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Comment by JCM9 | Hacker News Reader

2024 is going to shift into a tough year for AI. Business minded folks are already starting to deeply question where the value is relative to the amount of money spent on training. Many/most of the GenAI companies have interesting ideas but no real business plan. Many of the larger AI companies look very shaky in terms of their governance and long term stability. Stability is showing itself to be very unstable, OpenAI has its mess that still seems not fully resolved, Inflection had a bunch of strange stuff go down earlier this week, and more to come.

I’m a huge fan of the tech, but as reality sets in things are gonna get quite rough and there will need to be a painful culling of the AI space before sustainable and long term value materializes.

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> Business minded folks are already starting to deeply question where the value is relative to the amount of money spent on training

Kinda. In my experience, the bigger issue is the skillset has largely been diffused.

Overtraining on internal corpora has been more than enough to enable automation benefits, and the ecosystem around ML is very robust now - 10 years ago SDKs like Scikit-learn or PyTorch were much less robust than they are now. Implementing commercial grade SVM or <insert_model_here> is fairly straightforward now.

ML models have largely been commodified, and for most usecases, the process of implementing models fairly straightforward internally.

IMO, the real value will be on the infrastructural side of ML - how to simply and enhance deployment, how to manage API security, how to manage multiple concurrent deployments, how to maximize performance, etc.

And I have put my money where my mouth is for this thesis, as it is one that has been validated by every peer of mine as well.

I agree with you. My reference in business questioning value was on the flood of money going into building new models. That’s where we will see a significant and painful culling soon as it’s all becoming quite commoditized and there’s only so much room in the market when that happens. Tooling, security services and other things to build on top of a commoditized generative AI market opens up other doors for products to be built.

> flood of money going into building new models

In my experience, there really hasn't been that significant of a flood of money in this space for several years now, or at least not to the level I've seen based on discussion here on HN.

I think HN tends to skew towards conversations around models for some reason, but almost all my peers are either funding or working on either tooling or ML driven applications since 2021.

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I've found HN to have a horrible noise to value signal nowadays, and people with experience (eg. My friends in the YC community) deviating towards Bookface or in person meetups instead now.

There was a flood of new accounts in the 2020-22 period (my hunch is it's LessWrong, SSC, and Reddit driven based on the inside jokes and posts I've been seeing recently on HN) but they don't reflect the actual reality of the industry.

I agree that the quality of the posts has decayed dramatically since the start of the COVID pandemic and lots of the Reddit type memes and upvotes have added horrible levels of noise. I can still find gems in it and it’s still miles ahead of Twitter, but I do question my time using it passively and would much rather have a smaller and more focused community again.

Been on HN off and on for about 9 years with different accounts. I do believe the comments are getting more difficult to parse (find the good vs noise) but still the best site I have found - is hand curated links and people willing to offer solid advice given a question in the comments. I use Reddit from time to time but only for pure time killing purposes. I have learned more from the comments on HN than any course, book or (other) web site. Hopefully it will stay that way for years to come. A smaller community could offer more quality responses but less chance of finding the person who has the answer to your question.

> I do question my time using it passively and would much rather have a smaller and more focused community again.

Story of my life.

I have a severe HN addiction that I haven't been able to shake off.

I’ve been in crypto since 2010 and HN hasn’t predicted anything. At least with AI the congnoscenti here is on board. With crypto / blockchain the current plan is to pretend it doesn’t exist and never speak of it, as the industry never imploded as was long predicted.

Crypto is a mixed bag.

Deep down I fundamentally believe it's a solution searching for a problem. That said, if people want to put money into it, who am I to judge.

That said, IMO crypto as a growth story is largely done. Now that Coinbase has IPOed and the industry consolidated or wiped out (eg. Kraken, FTX, OpenSea), it's not as attractive an industry anymore unless some actual fundamental problems are found that can't be remediated by existing financial infrastructure (legal and illegal).

Hard disagree but even if all of the growth is done, you never would have captured a penny of it reading HN. It went from “scam” to “ponzi” to “government will surely ban it” to “ok it’s over no need to look at or speak of it”.

> government will surely ban it

This is plain hystronics, but regulation is absolutely coming and will only help the larger existing players to consolidate.

Coinbase, FTX, etc have all seen the writing on the wall and are working with regulators on this.

The Wild West days are definetly over now.

If I'd invest in the space, I'd probably look at KYC and AML product opportunties such as Chainalysis, but even that space has consolidated

I’m super deep in the space but there is enormous money to be made everywhere. Or at least everyone I know is searching Zillow…

I'm not denying that there's money in the industry - every portion of the software industry can rake cash due to the extremely high margins that software has compared to just about any other industry.

The magic is finding which subsegments might have even higher margins than others.

Crypto used to have fairly high margins, but all the easy gains have been claimed by larger firms as it's a much more mature industry now, but portions of the ML space still have much more opportunity for growth, so it makes sense to deploy capital there (this is a very high level view so take with a grain of salt - B2C and SMB B2B and Enterprise B2B have entirely different GTM motions and path to profitability).

But at least for me, I can't justify participating in a Series A round for a crypto startup compared to an MLOps startup today.

It's still a scam even if bitcoin is currently benefiting from the creation of institutional ETFs. FTX was one of the largest financial frauds in history and the founder was disgraced and convicted. There's clearly a large amount of appetite for regulatory action in government right now and afaik the funding in the space has completely dried up. What did we get for all that trouble? A really inefficiet payments system? "Digital Gold"? A fun way to fund terrorists and drug running? Crypto proponents are delusional if they think they can just shake off the reputational damage they brought onto themselves in the past several years.

Funding is through the roof! $300 million seed round valuations are happening again

VCs learning nothing or cynically continuing to try and cash in on this scam isn't exactly an airtight argument, even if my original statement was wrong. FTX also raised a ton of money.

It’s just further proof that people commenting on HN confidently about crypto, do not have any idea what is happening in crypto. This website is not plugged in and you won’t pick up any information about it here.

Most of us just don't see the point of following an industry that is predominantly fraud.

It is a scam. It is a Ponzi scheme (subcategory of scams).

Meh. Crypto is still a waste of resources that had no reason to exist. The modern art market hasn't crashed yet either, and homoeopathy is booming, too last I checked. Just because it's stupid and useless doesn't mean you can't sell it. (And if you underestimate the possibility of selling useless things, you end up incorrectly predicting the demise of the market a lot.)

Not wanting to be part of that is just having some morals. Grabbing money where you can isn't a sign of a successful life.

Homeopathy has a long history of contributing to modern medicine. Read the WHO’s article about it: https://www.who.int/news-room/feature-stories/detail/traditi...

There are definitely still homeopathic treatments that work, but have not received the investment necessary to go through clinical trials (or haven’t caught on due to lack of recognition from insurance companies).

> Business minded folks are already starting to deeply question where the value is relative to the amount of money spent on training.

Not just training but inference too, right? They have to make money off each query.

Yes. Each query needs to generate enough revenue to pay for the cost of running the query, a proportional cost of the cost to train the original model, overhead, SG&A, etc. just to break even. Few have shown a plan to do that or explained in a defensible way how they’re going to get there.

A challenge at the moment is a lot of the AI movement is led by folks that are brilliant technologists but have little to no experience running viable businesses or building a viable business plan. That was clearly part of why OpenAI has its turmoil in that some where trying to be tech purists where others knew the whole AI space will implode if it’s not a viable business. To some degree that seems to behind a lot of the recent chaos inside these larger AI companies.

It's always fascinating to see. The business portions are much easier to solve for with an engineering mindset, but it seems to be a common issue that engineers never take it into account.

This is saying nothing about "technologists" (or as they're starting to become derided as "wordcels": people that communicate well, but cannot execute anything themselves).

It would be... not trivial, but straightforward to map out the finances on everything involved, and see if there is room from any standpoint (engineering, financial, product, etc.) to get queries to breakeven, or even profitable.

But at that point, I believe the answer will be "no, it's not possible at the moment." So it becomes a game of stalling, and burning more money until R&D finds something new that may change that answer (a big if).

> the whole AI space will implode if it’s not a viable business

if the Good Lord's willing and the creek don't rise

Inference will continue to shift toward profitability, Google and the rest are going to choke the cost to gain traction but as TPU costs come down and GPU costs scale up and models become more efficient the cost to infer will drastically scale down into profitability.

This comment made me laugh because I thought of NVIDIA during the crypto boom and now the AI boom.

They played their cards so damn right when deep learning was taking off.

Many here know I personally despise AI, but to take off my tech critic hat for a moment, if subscription models don't work out, we still ultimately do have a bunch of pretty powerful base models to build on. If you can push inference to the edge and run on local machines, you can make your users bear the cost.

I'm fairly sure this is why there's a rush to get AI related capabilities into processors for consumer devices, to offload that computing so they don't bear the ongoing cost and it'll probably be more responsive to the user.

>Many/most of the GenAI companies have interesting ideas but no real business plan

This is most likely the reason being the SAMA firing, to be able to re-align to the MIC without terrible consequence, from a PR perspective.

no criticism here aside from the fact that we will see the AI killer fully autonomous robots will be here and unfettered by 'alignments' much sooner than we expected...

And the MIC is where all the unscrupulous monies without audits will come from.

> no criticism here aside from the fact that we will see the AI killer fully autonomous robots will be here and unfettered by 'alignments' much sooner than we expected...

What exactly do you mean with this sentence? That less woke/regulated companies will suddenly leapfrog the giants now? What timeframe are we talking here?

And do you mean for example non public mil applications from US/China or whatever or private models from unknown players?

One thing i've been wondering is that if GPT-4 was 100 mil to train, then there's really a lot of plutocrats, despots, private companies and states for that matter that could in principle 10x that amount if they really wanted to go all in, and maybe they are right now?

The bottleneck is the talent pool out there though, but i'm sure there's a lot people out there from libertarians to nation states that don't care about alignment at all, which is potentially pretty crazy / exciting / worrying depending on view.

maybe they are right now?

Aren’t they? Pretty sure that most tactical and strategical decisions are automated to the bottom. Drones and cameras with all sorts of CV and ML features. You don’t need scary walking talking androids with red eyes to control battlefields and streets. The idea of “Terminator” is similar to a mailman on an antigrav bicycle.

I don’t think the bottleneck is the talent pool. There are plenty of folks smart enough to do what OpenAI did, the question is, did they have enough access to capital?

> That less woke/regulated companies will suddenly leapfrog the giants now?

What kind of "leapfrog" do you think is necessary to produce a "killer fully autonomous robot"?

We've actually had "autonomous killer robots," machines that kill based on the outcome of some sensor plus processing, for centuries, and fairly sophisticated ones have been feasible for decades. (For example it's trivial to build a "killer robot" that triggers off of face or voice recognition.)

The only thing that's changed recently is the kind of decisions and how effectively the robot can go looking for someone to kill.

Of course we're there already sadly. I was just confused by the sentence structure.

This video is from 7 years ago: https://www.youtube.com/watch?v=ecClODh4zYk

The interesting thing is who's actively working on this, any despots, private companies, foreign nations, who from the talent pool, criminal orgs or even western military which mostly works for the western elite classes.

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