Wesley Zheng: Nvidia's weakness, China vs US AI arms race, Western AI coalition and energy bottlenecks

Welcome to another YC Wisdom podcast. Have my friend Wesley Zang with us today. Wesley is a founder of uh Posh, which is a great company solves the energy problem.

Uh that is a huge bottleneck the AI industry. Uh he's also CEO of Magic View. Magic View, you have to do on that one, right?

Magic. Yeah, magicview.com. It's pretty good domain, Wes.

And yeah, you're a Stanford PhD 2XYC down in SF, right? So tell us a bit more uh about yourself, Wes, and what you're up to. [snorts] >> Sure.

Uh so my background is in the energy space. Spent a couple of years doing uh research on batteries at grad school and then started my first company in 2015. Um in the drone space, we built uh fixedwing vertical takeoff and landing aircraft for logistic applications.

um initially more focusing on the uh commercial delivery um later on kind of pivot into more of the defense applications. Raised about $75 million from Lighteed Icon um and uh secure like a $400 million Air Force contract around 2021. Eventually we sold the company to Sierra Nevada Corporation uh in 2022.

um started Porsche around 2022 to look at energy for commercial and industrial application and uh since then we have raised about $5 million grow the team and grown the business a lot over the past couple of years. excited to be riding on the tail wing of huge uh power demand uh from AI data center and um a kind of revolution in um building out power generation capacity out in the US because of uh the re-industrialization and AI demand. So yeah, been super excited about um developing um uh the tag and also building a company and happy to share more.

>> There you go. Tell us a bit more about your background uh how you started in life. I see PI AR agents for science technology and research were also a professor right in 2018.

So, and yeah, I guess we could start from your PhD. >> Yeah. So, I was originally from Singapore.

Um um and uh if you met people from Singapore and um you probably have um heard a bit about the support uh from the government in terms of uh education. So, I um I took scholarship from from the government. this they they support my education from my undergrad all the way to my PhD and as part of the program um um I um I work at uh the agency for science technology research uh in Singapore for a couple of years and uh later on I went on to become a professor at the national university of Singapore uh for about two years.

Um but after a while I kind of felt the itch for starting a companies and really want to just full-time go into the startup world. So I kind of quit my professorship and moved back to San Francisco and continue my startup journey and um it has been a fun ride and this is probably the best place in the world to do startup and I enjoy every single second of it so far. >> When's your first time you got into YC?

um my first company going to YC in 2017 uh for for my first company Volanzi and um it was it was a very uh interesting time at the time uh YC wasn't as big um as right now used to just two batch and uh everything is in person and still at the computer history museum now in Mountain View So it's more like the old YC days and um got a lot of support from YC partners at the time of Jared and learned a tons and I like it so much that when I started my second company Posh uh we went to YC again and yeah it's been a great community and and and got a lot of support from from the partners. >> And what uh justified your move from Singapore to the US? Was that like a culture shock or was that what you were all always meant to like uh deep competition and just like being ranked up against the best of possible peers especially in your space?

>> Yeah. So um I I I always had this uh dream of come uh coming to Stanford. So when I when I finished my undergrad and and start looking at my uh grad school applications, I I applied to a bunch of um top school in the US.

Uh interestingly, I got rejected by uh all other schools except Stanford. So that was the only school uh accepted me and I was uh thrilled to to come to US. That was back in 2010 uh to start my my my my my PhD and um uh Stanford is kind of like a bubble where uh almost everybody is starting a company like in my labs I think there were like three to four people that are looking at starting a company.

my PhD advisor started uh four or five companies, a couple of them are like unicorns and it just felt like starting a company and growing a company to a unicorn is not as distant as uh previously thought. So that kind of planted a seed uh in my mind and uh when I went back to Singapore in 201 um uh 15 after my grad school I um uh I already had the idea of starting a company and I happened to met my ex co-founder Han and uh we kind of work on the ideas. Uh at the time I was traveling back and forth between Singapore and and and and Silicon Valley and running the company at the same time.

So I I say less of a cultural shock. Uh maybe because I've always wanted to do something in the startup space and uh Silicon Valley and and and the Bay Area just the right right place with the right culture for what I wanted to do. >> Right.

And tell me a bit more about Volance E. Was it uh successful? Was it challenging?

You spent seven years of your life building that. That's a lot of time. Uh double click on that one.

[snorts] >> Yeah, I I look at the journey as one of the best time uh in my life. I learned a ton. Um um success depends on how you define it.

Um uh we we didn't we didn't sell the company for billions of dollars. Um uh we did grow the company to about 150 people at one point of time. uh raised a bunch of funding and um um it we we went through a lot of up and downs for sure.

Uh tons of story that I can um share with you over over a drink. Uh but I I look at this as one of the most formative experience in my um in my in my career and I I I learned a tons and I like it so much that I uh went on to start another company. What's your best story you have to share for that one?

Whereas there like near death story or entertaining hardware ones in which uh yeah the yeah there's always funny stories in hardware >> multiple multiple stories um so I think uh as any startup especially in the hardware space um um is is always a more challenging experience because you are not like a SAS company where you have recurring revenue. So um I think between each round of fundraising we always had this kind of near death uh experience right before the next round came in and then um from um actual near death experience there was a lot of fun story of uh the early days where we were testing the platform. Uh remember in the early days um my co-founder and I went to Taiwan for one of our early pilot demonstration.

Uh we flew the drone along a river trying to flew from Taipei to Thailand. Uh, and then somewhere in between the drone land in the middle of the river and um um my my co-founder has to um swim >> a tugbo almost uh because of a super muddy part of the river is is um it dry. So it kind of had to um walk on the river bed to to fetch the the drone back and um uh if there was any water any like flood came uh came down it could it could be swept away.

So um a lot of similar stories when we were deploying um the drones uh out in remote areas uh testing the testing the aircraft. So um these are big aircraft. So uh in the early days when aircraft crash is it was always kind of like a little bit of scary experience.

Um um but overall it has been like um the best experience that I have and I I always love working with hardware because you can touch thing you can show what you are building and and and and you really feel the physical products. >> Yeah hardware is hard right? How did that one ended up?

Did you sell it? Did you exit? Like uh what was the the finality of that one?

Would you judge it as a success as well? >> Uh we we we sold part of the um asset to Sierra Nevada Corporation and part of the team uh went on to to join uh SNC. Uh I believe the platform is still uh being developed and um I I see as a success from my my point of view and uh um I I'll do it again if I give it a chance.

>> Right. Acquired by Sierra Nevada Corporation 2022. Uh and yeah, it's high payload, right?

Longrance and and man aerial system. What what you like about solving very hard problems like that? Um there's a quote from um Sam um Sam Elman uh along the line of like whether you're solving a hard problem or easy problem the the difficulty is about the same but when you are solving the hard problem >> um um the impact will be higher if you if you if you succeed By starting a company on easy problem, you are going to face the same uh day in and day out as well, right?

Like trying to find customer, trying to convince people to join you, trying to fund raise. Uh but when you are building a um in in a space that is not as competitive and perceived as hard, um it's it's actually easier to inspire people to join a team, especially smart people. and um also easier to convince uh VC to uh bet on you, right?

>> Yes. >> So um >> yeah, >> from a first principles, I disagree with the premise. It's not as easy to solve both.

It's way easier to solve an easy problem. But us nerds, we get a massive rush from solving hard problem. Plus our brain, we understand that our brains it adapts and it's better pretty much every day.

Uh and you get not only do you get a huge rush from doing that, but you get smarter, right? So like the easier the the hard problem that you thought was hard a year ago is now regarded as super easy. While the guy that solves easy problem is in this constant low growth zone and it's it's a trap, right?

Like once you you don't grow in your brain, you you start dying. And yes, uh it's more funable. A lot of smart people love getting behind that stuff.

Plus, you make a genuine impact on humanity, which is super important. If I'm I mean, and I'm saying this as a guy that never really solved hard problems. Unfortunately, my first startup was a new topic.

I think that was the hardest problems I solved. And I've been craving the past 10 years to solve hard problem, which is why I work with people like you, right? I'd love to contribute to solving these hard problem.

Although one could say GTM is hard and all of that, it's not like if I'm in deep tech and and hard tech, right? And I want to make like a genuine impact on humanity and I feel like with I'm making very good money, but it's not like solving life-changing stuff, right? So, which is why I was telling you before we started the call, the the call with the nonprofit um AI guy that's making the coalition at the AI frontier level, like I want to get into this kind of project, right?

So, any thoughts on this? Yeah, I think I think I think on the point about easy problem, hard problem like with with AI, a lot of the um the the perceived easy problem like software and and and and um uh building a website is is already um kind of done by AI um easily, right? And I think I think what what is interesting is that now with all these very powerful LM tools um it it it it make solving the harder problem less daunting relatively compared to before, right?

uh because you know that you have a 100 uh super smart PhD level AI agent that is at your disposal that you can ask questions, help you with thinking about uh solutions and um it it it makes solving some of these hot problems less daunting uh in my in my opinion. Um and yeah uh regarding the AI coalition, I love competition. I think competition make the world a better place.

Um uh I I have a lot of thoughts and opinions about how to um view competition in a way that is not uh adversarial. Um not >> well it's both right. It's competition.

You both compete and cooperate like all the big tech giants do. Um >> I think yeah it's a matter of leadership in US unfortunately the current leadership well I mean generally speaking in the US it's always like oh winner takes all uh it's us or you right like the US China arms race is like far-fetched right like we should >> and it's not a hippie perspective it's just like we should be coming up together and building stuff and unfortunately yes there are technical details that makes this hard with China right like China is sort of [snorts] closed source course and they they love like the win the win-lose mindset as well. Unfortunately, um >> China is more open source like more more like on the open.

>> Yeah. But the CCP for example is not opposed to Chinese company like stealing quote unquote stuff. And by the way, I'm all for copy paste improving, but I mean I would give out the credit to that person and I would potentially pay them.

I would not want to steal their you know? Um, if it's like blueprints that took them uh years and decades to build, right? I I don't think I'm not like an idea guy like, oh, let's give uh this guy money just because he had an idea, right?

Like ideas aren't worth But if this guy worked on something, uh, yeah, definitely partnership model. And I just I just think we should be more collaborative, right? Like Trump uh, on Canada and all the historic allies of the US is an incredibly bad move, right?

Um, and then a bunch of CEOs. It's all about incentives, right? It's not that Sam Altman's a bad guy, that Alex Karp, CEO of Palanteer or Parm Lucky, they're bad people.

It's just that they align their company's philosophy with like the current leadership. They don't have other options because they have investors. If it if they don't do so, uh people will just like start chilling on them and not invest into them.

So, just think, yeah, if we unify oursel a bit more and work in the same direction, that'd be great. And unfortunately right now the best solution is like to create a coalition that's part uh separate from the US until there's probably a new leader so that we can just team up and do some good together. Any thoughts on that long blabber?

Um I think competition is always good and um and and and I I think it make the world a better place and um it's you you need to view like um the exo of Eric Schmidt uh had this quote like um you want to view China as a competitor but not as an enemy. Uh and there's a a a difference between a competitors and the enemies, right? Uh enemies is someone who trying to kill you.

Uh you don't want the other person to be uh to be alive. While a competitor is just like in in the sports, right? You have uh you have someone who who is kind of at a similar level or like catching up to to the level and you want to make sure that you uh outsmart your your competitors.

And uh I I felt like a lot of times um um um we we we are not playing the game that um uh in in a smart way. All right? Like when you when you in sports when you're trying to win your competitors, you focus on how to make yourself better.

You how to how to make yourself uh stronger, right? you uh you pay a little bit attention to what your competitor is doing, but uh you shouldn't just spend a lot of your time trying to uh sabotage your competitor, right? Like sure, maybe you are trying to influence it, but I think you should spend more time make yourself like stronger, better, smarter um and um less worrying about how how to kill the competitors, right?

Because I think eventually competition make you a better person and make you stronger and make you um smarter. >> Yeah. The US analogy if we I mean let's take hockey for example.

US is good at hockey. Canada we're building like an all-star team. US is Alexander Ovetkin at the center right like it's scoring machine.

and it's responsible for uh 60% of the outcome, right? It's like if Ovkin would on his teammate and be like, "Oh guys, I got this and I'm I'm doing this alone." I think if we unite all the talent and all the countries, we get 100%. Now the best is like 60%.

Right? And the on the other side would be potentially China, right? And uh countries that are not aligned with some of our values, right?

But that's the equivalent of what Trump did. Um, and yeah, I might overstate the 60%, maybe it's a bit higher, but why spit on even 10, 20, 30% of the final outcome and output, right? >> Yeah.

[laughter] >> Sorry for for just throwing that out, but um and yeah, you want to compete for sure. Um, but yeah, there's also like >> Yeah, go ahead. I I think I think on um uh closer to kind of what I was saying is that um um you want to figure out how to improve yourself in in in a way that like um make yourself stronger.

For example, in what we are doing like at Porsche which is working on building up energy and solving the energy and power problem. It is a big bottleneck in the US, right? like we talk about how how um um open AI and and and clot um um or entropic is doing super well on developing the models but if US doesn't build up the power generation capacity uh and uh we don't have enough AI data centers to continue to uh train the model the um the lead and the race for sure, right?

Because China China is like 100x the energy capacity of US or >> Oh, China is is not just about the current capacity but also the trajectory, right? Uh that in China there about 35 or or 30 to 40 nuclear plant under construction. US have zero, >> right?

the solar installation um in China last year is more than the entire solar installation of the US uh entire history. Right? So the amount of uh development and the speed uh is astonishing and I think on the US side um um we have we right now we have some advantage in terms of um model development we have Jensen right uh Nvidia um um >> wild card >> but but the infrastructure development is is is super slow and um I was listening to a podcast this morning about simple things like transformer which which is not a super high-tech super um um rare like it doesn't involve like a lot of it's not like building a rocket but right now it's becoming a bottleneck for a lot of the uh infrastructure buildout and the lead time is um uh two and a half years >> um right >> and I I think um what I'm trying to say is that we should we should have more people looking at where are the um the bottlenecks, where are things that slow could potentially slow down and put more resources into um um strengthening those areas.

>> Yeah. >> Right. What was your take on the Jensen podcast with Dwarvesh?

Um I saw weakness. I saw like dents in his in his armor. I saw like a a guy that has too much on his plate.

[snorts] Um I think Jensen has a unique perspective on how things are going in the world because um he was from Taiwan. He's doing business in China in the US. Some people might think that Jensen is saying what he is saying because he want to sell more uh Nvidia chips.

But I think it does have a point that you want to um you don't want to shut the door. You don't want to um um give up a market share because of some short-term concern. I think he has a more long-term view on how to win the competition.

Um >> but it's very naive. It's uh I feel it's not naive on his end. It's capitalistically motivated.

Again, coming back to the investor, Jensen waited 20 30 years in the dark to be where he's at today and he doesn't want to give up on the on the good times, right? I can certain that's like at least 60% not 70 if not 80% of his thinking. It it came at a very bad time, you know, like his interview with Darkesh, it came at about the time with Claude which Claude Mitos announced that it had found like hundreds of critical security gaps in banks.

And it's a it's just a bad PR move as well, right? It's like, okay, sure, your company's going to make some money, the investors, well, but what if your uh chips, your GPUs contribute to Chinese hackers uh opening the uh financial system wide open? >> Uh have you thought about that?

So it's like >> um his point is more about if you don't sell the chips companies like Huawei uh and other companies will fill the gap and >> is that true? Is that would mean that he hasn't developed like a a moat strong enough? like isn't an Nvidia chip like millions of hours of R&D and they do have a moat and it so if that's untrue that means that what he built is not solid.

[snorts] >> Um >> also let's not forget like the fact that Chinese folks would just copy paste this chip right incredibly quickly. >> They're incredibly good at that. I think the mo is not bulletproof and he's deeply aware of that right like the um um it's not like there's some secret sauce that nobody else know that make Nvidia unique right the the the the secret sauce source of Nvidia is because of the cuda and all the ecosystem they have built right make make it super easy for developer to um uh build on top of the existing ecosystem it doesn't means that there's nobody else that can do what Nvidia is doing.

AMD is AMD is doing very well. They they they have they have uh a very uh compelling uh product. The reason AMD hasn't been as as as big or as successful at the moment as with Nvidia is because they they don't have the ecosystem yet.

But if if China all the uh LM model and uh all the labs move onto the Huawei ecosystem, which they could very well do and and maybe they're already doing it, then um the ecosystem mode is is not really there. So it it's not like Nvidia has this top secret invention that nobody else can copy, right? Um it's more about they already have an ecosystem, right?

um just like because other people are using it so I'm going to use it. It's just too much trouble to to rewrite all the library and and and and rewrite all the all the um codes. But if if um if deep 6 are against the wall and and have to choose between um having no chipset and a Huawei chipset that will require additional work in terms of writing a library, deep will definitely choose the Huawei and in fact the recent release of the deep sync model is a 1.5 trillion parameters model that is very close to the latest model from from entropic and and and open AI right so >> yeah makes tons of sense.

Yeah. It's like um Yeah. The argument is get us in there, favor the ecosystem.

That's going to get money in her pocket as Nvidia is going to get money in investor's pocket. Some geopolitical advantage. So that makes a lot of sense, right?

Um [snorts] and and genie's up the bottle. It's like AI arms race. If we don't do it, someone else going to do it, which is sort of unfortunate, right?

But I I think we we just cannot turn back, which is this full argument, right? Like there's no better alternative. That that makes tons of sense.

>> Yeah. And I I think I think um what what Jensen is saying and what um I I believe in is that eventually it's impossible to cut China off from this race. Right?

There's it's it's impossible, right? You need to recognize this as a as a fact first. >> Yeah.

Just like it's impossible to align a super intelligence. I mean, China's intelligent. They're moving fast.

They're breaking things. They're just like the US. They're I mean, they're humans.

They're smart. They're economically capable. So, yeah.

No way we can't we we we can put them out of the race. It's not they're not a North Korea for sakes. and and and and the only way to kind of um um um make sure that the the interests of the US is protected is to have a conversation and make make sure that um make sure that we are we are aligned and I I think >> today >> it's a more diplomatic approach and I think that that is probably the only approach available.

Uh I I don't believe like shutting out uh access to chip will will will slow down. It's Yeah. >> Yeah.

I fully agree with that. Stay close to your enemies and also Yeah. China's too big to fail, right?

It's just too big to fail. It's not stopable at the same time. The boulder's rolling and it will never pretty much start stop.

So it's like competition mindset again, right? compete and both cooperate with them to an extent extent as long as it's win-win >> and and I'm seeing a shift um among um the VC as well over the past over the past couple six 12 months I've seen a lot of top tier VCs that are investing a lot in defense in reindustrialization uh visiting China and and and and kind of um trying to figure out what's going on because there is a there is a a saying by which is the old um u military strategy from China um saying that know yourself and know your enemy um um you um then you don't have fear for for uh 100 battles. So I I I think you need to know what what's going on on the other side and um calibrate um strategy accordingly instead of just shutting the door and and and trying to um yeah just like you don't want to bury your head under the ground like ostrich and and and and and perceive everything as bad.

I think the smart way is to >> look at what's going on and come up with a good strategy to to to deal with that. Yeah. >> Yeah.

like strengthen the cable between both sides. But ironically, this was all started by COVID, right? like [snorts] the Wu one the Wuhan thing and two um the fact that COVID slowed down supply chain and then that was the main link of the US with China's like supply chain and that led to the full re reassuring populist leader elected for a second time that all brought the the US China relations uh down and then of course there's Taiwan and and uh semiconductors anything to to mention on the Taiwan front of things you think will pop off at that level and if so how would that affect your company and uh US China relations?

>> I think from a gender point of view um it's it's probably going to remain a status quo uh for the near future, right? There's been talk about China going to attack Taiwan in 2027 and uh a lot of defense companies are um kind of selling the message that that that China is going to invade Taiwan. I don't think that is going to happen um anytime soon unless there's some black swan event like I don't know uh like some Taiwan declare independence tomorrow or something.

But uh it's not in China's interest to to destabilize the the current relationship and um with with all the all the stuff going on in Iran and Middle East, I I don't think US has appetite or at least the current administration have any appetite to to kind of um get into another conflict um in in in in Taiwan. I think it's in the best interest of both countries just remain u to have things as >> status quo. Um right like think think about it like um if if if both side go crazy China just cut off Taiwan TSMC will stop producing chip to to uh for media and everything will go into hell yeah >> and andel and palunteer is going to win which is why you always need to be careful when you're at the helm of these companies you have a great responsibility and sometimes wararm mongering is really profitable for these companies so got to be careful at that level Wesley thank Thank you for showing up today.

Where can people find out more about you? >> Um I'm on LinkedIn. Um and um yeah, my uh my website is posh energy uh.com and uh I'm on X as well.

So happy to connect with people who want to chat more. All right.