7 ms·

> where you can make money and have a really profitable business I am not convinced. Nobody is making money, every player is losing money hand over fist.

steveBK123 7mo ago
Yes They are just pivoting to stuff that loses money more slowly but maybe has a path to profits eventually…
- heavyset_go 7mo ago
  Some of these AI companies that promised AGI are going to find out that they're actually IDE plugin subscription companies
  - steveBK123 7mo ago
    I think it remains to be seen if LLMs are even 25% as good at everything else as they are at coding.. which is fine, if they focus and stop promising the world. That alone is huge, if they let go of their egos about putting the entire white collar class out of work..
  - WarmWash 7mo ago
    Coding is a small minority of total generated tokens. It's easy swimming in tech waters all day to think Claude is the pack leader because it writes excellent code, but the reality is that tokens are overwhelmingly coming from OpenAI and Google doing mostly stuff like "Make this e-mail sound nicer" and "What's a cheap vacation spot with warm turquoise waters"
    - steveBK123 7mo ago
      > "Make this e-mail sound nicer" and "What's a cheap vacation spot with warm turquoise waters" Right but I think a lot of these use cases aren't replacing any jobs because it wasn't anyones job. It's just a little polish on existing work (did spell correction in Word kill jobs?) or the stuff that voice assistants have been promising for 10 years.
      - vel0city 7mo ago
        Both of those things both were and are jobs. They're called secretaries and travel agents.
        steveBK123 7mo ago
        Jobs that have already been killed is my point
        vel0city 7mo ago
        Together that's about four million American jobs so I'd disagree those jobs have "already been killed".
        deleted 7mo ago
        [deleted]
  - Bombthecat 7mo ago
    Nvidia CEO said we already have agi:)
    - steveBK123 7mo ago
      Ad generated income
jvictor118 7mo ago
With coding (it's not really coding per se that matters imo it's more like dynamic logic writ large) it's a land grab strategy. They want to get established as the de facto standard and get a whole bunch of people on their platform so by the time they need to "get profitable" they have a captive audience, a leg-up on other labs. It's a tale as old as time, that's why ubers used to be cheaper than cost.
- bryanlarsen 7mo ago
  It's a strategy as old as time, but it's a strategy that usually fails. Spending a lot of money on customer capture only works when customers are actually solidly captured. Most markets have fairly heavy competition and customers will only stay captured as long as there is no substantial cost to staying captive. Take Uber as an example: yes they've raised prices to become profitable, but not to the insanely profitable levels they could if they had a true monopoly. People will stay on Uber when the competition is still at a roughly equivalent price, but will switch if Uber raises its prices enough. Uber Eats is different, since its a 3 sided market where the cost is paid by the restaurant rather than the user. AI appears it's going to be more like Uber the car service. Claude can charge $200/month, but charging $2000/month seems unlikely to work. I'm sure many would be willing to pay $2000/month if they had no alternative, but there are alternatives.
  - ghurtado 7mo ago
    > it's a strategy as old as time, but it's a strategy that usually fails I like to call this the "Yahoo Effect"
- fooqux 7mo ago
  > They want to get established as the de facto standard and get a whole bunch of people on their platform so by the time they need to "get profitable" they have a captive audience, a leg-up on other labs. It's a tale as old as time, that's why ubers used to be cheaper than cost. Some of that is seeking to kill competitors before they can get established. That's normal and has been around for generations, if not since trading was invented. But most of what we've seen during the "enshitification age" has been to burn money until you achieve a critical mass of users. However, this only really applies to social platforms where the point of it is communicating with people you know. That's the lock-in. You convinced Grandma to join Bookface and now you feel bad leaving if she doesn't leave at the same time, and more importantly, who wants to join Google Square if nobody else uses it? That's not going to work for AI platforms. What I do see potentially working is one method that email platforms use to lock in users: having tons of data you can't export/migrate. If you spent lots of time training your AI by feeding it your data, that's going to make it harder to leave. So far none of them have capitalized on this (probably due to various technical reasons) but I expect it to start eventually.
azan_ 7mo ago
Not because there is no path to profitability (they make a ton of money on inference), they just spend a lot on R&D.
- mrbungie 7mo ago
  Afaik Anthropic still loses money for their main product in this space: Claude Code and their Max plans.
  - somehnguy 7mo ago
    This became immediately clear to me over the weekend when I used Opus via API key. I had it review the code for my (relatively small) personal blog to create an AGENTS.MD - it cost me $3.26.
    - bsaul 7mo ago
      same here... The API costs are absolutely insane for any real usage. This is either high prices to make sure no profitable competitor to claude workspace or other agent system emerges, or heavily sponsoring of their own soluions.
    - TheLNL 7mo ago
      Api cost need not correlate with running cost.
- aaa_aaa 7mo ago
  Not really. They are burning money on hardware, resources and payroll without meaningful return prospects.
- root_axis 7mo ago
  > they make a ton of money on inference So it is stated, but is it actually true? I am not convinced. Besides, it's not as if they can suddenly stop training models, the moment you do that you've spelled a death sentence for profitablity because Google and open source will very quickly undercut a 15 year break even timeline.
hobofan 7mo ago
Frontier model developers don't make money, but inference providers do. For open weight models there is a healthy market of inference providers that operate profitably without VC backing.
- wildster 7mo ago
  CoreWeave's cash flow do not look too healthy.
- lossyalgo 7mo ago
  Such as? Where do we find these open weight model providers? Why is hardly anyone talking about them or sharing links (here or elsewhere) if they are so wonderful and profitable?
  - rescbr 7mo ago
    Go to https://models.dev/ https://models.dev/ and you're going to see plenty of providers. OpenRouter makes it easy to use them, just add credits to your account. I thought this was common knowledge to anyone looking to use an inference API, but it seems it isn't. Well, even AWS is in this business with Bedrock.
  - vel0city 7mo ago
    Why is hardly anyone talking about basic web hosting provides or sharung links (here or elsewhere) if they are so wonderful and profitable? Because few people really care much about the commodity hosting world. They're not making waves, they're just packaging things made by others for a low-ish cost. They're also not very consumer-focused, as they're a bit lower level than what most people prefer to think about. It doesn't mean they don't exist or that they're not profitable though, just not headline-reaching numbers in the end.
- player1234 7mo ago
  [dead]

steveBK123 7mo ago

Yes They are just pivoting to stuff that loses money more slowly but maybe has a path to profits eventually…

heavyset_go 7mo ago
Some of these AI companies that promised AGI are going to find out that they're actually IDE plugin subscription companies
- steveBK123 7mo ago
  I think it remains to be seen if LLMs are even 25% as good at everything else as they are at coding.. which is fine, if they focus and stop promising the world. That alone is huge, if they let go of their egos about putting the entire white collar class out of work..
- WarmWash 7mo ago
  Coding is a small minority of total generated tokens. It's easy swimming in tech waters all day to think Claude is the pack leader because it writes excellent code, but the reality is that tokens are overwhelmingly coming from OpenAI and Google doing mostly stuff like "Make this e-mail sound nicer" and "What's a cheap vacation spot with warm turquoise waters"
  - steveBK123 7mo ago
    > "Make this e-mail sound nicer" and "What's a cheap vacation spot with warm turquoise waters" Right but I think a lot of these use cases aren't replacing any jobs because it wasn't anyones job. It's just a little polish on existing work (did spell correction in Word kill jobs?) or the stuff that voice assistants have been promising for 10 years.
    - vel0city 7mo ago
      Both of those things both were and are jobs. They're called secretaries and travel agents.
      - steveBK123 7mo ago
        Jobs that have already been killed is my point
        vel0city 7mo ago
        Together that's about four million American jobs so I'd disagree those jobs have "already been killed".
        deleted 7mo ago
        [deleted]
- Bombthecat 7mo ago
  Nvidia CEO said we already have agi:)
  - steveBK123 7mo ago
    Ad generated income

jvictor118 7mo ago

With coding (it's not really coding per se that matters imo it's more like dynamic logic writ large) it's a land grab strategy. They want to get established as the de facto standard and get a whole bunch of people on their platform so by the time they need to "get profitable" they have a captive audience, a leg-up on other labs. It's a tale as old as time, that's why ubers used to be cheaper than cost.

bryanlarsen 7mo ago
It's a strategy as old as time, but it's a strategy that usually fails. Spending a lot of money on customer capture only works when customers are actually solidly captured. Most markets have fairly heavy competition and customers will only stay captured as long as there is no substantial cost to staying captive. Take Uber as an example: yes they've raised prices to become profitable, but not to the insanely profitable levels they could if they had a true monopoly. People will stay on Uber when the competition is still at a roughly equivalent price, but will switch if Uber raises its prices enough. Uber Eats is different, since its a 3 sided market where the cost is paid by the restaurant rather than the user. AI appears it's going to be more like Uber the car service. Claude can charge $200/month, but charging $2000/month seems unlikely to work. I'm sure many would be willing to pay $2000/month if they had no alternative, but there are alternatives.
- ghurtado 7mo ago
  > it's a strategy as old as time, but it's a strategy that usually fails I like to call this the "Yahoo Effect"
fooqux 7mo ago
> They want to get established as the de facto standard and get a whole bunch of people on their platform so by the time they need to "get profitable" they have a captive audience, a leg-up on other labs. It's a tale as old as time, that's why ubers used to be cheaper than cost. Some of that is seeking to kill competitors before they can get established. That's normal and has been around for generations, if not since trading was invented. But most of what we've seen during the "enshitification age" has been to burn money until you achieve a critical mass of users. However, this only really applies to social platforms where the point of it is communicating with people you know. That's the lock-in. You convinced Grandma to join Bookface and now you feel bad leaving if she doesn't leave at the same time, and more importantly, who wants to join Google Square if nobody else uses it? That's not going to work for AI platforms. What I do see potentially working is one method that email platforms use to lock in users: having tons of data you can't export/migrate. If you spent lots of time training your AI by feeding it your data, that's going to make it harder to leave. So far none of them have capitalized on this (probably due to various technical reasons) but I expect it to start eventually.

azan_ 7mo ago

Not because there is no path to profitability (they make a ton of money on inference), they just spend a lot on R&D.

mrbungie 7mo ago
Afaik Anthropic still loses money for their main product in this space: Claude Code and their Max plans.
- somehnguy 7mo ago
  This became immediately clear to me over the weekend when I used Opus via API key. I had it review the code for my (relatively small) personal blog to create an AGENTS.MD - it cost me $3.26.
  - bsaul 7mo ago
    same here... The API costs are absolutely insane for any real usage. This is either high prices to make sure no profitable competitor to claude workspace or other agent system emerges, or heavily sponsoring of their own soluions.
  - TheLNL 7mo ago
    Api cost need not correlate with running cost.
aaa_aaa 7mo ago
Not really. They are burning money on hardware, resources and payroll without meaningful return prospects.
root_axis 7mo ago
> they make a ton of money on inference So it is stated, but is it actually true? I am not convinced. Besides, it's not as if they can suddenly stop training models, the moment you do that you've spelled a death sentence for profitablity because Google and open source will very quickly undercut a 15 year break even timeline.

hobofan 7mo ago

Frontier model developers don't make money, but inference providers do. For open weight models there is a healthy market of inference providers that operate profitably without VC backing.

wildster 7mo ago
CoreWeave's cash flow do not look too healthy.
lossyalgo 7mo ago
Such as? Where do we find these open weight model providers? Why is hardly anyone talking about them or sharing links (here or elsewhere) if they are so wonderful and profitable?
- rescbr 7mo ago
  Go to https://models.dev/ https://models.dev/ and you're going to see plenty of providers. OpenRouter makes it easy to use them, just add credits to your account. I thought this was common knowledge to anyone looking to use an inference API, but it seems it isn't. Well, even AWS is in this business with Bedrock.
- vel0city 7mo ago
  Why is hardly anyone talking about basic web hosting provides or sharung links (here or elsewhere) if they are so wonderful and profitable? Because few people really care much about the commodity hosting world. They're not making waves, they're just packaging things made by others for a low-ish cost. They're also not very consumer-focused, as they're a bit lower level than what most people prefer to think about. It doesn't mean they don't exist or that they're not profitable though, just not headline-reaching numbers in the end.
player1234 7mo ago
[dead]