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points by whatever1 2 days ago | 0 comments

Where? I am not aware of any significant business improvement on the actual bottom line.

We all feel more productive. But did your rust rewrite or my fancy react dashboard produce more value?

I advise a B2B startup that went from 4 developers to just the founder, who is technical but not a developer. It is now profitable and delivering just as many features with arguably better security. N=1

[–] zrobotics 2 days ago

So how is this startup going to be a value add long term? If they can cut all the devs, what moat is there? What's stopping their customers from just prompting their own model?

Seriously asking, why would this look like a good business model to be in? If they don't need anyone besides a technical non-developer to create the product, why would this look like a good business? If it's B2B, then most of their customers will have that type of IT person on staff.

[–] fn-mote 2 days ago

A dry cleaner and a car wash can be a good business. Outsource things that are not your core competency. A moat means you can defend it better, but in this case your business can capture the value of them not having the IT person on staff and not having to spend the tokens. It’s a good old fashioned business.

[–] daveguy 2 days ago

Wait... Are anthropic and openai just commodity suppliers? Because dry cleaners and car washes both need soap, but I've never heard of a trillion dollar soap company.

[–] keeda 2 days ago

AWS, Azure and GCP supply a commodity -- compute -- yet each one of them could be a trillion dollar company in its own right. Even when on-prem is nominally much, much cheaper than cloud services.

Turns out there are ways to monetize commodities, to the tune of double-digit billions in revenue per quarter.

[–] adventured 2 days ago

If it were true that what OpenAI and Anthropic offer were commodities, that there is no moat, Microsoft could trivially eat their lunch. There would be no OpenAI. Google with its nation-state money, extreme AI talent, chips, datacenters, could eat their lunch.

So mighty Google can't manage it. But it's a commodity that's easily copied.

Somehow HN can't reconcile the contradiction even though it's laughably obvious.

Hey anybody could go MVP a ride hailing app over the weekend. It's a commodity app. Should be super easy with LLMs.

Oh shit, wait, you mean I'd have to take a billion users away from GPT and getting those users is now 50x harder than it was four years ago? You mean it's drastically harder to peel users away from existing services than if you get to start fresh? Ohhhh.

They have gigantic moats and so long as they don't do anything too stupid, those moats will just get stronger with time.

No VC is giving you money to try to run down OpenAI and Anthropic. Nobody is writing that $100 billion check. It's already over, HN is just in its standard denial phase.

[–] mrheosuper 2 days ago

The Chinese could definitely eat their lunch if the US didn't decide to limit access to SOTA hardware.

So you could argue their moat is US government, not their model. I don't disagree with you, just saying what is their real moat.

[–] adventured 1 day ago

OpenAI's moat is the userbase and service layer, which is gigantic. It is extremely difficult to pull users away from giant services.

The Chinese models have no great branding with the masses, they have no service layer that any average user understands. Where does Joe go to use the Chinese model that he doesn't even know the name of? Joe has no clue what the difference between DeepSeek and Kimi is, and Joe will never know that.

They all know ChatGPT, they have all been trained on how to use it and what it is. The inertia is enormous and HNers endlessly undercount how that works because deep tech users all want to think the masses view tools like they do and approach tech like they do (which is entirely false).

OpenAI's future is as an ad platform in terms of its business. That's at least 2x-4x larger as a business opportunity than anything they have going on now. Which is to say $80-$160 billion minimum. That requires they maintain the giant userbase, we'll see how that goes. Losing it requires someone take it from them. Joe isn't just going to wake up tomorrow and go seek out how to use Kimi.

The LLM space is worth a minimum of half a trillion dollars per year in ad revenue. It will subsume all of search. Search becomes merely a service of an LLM, which will perform the function on your behalf. Google is on top of that shift, so OpenAI has its work cut out for it competing with Google there.

Of the US big three, Anthropic is by far the one most threatened by the persistence of the Chinese models. Anthropic will probably never stop being chased by them and will have to endlessly race to try to stay ahead. Anthropic has to figure out how to build out the LLM+ equivalent of AWS before China figures out how to beat them, ie build a very deep service / tool moat around Claude that the userbase gets stuck to. In short dramatically increase the difficulty in peeling away users, it has to become a big chore to switch (which eventually this is exactly what someone will figure out in that area of LLM competition).

[–] dalyons 2 days ago

a regular business is not a startup though. A startup implies a much higher ceiling on growth and profit. Worth investing in on a high risk, high multiple of return manner. An SME sized business is not that.

[–] michaelchisari 2 days ago

The hard lesson is that quality will be the new moat.

For decades, velocity, time to market and features all drove the industry. But AI puts speed in everyone's hands.

But quality is still hard. Maybe harder than ever.

[–] mkotlikov 2 days ago

Not to mention the possibility of 4 competitors popping up over night.

[–] marcus_holmes 2 days ago

The question is "what business value is AI driving?" and the answer was "a solo founder cut all the devs and still delivered a product".

Separate question: "now that AI is here and development isn't a moat any more, how does a business defend itself from competition?"

That second question is a direct result of AI. Five years ago the amount of cost and effort spent on software development was a moat. Now it's not. So that answers the first question completely, I think.

As for the second question - market sector knowledge, customer contacts and industry reputation, all the usual non-technical things that make a moat. Also, we may now be living in a world where software companies cannot expect to be monopolies in their markets any more. This company will have to compete with many similar competitors for market share, like in most other markets. I think this is a good thing. Less enshittification will ensue.

[–] whatever1 2 days ago

No extra value was generated in the example. If anything, AI in this example reduces the price of the product AND employment.

Value was destroyed.

The hope is that all these unemployed engineers can somehow generate value? Even if they do they need to generate enough value that would employ 4 engineers.

[–] marcus_holmes 2 days ago

I think this is Broken Window fallacy[0], though.

If a business can create software cheaper, then it can charge its customers less for that software (or, conversely, if a business can use an AI to create bespoke software for cheaper than it would cost to buy that software) then the customer business saves money. It, in turn, can use that money to improve its offering to its customers. They, in turn, and so on.

Having cheaper things means everyone gets more things. The value created is created further down the supply chain.

[0] https://en.wikipedia.org/wiki/Parable_of_the_broken_window

[–] whatever1 2 days ago

I understand what you are saying, it just seems that this technology in contrast to any other productivity related technology is deflationary, because there is no alternative avenue to employ the idle labor. Not now, not in the future.

Where will people work on if both blue and white collar jobs go away? In brothels?

[–] marcus_holmes 2 days ago

Good question, and the question of our age, for sure.

I loved the article that was on HN a while back (original article here [0] be warned it's a quite a long read). It compared the current revolution we're undergoing to the Mercantilist revolution when we stopped being farm workers and started doing other things instead, driven by technological change in agriculture.

The answer they came up with: we don't know yet. Much like the move from subsistence farmers who started working in a factory had to rely on other people to feed them, we have to answer this question ourselves and it'll probably involve doing something very different. And wonderful - subsistence farming is a shit life (despite all the influencers saying how amazing being in touch with the land is) and we would all prefer to be working in an nice clean office than trudging knee-deep in muck in the rain trying to keep our crops alive and pest-free. The same will probably be true once the dust settles on this revolution and we'll all be profoundly glad that AI came along.

The big problem we have to face as a society is that we cannot allow all the value from this technology to be captured and retained by the wealthy few. Our ancestors had to fight the same conflict with factory owners during the Industrial Revolution, and they didn't manage to win that war completely despite all the blood shed and battles won.

[0] https://contraptions.venkateshrao.com/p/cognitive-mercantili...

[–] hattmall 2 days ago

What are some businesses where software was really a moat but the software lacks sufficient complexity that AI can reproduce it?

I can't think of any, I'm sure there are some, but I would really like to know. I just don't think for most business the software is so much of a moat unless it's very complex.

[–] marcus_holmes 2 days ago

Well, the most recent example would be the Adobe suite rewrite [0]

[0] https://www.afr.com/technology/ai-can-make-free-copies-of-ad...

[–] happymellon 2 days ago

Wasn't that just a literal copy of Photopea?

[–] kasabali 2 days ago

Nope

[–] bluefirebrand 2 days ago

A company doing more with less sounds great, but I personally view a shrinking headcount as failing

[–] jnaina 2 days ago

yup, it's happening. many of the CEOs/CTOs of PE owned ISVs have their marching orders: put in strong product managers, software architects and other senior roles who define what to build and how the software should work, and thin out the developer teams, as agentic coding becomes the norm. Am not saying this makes for quality software, but this is where the industry is heading.

[–] whatever1 2 days ago

So the price of the product will just fall by 80%, unless nobody else cares to compete.

[–] nfw2 2 days ago

That's still increased productivity even if the consumer benefits instead of the business owner.

[–] tehjoker 2 days ago

This is why capitalism must always find new markets or die btw.

[–] leptons 2 days ago

It's going to be funny when AI soon costs 4x or more than it does now, and that non-developer CTO can't understand the slop codebase the AI created.

[–] selcuka 2 days ago

> It's going to be funny when AI soon costs 4x or more than it does now

What exactly will cause that? Hardware costs are (generally) going down, and open weight models are getting smarter. The subsidised subscription prices will go away, sure, but I don't see the average token getting more expensive.

[–] fn-mote 2 days ago

I also hope that rising costs return software dev to an elite, lucrative career. I’m not making my 10 years plan based on that theory, though.

Watch what the open weight models can do. Once they can manage your codebase, you’re safe from gouging.

[–] jan_m_savage 2 days ago

But there still remains the possibility of error/hallucination. Do you bet on a future where AI will never make any mistakes whatsoever?

I am often told humans make mistakes, too. But this is an elementary logical fallacy because the type, frequency and severity of the problems is never the same.

Also, humans are more likely to do as told, whereas AI often takes liberties (i compiled a book from a github repo and it did things on its own in the book though i had explicitly forbidden that).

[–] nradov 2 days ago

I'm not sure if I'm more productive, but in my role where most of my deliverables are technical documents or emails I think my output quality has gone up. Now that I typically use LLMs as a research assistant and editor before sending anything significant to co-workers or customers I'm sure I make fewer mistakes. AI catches a lot of gaps and errors. That's a significant qualitative improvement although I can't quantify that in terms of profit impact.

[–] lnxg33k1 2 days ago

I think you're letting the LLM write emails that are overly verbose that are shortened on the other side by another LLM and so there are 2 minus habens to both side of a communications that are communicating the same stuff as before but now are paying for altman's yacht in order to do it

[–] nradov 2 days ago

Nah, that's not what I'm doing at all. Did you even read my comment? I use it more like a fact checker. It's not perfect but it catches a lot of my errors.

Maybe you could use an AI assistant to help you write better HN comments.

[–] steve_adams_86 1 day ago

Where I work, we take on way more exciting and ambitious projects than we would have when I was hired. It's exhilarating at times. Genuinely, AI in general (not just LLMs) has radically transformed the types of work we can conceivably pursue and deliver on. We're an NGO so we have different staff than a regular tech company, but we're highly tech-driven. I don't doubt that this is the case at many orgs like ours.

And it's measurable. We don't just feel more productive; we get grants, we build systems, and we make plans we simply couldn't have before.

[–] vanuatu 2 days ago

Im surprised people still have this 2024-esque take

i add more value to my company because it lets me ship much faster, debug issues faster, onboard new people faster

total enterprise ai spend is climbing https://ramp.com/data/ai-index#adoption#overall

i know multiple stealth startups with 9 figure revenues and profitable and growing

lab arr is climbing

given the recent crackdown on token spend and from speaking to execs they are very focused on the exact ROI they will get from AI

Note that business revenues in competitive markets may actually not change that much, because if everyone is using the same models there's no competitive advantage from using AI. but if one of them didn't use AI they would fall hopelessly behind

[–] deadbabe 2 days ago

AI is not about productivity. It's about weaponizing the ability to ship fast go-to market features in the blink of an eye when it becomes necessary. If trends change fast and you can't adapt quickly with AI: you're dead. So you need to have AI ready to go, just in case.

[–] nfw2 2 days ago

How is shipping features fast not productivity?

[–] happymellon 2 days ago

Having a special Gemini button everywhere is "a new feature", but it isn't a useful feature, so the productivity needle doesn't budge.

[–] nfw2 1 day ago

This is what the parent post said:

ship fast go-to market features in the blink of an eye when it becomes necessary

Necessary go-to market features are useful

[–] nfw2 2 days ago

If you're getting more done but unsure of the resulting value, that is indicative of your role not the tools you're using.

[–] archagon 1 day ago

Actually, I think that is the very obvious incentive structure of generative AI.

[–] Art9681 2 days ago

We ship features faster and workers are more independent. They can get the answers they need faster than ever. And i'm talking about the business itself if the business has enabled that. There are a ton of productivity gains.

But make no mistake. Being more productive does not equal higher profits because your customers think you've added value. Both value and productivity are highly subjective terms which is why it is measured differently depending on where you work.

Most businesses adapted to AI by shipping a lot more features in smaller increments of time. What they should have done is become much more ambitious and build moon shots in two quarters instead. You need to go big or go home if you're going all in on AI.