Being in the direct path of AI token spend is now the single most important criterion for a company's ability to capture value, and that value capture will ultimately hinge on the unknowable competitive structure of the frontier model labs.

13:07technology already. Like very it's happened very fast. Um so, they're not going to be increasing budget for things that are like previous generation software. In fact, they can't even cover the growth in their costs that is happening from AI with that with reductions in that. So, there's going to be pressure on those. Um and you know, honestly, it's probably going to have to come from either higher

13:31prices that they can charge or restructuring of of the labor force. Um, the biggest driver of where value is going to get captured right now is I would say something that is totally unknowable, which is what is the market structure of the model companies? How much competition is there? If there's a couple at the frontier, token prices will probably be higher. If there are five at the frontier, token

13:56prices will probably be lower. Token prices being lower probably is better for the overall economy because there's not this pressure to kind of restructure the labor force as quickly as things get really, really big. Um, you know, right now the number is smaller. It's not five. Um, there's a tremendous amount of inelasticity for frontier intelligence right now. There's also question of how much does that change over time? Like, are a lot

14:24of the jobs that can be done fine to be done with previous generations of models? That's not the way anyone is consuming tokens today. Um, so, you know, that's an unknowable. The market structure is an unknowable. Um, you know, what role does open source play? You know, that's a tenuous situation. Um, you know, how much can you run locally? Um, how much can you run with small models? Like, these are all the

14:47open questions that I think will determine who captures value. Um, but for the broader ecosystem to thrive, it's probably competition that that keeps token prices, you know, lower. >> So, a couple of my colleagues are in China at the minute and it's been really interesting just getting their feedback, you know, relative to what we're seeing in the US. Um, and and one of the things that that