Beyond Silicon Valley: Where the Next Breakthroughs Will Come From (#309)

Summary

3 Takeaways™ Podcast, Episode #309 (July 7, 2026)
"Beyond Silicon Valley: Where the Next Breakthroughs Will Come From"
Host: Lynn Thoman | Guest: Mehran Gullah, author of The New Geography of Innovation

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Episode Overview

In this engaging episode, host Lynn Thoman interviews Mehran Gullah—acclaimed author of The New Geography of Innovation—to examine how the global innovation landscape has shifted beyond Silicon Valley and why new technological breakthroughs are increasingly emerging from unexpected places. The discussion challenges assumptions about American tech dominance, explores the rise of China and other key innovation hubs, and provides actionable insights for founders, workers, and policymakers in the era of globalized technology.

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Key Discussion Points & Insights

1. Rethinking American Tech Dominance

• Persistent US Lead, Shifting Second Tier:
  While the US still leads with major tech giants—"America has now nine companies that are worth over a trillion dollars, whereas the rest of the world only has one" (Mehran Gullah, 01:43)—the composition of the next-level innovation nations has radically changed.
• Emerging Global Players:
  Countries like China, South Korea, Taiwan, and Singapore have become integral to critical technology sectors such as semiconductors and AI.
  • "Now that second tier is populated more by countries like China or South Korea...or Taiwan...Singapore..." (B, 02:18)

2. Misconceptions About China's Innovation (Especially in the US)

• Beyond 'Copycat' Stereotypes:
  Gullah contends the main American misconception is that China only innovates at the application level, not in foundational science.
  • "Today the main way in which this misperception of China comes across in the US is mostly that it's all application level innovations and they're not really good at the underlying science." (B, 03:52)
• Chinese Breakthroughs:
  He notes significant foundational research, such as the 2015 Chinese AI paper on ResNet—"the most cited academic paper in any academic field...in the 21st century." (B, 04:10)

3. Invention vs. Deployment: The Electric Vehicle Case Study

• Who Scales Matters:
  Gullah details how the US may invent tech, but China excels at mass deployment:
  • "Globally today, 7 out of 10 EVs sold in the world are manufactured in China. So Tesla is at this point a minority player." (B, 05:16)
• Blind Spots Caused by Tariffs:
  Americans rarely see Chinese EVs due to import barriers, creating a misleading perception of global market shares.

4. Culture, Change & Public Attitudes Toward Tech

• Openness to Transformation:
  In cities like Shenzhen, rapid change is normalized, fostering receptiveness to new technologies.
  • "People just see change as a normal state of being...you don't find the kind of techno skepticism that you see in places like the US." (B, 07:31)
• Western Tech Backlash:
  Contrasts Chinese positivity with the skepticism and backlash observed in US and UK societies regarding new technologies.

5. The Chinese State: Catalyst, Constraint, or Both?

• A Complicated Role:
  The Chinese government is both enabler (via subsidies and support) and threat (with regulatory crackdowns).
  • "Their leaders get jailed, they get exiled...the state helps, and in other occasions the state is literally responsible for sinking entire industries." (B, 10:13)
  • Recent examples: Tencent's value plunge after regulation; edtech sector wipeout.
• Flight to Singapore:
  Many Chinese tech companies are redomiciling for greater stability, reflecting wariness of domestic policy risks.

6. Underappreciated New Hubs

• Who’s Next:
  Other rising players noted are Singapore ("C Group...already worth over $60 billion"), South Korea, and Sweden for their innovation prowess. (B, 12:48)

7. The Myth of AI Democratization

• Concentration, Not Leveling:
  Contrary to narratives from industry leaders, AI foundation models require massive resources, centralizing power further in the US and China:
  • "Making foundation models is not easy...it takes at least $500 million...AI is reconsolidating power among the two large tech players, the US and China." (B, 13:37-14:22)
  • Europe as an example: Only one notable AI foundation model (Mistral).

8. Geography Still Matters in Innovation

• The Return of Hubs:
  Despite the rise of remote work, major companies still cluster in leading cities like New York and San Francisco:
  • "The migration of companies and that migration of talent has gone up and not down. I would make the argument that geography matters more." (B, 15:43)

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Notable Quotes & Memorable Moments

• "[ResNet is] the most cited academic paper in any academic field, not just AI...published in the 21st century." (B, 04:10)
• "7 out of 10 EVs sold in the world are manufactured in China...companies that you would have never heard about, are now manufacturing more EVs than Ford, for instance, or GM..." (B, 05:16)
• "You don't really see those conspiracy theories about technology gaining that much traction in China. They see tech as being the leveler, as the thing that’s going to help them level up against the US..." (B, 08:24)
• "The state helps and in other occasions the state is literally responsible for sinking entire industries...many Chinese companies redomiciling to places like Singapore..." (B, 10:13-10:54)
• "I tend to think that AI is reconsolidating power among the two large tech players, the US and China." (B, 14:19)
• "Even if Hugging Face...was born in Paris...it's now based in New York. The migration of companies and...talent has gone up and not down. Geography matters more." (B, 15:35-15:43)

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Timestamps for Key Segments

• 01:43 — Shifting Map of Innovation: The rise of global second-tier tech powers
• 03:23 — American Misconceptions About China's Tech
• 05:08 — Invention vs. Deployment: Electric Vehicles
• 07:13 — Shenzhen's Culture of Change
• 09:10 — The Chinese State: Help and Hindrance to Innovation
• 12:38 — Underrated Innovation Hubs Beyond China
• 13:19 — Does AI Level the Playing Field or Consolidate Power?
• 15:10 — The Ongoing Relevance of Geography in Innovation
• 16:19 — Mehran Gullah’s Three Takeaways

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The Three Takeaways (16:19)

1. It’s Not Just US and China:
   Innovation races are global—with important roles for Singapore, ASEAN, and Latin American markets.

2. Widening Gap:
   The US and China are accelerating away from the rest of the world in the tech race.

3. Learn from the Nimble:
   Smaller nations like South Korea (Samsung) offer lessons in sustained relevance despite global shifts.

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Tone and Style

Throughout, Mehran Gullah’s analysis is clear-eyed, non-Eurocentric, and global in perspective, challenging listeners to question old assumptions and look past the noise of Silicon Valley boosterism or Western pessimism. The episode provides a nuanced understanding for ambitious founders, business leaders, and policy audiences curious about where—and how—the next big things will be born.

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Transcript

[A]

The personal computer, the smartphone, email, search, social media, electric cars. Almost all of them came from one country and much of them from one zip code. But that monopoly on innovation may finally be ending. So why do some places become engines of innovation, while others, with brilliant people, world class universities, and plenty of capital, never quite get there? Hi, everyone, I'm Lynn Thoman and this is three Takeaways. On three Takeaways, I talk with some of the world's best thinkers, business leaders, writers, politicians, newsmakers and scientists. Each episode ends with three key takeaways to help us understand the world, and maybe even ourselves a little better. Today I'm excited to be with Mehran Gullah, author of the wonderful and award winning new book, the New Geography of Innovation. He traveled to many of the world's leading innovation hubs to answer one question. Why do some places repeatedly create the technologies that change the world while others never seem to catch up? Welcome, Mehran, and thanks so much for joining three Takeaways today.

[B]

Thank you so much for having me. It's a real privilege to be on.

[A]

It is my pleasure. You started by asking whether American tech dominance was ending, but you eventually decided that was the wrong question. What was the better question?

[B]

I think the better question was to look at how the world is changing, despite the fact that it might still be the US that is in a pretty comfortable lead over the rest of the world. I think it's very easy to look at what's happening now and look at things like SpaceX, you know, just making the biggest IPO ever, or the fact that America has now nine companies that are worth over a trillion dollars, whereas the rest of the world only has one. And to think that the world hasn't really changed all that much just because of American leadership at the top. But if you look at the second tier, that is almost all completely reconfigured over the past two decades. If you were to look at one of the most technologically relevant countries in the world two decades ago, that second tier would be almost entirely European. You would have countries like Germany, like France, like the Nordics in that, the uk, et cetera. But now that second tier is populated more by countries like China or South Korea, which plays a big role in high bandwidth memory chips. Or Taiwan, for instance, which is, you know, a critical node in the semiconductor industry. Places like Singapore, which is responsible for the second largest sales of Nvidia chips in the world at this point in time. So it's easy to see the US on top 25 years ago and today and say nothing's changed. But even if you concede American leadership, the map of innovation in the world has still changed significantly in the past few decades.

[A]

So interesting. I think that many Americans have a very narrow perspective and don't see what's happening in the rest of the world. What's the biggest misconception that Americans have about China's tech rise?

[B]

That it is copycat innovation or that it's only at the level of applications but not at the level of basic science? I think every five years the objection kind of moves. So for instance, 10 years ago, the objection would probably be that they're not creating anything of their own. The benefit that they have is that they have this big captive market. They wouldn't let places like Facebook or Google into their own market. So they would create copycat products and reach scale that way. So the primary benefit that China has is a big market and no external competition. I think as of two years ago that changed to, sure, like, you know, they might be very disciplined in terms of their engineering, but if you look at things like AI, they're good at making application level interventions, they're good at making products and services, but not necessarily the underlying scientific breakthroughs that enable those applications somewhere down the line. Resnet is a major paper in AI that came out of a lab in Beijing back in 2015, which at this point is the most cited academic paper in any academic field, not just AI, in physics, in chemistry, across all academic fields published in the 21st century. So I think today the main way in which this misperception of China comes across in the US is mostly that it's all application level innovations and they're not really good at the underlying science, where I think they would be surprised by how well their universities are doing just across the board in terms of rankings, in terms of research output, in terms of quality research output as well. So I think that's the main misperception that I come across.

[A]

Mehran, you've mentioned the difference between invention and deployment. Can you talk a bit more about that difference and what it implies when

[B]

we talk about electric vehicles, for instance? I think in the U.S. even today, people have an association between electric vehicles and Elon Musk and Tesla, because that was the first major company that came up in the US that moved the economy away from gasoline to electric powered engines. But globally today, 7 out of 10 EVs sold in the world are manufactured in China. So Tesla is at this point a minority player. If you look at the top 10 EV manufacturers in the world, seven of those companies are Chinese. And these would be companies that an American wouldn't even recognize. These companies, companies like zeekr, for instance, or Nio or Li Autos, you know, companies that you would have never heard about, are now manufacturing more EVs than Ford, for instance, or GM, for example. So that's a very sort of clear distinction between something that was invented in one place, the U.S. and then that really reached scale in another. And it's easy for people in the US to sometimes not realize that how big a lead China has over that, because, you know, Chinese EVs have 100% tariffs when exporting them to the U.S. so you simply don't see Chinese EVs on American streets, which might make people underestimate how if you go to the Nordics, for instance, if you go to Europe, if you go to Latin America, many parts of Africa, the most common EVs in the streets are Chinese and not American. And I think this is playing out across a range of other industries as well. Like, you know, it's true for lithium ion batteries. The top 10 manufacturers of lithium ion batteries in the world are Chinese, even though the initial breakthrough inventions for lithium ion batteries were made by John Goodenough, who is from Texas, and he made some of those discoveries while based at Oxford University. So it's not something that's limited to smartphones or AI. It's something that we're seeing across the board. Just because you can come up with a new idea doesn't mean that you can take the idea to scale as well.

[A]

So, Mehran, take us inside Shenzhen in China. What changes in a person's imagination when they watch a fishing village become a global tech capital in a single generation?

[B]

I think we sometimes overemphasize the ability to produce technologies and under emphasize the cultural acceptance of those technologies. And if you look at the backlash against tech that has happened in places like the US and even the UK recently, people vandalizing Tesla charging stations, for instance, it's very hard to argue that there isn't a broad based backlash against tech in the us the sort of skepticism or cynicism that you come across about AI as well. You know, the number of speakers at graduations this year who were booed off stage because they talked about AI. You see that less frequently in China where because places like Shenzhen have changed so quickly, people just see change as a normal state of being. And just because a technology is going to, you know, wipe away some jobs is not really dictating the direction in which the technological trajectory of the entire country ought to take, as it is taking in the US where people are constantly talking about putting the brakes on AI. And I think in figuring out which country is pulling ahead compared to others, we don't just need to look at their capacity to produce technologies, but also their capacity and their willingness to absorb those technologies as well. And in China and in places like Shenzhen today, you don't find the kind of techno skepticism that you see in places like us. In places like China, you don't really see those conspiracy theories about technology gaining that much traction in China. They see tech as being the leveler, as the thing that's going to help them level up against the US in specific and the west more generally.

[A]

Shenzhen to me is just one example of many, many places in China that went from being a poor fishing village, essentially subsistence level, with people on bicycles, to now a tech capital in the West. We often assume China's political system is a constraint on innovation. What did you hear in China that complicates that view?

[B]

I actually hear the opposite in the west more frequently. So I agree with you that there is a factual basis to say that the Chinese state is an impediment to technological development, as there is a factual basis to say that the Chinese state helps technological development in China. What I frequently come across in the US is people saying that these companies like BYD or Tencent, et cetera, they're doing very well because the state protects them. It's because the state provides subsidies, it gives loans, it facilitates everything that they do that these companies have grown to the level that they have. And yet when I go to China, I see something very different, which is entrepreneurs who are quite concerned by the degree to which the state has managed to decapitate its tech sector. Go back to 2021, Tencent was almost a trillion dollar company and because of state actions it lost two thirds of that value. And that happened because the Chinese state decided that it's going to put some curbs on the gaming industry. And Tencent is a big player in the gaming industry, not just in China, but globally as well. I can give you one example after another. The entire edtech industry in China went up in flames because the state decided one morning that education ought not to be a sector for private profit making. So when I look at China and I talk to Chinese entrepreneurs off the record over there, you know, they would often emphasize that they hear in the US and in the Western press, very often people over explaining what's happening in China in terms of state subsidies. Or you know, market driven capitalism. I personally don't think that the success of companies like BYD or Catl or Tencent or Alibaba can be attributed to state actions. I think quite to the opposite. If you can point to subsidies at one end, you should also point at the fact that they also get fined, their leaders get jailed, they get exiled. You need to balance both perspectives. In some occasions the state helps and in other occasions the state is literally responsible for sinking entire industries. Which is also why you see so many Chinese companies redomiciling to places like Singapore. Because they feel that they would have more breathing room in places like that. With ByteDance, for instance, Hill House, Capital, Shein all now redomiciling to Singapore and it's so that they can put some distance between themselves and Chinese state.

[A]

And what do you think accounts for the rise of China as an innovation hub?

[B]

I think it's often the opposite of reasons that people give for why innovation happened in places like the U.S. i think it's a fact that it's just come up in much harsher circumstances than the much more comfortable situation that Bay Area companies have come up in in the past sort of 60 years. But there has been a lot of state support in the form of, you know, how did Silicon Valley first come up? It was because Fred Turman came back from the second World War and brought a lot of defense contracts with him which laid the foundation for the semiconductor industry. And every other Silicon Valley company came from Fairchild Semiconductor. And that's how the entire place got its boot sequence. Whereas you can't really find that one event in China or one event in Shenzhen that birth the entire region over there. The things are more poverty that stretches back generations and you know, people putting in that extra hour working, you know,996 just because this is the one opportunity that they have to climb out of the generational poverty that they're coming from. So again, not the same sorts of explanations that you come across in places like the Bay Area or Silicon Valley more generally.

[A]

What other countries are we underestimating when you think about creating the next massively successful companies?

[B]

For me, Singapore would be one, I think the C Group for instance, over there, which is already worth over $60 billion, even though the company is around 15 years old, it was at one point worth over $200 billion. One of the fastest growing companies in the world. Places like South Korea for instance, would be right up there. For me, places like Sweden would be playing an important role. So I think those are the countries that I would put on that second

[A]

tier, does AI make innovation more global or does it make the strongest hubs even stronger?

[B]

My contention would be that it's the latter, even though the popular thing to say is that AI is a leveling force. And if you look at the statements by people like Jensen Wang and Sam Altman, they always say that AI is a leveling force and that AI is democratizing technology because the work of 10 people can be done by one person.

[A]

But.

[B]

But I think it's just a clear fact that making foundation models is not easy. You can no longer even make foundation models within the constraints of a university department. Today, if it takes at least $500 million to come up with even a borderline competitive foundation model, then how many commercial entities out there are capable of doing that? And that's one of the main reasons why, if you look at the entire European continent, there's only one notable foundation model, which is the ones produced by Mistral that are relevant anywhere else in the world. So I tend to think that AI is reconsolidating power among the two large tech players, the US and China. And then within these places it is consolidating power within a handful of companies. Anthropic OpenAI Meta Google we just have this impression of the tech economy as a place which you can just start a company in a garage and then go conquer a trillion dollar market. But if you look at the AI industry at least it is striking how most of the winners of the AI industries are existing large hyperscale companies. Google, Nvidia, Microsoft in China, companies like ByteDance, companies that in some form or the other predated the AI boom in general. And that's because of the amount of capex expenditure that is going into both the hardware and the foundation models layer of AI and the fact that data centers are not that cheap to build

[A]

for a founder or an ambitious young person. How should this change how they think about where to live, work or build?

[B]

You know, when Covid happened, I read so many pieces in very reputable news outlets arguing things like geography does not matter anymore. This is the beginning of having distributed teams and you no longer need to be in Silicon Valley. And you know, you can build the next big thing in Raleigh, Durham or wherever you might be based. And yet if you look at the most consequential companies in the world, they're still coming from those handful of places. And not just that, the few companies that are coming from other places take no time to migrate to where all the action is. So even if hugging face for instance was born in Paris at Station F. It's now based in New York. It's not as if places like Europe are not producing interesting companies, but they are moving very early in the game to either New York or to San Francisco. And I think that migration of companies and that migration of talent has gone up and not down. So I think I would make the argument that geography matters more.

[A]

So interesting that geography is more important. Mehran what are the three takeaways you would like to leave listeners with about innovation?

[B]

The three takeaways would be it's not just about the US and China. I think other countries are showing up with the race as well, and it would help to keep an eye on what's happening. The race between the US and China is also happening in Singapore. It's also happening in asean. It's also happening in markets in Latin America, for instance, and I think it would be helpful to look at these places as well. The second thing to understand would be that for a lot of countries, the gap between the US and China and them is increasing and not decreasing. Both the US and China are really pulling away from the rest of the world and really opening up a massive gap between them and the rest of the world's economies. I think the third one would really be try and find models of countries that have managed to make themselves relevant to the global economy in the new technological frontier, despite being the disadvantages that they had. These smaller countries have often figured out the solution to a problem that the bigger countries are still struggling with. So I think places in the US would learn a lot from asking the question how is it that Samsung was the only smartphone manufacturer that was a big deal in the 1980s when there were handhelds, and also in 2026 when the entire industry has changed and Nokia, Ericsson, and all of those are dropped off, but Samsung is the only one that's still relevant.

[A]

Thank you Mehran. This has been fascinating. I really enjoyed your book the New Geography of Innovation.

[B]

Thanks so much Lynne. I'm really glad that you asked very insightful questions.

[A]

If you're enjoying the podcast, and I really hope you are, please review us on Apple Podcasts or Spotify or wherever you get your podcasts. It really helps get the word out. If you're interested, you can also sign up for the Three Takeaways newsletter at 3takeaways.com, where you can also listen to previous episodes. You can also follow us on LinkedIn, X Instagram and Facebook. I'm Lynne Thoman and this is three Takeaways thanks for listening.