Stewart Squared

In this episode of the Stewart Squared podcast, host Stewart Alsop III sits down with his father Stewart Alsop II to explore the emerging field of world models and their potential to eclipse large language models as the future of AI development. Stewart II shares insights from his newsletter "What Matters? (to me)" available at salsop.substack.com, where he argues that the industry has already maxed out the LLM approach and needs to shift focus toward world models—a position championed by Yann LeCun. The conversation covers everything from the strategic missteps of Meta and the dominance of Google's Gemini to the technical differences between simulation-based world models for movies, robotics applications requiring real-world interaction, and military or infrastructure use cases like air traffic control. They also discuss how world models use fundamentally different data types including pixels, Gaussian splats, and time-based movement data, and question whether the GPU-centric infrastructure that powered the LLM boom will even be necessary for this next phase of AI development. Listeners can find the full article mentioned in this episode, "Dear Hollywood: Resistance is Futile", at https://salsop.substack.com/p/dear-hollywood-resistance-is-futile. Timestamps 00:00 Introduction to World Models01:17 The Limitations of LLMs07:41 The Future of AI: World Models19:04 Real-Time Data and World Models25:12 The Competitive Landscape of AI26:58 Understanding Processing Units: GPUs, TPUs, and ASICs29:17 The Philosophical Implications of Rapid Tech Change33:24 Intellectual Property and Patent Strategies in Tech44:12 China's Impact on Global Intellectual Property Key Insights 1. The Era of Large Language Models Has PeakedThe fundamental architecture of LLMs—predicting the next token from massive text datasets—has reached its optimization limit. Google's Gemini has essentially won the LLM race by integrating images, text, and coding capabilities, while Anthropic has captured the coding niche with Claude. The industry's continued investment in larger LLMs represents backward-looking strategy rather than innovation. Meta's decision to pursue another text-based LLM despite having early access to world model research exemplifies poor strategic thinking—solving yesterday's problem instead of anticipating tomorrow's challenges.2. World Models Represent the Next Paradigm ShiftWorld models fundamentally differ from LLMs by incorporating multiple data types beyond text, including pixels, Gaussian splats, time, and movement. Rather than reverting to the mean like LLMs trained on historical data, world models attempt to understand and simulate how the real world actually works. This represents Yann LeCun's vision for moving from generative AI toward artificial general intelligence, requiring an entirely different technological approach than simply building bigger language models.3. Three Distinct Categories of World Models Are EmergingWorld models are being developed for fundamentally different purposes: creating realistic video content (like OpenAI's Sora), enabling robotics and autonomous vehicles to navigate the physical world, and simulating complex real-world systems like air traffic control or military operations. Each category has unique requirements and challenges. Companies like Niantic Spatial are building geolocation-based world models from massive crowdsourced data, while Maxar is creating visual models of the entire planet for both commercial and military applications.4. The Hardware Infrastructure May Completely ChangeThe GPU-centric data center architecture optimized for LLM training may not be ideal for world models. Unlike LLMs which require brute-force processing of massive text datasets through tightly coupled GPU clusters, world models might benefit from distributed computing architectures using alternative processors like TPUs (Tensor Processing Units) or even FPGAs. This could represent another paradigm shift similar to when Nvidia pivoted from gaming graphics to AI processing, potentially creating opportunities for new hardware winners.5. Intellectual Property Strategy Faces Fundamental DisruptionThe traditional patent portfolio approach that has governed technology competition may not apply to AI systems. The rapid development cycle enabled by AI coding tools, combined with the conceptual difficulty of patenting software versus hardware, raises questions about whether patents remain effective protective mechanisms. China's disregard for intellectual property combined with its manufacturing superiority further complicates this landscape, particularly as AI accelerates the speed at which novel applications can be developed and deployed.6. Real-Time Performance Defines Competitive AdvantageTechnologies like Twitch's live streaming demonstrate that execution excellence often matters more than patents. World models require constant real-time updates across multiple data types as everything in the physical world continuously changes. This emphasis on real-time performance and distributed systems represents a core technical challenge that differs fundamentally from the batch processing approach of LLM training. Companies that master real-time world modeling may gain advantages that patents alone cannot protect.7. The Technology Is Moving Faster Than Individual ComprehensionEven veteran technology observers with 50 years of experience find the current pace of AI development challenging to track. The emergence of "vibe coding" enables non-programmers to build functional applications through natural language, while specialized knowledge about components like Gaussian splats, ASICs, and distributed architectures becomes increasingly esoteric. This knowledge fragmentation creates a divergence between technologists deeply engaged with these developments and the broader population, potentially representing an early phase of technological singularity.