I’m sure anthropic has signed up more revenue this week in response to this debacle to cover it. Where they’re actually screwed is if the gov follows through and declare anthropic a supply chain risk.

So yeah, they bet a whole lot on “look at us, we have morals”.

Also, they got a huge PR win, and jumped to #1 on the Apple App Store. Consumer market share is going to decide which of the AI companies is the market leader, not fickle government contracts.

If you look at what generates cash, it's corp to corp. That's across most industries. While there are markets that are consumer mostly, LLMs have immense and enormous business facing revenue potential. The consumer market is a gnat in comparison.

1. Stargate seemed to require a dedicated press conference by the President to achieve funding targets. Why risk that level of politicization if it didn't?

2. Greg Brockman donated $25mil to Trump MAGA Super PAC last year. Why risk so much political backlash for a low leverage return of $200m on $25m spent?

3. During WW2, military spend shot from 2% to 40% of GDP. The administration is requesting $1.5T military budget for FY2027, up from $0.8T for FY2025. They have made clear in the past 2 months that they plan to use it and are not stopping anytime soon

If you believe "software eats the world" it is reasonable to expect the share of total military spend to be captured by software companies to increase dramatically over the next decade. $100B (10% of capture) is a reasonable possibility for domestic military AI TAM in FY2027 if the spending increase is approved (so far, Republicans have not broken rank with the administration on any meaningful policy)

If US military actions continue to accelerate, other countries will also ratchet up military spend - largely on nuclear arsenals and AI drones (France already announced increase of their arsenal). This further increases the addressable TAM

Given the competition and lack of moat in the consumer/enterprise markets, I am not sure that there is a viable path for OpenAI to cover it's losses and fund it's infrastructure ambitions without becoming the preferred AI vendor for a rapidly increasing military budget. The devices bet seems to be the most practical alternative, but there is far more competition both domestically (Apple, Google, Motorola) and globally (Xiaomi, Samsung, Huawei) than there is for military AI

Having run an unprofitable P&L for a decade, I can confidently state that a healthy balance sheet is the only way to maintain and defend one's core values and principles. As the "alignment" folks on the AI industry are likely to learn - the road to hell (aka a heavily militarized world) is oft paved with the best intentions

Dario & co are not starry-eyed naive individuals as implied. This is a calculated decision to maximize their goal (safe AGI/ASI.)

You have the right philosophy on the balance sheet side of things, but what you're missing is that researchers are more valuable than any military spend or any datacenter.

It does not matter how many hundreds of billions you have - if the 500-1000 top researchers don't want to work for you, you're fucked; and if they do, you will win because these are the people that come up with the step-change improvements in capability. There is no substitute for sheer IQ, you can't buy it (god knows Zuck has tried, and failed to earn their respect) and you can't build it (not yet, at least.) Consensus amongst less talented people does not work to achieve these "Eureka" moments either.

Had Anthropic gone forth with the DoD contract, they would have lost their top crowd. On the other hand, by rejecting it, Anthropic's recruiting just got much easier (and OAI's much harder.)

Generally, the military/Pentagon crowd have a somewhat inflated sense of self worth. Very few highly intelligent people with the skills to join these companies want to contribute to the war machine. If OpenAI becomes a glorified military contractor, they will bleed talent. Almost no top talent wants to work for Palantir, despite the pay.

Finally, the Anthropic restrictions will last, what, 2 more years? They are being locked out of a narrow subset of usecases (DoD contract work only - vendors can still use it for all other work - Hegseth's reading of SCR is incorrect) and have farmed massive reputation gains for both top talent and the next administration.

I don’t know the answers to these questions, but if the answer is “yes” to at least 1 or 2, then I think the equation flips quite a bit. This is what I’m seeing in the world right now, and it’s disconcerting:

1. Ukraine and Russia have been in a skirmish that has been drawn out much longer than I would guess most people would have guessed. This has created a divide in political allegiance within the United States and Europe.

2. We captured the leader of Venezuela. Cuba is now scared they are next.

3. We just bombed Iran and killed their supreme leader.

4. China and the US are, of course, in a massive economic race for world power supremacy. The tensions have been steadily rising, and they are now feeling the pressure of oil exports from Iran grinding to a halt.

5. The past couple days Macron has been trying to quell tension between Israel and Lebanon.

I really do not hope we are not headed into war. I hope the fact that we all have nukes and rely on each others’ supply chains deters one. But man does it feel like the odds are increasing in favor of one, and man does that seem to throw a wrench in this whole thing with Anthropic vs. OpenAI.

Being accurate, by all reporting Israel killed Iran's leadership.

Yes, likely enabled by US intelligence, but the one who pulls the trigger does matter.

The one who pulled the trigger is irrelevant here, because both have pulled the trigger hundreds or thousands of times in the past few days, dividing up targets between them for the joint operation.

I'm aware that internet forums like to play fast and loose with insinuations, but facts are facts.

It sounds like you think this means something?

Obviously it doesn't when we're talking about an administration that openly breaks laws, much less EOs, and issues whatever EOs they want saying whatever they want, even in violation of previous EOs. There aren't even any repercussions to the president "violating an EO".

So, the pedantry here is irrelevant. The two parties are on the same team, working towards the same goal, doing the same things, divvying up the list of targets to strike.

If you'd rather talk with yourself, I'll see myself out of this convo. No time for folks who would rather indulge in hyperbole than messy reality.

Anyways, happy friday! Feel free to come back if you're willing to share why you think the president not complying with a presidential executive order is significant here, rather than insignificant.

This is a massive cope imo. The reason that the AI industry is so incestuous is just because there are only a handful of frontier labs with the compute/capital to run large training clusters.

Most of the improvements that we’ve seen in the past 3 years are due to significantly better hardware and software, just boring and straightforward engineering work, not brilliant model architecture improvements. We are running transformers from 2017. The brilliant researchers at the frontier labs have not produced a successor architecture in nearly a decade of trying. That’s not what winning on research looks like.

Have there been some step-change improvements? Sure. But by far the biggest improvement can be attributed to training bigger models on more badass hardware, and hardware availability to serve it cheaply. To act like the DoD isn’t going to be able to stand up pytorch or vllm and get a decent result is hilarious: the reason you use slurm and MPI and openshmem is because national labs and DoD were using it first. NCCL is just gpu accelerated scope-reduced MPI. nvshmem is just gpu accelerated scope-reduced openshmem.

If anything, DoD doesn’t have the inference throughput requirements that the unicorns have and might just be able to immediately outperform them by training a massive dense model without optimizing for time to first token or throughput. They don’t have to worry about if the $/1M tokens makes it economically feasible to serve, which is a primary consideration of the unicorns today when they’re choosing their parameter counts. They can just rate limit the endpoint and share it, with a 2 hour queue time.

The government invented HPC, it’s their world and you’re just playing in it.

> Generally, the defense crowd have a somewhat inflated sense of self worth.

/eyeroll but nobody can do what you do!

The dense model argument is self-defeating long term. Sparsity (MoE etc.) lets you build a smarter model at the same compute budget, so going dense because you can afford to waste FLOPs is how you fall behind b/c you never came up with the step function improvements needed.

Sure, the DoD invented HPC, but also invented the internet, and then the private sector made it actually useful.

reminder that trump has been flirting with just continuing in power (2028 hats and talks about a third term) and is responsible for trying a coup last time he lost.

personally I think there's a possibility where he'll just declare martial law and stay in power at the end of his term.

As opposed to all those famous ethical battles where there's nothing in it for you to do the wrong thing?

Not a chance. The DoD has massive pockers which and INCREDIBLY SPREAD OUT. You can't underestimate how spread this money is. The DoD has maybe a 64 GPU cluster and ALMOST NO ONE USES IT FOR DEEP MODEL TRAINING. Even contractors end up working with DGX boxes to do all their training.

As of 2023, I was doing the largest Deep learning training runs out of anyone I have known in the industry and I've been in the industry for 20 yeras. The second best groups behind mine were using 4 GPU locally machines that they had to purchase on contract.

There's no way the DoD can train these models themselves, not even close. They are COMPLETELY DEPENDENT ON INDUSTRY. I was the PM for a DARPA program in 2023 and SAME PROBLEM. They had no compute or would rely on university compute if a program had a university partner. YOU HAVE NO IDEA HOW FAR BEHIND THE DOD IS IN THIS SPACE.