5 ms·

The key AI labs are not public companies, they are at liberty to brag about their margins to potential investors in private.

bwhiting2356 4mo ago
this is changing soon
- joelthelion 4mo ago
  Not really, how much of a public company are you when 5% of your capital is public ?
  - tverbeure 4mo ago
    The percentage is irrelevant for this discussion. As soon as you’re public, you need to report detailed financial numbers.
    - overgard 4mo ago
      Plus, you have to do real GAAP accounting, not their made up metrics.
    - fakedang 4mo ago
      That's changing with this administration though. Reduced reporting cycles reduce transparency.
      - deleted 4mo ago
        [deleted]
      - mrosett 4mo ago
        It won't impact the disclosure of key business details because it doesn't reduce the level of disclosure needed in the S-1 or the 10-K.
    - jimnotgym 4mo ago
      This is an interesting anomaly in the US. In the civilised world all corporations have to file public accounts, as the price for their limited liability. The detail and audit requirements depend on the size, turnover, staff numbers etc. This is because the shareholders are not the only stakeholder. The companies creditors, for instance, who are exposed to the limited liability have a right to see what they are lending to. To answer the sibling comment, all of these public accounts follow local GAAP or IFRS. The US still astounds me with its willingness to allow corporations to rip people off!
      - kortilla 4mo ago
        Creditors in the US can make visibility into financials a requirement for financing if they want. Protecting creditors isn’t a good argument for public reporting.
        VBprogrammer 4mo ago
        What are the arguments against public reporting? As a consumer you are often sending deposits or even the full cost of goods to companies some time before you receive those goods (in effect you become a creditor). You are also dependent upon some of those companies for service and repairs. It seems reasonable that you can check the finances of a company you are creating a business relationship with, I know in the past I've checked company statements. You are unlikely to have significant enough sway to force that kind of disclosure. Small businesses as consumers have less legal protection and are similarly unlikely to be able to make disclosure a precondition of a deal.
        nradov 4mo ago
        So what. As a customer you can insist on seeing audited financial statements as a condition of purchasing, or purchase from another vendor, or do without. No problem.
        VBprogrammer 4mo ago
        Or, in the real world, running a limited liability company could come with some sensible reporting requirements?
    - kfse 4mo ago
      Besides the legal requirement, the reason these companies go public is often to provide liquidity for early investors or employees. So they do want to have as good of a margin story that they can, at least in terms of unit margin.
  - Tuna-Fish 4mo ago
    That doesn't matter for the legal requirements. The short and only kind of wrong version is: In the US, companies are not allowed to unfairly privilege some investors over others by giving them access to secret information that would let them judge the future prospects of the company. (Except in all the ways they can, but these usually involve some kinds of insider trading rules.) Private companies can handle giving out secrets to investors by literally writing and memo and mailing it to all their investors, if they want to give out some secrets to one of them. Public companies cannot do that, even if they knew who all their investors were, but must instead consider every member of the public a potential investor, even if they don't already own the stock. Because of this, when public companies want to reveal material information about their future prospects, they must reveal it to everyone.
  - daemin 4mo ago
    Isn't there a limit on the public markets where if a company has less than a certain percentage of its ownership traded publicly then it is no longer a public company and therefore de-listed? I remember hearing about a guy trying to squeeze out short sellers of his own company but ended up effectively taking his company private because he bought out like 95% of all the shares. I wonder how that aligns to these small releases of stock for the public.
    - extraextra 4mo ago
      There is no legal minimum free float requirement before deregistration in US, however, different exchanges have different rules Essentially, a stock has to stay above 1$ per share, have a minimum market cap of $15m, minimum 400 shareholders and "adequate" liquidity If it meets those 4 criteria, it's essentially not at risk of deregistration
SiempreViernes 4mo ago
And investors will leak such claims quickly enough that this reasoning cannot plausibly hide big secrets.
- Tuna-Fish 4mo ago
  It's not a big secret. If you just do the math yourself, it's easy to compute that inference doesn't cost all that much. People just see all the capital investment going around and all the new data centers being built, see that it's spent on "AI", put two and two together and get a three, or "clearly serving AI requests costs an arm and a leg". The 1 they were missing is that AI requires both training and inference, and training is by far the expensive part. And that in principle you can stop training at any point and keep using the models as they are. (But that means that if other companies keep improving their models, you'll be left behind...) In contrast, inference is fairly cheap and all the providers have great margins on it. Eventually either investment in training stops having commensurate impact on model quality, and people stop doing that and instead concentrate on making inference faster and even more efficient. Or if that doesn't happen, things will get very weird very quickly.
  - ethin 4mo ago
    > If you just do the math yourself, it's easy to compute that inference doesn't cost all that much. Show us your work, then. If it's so easy to do, this should be a trivial request to accommodate, no?
    - mediaman 4mo ago
      Just look at large open weights models being served by inference providers. Kimi 2.6 is a 1 trillion total / 32B active parameter model that's something comparable to Sonnet. Sonnet's API pricing is $5 in, $15 out per million tokens. Deepinfra serves Kimi at $0.75 in, $3.50 out, and about the same at openrouter. So you're looking at a 4-7x multiple that Anthropic is charging compared to market rates that any plebe can get with a credit card.
      - 4mo ago

bwhiting2356 4mo ago

this is changing soon

joelthelion 4mo ago
Not really, how much of a public company are you when 5% of your capital is public ?
- tverbeure 4mo ago
  The percentage is irrelevant for this discussion. As soon as you’re public, you need to report detailed financial numbers.
  - overgard 4mo ago
    Plus, you have to do real GAAP accounting, not their made up metrics.
  - fakedang 4mo ago
    That's changing with this administration though. Reduced reporting cycles reduce transparency.
    - deleted 4mo ago
      [deleted]
    - mrosett 4mo ago
      It won't impact the disclosure of key business details because it doesn't reduce the level of disclosure needed in the S-1 or the 10-K.
  - jimnotgym 4mo ago
    This is an interesting anomaly in the US. In the civilised world all corporations have to file public accounts, as the price for their limited liability. The detail and audit requirements depend on the size, turnover, staff numbers etc. This is because the shareholders are not the only stakeholder. The companies creditors, for instance, who are exposed to the limited liability have a right to see what they are lending to. To answer the sibling comment, all of these public accounts follow local GAAP or IFRS. The US still astounds me with its willingness to allow corporations to rip people off!
    - kortilla 4mo ago
      Creditors in the US can make visibility into financials a requirement for financing if they want. Protecting creditors isn’t a good argument for public reporting.
      - VBprogrammer 4mo ago
        What are the arguments against public reporting? As a consumer you are often sending deposits or even the full cost of goods to companies some time before you receive those goods (in effect you become a creditor). You are also dependent upon some of those companies for service and repairs. It seems reasonable that you can check the finances of a company you are creating a business relationship with, I know in the past I've checked company statements. You are unlikely to have significant enough sway to force that kind of disclosure. Small businesses as consumers have less legal protection and are similarly unlikely to be able to make disclosure a precondition of a deal.
        nradov 4mo ago
        So what. As a customer you can insist on seeing audited financial statements as a condition of purchasing, or purchase from another vendor, or do without. No problem.
        VBprogrammer 4mo ago
        Or, in the real world, running a limited liability company could come with some sensible reporting requirements?
  - kfse 4mo ago
    Besides the legal requirement, the reason these companies go public is often to provide liquidity for early investors or employees. So they do want to have as good of a margin story that they can, at least in terms of unit margin.
- Tuna-Fish 4mo ago
  That doesn't matter for the legal requirements. The short and only kind of wrong version is: In the US, companies are not allowed to unfairly privilege some investors over others by giving them access to secret information that would let them judge the future prospects of the company. (Except in all the ways they can, but these usually involve some kinds of insider trading rules.) Private companies can handle giving out secrets to investors by literally writing and memo and mailing it to all their investors, if they want to give out some secrets to one of them. Public companies cannot do that, even if they knew who all their investors were, but must instead consider every member of the public a potential investor, even if they don't already own the stock. Because of this, when public companies want to reveal material information about their future prospects, they must reveal it to everyone.
- daemin 4mo ago
  Isn't there a limit on the public markets where if a company has less than a certain percentage of its ownership traded publicly then it is no longer a public company and therefore de-listed? I remember hearing about a guy trying to squeeze out short sellers of his own company but ended up effectively taking his company private because he bought out like 95% of all the shares. I wonder how that aligns to these small releases of stock for the public.
  - extraextra 4mo ago
    There is no legal minimum free float requirement before deregistration in US, however, different exchanges have different rules Essentially, a stock has to stay above 1$ per share, have a minimum market cap of $15m, minimum 400 shareholders and "adequate" liquidity If it meets those 4 criteria, it's essentially not at risk of deregistration

SiempreViernes 4mo ago

And investors will leak such claims quickly enough that this reasoning cannot plausibly hide big secrets.

Tuna-Fish 4mo ago
It's not a big secret. If you just do the math yourself, it's easy to compute that inference doesn't cost all that much. People just see all the capital investment going around and all the new data centers being built, see that it's spent on "AI", put two and two together and get a three, or "clearly serving AI requests costs an arm and a leg". The 1 they were missing is that AI requires both training and inference, and training is by far the expensive part. And that in principle you can stop training at any point and keep using the models as they are. (But that means that if other companies keep improving their models, you'll be left behind...) In contrast, inference is fairly cheap and all the providers have great margins on it. Eventually either investment in training stops having commensurate impact on model quality, and people stop doing that and instead concentrate on making inference faster and even more efficient. Or if that doesn't happen, things will get very weird very quickly.
- ethin 4mo ago
  > If you just do the math yourself, it's easy to compute that inference doesn't cost all that much. Show us your work, then. If it's so easy to do, this should be a trivial request to accommodate, no?
  - mediaman 4mo ago
    Just look at large open weights models being served by inference providers. Kimi 2.6 is a 1 trillion total / 32B active parameter model that's something comparable to Sonnet. Sonnet's API pricing is $5 in, $15 out per million tokens. Deepinfra serves Kimi at $0.75 in, $3.50 out, and about the same at openrouter. So you're looking at a 4-7x multiple that Anthropic is charging compared to market rates that any plebe can get with a credit card.
    - 4mo ago