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Where is the money coming from? It's coming from regular companies spending their own money on using AI. I.e. Profitable companies deciding they want to use AI

Where is the money coming from? It's coming from regular companies spending their own money on using AI. I.e. Profitable companies deciding they want to use AI for various reasons and spending their own revenue on said AI, whether it be Claude Cowork, OpenAI ChatGPT Work, OpenRouter, Nebius Tokenfactory, models hosted on BaseTen, Fireworks, etc, tools like Lovable. Or every piece of cyber software which are ALL using AI heavily these days. It's really not as complicated as AI-doomers like to make out, they seem so confused somehow that existing profitable, successful companies are spending larger and larger amounts of their revenue on AI. It's not circular by any definition. So anyway, this whole worry about "where the money comes from", is kind of funny. Where does the money come from to hire employees? Where does the money come from to pay for Cloud bills? The money for AI will come from the same place, it's not some big mystery. Total cloud/compute spend in the world is well over 5T per year, including all cloud and colo spend. AI is basically both taking up software spend, dev salary spend, white collar officer worker spend, hardware spend, general IT spend, etc. And if you sum up all the budget associated with all company software, personnel, white collar workers, etc, you end up with a much bigger number (probably 10-20T or more most likely). So the idea of total AI revenue being in the trillions, it's pretty simple, and will happen over the next couple of years, just like happened with regular servers and cloud. People like yourself downplaying AI reminds me of people both downplaying the internet ("it will never make money") and also the original launch of cloud providers (AWS originally), "no one will ever trust the cloud not to lose your data, why would any pay for AWS" etc etc). Both sets of folk were radically wrong, and the AI-doomers will be wrong this time too. Capabilities will increase across the board, amazing applications will be built (already happening), and people will want to pay for these products. People are ALREADY paying huge amounts of money for these products. Who do you think is paying for Lovable? They are probably the fastest growing startup ever from 0 to 1B valuation because less technical people LOVE using it and have zero issue paying for it. But AI doomers will somehow dismiss Lovable as somehow getting "circular financing", when loads of small business owners I know love the product and spend 100s of dollars a month on it! It's going to be funny watching the doomers over the next two years when none of the big AI companies goes bankrupt and keep growing in revenue. But but but the circular revenue!

swiftcoder 17d ago
> existing profitable, successful companies are spending larger and larger amounts of their revenue on AI Apart from the brief "tokenmaxxing" craze among the big tech firms a while back, is there any evidence that profitable companies are cutting their own margins in order to spend on AI?
reticulates 16d ago
Lovable's success is the perfect example. Lovable has a large number of users who do not pay for the platform who have been subsidized by investors while inference costs were high. Lovable know that long term, sending all their revenue to Anthropic and OpenAI and Google is very bad for business, especially if that revenue is subsidized by investors, which is why they have trained their own model. Lovable's long term success is in conflict with OpenAI and Anthropic! Lovable succeeds when it stops sending $0.50 of every $1.00 to OpenAI and Anthropic and Google, Lovable succeeds when it drives down the costs of inference to as little as possible. Regarding the cloud infrastructure comparison, it is not at all comparable. During the time I spend writing this comment, my device will make thousands of requests and connections to different servers for all sorts of reasons. During the time I spend writing this comment, my device has interacted with an LLM exactly zero times. The throughput of internet infrastructure is not even in the same universe as the throughput of LLMs at their most wildly successful. How many times does Lovable's AI run per month for their average customer? A few times? The repeated, continued value Lovable delivers to their customers is in the interactions that occur between their customer's customers and their customer's apps. A Lovable customer can love Lovable and have huge success with their Lovable app while using zero tokens per month. You should be comparing AI to a product that eventually became commoditized, not comparing it to an entire category, e.g: shared website hosting. Shared website hosting was very expensive to set up 30 years ago. Over time, it got cheaper and cheaper, now today it is commoditized, the major brands have all consolidated, companies have gone under, and technological innovations have completely reshaped how websites are hosted. Who still uses shared website hosting today? Websites are bigger than ever, web servers underpin the economy, Stripe alone has web servers that process trillions of dollars... how much money is there in web servers? > Capabilities will increase across the board, amazing applications will be built (already happening), and people will want to pay for these products. People are ALREADY paying huge amounts of money for these products. You're so caught up in the technology that you're oblivious to the economic reality. The capabilities, the amazingness, the excitement, that isn't how money is made. The most cheap and boring technology (like web servers) are fundamental to our economy. AI can be all of these things, it can have incredible capabilities and be amazing and have so much excitement and radically reshape our economy and be fundamental to every business... and make no money. You, like so many nerds, cannot seem to separate technology from business. Business is boring and simple and based on principles that have stood the test of time. Business doesn't run on excitement, it runs on numbers. Shopify powers most ecommerce, Shopify is one of the most important companies in ecommerce, Shopify is wildly successful, Shopify's revenue... $12bn. Stripe's revenue, on trillions of dollars in payments... less than $10bn. Shopify and Stripe are wildly successful and very important companies that are involved in trillions of dollars flowing through the economy and you're suggesting that AI is going to do 100x more revenue than them? Tailwind CSS is used on probably half of all major websites today. The creators of Tailwind recently announced they had to lay off everyone because the company was struggling to make any money despite usage growing every single day. WordPress, which (supposedly) powers half of all websites is operated by a company that is struggling too. Google and Meta, some of the most profitable companies in the world, almost all of their revenue is still from advertising that has barely changed in 25 years. Google make hundreds of billions of dollars from... showing videos, technology that existed 25 years ago. And so, that brings us back to the circular revenue argument. Right now, Anthropic and OpenAI have ~$50bn revenue each because of circular revenue, because of investors subsidizing, because in this experimental period, everyone is throwing shit at the wall to see what sticks, nobody wants to be left behind, they're digging for gold. If you want to make a compelling argument for why AI will impact the economy, that's one thing, but to argue that Anthropic and OpenAI are going to generate trillions of dollars in revenue from it is an entirely different argument altogether. They're completely independent. One of them is a reasonable argument (of which people can debate the extent) but the other is absolutely batshit and indefensible. > It's going to be funny watching the doomers over the next two years when none of the big AI companies goes bankrupt and keep growing in revenue. But but but the circular revenue! I bet that Anthropic and OpenAI's revenue will be less than $100bn each in September 2028. At their current rate of growth based on the ai boomer takes, it should be well over $250bn each by the end of 2027.

swiftcoder 17d ago

> existing profitable, successful companies are spending larger and larger amounts of their revenue on AI Apart from the brief "tokenmaxxing" craze among the big tech firms a while back, is there any evidence that profitable companies are cutting their own margins in order to spend on AI?

reticulates 16d ago

Lovable's success is the perfect example. Lovable has a large number of users who do not pay for the platform who have been subsidized by investors while inference costs were high. Lovable know that long term, sending all their revenue to Anthropic and OpenAI and Google is very bad for business, especially if that revenue is subsidized by investors, which is why they have trained their own model. Lovable's long term success is in conflict with OpenAI and Anthropic! Lovable succeeds when it stops sending $0.50 of every $1.00 to OpenAI and Anthropic and Google, Lovable succeeds when it drives down the costs of inference to as little as possible. Regarding the cloud infrastructure comparison, it is not at all comparable. During the time I spend writing this comment, my device will make thousands of requests and connections to different servers for all sorts of reasons. During the time I spend writing this comment, my device has interacted with an LLM exactly zero times. The throughput of internet infrastructure is not even in the same universe as the throughput of LLMs at their most wildly successful. How many times does Lovable's AI run per month for their average customer? A few times? The repeated, continued value Lovable delivers to their customers is in the interactions that occur between their customer's customers and their customer's apps. A Lovable customer can love Lovable and have huge success with their Lovable app while using zero tokens per month. You should be comparing AI to a product that eventually became commoditized, not comparing it to an entire category, e.g: shared website hosting. Shared website hosting was very expensive to set up 30 years ago. Over time, it got cheaper and cheaper, now today it is commoditized, the major brands have all consolidated, companies have gone under, and technological innovations have completely reshaped how websites are hosted. Who still uses shared website hosting today? Websites are bigger than ever, web servers underpin the economy, Stripe alone has web servers that process trillions of dollars... how much money is there in web servers? > Capabilities will increase across the board, amazing applications will be built (already happening), and people will want to pay for these products. People are ALREADY paying huge amounts of money for these products. You're so caught up in the technology that you're oblivious to the economic reality. The capabilities, the amazingness, the excitement, that isn't how money is made. The most cheap and boring technology (like web servers) are fundamental to our economy. AI can be all of these things, it can have incredible capabilities and be amazing and have so much excitement and radically reshape our economy and be fundamental to every business... and make no money. You, like so many nerds, cannot seem to separate technology from business. Business is boring and simple and based on principles that have stood the test of time. Business doesn't run on excitement, it runs on numbers. Shopify powers most ecommerce, Shopify is one of the most important companies in ecommerce, Shopify is wildly successful, Shopify's revenue... $12bn. Stripe's revenue, on trillions of dollars in payments... less than $10bn. Shopify and Stripe are wildly successful and very important companies that are involved in trillions of dollars flowing through the economy and you're suggesting that AI is going to do 100x more revenue than them? Tailwind CSS is used on probably half of all major websites today. The creators of Tailwind recently announced they had to lay off everyone because the company was struggling to make any money despite usage growing every single day. WordPress, which (supposedly) powers half of all websites is operated by a company that is struggling too. Google and Meta, some of the most profitable companies in the world, almost all of their revenue is still from advertising that has barely changed in 25 years. Google make hundreds of billions of dollars from... showing videos, technology that existed 25 years ago. And so, that brings us back to the circular revenue argument. Right now, Anthropic and OpenAI have ~$50bn revenue each because of circular revenue, because of investors subsidizing, because in this experimental period, everyone is throwing shit at the wall to see what sticks, nobody wants to be left behind, they're digging for gold. If you want to make a compelling argument for why AI will impact the economy, that's one thing, but to argue that Anthropic and OpenAI are going to generate trillions of dollars in revenue from it is an entirely different argument altogether. They're completely independent. One of them is a reasonable argument (of which people can debate the extent) but the other is absolutely batshit and indefensible. > It's going to be funny watching the doomers over the next two years when none of the big AI companies goes bankrupt and keep growing in revenue. But but but the circular revenue! I bet that Anthropic and OpenAI's revenue will be less than $100bn each in September 2028. At their current rate of growth based on the ai boomer takes, it should be well over $250bn each by the end of 2027.