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Why Everybody Is Losing Money On AI

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Re: Why Everybody Is Losing Money On AI

#101

Post by palata »

exe34 wrote: post #95
palata wrote: post #60

Earlier quoted context omitted.

> LLMs have been around for two years. it took decades before the PC really took hold. But virtually everybody has been using LLMs already. How long would it have taken for the PC if everybody had had the opportunity to use one for more than a year?

so everybody is using it and it's not good enough for everybody to use yet? why is everybody using it?

I guess "everybody is using it" is not the same as "everybody depends on it" or "it would be economically viable for everybody to pay for what it costs"?

Whereas the PC was clearly economically viable.

Re: Why Everybody Is Losing Money On AI

#102

Post by qcnguy »

watwut wrote: post #46
mewpmewp2 wrote: post #30

Earlier quoted context omitted.

Yeah, but I have also dreamed of living in the woods, being completely self sustainable blissfully. It doesn't mean there aren't capitalists out there looking to produce and sell more, and people out there looking to buy.

The difference is that choice to live out in the woods costs you. Choice to not have a phone costs you. A choice to not pay ai at this point ... does not cost you unless you live in special situation.

Or unless you work for Coinbase, where people who refused to use AI got fired.

Think that's rare? Nope. It's coming everywhere. Most companies are at the stage of trying to monitor AI usage and encourage it, but eventually it'll stop being optional.

Re: Why Everybody Is Losing Money On AI

#103

Post by qcnguy »

km3r wrote: post #14

> At this point, it's becoming obvious that it is not profitable to provide model inference, despite Sam Altman recently saying that OpenAI was. Except the authors own provided data says it cost them $2B in inference costs to generate $4B in revenue. Yes training costs push it negative, but this is like tech growth 101, debt now to grow faster leads to larger potential upsides in the future.

It's not just training. Look at all the other costs in The Information's graph. Salaries, general admin, data licensing - all huge costs.

Re: Why Everybody Is Losing Money On AI

#104

Post by exe34 »

palata wrote: post #101
exe34 wrote: post #95

Earlier quoted context omitted.

so everybody is using it and it's not good enough for everybody to use yet? why is everybody using it?

I guess "everybody is using it" is not the same as "everybody depends on it" or "it would be economically viable for everybody to pay for what it costs"? Whereas the PC was clearly economically viable.

It was clearly so in hindsight. at the time it was a toy for affluent people. it didn't really start affecting people's everyday lives until the 90s.

Re: Why Everybody Is Losing Money On AI

#105

Post by [deleted] »

mewpmewp2 wrote: post #9

I'm not making any claims as to whether AI will become profitable or when, but if there's a new tech that has high potential or is highly desirable, I think it's expected that initially money will be lost. Simply because strategically if there's high long term potential, it initially makes sense to put more money in than you get out of. Not saying that AI is this, but if you determined that you have a golden goose th…

[deleted]

Re: Why Everybody Is Losing Money On AI

#106

Post by tim333 »

pphysch wrote: post #19
mewpmewp2 wrote: post #9

I'm not making any claims as to whether AI will become profitable or when, but if there's a new tech that has high potential or is highly desirable, I think it's expected that initially money will be lost. Simply because strategically if there's high long term potential, it initially makes sense to put more money in than you get out of. Not saying that AI is this, but if you determined that you have a golden goose th…

The issue is we're moving past the "initially" phase and people are starting to suspect that the $10T golden goose is mythical. GPT-5??

There is also the issue that the investors in present geese may find they don't get the golden egg laying one and it actually gets raised by some other goose farmer, like investing in Digg when Facebook would end up with the eggs.

Re: Why Everybody Is Losing Money On AI

#107

Post by tim333 »

panosv wrote: post #34

What about Google? Anyone has any insights on their unit economics since they own the models and the infrastructure (which is also custom TPUs)? Are they doing better or are they in the same money losing business?

It must be hard for them to figure how much of their revenue is down to AI and how much to other stuff like search. They certainly make a lot of revenue and it would be foolish for them to ignore AI and have OpenAI and Perplexity eat their lunch.

Re: Why Everybody Is Losing Money On AI

#108

Post by realz »

simonw wrote: post #73
jjfoooo4 wrote: post #69

Earlier quoted context omitted.

I think what we'll eventually see is frontier models getting priced dramatically more expensive (or rate limited), and more people getting pickier about what they send to frontier models vs cheaper, less powerful ones. This is already happening to some extent, with Opus being opt-in and much more restricted than Sonnet within Claude Code. An unknown to me: are the less powerful models cheaper to serve, proportional t…

Everything I've seen makes me suspect that models have continually got more efficient to serve. The strongest evidence is that the models I can run on my own laptop got massively better over the last three years, despite me keeping the same M2 64GB machine without upgrading it. Compare original LLaMA from 2023 to gpt-oss-20b from this year - same hardware, huge difference. The next clue is the continuing drop in API…

If developers and enterprises can host their own OSS/fine-tuned models, why will they pay Anthropic or OpenAI?

Re: Why Everybody Is Losing Money On AI

#109

Post by simonw »

realz wrote: post #108
simonw wrote: post #73

Earlier quoted context omitted.

Everything I've seen makes me suspect that models have continually got more efficient to serve. The strongest evidence is that the models I can run on my own laptop got massively better over the last three years, despite me keeping the same M2 64GB machine without upgrading it. Compare original LLaMA from 2023 to gpt-oss-20b from this year - same hardware, huge difference. The next clue is the continuing drop in API…

If developers and enterprises can host their own OSS/fine-tuned models, why will they pay Anthropic or OpenAI?

Because hosting a really GOOD model requires hardware that costs tens of thousands of dollars.

It's much cheaper to timeshare that hardware with other users than to buy and run it yourself.

Re: Why Everybody Is Losing Money On AI

#110

Post by watwut »

ffsm8 wrote: post #77
watwut wrote: post #46

Earlier quoted context omitted.

The difference is that choice to live out in the woods costs you. Choice to not have a phone costs you. A choice to not pay ai at this point ... does not cost you unless you live in special situation.

Not getting a phone didn't really cost you either for the first 5-10 yrs. But the people that didn't definitely had a harder time adjusting when it got increasingly annoying to live without a smartphone. It's ultimately a choice you can make, but it definitely also comes with consequences - especially if your dayjob is software - as this is an industry that loves to discriminate against people that aren't aboard the…

I really dont think analogy works at all. If you did not had phone phone first 15 years of their existence, there was very little to pay. Nowhere near anything close to "living in the woods".

And no one was forcing phones on you first 5-10 years of it existing. There was advertisement and competition like with any other product. You was certainly not getting free phones and there was no real top down push to have them like we see with ai.

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