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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

#421

Post by woah »

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.

From my back of the envelope analysis for my own projects, paying per token on OpenRouter is competitive if not cheaper than running the same open weight model on a rented GPU. Per-token pricing is in the same ballpark (although more expensive) for closed frontier models and open weight models (cents to dollars per million). To me this says that the pricing is somewhat grounded in reality.

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

#422

Post by lrae »

pembrook wrote: post #53
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?

API pricing drops DRAMATICALLY in enterprise agreements. As with pretty much anything priced on volume/usage. Enterprise deals are negotiated ad-hoc, the listed pricing is simply a jumping off point for the final negotiated discount. If you’re going to give 20,000 employees Claude code you are not going to be spending $1B per year on Anthropic tokens as if you gave everyone an individual API key. Just as Anthropic is…

> Just as Anthropic isn’t paying AWS SES $10,000,000 to send 1 email update

How much do you think emails cost? That number is just so far off?

But besides that, running SES is also quite a bit cheaper than SOTA ai models with high demand (and comparatively) no competition. And quite a bit more pressure to make money (soon).

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

#423

Post by geraneum »

dirck-norman wrote: post #187
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…

Feelings aren’t fact. A lot of data shows the doomerism is not reflected in the actual numbers and much of it has to do with rapid inflation and continued vibes. Consumption has risen, inflation adjusted wages have risen for blue collar and white collar alike. Most social mobility has been the middle class moving into the upper middle class, not moving to the lower class. The main thing holding people back is the hou…

> Feelings aren’t fact... much of it has to do with rapid inflation and "continued vibes".

Oh the lost irony.

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

#424

Post by apocalyptic0n3 »

simplyluke wrote: post #366
doug_durham wrote: post #356

Earlier quoted context omitted.

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.

> that you can run locally That's doing a lot of work here. The future I see isn't most companies buying hundreds of thousands in hardware to run models, it's them adding a line item to their AWS bill. Inference costs on the larger hosted open source models are dramatically lower than the frontier labs API pricing.

> it's them adding a line item to their AWS bill

That's the future Amazon sees too. We just had a week long session with the AWS team and they pushed that to us multiple times.

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

#425

Post by nevertoolate »

simonw wrote: post #360
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.

> 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

From this I assume you think that what the llm has generated is as valuable as your own work generally is. How do you even calculate this?

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

#427

Post by saulpw »

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…

People are confusing "excitement" with "evangelism". Your blog is definitely on the pro-AI side of things, but as you say, it's not one-sided or uncritical.

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

#428

Post by keeda »

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…

Putting some more numbers out there (some of the links are broken, but numbers look about right):

https://github.com/danielmiessler/Substrate/blob/main/Data/K...

Knowledge worker compensation is 35 - 50 trillion a year globally (6 - 12T in the US alone.) That's a huge TAM. It's still close but 5T over 5 years seems doable.

>... 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.

The way we make ICs 10x productive is not just making each of them individually more productive, but by removing the coordination overhead of large organizations, because overhead scales super-linearly with the size of the org. And orgs will shrink automatically as AI-assisted ICs take ownership of larger and larger scopes of work, leaving much more budget for tokens.

I went into this in a bit more detail along with some made-up numbers here: https://news.ycombinator.com/item?id=48040999

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

#429

Post by osti »

doug_durham wrote: post #374
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…

GLM-5.1 isn't just as good. It is no match for Opus running in Claude Code. Please try it yourself. Open source models are about a year behind at least.

For coding I wouldn't say a year, last year this time claude or gpt definitely weren't able to do what GLM is able to do today, but easily 6 months I'd say.

Not sure about other domains though.

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

#430

Post by datadrivenangel »

irishcoffee wrote: post #401
datadrivenangel wrote: post #386

Earlier quoted context omitted.

what models are you using on that? My experiences with apple hardware have convinced me that it is not really good enough for coding locally.

It isn’t the models, it’s the closed api and the tooling associated with it. It’s driving me crazy how not-talked-about this is.

As in the coding harnesses?
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