The only upside to this is that all of these actual idiots puting money into this will lose that money, and hopefully put this reigh of speculation to an end for dacades.
The reality is the product is the easy part.
Actually selling it, maintaining it, selling more of it and running a profitable business is the hard part.
So the AI makes the product really easy to make, but selling it is the hard part.
Why don’t they ask ai how to sell it. After all, isn’t it super intelligent?
I do work for a software company, and sales is part of my job. And yes, sometimes I get the AI to review a tricky sale. Not usually though.
However, the reality is it takes years and years to build relationships, get into markets, get visibility.
Basically embed yourself into a market. So the product is the easy part. The sale is the hard part.
Because it’s only capable of producing slop.
That’s like asking why doesn’t Adobe make their own content and keep the tools internal.
For the same reason that people were selling crypto mining boxes rather than just plugging them in:
The only guaranteed profit in a gold rush is to be the one selling shovels.
See Nvidia for details.
Why does it cost so much to engineer new models? I thought AI can replace software engineers now, shouldn’t the development cost of new models decrease over time?
Joking aside - I think the whole “engineer time is expensive, computer time is cheap” approach stopped being true half a decade or so before LLMs were a thing. It was kind of self defeating - you’d think companies were trying to increase their usage of computing resources due to some misconception that it’d automatically decrease work humans have to do, saving them money in the long run.
I don’t have the numbers, but I wouldn’t be surprised if software/hardware costs exceeded engineering costs for about a decade now, with all these inefficient-on-purpose frameworks and with everything being on the cloud and with using various services for the sake of using a service.
You can’t avoid the compute requirements
Because its a scam.
A scam that will inevitably end humanity on a global scale…… probably.
Nah mankind will continue, but it’ll definitely hurt when this shitshow implodes and possibly takes out the current economic model and quite a few governments with it.
This is exactly the question i ask “investment advisor” services when they call asking if i want help managing investments.
For you to have a system that works well enough for me to be interested , there’d be no need for you to spend money on call centers full of people ringing up strangers for money, you could take all of that money and invest it in the plan you are trying to sell me.
I’ve always thought that as well. Surely it wouldn’t take them long to become ludicrously wealthy with their top investing acumen.
Ikr. If I knew a “foolproof” investing strategy to “make loads of money”, I wouldn’t spend my time trying to teach other people about it, id just be using that strategy myself and actually NOT want other people to know about it.
Their business is the LLMs. It’s like asking if a loaf of bread is expensive, then why don’t millers bake bread using their own flour
Yes, but selling the llms is not profitable either. They are burning through cash at extraordinary rates.
Even at highly subsidised rates, ai startups can’t make a profitable product. It’s nuts.
It’s not profitable for the mill, yes, but the millers (board members and C-suite) are making Hella bank
Drawing a healthy salary while the company you work for hemorrhages money is just grifting.
…by lying to investors and engaging in accounting tricks that would make Enron blush.
If they were not profitable just selling the flour but saw the potential profitability of baking bread, I’m sure they would. It’s just that they are profitable selling the flour so there’s no need.
I bet some Miller’s would vertically integrate in that case
They are going for the gold rush pick axe business model
The difference is there was actual gold in them there hills. LLM’s are hogwash
The real reason isn’t that they can’t turn a profit, it’s that they don’t have to.
They don’t have to be profitable because they aren’t fueling growth with profits, they’re fueling it with debt and investment. Like many have noted, they cannot do that forever and will eventually pass that cost to consumers. A significant portion of their existing cost is driven by research, which they can scale back by lobbying for legislation, so that peers getting a leg up is more difficult and small players catching up is almost impossible.
Also, both Anthropic and OpenAI have planned IPOs, where they will inevitably raise a ton of cash. It’s a game of chicken though. How long can they fuel growth without being publicly accountable to balance sheets and shareholders? Whether we like it or not, they will almost certainly transition to being profitable businesses, but only when it is advantageous for them to do so. Right now, it’s not a priority; the priority is growth to the point of diminishing returns.
AI is highly subsidized for users so AI wrappers can be profitable. (Even though they are a net negative to the economy)
But ai companies burn trillions of dollars of investor money with fake promises. They can’t make a reddit chatgpt bot that charges a user 10$ a month and make a profit.
And why would a user of reddit need/want a chat bot: for what? And on top of that pay $10???
Been shouting this from the rooftops since the beginning. If it was half as good as claimed, I would NOT have access to it.
Both open AI and anthropic are making a profit on inference / api usage. So if you’re using Claude code and burning through millions of tokens they’re making money off that. The revenue from this is also growing rapidly.
What’s dragging down the bottom line is training, which is the big money sink. They have to do it though to make the next biggest model to compete with each other. They’re hoping that they’ll hit a plateau in capabilities, whether that be AGI or some government regulation, so they don’t have to train any more. At that point the profits start coming in from just doing inference.
I could be wrong, but I don’t think that’s what the question was about.
It was “if people are trying to use Anthropic or OpenAI’s services to build a profitable company, why wouldn’t Anthropic or OpenAI just build that company themselves”
And the answer there would be lack of subject matter experts. You need people who know the industry they’re building the product for if you want to have any fighting chance. AI can work as a force multiplier, trying to use it as a completely autonomous agent that gets near-zero human feedback is hopeless. I doubt any of the AI companies want to take on thousands of employees just to use their own AI to take risks on new industries when they could just sell the AI to people who take on the risk.
In a gold rush it is better, on average, to sell the shovels then to mine the gold.
Slop image
