EP687 | 🐧

OpenAI's new o1 model, internally known as "Strawberry," represents a fundamental shift in how AI systems reason—and according to this episode, it changes the competitive calculus for the entire industry. The model doesn't just generate text faster; it "thinks" before answering, using chain-of-thought reasoning that produces dramatically better results on complex problems like math, coding, and science. But this advance comes with a cost structure that could reshape which companies thrive.

Why reasoning changes everything

The o1 model marks the first time an AI system has been trained to actually reason through problems step by step rather than simply predicting the next most likely token. When you ask o1 a difficult math question, the model might spend 30 seconds working through intermediate steps before producing an answer—something previous models could not do effectively. The hosts describe this as "the first real reasoning model," contrasting it with GPT-4, which they characterize as essentially a "bullshitter" that sounds convincing but often fails on logic.