Andreessen Horowitz general partner and Mistral board member Anjney “Anj” Midha first spied DeepSeek’s jaw-dropping performance six months ago, he tells TechCrunch.
That’s when DeepSeek introduced Coder V2, which rivaled OpenAI's GPT4-Turbo for coding-specific tasks, according to a paper it released last year. This put DeepSeek on a path to release improved models every couple of months right through R1, he said. R1 is its new open source reasoning model that has upended the tech industry for offering industry standard performance at a fraction of the cost.
Despite the sell-off of Nvidia’s stock, Midha says R1 doesn’t mean that AI foundational models will stop spending billions to gobble GPU chips and build more data centers as fast as they can.
It means they will do more with the compute power they can obtain.
“When people are like, okay Anj, Mistral has raised a billion dollars,” he says. “Does DeepSeek mean that all that billion dollars is completely unnecessary? No, actually, it's extraordinarily valuable for them to be able to look at DeepSeek’s efficiency improvements, internalize them, and then throw a billion dollars at it.”
He adds, “Now we can get 10 times more output from the same compute.”
That doesn't mean Mistral is hopelessly behind rivals OpenAI and Anthropic, he argues. Each of them have raised many more billions than Mistral. OpenAI is reportedly in talks to raise another jaw-dropping $40 billion.
Mistral remains competitive with them because it's open source, he says. And his logic does have merit. Open source gives a company access to essentially free technical labor from those who want to help because they use the project. Closed source rivals guard their secrets and have to pay for all the labor as well as compute power.
“You don’t need $20 billion. You just need more compute than any other open source model app. So Mistral is positioned [well]. They have the most compute of any open source provider,” Midha said of his portfolio company.
Facebook’s Llama, the largest Western open source AI model rival to Mistral, will also get plenty more investment. CEO Mark Zuckerberg on Wednesday said he’s still planning to spend “hundreds of billions of dollars” overall on AI. That includes $60 billion in 2025 on capital expenditures, mostly data centers.
a16z’s Oxygen GPU sharing program "overbooked"
Midha, who is also a board member for AI image generator Black Forest Labs and 3D model maker Luma (and an angel in AI outfits Anthropic, ElevenLabs, and others) has another reason why he doesn’t see AI’s hunger for GPUs abating anytime soon.