[latexr]

You stretched the analogy too far, to the point it doesn’t work at all. The advice to sell shovels works because shovels are cheap, already invented, simple, proven to work for their purpose, and can be bought in bulk. None of that is true in your analogy.

If anything you have it backwards and the LLMs (or eventually AGI) are the “gold” everyone is chasing. The low-effort crummy products that shove AI for the sake of hype and parting fools (mainly greedy investors afflicted by FOMO) from their money are the “pyrite”. A shovel in this sense would be something OpenAI, Anthropic, Google, DeepSeek, etc would want.

[iusewindows]

The shovel analogy is typically used to discuss tools versus goals, irrespective of the microeconomics of buying and selling.

I can use another sector, biotech, as an example. The sequencing industry spends billions of dollars designing and selling the next generation of sequencers, along with collecting more and more data. They are still actively researching and developing new platforms. The end goal (product) of biotech is ultimately to produce a medicine. Pharma is in the business of end products. You can spend billions on sequencing and never produce a new medicine.

Shovels = sequencing

End product = medicine

That has nothing to do with the cost or availability of shovels. As a biology major, you could choose to go into sequencing or go into medical research.

AI is a tool. For what? In the future, who knows--isn't that the big question at the moment, about whether the investments are justified and so on. But other businesses will presumably purchase and use these AI services. OpenAI can spend $500 billion, but how are they going to recover the cost (short of AGI demolishing HFT or the like, or simply taking over the world) without another business buying it and using it to create value in the form of end products.

Shovels are typically B2B.

End products are B2C.

OpenAI doesn't need anything from (the proverbial) you. Also, I stated in the title, "Currently". We aren't talking about doomsday AGI situations where AI exists as the end-all of humanity, and the point is just to own it. For current investors and labor, the model appears to be that these large companies sell their AI services.

[mattbrewsbytes]

I think in this analogy the shovels could be blogs, podcasts, youtube or other content produced quickly that offer info about $AI_thing. This is all mostly just marketing for the person’s content platform which is monetized and is often low quality content that is a regurgitation of press releases or release notes, etc.

[AznHisoka]

I would argue at least 3 of the 4 you mentioned are the shovels in AI. They are what everyone uses to build AI tools, which is the gold in this analogy. Anyone that offers infrastructure - hardware or software - around building AI is selling shovels IMO. Of course, to complicate things, they all sell applications to the enterprise too, so they’re not pure shovels.

The other 3rd category that are shovels is anything that provides data to LLMs. This include media publishers like Reddit. They definitely are not hard tech.

Anyone that is building any tools or applications whose target market is not companies who are building AI applications, is chasing after gold.