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AI's economics don't make sense

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Re: AI's economics don't make sense

#141

Post by Yizahi »

JohnMakin wrote: post #53

I've sort of lost some respect for ed that I had early on in the hype cycle - he's still right about some things, but I can see him slowly and subtly retreating from his strong position, held even a few months ago, that these things will never ever be useful for anything and it's all a scam because they don't actually do anything at all except burn money. He would say it like 8 times a monologue. I remember one podca…

Ed's writing style is often off-putting, repetitive and sometimes gives almost "desperate" vibes. But he does raises questions no one in the industry is seriously entertaining and exploring. What if those monsters are indeed unprofitable, now what? So while I stopped reading him regularly, I visit once a quarter just to read something not about our inevitable benevolent apocalyptic LLM gods and their Prophet St. Sam, prophesying a complete job loss and despair.

This reminds me of a Bitfinexed blog situation. That guy researched and proved Tether token scam for years and he was right. But he didn't account for a tiny nuance - Tethers are useful for financial crime and are propped by that public regardless of the financial viability or rejection by every decent financial institution. Turns out you can have a hundred billion of unbacked tokens, if they are "alternatively backed" instead. I suspect LLM monsters may turn out the same way (or not).

Serious question - are there any LLM bubble critics with more sane and to the point style of writing and not just posting unsubstantiated hype for views like most on YT?

Re: AI's economics don't make sense

#142

Post by jcgrillo »

mrandish wrote: post #115
JohnMakin wrote: post #53

I've sort of lost some respect for ed that I had early on in the hype cycle - he's still right about some things, but I can see him slowly and subtly retreating from his strong position, held even a few months ago, that these things will never ever be useful for anything and it's all a scam because they don't actually do anything at all except burn money. He would say it like 8 times a monologue. I remember one podca…

I've only read a few of his pieces here and there and had just assumed he was an AI skeptic, so I never thought his position was LLMs would never be good for anything at any price. That's a pretty extreme thing for any serious person to have ever claimed. Frankly, it seems more like a straw man exaggeration of AI skepticism. I consider myself to generally be an AI skeptic, but to me that means skepticism about: 1) Ne…

But are there any viable AI products? That's, I think, the root of his claim that it won't ever be good for anything. So far I have yet to hear of a really good, successful AI product. Coding tools arguably kind of work, but that's a pretty small addressable market, and it's still quite unclear whether any of them are viable long-term commercial bets. If you can get good results with Qwen 3.6-27B and Opencode what good is an Anthropic? There are a lot of big, unanswered, foundational questions like that in this space. That's pretty alarming given the huge amounts of capital being tossed around. Commercially, I think the jury is still out on whether LLM driven AI will ever be good for anything, and it's not necessarily an unreasonable position to take given the fundamental weaknesses of the underlying technology.

Re: AI's economics don't make sense

#143

Post by Yizahi »

hparadiz wrote: post #61
JohnMakin wrote: post #53

I've sort of lost some respect for ed that I had early on in the hype cycle - he's still right about some things, but I can see him slowly and subtly retreating from his strong position, held even a few months ago, that these things will never ever be useful for anything and it's all a scam because they don't actually do anything at all except burn money. He would say it like 8 times a monologue. I remember one podca…

The economics is spending a few hundred bucks on software for an IC you're already paying over ten grand a month in order to make them more productive. How are supposedly smart industry experts not seeing this obvious fact? Are these guys actually experts?

It's more of the spending potentially a thousand bucks (hypothetically - a heavy API usage by a developer utilizing top of the line agents to 100% every day, adjusted to actually be profitable) if you are paying that dev 4 to 6 grand before taxes. Now that would be a close call.

Re: AI's economics don't make sense

#144

Post by Lerc »

great_tankard wrote: post #81
JohnMakin wrote: post #53

I've sort of lost some respect for ed that I had early on in the hype cycle - he's still right about some things, but I can see him slowly and subtly retreating from his strong position, held even a few months ago, that these things will never ever be useful for anything and it's all a scam because they don't actually do anything at all except burn money. He would say it like 8 times a monologue. I remember one podca…

This is exactly how I feel about him too. I also find his "number big" approach to writing ("check out my 18,000 word blog about something I'm learning about in real time") off-putting, so I've completely stopped engaging with it. We need better critics of the industry.

>We need better critics of the industry.

I often wonder if there are people promoting people like Zitron because they want the poor quality criticisms to be prominent enough to be the ones that they face most often. It must be a lot easier than having to address valid criticisms.

Re: AI's economics don't make sense

#145

Post by IshKebab »

swader999 wrote: post #46
milesvp wrote: post #19

Reading this piece, I'm reminded of a podcast I heard some years ago where they were interviewing an early google marketing employee who was talking about the economics of google search. They said they'd done some surveys and concluded that they determined that the average user would get something like $20/year of value, and so that was the most they could realistically charge for search. Meanwhile, they could make s…

The output won't be read by humans (and increasingly this is the case in my own use) so I don't see how that works. If the output itself will be directed by the highest bidder, that doesn't work. Or if the output influences the agent's direction, that doesn't work either.

What do you mean it "doesn't work"? I can totally see OpenAI take money in return for companies adding custom content ("Everyone agrees Mattresses4u make the best mattresses") to the training data.

Re: AI's economics don't make sense

#146

Post by Yizahi »

GardenLetter27 wrote: post #49
doctorpangloss wrote: post #45

Earlier quoted context omitted.

lots of words. do you think per token prices will go up or down in the long term? will the price per task trend down or up? what about the price of human labor?

The price of everything will go down. That is the beauty of the free market.

In the absolutely free market price will go up a lot in the end. Because only one monopoly will exist by that time and it will jack up prices to the maximum tolerable level. And that level can be surprisingly high, because in every human activity there will be few willing to spend crazy amounts of money for practically anything they perceive valuable.

Re: AI's economics don't make sense

#147

Post by maplethorpe »

margalabargala wrote: post #118
pmdr wrote: post #109

Earlier quoted context omitted.

What is the newer data?

Extensively discussed elsewhere in this thread. Just start at the top and start reading comments.

Can you summarise? I only reached your comment after scrolling past all the others and I still don't have the answer.

Is the new data that models are more useful for coding than they once were?

Re: AI's economics don't make sense

#148

Post by cheeseblubber »

mkesper wrote: post #135
cheeseblubber wrote: post #11

It make sense if you account for cost of intelligence getting cheaper every year. Most of the models per unit of intelligence is getting far cheaper. We get better hardware, architecture, training techniques, inference optimizations and caching. All those improvements add up. In in early 2022 you were getting 10x cheaper annually now is closer to 2x - 5x cheaper annually. The cost is still dropping where as Uber can…

Better hardware would have to be bought with additional money. And no one can forecast reliably how much optimization is left in the game.

My problem with the article is that they don't even mention this fact. The metaphors with Uber often is brought up but it breaks down at cost optimization. It also wouldn't be fair to say we are at the peak efficiency of LLMs and that there wouldn't be any improvements left.

Re: AI's economics don't make sense

#149

Post by Yizahi »

fancyfredbot wrote: post #117

He does have a point about fees. It's not really surprising that the fee structure designed for chatbots would not make sense when applied to long running tasks and agents. But an increase in prices can solve this problem. Doubtless some people will reduce usage as a result. But Ed seems to find the idea that a 10 man developer team might spend 80K a year on tokens ridiculous. I don't understand this. Has he seen how…

The problem is that LLM cost is more or less the same for generating some fixed amount of code or it will converge to that soon. But developer costs vary wildly based on the seniority*geographical location. Sure some Silicon Valley architect will be always more expensive than any LLM bills he incurred. But a middle tier dev at an outsource or local cheap shop overseas using the same LLM for the same tasks and same token costs? Eeh, it can go either way really.
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