No. of Recommendations: 15
The wildcard here imo?
Models could become 5 to 20 times more efficient in the next decade. At least that?s what am told is possible. Think how that matches up with that overwhelming demand you rightly forecast?There is no moat in the models themselves at all. It is more complicated than just 3 layers, but to get at the main idea as to why models will be commodity part, I like to view it like this:
+-------------------------------------------------------------+
| LAYER 3: APPLICATION |
+-------------------------------------------------------------+
| MOAT: Anywhere between WEAK, MEDIUM and MASSIVE |
| just depending on the individual firm. |
| DYNAMICS: Proprietary data ecosystems, high switching |
| costs, network effects, and direct user access. |
| EXAMPLES: Google Search, Meta, Custom Enterprise Apps |
+-------------------------------------------------------------+
|
| Can lease or own, owning help
| protect moat above
V
...............................................................
. LAYER 2: MODEL .
...............................................................
. MOAT: WEAK / NONE (The Commodity Layer) .
. DYNAMICS: The "combustion engine" of AI. Squeezed by open- .
. source proliferation, algorithmic transparency, .
. and zero switching costs. Highly interchangeable. .
. EXAMPLES: OpenAI (GPT), Claude etc but not refer model only .
. and not the app that runs it, which can have .
. semi-weak-moat from habbit app habbit. .
...............................................................
|
| Part of profits must
| flow down to pay toll
V
===============================================================
= LAYER 1: INFRASTRUCTURE =
===============================================================
= MOAT: MASSIVE =
= DYNAMICS: The "oil and pipelines." Extreme CapEx, massive =
= economies of scale, constrained silicon supply, =
= and physical energy grid limitations. =
= EXAMPLES: AWS, Microsoft Azure, NVIDIA, TSMC =
===============================================================
|
| Can in turn produce massive
| revenue from leaseouts, returned
| to the owner. Not as Steadfast as
| railway, but closer than it looks
| and advantage of massively growing
| "tracks" from far more useage growth.
V
That was fun! You should see my programming code.
- Manlobbi
