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Outsourcing plus local AI will soon become more economical vs. frontier labs

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Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#371

Post by runtime_terror »

0xffff2 wrote: post #236
wongarsu wrote: post #212

Earlier quoted context omitted.

Sell more. The hope is that there is a huge addressable market that includes huge per-worker demand in almost all white collar work and lots of inference in people's private lives If that doesn't work, then yes, then prices will have to go up

Both anecdotally for myself and from what I'm reading in the news, it seems just as likely that AI usage has already largely peaked. There was a lot of hype and exploration of capabilities, but models aren't evolving fast enough to keep that going, so I'm settling down into a familiarity with what an LLM can and can't do that means I am using them less overall that I was 6 months ago when I was throwing everything un…

Exactly. Like how Meta has a "blow our money on LLMs" leaderboard. Seems like a few companies are attempting to inflate hype enough so all the investors can exit without losing their heads.

Reminds me of the crypto hype but where the hype agents are some of the largest companies in the world.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#372

Post by runtime_terror »

d1sxeyes wrote: post #348
0xffff2 wrote: post #236

Earlier quoted context omitted.

Both anecdotally for myself and from what I'm reading in the news, it seems just as likely that AI usage has already largely peaked. There was a lot of hype and exploration of capabilities, but models aren't evolving fast enough to keep that going, so I'm settling down into a familiarity with what an LLM can and can't do that means I am using them less overall that I was 6 months ago when I was throwing everything un…

> AI usage has already largely peaked. I think this is minimally likely. While as individuals on the bleeding edge, we're perhaps using these tools less and less, and our echo chamber reinforces that, the penetration of AI into the normal corporate workplace is still very low - emails rewritten with ChatGPT, meeting notes summaries generated by default, etc. There are a million use cases for LLMs which are not yet bu…

I agree that more uses will be found and that maybe we're not at the peak. But it also seems very clear a few players have been actively working to inflate usage numbers by margins that might take a while to replace with legitimate uses

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#373

Post by runtime_terror »

HDThoreaun wrote: post #313
runtime_terror wrote: post #192

Earlier quoted context omitted.

But explain to me how these companies will recoup these costs outside of increasing inference pricing? Their business model is selling inference but the training and other costs have to be accounted for somehow. Unless I'm missing something obvious, inference costs must go up drastically if these companies are going to survive beyond the subsidy stage.

Obviously they need more paying users. The entire game in tech is taking advantage of (comparatively)low marginal costs to pay off capex once you corner the market

I do think that's at least part of the strategy. The problem is that we've never seen a single product category so hyped in history, literally trillions of dollars invested. To recoup that, some not so trivial miracles will need to happen.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#374

Post by lunar_mycroft »

addedGone wrote: post #352
wahnfrieden wrote: post #285

Earlier quoted context omitted.

That’s what I’m saying. Enterprise customers don’t use the subscription plan

Except that they do, we do. A lot of startups pile up enormous amount of accounts, companies don't need the Enterprise Anthropic solution, they can just subscribe to many accounts and have their own staff KYC for each (1 codex, 1 claude, 1 google and so-on).

That will be clamped down on by Anthropic (and other providers) for the same reason they don't offer those plans to enterprise customers already.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#375

Post by brookst »

runtime_terror wrote: post #369
brookst wrote: post #294

Earlier quoted context omitted.

I sincerely doubt Anthropic’s IPO will say that their AI business is only 2% of their future revenue, and they’re bundling in totally unrelated, unprofitable things they expect to account for 98%.

I'm not sure what you're talking about or referring to... I haven't heard anyone claim their S1 will show that but that it will show how poorly their revenue figures look against their costs.

Space'x IPO docs say that launch + Starlink will be 2% of their revenue opportunity, with enterprise AI being 98%.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#376

Post by wahnfrieden »

addedGone wrote: post #352
wahnfrieden wrote: post #285

Earlier quoted context omitted.

That’s what I’m saying. Enterprise customers don’t use the subscription plan

Except that they do, we do. A lot of startups pile up enormous amount of accounts, companies don't need the Enterprise Anthropic solution, they can just subscribe to many accounts and have their own staff KYC for each (1 codex, 1 claude, 1 google and so-on).

Startups do but do you know large enterprises that do?

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#377

Post by ilikehurdles »

addedGone wrote: post #352
wahnfrieden wrote: post #285

Earlier quoted context omitted.

That’s what I’m saying. Enterprise customers don’t use the subscription plan

Except that they do, we do. A lot of startups pile up enormous amount of accounts, companies don't need the Enterprise Anthropic solution, they can just subscribe to many accounts and have their own staff KYC for each (1 codex, 1 claude, 1 google and so-on).

We definitely pay enterprise api costs. Only way to get google vertex integration, and Enterprise is too sensitive to let all of their data leave their moat.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#378

Post by burnte »

wongarsu wrote: post #36
burnte wrote: post #3

Earlier quoted context omitted.

> "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market. I feel it'll wind up like the dotcom/fiber bubble. Way too much money poured into it, lots of expensive bankruptcies or write-offs, and a readjusted market sea level.

Absolutely. We are in a phase of "free money" for AI. Just as with the dotcom bubble that leads to 1) lots of experimentation, and 2) lots of infrastructure buildout (which includes AI model training). Once the money dries up, some infrastructure (including models) will turn out to be profitable, most won't. And some experiments will turn out to be successful, most won't. Lots of useful things will come out of that,…

I agree. I think when companies go bankrupt due to bubbles it's healthy for the economy at large. Capital gets redistributed to other employees and other companies that can build something valuable, and bad business people leave the market.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#379

Post by HDThoreaun »

runtime_terror wrote: post #373
HDThoreaun wrote: post #313

Earlier quoted context omitted.

Obviously they need more paying users. The entire game in tech is taking advantage of (comparatively)low marginal costs to pay off capex once you corner the market

I do think that's at least part of the strategy. The problem is that we've never seen a single product category so hyped in history, literally trillions of dollars invested. To recoup that, some not so trivial miracles will need to happen.

I think that within 5-10 years most white collar workers around the world will be paying for AI assistants. There are 1.2-1.3 billion such people to sell ai to, so getting more users doesnt really seem like a miracle to me. I do think convincing everyone to use expensive proprietary models instead of open ones hosted cheaply by third parties will be a minor miracle for the AI labs. Definitely not out of the question though.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#380

Post by ocreat »

sceptic123 wrote: post #335
ocreat wrote: post #331

Why is it always the idea that the developers the work is outsourced to is less skilled than the local developers?

For me it is more that outsourced devs lack context and long term responsibility. Plus they are generally billing an hourly rate so their incentive structure is not directly aligned with the business that is outsourcing the work.

That won't change by giving them an LLM, that will just make it worse.
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