6 ms·

What's the path to recouping that money? Even if every major company in the US spends $100,000 a year on subscriptions and every household spends $20/month, it

by Mizza 1y ago

What's the path to recouping that money? Even if every major company in the US spends $100,000 a year on subscriptions and every household spends $20/month, it still doesn't seem like enough return on investment when you factor in inference costs and all the other overhead. New medical discoveries, maybe? I saw OpenAI's announcement about gpt-bio and iPSCs which was pretty amazing, but there's a very long gap between that and commercialization. I'm just wondering what the plan is.

mathw 1y ago
I think it's "scam everyone into giving us lots of money, then run before the bills come".
HWR_14 1y ago
If LLMs could double the efficiency of white collar workers, major companies would be asked for far more than $100,000 a year. If could cut their expensive workforce in half and then paid even 25% of their savings it could easily generate enough revenue to make that valuation look cheap.
- mathw 1y ago
  Unfortunately for the LLM vendors, that's not what we're seeing. I guess that used to be the plan, and now they're just scrambling around for whatever they can manage before it all falls apart.
- Gigachad 1y ago
  Ok but then another AI company would just offer the same thing at a lower cost.
  - EGreg 1y ago
    How much lower though?
    - Gigachad 1y ago
      It'll keep going down until it's hardly over cost price.
frfl 1y ago
Wasn't the plan AGI, not ROI on offering services based on current gen AI models. AGI was the winner takes all holy grail, so all this money was just buying lottery tickets in hopes of striking AGI first. At least that how I remember it, but AGI dreams may have been hampered by lack of exponential improvement in last year.
- brookst 1y ago
  I’m sure somebody believed that? But I never met them.
  - nwsm 1y ago
    I want to say Mark Zuckerberg but I think Meta's investment is also targeted at creating their own social media content
  - frfl 1y ago
    As sibling commentor mentions, Zuckerberg is dropping billions on AGI currently (or "super human intelligence", whatever the difference is). And, I don't have time to find it, but maybe Sam Altman might've said AGI is the ultimate goal at somepoint - idk, I don't pay too much attention to this stuff tbh, you'll have to look it up if you're interested. Oh and John Carmack, of Doom fame, went off to do AGI research and raised a modest 20(?) million last I heard.
  - latexr 1y ago
    > I’m sure somebody believed that? “Somebody” like… Sam Altman? Because he said that’s what he actually believes. https://www.startupbell.net/post/sam-altman-told-investors-bluntly-he-had-no-plans-on-how-to-generate-revenue https://www.startupbell.net/post/sam-altman-told-investors-b...
- deleted 1y ago
  [deleted]
brookst 1y ago
$100k/year is literally nothing. Think of it as maybe $10k/employee, figuring a conservative 10% boost in productivity against a lowball $100k/year fully burdened salary+benefits. For a company with 10,000 employees that’s $100m/year.
- techpineapple 1y ago
  But we won’t get there unless the company integration failure rate falls below 95%
  - reb 1y ago
    Eh, seems likely to me existing companies are structured for human labor in a way that's hard to really hard to untangle — smart individuals can level up with this stuff, but remaking an entire company demands human-level AI (not there yet) or a mostly AI-fluent team (working with/through AI is a new skill and few workers have developed it). New co's built by individuals who get AI are best positioned to unlock the dramatic effects of the technology, and it's going to take time for them to eclipse encumbent players and then seed the labor market with AI-fluent talent
- Mizza 1y ago
  Even at $10k/yr/employee, you'd need 30 million people on the 10k/yr plan to hit 300B ARR. I think that's a hell of a big swing. 3 million, recoup over ten years? Maybe, but I still don't think so. And then competition between 4 or 5 vendors, larger customers figuring out it's cheaper to train their own models for one thing that gives them 90% of the productivity gains, etc. But rather than speculating, I'm generally curious what the companies are saying to their investors about the matter.
  - simianwords 1y ago
    I don’t get why you need 300B arr?
- 34679 1y ago
  That's literally not how the word "literally" works.
CyanLite2 1y ago
Major companies will spend 10-100x that if it resulted in real tangible productivity gains for their businesses.
ACCount37 1y ago
The "game plan" is, and always was, to target human labor. Some human labor is straight up replaceable by AI already, other jobs get major productivity boosts. The economic value of that is immense. We're not even at AGI, and AI-driven automation is already rampaging through the pool of "the cheapest and the most replaceable" human labor. Things that were previously outsourced to Indian call centers are now increasingly outsourced to the datacenters instead. Most major AI companies also believe that they can indeed hit AGI if they sustain the compute and the R&D spending.
elzbardico 1y ago
If AI Doesn’t Fire You, It Can’t Pay For Itself https://esborogardius.substack.com/p/if-ai-doesnt-fire-you-it-cant-pay https://esborogardius.substack.com/p/if-ai-doesnt-fire-you-i...
simianwords 1y ago
They just have to be positive revenue on inference and run it for a long time. Why do you think they can’t recoup it?

by Mizza 1y ago

mathw 1y ago

I think it's "scam everyone into giving us lots of money, then run before the bills come".

HWR_14 1y ago

If LLMs could double the efficiency of white collar workers, major companies would be asked for far more than $100,000 a year. If could cut their expensive workforce in half and then paid even 25% of their savings it could easily generate enough revenue to make that valuation look cheap.

mathw 1y ago
Unfortunately for the LLM vendors, that's not what we're seeing. I guess that used to be the plan, and now they're just scrambling around for whatever they can manage before it all falls apart.
Gigachad 1y ago
Ok but then another AI company would just offer the same thing at a lower cost.
- EGreg 1y ago
  How much lower though?
  - Gigachad 1y ago
    It'll keep going down until it's hardly over cost price.

frfl 1y ago

Wasn't the plan AGI, not ROI on offering services based on current gen AI models. AGI was the winner takes all holy grail, so all this money was just buying lottery tickets in hopes of striking AGI first. At least that how I remember it, but AGI dreams may have been hampered by lack of exponential improvement in last year.

brookst 1y ago
I’m sure somebody believed that? But I never met them.
- nwsm 1y ago
  I want to say Mark Zuckerberg but I think Meta's investment is also targeted at creating their own social media content
- frfl 1y ago
  As sibling commentor mentions, Zuckerberg is dropping billions on AGI currently (or "super human intelligence", whatever the difference is). And, I don't have time to find it, but maybe Sam Altman might've said AGI is the ultimate goal at somepoint - idk, I don't pay too much attention to this stuff tbh, you'll have to look it up if you're interested. Oh and John Carmack, of Doom fame, went off to do AGI research and raised a modest 20(?) million last I heard.
- latexr 1y ago
  > I’m sure somebody believed that? “Somebody” like… Sam Altman? Because he said that’s what he actually believes. https://www.startupbell.net/post/sam-altman-told-investors-bluntly-he-had-no-plans-on-how-to-generate-revenue https://www.startupbell.net/post/sam-altman-told-investors-b...
deleted 1y ago
[deleted]

brookst 1y ago

$100k/year is literally nothing. Think of it as maybe $10k/employee, figuring a conservative 10% boost in productivity against a lowball $100k/year fully burdened salary+benefits. For a company with 10,000 employees that’s $100m/year.

techpineapple 1y ago
But we won’t get there unless the company integration failure rate falls below 95%
- reb 1y ago
  Eh, seems likely to me existing companies are structured for human labor in a way that's hard to really hard to untangle — smart individuals can level up with this stuff, but remaking an entire company demands human-level AI (not there yet) or a mostly AI-fluent team (working with/through AI is a new skill and few workers have developed it). New co's built by individuals who get AI are best positioned to unlock the dramatic effects of the technology, and it's going to take time for them to eclipse encumbent players and then seed the labor market with AI-fluent talent
Mizza 1y ago
Even at $10k/yr/employee, you'd need 30 million people on the 10k/yr plan to hit 300B ARR. I think that's a hell of a big swing. 3 million, recoup over ten years? Maybe, but I still don't think so. And then competition between 4 or 5 vendors, larger customers figuring out it's cheaper to train their own models for one thing that gives them 90% of the productivity gains, etc. But rather than speculating, I'm generally curious what the companies are saying to their investors about the matter.
- simianwords 1y ago
  I don’t get why you need 300B arr?
34679 1y ago
That's literally not how the word "literally" works.

CyanLite2 1y ago

Major companies will spend 10-100x that if it resulted in real tangible productivity gains for their businesses.

ACCount37 1y ago

The "game plan" is, and always was, to target human labor. Some human labor is straight up replaceable by AI already, other jobs get major productivity boosts. The economic value of that is immense. We're not even at AGI, and AI-driven automation is already rampaging through the pool of "the cheapest and the most replaceable" human labor. Things that were previously outsourced to Indian call centers are now increasingly outsourced to the datacenters instead. Most major AI companies also believe that they can indeed hit AGI if they sustain the compute and the R&D spending.

elzbardico 1y ago

If AI Doesn’t Fire You, It Can’t Pay For Itself https://esborogardius.substack.com/p/if-ai-doesnt-fire-you-it-cant-pay https://esborogardius.substack.com/p/if-ai-doesnt-fire-you-i...

simianwords 1y ago

They just have to be positive revenue on inference and run it for a long time. Why do you think they can’t recoup it?