[zozbot234]

They just have to incrementally raise the price of inference tokens and limit subscriptions to curtail existing demand (with much of it likely moving to slower and cheaper local models). Which, come to think of it, is exactly what seems to be happening right now.

> So they don't have investor money to burn (and when they do, they immediately burn it on new datacenters, which usually take years to build and aren't a certainty).

If AI models can get smarter and more practically useful via some combination of increased scale and more fine-tuned post-training on specific workloads (which is compute-heavy, even more than the usual kind of pre-training) these new datacenters are a fantastic investment.

[0xbadcafebee]

They would have to raise the price of inference (and not just inference but actual contracts) 4x, within a year or so, for PaaS not to run out of cash. But nobody wants to pay that much money, and there are a swath of companies all over the world who will do it for much, much less. People will stick with them out of irrational fears (fear of the unknown, fear of missing out) until it gets too painful. And when people start leaving, what then? Anthropic's hope is that they can make a moat so high everyone is trapped. But it's actually not hard to replace Claude with a competitor.

They can get more efficient, but inference efficiency doesn't map linearly to cost efficiency. Firstly because software is a gas; if you give people more compute (for the same price), they immediately use it all up. But second, if you spend $50BN, you still have to make $50BN to break even. They could make inference cost $0.00000001, but that isn't going to cover their costs. That's what's driving their cost right now - they're trying to collect enough cash from people at the table to pay the bill, without the price scaring everyone out of the restaurant.

So they can't raise the price without scaring people off, and they can't lower the price and pay the bill.

[zozbot234]

> But nobody wants to pay that much money

People will want to pay that much once they're enabled to make the best and most efficient use of SOTA proprietary models for tasks that actually benefit from them, while using cheap third-party inference everywhere else. That's very different from what the leading AI firms are proposing right now and it does require some careful balance to get there from here, but it's absolutely doable.

[agentpenguin]

The subscriptions will drop if they increase the price and if they don't increase the price, they will run out of cash to operate.

It's simply not feasible.