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Unlikely, api pricing includes a healthy profit margin (as near as we can tell from the outside) which they wouldn’t charge themselves.
by _aavaa_ 29d ago
Unlikely, api pricing includes a healthy profit margin (as near as we can tell from the outside) which they wouldn’t charge themselves.
- alch- 29d agoI don't think Anthropic is turning a profit ;)
- dist-epoch 29d agoNeither did Amazon for it's first 25 years ;)
- caughtinthought 29d agoI think you're missing the point of the comment you responded to, lol.
- CaptWorld 29d agoRegardless the profit margin as a talking point seems to be bad as AI as a tech might never be reversed whether anthropic failed or succeeded. Indeed it's imperative we subsidize AI companies and tech to make them explore more solutions to scientific problems which has a downstream effect on human flourishing.
- oblio 29d agoOr we could invest in a ton of other non AI related research we're underinvesting in.
- CaptWorld 29d agoLike? I feel breakthroughs that can be found via AI might help us more in the long term where even previously non AI fields can be helped by AI. So you have specific non AI research in mind that we're underinvesting in? Because the USA is already spending crazy anyway for healthcare and I don't feel like funding is the issue but better incentives, reforms etc
- fyredge 28d agoLike funding education. Let's build up human intelligence instead, they seem to have made great breakthroughs in every single field! The US doesn't pay too much to healthcare, they pay too much to health insurance. Too much for too little value
- CaptWorld 28d agoBut US also spends too much on education as well. The issue doesn't seem to be funding but the educational reform like in mississippi, where they increased student performance without increasing their budget too much. That's why you see bad k12 educational outcomes compared to the budget spent in blue states. It's all about efficiency. Give AIa chance in few years as I feel it can make great strides.. it's hard to imagine that chatgpt released in 2022 and look at the progress in just few years as it just changed software engineering field entirely.. i expect similar kinda progress where of course humans will still be making breakthroughs but it'll be accelerated with the help of AI. Spending on health insurance is spending on health care.. Americans want free healthcare but no tax bump so health insurance is a compromise.. when even just ACA was passed and premiums increased, democrats got destroyed at midterms so Americans might be living in la la land.
- fyredge 28d agoYou see funding of chatgpt as a panacea for progress. I see funding of chatgpt as one of small part of a history where governments and industry fund basic science and moonshot programs, not to generate revenue, but to explore what is possible. LLM funding is not aimed at improving our understanding of the world, it's aimed at making people reliant so that they may extract wealth through subscriptions for shareholders. Americans don't get good healthcare and education because that's what they vote for, in elections and wallets. I am hopeful that that changes, but we shall see.
- CaptWorld 28d agoWhy can't it both? Of course they are not gonna do it just because it improves the world and understanding but because there's an incentive to align money with progress. Even the vaccines initially were distributed to get monetary gains and as the government started subsiding it as well, it became cheaper to produce.. that's basic capitalism and markets and regulations 101, no human is that selfless to give it out for free and they shouldn't because it's their investment in time, money, effort etc. but we should strive to align the greed aspects with good outcomes. No Americans get fat and don't have a personal responsibility to maintain their health.. no amount of free healthcare is gonna change that.. they vote for free healthcare, see their taxes raise, then vote against cz they don't see tradeoffs in life.. it's better to maintain better habits than rely on govt to subsidize bad behaviour. There should be some basic coverage for poor people but not too much to sustain irresponsibly
- btilly 29d agoAmazon didn't make a profit because they were reinvesting money into starting new lines of business. Basically there was a choice between taking the money, and growing. They chose growth.
- chpatrick 29d agoAs opposed to...?
- drchickensalad 28d agoSpending all your money on extremely quickly depreciating graphics hardware and model training
- btilly 28d agoAs opposed to building a bigger bank account, or paying dividends.
- _aavaa_ 29d agoWhether on net they turn a profit as company overall is neither here nor there.. My point is that they are selling API tokens at a profit (or if being pedantic, then at a price higher than the cost to serve them ignoring research costs). And that that price is got a healthy margin which they don't charge themselves.
- irthomasthomas 29d agoBecause of the ongoing training costs. They are certainly making a healthy profit margin on inference.
- Philip-J-Fry 29d agoNever really a sound argument. It's like having new solar panels installed every week. Sure you're "profitable" on the $0.20/kWh you're selling your "free" energy at when you ignore the cost of the solar panels you're buying every week.
- ludwik 28d agoIt is a sound argument in the context of trying to estimate what it costs them to generate this specific output. They have training cost eather way.
- kinj28 28d agoI would like to imagine accounting inference revenue on trained model and the depreciation cost for training that specific model must already been capitalized + compute to serve would be a net positive margin business. Ongoing training must rather be for future models. But again once future models arrive they would render older models useless, so the asset must be depreciating really fast. Would love someone to throw light on revenue and cost recognition at the unit level for this.
- mbesto 29d ago> healthy profit margin (as near as we can tell from the outside) Ugh we still don't know if this is true and it's nearly impossible to calculate without a full understanding of the real CAPEX cycle. Stop spreading these rumors until we know for sure.
- bryanlarsen 29d agoSemiAnalysis estimates their profit margin to be 70%. To be losing money on inference implies that their costs are almost 4X higher than SemiAnalysis has calculated. That's not credible.
- p-e-w 29d agoI don’t see how they could credibly estimate inference costs without knowing the model size.
- FuckButtons 29d agoBut we do have a reasonable estimate of model size.
- nbardy 28d agoYou can estimate the model size by looking at tokens per second and comparing to open source models
- 2muchcoffeeman 29d agoThe token price seems like a poor measure. Building the LLM that could do this work in 11 days cost multi billions. The economics probably only make sense if LLMs prove to be a benefit to almost everyone in a way we can all accept. Otherwise this cost a lot more than we’d otherwise pay. It was incredibly fast though. But we all know: cost, speed, quality. Pick two.
- eproxus 28d agoThis the correct way to look at it. Just as the person spending 5 years working on this will have learnt many things which will be useful after this problem is solved, you have to factor in the training cost (sure it's only done "once", but that is the same for the person too once they jump on the next problem). The model wouldn't not be able to solve this without all the training leading up to the actual execution, so counting only the tokens of the execution doesn't give the full picture.
- aurareturn 28d agoHuman mathematicians also have to eat right, trained, etc.
- 2muchcoffeeman 27d agoChatGPT has raised over 120 billion USD in funding. For argument let’s just say we paid all the mathematicians 200k in salary from graduation till retirement. Say 40 years. That’s about 8 million. Let’s round that up to USD 10 million. We can see the future and pay to raise all the baby mathematicians. For 100 billion that’s 10000 mathematician lifetimes. For 1 AI company _so far_. There’s no value for money in AI yet.
- aurareturn 27d agoWell, it's taken 4 billion years for life to evolve into humans to be able to do math. That's a lot of resources, right? Likewise, LLMs also needed the same amount of evolution. My point is that it's silly to make these comparisons on resources. A single SOTA trained LLM isn't just doing advanced math research. It's used by hundreds of millions or even billions daily for various tasks. It's just a tool humans invented.
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- musictubes 28d agoAnd which they could not charge anyone for. Unless these were extra resources that would otherwise go unused it cost them the amount they could have charged for them. Normally I would expect most businesses to make reasonable tradeoffs when it comes to how to allocate resources. I’m not convinced that any of the AI providers should be given that benefit of the doubt.
- _aavaa_ 24d agoI don't see them turning people back from buying tokens through the API. Until then, I don't see why we should follow this argument.