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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

#131

Post by thewebguyd »

asim wrote: post #91

Love how everyone boasted about replacing all the software with ChatGPT and then we end up with coding agents meaning the software engineer are STILL important. The sell is the development tool. It's classic cloud. Where did all the ops people go, many got subsumed by the cloud companies YET every company still has DevOps people to manage cloud infrastructure. The layer of abstraction went up but we still need the pe…

> The sell is the development tool.

I've been calling that out for a couple years now. LLMs best and most viable use case is still just as a dev tool. Even for non-programming tasks, I still get better results from the LLM if I instruct it to write code to do the task...look at Claude Cowork for example, it's everything I used to do with python myself. It's not really a novel capability, it's just using python & bash for automations that any sysadmin has been doing for decades. Yeah, that's valuable for a non-techincal audience but is it $1T valuable? I don't think so.

When has an IDE or other dev tool ever commanded a $1T valuation?

These things get lost in discussions because people conflate "overvalued" with "not useful." LLMs are useful, particularly as dev tool, but Anthropic & OpenAI are definitely way overvalued.

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

#132

Post by aerhardt »

I find this analysis confusing. PMF for coding was likely reached some time last year. Profitability, which is different, we don’t know. The article kind of confuses both without making a strong economic case or using numbers in a compelling way. I don’t understand what the Uber case has to do with this either. The Uber COO clearly said that at least in terms of ROI he’s not seeing the results either.

My take is the product has been very useful for coding (PMF) for months. But it’s certainly not useful at any cost…

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

#133

Post by hansmayer »

jmyeet wrote: post #111
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…

YEPPP... and I'm kind of shocked at how many people can't do simple math. Let's put it context. Google's annual revenue seems to be north of $400B. So if OpenAI suddenly had Google's revenue, it would still be insufficient to recover their investment. and it's a ticking time bomb because $1T in servers, CPUs, GPUs and memory is going to be worth $200B in 5 years. You can say they can keep using what they've got. Sure…

This should be the top comment. Also, I think its not that many people, including our Simon here, are not good at math. Its more like, some of them seem to be incentivised to not be cough, cough, "good at math". How else will the hype sell?

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

#134

Post by zero_shift »

simonw wrote: post #118
freakynit wrote: post #106

Earlier quoted context omitted.

I mean this case with AI-productivity fires itself back when we talk about GDP. The more AI causes productivity increases, the less and less number of workers will be needed. This will heat up the job market even more and bring salaries down. Net effect of this productivity increase: less consumption by the masses, even though you may be producing more good and much more efficiently. A third effect also comes into pl…

> The more AI causes productivity increases, the less and less number of workers will be needed. That only holds if companies have a fixed need for "productivity" which is met by their current employees, such that their employees becoming more productive means they need less of them. Every company I've ever worked for has wanted to achieve way more than they are able to get done with current resources. But generally…

> Every company I've ever worked for has wanted to achieve way more than they are able to get done with current resources.

I mean sure. Every company wants an infinite addressable market. But that doesn't mean it exists.

It might not be possible to sell 10x the software we sell today. It might not even be possible to sell 2x

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

#135

Post by properbrew »

dd8601fn wrote: post #77
adithyassekhar wrote: post #50

Earlier quoted context omitted.

I asked claude to generate a frontend and it made the same template. Same san serif and serif fonts together. Same colors. Same typography. Same layout and animations even. It’s wild how similar it is. No not similar it’s the same damn thing.

I’ve seen the same dashboard for a dozen custom web applications now, including a couple I had it make for me. It really does have a particular lane for each chore, and it’s reproducible.

Yep and when you see it in the wild it stands out like a sore thumb, absolutely no thought into a bit of a unique design or branding.

I have a few live websites built using LLMs and they will just go for default generic templates and colours if there's no vision.

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

#136

Post by bigbuppo »

smokel wrote: post #49
realo wrote: post #22

200$ per month per seat is nothing . A single 3D CAD license pack for the guys in our R&D group costs multiple thousands of dollars per seat, per month. It's about time software seats get some love too.

AutoCAD is $175 per user per month [1]. [1] https://www.autodesk.com/products/autocad/buy

AutoCAD is still the budget-friendly CAD program it has always been. You don't build big boats in AutoCAD.

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

#137

Post by j_w »

antman wrote: post #33

The costs are exorbitant and most software is not produced by companies with such a huge moat. Anthropic made a profit through their recent bait amd switch pricing. There is zero useful insights online to indicate whether this might die due to commoditisation with good enough open models or fail the race to get more people subsidising unsustainable growth with other people’s money. Who knows? In any case they dont se…

Continuing with your skepticism:

> Stories are circulating of companies surprised at how expensive their LLM bills are becoming from usage by their staff

> Enterprise customers are now paying API prices

How long before enterprise customers start to question the bill? Anthropic goes from not making money to doing pricing shakeup, and now they are making money and the biggest spenders are shocked at prices.

Seems like things are still very uncertain.

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

#138

Post by solenoid0937 »

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…

> 20% if you're a developer. That's a _huge_ shift. Most people I know cite +20%-40% velocity with these tools, against the actual work their company cares about doing. +20% speed for +20% spend isn't going to motivate a trillion dollars a year in spending.

Of course it will. The value of an employee is a multiple of what they get paid.

If you pay an employee $500k and they make $2M for your company (like Meta), then of course a 20% increase for the salary is justified if the velocity is increased 20% as well.

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

#139

Post by hansmayer »

> I currently subscribe to the $100/month Max plan from Anthropic and the $100/month Pro plan from OpenAI. If you are a heavy user of coding agents these plans are a fantastic deal.

Agreed. But its only a great deal because it is heavily subsidized, as you said yourself. Enjoy while it lasts, but in my book, product-market fit means something along the lines of "product which enjoys a loyal customer base, sold at a price perceived fair by the customers, and generating profit. How many of these does your definition of product-market fit hit here?

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

#140

Post by pianopatrick »

spprashant wrote: post #2

So it largely sounds like many more people will be able to write software - and will use AI to do it. Existing software engineers will continue to automate their tasks away like they always did, but perhaps at a faster rate. The impact of AI in other fields seems to be muted.

If the AI can write code for robots the impact in other fields may be pretty large. Seems to me a lot of jobs can be automated with software and robots combined. The limit in the past was writing the software to get the robots to work. But if AI can remove that limit...
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