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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

#301

Post by m1coti »

roncesvalles wrote: post #226
cogman10 wrote: post #167

Earlier quoted context omitted.

This is the same argument that has been historically made for outsourcing developers. Get 20 more devs for the cost of 1 dev in the US. I suspect that AI will fail to pan out to the same extent for the same reason why outsourcing hasn't fully panned out (even though every company tries it after getting big enough). The problems that will come up will be and always have been ongoing maintenance. AI is great at writing…

Outsourcing of knowledge workers didn't work out because at large enough scales, the geographic arbitrage disappeared. Companies mostly always got what they paid for. The determinant of success was only whether the task needed American-tier labor or could make do with sub-American quality labor.

I am not sure this feels right. I agree that the US currently has leading minds in terms of tech, but I am not sure it is too big of difference with the EU knowledge workers. EU is still a lot cheaper then US in terms of wages you would need to pay.

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

#303

Post by rtgfhyuj »

simonw wrote: post #16
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?

[dead]

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

#304

Post by npn »

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…

we all know it is impossible goal to make. surely AI will be even more useful in the future, but as long as china exists and continue to undercut the price, the goal will be never meet.

> 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.

with that much money, the companies can easily buy their own hardware and hosting free public models, no need for those expensive subscriptions.

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

#305

Post by simplyluke »

FuriouslyAdrift wrote: post #246
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…

I work for a tiny little company ($150MM annual rev with 9% net) and we are already looking at dropping $100k on hardware to run local models because, for us, they're "good enough." Our estimated spend for AIaaS would exceed that cost in less than a year. In a few years, there will be hardware capable of running frontier models good enough for most things at accessible prices for even tiny companies.

Yeah, that's the part that just seems to be wildly under-discussed to me.

If open source models are ~3-6 months behind SOTA, and ~opus4.6 capabilities are good-enough for product market fit, do the frontier labs have half a decade to catch up on their prior burn?

AI cost ballooning faster than companies can afford is becoming a very common topic in my circles right now. The era of "I'll pay infinitely more for marginal gains" is over from what I can tell.

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

#306

Post by bigbuppo »

simonw wrote: post #223
bigbuppo wrote: post #176

Earlier quoted context omitted.

Not to mention the API plans are also still in their "lose money, just get the suckers hooked like addicts" phase. Once the reality-based pricing comes into play, it's a coin flip of whether the bulk of the companies fail, or they get to live off government subsidies for a few decades. On the plus side, I'm happy I'll have a nice hay barn when the local half-built AI data center is abandoned.

I believe that API pricing runs at a healthy margin, at least compared to the server and energy costs used to serve the tokens. Recent conversation here on that topic: https://news.ycombinator.com/item?id=47062534#47063134

There isn't a single thing about how the AI companies are operating that looks like a normal business. I know people who were in the room when Scott Sullivan, CFO of Worldcom, assured everyone that the future was bright at Worldcom days before they collapsed. So you'll have to excuse me if I don't believe the words of someone whose sole job is to justify hundreds of billions of dollars being thrown at Anthropic when he says their future is bright.

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

#307

Post by csomar »

simonw wrote: post #178
righthand wrote: post #145

Earlier quoted context omitted.

It’s not supposed to be logical, it’s an LLM evangelism blog that rarely, if ever, has any critical analysis that isn’t pro-industry. Read any/all of the other posts and you won’t find much skepticism but you will find a lot of shilling how great it all is.

308 posts on AI ethics: https://simonwillison.net/tags/ai-ethics/ 52 on AI misuse: https://simonwillison.net/tags/ai-misuse/ 149 on the unsolved challenge of prompt injection: https://simonwillison.net/tags/prompt-injection/ 40 on slop: https://simonwillison.net/tags/slop/ If you want an "LLM evangelism blog that rarely, if ever, has any critical analysis that isn’t pro-industry" there are plenty out there. I'm not o…

All of these are about AI misuse, not skepticism of AI. By skepticism I mean doubting whether AI actually delivers on its promises which, based on this last post, sounds like something you think we're already past.

Many people still think AI coding agents are slop on steroids despite all the current hype around AI actually shipping functional products.

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

#308

Post by mannanj »

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…

One quick question. Did tax payer money fund these data centers? If so, how does that money translate to their profit and a return for the people whose work paid for the resources?

Or did we just get scammed?

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

#309

Post by aspenmartin »

pier25 wrote: post #185
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…

Yeah I'll believe it when I see it. Revenue is increasing but so are their costs. Back in 2024 their CEO claimed training costs would rise to $10-100B in the next years. https://www.tomshardware.com/tech-industry/artificial-intell...

thats not that far off. Costs like $100Ms to train a frontier coding agent model today, billions if you count the full pipeline. Combine that with the infra we're building out, the fact that you have multiple labs building similar scaled models, the industry-wide costs of training frontier models could easily surpass 10B/yr in 2027

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

#310

Post by supern0va »

hansmayer wrote: post #243
pier25 wrote: post #185

Earlier quoted context omitted.

Yeah I'll believe it when I see it. Revenue is increasing but so are their costs. Back in 2024 their CEO claimed training costs would rise to $10-100B in the next years. https://www.tomshardware.com/tech-industry/artificial-intell...

Their CEO claims a lot of wild shit. He claimed in January this year, that in about 2-3 weeks from this moment, i.e. "in 6 months" that AI will be doing all of SWE work. Lets hold these people accountable for a change!

I work in big tech and probably 90% of code over the last month has been written by AI. And I suspect it's probably higher within Anthropic, which is probably what he's basing his opinion on.

So, he's closer to correct than not.

That said, your recollection is also flawed. It was in mid-March, and here's the relevant quotes:

>I think we’ll be there in three to six months—where AI is writing 90 percent of the code. And then in twelve months, we may be in a world where AI is writing essentially all of the code.

[...]

>But the programmer still needs to specify, you know, what are—what are the conditions of what you’re doing, what—you know, what is the overall app you’re trying to make, what’s the overall design decision? How do we collaborate with other code that’s been written? You know, how do we have some common sense on whether this is a secure design or an insecure design?

[...]

>So as long as there are these small pieces that a programmer, a human programmer, needs to do, the AI isn’t good at, I think human productivity will actually be enhanced. But on the other hand, I think that eventually all those little islands will get picked off by AI systems.

With another 3-4 months left on the clock, his prediction seems remarkably on point for at least certain organizations and domains.

I welcome you to also hold yourself accountable in the coming months if this trend continues. ;)

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