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Things in general I think he's right about: 1. Revenue if anthropic and openai is unlikely to grow to the high levels they need to pay for their commitments. M

Things in general I think he's right about: 1. Revenue if anthropic and openai is unlikely to grow to the high levels they need to pay for their commitments. Many of their heavy users (coding) will eventually offset a lot of usage to more efficient and cheaper open weight models. I know of people in a company I was at that spend thousands of dollars a month on tokens. I am sure that what they're using it for can be substituted in large part by way cheaper models. 2. A lot of corporate AI usage is being pushed by management that doesn't really understand the extent of its useful, and just wants to call themselves an AI-first company. 3. If this datacenter build-out proves to be beyond the actual demand, there might be a big economic crisis as to how much of the financial system is getting tied up with it (insurance money, private credit). Whether openai and anthropic actually die, I'm not sure. But I don't think they'll be the next big tech companies. I think eventually they'll be absorbed by others. The whole thing I think, can be summarized as: LLMs will be commodity like. And it's price will go down and eventually will run locally, it's not at all clear that this will bring AGI and that it's worth infinite amount (or trillions) of investment ahead of the actual demand or the AGI level do-it-all-for-you AI being reached.

avisser 1mo ago
> I am sure that what they're using it for can be substituted in large part by way cheaper models. I saw a commit in the repo at work that edited a few config files and a dictionary.txt file. "co-authored by Fable"
- gorbachev 1mo ago
  I have colleagues who have replaced ctrl-f on a (long) document they already have open with prompting an LLM to find things for them.
  - dominotw 1mo ago
    thats me
  - 27183 1mo ago
    It never ceases to amaze the lengths people will go to avoid using grep
reticulates 1mo ago
re: substituting with cheaper models. I think some people here are oblivious to how much of Anthropic and OpenAI’s usage is artificial. Take this one example of a user with 15 Codex subscriptions ($3k) generating $60k in API-equivalent usage per month: https://hraness.com/writing/my-girlfriend-asked-me-why-i-have https://hraness.com/writing/my-girlfriend-asked-me-why-i-hav... “there’s a once in a lifetime discount happening at the OpenAI Intelligence Depot, and I brought 15 shopping carts.” We have to understand current usage with this behavior in mind, there are tens of thousands of people just like this author who are intentionally generating as much usage as possible on their subsidized plans because they feel compelled by some need to get free intelligence. The only reason these expensive models are generating so much usage is because they are so heavily subsidized. Pragmatic users will shift to cheaper models which will hurt per token revenue, yes, but huge volumes of usage is going to just disappear because there isn’t the demand when it isn’t being subsidized. Less revenue per token and less tokens. https://tokscale.ai/leaderboard https://tokscale.ai/leaderboard a small sample of just 2k users have generated over $100m of API-equivalent usage while paying closer to just $1m. https://aicharts.io/gpt-subsidy https://aicharts.io/gpt-subsidy
- retr0rocket 1mo ago
  [dead]
- piker 1mo ago
  It goes a layer up, too. Harvey (legal AI) recently tweeted that a single user query cost that firm 26k USD. This, while they have thousands of users and reportedly whole law firms paying zero. That difference is being subsidized by billions of VC dollars.
  - toomuchtodo 1mo ago
    A bit of a collective action problem, but if everyone leverages this services as hard as they can without cost concern, better capital decisions will eventually be made. Like the Federal Reserve draining the M2 money supply, AI users must drain the capital supply of subsidized tokens. This pulls forward the future of "Does this tech have value at actual unsubsidized costs?" If it does, tremendous, if it doesn't, also a reasonable outcome to the grand experiment. The current pain comes from the valley of uncertainty we find ourselves in at the moment. > That difference is being subsidized by billions of VC dollars. "History never repeats itself, but it rhymes." -- Twain Doordash and Pizza Arbitrage - https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852 - May 2020 (514 comments) > I cut this deal with my neighborhood Italian restaurant! I texted the owner about being miffed they hadn’t told me they were on DoorDash. He replied. They aren’t. We compared pricing, and found the prices advertised are way off from what the restaurant charges. So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbours have also partaken.) Glad to know it’s scaling. SoftBank has assembled a unique concentration of stupidity for itself.
barrell 1mo ago
Yeah personally I think he is right about a lot of the current state of affairs. I think he has a decent grasp of the situation despite being incredibly biased. His predictions though? I don’t think I’ve ever read anything from him to get his read on how things will play out. Just because one makes the wrong predictions does not mean that the data used to make them was wrong. A lot of people seem to dismiss his reporting because of his takeaways
eloisant 1mo ago
I feel like too many people have a binary vision of the world, i.e. you're either "pro AI" or "anti AI". Ed Zitron doesn't say that AI doesn't work, that its impact on the world will not increase. He's basically saying that (1) the current data center investments are based on unrealistic revenue projections and (2) hyperscalers are using accounting tricks to move around "money" in a circular way to make it look like more money is already flowing to AI. You can believe all of that and still believe that AI (as in "LLM based services") work, are useful and will probably see their usefulness grow even more. Just not in the magnitude necessary to make the current investments make sense.
- QwenGlazer9000 1mo ago
  After looking at some of his recent interviews, he's acknowledged his previous predictions that 1. He was naive enough to think the investment won't keep coming despite lack of profitability and 2. He acknowledges that AI in it's current form is a billion dollar industry, not a trillion dollar one, but also not zero. Definitely less extreme than he used to be.
- unreal37 1mo ago
  If you ever listen to more than a couple of Zitron interviews, it's clear that he's not the "reasonable centrist" viewpoint on AI. He's the doom-and-gloom guy. Maybe there is someone out there positive on AI itself and calling out reasonable objections to some of the extreme things. But that's not Zitron.
  - runarberg 1mo ago
    The center is not always the reasonable viewpoint. And sometimes the doom-and-gloom guy is correct.
    - heaney-555 1mo ago
      Right, but as the article linked lays out in detail, Zitron has been repeatedly and consistently objectively incorrect.
leesec 1mo ago
This reads to me as incredible cope. Maybe not both of these companies but certainly one of them will be enormously valuable, and there will always value in the frontier models even if much of the practical usage can be done locally
- blltprfmnk 1mo ago
  Why is it “certainly” the case that one will be enormously valuable? Neither appears to be on track to long-term profitability specifically once you take into account depreciation on CAPEX. On top of this the “productivity gains” from AI across the board seem to be a very mixed bag. The pitch from these companies has been huge gains in productivity and automation and although there is anecdotal evidence some people are able to do that, the broader studies seem to show marginal gains in most cases.
streb-lo 1mo ago
None of this actually matters if this is a nuclear weapons-style arms race. The data center build out will become a matter of national security, and will be backstopped by governments.
- yousif_123123 1mo ago
  LLMs are a national security issue? Why is China releasing their models then? The question is not whether you should have datacenters, or the most advanced chips, or the ability to build the most capacity. But do we need all this now? Will there be enough demand? People want to make profits form this thing, and what's being pointed out is that maybe there won't be enough demand to generate profits for all this investment.
  - streb-lo 1mo ago
    I would guess there is probably a capability ceiling beyond which China will not open source their weights. Maybe there is a scenario where they do so or threaten to do so if the US is so far ahead or something as a deterrent. >But do we need all this now? Did people want to make profits from the nuclear arms race? I'm sure some did, but it was not really a requirement. The bottom line is there is a theoretical capability of AI which is effectively a super weapon that can be deployed against your competitor. If you think that is a possibility, even with a low probability, you should probably have a giant AI-related build if you are the US or China.
deleted 1mo ago
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avisser 1mo ago

> I am sure that what they're using it for can be substituted in large part by way cheaper models. I saw a commit in the repo at work that edited a few config files and a dictionary.txt file. "co-authored by Fable"

gorbachev 1mo ago
I have colleagues who have replaced ctrl-f on a (long) document they already have open with prompting an LLM to find things for them.
- dominotw 1mo ago
  thats me
- 27183 1mo ago
  It never ceases to amaze the lengths people will go to avoid using grep

reticulates 1mo ago

re: substituting with cheaper models. I think some people here are oblivious to how much of Anthropic and OpenAI’s usage is artificial. Take this one example of a user with 15 Codex subscriptions ($3k) generating $60k in API-equivalent usage per month: https://hraness.com/writing/my-girlfriend-asked-me-why-i-have https://hraness.com/writing/my-girlfriend-asked-me-why-i-hav... “there’s a once in a lifetime discount happening at the OpenAI Intelligence Depot, and I brought 15 shopping carts.” We have to understand current usage with this behavior in mind, there are tens of thousands of people just like this author who are intentionally generating as much usage as possible on their subsidized plans because they feel compelled by some need to get free intelligence. The only reason these expensive models are generating so much usage is because they are so heavily subsidized. Pragmatic users will shift to cheaper models which will hurt per token revenue, yes, but huge volumes of usage is going to just disappear because there isn’t the demand when it isn’t being subsidized. Less revenue per token and less tokens. https://tokscale.ai/leaderboard https://tokscale.ai/leaderboard a small sample of just 2k users have generated over $100m of API-equivalent usage while paying closer to just $1m. https://aicharts.io/gpt-subsidy https://aicharts.io/gpt-subsidy

retr0rocket 1mo ago
[dead]
piker 1mo ago
It goes a layer up, too. Harvey (legal AI) recently tweeted that a single user query cost that firm 26k USD. This, while they have thousands of users and reportedly whole law firms paying zero. That difference is being subsidized by billions of VC dollars.
- toomuchtodo 1mo ago
  A bit of a collective action problem, but if everyone leverages this services as hard as they can without cost concern, better capital decisions will eventually be made. Like the Federal Reserve draining the M2 money supply, AI users must drain the capital supply of subsidized tokens. This pulls forward the future of "Does this tech have value at actual unsubsidized costs?" If it does, tremendous, if it doesn't, also a reasonable outcome to the grand experiment. The current pain comes from the valley of uncertainty we find ourselves in at the moment. > That difference is being subsidized by billions of VC dollars. "History never repeats itself, but it rhymes." -- Twain Doordash and Pizza Arbitrage - https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852 - May 2020 (514 comments) > I cut this deal with my neighborhood Italian restaurant! I texted the owner about being miffed they hadn’t told me they were on DoorDash. He replied. They aren’t. We compared pricing, and found the prices advertised are way off from what the restaurant charges. So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbours have also partaken.) Glad to know it’s scaling. SoftBank has assembled a unique concentration of stupidity for itself.

barrell 1mo ago

Yeah personally I think he is right about a lot of the current state of affairs. I think he has a decent grasp of the situation despite being incredibly biased. His predictions though? I don’t think I’ve ever read anything from him to get his read on how things will play out. Just because one makes the wrong predictions does not mean that the data used to make them was wrong. A lot of people seem to dismiss his reporting because of his takeaways

eloisant 1mo ago

I feel like too many people have a binary vision of the world, i.e. you're either "pro AI" or "anti AI". Ed Zitron doesn't say that AI doesn't work, that its impact on the world will not increase. He's basically saying that (1) the current data center investments are based on unrealistic revenue projections and (2) hyperscalers are using accounting tricks to move around "money" in a circular way to make it look like more money is already flowing to AI. You can believe all of that and still believe that AI (as in "LLM based services") work, are useful and will probably see their usefulness grow even more. Just not in the magnitude necessary to make the current investments make sense.

QwenGlazer9000 1mo ago
After looking at some of his recent interviews, he's acknowledged his previous predictions that 1. He was naive enough to think the investment won't keep coming despite lack of profitability and 2. He acknowledges that AI in it's current form is a billion dollar industry, not a trillion dollar one, but also not zero. Definitely less extreme than he used to be.
unreal37 1mo ago
If you ever listen to more than a couple of Zitron interviews, it's clear that he's not the "reasonable centrist" viewpoint on AI. He's the doom-and-gloom guy. Maybe there is someone out there positive on AI itself and calling out reasonable objections to some of the extreme things. But that's not Zitron.
- runarberg 1mo ago
  The center is not always the reasonable viewpoint. And sometimes the doom-and-gloom guy is correct.
  - heaney-555 1mo ago
    Right, but as the article linked lays out in detail, Zitron has been repeatedly and consistently objectively incorrect.

leesec 1mo ago

This reads to me as incredible cope. Maybe not both of these companies but certainly one of them will be enormously valuable, and there will always value in the frontier models even if much of the practical usage can be done locally

blltprfmnk 1mo ago
Why is it “certainly” the case that one will be enormously valuable? Neither appears to be on track to long-term profitability specifically once you take into account depreciation on CAPEX. On top of this the “productivity gains” from AI across the board seem to be a very mixed bag. The pitch from these companies has been huge gains in productivity and automation and although there is anecdotal evidence some people are able to do that, the broader studies seem to show marginal gains in most cases.

streb-lo 1mo ago

None of this actually matters if this is a nuclear weapons-style arms race. The data center build out will become a matter of national security, and will be backstopped by governments.

yousif_123123 1mo ago
LLMs are a national security issue? Why is China releasing their models then? The question is not whether you should have datacenters, or the most advanced chips, or the ability to build the most capacity. But do we need all this now? Will there be enough demand? People want to make profits form this thing, and what's being pointed out is that maybe there won't be enough demand to generate profits for all this investment.
- streb-lo 1mo ago
  I would guess there is probably a capability ceiling beyond which China will not open source their weights. Maybe there is a scenario where they do so or threaten to do so if the US is so far ahead or something as a deterrent. >But do we need all this now? Did people want to make profits from the nuclear arms race? I'm sure some did, but it was not really a requirement. The bottom line is there is a theoretical capability of AI which is effectively a super weapon that can be deployed against your competitor. If you think that is a possibility, even with a low probability, you should probably have a giant AI-related build if you are the US or China.

deleted 1mo ago

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deleted 1mo ago

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