its not like its obscure though, since the signs were all there that NVIDIA, The main AI companies were looking for sucks to hold the bag.
alexa play despacito
This reporting is basically dishonest. The execs are not confused. They knew this was likely to occur, because we all told them so.
Now, you can argue that they hoped otherwise, that they were being ridiculously optimistic. But to argue that they didn’t expect it is simply unbelievable.
Well it was cheaper before, till Ai vendors increased prices to cover the real costs
I look at AI usage at work as basically taking on a bad but salvageable employee. For every use case, it needs a manager overseeing all their work and adapting to their strengths and weaknesses while also considering cost. It’s a deployment problem created by over promising.
Yes, when employed properly it can be a helpful tool. But when it’s given all the house keys and unlimited leeway, it will burn down your house (and your budget) because it cannot make reasonable choices. It’s not sentient (yet), despite all the promises from AI evangelists.
The first hit was free.
There’s no free lunch. These people said it themselves.
Here is how it has gone down for a few companies I have visibillity on:
- Investors with enough stock to have influence demand the company use AI and cut staff
- remaining ataff struggles to fit AI into their now bloated workload
- quality slips and stumbles. a few employees are able to make the transition and cause huge AI bills while attempting to cover the workload
- everyone gets upset and nothing gets done well
It looks like investors who have also invested in AI are trying to push its use and it is stumbling all over the place. If a company cant adapt it is basically stripped for parts and sold off to companies that are handling it better.
On the same token, it’s important …
We see what you did there.
If you’ve ever spent 10 minutes using an AI agent, you’d know that there’s no way to predict how many tokens it’s going to use before you give it a task. It can be $0.20 worth sometimes or $20 other times. Or anything, really.
It’s only after watching it churn away for a few minutes that you can assume it’s gotten stuck and have the option of pulling the plug before the bill gets run up too high. But you need to watch it like a hawk and you need to be the one paying the bill otherwise you’re not going to care (e.g. workers using AI at work aren’t paying for it, their company is).
Taken in aggregate across a month, that unpredictability might average out or it might explode.
i think the ones creating AI videos would be the highest costs.
Bold of you to assume these old people even engage with the business they claim to own.
Computerphile demonstrated this using copilot(timestamp 20:50), where he created a screensaver sort of thing with just a few prompt back and forth, and that used up 2 million input tokens and 47k output token. That’s about $6 to $10 just to create that screensaver.
I’d rather buy a used php book from my local bookstore for $10
I swear, execs are some of the most gullible people on earth. I know some of them, and none of them are very bright, just very greedy.
As we’ve seen with Donald Trump and George W. Bush, if you’re wealthy enough or in an aristocratic social group, you fail upwards.
And if you always fail upwards, it’s very easy to not gain the skills to succeed.
They’re not selected for intelligence, but for sociopathy.
I think it’s more sociopaths rising by being sociopaths and then promoting gullible idiots they can use and control with no issue, then blame when shit goes wrong
Man, if all it takes to be a CEO is to make stupid decisions, they should just hire me. I’m the master at that.
You’d think the cocaine-snorting classes would understand that only the first hit’s free.
I guess this proves that the execs are clueless about AI.
I guess this proves that the execs are clueless
about AI.Good note.
CEO “What, you screwed me over, too? Me?!?”
“We’re supposed to fuck everyone over together!!”
- Build up reliance on AI, which looks really cheap
- You can now replace employees with AI so fire away!
- You are now completely dependent on AI and a handful of employees
- AI company sees they have you and start jacking up rates. If you could afford paying for people before then you have the $ to pay high rates.
- Company now wonders why costs are back to where they were before and the AI isn’t working out as expected.
- AI company hijacks your processes, trade secrets, and market to offer the same thing for cheaper than you can. Raises rates for competitors to cover its own token use and simultaneously drive the others out of business.
It’s particularly funny because I’m pretty sure AI companies are still selling the service below cost to try to retain market share (and drive small competitors out of business). They just aren’t taking quite as big a loss on every token with the increased prices.
Pretty much the model for so many internet services or streaming services.
Yeah. It certainly pays off sometimes. Amazon did it. It just, y’know, also crashes and burns sometimes, and I’m not sanguine about the way this is shifting its investment money from venture capitalists to, y’know, passive index fund investors.
So, they’re earning money on token generation but not overall (including training)?
No, my understanding is that they’re bringing in revenue on token generation, but it’s exceeded by the costs of token generation (running data centers, so, electricity and cooling). They definitely want to make a profit on token generation, but they’re afraid that raising costs that high too quickly would drive customers to switch to other providers. So they’ve reduced the amount they’re subsidizing token costs, but not switched over to making a profit.
I can’t find a good citation for this, though, so it’s possible I’m mistaken. They also have huge costs associated with buying new GPUs and building new datacenters, so they’re operating at a massive loss either way, and it’s a little hard to find articles which tease apart the two aspects.
In any case, operating at a massive loss for the first few years is practically standard operating procedure in silicon valley at this point, and sometimes it eventually leads to a profitable, even wildly profitable, business (e.g. Amazon). But it does require a steady stream of investors and a steadily increasing market valuation. That’s…we’ll have to see what happens on that front.
Openai had 2025 6billion in revenue and 20 billion costs on compute. So just to run the models to get 6billion they need to pay 20billion r&d and marketing etc get on top of that
I’m sure there’s a term for it but this is like when a company keeps securing funding from investors so they keep growing to try to outpace costs with the illusion that you’re profitable when in reality you’re not. Just like WeWork.
Venture capital
Private credit. Get ready for the tsunami.
It’s just a Ponzi scheme with extra steps.
Yeah it’s basically the enshitification model
With the quirk that the service was shit to begin with.
Maybe but it’s like crack for CEOs
It’s just newsworthy when it happens to companies.
- They see people have gone to new companies thatre private unionized and value customers/employees/etc replacing them as they had done with their employees
- The company asks for them to come back to be laughed at as the people watch for them to slowly sink and be replaced with many better alternatives to take their place
- That is happening right now and we all can make it happen faster
Is this real life, or is it just fantasy?
It’s such a perfect grift
