It is a huge open question why no US company is building a competitive open-weight low-cost model business when Chinese companies are proving it can be a viable $50-70 billion outcome.
Rory highlights the paradox that while five Chinese companies are aggressively shipping competitive open-weight models and getting large valuations, four or five capable US companies (Google, Reflection, Thinking Machines, Lambda, etc.) are not pursuing this opportunity despite the demonstrated demand for 80% cheaper AI intelligence. ✦ AI generated
Rory · 20VC · 2026-07-23 · original ↗
starts at this moment · 15:50
it's also worth pointing out that while we're talking about banning Chinese openweight models, the Chinese administration are talking about preventing those companies from selling those models to the US. Like just like we don't let them buy Nvidia, they're not going to let us buy their open source models. So which is kind of totally zany. We think they're trying to sell it to us and we don't want to buy it and they think they're trying and they think they shouldn't be selling it to us cuz it's so powerful. So we can that's kind of just weird in of itself. But I think the really interesting question here and it gets to thinking machines is is the opensource LLM open weight low let's call it openweight lowcost LLM business a good business and if it's a good business why can't some red-blooded American company step up and give OpenAI and Antropic a run for the money and Jason it's the point you made if this is I mean where's Grock where's Gemini I thinking machines had an announcement last week. I they announced a model. They they didn't position it as, you know, state-of-the-art frontier, but they kind of I think they made a comment on something that you can build upon. Inkling, I think it was called. So, one of the and you know, at one point, Meta looked like they were going to go down this route, right? Is there a business? How can you make money? It's an interesting question. Can you make money as a maybe not completely openweight but a lowcost US provider of these models and be competitive with those guys because you know the the open weight models in China are getting 5070 billion valuations like it's not entropic but I wouldn't turn down a $50 billion outcome if someone could make a convincing case to me that a US company could do this.
verbatim transcript · starts at 15:50
15:50those models to the US. Like just like we don't let them buy Nvidia, they're not going to let us buy their open source models. So which is kind of totally zany. We think they're trying to sell it to us and we don't want to buy it and they think they're trying and they think they shouldn't be selling it to us cuz it's so powerful. So we can
16:05that's kind of just weird in of itself. But I think the really interesting question here and it gets to thinking machines is is the opensource LLM open weight low let's call it openweight lowcost LLM business a good business and if it's a good business why can't some red-blooded American company step up and give OpenAI and Antropic a run for the money and Jason it's the point you made if
16:32this is I mean where's Grock where's Gemini I thinking machines had an announcement last week. I they announced a model. They they didn't position it as, you know, state-of-the-art frontier, but they kind of I think they made a comment on something that you can build upon. Inkling, I think it was called. So, one of the and you know, at one point, Meta looked like they were going
16:52to go down this route, right? Is there a business? How can you make money? It's an interesting question. Can you make money as a maybe not completely openweight but a lowcost US provider of these models and be competitive with those guys because you know the the open weight models in China are getting 5070 billion valuations like it's not entropic but I wouldn't turn down a $50 billion outcome
17:20if someone could make a convincing case to me that a US company could do this. So I think that's one of the interesting questions here. Maybe it's because the dirty little secret is a lot of their advantage is distillation, which you can't legally do if you're US-based. So I I do wonder Jason to your exact point if there is a market for 80% cheaper intelligence and that's roughly what we're looking at in
17:44terms of when you take into account the cost of inference the difference between the bundled product that is an frontier model you know IP plus inference and an open source model where you dissociate the IP from the inference cost if you're looking at 80% cheaper opportunity and there's the mass demand for that when is someone going to try and fill that demand in the US? I just I don't
18:10know. >> I've asked so many people on on why we don't have leading open models in the US. No one's actually given me an answer. Uh we're still waiting for models from Reflection, which I think is kind of one of the >> uh hopes that we have. Um I completely I was I was offered Kimmy today by the way, Rory, at 20 billion. Um this was the it fell into my inbox. I have an SPV