I understand what you’re saying but Opus has already changed programming forever. It is here, companies are stuck on it, people are stuck on it and that’s if everything stopped today.
Nobody is going back to coding by hand. Does path to probability make sense when you have as sticky as a product as they have?
Worst case scenario open source catches up to you and we move back to a more centralized computing model.
Yeah companies aren’t going to pay a time and a half for devs without questioning why they aren’t actually producing more software or less defects than they used to.
I didn’t really understand this take, if you work in the start up industry, we’ve been shipping like crazy. We’re producing a metric shit ton especially compared to enterprises. It’s drastically different right now in forward orgs.
We’ve had this discussion at work, but more in a “what if they keep hiking up the price” rather than Anthropic going down. The conclusion we reached was, we will probably move to local models, possibly open source, due to how much they are improving, and will most likely improve by the time this happens
Same. Anthropic is great, probably the best… this week. Even if the open source models never catch up, having something 90% as good for a fraction of the cost (capex + electrical bills) will definitely make it attractive.
Yeah I agree this is probably the long-term move. But I give it another year or two till we get an open source model that’s comparable to even sonnet 4 which imo is where it started getting really solid.
Ed Zitron has a piece out talking about how even if Anthropic and OpenAI are bringing in revenue, most of it is coming from startups in such a way that their revenue will evaporate if the underlying startups crash, especially because the underlying cost of operating remains high (and where improvements in the underlying tech go towards improving performance rather than making operations cheaper).
To me, it’s a pretty persuasive argument that failures at any one part of the web of businesses and funds involved (even if completely unrelated to the AI industry) will cause stress on all of them, because they’re so interrelated in a web of relationships.
Ed Zitron publishes a lot of pretty biased reporting. Anthropic has been signing enterprise deals left and right this year, why would you willingly put yourself behind?
Obviously startups will be the first to play they can’t give up the advantage at any cost. Enterprises move slower but they won’t take longer than this year.
Ed Zitron publishes a lot of pretty biased reporting.
The core thesis is sound, though:
Anthropic and OpenAI’s revenue comes in from customers.
The revenue does not translate into profits, because their capital expenditures investing in future capabilities is quite high, and because their operating expenses are also quite high, to where their revenue doesn’t even cover their ongoing compute cost.
The actual money Anthropic and OpenAI have to spend at a loss comes from their investors.
The customers are largely vulnerable to shocks and are themselves reliant on investor cash rather than a profitable business model of their own, and are essentially subsidizing a lot of the demand for the core services that Anthropic and OpenAI provide.
Taken together, the whole ecosystem is currently relying on a continued influx of cash from investment: investors taking equity in these companies, lenders/bondholders charging interest on borrowed money, otherwise profitable businesses like Google and Meta steering their other profits into investment into AI.
And so if there’s a shock to investment activity, such as if there’s a war in Iran causing an energy crisis and a global recession in real economic activity, that might translate into a cash crunch, as the investors pull back right at the time that the customers start defaulting on their payments. And if you remove the middleman startup businesses that pay Anthropic and OpenAI more than they receive from their own customers, the underlying “real customer” demand at the actual unsubsidized prices charged by Anthropic and OpenAI will plummet.
I’m not a tech guy, but I am a business/finance guy, and I’m not seeing where the analysis is wrong. The argument is always that there’s a runway to profitability, and they just need to take off before they run out of runway. And we can argue about whether they will or they won’t get to takeoff, but if the business is relying on more runway being built because they know for sure they don’t currently have enough runway to take off, that’s a shaky situation to be in. Even if everyone is clamoring to be their runway-building partner today.
I agree this will lead to a large pullback, but in a world where a shovel has been discovered I can’t see anyone going back to digging by their bare hands again.
And that doesn’t change if all the investment into future capabilities stops today.
I would think this would to lead to the demise of OpenAI whereas Anthropic will survive due to enterprise contracts.
FYI on Ed Zitron the guy didn’t even know what a programming function was a few weeks ago. This is freshmen level CS stuff. You should keep that in mind when reading his LLM takes. He’s not an adequate reporter there imo.
I’m curious, with Claudes adoption across regular users and Enterprises and their revenue absolutely skyrocketing, what leads you to this conclusion?
The fact that every company involved other than nvidia is hemorrhaging cash and has no path to profitability.
I understand what you’re saying but Opus has already changed programming forever. It is here, companies are stuck on it, people are stuck on it and that’s if everything stopped today.
Nobody is going back to coding by hand. Does path to probability make sense when you have as sticky as a product as they have?
Worst case scenario open source catches up to you and we move back to a more centralized computing model.
Yeah companies aren’t going to pay a time and a half for devs without questioning why they aren’t actually producing more software or less defects than they used to.
I didn’t really understand this take, if you work in the start up industry, we’ve been shipping like crazy. We’re producing a metric shit ton especially compared to enterprises. It’s drastically different right now in forward orgs.
We’ve had this discussion at work, but more in a “what if they keep hiking up the price” rather than Anthropic going down. The conclusion we reached was, we will probably move to local models, possibly open source, due to how much they are improving, and will most likely improve by the time this happens
Same. Anthropic is great, probably the best… this week. Even if the open source models never catch up, having something 90% as good for a fraction of the cost (capex + electrical bills) will definitely make it attractive.
Yeah I agree this is probably the long-term move. But I give it another year or two till we get an open source model that’s comparable to even sonnet 4 which imo is where it started getting really solid.
Ed Zitron has a piece out talking about how even if Anthropic and OpenAI are bringing in revenue, most of it is coming from startups in such a way that their revenue will evaporate if the underlying startups crash, especially because the underlying cost of operating remains high (and where improvements in the underlying tech go towards improving performance rather than making operations cheaper).
To me, it’s a pretty persuasive argument that failures at any one part of the web of businesses and funds involved (even if completely unrelated to the AI industry) will cause stress on all of them, because they’re so interrelated in a web of relationships.
Ed Zitron publishes a lot of pretty biased reporting. Anthropic has been signing enterprise deals left and right this year, why would you willingly put yourself behind?
Obviously startups will be the first to play they can’t give up the advantage at any cost. Enterprises move slower but they won’t take longer than this year.
The core thesis is sound, though:
Taken together, the whole ecosystem is currently relying on a continued influx of cash from investment: investors taking equity in these companies, lenders/bondholders charging interest on borrowed money, otherwise profitable businesses like Google and Meta steering their other profits into investment into AI.
And so if there’s a shock to investment activity, such as if there’s a war in Iran causing an energy crisis and a global recession in real economic activity, that might translate into a cash crunch, as the investors pull back right at the time that the customers start defaulting on their payments. And if you remove the middleman startup businesses that pay Anthropic and OpenAI more than they receive from their own customers, the underlying “real customer” demand at the actual unsubsidized prices charged by Anthropic and OpenAI will plummet.
I’m not a tech guy, but I am a business/finance guy, and I’m not seeing where the analysis is wrong. The argument is always that there’s a runway to profitability, and they just need to take off before they run out of runway. And we can argue about whether they will or they won’t get to takeoff, but if the business is relying on more runway being built because they know for sure they don’t currently have enough runway to take off, that’s a shaky situation to be in. Even if everyone is clamoring to be their runway-building partner today.
I agree this will lead to a large pullback, but in a world where a shovel has been discovered I can’t see anyone going back to digging by their bare hands again.
And that doesn’t change if all the investment into future capabilities stops today.
I would think this would to lead to the demise of OpenAI whereas Anthropic will survive due to enterprise contracts.
FYI on Ed Zitron the guy didn’t even know what a programming function was a few weeks ago. This is freshmen level CS stuff. You should keep that in mind when reading his LLM takes. He’s not an adequate reporter there imo.