This is important context in the wake of yesterday’s “raise” announcement. A lot of this stuff seems to just quietly never happen once the ink on the PR puff dries.
The AI industry increasingly looks in scramble mode to keep the hype going as those storm clouds of financial and business reality get darker and darker on the horizon.
cj 47 minutes ago [-]
For a company bringing a new technology from zero to mainstream, I think it's pretty normal that there will be a lot of failed attempts at productization.
The thing that isn't normal is the degree of experimentation relative to company valuation. Normally once a company reaches $700 B+ valuation, they've figured out their product and monetization strategy. ChatGPT is clearly still iterating heavily on that - not normal for a company that size.
dgellow 1 hours ago [-]
Anthropic does look healthier, with their enterprise focus. Or am I missing something?
cmiles8 1 hours ago [-]
They nominally come across as a more stable ship with less clouds over its leadership.
However all of the major privately held AI players are struggling to paint a business and financial picture that doesn’t look “terrible” at best and “verge of market moving implosion” at worst.
For now the only thing keeping this all alive is more and more irrational cash being thrown on the pile in the faint hope that something stops the implosion from happening.
zer00eyz 50 minutes ago [-]
Outwardly it looks much better.
But between their token curtailment and time of day restrictions, and some of the clues in the code leak (regex for sentiment, telling the public client to be "brief") it seems like they are facing some capacity issues.
Im guessing that the accountants at all the AI incumbents drink heavily.
mpalmer 46 minutes ago [-]
Anthropic can't prop up Nvidia and the chip industry itself. If AI as an industry can't start turning a dollar into $1.05, a lot of stuff starts falling in value
adventured 59 minutes ago [-]
The LLM usage will generate hundreds of billions of dollars in ad revenue, which will be wildly lucrative in terms of margins (not as good as Google search used to be). If GPT is a leader in that, they'll take a sizable share of that pot.
There's a lot more money in being Google -> consumer ads, or Amazon -> consumer ads, or Meta -> consumer ads, than there is in being Anthropic -> enterprise.
Just take a look at the enterprise. Amazon's ad business alone is already a better business than Oracle or SAP or Salesforce, with superior margins, and it's growing faster too.
And of course everybody knows the Google & Meta ad monsters.
The only question remaining is who is going to extract all those LLM ad dollars, how will that break out. Right now it's Gemini and GPT in the obvious lead, with Anthropic in third, and Meta & Grok nowhere to be found (permanent situation for those).
operatingthetan 55 minutes ago [-]
>The LLM usage will generate hundreds of billions of dollars in ad revenue, which will be wildly lucrative in terms of margins (not as good as Google search used to be).
This seems like ... not the situation we are in. LLMs are great for coding now but their text generation capabilities aren't exactly capturing the masses or replacing their jobs yet. People are already tired of the deluge of fake content on the internet, it's not going to drive a second revolution in web ads.
The $20-200 LLM plans are all subsidized and aren't paying for themselves. Something has to give here.
steveBK123 43 minutes ago [-]
> The $20-200 LLM plans are all subsidized and aren't paying for themselves. Something has to give here.
Whats interesting to me as well as much as companies are pushing AI adoption, i have started to hear AI token spend limits enforced across a few companies, so its not entirely clear that b2b can make them profitable yet either.
If all the models reach good enough, then low cost provider would win. Gemini seems like a safer bet since Google controls more of the stack / has more efficiencies / cross selling / etc.
It’s not like “best” has won any other b2b arms race in the past.
operatingthetan 33 minutes ago [-]
>If all the models reach good enough, then low cost provider would win. Gemini seems like a safer bet since Google controls more of the stack / has more efficiencies / cross selling / etc.
Gemini is the best deal too. For $20: you get multiple quotas per day across the products (web, CLI, antigravity, AI Studio) 2tb of cloud storage, and you can family share the plan.
cmiles8 33 minutes ago [-]
In large part because most companies have a set budget for IT spend. Thats how “normal” profitable companies operate outside this cash burning bonanza that’s going on.
And in that reality one can’t just magically spend a bunch more on some fancy new thing, especially when said fancy new thing isn’t retuning value. So “token limits” and cost controls on B2B is entirely expected here.
steveBK123 21 minutes ago [-]
> especially when said fancy new thing isn’t retuning value
I think this is the key element. Either they can't measure the value, or it's far far lower than anyone wants to believe, or both.
I think the problem is less that it makes some coding tasks XX% faster, but that the end to end of a SWEs roles tasks is only improved by some much smaller Y%.
If a CTO sets $10k/year spend limits on $500k SWEs.. they must not believe any of the hype.
adventured 43 minutes ago [-]
LLM usage will largely replace traditional search, and that's stage one. To be specific, search will be consumed by the LLMs, it'll be merely an aspect of what they do for the user, and that'll include handling the more intricate details of the search, refining the search, understanding the results of search, etc. The age of the typical user handling any of that is about to end. Search will more be a feature of Gemini in the not very distant future, rather than Gemini being bolted onto/into search.
Fuller integration into the user's life will bring ever more ad opportunities (and it doesn't matter if the HN base hates that notion, it's going to happen regardless). That'll happen over the next decade gradually.
Shopping, home management, tasks (taxes, accounting, lifestyle, reminders, homework, work work, 800 other things), travel (obvious), advice & general conversation (already there), search (being consumed now), gaming (next 3-5 years to start), full at-work integration (gradual spread across all industries, with more narrow expertise), digital world building (10-15+ years out for mass user adoption). And on the list goes. It's pretty much anything the user can or does touch in life.
satvikpendem 4 minutes ago [-]
You see it already with how many people use LLMs for everything these days. Google Gemini can also integrate with your other Google apps to personalize further, and Gemini already has product placement ads.
operatingthetan 38 minutes ago [-]
> To be specific, search will be consumed by the LLMs, it'll be merely an aspect of what they do for the user, and that'll include handling the more intricate details of the search, refining the search, understanding the results of search, etc. The age of the typical user handling any of that is about to end.
We already have the tech for that, why hasn't it happened? People are revolted by the AI results in Google. AI isn't going to make people use their computers more. It's not opening up a new consumer market. This is just making each search infinitely more expensive.
satvikpendem 11 minutes ago [-]
Who is revolted? I use the AI Google results every day when asking for specific questions, I rarely visit the webpages before anymore. Also Google already injects ads into conversations in the form of Google Shopping affiliate links.
cmiles8 32 minutes ago [-]
Google is already dumping LLMs into search and it works well and is free.
sylos 12 minutes ago [-]
It doesn't work well. The searches are wrong and uninformative much of the time.
satvikpendem 10 minutes ago [-]
Any examples of bad ones? I find them perfectly fine for my queries.
steveBK123 47 minutes ago [-]
> Just take a look at the enterprise. Amazon's ad business alone is already a better business than Oracle or SAP or Salesforce, with superior margins, and it's growing faster too.
You can say the same about AWS and then prove the b2b case instead of ad case as well
adventured 38 minutes ago [-]
AWS is legitimately a giant and it should be considered in enterprise broadly. It's infrastructure more than enterprise software of course, which is where Anthropic is at. Anthropic is not trying to host the world's databases and services (at present anyway). Anthropic will however help you write software to compete with Salesforce, Oracle, SAP, et al.
Google's ad business remains far larger and more profitable than AWS. And the advertising segment is drastically larger than the segment AWS is in. Just Google + Meta = nearing $600 billion in ad sales. Amazon will soon have their own $100 billion in ad sales.
steveBK123 18 minutes ago [-]
I guess the question is how many more $100B of ad sales slots are available, aside from just stealing share from incumbents (who already took it from traditional media channels over last 20 years).
At some point someone needs to add value to the real economy, not just take an ad tax off the top.
cmiles8 56 minutes ago [-]
“The LLM usage will generate hundreds of billions of dollars in ad revenue”
And yet every attempt to extract even minimal ad revenue has been canned to date as something nobody wants with AI providers retreating in failure.
I don’t doubt that there’s “some” ad revenue to be had but there’s little evidence that ads are going to save the day here.
bdangubic 44 minutes ago [-]
These exact words were said tens of thousands of times about Facebook (am old enough to remember those discussions :) ), “no way they can monetize on mobile” (this was the most fun).
rules are simple, if you have Xbn or XXXm users on your system, you will make big bank in ads eventually
harmonic18374 35 minutes ago [-]
It's tempting to look at trends and assume there must be a rule behind them, but it's also intellectually lazy. Please do the hard work of justifying your stance like GGP did.
bdangubic 31 minutes ago [-]
it is a simple stance - if you have a product that is used by hundreds of millions of people ad monetization strategy will be found cause there are people a lot smarter than you and me that will get it done. here’s intellectual challenge - find a business with comparable number of users to openai which is not swimming in ad revenue - one will do
iAMkenough 35 minutes ago [-]
At that time, Facebook provided a free service without any real competitors. The masses will switch to Meta AI or Gemini or Claude at the drop of an ad that annoys them enough.
adventured 16 minutes ago [-]
Gemini, GPT and Claude will all have ads on the consumer side. They will go together in quasi lock-step into the ad future, because that money is gigantic and they're going to need it.
The masses will have no say in the matter. Just as they had no say in the matter with Google's ads getting ever more intrusive, or cable prices previously, or streaming prices going perpetually higher in the present, or YouTube ads, or anything else. Consumers will have no say in the matter, they'll take it and that's that.
With only three relevant competitors (maybe Mistral in Europe), there will be nowhere to flee the deployment of ads.
adventured 36 minutes ago [-]
For several early years search was thought to have no great business model (banner ads and similar). And then it did.
GoTo.com -> Google -> $$$
iAMkenough 50 minutes ago [-]
Not interested in a service with ads throughout my workday, which is why I switched to Anthropic.
Billions in projected revenue is nothing but hype/cope. Google and Meta got their edge because their product was offered for "free" to the masses.
bdangubic 36 minutes ago [-]
absolutely not the case. there isn’t a single nerve in human brains that goes “oh imma tolerate ads cause this shit’s free but if I pay a few bucks no way” - if the product you use has utility to you, you will tolerate ads provided no other acceptable alternative. not to tell you something you don’t already know but anthropic is getting ads, eventually, it is a given. so while today you may have an alternative (arguably better even if no ads in the equation) at some point you won’t have an alternative (other than running local) and you’ll tolerate ads. the thing with LLM ads is that companies can make $$$$ from “ads” you don’t see, i.e. I can (not now but in the future) companies to push my product, e.g. claude is setting up architecture and proposes upstash (which I own and am paying anthropic a lot of money) instead of any competitor. or even more silently adding dependencies on my NPM library which has free and commercial offering…
iAMkenough 32 minutes ago [-]
Yeah sure, but for me the common man OpenAI doesn't add any value that Claude, Gemini or Meta AI doesn't also provide.
If they want to out-ad those companies to the tune of billions, I'll go with the least annoying. OpenAI hasn't earned any loyalty.
paxys 34 minutes ago [-]
If/when the bubble bursts Anthropic is going down as well. There's nothing unique that sets it apart from OpenAI. Their cash burn is similarly egregious.
nacozarina 1 hours ago [-]
sell the roadmap, deliver a sku, sell/comp consulting services on escalations
the silicon valley shuffle, tried & true
woah 58 minutes ago [-]
My guess is Sam Altman is a better VC than CEO. Better at hype, networking, fund raising, and back room political hijinks than shipping a focused product
He seems to be trying to take almost a "venture studio" approach by throwing shit at the wall, but the problem with these things is always that the "internal startups" are "founded" by people who don't have enough incentive or control over their product to perform as well as an actual startup, and are distracted by internal politics. And frankly, it may also be that the really good founders will just do their own startup vs working on a quasi-startup inside a large org so there's some selection bias as well.
tokai 32 minutes ago [-]
What he would be truly amazing at is shitcoin rug-pulling.
paxys 26 minutes ago [-]
Isn't he already doing that with his Worldcoin thing?
jmkni 50 minutes ago [-]
I'd say he's a better CTO than CEO
mbesto 42 minutes ago [-]
He ran a small (30 employee) tech startup for 7 years
He was a partner at YC for 8 years
He has no research/PhD background in AI and is the CEO of an AI company
There is no objective data point in which he's a better CTO than a CEO
raincole 52 minutes ago [-]
> GPT-4o
Why is this on the list? Like... what? How about including GPT 3.5 and GPT 2 here too?
adrian_b 41 minutes ago [-]
In TFA it is put on the list because some of the users of this GPT version were discontent with its cancellation, which caused even OpenAI to oscillate in its decision, so they first cancelled it, then they resurrected it and then they cancelled it permanently, probably because continuing to run it would have cost more than the generated revenue.
Nothing similar happened when the earlier, presumably worse versions were discontinued.
bigbuppo 1 hours ago [-]
And if Forbes is reporting this, that means the actual movers and shakers were talking about this months ago.
et-al 38 minutes ago [-]
Keep in mind this is a Forbes "Site", so basically a personal blog with some minor vetting.
fred_is_fred 43 minutes ago [-]
And that people are going to end up in jail - but only if they are under 30.
jexe 17 minutes ago [-]
I'm not an OAI fanboy by a longshot - but I'd view lots of experiments that didn't work out as a healthy thing, especially for a company trying to find footing in a new industry.
shimman 14 minutes ago [-]
It's not an experiment if you publicly showcase and create tens of millions worth of marketing materials on it.
Usually company "experiments" are typically hush hush, not blasted on every corporate media channel as a means to boost your company holdings.
crispyambulance 28 minutes ago [-]
I think the VC/investor community needs to take A LOT of blame here. They've created an insane rush to financialize everything to moon at the drop of a hat.
These people are also looking (and funding) quantum computing companies as though quantum computing is right around the corner after AGI.
They need to cool their jets. AI is certainly a worthwhile and super important development, but it's still possible to go overboard with it.
21 minutes ago [-]
MisterTea 45 minutes ago [-]
Who is the person in the portrait at the top of the page?
adrian_b 36 minutes ago [-]
The CEO himself.
For some reason, he does not look like a man whom I would trust with my money, but it appears that there are enough rich investors who disagree.
MisterTea 29 minutes ago [-]
Threw me off because I have no idea what Altman looks like and the article opened with "OpenAI’s CEO of applications Fidji Simo..."
EGreg 60 minutes ago [-]
So is OpenAI on track to overtake Google for discontinuing projects?
Mistletoe 60 minutes ago [-]
Has there ever been a period o time where people saw a bubble coming and that we were in one, but it just inexorably refused to pop/drug out this long? This isn’t a rhetorical question, I’m wondering how this period compares to other irrational periods of the economy like railroad fever etc.
neaden 6 minutes ago [-]
Not at all, there is a famous saying (often attributed to Keynes but as far as I can tell he never said) “Markets can remain irrational longer than you can remain solvent.”
ceejayoz 6 minutes ago [-]
NFTs lasted a lot longer than they should have.
cmiles8 58 minutes ago [-]
It’s not been that long really. The dot com bubble was called a bubble for a while before it finally imploded. And just like now folks were in massive denial that it was a bubble.
One of the challenges here is that a lot of folks simply weren’t around then and haven’t seen what happens when everything implodes overnight. Those that have experienced it know what that looks like and know it will happen again.
bigbuppo 52 minutes ago [-]
It's no coincidence that daytrading ascended with the dotcom era.
banannaise 52 minutes ago [-]
Bubbles don't pop overnight. In the aftermath of any collapse, you can generally see a pretty clear pattern of red flags (and attempts to minimize them or cover them up). Some parties notice earlier than others, but the realization is generally a much more gradual process than the collapse.
1 hours ago [-]
Rendered at 18:03:11 GMT+0000 (Coordinated Universal Time) with Vercel.
The AI industry increasingly looks in scramble mode to keep the hype going as those storm clouds of financial and business reality get darker and darker on the horizon.
The thing that isn't normal is the degree of experimentation relative to company valuation. Normally once a company reaches $700 B+ valuation, they've figured out their product and monetization strategy. ChatGPT is clearly still iterating heavily on that - not normal for a company that size.
However all of the major privately held AI players are struggling to paint a business and financial picture that doesn’t look “terrible” at best and “verge of market moving implosion” at worst.
For now the only thing keeping this all alive is more and more irrational cash being thrown on the pile in the faint hope that something stops the implosion from happening.
But between their token curtailment and time of day restrictions, and some of the clues in the code leak (regex for sentiment, telling the public client to be "brief") it seems like they are facing some capacity issues.
Im guessing that the accountants at all the AI incumbents drink heavily.
There's a lot more money in being Google -> consumer ads, or Amazon -> consumer ads, or Meta -> consumer ads, than there is in being Anthropic -> enterprise.
Just take a look at the enterprise. Amazon's ad business alone is already a better business than Oracle or SAP or Salesforce, with superior margins, and it's growing faster too.
And of course everybody knows the Google & Meta ad monsters.
The only question remaining is who is going to extract all those LLM ad dollars, how will that break out. Right now it's Gemini and GPT in the obvious lead, with Anthropic in third, and Meta & Grok nowhere to be found (permanent situation for those).
This seems like ... not the situation we are in. LLMs are great for coding now but their text generation capabilities aren't exactly capturing the masses or replacing their jobs yet. People are already tired of the deluge of fake content on the internet, it's not going to drive a second revolution in web ads.
The $20-200 LLM plans are all subsidized and aren't paying for themselves. Something has to give here.
Whats interesting to me as well as much as companies are pushing AI adoption, i have started to hear AI token spend limits enforced across a few companies, so its not entirely clear that b2b can make them profitable yet either.
If all the models reach good enough, then low cost provider would win. Gemini seems like a safer bet since Google controls more of the stack / has more efficiencies / cross selling / etc.
It’s not like “best” has won any other b2b arms race in the past.
Gemini is the best deal too. For $20: you get multiple quotas per day across the products (web, CLI, antigravity, AI Studio) 2tb of cloud storage, and you can family share the plan.
And in that reality one can’t just magically spend a bunch more on some fancy new thing, especially when said fancy new thing isn’t retuning value. So “token limits” and cost controls on B2B is entirely expected here.
I think this is the key element. Either they can't measure the value, or it's far far lower than anyone wants to believe, or both.
I think the problem is less that it makes some coding tasks XX% faster, but that the end to end of a SWEs roles tasks is only improved by some much smaller Y%.
If a CTO sets $10k/year spend limits on $500k SWEs.. they must not believe any of the hype.
Fuller integration into the user's life will bring ever more ad opportunities (and it doesn't matter if the HN base hates that notion, it's going to happen regardless). That'll happen over the next decade gradually.
Shopping, home management, tasks (taxes, accounting, lifestyle, reminders, homework, work work, 800 other things), travel (obvious), advice & general conversation (already there), search (being consumed now), gaming (next 3-5 years to start), full at-work integration (gradual spread across all industries, with more narrow expertise), digital world building (10-15+ years out for mass user adoption). And on the list goes. It's pretty much anything the user can or does touch in life.
We already have the tech for that, why hasn't it happened? People are revolted by the AI results in Google. AI isn't going to make people use their computers more. It's not opening up a new consumer market. This is just making each search infinitely more expensive.
You can say the same about AWS and then prove the b2b case instead of ad case as well
Google's ad business remains far larger and more profitable than AWS. And the advertising segment is drastically larger than the segment AWS is in. Just Google + Meta = nearing $600 billion in ad sales. Amazon will soon have their own $100 billion in ad sales.
At some point someone needs to add value to the real economy, not just take an ad tax off the top.
And yet every attempt to extract even minimal ad revenue has been canned to date as something nobody wants with AI providers retreating in failure.
I don’t doubt that there’s “some” ad revenue to be had but there’s little evidence that ads are going to save the day here.
rules are simple, if you have Xbn or XXXm users on your system, you will make big bank in ads eventually
The masses will have no say in the matter. Just as they had no say in the matter with Google's ads getting ever more intrusive, or cable prices previously, or streaming prices going perpetually higher in the present, or YouTube ads, or anything else. Consumers will have no say in the matter, they'll take it and that's that.
With only three relevant competitors (maybe Mistral in Europe), there will be nowhere to flee the deployment of ads.
GoTo.com -> Google -> $$$
Billions in projected revenue is nothing but hype/cope. Google and Meta got their edge because their product was offered for "free" to the masses.
If they want to out-ad those companies to the tune of billions, I'll go with the least annoying. OpenAI hasn't earned any loyalty.
the silicon valley shuffle, tried & true
He seems to be trying to take almost a "venture studio" approach by throwing shit at the wall, but the problem with these things is always that the "internal startups" are "founded" by people who don't have enough incentive or control over their product to perform as well as an actual startup, and are distracted by internal politics. And frankly, it may also be that the really good founders will just do their own startup vs working on a quasi-startup inside a large org so there's some selection bias as well.
He was a partner at YC for 8 years
He has no research/PhD background in AI and is the CEO of an AI company
There is no objective data point in which he's a better CTO than a CEO
Why is this on the list? Like... what? How about including GPT 3.5 and GPT 2 here too?
Nothing similar happened when the earlier, presumably worse versions were discontinued.
Usually company "experiments" are typically hush hush, not blasted on every corporate media channel as a means to boost your company holdings.
I mean, even Andresson-Horowitz was taking NFT's seriously as though they weren't a scam only a few years ago (https://a16z.com/the-nft-starter-pack-tools-for-anyone-to-an...).
These people are also looking (and funding) quantum computing companies as though quantum computing is right around the corner after AGI.
They need to cool their jets. AI is certainly a worthwhile and super important development, but it's still possible to go overboard with it.
For some reason, he does not look like a man whom I would trust with my money, but it appears that there are enough rich investors who disagree.
One of the challenges here is that a lot of folks simply weren’t around then and haven’t seen what happens when everything implodes overnight. Those that have experienced it know what that looks like and know it will happen again.