00:00hi everyone welcome to the a6 & Z
00:02podcast I am sonal and I'm really
00:04excited because we have a podcast today
00:06with two guests and we're talking about
00:08smartphones Xiaomi and the Chinese dream
00:11that's actually the subtitle of the book
00:13little rice by Clay Shirky who's one of
00:15the guests on this podcast clay has been
00:16a longtime observer and commenter of
00:18internet culture social media
00:20um he's written a really popular book
00:22called here comes everybody and he's
00:24currently the global network professor
00:25at NYU Shanghai we also have on the
00:29Connie Chen who's a partner in the deal
00:30and investing team here at Andreessen
00:32Horowitz and she's an expert in all
00:34things China among many of her other
00:36pieces she wrote a piece earlier this
00:38year on WeChat and in both of these
00:40cases were just mentioning WeChat
00:41neshaminy what we're really talking
00:42about more broadly is this broader theme
00:44of innovation and how it's now happening
00:47in a different way than before where
00:49we're starting to see companies that
00:51maybe previously might have been quote
00:53so-called copycats actually lead the
00:56march forward I want to just start on
00:58that note and hear from both of you
00:59Connie and clay on what's happening I
01:01think the important note here is to
01:03understand that there are various ways
01:05of defining the word innovation some
01:07people might say and take a very strict
01:09view that innovation is the first person
01:12that comes up with the new piece of
01:13technology or the first person to figure
01:15out some formula if you argue though
01:18that innovation can mean the first
01:20person to scale a company scale a
01:22product the first person who can figure
01:24out a distribution model or a business
01:26model that allows the product to be
01:28given to millions of consumers then I
01:30would say there's a ton of innovation
01:31happening in China and their husband for
01:33the last several years I think that's
01:34absolutely right and and one of the
01:37things I think people often miss is the
01:39Americans have been brought into the
01:42cult of Steve Jobs and if regarded
01:44innovation as being basically covalent
01:46with industrial design and so when they
01:49hold an iPhone in their hands they think
01:51it's a hardware and they user experience
01:54that they're having is is what
01:56innovation is but when you look at a
01:58company like Xiaomi what you see is
02:00innovation in process you see innovation
02:03in customer service you see innovation
02:05in manufacturing the hardware itself is
02:08the least important part of this
02:10incredible chain of supply and
02:14I think Connie's right that when we
02:16think about innovation we have to
02:18realize that there can be innovation in
02:20operating system design there can be
02:22innovation in packaging and shipping
02:25there can be innovation in customer
02:27service and that in many cases the
02:30innovation that's outside the direct
02:32thing the consumer holds in their hands
02:34or interacts with is a bigger part of
02:37the business landscape right now when
02:39you said supply and creativity I don't
02:41never put those two words together how
02:43does that actually play out Xiaomi has
02:44created this sweet spot which no one
02:47previously thought existed in the market
02:49where there is a well-designed product
02:52for cheap enough but be competitive with
02:56luxury products in it painful made what
02:58it lets chamois do is do these flash
03:00sales where they say look we've got a
03:02hundred thousand of them of the hongni
03:05and we've got a hundred thousands of me
03:06- we're gonna sell those now you have to
03:10sign up for the right to get a ticket to
03:13have a chance to buy the phone which
03:16means xiaomi has now used e-commerce as
03:18a way of signaling massive unmet demand
03:21they can then take that down to Shenzhen
03:23and say we know how many people want
03:25this phone and we want you to give us
03:27these components at the million unit
03:30price so they can actually squeeze costs
03:33out of the manufacturing system even
03:36before they make the phone and they can
03:37use that money to invest in design
03:39without driving cost to the roof what I
03:41love that you're touching upon is that
03:43using flash sales as one of the
03:45mechanisms as well as the design process
03:47and how they come up with changes to the
03:49software they're able to create a brand
03:51that users actually adore and so it's
03:54not about just consuming a you know a
03:56product that is interchangeable with
03:58something else the brand actually stands
04:00for something people love their Xiaomi
04:02bunnies they love promoting the fact
04:04that they own Shami devices companies
04:07have been manufacturing products like
04:08smartphones in China for years what's
04:11what's changed why now
04:13they bet on open source software they
04:15bet on e-commerce they said you know
04:17we're not even gonna bother with the
04:19supply chain thing we're gonna ship from
04:21the warehouse anybody who buys a son
04:22from us whether it's a you know
04:24mom-and-pop vendor or an end user we get
04:26the money they get the phone we don't
04:28with returns and they bet enormous ly on
04:30social media every time you upgrade your
04:33operating system you're given the
04:35ability to advertise to your friends hey
04:37I just upgraded me UI right so Dave's
04:39they've got their users and as Connie
04:41said these these me fans that sort of
04:44really passionate engaged users have
04:47become their marketing base they provide
04:49feedback they suggest new features and
04:52I'd say they also just caught the right
04:53timing to be frank Li Jing is famous for
04:56that saying where you know in the eye of
04:58a tornado even pigs can fly and it's
05:01really indicative of the rapid adoption
05:03of technology in China just users in
05:06China adopt new forms of technology at a
05:09very very fast pace it's not just about
05:11the technology it's also about the
05:13business model and the distribution and
05:15the whole company that goes around it
05:17what kind of comes full circle to the
05:18point that there's different types of
05:20innovation I resist this a little bit
05:22simply because I'm so used to thinking
05:23of innovation as something new and even
05:26though you're describing new mechanisms
05:27and new processes and new logistics and
05:30new marketing techniques when I think of
05:32new I think of like Elon must like
05:34launching a shuttle into space
05:37and so the other thing I want to kind of
05:40hear your thoughts on is how this plays
05:42out in the broader context of other
05:43trends around innovation because you
05:45know there's there's a phrased you got
05:46innovation in in which is described of
05:49an Indian word you God which is sort of
05:50like using sort of the constraints that
05:52you have around you to come up with new
05:53innovative ways you have reverse
05:55innovation which is this philosophy that
05:57innovations that are happening in other
05:59places are now coming back to the US
06:01what are we talking about here more
06:02broadly I don't mean to keep hammering
06:04on this but I want you guys to convince
06:06me a little harder about what the
06:07innovation is that's happening when I
06:09think about China innovation to me means
06:11survival and I say that because there
06:14are so many people in China 1.3 billion
06:17people there's a huge population of
06:20entrepreneurs in China right now and and
06:22you match that with a huge abundance of
06:24capital it's available to these
06:26entrepreneurs and you just crew you have
06:28an environment it's extremely fierce and
06:30so for me innovation is a lot about
06:32survival because in China a lot of these
06:35startups they're thinking of it as an
06:36all-or-nothing game everything is built
06:39because it has to scale because if it
06:40doesn't scale you're going to go to 0
06:42and therefore innovation is is very tied
06:45to business model path to profitability
06:48for for a lot of companies and
06:50distribution yeah and the size question
06:53it really it particularly for a la Y
06:57lightness of a foreigner just getting
07:00used to being in a country that operates
07:02at this scale every day is itself a kind
07:06of disorienting process I move with my
07:08family to Shanghai about a year and a
07:10half ago and it took a while to realize
07:14what it means to live in a city whose
07:16population is larger than Australia
07:19right it's just it's a different it's a
07:21different set of scale here so here's
07:25where that ties into innovation because
07:28anything that works well here works
07:29under crushing load and because you have
07:32to control costs everywhere on the chain
07:34if you're going to reach the mass market
07:36the question about innovation is will
07:39Xiaomi now be better prepared to compete
07:42in those global markets then US
07:44companies that have all of the
07:46infrastructure they can afford to
07:47operate at small scale everyone has a
07:50the kinds of innovations around
07:52ecommerce where people are paying using
07:55their mobile phones is with MPs in Kenya
07:57or have entirely alternate payment
07:59systems as with alley pay here that's
08:02the kind of innovation Americans don't
08:04even recognize right are our innovations
08:06around the financial system right now
08:07look like mint whereas in China it
08:11really is an entire alternate electronic
08:13currency and I think because we expect
08:16innovation to look like the space race
08:19we're very often missing the kind of
08:21innovation that as Connie says is coming
08:24out of these countries where the
08:25question for the for the entrepreneur is
08:27not do I get a 15% margin or 45% margin
08:31the question for the entrepreneur is do
08:33I stay in business or not Chinese
08:35companies have global aspirations
08:36they're chomping at the bit to go global
08:39to be international and they're thinking
08:41that way very very early on but another
08:44point is that they're going to face
08:46struggles when they try and go
08:48international and the same is true for
08:49Silicon Valley companies when they try
08:51and enter China the same kind of
08:53struggle is that the US companies face
08:54Chinese companies are facing that as
08:56they enter new markets as well they
08:58regard the hardware as a way of getting
08:59their platform into the hands of the
09:01users and then selling services and
09:04that's working well in China the real
09:07question is and it's a question not just
09:09for show me but for Baidu Alibaba
09:11$0.10 seen other big Chinese Internet
09:13companies easy is the ability to offer
09:17an Internet service in China an
09:19advantage or a disadvantage when trying
09:21to move to the rest of the world because
09:23unlike hardware the an Internet service
09:26company doesn't just have to operate at
09:28scale it also has to implement an
09:30enormous number of controls that Beijing
09:32demands over over certain kinds of
09:34public speech whether it's monitoring or
09:36censorship or propaganda and we are good
09:40at doing what Beijing asks us to do it's
09:42a competitive advantage in only one
09:44country in the world it remains to be
09:46seen whether or not China as it moves
09:48locally to a services more services
09:51based economy can export that as well as
09:53its exported hardware for some companies
09:55it's not necessarily appropriate to
09:57enter that market and they might not
09:59have good chance of the survival there
10:00and the question that I usually ask our
10:02portfolio companies is does
10:04your product or service get better if
10:06you have Chinese consumers on your on
10:09your platform so that on the flip side
10:11of that what is the advantage that a
10:13Chinese company would have
10:15internationally because to your point
10:17there's this advantage in the scale but
10:19then there's this trade-off in the fact
10:20that they are optimizing for this
10:22scenario like so what what are the
10:24things that they can sort of bring to
10:25the world in a way that's actually
10:28translatable outside of boundaries well
10:30first of all Genki infrastructure is no
10:32surprise right operating in a world
10:36where you have to have backup systems
10:39you have to assume that things are going
10:40to go wrong they're not used to walking
10:43into a into a country where you know
10:46everything from the internet interstate
10:47highway to the phone grid it has been
10:49has been laid out decades before and
10:51everybody understands how it works and
10:53this is something I think people often
10:55don't understand about China because
10:57technological change comes late and fast
10:59the interstate highway system is
11:02something that's happened in recent
11:04memory right the connecting of the
11:05Western cities in in in and the building
11:09of new buildings is going on at such a
11:12feverish pace that the Chinese
11:15businesses just operate with an outlook
11:17that's more like what's going on in
11:20Lagos now that someone trying to move
11:22from Cupertino or Mountain View you know
11:24when I talk to a lot of US companies
11:26thinking about entering the Chinese
11:28market that decision can take one or two
11:30years when I talk to a Chinese
11:32entrepreneur who wants to enter the US
11:34market he can have a team out here in a
11:36quarter so Chinese companies move very
11:38very quickly and they have access to
11:40large amounts of capital now but can
11:42they compete so you know one of the
11:44arguments that you guys are both made is
11:45like Ann and Benedict has made as well
11:47is that and just use a case of Xiaomi
11:49here we're seeing for the first time the
11:50design as well as this innovation coming
11:53out of China like originating in China
11:55I understand all the things happening
11:57underneath how does a consumer know and
11:59do they even care that they're
12:00benefiting from these innovative
12:03products the question I'm trying to get
12:05at handle on is like does the
12:06origination of that really matter the
12:09first thing the consumer cares about in
12:10the first place the innovation shows up
12:12is in price and that ability to just in
12:14select the cost quality curve in the
12:17who have a moderate amount of money and
12:20are willing to pay something of a design
12:22premium the consumer cares about that
12:24even if they just experienced it as this
12:26thing works well and I got it for cheap
12:28the more complex a product is the more
12:31the user interface is the user
12:34experience right that in fact you know
12:36any given smartphone is just a slab of
12:38black glass with three or four hardware
12:40buttons everything is on the screen and
12:43Xiaomi has invested enormous lee and
12:45what's called me you are their their
12:47their version of android and the user
12:49experience is that all the time blaze
12:51you just said that a third of the
12:53features in me UI have come from
12:56suggestions from users so they are
12:59really investing in the kind of open
13:02source model of look it's just it's just
13:05Android we can't prevent these features
13:07from being from being copied but if
13:10we're closer to our users and do a
13:12better job of understanding and
13:14integrating we still have a competitive
13:16advantage so they built their own they
13:19built their own scam database they they
13:21they look at incoming phone calls and
13:22look at incoming text and they tell you
13:24you know this this is a scam call there
13:27is no there is no Do Not Call Registry
13:29in China but they built that feature for
13:30their users because their users wanted
13:32it so both of you guys are talking about
13:34this concept that Eric von Hippel laid
13:36out a few years ago around innovation
13:38coming from the users so just to be
13:40clear this isn't crowdsourcing the
13:42innovation technically what is it
13:44exactly that we're talking about it's
13:45being really clear about what customers
13:48want and what customers don't but not
13:50just broad market study actual customers
13:53it's being really focused on customer
13:56service rigidly who's one of the one of
14:00the earliest investors has said we never
14:02talk in terms of handsets sold we always
14:06talk in terms of customers converted
14:09every time they ship a new version of
14:11the operating system which is every
14:13Friday they do it every week and they've
14:14done it every week for years they go out
14:17with a set of exactly the same four
14:20questions they ask the user what was
14:22your favorite feature what did what do
14:24you not like what are you missing and so
14:25forth and they they collate this
14:28feedback week by week so it's not
14:31sourcing in the sense of Wikipedia where
14:34it is it is assembled by by a self
14:37nominating group but it's about what
14:40actual users think not field test not
14:42markets not market research not focus
14:45groups one of the most arguing is that
14:46they in almost any manufacturing company
14:50they would regard customer service as a
14:52cost to be reduced by outsourcing it
14:55right and and to type that specific
14:58example back to sonal your original
15:00question of what are advantages that
15:02Chinese companies might have coming here
15:04or US companies going out there I think
15:06you can think of that that analogy
15:08across countries as well and so for a US
15:10company to enter the Chinese market that
15:13means they're also now going to be able
15:14to get the feedback and their product
15:17suggestions of a whole new crop of
15:18people a billion plus people right and
15:21the same thing is true for Chinese
15:22companies when they expand elsewhere
15:24they're able to make their product not a
15:26Chinese product but a global product but
15:28tying back again to this original notion
15:30of this cult of Steve Jobs I can't help
15:32but wonder like Apple would never do
15:34this or maybe they do secretly we don't
15:36know about it so how do we sort of
15:37reconcile what's happening with say like
15:39the leader Apple and we are talking
15:41about this larger question of who's
15:43leading innovation what are your
15:44thoughts on that I'd like to question
15:46the premise that Apple's the leader the
15:49company that Xiaomi is most like is
15:51Amazon and when you think about the
15:54kinds of things Amazon has done to
15:57innovate you see again this obsession
16:00with supply chain management you see
16:02this obsession with aggregating and then
16:04creating value from customer feedback
16:06you see an obsession with customer
16:08experience at every part of the chain
16:10shifting to B now in China for long
16:12enough that a little bit of my doula to
16:14understand the context of the u.s. is
16:16fading and when I look back at the US I
16:19think that the US has been somewhat
16:21damaged by regarding Apple as our
16:23official most innovative company because
16:27in fact Apple Apple does what it does
16:29brilliantly no question and it's
16:31obviously its commercial success as a
16:33result of you know is the result but in
16:36terms of practical surprises and how a
16:39company does things you you would look
16:42at other companies before you would
16:44the competitive battle is not going to
16:47be engaged in North America it's going
16:49to be engaged in Kenya and Mexico that's
16:52it's just there's so much American
16:55centricity in a way we think about
16:57technology that we're often just
16:59unprepared for the coming global market
17:02I think I agree and in general I don't
17:03like right I always never feel like it's
17:06perfectly accurate when I say this is
17:08the ex of China or the ex of of whatever
17:11if I really had to pick two other brands
17:15that have some kind of connection to how
17:17I think about Xiaomi one I would say is
17:19Dell in the sense that they're able to
17:22offer good products at low prices and
17:25have different new ideas of distribution
17:28and a good understanding of supply chain
17:30and another one that I I know people
17:33don't think about but in some ways it
17:35captures that brand loyalty is IKEA
17:37because IKEA is able to give a lot of
17:39people access to beautiful design
17:42furniture at a very very reachable price
17:45the one thing I think is a nuance here
17:47is that there is this interesting
17:50tension between the notion of the
17:51smartphone as both a commodity device
17:53and a premium object is that something
17:55we resolve in a single device or is that
17:57something that we resolve with the range
17:58of whatever objects are offered as a
18:01line by a particular company what are
18:02your guys's views on that I think on the
18:04Android side that answers your questions
18:07in all which is there is not going to be
18:10one premium product there's in fact
18:13already in China a range of phones that
18:19people can choose from but it's the
18:22Android Market is fragmenting now not
18:24just in terms of what the manufacturers
18:26do with the operating system it's
18:28fragmented in terms of how they reach
18:29customers and the interesting you know
18:32sort of macro question is does that make
18:34the android market more competitive or
18:37less competitive with the iPhone and
18:39certainly it certainly the view from
18:40China suggests more competitive what I
18:42love about what you're saying is maybe
18:44that's another way to think about
18:45innovation like what kind of company
18:47pushes an entire industry forward I
18:49think that's one way to think about
18:50innovation who is pushing everyone
18:53forward and who is challenging everyone
18:55to be more efficient coming
18:57a better product create more customer
18:59loyalty I like that we're expanding the
19:01definitions of innovation and how and
19:03where the innovation comes from I
19:05accidentally did like a little Freudian
19:07slip earlier and said American Dream not
19:08to be ethnocentric about by any means
19:10but like how what is the Chinese dream
19:12what does that mean I make a distinction
19:14between lowercase B and uppercase D so
19:17the lowercase D Chinese dream is the
19:20casual connection that many Chinese
19:23citizens feel with the kind of national
19:25greatness and a sense that their country
19:28after a long period of what sometimes
19:30called the century of humiliations and
19:32then more recent suffering in there in
19:35the Great Leap Forward and the Cultural
19:36Revolution their country has reasserted
19:38its itself in its natural place on the
19:40world stage and the importance of China
19:44in global affairs is on the rise in all
19:47kinds of way its economic and political
19:48and so forth and there is just a pride
19:52in Chinese achievement that feels to an
19:55American like America used to feel there
19:59is a sense here still of incredible
20:02optimism desaad despite having obvious
20:05problems that the country has to
20:06overcome on top of that there is the
20:08uppercase D Chinese dream which is a
20:12motto promulgated by by Beijing under
20:15under Xi Jinping under the current
20:16administration which wants to harness
20:19that sense of pride and entrepreneurial
20:23activity into a kind of nationalist
20:27sentiment that is basically comfortable
20:30with the status quo and also comfortable
20:33with slowing economic growth so the
20:35Chinese dream in its you know billboard
20:39you know billboard driven version where
20:42Beijing creates these slogans and
20:44distributes them from morning to evening
20:46living the dream is one of the things it
20:48says in the subways you know yeah
20:49besides by the suburbs as you go in here
20:51it's trying to create a sense among the
20:54citizens that everything you know that
20:58the current the current model of Chinese
21:00governor's particularly political
21:01governance is to be supported and that
21:06we have a kind of national identity
21:08which will enable us
21:11- which will enable Beijing basically
21:14the weather the economic slowdown and
21:16one of the really interesting questions
21:19for me living in China is are those two
21:22dreams going to diverge are the things
21:25that the population wants for themselves
21:28going to become different enough and the
21:30things that Beijing wants for them that
21:33the government will have a harder time
21:34managing it's essentially well the
21:39government Beijing have a hard time
21:40harder time legitimating itself in the
21:43eyes of its now newly successful people
21:45well I like the phrase the Chinese dream
21:47so much as how it captures the idea that
21:50hard work means that it can pay off and
21:54you can create lots of opportunity and
21:56create a better financial outcome for
21:57you and your family that's how people
21:59describe the American dream - right
22:01right and and I do also agree with clay
22:03that you have people from all kinds of
22:05backgrounds who really believe that if
22:07they work really hard they can make
22:09something huge and when you pair
22:11millions of people with that mindset and
22:14then you pair that with access to a lot
22:17of capital you get the ingredients for
22:19these mega companies when I first
22:21started coming here in 2011 the Shanghai
22:24Tower which is the second tallest
22:26building in the world was a hole in the
22:27ground and we walked around it and the
22:30kids looked at it like oh yeah they're
22:31building a building and then we got back
22:33in 2013 the steel was up and it was
22:38really striking to see that speed of
22:41construction I look at where I live in
22:42New York I looked at my South window at
22:44one world trade which took 14 years I
22:48think from the idea that we should build
22:49something here to topping out the steel
22:51so the the speed with which once a
22:55decision is made the speed with which it
22:57is enacted here is is astonishing at the
23:01same time one thing I love about Chinese
23:03companies is they'll launch products and
23:05features before it's fully Qi tested or
23:07and before it's fully ready and so
23:09sometimes you will try products and
23:11you'll hit some dead ends here and there
23:12are some features will be buggy but it's
23:14because things are launched very quickly
23:15what does that mean for the shape of the
23:18firm the nature of the company it sells
23:20and the organizational structure like
23:21does that change to adapt back to
23:23Connie's earlier point
23:24perhaps perhaps one way to think about
23:26innovation is what company changes the
23:29shape of the market they operate in
23:31Xiaomi has absolutely done that for for
23:35the idea of focused experimental
23:39management and for being able to decide
23:41sort of an employee their time their
23:43division at a time what you're going to
23:44invest in yeah I'd say that question
23:46around headcount probably case specific
23:48when I think about China there are
23:51companies that have enormous headcount
23:54that I think they're Silicon Valley
23:55counterpart probably what bulk at but in
23:58my mind that's just a different usage of
24:00resources the question around org
24:02structure I think is a really
24:03interesting one and it's one that often
24:06goes overlooked for US companies when
24:08they are entering China in the software
24:10space it's a question they really have
24:12to think about are they willing to make
24:13changes to their org structure are they
24:15willing to have product and engineering
24:17either be global or do they want product
24:21and engineering to have a small team in
24:23in China and what are the ramifications
24:25for how quickly they can get new
24:27features out there that stuff that
24:28management teams really need to think
24:30hardly hard about before they decide
24:32whether or not they want to go to China
24:34one theme that's kind of fascinating to
24:36me that you guys keep coming back to
24:38this notion of density density and
24:40population in proximity in this notion
24:44clay you mentioned your book teledensity
24:45which is a really awkward phrasing I've
24:47never even heard that word how do we
24:49sort of wrap our heads around the impact
24:51of that and how this all sort of plays
24:52out to me density means more competition
24:55and more competition means it's harder
24:58to survive but at the same time that
25:00means those that do survive are stronger
25:02smarter wiser just just someone we can
25:06learn from and respect density means
25:10it's not just volume of people it's the
25:12fact that the tier 1 cities here the
25:15tangi and Beijing chengde and Shanghai
25:18are there they are the size of countries
25:23the city I live in is larger than on the
25:25continent of Australia getting that
25:27scale in in something that works like a
25:30city rather than a country means that
25:33the kinds of applications that rely on
25:36density any app that has
25:38to do anything that has to do with
25:40delivery anything that has to do with
25:42transportation anything that has to do
25:44with local with ratings and
25:47recommendations for things you would
25:48actually physically go to simply work to
25:52the scale here that Dwarfs anything in
25:55the United States one of the one of the
25:57challenges for the u.s. is we have no
25:59testbed for operating in very high
26:03density moderate-income environments our
26:06high density environments New York San
26:07Francisco and so on also tend to be
26:09where the luxury markets aren't and so
26:12people get lulled into a sense that New
26:15York is a big city I used to think I
26:18lived in New York for 30 years and it
26:19felt like a big city and now I go home
26:21in New York feels medium-sized the US
26:24has no no native testbed for building
26:28out services that have have tens of
26:32millions of potential users on
26:35moderate-income living in a small area
26:38and yet that is where many of the next
26:41battles over innovation and market share
26:44are going to be are going to be waste
26:45what that density means its complexity I
26:47think it's what you're saying right it's
26:49it's so much more difficult to solve a
26:51problem in terms of scaling to that many
26:54customers it's a beautiful thing this
26:56density that we're talking about this
26:57amazing testbed but another physical
26:59manifestation of that is the pollution
27:02problem that's happening in the red
27:04there are definitely consequences of
27:06fast growth the banking system simply
27:10credit cards are not widely accepted
27:12many of the things you take for granted
27:14being plugged into are just not not
27:18readily available and so doing living
27:21here is hard doing businesses hard but
27:22yeah it's good to not sort of over draw
27:25the picture of this environment because
27:27in many cases innovation is an answer to
27:30problem solving it's and to be an
27:32environment where you want to solve our
27:33problems you have to be in an
27:34environment where you have hard problems
27:36who knows from that there might be
27:37innovation coming through electric cars
27:39or alternate uses of energy right it's
27:41already happening so Shanghai has moved
27:44to largely electric scooters in part by
27:47simply raising licensing costs
27:50to the point where a market for electric
27:52scooters and charging stations emerged
27:54as a results of the market signals just
27:57something something that that I think
27:59doesn't often make it to the United
28:01States about the the about pollution and
28:04innovation here is there's plan a which
28:07is clean all of the smoke coming out of
28:09the smokestack industries and
28:11importantly that's not in the big cities
28:13that is in the heartland where because
28:15the electrical grid was not good enough
28:16when the industrialization happened
28:18every factory started generating its own
28:20electricity burning dirty coal rather
28:23than having a single plant that you
28:25could clean but the the solution to the
28:31pollution problem here is going along
28:34there's plan a which is clean the air
28:37but there's also Plan B which is to to
28:40clean indoor air in particular so the
28:43market here for air purifiers air masks
28:47etc has taken off it is a response to
28:50local needs and it is a local innovation
28:53but when you look at the Shanghai Tower
28:55which is just down the block for me it
28:58is this it is the tallest skyscraper in
29:00Shanghai which is saying something and
29:03when you're looking at it you're not
29:05actually looking at the skyscraper the
29:08skyscraper is enveloped in a glass a
29:11glass sheath that it stands about two
29:14and a half meters away from the actual
29:16skyscraper so they built a skyscraper
29:19and then they built an environmental
29:21containment shelf Wow the skyscraper Wow
29:25and so that's that plan B which is to
29:28say stake out some some kind of turf or
29:32whatever the atmospheric equivalent of
29:34turf is and defend that and that
29:38solution is going to have all kinds of
29:41ramifications for environmental control
29:44and for for indoor and architectural
29:47construction it's in part just a
29:49response to pollution an HVAC but it is
29:52going to spread from here to elsewhere
29:54yeah so maybe in that sense that kind of
29:57innovation is problem solving no I think
29:59that's a very compelling thing but
30:01environment the more the innovation can
30:03happen and you need to happen needs to
30:06happen right one last final question to
30:08wrap it up which is just basically this
30:10interesting notion of you being an
30:12American living in China and what it was
30:14like to write the book one of the things
30:16when I was when I was writing little
30:17rice one of the things I wanted to
30:18wanted to be sure to emphasize is I am a
30:21foreigner one of the things I often say
30:23about Shanghai is it's the most
30:25different place I've ever been that
30:27isn't at all exotic you know I if you go
30:30to Vietnam and you see someone plowing
30:31all rice paddy with a water buffalo
30:33that's very different from New York City
30:35Shanghai what I see in China is just an
30:37alternate way to be a fully
30:38industrialized society so the the
30:42surprises that I feel as an American and
30:45who thinks about internet technologies
30:47in particular on you know both sides of
30:49the Great Firewall have been the thing I
30:51tried to put into little rice because
30:53that that sense of this system works you
30:58know parts of it work well parts of it
31:00works badly just like in the United
31:01States but different parts are working
31:04well and that's really the thing that I
31:06find most fascinating
31:07this idea that China is an alternate
31:09universe it's similar but different I
31:12like that mindset as a way to think
31:15about China that you will see companies
31:17that look like the Facebook of China
31:20look like the Google of China look like
31:21the YouTube of China but they're
31:23different and that's why it's not just
31:25Chinese Twitter right right right this
31:27idea of distinct distinct distinct
31:30companies similar but different I really
31:32like that that's great okay you guys
31:34will thank you again for taking the time
31:36and for those of those of our listeners
31:38thanks for being patient with our
31:40technical sound difference it was
31:42actually quite complicated getting this
31:43caught podcast going believe it or not
31:44but thank you everyone
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