What's the scenario look like where multiple LLM providers like Anthropic and OpenAI both live up to their valuations? Claude being 1.1x better at code and OpenAI 1.1x better at some other stuff doesn't seem like enough differentiation to do it.
NewHype valuations reflect how confident current investors are that later investors are still coming and have nothing to do with specific profit models. Maybe the hype will pay off or maybe it won't, but during this phase all I need to believe is that I can get out before the tide turns.
At this point, the carrot that keeps investors coming is that many many people still believe at least one of these companies will become the next IBM/Microsoft/Apple/Google in one way or another and we don't know which one yet.
It's just buying tradable bets on a horse race that won't see its end for several more years. One horse could win, all the horses could drop dead, and none of it matters today: the game is in deftly trading those betting tickets as the odds shift.
I personally don't think this is possible unless these AI Companies translate from just bits to atoms but that's not out of the question[1].
[1]: https://venturebeat.com/ai/openai-has-begun-building-out-its...
The real target is replacing search with AI, as well as locking up all content creators into exclusive deals so that other LLMs don't get access to the new data.
Just like how streaming has locked video content under different vendors, LLMs will split information across multiple vendors and we will need to get subscriptions to different companies in order to search things in the future. And it's going to cost a lot of money for us peons to get access to data in the future.
Late 1990s internet infrastructure buildout means that most of the captured value was at the hardware level (HP Computers, Dell, Intel, Cisco etc.).
2020s AI infrastructure buildout appears to be the same. NVIDA is capturing a lot of value, and experiencing explosive growth.
Late 1990s/early 2000s was a time of tremendous development for web software , but no one really had a business model. These LLMs are like the web browsers of that era -- they are an interface to access other peoples IP, but no one really knows what the financial model looks like.
It wasn't until the mid 2000s/early 2010s that the business models came into sharp focus for web services.
Like web browsers, the LLMs might be a vital tool for enabling the capture of value for businesses, but it might not be the actual thing that they end up monetizing.
To draw an analogy it's sort of like the stock market. You'll never achieve sustained above-market returns by trading based on publicly available data because everyone else has access to all the same data. In order to get an edge over other traders you have to do proprietary research (or be faster or cheat).
It seems like most (all?) foundational models were trained on stolen content. I’m not sure what content exclusivity looks like for LLMs. It’s not like Joe Rogan signing on with Spotify where they have exclusive distribution rights for a particular piece of content.
This is the worrying part. The real content creators are people like you or me (not reddit or stackoverflow) and we aren't getting a piece of the exclusive deals. So if this is the end game, then it means either exploiting real people who are writing things or that people stop using it and the internet uses a lot of its utility as a place for communication and shared knowledge; probably a bit of both
At this point, I would bet that for the average user the middle tier models for all the major players are more for their uses and any differences are indistinguishable. Even when major advancements are made by one party, it seems like everyone else can catch up pretty quick. I'd expect that to continue to happen, especially if companies start embracing open source as the future (like they're claiming they will).
If that happens, the winner in this space won't be who has the best model, but who can build the better company. It's going to be able the deals they make, they products they build on top of their models, and who can bring their costs down the most.
Our hacker community is not a good proxy for the overall userbase.
And I can run it locally!
I don't have this issue with qwen2.5-coder, deepseek, etc.
Some of OpenRouter's [0][1] providers seem bunk; their version is corrupted. Occasionally just get mangled outputs. Fireworks [2] is my best experience so far: their serverless API, haven't messed with custom deployments. Fast, performant, better than other models in its size category and less expensive.
[0] https://openrouter.ai/deepseek/deepseek-chat:free
IDK, I won't pretend to know the difference between $61.5B and $123B, we can safely assume both will have a similar value, OpenAI as first mover, and Anthropic like a Pepsi.
>What's the scenario where both Anthropic and OpenAI both live
Pretty much all of them, their risk of failure is pretty much independent. You said software usually has near monopolies, which I agree, there's usually 3 or 4 or 10 big entities. To my estimation because of the need for competition and market segmentation. So the survival of one only conditions the other as a dependent event in the order of 1/10.
Our economic system is set up to continuously increase the supply of money at a rate that results in the average price of things consumers buy increasing 2% a year.
Technology is a deflationary force and if our system wasn't constantly adding more money the price of almost all consumption goods would continuously fall.
These investors are banking on the idea that these companies will automate so much high value labour that there is a massive wave of deflationary pressure on the economy, resulting in massive increases to the supply of money to balance it out.
So by crude example; 10 years from now anthropic could end up with 1% market share and be worth $10 trillion.
And still there is plenty of space for those closely related, such as Cloudflare.
It's the Azure/AWS business model.
Protectionism by the US federal government.