#97 - Three Breakthroughs: The AI Arms Race

Some big shifts are happening in tech and science. AI investments are scaling to unbelievable levels. Social media is breaking apart in unexpected ways, and cancer research is making real strides toward personalized treatments. Welcome back to The Tech Optimist, where we break down the breakthroughs shaping the future. Today we're covering an AI arms race, the unbundling of social media, and a major breakthrough in cancer vaccines. You heard me right. Now, this episode is packed with insights you won't want to miss. So let's get started. Real quick, we've got an ad and a disclaimer. We'll be right back.

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And we're back. Now let's dive into today's episode where we're unpacking some of the biggest breakthroughs that I mentioned earlier. From the AI arms race to a game-changing medical discovery, this is one episode You're not gonna wanna miss. Let's get started.

Hey, and welcome to this week's 3 Breakthroughs. I'm here again with Lukas. I'm Mike Collins, the founder and CEO of Alumni Ventures. We get together every week and talk about what's going on in tech and science and innovation and venture capital and whatever the hell else we want to talk about. So,

this seems to be my cue in this type of episode. Before we dive in deeper into the conversation, I'm gonna set the stage a bit more for what's ahead, 'cause today's breakthroughs aren't just important. They're reshaping the future in real time. First up, we're talking about the AI arms race, and things are escalating fast. Google, Microsoft, and Amazon are investing billions into compute power. I'm going to explain what that means a little bit later, but building out massive AI supercomputers to fuel the next generation of models. But is this a necessary step forward, or are we racing towards an AI monopoly where only the biggest players can compete? And what happens when AI advancement is limited by who can afford the most GPUs? We're going to break that down today. And next, social media is evolving as users seek more tailored experiences. We're seeing a shift from all-in-one platforms to smaller, more specialized communities. So what does this mean for the future of online interaction and how will platforms adapt to this changing landscape? And then finally, we're going to shift from technology to medicine, where one of the most promising breakthroughs in cancer research is Only unfolding. A new cancer vaccine trial has delivered stunning results, with kidney cancer patients showing zero recurrence of the disease after 3 years. It's an incredible step forward in personalized immunotherapy, and if this approach scales, it could change how we treat cancer forever. The world is shifting, industries are evolving, and these breakthroughs are leading the charge. Stick with us, we're about to break it all down.

So the big splash a few weeks ago was DeepSeek and everybody freaking out. We talked a little bit about it, but we're now a couple weeks into it. And, um, from the people writing big checks in the know, it seems to be, uh, a yawn and we are going to continue to spend enormous amounts of money. On compute and data centers and energy. And if you listen to the earnings report, they all believe that they are compute constrained and not backing off at all, whether that's Meta, whether that's Google. It just seems that they're plowing ahead. What's your take on it, Luke?

Yeah, I mean, I mean, not backing off is, is putting it lightly. Last week was Google's earnings announcement and they announced plans to increase CapEx to $75 billion in 2025. And that's off of $50-something. I think in 2024, analysts were expecting them to increase like $58, $60, but they just blew that out of the water. So big tech is going all in, writing checks so big. They may as well be government defense budgets. It's Amazon, Google, Microsoft, Meta pouring tens of billions of dollars into AI infrastructure.

All right, let's take a second to talk about how massive $75 billion really is, because when you throw around numbers that big, it's easy to lose perspective. So let's break it down. If you had $75 billion in $100 bills, the stack would reach about 50 miles high. That's nearly twice the height of the stratosphere. And if you spent $1 million every single day, it would take you over 205 years to run out of money. Now let's put that into some real-world comparisons. Netflix, the streaming powerhouse, made about $39 billion in total revenue last year. So $75 billion is nearly double of Netflix's entire business. It's also 40% of the entire global gaming industry. Or how about this? When the US sent astronauts to the moon, the entire Apollo program cost around $25 billion in the 1960s. Adjusted for today's dollars, that's about $150 billion, meaning $75 billion is half the cost of putting humans on the moon multiple times. And for one more example to round this off, in the world of tech, companies like Meta spent $33 billion last year on AI infrastructure, meaning that $75 billion could more than double Meta's AI investment. OpenAI's next big model, GPT-5, is rumored to cost between $1 and $10 billion to develop. So $75 billion could fund multiple generations of the most advanced AI systems we've ever seen. Bottom line, $75 billion isn't just a big number, it's a game-changing amount of money that could shift entire industries, fund moon missions, or shape the future of AI for years to come.

And I think their big bet is like, even in the face of what DeepSeek brought to the market a couple weeks ago, they believe that dominance in compute today is just going to mean greater control in this sector in the future.

Yeah. And I'm in the camp too that these people are not run by speculative, go-from-the-gut people. These are run by the smartest, you know, they're seeing ROI. ROIC. So I tend to trust them that this is not just game theory. I've got to spend it because that guy's spending it. I believe they're looking at usage. I believe they're looking at their business model and what they can charge. And they're basically saying this is being used, this is being paid for, this is an investment that is going to pay back for our company and our shareholders. So, yeah, I believe that is true, that this is not kind of mass hallucination and a bubble. I believe people are using this stuff every day and are going to be using it more and more. And they're investing in where there is demand. Mm-hmm. So, I could be wrong. But I tend to fall on that end of the spectrum that these people are seeing things, seeing numbers, sharing it, and they literally are, we cannot make this stuff fast enough.

Yeah.

And even our portfolio company just this week in the Middle East announced a big deal, $1.5 billion. For Grok.

Grok,

yeah. And again, I think that this is not just the big tech investing here. I think you're going to increasingly see countries investing in this infrastructure. Yeah. I think you're going to see small and medium size looking to control their own models, customize their own models, train their own models. I think all of the above. Yes, yes, yes. And we've talked about this too, which is there's going to be a lot of picks and shovels. Exactly. There's going to be a lot of energy constraints, that there is going to be— I think the interesting debate is where's their venture money to be allocated? Where in the stack? Where do you want to play? Do you want to play it, you know, close to the metal? You want to play way up the stack at the application layer? I think those are all interesting debates. But I think the— I think big tech has spoken, which is we're not blinking. We need more compute. And obviously that's going to feed into Nvidia and the like for sure. But, you know, this whole shock and recalibration, I'm not seeing it. And to plug another podcast, I think a really good discussion over on BG2 with— Yeah. I'd encourage people that they want to dig into deep seek in this analysis. I thought those guys, their analysis was phenomenal. So, again, We're not here about viewership and numbers and stuff. We're trying to add value to our, mostly our customers and our portfolio company CEOs. Um, you know, go check them out. Great discussion.

Great discussion. And, and I think, um, you know, in terms of kind of the, the 2-week fallout from, from DeepSeek, you know, sure, it's not, it's not gonna cause big tech to, to spend any less, but what the BG2 guys were talking about, I think was really fascinating, which is DeepSeek's rise as an open-source AI powerhouse is something that the rest of the industry is reckoning with and is kind of rethinking. You know, for years, OpenAI, Google, Anthropic, they were able to justify their closed models by arguing AI is too powerful, too dangerous, too expensive to give away for free.

That genie's out of the bottle for sure. In fact, I think you raise a really good point, Lukas, about You know, Sam Altman in an interview just recently said, hey, I think we need to rethink that. So again, I encourage people to go see kind of Sam's— just did a fascinating blog on kind of the 3 rules of AI where he talked about scaling laws and, you know, 1/10 the cost, but also this opening of like, hey, there's— I think there's a place for open source even within our— Framework of the world. I think you're absolutely right. I think scale is one dimension. How much money, how big, how fast do we build compute? I think energy is the dimension. And I think there's a fascinating, where's value going to accrue in this whole open source discussion? Fascinating.

Yeah. It's really interesting how Sam's tone has shifted in the last couple of weeks. It started with, you know, gear up for the lawsuits, distillation practices.

Yeah, they ripped me off.

Yeah. And now he's acknowledged—

ironic from the guy who scraped the internet.

Yeah, right. But he has acknowledged, like, you know, no, this was impressive and there was real innovation here. I don't know if he's going to drop the lawsuits ultimately. Well, we'll see what he does. He definitely indicated an understanding that the R1 model from DeepSeek really did require some impressive innovation. And he also indicated a potential openness to implementing kind of a more open plan, an open plan for OpenAI, which is, I think, initially when the company was founded, it was supposed to be a pretty open model and has been closed really to date.

You know, and again, I think this discussion too about what does open really mean. Like a lot of people throw that around like it's black and white. And I think one of the things that I imagine happened is Zuck lost his shit, right? Because really kind of positioned, hey, you know, we got, we got Google over here and trying to finesse what they're doing with losing their search business. And you got kind of nonprofit, for-profit, closed system ChatGPT over here. And we are going to be the, you know, open source guys with an asterisk. And, you know, but we're really on the scale of kind of what I'll call semi-open source. Because if, you know, if you were big enough in reading the fine print, Again, Facebook talking a big game, doing a lot of other stuff, a lot of things they're trying to protect. And then really, the renegade entrepreneur, who in this case happened to be in China, says, no, we're going to be actually a little further down the scale of open source and rock the world. Again, from where I sit in the cheap seats, all good, good competition. You know, you know, we're trying to vest around the kind of the elephant's footsteps, you know, here. But I think it's— I think it's good. I think it's good for humanity. I think this is this illusion of, oh, we're going to keep the genie in the bottle and we're going to keep it in the United States. And there's only a few players that are going to play. Whether that ultimately would have been the right thing to do or not, I think that that was never going to happen. Technology— you know, life finds a way. Technology finds a way. Innovation finds a way. Capitalism finds a way. I think all that is true.

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Uh, let's move on to, to something that we're calling the social media unbundling. So for a long time now, social media has been synonymous with a handful of giants in the arena— Meta, X, TikTok, Snap to some degree. But there are cracks that are forming. Mm-hmm. You know, consumer frustration with algorithmic feeds and privacy concerns and the sheer dominance of big tech has been fueling this new wave of decentralized open-source social networks. So keeping on the theme here of of open source. And so what that means is unlike their predecessors, these newer platforms are built on open protocols like ActivityPub or AT Protocol, and it allows users to move between apps without being locked into a single company's ecosystem. So think about how email works, right? Like you have your Gmail account, but that doesn't stop you from emailing someone who uses Outlook or ProtonMail or a different client. The service you use is just A preference. It's not a restriction in any way. And we're starting to see social media move in that direction. And I think it's really exciting. We are early investors in Bluesky. That is kind of the open protocol, uh,

version of that. Yeah.

Version of X. And it allows the apps to kind of communicate with one another just like email providers do.

Yep.

Um, so in the future, social media is, is not about choosing one platform. It's about choosing the actual experience that you prefer. Um, and one of the reasons I want to talk about this is, is like, there are a rising number of, just like Bluesky has been a rising competitor to X, Mastodon was another rising competitor to X that was big last year. Um, Bluesky has amassed like 25 million users.

Yeah, 30 now, I just heard. Yeah.

Incredible. Um, and so we're starting to track something similar on the Instagram side. There's one, uh, called PixelFed that's gaining some traction on the, on the activity protocol. And it's something that we're looking at really closely here at Alumni Ventures.

So as Lucas prepped us earlier, social media is shifting and Bluesky is at the center of it. In just 4 months, the platform has grown from 10 million users in September of last year to over 27 million by mid-January of this year. A remarkable 174% increase. So what is driving this rapid adoption? A major factor has been the 2024 US presidential election, which led to a significant number of users seeking alternate platforms. Bluesky saw daily increases of over 500,000 users, with some reports showing up to a million new signups per day in late November. But this isn't just about one election. It reflects a broader trend in how people are engaging online. Many users are exploring new platforms that align with their evolving preferences for social media, and studies indicate that Bluesky has gained traction with certain political groups, while other platforms continue to maintain their own dedicated audiences. Additionally, recent changes in leadership and platform policies across social media have influenced how users interact, contributing to Bluesky's growing appeal. Its decentralized approach and user-controlled experience have been major factors in attracting new members. Even political figures are recognizing its potential. Several elected officials, including U.S. representatives and state leaders, have joined the platform, reinforcing its role in digital communication. Bluesky's growth highlights an ongoing shift in the social media ecosystem where users are increasingly seeking platforms that reflect their communication preferences, content policies, and digital experiences. So what does this mean for the future of online interaction, and will this trend continue? What does that look like?

No, and again, I think this is, this is really healthy for the ecosystem, right? When, when you have one dominant platform, it just, you know, competition is good. It leads to innovation, it leads to customer choice, it leads to options, and a lot of these social networks have such powerful network effects that you really have huge lock-in, right? Mm-hmm. And that makes for a really good business. But I think consumers benefit with choice. And as you know, we're big fans of Bluesky and their approach and their tech stack and this idea of related to— everybody thinks, oh, Alumni Ventures was in early at Bluesky. That must have been done by the Women's Fund, because it has a woman CEO founder. And it was actually done by our blockchain team. And we were really— it's in several of our funds, but it really— we made the initial investment because we really just love this idea of decentralized tech stack, consumer choice, the ability to move, And yeah, we're just very excited about that as being a good option for people to put more control and more options in the hands of the user with their information, their preferences, and their control. So, you know, it's good stuff. And I think we're going to be active with more companies that are innovating along that dimension as well. We're big believers.

Yeah, it'll be interesting to see what new business models come to prominence in this future. You know, big tech's dominance in social media has been fueled by advertising revenue. And they thrive because they control the user experience. They track every click, like, comment, and they can serve these hyper-targeted ads. Um, in a more open, decentralized social web, that control erodes completely.

Yeah.

Um, and so it'll be interesting to think about how these social platforms actually make money instead of squeezing revenue out of ads. We could see a move toward subscription-based models, creator-driven monetization, community-funded platforms. Um, you know, Mastodon is sustained by donations. Bluesky is exploring more premium features. But at the end of the day, what's most—

You have attention and you have eyeballs. I mean, again, coming back to the venture capital preference, we're in it. The way I look at it is if you have attention and you have eyeballs, you can figure out a business model. And obviously, we saw that with Google. We saw that with Facebook, that we live in an attention economy and good smart people will figure out a fair way to build value in a good business model. But it all starts with get people to use your thing.

Yeah,

for sure.

And make no mistake, this makes our jobs hard. Yeah, yeah. We like investing in companies that have high switching costs, uh, and this reduces switching costs, uh, immensely. Yeah.

Yeah.

Um, you know, I'm, I'm annoyed as a, yeah, but, but better competition is, is good. And as a consumer, I mean, I'm, I wake up to notifications that YouTube TV is gonna increase my subscription and they're gonna lose all of their Paramount affiliated channels possibly. And, and that's really annoying.

Yeah.

Um, so the more that players in the ecosystem need to provide the better experience in order to keep users, I think is a good thing.

It's capitalism, right?

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Yeah. Hey, and the last thing on today, right? We're in a day where we, you know, I believe, uh, confirmed a new, uh, person to lead the department that oversees vaccines, who has been accused fairly, unfairly, of being a vaccine skeptic, I just want to spend a minute talking about, you know, a real promising new drug discovery in the area of vaccines for cancer. And so, again, I go to the science, and unequivocally vaccines have done more for humanity than almost any technology of the last 100 years in lives saved, misery avoided. And, you know, just the data of good being done, that the chart for vaccines is very, very strong. Yeah. So huge fan of vaccines and exciting news out of just down the road at Dana-Farber. Again, a very small trial, just a handful of people, but Neovax, which dealing with kidney cancer, and the vaccine was administered after surgery, and at medium follow-up after 3 years, all patients remained cancer-free, showing that the immune response kind of swooping up All the random little kidney cancer cells kind of flowing around had yet to find a foothold, yet to find traction. These patients' immune systems had been effective in gobbling this stuff up with relatively minor flu-like symptoms that again are You know, the equivalent of you and I having a bad night out with airport sushi. So a really good trade-off there. Again, you and I have talked about, Lucas, at length the real good work being done now in life sciences. We've talked extensively about, you know, the innovation with GLP-1 drugs. And again, data coming out just this week about helping with treating alcohol and fatty liver disease. And again, we kind of the 4th thing on the topic list that we didn't get to, which is, you know, people using surgery to really effectively kind of combat just advanced disease around liver problems. And so again, I just want to put a plug in for vaccines today and this real promising thing coming out of Dana-Farber for kidney cancer.

Yeah, Mike, thank you for sending me the article. It's You know, I read through the the study summary from Dana Farber, and I got goosebumps. Like this is a big moment. I have someone very close to me in my life who in the summer of 2023 was diagnosed with late stage kidney cancer. Thankfully, the immunotherapy he's on has been very effective, but the prognosis initially was not good, and the therapy took a toll. And the idea that In these patients in this phase 1 study, the idea that at stage 3 and 4, meaning there's been some degree of metastasis. Yeah. All 9.

3 and 4 is the horse has left the barn. Yeah. And it's very bad news.

Right? All 9, all 9 of these patients are cancer-free still 3 years after treatment. Yeah. I mean, this is a huge moment. Cancer vaccines. have been talked about for years. They've been mostly theoretical or limited to only a couple types of cancers. And, and, um, you know, if these results hold up in larger trials, we could be witnessing the beginning of an entirely new category of—

Hope for later stage cancer patients, right? And again, I think under the sheets, we're seeing the benefit of CRISPR. I think we're seeing the benefits of AI. I hear from a lot of cancer researchers that they're using these tools, you know, some of the tools coming out of Google with protein folding. All of this is creating a mesh of opportunity and optimism and hope for people. And again, just, I think underscoring this specific example is just one of many and hopefully the beginning of much, much more. I go back to, you know, we just lost President Carter, you know, age of 100. But I think, you know, he was diagnosed with brain cancer. You know, I forget the exact age, but, you know, it was a while ago. And, you know, people were just basically saying hospice, he's done. And, you know, because of immunotherapy, The ability to take one's own immune system, which is whatever you— however religious you are, you know, it is a beautiful system to keep us alive and keep us healthy. And, you know, frankly, to fight cancer and fight other diseases and things, it is a wondrous system. And by tweaking it and tuning it and activating it, it is turning out to be the best cure, the best way to address something like the scourge of cancer. So just, you know, I am just super excited about these cancer vaccines and other related things, whatever you want to call them. It may need a new branding. Right? But just turbocharging our immune system to fight this problem, everybody's all on board on that for sure. We don't have to get political or anything. But if you're stage 3 cancer, you're looking for answers. And if the answer is your own body, super exciting, super promising. Like you say, it gives us all goosebumps because we've all been touched by cancer. in our families and lives. So yeah, well, Lucas, it's been great. I think your, your, your sprint tour of duty, you've done great. Couple of months, we're on to another young buck. Um, Drew Wonslak, I think, is going to be kind of the next on the baton. And, uh, we'll circle back to you.

You're not rid of me yet. I think we're going to go once more next week, Mike.

Excellent. I am just I am preparing our millions of listeners and followers for the coming baton passing. So, all right, we'll do it again next week, Lucas, and have a good night.

I'll make sure to bring it home with a good one next week.

Thanks, Mike. All right, bring it home. A lot of pressure.

All right.

Okay. See you, buddy.

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