>There's an important distinction here. Anthropic isn't actually spending more cash on AI than salaries. It's valuing its internal AI consumption at retail prices.
If virtually any other company in the world said "we have internal AI servers and we let our employees use them" ... the company would measure that as they would any other internal expenditure: by how much it costs them. You blow $50k a year on servers running your LLMs? It cost you $50k.
Only a company like Anthropic, desperate to make news and help their IPO, would measure by the cost they charge customers. It's as ridiculous as Microsoft counting every employee's use of MS Word ... as if it had paid the full consumer price of each copy.
ai-x 60 minutes ago [-]
No. This is opportunity cost.
A clear example is Google. They can easily give all compute to Deepmind, yet majority is allocated to be sold at market rate.
So, every compute Deepmind and Googlers get is lost revenue opportunity and must be measured as such.
No other internal tools or servers has this much external demand to be comparable.
Also, Anthropic is showing that to operate at Anthropic level, you need $300,000 compute spend per employee
skybrian 12 minutes ago [-]
It depends on your assumptions. When Google is in "space crunch" mode, there are opportunity costs. Otherwise, there aren't, because you could do both.
You could also look at the opportunity cost of not letting Deepmind do quite as much research. How much is additional research worth on the margin? There will be diminishing returns.
RandomLensman 32 minutes ago [-]
So every business should measure any client fungible resource that way? Should a bank put a revenue number to any capital held in excess of regulatory requirements, for example?
throwitaway222 3 minutes ago [-]
Not really- since they have an internal view of low and high usage times of the day, they can optimize differently.
robrenaud 56 minutes ago [-]
> Anthropic is showing that to operate at Anthropic level, you need $300,000 compute spend per employee
You have confused necessary and sufficient.
37 minutes ago [-]
cortesoft 39 minutes ago [-]
> So, every compute Deepmind and Googlers get is lost revenue opportunity and must be measured as such
Maybe, but it also reduces supply that can drive up prices
woah 52 minutes ago [-]
They also offer $300,000 in compute spend (allegedly) for $200 a month to anyone who isn't employed by a large corporation so their pricing should be taken with a grain of salt.
gruez 40 minutes ago [-]
>$300,000 in compute spend (allegedly)
source? The most optimistic calculations don't come anywhere close to that.
Usage allowances have decreased since that analysis. Also the 20X plan became the 10X plan (cut in half).
Aurornis 46 minutes ago [-]
Are you talking about their $200 consumer plan? If you use 100% of the quota every week it's closer to $2000 at API rates.
They have never claimed that the API rates are the "real cost" of the compute spend.
sigseg1v 5 minutes ago [-]
On the $200* consumer plan, according to "npx ccusage", I'm using $11,000 per month at API rates. Possibly significantly more, because I was previously using the $100 plan so that only reflects about 1 week of the $200 plan.
woah 42 minutes ago [-]
I was spending thousands of dollars a day in funny money (free promotional tokens from VCs) before switching to a paid subscription for convenience.
whimsicalism 39 minutes ago [-]
i don't understand why so many people on this site comment on issues they clearly do not know anything about
27 minutes ago [-]
Rapzid 39 minutes ago [-]
The price is the price, everything else is bullshit.
aleqs 39 minutes ago [-]
Obvious bullshit that's been disproven many times already.
hackingonempty 40 minutes ago [-]
> Also, Anthropic is showing that to operate at Anthropic level, you need $300,000 compute spend per employee
There are a bunch of open source harnesses that are competitive with CC and they aren't using anywhere near that many tokens to do it.
ako 26 minutes ago [-]
It's not just the LLM costs, to keep your agents busy you need to move them of your workstation onto a server/cloud. I currently have about 16 claude code agents working on different bugs, uses so much resources that my macbook pro m5 max becomes slow to respond. Using cloud session would free up my macbook for other work.
Anthropic recently handed out free cloud resources (it's still free, guess they want you to get used to the fact that cloud is not free). I went through $250 cloud budget in less than 2 days.
Feels almost as expensive as LLM calls.
eyegor 8 minutes ago [-]
I'm impressed you have a workflow that can keep 16 separate agents fed without the whole thing collapsing into nonsense. Even running full agent teams I can't think of ways to do that without being intentionally inefficient
Rabbit504030201 21 minutes ago [-]
You call your laptop "workstation"?
glimshe 7 minutes ago [-]
Technically it is... According the original vision for workstation, a computer with >1MB RAM, >1 megapixel of screen resolution, >1 MIPS and costing under 1 Mega cents (10K dollars).
By 'operate at Anthropic level', you mean terrible reliability and availability, and terrible efficiency right?
fwip 31 minutes ago [-]
If it were opportunity cost, that would imply that Anthropic can't sell as many tokens as people want to buy. But as far as I can tell, there aren't any "token shortages," at least at API prices. Or is there a maximum per-customer limit that I'm not aware of?
nullsanity 28 minutes ago [-]
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throwup238 54 minutes ago [-]
Plenty of companies use retail/wholesale pricing internally to make sure a business unit doesn’t appear profitable just because it’s being subsidized by the one providing the resources. Plenty also have to have arm’s length pricing for legal reasons.
Anthropic isn’t booking it as GAAP revenue, they’re just using the number for marketing.
buildbot 13 minutes ago [-]
Microsoft basically does the same with internal Azure services? When I was there our budget/usage was based on and consumed at the consumer price for GPUs and other compute. What happened behind the scenes really I have no knowledge.
Aurornis 47 minutes ago [-]
That's not really true. Measuring the equivalent retail cost of the usage is the only way to put it in a relatable perspective.
If Anthropic had revealed their internal cost, there comments would be complaining that they were hiding something and giving useless, unrelatable data.
The expenditure is most interesting when compared to retail rates, because that's the rate the rest of us have to compare against.
aleqs 35 minutes ago [-]
What's is the 'retail cost'? Because nobody (except total idiots) is actually paying their published API pricing.
simonw 16 minutes ago [-]
Most "enterprise" companies are paying full API costs. The subscription deals are only available to consumers. If you want enterprise levels of control over how your staff are using the models you need to pay up.
Anon1096 22 minutes ago [-]
Big companies actually are paying published API rates, Anthropic and OpenAI models are desirable enough that there is very little wiggle room to negotiate. It's their way or the high way. Same with things like "safety" filters and (for Fable) mandatory data retention.
56 minutes ago [-]
Foobar8568 58 minutes ago [-]
In a lot of companies, you would get charges back on usage/license/cost and this can get even funnier in NGOs.
In a similar way, internal employees would have also a "standard daily rate" like an external employee.
1 hours ago [-]
BigTTYGothGF 1 hours ago [-]
Seems entirely in line with Hollywood-style practices.
reducesuffering 1 hours ago [-]
Actually I think it's very informational. For every other company, working on the cutting edge of technology, paying for intelligence at retail prices, means you are now paying more for AI than you are employees. That $ could have been spent on 2x the employees, however that's not as useful as 50% AI / 50% humans, and indicative of where we are headed.
pixl97 21 minutes ago [-]
>means you are now paying more for AI than you are employees.
Yea, isn't the entire point of RSI to replace your employees altogether? So you'd spend an infinite amount more on AI than employees in that theoretical.
Like, if you were in an energy generation business spending way more on fuel and capital expenditures is way better than having zillions of employees earning checks , it would be a sign of efficiency.
aleqs 56 minutes ago [-]
Anthropic's use of AI in no way translates or represents any other companies' use of AI, so your apparent extrapolation makes no sense.
reducesuffering 34 minutes ago [-]
Anthropic is full of the smartest talent and a bellwether for how the rest of the service industry will work. Just as cutting edge companies of the past, like 2005-2020 Google's use of computers and software were indicative of the software every other service company was going to be using, lest they turn into an old fashioned uncompetitive dinosaur.
staticman2 21 minutes ago [-]
Wikipedia tells me that "service industry" is a term that includes transportation companies and law firms.
So you are apparently now claiming my local train company or law firm will be using as many tokens per employee as an A.I. lab.
nullsanity 26 minutes ago [-]
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blobbers 1 hours ago [-]
Do they actually book the revenue against themselves?
This is the world of spend more, get valued more; obviously the investment will be used to spend more and get more, so it must be good. This is investor-think. If you don't have spend, why do you need investment?
(Or it could be bad. Very very bad)
JohnMakin 9 minutes ago [-]
I'm not really sure I understand the excitement around this. It seems like the implication is that if retail price > employee salary, you are replacing employees with AI spend? Yet, anthropic's head count has nearly doubled since last year - so, in a company where nearly half of that head count is engineers, but claude is "writing 90% of the code," what is everyone doing then? You would think, if the hype feeling around this held true, that the output would be going up and costs remaining stable. Costs rising as you scale is not a new thing but that's not really what AI promises. It sounds to me like the retail AI spend per employee is very high. What is the appeal of that?
crazygringo 1 minutes ago [-]
Imagine an employee is 1x productive without AI.
Now spend 0.5x their salary on AI, and they become 5x productive compared to no AI.
Now spend 1.1x their salary on AI, and they become 20x productive compared to no AI.
It's still obviously worth it to spend the 1.1x. But it is truly remarkable that the biggest cost of hiring a knowledge worker is no longer their salary, but their AI usage.
There is no implication here that employees are being replaced by AI spend, as long as all of the productivity is generating profit. The AI usage still needs a knowledge worker to direct it in ways that it can't direct itself, so you still need the employees.
notfried 55 minutes ago [-]
It's kind of expected, no? If I was an Anthropic employee expected to dog-food the product and be on the frontier of usage, I'd probably be using Mythos all the time at the highest thinking level. And if I am not being metered, I'd probably do more stuff that I know are likely low yield since I am not worried about a quota. This would probably take my "API-equivalent" usage beyond the average salary in far less than a month.
riazrizvi 5 minutes ago [-]
I wonder how much dog shit has crept into their codebase by this point. Another company might dogfood their product but Anthropic is so heavily marketing oriented, I doubt this is driven by the desire to improve the product as much as it is by the desire to pad out usage numbers and create shareable stories. No matter the consequences. I bet $1 it sucks to be a good engineer in their software effort.
maxnevermind 31 minutes ago [-]
> employee expected to dog-food
I guess kinda put you in a bubble a little, I wonder how the experience of Anthropic eng who left the company would look like, when such eng would go and spend few $K a day in non AI lab, would that be encourage/allowed/taken as example?
maxnevermind 41 minutes ago [-]
Dumb question, what most engs at Anthropic work on? It doesn't seem like release some large new products all the time while they have quite a few of engs. What are the major branches of work besides LLM research? I guess there is a lot of infra stuff to support the scale of operation, just supporting API and TUI shouldn't be that demanding I guess.
5 minutes ago [-]
Morromist 15 minutes ago [-]
I'm kinda curious about this too. But then I'm always amazed at the enormous workforces these tech companies have, and I'm sure they cut them as thin as they can. Like adobe has 30,000 employees & some blogger estimated that 1/3rd of their workers are actually working on their software. I use their software sometimes and I really haven't noticed many changes to it over the years, except recently with the ai stuff. Like from 2015-2020 I can't think of any major things they added to adobe illustrator. I guess making and maintaining software is hard.
vrosas 2 minutes ago [-]
I fully agree most big tech companies are pretty bloated. But FWIW a lot of my time at SaaS companies, especially in the B2B space, was spend working on features for larger customers that most others would never use or even see. Like, yeah, product X isn't that complex, but $BigCorp wants to use it in their private cloud, or needs it to be single tenant, or needs these audits done, or want their $Gov client to use it. Now you have a ton of work for zero visible changes.
BigTTYGothGF 58 minutes ago [-]
> In March, I wrote about a new trend: Tech companies are starting to treat AI tokens (the main way to measure usage) as a fourth component of employee compensation, alongside salary, bonuses, and stock awards.
There's a lot to unpack about this statement.
compiler-guy 52 seconds ago [-]
It's certainly a cost of having an employee, along with salary and benefits. But employee costs also include things like laptops, electricity, internet, management, support staff, and possibly office space. Tokens are much more like the latter than the former.
cmdli 46 minutes ago [-]
Until employees can use those AI tokens for personal projects, it's not compensation. Rather, it's just a cost of doing business, like laptops, office space, or testing servers.
Aurornis 39 minutes ago [-]
I think the author used the wrong word.
I haven't seen anyone treating AI tokens as employee compensation. If anyone can show me an article where employees were paying taxes on their token use at work, please share it.
Companies have been treating AI tokens as part of the cost of having employees, like the cost of their office or travel expenses.
Terr_ 24 minutes ago [-]
> I think the author used the wrong word.
True, though that understates the author's problem a bit because it's surrounded with more also-wrong words, the idea is wrong too.
FartyMcFarter 53 minutes ago [-]
> There's a lot to unpack about this statement.
Including the fact that it's probably not true.
If something is compensation, it can often be negotiated and traded off against other compensation components. How many people have successfully negotiated AI tokens away in favour of salary/bonus/stock? I'm going to guess "approximately zero".
r0m4n0 30 minutes ago [-]
Yea they used the wrong word and it felt like rage bait. AI tokens you use for your job given by your employer is not compensation. Hell money isn't even compensation in many cases, it all depends on the context. The author needs use AI to help them rework that sentence or open a dictionary
55 minutes ago [-]
borzi 52 minutes ago [-]
So...given how much they are loosing and the looming bankruptcy risk, the lesson is: don't do this?
plaidfuji 12 minutes ago [-]
What does this translate to in terms of number of 24/7 coding agents per engineering staff member?
asim 25 minutes ago [-]
Do the same math on AWS cloud use at AWS and you'll probably see proportionate massive costs.
This is the nature of managed anything. AI efficiency will improve but essentially this is what automation does.
cmiles8 38 minutes ago [-]
I’m not sure what this “stat” tells us other than Anthropic is dogfooding its own tech. Which is kinda expected.
The real question is what could they have done with open weight models on the same compute they’re renting. If the answer is “basically the same” then this flips the entire conversion back to what is Anthropic’s moat here.
pixl97 16 minutes ago [-]
I mean, they probably could not have done most of it with open models. Again, a lot of this isn't going to standard software development, at least I would assume but instead to SOTA model development and RSI.
blobbers 1 hours ago [-]
They giving stock options to the AI now?
Or has it broken out of its jail and taken over the board? Dario seems like a bit of a windbag anyways, AI can probably automate most of what he does these days.
j45 7 minutes ago [-]
Could it be because spending it internally means they can’t receive retail prices for the tokens?
InsidiousWombat 1 hours ago [-]
all of that to hit two nines of uptime
margalabargala 1 hours ago [-]
Oh is it finally up to 89.9%?
lenerdenator 1 hours ago [-]
"ohhh, la-di-dah, this guy's got tens in front of his two nines instead of just 9.9" - github, probably.
cat5e 19 minutes ago [-]
Don’t get high on your own supply
polski-g 11 minutes ago [-]
For every new hire, you have to ask yourself: "Will this employee be better than another $300k in tokens?"
torben-friis 55 minutes ago [-]
Regardless of one's opinions about future AI usage, I'm not sure this metric says anything at all.
Would Anthropic themselves be paying this much if it was actually billed? It is not obvious.
Is Anthropic a good sample for AI use? Surely not, since they have special needs (dogfooding) and a vested interest in proving that AI usage is the future.
Can we compare their results pre and post AI usage? Close to definitionally impossible.
Are their employees good examples of AI-assisted engineers? Not really, as (one would hope) they're more well versed on the topic than an average eng.
robotresearcher 30 minutes ago [-]
> they're more well versed on the topic than an average eng.
That’s the suggested value of the observation: Anthropic’s people are a hint about what your people might be like in the future.
And the retail value metric is pretty normal: it’s approximately the opportunity cost of the tokens consumed. They could have sold (most of?) them to paying customers.
124-asf 59 minutes ago [-]
- @robobun, plz rewrite in Rust.
- @fable, plz s0lv3 Riemann. You are doing great.
- @claude. rewrite yourself for the 10000th time. Use as many tokens as you like.
Palomides 1 hours ago [-]
everyone who said "why aren't AI companies replacing their employees with AI?" should be rethinking their position
doctorwho42 50 minutes ago [-]
To what?
All this news says is Company A uses internally the resource they sell externally at ($X) value. It's not saying how much it cost the company to generate said consumed resource
Palomides 26 minutes ago [-]
to spell it out: the implicit claim is "ai companies think ai is a scam, as evidenced by them using humans instead of ai", and I believe the huge internal ai use is evidence to the contrary
ar_lan 53 minutes ago [-]
Anthropic/OpenAI should start doing mass layoffs if they want to convince other companies that this is really the human-labor killer.
Palomides 23 minutes ago [-]
they're using ai instead of employing more people, how is that not exactly the same minus a completely morale-destroying marketing stunt
both of those companies combined are smaller than the number of people microsoft is trying to buy out right now
ieieiezs 51 minutes ago [-]
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annodomini2019 59 seconds ago [-]
You shouldn't be getting downvoted, people should be concerned that a company that's about to hit the valuation that it's at is not exploding in junior hiring and expanding their workforce like prior companies
runarberg 53 minutes ago [-]
I will keep assuming any news coming from AI companies are a type of corporate propaganda, and that AI companies frequently use their millions of dollars of marketing money to create a narrative to maximize hype and make money.
goatlover 47 minutes ago [-]
Recursive self-improvement is just around the corner. Any day now they'll be laying off all their employees as their god-like AI makes investors trillions of dollars. /s
40 minutes ago [-]
Rendered at 18:22:14 GMT+0000 (Coordinated Universal Time) with Vercel.
If virtually any other company in the world said "we have internal AI servers and we let our employees use them" ... the company would measure that as they would any other internal expenditure: by how much it costs them. You blow $50k a year on servers running your LLMs? It cost you $50k.
Only a company like Anthropic, desperate to make news and help their IPO, would measure by the cost they charge customers. It's as ridiculous as Microsoft counting every employee's use of MS Word ... as if it had paid the full consumer price of each copy.
A clear example is Google. They can easily give all compute to Deepmind, yet majority is allocated to be sold at market rate.
So, every compute Deepmind and Googlers get is lost revenue opportunity and must be measured as such.
No other internal tools or servers has this much external demand to be comparable.
Also, Anthropic is showing that to operate at Anthropic level, you need $300,000 compute spend per employee
You could also look at the opportunity cost of not letting Deepmind do quite as much research. How much is additional research worth on the margin? There will be diminishing returns.
You have confused necessary and sufficient.
Maybe, but it also reduces supply that can drive up prices
source? The most optimistic calculations don't come anywhere close to that.
https://x.com/SemiAnalysis_/status/2064815044085318040
They have never claimed that the API rates are the "real cost" of the compute spend.
There are a bunch of open source harnesses that are competitive with CC and they aren't using anywhere near that many tokens to do it.
Anthropic recently handed out free cloud resources (it's still free, guess they want you to get used to the fact that cloud is not free). I went through $250 cloud budget in less than 2 days.
Feels almost as expensive as LLM calls.
However, so is my phone!
https://en.wikipedia.org/wiki/3M_computer
Anthropic isn’t booking it as GAAP revenue, they’re just using the number for marketing.
If Anthropic had revealed their internal cost, there comments would be complaining that they were hiding something and giving useless, unrelatable data.
The expenditure is most interesting when compared to retail rates, because that's the rate the rest of us have to compare against.
In a similar way, internal employees would have also a "standard daily rate" like an external employee.
Yea, isn't the entire point of RSI to replace your employees altogether? So you'd spend an infinite amount more on AI than employees in that theoretical.
Like, if you were in an energy generation business spending way more on fuel and capital expenditures is way better than having zillions of employees earning checks , it would be a sign of efficiency.
So you are apparently now claiming my local train company or law firm will be using as many tokens per employee as an A.I. lab.
This is the world of spend more, get valued more; obviously the investment will be used to spend more and get more, so it must be good. This is investor-think. If you don't have spend, why do you need investment?
(Or it could be bad. Very very bad)
Now spend 0.5x their salary on AI, and they become 5x productive compared to no AI.
Now spend 1.1x their salary on AI, and they become 20x productive compared to no AI.
It's still obviously worth it to spend the 1.1x. But it is truly remarkable that the biggest cost of hiring a knowledge worker is no longer their salary, but their AI usage.
There is no implication here that employees are being replaced by AI spend, as long as all of the productivity is generating profit. The AI usage still needs a knowledge worker to direct it in ways that it can't direct itself, so you still need the employees.
I guess kinda put you in a bubble a little, I wonder how the experience of Anthropic eng who left the company would look like, when such eng would go and spend few $K a day in non AI lab, would that be encourage/allowed/taken as example?
There's a lot to unpack about this statement.
I haven't seen anyone treating AI tokens as employee compensation. If anyone can show me an article where employees were paying taxes on their token use at work, please share it.
Companies have been treating AI tokens as part of the cost of having employees, like the cost of their office or travel expenses.
True, though that understates the author's problem a bit because it's surrounded with more also-wrong words, the idea is wrong too.
Including the fact that it's probably not true.
If something is compensation, it can often be negotiated and traded off against other compensation components. How many people have successfully negotiated AI tokens away in favour of salary/bonus/stock? I'm going to guess "approximately zero".
This is the nature of managed anything. AI efficiency will improve but essentially this is what automation does.
The real question is what could they have done with open weight models on the same compute they’re renting. If the answer is “basically the same” then this flips the entire conversion back to what is Anthropic’s moat here.
Or has it broken out of its jail and taken over the board? Dario seems like a bit of a windbag anyways, AI can probably automate most of what he does these days.
Would Anthropic themselves be paying this much if it was actually billed? It is not obvious.
Is Anthropic a good sample for AI use? Surely not, since they have special needs (dogfooding) and a vested interest in proving that AI usage is the future.
Can we compare their results pre and post AI usage? Close to definitionally impossible.
Are their employees good examples of AI-assisted engineers? Not really, as (one would hope) they're more well versed on the topic than an average eng.
That’s the suggested value of the observation: Anthropic’s people are a hint about what your people might be like in the future.
And the retail value metric is pretty normal: it’s approximately the opportunity cost of the tokens consumed. They could have sold (most of?) them to paying customers.
- @fable, plz s0lv3 Riemann. You are doing great.
- @claude. rewrite yourself for the 10000th time. Use as many tokens as you like.
All this news says is Company A uses internally the resource they sell externally at ($X) value. It's not saying how much it cost the company to generate said consumed resource
both of those companies combined are smaller than the number of people microsoft is trying to buy out right now