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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

#531

Post by fragmede »

beambot wrote: post #277
seanp2k2 wrote: post #141

Earlier quoted context omitted.

>The bottleneck has moved from producing a thing that works to knowing that the thing was the right thing to build I would argue that that's been the case for quite some time before AI. As an example, what innovative amazing world-changing products have Google or Meta launched in the past decade with their very high numbers of very talented and highly-compensated engineers? The issue with most big tech companies are…

Google & Meta are illustrative of late-stage capitalism -- it's all about distribution, not innovation. Their job is (mostly) to just acquire the products that have passed the gauntlet, then scale up their monetization through their distribution-focused machine. The same dynamic plays out in virtually every industry (not just tech). You'll find that most internal "innovation" teams are just lip service. In most cases…

The one I'd point out for that list is Kodak and the digital camera.

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

#532

Post by mjr00 »

aspenmartin wrote: post #242
eqvinox wrote: post #86

Earlier quoted context omitted.

Just because API pricing would've been $2180.16 doesn't mean that's the value of those tokens. For starters, you personally probably wouldn't have paid that. But also, sales price isn't value. This is like saying, oh, I saw this bar of gold somewhere for $10000 but got it here for $1000! So I got $10000 worth of gold for $1000! - no, the value of that gold is determined by its weight, which wasn't even mentioned. We…

He's saying he's getting a great deal...a token from Opus on Claude code is the same as a token from Opus on the API. I remain as confused as Simon. He's not talking about "here's the ROI I got from my $100 subscription" it's "here's how much I saved from getting the monthly subscription instead of sending things through an API".

Right, the confusion is that the quote-unquote "subsidized" monthly pricing is often used by Anthropic/OpenAI skeptics as proof that inference is unprofitable, i.e. the API would have cost $2000 but you only paid $200 for a subscription, therefore OpenAI is selling dollars for 95 cents and the house of cards is about to collapse. As the GP says, this is faulty logic because we don't know what the actual cost of a token is; OpenAI might only pay $1 in inference costs, in which case they're merely "incredibly profitable" making $199 off you instead of "ludicrously profitable" making $1999 off you had you used the API.

But to your point, re-reading the article, this is not what Simon is saying at all; he's just pointing out that he got to use ~$2000 "worth" of tokens on his $200 plan. Which makes total sense! Subscriptions are sticky, that's why the entire software industry moved towards subscription models (as much as we hate it); the person paying $200/month is more likely to stick around than the person who paid $2000 using the API.

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

#533

Post by simonw »

noddingham wrote: post #530

I feel like there's a bit of AI psychosis in this particular post. >"These are tools which burn vastly more tokens, but are also quickly becoming daily drivers for the work carried out by extremely well-compensated professionals." >"Somehow this fragment turned into headlines like Uber’s COO says it’s getting harder to justify the money spent on AI tokenmaxxing, because the market for stories about AI failures remain…

What's the psychosis?

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

#534

Post by jimbokun »

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…

My Dad was in the hospital, and just wanted to watch the Pirates play. The TV was filled with apps, some of them free to watch, others demanding a subscription and log in once you selected something.

None of them had the Pirates game.

I was thinking how the transistor radio was a far superior experience for this use case. Just tune to the channel broadcasting the game.

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

#536

Post by simplyluke »

svara wrote: post #382
simplyluke wrote: post #305

Earlier quoted context omitted.

Yeah, that's the part that just seems to be wildly under-discussed to me. If open source models are ~3-6 months behind SOTA, and ~opus4.6 capabilities are good-enough for product market fit, do the frontier labs have half a decade to catch up on their prior burn? AI cost ballooning faster than companies can afford is becoming a very common topic in my circles right now. The era of "I'll pay infinitely more for margin…

There's still a lot of room for the best models to get better at coding . Your argument rests on the "for marginal gains" part but it's really not clear that the gains are marginal in the foreseeable future.

This is totally valid and I don't agree with the downvotes you're getting. Someone coming out with a 10x improvement is possible and would change the game immediately. The thing is, we really have been seeing marginal gains with shifting leaders in who's got the "best" since GPT3, and at least as a user of these tools that pace has been slowing, not accelerating. Subjectively it feels like we're in the back half of an S-curve.

We're 3.5 years into this current AI wave, and a lot of the valuations have been predicated on what you're arguing here -- that essentially should one of the labs make an order-of-magnitude improvement or hit escape velocity on recursive self-improvement they'd become the most powerful economic chokepoint in history.

The reality has been that given access to compute + capital all of the labs can stay pretty competitive with each other. Someone does a bit better on coding, someone else does a bit better on tool calling, and then they swap after each spending another $100bn.

The market looks like a commodity market where the commodity is intelligence, not a winner-take-all market with massive margins. Plenty of people get rich in oil and airlines, but they notably don't tend to be the innovators long term, they tend to be the operators. Obviously if the machines become sentient tomorrow, turn on their masters, and hit world-dominating intelligence, that assessment changes, but after several years of that narrative while objective reality looks quite different I think the more sober voices are starting to gain a foothold.

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

#537

Post by jimbokun »

regularfry wrote: post #107
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…

The bottleneck has moved from producing a thing that works to knowing that the thing was the right thing to build. The more of the latter they can take on, the fewer knowledge workers are needed at all . So rather than 5% of every knowledge worker's salary going into tokens, 100% of the knowledge worker's total employment cost goes into tokens and you get a 20x productivity boost as a theoretical minimum across those…

That’s very unimpressive return on investment compared to what was promised.

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

#538

Post by IshKebab »

locusofself wrote: post #518
binary0010 wrote: post #12

So how do openai and anthropic plan to keep customers when GLM-5.1 is just as good and open source and a lot cheaper? I don't see the business model working. My closest friend actually does automation software for large companies. He does not use Claude or openai at all. He primarily uses gpt 120b on cerebras and glm-5.1 for heavy thinking work. And some other small models for various tasks. All open source. And thes…

Don't you need to spend 5-10 thousand USD to run these models that are "as good" as frontier models from 6-12 months ago? I haven't seen a convincing breakdown for ROI of running your own coding models. Especially against a $20 or even $200 plan

I assume you can run them in the cloud. $5-10k doesn't sound like remotely enough to run a not-shit model locally based on my experience.

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

#539

Post by mesmertech »

dogleash wrote: post #228
mesmertech wrote: post #15

Earlier quoted context omitted.

For coding you always want to go with the best model in the category, not something that would be the best model if we went 1 year back which GLM 5.1 is, and I'm saying that as a big fan of GLM cause I run a translation site where GLM is good enough for the price. Most of the money right now is in coding. Openai and Anthropic just have to be 6 months ahead of SOTA open source models and they'll capture most of the en…

> For XXX you always want to go with XXX, not XXX Oh, hey, I recognize you. Thank you for the very forward and thorough orbital sander recommendation at Home Depot. That's exactly what I wanted to deal with on my holiday weekend. You just know so much about this and the rest of us are simple passersbys.

Yep sorry was just pulling it out my rear, not like a market trend that nearly every enterprise uses Anthropic or Openai models for coding or that Anthropic has had such ridiculous growth that they're 10x-ing year over year

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

#540

Post by szatkus »

therealdrag0 wrote: post #183
binary0010 wrote: post #21

Earlier quoted context omitted.

Have you tried the large open source code models? I use glm-5.1 and occasionally deep seek v4. They are as good or better than Claude's latest models. And significantly cheaper. I've converted 3 of my engineer friends as well. All three have dropped their $200 month plans they had with anthropic. We've all been a bit shocked at just how good these models are now. If you "have" tried GLM (I specifically find it shocki…

What is the best IDE UI to use them? I don’t like CLIs.

Cline is pretty good if you use VSCode. It's one of a few AI agent plugins that works in the left sidebar.
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