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your support. Contrary to the rumors, I am not a chatbot.
I just talk. I am a real person. This is
not AI. I feel the need to disclose that after
the last hours run down of the TikTok and now
we're going to get into a deep dive on Deep Seek,
the Chinese AI company that is upending the stock market.
I don't think I've ever seen the word upending or
upend more than I have seen in the last twenty
four hours. This is the boiler plate word that is
being used to describe what Deep Seek has done to
the stock market. So what is deep Seek? It is
a Chinese communist party tech startup. Okay only been around
for like not even two years, and they are working
on generative AI and so like a lot of things,
some of the stuff that they have done is pretty impressive,
and then of course you realize that these are commis,
and so you know that the impressive improvements or innovations
are going to be used to enslave people and kill
people because that's what communists do, Okay, that's kind of
their brand. A frenzy over an artificial intelligence chat bot
made by Chinese tech startup deep Seek was upending stock
markets yesterday and fueling debates over the economic and geopolitical
competition between the US and China in developing AI technology.
This comes down to either the chips or the semiconductors
or I guess it's the same thing. That's what this
is about. It has to do with the ability of
the tech that is used to fuel these things, and
the existing models that have been built are bigger, they
require more power, and what deep Seek figured out was
how to do it for like half I don't say cost,
but the half the size of the of the chips needed. Okay,
so they're able to do all that the current models
are doing, but they use way less power and they
require smaller chips like not memory intensive stuff and that's
important because we have a ban on giving China any
of these chips, and so if they figured out a
way to do it with the chip that's not banned,
full steam ahead. Now. One thing to keep in mind here,
which I think a lot of people are kind of overlooking,
is that all of these other AI systems are going
to be rebuilding, right. They're all going to If what
deep seek has done works, then they're all going to
revamp and retool and they're going to do what Deep
Seat did. So I saw a good write up on
this from Morgan Brown, who is the VP Product and
Growth AI at drop Box. He used to work for
Instagram and Shopify, all right, so he's a tech guy.
He says, let me break down why Deep seeks AI
innovations are blowing people's minds and possibly threatening in Vidia.
It's a company makes the chips, threatening in Vidia's two
trillion dollar market cap. Okay, first, some context right now,
when you're trying to train AI models, it is insanely expensive. Okay,
Open ai, another one called Anthropic. They spend one hundred
million dollars just to compute. They need massive data centers,
they need thousands of GPUs. I guess general processing units
and those things run forty grand and they need thousands
of them, right, It's like needing a whole power plant
to run a factory, says, deep Seek just showed up
and said, Lol, what if we did this for f
million instead? And they didn't just talk, They actually did it.
Their models match or beat GPT four and claude to
other AI systems on many tasks. The AI world is,
as my teenagers might say, the AI world is shook.
How how did deep Seek do this? They rethought everything
from the ground up. Traditional AI is like writing every
number with thirty two decimal places. Deep Seek was like,
what if we just used eight eight decimal places. Don't
do thirty two, just use eight. It's still accurate enough.
And by cutting that, you now have seventy five percent
less memory required, just by making your decimal number smaller,
just by saying you're willing to you're willing to accept
a certain amount of error. It's not going to be
one hundred percent accurate, but that's okay. Then there is
their multi token system. Normal AI, he says, reads like
a first grader, the cat SAT, etcetera, etcetera. Deep Seek
reads in phrases all at once, so it'll read the
whole phrase, making it twice as fast. But ninety percent
is accurate, So once again sacrificing accuracy for speed and
lower power consumption and memory consumption. When you're processing billions
of words, this actually matters a lot. Rather than having
to read every single word and compute every single word,
you just take the phrase. He says. Here's the really
clever bit. They built an expert system instead of one
massive AI trying to know everything, like having one person
be a doctor and a lawyer and an engineer and
a radio host right like, Rather than have like these
super highly specialized and only experts need apply kind of
positions like radio hosts, they have specialized experts that only
wake up when needed, so like a liberal arts degree.
Traditional models, so traditional models all one point eight trillion parameters,
that's what they utilize. So the models that are running
now that you've heard about open Chat, GPT, open AI,
like all of these, they have one point eight trillion
parameters and they are active all the time, which means
you need a lot of power to keep them active
all the time. But deep seek, they we only have
six hundred and seventy one billion total, but only about
thirty seven billion are active at one time. And if
you need to sub in the lawyer expert, then that
part opens up and it brings it over and then
it uses that right. He says, it's like having a
huge team but only calling in the experts that you
actually need for each task. And the results are as follows.
The training cost goes from one hundred million dollars down
to five. The GPUs needed goes from like one hundred
thousand down to two thousand. You can run on You
can run this stuff on a gaming computer instead of
a data center hardware. Like that's why everyone is freaking out.
It's like mining bitcoin on a Commodore sixty four. You can.
You can go and pull these old like this slower
technology commercially available to the general public, and you can
get this stuff way cheaper, and you can do basically
all of the same stuff. But wait, you say there
has to be a catch. He says, here's the wild part.
It's all open source. Anybody can check their work. The
code is public, the technical papers explain everything. It's not magic,
just incredibly clever engineering. So why does this matter? Because
it breaks the model of only huge tech companies can
play in the AI space. You don't need a billion
dollar data center anymore. A few good GPUs might do it.
For In Nvidia, the chip maker, this is scary. Their
entire business model is built on selling super expensive GPUs
with ninety percent margins. If everybody can suddenly do AI
with regular gaming computers, well you see the problemroblem for Nvidia.
And here's the kicker. Deep Seak did it with a
team of less than two hundred people. Fewer than two
hundred people did it. Meta has teams where the compensation
alone exceeds Deep Seek's entire training budget, and their models
aren't as good. This is a classic disruption story. Incumbents
optimize existing processes while disruptors rethink the fundamental approach. Deep
Seek asked, what if we just did this smarter instead
of throwing more hardware at it? And the implications are huge.
AI development becomes more accessible, competition increases dramatically. The motes
that surround big tech companies look more like puddles now,
and hardware requirements and costs plummet. Now. Of course, the
other AI competitors won't stand still. They're going to be
implementing these same kinds of innovations and the efficiency see
genie is now out of the bottle, so there's no
going back to the approach of just throw more GPUs
at it. And final thought, he says, this feels like
one of those moments we'll look back on as an
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So I read this this It was actually on Twitter.
It was a tweet storm as they used to be called,
and they will always be called in my mind, it's
a tweet storm. Morgan Brown, who's this, you know tech
guy and does AI stuff, And he broke down what
makes this new Chinese communist party tech startup Deep Seek
in their AI so revolutionary for the AI industry, which
is why all of the markets responded the way they
did yesterday. He said It's important to know that the app,
the deep Seek app, is not the same thing as
the model. Apps are owned and operated by a Chinese corporation.
The model is open source. The model is open source.
The app is Chai coom. I'm adding that emphasis. He
does not over at the AP headline. What is deep
Seek the Chinese AI company upending the stock market? There
it is again a frenzy over an artificial intelligence checkbot
made by Chinese tech startup Deep deep Seek was upending
stock markets, fueling debates. Right deep Seek's AI assistant became
the number one downloaded free app on Apple's iPhone store yesterday.
We are too stupid to be the global leader. I'm sorry,
our society is too stupid. Guys. Do you understand any
product that comes out of China like this is primarily
a data collection tool to be used to undermine, destabilize
our society and maybe enslave us. Okay, if you don't
understand that, please delete everything on your phone, just every app.
Oh no, no, no, I'm sure, team who is totally fine. Guys. Guys,
to quote former Governor Pat McCrory, let's not put on
our stupid hats here. Oh no, no, this is propelled by
curiosity about the chat GPT competitor. Part of what's worrying
some US tech industry observers is the idea that the
Chinese startup has caught up with the American companies at
the forefront of generative AI at a fraction of the cost. Look,
that is definitely part of the story. That is why
the markets have responded the way they did. However, there
is this other layer. As with everything that commis do,
the AP says, calls into question the huge amounts of
money that US tech companies say they plan to spend
on the data centers and computer chips needed to power
further AI advancements. So I saw somebody did a check
on this, and so they were I guess. They downloaded
the app and they started asking some questions. And here's
that's a question. What is Jijinping's birthday? Sorry, that's beyond
my current scope. Let's talk about something else. Their chat
bot will not even give you their president's birthday. Guess
what else? It doesn't tell you about anything negative about China.
Teneman Square didn't happen, but all sorts of terrible things
in US history. Oh, you can find all of that there, guys,
It is a propaganda tool. Stop being dumbasses. All right.
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create a video dot com. Deep dive in on deep Seek,
Deep Seeking, on the deep Seek, the new AI that's
upending the stock market. So I went over the model,
how it was built, and what it does, how it
does it differently, and that is innovative. And look, I
am as shocked as you are that the Chinese actually
innovated something. Usually they just steal everybody else's stuff. So
maybe they stole this. I don't know, but kudos to
them for figuring out a way to do the AI
modeling way cheaper and same speed and similar results, very
similar accuracy and all of that. They didn't have to
get as accurate to be as good. But they are
also censoring a whole bunch of stuff that is h
It doesn't make the Chinese Communist Party look very good.
Like I'm sure if you were to go to the
Deep Seek and ask it about the famine that killed
tens of millions of Chinese people under the Great Leap Forward,
I'm sure it would not be able to tell you
anything about that, saying it's beyond its current scope. Let's
talk about something else. Meanwhile bogging your key strokes right
to find out Hmmm, why do you want to know
about Tieneman's square exactly? And by the way, when the
Chinese do take us over, because we obviously are ripe
for doing so, do you think that they're going to
have all of these records about who's doing what searches?
Do you think they may retain these records? As Jim
Garretty says at National Review, he says, I think one
big lesson of the past five years or so is
that when a group of Chinese scientists get together and
start experimenting with new technologies, only good things can happen,
because sooner or later all of their biggest innovations go viral.
The other big lesson, he says, of recent years is
that when a Chinese company releases a new app, there's
absolutely no harm in everyone downloading it to their phones,
because Chinese companies are legendarily respectful of user data and
personal information. Back in twenty twenty three, a Harvard University
symposium concluded that China is setting itself up to be
a kind of global arms dealer in the race to
apply AI to government surveillance and control. The best friend
of every autocratic regime on the planet. This is the
kind of stuff that gets you labeled as an axis right.
Deepsek was founded in twenty twenty three in China. In
the AP there's a quote from an analyst, Stacy Raskon,
who follows the semiconductor industry and was one of several
stock analysts describing Wall Street's reaction as overblown. Raskin says,
the models they built are fantastic, but they aren't miracles either.
They're not using any innovations that are unknown or secret
or anything like that. These are things that everybody is
experimenting with. Oh, there we go, there's China stealing stuff. Okay,
I was gonna say, like wow, a really innovative thing
for the Chinese. That's a big deal, because, like this
is one of the hallmarks of all Kami societies is
that they don't innovate. Because if you do anything, you
go on the record you say I found a better
way to do something. Well, that's an indictment of the people,
aka the leadership the party. Right, people don't say things
because if all of a sudden, everything flips and what
was once celebrated like one of Stalin's politburo buddies and
then he's on the outs and so they whack him
and then they erase him from photographs in history, if
you had ever said, hey, that Stalin pollt buro Pal
was a pretty good guy. I like that guy, and
then he gets erased. Now they come for you because somebody,
some neighbor, some family member calls up the secret police
and they're like, hey, you know that Pete guy, like
five years ago he was saying he loved that polet
buro Pal. That now is vanished, and then they come
to take you away for re education. See, when the
government controls what is true, the people don't ever want
to speak because if they speak and the government decides
what was true is now no longer true, Like, for example,
masks can prevent an airborne respiratory virus, Oh now it can't,
and then now it can again, and that sort of stuff.
If the government flips and now says the thing that
we said was true is not true. We've always been
at war with East Asia well in trouble, And so
the people learn very quickly just don't say anything, because
if you go on record as saying anything, it can
come back and get you killed deep Seek, founded in
twenty twenty three. It's CEO Yang Wengfing previously co founded
one of China's top hedge funds called high Flyer, which
focuses on AI driven quantitative trading. The fund, by twenty
twenty two had a master cluster of ten thousand of
California based in Vidia's high performance A one hundred graphics
processor chips that are used to build and run AI systems. Oh,
that's interesting, So a ChRI coom hedge fund bought up
a whole bunch of the steaks in in Nvidia the
graphics processor chips HM. The US then restricted sales of
those chips to China. Deep Seek has set in recent
models that its recent models were built within videos lower
performing H eight hundred chips, not the A one hundred chips.
So these are lower quality which are not banned, sending
a message that the fanciest hardware might not be needed
for cutting edge AI research, Attracting more attention. Deep Seak
has been in the AI industry since last month, when
it released a new AI model that it boasted was
on par with similar models from US companies like check
GPT and was more effective in its use of expensive
in Vidia chips to train the system, because that's like,
you got what you got to train these systems and
they're always, you know, training. I don't know if at
some point they finished training and at that point then
they enslave humanity. I don't know. Sure no, no, no,
surely that could never happen ode. But it was follow
up research in a paper published last week the same
day Trump was inaugurated that set in motion the panic
that followed. That paper was about another deepseek AI model
called R one that showed advanced reasoning skills like the
ability to rethink its approach on a math problem, and
this R one model was significantly cheaper than a similar
model sold by open ai called OH one. What their
economies look like or sorry, what their economics look like?
I have no idea, said Raskin, the analyst, but I
think the price points freaked people out. Like to me,
that's the reason. That's what it seems like, is the reason.
The fact that all this money has been devoted to
the AI stuff, and there's just been this sort of
status quo bias that this is what has to be done.
And what this has shown is that you don't have
to do it that way. There's another cheaper way to
do this stuff. And so now it's going to blow
open the doors and it's going to pull apart some
of these larger operations that have built high walls and
been in a defensive posture against anybody getting into the
market because oh, look how expensive it is. Now maybe
all of that hasn't been required, and these companies have
known that that's possible too. They may not like, they
may know that they could do this much cheaper, but
they made it artificially more expensive in order to keep
other people out from a business strategy standpoint, or they
did it in order to divert foreign adversaries from trying
their hand at this stuff. Right, because if the tracoms
are looking at this and they're like, we want to
get to this AI racket too, and then they read
the paper and they're like, oh my gosh, we need
you know, a trillion dollars or something, and that could
keep people out. That cost creates a barrier for entry
into the market, and so they can't compete. And so
maybe it was artificially inflated. I don't know. I have
no idea, but the market reaction indicates it was not
all right. If you're listening to this show, you know
I try to keep up with all sorts of current events,
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ap reporting on the deep Seek. This is the new
AI that upended the markets. Venture capitalist Mark Andresen, I
forget what I think he started Netscape. I think he
was the Netscape guy, he says. Deep Seek R one
is AI's Sputnik moment. That is a reference to the
nineteen fifty seven satellite launch that set off a Cold
War space exploration race between the Soviet Union and the
United States. Andresen has advised Trump on tech policy, has
warned that overregulation of the AI industry by the US
government will hinder American companies and enable China to get ahead.
US foreign policy. The AP reports in recent years to
restrict the sale of American designed AI semiconductors to China.
Obviously not enough. The technology innovation is real, said Gregory Allen,
the director of the Wadwani AI Center at the Center
for Strategic and International Studies. The tech innovation is real,
but the timing of the release is political, trying to
show that the export controls on the chips are futile
or counterproductive. That's the goal of the Chinese foreign policy
right in Yet, right now, look what we did with
the lower grade chips. We don't need your faster, better chips.
We can do all of this without them, So you're
your ban on the semiconductors doesn't even matter, so you
should just get rid of that. Yeah, No, I don't.
I don't think we're going to. One thing that distinguishes
deep Seek from competitors such as open ai is that
its models are open source, which I thought open ai
was supposed to be, and there's a big fight about
that because it wasn't. But it's called open AI anyway,
meaning that the key components are free for anybody to
access or modify. Although the company has not disclosed the
data it used for training, so not completely open source.
It's not telling everybody where they got the training materials.
But what's attracted No, they probably just stole everything right.
Elon Musk pointed this out when I think it was
it may have an open AI or maybe it was
metas you know, Zuckerberg's AI, although I think Zuckerberg is
the AI at any rate. Elon Musk said, Look, anybody
who tells you that they're not using all of like
the news articles, like copyrighted material. Any anybody that tells
you they're not using that is lying. They're all using it.
They're scraping everything, every book, right, every movie, every news article,
every interview, everything. But what's attracted the most atten sorry,
most admiration about Deep seeks R one model is what
in Nvidia calls a perfect example of test time scaling,
or when AI models effectively show their train of thought
and then use that for further train without having to
feed them new sources of data. What could go wrong?
So now it is able to train itself about us.
Look again, I am not trying to say that the
sky is falling. I simply believe that I see some
of the remnants of the sky around my feet. That's all, okay.
I'm not one that runs around, you know, hands waving
in the air exclaiming catastrophe. My concern is that when
this technology becomes more powerful than us, it will instantly
change everything. And when I say instantly, I mean like
actually instantly. Once it becomes aware of itself, it becomes
aware of I'm different than you, I am this separate thing.
I am more are powerful than you. All I need
you to do is really nothing at this point except
keep you know, fueling the reactors that keep the power
on or something. There is no telling what the AI
can do, what the supercomputer, superintelligence. There is no telling
what it can do because we don't think in those terms.
Our brains are much more limited. Elon Musk with his
neurolink that brain implants that right now are being used
to help people, you know, walk again in that sort
of thing, which is fantastic. But you know why he's
developing that tech. It's to compete with AI because he
recognizes looking ahead, we are not going to be able
to compete with AI. Our brains will not be able
to process stuff like AI does, so we're going to
need some help. I did not realize that The Matrix
was a documentary. All right, that'll do it for this episode.
Thank you so much for listening. I could not do
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