[simianwords]

I'm simply saying this: there are third party hosters of Open Weight models like deepseek and they have been doing this for a while.

Obviously they are not subsidised, do you disagree? If you agree, they have a way to price it at a point that people wanna pay for it and also they aren't losing money.

So there's nothing inherent about inference that makes it too costly or whatever.

[oblio]

> I'm simply saying this: there are third party hosters of Open Weight models like deepseek and they have been doing this for a while.

> Obviously they are not subsidised, do you disagree? If you agree, they have a way to price it at a point that people wanna pay for it and also they aren't losing money.

> So there's nothing inherent about inference that makes it too costly or whatever.

Do we have audited GAAP financial data for any of these companies? If we don't, all these are... vibes, man.

[simianwords]

Good questions. The post you are replying to is also based on vibes. So how about we make a bet and come back after IPO filings?

But isn't it okay to suggest that random 3rd party hosting companies are ... not losing money? Why?

[oblio]

I'll bet 50€ that big AI companies (OpenAI, Anthropic, xAI) have bad regarding their core financials. Excluding one time deals such as renting hardware, external cash infusions, the core AI model business (training models and selling inference) is unprofitable and will be be at the expected scales (50 billion € or more) for the next 5 years at least.

I bet that within 5 years they will be sold for scrap to bigger companies and will become divisions inside them.

[simianwords]

This is not fair, lets just speak about Inference margins. You are bringing 100 other things to make it more ambgigous.

    Statement: margins API prices of all models are greater than 10% in Anthropic. 

Feel free to either agree to what I'm saying or bet otherwise.

[oblio]

1. You can't have a model without training. Training is part of the cost. A model trained 5 years ago is borderline useless. Also models cannot be retrained continuously, we do not have the technology (even if we had it, it would just increase the ongoing operational cost).

2. Rephrasing your statement:

  At June 2026 prices, profit margins for all Anthropic models are >10%.

That claim is super defensive. Serving a model can only be done if the model has been built and trained, can't have it any other way. Building it and training it costs lots of money.

Even so, fine, I'll take that bet. Anthropic inference prices are still marginally subsdizided. Once they're public they will hike their API prices several times over the next 24 months. Even that might not save them, because when we take all their expenses into account, they will probably need to raise prices 2-3x compared to their June 2026 prices.

[emil-lp]

Since you couldn't answer, I asked ChatGPT.

It said: upfront investment: $3M to $6M.

Customers should pay $25k per month.

Checks out

[simianwords]

I pasted everything you wrote and ChatGPT said

>The "$25k per month" figure is almost certainly the result of ChatGPT making assumptions, not a fact derived from any known business model.

https://chatgpt.com/share/6a28193b-6ec0-8333-a1af-d07e8d89ef...

Your whole calculation is also ridiculous - I think you assumed what revenue per month is required to pay off hardware within a year? Why would I use hardware within a year?

I would suggest consulting with ChatGPT and coming up with a better and more coherent argument.

[emil-lp]

I reran the numbers, break even after four years. 10k users.

Minimum upfront: about $15M

Comfortable upfront: $20M–$25M

Monthly revenue needed: $900k–$1.5M

Required price per 10k individual customers: $99–$149/month

API-equivalent output price: usually $8–$20/M output tokens, unless utilization is very high.

[simianwords]

dawg -- what is your point? please write your statement clearly and we can discuss.

[emil-lp]

My apologies for not being clear about my point.

I try to do some napkin math of what it takes to start a company serving an LLM to customers. I thought maybe 10,000 users sounded like a reasonable number.

I'd like also to compare it to traditional Internet companies, e.g. Twitter. I'd guess Twitter with 10k users would cost me literally a dumpster dive, so essentially no cost.

If I were to start an LLM company, what would my initial investment look like?

Turns out around 15+ million dollars assuming I would get 10,000 users willing to pay 200$/month.

I just don't see how the numbers you show add up.