cmiles8

Reason 732 on why I want the “dumbest” fridge possible, not some “smart” fridge with an app.

Said by a company that’s increasingly desperate to convince you that there’s serious business value in using their product. The challenge is those without that conflict of interests don’t seem to agree there’s a lot of ROI.

In other news, Turkey farmers encourage you to buy more turkey for Thanksgiving.

That trajectory appears to be changing. Virtually every company I see is shifting more and more to open weight models. Anthropic’s slowing growth rate is already spooking investors and that shift is just getting started.

Yes but that’s a tiny portion of AI use cases. Maybe 1-2% max. The big labs need a lot more than that to survive.

You’re assuming other model creators can’t build these mega models. Evidence is they’ve simply decided it’s a fools game to do so and they’re focused on where the use cases are.

Honestly given how good the open weight models are getting I don’t see a viable business model for OpenAI and Anthropic anymore. The profit is in the compute, not the model. OpenAI and Anthropic spent all their money renting compute from others so yes they can sell lightweight model inference but they have a massive structural disadvantage now as others can always sell good-enough inference much cheaper.

There’s also zero stickiness to models and most companies now have their own internal routing utilities so devs and users can just keep the same API endpoint and move between models with a single line of code swap.

Unless something changes with the big labs and fast, they look pretty f*cked.

Like most things there’s broader context:

1. The US is still the top desired place to move by a large margin

2. There a variety of evidence to suggest that this also splits by tier of talent. For the best of the best the desire to move to the US remains strong. What has clearly attenuated is the lower tiers, with the crackdown on H1Bs and other areas there’s clearly fewer lower tier talent folks flooding in. That’s impacting tech masters degree mill type folks. but ultimately not a terrible thing as that system has been broken for a while.

Because the general consensus at this point appears to be that the notes will fail. You wouldn’t buy a loan if you thought it wasn’t going to be repaid.

Yes this is basically the Margin Call situation.

Everyone knows these loans are dogshit but if anyone moves first to say so then everyone else’s loans basically are screwed too. So everyone is incentivized to pretend like there’s no problem even though everyone knows there’s a problem.

The CDSs on some loans are getting to the point where it’s too expensive to even bet that the loans will fail as the CDS market seems to have concluded the loans will fail.

Same thing they did with bad mortgages just before the 2008 crash.

Both can be true. It’s clear models are doing rogue things. But it’s also clear that the labs look like amateur hour with their technical security and testing practices.

You’re right, but your argument also has a lot of survivorship bias in it. There are rich VCs. There are also VCs that lose their shirts making bad bets. You just don’t hear about those as much.

On the models yes. All indications are models will basically be a free commodity soon.

On the datacenter side the closest analogy is the fiber buildout of the .com bust. While that fiber ended up being useful decades later it’s unclear what value a bunch of half-completed datacenters will bring if their owners go bust.

Yes, separate from the “do AI startups have a viable business?” issue is the datacenter debt bomb ticking on the horizon.

You make some valid points, but the bigger fact remains that Uber survived because its model was not capital intensive. Yes it burned cash for a while but on one-off costs like setting up new markets. Had it signed contracts to be buying new cars every 6 months in the way AI startups have committed to future expenses it would have gone bankrupt.

FOMO

The company was hallowed out broadly because it was a dead startup walking. It just took this long for an official bankruptcy to happen.

If Uber operated like most AI startups its business model would be to buy new cars every 6 months, sign agreements with every automaker to buy every car they make for the next 5 years despite having neither the cash nor cash flow to pay for that, and sell rides for a fraction of what all this costs them. All while providing a service only moderately better than the boring taxi service that costs the same price and that taxi service just released an app to hail rides. It would then claim it’s worth 100x the valuation of the taxi service.

Literally any software company, which is what VCs loved for 20 years.

The economics of AI are terrible. The exact inverse of what VCs normally say they strive for.

It’s capital intensive, doesn’t easily scale without linear costs, is basically a commodity, seemingly has negative cashflow forever, and customers aren’t willing to pay what it actually costs. It’s basically the worst tech business model and yet somehow VCs caught a spell and threw every available penny into the fire.

Watching this all unravel is going to be interesting.

Many DEI programs were highly discriminatory if not outright racist towards certain minorities that were seen as less worthy. Asians and Jewish individuals were often heavily discriminated against via DEI initiatives. The list goes on.

These programs were, in theory, well intentioned but to suggest they did nothing wrong is simply factually incorrect.

The implication here that the DEI movement had done nothing wrong is rather naive… it wasn’t all bad, but there was a lot of bad things happening to answer for.

The IPO failures last week are not depicting a market that’s keen for a $2T Anthropic.

In the bizzare world of today, rather than trying to convince folks that they have a viable business the AI labs appear fully dedicated to finding a story, any story, that lets them off the hook for tough business and financial questions they seemingly don’t have basic and good answers for.

“We’d be doing awesome financially right now, but we had to slow down because of the killer self replicating bots… humanity over profit!” is not a messaging that’s going to work in the public markets to explain quarter after quarter of massive losses.

From what was reported there was a broad reduction of interest from sponsors. Speculation, but the late cancellation very much sounds like there was an effort to find a main sponsor to make up the gap but no corporate was willing to step up and just be the primary sponsor to fund what was needed.

Corporate lawyers now broadly advise their companies against putting any money towards demographic-specific initiatives due to the risks of being sued for discrimination.

Buying a booth at an event would probably be seen as fine but I can only imagine pitches to be a title sponsor were met with “don’t touch this” advice from corporate lawyers.

Sad to see this canceled and especially at the last minute.

Since DEI imploded most companies won’t touch anything with a 100 ft pole that looks like it might go anywhere near that, and seems like that didn’t help on funding and sponsors.

This always seemed like a good event and only ever heard positive things about it. The controversies and scandals surrounding DEI were not about this, and thus it would appear this may be collateral damage.

“Sophisticated device”

Built by a guy that asked ChatGPT how to be a spy.

It’s a company asset to auction off to the highest bidder now

Anthropic has been fairly strict on token limits for some plans, with laid overage.

OpenAI released an AI video app to the masses for free, made a bunch of promises, and then just shut it down.

So there’s a growing body of evidence that while neither of these are in great financial shape, Anthropic looks to be the more disciplined of the two.

You’re not wrong but this is not 2008 2.0 either.

Some banks will suffer losses but there isn’t data to say the banks will fail en mass. This is bad, but not 2008 bad in so far as the stability of the financial system.

Some yes. But it’s no secret that there are a lot of folks way in over their head at the moment with no clear way out.