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There's other side to it too. Whoever running and selling their own models with inference is invested into the last dime available in the market. Those valuat
by wg0 6mo ago
There's other side to it too.
Whoever running and selling their own models with inference is invested into the last dime available in the market.
Those valuations are already ridiculously high be it Anthropic or OpenAI to the tune of couple of trillion dollars easily if combind.
All that investment is seeking return. Correct me if I'm wrong.
Developers and software companies are the only serious users because they (mostly) review output of these models out of both culture and necessity.
Anywhere else? Other fields? There these models aren't any useful or as useful while revenue from software companies by no means going to bring returns to the trillion dollar valuations. Correct me if I'm wrong.
To make the matter worst, there's a hole in the bucket in form of open weight models. When squeezed further, software companies would either deploy open weight models or would resort to writing code by hand because that's a very skilled and hardworking tribe they've been doing this all their lives, whole careers are built on that. Correct me if I'm wrong.
Eventually - ROI might not be what VCs expect and constant losses might lead to bankruptcies and all that build out of data centers all of sudden would be looking for someone to rent that compute capacity result of which would be dime a dozen open weight model providers with generous usage tiers to capitalize on that available compute capacity owners of which have gone bankrupt and can't use it any more wanting to liquidate it as much as possible to recoup as much investment as possible.
EDIT: Typos
- solenoid0937 6mo agoOpenAI has an absurdly high valuation given their cash burn vs RRR. Anthropic's is far more reasonable. It makes no sense to lump these two companies together when talking about valuation. They have completely different financial dynamics
- wg0 6mo agoNo matter how low and reasonably Anthropic is valued, don't think $200 Max plans are going to recoup the investment + some return on top because size of the software industry is not that huge and profit margins for AI inference aren't very high either.
- solenoid0937 6mo agoPro and Max plans are probably a drop in the bucket for them.
- drra 6mo agoSeems like everybody an their mothers are using max plans these days. I wouldn't be surprised if LTV of each customer was big enough to justify spending.
- wg0 6mo agoAssuming there are 10 million developers and everyone is at $200 max plan, that would be $2 billion/month or $24 billion/year maximum. Note - this is just the revenue not the profit. No salaries, no compute paid for. Just plain revenue. Profit would be way less. But even that - if we take it to $24 billion/year and we take a 10x multiple, the company is barely valued at $240 billon dollar, lets be generous and make it double at $480 billion and then round it up to $500 billion for a nice round number. Far far from the $800 billion valuation Anthropic is looking at. Only a matter of time. EDIT: Fixed math
- billziss 6mo agoWhile I agree with you that AI companies are overvalued, I think 10 million developers at $200 per month makes 2 billion. >>> f"{10_000_000 * 200:_}" '2_000_000_000'
- wg0 6mo agoThanks for pointing out. I updated the comment.
- steveklabnik 6mo agoCompanies are spending far more than $200/month/developer. The $200 Max plan is a great value but you hit limits far too soon, and it also doesn't cover any of the other styles of integrations and tools that you can build and use to help your developers, like code review suggestions, which at the very least would come from additional Max plans, and not from the individual developers' plans.
- christkv 6mo agoIt feels like a repeat of the dot com infrastructure buildup that spurred the whole 2005 explosion in affordable hosting and new companies. This will probably leave us massive access to affordable compute in a couple of years.
- raw_anon_1111 6mo agoFor power maybe. But the expected lifetime of GPU hardware is 3 years before they fail completely
- classified 6mo ago> would resort to writing code by hand because that's a very skilled and hardworking tribe they've been doing this all their lives Shush, don't tell that to the AI coding acolytes.