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If you're older than 30, you've seen this play out before… This is just how the VC game works. Cross-town Uber rides don't stay $5 forever. The bright side is:

If you're older than 30, you've seen this play out before… This is just how the VC game works. Cross-town Uber rides don't stay $5 forever. The bright side is: this is a golden era of subsidized tokens. It will not always be like this, so now is the time to churn out your passion projects.

Aeolun 5mo ago
I think the good news is that we’re not at peak cheapness for tokens yet, but companies like deepseek show that it is perfectly possible.
BoredPositron 5mo ago
Probably the worst comparison I have seen on the topic. gz.
- TheSkyHasEyes 5mo ago
  Eventually you come to realize the more things change the more they stay the same.
  - BoredPositron 5mo ago
    Sorry but no. It's a flawed analogy to suggest that an emerging technology like AI follows the same scaling laws as the taxi industry. AI benefits from active R&D, rapidly improving hardware, compounding software efficiencies, and deflationary cost curves that simply have no equivalent in a labor- and vehicle-dependent service...
    - grebc 5mo ago
      Yeah. And we were going to use blockchains & ledgers to store & process every single skerrick of data possible… oh wait…
      - BoredPositron 5mo ago
        post modern crypto was and never will be useful...
edwin2 5mo ago
Uber was an application of technologies sitting on top of many iterations of performance optimizations. (Think: the difference between 2009 internet speeds versus 2019 internet speeds. Or, 2009 smartphone specs versus 2019 smartphone specs.) You could imagine a Moore’s Law-esque cheapening of the tech that coincides with the business raising their prices. That might look like a continuation of simply “using the tools” on the surface, but on the inside it would spell a gradual, meaningful increase in margin
Aurornis 5mo ago
Uber is a good comparison because everyone was predicting the demise of ride sharing as soon as they tried to become profitable. The subsidies went away gradually and the prices leveled out in a spot where the services are heavily used. Uber became profitable. Ride sharing is affordable. I think our $20/month plans might become a little less generous and the $200/month plan won’t always allow non-stop vibe coding, but I don’t think the prices are going to rise so much that users are priced out. Like Uber, customers will grumble for a while and then adapt to the new normal. The big difference is that compute hardware is getting better. I think we might overshoot with data center buildouts to the point that compute becomes cheap, while hardware improvements continue to lower the cost of serving models. Over time the same service becomes cheaper to operate, opposite of Uber where driver wages are creeping upward.
- eieiewq 5mo ago
  No it’s a bad example as uber had solid unit economics. Uber is more Akin to Amazon.
  - bensyverson 5mo ago
    I would love to see the data to support the idea that Uber had solid unit economics during their expansion.
    - eieiewq 5mo ago
      State your priors so I can determine whether you are qualified to have this discussion.
      - bensyverson 5mo ago
        haha what My "priors" are that I raised a search fund and analyze companies every day.
      - bauldursdev 5mo ago
        "I know these facts, they just go to a different school. I'd bring you to them if your Mom would let you leave the neighborhood, but you're just a little boy". I mean surely to make this claim, you aren't just making it up, surely you've done the research. In that case, what's so hard about sharing facts which you already know? I'm not asking you to put in a bunch of effort pulling financial statements and analyzing everything, I assume you've already done that because I doubt you'd make the claim otherwise.
neals 5mo ago
Token cost will come down in the future, it might even out
- bensyverson 5mo ago
  It's hard to predict the future, but it seems likely that flagship tokens will become more expensive, but many people will use free tokens via local inference.
skybrian 5mo ago
For Uber, paying the driver is unavoidable (for now) so this isn’t a good comparison at all. A better comparison is with how much PC costs went down during the 80’s due to IBM clones and Moore’s law.
giancarlostoro 5mo ago
I mean SubQ claims to reason as good as the frontier models, not better, but reasonably as good, and is 5x cheaper, so the future might not be all in on overpriced LLMs. Data science devs don't engineer for scalable performance, they engineer for the model's capabilities first and foremost. SubQ was validated by at least one third party, not sure if we'll see more confirmation, but 5x cheaper costs is worth it. None of the frontier models care enough about cutting costs of their models, only being the best in benchmarks. https://subq.ai/ https://subq.ai/
deleted 5mo ago
[deleted]
SirMaster 5mo ago
I like writing my passion projects without AI. Is this so strange? Using AI to write my software just takes all the fun out of it for me. It feels like just reading a summary or recap instead of reading the actual full novel myself. Like it defeats the whole purpose of it. I write software because it's fun and it stimulates my mind and teaches me things and improves my skills.
- bensyverson 5mo ago
  Not strange at all! I think there will always be people writing code by hand. I take photos with a 100 year old camera because it's fun.
DonsDiscountGas 5mo ago
Seeing as the physics and economics of SaaS LLMs are a lot different from branded taxis, and that LLM token prices are down 100x over the past 4 years, there is good reason to believe that analogy isn't exactly perfect. Price hikes in the near term wouldn't shock me (in fact they've kinda already happened) but in the long term I'm optimistic
- bensyverson 5mo ago
  Tokens are a commodity, so the price should drop over the long term as more and more efficient compute comes online. However, in the short term, these foundation models are worth paying for. So I think we will continue to see the price creep up as investors push OpenAI and Anthropic to drive revenue growth. It's hard to imagine a bright future for either company. The more hopeful analog might be Coca Cola & Pepsi. Both have a commodity product, but due to distribution networks and brand, they command a price premium. But it doesn't seem much fun to provide a high-volume low-margin commodity.
catdog 5mo ago
> This is just how the VC game works. Cross-town Uber rides don't stay $5 forever. Basically yes but there is a small difference I think. Things like Uber took an existing and proven business model. slapped an App on top and priced the competition out of the market. The winner takes it all. With "AI" it's not yet clear if there will be any winner at all because it's not yet proven if the business model is viable at the "real" price. Think air taxis across town, 5$ a ride, will work at scale for sure, probably won't work for 500$.
- tonyneel923 5mo ago
  Also harder to run the competition out of town ie programmers. It will need to always undercut us for the cost and time.

Aeolun 5mo ago

I think the good news is that we’re not at peak cheapness for tokens yet, but companies like deepseek show that it is perfectly possible.

BoredPositron 5mo ago

Probably the worst comparison I have seen on the topic. gz.

TheSkyHasEyes 5mo ago
Eventually you come to realize the more things change the more they stay the same.
- BoredPositron 5mo ago
  Sorry but no. It's a flawed analogy to suggest that an emerging technology like AI follows the same scaling laws as the taxi industry. AI benefits from active R&D, rapidly improving hardware, compounding software efficiencies, and deflationary cost curves that simply have no equivalent in a labor- and vehicle-dependent service...
  - grebc 5mo ago
    Yeah. And we were going to use blockchains & ledgers to store & process every single skerrick of data possible… oh wait…
    - BoredPositron 5mo ago
      post modern crypto was and never will be useful...

edwin2 5mo ago

Uber was an application of technologies sitting on top of many iterations of performance optimizations. (Think: the difference between 2009 internet speeds versus 2019 internet speeds. Or, 2009 smartphone specs versus 2019 smartphone specs.) You could imagine a Moore’s Law-esque cheapening of the tech that coincides with the business raising their prices. That might look like a continuation of simply “using the tools” on the surface, but on the inside it would spell a gradual, meaningful increase in margin

Aurornis 5mo ago

Uber is a good comparison because everyone was predicting the demise of ride sharing as soon as they tried to become profitable. The subsidies went away gradually and the prices leveled out in a spot where the services are heavily used. Uber became profitable. Ride sharing is affordable. I think our $20/month plans might become a little less generous and the $200/month plan won’t always allow non-stop vibe coding, but I don’t think the prices are going to rise so much that users are priced out. Like Uber, customers will grumble for a while and then adapt to the new normal. The big difference is that compute hardware is getting better. I think we might overshoot with data center buildouts to the point that compute becomes cheap, while hardware improvements continue to lower the cost of serving models. Over time the same service becomes cheaper to operate, opposite of Uber where driver wages are creeping upward.

eieiewq 5mo ago
No it’s a bad example as uber had solid unit economics. Uber is more Akin to Amazon.
- bensyverson 5mo ago
  I would love to see the data to support the idea that Uber had solid unit economics during their expansion.
  - eieiewq 5mo ago
    State your priors so I can determine whether you are qualified to have this discussion.
    - bensyverson 5mo ago
      haha what My "priors" are that I raised a search fund and analyze companies every day.
    - bauldursdev 5mo ago
      "I know these facts, they just go to a different school. I'd bring you to them if your Mom would let you leave the neighborhood, but you're just a little boy". I mean surely to make this claim, you aren't just making it up, surely you've done the research. In that case, what's so hard about sharing facts which you already know? I'm not asking you to put in a bunch of effort pulling financial statements and analyzing everything, I assume you've already done that because I doubt you'd make the claim otherwise.

neals 5mo ago

Token cost will come down in the future, it might even out

bensyverson 5mo ago
It's hard to predict the future, but it seems likely that flagship tokens will become more expensive, but many people will use free tokens via local inference.

skybrian 5mo ago

For Uber, paying the driver is unavoidable (for now) so this isn’t a good comparison at all. A better comparison is with how much PC costs went down during the 80’s due to IBM clones and Moore’s law.

giancarlostoro 5mo ago

I mean SubQ claims to reason as good as the frontier models, not better, but reasonably as good, and is 5x cheaper, so the future might not be all in on overpriced LLMs. Data science devs don't engineer for scalable performance, they engineer for the model's capabilities first and foremost. SubQ was validated by at least one third party, not sure if we'll see more confirmation, but 5x cheaper costs is worth it. None of the frontier models care enough about cutting costs of their models, only being the best in benchmarks. https://subq.ai/ https://subq.ai/

deleted 5mo ago

[deleted]

SirMaster 5mo ago

I like writing my passion projects without AI. Is this so strange? Using AI to write my software just takes all the fun out of it for me. It feels like just reading a summary or recap instead of reading the actual full novel myself. Like it defeats the whole purpose of it. I write software because it's fun and it stimulates my mind and teaches me things and improves my skills.

bensyverson 5mo ago
Not strange at all! I think there will always be people writing code by hand. I take photos with a 100 year old camera because it's fun.

DonsDiscountGas 5mo ago

Seeing as the physics and economics of SaaS LLMs are a lot different from branded taxis, and that LLM token prices are down 100x over the past 4 years, there is good reason to believe that analogy isn't exactly perfect. Price hikes in the near term wouldn't shock me (in fact they've kinda already happened) but in the long term I'm optimistic

bensyverson 5mo ago
Tokens are a commodity, so the price should drop over the long term as more and more efficient compute comes online. However, in the short term, these foundation models are worth paying for. So I think we will continue to see the price creep up as investors push OpenAI and Anthropic to drive revenue growth. It's hard to imagine a bright future for either company. The more hopeful analog might be Coca Cola & Pepsi. Both have a commodity product, but due to distribution networks and brand, they command a price premium. But it doesn't seem much fun to provide a high-volume low-margin commodity.

catdog 5mo ago

> This is just how the VC game works. Cross-town Uber rides don't stay $5 forever. Basically yes but there is a small difference I think. Things like Uber took an existing and proven business model. slapped an App on top and priced the competition out of the market. The winner takes it all. With "AI" it's not yet clear if there will be any winner at all because it's not yet proven if the business model is viable at the "real" price. Think air taxis across town, 5$ a ride, will work at scale for sure, probably won't work for 500$.

tonyneel923 5mo ago
Also harder to run the competition out of town ie programmers. It will need to always undercut us for the cost and time.