How Google DeepMind is winning the AI financing race
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Illustration: Allie Carl/Axios
The AI race won't be won by who builds the best model, but by who can afford to keep the lights on.
The big picture: DeepMind CEO Demis Hassabis knew that when he sold his AI lab to Google, according to a new biography by Sebastian Mallaby, senior fellow at the Council on Foreign Relations.
- The sale to Google gave DeepMind the one thing OpenAI and Anthropic are still scrambling for: a parent company that prints cash.
What they're saying: The big surprise is that "Google plus Demis counterpunched so effectively," Mallaby told Axios, referencing Google DeepMind's Gemini model forcing OpenAI into a "code red" frenzy to keep up at the end of 2025.
- People saw the science side of Hassabis but underestimated his competitive background, which included shipping commercial video games before he founded DeepMind.
- The combination of the two framed his interest in going in house with Google, which is using the lowest percentage of debt to fund its AI buildout among the hyperscalers, thanks in part to its hefty cash flow.
Between the lines: That cash allowed DeepMind scientists the freedom to do blue sky research without worrying as much about things like revenue, resulting in major discoveries that put the AI lab on the map.
- "We don't feel any immediate pressure to make ... knee-jerk decisions," Hassabis told Axios' Ina Fried at Davos when she asked whether he felt pressured to monetize through things like ads.
- Competitor OpenAI is testing ads as it moves to prove a sustainable revenue strategy pre-IPO, with the company projecting $14 billion in losses for 2026.
Yes, but: Hassabis' competitive spirit has its downsides.
- "The classic criticism of him is that he's so consumed with winning the race and being the person who brings AI to the world ... is messianic, and it's over the top, and it distorts DeepMind's mission," Mallaby said.
- Still, that's textbook for successful founders, he added.
The intrigue: Mallaby says Hassabis was not always attached to the Google deal.
- He and co-founder Mustafa Suleyman recruited Reid Hoffman to pledge $1 billion to spin DeepMind back out of Google and become independent.
- Lawyers and bankers worked for three years to push Google to let them go, Mallaby writes in his biography.
- The arrangement Hassabis couldn't escape could now be his biggest advantage: DeepMind is the only major AI lab not pursuing both the AI race and an IPO.
The bottom line: The AI race is a financial endurance contest, and Hassabis is the only major lab leader who doesn't have to worry about the bill, for now.
