[fairity]

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.

[aurareturn]

This 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.

[dplgk]

What is OpenAI's first-mover moat? I switched to Claude with absolutely no friction or moat-jumping.

[itissid]

OpenAI 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.

[lxgr]

> First mover advantage acquired and keeps subscribers.

Does it? As a chat-based (Claude Pro, ChatGPT Plus etc.) user, LLMs have zero stickiness to me right now, and the APIs hardly can be called moats either.

[jaynate]

They also burnt a hell of a lot more cash. That’s a disadvantage.

[Mistletoe]

I 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]

> 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]

Deepseek is unique, but the US has consistently underestimated Chinese R&D, which is not a winning strategy in iterated games.

[rightbyte]

Unique, ye, but isn't their method open? I read something about a group replicating a smaller variant of their main model.

[jerjerjer]

We have one success after ~two years of ChatGPT hype (and therefore subsequent replication attempts). That's as fast as it gets.

[boringg]

Your 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]

DeepSeek is profitable, openai is not. That big expensive moat won't help much when the competition knows how to fly.

[aurareturn]

DeepSeek 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.

[WiSaGaN]

Deepseek 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.