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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

#351

Post by surgical_fire »

skybrian wrote: post #293
surgical_fire wrote: post #231

Earlier quoted context omitted.

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.

Depreciation is part of the cost of inference. Inference happens in GPUs that have a relatively short lifespan.

Those GPUs are very expensive.

Inference is expensive because a GPU can only process a certain amount of requests in a given timeframe. Remember that Anthropic is constrained in compute.

If they are constrained, it means that those GPUs are not idle. If they have more customers, they will need more GPUs.

If they have to play silly games using EBITDA to be "profitable", then it means that they need to ramp up prices a lot more than they already did.

Which is why in these discussions I always say that inference is also extremely expensive. Too many people like to pretend without any evidence that inference is cheap.

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

#352

Post by cmdrk »

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.

Do you think this will be a trend for larger companies as well?

The decadal move to all-cloud-all-the-time killed off in-house hardware teams while the C-suite chased their OpEx dreams.

It would be interesting if we come full circle on this.

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

#353

Post by uncivilized »

Legend2440 wrote: post #213
hansmayer wrote: post #175

Earlier quoted context omitted.

Well, it is a big news when the COO of Uber says it no? Not quite some small consultancy shop here.

But the COO did not say that. The headline was deliberately misrepresenting what he said.

The article was posted on HN and discussed a day or two ago.

https://news.ycombinator.com/item?id=48268871

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

#354

Post by ciconia »

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…

> make developers 2x, 5x, 10x as productive on stuff that matters

What does this even mean? Is this about speed of development? Is this about headcount? LoC? How are coding agents contributing to productivity in places like GitHub, Shopify or Meta? I mean companies that already have an established product. I really wanna understand this because I'm not seeing that GitHub's product suddenly became so much better than it was 2 years ago, so where's all that productivity going?

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

#355

Post by Danox »

kilroy123 wrote: post #160
TimTheTinker wrote: post #117

Earlier quoted context omitted.

I thought Anthropic and OpenAI's combined CapEx has been source: https://isaiprofitable.com/

That site needs Apple on the list. ;-)

Why? All their money is going to Apple Silicon and the five ecosystems, so far in Apples entire history, the largest acquisition has only been $3 billion dollars, OpenAI is currently getting nothing and they gave Google a measly $1 billion refund per year for the use of Gemini.

If John Ternus wants to spend some money, spend it on bringing memory in house. Apple has the money and the engineering talent to do so, have it fab/made onshore in partnership with TSMC.

Do it Apple because you have to not because you want to the Chinese probably will be taking over the memory industry, worldwide, by taking advantage of the greed from three memory companies and their AI overlords.

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

#356

Post by doug_durham »

simplyluke wrote: post #305
FuriouslyAdrift wrote: post #246

Earlier quoted context omitted.

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 margin…

Open source models that you can run locally are much more than 3 to 6 months behind. 6 months was the November inflection for Claude. No open source model is as good as Claude Opus 4.6.

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

#357

Post by aerhardt »

simonw wrote: post #290
aerhardt wrote: post #265

Earlier quoted context omitted.

I like his other posts. He's bullish on AI, which is fine. I'd like to read a mix of bearish and bullish level-headed takes from people who are subject matter experts. His technical credentials are well past discussion - I love Django, and he comes across as a pretty upbeat but level-headed guy. Certainly beats radical takes in either direction from people who have no clue what they're talking about. It's just this a…

The thing that matters most to me is if reading what I wrote teaches you some new things and gives you something useful to think about. If I make an argument and you disagree that's fine with me, provided I didn't use misinformation or sloppy thinking in making that argument.

That's how I feel about most of your writing. I click through most times when I see you either on the front page or in the comments, and I generally walk away feeling like I have food for thought, without necessarily buying everything wholesale. It's part of why I keep coming back.

My root comment simply represented my two cents about the current post. I don't think anything about the post is outrageously incorrect or anything, just somewhat confusing. You're a very prolific contributor in this community and I don't think me or anyone else that welcomes your takes expects everything you write to rock our collective socks every single time, anyway.

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

#358

Post by packetlost »

aspenmartin wrote: post #218
cryo32 wrote: post #201

Earlier quoted context omitted.

This is never going to materialise. It’s dead in under 2 years. The market is shrinking and saturated already and it’s not because of AI gains but geopolitical instability and supply chain issues, some of which are caused by AI spending and stupid ass PE firms refocusing on AI supply chains. Only our pensions and futures burning.

What do you mean by the market is shrinking?

It's consolidating into fewer, higher value assets. Over 40% of the S&P500 is in companies that are heavily (potentially over) invested in AI.

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

#359

Post by keeda »

simonw wrote: post #152
layer8 wrote: post #120

Earlier quoted context omitted.

Who pays for that value, and from what, if all knowledge workers lose their jobs? It sounds like the economy would largely reduce to the small minority class of independently wealthy people.

The more time I spend using agent tools the less I worry about knowledge worker job loss. It takes a skilled knowledge worker to use these things.

Yes, but I do worry about junior knowledge worker job loss. These models are very good (and getting better) at the vast dark matter of "donkey work" that happens in knowledge-based industries -- work typically done by junior devs / analysts / lawyers / consultants, paralegals, admin assistants, customer success / support, etc. -- and those roles comprise the bulk of the workforce.

And worse, these are the tasks that help the junior people eventually grow into the skilled knowledge workers required to operate models, so there's a pipeline problem too.

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

#360

Post by simonw »

bambax wrote: post #350

> That’s $2,180.16 worth of tokens for $200 So the author claims he's getting $2000 per month worth of frontier AI free of charge. Ok. If he's been doing that for 6 months that's $12k. What has this produced concretely? For $12k you can find a used car in decent condition. Heck for $1200 (his actual out-of-pocket spend) you get a brand new ebike! (on which you could put a pelican and make a photo of both if that's yo…

I've written a great deal of code - code that would have taken me years of work to produce without LLMs.

(It's mostly open source, you're welcome to dig around in https://github.com/simonw and https://github.com/datasette if you like.)

My time as an experienced software engineer is worth a lot of money - a whole lot more than $12,000 for the past six months.

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