VALUE: After Hours (S07 E14): China vs US: Tech Race and Consumer Edge

During their recent episode, Taylor, Carlisle, and Bill Brewster discussed China vs US: Tech Race and Consumer Edge. Here’s an excerpt from the episode:

Tobias: Yeah. Oh, yeah, for sure. For sure. I’ve thought about this a little bit more. I’ve talked to more people since– I think in terms of hard tech, which is high tech or deep tech or whatever you want to call, like the stuff that’s really bleeding edge or cutting edge or however they describe it, America is still ahead. I think when they say that, they mean AI.

I think OpenAI is the leader, but OpenAI has dropped an absolute megaton of money into this thing. And then, DeepSeek is like 5% behind. They’re 95% of where OpenAI is, and they’ve done it at 5% of the cost. I think that that’s representative of high tech US versus China. US is still ahead, China’s just a little bit behind.

But in terms of consumer tech, the stuff that we’re all buying, I think China’s a generation ahead, and they’re doing it much cheaper than the US is. So, their cars, their phones, their TVs, they’re better and they’re cheaper. And so, that to me, I’m having a little bit of trouble processing that at the moment.

Bill: Yeah. I don’t know the DeepSeek stuff. I guess I should have read the paper by now, but I don’t know about the– I know the cost is allegedly that much less, but I don’t know how much of that is real verse marketing. But yeah, I’d–

Tobias: We talked to VCs there. We talk to these hard tech VCs. And then, many of them have been educated in the west and spent time in like Facebook, or they’ve come out of big organizations like that. And to me reading these guys, like, they don’t know either, they’re speculating like we are, but they’ve probably got more expertise than we do. They were saying–

Bill: I think that’s a safe assumption. [laughs]

Jake: Yes, it’s a low bar.

Tobias: I’m not even in a position to assess that. I can’t even assess their expertise. I’m just saying this is my rough impression. But they all seem to say that they take– This guy at his word, that is how they’ve done it. And the thing that they use as evidence for supporting that is how open– Like they said, there are two types of openness. There’s openness with the model itself, where you can see the model, and there’s openness with how they train the model. I think that they say–

Jake: The weightings.

Tobias: Yeah, they can see the weightings and they think that they’ve done it the way that they said that they’ve done it. And so, I think that they really, we find out– We get confirmation with the next round. The next thing out of OpenAI and the next thing out of DeepSeek tells us whether we’re on that S-curve of– They’ve now fed every single bit of information that humanity has ever written down since the dawn of time into these things, and they’re still not smart enough. So, now they’re creating synthetic data. So, are we at the smoothing part of that S-curve? You guys know that S-curve goes like that. And then, the question is, [crosstalk] are we on the top part of this S-curve rather than this part of the S-curve.

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