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When AI Costs More Than the Engineer

tomtunguz.com

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Re: When AI Costs More Than the Engineer

#31

Post by psychoslave »

spiderfarmer wrote: post #4

I'm not a VC guru but in my opinion you can't include the time and money it takes to grow a tree and mine the iron to compare the time it takes to hammer in a nail with a hammer versus using your fist.

That’s how policy makers and concentrated decision power class get completely disconnected from actual resources at stake and what actual constraints need to be weighted. If a job require to put a blindfold and a sound blocker headset preventing to hear the things people scream, people in the role will happily accelerate against the wall the are induced to ignore.

This is not even specific to capitalism or VC mind you. Look how PRC led to the Great Chinese Famine. That’s why actual democracies (not the inter-elected aristocraties ), despite all their downsides, are so damn interesting. Corruption, negligence, or mere error with catastrophic follows, is easily spread in a situation where small core of individuals monopolize greatest part of decision weight, but is logistically impossible to achieve in a system optimized for widespread and highly redundant power responsibilities.

https://en.wikipedia.org/wiki/Great_Chinese_Famine

Re: When AI Costs More Than the Engineer

#32

Post by sevenzero »

brown_munda wrote: post #15

Mr. Mark Zuckerberg is particularly not happy about these stats. He was promised something else and he has already fired like half of the company. It is really crazy people didn't think this through.

I think its a fallacy to believe people like Zuckerberg or any other stupidly rich person aren't extremely calculative about this. I am very sure they have surrounded themselves by top tier engineers making very informed decisions while their top tier marketing teams make very calculated decisions on how its expressed to the public. The public generally is NOT in favor of AI outside of tech circles so it makes sense to communicate critique of AI to the public.

Re: When AI Costs More Than the Engineer

#33

Post by seasox »

general1465 wrote: post #16
peppevignanello wrote: post #10

Earlier quoted context omitted.

Exactly, it's like saying Shell is spending a fortune on fuel compared to what they spend on employees, if you count oil extraction costs as 'fuel'.

So where are these training costs getting paid from?

VC mostly, since Anthropic is not profitable.

Re: When AI Costs More Than the Engineer

#34

Post by ErroneousBosh »

iLoveOncall wrote: post #7
geon wrote: post #2

Garbage. You can't include training by the companies that develop an llm in the comparison against companies that merely use the same llm. Apples and potatoes.

OpenAI and Anthropic aren't charities, so whatever cost they inccur for training will be passed down to the companies using the models. So you absolute should include it.

Why can't we pass on the costs of OpenAI and Anthropic's training back to OpenAI and Anthropic?

Bandwidth isn't free, and all my life I've been told that piracy is theft.

Re: When AI Costs More Than the Engineer

#35

Post by onion2k »

iLoveOncall wrote: post #7
geon wrote: post #2

Garbage. You can't include training by the companies that develop an llm in the comparison against companies that merely use the same llm. Apples and potatoes.

OpenAI and Anthropic aren't charities, so whatever cost they inccur for training will be passed down to the companies using the models. So you absolute should include it.

OpenAI and Anthropic aren't charities, so whatever cost they inccur for training will be passed down to the companies using the models

You should, but with two important caveats. First, you don't know what their amortization schedule is like so you don't know what the impact on the pricing will be (are they going to pass the cost on over 5 years or over 20 years?), and second they may go bust before paying the cost down so they may not get a chance to pass it all on. If someone buys the company then they'll get a discount on the value, which means the training costs are just eaten by the investors.

Re: When AI Costs More Than the Engineer

#36

Post by schnitzelstoat »

sevenzero wrote: post #28
schnitzelstoat wrote: post #12

Ignoring the bizarre inclusion of training compute for the AI company estimates, the other comparisons are still valid. > The rest of the software market trails. The top 1% of companies spend $89k per engineer per year on AI, 40% of a fully-loaded $224k senior engineer salary. The median spends $137. That is the gap : ... 0.4x at the top of the market, near zero at the median. So it's not more expensive than an engin…

>it still makes sense to pay for the LLM Enterprise subscriptions. Does it though? I do not see any advantages in my day to day job over using the cheaper models.

My company has a Claude Code and Codex one and I use Claude Code because I am more familiar with it. That said, I just use Opus for planning and Sonnet for implementation and it's pretty cheap. Codex seems decent too so I should try it out some more.

But you can get an awful lot done even with just like $200 a month at API pricing if you are careful not to waste a powerful model on an easy task, or carry around a bloated context window etc.

I think a lot of the 'tokenmaxxing' people spending thousands every month are simply using the tools ineffectively (like having loads of Opus agents doing tasks that Sonnet or even Haiku could do). I suspect this will only get worse now with the release of Fable, but Anthropic must love it.

When you say the cheaper models do you mean like Deepseek or GLM? I haven't tried those but they look interesting. It'd be nice to shift to open weights and not be tied to one company.

Re: When AI Costs More Than the Engineer

#37

Post by scotty79 »

iLoveOncall wrote: post #7
geon wrote: post #2

Garbage. You can't include training by the companies that develop an llm in the comparison against companies that merely use the same llm. Apples and potatoes.

OpenAI and Anthropic aren't charities, so whatever cost they inccur for training will be passed down to the companies using the models. So you absolute should include it.

> whatever cost they inccur for training will be passed down to the companies using the models

Assuming their investors win the bet they placed on them. Which isn't given.

Re: When AI Costs More Than the Engineer

#38

Post by eru »

alexjurkiewicz wrote: post #8
avaer wrote: post #3

Earlier quoted context omitted.

I don't know, compute is compute. Arguably making complex software with LLMs isn't all that different from training a model to do a thing. You're throwing a lot of compute at the problem and hoping for a stochastic solution. The distinction will become even blurrier with time. Though I agree it might be informative to split it by industry sector.

AI training uses wildly more compute than most companies, who are generally building domain specific CRUD apps. Compare AI costs per-engineer-salary-dollar, because more expensive engineers probably need more expensive AI.

> Compare AI costs per-engineer-salary-dollar, because more expensive engineers probably need more expensive AI.

Let's see how this works out in the long run. For a historical analog, more expensive engineers don't use more expensive computers (by and large).

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