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There's more to startup value that whether or not they've implemented the latest nifty trick into their models. Their moat is architecture, research, distribution, design, and scale. Have all the local LLM hacks based off Llama 2 and the like done anything to diminish OpenAI's value?

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I would say it has. If no one could demonstrate even GPT3.5 capabilities, then OpenAI could be worth a few hundred billion more in private valuations.

But multiple vendors have already demonstrated viable alternatives.

Their valuation tripled to 80 billion in 10 months. I'm pretty sure they're not losing much to open source

It gives an idea in investors' minds that OpenAI's models can be matched or be "good enough" by open source models.

OpenAI has been at least one year ahead of everyone else in everything they have released do far. And there’s no sign they are stopping any time soon (e.g. GPT5 is expected this year).

GPT-5 will likely only see improvements in deductive reasoning like in math, I think it there are diminishing returns if all GPT-5 is a larger transformer than GPT-4

That’s probably what GPT-4.5 will be. The bar is much higher for GPT-5.

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