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DeepSeek just further reinforces the idea that there is a first-move disadvantage in developing AI models. When someone can replicate your model for 5% of the
by fairity 2y ago
DeepSeek just further reinforces the idea that there is a first-move disadvantage in developing AI models.
When someone can replicate your model for 5% of the cost in 2 years, I can only see 2 rational decisions:
1) Start focusing on cost efficiency today to reduce the advantage of the second mover (i.e. trade growth for profitability)
2) Figure out how to build a real competitive moat through one or more of the following: economies of scale, network effects, regulatory capture
On the second point, it seems to me like the only realistic strategy for companies like OpenAI is to turn themselves into a platform that benefits from direct network effects. Whether that's actually feasible is another question.
- Mistletoe 2y agoI feel like AI tech just reverse scales and reverse flywheels, unlike the tech giant walls and moats now, and I think that is wonderful. OpenAI has really never made sense from a financial standpoint and that is healthier for humans. There’s no network effect because there’s no social aspect to AI chatbots. I can hop on DeepSeek from Google Gemini or OpenAI at ease because I don’t have to have friends there and/or convince them to move. AI is going to be a race to the bottom that keeps prices low to zero. In fact I don’t know how they are going to monetize it at all.
- tw1984 2y ago> DeepSeek just further reinforces the idea that there is a first-move disadvantage in developing AI models. you are assuming that what DeepSeek achieved can be reasonably easily replicated by other companies. then the question is when all big techs and tons of startups in China and the US are involved, how come none of those companies succeeded? deepseek is unique.
- 11101010001100 2y agoDeepseek is unique, but the US has consistently underestimated Chinese R&D, which is not a winning strategy in iterated games.
- rightbyte 2y agoThere seem to be a 100 fold uptick in jingoists in the last 3-4 years which makes my head hurt but I think there is no consistent "underestimation" in academic circles? I think I have read articles about the up and coming Chinese STEM for like 20 years.
- coliveira 2y agoYes, for people in academia the trend is clear, but it seems that WallStreet didn't believe this was possible. They assume that spending more money is all you need to dominate technology. Wrong! Technology is about human potential. If you have less money but bigger investment in people you'll win the technological race.
- rightbyte 2y agoI think Wall Street is in for surprise as they have been profiting from liquidating the inefficiency of worker trust and loyalty for quite some time now. It think they think American engineering excellence was due to neoliberal inginuenity visavi the USSR, not the engineers and the transfer of academic legacy from generation to generation.
- coliveira 2y agoThis is even more apparent when large tech corporations are, supposedly, in a big competition but at the same time firing thousands of developers and scientists. Are they interested in making progress or just reducing costs?
- corimaith 2y agoWhat does DeepSeek or really High Flyer do that is particularly exceptional regarding employees? HFT and other elite law or Hedge funds are known to have pretty zany benefits.
- Der_Einzige 2y agoOrwellian Communism is the opposite of investing in people.
- rightbyte 2y agoUnique, ye, but isn't their method open? I read something about a group replicating a smaller variant of their main model.
- ghostzilla 2y agoWhich brings the question, if LLMs are an asset of such strategic value, why did China allow the DeepSeek to be released? I see two possibilities here, either that the CCP is not that all-reaching as we think, or that the value of the technology isn't critical, and that the release was further cleared with the CCP and maybe even timed to come right after Trump's announcement of American AI supremacy.
- rightbyte 2y agoIt is hard to estimate how much it is "didn't care", "didn't know" or "did it" I think. Rather pointless unless there are public party discussion about it to read.
- fairity 2y agoIt's early innings, and supporting the open source community could be viewed by the CCP as an effective way to undermine the US's lead in AI. In a way, their strategy could be: 1) Let the US invest $1 trillion in R&D 2) Support the open source community such that their capability to replicate these models only marginally lags the private sector 3) When R&D costs are more manageable, lean in and play catch up
- creato 2y agoI really doubt there was any intention behind it at all. I bet deepseek themselves are surprised at the impact this is having, and probably regret releasing so much information into the open.
- lenerdenator 2y agoIt will be assumed by the American policy establishment that this represents what the CCP doesn't consider important, meaning that they have even better stuff in store. It will also be assumed that this was timed to take a dump on Trump's announcement, like you said. And it did a great job. Nvidia stock's sunk, and investors are going to be asking if it's really that smart to give American AI companies their money when the Chinese can do something similar for significantly less money.
- jerjerjer 2y agoWe have one success after ~two years of ChatGPT hype (and therefore subsequent replication attempts). That's as fast as it gets.
- deleted 2y ago[deleted]
- aurareturn 2y agoThis is wrong. First mover advantage is strong. This is why OpenAI is much bigger than Mixtral despite what you said. First mover advantage acquired and keeps subscribers. No one really cares if you matched GPT4o one year later. OpenAI has had a full year to optimize the model, build tools around the model, and used the model to generate better data for their next generation foundational model.
- jaynate 2y agoThey also burnt a hell of a lot more cash. That’s a disadvantage.
- itissid 2y agoOpenAI does not have a business model that is cashflow positive at this point and/or a product that gives them a significant leg up in the same moat sense Office/Teams might give to Microsoft.
- aurareturn 2y agoCompanies in the mobile era took a decade or more to become profitable. For example, Uber and Airbnb. Why do you expect OpenAI to become profitable after 3 years of chatgpt?
- meiraleal 2y agoNobody expects it but what we know for sure is that they have burnt billions of dollars. If other startups can get there spending millions, the fact is that openai won't ever be profitable. And more important (for us), let the hiring frenzy start again :)
- aurareturn 2y agoThey have a ton of revenue and high gross margins. They burn billions because they need to keep training ever better models until the market slows and competition consolidates.
- boringg 2y agoYour making some big assumptions projecting into the future. One that deepseek takes market position, two that the information they have released is honest regarding training usage, spend etc. Theres a lot more still to unpack and I don’t expect this to stay solely in the tech realm. Seems to politically sensitive.
- meiraleal 2y agoDeepSeek is profitable, openai is not. That big expensive moat won't help much when the competition knows how to fly.
- aurareturn 2y agoDeepSeek is not profitable. As far as I know, they don’t have any significant revenue from their models. Meanwhile, OpenAI has $3.7b in revenue last reported and has high gross margins.
- meiraleal 2y agotell that to the stock market then, it might change the graph direction back to green.
- aurareturn 2y agoI’m doing the best I can.
- WiSaGaN 2y agoDeepseek inference API has positive margin. This however does not take into account R&D like salary and training cost. I believe OpenAI is the same in these aspects, at least before now.