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I think Anthropic and OpenAI have found product-market fit

simonwillison.net

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Re: I think Anthropic and OpenAI have found product-market fit

#11

Post by trjordan »

They've got, ballpark, $5t to $10t to make back in the next 5 years, or the hardware buildouts will start getting written down.

This means we're going to need $1t+ per year in spending, per year, on tokens. 200m knowledge workers in the world, 30m developers. We're talking about a world where you need 5% of every knowledge workers salary to go into tokens. 20% if you're a developer.

That's a _huge_ shift. Most people I know cite +20%-40% velocity with these tools, against the actual work their company cares about doing. +20% speed for +20% spend isn't going to motivate a trillion dollars a year in spending.

We're not there yet. This is still the upswing of the hype cycle, and unless we figure out how to make developers 2x, 5x, 10x as productive on stuff that matters, this isn't going to play out well.

Re: I think Anthropic and OpenAI have found product-market fit

#12

Post by binary0010 »

So how do openai and anthropic plan to keep customers when GLM-5.1 is just as good and open source and a lot cheaper?

I don't see the business model working. My closest friend actually does automation software for large companies.

He does not use Claude or openai at all. He primarily uses gpt 120b on cerebras and glm-5.1 for heavy thinking work. And some other small models for various tasks. All open source.

And these systems are extremely useful for the businesses and are able to run fully automated pipelines that are very stable and fast.

We discuss this a lot, and we both think any business doing heavy agentic work on Claude and openai just aren't aware of exactly how good and cheap open source has gotten on the last year.

So... once the legacy businesses and developers catch up, won't Claude and openai be unable to recoup their costs?

Re: I think Anthropic and OpenAI have found product-market fit

#14

Post by prepend »

> $2,180.16 worth of tokens for $200

“Tokens” don’t have an intrisic cost or value. Saying that I used $2,180.16 worth of tokens is like relying on the salesperson to convince me I’m getting a billion dollars worth of pots and pans for $19.99.

I think it’s funny how we are throwing critical thinking out the window when it comes to evaluating biased sources of info.

Re: I think Anthropic and OpenAI have found product-market fit

#15

Post by mesmertech »

binary0010 wrote: post #12

So how do openai and anthropic plan to keep customers when GLM-5.1 is just as good and open source and a lot cheaper? I don't see the business model working. My closest friend actually does automation software for large companies. He does not use Claude or openai at all. He primarily uses gpt 120b on cerebras and glm-5.1 for heavy thinking work. And some other small models for various tasks. All open source. And thes…

For coding you always want to go with the best model in the category, not something that would be the best model if we went 1 year back which GLM 5.1 is, and I'm saying that as a big fan of GLM cause I run a translation site where GLM is good enough for the price.

Most of the money right now is in coding. Openai and Anthropic just have to be 6 months ahead of SOTA open source models and they'll capture most of the enterprise and dev market

Re: I think Anthropic and OpenAI have found product-market fit

#16

Post by simonw »

prepend wrote: post #14

> $2,180.16 worth of tokens for $200 “Tokens” don’t have an intrisic cost or value. Saying that I used $2,180.16 worth of tokens is like relying on the salesperson to convince me I’m getting a billion dollars worth of pots and pans for $19.99. I think it’s funny how we are throwing critical thinking out the window when it comes to evaluating biased sources of info.

I'm not sure what you're pushing back against here.

I spent $200. If I had been paying API pricing it would have been $2,180.16. The article is about how enterprise customers get charged API pricing, which means if I had been employed by one of those companies I would have cost them $2,180.16.

What am I missing?

Re: I think Anthropic and OpenAI have found product-market fit

#17

Post by dylan604 »

prepend wrote: post #14

> $2,180.16 worth of tokens for $200 “Tokens” don’t have an intrisic cost or value. Saying that I used $2,180.16 worth of tokens is like relying on the salesperson to convince me I’m getting a billion dollars worth of pots and pans for $19.99. I think it’s funny how we are throwing critical thinking out the window when it comes to evaluating biased sources of info.

[dead]

Re: I think Anthropic and OpenAI have found product-market fit

#18

Post by EGreg »

mesmertech wrote: post #15
binary0010 wrote: post #12

So how do openai and anthropic plan to keep customers when GLM-5.1 is just as good and open source and a lot cheaper? I don't see the business model working. My closest friend actually does automation software for large companies. He does not use Claude or openai at all. He primarily uses gpt 120b on cerebras and glm-5.1 for heavy thinking work. And some other small models for various tasks. All open source. And thes…

For coding you always want to go with the best model in the category, not something that would be the best model if we went 1 year back which GLM 5.1 is, and I'm saying that as a big fan of GLM cause I run a translation site where GLM is good enough for the price. Most of the money right now is in coding. Openai and Anthropic just have to be 6 months ahead of SOTA open source models and they'll capture most of the en…

Most work is not coding.

And also, people have it wrong… their models are not the main problem anymore. It’s the RAG

Re: I think Anthropic and OpenAI have found product-market fit

#19

Post by EGreg »

trjordan wrote: post #11

They've got, ballpark, $5t to $10t to make back in the next 5 years, or the hardware buildouts will start getting written down. This means we're going to need $1t+ per year in spending, per year, on tokens. 200m knowledge workers in the world, 30m developers. We're talking about a world where you need 5% of every knowledge workers salary to go into tokens. 20% if you're a developer. That's a _huge_ shift. Most people…

Here is a serious question.. Can we sell into the hype cycle and on the way down with this: https://safebots.ai/costs.html

Re: I think Anthropic and OpenAI have found product-market fit

#20

Post by troyastorino »

prepend wrote: post #14

> $2,180.16 worth of tokens for $200 “Tokens” don’t have an intrisic cost or value. Saying that I used $2,180.16 worth of tokens is like relying on the salesperson to convince me I’m getting a billion dollars worth of pots and pans for $19.99. I think it’s funny how we are throwing critical thinking out the window when it comes to evaluating biased sources of info.

Tokens do have a clearly calculable intrinsic cost. There's the marginal cost of production (i.e. the inference cost) and the amortized R&D cost that goes into the model producing them.

Yes, value is hard to calculate, but luckily market pricing mechanisms exist exactly for this purpose. There isn't a better number to use than what people are willing to pay for them.

So he's saying that on an enterprise plan, he'd be spending $2,180.16. He's not paying that much, but enterprises are.

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