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I don't know a single white collar worker who isn't using AI for their job. Not like forced, but like "Oh damn, this bot thing can do a lot of tedious leg work

I don't know a single white collar worker who isn't using AI for their job. Not like forced, but like "Oh damn, this bot thing can do a lot of tedious leg work for me". To think that people won't pay $60-$80/mo to continue using it is wild to me. In a white collar environment it pays for itself in a few hours of use. If you focus on how much value AI brings to people (mostly in time saved), the bubble hardly looks bubbly. Did Uber die when a trip across town went from $3 to $13? No. It's giving more rides than ever, 10x more than when it was $3. I'm sure there will be some losers, but unlike the dot-com boom, the entirety of the population already has all the tools needed to leverage AI.

mr-pink 2mo ago
using how?
- dominotw 2mo ago
  summarize email and then generate slop that gets summarized on the other end
  - Ekaros 2mo ago
    Not to forget asking questions and getting wrong answers... Thus possibly causing net loss for company.
acivitillo 2mo ago
$80 per month in a 5,000 people Enterprise is 400k per month which translates to ~5m per year. That is easily in the 8-16% of their total IT budget. I don’t know you, but companies don’t like to increase recurring cost. Is AI good? Yes. Is it clear how it generates enough ROI to justify a material IT cost increase? No. This is the problem now, not how much white collar workers use AI, but what is the productivity narrative of it. Because AI is so generic, there is no clear specialized use case, like when Salesforce invented the CRM for example.
- generic92034 2mo ago
  > when Salesforce invented the CRM for example Huh? If that was not a joke, here is the history of CRM: https://en.wikipedia.org/wiki/Customer_relationship_management#History https://en.wikipedia.org/wiki/Customer_relationship_manageme...
  - inigyou 2mo ago
    > Using it, people that FDR met were impressed by his "recall" of facts about their family and what they were doing professionally and politically. Hmm. Today that'd be creepy.
- jrflo 2mo ago
  The thing that's a bit different about AI from a CRM is it translates pretty directly into time savings. You only need each employee to save 1-2 hours of work per month to break even with a $80/seat subscription.
  - tobinfekkes 2mo ago
    It's true that it can easily save 1-2 hours per month, but it only seems worth it if those hours saved are spent doing something else productive/profitable. It appears that a lot of the time saved is spent either 1) doing nothing instead, 2) waiting for the AI to finish, or 3) increasing the hours spent elsewhere down/up the chain for reviewing, fixing, auditing. The obvious benefit of anything offering to save time is that now you have time for "higher order work", but often, we use the time saved to be lazy. After all, that's the underlying reason we used the time-saving, corner-cutting tool in the first place.
    - WarmWash 2mo ago
      People will pay out of their pockets if an AI can free up a few of their hybrid hours a month. And already it looks like the vast majority of white collar AI spend is from individuals, not companies. I mean, why would you show your hand by using the company AI? Use your AI and take the credit...
csomar 2mo ago
Currently, a $20/month openai subscription gives roughly $400 in codex api credits. That doesn’t count what you can get from the web chatbot. So it better be that api tokens are seriously overpriced. There is value at $20/month. I am not so sure if it’s $400/month or more.
TrackerFF 2mo ago
But the question is how much are people willing to pay for AI. I use AI every day at work, but I only pay $20. That's the most I will ever want to pay. And, so far, it gives me everything I need. If OpenAI or Anthropic suddenly said "Sorry, the game is up. You'll have to pay $100/month now", I would 100% look into cheaper Chinese solutions. I suspect the AI subscription (or API) economy is whale economy. You have a small, small percentage of users that are happy to pay whatever it takes - while the vast majority will either use the free tier, and then the next group will pay for the cheapest or next cheapest subscription. EDIT: And I'll echo what another user wrote here. The VAST majority of office users around the world don't work for tech companies flush in cash. Even adding something like $20 - $100 subscriptions to every user is a serious enough financial obligation that it needs to go through budget planning / boards. Even more so for all the government workers around the world.
- surgical_fire 2mo ago
  Rofl, I already went for cheaper Chinese solutions. I can achieve more than I could when I was giving OpenAI 20 bucks a month, and for a fraction of the price. I have no idea why people still use ChatGPT or Claude.
  - coliveira 2mo ago
    Most people don't understand how cheap models like DeepSeek and similar are. I have $5 in an account that I use for months. I can get very complex code for less than 50 cents.
  - Kuyawa 2mo ago
    Me too. Sinophobia may be the culprit, too many years watching fox or cnn is my guess? I love chinese phones, cars, cities, people, and now AI models. There is a beautiful world out there to admire if people is willing to open their eyes.
- johnbarron 2mo ago
  You can now, as of this week, run locally models with the same performance of a SOTA model of March this year: https://news.ycombinator.com/item?id=49214008 https://news.ycombinator.com/item?id=49214008 https://news.ycombinator.com/item?id=49229621 https://news.ycombinator.com/item?id=49229621 The FAFO day of Anthropic and OpenAI arrived.
api 2mo ago
After using it a bit I’m convinced it’s not, as a whole, a bubble. Bubbles exist around it. Data center construction may end up overbuilding, much like the dark fiber thing during dot.com, since better chips and models will shrink power and space requirements over time. But the core tech is the most powerful new thing I have seen since discovering the Internet, at least. Maybe more.
- lkjdsklf 2mo ago
  A bubble doesn’t mean a technology is useless. It just means it’s overvalued In the last 30 years, we’ve had multiple bubbles in the tech industry. Every one of them was backed by real stuff that we still use today. They were still bubbles and a ton of people were hurt when they popped.
  - inigyou 2mo ago
    The railway bubble and the optical fiber bubble left the world with lots of railways and optical fibers. Once their original owners went bankrupt, the assets themselves were quite useful and changed the world. The cryptocurrency bubble, however, didn't. Not really. At best you can use it to buy drugs. Some of the GPUs may have been repurposed for AI, but not enough to make a dent in AI, and the AI reesarchers who kicked off the AI bubble were having to buy their GPUs for high prices to compete with the miners, not low prices after they went bust, so we can't even say miners helped kick it off.
    - watwut 2mo ago
      Many of those assets were useless - like railways from nowhere to nowhere. Only some ended up being used. And many innocent people ended up being hurt in the process. Bubbles are not good. They are harmful. The ability yo recoup some of the losses in the span of next 15 years does not make the bubbles something positive.
      - inigyou 2mo ago
        Even railways from nowhere to nowhere often ended up being useful when the ends were extended to somewhere or when somewhere grew to encompass nowhere. For example the Berlin Ringbahn was once some billionaire's toy but now it serves very useful traffic, as Berlin grew outwards to where the Ringbahn is.
elorant 2mo ago
That’s not the argument though. The argument is that conversion rates as per OpenAI are about 5% and to serve the other 95% you need to build significant infrastructure that costs hundreds of billions annually. So for every white collar worker that you know and uses it and pays for it there are 20 free loaders. And mind you, 5% conversion rate is extremely high already as a number per se. It won't magically reach 20% in a couple of years. Chances are it will fall particularly for the enterprise segment due to the advent of the Chinese models.
borzi 2mo ago
The reason uber didn't loose that much business is because it replaced the established businesses and left most consumers with little alternative. That's not the case with AI - unless the frontier labs achieve AGI or some sort of super intelligence that lets them create infinite economic value (at which point, any further discussion is pointless for obvious reasons), the average worker can do most of their tasks with 5% of the api costs using an open source model from China and achieve the same results.
- Aurornis 2mo ago
  > The reason uber didn't loose that much business is because it replaced the established businesses and left most consumers with little alternative. The established businesses were awful. There was not a thriving and beloved taxi service in every city pre-Uber. Taxis were bad and very expensive. Also did you forget that Lyft exists and normal taxis are still available? Taxi services had to improve their business when the ride sharing companies entered the market because they previously relied on their own grip on on-demand transportation to keep prices high and service poor.
  - borzi 2mo ago
    Imagine suddenly a new taxi business was able to come into your city and provided taxi rides for 5 cents on the dollar. What would happen? Edit: now add on top of that that even if uber tried to undercut them again by running losses as they did in the past, that new taxi business would not loose any money if the number of their rides went down because their operating costs simply scale with the number of rides - while uber was loosing money on every ride.
    - Aurornis 2mo ago
      > Imagine suddenly a new taxi business was able to come into your city and provided taxi rides for 5 cents on the dollar. What would happen? I literally lived through this situation. It was not 5 cents on the dollar. The taxis continued to exist then and continue to exist now.
- 2mo ago
gostsamo 2mo ago
A bit of napkin math. How many are the white collar workers? 300 mln? even with $100 subscription each, the monthly revenue for your addressable market rises to $30 bln. If we increase the figure to half of humanity and they are 3 bn, you multiply it upto 10 and $300 bn monthly, $3.5 tn annually. Now start cutting it down keeping in mind that not everyone is an office worker, does not need $100 plan, has access to cheaper models, could get ai through someone elses subscription or local models. I'm not sure how down it will get, but it can get down a lot and will have to be split among few players. At least for me it does not seem unrealistic that the revenue won't be enough for everyone.
cm2187 2mo ago
The real question is not whether there will be a market for AI, it is obvious that there will be one (as it was obvious the Internet was a gigantic thing in the dotcom boom). It is rather whether the value will be in the models (and if so in which?) or the infrastructure or somewhere else. Interesting thoughts from Dwarkesh Patel on the future of models [1]. In summary, no moat if a client can switch to a competitor from a dropdown when all models are similar-ish (so models are commodities), but to really compete with humans, AI needs to start "learning on the job", i.e. accumulating experience like an employee (as opposed to the training / inference approach where the model isn't learning after it is released). If your model does that, then you have vendor lock-in as you can't replace an experienced model with a competitor. Then the value is in the model. As in the 90s, this could go in all sort of different directions, hard to make predictions. And remember the 90s: the value was in the browser (you had to purchase it, eg Netscape), then the browser came for free with the OS (no value in the browser), then the browser was the most important thing in the world as it was control over the default search engine, everyone thought portals was the most important thing to control, so ISPs had their own applications accessing the internet from their own portal, etc - none of those people were stupid. [1] https://www.youtube.com/watch?v=iewm45atodE https://www.youtube.com/watch?v=iewm45atodE
- porridgeraisin 2mo ago
  The moat is in sales, the model and its quality is largely irrelevant. Gross margins will be high enough for moats to not matter that much.
  - cm2187 2mo ago
    I work for a large company and for any LLM I use professionally, whether programmatically or via a UI, I get to pick from a dropdown from Gemini, Claude, OpenAI and the open weight ones. We ain't locked in.
    - porridgeraisin 2mo ago
      Yeah, and that is completely fine business-wise for all the businesses in that dropdown. Averaged over the whole TAM, they will all make a lot of money. The reason is that the total market becomes _bigger_ with every new model (upto a reasonable point of course, but for 5 models it is obviously true), they don't end up competing for the same slices of the pie. The core business for each of the 5 will not be companies like yours, but rather few hundred to few thousand companies each who exclusively use their model not for technical reasons, but because they were wined and dined or due to bundling with another service. The other hundreds of thousands of customers are all bonus. This is true for most categories of SaaS not just LLM inference. If the vendor of a core piece of software that you are already locked into tells you they are raising prices and adding AI inference features, you are going to cancel whatever AI plan you have and use theirs. Or pay the amount anyways (which is even better business-wise for them). Eventually, semi-random differences that arise in their distribution may end up informing model capabilities as well, and _that_ is when true model-level differentiation may happen. But this is not necessary and if it comes true would just be a bonus.
TacticalCoder 2mo ago
I agree that it's working good enough and that it's here to stay: mostly everybody around me uses AI too but... > Did Uber die when a trip across town went from $3 to $13? No. It's giving more rides than ever, 10x more than when it was $3. The competition from open-weights models is already putting pressure on how much this can be billed. That's today, with stuff like OpenAI announcing 80% cuts on terra and luna. Tomorrow, in addition to the pressure from open-weights models, there's going to be pressure from chinese hardware: Tencent, Alibaba, etc. are all already working on their own AI chips. What good would, say, a SOTA open-weights model running on chinese chips (chinese chips located in China or elsewhere btw) do to, say, Meta or Oracle's insane AI investements? And it doesn't even have to be chinese chips: what good AMD AI chips doing inference by having weights etched on silicon will do to OpenAI and Anthropic? All the people, especially here on HN, who were explaining six months ago that OpenAI and Anthropic models where so good for coding that coding was solved once and for all can now run better open-weights models than the proprietary ones from six months ago. For a fraction of the price. If people, instead of paying $20 per month pay $80 per month for their AI subscriptions, what makes you believe that money is going to go to one of these companies participating in this $2 trillion debt? And really, in which new domain have we seen the first movers being able to keep a lifetime grip on the market without getting their arse handed to them by the competition? Things moves quickly today: I'm not sure OpenAI and Anthropic are the Ford equivalent for AI. For all I know OpenAI is "La Mancelle": https://fr.wikipedia.org/wiki/La_Mancelle https://fr.wikipedia.org/wiki/La_Mancelle And Anthropic is Panhard. That AI is here to stay is a given. That people may be willing to pay more is likely (even though IMO they won't pay 4x more for something only marginally better). But that the current players are going to stay on top even though the competition closed the gaps to weeks? I don't buy it.
w29UiIm2Xz 2mo ago
If you need fewer workers due to the increased productivity, then the number of white collar workers (the TAM) won't be as large as anticipated.
- sneak 2mo ago
  That’s never really how efficiency gains tend to work except in places where entire industries ceased to exist (printers, weavers, clothes washers, etc).
  - galangalalgol 2mo ago
    How sure are we that isn't the case here?
tim333 2mo ago
People may pay less than they are willing to pay as competition drives the price down. I paid $20/mo a while which I was happy with but I found I could get similar for free so pay $0 now.
root-parent 2mo ago
Mods, can you explain what happened here? This story had 49 points and 81 comments in about four hours and was on the front page. Then it seems to have disappeared from the top stories feed completely.
root-parent 2mo ago
Google funds Anthropic | v Anthropic promises to rent Google's TPUs | v Google guarantees the infrastructure needed to fulfil Anthropic's promise | v Wall Street lends against Google's guarantee | v Borrowed money buys Google-designed TPUs | v The TPU purchases "prove" demand for Google TPUs | v Anthropic's compute capacity and valuation rise | v Google's investment in Anthropic rises in value | v Higher valuations justify still more financing | +--------------------------------------+ | v DO IT AGAIN
- tristanj 2mo ago
  Anthropic has 80%+ margins on inference. Google has 30%+ margins on compute. Both parties have discovered a literal money printer. The payback period is <2 years. At those unit economics, anyone not borrowing aggressively here to create more money printers is a moron.
  - stackskipton 2mo ago
    >Anthropic has 80%+ margins on inference. That's like saying my delivery company is profitable because with current gas prices, my margin is 80%. Yea, what about all money you spent to get there? You still profitable then?
    - tristanj 2mo ago
      Yes, actually. Anthropic has gross margins of 40%+, hit $75B ARR last month, and (as of this quarter) is profitable.
      - stackskipton 2mo ago
        As Ed Zitron pointed out, that "quarter" of profitability is EBITDA profitability and comes with plenty of creative accounting. When they do it for a year, we can say "They have found profitability"
poisonborz 2mo ago
But pay for who? $50 for a cheaper competitor? $20 for a chinese one? Or just buy hardware and host/co-host for privacy? And to balance the insane spending even your $60-80 example would be hardly enough from that white collar audience.
archagon 2mo ago
Your base premise is flawed. I know plenty of white collar workers who do not use AI for their job.
ponector 2mo ago
At my $day_job we are forced to use a shared virtual machine for all work activities. The Windows instance has 64gb of RAM, 8 virtual cores of old EPYC CPU and no GPU acceleration. It is also shared between 6 users. They will not spend extra 20$ per user per month to add compute and increase productivity.
InsideOutSanta 2mo ago
The question is not whether LLMs have value; the question is who will earn how much money off them. I don't see any scenario where the companies that put hundreds of billions into their models make that money back.
globular-toast 2mo ago
Pays for itself how? Customers don't care if a business saved time on bullshit paperwork. It needs to actually convert to increased competetiveness which leads to increased profit to pay for itself. But if everyone is doing it anyway businesses will quickly realise they're just paying an AI tax and look for ways to eliminate it. Maybe by just not doing the bullshit they got AI to do.
jmathai 2mo ago
I avoid subscriptions like the plague and I was getting enough value from Claude that I was paying for the Max plan for a couple months. I don't know how much Anthropic needs to make to be sustainable but I think it's worth north of $50 or $100 per month for many knowledge workers.
- StevePrefontain 2mo ago
  I highly doubt anything more than a small single-digit percent of users are willing to pay $50-100 for a Claude subscription themselves. Just like everything else (if your company isn’t paying for a seat) 90% of people will just use the free tier, 7-8% will use the first paid tier, 2-3% use some kind of power user plan. It could end up being a whale-driven business model in the end.
  - jmathai 2mo ago
    I don’t think end users will purchases subscriptions out of their own pocket for work en masse. If the value is there, companies will.
bsder 2mo ago
> To think that people won't pay $60-$80/mo to continue using it is wild to me. I'm fine paying $200 per month. Companies seem to be fine at $2000 per month but I would balk at that. Companies are already balking at $20,000 per month. So, we KNOW what the numbers are. If corporations are only willing to pay $2000 per month per developer for all the developers in the US, the amount of VC investment already exceeds what they can get back from 10 years of revenue.
casey2 2mo ago
Why $60/mo when you can pay $5? Why $5 when you can pay $1. Unless you happen to be in one of the industries OpenAI focuses on you would always just use a Chinese model. Even now, but especially in the next 1-5 years.
amluto 2mo ago
> Did Uber die when a trip across town went from $3 to $13? No. It's giving more rides than ever, 10x more than when it was $3. Uber has a fairly large moat: the regulatory mess they’ve waded through and the collection of drivers willing to drive for them. Sure, it’s probably easier to start a competitor now than 20 years ago, but there’s still a substantial network effect — a transportation service needs a lot of cars to provide good service, and they need a lot of users to keep those cars busy. An AI service like chatgpt.com or claude.ai costs literally billions of dollars to develop, except that several Chinese companies are currently happy to spend that money and release the models and weights for free. And even a small company can rent the datacenter capacity they need, at least at moderate scale, and they only need enough scale to reliably fill up the batches on a handful of servers. There is no obvious network effect — a tiny Uber with a total of two cars in a city is useless, but a tiny AI provider that only services 2000 users is just fine as long as someone else provides the models weights. And the costs to run these services keep coming down. The numbers people are reporting for unquantized DeepSeek v4 Flash 0731 on 2x RTX 6000 Pro [0] using open weight models and open source inference stacks are astounding, and one single copy of this could probably cover the entire inference usage of a decent sized business doing the kind of desk work that OpenAI and Anthropic could need to monetize to cover their expenses. (Using bespoke models has value but may reduce available usage of a single inference machine. Quantizing can make everything cheaper and is often good enough.) This is not to say that these companies won’t make it on the strength of their enterprise offerings (never underestimate the willingness of enterprises to overpay for services they’re already using or by becoming the next Googles and finding other revenue sources beyond just inference. [0] I admit to some skepticism that the pile of sketchy, obviously AI-generated patches to SGLang that allegedly achieve this are doing what the say they’re doing, but the point stands.
- sandcat_ 2mo ago
  There were so many comments[1][2][3] at the time saying that Uber has no moat, there’s no switching cost, the only value is the $3 rides, etc, etc. I suspect it’ll play out the same. [1] https://news.ycombinator.com/item?id=8987827 https://news.ycombinator.com/item?id=8987827 [2] https://news.ycombinator.com/item?id=6137542 https://news.ycombinator.com/item?id=6137542 [3] https://news.ycombinator.com/item?id=9984619 https://news.ycombinator.com/item?id=9984619
crote 2mo ago
And I know very few white collar workers who are, beyond "I guess Google Search is AI now". Each their own bubble, I guess. AI has some value in some scenarios. Most models still fail badly enough often enough that I personally would not pay $80 for it. I would make use of it if it were free, or $10 / month, but it would have to significantly improve if I were to ask my employer to pay $150 / month for it - let alone $1500 / month. The evidence is obvious: everyone and their dog has access to highly subsided AI agents right now. Literally every single company is pushing its employees to trial AI - some even forcing AI use. So why aren't we seeing a giant white-collar productivity boom yet? The idea that every single white-collar worker is going to get a $800 / month AI subscription is ludicrous. The big question is, can the AI companies survive off everyone getting a $5 / month subscription, with a handful of workers getting a $500 / month one?
curvaturearth 2mo ago
The problem is the value you speak doesn't seem to be materializing. I barely know anyone who sings the praises of saving time with AI, but I know plenty of people who complain about peers doing a shoddy job because they used AI to do their work, or having to clean up someone else's AI generated slop.
harrouet 2mo ago
Uber is the wrong example here, as it has destroyed $27B of value since inception. Or maybe that's exactly the right example...
boesboes 2mo ago
I'm willing to pay >100$ a month to not have to use AI at all. It's trash and will never create anything of value.
deaux 2mo ago
> Did Uber die when a trip across town went from $3 to $13? No. It's giving more rides than ever, 10x more than when it was $3. Would Uber have died if a competitor kept offering $3 rides? Yes.
enaaem 2mo ago
The question isn't whether AI is worth it, but whether it becomes a commodity.
simplesocieties 2mo ago
Why are there an endless flood of comments like this on HN and other social media insisting that because there’s such high demand, it’s IMPOSSIBLE that these tech companies are overvalued and over leveraging debt. Reality is way more nuanced. Something can have high demand AND be on the precipice of financial catastrophe. See: Spirit Airlines.
conartist6 2mo ago
It doesn't cost you $80 a month, it costs you your creativity first and then your reputation

mr-pink 2mo ago

using how?

dominotw 2mo ago
summarize email and then generate slop that gets summarized on the other end
- Ekaros 2mo ago
  Not to forget asking questions and getting wrong answers... Thus possibly causing net loss for company.

acivitillo 2mo ago

$80 per month in a 5,000 people Enterprise is 400k per month which translates to ~5m per year. That is easily in the 8-16% of their total IT budget. I don’t know you, but companies don’t like to increase recurring cost. Is AI good? Yes. Is it clear how it generates enough ROI to justify a material IT cost increase? No. This is the problem now, not how much white collar workers use AI, but what is the productivity narrative of it. Because AI is so generic, there is no clear specialized use case, like when Salesforce invented the CRM for example.

generic92034 2mo ago
> when Salesforce invented the CRM for example Huh? If that was not a joke, here is the history of CRM: https://en.wikipedia.org/wiki/Customer_relationship_management#History https://en.wikipedia.org/wiki/Customer_relationship_manageme...
- inigyou 2mo ago
  > Using it, people that FDR met were impressed by his "recall" of facts about their family and what they were doing professionally and politically. Hmm. Today that'd be creepy.
jrflo 2mo ago
The thing that's a bit different about AI from a CRM is it translates pretty directly into time savings. You only need each employee to save 1-2 hours of work per month to break even with a $80/seat subscription.
- tobinfekkes 2mo ago
  It's true that it can easily save 1-2 hours per month, but it only seems worth it if those hours saved are spent doing something else productive/profitable. It appears that a lot of the time saved is spent either 1) doing nothing instead, 2) waiting for the AI to finish, or 3) increasing the hours spent elsewhere down/up the chain for reviewing, fixing, auditing. The obvious benefit of anything offering to save time is that now you have time for "higher order work", but often, we use the time saved to be lazy. After all, that's the underlying reason we used the time-saving, corner-cutting tool in the first place.
  - WarmWash 2mo ago
    People will pay out of their pockets if an AI can free up a few of their hybrid hours a month. And already it looks like the vast majority of white collar AI spend is from individuals, not companies. I mean, why would you show your hand by using the company AI? Use your AI and take the credit...

csomar 2mo ago

Currently, a $20/month openai subscription gives roughly $400 in codex api credits. That doesn’t count what you can get from the web chatbot. So it better be that api tokens are seriously overpriced. There is value at $20/month. I am not so sure if it’s $400/month or more.

TrackerFF 2mo ago

But the question is how much are people willing to pay for AI. I use AI every day at work, but I only pay $20. That's the most I will ever want to pay. And, so far, it gives me everything I need. If OpenAI or Anthropic suddenly said "Sorry, the game is up. You'll have to pay $100/month now", I would 100% look into cheaper Chinese solutions. I suspect the AI subscription (or API) economy is whale economy. You have a small, small percentage of users that are happy to pay whatever it takes - while the vast majority will either use the free tier, and then the next group will pay for the cheapest or next cheapest subscription. EDIT: And I'll echo what another user wrote here. The VAST majority of office users around the world don't work for tech companies flush in cash. Even adding something like $20 - $100 subscriptions to every user is a serious enough financial obligation that it needs to go through budget planning / boards. Even more so for all the government workers around the world.

surgical_fire 2mo ago
Rofl, I already went for cheaper Chinese solutions. I can achieve more than I could when I was giving OpenAI 20 bucks a month, and for a fraction of the price. I have no idea why people still use ChatGPT or Claude.
- coliveira 2mo ago
  Most people don't understand how cheap models like DeepSeek and similar are. I have $5 in an account that I use for months. I can get very complex code for less than 50 cents.
- Kuyawa 2mo ago
  Me too. Sinophobia may be the culprit, too many years watching fox or cnn is my guess? I love chinese phones, cars, cities, people, and now AI models. There is a beautiful world out there to admire if people is willing to open their eyes.
johnbarron 2mo ago
You can now, as of this week, run locally models with the same performance of a SOTA model of March this year: https://news.ycombinator.com/item?id=49214008 https://news.ycombinator.com/item?id=49214008 https://news.ycombinator.com/item?id=49229621 https://news.ycombinator.com/item?id=49229621 The FAFO day of Anthropic and OpenAI arrived.

api 2mo ago

After using it a bit I’m convinced it’s not, as a whole, a bubble. Bubbles exist around it. Data center construction may end up overbuilding, much like the dark fiber thing during dot.com, since better chips and models will shrink power and space requirements over time. But the core tech is the most powerful new thing I have seen since discovering the Internet, at least. Maybe more.

lkjdsklf 2mo ago
A bubble doesn’t mean a technology is useless. It just means it’s overvalued In the last 30 years, we’ve had multiple bubbles in the tech industry. Every one of them was backed by real stuff that we still use today. They were still bubbles and a ton of people were hurt when they popped.
- inigyou 2mo ago
  The railway bubble and the optical fiber bubble left the world with lots of railways and optical fibers. Once their original owners went bankrupt, the assets themselves were quite useful and changed the world. The cryptocurrency bubble, however, didn't. Not really. At best you can use it to buy drugs. Some of the GPUs may have been repurposed for AI, but not enough to make a dent in AI, and the AI reesarchers who kicked off the AI bubble were having to buy their GPUs for high prices to compete with the miners, not low prices after they went bust, so we can't even say miners helped kick it off.
  - watwut 2mo ago
    Many of those assets were useless - like railways from nowhere to nowhere. Only some ended up being used. And many innocent people ended up being hurt in the process. Bubbles are not good. They are harmful. The ability yo recoup some of the losses in the span of next 15 years does not make the bubbles something positive.
    - inigyou 2mo ago
      Even railways from nowhere to nowhere often ended up being useful when the ends were extended to somewhere or when somewhere grew to encompass nowhere. For example the Berlin Ringbahn was once some billionaire's toy but now it serves very useful traffic, as Berlin grew outwards to where the Ringbahn is.

elorant 2mo ago

That’s not the argument though. The argument is that conversion rates as per OpenAI are about 5% and to serve the other 95% you need to build significant infrastructure that costs hundreds of billions annually. So for every white collar worker that you know and uses it and pays for it there are 20 free loaders. And mind you, 5% conversion rate is extremely high already as a number per se. It won't magically reach 20% in a couple of years. Chances are it will fall particularly for the enterprise segment due to the advent of the Chinese models.

borzi 2mo ago

The reason uber didn't loose that much business is because it replaced the established businesses and left most consumers with little alternative. That's not the case with AI - unless the frontier labs achieve AGI or some sort of super intelligence that lets them create infinite economic value (at which point, any further discussion is pointless for obvious reasons), the average worker can do most of their tasks with 5% of the api costs using an open source model from China and achieve the same results.

Aurornis 2mo ago
> The reason uber didn't loose that much business is because it replaced the established businesses and left most consumers with little alternative. The established businesses were awful. There was not a thriving and beloved taxi service in every city pre-Uber. Taxis were bad and very expensive. Also did you forget that Lyft exists and normal taxis are still available? Taxi services had to improve their business when the ride sharing companies entered the market because they previously relied on their own grip on on-demand transportation to keep prices high and service poor.
- borzi 2mo ago
  Imagine suddenly a new taxi business was able to come into your city and provided taxi rides for 5 cents on the dollar. What would happen? Edit: now add on top of that that even if uber tried to undercut them again by running losses as they did in the past, that new taxi business would not loose any money if the number of their rides went down because their operating costs simply scale with the number of rides - while uber was loosing money on every ride.
  - Aurornis 2mo ago
    > Imagine suddenly a new taxi business was able to come into your city and provided taxi rides for 5 cents on the dollar. What would happen? I literally lived through this situation. It was not 5 cents on the dollar. The taxis continued to exist then and continue to exist now.
2mo ago

gostsamo 2mo ago

A bit of napkin math. How many are the white collar workers? 300 mln? even with $100 subscription each, the monthly revenue for your addressable market rises to $30 bln. If we increase the figure to half of humanity and they are 3 bn, you multiply it upto 10 and $300 bn monthly, $3.5 tn annually. Now start cutting it down keeping in mind that not everyone is an office worker, does not need $100 plan, has access to cheaper models, could get ai through someone elses subscription or local models. I'm not sure how down it will get, but it can get down a lot and will have to be split among few players. At least for me it does not seem unrealistic that the revenue won't be enough for everyone.

cm2187 2mo ago

The real question is not whether there will be a market for AI, it is obvious that there will be one (as it was obvious the Internet was a gigantic thing in the dotcom boom). It is rather whether the value will be in the models (and if so in which?) or the infrastructure or somewhere else. Interesting thoughts from Dwarkesh Patel on the future of models [1]. In summary, no moat if a client can switch to a competitor from a dropdown when all models are similar-ish (so models are commodities), but to really compete with humans, AI needs to start "learning on the job", i.e. accumulating experience like an employee (as opposed to the training / inference approach where the model isn't learning after it is released). If your model does that, then you have vendor lock-in as you can't replace an experienced model with a competitor. Then the value is in the model. As in the 90s, this could go in all sort of different directions, hard to make predictions. And remember the 90s: the value was in the browser (you had to purchase it, eg Netscape), then the browser came for free with the OS (no value in the browser), then the browser was the most important thing in the world as it was control over the default search engine, everyone thought portals was the most important thing to control, so ISPs had their own applications accessing the internet from their own portal, etc - none of those people were stupid. [1] https://www.youtube.com/watch?v=iewm45atodE https://www.youtube.com/watch?v=iewm45atodE

porridgeraisin 2mo ago
The moat is in sales, the model and its quality is largely irrelevant. Gross margins will be high enough for moats to not matter that much.
- cm2187 2mo ago
  I work for a large company and for any LLM I use professionally, whether programmatically or via a UI, I get to pick from a dropdown from Gemini, Claude, OpenAI and the open weight ones. We ain't locked in.
  - porridgeraisin 2mo ago
    Yeah, and that is completely fine business-wise for all the businesses in that dropdown. Averaged over the whole TAM, they will all make a lot of money. The reason is that the total market becomes _bigger_ with every new model (upto a reasonable point of course, but for 5 models it is obviously true), they don't end up competing for the same slices of the pie. The core business for each of the 5 will not be companies like yours, but rather few hundred to few thousand companies each who exclusively use their model not for technical reasons, but because they were wined and dined or due to bundling with another service. The other hundreds of thousands of customers are all bonus. This is true for most categories of SaaS not just LLM inference. If the vendor of a core piece of software that you are already locked into tells you they are raising prices and adding AI inference features, you are going to cancel whatever AI plan you have and use theirs. Or pay the amount anyways (which is even better business-wise for them). Eventually, semi-random differences that arise in their distribution may end up informing model capabilities as well, and _that_ is when true model-level differentiation may happen. But this is not necessary and if it comes true would just be a bonus.

TacticalCoder 2mo ago

I agree that it's working good enough and that it's here to stay: mostly everybody around me uses AI too but... > Did Uber die when a trip across town went from $3 to $13? No. It's giving more rides than ever, 10x more than when it was $3. The competition from open-weights models is already putting pressure on how much this can be billed. That's today, with stuff like OpenAI announcing 80% cuts on terra and luna. Tomorrow, in addition to the pressure from open-weights models, there's going to be pressure from chinese hardware: Tencent, Alibaba, etc. are all already working on their own AI chips. What good would, say, a SOTA open-weights model running on chinese chips (chinese chips located in China or elsewhere btw) do to, say, Meta or Oracle's insane AI investements? And it doesn't even have to be chinese chips: what good AMD AI chips doing inference by having weights etched on silicon will do to OpenAI and Anthropic? All the people, especially here on HN, who were explaining six months ago that OpenAI and Anthropic models where so good for coding that coding was solved once and for all can now run better open-weights models than the proprietary ones from six months ago. For a fraction of the price. If people, instead of paying $20 per month pay $80 per month for their AI subscriptions, what makes you believe that money is going to go to one of these companies participating in this $2 trillion debt? And really, in which new domain have we seen the first movers being able to keep a lifetime grip on the market without getting their arse handed to them by the competition? Things moves quickly today: I'm not sure OpenAI and Anthropic are the Ford equivalent for AI. For all I know OpenAI is "La Mancelle": https://fr.wikipedia.org/wiki/La_Mancelle https://fr.wikipedia.org/wiki/La_Mancelle And Anthropic is Panhard. That AI is here to stay is a given. That people may be willing to pay more is likely (even though IMO they won't pay 4x more for something only marginally better). But that the current players are going to stay on top even though the competition closed the gaps to weeks? I don't buy it.

w29UiIm2Xz 2mo ago

If you need fewer workers due to the increased productivity, then the number of white collar workers (the TAM) won't be as large as anticipated.

sneak 2mo ago
That’s never really how efficiency gains tend to work except in places where entire industries ceased to exist (printers, weavers, clothes washers, etc).
- galangalalgol 2mo ago
  How sure are we that isn't the case here?

tim333 2mo ago

People may pay less than they are willing to pay as competition drives the price down. I paid $20/mo a while which I was happy with but I found I could get similar for free so pay $0 now.

root-parent 2mo ago

Mods, can you explain what happened here? This story had 49 points and 81 comments in about four hours and was on the front page. Then it seems to have disappeared from the top stories feed completely.

root-parent 2mo ago

Google funds Anthropic | v Anthropic promises to rent Google's TPUs | v Google guarantees the infrastructure needed to fulfil Anthropic's promise | v Wall Street lends against Google's guarantee | v Borrowed money buys Google-designed TPUs | v The TPU purchases "prove" demand for Google TPUs | v Anthropic's compute capacity and valuation rise | v Google's investment in Anthropic rises in value | v Higher valuations justify still more financing | +--------------------------------------+ | v DO IT AGAIN

tristanj 2mo ago
Anthropic has 80%+ margins on inference. Google has 30%+ margins on compute. Both parties have discovered a literal money printer. The payback period is <2 years. At those unit economics, anyone not borrowing aggressively here to create more money printers is a moron.
- stackskipton 2mo ago
  >Anthropic has 80%+ margins on inference. That's like saying my delivery company is profitable because with current gas prices, my margin is 80%. Yea, what about all money you spent to get there? You still profitable then?
  - tristanj 2mo ago
    Yes, actually. Anthropic has gross margins of 40%+, hit $75B ARR last month, and (as of this quarter) is profitable.
    - stackskipton 2mo ago
      As Ed Zitron pointed out, that "quarter" of profitability is EBITDA profitability and comes with plenty of creative accounting. When they do it for a year, we can say "They have found profitability"

poisonborz 2mo ago

But pay for who? $50 for a cheaper competitor? $20 for a chinese one? Or just buy hardware and host/co-host for privacy? And to balance the insane spending even your $60-80 example would be hardly enough from that white collar audience.

archagon 2mo ago

Your base premise is flawed. I know plenty of white collar workers who do not use AI for their job.

ponector 2mo ago

At my $day_job we are forced to use a shared virtual machine for all work activities. The Windows instance has 64gb of RAM, 8 virtual cores of old EPYC CPU and no GPU acceleration. It is also shared between 6 users. They will not spend extra 20$ per user per month to add compute and increase productivity.

InsideOutSanta 2mo ago

The question is not whether LLMs have value; the question is who will earn how much money off them. I don't see any scenario where the companies that put hundreds of billions into their models make that money back.

globular-toast 2mo ago

Pays for itself how? Customers don't care if a business saved time on bullshit paperwork. It needs to actually convert to increased competetiveness which leads to increased profit to pay for itself. But if everyone is doing it anyway businesses will quickly realise they're just paying an AI tax and look for ways to eliminate it. Maybe by just not doing the bullshit they got AI to do.

jmathai 2mo ago

I avoid subscriptions like the plague and I was getting enough value from Claude that I was paying for the Max plan for a couple months. I don't know how much Anthropic needs to make to be sustainable but I think it's worth north of $50 or $100 per month for many knowledge workers.

StevePrefontain 2mo ago
I highly doubt anything more than a small single-digit percent of users are willing to pay $50-100 for a Claude subscription themselves. Just like everything else (if your company isn’t paying for a seat) 90% of people will just use the free tier, 7-8% will use the first paid tier, 2-3% use some kind of power user plan. It could end up being a whale-driven business model in the end.
- jmathai 2mo ago
  I don’t think end users will purchases subscriptions out of their own pocket for work en masse. If the value is there, companies will.

bsder 2mo ago

> To think that people won't pay $60-$80/mo to continue using it is wild to me. I'm fine paying $200 per month. Companies seem to be fine at $2000 per month but I would balk at that. Companies are already balking at $20,000 per month. So, we KNOW what the numbers are. If corporations are only willing to pay $2000 per month per developer for all the developers in the US, the amount of VC investment already exceeds what they can get back from 10 years of revenue.

casey2 2mo ago

Why $60/mo when you can pay $5? Why $5 when you can pay $1. Unless you happen to be in one of the industries OpenAI focuses on you would always just use a Chinese model. Even now, but especially in the next 1-5 years.

amluto 2mo ago

> Did Uber die when a trip across town went from $3 to $13? No. It's giving more rides than ever, 10x more than when it was $3. Uber has a fairly large moat: the regulatory mess they’ve waded through and the collection of drivers willing to drive for them. Sure, it’s probably easier to start a competitor now than 20 years ago, but there’s still a substantial network effect — a transportation service needs a lot of cars to provide good service, and they need a lot of users to keep those cars busy. An AI service like chatgpt.com or claude.ai costs literally billions of dollars to develop, except that several Chinese companies are currently happy to spend that money and release the models and weights for free. And even a small company can rent the datacenter capacity they need, at least at moderate scale, and they only need enough scale to reliably fill up the batches on a handful of servers. There is no obvious network effect — a tiny Uber with a total of two cars in a city is useless, but a tiny AI provider that only services 2000 users is just fine as long as someone else provides the models weights. And the costs to run these services keep coming down. The numbers people are reporting for unquantized DeepSeek v4 Flash 0731 on 2x RTX 6000 Pro [0] using open weight models and open source inference stacks are astounding, and one single copy of this could probably cover the entire inference usage of a decent sized business doing the kind of desk work that OpenAI and Anthropic could need to monetize to cover their expenses. (Using bespoke models has value but may reduce available usage of a single inference machine. Quantizing can make everything cheaper and is often good enough.) This is not to say that these companies won’t make it on the strength of their enterprise offerings (never underestimate the willingness of enterprises to overpay for services they’re already using or by becoming the next Googles and finding other revenue sources beyond just inference. [0] I admit to some skepticism that the pile of sketchy, obviously AI-generated patches to SGLang that allegedly achieve this are doing what the say they’re doing, but the point stands.

sandcat_ 2mo ago
There were so many comments[1][2][3] at the time saying that Uber has no moat, there’s no switching cost, the only value is the $3 rides, etc, etc. I suspect it’ll play out the same. [1] https://news.ycombinator.com/item?id=8987827 https://news.ycombinator.com/item?id=8987827 [2] https://news.ycombinator.com/item?id=6137542 https://news.ycombinator.com/item?id=6137542 [3] https://news.ycombinator.com/item?id=9984619 https://news.ycombinator.com/item?id=9984619

crote 2mo ago

And I know very few white collar workers who are, beyond "I guess Google Search is AI now". Each their own bubble, I guess. AI has some value in some scenarios. Most models still fail badly enough often enough that I personally would not pay $80 for it. I would make use of it if it were free, or $10 / month, but it would have to significantly improve if I were to ask my employer to pay $150 / month for it - let alone $1500 / month. The evidence is obvious: everyone and their dog has access to highly subsided AI agents right now. Literally every single company is pushing its employees to trial AI - some even forcing AI use. So why aren't we seeing a giant white-collar productivity boom yet? The idea that every single white-collar worker is going to get a $800 / month AI subscription is ludicrous. The big question is, can the AI companies survive off everyone getting a $5 / month subscription, with a handful of workers getting a $500 / month one?

curvaturearth 2mo ago

The problem is the value you speak doesn't seem to be materializing. I barely know anyone who sings the praises of saving time with AI, but I know plenty of people who complain about peers doing a shoddy job because they used AI to do their work, or having to clean up someone else's AI generated slop.

harrouet 2mo ago

Uber is the wrong example here, as it has destroyed $27B of value since inception. Or maybe that's exactly the right example...

boesboes 2mo ago

I'm willing to pay >100$ a month to not have to use AI at all. It's trash and will never create anything of value.

deaux 2mo ago

> Did Uber die when a trip across town went from $3 to $13? No. It's giving more rides than ever, 10x more than when it was $3. Would Uber have died if a competitor kept offering $3 rides? Yes.

enaaem 2mo ago

The question isn't whether AI is worth it, but whether it becomes a commodity.

simplesocieties 2mo ago

Why are there an endless flood of comments like this on HN and other social media insisting that because there’s such high demand, it’s IMPOSSIBLE that these tech companies are overvalued and over leveraging debt. Reality is way more nuanced. Something can have high demand AND be on the precipice of financial catastrophe. See: Spirit Airlines.

conartist6 2mo ago

It doesn't cost you $80 a month, it costs you your creativity first and then your reputation