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[Recursive Reasoning: Moving Beyond Bigger Models in AI]-[Beyond Bigger Models: Recursion As The Next Scaling Law In AI]

Y Combinator Startup Podcast · B2 · 2026-05-01

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📋 Summary

The Paradigm Shift: From Scale to Recursion

In the current AI landscape, the prevailing strategy for improving model performance has been to make models "bigger and bigger." However, recent research into recursion—specifically Hierarchical Reasoning Models (HRM) and Tiny Recursive Models (TRM)—suggests that we can achieve superior reasoning capabilities without relying solely on massive parameter counts. By moving away from the "one-shot feed-forward" process inherent in standard Large Language Models (LLMs), these recursive architectures allow for iterative computation that mirrors the efficiency of algorithms like radix sort or Turing machine operations.

The Limitation of LLMs: The Incompressibility Problem

LLMs operate primarily as next-token predictors. Francois Chaubard highlights that while LLMs appear to reason, they often fail at "incompressible problems" like complex sorting, Sudoku, or maze solving. Because a standard transformer lacks an internal "memory tape" or iterative scratchpad, it is bound by its layer count; if a problem requires more steps than there are layers, the model fundamentally cannot solve it. While "Chain of Thought" (CoT) and tool-use are common hacks to bypass this, they are restricted by the limits of human-labeled training data and the model’s inability to discover new algorithms from first principles.

HRM and the Power of Outer Refinement

HRM introduces a novel approach inspired by the brain's frequency-based hierarchical processing. It utilizes three levels of recursion: a low-level module, a high-level module, and an outer refinement loop. The breakthrough of HRM is its departure from traditional Backpropagation Through Time (BPTT), which suffers from vanishing gradients and memory constraints. Instead, it employs a Deep Equilibrium (DEQ) method, treating the recursion as a way to construct mini-batches across the latent memory space rather than across different inputs. This allows a 27-million-parameter model to outperform much larger models on the ArcPrize benchmark.

TRM: Simplifying for Efficiency

TRM (Tiny Recursive Models) further refines the HRM approach by collapsing the hierarchical network into a single shared-weight architecture. By setting the BPTT truncation to $t=1$, the researchers demonstrated that backpropagating through just one latent recursion step is sufficient to yield high performance. This simplification leads to a drastic reduction in parameter count—down to 7 million—while simultaneously boosting performance from 70% to 87% on ArcPrize challenges. The core takeaway is that the "magic" lies in the outer refinement loop and the iterative update of latent variables ($Z_L$ and $Z_H$), which act as a candidate answer space that the model continuously improves.

Future Implications: The Convergence of Scale and Reasoning

The success of these models suggests a future where we don't have to choose between the powerful semantic embedding spaces of giant LLMs and the efficient, recursive reasoning of tiny models. The ultimate frontier in AI research is likely the integration of these two: using massive models to create rich, semantically separated latent spaces, and then applying recursive "reasoning modules" within those spaces to perform complex, multi-step tasks. As Chaubard notes, it is "sufficient, not necessary" to go bigger; by combining recursive architectures with the massive scale of current foundation models, we may unlock a new era of AI that can perform genuine, autonomous reasoning without being tethered to human-provided traces.

🎯Key Sentences

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just to give the cliff notes.
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it just kind of stops to work.
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it's actually unlike all happening in time in one shot magically
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what you actually paid for that you have to give up is this latent reasoning thing
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we know a theoretical lower bound
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📝Key Phrases

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set up a foundation
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overdo it
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at face value
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in one shot
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trade off memory for compute
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📖 Transcript

Welcome back to another episode of Decoded.
Today I'm back with YC visiting partner, Francois Chaubard, to talk about one of the most interesting recent trends in AI research recursion.
Specifically, we're going to talk about how we can improve a model's reasoning performance by using recursion at inference time, rather than by just making the model bigger and bigger.
There were two papers that made the power of this approach really clear in 2025.
One on hierarchical reasoning models, or HRM, and another on tiny recursive models, TRM.
Francois, thanks for joining us.

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