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The open-weight, low-cost LLM business is a real and growing category, and it's an open question why no US company has stepped up to compete with OpenAI and Anthropic in this space.

The hosts question why no US company has built a leading open-weight model business, given that Chinese companies like Kimi and Alibaba are doing it and getting $50-70B valuations, while US frontier labs remain premium-priced products. ✦ AI generated

Rory · 20VC · 2026-07-23 · original ↗

starts at this moment · 26:50

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 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. 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 do wonder if there is a market for 80% cheaper intelligence and that's roughly what we're looking at in terms 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?

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26:32maybe later in life it's now 10x and building something and this is another trit VC is building something truly generational. You kind of know as a founder when you're on that path. Okay. And so the VC that what should I do it for 2.8x on my last you know it's just it's the right way as a finance year to think about it. Don't get me wrong but it's a terrible way for a

26:53founder to think about it because there's way too much risk for not enough money. like going from again going from 40,000 in the bank to 400 million versus 800 million. It's it's it's irrelevant if there's risk. This is and and and sometimes then there is a handful of work. There is a handful of work in those next three years. It is a handful of sweat and a handful of market change

27:15and a handful of people that quit and move on and a handful of competitors that they're they're looking pretty good and they may pass you. Three 3x not good enough, man. Got to be 10x. >> I'm confused. What are you saying? Are you saying to sell at six or you saying no? Which is odd because >> I'm saying if it's financial, sell at six. If the mo if the 18 is not enough,

27:35it's got to be 60 >> to be worth the risk for most founders. It's not enough gain. >> I I understand what he's saying. >> This isn't clearing the prep stack. This is clearing my life stack. >> It was weird. I didn't think you were going that direction, but as often happens with you and I listen to the whole thing, I'm like, I get it. I think

27:52what he's saying is this, Harry. Right. you know, when you face that sell decision, um, you you don't not sell because you think you can make twice as much in a year, right? Because you just never know. And it like, you know, and I so in the end, even though I didn't think I'd agree with him, in the end, I did. It's like what I think he's saying is let's

28:15leave aside the what do you want to do with your life questions from a return perspective, you know, don't think incrementally. If you have a chance to sell a company for six billion and make 600 million and you you have a you think you can run it another three years and get you know 1.2 billion that might that risk adjusted that mightn't be worth it if your

28:36current net worth is $40,000 and that's actually good good financial advice. I mean it doesn't in other words if you turn down a big ass offer you better be sure it can be way bigger. You better have high certainty and high bigness. I I think that's a fair comment. >> Yeah. If it's 10x this is my net advice. If it's 10, if you know in your heart

28:52and soul you are building a company 10x bigger than this, right or wrong, like like I I don't know, then go then effing say no and go for it. Here's a few more shares. In fact, friends, let me reload you. But but they only best at 10x. >> It wasn't what I thought where I thought you were going cuz I actually thought you were going to say yeah something

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