4 ms·

Not only do I think there will not be a winner take all, I think it's very likely that the entire thing will be commoditized. I think it's likely that we will

by nerdix 1y ago

Not only do I think there will not be a winner take all, I think it's very likely that the entire thing will be commoditized. I think it's likely that we will eventually we hit a point of diminishing returns where the performance is good enough and marginal performance improvements aren't worth the high cost. And over time, many models will reach "good enough" levels of performance including models that are open weight. And given even more time, these open weight models will be runnable on consumer level hardware. Eventually, they'll be runnable on super cheap consumer hardware (something more akin to a NPU than a $2000 RTX 5090). So your laptop in 2035 with specialize AI cores and 1TB of LPDDR10 ram is running GPT-7 level models without breaking a sweat. Maybe GPT-10 can solve some obscure math problem that your model can't but does it even matter? Would you pay for GPT-10 when running a GPT-7 level model does everything you need and is practically free? The cloud providers will make money because there will still be a need for companies to host the models in a secure and reliable way. But a company whose main business strategy is developing the model? I'm not sure they will last without finding another way to add value.

joelthelion 1y ago
> Not only do I think there will not be a winner take all, I think it's very likely that the entire thing will be commoditized This begs the question, why then do AI companies have these insane valuations? Do investorsknow something that we don't?
- jdlshore 1y ago
  Investors are often irrational in the short term. Personally, I think it’s a combination of FOMO, wishful thinking, and herd following.
  - j_timberlake 1y ago
    "Billionaire investors are more irrational than me, a social media poster."
    - hoanamiu 1y ago
      "Having money is proof of intelligence"
      - osti 1y ago
        It kinda is, at least I'd say a rich person is on average more intelligent than a poor person.
        hoanamiu 1y ago
        Why do you think that? Do you have data or is it just, like, your vibe?
        GoatInGrey 1y ago
        One can apply a brief sanity check via reductio ad absurdum: it is less logical to assume that poor individuals possess greater intelligence than wealthy individuals. Increased levels of stress, reduced consumption of healthcare, fewer education opportunities, higher likelihood of being subjected to trauma, and so forth paint a picture of correlation between wealth and cognitive functionality.
        habinero 1y ago
        Yeah, that's not a good argument. That might be true for the very poor, sure, but not for the majority of the lower-to-middle of the middle class. There's fundamentally no difference between your average blue collar worker and a billionaire, except the billionaire almost certainly had rich parents and got lucky. People really don't like the "they're not, they just got lucky" statement and will do a lot of things to rationalize it away lol.
        shruggedatlas 1y ago
        > lower-to-middle of the middle class The comparison was clearly between the rich and the poor. We can take the 99.99th wealth percentile, where billionaires reside, and contrast that to a narrow range on the opposite side of the spectrum. But, in my opinion, the argument would still hold even if it were the top 10% vs bottom 10% (or equivalent by normalised population).
- apwell23 1y ago
  because ppl are using claude code not cursor
- bmau5 1y ago
  The top companies are already doing double digit billions in revenue. They're valuations aren't insane given that.
  - londons_explore 1y ago
    I wonder if that revenue might be short-lived when the free version of most AI's is good enough for almost all use cases.
    - bmau5 1y ago
      This would explain why OpenAI and others seem to be pushing much harder into the B2B/api applications. It feels like we're on to distribution capture as the differentiator now.
- nerdix 1y ago
  I could certainly be wrong. Maybe I'm just not thinking creatively enough. I just don't see how this doesn't get commoditized in the end unless hardware progress just halts. I get that a true AGI would have immeasurable value even if it's not valuable to end users. So the business model might change from charging $xxx/month for access to a chat bot to something else (maybe charging millions or billions of dollars to companies in the medical and technology sector for automated R&D). But even if one company gets AGI and then unleashes it on creating ever more advanced models, I don't see that being an advantage for the long term because the AGI will still be bottlenecked by physical hardware (the speed of a single GPU, the total number of GPUs the AGI's owner can acquire, even the number of data centers they can build). That will give the competition time to catch up and build their own AGI. So I don't see the end of AGI race being the point where the winner gets all the spoils. And then eventually there will be AGI capable open weight models that are runnable on cheap hardware. The only way the current state can continue is if there is always strong demand for ever increasingly intelligent models forever and always with no regard for their cost (both monetarily and environmentally). Maybe there is. Like maybe you can't build and maintain a dyson sphere (or whatever sufficiently advanced technology) with just an Einstein equivalent AGI. Maybe you need an AGI that is 1000x more intelligent than Einstein and so there is always a buyer.
  - didibus 1y ago
    You're forgetting the cost of training. Running the inference might commoditize. But the dataset required and the hardware+time+know-how isn't easy to replicate. It's not like someone can just show up and train a competitive model without investing millions.
- lmm 1y ago
  Investors, especially venture investors, are chasing a small chance of a huge win. If there's a 10% or even a 1% chance of a company dominating the economy, that's enough to support a huge valuation even if the median outcome is very bad.

by nerdix 1y ago

joelthelion 1y ago

> Not only do I think there will not be a winner take all, I think it's very likely that the entire thing will be commoditized This begs the question, why then do AI companies have these insane valuations? Do investorsknow something that we don't?

jdlshore 1y ago
Investors are often irrational in the short term. Personally, I think it’s a combination of FOMO, wishful thinking, and herd following.
- j_timberlake 1y ago
  "Billionaire investors are more irrational than me, a social media poster."
  - hoanamiu 1y ago
    "Having money is proof of intelligence"
    - osti 1y ago
      It kinda is, at least I'd say a rich person is on average more intelligent than a poor person.
      - hoanamiu 1y ago
        Why do you think that? Do you have data or is it just, like, your vibe?
        GoatInGrey 1y ago
        One can apply a brief sanity check via reductio ad absurdum: it is less logical to assume that poor individuals possess greater intelligence than wealthy individuals. Increased levels of stress, reduced consumption of healthcare, fewer education opportunities, higher likelihood of being subjected to trauma, and so forth paint a picture of correlation between wealth and cognitive functionality.
        habinero 1y ago
        Yeah, that's not a good argument. That might be true for the very poor, sure, but not for the majority of the lower-to-middle of the middle class. There's fundamentally no difference between your average blue collar worker and a billionaire, except the billionaire almost certainly had rich parents and got lucky. People really don't like the "they're not, they just got lucky" statement and will do a lot of things to rationalize it away lol.
        shruggedatlas 1y ago
        > lower-to-middle of the middle class The comparison was clearly between the rich and the poor. We can take the 99.99th wealth percentile, where billionaires reside, and contrast that to a narrow range on the opposite side of the spectrum. But, in my opinion, the argument would still hold even if it were the top 10% vs bottom 10% (or equivalent by normalised population).
apwell23 1y ago
because ppl are using claude code not cursor
bmau5 1y ago
The top companies are already doing double digit billions in revenue. They're valuations aren't insane given that.
- londons_explore 1y ago
  I wonder if that revenue might be short-lived when the free version of most AI's is good enough for almost all use cases.
  - bmau5 1y ago
    This would explain why OpenAI and others seem to be pushing much harder into the B2B/api applications. It feels like we're on to distribution capture as the differentiator now.
nerdix 1y ago
I could certainly be wrong. Maybe I'm just not thinking creatively enough. I just don't see how this doesn't get commoditized in the end unless hardware progress just halts. I get that a true AGI would have immeasurable value even if it's not valuable to end users. So the business model might change from charging $xxx/month for access to a chat bot to something else (maybe charging millions or billions of dollars to companies in the medical and technology sector for automated R&D). But even if one company gets AGI and then unleashes it on creating ever more advanced models, I don't see that being an advantage for the long term because the AGI will still be bottlenecked by physical hardware (the speed of a single GPU, the total number of GPUs the AGI's owner can acquire, even the number of data centers they can build). That will give the competition time to catch up and build their own AGI. So I don't see the end of AGI race being the point where the winner gets all the spoils. And then eventually there will be AGI capable open weight models that are runnable on cheap hardware. The only way the current state can continue is if there is always strong demand for ever increasingly intelligent models forever and always with no regard for their cost (both monetarily and environmentally). Maybe there is. Like maybe you can't build and maintain a dyson sphere (or whatever sufficiently advanced technology) with just an Einstein equivalent AGI. Maybe you need an AGI that is 1000x more intelligent than Einstein and so there is always a buyer.
- didibus 1y ago
  You're forgetting the cost of training. Running the inference might commoditize. But the dataset required and the hardware+time+know-how isn't easy to replicate. It's not like someone can just show up and train a competitive model without investing millions.
lmm 1y ago
Investors, especially venture investors, are chasing a small chance of a huge win. If there's a 10% or even a 1% chance of a company dominating the economy, that's enough to support a huge valuation even if the median outcome is very bad.