“I think that the way we probably need to reposition our thinking about AI is that the models are a commodity like electricity or water… So I think what's happening in terms of margin compression on the model side is a healthy thing because intelligence should be viewed as foundational and fundamental as electricity, water. It's a commodity.”

Prof G Markets · Money & Markets · November 2026

Context

Ed Elson noted that open models have pushed token prices down and forced OpenAI and Anthropic to reprice, and asked how an open-model business makes money. Laskin says models will become a low-margin commodity, while inference and the systems around them still earn healthy margins.

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Transcript

Prof G Markets Around 20:13 into the episode

Misha Laskin

…source software is so ubiquitous and robust, because it's had hundreds of thousands of developer eyeballs on it looking at various sorts of vulnerabilities. And while they might not patch all of them, open source software is definitely tends to be much more hardened and robust than closed software.

Ed Elson

…open models, is how is that business model actually going to work? Because my understanding is that to build a model and to train it, that's the most expensive part of the whole thing. And that's the part that is technically being given away. So, how will the business model work over the long term?

Misha Laskin

…right? The first really mobile OS came from Apple, was closed. It was followed by an open source version, Android, that now the majority of the world's phones actually run on Android. The internet is an open protocol, startoff closed, right? Was built basically within the government and universities. So this is actually like what's happening here is a continuation of a very natural thing. And I think that the way we probably need to reposition our thinking about AI is that the models are a commodity like electricity or water, right? When we think about electricity and water, we don't think about, oh, how does my energy company sustain its business? It needs to be making 90% margin. We think about energy and water as commodities, that there is some margin that these companies sustain that's actually low, but it's a massive service that's provided as fundamental infrastructure to the entire country, entire world. So I…

Ed Elson

On the inference, though, because and so I think the utility point is really interesting. And I think Sam Altman has said that he thinks that there's a world where that might happen with open AI. It doesn't seem to be the direction that they're actually headed in terms of what they're pursuing as a…

Misha Laskin

Perhaps in some future. I think right now the market is kind of too early to tell, right? Because I guess what I'm describing is kind of the desirable end state for AI is that it's a utility and right, like internet, right? The internet is effectively a utility, right? It's a commodity that is…

Ed Elson

So the Chinese open models are so interesting because DeepSeek comes along and I mean, we all remember what happened in the market. Suddenly everyone panics and you see all of the AI, US AI stocks going down. But it seems like what happened, what is happening in China, which is why you have emerged…

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More from Prof G Markets

“Reinforcement learning as a problem was solved actually faster than we anticipated. We thought it would take years. It took less than a year, both within external labs, but even within our own experiments.” — Misha Laskin, Prof G Markets

“When something is not the core strategy of the company, you tend to not pay as much attention to it. And you tend to open source, you know, maybe like a lesser version of the thing that you're actually kind of monetizing. And that's kind of what we've seen from open source launches from Google… similar when OpenAI launched GPT-OSS.” — Misha Laskin, Prof G Markets