← kaysauer.com AI & Tech · 23 August 2026

Which Dial to Turn Next

Week 34 — three focus stories, all really one argument told from three altitudes, plus a roundup of everything else the week's scan turned up.
This Week's Overview

Scaling becomes more complex. Three pieces anchor the issue, all converging on the same idea from different altitudes. Z.ai CEO Jie Tang's "death of params" case is the research-level argument: raw parameter count has stopped meaning much on its own, and GLM 5.3 proves a lab can post a real capability jump from post-training and reinforcement learning alone. Simulation as the next scaling axis zooms out to the industry-wide pattern behind that argument — human-generated training ingredients quietly getting swapped for cheaper synthetic ones, all the way up to Simile AI simulating human subjects themselves. And Glean's model routing is the same cost pressure showing up already-shipped, in production, this week, rather than in a research paper. Below that, Also This Week covers everything else the scan turned up: three pieces bumped out of Focus Topics (Poolside's fold-in to NVIDIA, a SemiAnalysis investigation into a power-grid modeling mistake, and a Waymo-vs-Tesla comparison), plus NVIDIA's distribution bets, agent-planning tools, and more.

Contents

Focus Topics

  1. AI scaling has more than one dial
  2. Simulation as the next scaling axis
  3. Why everyone's suddenly excited about model routing

Also This Week

  1. Poolside's strange $12B fold-in to NVIDIA
  2. $12B of US ratepayers' money wasted on a modeling mistake
  3. Waymo vs Tesla: two ways to build self-driving cars
  4. NVIDIA's bets on distribution and demand
  5. Three architecture stories: a model, a harness, and a human planning an agent
  6. Retrieval and hardware: GraphRAG and Cerebras CS-4
  7. Provenance and trust
  8. AI tooling meets the day job

Test Yourself

Read the newsletter and you'll be able to answer these.
  1. According to Jie Tang, what else does a raw parameter count need to be considered alongside to actually mean something?
    Show answer
    How much data you have, where you intend to spend your compute, and who will run the model, under what conditions. Scaling isn't a single volume knob anymore — it's a control panel of several separate dials (model size, pre-training data, compute per pass, mid-training, post-training-plus-RL), and which one is worth turning next depends on where a model already sits.
  2. What specifically produced GLM 5.3's real capability gains, given that its architecture and size are identical to its predecessor GLM 5.2?
    Show answer
    C — simulated multi-day engineering tasks, complete with compute clusters, real codebases, and experiment results, that the model has to work through end to end, diagnosing bottlenecks and delivering a measurable fix. Non-marginal gains from the post-training-plus-RL dial alone, with the model-size dial left untouched.
  3. In the Mixture-of-Experts "restaurant kitchen" analogy, what's the difference between what total parameters represent and what activated parameters plus depth represent?
    Show answer
    Total parameters are the kitchen's full staff — knowledge capacity, facts, long-tail memory. Activated parameters and reasoning depth are who actually works a given problem, walking it through a chain of steps to a plated answer. Knowing more facts isn't the same as thinking longer about a hard one.
  4. What single factor does the "simulation as the next scaling axis" piece argue actually determines whether a synthetic substitution becomes trusted?
    Show answer
    Verification — every synthetic substitution (reward signals, training data, teachers, curricula, environments) drew real objections about models drifting or collapsing when trained on their own synthetic output, and every one only became trusted once someone built a reliable way to check the synthetic version against ground truth.
  5. Why does Simile AI deliberately train its digital-twin models to reproduce people's irrational mistakes rather than correct them?
    Show answer
    Because, as founder Joon Sung Park puts it, "models optimized to be rational can be bad simulations of irrational humans" — a digital twin is only useful if it reproduces how the real person actually behaves, quirks included, not an idealized rational version of them.
  6. What does Glean's Waldo system actually do before a query ever reaches an expensive frontier model?
    Show answer
    It acts as a cheap "agentic search model" that reads the incoming query first, figures out how to break it down and which tools it'll need, and assembles the raw materials for the answer — so the expensive frontier model only gets invoked once the groundwork's already done.
  7. How does Glean's router improve its own routing decisions over time?
    Show answer
    C — watching real traffic across customers to keep tuning which requests actually need the expensive model, rather than a static or purely manual process.
  8. What's the core distinction the "written-down vs. computed knowledge" framework draws, and where else in this issue does it show up?
    Show answer
    Written-down knowledge is surveyed, validated, and inspectable ahead of time (Waymo's structured object lists and roadgraph); computed knowledge is inferred fresh and is more flexible but opaque (Tesla's camera-only neural network). The same tension runs underneath this issue's scaling and simulation stories — training dials and synthetic substitutes instead of sensors.
  9. What two physical effects did the PJM power-grid investigation find the capacity-auction model was missing, and why do they matter specifically in winter?
    Show answer
    Cold air makes gas turbines produce more power, which the model didn't credit; and cold-weather hardening that plants paid for since 2022's Winter Storm Elliott kept getting dragged down by old storm failure data. Together, the model was undercounting roughly 4 gigawatts of power the grid already reliably has — a gap that matters most exactly when winter demand peaks.
  10. What structural fix, borrowed from DeepSeek, does Thinking Machines' Inkling model use to prevent a few experts from absorbing all the training signal?
    Show answer
    Each expert carries a separate bias number, adjusted by a simple counting rule outside of backpropagation, that nudges an overused expert's selection score down without touching how much its output gets weighted once picked — so balancing usage and predicting correctly stop pulling against each other during training.
  11. Why does standard retrieval-augmented generation (RAG) break down on "global" queries, and how does GraphRAG fix that?
    Show answer
    A global query's real answer is a pattern distributed across hundreds of documents, not sitting in any single retrievable chunk that standard chunk-and-embed RAG can find. GraphRAG fixes this by extracting a knowledge graph at index time and pre-writing summaries for clusters of related documents, so a global query runs as a map-reduce over those summaries instead of re-deriving the pattern live.

From Last Week's Issue — 2026-08-16

  1. What's the general technique behind last week's reasoning-trace extraction vulnerability, before you get into each provider's specific bypass?
    Show answer
    Replay the encrypted, signed reasoning block into a new request — typically to a different, weaker model from the same provider — then prompt or prefill that weaker model to transcribe the attached reasoning, effectively getting the weaker model to decode what the stronger model's encryption was meant to hide.
  2. Grok 4.6 and Muse Glimmer, released the same week, took opposite bets on scale and where the model actually runs — what's the key structural difference between them?
    Show answer
    Grok 4.6 is a confirmed 1.5T-parameter frontier model chasing raw capability. Muse Glimmer is a 30B dense model quantized to fit under 20GB, logit-distilled from a larger sibling and trained from the outset on agentic traces specifically so it can run locally on a single consumer GPU. One optimizes for frontier capability; the other for local, always-on deployment.
  3. Why do observers see Grok Bot, launched alongside Grok 4.6, as arguably the bigger story of the two?
    Show answer
    Grok Bot is an "AI teammate" product (signs into tools, runs scheduled routines, manages other bots), putting xAI into the same category as Claude Tag and Block's Buzz. The model and the product race are becoming equally competitive.
  4. Which AI-text-detection approach did Sebastian Raschka actually implement to build his own detector?
    Show answer
    C — he fine-tuned a small model (DistilBert) on human text versus text generated by having multiple LLMs write responses based on existing human corpora, then used that trained detector as a verifier to train a small model that evades it.

Focus Topics

AI scaling has more than one dial

[AINews] Death of Params — Z.ai CEO Jie Tang on GLM 5.3 and the new Post-training Scaling Law — Latent Space, 20 August 2026

For years, scaling in AI meant one knob: add parameters, add data, get a better model. Z.ai CEO Jie Tang, promoting the release of GLM 5.3, used the week's clearest single argument for why that's no longer the whole story — a parameter count only tells you something "alongside three others: how much data you have, where you intend to spend your compute, and who will run the model, under what conditions." Scaling, on this account, isn't a volume knob anymore. It's a control panel: model size, pre-training data, compute per pass, mid-training, and post-training-plus-RL are five separate dials, and which one is worth turning next depends on where a model already sits.

GLM 5.3 is Tang's own demonstration. It uses the identical architecture and size as its predecessor GLM 5.2 — same base model, nothing added — and its real capability gains came from about a month of reinforcement learning inside long-horizon synthetic environments: simulated multi-day engineering tasks, complete with compute clusters, storage, real codebases, and experiment results, that the model has to work through end to end, diagnosing bottlenecks and delivering a measurable fix. Non-marginal gains, from the post-training-plus-RL dial alone, with the model-size dial left untouched.

The reason that dial matters more now traces back through how the field has actually scaled models over time. Kaplan's 2020 scaling laws pushed toward sheer size — roughly 2.7 parameters for every training token — and models got huge. Chinchilla, in 2022, corrected the ratio the other way, toward roughly 20 tokens per parameter, better balancing size against data. Today's correction is a third one, driven by a fact neither of those eras optimized for: a model gets trained once but run billions of times at inference, so a smaller model can easily justify far more training per parameter than either law assumed — Llama-2-7B trained on roughly 290 tokens per parameter, Gemma-2-9B on roughly 889. The MoE (Mixture-of-Experts) architecture most frontier models now use makes the same point structurally: total parameters are the kitchen's full staff — knowledge capacity, facts, long-tail memory — while activated parameters and reasoning depth are who actually works a given problem, walking it through a chain of steps to a plated answer. Tang's underlying claim is exactly this distinction: advanced skills, like finding a real security vulnerability, depend on holding a causal chain together across twenty-plus reasoning steps without losing the thread, and knowing more facts isn't the same as thinking longer about a hard one.

Two more items this week back the shift independently of Tang's own framing. A SemiAnalysis benchmark comparison spanning three eras of LLM progress — early scaling, reasoning, agentic — finds the time for open models to close each new capability gap has roughly halved with every era, evidence that whatever a frontier lab does in private eventually gets reverse-engineered by everyone else, sharpening the pressure to find the next lever once size and data alone stop being a moat. And this week's top-papers roundup led with "Skaling: Chinchilla's Exponents Meet Kaplan's Coupling", a generalized neural scaling law coupling model size and data through a single interaction exponent, aimed specifically at fixing systematic errors in the Kaplan/Chinchilla-era formulas at the data-scarce, heavily-overtrained regime GLM 5.3's own approach lives in — the academic literature catching up to what practice had already started doing.

Why it matters

The industry isn't done scaling — it's learning which dial to turn next. That's a genuinely different, more interesting story than "bigger model wins," and GLM 5.3 is this week's cleanest evidence a lab can post a real capability jump from post-training and RL alone, without touching model size at all.

Sketchnote infographic titled 'AI Scaling Has More Than One Dial: Parameter count is only one part of the story.' Panel 1 shows a stick figure straining to push one giant PARAMETERS dial versus a control panel of five smaller dials: Model Size, Pre-training Data, Compute per Pass, Mid-training, Post-training + RL. Panel 2, A Quick History: 2020 Kaplan to 2022 Chinchilla to Today. Panel 3, MoE explained via a restaurant-kitchen analogy. Panel 4, Where capability comes from next, with GLM-5.3 as the example. Closing banner: 'We are not done scaling. We're learning which dial to turn next.'
Infographic credit: Latent Space, from their 20 August AINews coverage of GLM 5.3 — not created for this newsletter, reproduced here to illustrate the piece's own argument.

Simulation as the next scaling axis

Latent Space, 21–22 August 2026

Zoom out from GLM 5.3 above and the same substitution shows up as a general pattern, not one lab's trick: across nearly every stage of building a model, the human-generated version of something is quietly being swapped for a synthetic one, and the trade is consistently the same shape — lose maybe 10 percent quality, gain something like 100 times the cost efficiency and 10,000 times the speed. The piece traces this through eight stages since 2022 — synthetic reward signals replacing human raters, synthetic training data (Microsoft's Phi models were built on the idea that "textbooks are all you need"), synthetic teachers where cheaper models get fine-tuned to imitate frontier ones, models picking their own training curriculum, and synthetic training environments — exactly the mine-patterns-then-verify pipeline behind GLM 5.3. What ties the whole argument together, and what the piece insists matters more than any individual substitution, is verification: every one of these swaps drew real objections about models drifting or collapsing when trained on their own synthetic output, and every one only became trusted once someone built a reliable way to check the synthetic version against ground truth.

The next stage in that sequence — synthesizing human subjects themselves — is exactly what Joon Sung Park built Simile AI to do, and "Simulation: the new Scaling Law", a full interview with Park, is worth slowing down on. Park started as a painter, moved into AI research at Stanford, and co-authored the viral 2023 "Generative Agents" paper — the "Smallville" simulation where AI characters living in a small virtual town developed emergent routines and socialized in ways nobody scripted. That result convinced him the real opportunity wasn't building a personal assistant, it was building "an amazing model of your users" first. Simile's technology rests on three kinds of data per person: long biographical interviews for texture, behavioral records and transaction histories for baseline patterns, and, crucially, data from actual randomized controlled trials, which reveal why someone made a choice rather than just what they chose. The company deliberately trains its models to reproduce people's mistakes and irrational quirks rather than iron them out, because, as Park puts it, "models optimized to be rational can be bad simulations of irrational humans."

The validation number anchoring the whole approach: in Simile's landmark study, digital twins built from two hours of interview and behavioral data with 1,000 real US participants reproduced those same people's own survey answers and behavioral-economics choices 85 percent as accurately as the actual people reproduced their own answers two weeks later — compared with just 20 to 30 percent accuracy for general-purpose frontier models attempting the same thing on niche populations. Simile is already working with CVS, Gallup, Deloitte, and Wealthfront, who used simulated users to test UI mockups by having agents click through Figma designs, and the company is currently valued at $2 billion. Park frames the value as being about pathways, not just predictions: simulation doesn't only forecast an outcome, it can reveal that a marketing strategy aimed at boosting EV sales might, several steps downstream, quietly depress sales of everything else — an effect invisible without walking the multi-step chain.

Why it matters

This reframes "scaling" as something much broader than model size: the same lose-a-little-gain-a-lot substitution logic that produced GLM 5.3 is now being applied to human subjects themselves, and Simile's 85% fidelity number is the first concrete evidence that a simulated population can stand in for a real one at a level actually useful for product and policy testing, not just a research curiosity.

Why everyone's suddenly excited about model routing

Frontier Model Cost and Open-Weights Popularity is Driving Demand for Model Routing — Latent Space, 19 August 2026, an interview with Glean CEO Arvind Jain

If the two focus topics above are about where model capability comes from next, this one is about what happens once that capability actually has to be paid for on every single request. Glean CEO Arvind Jain's framing is blunt: "why are people talking about model routing? why are they excited about it? it's mostly because of cost" — the newest frontier models cost exponentially more per token than their predecessors, users are running longer and longer tasks on them, and the two together can multiply a company's per-user AI bill ten or twenty times year over year. Routing means picking the right model for each individual request instead of sending everything to the single best, most expensive model available.

Glean does it in layers: employees can pick a model by hand, administrators can restrict which models are available, but the dominant mode is automatic — a system called Waldo acts as a cheap "agentic search model" that reads each incoming query first, figures out how to break it down and which tools it'll need, and assembles the raw materials for the answer before a frontier model ever gets involved, so the expensive model only gets invoked once the groundwork's already done. The routing decisions themselves improve through feedback: Glean runs parallel evaluations where AI judges compare the model the router picked against both a cheaper and a pricier alternative on the same task, watching real traffic across customers — Zillow, for instance, has 80 percent of its 7,000 employees actively using the system — to keep tuning which requests actually need the expensive model. And that same cost pressure is pulling enterprises toward open-weight models generally: Glean's co-founder says open-model usage was "minuscule" a year ago and has become close to essential in the last three months, simply because open weights run an order of magnitude cheaper.

Why it matters

This is the practical, already-shipping version of the same cost pressure the two pieces above are describing at a research level — if GLM 5.3 and Simile are both about finding cheaper substitutes for training data and human subjects, Glean's router is the same substitution logic applied directly to production inference spend, with a real customer base already depending on it.

Also This Week

Poolside's strange $12B fold-in to NVIDIA

Poolside is an AI-coding startup, and "reverse execuhire" is industry slang for a big company effectively absorbing a smaller one's talent instead of doing a normal acquisition — usually the executives leave and the rank-and-file stay; this deal ran backwards, with 109 of Poolside's roughly 115 technical staff moving to NVIDIA while the founders stayed put running what's left of the company, in a roughly $6B tech-and-team license plus a $1B investment at a $12B valuation. What actually broke Poolside wasn't a lack of money in the usual sense — the founders needed $2 billion inside a six-week window to secure a 40,000-GPU cluster arriving in January, missed the window, and in their own words, "lost the cluster." A vivid, concrete example of physical compute scarcity breaking a well-funded startup.

$12B of US ratepayers' money wasted on a modeling mistake

PJM runs America's largest electricity market, and a six-month SemiAnalysis investigation found its capacity-auction model is missing two physical effects that matter a lot in winter, undercounting roughly 4 gigawatts of power it already reliably has. Because PJM's supply curve spikes almost vertically at the end and the entire fleet gets paid whatever the last needed plant clears at, a tiny quantity correction produces an outsized price swing — $6.7B and $4.9B in two consecutive auctions. PJM is about to run an emergency backstop auction for new capacity under 20-year contracts with no committed counterparty; if anticipated AI datacenter demand doesn't fully materialize, residential ratepayers are left holding the bill.

Waymo vs Tesla: two ways to build self-driving cars

Waymo's sixth-generation vehicles carry 13 cameras, four lidar units, and six radar units, keeping explicit, structured, inspectable representations of what they sense — validated in simulation before the car acts. Tesla skips that redundancy on purpose, running a camera-only system where 48 neural networks build a world model entirely from learned inference, living inside the network's internal state rather than something you can open and check line by line. Waymo reports 220.6 million fully driverless miles with a 94% crash reduction versus human drivers; Tesla's figures compare its assistance system engaged against the same fleet driving manually. The written-down-vs-computed-knowledge framing here is a clean lens on the same tension running through this week's scaling and simulation pieces above.

NVIDIA's bets on distribution and demand

Beyond the Poolside deal above, NVIDIA's playing the same hand from two more angles: Nathan Lambert argues Nvidia's ~$26B in open-model investment is deliberate demand generation, teaching the world to train its own models so more of that training happens on Nvidia hardware — not altruism. Stripe's reported $7B purchase of OpenRouter is the same land grab one layer up, on distribution rather than compute: OpenRouter aggregates access to hundreds of models and reportedly moves 250 trillion tokens a month. And underneath both, DRAM prices have spiked 500% in a year, with hyperscalers reportedly pre-buying nearly all of 2027's memory-chip production — a reminder the AI buildout's next hard ceiling might be a boring commodity chip nobody was watching.

Three architecture stories: a model, a harness, and a human planning an agent

Thinking Machines' new open-weights model, Inkling, is a 975B-parameter Mixture-of-Experts model where only ~41B parameters (4%) activate per token, using a structural fix (borrowed from DeepSeek) to stop a handful of experts from absorbing all the training signal, plus a million-token context window handled by mostly-sliding-window attention. "The Evolution of the Agent Harness" traces how the scaffolding wrapped around a model — tools, memory, guardrails — keeps getting absorbed back into the model's own weights across three eras: an early "bolt-on" period (ReAct, AutoGPT) where the harness demanded autonomy the model wasn't capable of yet, a present "co-training" era kicked off by Claude Code, where Anthropic reportedly deleted 80% of its system prompt without losing performance because the model had absorbed what those instructions used to spell out, and a coming "attention" era where the harness shrinks to just deciding when an agent should interrupt a human. On the human side of that same design problem, /wayfinder is a planning tool built for "away-from-keyboard" agents you set running overnight — a running "map" of decisions made so far, since you genuinely can't specify the whole plan upfront, a problem its creator calls "fog of war."

Retrieval and hardware: GraphRAG and Cerebras CS-4

Standard retrieval-augmented generation breaks on questions whose answer is a pattern spread across hundreds of documents rather than sitting in one retrievable chunk. GraphRAG pre-builds a knowledge graph and cluster summaries at index time so a "global" query runs as a map-reduce over pre-written summaries instead of re-deriving the pattern live — LinkedIn saw a 77.6% improvement in mean reciprocal rank adopting it in production. On the hardware side, Cerebras's CS-4 doubles tokens-per-second-per-user on the same wafer as its predecessor via a modular "backpack" rack redesign and a big power/clock bump rather than a smaller process node — but on-chip SRAM stays capped at 44GB, forcing Cerebras into disaggregated-inference partnerships to cover the gap.

Provenance and trust

A deep technical walkthrough of how Claude's token-sampling-based watermarking actually works under the hood — letting a model's output carry a statistically detectable signature after the fact, rather than trusting a provenance claim at face value.

AI tooling meets the day job

Addy Osmani — fourteen-plus years on Chrome, DevTools, and Core Web Vitals before moving into AI developer experience — discusses how developer tooling itself is being rebuilt around AI. And a concrete result rather than a prediction: Asana used AI to complete a migration off its testing framework in two weeks — the kind of rewrite that would otherwise have been indefinitely deferred — with Airbnb and Uber reporting similar results.