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- [00:01]
Bell Lin
This episode is brought to you by indeed. Stop waiting around for the perfect candidate. Instead, use Indeed sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate. C According to Indeed data, Sponsored jobs have four times more applicants than non sponsored jobs. So go build your dream team today with Indeed. Get a $75 sponsored job credit@ Indeed.com podcast. Terms and conditions apply. Welcome to Tech News briefing. It's Friday, April 10th. I'm Bell Lin for the Wall Street Journal. You may have heard of hacker houses in Silicon Valley, young founders living and working together to build the next big tech company. Now there's a new generation of houses for AI founders, often college dropouts who feel like they don't have time to waste in chasing their AI dreams. Then, in a different area of technology, China is surging forward. The country's biotech sector has become one of the world's hottest sources of new drug ideas, and US Drug makers are keenly aware of where to find the latest innovations up first. Starting a company might just be easier than ever, thanks to AI. And some young founders are making the case that finishing college isn't worth it while they get a head start on their startup dreams. WSJ reporter Kate Clark joins us now to discuss this latest generation of young AI founders and why VCs are stepping in to pay their bills. So Kate, why is it so attractive for young people to drop out of college and work on AI startups these days? Well, why don't they just wait until they graduate?
- [01:48]
Kate Clark
I think that they feel like there's maybe one year, maybe two years if you're being generous, where there really is an opportunity to build something entirely new. And if you don't jump in right now, then you miss the opportunity entirely. And I mean, that's amongst investors. There's this growing sense that you're not really AI native unless you are a really young person. So there is a little bit of a ageism I think happening. And you're seeing investors really like recruit some of these 18, 19, 20, 21 year olds and handing them 5, 6, $7 million. And that is becoming much more common than you would have seen several years ago. And what I'm mostly seeing, which is like people who are not yet even drinking aids that are raising quite a lot of money.
- [02:32]
Bell Lin
And why are some VCs even covering rent and housekeeping expenses for their young founders?
- [02:38]
Kate Clark
It's very competitive kick funds the best AI talent. These investors just really want to make sure that these AI founders are spending pretty much every waking moment working. And so they thought through like, how can we help ensure that? I think that that's what they landed on is like, we can make sure that they have everything that they need. They don't need to spend one second worrying about where are they going to live, how are they going to get car insurance, all of those little things. They feel like if they can just kind of remove that from the equation, then they can be 100% hyper focused on their company 24, 7.
- [03:10]
Bell Lin
Can you also paint a picture for us of what this current wave of AI founder homes looks like?
- [03:16]
Kate Clark
It's not as exciting as you might envision having gone to some of these places. It's not as like kooky crazy as you would probably think. And these founders are not really partying, they're very serious. So for the most part they just kind of look like any apartment that you might expect like a 22 year old to be living in. It's pretty sparse. They don't have a lot of furniture. They had stacks of leadership books, books about artificial intelligence. Things that you would expect from somebody who's putting everything they have and all their focus into like the startup tech Silicon Valley world and who doesn't have a lot of free time to do much beyond that.
- [03:49]
Bell Lin
And what do these young founders say about actually having their builds covered? Does it make a difference?
- [03:55]
Kate Clark
They're stoked about it. I don't think that a lot of them have that much perspective on anything different. You're talking about a bunch of people who've just dropped out of prestigious Ivy League universities where they were getting their meals in the cafeteria, they had a dorm, they're being taken care of by their investors. I don't think that they really know that much different because I haven't really found many older founders who are doing this right, because the older you get, usually the more responsibilities you have. Like you might have kids, you might be married. That kind of removes you from participating in this kind of crazy VC house lifestyle.
- [04:26]
Bell Lin
It's also fascinating that there's a sort of like cachet to being a dropout, which also isn't totally new, but that it's, yep, kind of returned this time around.
- [04:35]
Kate Clark
Yeah, it's a trend. Almost like these students are seeing their friends do it or their peers or people they admire and they're like, well, what am I doing sitting in a classroom when I could be raising $100 billion and building the next great thing in AI? And we are in this moment where, yes, we're very much in a bubble. There's a lot of enthusiasm. There hasn't been any correction. So you're going to continue to see people jumping in. And of course, when things do shift, that trend will shift back as well. But for right now, we're only going up still from here is the way it seems. And so I think we can expect to see a lot more of this.
- [05:06]
Bell Lin
That was WSJ reporter Kate Clark. What do you make of the latest wave of young AI founders? If you're a listener on Spotify, leave us a comment with your thoughts. Coming up, China has become a leader in biotech and that's affecting drug makers and pharmaceutical firms here in the US we dig into these shifting dynamics after the break. Refreshing Wild Cherry Cola meets Smooth Cream, the treat you deserve. Pepsi Wild Cherry and Cream Treat yourself. Biotechnology is an incredibly competitive, research driven field. Meaningful advancements can mean breakthrough drugs and potentially billions of dollars for their manufacturers. While the US has long been the leading player in biotech, China has become increasingly innovative in the space and that means American research firms and pharma companies can't afford not to pay attention. WSJ reporter Peter Loftus joins us now to talk about China's rise in biotech and how US Companies are reacting to the power shift. So Peter, you write that not too long ago, China was not a major player in drug research and development and its companies were mainly making things like pharmaceutical ingredients or generic drugs. What changed?
- [06:37]
Peter Loftus
Well, what changed was a lot of investment by the Chinese government as well as the private investors in China to really make a priority of building up this biotech biopharma ecosystem that placed a lot more emphasis on more cutting edge research so that they could produce these companies, these startups that were coming up with new drugs for different diseases that were really innovative and much more so than had been the case in the past when, yes, when China was, you could say, farther behind on the innovation spectrum.
- [07:15]
Bell Lin
What are some of the pharmaceutical or research areas where China has shown that it has a true advantage?
- [07:21]
Peter Loftus
Drugs have become a lot more complex over the last 20 years or so. So you have much more innovative ways of trying to combat disease using drugs like biologics, which are basically like drugs that are made in living cells and have proteins and are really much more targeted to a disease than the way drugs were made in the past. That's the kind of thing that China is doing more of. And so one example is something called an antibody drug, conjugate, which uses both like a traditional small molecule like you would find in a pill, but also combines it with an antibody, which is a more advanced type of treatment. And its main application is in cancer, where the basically by using this sort of dual approach, researchers think that they can deliver chemotherapy type drugs to cancer patients, but in a more targeted way, so that it gets more at the tumor, causing less collateral damage like we've all heard about with chemo.
- [08:25]
Bell Lin
And what kind of implications does China's biotech prowess have for US Drug makers?
- [08:30]
Peter Loftus
Well, it has a few implications if you're a big company, like the names that we've heard of like Pfizer, Eli Lilly, Merck. You know, the way those companies have operated for a number of years now is that they have their own in house research labs and they spend a lot of money and do a lot of science trying to find new drugs for diseases that have been tough to treat with drugs in the past. But they've all shifted to kind of also look beyond their own labs. Because in the last 20 or more years, there have been a lot of biotech companies, small companies, which have primarily been in the US that are really doing cutting edge drug research. And what often happens is a small company will do really good work and come up with a really good drug, but it's a small company and so it doesn't have the capacity to really do the big trials or get that drug commercialized. And so they either get sold to a big pharma company or they license the rights, and then that drug basically becomes the next big product for a company like Eli Lilly or Merck or Pfizer. So for many years, the main base of operations for those biotech companies that were funneling their pipeline to big pharma was in the US but now what we're seeing is there's a lot more of those in China. And so the implications for the big companies is it's like another whole source of this cutting edge innovation where they can fill their own pipelines with these externally discovered drugs. And for the moment, at least, at costs that are less than when they do similar deals with US Companies.
- [10:10]
Bell Lin
And from a geopolitical lens, why are there now also national security concerns associated with China's advancements?
- [10:17]
Peter Loftus
One is just the pure competitive threat, a sense of policymakers not wanting the US Biotech ecosystem, which has long been the strongest in the world, not wanting to lose that position. There are concerns about national security just because there have been issues in the past where there have been data integrity issues with Chinese companies doing clinical trials.
- [10:40]
Bell Lin
Are China's advancements changing anything about how and which drugs are developed in the United States.
- [10:47]
Peter Loftus
I do think that Western companies and investors are becoming more aware of what's being developed in China. So I spoke to a consultant who advises both companies and investors on various deals of all kinds. And one of the things that he told me is that now when, say, an investor or a big company wants to invest in or license the rights to a drug from a smaller company, even if that smaller company is in the US they're doing a lot more due diligence about whether that same drug category is being developed in China. And so it's affecting those investment decisions that are basically asking the question of whether, say, an American or European biotech is really as cutting edge as it seems to be.
- [11:38]
Bell Lin
That was WSJ reporter Peter Loftus. And that's it for Tech NEWS Briefing. If you're a listener on Spotify, be sure to leave us a comment. Today's show was produced by Julie Chang. Jessica Fenton, and Michael Lavelle wrote our theme music. Our supervising producer is Katie Ferguson. Our development producer is Aisha El Musleam. And Chris Sinsley is the deputy editor of audio for the Wall Street Journal. We'll be back later this morning with TNB Tech Minute logging off for the weekend. I'm your host, Bell Lin. Thanks for listening. Hey, this is Telus Demos and I'm Miriam Gottfried. We're reporters at the Wall Street Journal and The hosts of WSJ's take on the Week. It's a weekly show that gives listeners a leg up in the world of markets and investing. From the Fed's moves to market bubbles, we dive into the biggest deals, key players and business news ahead. If you're looking for more news and tools that you can use to help navigate the markets, consider becoming a subscriber to the Wall street journal. Visit subscribe.WSJ.com take on the week. To subscribe now.