Forbes: Talk to Kai-Fu Lee, co-author of Artificial Intelligence 2041, on the future of artificial intelligence

Forbes published an interview with Russell Flannery on October 24, in which Kai-Fu Lee, co-author of "With Artificial Intelligence 2041", talks about the future of artificial intelligence and his AI investments.

AI is changing the way we live and the balance of global military power. Nicholas Charan, the former Pentagon's head of software, said this month that the United States has lost to China in military applications. Even Henry Kissinger, 98, as co-author of a new book, The Age of Artificial Intelligence: and the Future of Our Humanity, is evaluating IT.

Kai-Fu Lee has been evaluating the impact of AI for decades. The former Google executive, who turned into a venture capitalist, examined the U.S.-China competition in his 2018 book, "The Superpower of Artificial Intelligence." His new book, Artificial Intelligence 2041, co-authored with science fiction writer Chen Qifan, proposes how artificial intelligence will bring earth-shaking changes to everyday life in the next 20 years. Earlier this month, I spoke with Kai-Fu Lee, who currently oversees $2.7 billion in assets at Beijing-based Sinovation Ventures. Sinovation has supported seven AI startups that have become "unicorns" worth more than $1 billion. AInnovation, 4 Paradigm, Megvii, Momenta, WeRide, Horizon Robotics and Bitman. We discuss Kai-Fu Lee's new book, his investments based on the predictions in the book, and the current state of the U.S.-China AI competition. Excerpts are provided below.

Before we talk about the new book, let's first review AI Superpowers. How has the U.S.-China competition unfolded since its publication three years ago?

Both countries continue to be what I predict as "AI superpowers," so far ahead of the world. The U.S. is stronger in basic research, enterprise software, and enterprise artificial intelligence. China has accelerated the development of robotics and manufacturing. It's a good match, isn't it? The U.S. is stronger in enterprise software, while China is stronger in manufacturing. Naturally, both sides will apply AI to their own areas of strength. Both countries have done a lot of work on the medical side of AI. It's an emerging thing that's beyond what I predicted in "AI Superpowers" because COVID-19 has really greatly accelerated the development of AI. This has led to AI-based drug discovery, protein folding, AI-based intelligent radiology, AI for social grooming, and the use of robots in the lab. The lab proves to be a great place for robotics.

An example of one of the portfolio companies we invest in is a company called Mega Robo. It has developed a robotic machine that can do COVID-19 testing 100 times faster than it does without a machine because it can work 24-7 non-stop. The same product could be extended to laboratory research, and, basically, begin to replace much of the work of lab technicians. We're seeing a lot of huge breakthroughs in healthcare.

In terms of basic research, China has already caught up with the United States in terms of the total number of papers and the top 50% of papers. In the top 10 percent of papers, it almost caught up; in the top 1 percent of papers, it still lagged behind. One theory is that young researchers in China are very similar to, if not more, AI researchers in the United States. China is still lagging behind in terms of more senior, distinguished researchers, but young researchers are expected to fill that gap in another 10 or 20 years.

So overall, I think both countries are doing a good job. If you go a year or a year and a half ahead and count the number of AI IPOs, China will actually lead. We can calculate that about 10 to 12 expected AI companies will go public in China at a multibillion-dollar valuation by the end of next year. I don't think the U.S. numbers would be that big.

AI 2041 differs from AI Superpowers in that it uses fictional stories and subsequent analysis of its lessons. How did you react?

Mostly very positive. I want to introduce people to AI with imaginative stories that otherwise they might find AI daunting. The next 20 years is a good time period, and anything too short won't look revolutionary; anything too long won't be a responsible prediction. The stories take place in 10 different countries and affect 10 different industries.

If you had to pick one of these 10 stories as the most important, which would it be and why?

"Contactless love" would be the most important because it illustrates the power of AI for healthcare. This pandemic has made us all realize how vulnerable we humans are. AI is poised to be adopted to help address future pandemics, future health, and future healthcare. In areas such as wearable computing, radiology, gene sequencing, and more detailed blood testing, human healthcare is being digitized. Whether it's diagnosis, treatment, preventive maintenance, or health checks, data can be fed into ai engines. An AI medical assistant can valuablely tell us about our vulnerabilities, how to reduce them, what kind of medications to take, and how to exercise in a way that suits us personally. When there is a lot of data, AI is very suitable for high-precision advice and decision-making. Many other AI technologies have huge implications, however, they can be used for good or bad purposes. I think one area of technology that is really "AI for good" is healthcare.

Let's connect this book to your investment in Sinovation. First, how important is AI in your portfolio?

It is quite important and may be related to 70% of our investment. They're not all pure AI companies. The development of artificial intelligence is such that some mature technologies are still in the process of being injected into products and industries. The real breakthrough is 10% or 15% of our investment. The others are what I think of as AI applications. Overall, it's about 70 percent.

Can you take us through some of the investments you've made and how they match the vision you present in the book?

The chapter "Deep Fraud" talks about computer perception and vision. This goes a lot back to deep learning and convolutional neural networks, which became popular about five to seven years ago. What we see in Sinovation is that computer vision will be disruptive and that machines will be able to see things like people, not exactly the same, but just as good. For example, it can do better than people when it comes to recognizing objects and faces. We see that this can be used for visual inspection of quality in autonomous retail stores, radiology and manufacturing. It can also be used for navigation robots and autonomous vehicles. Deep learning can be applied to computer vision, which will have many industrial applications. In total, we have about 14 companies in the category of computer vision applications. Several of them will be available by the end of next year.

Another breakthrough we are seeing now is in large, self-supervised natural language models that can be fine-tuned. I think natural language will be the next big AI application. Vision comes first, followed by natural language. You can see in the book Gemini how AI child partners are trained to converse fluently in human language and can have very coherent conversations with children to help them progress. So far, we've made four investments in natural language, and probably a dozen more to build a portfolio similar to computer vision.

What's going on in the entertainment industry?

We didn't invest in this area because I think it's a bit far away. AR-VR is still too clumsy. The head-mounted display is too big, people feel dizzy, and it's too expensive to create content. I do think these issues will be addressed over time, the experience will be truly vivid, realistic, not dizzying, and the cost of creating content will be relatively low. This happens over a time span of 5 to 10 years.

How will autonomous driving unfold?

We see transportation as a huge revolutionary area for AI self-driving cars. However, if you think it's going to completely replace the human driver and remove the steering wheel, throttle and brakes from the car, we'll have at least another 10, if not 15 years. Investing in this area is difficult to succeed because you have to constantly burn money and collect data, and you will not have income for a long, long time.

A more appropriate approach is to find low-hanging fruit. In a more restrictive environment, there's a simpler problem where you collect data and gradually make your AI better, and that makes a difference. We've invested in four companies and are doing exactly that. One is for airport transportation, the other is for port transportation, that is, mobile crates. A third company is making aftermarket products to help drivers and collect data. The last company is making robotic minibuses — which are deployed in three cities this year. These robotic minibuses are easier to deploy than robot cars and robo-taxis because robot buses have fixed routes. Once you've collected data from these robot buses, then you can handle the robot taxi. For each, we don't have to wait 10-15 years to get an income.

At the end of the book, you argue that the development of artificial intelligence will challenge traditional economic theories. Can you talk about that?

If we look at the 20-40 time frame from 2041 onwards, I think the cost of goods will fall dramatically. Thanks to automation, the cost of labor will become even lower. The cost of materials will also be greatly reduced by advances in life sciences and materials science. The cost of energy will also fall with distributed solar and battery storage. Over the past 10 years, we have seen a lot of improvements.

It's not just our phones or everyday items like cars that cost them should come down. Current non-manufacturing stuff will also become manufacturable. For example, food, vegetables and meat will start being produced in factories, not necessarily on farms. We will reduce many of today's problems to manufacturing problems. At that stage, the cost of providing everyone with shelter, food, basic transportation, and clothing should be manageable. That is, we should be able to eradicate poverty and hunger. At the same time, our existing economic system will no longer function. This includes a market economy or capitalism, the stock market, money, and jobs. In the book, I call it the "Age of Abundance."

In the future, routine work will be replaced by artificial intelligence, so the meaning of work may change. The meaning of money may change because the state may want to subsidize everyone with a universal basic income. We may also want to motivate people not just through money; money may not be the only measure of pay.

I think the positive part would be that we have the ability to make a lot of stuff at a lower price. Artificial intelligence will do all the routine work for us, but what about the jobs that are replaced? What about companies that need profits to prove stock prices? These are all problems that must be solved. For every benefit, there will be a series of problems that need to be solved.