The AI Pioneer Who Wants to Replace Teachers With Algorithms

Derek Li pulled his sons out of school to be taught by artificial intelligence. Now he’s betting the US is ready for machine-led learning.

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Episode Transcript

Speaker 1 (00:00):
The AI pioneer who wants to replace teachers with algorithms,
read by Mark Lee on a scorching July afternoon in Shanghai,
dozens of Chinese students hunge over tablet screens, engrossed in English,
math and physics lessons. Algorithms track every keystroke and the
second spent pondering each question. A pair of teaching assistants

(00:22):
linger quietly in the background, intervening only when necessary. For
Derek Lee, the forty seven year old founder of Chinese
et tech company Squirrel ai Learning, this is the future
of education, adaptive software powered by artificial intelligence that's able
to pinpoint knowledge gaps, measure progress, and adjust lessons on
the fly. He compares it to autonomous driving, where a

(00:46):
computer takes over the main tasks under minimal human supervision.
You can't keep following the old playbook, says Lee, who
withdrew his own fourteen year old twin sons from a
prestigious private school in Shanghai in January so they could
be home schooled using its company's platform. What we're modeling
is truly groundbreaking around the world. The use of artificial

(01:07):
intelligence in education is accelerating in the US, OpenAI has
partnered with the California State University System to bring its
software to five hundred thousand students and faculty alphabet inks.
Google has also struck deals with public schools and universities.
Analysts at grand View Research estimate the global market for
AI in education could be worth more than thirty two

(01:30):
billion dollars by twenty thirty. Squirrel's business is being fueled
by relentless academic pressure in China, where success in the
Grilling gau Cow college entrance exams can determine future career
paths and social mobility. The company has become one of
China's best known adaptive learning brands, with over three thousand
centers run by franchisees across a country and one point

(01:53):
two million students subscribing to its content. Last year, Squirrel
set a Guinness World Record for the largest online math lesson,
with one hundred twelve thousand, seven hundred eighteen students logged
on in twenty four hours. Li says it's now in
the verge of opening centers in the US, with the
potential initial public offering in twenty twenty seven, either on

(02:13):
the Nastak or in Hong Kong. The growth has attracted
customers like Zuhai Bao seventy seven, who brought her grandson
to a squirrel self study center and Shanghai every day
during the summer vacation. The sixth grader, who'd been bullied
in miss school for most of last year, has gone
from failing to being in the top half of his class.
Unless his place shuts down, will keep coming back until

(02:37):
he gets into college, Ju said soft skills. Lee grew
up in Jung Joe, the capital of Central Hanan Province.
A gifted student, he won a national Math Olympiad and
was admitted to Shanghai Jiaotong University's prestigious Computer science Experimental
program while still in high school. Socially awkward in school,

(02:58):
he couldn't even speak to girls liked, Lee pushed himself
to develop soft skills by running a book club, a
drama society, and a school newspaper. After graduating with a
degree in international economic law, he ran a traditional after
school tutoring business in his hometown before joining a larger
tutoring firm in Shanghai and running an English language program.

(03:20):
But Lee struggled with the same problem many such centers
face recruiting, training, and retaining enough good teachers to meet demand.
His own father was a super greade English teacher honored
by the government. Lee believed that technology could standardize such
excellence and make it accessible to everyone, so he founded
Squirrel Ai and twenty fourteen. Early backers included Yu min Hong,

(03:43):
the founder of tutoring company New Oriental Education and Technology Group,
and Wall Street trading giant Susquehanna International Group. By twenty
twenty one, thousands of tutoring firms were using Squirrel software,
generating six hundred million yuan or eighty four million US
dollars in sales a year. Then President Shi Jinping banned

(04:04):
for profit after school tutoring practically overnight revenue collapsed to zero,
leaving Lee with a nine hundred million yuan of debt,
two thousand employees, and death threats from creditors. He quickly pivoted.
Adapting to the new regulations, Lee sold learning tablets priced
from two hundred dollars to two thousand dollars to franchisees

(04:24):
running newly established Squirrel branded self study centers, and directly
to families. He repositioned the company as a widely accessible
technology platform that could support students, whilst all aligning with
the government's broader goal of tech innovation. There's no blackboards
nor teachers, he said. This is not tutoring, it's self studying.

(04:46):
Reality TV. Tall and slim, Lee cuts a charismatic figure.
He avoids spending money on advertising, saying a company's founder
should be its most effective spokesperson. To that end, his
account on du yin the Chinese version of TikTok, is
filled with success story videos shot by a professional crew.
Titles include my net worth is one billion? You on,

(05:09):
but I don't leave anything to my kids? And happy
education in the West is a lie? Working hard is
the only solution. Lee has also starred on reality TV,
grilling job candidates on a show similar to The Apprentice,
and giving advice to troubled young couples and irony. He
admits given his own divorce, but he knows his target audience.

(05:30):
Many of squirrel AI's customers are young moms. There's an
air of focused intensity around Lee. A recent weekly catch
up call with his tech team ran to four hours
past midnight for Seattle based employees as he growed them
on technical details. You have to hire the smartest scientists.
He says, lead down a bowl of avocado and sam

(05:51):
and salad during the call before heading to the gym
for a leg day. Since COVID, he works out four
times a week and his assistant scouts out jims When
he's overseas Ease, he spends about half of the year
traveling in the US and Europe, meeting with educators, officials,
and AI specialists. Joline Leang, who quit her family catering

(06:11):
in beverages business to join Squirrel in twenty sixteen and
as president of its US division, sees similarities between Lee
and Apple Inc. Co Founder Steve Jobs. Standing at six'
to one or one hundred eighty six, centimeters he is
a similar bill To. Jobs favors a simple, wardrobe black
UNICLOAD t shirts and, sweatpants and has the same demanding.

(06:32):
Expectations he always goes to. Extremes if he asks ten
things of, you he pushes himself to deliver. Fifteen liang
says he's wildly ahead of the, curve chasing innovation like a.
Madman knowledge Points squirrel software is built around adaptive, learning
using algorithms to continuously personalized lessons for. Students each subject

(06:55):
is broken down into thousands of knowledge. Points an initial
diagnostic TEST i dentifies as student strengths and weaknesses before
plotting out an individual learning. Path students receive real time
feedback on each answer and a dashboard showing their. Proficiency
competitors include McGraw, Hill, Inks alex And John wiley And, Son,

(07:15):
Inks new And alta in THE us And Century tech
in THE. Uk But Chris, deed a professor in learning
technologies At Harvard University's Graduate school Of, education Says squirrel
stands apart due to the huge amount of data it is,
collected having worked with millions Of chinese students for a.
Decade both CLASSIC ai and large language models work on,

(07:36):
data and the more data they, have the better they,
get Says, deed who has Advice squirrel but does not endorse.
It squirrel has a potentially very valuable resource in terms
of its quality of ITS. Ai lee is fond of
showcasing that quality THROUGH ai versus human contests and says
his software consistently produces better. Results earlier this, month the

(07:58):
company kicked off its boldest trial, yet one thousand children
studying full time for sixty days five hundred Using squirrel
software and five hundred working with human, teachers with their
progress measured through. Tests lee says it's Like Jackie chan
taking Out Iron. Man no, contest but skeptics are and
convinced THAT ai can fully replace traditional. Schooling critics argue

(08:20):
that WHILE ai can drill facts and prepare students for,
exams it cannot, inspire mentor or foster social, skills and
does little to cultivate creativity or critical. Thinking it's pushing
students in the opposite direction THAT i think they need to,
go Says Yuta, trevoranos a professor at The Ontario college
Of art And Design university who specializes in inclusive. Learning education

(08:44):
does need rethinking in AN ai, era but USING ai
to teach or to tutor requires much more careful, thought she.
Says lee acknowledges such, concerns but maintains That squirrel software
is sufficient to cultivate, most if not, all of those.
Skills he also says that while school teachers play an
irreplaceable role in, education that role should evolve into analyzing

(09:06):
data FROM ai tutors and acting as. Counselors taking a.
Gamble the, rise, fall And rise again Of lee's venture
is a case study of the challenges of doing business In,
china where there's an ever present risk of regulatory. Change
Since squirrel's near, Collapse lie says he's become more. Practical
he sold his Customized Lincoln stretch limousine and rents a

(09:28):
forty square meter or four hundred and thirty one square
foot apartment near A shanghai. Offices his Trifolding huawei smartphone
doubles as a, tablet enabling him to work. Remotely he
eats simple meals made with a rice cooker he keeps
on the back seat of A zeker. Suv lee believes
that being a GOOD ceo means taking a gamble and

(09:49):
sticking with it from the. Outset he sought to create
something new rather than emulating existing tutoring. Apps he poached
engineers For Microsoft, Corp amazon Dot, Com. Inc And Oldman
Sachs Group, bank as well as world CLASS ai scientists
that Include Tom, mitchell who founded the machine learning department
At Carnegie Mellon. University mitchell served as CHIEF ai officer

(10:10):
At squirrel for about two years and says he remains
in touch with the. Firm lee aims to expand in
THE us through franchise run self study centers and envisioned
squirrel as The kuman of THE ai, era referring to
the pencil and worksheet program founded In japan in the
nineteen fifties that's become one of the largest private tutoring
businesses in the. World but regulatory change isn't only a

(10:32):
threat at. Home chinese tech companies operating in THE us
are under intense scrutiny and data privacy. Concerns under a
framework DEAL Us President Donald trump is set to discuss
With president Shi, Jinping TikTok's us operations would be acquired
by an investor consortium that Includes Oracle. Corp And grees
And horowitz and private equity Firm Silver Lake MANAGEMENT. LLC

(10:55):
i don't think it will be a smooth. Road it's
bound to be full of, Thorns lee says of entering
THE us. Market if it were a smooth, road why
would we be the ones doing? This ordinary people could
do it, too