Open source model improvements do not cannibalize our core business because data is most valuable on the frontier of model performance — open models just raise the floor, while customers still need data for new capabilities beyond what open models can do.
Oswald argues that open source models don't hurt Mercor's business because data demand is driven by frontier capabilities, not commoditized tasks. Open models raise the floor, but customers still pay for data to reach new heights. ✦ AI generated
Oswald Nitski · 20VC · 2026-07-25 · original ↗
starts at this moment · 1:13
“Does open cannibalize Mercor's core business?”
I wouldn't say that open source model improvements cannibalize our core business because data is most valuable on the frontier of model performance. So each of our customers has their own unique goals and is purchasing eval training data sets to fill gaps in current model capabilities. Open models just raise the floor of what people are interested in. As long as customers still have new capabilities that they want to get better at, our business still continues to grow. Open source models just mean that nobody's buying anything that can already do what open models can already do.
verbatim transcript · starts at 1:13
1:13>> Dude, I am seeing open open open. Everyone claiming that we will see the mass migration from frontier closed to open. Kimmy very recently came out with that new model. And I literally I didn't really know. Does [snorts] open cannibalize Mcore's core business? >> I wouldn't say that open source model improvements cannibalize our core business because data is most valuable on the frontier of model performance. So
1:42each of our customers has their own unique goals and is purchasing eval training data sets to uh fill gaps in current model capabilities. Open models just raise the floor of what people are interested in. Uh as long as uh customers still have new capabilities that they want to get better at, um, our business still continues to grow. Uh, open source models just mean that nobody's buying anything that can be K3
2:07can already do. >> So, if like 90% of enterprise workflows can be done with open models, which more and more people say they can be, and that 10% is really where you serve your customers and provide data. I'm naive, does that not make it harder and harder to make huge amounts of revenue if that 10% and frontier moves further and further away? >> I'm not convinced that 90% of enterprise
2:33enterprise workflows can be handled by open models or frontier models right now. Uh, we think that the these calculations might be based off of existing demand or things that, um, come top of mind when uh, current model users are thinking about models could do, but there's a whole category of latent demand that people aren't even, these are things that people aren't even trying to do with models yet. Uh, most