This episode describes DeepSeek R1, a free, open-source AI model developed for under $6 million. Unlike most AI models trained using expensive human-labeled data, DeepSeek R1 utilizes self-reinforced learning. It demonstrates impressive performance on certain benchmarks, particularly in mathematics, but lags behind in coding tasks compared to paid competitors like GPT-4. The video highlights R1's unique ability to explain its reasoning process and correct its own mistakes (hallucinations), showcasing a more transparent and human-like interaction. While server speed is currently a limitation due to high demand, users can run R1 locally for increased privacy, though this requires significant computing power.