[ericmcer]

It is already bafflingly expensive. I interviewed at a place recently where they said the average dev was hitting $2k/mo in Claude code costs.

That is no longer a helpful tool... it costs like ~15% of an actual dev.

Even if it is helping, is it actually... making things better or building anything truly important? The issue seems way too nuanced to spend $2k/mo. Not to mention the entire tech industry floats on hype and imaginary goal posts so now what? Devs can hurdle towards those faster and more mindlessly?

[Aurornis]

> That is no longer a helpful tool... it costs like ~15% of an actual dev.

The full cost of each employee is more than their salary. The common estimate is 1.4X their salary due to all of the employer-paid taxes, benefits, and other things.

So even $2K/month of token costs would only be around 10% of the cost of a mid-range developer cost.

It doesn't have to increase productivity much to justify the cost.

[Silhouette]

The arithmetic is a little different in every country because of local rates of pay and taxation but it's worth remembering that in most of the world except for the richer parts of the US developers do not get paid what those US developers have been making in recent years. There are a few exceptions but the norm is several times less even in major economies in Europe or Asia.

Another challenge for US tech companies is that - if you'll forgive the bluntness - their "brand" is now toxic in most of the world. Almost everyone is trying to distance themselves from US tech as fast as they can. Governments and big businesses are starting to invest seriously in alternative solutions and local resources. It will happen over time but I don't see much the US tech companies or the US government can do to stop the train now the wheels are turning.

So there's a serious risk for US tech companies now of a double whammy where their already relatively high R&D costs increase even further and yet they're also facing much stronger competition in international markets or maybe even excluded from some of those markets entirely.

If we also reach the seemingly inevitable point that "capable enough" LLMs can run locally - or at least as a private resource provided internally by large organisations - there is very little moat left to protect not only US Big Tech whose stocks have been heavily driven by expected returns from AI but the whole US tech industry that is banking on productivity gains from that AI tech. Then they also won't be able to capture most of the entire global supply of components like GPUs/RAM/SSDs because it won't be cost effective any more - and that is one of the few practical moats they have built (however accidentally) that would be a significant barrier to direct competitors setting up shop in places like Europe and Asia.

It's going to be interesting to see how US tech companies respond to these effects over the next 5-10 years. The giants are all aboard the AI train and can't back down now so there will probably be some casualties there if - as again seems inevitable - the bubble bursts at some point. But then there's a very long tail of still very successful US tech companies that might be paying US salaries and using AI-based tools but aren't themselves focussed on developing or providing those AI-based tools and they're the ones who are going to need to find new ways to compete effectively within that kind of time frame.

[demorro]

I'm very excited for a tech sector disconnected from silicon valley. We've forgotten that you can get a lot of scrappy stuff done in a shed for quite cheap when you're not trying to inflate hype bubbles constantly.

[Silhouette]

I often think the saddest part of all about the US VC culture is how many businesses that could have been successful by any normal standard - just making millions instead of billions - must have failed because they gave up a viable business model with real customers and modest but steady growth in their quest to become the next unicorn.

[legulere]

Don't forget the organisational overhead. You'll need managers and communication overhead between developers grows superlinear (see Brook's law).

[JohnHaugeland]

brook’s law is probably not true anymore

[sarchertech]

The 1.4x multiple doesn’t work when you get to engineering salaries.

[jcgrillo]

Some people are claiming to use a billion tokens per day. According to Claude's API pricing page that'll cost somewhere between $3k and $10k per day. Leaving aside whether we trust Claude's API pricing model will remain constant into the future, it's abundantly clear that developer is not generating tens of millions of dollars per year in value.

[ilovecake1984]

The real thing is that it is on tap. If I have to engage an Indian outsourcer to hand off easy stuff to it’s going to be much more painful.