AI model leads may be easier to catch than expected

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 55:05

   which is two years ago or three years ago, for sure, you would have said, wow, OpenAI is like way out ahead. And like, it's probably going to be impossible for everybody to catch up. And then it's like, okay, well, Anthropic caught up. And so, but, you know, they came out of OpenAI and so they had all the secrets, you know, whatever. And so, knew how to do it. And so, okay, they caught up. But surely nobody can catch up after them.

2. 55:20

   And then very quickly after that, there were a raft of other companies that caught up very fast. And XAI is maybe the best example of that, which is like, you know, XAI, you know, Elon's company, XAI is the company name, Grok is the consumer product version of it. XAI basically caught up to, you know, state-of-the-art OpenAI Anthropic level in like less than 12 months from a standing start, right?

3. 55:40

   And so, and again, that kind of argues against any kind of permanent lead, right, by any one incumbent that's just going to basically be able to lock the entire market down, like if you can catch up like that. And then as we've discussed, you know, the China part is all new in the last year, right? The DeepSeek moment, I think, was in January or February of this year, right? So less than 12 months ago.

4. 56:01

   And so, and now you've got like four Chinese companies that have effectively caught up. And so, you know, so it's like, all right, I mean, again, these are trillion dollar questions, not answers, but it's just like, wow, okay. Like, it's one of these things where once somebody proves that it's capable, it seems to be... to not be that hard for other people to be able to catch up, even people with far less resources.

5. 56:21

   And so, you know, I don't know what that does. Maybe it makes you slightly more skeptical in the long-range economics of the big players. On the other hand, maybe it makes you, like, more bullish about the startup ecosystem. It certainly should make you more bullish about startup application companies, right, being able to do interesting things, which is why we're so excited about that. You know, it should make you probably, you know, a bit more excited about, certainly, about China.

6. 56:43

   Yeah, on the other hand, the Chinese competition putting pressure on the American system to not screw itself up is very positive. So it should probably make you a little bit more bullish on the U.S. And so, yeah, I think, you know, these are, yeah, these are, yeah, these are our live dynamics. And I think we still need more time to pass before we know the exact answer. I should say this, because sometimes, I don't know, sometimes I freak people out when I say these are open questions.

7. 57:04

   When a company is confronted with fundamentally open strategic or economic questions, it's often a big problem because a company needs to have a strategy. And the strategy needs to be very specific. and a company has to make, like, very specific, concrete choices about where it, like, deploys investment dollars and personnel, and, like, the strategy has to be, like, logical and coherent, or the company kind of collapses into chaos.

8. 57:26

   And so, like, companies, like, need to answer these questions, and if they get the answers wrong, they're really in trouble. Venture, we have our issues in venture, but a huge advantage that we have is we don't have to, we can bet on multiple strategies at the same time, right? And we are doing this. So we are betting on big models and small models and proprietary models and open source models, right?

9. 57:46

   And, you know, and foundation models and applications, right? And consumer and enterprise. And so the portfolio approach, the nature of it is like we are aggressively, basically, we are aggressively investing behind every strategy that we've identified that we think has a plausible chance of working, even when that's contradictory to another strategy that we're investing in. And one is just like the world's messy and probably a bunch of things are going to work.

10. 58:10

    And so like there's not going to be clean yes or no answers to a bunch of this. Like a lot of the answers to this, I think are just going to be and answers. But the other is like, if one of these strategies doesn't work, like, you know, we're not trying to hedge per se, but, you know, we're going to have representation in the portfolio of the alternate strategy. And so we're going to have multiple ways to win.

11. 58:26

    So anyway, that's the goal. That's the theory of why we are, you know, kind of taking the approach in the space that we're taking. And that's why I have a big smile on my face when I say that there are these big open questions because I think that actually works to our advantage. It's a good segue to A, 16, Z questions because we've gotten a few in so far,