Contrary to popular belief, plenty of long-term profitable businesses have no moat. It's just that if you use Warren Buffett's investment strategy and want to buy stocks to keep for decades, companies with moats are the surest way of doing that.
als0•30m ago
Why? Do you think frontier AI will never generate enough profit to justify its costs? The market seems to move on vibes rather than logic. I can imagine one of those company failing and the other seizing the market.
freecodeio•19m ago
while what you say is true, trillions of dollars and thousands of people invested in something that ultimately leads to a few companies from china doing the same 10x cheaper is a vibe that can go so far
lenerdenator•9m ago
I know that there are a few regulated industries that will go out of their way to not have any prod data ever exposed outside of the United States.
"China can do it cheaper" applies well to your personal projects. It doesn't apply well when you handle things like trade secrets, healthcare, or financial data.
InsideOutSanta•11m ago
> Do you think frontier AI will never generate enough profit to justify its costs?
I don't know, but I'm not sure it matters. Anthropic and OpenAI still have such large market shares only because their services are heavily subsidized. This can't go on forever.
At some point, they will have to stop burning investor money and start hiking prices. At that point, all of their competitors will look even better than they do now. So I don't see how these two companies in particular can generate enough profit to justify their costs.
dang•28m ago
Ok, but please don't post unsubstantive comments to Hacker News.
impossiblefork•9m ago
Yeah, i calculated something like that earlier.
But with a 2T valuation-- if they did raise, let's say, 300B, that's a 15% float, maybe they'd have a chance.
518 B in future compute obligations for the coming decade. 300 B, then 218 B is left. That's 13x their current revenue, not too far from 10x their current revenue.
Perhaps they could survive if they raised 300B. With that they'd only need to increase revenue a little bit, and that's probably possible, what with inflation and all.
The big problem is if there's improvements in AI accelerators that aren't going to be be bought by the companies that the people to whom Anthropic have obligations are likely to buy from. So if Google, AWS or NVIDIA end up not being the leaders in tokens/$, then Anthropic are screwed.
I'm not sure how the total picture ends up if one adds OpenAI to the picture.
mixdup•36m ago
Never once have heard about Warby Parker being a PBC
crystaln•38m ago
downrightmike•31m ago
DennisP•3m ago
als0•30m ago
freecodeio•19m ago
lenerdenator•9m ago
"China can do it cheaper" applies well to your personal projects. It doesn't apply well when you handle things like trade secrets, healthcare, or financial data.
InsideOutSanta•11m ago
I don't know, but I'm not sure it matters. Anthropic and OpenAI still have such large market shares only because their services are heavily subsidized. This can't go on forever.
At some point, they will have to stop burning investor money and start hiking prices. At that point, all of their competitors will look even better than they do now. So I don't see how these two companies in particular can generate enough profit to justify their costs.
dang•28m ago
impossiblefork•9m ago
But with a 2T valuation-- if they did raise, let's say, 300B, that's a 15% float, maybe they'd have a chance.
518 B in future compute obligations for the coming decade. 300 B, then 218 B is left. That's 13x their current revenue, not too far from 10x their current revenue.
Perhaps they could survive if they raised 300B. With that they'd only need to increase revenue a little bit, and that's probably possible, what with inflation and all.
The big problem is if there's improvements in AI accelerators that aren't going to be be bought by the companies that the people to whom Anthropic have obligations are likely to buy from. So if Google, AWS or NVIDIA end up not being the leaders in tokens/$, then Anthropic are screwed.
I'm not sure how the total picture ends up if one adds OpenAI to the picture.