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points by josephg 3 days ago | 0 comments

I’ve spent more money on Claude this year than I’ve given to a lot of other tech companies, combined. Well, I bought a new phone too - but amortised over the phone’s lifetime it’s still much cheaper than I’ve spent on my claude subscription and what I’ve gotten my company to pay in api usage credits.

There are two questions. Will the value keep scaling? And how much of that value chain will anthropic hold on to? Right now software development is being eaten alive by LLMs. Will that happen to other industries too? And in the long run, what do the models we run look like? Are people going to end up self hosing opensource models themselves, or are we going to collectively hitch our wagons to frontier models provided by anthropic and their competitors?

If ai keeps getting better - which I think it will - and if anthropic can corner a large part of the market in an enduring way - which seems less likely to me - then yes. I can easily imagine them becoming a huge company.

[–] Zigurd 3 days ago

Your usage and spending is an outlier in the current market. Anthropic's numbers are only plausible if you become typical of AI users.

[–] josephg 3 days ago

Yeah. It would require LLMs to sweep through other professions like they have in computing. I don't see strong evidence of that happening yet.

[–] quxbar 3 days ago

This is like somebody with a construction job who buys a new $100,000 truck - just because you paid that much to do your work doesn't mean somebody couldn't have accomplished the same with 1/5th the expense.

[–] r0b05 3 days ago

You've spent that money at subsidized prices but would you spend 5x if subsidies stop?

[–] 0xbadcafebee 3 days ago

"Subsidies" don't stop because it's not "a subsidy". It's a subscription service.

Like Netflix, Comcast, T-Mobile, etc, etc. There are millions of subscription services in the world. They all "subsidize" higher-usage users with plans for lower-usage users using a fixed price plan and rate limit. The profit comes from lots of users who don't hit their cap. The higher priced plans are actually more profitable.

This is called a tiered usage-based subscription business model.

[–] LinXitoW 3 days ago

That's how it's supposed to work. That's not necessarily how it does work, especially considering how hush hush and scammy all the AI companies are when it comes to posting real numbers.

They might also be in a Uber style subscription strategy. Make something super duper cheap, at great cost to yourself, so that you can grow a massive user base. Use that user base to get investments to keep burning money. Once you've got enough competitors out-priced long enough, jack up prices and enshittify like CRAZY to recoup the cost.

[–] 0xbadcafebee 3 days ago

The price is a factor of a great many things. Cost of inference, desire for user growth, market competition, investment recoupment, revenue numbers for S1, tier/rate balancing, etc.

They cannot follow the Uber model because of scale. You could keep getting tens/hundreds of millions from investors, back when there was lots of cash floating around. But you can't keep getting hundreds of billions of dollars. There are only so many dollars. The world is tapped out of private capital. That's why they want an IPO - so retirement and pension funds are forced to buy their shit stock, and feed them more money. But again there is only so many dollars.

Anyway it does not matter. Subscriptions are the most effective way to extract wealth from customers. This has been established so clearly that every business in America now has a subscription. Your fridge, TV, car, hell even car washes, now have subscriptions. Not because they didn't make money from you before, but because it's the ideal way to make even more money off you. There is no reason not to use subscriptions. No AI company in their right mind would end them.

The question of how much value you get from the subscription is different. They have already adjusted both price and rate limit a dozen times. They will keep adjusting it... but the subscriptions are here to stay.