AI Pioneer Lee on Moonshot's Launch of Kimi K3

0:00 First of all, just your thoughts on the latest news of the Kimi K3 model. How is this changing the playing field, including for you? It is an excellent model. We've tested it. It's quite good, and we'll be using it, in our products. I think we're if we kind of look just look at the trajectory, the models keep getting smart better and smarter, and there's there's no end in sight. And that's something I think that, underscores the whole improvement. We also see open source catching up, gradually with the, the closed source narrowing the gap. So it looks like that's what it signifies. And having an open source model actually is great for enterprises because they want on premise deployment. They don't wanna send their data to the cloud. So I think that's probably the bigger news. There will continue to be good models in The US and China, but I think the important thing is it's getting so smart. We gotta learn to use it for the most, important tasks.

0:57 Your company also has your own foundational model, the e series. So how do you see this relationship with Kimi? Is it a competitive or a or a collaborative relationship? We think we want to focus our energies on building applications. And we think with these models getting so good, we're better off building applications on the very, very best model and using their intelligence to change the financial statement of companies. Because the the models, you know, three years ago, were like an average human, but now they're smarter than all humans. So it's such a pity if these models are only applied to simple tasks. So we are we are building in my company a product called Boss AI. It is a product designed to give the CEO the god's eye view over all the data to make all the right decisions that will move the dial in the financial statement of the company. So that's where our company has pivoted to since about a year ago.

1:53 So that means am I right to say you're no longer going to invest on fine tuning and expanding your financial, foundational model? You're working with other companies and building applications on top of it. Well, ecosystem is emerging, and we're very relieved and happy with this choice because our expenses have dropped tremendously over the last year so that we can get to profitability fairly soon. I remember you mentioned that you want to be the first highly profitable AI two point zero company. Where are you on that milestone?

2:24 We're our bookings have increased, you know, three to four times from last year, and we're busily hiring, fulfilling. And because the BOSS AI product is so understandable, right, many CEOs think about, I wanna do AI transformation. What should I do? Ask my CIO. Ask the IT department. Install customer service. Do legal. Do finance. But in end of the day, all they have is a bunch of sugar coated demonstrations, but no substantial impact. So we feel that our BOSS AI is the first product of its kind that superpowers the boss and really gives him or her the chance to gain insight, make the right decision, see the risks, and help the company become more profitable. I use it every day. So to the extent our business has developed well, is thanks to BOSS AI that's helped us, taught us how to sell the product to the customers.

3:22 Okay. So some personal experience with your own product. So what's your timeline to profitability? It should be soon. Sometime next year. Okay. Amazing. And tell me about your client uptake rate. What are you foreseeing in terms of the demand pipeline going forward? Well, we're getting more demand than we can handle because in order for us to do the business, we do global business. So we service not just Chinese enterprises, but also global enterprises in Asia, South America, Middle East, and so on. So our challenge, frankly, is finding English speaking, Arabic speaking, and other language speaking people who are qualified to be either consultant or FTEs who can fly to those countries and work with their teams to AI infuse.

4:10 So I think the limitation of our business, if there is one, is our ability to hire. Now as we get into businesses, we'll see our the uptake grow, and also there will be license revenue, subscription growth. So we can definitely foresee a single digit sorry, hundreds of percent of growth for the coming years. But we are not a token factory, so you're not gonna see a 50 times growth. Okay. So triple digit growth still. Yeah. We have been hearing that the government might be mulling restrictions on foreign access to advance AI models in China. Does this is this going to impact your business in any way, especially your overseas portion of the business?

4:54 I I I know nothing about what you the the rumor you talk about, but we sell any model legally in any country. So if if there is, you know, a Spanish buyer that wants to use a legal model to operate and they want to use an American model or a French model, we'll do that. So we're agnostic, and we support every model from every country, but we operate it legally in the country in which our product is sold.

5:23 Let's talk about some of the export controls. Right? With restricted access to the advanced GPUs from NVIDIA's, how serious is the shortage of GPUs domestically? How is this is this constraining the pace of your innovation or development, or is it raising the cost of your business? Well, I think globally, there's not enough GPU because the entire market is blossoming. I think exports control was an imaginative but unsuccessful effort to contain China. It has failed. So to whatever extent China faces a shortage, it's not from the export control. It's from either businesses being frugal, or it's about the supply not being sufficient, or it's about businesses choosing not to buy. So the export control just simply has not worked.

6:13 And given the sort of two track tech ecosystem, in The US, it's been the leads in the hardware. In China, it's been mainly the innovation on the software side. Where do you think China and US stand in this race? Maybe in three to five years. Well, I think in models, US will make a lot more money, but China will have a larger market share because of open source being a powerful distribution and on prem premise deployment being such an important thing to enterprises. On applications, I think US will have more profitable enterprise applications. But when it comes to, sort of heavy lifting, like what we do, and what companies like Palantir does, we actually think the the Chinese flexibility, willing to work hard, willing to fly anywhere to help our customers be successful, is going to be a specialty that makes us stand out in this category of, enterprise AI transformation. In consumer software, both sides will come up with ideas, but the Chinese large companies like Tencent, ByteDance will clearly beat the American companies in coming up with clever AI applications. And then in hardware, China is ahead as we know.

7:24 So you talked about how The US might have more profits and China might have more market share. Then therein lies the question around monetization. Given that many of these Chinese AI Models are priced at a fraction of US cost, is this sustainable? Well, history has told us if you can win the hearts of users, even if it's a free product, there will be ways to figure out how to monetize later. But we've seen that with, Internet applications, with websites early with social media, with, you know, products like TikTok. So I there there will be waste. If there is the companies continue to care about users, build good products, and win the hearts and minds of the users and developers, I think money will be made in the future. But in the short to medium term, the enterprise money favors the American approach.

8:16 Going back to your company, I know you said you are reaching profitability very soon. What are your fundraising plans, your timeline to an IPO? We hope very soon also, but a lot of more work has has to be done to be eligible for filing for IPO. But I I think our our financial numbers are ready right now, but it's a it's a matter of going through the process. Is it going to happen in 2027? I hope so.

8:44 Alright. Tell me as well, when you talk about selling your BOSS AI product, how has how have you been able to compete with the suite of enterprise solutions there. You have benchmarked yourself against Palantir in the past. What is the unique selling point or advantage that you have against the competitive landscape here? Okay. So we sell globally. We we don't sell sell much to The US because the market is not so receptive. But other than US, we sell globally. I think Palantir and we have the only two products that are good enough to do AI transformation and do it from the top and show results within two to three months. So we're very proud to be in that company. We we are very respectful of Palantir who is a pioneer in the space, and we're very thankful to them because they don't come to the countries where we have the most business. They choose to focus on US and American allies, and those are exactly the company the countries we have trouble selling to. So we have a two player horse race, a two horse race where the other horse chooses not to run-in the tracks that we're entering.

9:54 So the big question then, if these US players start to look overseas to those markets and you're, of course, constrained in The US market because of geopolitical head headwinds, I mean, how do you how do you see things playing out? Well, actually, I think the approach is is while the products are similar, the approach is quite different. Palantir chooses to do a lot of defense military. We don't touch that. And also landing in Asia, for example, is going to be a difficult proposition, for Palantir even if they choose to. And also their guiding principles chooses not to come to these countries.

10:33 So all these reasons combined, I think it will be unlikely. Also, they're doing extremely well. You know, if I were Alix Karp, for the same, you know, 100% investment, he'll make so much more money going to US, Europe, and Japan. I I can't imagine why he would consider coming to our countries. But I do also think there is a first mover advantage, and we're already gaining that in many of China and the Belt and Road countries.

11:01 So when that happens, I I think it'll become a very defensible moat. I wanna ask your take on where do you think we are in the AI development phase, especially in China because they are now concerned about whether or not we are in a boom, you know, whether we are in a very unhealthy period of price competition. Where do you think things stand? Well, I think what's really going well for China is government is hugely supportive, and we're gonna see companies that are worthy of going public go public and raise the money they need to to deliver their business goals. And we're also seeing a phenomenal consumer and enterprise enthusiasm about AI. I mean, you see the show here. Everyone's so excited. And also the poll in China shows 84% of the people think AI is a great thing, whereas in The US, it's under 50%. So I think, you know, customer consumer optimism is important. Having the technology is important. Having a supportive government policy is important. We do have these. That said, there are some issues with, enterprises, willingness to pay substantial fees for AI, that might be a challenge. And and other than that, I think everything is going to go extremely well for China, with an unsell an unassailable position of at least number two in AI and possibly number one in many of the key areas.