This article is based on a speech by Lu Qi delivered in 2019. Lu is the head of startup incubator Miracle Plus. Previously, he headed the Y Combinator China. He has also held executive-level positions at Baidu and Microsoft. The article was originally published by educational institute and online media Hundun University. Oasis is authorized to translate and publish the content on its platform. The translation, done by Yuqian Shi, has been edited for brevity and clarity. Image credit to Pandaily.
In this era of digital revolution, everything in our society is going to be digitized. While it is indeed exciting, there is anxiety about unprecedented changes phenomena arising from the digitalization of society, as we are not yet able to predict all the changes and consequences they may bring. Thus, what a digital future holds for us has become one of today’s most popular topics.
The benefits and problems of digitalization
How exactly do we benefit from digitalization?
Through digitalization, the information we need is captured and stored on a given medium and then processed on a massive scale before being delivered back to the endpoints, where it will be available for further use.
However, despite the continuous progress of digital transformation, there is still a disconnect between the digital and the physical world. This has led to all sorts of challenges:
First, it is a big challenge to establish mechanisms that can empower the development of new technology, thereby supporting the ongoing digital transformation. Capital markets, for example, are in urgent need of improvement. While deep tech is an investment-worthy sector, it is not the most desirable target for venture capital investors, as their investments usually predilect services that can offer a high return in a short period of time. There should be a new type of capital tailored to deep tech, based on factors such as timing, scale, risk structure, and global trends to empower the technology sector.
Secondly, data is a core resource for improving productivity. Data is being turned into an asset to train new models based on it. Furthermore, there will be a shortage of human capital, resulting in an increasing demand for more and better entrepreneurs, researchers, and technologies to boost productivity.
Lastly, the role of governments in the future will become more and more diverse. Privacy protection and data security have become issues of common concern, calling for governments to implement innovative approaches in policy-making and infrastructure development.
A closed-loop information architecture
Solving the disconnection requires the industry to develop a new computer system and information architecture to design an effective structure to better digitize social behaviors.
For this reason, I have been working on designing an information aggregation system. Basically, it has four subsystems: the observation system, which analyzes the behavior of the human being and the society to obtain information. The intelligent system, which expresses, stores, calculates, and processes the obtained data, then transmits it. Also, we have the motion system, which is responsible for interacting with the user or the environment. Finally, the operating system is the platform through which people, namely the author of this system, maintain and update such a digital ecosystem.
The information aggregation system remains open and transparent while displaying the digital process and closed-loop structure of a given social phenomenon. The urban transportation sector, with major players such as Uber, Didi, Grab, and Lyft, is a good example of how it works. The key task for the system is to obtain the location information of passengers and drivers, calculate how long their trips will take, and then, price the orders following economic and computer science methods. In addition, it also calculates the safety factor of each trip. All the estimates are made with a digitization approach.
This architecture opens up a wide range of other applications such as news feeds, social media, retail, education, and healthcare. The human body, micro-organisms, and even tiny nanoscale objects could be digitized. So can larger things, including cities and countries, the weather, and even the entire planet.
Opportunities in the era of digitalization
Which occupation has the greatest potential to create wealth in the future?
Different times in history have had different answers to this question. In the 20th century, it may have been buying and selling companies on Wall Street. At the beginning of the 21st century, entrepreneurship was the greatest opportunity to create wealth. Currently, I believe that scientific research is the answer. Here are the reasons:
Starting a new business requires not only brilliant entrepreneurs but technologies that are commercially viable. While there are more and more entrepreneurs emerging today, there is a general lack of adequate technologies.
What’s more, the entrepreneurship ecosystem cannot meet all social needs. The nature of entrepreneurship is to test a market with products, but some needs cannot be addressed without new scientific inventions, such as finding a cure for Alzheimer’s or making progress in carbon sequestration to mitigate climate change. This is why I established Miracle Plus, which is currently focusing on supporting early-stage entrepreneurs doing scientific research to address the needs of the market and society. I am looking to make the world a better place by helping tech startups with digital transformation.
The era of digitalization is presenting us with a range of rare opportunities and challenges, and I think it is very important to be on the right side of history to embrace them. Enterprises today, especially those in high-tech, are capable of making great impacts on society. It is important that when exploring uncharted waters, instead of waiting for new government regulations, those enterprises should make ethical decisions and put them into action conscientiously.
I sincerely look forward to seeing more of the younger generation engaging in scientific research and entrepreneurship, while being on the right side of history. People need to embrace the new opportunities brought by digitalization without being afraid of the challenges.