China Open-Source, Compute Arms Race, Reordering Global Trade | BG2 w/ Bill Gurley and Brad Gerstner

**Brad Gerstner** (0:00)
15% on all goods coming from Europe, 0% on US goods going to Europe. So an opening up of Europe markets, paying us 15%, and on top of that, getting commitments like $750 billion, almost a trillion dollars of energy purchases from the US. Or look at Japan, which they announced last week, another huge market. Again, similar, they're going to pay tariffs to the United States, no tariffs imposed on the United States, and they're going to invest $550 billion into the US in a way the president gets to direct. So I just think we need to give the president credit where credit is due. Everybody said this was going to lead to retaliation, to trade wars, was going to be disastrous for the US, and all we've seen so far is deals, deals, deals, deals. And I have to say, if this was the CEO of one of our companies, right, let's say we had a board meeting at the start of the year and he outlined these plans and we said, hey, we're really nervous about this. You know, this is a high risk, high reward strategy. It's either going to backfire and we're going to fire you, or it's going to work really well and we give you a bonus. If we're measuring them halfway through the year, I would say that he's in line for a bonus. All right, the SummerPod's back in action. Good to see you guys. We have our good friend, Sunny Madra, the COO of GROK joining from, I don't know, Sunny, it looks like some fancy hotel in Saudi Arabia in the middle of the night. Good to see you.

**Sunny Madra** (1:45)
You picked it up, you have a good eye for the Middle East.

**Brad Gerstner** (1:49)
And Bill, you got off your boat catching bluefin tuna. You look like you're in some office somewhere, so good to see you.

**Bill Gurley** (1:57)
I am borrowing Mitch Lasky's incredible podcast set up in our Woodside office with the iDef SLR camera.

**Brad Gerstner** (2:07)
Nice, you're looking good. Sunny, of course, our good buddy Sunny is the COO of GROK. I don't know, Sunny, probably a few hundred million of revenues, maybe doubling year over year. I just saw something, you're rumored to be raising 600 million at a $6 billion valuation. Maybe that has something to do with you being over in Saudi Arabia. Of course, you're hosting all the open source models in your inference clouds around the world. Is that about right?

**Sunny Madra** (2:35)
Yeah, you got it right. You touched on all the key points. We don't comment on speculation, but you touched on some good points.

**Brad Gerstner** (2:42)
Well, it's great to see you in DC last week. Our good friend David Sachs is really on a heater. First, it was the crypto summit a couple of weeks ago. Of course, the Genius Act got passed, which really teed up these stable coins. And now the Clarity Act around market structures making its way through Congress. And then, of course, last week was the AI Summit, where the president laid out a multi-pronged strategic plan for American AI that both extends the government's investment and leadership, but also accelerates the distribution of the American AI stack around the world.
Both of those things, both the crypto and the AI Summit that he put together, I thought are key contributions, really, to the next generation of American technology leadership around the world. It's amazing to see that much progress in six months. Congrats to Sachs.

**Sunny Madra** (3:36)
And the rest of the team, Kratzius, Dean Ball, Sri Ram, they really all kind of brought the heat with that. Yeah, for sure.

**Brad Gerstner** (3:44)
Of course, the AI Action Plan was focused on maintaining global AI leadership, particularly over China. And I hate to say it, but we have really been our own worst enemy. You know, it seems like excess regulation on everything, from energy production, to model development, to semiconductor chip distribution. It's really been a bit of an unforced error by the US over the course of the last 24 months, and it handed a lot of momentum to China, and I think really threatened our leadership. So this is kind of a 180 to get America back on track. You know, we've underestimated Huawei and the Chinese AI development, model development really at every step of the way. So I want to kick off today talking about recent developments with the base models and reasoning models coming out of China. Because we had this freak out moment earlier in the year with DeepSeq that we all remember. Remember, NVIDIA stock plummets, everybody in Washington is talking about it. But since then, people kind of forgot about DeepSeq, but the reality is China has been on a roll. They're dominating the global landscape for open source models. We've seen six to seven high quality open source model providers, many of the fastest growing in the world. And this at a time when American open source, Lama 4, has been sputtering a bit, really losing its mojo around the world. So Quinn, the open source model out of Alibaba has passed, I think 400 million downloads. Of course, that's released like these other models under the Apache 2 open source license. So very open, as Bill's talked about. But Sonny, you tweeted, and one of the reasons I wanted to get you on the pod this week is because you tweeted that all of these open source models are really coming together in China. They're leveraging one another. They can distill and generate synthetic data on each other's work. And you went so far as to suggest this might allow them to pass the best proprietary models coming out of the US yet this year, maybe by Q4 of this year. So why don't we dig in there? What is your theory of the case? Why is China, you know, doing so well in open source? And should US model companies like OpenAI and the Anthropic be concerned?