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Counterpoint, why do current state of the art generative AI companies, with the ability to use models that the public can't even access, and the ability to burn

Counterpoint, why do current state of the art generative AI companies, with the ability to use models that the public can't even access, and the ability to burn tokens at cost, still pay for very expensive Saas software?

bsder 8mo ago
Because SaaS at the corporate level is about liability transfer first and any value or functionality is a distant second.
OtomotO 8mo ago
Bingo!
bieganski 8mo ago
their costs are bound to compute anyway, they don't mind huge compensations also - it's not much of a cost saving to re-build, even cheaply, inhouse Slack or whatever?
onion2k 8mo ago
That's really simple - actually writing the software has never really been the hard part in most SaaS apps. So long as you're moderately disciplined and organised it's easy to build what most SaaS apps are e.g. a CRUD-app-with-a-clever-bit. The clever bit is the initial challenge that sets it apart from the rest, but encoding that in software has never really been that difficult. Having the ideas necessary to know what to write is where practically all the value lies (caveat: there is value in doing the same as someone else but better, or cheaper.) AI can help with that, but only in so much as telling you the basics or filling in the blanks if you're really stuck. It can't tell you the 'clever bit' because that is by definition new and interesting and doesn't appear in the training data. What this means is that at some point Anthropic will be able to prompt Opus to clone Jira and never pay an Atlassian bill again. Opus just needs to figure out what Jira is first. It's not there yet.
- yellowapple 8mo ago
  On top of that, it's one thing to write the code, whereas it's another to actually run that code with maximal reliability and minimal downtime. I'm sure LLMs can churn out Terraform all day long, but can they troubleshoot when something goes wrong (as is often the case)?
  - deleted 8mo ago
    [deleted]
  - oceansky 8mo ago
    Sounds like a fun experiment, let AI completely control an infrastructure, from application layer to load balancing and databases. I bet it would burn a lot of money very fast and not just on tokens.
- ethbr1 8mo ago
  > What this means is that at some point Anthropic will be able to prompt Opus to clone Jira and never pay an Atlassian bill again. Opus just needs to figure out what Jira is first. It's not there yet. Bang on, and Jira is the perfect example! Because Jira isn't a bag of features: Jira is a list of features and the way they fit together (well or poorly, depending on your opinion). That's the second-order product design that it's going to take next-gen coding AI workflows to automate. Mostly because that bit comes from user discovery, political arguments, sales prioritization, product vision, etc. It's a horrendous "art" of multi-variable zero-sum optimization. When products get it right (early Slack) then it's invisible because "of course they made it do the thing I want to do." When products get it wrong (MS Teams, Adobe Acrobat, Jira, HR platforms) then it's obvious features weren't composed well. Expect there's more than one {user discovery} -> {product specification} AI startup out there, working on it in a hierarchical fashion with current AI now.
- ej88 8mo ago
  I would posit another large factor is "owning" the software comes with the long tail of edge cases, bugs, support, on-call, regulations, etc... that an established SaaS has learned and iterated on for many years with many customers. For the vast majority of companies they would (and should) rather let the SaaS figure that out and focus on their actual company
vntok 8mo ago
How is that a counterpoint? Do these companies currently use as many SaaS as other companies? More importantly, will they do so in the future?
dist-epoch 8mo ago
Opportunity cost. Cloning Slack and wasting ultra-expensive engineers on that might be more expensive, and it's not your core mission.
- anonymous908213 8mo ago
  Why do you have to waste ultra-expensive engineers on it? You have agents. And verifying your product works as it is claimed should absolutely be part of your mission. How can you possibly claim that your models are revolutionising software development if you haven't even used them to revolutionise your own software development in-house? Not only that, it would produce a huge marketing coup that would immediately lead to a flood of enterprise spending if you could demonstrate that your agents actually do what you constantly claim them to do. PS. If you're claiming that coding an application is ultra-expensive, you are already entering the argument on the side of the comment you're arguing against, which is making a counterpoint to the article, which claims in the first sentence: > The math is simple: if it costs almost nothing to build an app, it costs almost nothing to clone an app. And if cloning is free, subscription pricing dies.
  - dist-epoch 8mo ago
    They did revolutionise software development in-house. Both Codex/Claude Code are 90% agent written these days, and bring in billions of dollars of revenue. Cloning Slack would bring in $0 dollars.
    - anonymous908213 8mo ago
      Billions of dollars of revenue on trillions of dollars of investment is not a revolutionary feat. I promise you I could turn trillions into billions too. Neither of those software are primarily responsible for the revenue, either. The actual models underlying them are, not the trivial CLI chat interface (which, despite being trivial software, still manages to be full of bugs that go unfixed for months). I also don't even think it's true that Codex is primarily agent-written. OpenAI specifically cited using Electron in their recent Codex desktop application for "agent orchestration" to save human developer time on porting it across platforms, which does not sound like a successful exercise in eating their dog food.
MontyCarloHall 8mo ago
Addendum to counterpoint: why haven't those SotA gen-AI companies become the most productive software companies on earth, and release better and cheaper competitors to all currently popular software? People always gripe about the poor quality of software staples like Microsoft Office or GitHub or Slack. Why hasn't OpenAI or Anthropic released a superior office suite or code hosting platform or enterprise chat? It would be both a huge cash cow and the best possible advertising that AI-facilitated software development is truly the real deal 10x force multiplier they claim. If someone invents a special shovel that can magically identify ore deposits 100% of the time, they aren't going to sell it with the rest of the shovelmongers. They're going to keep it to themselves and actually mine gold.
- plagiarist 8mo ago
  They're still training up using all of our extensive feedback to improve software architecture. Maybe later this year.
- ethbr1 8mo ago
  Anthropic appears to have realized before OpenAI that code gen was an important enough market to specialize in. For now though, building smarter models / general integration tooling is a better us of model companies' capital. Once/if performance gains plateau, expect you'll see them pivot right quick to in-house software factories for easily cloneable, large TAM product spaces, then spin off those products if they're successful.
  - MontyCarloHall 8mo ago
    100% agreed. When/if that pivot happens will be the sign that gen-AI is truly disrupting the software market in a profound way. "You're using the model wrong/you're not using the latest model" is an oft-repeated argument against AI skeptics. Nobody knows how to use the latest models better than their developers.
  - pydry 8mo ago
    For the time being though, theyre going to build their in house software with electron because building native apps is hard.
deterministic 8mo ago
... and why are they still loosing billions of $? Surely their AI can help them (say) generate good biz models? :-)
- robocat 8mo ago
  Correction: the investors lose billions (and perhaps their customers and/or suppliers lose billions too). The companies don't lose anything. The employees and executives are not losing anything. Welcome to business.

bsder 8mo ago

Because SaaS at the corporate level is about liability transfer first and any value or functionality is a distant second.

OtomotO 8mo ago

Bingo!

bieganski 8mo ago

their costs are bound to compute anyway, they don't mind huge compensations also - it's not much of a cost saving to re-build, even cheaply, inhouse Slack or whatever?

onion2k 8mo ago

That's really simple - actually writing the software has never really been the hard part in most SaaS apps. So long as you're moderately disciplined and organised it's easy to build what most SaaS apps are e.g. a CRUD-app-with-a-clever-bit. The clever bit is the initial challenge that sets it apart from the rest, but encoding that in software has never really been that difficult. Having the ideas necessary to know what to write is where practically all the value lies (caveat: there is value in doing the same as someone else but better, or cheaper.) AI can help with that, but only in so much as telling you the basics or filling in the blanks if you're really stuck. It can't tell you the 'clever bit' because that is by definition new and interesting and doesn't appear in the training data. What this means is that at some point Anthropic will be able to prompt Opus to clone Jira and never pay an Atlassian bill again. Opus just needs to figure out what Jira is first. It's not there yet.

yellowapple 8mo ago
On top of that, it's one thing to write the code, whereas it's another to actually run that code with maximal reliability and minimal downtime. I'm sure LLMs can churn out Terraform all day long, but can they troubleshoot when something goes wrong (as is often the case)?
- deleted 8mo ago
  [deleted]
- oceansky 8mo ago
  Sounds like a fun experiment, let AI completely control an infrastructure, from application layer to load balancing and databases. I bet it would burn a lot of money very fast and not just on tokens.
ethbr1 8mo ago
> What this means is that at some point Anthropic will be able to prompt Opus to clone Jira and never pay an Atlassian bill again. Opus just needs to figure out what Jira is first. It's not there yet. Bang on, and Jira is the perfect example! Because Jira isn't a bag of features: Jira is a list of features and the way they fit together (well or poorly, depending on your opinion). That's the second-order product design that it's going to take next-gen coding AI workflows to automate. Mostly because that bit comes from user discovery, political arguments, sales prioritization, product vision, etc. It's a horrendous "art" of multi-variable zero-sum optimization. When products get it right (early Slack) then it's invisible because "of course they made it do the thing I want to do." When products get it wrong (MS Teams, Adobe Acrobat, Jira, HR platforms) then it's obvious features weren't composed well. Expect there's more than one {user discovery} -> {product specification} AI startup out there, working on it in a hierarchical fashion with current AI now.
ej88 8mo ago
I would posit another large factor is "owning" the software comes with the long tail of edge cases, bugs, support, on-call, regulations, etc... that an established SaaS has learned and iterated on for many years with many customers. For the vast majority of companies they would (and should) rather let the SaaS figure that out and focus on their actual company

vntok 8mo ago

How is that a counterpoint? Do these companies currently use as many SaaS as other companies? More importantly, will they do so in the future?

dist-epoch 8mo ago

Opportunity cost. Cloning Slack and wasting ultra-expensive engineers on that might be more expensive, and it's not your core mission.

anonymous908213 8mo ago
Why do you have to waste ultra-expensive engineers on it? You have agents. And verifying your product works as it is claimed should absolutely be part of your mission. How can you possibly claim that your models are revolutionising software development if you haven't even used them to revolutionise your own software development in-house? Not only that, it would produce a huge marketing coup that would immediately lead to a flood of enterprise spending if you could demonstrate that your agents actually do what you constantly claim them to do. PS. If you're claiming that coding an application is ultra-expensive, you are already entering the argument on the side of the comment you're arguing against, which is making a counterpoint to the article, which claims in the first sentence: > The math is simple: if it costs almost nothing to build an app, it costs almost nothing to clone an app. And if cloning is free, subscription pricing dies.
- dist-epoch 8mo ago
  They did revolutionise software development in-house. Both Codex/Claude Code are 90% agent written these days, and bring in billions of dollars of revenue. Cloning Slack would bring in $0 dollars.
  - anonymous908213 8mo ago
    Billions of dollars of revenue on trillions of dollars of investment is not a revolutionary feat. I promise you I could turn trillions into billions too. Neither of those software are primarily responsible for the revenue, either. The actual models underlying them are, not the trivial CLI chat interface (which, despite being trivial software, still manages to be full of bugs that go unfixed for months). I also don't even think it's true that Codex is primarily agent-written. OpenAI specifically cited using Electron in their recent Codex desktop application for "agent orchestration" to save human developer time on porting it across platforms, which does not sound like a successful exercise in eating their dog food.

MontyCarloHall 8mo ago

Addendum to counterpoint: why haven't those SotA gen-AI companies become the most productive software companies on earth, and release better and cheaper competitors to all currently popular software? People always gripe about the poor quality of software staples like Microsoft Office or GitHub or Slack. Why hasn't OpenAI or Anthropic released a superior office suite or code hosting platform or enterprise chat? It would be both a huge cash cow and the best possible advertising that AI-facilitated software development is truly the real deal 10x force multiplier they claim. If someone invents a special shovel that can magically identify ore deposits 100% of the time, they aren't going to sell it with the rest of the shovelmongers. They're going to keep it to themselves and actually mine gold.

plagiarist 8mo ago
They're still training up using all of our extensive feedback to improve software architecture. Maybe later this year.
ethbr1 8mo ago
Anthropic appears to have realized before OpenAI that code gen was an important enough market to specialize in. For now though, building smarter models / general integration tooling is a better us of model companies' capital. Once/if performance gains plateau, expect you'll see them pivot right quick to in-house software factories for easily cloneable, large TAM product spaces, then spin off those products if they're successful.
- MontyCarloHall 8mo ago
  100% agreed. When/if that pivot happens will be the sign that gen-AI is truly disrupting the software market in a profound way. "You're using the model wrong/you're not using the latest model" is an oft-repeated argument against AI skeptics. Nobody knows how to use the latest models better than their developers.
- pydry 8mo ago
  For the time being though, theyre going to build their in house software with electron because building native apps is hard.

deterministic 8mo ago

... and why are they still loosing billions of $? Surely their AI can help them (say) generate good biz models? :-)

robocat 8mo ago
Correction: the investors lose billions (and perhaps their customers and/or suppliers lose billions too). The companies don't lose anything. The employees and executives are not losing anything. Welcome to business.