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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

#711

Post by HerbManic »

peteforde wrote: post #622
HerbManic wrote: post #577

Earlier quoted context omitted.

Pretty much. Ed does a lot of great work in digging through all this stuff but his conclusions always feel far too doomer oriented. OpenAL should have closed 5 times by now if you have been following his assertations from the start. There will be big parts of what he says are true once the rubble settles but it will not be anywhere near what he is predicting. How that will shape out may not be great for the average p…

> It won't be a total wreck. Honestly, I think it's very short-sighted to assume that all of this will be seen as any kind of wreck in the long term. Normies are still catching up and reacting to chat-based LLMs. HN types are further ahead of the curve, but still catching up and reacting to agentic coding and design workflows. What often gets completely ignored is that entirely new modalities for how the underlying t…

I think the big issue isn't so much a technology thing, I mean that will improve for a long while yet, but it is an economic one. My whole concern over the rapid expansion of LLM's is the massive build out on a technology that hasn't found its feet in a big enough range of markets yet that are willing to pay top dollar. Yes, world models for protein discover is very cool stuff and I kind of hate it gets lumped in with these other companies efforts because it has a very clear path forward that doesn't rely on massive IPO's just to keep the lights on.

This stuff is here to stay but I'm not sure how many of the current front runners will be able to stay solvent if they cannot turn these things in to massive money spinners. Revenue is fine-ish but spending is out of control. I see the debt in hundred of billions of dollars and start to wonder "Who is going to pay for this?" and "Will the people be willing to pay that much?". It just all feels forced rather than organic growth.

This is why I think Google may end up being one of the leaders in this field. They have their custom TPU's that seem to be fairly efficient at these tasks, they are slowly but surely improving their training and inference tech using their massive data set and most importantly, other parts of the business can subsidize this stuff for a decade if needed until it is genuinely profitable.

I am not against the industry but I do worry that many are rushing in with no means of genuine sustainability other than jump out for a golden parachute and let someone else clean up the mess.

I do hope I am wrong.

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

#712

Post by zaphirplane »

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…

> 200m knowledge workers in the world, 30m developers

1 in 6 knowledge worker is a developer ! Surely that’s too high thou explains the job market

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

#714

Post by mrandish »

alexpotato wrote: post #377
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…

I was in college in the late 1990s/early 2000s and I distinctly remember an econometrics professor state the following: "As cable TV and Pay Per View came out, there were studies done about how many movies people would watch if given unlimited access to films. The results were bandied about as proof that we should build out all this infrastructure to support this line of business. When the data was further analyzed b…

> they were going to watch films 10-12 hours a day, every day of the week. Impossible.

A lot of these LLM demand scaling scenarios make broad "up and to the right" assumptions about things which in practice have finite limits. Only some percentage of knowledge work benefits from acceleration, optimization or other improvements, and even then the amount of economic gain is capped.

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

#715

Post by jvaqueiro »

I'm surprised by how good coding agents are. I think PMF was reached last year or the year before (at least for coding).

With current limits my 100/mo codex subscription is more than enough for the work I do.

However, I do worry about when does current subsidies are going to end? I can see myself paying up to 300/mo, but more than that will be prohibitive.

What's the long term plan here? Are OpenAI's and Anthropic's costs expected to increase/decrease?

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

#716

Post by samrus »

freakynit wrote: post #106
onlyrealcuzzo wrote: post #62

Earlier quoted context omitted.

> We're talking about a world where you need 5% of every knowledge workers salary to go into tokens. They are assuming ~10% global GDP growth instead of ~3%. You probably don't need the same %s if the pie grows a ton. I'm highly skeptical we get that growth, but if you aren't, it makes it easier to digest.

I mean this case with AI-productivity fires itself back when we talk about GDP. The more AI causes productivity increases, the less and less number of workers will be needed. This will heat up the job market even more and bring salaries down. Net effect of this productivity increase: less consumption by the masses, even though you may be producing more good and much more efficiently. A third effect also comes into pl…

> The more AI causes productivity increases, the less and less number of workers will be needed

This might not necessarily be true. Increased efficiency creates induced demand to the point where more workers are needed. Because the new capabilities unlock more value to extract and the economy rushes in to get it. The steam engine is a huge example of this

I dont exactly know what new value genAI will unlock but i think its more likely than not

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

#718

Post by 3fgf »

doug_durham wrote: post #356
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…

Open source models that you can run locally are much more than 3 to 6 months behind. 6 months was the November inflection for Claude. No open source model is as good as Claude Opus 4.6.

[dead]

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

#719

Post by whattheheckheck »

dogwalker5000 wrote: post #694
Figs wrote: post #189

Earlier quoted context omitted.

> AI for product development and management would be far more impactful than automating rote coding tasks [...] Yeah, if this stuff actually worked that well already, OpenAI et al. would just run AI CEOs and engineers. Why get some other company to pay you at all when you can automate every other company out of existence and take all the money they make? The fact of the matter is that while the tech has some uses, it…

> When that changes, it won't just be engineers losing work; there will be no reason to even have a human CEO any more. The human race isn’t ready for that world IMHO. The only reason there is a middle class is because people have leverage in the form of their labor. When that becomes worthless … the people who own stuff and make their living from doing so won’t hesitate to get rid of everyone else - whom are now wor…

Humans will revolt and mutiny on the ai ceo so fast its not even funny

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

#720

Post by vessenes »

simplyluke wrote: post #305
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.

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…

You have to think about why open models are behind. Exfiltration is a big part of it. So you could change the Nash equilibrium by increasing your security, or other multilateral approaches.
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