5 ms·

Ed is an interesting character. His financial analysis of the AI industry makes logical sense to me (though I am not knowledgeable enough to actually know if it

Ed is an interesting character. His financial analysis of the AI industry makes logical sense to me (though I am not knowledgeable enough to actually know if it is correct.) However, he seems to be so angry at AI in general, that he misses the obvious areas where LLMs are actually changing the State of the Art. Coding seems to be one of the core use-cases for LLMs (as Simon Willison pointed out recently) and even if that's the only real use-case for LLMs, they're wildly useful. I do understand that useful != profitable and that's where I think Ed has a real point: until inference becomes much cheaper these companies cannot be profitable. Some mega-players will pay the API token price, but most will not.

hungryhobbit 5mo ago
I don't think whether "LLMs are actually changing the State of the Art" or not matters for anything he wrote. If the AI companies need $X billion in revenue to stay afloat, it doesn't matter if 0.5% or 5% or 50% of that revenue is from transforming the State of the Art. It's 100% irrelevant: what matters is that, transformation or no, these companies won't have the income to pay their bills. And if they can't pay their bills, a whole lot of other companies can't either. So again, transformation or no, it's still a house of cards waiting to collapse. The only thing that would change that is not more "transformation" ... it's a feature set that lets them multiply their current user base (or multiply how much they charge them) several times over.
- anthonypasq 5mo ago
  maybe its insane to think this, but if all AI providers turned off free plans tomorrow i think they would easily have enough people willing to pay $20 a month for it to sustain all their spending. everyone is still fighting for market share so they are giving stuff away, but that doesnt mean people wouldnt be willing to pay for it if it wasnt free.
  - FromTheFirstIn 5mo ago
    This proposition boils down to a belief that there are 3 billion people who are interested in AI for free but aren’t currently paying $20, but who would pay $20 if that was the price. The global median income is around $12k, so this would mean that there’s roughly be a global budget of 0.5% of everyone’s annual income going to chatbots. If you’re off by half, the price doubles for each person. I think you’d make a lot of money betting against the existence of 3 billion ghost customers
  - brokenmachine 4mo ago
    I wouldn't.
tom_ 5mo ago
He's got subscribers. Maybe the attitude is one he's found plays well with them. I find it quite refreshing in some ways. Lots of people, when they start complaining about this or that aspect of this AI stuff, are wont to add in a little disclaimer that, despite all of the above, they actually really like AI and use it all the time. I assume this is to avoid the scenario of a bunch of pragmatic builders turning up and calmly shipping nuance in the comments (or whatever you call it these days when you get brigaded by a pile of angry keyboard warriors with chips on their shoulder) - and it sure is tiring having to wade through the equivocation. That's a criticism that'd be hard to level at Zitron! Say what you like about the man, but he's unafraid to appear to take a side.
- marcosdumay 5mo ago
  > Maybe the attitude is one he's found plays well with them. Kind of a self-fulfilling prophecy. What's not a problem, by the way. That's why people always recommend content creators to be themselves. If they try to be somebody else, they find their public is already busy following other people.
simianwords 5mo ago
> until inference becomes much cheaper these companies cannot be profitable. Some mega-players will pay the API token price, but most will not. This is often repeated but comes from ignorance mostly. You have * zero * reason to believe inference is costly other than just vibes. If you go by data and intuitions - the margins are high. This kind of thinking really reinforces my belief that people have no idea and are using this whole [AI is not profitable and too costly] thing as a cathartic way to deal with immense progress.
- lompad 5mo ago
  We know that inference cost is very significant, as he shows for example in this piece. https://www.wheresyoured.at/oai_docs/ https://www.wheresyoured.at/oai_docs/ However, it needs to be said that he received those numbers. I personally have quite a few issues with him, but there's no reason to doubt his journalistic integrity. Because of that, I believe he reports truthfully on data he receives by informants. Additionally, none of the frontier models actually publicly talks about inference costs in anything but broad, "let's just forget that"-like takes. Which does not exactly spark confidence. I'm eagerly awaiting anthropic's public disclosure of their financial details. That should be rather interesting in any case and finally put the inference-discussion to rest.
  - remich 5mo ago
    No reason to doubt his journalistic integrity? He's not a journalist for starters. He's a PR flack who does PR for AI startups on the side while blogging on substack. There is every reason to doubt his journalistic integrity.
    - lompad 5mo ago
      The PR-thing was always openly communicated by him and is not some secret or gotcha. It's essentially "fleecing the boosters", which I fully approve of and do similarly myself. I'll gladly tell my customers all the most glorious stuff about AI and big tech while spending a significant chunk of the money they pay me on supporting AI-/tech-counterculture, such as doctorow, zitron and quite a few other writers, journalists and activists. It's the old "you live in a society" counter-point against anti-capitalist activism. Needing to make ends meet does not imply that your points or principles are meaningless, it just implies that you have no interest in being homeless and that way losing your chance to actually change things. So that's fine to me. But: I stated it for a reason, because I know others don't agree. I, personally, consider him trustworthy. You do not, and that's fine. I suspect we both await anthropic's Z.1, which will be able to settle a big chunk of the debate. If he is right, the numbers will show it.
DonsDiscountGas 5mo ago
It's pretty likely that inference will get substantially cheaper. His argument is that for these companies to be profitable some very major and (pre 2022) unprecedented things have to happen. Which I tend to agree with, except I think they will happen, seeing as how they've been happening for a few years.
- overgard 5mo ago
  Except inference has been getting more expensive, not less
  - CuriouslyC 5mo ago
    Inference has been going down in price on a cost/intelligence basis. If you don't need the smartest model, there are plenty of good Chinese models that are dirt cheap.
    - GolfPopper 5mo ago
      Doesn't that sort-of make one of Zitron's core points? "Chinese models are dirt cheap" isn't going to do anything good for the return the investments in OpenAI and Anthropic demand.
      - CuriouslyC 5mo ago
        It supports his point that they're planning to massively overbuild compute, which was already well supported by the financials. A lot of that planned compute buildout can be walked back though, and the technology is unquestionably useful in moderation, so it's not the catastrophe he suggests, and his hyperbole is part of what makes me dislike him even if there are elements of his foundational argument I agree with.
    - lenkite 5mo ago
      Aren't these Chinese models also heavily subsidized at the moment ? They are running off govt money which also has a cut-off date by 2028-30.
star-glider 5mo ago
It seems that a certain kind of person cannot separate the following things: 1) I dislike AI as a technology 2) I dislike the people and companies that profit from AI 3) I think AI is useless These are three completely separate positions to have. You can think AI is incredibly useful and also dislike it because it will, for example, reduce your relative status in society. You can love the tech but think that Sam Altman is a dishonest person, etc. But for some reason, most anti-AI commentators feel compelled to present all three arguments. Which is even sillier when you think about it, because if it's useless, then you really shouldn't care: the markets will eventually find out that it's useless, and everything will go back to normal, and the people you don't like will have lost money, so there's no point in being outraged. Of course, I don't really believe that they think it's useless. I do think they're worried about what it'll do to their prestige, though, and they're just hoping beyond hope that somehow everyone will one day "wake up" and share their belief that LLMs are just "stochastic parrots" with no utility, despite the fact that people are using them every day and can watch in real time as they improve.
- degamad 5mo ago
  > ... the markets will eventually find out that it's useless, and everything will go back to normal, and the people you don't like will have lost money, so there's no point in being outraged... Except that in the process of the markets finding out, things will not go back to normal if everyone's retirement is tied to the market. And in the process of finding out, things will not go back to normal if the hype cycle disrupts traditional hiring/firing decisions. If it's as bad as some of us believe, then when it falls apart, a lot of people get hurt as collateral damage. The market eventually found out about Bear Stearns, but a lot of innocent people lost their homes in the process.
  - zuzululu 5mo ago
    They'll be fine
- overgard 5mo ago
  I see little evidence that people combine all three positions together. You're making a broad generalization based on personal vibes.
overgard 5mo ago
So here's the thing. I am not generally an angry person. But Ed's writing really resonates with me, because for the last four years these people have been making a strategy of scaring the shit out of us while trying to ruin something I genuinely love (coding), while simultaneously fucking up the economy and multiple industries and turning the internet into slop. I very badly want more people to call these guys "chucklefucks" or whatever innovative ways he comes up with to insult them because they deserve far more public ridicule and disdain than the (captured, useless) media is giving them. So far the data for productivity in coding is.. sus. The productivity gains outside of toy projects are mostly anecdotal and it's hard to tell if those accounts are even real humans or just astroturfing and bots. Almost every programmer I know personally has a pretty measured opinion on where these things are useful and where they're not. The breathless hype seems mostly from non coders.
- hzhzhzha 5mo ago
  I want to be one data point seeing as this goes uncontested (the ones in the know don’t care anymore to be honest). They are not only useful it is obvious they are. If you don’t see it I really, really don’t know what to tell you. You can tell yourself I am bot or shill or whatever if that helps you sleep but .. just trying to help out another dev here. Wake the F up.
  - latexr 5mo ago
    > it is obvious they are. If you don’t see it I really, really don’t know what to tell you. (…) just trying to help out another dev here. Wake the F up. Your whole post is dismissive and insulting and has zero arguments. No one is helped by that, no one is going to change their mind with that, you’re only making the divide more pronounced. You’re being actively unhelpful. > You can tell yourself I am bot or shill or whatever I mean, your account was obviously created specifically to post that comment…
  - cyclopeanutopia 5mo ago
    I'm not sure you understand what "obvious" means.
- 5mo ago
barrell 5mo ago
I do think Ed in intentionally ignorant of the capabilities of LLMs. But I also don't know that I would classify LLMs as 'wildly useful' for coding. Most productivity gains seem to be hallucinated, and while it's too early to make any claims on long term outcomes, there are plenty of studies indicating they might be even more negative. There are definitely use cases for LLMs in coding. And at times, they can be wildly useful. But I feel like the industry atm wildly overestimates their broader/long term utility. Anecdotally, I have not seen an explosion in quality/bespoke software since LLMs. In fact I've noticed the opposite to quite the extreme. Not only are new products worse in quality, but the quality of existing products is falling off a cliff.
- Aerolfos 5mo ago
  > I do think Ed in intentionally ignorant of the capabilities of LLMs. I think it's more complicated than that too. He's pretty well versed in the stated capabilities of LLMs. The fact that he isn't a deeply involved technical developer who knows the ins and outs and nuances of using LLM tools is the point, because the stated capabilities of LLMs are that they are trivial to use, extremely powerful, and getting so much better every month that you personally can replace developers without even trying as a completely non-technical person with basic writing skills. Given the hype and extreme claims being made, the fact that he remains ignorant and gets practically no use out of LLMs immediately disproves those statements. The counterargument boiling down to "you're using it wrong" is actually just a further indictment of Sam Altman and his like, because it shouldn't be possible to use LLMs wrong! The rest, well, the hype needs to die before anyone can make sane estimates of what LLM tech can do for us in various fields. Right now it's all a complete mess.
  - barrell 5mo ago
    I don’t get me wrong, I’m on Ed’s side and get where he’s coming from. I just think his arguments are normally taken to the extreme, making them less defensible, when he could make the same arguments from a more moderate stance and ultimately be more convincing. His arguments, albeit valid, can often sound like reductos ad absurdums the way he presents them.
lelanthran 5mo ago
> I do understand that useful != profitable and that's where I think Ed has a real point: until inference becomes much cheaper these companies cannot be profitable. If inference becomes cheaper, it becomes cheaper for everyone.
xdertz 5mo ago
I would say his overall negative outlook is a well needed counterbalance to the completely delusional hype one is exposed to on a daily basis. The truth will then probably land somewhere in the middle.

hungryhobbit 5mo ago

I don't think whether "LLMs are actually changing the State of the Art" or not matters for anything he wrote. If the AI companies need $X billion in revenue to stay afloat, it doesn't matter if 0.5% or 5% or 50% of that revenue is from transforming the State of the Art. It's 100% irrelevant: what matters is that, transformation or no, these companies won't have the income to pay their bills. And if they can't pay their bills, a whole lot of other companies can't either. So again, transformation or no, it's still a house of cards waiting to collapse. The only thing that would change that is not more "transformation" ... it's a feature set that lets them multiply their current user base (or multiply how much they charge them) several times over.

anthonypasq 5mo ago
maybe its insane to think this, but if all AI providers turned off free plans tomorrow i think they would easily have enough people willing to pay $20 a month for it to sustain all their spending. everyone is still fighting for market share so they are giving stuff away, but that doesnt mean people wouldnt be willing to pay for it if it wasnt free.
- FromTheFirstIn 5mo ago
  This proposition boils down to a belief that there are 3 billion people who are interested in AI for free but aren’t currently paying $20, but who would pay $20 if that was the price. The global median income is around $12k, so this would mean that there’s roughly be a global budget of 0.5% of everyone’s annual income going to chatbots. If you’re off by half, the price doubles for each person. I think you’d make a lot of money betting against the existence of 3 billion ghost customers
- brokenmachine 4mo ago
  I wouldn't.

tom_ 5mo ago

He's got subscribers. Maybe the attitude is one he's found plays well with them. I find it quite refreshing in some ways. Lots of people, when they start complaining about this or that aspect of this AI stuff, are wont to add in a little disclaimer that, despite all of the above, they actually really like AI and use it all the time. I assume this is to avoid the scenario of a bunch of pragmatic builders turning up and calmly shipping nuance in the comments (or whatever you call it these days when you get brigaded by a pile of angry keyboard warriors with chips on their shoulder) - and it sure is tiring having to wade through the equivocation. That's a criticism that'd be hard to level at Zitron! Say what you like about the man, but he's unafraid to appear to take a side.

marcosdumay 5mo ago
> Maybe the attitude is one he's found plays well with them. Kind of a self-fulfilling prophecy. What's not a problem, by the way. That's why people always recommend content creators to be themselves. If they try to be somebody else, they find their public is already busy following other people.

simianwords 5mo ago

> until inference becomes much cheaper these companies cannot be profitable. Some mega-players will pay the API token price, but most will not. This is often repeated but comes from ignorance mostly. You have * zero * reason to believe inference is costly other than just vibes. If you go by data and intuitions - the margins are high. This kind of thinking really reinforces my belief that people have no idea and are using this whole [AI is not profitable and too costly] thing as a cathartic way to deal with immense progress.

lompad 5mo ago
We know that inference cost is very significant, as he shows for example in this piece. https://www.wheresyoured.at/oai_docs/ https://www.wheresyoured.at/oai_docs/ However, it needs to be said that he received those numbers. I personally have quite a few issues with him, but there's no reason to doubt his journalistic integrity. Because of that, I believe he reports truthfully on data he receives by informants. Additionally, none of the frontier models actually publicly talks about inference costs in anything but broad, "let's just forget that"-like takes. Which does not exactly spark confidence. I'm eagerly awaiting anthropic's public disclosure of their financial details. That should be rather interesting in any case and finally put the inference-discussion to rest.
- remich 5mo ago
  No reason to doubt his journalistic integrity? He's not a journalist for starters. He's a PR flack who does PR for AI startups on the side while blogging on substack. There is every reason to doubt his journalistic integrity.
  - lompad 5mo ago
    The PR-thing was always openly communicated by him and is not some secret or gotcha. It's essentially "fleecing the boosters", which I fully approve of and do similarly myself. I'll gladly tell my customers all the most glorious stuff about AI and big tech while spending a significant chunk of the money they pay me on supporting AI-/tech-counterculture, such as doctorow, zitron and quite a few other writers, journalists and activists. It's the old "you live in a society" counter-point against anti-capitalist activism. Needing to make ends meet does not imply that your points or principles are meaningless, it just implies that you have no interest in being homeless and that way losing your chance to actually change things. So that's fine to me. But: I stated it for a reason, because I know others don't agree. I, personally, consider him trustworthy. You do not, and that's fine. I suspect we both await anthropic's Z.1, which will be able to settle a big chunk of the debate. If he is right, the numbers will show it.

DonsDiscountGas 5mo ago

It's pretty likely that inference will get substantially cheaper. His argument is that for these companies to be profitable some very major and (pre 2022) unprecedented things have to happen. Which I tend to agree with, except I think they will happen, seeing as how they've been happening for a few years.

overgard 5mo ago
Except inference has been getting more expensive, not less
- CuriouslyC 5mo ago
  Inference has been going down in price on a cost/intelligence basis. If you don't need the smartest model, there are plenty of good Chinese models that are dirt cheap.
  - GolfPopper 5mo ago
    Doesn't that sort-of make one of Zitron's core points? "Chinese models are dirt cheap" isn't going to do anything good for the return the investments in OpenAI and Anthropic demand.
    - CuriouslyC 5mo ago
      It supports his point that they're planning to massively overbuild compute, which was already well supported by the financials. A lot of that planned compute buildout can be walked back though, and the technology is unquestionably useful in moderation, so it's not the catastrophe he suggests, and his hyperbole is part of what makes me dislike him even if there are elements of his foundational argument I agree with.
  - lenkite 5mo ago
    Aren't these Chinese models also heavily subsidized at the moment ? They are running off govt money which also has a cut-off date by 2028-30.

star-glider 5mo ago

It seems that a certain kind of person cannot separate the following things: 1) I dislike AI as a technology 2) I dislike the people and companies that profit from AI 3) I think AI is useless These are three completely separate positions to have. You can think AI is incredibly useful and also dislike it because it will, for example, reduce your relative status in society. You can love the tech but think that Sam Altman is a dishonest person, etc. But for some reason, most anti-AI commentators feel compelled to present all three arguments. Which is even sillier when you think about it, because if it's useless, then you really shouldn't care: the markets will eventually find out that it's useless, and everything will go back to normal, and the people you don't like will have lost money, so there's no point in being outraged. Of course, I don't really believe that they think it's useless. I do think they're worried about what it'll do to their prestige, though, and they're just hoping beyond hope that somehow everyone will one day "wake up" and share their belief that LLMs are just "stochastic parrots" with no utility, despite the fact that people are using them every day and can watch in real time as they improve.

degamad 5mo ago
> ... the markets will eventually find out that it's useless, and everything will go back to normal, and the people you don't like will have lost money, so there's no point in being outraged... Except that in the process of the markets finding out, things will not go back to normal if everyone's retirement is tied to the market. And in the process of finding out, things will not go back to normal if the hype cycle disrupts traditional hiring/firing decisions. If it's as bad as some of us believe, then when it falls apart, a lot of people get hurt as collateral damage. The market eventually found out about Bear Stearns, but a lot of innocent people lost their homes in the process.
- zuzululu 5mo ago
  They'll be fine
overgard 5mo ago
I see little evidence that people combine all three positions together. You're making a broad generalization based on personal vibes.

overgard 5mo ago

So here's the thing. I am not generally an angry person. But Ed's writing really resonates with me, because for the last four years these people have been making a strategy of scaring the shit out of us while trying to ruin something I genuinely love (coding), while simultaneously fucking up the economy and multiple industries and turning the internet into slop. I very badly want more people to call these guys "chucklefucks" or whatever innovative ways he comes up with to insult them because they deserve far more public ridicule and disdain than the (captured, useless) media is giving them. So far the data for productivity in coding is.. sus. The productivity gains outside of toy projects are mostly anecdotal and it's hard to tell if those accounts are even real humans or just astroturfing and bots. Almost every programmer I know personally has a pretty measured opinion on where these things are useful and where they're not. The breathless hype seems mostly from non coders.

hzhzhzha 5mo ago
I want to be one data point seeing as this goes uncontested (the ones in the know don’t care anymore to be honest). They are not only useful it is obvious they are. If you don’t see it I really, really don’t know what to tell you. You can tell yourself I am bot or shill or whatever if that helps you sleep but .. just trying to help out another dev here. Wake the F up.
- latexr 5mo ago
  > it is obvious they are. If you don’t see it I really, really don’t know what to tell you. (…) just trying to help out another dev here. Wake the F up. Your whole post is dismissive and insulting and has zero arguments. No one is helped by that, no one is going to change their mind with that, you’re only making the divide more pronounced. You’re being actively unhelpful. > You can tell yourself I am bot or shill or whatever I mean, your account was obviously created specifically to post that comment…
- cyclopeanutopia 5mo ago
  I'm not sure you understand what "obvious" means.
5mo ago

barrell 5mo ago

I do think Ed in intentionally ignorant of the capabilities of LLMs. But I also don't know that I would classify LLMs as 'wildly useful' for coding. Most productivity gains seem to be hallucinated, and while it's too early to make any claims on long term outcomes, there are plenty of studies indicating they might be even more negative. There are definitely use cases for LLMs in coding. And at times, they can be wildly useful. But I feel like the industry atm wildly overestimates their broader/long term utility. Anecdotally, I have not seen an explosion in quality/bespoke software since LLMs. In fact I've noticed the opposite to quite the extreme. Not only are new products worse in quality, but the quality of existing products is falling off a cliff.

Aerolfos 5mo ago
> I do think Ed in intentionally ignorant of the capabilities of LLMs. I think it's more complicated than that too. He's pretty well versed in the stated capabilities of LLMs. The fact that he isn't a deeply involved technical developer who knows the ins and outs and nuances of using LLM tools is the point, because the stated capabilities of LLMs are that they are trivial to use, extremely powerful, and getting so much better every month that you personally can replace developers without even trying as a completely non-technical person with basic writing skills. Given the hype and extreme claims being made, the fact that he remains ignorant and gets practically no use out of LLMs immediately disproves those statements. The counterargument boiling down to "you're using it wrong" is actually just a further indictment of Sam Altman and his like, because it shouldn't be possible to use LLMs wrong! The rest, well, the hype needs to die before anyone can make sane estimates of what LLM tech can do for us in various fields. Right now it's all a complete mess.
- barrell 5mo ago
  I don’t get me wrong, I’m on Ed’s side and get where he’s coming from. I just think his arguments are normally taken to the extreme, making them less defensible, when he could make the same arguments from a more moderate stance and ultimately be more convincing. His arguments, albeit valid, can often sound like reductos ad absurdums the way he presents them.

lelanthran 5mo ago

> I do understand that useful != profitable and that's where I think Ed has a real point: until inference becomes much cheaper these companies cannot be profitable. If inference becomes cheaper, it becomes cheaper for everyone.

xdertz 5mo ago

I would say his overall negative outlook is a well needed counterbalance to the completely delusional hype one is exposed to on a daily basis. The truth will then probably land somewhere in the middle.