Thread by @kevinsxu

1/ Been struggling to find an elegant analogy to explain all this China tech crackdown + regulatory changes.

I think I've found it.

China is removing 40+ years worth of "startup debt"

Lemme explain 🧵👇

2/ Opening & Reform in 1978 marked birth of China the startup

Deng was founding CEO, looking for product-market fit, experimenting w/ FDIs, Shenzhen (a fishing village back then) etc

40+ years later, it mostly worked, but China accumulated a lot of "startup debt"

3/ Every successful tech co needs to clean up its "startup debt" when reaching maturity; most don't survive that long

Takes usually 8-10 years

$FB's transition from Move Fast & Break Things -> Move Fast with Stable Infra happened 10 years after founding

4/ Removing startup debt always take longer than planned. $FB still working on it; IG was just down earlier this month

Growth also must continue, can't stop shipping features, just slower w/ more code review, testing, a longer compliance check list

Same happening in China...

5/ Everything mappable to some kind of "debt":

Literal debt: Evergrande
Tech debt: data governance/privacy + cybersecurity rules
Regulatory debt: antitrust, fintech
Cultural debt: non-profit AST, limiting minors playing video games

All happening under new CEO of China Inc: Xi

6/ Products are still shipping, just less headline-grabbing

$BABA shipped "Singles Day 2021", 8.5% growth YoY, not bad, not spectacular

AliCloud shipped new custom chip + open sourced tools to bolster #RISCV. Hugely important strategically but boring 🥱

That's the "new China"

7/ For a startup “removing startup debt” usually slow things down in short-term but creates better growth for the long-term

Same likely happening in China, will just take longer

Smart folks like @_ram_ @chrishuskey @OctahedronCap seem to agree
…f-4fe8-92ca-0d0f7dae4fd1.filesusr.com/ugd/7a471b_59e…

8/ No pain, no gain.

See full post: Removing China’s “Startup Debt” 👇
interconnected.blog/removing-china…