Even with increased prices, AI enables velocity both in development and bugs fixing. Would companies want that? If prices are biting the company, I think companies will route all development and bugs fixing requests through few superperfomer developers with complete knowledge of the different components within the company (they will be the Queen Bees holding the company on their head). The rest of the company will be tasked with requirment gathering, specs cleaning, deambiguation and so on (worker bees).

From what I understand, that is sort of how IBM Bob works - multiple models behind the scenes and they route the request to the model that will handle it best at the lowest price.

So kinda like how stuff is now at a lot of big companies? I've worked at many different companies and almost always there are a few out-performers and a lot of people just found enough not to get fired (no hate, power to them lol).

We're already seeing slash their AI budgets. I expect that will increase till we hit more of an equilibrium.

I think people will start measuring (features * time taken to implement) to tokens consumed ratio and then redistribute token budgets to developers. This will measure how effective/efficient people are LLMs.

> Even with increased prices, AI enables velocity both in development and bugs fixing.

What about human understanding of the codebase that's essential to any project's long term health? Even "superperformer developers" eventually leave the company.

Ask multiple AIs (if you can't trust one) to explain the project.

Most software development teams are pushing back on the deluge of bad changes from AI tools and are moving slower again to regain trust and stability. It is likely that future software development will not actually be higher velocity.

Bad changes will be eliminated because better people are using the AI tools. They will reduce cost as well as slop.

The models are the same whether you're smart or dumb

Yes and we will all hold hands together singing and bring world peace from now on forever. Back in reality, I can see some obstacles without even trying

Do you want 60% of people to be employed in farming? I am being rhetorical because that is what you sarcasm implies. Today only 2% of people in farming support so many people in America.

> AI enables velocity both in development and bugs fixing

Or so they say. You'll have to trust those vibes blindly, because double-checking these claims apparently makes you an anti-science luddite.

Incentives matter…

If prices keep going up, watch for companies to exit frontier models and go to local llama.cpp instances for 6-month-ago SOTA, with the flex of being housed within the office - no more privacy leakage, no more price gouging.

To be honest, I’m not sure why a Y-Combinator backed company hasn’t come out yet flooding the market with highly capable OPAI (pronounced “Oh-pah” as in what Greeks shout as the drink shots), which stands for “On-Prem AI”

… yes, I just made up OPAI right now lol

> I’m not sure why a Y-Combinator backed company hasn’t come out yet flooding the market with highly capable OPAI

If we momentarily disregard the fact that YC itself owns billions of dollars worth of OpenAI shares[1], YC would plan to find demo-day investors willing to drive down the value of frontier labs. The coöpetition among VCs and the existing web of AI investments will mean no VC will be interested in investing in local AI...until after the frontier labs IPO.

1. Thanks to the self-dea^w foresight of former YC president Sam Altman

I do think many will move to lower cost models or self hosted over the next few years as prices balloon. And the privacy/control story is compelling.

If we're able to see some big increases in hardware capabilities that can be self-hosted, that will be an accelerant.

That said, most companies just want to pay a provider to delegate responsibility in exchange for cost and control.

> If prices keep going up, watch for companies to exit frontier models and go to local llama.cpp instances for 6-month-ago SOTA, with the flex of being housed within the office - no more privacy leakage, no more price gouging.

That or just hiring people to do the work! I hear rumours that this is already starting to happen in some places (perhaps those that were a little overzealous with AI-hype driven layoffs).

Fool me once… I think applying for jobs at a company that only within the last 12 months shed thousands of people “because of AI” should be seen as laughable, and employees collectively rejecting to work there should be seen as the norm

Theres recent reporting that Anthropic will be profitable this quarter...

edit: I see in other comments on this thread you think Ed Zitron is a reliable pundit so that explains everything.

How will it be profitable, really?

You can dismiss Ed (and me vicariously) but what's your compelling evidence to counter their extremely uphill battle towards profitability?

Either way it will be very interesting to see their S1 when they try and IPO.

If it's anything like SpaceX's then I suspect my post will age better than yours.

I sincerely doubt Anthropic’s IPO will say that their AI business is only 2% of their future revenue, and they’re bundling in totally unrelated, unprofitable things they expect to account for 98%.

I'm not sure what you're talking about or referring to...

I haven't heard anyone claim their S1 will show that but that it will show how poorly their revenue figures look against their costs.

Space'x IPO docs say that launch + Starlink will be 2% of their revenue opportunity, with enterprise AI being 98%.

Ah yes I see, SpaceXs IPO is a thing of beauty in how insane it is.

the alternative is that api prices change to be more in line with deepseek's

So then how do these companies return profits to investors?

Here is the fun part: they don’t