Comment by mrandish

> doesn't this just mean that we expect the money to come from large enterprise users?

Yes, if you agree that not enough consumers will value "smart paid chatbots" over dumb free chatbots at ~$20/mo, then, as you say, the money has to come from enterprise developers and knowledge workers (PD&K). The big problem with that is the numbers don't work. There aren't enough PD&K workers that are highly-paid enough to justify $12,000 to $16,000 a year to cover the astronomical spending run rates.

Without recapitulating all the various scenarios AI CEOs like to hand-wave, my take-away is the scenarios which show today's frontier AI vendors earning the returns they've promised investors to get those trillions of dollars they're spending ALL require truly extraordinary deltas far above current historical actuals. Whereas ALL the scenarios which I find more plausibly realistic, even if still quite bullish, never even get near the required ballpark.

I've tried to make various scenarios fit but inevitably, when the PD&K demand side starts getting implausibly inflated, I start pushing the cost side down to keep the adoption rates remotely plausible. For example, assuming things like the number of PD&K workers will grow at 2X the highest rates ever seen before or that the percentage of the tasks knowledge workers actually do at sufficient frequency to really matter and which are also "LLM improvable" is implausibly vast.

It gets challenging because one quickly hits finite limits on the increase in tangible economic value that an LLM can possibly deliver on many common knowledge work tasks like drafting an email or a product proposal. Even if we assume next year's frontier LLM is so good literally ZERO slop is even possible so that our knowledge worker doesn't ever have to review anything - turning a 20 minute task into 2 minutes, or even 200 milliseconds, yields finite economic value to the enterprise. Even if you go extreme and suppose pretty crazy stuff like 18 months from now LLMs have eliminated 50% of PD&K workers, that messes with the spreadsheet assumptions because now the there are half as many $16,000/yr seats so the LLM license prices have to double again just to stay even.

At the edges it quickly gets nuts. I even tried assuming that in five years LLMs eliminate 100% of non-managerial PD&K jobs. All actual work is done by Super-AGI LLMs. Even if we assume such amazing intelligence can be profitably sold in five years for only 4x the price of today's far dumber LLMs, that Super AGI still costs $50,000/yr per human replaced. Even that assumption only cuts the blended labor cost of non-managerial roles roughly in half (depending on industry and geo). In the end, no matter how much labor cost LLMs enable companies to cut, it still only reduces overhead. Lower costs might allow Vendor A to steal some of Vendor B's customers but it doesn't increase the total TAM or demand of the entire sector both vendors serve.

Once you're out of plausible labor savings, one has to move to assuming that within five years Super-AGI LLMs working unsupervised will be making and validating fundamental scientific breakthroughs, then reducing those breakthroughs to engineering practice enabling new technologies which create entire new markets. Then they'll create whole new companies with maybe only 1/10th the humans and profitably grow those new markets. It quickly starts to feel like bad sci-fi instead of plausible, near-term financial scenario planning. Is stuff that extreme and unprecedented actually possible? Sure, incredibly unlikely and unprecedented things DO sometimes happen but things so far out of the distribution are very rare. But when making Sam and Dario's scenarios actually 'math out' starts requiring more than one "Black Swan" unlikely, historically unprecedented, earth-shaking event. And then goes on to need whole flocks of Black Swans, it just isn't credible. That said, I do believe that some parts of these scenarios may happen in 10 or 20+ years. It's just that the investment theses trillions worth of our 401K's are sunk into assume five or six year amortization and financial payback.