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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

#291

Post by vablings »

jstummbillig wrote: post #286
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…

> 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. This is where the napkin math is breaking down in a big way. There is absolutely no reason to assume this will only impact "knowledge workers". Farmers use computers. Farmers will use AI.

AI for what? None of the AI a farmer could or would use would be any more meaningful that light chatbot usage or already existing computer vision/gps

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

#292

Post by mattas »

simonw wrote: post #244
cj wrote: post #215

> Coding agents really did change everything. These are tools which burn vastly more tokens The assumption here is that this is a positive thing. But this very well could end up being a major negative long term by increasing the cost per user, reducing margins. More usage = more cost = less profit. It's not obvious that more usage is good. It's only good if revenue per user increases more than cost does. I'm skeptica…

> It's only good if revenue per user increases more than cost does. That's why it's so important for these labs that they're selling API tokens for more than the compute+energy costs needed to generate them. Every indicator I've seen is that they do have a positive margin on that. If they don't, they're screwed.

What's an example of an indicator? Genuinely curious!

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

#293

Post by skybrian »

surgical_fire wrote: post #231
hansmayer wrote: post #128

> Anthropic are strongly rumored to be about to have their first profitable quarter No, its more like their own leak to WSJ and according to Ed Zitron -> seems to be heavily engineered via non-GAAP practices such as counting potential , but not realised revenue as actual revenue - the stuff for which I would be arrested if I did it at my company. Also it appears according to Ed's analysis - strangely they seem to be…

Also, if I understand correctly, they are rumored to have a profitable EBITDA. It's a funny metric considering Depreciation is a huge cost for them. "We are profitable when we don't count our expenses"

There's a good reason to look at it separately: if inference is profitable then they make money (or at least lose less money) when they get more customers, because any fixed costs are spread across more usage.

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

#294

Post by Szpadel »

> but as far as I can tell those credit costs are an exact match for the API token costs listed for those models.

it is only true for USD. for example if you pay in euro, this is actually more expensive. kind of makes no sense, because it translates to $1 = €1

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

#295

Post by cainxinth »

tariky wrote: post #168
smokel wrote: post #29

Earlier quoted context omitted.

For coding assistance, I have tried OpenCode with several large open models through OpenRouter. All were fairly bad compared to Claude Opus. Could you provide some hints on how I should be holding these open models so that I might get more value out of them? I agree with the common trope that open models lag behind by about a year, but something magical happened just around a year ago when the state of the art models…

I tried almost all OS models on opencode, none of them is on levels as opus 4.7. In latest experiment I used opus for implementation plan then used cursor composer 2.5 for execution. I must say that combo is really good. Main drawback of claude code is that is super slow. So when paired with composer that is super fast it flies.

No one is claiming that OS is as good. They are saying it isn't that far behind SOTA commercial products. So why pay exorbitantly just to get something only a few percent better than the free option?

But there have been very good open source office apps for decades and few enterprises use them, so perhaps this is just the nature of B2B purchasing committees and 'nobody getting fired for buying IBM.'

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

#296

Post by forlorn_mammoth »

WarmWash wrote: post #256
specproc wrote: post #124

Earlier quoted context omitted.

I'm sorry, what the feck does "value creation" mean here? I live in a place where people are so, insanely squeezed from every angle. Wages are stagnant, prices rocketing. Where is the money to pay for this value going to come from? No one I know feels richer than they did a decade back. I've not been able to meaningfully put up my prices for a decade. People are tired and stressed and scared, particularly scared of a…

Sounds like internet sentiment and not research data. It's kind of become socially taboo to not be suffering "in this economy", but on paper it's hard to see weakness in places that there isn't always weakness. As long as the 65-95% are doing well, there isn't going to be a collapse.

The most recent U Michigan 'Survey of Consumer Sentiment', which is THE authorative source in the US, shows consumer sentiment at the lowest levels since the survey started in 1977

From the U Michigan page: https://www.sca.isr.umich.edu/

or from the FED https://fred.stlouisfed.org/series/UMCSENT

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

#297

Post by cootsnuck »

hansmayer wrote: post #128

> Anthropic are strongly rumored to be about to have their first profitable quarter No, its more like their own leak to WSJ and according to Ed Zitron -> seems to be heavily engineered via non-GAAP practices such as counting potential , but not realised revenue as actual revenue - the stuff for which I would be arrested if I did it at my company. Also it appears according to Ed's analysis - strangely they seem to be…

Also it was but a few months ago that their CFO said, in a court filing, that Anthropic's revenue across the entire lifetime of the company "exceeds $5 billion". Pretty strange.

https://www.reuters.com/commentary/breakingviews/anthropic-g...

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

#298

Post by [deleted] »

eqvinox wrote: post #86
simonw wrote: post #16

Earlier quoted context omitted.

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?

Just because API pricing would've been $2180.16 doesn't mean that's the value of those tokens. For starters, you personally probably wouldn't have paid that. But also, sales price isn't value. This is like saying, oh, I saw this bar of gold somewhere for $10000 but got it here for $1000! So I got $10000 worth of gold for $1000! - no, the value of that gold is determined by its weight, which wasn't even mentioned. We…

[deleted]

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

#299

Post by simonw »

mattas wrote: post #292
simonw wrote: post #244

Earlier quoted context omitted.

> It's only good if revenue per user increases more than cost does. That's why it's so important for these labs that they're selling API tokens for more than the compute+energy costs needed to generate them. Every indicator I've seen is that they do have a positive margin on that. If they don't, they're screwed.

What's an example of an indicator? Genuinely curious!

Insider tips from Google and AWS telling me that they run inference at a profit (though that was over a year ago now).

Dario telling Dwarkesh three months ago that they have a margin on inference: https://www.dwarkesh.com/p/dario-amodei-2?timestamp=3528.0

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

#300

Post by amilios »

slopinthebag wrote: post #255
smokel wrote: post #29

Earlier quoted context omitted.

For coding assistance, I have tried OpenCode with several large open models through OpenRouter. All were fairly bad compared to Claude Opus. Could you provide some hints on how I should be holding these open models so that I might get more value out of them? I agree with the common trope that open models lag behind by about a year, but something magical happened just around a year ago when the state of the art models…

Do more planning yourself, be smart about the context, break down tasks into smaller components, give it more guidance. You can't just lazily prompt it to complete large features autonomously and expect good results.

But if the closed-source models can do this without the additional effort, that's a significant gap, no?
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