So I think the current generation of models are arguably all about the same in terms of capability. However, the requirement for exponential growth I mentioned is all about the economics.

AI companies are trying to ride a growth wave where the income curve lags the expense curve by 1-2 years, and at the same time investing 10x their historical income on next year's projected demand.

Everyone is selling their API calls at a loss, because to capture the investment required to scale the business up and the costs down, you need to grow your market now (in relative and absolute terms). And history shows, that in big tech you often have winner-takes-all situations, or, at least a couple of big firms will dominate, and the others will die. That's where market share becomes a key strategic goal.

But to secure that, they also need to be building next year's compute now. And if their anticipated compute needs are 10x this year, they've got a serious funding problem, one that can only be filled by capital with an appropriate risk appetite. You can only get this high-risk capital when the potential payoff is even more enormous, or, when it's a smaller bite of a much bigger pie. Hence, MS putting into OpenAI and so on. But the investment needs are getting so big we are starting to see some pullback from more conservative sources, but also record deals from others.

Now say an AI company does get the capital they need to grow. Well, they've still got a very serious supply problem. RAM, GPUs, water, electricity etc. Hence why there's a lot of deals and cross-investment going on - everyone is trying to secure resources and lower their overall risk exposure while keeping a foot in every possible door, so they can switch alliances whenever it's expedient, and because collaboration also helps the overall market to grow.

This all explains to me why the industry _needs_ the hype. These companies can't exist without it, because the money they need to sink in, in order to even be around in 18 months, far outstrips all reasonable financial practices. So it's capitalism on steroids or nothing. If you believe the AI story, then to that extent, it's rational.

But note that nowhere in this scenario does it suggest the actual consumers will be getting a consistent product at a consistent price!!!

The only moat is the us trying to buy all the compute hardware in the world for the next two years. Then China, amd, etc are just making their own chips.

why are we pretending these are equivalents?

yes, single gpu open models exist. Now show me the one that can keep up with a SOTA api model on more than short code block evals.

Operating in a jurisdiction where US companies can't sue them.

a lack of existential threat in the form of pay-seeking and remediation from the people you stole training materials from that allows for an intrinsically different pace of operation than the Western competition

I’m not happy with their privacy policy [1]. I’m unfamiliar with the phrase “Parties with Other Legal Rights”. Given the well-documented struggles of Anthropic and others to provide enough compute, I wonder if “Parties with Other Legal Rights” constitutes part of the advantage here.

[1]: https://cdn.deepseek.com/policies/en-US/deepseek-privacy-pol...

A sane government policy that invests heavily on innovative businesses.

That, and:

- Every competitor is planning for the demand to be much higher in a few years than it is now, and aiming to capture as much of that as they can, which starts by getting companies hooked on their models now

- The data center capacity will get used no matter who captures the most demand