sgt101
Joined 14 years ago
Joined 14 years ago
There is a paradox here, I think that there is a lot of denial about it.
I think that the first issue you raise is "why would they" and the answer is (IMHO) because there are a bunch of people who are trying to make money anyway that they can and as far as they are concerned it's just bad luck and social darwinism if they get the cash and other people are left holding the bag.
You are right that the products that have emerged from the AI boom have real value, but it's not clear that anyone can capture the value from consumers. LLMs are more or less commodity items. Listen, for sure, for serious, if you gave me $20m I could build a tier 3 LLM in six months. Fella, I am not boasting, I am a small fry old AI researcher and there are 100 like me in every bar in my town (London, near enough) but I know I could do that. I also know that the tricks to move from tier 3 to tier 1 are increasingly available *FROM THE FRONTIER MODELS THEMSELVES* . The number 1 use case at OpenAI for AI is... managing the clusters. And managing the clusters has been the hard bit since about 2017. This is not the case of a rare product that everyone wants, it's basically the same as Florida condos - yes a view over the ocean is great, yes a nice condo is good to live in, but also there is a lot of beach front in Florida and building condos is not rocket science (I am bearish on SpaceX too but for other reasons).
No one will give me $20M sadly, and if they did I'd probably abscond to somewhere I hoped was safe with it and spend the rest of my life raising litters of kittens. This is definitely a good hobby and is actually quite like managing big clusters, but with a better emotional balance.
Anyway, the next point is profitability.
These companies are not profitable. OpenAI is not profitable, Anthropic is not profitable. In fact they are burning cash and losing money hand over hand. They are subsidising subscribers and enterprises to use their models because if they don't, and they force market costs, then they won't have market share. Look to openrouter's stats if you don't believe me : https://openrouter.ai/rankings
The path for Amazon to be profitable was to use investor cash to build a modern last mile distribution and supply chain across the US and then the globe. The AI gamble was to create a capability to serve AI that could effectively monopolise the market and that they could raise the drawbridge like Google did with search. But Google created a market out of you and me for advertisers, where as OAI and Anthropic are asking you and me to buy their products. Brother, I will, but only if they are cheapest and best, which means that this will be a competition, and in a competition I do not care if you go bust and the data centre has to be auctioned to the lowest bidder because if that happens I will then see a cheap service come into use that asset to replace the leavered up investors who sadly lost their pants. If you have to sell off an Amazon distribution center you've got a big problem, an Amazon distribution center only has real value because of the last mile fulfillment and the global supply chain that's attached to the store. A data center for LLMs is not the same, tokens are tokens. I can buy them from Slough or Texas, the Texas ones might cost be less because gas is cheap there, but we're talking $1.40 per million vs $1.00.
That's it.
A $3Trn commodity service.
In 2008 the USA managed to export the shit assets generated by the mortgage boom , mostly to Europe. The consequence for the European economy and political setting have been quite sharp. For example it's hard to imagine a Brexit vote if the economic conditions of 2006 had persisted in the UK.
If the AI boom unwinds it's quite hard to see how the USA will export the pain this time. The issue is that the boom is tied to physical infrastructure in the USA and these assets will be stranded. Corporate bonds used to finance it are mostly owned by US pensions and 401k. We are likely to see many US insurance companies liquidated... and that will kill the annuities for many retirees.
The grid expansions that are being created in the USA will mean significant debts on US utility providers as well, if the data centres profitably come on line then this will get paid back. If not then American households are going to have to pay. Chip producers (Tiawan SK) will also get burned.
The USA will forfeit tech leadership, the US bond market will not permit Keynesian expansion. Basically the USA will be looking at a great depression. US hackernews friends need to find a cover story that stops their neighbours realising that they were part of the shit storm, and they also need to sharpen their camping skills and general outdoor hardiness. Alternatively -> try and get a French passport?
My revelation on this was when my daughter got type 1 diabetes. If the world goes south, even if I manage to do everything and "win", she's dead in six months. Of course, since then I've realised that the "do everything and "win"" thing is also stupid, no one is going to be able to "make it" a handful will luck out and mangage somehow.. but it won't be because of prepping.
On the other hand, if there's a blip - like a cyber attack, or a regional war, a solar flare, bad volcano, or a mega storm. then preps might make things more comfortable until the state gets back up and running.
- Traditional: a generator. Problem is that you need a fuel tank, but if you are aiming to get through a couple of weeks then that's possible.
- Grid attached battery backup: good because in some places (like the UK) electricity at night is much cheaper than electricity during the day... so you can charge the battery and then save money and get payback on your installation. Bonus point is that if there is a grid outage then you have power, for a day or so if you are careful.
- Grid attached with solar/wind: as above, but you can charge independently from the sun/wind... obviously in some places (like the UK) this has limited utility because the sun don't shine (like today), and the wind can be annoying and difficult as a power source (gearboxes, noise, aesthetics). Can cost in though - because of summer power my panels pay back in 11 years. Small wind turbines seem to be getting more practical but I am no expert.
- Non grid battery backup. These also come with solar now, so you can recharge if it's sunny. These are cheap (<~£1000), hold maybe 2Kw and so can power some devices while the grid is off for a little while. Definitely you can run your phones and computers for a few extra cycles, but people are often looking to run freezers or fridges with medicine with these.
Another thing that folks like to have is grid independent heating / cooking via a woodstove. This is frowned on in urban areas and by eco people but I live in the country and have done my reading and while other people will pop up and decry particulates to be honest I'm keeping my burner so my family will be warm and fed for as long as our food lasts or we don't get looted by the neighbours.
"Anthropic employee John Smith [killed the children with the gun||launched a cyber attack] because he was ordered to by his superior and [has all the blame because such orders are null || we agree that Anthropic can order children to be killed]"
Who knows what Altman wants? It's moot what individual motivations are as he is definitely fronting for investors who have significant power in the business.
Public money comes with legal fiduciary duties.
The reason to IPO is to get private money out, materialise the whole valuation.
https://www.rameznaam.com/p/471bbae4-1163-4048-944b-18f8b0bf...
They can be brutal.