Marc Andreessen

On a fixed size pie basis, the losers are the proprietary model companies. So OpenAI, Anthropic and so forth. You'll notice both OpenAI and Anthropic put out pretty strong, but clearly provoked messages in the last week explaining why this wasn't terminal for them. And there's an old adage in business and in politics, when you're explaining, you're losing. They definitely notice this.

On a fixed size pie basis, the losers are the proprietary model companies. So OpenAI, Anthropic and so forth. You'll notice both OpenAI and Anthropic put out pretty strong, but clearly provoked messages in the last week explaining why this wasn't terminal for them. And there's an old adage in business and in politics, when you're explaining, you're losing. They definitely notice this.

And then the other is, you know, NVIDIA is the other company. There's been a lot of commentary on this, but NVIDIA makes the standard AI chips that people use. There are some other choices, but NVIDIA is the one that most people use. The margins on their chips are as high as 90%. And the company stock price reflects that most valuable company in the world.

And then the other is, you know, NVIDIA is the other company. There's been a lot of commentary on this, but NVIDIA makes the standard AI chips that people use. There are some other choices, but NVIDIA is the one that most people use. The margins on their chips are as high as 90%. And the company stock price reflects that most valuable company in the world.

One of the things the deep seat guys did and documented in their paper is they figured out a way to use cheaper, actually still using NVIDIA chips, but they're using cheaper chips and they are using them much more efficiently. Part of the 30X cost reduction is you just need a lot fewer chips.

One of the things the deep seat guys did and documented in their paper is they figured out a way to use cheaper, actually still using NVIDIA chips, but they're using cheaper chips and they are using them much more efficiently. Part of the 30X cost reduction is you just need a lot fewer chips.

And then, by the way, China's building its own supply chain of chips, and these guys are also starting to use the Chinese-derived chips, which is, of course, an even more fundamental threat to NVIDIA. So that's the snapshot at a point in time. But the thing is, the implication of your question is there's another way to look at it, which is over time.

And then, by the way, China's building its own supply chain of chips, and these guys are also starting to use the Chinese-derived chips, which is, of course, an even more fundamental threat to NVIDIA. So that's the snapshot at a point in time. But the thing is, the implication of your question is there's another way to look at it, which is over time.

And over time, what you want to look at is the elasticity effects. Satya Nadella uses this phrase called the Jevons Paradox. Think of this like gasoline. If you drop the cost of gasoline dramatically, then all of a sudden people are going to drive a lot more. This comes up in traffic planning a lot. So you'll have a city like Austin or something, and it'll be gridlocked.

And over time, what you want to look at is the elasticity effects. Satya Nadella uses this phrase called the Jevons Paradox. Think of this like gasoline. If you drop the cost of gasoline dramatically, then all of a sudden people are going to drive a lot more. This comes up in traffic planning a lot. So you'll have a city like Austin or something, and it'll be gridlocked.

And somebody will have the bright idea of building a new freeway alongside the current freeway. And within like two years, the new freeway will have also filled up with traffic. And maybe it'll even be harder to get from place to place. And the reason is because reduced price of key inputs can induce demand. If AI is all of a sudden 30x cheaper, people might use it 30x as much.

And somebody will have the bright idea of building a new freeway alongside the current freeway. And within like two years, the new freeway will have also filled up with traffic. And maybe it'll even be harder to get from place to place. And the reason is because reduced price of key inputs can induce demand. If AI is all of a sudden 30x cheaper, people might use it 30x as much.

Or by the way, they might use it 100x as much or 1000x as much. This might mean that AI gets built into many more things than it was going to get built into before and much more quickly. The economic term there is elasticity. So falling prices equals explosion of demand. I think there's a very plausible scenario here that on the other side of this is just what happens is usage explodes.

Or by the way, they might use it 100x as much or 1000x as much. This might mean that AI gets built into many more things than it was going to get built into before and much more quickly. The economic term there is elasticity. So falling prices equals explosion of demand. I think there's a very plausible scenario here that on the other side of this is just what happens is usage explodes.

And DeepSeat does really well. And by the way, so do OpenAI and Anthropic. And by the way, so does NVIDIA and so do the Chinese chip makers. Then you have like a rising tide effect where the entire industry explodes in size. We're really only at the beginning of people figuring out how to use these technologies. Reasoning just started working in like the last four months.

And DeepSeat does really well. And by the way, so do OpenAI and Anthropic. And by the way, so does NVIDIA and so do the Chinese chip makers. Then you have like a rising tide effect where the entire industry explodes in size. We're really only at the beginning of people figuring out how to use these technologies. Reasoning just started working in like the last four months.

OpenAI released their O1 Reasoner not that long ago, a few months ago.

OpenAI released their O1 Reasoner not that long ago, a few months ago.

This is like fire being brought down from the mountain, being given to humanity, and most humanity is not yet using fire, but they're going to. I tend to be a believer that it's much more of a, at least for a while here, it's going to be much more of a positive something where there's just going to be so much explosive growth.

This is like fire being brought down from the mountain, being given to humanity, and most humanity is not yet using fire, but they're going to. I tend to be a believer that it's much more of a, at least for a while here, it's going to be much more of a positive something where there's just going to be so much explosive growth.