Guests: Imran Khan, Founder of Alliance DAO; Qiao Wang, Founder of Alliance DAO

Podcast Source: Good Game Podcast

Original Title: Trade War & The Markets | EP 74

Key Takeaways

Imran and Qiao sit down to discuss the trade war and the markets, providing straightforward cryptocurrency insights for founders.

Highlights Summary

Next year could be a good year for Bitcoin and risk assets.

• Qiao: I am currently not making any moves on Bitcoin. My cost basis is essentially zero, and the tax rate is about 30%. So I have to be very sure that Bitcoin will drop 30% before I choose to sell, and I don't think that will happen.
• Imran: I sold all my stocks during the last rebound. I just plan to wait and see. I currently only hold Bitcoin, Solana, Fartcoin, and some other cryptocurrencies. Fartcoin has been performing quite well; I think it's a safe haven.
• The Federal Reserve's dual mandate is to promote employment and control inflation, not to influence market prices.
• I am pessimistic about the future of U.S. stocks.
• My biggest concern is not economic issues but potential military conflicts.
• Bitcoin somewhat combines the growth potential of Nasdaq and the safe-haven characteristics of gold, so it is expected to perform well.
• If that is the case, I think there could be some regional or even global conflicts under the Biden administration. Under the Trump administration, I am not sure if he would pay particular attention to the Taiwan issue.
• China is leading in many hardware manufacturing sectors such as shipping, automobiles, and solar energy, which are particularly important during wartime. The U.S. has gradually lost this capability over the past few decades.
• If the purpose of tariffs is to bring manufacturing back to the U.S., then tariffs may not be the best strategy. A wiser approach would be to invest in these industries to ensure that domestic companies are competitive in the global market, rather than harming domestic industries through tariffs, which is a zero-sum game.
• Once companies start using your AI products, they are less likely to switch to other products because the level of lock-in is deeper.

Movement Labs

Imran:

Did you see the announcement from Movement Labs?

That 0x balloon lever account has been talking about Rushi and Movement for the past six months, involving some insider trading, token price manipulation, and working with possibly less professional market makers. I am not clear on the specifics. Something happened at an event in China, and many participants in the airdrop felt very angry, which led to the event hosted by Movement being halted. Then this quickly spread. Many influencers started discussing Rushi's mishandling of the token issuance. A few days ago, Rushi suddenly announced he would take a temporary leave, but not permanently. We don't know more details yet if you want to talk about this topic.

Qiao:

Did he sell his tokens?

Imran:

We are not sure, but you know, OM Labs or OM, the disclosure of information regarding market makers and founders is insufficient, and the exchanges are the same. So many tokens look good on Twitter, but they may actually be artificially created.

Qiao:

How could OM drop 90% in a minute?

Imran:

There is no clear explanation, but someone pulled a large amount of tokens from the market and sold them.

Qiao:

Was it a market maker or a specific person?

Imran:

Some have accused Laser Digital, a company based in Southeast Asia. They claim they were not involved. But Hasie and a few others mentioned that there is actually no transparent framework to explain how tokens are listed and the situation with market makers, so many areas are quite opaque now. Therefore, people may be misled into buying tokens, and these prices do not reflect the actual market value. So we see a lot of such situations.

Market Discussion

Imran:

Is there anything else you want to talk about? Have we covered everything? The market? Well, let's talk about the market. We briefly mentioned that we might be bearish on the S&P 500. So, I think we can talk about what assets you currently hold?

Qiao:

Actually, I am selling stocks. Every time the market has a significant rebound, I sell a portion of my stocks, but I still hold the stocks I mentioned earlier: Google, TSMC, and PDD.

I am indeed very concerned about the war. So I sold more TSMC rather than other stocks. Of course, my largest holding is Bitcoin, but I don't have much I can do with it. I believe Bitcoin will continue to trade as a mix of the S&P 500 and gold. Recently, Bitcoin's performance has basically been between the S&P 500 and Nasdaq, actually between Nasdaq and gold. Therefore, I am currently not making any moves on my Bitcoin. I can't act rashly because my cost basis is essentially zero, and the tax rate is about 30%. So I have to be very sure that Bitcoin will drop 30% before I choose to sell, and I don't think that will happen. That's my holding situation.

Imran:

I sold all my stocks during the last rebound. I just plan to wait and see. I currently only hold Bitcoin, Solana, Fartcoin, and some other cryptocurrencies. Fartcoin has been performing quite well; I think it's a safe haven.

I feel that all the money flowing into safe havens is concentrated in one direction; something has happened, similar to the case of Pepe. If you remember Pepe, it was a similar market dynamic, but at that time it was a bear market. As we came out of the bear market, if you remember, our market cap rose from about 300 million to, I sold half, and then it rose to about 3 billion or 4 billion. So this is similar to the dynamics at that time. Other than that, nothing particularly special. Just see how the market develops.

Market Predictions

Imran:

Previously, we were optimistic about the S&P 500 because we have mentioned it several times on the show.

Qiao:

I am not very bullish; I am indeed bullish, but the upside is very limited.

Imran:

We all thought things were good; we were bullish, but that was before Trump stirred things up. We were very optimistic about cryptocurrencies at the beginning, but we do feel fatigued. I mentioned this in the first episode of the year, and you also mentioned it, that although we are bullish, we feel fatigued. This usually means you should sell, but we didn't sell because we are strong supporters of the cryptocurrency space, right? We like to hold on during market fluctuations.

Qiao:

In the short term, I am pessimistic about U.S. stocks, while I don't have a particularly clear view on Bitcoin. Because Bitcoin somewhat combines the growth potential of Nasdaq and the safe-haven characteristics of gold, it is expected to perform well. However, I am not sure how Bitcoin will perform specifically, but next year could be a good year for Bitcoin and risk assets.

Cryptocurrency Regulation

Qiao:

I find this very frustrating because Massari tried to address this issue back in 2017, right? It has been 8 years, and this is still an unresolved issue.

For example, who owns what tokens, and who is selling them? According to Section 5 of the Securities Act, if you are a major shareholder of a company and sell stock, you typically need to disclose it immediately, usually within a day or two. Whenever Warren Buffett sells stock in the companies he holds, I always receive SEC disclosure emails. I believe this number exceeds 10% of the shares. There are reasons for these regulations.

Imran:

I agree. I think the unlicensed nature of the market has led to a lack of sufficient regulatory framework, and no one really takes responsibility for what it should look like. As far as I know, they have even discussed that we should have a process for quarterly earnings reports. Each quarter, we should hold a conference call to review what we have done, what we plan to do next, and provide some forward-looking guidance on how we think the market and the company will develop.

Qiao:

The benefit of cryptocurrency is that you can do this every day, not just quarterly. Yes, because everything is on-chain. If someone sells their insider shares, it is all visible on-chain. You just need to associate the address with the owner's identity. This way, you can get automatic disclosures in real-time. This is something traditional finance cannot do, which is why they need to do quarterly reports and so on.

Imran:

So the question becomes, who takes on this responsibility? Is this something companies like ByteDance would do? Or is it something like Jupiter would do? Or is it more like a form of self-regulation?

Qiao:

This is a conversation we had with Massari seven years ago. Unfortunately, it has proven to be a problem that a startup cannot solve. At that time, Massari only had 5 people. This should be a problem that large exchanges and other top players in the industry solve together. Unfortunately, that has not happened. It is definitely the responsibility of companies like ByteDance, Coinbase, and others.

Imran:

I am curious how this will work. There must be some connection established between exchanges, market makers, and founders for all of this to happen. But I don't think this will happen under the Trump administration.

Qiao:

I was thinking the other day, if cryptocurrency ultimately fails, it will be the biggest challenge to the free market. Because in traditional finance, you could say that due to regulation, the SEC, etc., the market is not completely free. There is indeed a central planner to set some rules. And in cryptocurrency, we don't have those rules. Yes, perhaps these rules are actually necessary; a 100% completely free market may not be the ideal approach. Maybe it should be 90% free and 10% need centralized planning and regulation.

Imran:

I agree with that. I do think there should be a moderate level of regulation to govern how IPOs or ICOs are handled.

Impact of the Speculative Nature of Cryptocurrency

Imran:

This may be because cryptocurrencies are often not seen as reliable investments, clearly due to their speculative nature, which in turn affects our overall image. Therefore, high-quality talent may be reluctant to enter this tech industry because they see everything that is happening. If you see a shooting incident on social media, would you really be excited about changing the world of the future? Probably not. But if you talk about stablecoins and frame it that way, you say, "Well, we are cryptocurrency, but actually not; we are stable."

Qiao:

This is not a perfect analogy, but it feels like Web3 has diverged from cryptocurrency four years ago. And extreme supporters of Bitcoin have been trying to avoid association with cryptocurrency. So Bitcoin and cryptocurrency are two mutually exclusive concepts. And now stablecoins are also distinguishing themselves from cryptocurrency.

This might be a better option. You know, for high-end talent like those in Silicon Valley, they might be more willing to join this sub-industry because it allows them to distinguish their work from traditional cryptocurrency. "Oh, I'm not doing cryptocurrency; I'm working on stablecoins."

Qiao:

I'm not so sure, because their understanding of stablecoins is relatively straightforward. Even Bitcoin can be hard to grasp for many, but stablecoins are like an extension of fintech. It's essentially fintech 2.0, involving payments and remittances, which is something traditional tech professionals can almost all understand.

Imran:

Yes, that's the narrative I’m talking about. I'm not worried about it. If we can achieve this, it could be beneficial for the entire cryptocurrency industry.

Trade War

Imran:

In terms of the trade war, we are seeing a lot of interesting things. Trump just tweeted today that we might reach an agreement with China soon, and then the market went up.

The S&P 500 rose by 0.79%. Yesterday, I listened to Powell's speech in Chicago, where someone asked him if the Federal Reserve would intervene in the stock market, and everyone laughed. Powell responded that while everyone hopes the Fed will intervene, we believe the economy is performing well. In fact, I think the market is struggling to digest this new information in the coming months. Before that, the market will be in a state of uncertainty, not knowing which way to go next. Therefore, it's hard for me to make decisions until everything is clear.

Qiao:

He is trying to apply pressure.

Imran:

I don't agree with this method of pressure. Powell said the market is digesting all the information. If the market is still volatile, what’s the point of me making any decisions? I agree with that.

Qiao:

Technically, the market is not one of the Fed's dual mandates.

Imran:

The Fed's dual mandate is to promote employment and control inflation, not to influence market prices.

Qiao:

But you can see that this is becoming an area of concern for the Fed. Even if it’s not their mandated responsibility, it’s interesting. Overall, regarding the trade war situation.

Imran:

What are your thoughts on this?

Qiao:

I believe the impact of the trade war on businesses, consumers, and the market is much more severe than expected. Over the past few weeks, retail investors are still "buying the dip." What do you think? Have you talked to people around you? I feel that people still expect the Fed to save the market. They have been buying in with almost no signs of giving up. That’s one aspect. At the same time, U.S. stocks are still very expensive. Even assuming future earnings remain unchanged, why not? Because tariffs will affect earnings. But even so, the current P/E ratio of U.S. stocks is still around 24, which is very high by historical standards.

Qiao:

I am pessimistic about the future of U.S. stocks. I am very unoptimistic about the outlook for U.S. stocks. While it may be difficult to predict in the short term, I believe that within three to six months, the market will gradually become aware of these issues.

Imran:

I think the market will only react after everything is finalized because there are too many uncertainties right now. People expect that once Trump announces an agreement, we will see a V-shaped recovery, right? Everything will return to normal. People may retract their previous decisions and make some adjustments. But they do not realize that we may have already been affected by all the policy changes. Even in the short term, this impact takes time to recover.

Qiao:

I believe the damage has been done, and business confidence and consumer confidence have been psychologically affected. This means consumers will be more cautious in their spending due to too much uncertainty. The same goes for businesses; they cannot make large-scale investments because they cannot predict the tariff levels a month or three months from now. Therefore, everyone will reduce spending, which will undoubtedly have a significant impact on the economy. A 10% tariff, if you think about it, 10% is not a small number. Yes, the tariff is 10%. But it is not on the price of final goods; it is on production costs, which is worse than 10% on the price of final goods. If your business has a profit margin of 10% and costs suddenly rise by 10%, then you cannot make a profit.

Someone posted a chart showing that even at 10% and 20% tariff levels, it is actually close to the levels of the Hollis-Smoot Tariff Act in the late 1920s and early 1930s. This is the highest tariff level in the past century.

Imran:

Toy prices in the U.S. have risen by 80% since then. So, a toy you bought for three dollars now costs seventy dollars; that’s a typical example. The average car price will increase by 15%, which means an average increase of $7,600. Additionally, the annual spending for each household will increase by an extra $3,800, just in average costs like grocery spending. These are things that people have not yet realized are already being affected.

Trade War Strategy Discussion

Imran:

So what is the strategy for the U.S. in this trade war? I have seen a lot of analyses and comments, and some traders and macroeconomic experts I follow believe that the U.S. strategy may be similar to Scott Besson's view. His goal at the Treasury might be to curb China's development, as China has become a world power, ranking second and possibly surpassing the U.S. To achieve this, the U.S. may be trying to prevent other countries from trading with China. They hope to create a multipolar world, leveraging the dollar's position in global business and trade as a safeguard to attract other countries to trade more with the U.S. rather than with China. For example, they are trying to use Vietnam as a case in point. I think Vietnam has just shifted to cooperating with China.

They are also trying to negotiate with Japan and other countries. This is just one example. If successful, China's GDP could decline, forcing China to yield to U.S. pressure. That’s the view of some people. What do you think?

Qiao:

If that is their goal, then the actual execution is completely inconsistent with it. Because Trump's actions so far have not only made China unhappy but have also made all of America's allies uneasy, including several countries bordering China, such as Europe, Japan, and South Korea. Now, these countries are at least trying or publicly expressing a willingness to negotiate with China to reduce each other's retaliatory tariffs. For example, Spain has started exporting pork to China at significantly reduced tariffs.

I have seen this in the news, although I am not clear on the specific numbers. South Korea and Japan have similar situations. Historically, China, South Korea, and Japan have had tense relations, but now they have to cooperate in some way. At least in public, that’s the case. The relationship between Vietnam and China has also seen similar developments. Therefore, the actual policy execution is inconsistent with the stated goals. In my view, it is more likely that there is no clear strategy at all. Trump seems to be acting on instinct without careful consideration. This strategy aligns with my impression of Trump as a businessman; he likes to bluff and create uncertainty, starting with a big demand and then gradually backing down. This strategy resembles the art of negotiation of a beginner. Overall, I think this strategy is really bad, much worse than people expect.

Impact of the Trade War on Global Relations

Imran:

I believe this trade war will have far-reaching effects globally. Clearly, the U.S. stock market may be negatively impacted.

I noticed that someone mentioned on Twitter that many people are now increasing their allocations to European stocks, gold, and Bitcoin in their portfolios as a new investment strategy.

Qiao:

What I am most worried about is not economic issues but potential military conflicts.

Imran:

Do you think the situation will develop to that extent?

Qiao:

What I mean is that economic difficulties may increase the risk of military conflict. If a conflict does occur, it is likely to be in the Taiwan Strait. Before the tariff issues arose, I estimated that the probability of a military conflict between the U.S. and China over Taiwan in the next three years was about 25%. However, after this tariff and uncertainty event, I believe that probability may rise to 50%.

Imran:

If that is the case, I think there could be some regional or even global conflicts under the Biden administration. Under the Trump administration, I am not sure if he would pay particular attention to the Taiwan issue.

Qiao:

But he is very concerned about his image and does not want to appear weak. That is a reasonable consideration. I am not sure to what extent the U.S. will be involved, but I believe the likelihood of military conflict between China and Taiwan will significantly increase.

Imran:

That is a reasonable point. If that is the case, then regional conflicts may not only occur between Taiwan and China; this could have catastrophic effects on global relations, business, and trade. Yes, I just hope he can handle this issue properly, and we just need to go through a mild economic recession, and then we can forget all about it.

Impact of the Trade War on Startups

Imran:

So, what impact does this trade war have on local startups? I feel that, for example, we might find it difficult to attract entrepreneurs from China and India. What are your thoughts?

Qiao:

Don't you think that if the economy slows down, venture capital will also slow down? This will similarly affect the venture capital market, as the venture market typically reacts several quarters later than the public market.

Imran:

I think it also depends on our progress in the field of artificial intelligence. Because AI is very hot right now. You know, I just did a quick data analysis to look at the situation of the last two batches of YC startups. I wanted to know what the average valuation of these companies was on demo day. The result showed that the average valuation of AI startups is about $22 million. That number seems quite high to me, right? Ideally, you would want that number to be around $15 million. And a valuation of $22 million, without any product or even a minimum viable product (MVP), seems particularly high. I think that number will continue to rise.

So I do believe we are approaching a turning point, especially in the field of artificial intelligence, where things may change. Especially considering projects like the one OpenAI is working on, Windsurf is a good example: without any product, unless they have some kind of network, no one can ensure safety.

OpenAI's Attempt to Acquire Windsurf

Imran:

Yesterday I mentioned in a chat that OpenAI attempted to acquire a company called Windsurf for about $3 billion. OpenAI reached out to Cursor twice but was rejected. So they turned to acquire Windsurf.

You can think of OpenAI as an L1, and then build applications on top of that. The company with the most applications will have the best models, which will attract more people to use the product and help them develop more applications. Is that the right understanding?

Qiao:

I have two points in mind. First, so far, OpenAI has not developed the best coding model. They have been working hard, but Anthropic may have an advantage in the coding field. Cursor and Windsurf may also be using Anthropic's models. For OpenAI, they really want to develop a top-tier coding model, but that requires a lot of data.

So where does the data come from? You can acquire coding data by purchasing it from companies that specialize in data annotation, like Scale AI. But another way to obtain data is directly from Cursor or Windsurf. Because when you use Cursor and Windsurf for coding, you are actually providing data to these platforms. You prompt, request code suggestions, and accept those codes, right? As a user, you accept the suggestions. This is essentially a form of labeling the model's output. It’s almost like reinforcement learning with human feedback. Therefore, this data is extremely valuable. That’s why OpenAI wants this data. This is also the reason they attempted to acquire Cursor but were rejected, and now they have acquired OneServe. That’s the first point I thought of.

The second point is that these large AI labs may be paying attention to the direction of market development, specifically where users are and what their interests are. They may be concerned that foundational models will become commoditized over time, which is somewhat similar to the situation with cryptocurrencies, right? The foundational layer may gradually become commoditized, while the application layer will capture a lot of value. Therefore, by acquiring applications that already have a large user base, like Windsurf or Cursor, they can solidify their position in the application layer. Because ChatGPT is an application, right? ChatGPT is built on various OpenAI models. But they want more; they want coding applications, and perhaps other things in the future. So I think that’s the nature of their acquisition strategy.

OpenAI as a Super App

Imran:

In my view, this is more like a super app. You should have seen OpenAI's announcements exploring the social space. It’s almost like a comprehensive platform where you can experience various forms of AI, whether it’s tools for coding or tools for generating photos and videos to create content and stories, or even general intelligence to help you understand everyday matters, just like what you search for on Google. This development is interesting because you could say that with each new product OpenAI launches, it is gradually replacing hundreds of startups focused on specific niches. Even in our own field, we are focused on a very specific sub-market, like building applications around cryptocurrencies. We believe there is a unique opportunity here due to the nature of cryptocurrencies. But you could say that many of these things may be replaced by larger companies.

Qiao:

In fact, half of the YC startups are almost saying that whenever a new foundational model appears, their ideas become unviable. Of course, they can pivot at any time, but as soon as a new foundational model emerges, their current ideas lose their utility.

Investment in AI Companies

Imran:

Another interesting phenomenon is that I don’t know if you’ve seen that chart showing the investment situation of major AI companies by venture capital firms like Index Ventures, A16Z, and LightSpeed. The chart shows that these venture capital firms typically made two to three investments in these startups. Meanwhile, Vinod Khosla only invested once in the early stages, and that was in OpenAI.

Imran:

Interestingly, I spoke with Founders Fund yesterday. They have only made one investment in the AI space, primarily in OpenAI. They have some small investments in other specific AI companies, but those are very niche. When I talked to them, they mentioned that Peter Thiel does not want to over-invest in AI. He believes everything will be eaten away like the internet bubble. Therefore, he has clearly told the team not to focus too much on AI because it reminds him of the internet bubble.

Qiao:

I remember he expressed a similar view about six months ago; I saw that interview on the "All In" podcast. Yes, he did mention the similarities between AI and the internet bubble.

Imran:

So he reiterated this point when launching his new fund, emphasizing that they should not invest too much in AI right now.

Comparison of AI and Cryptocurrency Startups

Imran:

You could say that the current market focus on AI has reached a very high consensus, and the competition is exceptionally fierce. If you think the competition in the cryptocurrency space is intense, you should look at what’s happening in the AI field. In our current batch, there are several AI startups, and each company has about 25 to 50 competitors.

Qiao:

I feel that the level of competition and congestion in the AI field is probably several times higher than that of cryptocurrency startups.

Imran:

I feel that the cryptocurrency space has become somewhat less unified.

Qiao:

In fact, this inconsistency has become more pronounced over the past two years.

Imran:

To the extent that they are starting to try to redefine cryptocurrency from a completely new perspective. For example, the founder of Bridge.xyz mentioned on Twitter a few days ago that after cloud computing and mobile internet, the next big platform should be stablecoins. Therefore, he completely excluded cryptocurrencies from the discussion, believing that stablecoins are the direction of the next major transformation.

Exciting Startups in AI and Cryptocurrency

Imran:

Which startups are you particularly excited about? Because from a technical perspective, we can at least predict industry trends a quarter in advance, right? So which startups are you most interested in?

Qiao:

I think in our current batch, there are many startups focused on stablecoins, about a third of the companies are in this area, and they are dedicated to specific regions or use cases, such as remittances or yield management. Additionally, we have some AI startups focused on specific industry sectors, like a tool company for scientific research and another company using AI video models for advertising. Moreover, there’s a team specifically providing coding services for crypto applications, and their team is quite strong, which is also exciting.

Poof.new

Imran:

I am very excited to collaborate with a few startups that I find exciting, and clearly, I am also interested in the companies you mentioned. However, Poof.new is a platform that provides coding services specifically for cryptocurrencies, and I think they have a unique advantage in this area. The team is very strong, with members coming from Phantom and Coinbase, and they have a deep understanding of this field, having developed similar products on Flow two or three years ago. Therefore, they possess the expertise to build excellent products, which I find very important.

Slop.club

Imran:

This project is somewhat experimental. I know your views on it. However, Slop.club is a video generation platform. It uses some of the latest models, like Google’s Clean and Vo, allowing people to come together to create and remix content. This functionality is cool; you can even upload images and then generate some interesting video models around those images. This kind of interaction and remixing behavior has indeed sparked some new trends among consumers. In fact, OpenAI's market entry point is the generation of images and videos. So the question is, how will these video models be used? I feel that Slop is somewhat like 4chan, but it focuses on video models.

Qiao:

The core insight is that video models can enable new behaviors that were previously impossible. Yes, this greatly reduces the time delay in video creation and remixing. Because before, it took creators a long time to make a video. Now, you can generate a video in seconds with a prompt, at most just a few minutes. The ability to remix is the same; you can remix instantly, whereas it might have taken longer before. That’s the core insight behind this product.

01 Exchange

Imran:

The last one is 01 Exchange, created by the Photon and Bullex teams. You might have seen tweets about the Bullex founder today; they don’t seem to be very responsive. They made a lot of money, and in the cryptocurrency space, the incentive mechanism for founders is a unique challenge. For example, even if you are a billionaire or have hundreds of millions of dollars in your bank account, would you still be willing to continue developing a product? This is a unique challenge faced by crypto founders, and the best founders can overcome this difficulty. The Pump.fun team is a perfect example. They have generated significant revenue and continue to innovate on the product, recently announcing a live streaming feature. This is a unique challenge that founders must face.

Imran:

Bullex has somewhat slowed down, and Photon is in a similar situation. I’m not quite sure how their product progress is going. So the 01 Exchange team is very eager; they work around the clock and have some unique approaches to building upgraded products for traders. These are some of the products I mentioned.

Impact of Military Conflict on AI Development

Qiao:

Potential military conflicts could lead to disruptions in the semiconductor supply chain, which would impact the development of artificial intelligence, especially in robotics, as they are more reliant on hardware.

Imran:

And a lot of the hardware is imported from China, right?

Qiao:

Many advanced chips do come from China, although not the most cutting-edge ones, like 3-nanometer process chips, but slightly lower-tier chips and the production of many other electronic components are done in China.

China's Dominance in Robotics

Imran:

Interestingly, I find that China dominates the robotics field. Specifically, while I haven’t delved deeply into humanoid robots, China holds a 51% market share in global industrial robot manufacturing, while the U.S. only accounts for 5%.

Imran:

This means that if the production and sales scale of humanoid robots expand, the primary market may be dominated by China rather than the U.S.

Qiao:

I believe the development of robotics may follow a similar trajectory to digital AI and AI agents. That is to say, the U.S. will lead in innovation, becoming a pioneer and creating many new technologies, and then China will step in to make these technologies cheaper and more efficient.

Imran:

Travis Kalanick, the founder of Uber, mentioned in a podcast that earlier he was competing with Chinese rivals, and every time they launched a new feature, the Chinese companies could replicate it within a day. He was very surprised by this speed and thus developed a certain respect for these Chinese startups.

Look at BYD's cars; they perform exceptionally well. I don't know if you've seen related videos. The car's suspension system can move up and down. I've seen many cool features and even considered whether to buy one. Although they are not available in the U.S., I really want to learn more about them.

Qiao:

I spoke with someone knowledgeable about Chinese electric vehicles yesterday. The advantages of Chinese electric vehicles are that they look luxurious, have better interiors than Tesla, are cheaper, and have decent battery performance. But the downside is that they are not very safe, with many reports of these cars catching fire.

The batteries can catch fire, and drivers are injured not due to accidents but because of battery explosions. This is a problem. Such news usually doesn't get publicized because it gets quickly censored.

Another issue is full self-driving (FSD). They don't have this technology. You know, Tesla is far ahead in full self-driving.

China's Progress in Solar Energy

Imran:

What products do you think China is ahead of the U.S. in?

Qiao:

In solar energy, especially in energy.

Imran:

I believe they manufacture about 80% of the world's solar panels.

Qiao:

Pretty much. These changes have mainly occurred in the past decade, developing very rapidly. Ten years ago, China had almost no industry in this area, and then they began investing heavily in these sectors. I think there are strategic considerations behind this. While I'm not sure, I believe China's significant investment in hardware manufacturing is because these industries become very critical during wartime. Now, China is leading in many hardware manufacturing fields like shipping, automobiles, and solar energy, which are particularly important during wartime. The U.S. has gradually lost this capability over the past few decades.

Imran:

I feel that the U.S. never really had this capability. For example, when I read the book "Chip War," I found that even back then, the yield of chips produced in the U.S. was not high. I think they made some efforts in this area.

Qiao:

This reminds me of the tariff war. If the purpose of tariffs is to bring manufacturing back to the U.S., then tariffs may not be the best strategy. A wiser approach would be to invest in these industries to ensure that domestic companies are competitive in the global market, rather than harming domestic industries through tariffs, which is a zero-sum game.

Imran:

It is indeed a zero-sum game. Yes, you have to compete harder and faster. When reinvesting in manufacturing in the U.S., care must be taken not to raise costs, as this could affect consumer confidence and the global economy. However, I'm not quite sure; some say Trump is engaged in a complex strategic game.

Advantages of Going Public

Imran:

While reading about Snapchat, I learned that founder Evan recently gave a talk. He mentioned that after the company went public, they became more efficient in operations, both in backend management and user acquisition.

This indeed helped him manage the company better. Therefore, I believe going public does bring some positive effects, as it encourages founders to be more cautious in capital management and user acquisition. If you are launching a new product, going public also forces founders to focus not only on short-term goals but also on the development over the next 5 to 10 years. Therefore, I think enhancing operational efficiency through going public is very important.

Latest Developments in AI

Imran:

Are there any fresh developments in the AI field recently? We talked about some acquisitions, but do you think if an entrepreneur wants to develop a product in a certain field, they might worry about the impact that OpenAI or other large AI companies could have? Are there any industries or fields that are relatively safe?

Qiao:

Personally, I think enterprise use cases are safer than consumer use cases. You might have a different view. I come from the enterprise space, so I can give you some reasons.

I think enterprises are more resistant to change. Once enterprises start using your AI product, they are less likely to switch to other products because enterprises are more locked in. The reason is that enterprises are made up of a group of people, while consumers are usually just one person. So coordinating a group of people to switch products is much harder than coordinating one person, right? So I think that’s why the switching costs for enterprises are higher than for consumers. What do you think?

Imran:

Your point makes sense. However, in practice, I see that enterprises do resist change. Yes, but their resistance to change is because many products are bundled.

Qiao:

For example, Microsoft. If you subscribe to Office 365, you are likely also using Azure, Outlook, and other products, essentially being locked in.

Imran:

Microsoft Teams is a typical example. Microsoft Teams has somewhat hindered Slack's growth because it is free for all Office 365 subscribers, most of whom are enterprises.

So I think enterprises actually find it easier to convert these customers to new products because they are already locked in by subscriptions. For example, Canva; yesterday one of our founders tweeted that they launched their own education product. These educational institutions, like schools and universities, can be seen as enterprise customers, and they are all locked into this software. Now they have released a new product that allows any child to create an application, right? So imagine products like Lovable or Bold being offered for free to everyone. Those startups that originally wanted to compete for these customers now have no chance. They can still try to win them over one by one, but they need a sales team to penetrate each market.

However, there is a counterexample, which is Zoom. I mentioned this example before; although Zoom is not as popular as it used to be, its usage surged during the pandemic. One reason for Zoom's success is that every consumer was using it. Because consumers were using it, enterprises found it easier to accept and adopt this new video platform since they were using it at home every day.

The same situation occurred between the iPhone and BlackBerry. BlackBerry was once the standard for enterprise hardware, while the iPhone became ubiquitous. All of this happened through consumer channels. Once consumers accepted it, enterprises had to change. This has historically been how it happens. Will this time be different? Maybe.

Qiao:

But you haven't refuted my point. What I said is that enterprises are harder to disrupt by OpenAI. If you develop an AI product for enterprises, the disruption from OpenAI will be relatively small, while products developed for consumers are more easily disrupted.

Imran:

OpenAI can develop products for enterprises. They already have enterprise support. Because they are the pioneers, many enterprises may have already adopted OpenAI's products to some extent. Therefore, OpenAI's entry into the enterprise market is relatively easy.

Qiao:

You mean that because OpenAI has a large consumer base, they also find it easier to enter the enterprise market?

Imran:

Exactly, because they have become synonymous with AI. So, they find it easier to win adjacent products related to AI. Microsoft is the same. The competition between Microsoft and OpenAI is an example. You know, Microsoft has made some significant moves, and the competition between them is very intense. They have shifted many workloads that were originally on Azure to Oracle and other providers to balance the competition with Microsoft. Therefore, Microsoft is now also developing its own products, and they must win these users. So, OpenAI is competing with everyone. I think they are fighting too many opponents on too many fronts, and this often leads to failure.

Qiao:

Returning to the initial question, what types of AI applications are harder to be easily disrupted by OpenAI? I believe pure application layer startups have an advantage over OpenAI because these application layer startups can choose from various foundational models, which differ from each other. In certain fields, some models may perform better. For example, Cursor and Windsurf use Anthropic's models because Anthropic's models outperform OpenAI's in coding. Therefore, OpenAI cannot solely rely on its models to build development tools; they must acquire Cursor or Windsurf. This is a defensive capability for application layer startups against OpenAI. Does that make sense? Essentially, it’s a network effect.

Imran:

Yes, the ability to choose different models. You can only do this if you have distribution channels, right?

Qiao:

But the reason you can gain distribution is that you first built something useful.

Imran:

I think in these cases, they are all pioneers in the market and have adapted quickly.

Qiao:

I think it’s hard to predict which industries can withstand the impact of OpenAI. It’s really hard to predict.

Imran:

Because it mainly depends on two factors. First, whether the application can act quickly to acquire a large number of users and have extensive distribution; second, it depends on what OpenAI actually wants to do and which industries they want to enter. It’s really hard to predict.

OpenAI o3

Qiao:

OpenAI just released o3, and their benchmark results are quite good. I think they performed exceptionally well.

Some say this is close to a general artificial intelligence model, but I don't really like that characterization.

Qiao:

However, someone gave it a simple math problem, and it failed to solve it.

Imran:

But this o3 ranks very high, outperforming Gemini 2.5. So o3 is now the best-performing model in this category, especially in long text reasoning.

Imran:

How does it compare to Google's Gemini?

Qiao:

As I said, I think Google's Gemini 2.5 is now in second place.

Competitiveness of AI Models

Qiao:

This goes back to the previous point that the advantage of the application layer is that they can quickly adapt to the latest models, while OpenAI can only use its own models, which is a fundamental difference.

Imran:

At this stage, the model itself is almost less important; the key is their distribution channels.

Qiao:

Yes. I think switching models is much easier than switching platforms. AI models have lower defensive capabilities and are more like commodities, while blockchain is less easily replaceable.

Imran:

Interestingly, despite this, for example, Zuckerberg recently released Llama 3 and Llama 4, and the competition has become very intense. Now almost no one is willing to use Llama 4. Interestingly, some researchers who left, such as those who participated in Llama 2 and Llama 3, have now gone to OpenAI. You can check his LinkedIn.

Qiao:

Did you see that? I saw that news; it's quite interesting. He wrote in his job description that he participated in Llama 2 and Llama 3 but did not participate in the earlier versions.

Imran:

All of this shows the intensity of the competition. Without funding or top talent, there is no competitive advantage. So the competition in terms of models has ended. Aggregated models like OpenRouter and Freedom GBT are an interesting direction.

Imran:

Because at least in this way, I have pitched the idea of Freedom GBT to some people, asking them if they think OpenAI is the only option. By the way, I asked about 25 people, and no one had heard of anything else, including Perplexity and Gemini. Now people only know OpenAI. I talked to those kids aged 12 to 18, and they had never heard of anything other than OpenAI.

Because at least in this way, I have pitched the idea of Freedom GBT to some people, asking them if they think OpenAI is the only option. By the way, I asked about 25 people, and no one had heard of anything else, including Perplexity and Gemini. Now people only know OpenAI. I talked to those kids aged 12 to 18, and they had never heard of anything other than OpenAI.

Then I introduced them to the idea of Freedom GBT, asking if they were aware of this issue, and they said sometimes they hated that OpenAI didn't respond to certain questions they had. I asked them if they wanted to know X, and they said of course. Then I asked if they knew about Freedom GBT, and I explained the whole concept of the model and OpenAI's concept. In the end, they understood.

Qiao:

The way I use AI now is that I usually ask a question, at least asking several different models. Usually, it's ChatGPT and Gemini, but sometimes I also use DeepSeek and Claude because they provide different answers, and I need to cross-verify between them.

Imran:

I find that for some models, I choose them for specific purposes, which we discussed in the last episode. For example, I know that Google's Gemini has clear advantages in certain aspects. I really like Google's Gemini because it can analyze YouTube videos and other proprietary content, right?

It actually pulls from all sources, all videos, and extracts content from where it comes from. I think there are many subtle viewpoints or information on YouTube that cannot be found elsewhere. Therefore, I think this is a very interesting entry point.

AI's Memory Function

Imran:

We previously discussed the memory function because Oak and I have made quite a few improvements in this area. I think there are some patterns in it, while you seem to disagree. Do you think there are patterns in the memory function? I would love to hear your thoughts.

Qiao:

I do think there are indeed some patterns. Although they are not particularly obvious, they are not completely absent either. Of course, it is useful, but I'm not quite sure what specific improvements they have made. What does "complete memory" really mean? I once asked ChatGPT, for example, what it thought my MBTI type was based on its understanding of me. The answer it gave was quite good. I always thought the memory function already existed. So I'm not clear on what changes were made when they released this feature.

Imran:

Yes, I'm also not quite clear on the specific impact. From what I understand, they have expanded the memory function to remember more about you across different conversations and extract data from it. I know OpenAI has a memory button, and sometimes I reset it. That was in the past because I was very cautious. Now I'm not too worried because it has some background information about me, which allows it to provide better answers. You feel like these answers are tailored for you. For example, it knows I have issues with X and Y, so it might adjust the answers because of that. I appreciate this feature. Sometimes, I feel like it’s like a person, as if it understands me. This feeling makes me a bit uneasy because I know it's just AI. But if I feel this way, I think many people may have already established some kind of relationship with it.

Qiao:

Just like Iron Man and Jarvis. I don't think it is a conscious being, although some people might think so.

Imran:

I don't think it is conscious, but the way it converses and how it tailors the conversation to you does reflect some human emotions. Just like you can resonate with someone, it can resonate with you, which I find strange.

I do think there are indeed some patterns in it. Because the closer your connection with a system, the more it understands you, the harder it becomes to switch to something else.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。