There May Be No Big Business in the Future — Young People Might as Well Live the Life They Like
Wu Xiaobo divides the entrepreneurs since Reform and Opening into six waves, and the sixth is the strangest: rapid growth is over, the market is saturated, and this generation are the children of the propertied. He judges that most future startups will be small ones, and that AI has a winner-take-all quality that will not create opportunity for everyone.
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The sixth wave of founders is the strangest wave of all
Wu Xiaobo divides the entrepreneurial waves since Reform and Opening into six. The first wave was farmers in rural enterprises; the second was the 1984 urban system reform; the third was intellectuals jumping into business in 1992; the fourth was the PC internet in 1998; the fifth was the mobile internet in 2012. He argues the sixth wave is not a technology wave driven by AI but entrepreneurship driven by the country's stage of development. Its features: rapid growth has ended, the market is fully saturated, and this generation are the children of the propertied — earlier waves were children of the propertyless, living in Beijing basements. Their drive to surpass, their path models, their sources of capital are all different.
— Wu XiaoboThe strongest hunger for wealth was in the first wave, the farmers
Wu Xiaobo compares the traits of the five waves of entrepreneurs. The strongest hunger for wealth was in the first wave, the farmers. The first to have a public social consciousness were the 1992 cohort of intellectuals and civil servants, whose sense of public mission was especially large. The 1984 wave were beneficiaries of a catch-up strategy, relying on cost advantages, scale advantages and lower-tier market advantages to do import substitution, which is why it so easily produced big players — Wang Shi came out of this wave. The 1998 internet wave were basically undergraduates, globalisation was innate to them, their sense of capital was strong, and they had no property-rights problems. The 2012 mobile internet wave was the fiercest and bloodiest, because the time pressure was intense — group buying, Didi, shared bikes slashing at each other with knives, burning money continuously, the market taking shape in a very short time, and the profitability was also the greatest.
— Wu XiaoboIn the age of revolutionary narrative, entrepreneurs were a conservative force
One responsibility Wu Xiaobo took on in writing A Hundred Years of Ups and Downs was to bring the entrepreneurial group of the revolutionary period into view. In the age of revolutionary narrative, entrepreneurs were in fact a conservative force — revolution wants to destroy everything, entrepreneurs want to preserve everything. He writes specifically about how the May Fourth Movement went from a march by a few Beijing university students to a nationwide strike of students, workers and shops: it could not have been pushed forward without money. The strikers had someone paying their wages, and the driving force was a large number of Chinese national capitalists and national merchants, who had political demands and expressed their dissatisfaction with the Beiyang government through street movements. This history was covered over in the revolutionary narrative, and that book, A Hundred Years of Ups and Downs, is meant to tell what role business played during the age of great revolution.
— Wu XiaoboThe internet generation no longer draws resources from the government
Wu Xiaobo argues Chinese entrepreneurs are too entangled with politics, sometimes actively, sometimes passively. In the Republican era, John King Fairbank noted in The United States and China that the question of why Chinese entrepreneurs did not go catch rats but instead fought over the right to the general apparatus shows there was also a problem of official-merchant collusion in that era. The salt merchants, the cart-and-three-trades merchants, the Huizhou and Shanxi merchants all basically arose from collusion between officials and merchants. After Reform and Opening, with the dual-track price system, you still had to cut deals with the government for resources. But the internet generation is a revolutionary generation, because their own model of wealth creation and resource acquisition no longer needs to come from the government level, and they have also become a new kind of infrastructure. Today China will no longer produce the kind of entrepreneurial group seen in the old Shanxi merchants or the 1990s property-rights reform — the soil for those resources has disappeared, and the opportunity is thoroughly over.
— Wu XiaoboLearning from Tencent is hard; learning from Moutai is relatively easy
Wu Xiaobo says that in the future, doing business in China, learning from Tencent is quite hard, while learning from Moutai may be relatively easier. Because we have entered a conservative period, the country's whole era of rapid development is over, and the cycle in which you could gain wealth by telling a story, innovating a business model, or a small piece of technology is gone. Now you basically need to immerse yourself deeply in doing one thing, acquiring users, and building your own rule-making capacity and resource barriers in a very narrowly segmented industry — which is exactly what Moutai has been doing. He gives an example: if you just want a steady, stable business, open a noodle shop, and if you choose Moutai you will certainly be able to run a good noodle shop — learn a few things like the master-apprentice system and rule-setting and you can open a really good noodle shop; but opening a noodle shop the Tencent way probably won't work.
— Wu XiaoboAI has a winner-take-all quality and will not create opportunity for everyone
Wu Xiaobo does not define the current generation as one driven by AI, because AI is a tool and has not produced an ideological transformation in the business world — it is still merely a substitution, like using a machine to write a document. The opportunity of AI does not belong to everyone the way PC internet, mobile internet and e-commerce startups once did; it has a strong platform character and a winner-take-all quality. He gives an example of a company he saw in Hangzhou called Lindi, using ChatGPT for clothing design: if it gets very strong, it will take the entire clothing industry, and in the future Chinese clothing designers may be finished off with one or two tools. So AI will not bring huge startup opportunities; it may instead be a winner-take-all logic, and even in segmented niches it may be winner-take-all.
— Wu XiaoboThere may be no big business in the future; many people will do small business
Wu Xiaobo judges that most future startups will be small startups, tied to small certainties — what he calls leapfrog entrepreneurship, which cannot get big and for business is certainly not big business. There may be no big business in the future, and large numbers of people will have to settle for doing a small business. He gives the example of his own daughter and son-in-law running a business — a small bar, just that one room. The startup opportunities that exist may still be in using AI tools to make things related to human needs, maybe a teacup, maybe a song. This differs from earlier waves that started businesses to cater to market demand; this wave is more about settling into doing a small business.
— Wu XiaoboI may myself be my daughter's suffering
Wu Xiaobo wrote You Eat Your Suffering, I Eat Mine because he was scrolling on his phone and saw an academician say he works until two in the morning every night so the next generation won't have to suffer. He thinks this view is wrong: each generation has its own suffering, and he may be his daughter's suffering. His daughter graduated from the same high school as him; he was the top liberal-arts student in that school's history, his photo hung on the wall, and when his daughter graduated the school invited him to give a talk as a distinguished alumnus, and classmates went to his daughter and said, that's your dad. He realised that when a father is hanging on the wall, the daughter's grades cannot be very bad; if she didn't have such a father, being middling would be perfectly fine. So parents may work very hard, thinking they are helping their child, when in fact they are pressure on the child.
— Wu XiaoboAdvice to the post-90s and post-00s: stop trying to please people
Wu Xiaobo's advice to the post-90s and post-00s is: find something you like, a long-lasting work like Moutai, and stop dreaming, stop trying to please people — just live the life you like, and that's good enough. He mentions a news item that day: Zhang Zetian's net worth of 60 billion hit the top of the trending searches. Zhang Zetian is post-90s; the post-90s have not produced any particularly big founder in recent years, yet they have produced one particularly rich negative asset. He asks in return whether there is any post-90s founder worth tens of billions — Zhang Yiming was born in 1984. He admits his own generation didn't have this situation either; living the life you like — isn't that the life you like?
— Wu XiaoboIn their own words · checked verbatim
In the future, doing business in China, learning from Tencent may be quite hard, while learning from Moutai may be relatively easier.
未来中国做企业 可能学腾讯挺难的 学茅台可能相对还容易一点
Wu Xiaobo29:18
If China's entrepreneurial spirit is gone, then this country will not progress, because the progress we can now hope for, the progress with the most possibility, is commercial progress.
中国如果企业家精神没了 那这个国家就不进步了 因为我们现在所能指望的 最有可能性的进步 就是商业进步
Wu Xiaobo29:51
AI is a tool, and this tool in today's business world has not produced an ideological transformation; personally I think it is still merely a substitution.
AI它是一个工具 这个工具在现在的商业世界里面 并没有产生 意识形态式的变革 我个人认为 它仅仅还是一种替代
Wu Xiaobo31:57
This tool has a strong platform character and a winner-take-all quality, so to say that in the future Chinese market there will be endless startups created by AI innovation is unlikely — it may instead eat up everything.
它这个工具它有很大的一个平台性和通吃性 所以你说在未来中国市场中 因为AI创新而带来层出不穷的创业企业 不太可能 它反倒可能会通吃掉所有的东西
Wu Xiaobo32:19
It's the same as what I told my daughter: find something you like, a long-lasting work like Moutai, and stop dreaming, stop trying to please people — just live the life you like, and that's good enough.
就是我跟我女儿说的一样就是找一件自己喜欢的事 像茅台这样长长久久的作品 就不要再去梦想 不要去讨好人家了 就做自己喜欢的人生就挺好
Wu Xiaobo38:24
Figures
| Moutai market cap | 2 trillion to 3 trillion | 5:04 |
| Years Ji Keliang served as factory director | 32 years | 7:06 |
| Years Zhou Kailiang served as factory director | 17 years | 7:06 |
| Consecutive years Moutai lost money | 16 years | 11:07 |
| Zhang Zetian's net worth | 60 billion | 37:57 |
Glossary
- leapfrog entrepreneurship
- Wu Xiaobo's term for the sixth wave of startups: they cannot get big, and are small startups tied to small certainties.
- artisan-type entrepreneur
- Wu Xiaobo's assessment of Ji Keliang: at bottom an artisan, but with a great deal of modernity.
- the entrepreneurial economy
- Proposed by Drucker: the way entrepreneurs manage enterprises extends to government, NGOs and religious organisations.
How to listen
Founders and investors who want to understand the generational differences among Chinese entrepreneurs and judge AI startup opportunities, plus young people thinking about career choices in the post-90s and post-00s generations.
The first 3 minutes of in-car small talk and the book-signing noise at the end can be skipped.