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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

#581

Post by fragmede »

cmdrk wrote: post #352
FuriouslyAdrift wrote: post #246

Earlier quoted context omitted.

I work for a tiny little company ($150MM annual rev with 9% net) and we are already looking at dropping $100k on hardware to run local models because, for us, they're "good enough." Our estimated spend for AIaaS would exceed that cost in less than a year. In a few years, there will be hardware capable of running frontier models good enough for most things at accessible prices for even tiny companies.

Do you think this will be a trend for larger companies as well? The decadal move to all-cloud-all-the-time killed off in-house hardware teams while the C-suite chased their OpEx dreams. It would be interesting if we come full circle on this.

I doubt it. Companies that have moved to the cloud are already trusting the cloud with their IP. You can rent time on a high end Nvidia system from various clouds. OpEx means there's no write down in three/five years as that system goes out of date so it would only make sense if the performance/$ is there, or the company is highly protective of their IP and doesn't trust the cloud, at which point they're not on the cloud anyway.

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

#582

Post by fragmede »

MASNeo wrote: post #433
FuriouslyAdrift wrote: post #246

Earlier quoted context omitted.

I work for a tiny little company ($150MM annual rev with 9% net) and we are already looking at dropping $100k on hardware to run local models because, for us, they're "good enough." Our estimated spend for AIaaS would exceed that cost in less than a year. In a few years, there will be hardware capable of running frontier models good enough for most things at accessible prices for even tiny companies.

On prem AI makes sense for more than just the cost. More control, IP, model improvements you can keep, data privacy to name a few. People will realize that AI is not like compute the moment they get their own knowledge sold back at a premium.

What are the advantages to on-prem for a company that's already in the cloud and trusts it with their IP? That company can just rent GPU instances from the cloud if they want to train/fine-tune their own models and keep avoiding CapEx.

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

#583

Post by dminik »

skybrian wrote: post #293
surgical_fire wrote: post #231

Earlier quoted context omitted.

Also, if I understand correctly, they are rumored to have a profitable EBITDA. It's a funny metric considering Depreciation is a huge cost for them. "We are profitable when we don't count our expenses"

There's a good reason to look at it separately: if inference is profitable then they make money (or at least lose less money) when they get more customers, because any fixed costs are spread across more usage.

Assuming that there are infinite suckers with cash to spend. It's entirely possible (if unlikely) that the market is not big enough to cover the training costs. Especially for multiple companies all burning insane amount of money on the regular.

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

#584

Post by fragmede »

jimbokun wrote: post #534
wizzwizz4 wrote: post #472

Earlier quoted context omitted.

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.

You mean the station that the MLB regulatory captured into not broadcasting when the local team was playing?

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

#585

Post by grttq »

simonw wrote: post #244
cj wrote: post #215

> Coding agents really did change everything. These are tools which burn vastly more tokens The assumption here is that this is a positive thing. But this very well could end up being a major negative long term by increasing the cost per user, reducing margins. More usage = more cost = less profit. It's not obvious that more usage is good. It's only good if revenue per user increases more than cost does. I'm skeptica…

> It's only good if revenue per user increases more than cost does. That's why it's so important for these labs that they're selling API tokens for more than the compute+energy costs needed to generate them. Every indicator I've seen is that they do have a positive margin on that. If they don't, they're screwed.

No this is not what matters.

The customers of these tokens need to see returns on their projects that exceed the cost of financing.

Laying people off only goes so far.

If enough said firms don’t see enough value given the price of frontiers they will cancel and consume open source. This is the risk the frontier labs are exposed to.

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

#586

Post by fragmede »

regularfry wrote: post #420
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…

Yes, that exists at the wider business level. No question. I think what needs to get asked is are we talking about a bottleneck within the business as a whole, or a bottleneck within the scope of the knowledge work in question. Within software delivery there's a very clear shift when it's suddenly trivial to drop a 100kLoC plausible-looking PR into code review within an afternoon. Producing working code with a whole…

Trusting CodeRabbit for sign-off is "just" a small matter of configuration.

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

#587

Post by cyanydeez »

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…

if you ignore all catastrophic mistakes, these numbers are true

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

#588

Post by overgard »

WarmWash wrote: post #287
swatcoder wrote: post #123

Earlier quoted context omitted.

You're suggesting that 1 in 8 people worldwide, including every one from infants and the elderly, are knowledge workers. Are you sure that's what you mean? I'm not even sure that 1 in 8 people I know would qualify as a knowledge worker, let alone a knowledge worker that might profoundly benefit from on-the-horizon AI. And I'm in a highly skewed population.

I think the underestimation is how many people want a personal knowledge worker in their pocket, and are willing to pay ~$65/mo for it.

I've yet to meet a person that fits that description IRL. Admittedly I don't live in the valley but I do work in tech. The only place I see that demand is on hacker news (and I imagine twitter - I'm not on it).

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

#589

Post by shimman »

simonw wrote: post #533
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?

That leaders are completely fine with impoverishing vast swaths of American workers because of "progress?"

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

#590

Post by tredre3 »

simonw wrote: post #436
bambax wrote: post #417

Earlier quoted context omitted.

> code that would have taken me years of work to produce without LLMs As you might suspect, this is what I have an issue with. Without LLMs, isn't it possible or even likely that that code wouldn't have been written at all, and wouldn't have been missed? If LLMs are mostly used to produce throwaway prototypes then it's a stretch to say that's money well spent. If indeed it let you advance your main product much faste…

I've thought about this a lot. I am very confident that the way I use LLMs is both accelerating progress on my core projects (here's a substantial, reviewed PR I landed just yesterday https://github.com/simonw/datasette/pull/2741 ) and helping me create plenty of projects that otherwise would not have existed.

The point being made by GP was that your projects have no value and their non-existence wouldn't be a negative to this world.

And that is likely a fair assessment, though I understand perfectly the feeling that you have that you are accomplishing great(er) things thanks to AI.

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