The World Isn't Zero Sum
I debated the title for this article a lot. The other option was “The World Isn’t Binary.” I’m still not exactly sure which title better describes this article, but I’ve found the principal of living with a positive sum mentality more impactful in my life so I went with that title. Anyway..on to the post!
There are no shortage of big debates right now in AI. Open vs closed models. Nvidia vs custom silicon. Will chips have value after 5 years. Will AI kill software. God model vs fleet of specialized models. Are we in an AI capex bubble or not. Model layer vs application layer. Will models commoditize. The list goes on! These were just a few that came to mind…
I won’t address all of these today, but the answer for most is “you’re not thinking big enough.” I’m clearly a hyper-optimistic person, I like to view the world through this lens! But I genuinely think these questions do a disservice to the moment we’re in. I don’t mean to invalidate the questions, they are smart questions, BUT in an early exponential moment I think it’s easy to “reduce” the moment to these simple questions that often seem zero sum in nature. When the size of the prize is expanding this quickly, the answer often turns out to be “everybody won.”
Let’s look at the current open vs closed model debate (or really the “Are Anthropic and OpenAI screwed as low cost open weight models take over” question). The TLDR of my perspective is that there will be both a massive market for closed frontier models AND open weight models. Does one come at the expense of the other? Of course. If open weight models didn’t exist, more dollars would accrue to the frontier labs. BUT - the total spend on models won’t stay static…
If it did, sure the mix shift of frontier to open would shift towards more open over time (given the starting point today on frontier closed is such a high relative percentage). But, the topline isn’t static. It’s growing exponentially. So as more tokens start shifting to open weight models, the absolute dollar spend on frontier will still grow significantly (even exponentially). I hate to reduce it down to a cliche, but the size of the pie is growing much faster than mix shift is changing.
Same debate for Nvidia vs challengers or custom silicon. Will we have more custom ASICS, or new chips from upstarts like Etched, Positron, MatX, Fractile, d-Matrix, etc? Of course. Will the mix shift of today look less “Nvidia heavy” in the future? Probably. $NVIDIA(NVDA)$ is just such a massive percentage today. But do I think Nvidia will continue to grow meaningfully for a while? I do!
So the answer to both of these questions isn’t one winner one looser, it’s “many winners.” And I think in the early days of an exponential it’s easy to reduce questions down to “who wins and who looses” when the real answer is “both can win.”
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