Two words have caught the Internet by storm. DeepSeek. The Chinese reasoning model r1 is rivaling others at the frontier with an open-source MIT license, methods that some claim may be 45x more efficient, an alleged $5.6m cost, the release of reasoning traces, a follow-on image model, and the fact that all of this was released by a hedge fund China. Many are already referring to this as a Sputnik moment. If that’s true, how should we – whether founder, researcher, policy maker – not just react, but act? Joining us to tease out the signal from the noise are a16z General Partner Martin Casado and a16z board partner, Steven Sinofsky. Both Martin and Steven have been on the frontlines of prior computing cycles, from the switching wars to the fiber buildout, and have witnessed the trajectories of companies like Cisco to AOL to ATT – even Worldcom. So what really drove this DeepSeek frenzy and more importantly what should we take away? Today, we answer that question through the lens of Internet history. Timecodes: 00:00 - DeepSeek's release 04:06 - Teasing signal from noise 09:19 - OS license and reasoning traces 11:22 - Monetizing layers of the stack 18:42 - What’s different this time around? 22:09 - Scaling up vs scaling out 29:24 - Changing benchmarks 31:48 - Building defensibility 35:27 - AI’s Sputnik moment? 41:17 - Impact on frontier companies 43:00 - Participating in the next wave Resources: DeepSeek Has Been Inevitable and Here's Why (History Tells Us): https://hardcoresoftware.learningbyshipping.com/p/228-deepseek-has-been-inevitable Why DeepSeek Is a Gift to the American People: https://www.thefp.com/p/why-deepseek-is-a-gift-to-the-american Follow Martin on X: https://x.com/martin_casado Follow Steven on X: https://x.com/stevesi Stay Updated: Let us know what you think: https://ratethispodcast.com/a16z Find a16z on Twitter: https://twitter.com/a16z Find a16z on LinkedIn: https://www.linkedin.com/company/a16z Subscribe on your favorite podcast app: https://a16z.simplecast.com/ Follow our host: https://twitter.com/stephsmithio Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.