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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

#701

Post by jwpapi »

aspenmartin wrote: post #636
jwpapi wrote: post #631

I have to give them kudos. This whole thing is the greatest swindle of all time. AI has some use cases, but not at the price it’s currently priced at. I’ve been on AI since GPT-2 with a lot of heavy users. Every user has the same story, curiosity, surprise, hype, hate, realization. Enterprise is usually a bit behind and are right now at hype cycle, that’s where they sold all the deals and do the IPO. It’s really a VC…

Trying to parse the raw claims here maybe you can help me out - it’s a swindle because ROI of tokens for coding models is not positive? As in it doesn’t bring enough value to charge like the $100/mo? - enterprise customers are too dumb to see this - IPO to max out the CEO profits for what is ultimately blockchain vaporware Am I getting that right? Or am I putting words in your mouth? > it gives tons of people in the…

You kind of got it right, but the biggest loser of them all are the investors especially the index investors. They don’t even decide what they invest in but the savings that goes in funds need to invest in these stocks.

It’s quite an elaborate swindle obviously. But you generate hype with underselling your core product, you claim way more usability then there is. Users will experience usability initially. Everything multiplies with each other and then you put it on the market. Everybody involved makes money and you’ve succesfully extracted money from everyone who’s invested in NASDAQ index funds at the very least.

> Dario and Sam are saying “if you buy our coding agent subscription you can build a game with zero skill and one shot and then be rich”?

That’s Anthropics marketing, yes.

Also their offering is not uniqe that justifies a 1 trillion valuation. The first companies are already rowing back. It’s a really certain time window that they are about to hit now with their IPOs

The companies that have signed these enterprise deals haven’t done a ROI analysis. They had Fomo.

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

#702

Post by Denzel »

simonw wrote: post #299
mattas wrote: post #292

Earlier quoted context omitted.

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

Unless your insider is the CFO, I wouldn’t trust these sources to have the access, knowledge, or insight to determine whether they’re running inference at a profit.

Simple test: can they get their hands on a data center contracts and financials?

Search isn’t anywhere near as high profile as the profitability of AI inference, and yet, even aspects of the Search org were walled off from the rest of the company such that other employees couldn’t see what we see.

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

#703

Post by rudedogg »

twobitshifter wrote: post #695
whatshisface wrote: post #173

Earlier quoted context omitted.

Here are a few thoughts: - The publicly available information about how inference costs compare to training costs is conflicted. EEs involved in datacenters talk about power usage spikes during training runs as if they were a major factor in the designs, but academic papers discussing cost-optimal scaling confidently treat inference-time compute as a major factor. - On the side of the balance indicating that training…

We have GPU costs, power costs, and how many token/s models can generate on those GPUs. It’s possible to figure out the marginal cost based on this. The current estimate is about $0.40 per million tokens for gpt4 equivalent model. Sonnet 4 is $15 per million tokens, so they are charging high margins on inference. The issue is how large of a margin is needed to recover their costs before the GPUs age out, and how high…

That seems way off to me.

I skimmed the article, but couldn’t spot any details on their estimates. They mention 70b+ params as being large in several places. But we’ve had several 100b+ param models that trail Sonnet.

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

#705

Post by rsalus »

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…

they need to make 5t-10t back, but not necessarily through selling tokens. as we can see, the frontier labs are making vertically integrated products. their revenue is no longer strictly tied to inference.

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

#706

Post by simonw »

wg0 wrote: post #704

This requires hard evidence which isn't available. Circumstantial evidence is all otherwise. Bloggers are having AI psychosis too.

I thought the links I provided were pretty solid. A lot more solid then you'll see in most commentary about this stuff!

I agree with this person, let's use AI psychosis for when using an LLM gives someone psychosis, not for when we think, what, that a blogger made some poor assumptions?

https://news.ycombinator.com/item?id=48296794#48303200

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

#707

Post by spamizbad »

fragmede wrote: post #596
spamizbad wrote: post #285

Earlier quoted context omitted.

I will also tell you, as someone who works at a company that's trying to remain profitable, that token spend has caught the eyes of finance and much like cloud spend they've already started applying pressure to control costs. This May my team is protected to use 30% fewer tokens than we did in April - this was by intention. I suspect we'll drop more in June.

Can't wait till June, when finance gives the team the choice: everyone gets double tokens if you choose to fire somebody.

Oh we already had that with a RIF earlier in the year.

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

#708

Post by ozozozd »

wizzwizz4 wrote: post #472
j-bos wrote: post #441

Earlier quoted context omitted.

But isn't it wonderful that they did?

It's vaguely disturbing that people "watch" films 10-12 hours a day. Many of them are using it as a radio, for background noise, without really caring what the program is beyond vague genre, tuning in and out without particular regard to the plot… and yet we have all the cost of transmitting high-resolution video point-to-point. Surely we could just put better stuff on the radio, and accomplish most of the same goals…

Who has the time to watch films 10-12 hours a day?

I think the comment put forward that as an incorrect assumption that was made prior to the cable build-out.

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

#709

Post by gz5 »

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…

there are many paths towards ROI and ruin. but towards ROI:

+ LLM-powered robotics, autonomous, IoT, smart manufacturing

+ LLM-powered biotech, healthcare, genetic engineering, medicine

+ Recursive model improvement

+ Multiply the # of devs (software truly eats world)

+ Exponential increases in model performance / cost decrease (algorithms, power, infra, chips, architectures, etc.)

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

#710

Post by unmole »

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…

> They've got, ballpark, $5t to $10t

What are you basing this on? For reference, Anthropic raised ~$70 billion in total and OpenAI ~$190 billion. Why do they need to make 20-40x that?

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