot of Huawei people who were just early employees, and it, and Ron Jang Fey the founder, he's always believed in this.
And so from, from the beginning,

Steve Hsu: PLA, Ron Jang Fey.

Taylor Ogan: Oh, right, of course. Yes. You have

Steve Hsu: to say he would, he was once an officer in the PLA.

Taylor Ogan: Yeah. And he worked behind a desk because of bad eyesight. But yeah, so they, I will say actually Huawei structure within the company is kind of like the military, and it's one of these things just, they, they call each other comrades and everything.

And it's, it's quite silly. I, I think that maybe there was some, at some point, some conversation with, you know, US intelligence and they heard of someone who knew how Huawei was structured and they said it's structured internally, like the military, and then they thought it was a military company.
Right,

Steve Hsu: right.

Taylor Ogan: But, but no, yeah, it, it's, it's completely employee owned and and it's a, again, a huge draw, huge incentive for people to work at Huawei. And basically if you work at Huawei, you do not leave. Unless you are starting something that is going to make more money. and, and I have some friends who I can't believe that they left and probably their families can't either.

But they're really betting on themselves. And I think kind of, the flip, well, the same thing is happening with DJI employees, just that complete opposite ends of, of, you know, the age range. So DJI employees, they're some of the best students. The best students right now in China are going to DJI. And they, by the time they're 30 years old, I mean, some of 'em have been working there since they were literally even 17 years old they now have been, they've amassed a lot of money and they get together and they are forming. These are companies that I, I think probably. Every listener has in their home. And you know, some of these home robot vacuum cleaners and pool cleaners, like robots that play tennis against you, these are all ex young DGI guys.

And the thing is, it's very hard even for me to track this on the private side because they're, they are not fundraising beyond just their own, their own bank account. That works. Yeah. And so yeah, these, and these are truly some of the smartest people at the other end. You have Huawei guys who are in their fifties, who have amassed a ton of money and they want to sell, you know, they think they can sell amazing products.

One friend who's quit his job at Huawe and is selling actually you know, PhD from Slaw, he's selling a pet hair remover. Okay. And he, he is targeting the US market on Amazon. And I mean, he's a genius. It's probably gonna be the best end pet hair remover you've ever seen, but, you know, when they believe in something, they can just do it.

and so that's the kind of risk I'm, I'm talking about. But beyond that, it's the same. Like, you would be a fool to quit your job at DJI right now same thing at ByteDance, same thing at, you know, these, these leading companies, whereas there's less job security, well, there's job security, but there's, less upward mobility at a company like maybe BYE, or even maybe Xbi.

Steve Hsu: But just coming back to the unique structure of Huawei. So, the company's completely owned by employees. There's no outside investment that comes in, when the company has a good year, I think last year they had a good year. Are they redistributing those profits? Oh yeah. To the employees? Yeah.

Taylor Ogan: Yeah. They, they pay very handsome dividend.

Steve Hsu: Yeah.

Taylor Ogan: And and especially recently, they've been doing super well. So, it's, it's actually becoming such an issue, that they're paying them too well and they're retiring too early.

Steve Hsu: Yes.

Taylor Ogan: So yeah, they, but still, I don't think they're gonna change that. It's you know, people see maybe ZTE or BYD as stepping stones

Steve Hsu: to get a job

Taylor Ogan: at Huawe to get to, yeah,

Steve Hsu: yeah,

Taylor Ogan: yeah.

Steve Hsu: See, what I find really interesting about the ownership structure of Huawei is that you could find people who label themselves like a hundred percent free market capitalists. Who would look at the structure of that company and go like, yeah, that's the ideal company. There's, there's nothing wrong with that company, right?

That it's got the right incentive structure. The employees actually benefit from success of the company. Well, nothing wrong with that. And you, you would even have some like kind of socialist left wingers who are against corporations, but when they look at the structure of Huawei, they go, well, if we have to have corporations, that's how it should work. That's a good

Taylor Ogan: structure.

Steve Hsu: They should be owned by their, it's like a co-op, it's like the food co-op, you know, in Brooklyn or something. So I find that it really interesting that this is, some people would say it's the most formable technology company in the world. I think this, they completely rule 5G, six G networking and, you know, they're involved in making manufacturing semiconductors and making phones and AI

Taylor Ogan: cars.

Steve Hsu: Yeah, maybe not, they're not so good at AI right now. But, but maybe they're, they're other companies that are better at AI. But, still it's one of the most impressive, Tech companies in the world, but it's got this very unique structure that's, I, I think they're, I can't think of any other really prominent company that has a structure like this.

Taylor Ogan: Yeah, no, it's very unique. And, and also they're, they make the software for a lot of cars. Some of the coolest cars are,

Steve Hsu: are

Taylor Ogan: co-produced by Huawei and they make the best, autonomous driving system in the world. so yeah, I mean, they are, they're the, the company to be, I will say, internally, pretty much every tech company in China that is not Huawei, hates Huawei.

Steve Hsu: Oh, really?

Taylor Ogan: They hate them so much

Steve Hsu: because they're

Taylor Ogan: tough to compete against. So. Cool. And, and also, I mean, they're envious of their structure and, you know, also I think tying into what we were talking about earlier, their structure also is one of the, the explanations for why they act like they did with when Gina Romano was here with May 60, and they just, they each personally feel.

You know, attacked when the US attacks them. And so yeah, they, they lash out. And also, you know, they, if you go to Huawei, press, you know, release, product release, you'll see the teams who are involved in each, you know, product that's being unveiled outside of, they do it in these sports stadiums and they fill every seat and they will like be chanting these slogans.

And if, if you didn't speak Chinese, you would kind of think it is the military because that's, they treat these projects like they're, you know, you know, in the military. So, yeah, it's, it's very unique company. I think this is maybe why the US fears them so much. It's because they can't do anything except just spew propaganda that the, the government owns them.

Steve Hsu: There's so many things mixed up in this because you know, one of the ways that the US has controlled Europe, and again, this makes me sound like a conspiracy theorist, but. If you just look at the Snowden leaks, it's, it's pretty clear. You know, Snowden revealed that Angela Merkel, the Chancellor of Germany, her cell phone had been monitored for I think over a decade by us, NSA and CIA.

And if I'm able to monitor the cell phone of major European leaders, you know, up and coming, politicians, politicians are already at the top. And all these people, you know, maybe not all of them, but a pretty good chunk of them are up to things that they're embarrassed about. They might be sleeping with their aid, they might have be having an affair.

They might be taking a bribe, very likely that because they're not trained spies, what they're doing is picked up by their phone. And so it's very easy for the US to, to control these people. Like the more naive thing is to say like, oh, the US just knows what the top leadership in France is thinking 'cause we have access to their cell phones.

But more much stronger than that is the ability to just blackmail a particular French politician. Hey, I know you're cheating on your wife and the girl you slept with is only 14. We don't want this to get out. You know, and, and the way the meeting would actually happen is some CIA person who is actually like, official title is the embassy or something.

They're at the State Department, but they're actually CIA. They might have a meeting with this politician and say, I, I'm here to warn you. You know that we notice the Russians or the Chinese have been trying to hack your phone and they did get some access to your phone and this seems to be what they learned

Taylor Ogan: interesting.

Steve Hsu: And then they say, look, this should not get out. And I, we want to assure you that first of all, we're going to gonna take some steps to protect you, but you should protect yourself. But then after that, that guy of course is like, what people know X is true about me. And, and then like when, if we need a favor from that guy, you just say, Hey, I'd like this favor.

And, you know, we protected you against this stuff. Protected, I'm using air quotes, right? So that's a very common thing in espionage circles. Now, when Huawei comes along and says, oh, we, we have better 5G technology, you can build your whole national data network using our technology. It has no back doors for NSA or CIA.

Maybe it has back doors for the Chinese side. Okay? But, but that is such a threat to the American Spook way of doing business, that they will do everything they can to kill Huawei, which is, which is literally the history of what they've tried to do to Huawei for the last, you know, like literally like gone to the British government.

I, I'll tell you a story 'cause my friend Dominic Cummings was the special advisor to Boris Johnson when Boris Johnson was in power. And around that time, GCHQ, which is their NSA had done a whole review and they said, well, we don't want our core routers to be Huawei, but some edge router that's just like on some city block and it's just like taking, processing the cell phone calls from, you know, within a block of where we put the little thing.

That's okay to be Huawei 'cause it's on the edge. So GCQ did a very thorough technical review of Huawei technology and said it can be used in these ways, but not in these other ways. End of story. And very confident group of people there. So that was the British position, but the US didn't like that position.
And I believe I've been told from sources that were actually there that, I think it was Pompeo, I, I can't remember exactly which person it was, but it might've been Pompeo. Like literally went to number 10, camped out in an office, had to have meetings with the top officials there, and just started yelling.
You know, at these people F-bombs. And so like, no, you will not install any hu you know, we will fuck you, we will kill you guys if you do this. And so eventually the British government just like reversed their position on this. But it was, it was not because like, some like technical argument, like, no, your GCHQ report was wrong.

You shouldn't do it this way. Here, let me show you some internal documents about Hu Huawei technology. Where no, it was literally like just bully a hundred percent bully tactics. And then they kicked, they kicked Huawei, or they, they, they at least set in motion the policies to kick Huawei out of their system. Right.

Taylor Ogan: So, and remember they, they, years ago, the Europeans forced Huawei to pay for their own third party independent review

Steve Hsu: Correct.

Taylor Ogan: Organization in Europe and test everything.

Steve Hsu: Right.

Taylor Ogan: And they, to my knowledge, have never found any of these. Right. Like it's, it's

Steve Hsu: right.

Taylor Ogan: I'm not, I think the Australians also pushed back. Yeah, I remember.

Steve Hsu: I'm not saying that Huawei is better than U.S. Telco providers that do put in back doors for CIA and NSA May, maybe Huawei is more or less equivalent. I I'm not saying that one is better than the other, but the point is a lot of the hostility of the US Deep State and Nat Ssec establishment against Huawei is literally because they are doing this stuff. Yeah, exactly. They don't want anyone stopping them from being able to do this stuff.

Taylor Ogan: Exactly. And, and so like all party members in, in China, they're not allowed to use iPhone. they,

Steve Hsu: which is totally reasonable. Like Yeah, yeah. People, people in the US interpreted this as like, oh, they're trying to support their national champion, Huawei, and they just, they just wanna damage Apple.

But it's like, no, if I were running a country, if I were running Iran and, and like, oh, you, you guys might try to assassinate my top leadership. Yeah. I'm gonna ban iPhones. Yeah, yeah.

Taylor Ogan: But, but also Huawei will, will, will, you know, have white papers on their privacy. Right. And Apple will have commercials on

Steve Hsu: theirs. Right.

Taylor Ogan: You know, that's the difference. And people think that just because the FBI can't crack the password to some school shooter's iPhone, that means that it's super secure.

Steve Hsu: Right.

Taylor Ogan: Absolutely not. They could crack it so easily. Right. And they do every day. So Yeah. I mean, Huawei is, I mean most government officials use a Huawei phone.

And I mean, trust me, I've been in meetings where they were bad mouthing Huawei. Most of the phones in there where Huawei, they. If if they thought that Huawei were listening

Steve Hsu: Yeah.

Taylor Ogan: They would leave their phones outside. Yeah. And some companies do just, you know, it's a policy to leave all their phones outside. But, but trust me, I've been in plenty of meetings where if Huawei were listening, it would be bad

Steve Hsu: Yeah.

Taylor Ogan: For them. so no, I mean, Huawei is super secure in the Chinese mind, and so you kind of have to trust that it's pretty secure. Yeah. Yeah. Fascinating company though.

Steve Hsu: Yeah.

Taylor Ogan: Totally misunderstood by the rest of the world.

Steve Hsu: Incredible. So we've been talking, I think it's a little over an hour now. maybe we can start wrapping up. I think we're both boosters for Americans when they come to China to visit this city. Totally. In particular. For, for someone who doesn't have the kind of connections that you have when they come to s Shenzhen, what, what should they do?

What, what's something that average person can see that will really impress upon them the enormity of what's going on here?

Taylor Ogan: Unless someone you know really high power power, wants to see something specific no matter who you are. I actually have the same answer. You need to see how technology is embraced by the average person here because it is no exaggeration.

If, if I were to tweet a video of, you know, some, some really crazy series of high tech things in someone's life here, it wouldn't be believable. You know, maybe I just capture this one edge case, right? That's just not the case though. This city is so nerdy, it is so techy, and so what, what I recommend is people, to, to stay in of the district we are now.

There's a, a park called Talent Park and I think it's just a good way to see everything at once. You can see brand new infrastructure, the newest mall in the country. Definitely the best mall in the world. just opened a few months ago.

Steve Hsu: We ended have dinner there tonight

Taylor Ogan: probably. Yeah, I'm not kidding.

Yeah. You can see and experience drone delivery. You can see all of the robo taxis surrounding the park. It's also a beautiful park. And you can see the skyline similar to this view where we have now. And you, you can just listen and you can hear how silent the roads are. And there's actually a store, the world's first ever Kickstarter physical store just opened it's called NO 100. and that's a good collection of all of, and I'll take you there later of all of Shenzhen's latest products, many of which you can buy in the US and some of which you can't just because the government banned them. but it's, it's just kind of the best of the best stuff. And it, it's like a, a sharper image, but like shen identified.

so I think that kind of series in an, in an afternoon is, is a good, really good way to see. The genuine high tech aspects of the city. And also some of these, you know, Shein is kind of known for malls, especially in the summer. It's so hot, you don't wanna be outside that much. Yeah. So you go to malls and the malls here are just on another level.

but many of these malls also have car dealership showrooms, and so you can actually get a good sense of the latest cars by just going to pretty much any random mall. Yeah. And, and also just driving around the city, you can, you can see a lot, you can see how every single taxi is electric. Most of the, the plates, they're either green or blue.

They're green up, they're EVs. Most of the plates now are green, so you don't have to be a car expert to know if that car is electric, you leave the plate. Right. So, yeah. I mean, but now like you could, you just, just drive around, walk around wherever your hotel is, just walk around that, that neighborhood.
You'll see what people, you know, say is the real China. You'll see the real Shenzhen and you'll see kids on, you know, electric you know. Scooters, fighting each other with, you know, digital, you know

Steve Hsu: Yeah.

Taylor Ogan: Guns and, you know, it's, they're, they're just super nerds. and it's, it's an awesome city. You know, people critique it for not having culture because it's so new.

That is Sheen's culture. it's just so high tech and the, the, I think my favorite part of the city is that if something is, is overly done when it comes to technology, it won't make it out of the city. So you do see some stuff that you just, you shake your head because it's ne that's so, it's too Shenzhen .
Yeah. You know, it's never leaving here. And just seeing that stuff, it's people's attempts 'cause they never know what's gonna stick. And, so just watching, you know, technology basically walking prototypes everywhere you look

Steve Hsu: now Doubao on your ZTE phone. That is gonna leave Shenzhen. Right. You, you think that's something that's gonna be on every phone within a few years. My

Taylor Ogan: friends at ByteDance say that it's, they, expect to ship this overseas.

Steve Hsu: Yeah.

Taylor Ogan: So incredible. Yeah. And again, in English and many languages,

Steve Hsu: we won't, we won't get in the US though.

Taylor Ogan: definitely not.

Steve Hsu: Yeah. Everyone in the UK will have it and you know, Germany and Dubai, but we won't have to.

Taylor Ogan: Exactly. Just like many other things.

Steve Hsu: Alright, Taylor, it's been a pleasure. Thanks again for being on Manifold.

Taylor Ogan: Thanks for having me, and thanks for coming out.