San Francisco Travelogue Part 1

Is China even on the minds of the Bay Area Residents?

Hi all,

I’ve been in San Francisco this week, meeting amazing people and taking it all in. While I’ve been on this side of the world, back in China AI land, it seems like Qwen had a bit of internal fallout. There’s a lot of speculation about what happened, but as of now, it’s just speculation, and no new announcements have been made regarding the team’s restructuring. For now, Kevin Xu put together a good explainer here.

A week ago, Anthropic accused Chinese AI labs of distilling their models. Paul Triolo explains what is really happening here.

In the meantime, I wanted to share some high-level thoughts first, and then I think I’ll slowly dive deeper into some of these topics once I get back to Hong Kong.

---

SF notes

I haven’t been to San Francisco in nearly a decade. Driving in from the airport at 11 pm, it was mostly pitch black, but you could see the glimmer of billboards with flashes of words like “inference,” “agent,” “to do and to be done.”

Then the next day, I looked closer, something you’d only see in San Francisco. A city in an echo chamber of hype and doomism, but also just raw (love/hate) passion for technology.

Only in San Francisco

For a city so full of contradictions, at least from headlines, it’s home to some of the wealthiest self-made people, while homelessness continues to plague the city. But that’s also what I realized: headlines often only capture the extremes. The majority of our lives aren’t reflected in any of that. And I wondered, do the headlines around China-hate/fear also showcase the reality? How much of the U.S.–China story is in the headlines, and how much is lived reality within the ecosystem?

I went in with curiosity and openness. As someone who’s covered tech and worked in tech for a big chunk of my career, I’ve never actually lived in SF. I’ve visited a few times, mostly when I was young, when my father would drive us through California on long road trips along the Pacific Coast Highway.

As I’ve lived in BJ, NY, and now in HK, I’ve realized my circle was more with people in public investing, allocating capital to businesses, or covering stories of capital movement, rather than with builders. So I was most keen to hear directly from founders and early-stage investors.

Vibes

A few weeks ago, I had lunch with Dan Wang in Hong Kong over some spicy Hunanese.

He asked me, “Why do you choose to live in HK?”

I confidently said: the nature, the city, the safety, the convenience, the proximity (and distance) to the mainland, the ability to be bicultural so naturally, and the education that allows my kids to be trilingual (quadrilingual) easily, at least easier than when I was raised in North America.

He nodded, and paused, the way that he is, a thoughtful thinker, he said, I see, but nowhere compares with San Francisco for its innovation and its belief in meritocracy.

I nodded. Yes. That, maybe, Hong Kong lags.

In some instances, the city feels like the opposite of Hong Kong. With ample space, as everything is so far apart from each other. I naively first thought I could just buffer 30 mins between each meeting as everything is about 15mins away in Hong Kong via MTR or taxi. In reality, everything was about an hour away as I traveled from SF downtown to Mountain View, Santa Clara, Cupertino, Palo Alto for meetings…

While multi-millionaires are in Patagonia vests and dressed no differently from the average man on the streets, in Hong Kong, Van Cleef necklaces and Hermès purses have somehow become the first aspirational purchases, eroding the intended desired “exclusivity” and taste.

In Hong Kong, it often feels like wealth is to be shown off, and wealth accumulation and ownership still are largely tied to legacy, and real estate, while in the Bay area it feels like its about what you build, things you cannot touch or see, influences you have on people is through how they embrace your brain child not through galas and self-celebratory events.

In that sense, oh how I love the culture and vibes here. Every coffee shop I walked into had this mix of energy and ease. People were in comfortable shoes, relaxed, but animated, talking about ideas. Back in Hong Kong, you sometimes walk into places and hear people talking about people. I know that’s a generalization, and it’s not always fair, but being here makes that contrast feel sharper.

Then it was another thought that kept coming back to me.

As I’ve gotten older, I’ve kind of realized how little I know, and I’ve become more comfortable saying I don’t know or not commenting on things I do not have insight into. For years, I’ve read people who justified writing about China because they have an East Asian studies degree, studied abroad in Shanghai during uni, or lived in China in the 1990s. Or worse, “I’ve read a lot of books about China.”

Surely we can see how some of those views can become tunnel-visioned, outdated, or out of touch. It proves again that knowledge can be obtained through 远程教育, but insights, intuition, judgment, and understanding need human experience. You have to see, hear, and experience that life for yourself to understand the nuance.

So it’s with that in mind that I never really write about Silicon Valley. I compare tech companies’ business models and read the literature, but I don’t usually write first-person commentaries. Even for this piece, I feel ample impostor syndrome.

Alas, today, I’m going to take a stab at it and share some takeaways. I want to thank the generous people who have met with me and shared their insights. They are scholars, educators, venture capitalists, operators, public investors, builders, infrastructure providers, and marketing executives…

China who? China how?

Public investors

This week is Morgan Stanley’s annual TMT conference, where investors fly in from around the country and the world to hear directly from the tech leaders who are deciding the future of the world. Lisa Su, Jensen Huang, Dario Amodei, Satya Nadella, and so on. Whether you like them or not, their beliefs and actions are shaping the global economy right now.

From conversations with public investors, the first obvious interest I detected is that American investors have been watching China’s IPO market in Hong Kong revive, and USD capital has been finding ways to return to the Chinese market. But then I realized how fragmented and unrepresentative that group and interest were.

Venture capitalists

The VCs I met mainly fell into two camps, and there was no in between: the ones that didn’t really care about China, and the ones actively exploring avenues to invest in Chinese companies, looking for the next Manus, the ones that hope to go global from the very start.

The bet is on young teams that still want to find an exit abroad.

Founders and builders

The builders, though, that was the most interesting bit.

While many Chinese AI startups are looking to sell to the US on day one. Even a Chinese-heritage founder seemed not to take the Chinese market seriously. As he showed me his products, I asked, wouldnt this be too expensive to compete in China? He simply shrugged it off. ‘It’ll sell here in the U.S.’

Is the Chinese China story really just for a small, tiny circle? Are the ones who are trying so hard to ‘go global’ 出海 really just ‘competing’卷ing on its own? “China who? China, how?”

According to an operator who originally thought her niche would be helping Chinese companies go global, she now finds that most Chinese companies that wanted to go through SG still didn’t make it work. That’s not a one-size-fits-all playbook. Many Chinese founders don’t want to move. And even if they want to, they cannot move their teams abroad. The cost is too high, not because of price, but because the quality of life is simply too good and affordable in China in comparison. To convince team members to leave their motherland with their kin just isn’t that attractive an offer anymore.

Despite so many who still want to ‘run’ 润, there are also many who believe the American dream is no longer something to aspire to. I came across this Atlantic piece depicting this, too. Headlined, What Trump’s America Looks Like From China: That life is better in the U.S. is no longer an article of faith.

The reality is, everything is personal. A business decision is personal. A place of abode is personal. If you work in Hangzhou or Shenzhen on a 2 million RMB salary (~$300k), you’re living a pretty good life. You have access to top schools, your wife (not to overgeneralize) can keep her teaching, law, or healthcare job, and you are close to family.

Now that a similar role, let’s say, pays ~$600k USD in the Bay Area, but it means no more affordable help (nanny), and the spouse likely gives up a hard-earned career (hard to transfer credentials in those industries).

And for the Chinese-heritage founders I met, many are now paying $40,000+ a year for their toddlers to attend private Chinese immersion programs, an effort to stay connected to roots/ and or opportunities that China may bring? That again adds to the cost of living in the Bay Area.

Thus, what you’re seeing is that quality-of-life math no longer makes sense. It’s not the 1990s anymore, when immigrating to the West was objectively an improvement in quality of life /future prospects for most Chinese families.

Of course, there are those who choose to stay in America and usually choose it for the space, lifestyle, multiculturalism, politics, or ideals.

So now, the operator/ advisor mainly helps founders who may have Chinese heritage, as the teams are natively hired, they feel akin to people who can also straddle the two languages and cultures at ease.

Mag7

For big tech, it seems complacency remains. ‘We’re the best, because America is, well, that remains. The grind will need to wait as I find work-life balance. All very fair and warranted, but even the German Chancellor is getting triggered after his China visit and saying Western workers do not realize 4-day work weeks will not get them ahead, that complacency may be a hindrance to fast growth, not growth, but fast-paced growth.

Overall, only the NVIDIA team seemed extremely on top of the latest happenings and seriously aware of Chinese competitors and the ecosystem's development.VIDIA

NVIDIA HQ Voyager/ Endeavor Tour + Demo

Most others were completely indifferent to Chinese models and Chinese AI. But the irony in all the DC-driven headlines and the Dario-fueled China fearmongering is that literally everywhere I went, from Santa Clara to Mountain View, not even Fremont, the streets were filled with Chinese restaurants. Like the real Chinese restaurants, not the Panda Express kind: pickled fish 酸菜鱼, spicy pots 麻辣香锅.

Street directories were even written in English and Chinese. And I heard just as much Mandarin as English while walking through some of these Mag 7 campuses. How do these company leaders continue to justify the China-bashing internally? Even if it’s just internal stakeholder management. That puzzles me.

Chinese Big Tech in the US

The obvious takeaway here is that the ambitions of global expansion remains but the strategies are shifting. A decade ago, many of the BBATs were looking to hire local teams, work with local IPs, and ship consumer products natively for locals.

That delusion has burst because 1/ many managers sent here simply have trouble managing local staff, the work culture clash is just too challenging, 2/ local staff is too expensive, and on the creative level, many don’t see eye to eye, or there is a choice to dismiss HQ, 3/ cost is high, but returns are not.

So the more proven business model is to continue R&D and product design in China, and then ship the product with the help of locally hired sales and support teams. TikTok paved the way, and there is no economic sense in not doing so now. Thus, we’re seeing offices being closed down, and talents facing two choices: return to China? Stay and assimilate? Ok, maybe there is a third choice, but a non-mainstream one - move to Singapore?

Academics

At dinner, a friend who had decided to take a sabbatical from a very successful career to learn AI at Stanford said: MBA students seem to be ambivalent or indifferent or ignorant about Chinese labs and tech; but the engineers are much more plugged in, since there is more direct collaboration with Chinese institutions, and faculty (many are Chinese by birth) have also moved around more between the two ecosystems.

Recently, the investment world seems to have somehow suddenly woken up to China’s industrial strengths. From Bill Gurley to John Arnold, joining Patrick O’Shaughnessy on Invest Like the Best to discuss how NIO’s factories are much more advanced than American car manufacturing plants, which are at least decades behind in terms of technological innovation. And that understanding has now extended into all physical AI and embodied AI realms.

It’s said that the former Google executive Eric Schmidt, who now teaches at Stanford, has become something of an advocate on campus and in classrooms, urging students to just jump on a plane and see what is happening in China for themselves instead of listening to hearsay.

As he wrote in an op-ed for TIME, “As AI becomes integrated into our physical world, we’re hurtling into a new chapter of embodied intelligence. Unlike the past few years, where China has been playing catch-up in AI models, China is pulling ahead of the U.S. in physical AI.”

While his focus has been heavily on hardware, he also touches on the fact that, beyond the robotics hype, we’re neglecting anything physical - that includes consumer wearables. It is no secret that China has had a huge hardware lead. It’s not just drones, industrial robots, and humanoids. What people are missing is that the innovation in what hardware can look like is also increasingly coming out of China.

Consumer wearables

The more everyone wanted to talk about humanoids, the more my mind kept drifting to the stuff that’s already on us, in our homes, and in our pockets, quietly scaling faster than the robots.

For VCs, the question on wearables is brutally simple: even if the demand is there, if your hardware supply chain isn’t in China, how are you cost-efficient? Wearables are unforgiving. You’re fighting BOM costs, tooling, firmware quirks, certification, returns, and a user who won’t tolerate “almost works.” Margins are thin, iteration speed matters, and the entire game becomes: who can ship, learn, tweak, and ship again without bleeding out.

I met a Singaporean company a while ago that is building businesses around mapping the entire supply chain for consumer hardware exports. The company reminded of middlemen who made a big business helping the Zara and ASOS of the world source designs and clothing ten years ago. They didn’t care about building a brand name, but they made money.

Now, there is a group of companies sourcing OEMs in China to build white-labeled robots, consumer wearables, and physical AI products, which are then exported to Western markets and, in local markets, rebranded or slightly redesigned to sell as “non-Chinese” products. It’s the same playbook as the retail vendor/ supplier; now it’s just that the hardware supply chain has become the product.

Schmidt and Xu’s argument is that the next chapter of AI is physical, and China is pulling ahead not necessarily on chatbots, but on embodied systems that leave the screen and show up in real life. They even point out that Chinese startups showed up at CES with AI-enabled hardware across everything from smart home appliances and wearables to a variety of robots. The wearable angle is the “everyday consumer” version of that same story: deployment, iteration, and a hardware ecosystem that tightens the loop.

Anyway, I have a few more days here, and many more people to meet. I have been very inspired by the conversations and, in particular, I want to do a piece on consumer wearables, and one on AI and children/education after I return to Hong Kong. For now, these are some half-baked thoughts. Thanks for indulging me.

---