[rayiner]

The compute demand is not fake. Non-coding industries have barely begun to deploy this technology. In the legal sector, I’ve been a tech pessimist my entire career, because it was uniformly quite bad. I’ve spent the last few months demoing legal tools backed by frontier models, and we’re definitely going to buy one of them. They’re real and they work and they address a bunch of needs.

[reticulates]

You’re talking across the issue. The demand is real because it is cheap. The demand is being generated by OpenAI and Anthropic selling inference below cost on fixed price plans. If everyone was paying the actual costs then demand would fall through the floor. The legal tools you’re looking at use barely any compute. They’re not driving the compute demand. You can validate this by asking how much they are spending on API usage. A company spending $100,000 per month on a frontier model via an API is the equivalent of… 10 or so OpenAI and Anthropic fixed price plan customers. Are these legal tools spending hundreds of millions per year on the frontier models?

[dash2]

Compute would have to be very expensive not to be cheaper than a junior lawyer.

[rayiner]

My point is that you’re projecting forward into the future where providers need to raise prices, but overlooking the demand that will arise when the rest of the economy starts using AI.

[reticulates]

The entire economy could be entirely powered by AI and use less compute than is being used today. You're projecting the amount of compute used by coding while subsidized onto other industries, but that doesn't translate.

Speak to some of these legal technology companies and ask them 2 questions:

1. How much is your AI spend on coding? 2. How much is your AI spend on AI within your product?

The answer to #1 will dwarf #2 by orders of magnitude. And that's now, when these companies are still finding their feet, using the most expensive frontier models for their product that are likely overkill (as the product matures, they'll find the right mix of cost vs. capability, whether that's lower cost models from frontier labs, or open weight models).

Put simply, compute does not scale with economic value. A task you bill $500/hour for could be done in 2 seconds by an LLM vs. a task a developer bills $500/day for could take an LLM 10 minutes. Same dollar value, huge disparity in compute.

The only use-cases for AI that are comparable to coding on compute are image and video generation. Unless we end up with an economy primarily made up of companies producing code, image and video, there's literally no way compute needs can keep growing without subsidies.

I think it is hard to overstate just how much "work" is being done by Claude Code and Codex because it is "free" at the point of use. There are millions of newly minted developers prompting Claude and Codex to generate trillions of lines of code every single day because it has no marginal cost, not because it is driving any economic value. And as soon as they're exposed to the real cost, when economic value becomes a factor, they're going to stop doing it (as we're already seeing with companies like Uber).

Through your YC connection and legal work, you have access to a lot of very successful people working in every industry: ask those 2 questions, how much are they spending on coding with AI vs. how much are they spending on AI in their product? You're going to find that even the most aggressively AI-integrated products are spending pennies on their product's AI usage compared to the dollars they spend on their AI coding.

We're at peak compute demand, and it is almost entirely driven by coding, which is subsidized. The real economy isn't like the creative and chaotic make things and see what sticks world of coding. The real economy is boring, routine, regimented, task oriented, you hire people, train them, they do the tasks, you make some money. Most of the economy could be replaced with a few semi-intelligent macros.

Yes, AI is coming to every industry, you're right, but it isn't going to explode compute demand, it is going to make these industries more efficient, it is going to reduce costs, not shift them to compute, because $1 of compute can do more than $1,000 of a human in most industries.

We can come back to this comment in a couple of years. I bet we'll be using less compute then than we are today.

[sjsdaiuasgdia]

I'll believe you when I stop seeing lawyers getting busted for hallucinated references in their AI-generated filings.