Taylor Ogan, Snow Bull Capital: China's tech frontier, the view from Shenzhen — #47
Nov 2, 2023
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Taylor Ogan, CEO of Snow Bull Capital, discusses moving his firm to China for better market access and transparency post-pandemic. They explore China's dominance in electric vehicles and LiDAR technology, the value of site visits for investment research, and the challenges and unpredictability of investing in China's stock market. They also highlight the rapid technological advancements in various sectors and the transformative power of technology for the Chinese economy.
Chinese companies are dominating green technology industries, leading to the decision to establish Snow Bull Capital in China
LIDAR technology is becoming increasingly important in the automotive industry, driving advancements in autonomous driving capabilities
On-site visits to companies, factories, and research facilities provide valuable insights for investment research and decision-making
Deep dives
Chinese Hedge Fund CEO Explains Move to China and Focus on Chinese Companies
In a podcast episode, Taylor Ogan, CEO of Snow Bull Capital, discusses his decision to move to China and the focus on Chinese companies. He founded Snow Bull Capital in Boston with a focus on investing in green technology, but soon realized that Chinese companies were dominating those industries. Due to the lack of research and communication with Chinese companies, Ogan decided to cleverly establish an entity in China. Covid-19 further cemented their decision to move to China permanently. Ogan emphasizes the tremendous opportunities in China and the impressive development in cities like Shenzhen, with advancements in technology such as robo taxis and drone deliveries. American investors often underestimate the quality of Chinese electric vehicles (EVs), but Ogan highlights the engineering precision and automation in Chinese factories, driving significant advancements in EVs and battery technology. China's focus on innovation and technology will have enormous economic implications, and Ogan believes collaboration between the US and China is essential for a positive-sum future.
The Growing Importance of LIDAR in Autonomous Vehicles and China's Role
LIDAR, a key sensor in autonomous vehicles, is becoming increasingly important in the automotive industry. LIDAR technology allows for precise mapping and detection of objects, significantly enhancing autonomous driving capabilities. In China, the adoption of LIDAR in new energy vehicles is already significant, with an estimated 10% of new energy vehicles equipped with LIDAR. Chinese companies, such as Huawei and DJI, have made significant strides in developing their own LIDAR technology. This progress is driven by China's focus on automation and robotics in manufacturing, leading to advancements in build quality and cost reduction. The availability of low-cost LIDAR sensors is reshaping the autonomous vehicle landscape and enabling faster iteration of software algorithms. While some companies have opted for LIDAR in their autonomous vehicle systems, Tesla's CEO Elon Musk has been skeptical of its necessity. However, the substantial cost reduction and performance improvements in LIDAR technology challenge his views. Overall, LIDAR plays a crucial role in improving autonomous driving safety and can provide more accurate data for better decision-making.
The Value of On-Site Visits in Investment Research
On-site visits to companies, factories, and research facilities provide invaluable insights and information for investment research. These visits allow investors to observe firsthand various aspects of a company's operations, engineering processes, and technological advancements. Interactions with company representatives and engineers provide an opportunity to ask specific questions and gain a deeper understanding of the company's capabilities and competitive advantages. For example, visiting a battery factory in China allowed for direct observation of advanced manufacturing processes and automation. Site visits can reveal crucial details about a company's technology, supply chain, and potential risks. Additionally, they allow investors to compare and evaluate different companies in the same sector more effectively. Overall, on-site visits provide a comprehensive and practical way to gather information and make informed investment decisions.
The Transformation of China's Economy and Innovative Advances
Contrary to Western narratives, China's economy is not on the verge of collapse but undergoing significant transformations and advancements. The economy remains resilient, with high GDP growth rates compared to other major economies. China's focus on innovation and technology is reflected in impressive developments across various sectors, such as electric vehicles, semiconductors, aerospace, and more. Chinese companies are at the forefront of these advancements, reflected in the high-quality and competitive nature of their products. The rapid pace of development and the significant investments in research and development have solidified China's position as a global tech leader. The transformation of cities like Shenzhen showcases the scale and speed of development, with advanced technologies like robo taxis and drone deliveries becoming commonplace. Collaboration between the US and China is crucial for fostering a positive-sum future and leveraging the potential of technological advancements for mutual benefit.
The Value of Site Visits and Conversations
During site visits to companies in China, valuable insights can be gained not only about the visited company but also about their supply chain. These visits often lead to discovering other companies that are crucial to the supply chain and have unique capabilities. Chinese companies tend to be more open and willing to share information, making it easier to uncover hidden opportunities. The willingness to cooperate and work together between Chinese companies is an advantage that fosters technological advancements and innovation.
The Transformation of Chinese Tech
China is experiencing a significant technological revolution, with the Chinese tech industry poised for exponential growth. This revolution is driven by factors such as the construction of new factories, supportive government policies, and the rise of smarter engineers and innovators. The Chinese government is setting frameworks and regulations to guide and facilitate this revolution, allowing companies to thrive and collaborate. The cooperative mindset among Chinese companies and the environment of innovation fostered by the government create possibilities for groundbreaking technologies that could surpass the impact of the smartphone revolution.
0:00 Introduction 1:02 Taylor's background and why he moved his firm to China 20:43 China post-pandemic and economic dynamism 33:43 China dominance in electric vehicles; LIDAR 56:55 Investment research: factory and site visits 1:06:52 US-China competition - the future of innovation is in China
Music used with permission from Blade Runner Blues Livestream improvisation by State Azure.
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Steve Hsu is Professor of Theoretical Physics and of Computational Mathematics, Science, and Engineering at Michigan State University. Previously, he was Senior Vice President for Research and Innovation at MSU and Director of the Institute of Theoretical Science at the University of Oregon. Hsu is a startup founder (SuperFocus.ai, SafeWeb, Genomic Prediction, Othram) and advisor to venture capital and other investment firms. He was educated at Caltech and Berkeley, was a Harvard Junior Fellow, and has held faculty positions at Yale, the University of Oregon, and MSU.
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