Josh Wolfe of Lux Capital says DeepSeek's breakthrough should push the U.S. to loosen AI regulations and speed up defense innovation to compete with China. He argues open-source models and companies like Anduril and Hugging Face are now critical to staying ahead, and warns DeepSeek poses bigger national-security risks than TikTok.
Chapters
Well, someone else who has been watching AI and the role of technology through a geopolitical lens, Josh Wolfe, co-founder and managing partner of venture firm Lux Capital, which touts Andrell Industries, Hugging Face, Databricks, Icon Therapeutics among its many investments. Josh, it's great to have you back to the show. Welcome.
Morgan, great to be with you.
That's exactly where I want to start, because I've had multiple conversations with Alex Karp over at Palantir. And what he has said is that the US China's dominance in the rollout of AI establishes a new era of deterrence. Given what we've seen with Deepseek now, does that go away? And does that thus in turn make Mark Andreessen's comments about this being a Sputnik moment very true?
Well, you know, you have one camp that thinks that Deepseek means we're in deep, you know what. And you have another camp that think that this is a wake-up call. And I think— I think it's the latter camp, that this is a wake-up call. Call for American innovation to be relatively untethered. You go back to AI and the Biden administration, well-intentioned, trying to regulate, trying to put some regulatory guardrails on top of this. And I think, you know, he was worried that we were going to drive off into a ditch with the new Trump executive order. I think what you're seeing here is that AI and our innovators, both in defense, the neo-primes, people like Anduril and Saildrone, are are going to be relatively untethered and we're going to have a speed pass to compete. And that is the most important thing. You're going to have a far more permissive Department of Justice and FTC that instead of attacking big tech will exactly as your prior guest from Lockheed noted, be able to compete with this civil military fusion that China has been pioneering.
You know, you've come on the show. We've talked about TikTok. We've debated the national security implications of it. We know that that is a situation that is you know, going through its own policy process in Washington right now. But the terms of data and what happens to the data with something like Deepseek perhaps puts the national security implications of TikTok— they make them look minor. Your thoughts?
Well, anybody that is using the Deepseek app is an absolute fool. If you're using Deepseek on one of companies like Together Computer, one of Lux's companies, which can get rid of the China CCP censorship, then it's probably okay. But remember, the open source movement is something we believe deeply in. Most great technologists and entrepreneurs and venture capitalists are on the side of open source, and the closed source models that have consumed tens of billions of dollars are the ones that are really going to be at risk. But when you look at Hugging Face, major repository, you look at Together Compute, you look at RunwayML, a lot of the Lux companies here, they have been pioneers in open source. Now, why am I not worried about open source even with the Deepseek model? As long as you don't have the CCP censorship on it, the models with their open weights allow people to run on their proprietary data. So that means that people like pharma companies or defense companies that have their own siloed repository, their own proprietary data— you think about Bloomberg with their proprietary and longitudinal data, you think about Meta with their longitudinal proprietary data, particularly all of our personal information— that those are the people that are going to have the edge even as open source really takes hold. So I'm not worried about open source being the problem. I'm worried about people overfunding things that are really closed models with no proprietary source. And a lot of capital is going to be burnt there. And you're seeing that now with people worried about OpenAI in some aspects, people worried about Anthropic, which, if I had to speculate, probably ends up in the hands of Amazon. But the open source movement is, if anything, given a huge tailwind because of this.
