Y Combinator's Garry Tan: Let U.S. Open-Weight Labs Distill Frontier Models
Y Combinator CEO Garry Tan believes U.S. regulators should stay out of the debate over distillation — and that American open-weight AI labs should be free to use the same techniques Chinese labs have been accused of employing against frontier model makers.
"I would do nothing," Tan told CNBC in an interview this week. "We could argue that there should be an American distillation regime."
Speaking further with TechCrunch, Tan clarified that he wants smaller American open-weight labs to apply similar training techniques to U.S. frontier models, giving the country a more robust set of open-weight alternatives that aren't Chinese.
What Is Distillation?
Distillation is a technique in which a model maker extensively prompts another model to learn how it works and reasons. It is commonly — and legitimately — used across the AI industry to help train new models.
Anthropic's Distillation Accusations
The debate has intensified in 2026. Anthropic this week released its second report alleging that Chinese labs are engaged in "illicit distillation attacks," hiding their identities to distill without permission and relying on fraud and stolen credentials. Anthropic CEO Dario Amodei had previously publicly called on U.S. regulators to crack down on distillation.
It is notable that the head of Silicon Valley's most prestigious and prolific startup accelerator disagrees.
Tan's Twofold Argument
To be clear, Tan is not advocating that American AI labs use stolen credentials to distill. He wants them to be free to come in the front door.
His argument is twofold. First, he feels it is an overreach for AI labs to dictate what their customers can do with the information their models share with them.
Second, he notes that proprietary AI labs didn't ask permission when they vacuumed up as much human knowledge as they could to train their models. They famously ingested plenty of copyrighted material without the permission of those intellectual property holders.
"Controlling what users and customers do with API calls to closed weight models feels constraining, and there's a role government can play here to normalize the fact that access to intelligence that was trained on broad public access data should itself also be more a form of a public good than something locked away behind restrictive terms of service," Tan told TechCrunch when asked why American labs should be free to distill too.
Balancing Open-Weight and Frontier Labs
Tan — who is such an avid AI user that he once described himself as having cyber psychosis — wants to see a balance between open-weight AI labs and frontier labs.
"They are at the frontier and driving it forward. We want that to be fundable, and be a great business model ongoing," he told CNBC. "You want open weight models to give people freedom and access."
To him, the true AI doomer scenario is for all the immense power of frontier AI to wind up in the hands of a single powerful, proprietary player.
via TechCrunch AI