Prof G Markets
00:44:36 · Misha Laskin
[00:44:36] S4: So some enterprise are testing it out because, again, it's sort of like the demand for it is so high, but it's very rare see Chinese open models go into production in Fortune 500. And what that means is that our domestic enterprises do not have the same competitive edge, let's say, as the startups that are able to assume the risk and don't care about it. So, we need to provide good solutions for, you can kind of think about enterprises who, instead of renting their intelligence, they wanna own it, or they wanna do something, they wanna do a bit of both. You have to provide them a good solution. And so, where we are at the market is that our largest enterprises, our public sector agencies are operating at a competitive disadvantage to Chinese companies, and also to other companies within our own ecosystem who are willing to take the right, the sort of risk around it. So, it's extremely important to have something that's competitive to Chinese models to support our own companies and agencies. And then abroad, it's really important that our allies build on American technology. And this is kind of where the geopolitical part comes in, is that the world abroad will adopt whatever the best stack is, right? Whatever the best technology stack, they'll adopt it. There's a reason why Linux and Android came from America, and not from China. America has been traditionally really good at building the best open source technology in the world. This is the first time where for something so major, it is not being originated in America, and what that means that the world abroad is building on Chinese technology. What that will lead to is that open models are... You can think about as Trojan horses for the infrastructure that they bring, because again, it's just the engine, you need the car around it. And what's the car? Well, it's the chips, right? So now, when Chinese companies go and sell open models into The Middle East, or other Asian countries, or Brazil, or what have you, they will now also start selling chips in their data centers. And what that means is that other governments, allied nations, will start getting locked into Chinese infrastructure, and that is really the risk to The United States from a national security perspective.
00:46:54 · Misha Laskin, Ed Elson
And so, it's just important for us, both domestically and internationally, in order to have, for our national security as a country, to have the best stack on merit, that our open models are the best, our chips are the best, and the world chooses to build on our technology. So it's kind of nuanced. Chinese models, it's, like, incredible. It's it's a gift to the world that they exist, but for our national security, we need to have a great offering that our that our allies can adopt. [00:47:24] S2: When you say the Chinese gave us a gift, I'm like, would they ever really give America a gift? And I think what you're pointing to is that there are sort of two theories behind why they would do this. One of the theories is it's not a gift at all, and they're trying to erode the economics of the AI market in The US. It sounds like you don't fully agree with that. And in your view, maybe the analogy would be something like the Belt and Road Initiative where they're going out building, making other Western societies incredibly dependent on their own technology. And as soon as you have the upper hand in that way, maybe similar to the way that we have a huge dependence on their critical minerals, which has obviously become a huge problem, then that's a lot of leverage that they can use later down the line. [00:48:10] S4: That's correct.
00:48:10 · Misha Laskin, Ed Elson
[00:48:10] S4: That's correct. [00:48:11] S2: Right. So I'm gonna assume that's what is happening here. I guess the next question is, why wouldn't The US just ban Chinese models? I've been sort of waiting for that to happen. Like, you know, why not just ban DeepSeek? Why why are we letting them flood our market with their open models? I guess it's useful, but I don't know. I'm just... I'm a little surprised given this administration's positioning on on China, why we have been kind of open to them... To using their models.
00:48:46 · Misha Laskin
[00:48:46] S4: I think that the lack of open source period, wherever it comes from, will actually be more devastating for... Like, that will be the thing that's devastating for our economy. Because all of a sudden, our startups can't build their own intelligence and can't compete with large incumbents. Our researchers get locked out, and can't really understand how these systems are built unless you're in one of the big labs. The whole, I think, notion of America's success as a country is in its ability to foster very diverse competition and innovation across this country, and openness enables you to do that. So I actually think that these... What actually happened, right, is that when DeepSeek v3 came out, there was a market scare, and some stocks went down. But the reality is that even... It was an irrational reaction. Those stocks rebounded and started doing very well because of demand for various things like compute went up. Because now that you have an open model out there, do you have more buyers for compute? Have now anyone who... Again, it's an ownership market, and ownership means that I get the model, and I put it on my own compute. So by nature of having a good open model, there's just gonna be more diverse demand for compute. Startups and the various ones that are doing more scientific pursuits will just be able to explore a much wider set of ideas than any one company could. This is just kind of the way the innovation economy works, and it's extremely important that we preserve that. Now, right? So it's kind of, I think that there's a simple answer that I think would be sort of nice for us to believe that China is bad, therefore open models from China is bad, but it's actually more complicated. It's actually no, open models from China, very good, but we also need to have our own... It's really good for ecosystem, but we also need to have our own great open models. These are the two superpowers of the world, and America is the predominant superpower. And so, it's kind of like you're building a foundational technology, it's like if electricity existed in one place, but not in another, right? You have to be competitive. You have to ensure that the world builds on top of your stuff for your national security.
00:51:11 · Misha Laskin, Ed Elson
And while they kind of seem at odds, both things can be true, that it's great that Chinese open models are out there, but it's also something that is a matter of national security for this country. [00:51:24] S2: Do you think Anthropic and OpenAI will, at any point, switch to being open? Do you think that... I mean, I just... If this is the direction we're headed in where, you know, if we're basically giving the engines out for free and the idea being that if you give the engines out for free, then that's gonna spur a lot more activity and a lot more growth and a lot more innovation, which will result in a more prosperous and more productive ecosystem where the returns will eventually be seen in the future. If that's the direction we're headed, and it seems like maybe we are, especially if China's just deciding to do that, why would you not use cheaper open weight models? I mean, does that not mean that Anthropic and OpenAI are gonna have to get with the program? Like, what are they gonna do?
00:52:15 · Misha Laskin
[00:52:15] S4: I think they're gonna do just fine. These are incredible companies that have scaled at an unprecedented rate and keep discovering new breakthroughs in AI. So, I think that you can be in a world where... I mean, it's positive sum world where it's a this and that. There'll be open model companies, and kind of builders on top of open models, and distributors that are successful, right? And there will be closed model companies that are successful, and you have a rental and ownership market. And just because ownership is starting to grow in its demand, doesn't mean that everyone will then own a house. There'll be still people who are renting, still people who are owning. Think that... Mean, OpenAI has open sourced models in the past. I think that when something is not the core strategy of the company, you tend to not pay as much attention to it, and you tend to open source maybe like a lesser version of the thing that you're actually kind of monetizing. And that's kind of what we've seen from open source launches, Google has done a lot for the open source community with the Gemma launches, but it's a very different model class than the Gemini models, similar when OpenAI launched GPTOSS. So, right, it's very different from the class of actual internal models they're sitting on. So I don't see that strategy necessarily changing for them, because I think that they have so much opportunity ahead of them just chipping away at their current business that I don't think they might, but I think they're also gonna do just fine.