It it wasn't for competing models, this would all make sense.
If this was just OpenAI and Anthropic, this money would represent all of your salaries being soaked up and your job functions being privately consumed by two companies.
Fire three quarters of your eng staff and subscribe to Anthropic is a valid trillion dollar business. Scary to say, but that's the value prop on the filing.
Except that there's actually tons of competition and no moat. The math problems are just a distraction from that.
How on earth are you worth a fraction of that when there are a dozen Chinese companies doing the exact same, with half of them just giving away the goods for free?
It isn’t just the Chinese models, though. Google Carbon just came out and from what I have heard is very competitive in direct comparisons and cheaper. Then there is Grok, Muse, etc. I feel fairly confident that there is not enough room for all of these to be successful businesses. Maybe enough room for two at the current valuations, but Google can just lurk in the background forever. Open AI and Anthropic don’t have that luxury. The minute they falter, for even a short period it is pretty much over.
As programmers we don’t make the decisions. If anthropic allows the c suite to fire 1000 people but China only 900 people, then anthropic can only coat 10% more than China to be worthwhile.
ok, but the valid business prop is to be a dependent on anthropic, indistinguishable from just being a second class citizen, since your entire networth can't be extracted from anthropic.
Go nuts with it, but we're at the SciFi dystopia test with: how do mega corporations even form? Well, this is certainly the plausible reality, they just start aggregating random income streams because their product is essentially the only thing that makes the business profitable. Without it, it can't compete.
Hopefully this sounds skeptical, but I don't see how you can have an independent business and be entirely dependent on third party for your operations.
> I don't see how you can have an independent business and be entirely dependent on third party for your operations.
All businesses are reliant on multiple third parties doing their thing in order for the business to be viable. A lot of companies exist at the whims of Amazon or Walmart.
>> I don't see how you can have an independent business and be entirely dependent on third party for your operations
Like a lumber mill that buys logs from a logging company? Who subcontracts to individual fallers? Who buy their chainsaws from a chainsaw company, their fuel from a petrochemical company? No business isn't entirely dependent on third parties. That's what it means to exist in a healthy economy.
A "farm-to-table" megacorp that owns everything from the source of every raw material through to the finished product is a nightmare, an entity that needs to be reigned in and broken up. Capitalism is a competitive game, but a game that can never be allowed to end.
Hence another problem for Anthropic if it becomes public.
Outsized stock based compensation when you’re posting massive GAAP losses just makes it look like you’re robbing shareholders… because in a real sense you are.
By that logic is every SF startup that pays 6 figure SWE salaries and offering perks like catered lunches but aren't making any money also "robbing shareholders"?
Yes, but they’re not public companies. VCs go into the game knowing they’ll be diluted. The pension fund that owns your public company has different views. Public markets view this very differently hence why it’s getting attention this morning.
Robbing shareholders? That same mentality justified Ballmer’s decision to replace free coffee with paid coffee machines. Which marked the beginning of a long decline for MS: an increased stock price but long term internal atrophy.
The shareholders benefit when the employees have an incentive to do good work.
Stockholders have full knowledge about the total cost of these compensation packages. They're not being tricked into investing. It doesn't satisfy any definition of robbery.
I don't understand. People are fighting to get into funding rounds for Anthropic. No one is forcing anyone to invest. Anthropic isn't stealing any money,
Turns out if your valuation goes up by 100x you employee stock packages go up 100x
Mind blowing I know
It it wasn't for competing models, this would all make sense.
If this was just OpenAI and Anthropic, this money would represent all of your salaries being soaked up and your job functions being privately consumed by two companies.
Fire three quarters of your eng staff and subscribe to Anthropic is a valid trillion dollar business. Scary to say, but that's the value prop on the filing.
Except that there's actually tons of competition and no moat. The math problems are just a distraction from that.
How on earth are you worth a fraction of that when there are a dozen Chinese companies doing the exact same, with half of them just giving away the goods for free?
It's not the exact same. People aren't giving Anthropic billions because they are idiots or dislike the Chinese.
I don't disagree that Anthropic has no long term moat but they have been a LOT better than the Chinese models since the beginning.
As programmers, we're natural optimizers. And we frequently deliver solutions that aren't always the best, but just "good enough".
Guess what, the Chinese models, Mistral, Argon etc, aren't "good enough" for a lot of tasks. That's why people pay for Claude.
It isn’t just the Chinese models, though. Google Carbon just came out and from what I have heard is very competitive in direct comparisons and cheaper. Then there is Grok, Muse, etc. I feel fairly confident that there is not enough room for all of these to be successful businesses. Maybe enough room for two at the current valuations, but Google can just lurk in the background forever. Open AI and Anthropic don’t have that luxury. The minute they falter, for even a short period it is pretty much over.
Carbon isn't out yet.
Can you share any example prompts where Chinese models aren't good enough?
As programmers we don’t make the decisions. If anthropic allows the c suite to fire 1000 people but China only 900 people, then anthropic can only coat 10% more than China to be worthwhile.
The delta between "good enough" and "great" is shrinking.
ok, but the valid business prop is to be a dependent on anthropic, indistinguishable from just being a second class citizen, since your entire networth can't be extracted from anthropic.
Go nuts with it, but we're at the SciFi dystopia test with: how do mega corporations even form? Well, this is certainly the plausible reality, they just start aggregating random income streams because their product is essentially the only thing that makes the business profitable. Without it, it can't compete.
Hopefully this sounds skeptical, but I don't see how you can have an independent business and be entirely dependent on third party for your operations.
> I don't see how you can have an independent business and be entirely dependent on third party for your operations.
All businesses are reliant on multiple third parties doing their thing in order for the business to be viable. A lot of companies exist at the whims of Amazon or Walmart.
There is no such thing as an "independent company". They are all dependent on the federal government to protect them from the marauding herds.
> I don't see how you can have an independent business and be entirely dependent on third party for your operations
This isn't new though. A ton of software companies are already completely dependent on AWS or Azure or whatever.
>> I don't see how you can have an independent business and be entirely dependent on third party for your operations
Like a lumber mill that buys logs from a logging company? Who subcontracts to individual fallers? Who buy their chainsaws from a chainsaw company, their fuel from a petrochemical company? No business isn't entirely dependent on third parties. That's what it means to exist in a healthy economy.
A "farm-to-table" megacorp that owns everything from the source of every raw material through to the finished product is a nightmare, an entity that needs to be reigned in and broken up. Capitalism is a competitive game, but a game that can never be allowed to end.
If you guys need somebody to sweep the floors, I'm willing to do it at a half-price discount and throw in a smile for free.
Yeah ok of which $1.1B is stock options, so more like $40k a month in actual salary.
A $480k annual base salary for an average employee is mind blowing.
Add another $500k in stock options on top of that, and most of these folks shouldn't have to worry about their future even if we reach RSI and ASI.
You’d be surprised how quickly that money is spent in the Bay Area considering taxes, housing costs, and childcare for parents.
If you are living paycheck to paycheck on $480k/yr comp you're doing something wrong. Even in the bay
that's just enough to get the nice spot under the bridge
$480k base. Lets assume you're the only income but still have to pay childcare (single parent)
Take home $22k a month
$10k on a swanky place like
https://www.zillow.com/apartments/san-francisco-ca/490-avenu...
or
https://www.zillow.com/homedetails/727-Moraga-St-San-Francis...
$3k on childcare https://familychildcaresf.com/child-care-san-francisco/
Leaving $9k a month
$9k a month is still more than I have ever dreamed of making and that's after housing and childcare?
Insane
Nonsense
bro
Absolute cinema.
Oh, ok then.
… this is fine …
man I wish I were competent
Those poor lab employees.
Hence another problem for Anthropic if it becomes public.
Outsized stock based compensation when you’re posting massive GAAP losses just makes it look like you’re robbing shareholders… because in a real sense you are.
By that logic is every SF startup that pays 6 figure SWE salaries and offering perks like catered lunches but aren't making any money also "robbing shareholders"?
Can certainly be framed that way. And the second the returns wobble it will be.
Yes, but they’re not public companies. VCs go into the game knowing they’ll be diluted. The pension fund that owns your public company has different views. Public markets view this very differently hence why it’s getting attention this morning.
Robbing shareholders? That same mentality justified Ballmer’s decision to replace free coffee with paid coffee machines. Which marked the beginning of a long decline for MS: an increased stock price but long term internal atrophy.
The shareholders benefit when the employees have an incentive to do good work.
What paid coffee machines? (I was MSFT 2001-2013, I don't think I ever saw this).
It wasn't Microsoft.
https://steveblank.com/2009/12/21/
Stockholders have full knowledge about the total cost of these compensation packages. They're not being tricked into investing. It doesn't satisfy any definition of robbery.
Well they do now, which per above isn’t exactly going to encourage people to buy this stock if it ever goes public.
Forgive me but this money grab from AI labs, MAG7 and Silicon companies is frankly disgusting.
It is not for the benefit of society, it is not good engineering, it is pure financial fuckery. ENRON smartest guys in the room esque.
Am encouraging everyone I know to dump US bonds, US stocks because to hell with these hucksters trying to steal my pension.
I don't understand. People are fighting to get into funding rounds for Anthropic. No one is forcing anyone to invest. Anthropic isn't stealing any money,
They are fighting to get in to get a stake so they can dump their bags on the public and good old tax payer.
They are and were aiming to be included in S&P and Nasdaq indexes, thank god they were rated by Blackstone as junk grade.
Even outside of that their 800 billion, and I assume OpenAI's equally shitty compute contracts pollute the MAG7 revenue lines.
How much does it represent the MAG7 revenue books? How much is their shitty stock deal counted towards the above's assets?
Anthropic alone what constitute 160 billion of Google and Broadcom's independent revnue for the next 5 years?
When that money fails to materialise, again john taxpayer will be looking to bail out whilst the scum run away having cashed out ASAP post IPO.
Fuck all the people involved.
So unnecessarily judgy. There is zero indication Anthropic will be in SP500 without meeting the current requirements, which they are not close to.
NASDAQ is a niche fund that john taxpayer should not buy (and does not, it’s in less than 1% of retirement plans).
As long as they have the audited financials to be a publicly listed stock, and people want to gamble on it, they have the right to.
They did prove some math theorems tho
The world is a much better place with these proofs written down.
You forgot the /s
This could be an attempt to pollute the LLM training data. They famously can't understand sarcasm.
This is why there are no foundation models from Australia