2 ms·
>they've been a huge success over the past 12 months They lose billions of dollars annually. In what universe is that a business success?
by lbrito 8mo ago
>they've been a huge success over the past 12 months
They lose billions of dollars annually.
In what universe is that a business success?
- simonw 8mo agoCoding agents are successful products which generate billions of dollars of revenue from millions of paying customers. The organizations that provide them lose money because of the R&D costs involved in staying competitive in the model training arms race.
- lbrito 8mo agoRevenue isn't profit. Checking whether Claude Code by itself is profitable or not is probably impossible. It doesn't make a lot of sense divorcing R&D from the product. And obviously the running costs are not insignificant. The company as a whole loses money.
- simonw 8mo agoThe most important question is whether they make or lose money on each customer, independent of their fixed R&D costs. If they make money on each customer they have a credible business - they could become profitable even with their existing R&D losses provided they can sign up enough new paying customers. If they lose money on every customer - such that signing a $1m new enterprise account costs them $1.1m in server costs - then their entire "business" is a sham. I currently believe that Anthropic make money on almost every customer, such that their business is legit. I guess we'll have to wait for the IPO paperwork to find out if I'm right about that.
- mgh95 8mo ago> The most important question is whether they make or lose money on each customer, independent of their fixed R&D costs. The ZIRP era called and wants its business strategy back. Half the problem is as frontier models are released free as in free beer models with "good enough" performance pop up. Half the arguments about LLMs are "you're not holding it right", which borders on indicating that it's unable to distinguish between two sufficiently close LLMs.
- kridsdale3 8mo agoBut humanity is gaining hugely productive (in financial terms) assets. It doesn't matter if the entity or its investors that created the asset goes kaboom. Most of the investors and companies that built the rail network went bust. The iron remained. Most of the investors and companies that built the telecom network went bust. The fiber remained. Most of the investors and companies that are building models will go bust. The files (open weight or transfered to new owners for pennies) will remain, and yield economic benefits for as long as we flow current through them.
- nunez 8mo agoJust like rail and fiber, the GiganticCos will own foundational model development (from which oss models originate). Unlike rail and fiber, these models will continue to threaten multiple industries simultaneously while yielding power back to the GiganticCos.
- cudgy 8mo agoIron and fiber are durable and last for decades. Data centers (where the current flows for inference) consist of hardware that becomes obsolete within 5 to 10 years. The question is can improvements in the hardware both in cost and performance outpace the increased demands on the LLMs and their future derivatives.