Comment by cj
1 day ago
> Coding agents really did change everything. These are tools which burn vastly more tokens
The assumption here is that this is a positive thing.
But this very well could end up being a major negative long term by increasing the cost per user, reducing margins.
More usage = more cost = less profit.
It's not obvious that more usage is good. It's only good if revenue per user increases more than cost does. I'm skeptical about that.
> It's only good if revenue per user increases more than cost does.
That's why it's so important for these labs that they're selling API tokens for more than the compute+energy costs needed to generate them.
Every indicator I've seen is that they do have a positive margin on that. If they don't, they're screwed.
No this is not what matters.
The customers of these tokens need to see returns on their projects that exceed the cost of financing.
Laying people off only goes so far.
If enough said firms don’t see enough value given the price of frontiers they will cancel and consume open source. This is the risk the frontier labs are exposed to.
What's an example of an indicator? Genuinely curious!
Insider tips from Google and AWS telling me that they run inference at a profit (though that was over a year ago now).
Dario telling Dwarkesh three months ago that they have a margin on inference: https://www.dwarkesh.com/p/dario-amodei-2?timestamp=3528.0
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