The AI Wars Have Begun

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1 In the beginning, Sam Altman created GPT-3 and decided not to share.

2 And the market was without competition; and the darkness of closed models was upon the face of the shareholders invested in Meta. And the Spirit of Capitalist Industry moved upon the face of the market.

3 And Zuck said, let there be open-source: and there was Llama.

4 And Zuck saw the model, that it was good: and Zuck divided the light open-source from the darkness of closed-source.

5 And on the second day, everyone dropped their own models.

6 Behold, like, so, so, so many people have released open-source models: Apple, Snowflake, Databricks, Mistral, on and on and on. They are all different, but also kind of the same.

7 And the innovation brought forth cost savings and yielded startup after startup, and the stock prices appreciated (which is the purpose of life, after all): and Zuck saw that it was good.

8 And then, right as the reader tired of this scriptural prose gimmick, a devilishly handsome, Boston-based newsletter writer asked, “What the hell happens next?”

What happens next? 

In 2023, venture capitalists invested more than $50 billion in AI, and according to Sequoia Capital, Nvidia sold $50 billion of its AI-grade chips. Add in all of the investment by big tech companies like Amazon and Google, and it’s reasonable to estimate that more than $120 billion was invested into AI over the last 12 months.

This is a staggering, unparalleled, slap-ya-momma-silly, slightly-more-than-the-GDP-of-Ecuador-level of capital. While much of that money was spent to integrate AI into existing workflows, a large chunk has also gone to building foundation models—technology like OpenAI’s GPT-4 or Anthropic’s Claude, both genuine marvels that I think will change the world.

Now, fast followers that trained their own AI models are entering the fray to compete with OpenAI. Adobe, Amazon, Microsoft, and Snowflake all released new models in the last week alone. Two weeks ago, Meta open-sourced its Llama 3 model. It is chaotic and exciting and probably a bubble—but that’s fine. Every Silicon Valley executive seems convinced that this tech is important to the success of their business.

The $120 billion question is this: Are AI models commodity components that lose their unique value with each new open-source model? Or are they valuable products that can withstand the open-source deluge?

If models are the product, they will keep growing quickly, and there will be enough revenue to continue investing in AI at ever-greater scale. OpenAI and its ilk will be able to build GPT-5, GPT-6, etc., and we have a reasonable way to fund the way to superintelligence. 

If models are commodity components, the world gets a lot more competitive, profit vanishes, and that $120 billion turns into dust on the wind.

Thankfully, Mark Zuckerberg is willing to foot the bill to answer that question.