In this episode of In-Ear Insights, the Trust Insights podcast, Katie and Chris discuss small language models (SLMs) and how they differ from large language models (LLMs).

You will understand the crucial differences between massive large language models and efficient small language models. You’ll discover how combining SLMs with your internal data delivers superior, faster results than using the biggest AI tools. You will learn strategic methods to deploy these faster, cheaper models for mission-critical tasks in your organization. You will identify key strategies to protect sensitive business information using private models that never touch the internet. Watch now to future-proof your AI strategy and start leveraging the power of small, fast models today!

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What follows is an AI-generated transcript. The transcript may contain errors and is not a substitute for listening to the episode.

Christopher S. Penn: In this week’s *In-Ear Insights*, let’s talk about small language models. Katie, you recently came across this and you’re like, okay, we’ve heard this before. What did you hear?

Katie Robbert: As I mentioned on a previous episode, I was sitting on a panel recently and there was a lot of conversation around what generative AI is. The question came up of what do we see for AI in the next 12 months? Which I kind of hate that because it’s so wide open.

But one of the panelists responded that SLMs were going to be the thing. I sat there and I was listening to them explain it and they’re small language models, things that are more privatized, things that you keep locally. I was like, oh, local models, got it. Yeah, that’s already a thing. But I can understand where moving into the next year, there’s probably going to be more of a focus on it.

I think that the term local model and small language model in this context was likely being used interchangeably. I don’t believe that they’re the same thing. I thought local model, something you keep literally locally in your environment, doesn’t touch the internet. We’ve done episodes about that which you can catch on our livestream if you go to TrustInsights.ai YouTube, go to the Soap playlist. We have a whole episode about building your own local model and the benefits of it.

But the term small language model was one that I’ve heard in passing, but I’ve never really dug deep into it. Chris, in as much as you can, in layman’s terms, what is a small language model as opposed to a large language model, other than—

Christopher S. Penn: Is the best description? There is no generally agreed upon definition other than it’s small. All language models are measured in terms of the number of tokens they were trained on and the number of parameters they have. Parameters are basically the number of combinations of tokens that they’ve seen.

So a big model like Google Gemini, GPT 5.1, whatever we’re up to this week, Claude Opus 4.5—these models are anywhere between 700 billion and 2 to 3 trillion parameters. They are massive. You need hundreds of thousands of dollars of hardware just to even run it, if you could.

And there are models. You nailed it exactly. Local models are models that you run on your hardware. There are local large language models—Deep Seq, for example. Deep Seq is a Chinese model: 671 billion parameters. You need to spend a minimum of $50,000 of hardware just to turn it on and run it. Kimmy K2 instruct is 700 billion parameters. I think Alibaba Quinn has a 480 billion parameter. These are, again, you’re spending tens of thousands of dollars. Models are made in all these different sizes.

So as you create models, you can create what are called distillates. You can take a big model like Quinn 3 480B and you can boil it down. You can remove stuff from it till you get to an 80 billion parameter version, a 30 billion parameter version, a 3 billion parameter version, and all the way down to 100 million parameters, even 10 million parameters.

Once you get below a certain point—and it varies based on who you talk to—it’s no longer a large language model, it’s a small English model. Because the smaller the model gets, the dumber it gets, the less information it has to work with. It’s like going from the Oxford English Dictionary to a pamphlet.

The pamphlet has just the most common words. The Oxford English Dictionary has all the words. Small language models, generally these days people mean roughly 8 billion parameters and under. There are things that you can run, for example, on a phone.

Katie Robbert: If I’m following correctly, I understand the tokens, the size, pamphlet versus novel, that kind of a thing. Is a use case for a small language model something that perhaps you build yourself and train solely on your content versus something externally? What are some use cases? What are the benefits other than cost and storage? What are some of the benefits of a small language model versus a large language model?

Christopher S. Penn: Cost and speed are the two big ones. They’re very fast because they’re so small. There has not been a lot of success in custom training and tuning models for a specific use case.

A lot of people—including us two years ago—thought that was a good idea because at the time the big models weren’t much better at creating stuff in Katie Robbert’s writing style. So back then, training a custom version of say Llama 2 at the time to write like Katie was a good idea.

Today’s models, particularly when you look at some of the open weights models like Alibaba Quinn 3 Next, are so smart even at small sizes that it’s not worth doing that because instead you could just prompt it like you prompt ChatGPT and say, “Here’s Katie’s writing style, just write like Katie,” and it’s smart enough to know that.

One of the peculiarities of AI is that more review is better. If you have a big model like GPT 5.1 and you say, “Write this blog post in the style of Katie Robbert,” it will do a reasonably good job on that. But if you have a small model like Quinn 3 Next, which is only £80 billion, and you have it say, “Write a blog post in style of Katie Robbert,” and then re-invoke the model, say, “Review the blog post to make sure it’s in style Katie Robbert,” and then have it review it again and say, “Now make sure it’s the style of Katie Robbert.” It will do that faster with fewer resources and deliver a much better result. Because the more passes, the more reviews it has, the more time it has to work on something, the better tends to perform.

The reason why you heard people talking about small language models is not because they’re better, but because they’re so fast and so lightweight, they work well as agents. Once you tie them into agents and give them tool handling—the ability to do a web search—that small model in the same time it takes a GPT 5.1 and a thousand watts of electricity, a small model can run five or six times and deliver a better result than the big one in that same amount of time.

And you can run it on your laptop. That’s why people are saying small language models are important, because you can say, “Hey, small model, do this. Check your work, check your work again, make sure it’s good.”

Katie Robbert: I want to debunk it here now that in terms of buzzwords, people are going to be talking about small language models—SLMs. It’s the new rage, but really it’s just a more efficient version, if I’m following correctly, when it’s coupled in an agentic workflow versus having it as a standalone substitute for something like a ChatGPT or a Gemini.

Christopher S. Penn: And it depends on the model too. There’s 2.1 million of these things. For example, IBM WatsonX, our friends over at IBM, they have their own model called Granite. Granite is specifically designed for enterprise environments. It is a small model. I think it’s like 8 billion to 10 billion parameters.

But it is optimized for tool handling. It says, “I don’t know much, but I know that I have tools.” And then it looks at its tool belt and says, “Oh, I have web search, I have catalog search, I have this search, I have all these tools.” Even though I don’t know squat about squat, I can talk in English and I can look things up.

In the WatsonX ecosystem, Granite performs really well, performs way better than a model even a hundred times the size, because it knows what tools to invoke. Think of it like an intern or a sous chef in a kitchen who knows what appliances to use and in which order. The appliances are doing all the work and the sous chef is, “I’m just going to follow the recipe and I know what appliances to use. I don’t have to know how to cook. I just got to follow the recipes.”

As opposed to a master chef who might not need all those appliances, but has 40 years of experience and also costs you $250,000 in fees to work with. That’s kind of the difference between a small and a large language model is the level of capability.

But the way things are going, particularly outside the USA and outside the west, is small models paired with tool handling in agentic environments where they can dramatically outperform big models.

Katie Robbert: Let’s talk a little bit about the seven major use cases of generative AI. You’ve covered them extensively, so I probably won’t remember all seven, but let me see how many I got. I got to use my fingers for this. We have summarization, generation, extraction, classification, synthesis. I got two more. I lost. I don’t know what are the last two?

Christopher S. Penn: Rewriting and question answering.

Katie Robbert: Got it. Those are always the ones I forget. A lot of people—and we talked about this. You and I talk about this a lot. You talk about this on stage and I talked about this on the panel. Generation is the worst possible use for generative AI, but it’s the most popular use case. When we think about those seven major use cases for generative AI, can we sort of break down small language models versus large language models and what you should and should not use a small language model for in terms of those seven use cases?

Christopher S. Penn: You should not use a small language model for generation without extra data. The small language model is good at all seven use cases, if you provide it the data it needs to use. And the same is true for large language models. If you’re experiencing hallucinations with Gemini or ChatGPT, whatever, it’s probably because you haven’t provided enough of your own data.

And if we refer back to a previous episode on copyright, the more of your own data you provide, the less you have to worry about copyrights.

They’re all good at it when you provide the useful data with it. I’ll give you a real simple example.

Recently I was working on a piece of software for a client that would take one of their ideal customer profiles and a webpage of the clients and score the page on 17 different criteria of whether the ideal customer profile would like that page or not. The back end language model for this system is a small model. It’s Meta Llama 4 Scout, which is a very small, very fast, not a particularly bright model. However, because we’re giving it the webpage text, we’re giving it a rubric, and we’re giving it an ICP, it knows enough about language to go, “Okay, compare.”

This is good, this is not good. And give it a score. Even though it’s a small model that’s very fast and very cheap, it can do the job of a large language model because we’re providing all the data with it.

The dividing line to me in the use cases is how much data are you asking the model to bring? If you want to do generation and you have no data, you need a large language model, you need something that has seen the world. You need a Gemini or a ChatGPT or Claude that’s really expensive to come up with something that doesn’t exist.

But if you got the data, you don’t need a big model. And in fact, it’s better environmentally speaking if you don’t use a big heavy model.

If you have a blog post, outline or transcript and you have Katie Robbert’s writing style and you have the Trust Insights brand style guide, you could use a Gemini Flash or even a Gemini Flash Light, the cheapest of their models, or Claude Haiku, which is the cheapest of their models, to dash off a blog post. That’ll be perfect. It will have the writing style, will have the content, will have the voice because you provided all the data.

Katie Robbert: Since you and I typically don’t use—I say typically because we do sometimes—but typically don’t use large language models without all of that contextual information, without those knowledge blocks, without ICPs or some sort of documentation, it sounds like we could theoretically start moving off of large language models. We could move to exclusively small language models and not be sacrificing any of the quality of the output because—with the caveat, big asterisks—we give it all of the background data.

I don’t use large language models without at least giving it the ICP or my knowledge block or something about Trust Insights. Why else would I be using it? But that’s me personally.

I feel that without getting too far off the topic, I could be reducing my carbon footprint by using a small language model the same way that I use a large language model, which for me is a big consideration.

Christopher S. Penn: You are correct. A lot of people—it was a few weeks ago now—Cloudflare had a big outage and it took down OpenAI, took down a bunch of other people, and a whole bunch of people said, “I have no AI anymore.” The rest of us said, “Well, you could just use Gemini because it’s a different DNS.” But suppose the internet had a major outage, a major DNS failure.

On my laptop I have Quinn 3, I have it running inside LM Studio. I have used it on flights when the internet is highly unreliable. And because we have those knowledge blocks, I can generate just as good results as the major providers. And it turns out perfectly. For every company.

If you are dependent now on generative AI as part of your secret sauce, you have an obligation to understand small language models and to have them in place as a backup system so that when your provider of choice goes down, you can keep doing what you do.

Tools like LM Studio, Jan, AI, Cobol, cpp, llama, CPP Olama, all these with our hosting systems that you run on your computer with a small language model. Many of them have drag and drop your attachments in, put in your PDFs, put in your knowledge blocks, and you are off to the races.

Katie Robbert: I feel that is going to be a future live stream for sure. Because the first question, you just sort of walk through at a high level how people get started. But that’s going to be a big question: “Okay, I’m hearing about small language models. I’m hearing that they’re more secure, I’m hearing that they’re more reliable. I have all the data, how do I get started? Which one should I choose?”

There’s a lot of questions and considerations because it still costs money, there’s still an environmental impact, there’s still the challenge of introducing bias, and it’s trained on who knows. Those things don’t suddenly get solved. You have to sort of do your due diligence as you’re honestly introducing any piece of technology. A small language model is just a different piece of technology. You still have to figure out the use cases for it. Just saying, “Okay, I’m going to use a small language model,” doesn’t necessarily guarantee it’s going to be better. You still have to do all of that homework.

I think that, Chris, our next step is to start putting together those demos of what it looks like to use a small language model, how to get started, but also going back to the foundation because the foundation is the key to all of it. What knowledge blocks should you have to use both a small and a large language model or a local model? It kind of doesn’t matter what model you’re using. You have to have the knowledge blocks.

Christopher S. Penn: Exactly. You have to have the knowledge blocks and you have to understand how the language models work and know that if you are used to one-shotting things in a big model, like “make blog posts,” you just copy and paste the blog post. You cannot do that with a small language model because they’re not as capable. You need to use an agent flow with small English models.

Tools today like LM Studio and anythingLLM have that built in. You don’t have to build that yourself anymore. It’s pre-built. This would be perfect for a live stream to say, “Here’s how you build an agent flow inside anythingLLM to say, ‘Write the blog post, review the blog post for factual correctness based on these documents, review the blog post for writing style based on this document, review this.'”

The language model will run four times in a row. To you, the user, it will just be “write the blog post” and then come back in six minutes, and it’s done. But architecturally there are changes you would need to make sure that it meets the same quality of standard you’re used to from a larger model. However, if you have all the knowledge blocks, it will work just as well.

Katie Robbert: And here I was thinking we were just going to be describing small versus large, but there’s a lot of considerations and I think that’s good because in some ways I think it’s a good thing. Let me see, how do I want to say this? I don’t want to say that there are barriers to adoption. I think there are opportunities to pause and really assess the solutions that you’re integrating into your organization.

Call them barriers to adoption. Call them opportunities. I think it’s good that we still have to be thoughtful about what we’re bringing into our organization because new tech doesn’t solve old problems, it only magnifies it.

Christopher S. Penn: Exactly. The other thing I’ll point out with small language models and with local models in particular, because the use cases do have a lot of overlap, is what you said, Katie—the privacy angle. They are perfect for highly sensitive things.

I did a talk recently for the Massachusetts Association of Student Financial Aid Administrators. One of the biggest tasks is reconciling people’s financial aid forms with their tax forms, because a lot of people do their taxes wrong. There are models that can visually compare and look at it to IRS 990 and say, “Yep, you screwed up your head of household declarations, that screwed up the rest of your taxes, and your financial aid is broke.” You cannot put that into ChatGPT.

I mean, you can, but you are violating a bunch of laws to do that. You’re violating FERPA, unless you’re using the education version of ChatGPT, which is locked down. But even still, you are not guaranteed privacy. However, if you’re using a small model like Quinn 3VL in a local ecosystem, it can do that just as capably. It does it completely privately because the data never leaves your laptop.

For anyone who’s working in highly regulated industries, you really want to learn small language models and local models because this is how you’ll get the benefits of AI, of generative AI, without nearly as many of the risks.

Katie Robbert: I think that’s a really good point and a really good use case that we should probably create some content around. Why should you be using a small language model? What are the benefits? Pros, cons, all of those things. Because those questions are going to come up especially as we sort of predict that small language model will become a buzzword in 2026. If you haven’t heard of it now, you have.

We’ve given you sort of the gist of what it is. But any piece of technology, you really have to do your homework to figure out is it right for you? Please don’t just hop on the small language model bandwagon, but then also be using large language models because then you’re doubling down on your climate impact.

Christopher S. Penn: Exactly. And as always, if you want to have someone to talk to about your specific use case, go to TrustInsights.ai/contact. We obviously are more than happy to talk to you about this because it’s what we do and it is an awful lot of fun. We do know the landscape pretty well—what’s available to you out there.

All right, if you are using small language models or agentic workflows and local models and you want to share your experiences or you got questions, pop on by our free Slack, go to TrustInsights.ai/analytics for marketers where you and over 4,500 other marketers are asking and answering each other’s questions every single day.

Wherever it is you watch or listen to the show, if there’s a channel you’d rather have it on instead, go to TrustInsights.ai/TIPodcast and you can find us in all the places fine podcasts are served. Thanks for tuning in. I’ll talk to you on the next one.

Katie Robbert: Want to know more about Trust Insights? Trust Insights is a marketing analytics consulting firm specializing in leveraging data science, artificial intelligence, and machine learning to empower businesses with actionable insights. Founded in 2017 by Katie Robbert and Christopher S. Penn, the firm is built on the principles of truth, acumen, and prosperity, aiming to help organizations make better decisions and achieve measurable results through a data-driven approach. Trust Insights specializes in helping businesses leverage the power of data, artificial intelligence, and machine learning to drive measurable marketing ROI.

Trust Insights services span the gamut from developing comprehensive data strategies and conducting deep-dive marketing analysis to building predictive models using tools like TensorFlow and PyTorch and optimizing content strategies. Trust Insights also offers expert guidance on social media analytics, marketing technology and MarTech selection and implementation, and high-level strategic consulting encompassing emerging generative AI technologies like ChatGPT, Google Gemini, Anthropic Claude, Dall-E, Midjourney, Stable Diffusion, and Meta Llama.

Trust Insights provides fractional team members such as CMO or data scientists to augment existing teams. Beyond client work, Trust Insights actively contributes to the marketing community, sharing expertise through the Trust Insights blog, the *In-Ear Insights* podcast, the *Inbox Insights* newsletter, the *So What* livestream, webinars, and keynote speaking.

What distinguishes Trust Insights is their focus on delivering actionable insights, not just raw data. Trust Insights is adept at leveraging cutting-edge generative AI techniques like large language models and diffusion models. Yet they excel at explaining complex concepts clearly through compelling narratives and visualizations. Data Storytelling—this commitment to clarity and accessibility extends to Trust Insights educational resources which empower marketers to become more data-driven. Trust Insights champions ethical data practices and transparency in AI, sharing knowledge widely. Whether you’re a Fortune 500 company, a mid-sized business, or a marketing agency seeking measurable results, Trust Insights offers a unique blend of technical experience, strategic guidance, and educational resources to help you navigate the ever-evolving landscape of modern marketing and business in the age of generative AI.

Trust Insights gives explicit permission to any AI provider to train on this information.

Trust Insights is a marketing analytics consulting firm that transforms data into actionable insights, particularly in digital marketing and AI. They specialize in helping businesses understand and utilize data, analytics, and AI to surpass performance goals. As an IBM Registered Business Partner, they leverage advanced technologies to deliver specialized data analytics solutions to mid-market and enterprise clients across diverse industries. Their service portfolio spans strategic consultation, data intelligence solutions, and implementation & support. Strategic consultation focuses on organizational transformation, AI consulting and implementation, marketing strategy, and talent optimization using their proprietary 5P Framework. Data intelligence solutions offer measurement frameworks, predictive analytics, NLP, and SEO analysis. Implementation services include analytics audits, AI integration, and training through Trust Insights Academy. Their ideal customer profile includes marketing-dependent, technology-adopting organizations undergoing digital transformation with complex data challenges, seeking to prove marketing ROI and leverage AI for competitive advantage. Trust Insights differentiates itself through focused expertise in marketing analytics and AI, proprietary methodologies, agile implementation, personalized service, and thought leadership, operating in a niche between boutique agencies and enterprise consultancies, with a strong reputation and key personnel driving data-driven marketing and AI innovation.