The AI industry's 'next big bet,' and the DOJ tells Google to sell Chrome | Equity Podcast

Google, Chrome, and the DOJ

• The Department of Justice has argued that Google should divest its Chrome browser as part of a remedy to break up the company's alleged illegal monopoly in online search, although this does not necessarily mean it will happen and the issue will be resolved through court hearings in the future 1m34s.
• The suggestion that the Onion buy Chrome has been jokingly proposed, with some even suggesting that the press could lend the Onion the money to make the purchase 2m4s.
• It is unlikely that Chrome will be completely disconnected from Google, but the threat of this happening could lead to Google making concessions, such as siloing Chrome and disconnecting tracking cookie technology 2m35s.
• The goal of the Department of Justice's actions is to improve search quality, which has been in decline, and to potentially break Google's monopoly in the process 3m11s.

Whiz and Dasher Acquisition

• Whiz has turned away from a possible acquisition by Alphabet and has instead acquired Dasher for $450 million to expand its cybersecurity platform, a move that is seen as smart given the complaints around Google and Alphabet's monopolistic behavior 3m39s.

Tekever and Dual-Use Drones

• A company called Tekever raised $74 million for dual-use drones, with investments from the NATO Innovation fund, and being based in Portugal is seen as a competitive advantage in the European Defense Tech scene 4m27s.
• European countries tend to prefer giving contracts to European companies, making it difficult for US-based companies to break into the market, and this trend is also seen in other regions such as Asia 4m54s.
• The development of dual-use drones is expected to lead to a convergence of features and technologies, with companies potentially adopting similar protocols and designs 5m28s.
• Tekever is developing a large drone that can carry and release a swarm of tiny drones, a technology that is already being developed by other companies 6m2s.
• The NATO Innovation fund's investment in Tekever raises questions about the fund's focus on European companies, despite NATO including the US as a member 6m17s.

Defense Tech Boom

• The US Department of Defense has a large budget for investing in dual-use technologies, including autonomous vehicles and drones 7m3s.
• There is a European Defense Tech boom, with a growing number of deals and investments in the sector, particularly in parallel with the US defense Tech boom 7m24s.
• European countries are investing heavily in the defense space, particularly in developing their own drones, due to their proximity to conflict zones and the need for local solutions 7m34s.

Converge Bio and Biotech LLMs

• Converge Bio has raised $5.5 million in a seed round to develop an "everything store" for biotech language models (LLMs), which are trained on large amounts of data but often lack specificity 8m10s.
• Converge Bio's goal is to provide post-training services for existing biotech LLMs, making them more specific and useful for companies in the industry 9m27s.
• The company's business model involves working with biotech companies to fine-tune LLMs using proprietary data, making them more useful as a tool for researchers 10m43s.
• Converge Bio's service is a mix of bespoke and automated solutions, where companies can come to them with specific needs and data, and they will fine-tune the LLMs to meet those needs 10m19s.
• The company plans to charge clients, such as pharmaceutical research companies, for their services, with prices potentially in the range of $1 million 11m4s.
• There are already companies working in this space, but Converge Bio aims to provide a unique solution for biotech companies looking to leverage LLMs 11m12s.
• Converge is different from competitors like Goo Bioworks in that it allows customers to use foundation models on their own data and own everything about it, rather than providing a full-service solution 11m33s.
• Converge thinks it can acquire earlier customers by offering a more affordable solution, such as fine-tuning a model for $100,000, rather than spending $1 million a month 12m8s.
• More than half of biotech companies have no experience with machine learning and foundation models, so Converge is trying to get in early with these companies and lock them in as customers 12m22s.

LLM Risks in S1 Filings

• The risk factor section of an S1 filing can reveal interesting information about a company's potential risks, such as the risk of damage from large language models (LLMs) 13m5s.
• Cloud service startup Service Titan included a risk factor in its IPO filing about the potential damage from LLMs, specifically naming Microsoft and Open AI 13m21s.
• This risk factor is not commonly seen in S1 filings, but it may become more standard language in the future 13m53s.
• The risk factor is not just about LLMs creating hallucinations or incorrect information, but also about the potential for security breaches and the sharing of customers' private data with third-party companies 14m13s.
• The use of AI and LLMs introduces unknown unknowns and novel ways of attacking, which makes it important to implement carefully 14m46s.
• The AI industry is expected to see more filings that mention the risks associated with new and weird technologies, even if those risks are not fully understood, as a way to cover all possible risks 15m2s.
• The inclusion of these risk factors in filings could potentially lead to the development of safer AI models, as companies may be forced to find solutions to mitigate these risks, such as using AI models designed to be safer and less prone to hallucinations 15m24s.
• Even with solutions available, companies will still include these risk factors in their filings as a precautionary measure, but this could lead to the development of standard solutions to address these risks 15m44s.
• The mention of these risks could lead to the adoption of mitigation strategies, such as retaining a pen testing startup to conduct independent testing and provide quarterly reports on vulnerabilities 16m14s.

Puerto Rico and Innovation

• Puerto Rico is being promoted as a hub for innovation, with a highly skilled and bilingual workforce, competitive tax incentives, and a vibrant ecosystem for startups and global players 17m5s.

AI Scaling Laws and Test Time Compute

• The current state of AI scaling laws is showing diminishing returns, forcing AI labs to change course, and this will be discussed further 17m37s.
• Scaling laws, such as Moore's Law, refer to the idea that certain technologies will improve at a predictable rate, enabling new applications and advancements, and AI has its own scaling law related to the number of parameters in AI models 17m50s.
• Puerto Rico is being promoted as a hub for innovation, with a highly skilled and bilingual workforce, competitive tax incentives, and a vibrant ecosystem for startups and global players 17m5s.
• The AI industry has been scaling AI models by increasing the number of parameters and compute power, but it's unclear whether this approach will continue to yield exponentially better results or eventually plateau, with some people experiencing only 1% better AI despite increased compute power 19m6s.
• The industry is running out of data and facing high compute costs, making it difficult to achieve significant performance gains by simply making models bigger 19m32s.
• Researchers are exploring alternative methods to improve AI models, including "test time compute," which involves allowing models to "think" about answers before responding, similar to how humans break down complex questions into smaller steps 19m52s.
• This approach has shown promise in improving the reliability and accuracy of AI models, and Open AI's 01 model is an example of this concept in action 20m38s.
• The idea of test time compute is being marketed as the AI industry's next big bet, with potential applications in various fields 21m23s.
• The shift towards incremental improvements in AI could have implications for the perceived AI arms race between the US and China, potentially rendering the idea of an AI cold war obsolete 22m2s.
• Some experts, including those in the Venture side, are exploring the implications of this shift and how it may affect the AI industry and related fields, such as foreign policy and defense 21m36s.
• The AI industry's success is being questioned, with concerns that it may be solely dependent on the amount of money and resources invested, specifically in building data centers and acquiring high-performance computing hardware like H100s, rather than research and ingenuity 22m9s.
• If the success of AI is just a matter of capital investment, it becomes a capital race, and there's no guarantee that any particular country or company can stay ahead of others, such as China, which is reportedly about six months behind in AI development 22m50s.
• The concept of "test time compute" is unclear, and its scalability is uncertain, which could lead to a significant advantage for those who can figure it out before their adversaries 23m16s.
• If test time compute fails, there is a possibility that AI chips specializing in high-speed inference could become more prominent, with one A16 partner suggesting that they could see a dramatic increase in demand 23m25s.

Network States

• A network state is an internet community seeking to establish a physical presence, often by buying land and creating special economic zones, with the ultimate goal of forming their own country 23m59s.
• One notable example of a network state is the project led by Balaji Srinivasan, who has raised over $500 million in funding to build a city and has been attempting to convince countries to allow him to establish a city, with his most recent attempt being in Greenland 24m39s.
• This is not the first attempt at creating a network state, with previous waves of activity centered around cryptocurrency, and it is unclear whether this is the second, third, or fourth wave of such attempts 25m24s.
• Balaji Srinivasan has made previous attempts to buy uninhabited land, although it is unclear whether he has tried to do so in Greenland before or in other areas 25m31s.
• A person has been traveling to around 30 countries, spamming local government officials, and offering to build a city in exchange for permission, with the Mediterranean and Caribbean being potential locations, and a recent event in the Dominican Republic possibly hinting at the chosen location 25m44s.
• These projects are seen as "resorts for rich people" with features like Bitcoin vending machines, rather than actual utopias, as they prioritize the wealthy over the working class and do not address the needs of the lower levels of society 26m26s.
• To create a true utopia, it is suggested that one should start by overpaying and overcompensating the ground-level workers, rather than catering to the rich, as the current approach is seen as merely creating luxury resorts or hotels 26m45s.
• The concept of "Network states" is mentioned, where rich individuals buy luxury land and create exclusive communities, which is seen as being more capitalist than utopian 27m5s.
• A conversation with Jen is mentioned, where he expressed feeling emboldened by the Trump presidency and its potential to help these Network states, despite them being located abroad 27m31s.
• The existence of successful Network states is questioned, with one example being Prospera in Honduras, which allows businesses to register and choose from 36 countries for regulation, but is seen as a "total scam" or a tax haven catering to the rich 28m0s.
• Prospera is also mentioned to be involved in medical testing, with a notable example of a person getting a Tesla key implanted 29m4s.
• Some people have embedded devices in their bodies, such as Tesla keys in their arms, and there are businesses that offer implantation services, although these are not FDA approved 29m10s.
• The rise of crypto may lead to more "Network States," which are communities that form around a shared interest or goal, often facilitated by blockchain technology 29m27s.

Equity Podcast

• Rebecca Balan had a conversation with the founder of blockchain analysis startup Chainalysis about the state of crypto after the election, which may provide interesting insights 29m46s.
• The podcast "Equity" will be back next week and can be found on social media platforms under the handle @EquityPod 30m16s.
• The podcast is produced by Teresa Consolo, edited by Kell Bryce, and illustrated by Durban, with thanks to the audience development team and Henry Pick who manages TechCrunch audio products 30m25s.