Comment by simonw
3 hours ago
One big difference I have with Ed Zitron is I look at companies suddenly getting worried that they're spending millions of dollars on tokens and think "wow those AI vendors are going to make SO MUCH MONEY".
The best price for a product is what I call the "suck air through your teeth" price. You want your customers to suck air through their teeth... and then pay the full amount anyway.
Uber set their per-developer token allowance to $1500 per developer per tool. That suggests to me that they think they can get at least that much ROI out of AI tooling.
Selling $1500/employee/month plans to companies is a great business to be in.
Sure, but what you're not taking into account is that $1500/month is subsidised by VC money.
If Uber were asked to pay full price, they'd either get the same value for significantly more outlay, or keep their outlay capped but get significantly fewer tokens.
This would, I'm sure you'd agree, change the ROI outcome.
Zitron is arguing that if we all pay the true cost once the subsidies go, we'll either stop paying for the value we get today, or we'll find AI to be less useful than we do today, and those businesses won't be sustainable, and then <pop> goes the bubble.
I enjoy keeping an eye on https://isaiprofitable.com to see just where we are overall. Interesting reading if you like to think about such things.
Well hold on. "They" also thought tokenmaxxing was a good idea, until they didn't.
Whether companies pay will come down to the bottom line once the hype around the country club dies down a bit and for that it's still TBD on the actual product cost impact.
Yeah, tokenmaxxing was obviously stupid. Setting a limit is what happens when the adults in the room stop being stupid.
It's hard to read this take seriously, when you promoted a company spending $1k per engineer per day on LLM usage.
Not sure about that. As I replied elsewhere, it's a forcing function:
> People misunderstand the point of the tokenmaxxing time period, it was to force people to use AI so as to not have them stuck in their way, as some people are, and then to evaluate how it can help the company.
https://news.ycombinator.com/item?id=49047448#49047826
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that $1.5k is ostensibly not coming out of productivity gains from the AI though.
it's coming out of the salary budget from what i've seen. i've seen a company both say "AI max. it's the future! don't be late" and then go on to increase limits to compensation across the board.
Very true and I don't think you can completely discount the end consumer market either. A large number of the people not currently paying for a subscription are becoming dependent on AI enabled search results. I imagine monetization of those users is in its infancy and will rival the search result ad business eventually