[juancn]

AI companies are a lot more like traditional manufacturing companies.

They can only subsidize you so far, because they may not be even be covering their variable cost at this point.

There's no software multiplier (build once — pay the cost once — sell many times).

Traditional SaaS is in a middle ground, there are operational costs associated with providing services, but per request they're usually negligible.

AI? I don't know, but it's not looking great from where I sit, unless there's a significant breakthrough in inference efficiency.

[plaidfuji]

I think the manufacturing analogy is apt. If you consider both the need for minimal COGS and the large R&D expense, it’s kind of like… biomanufacturing. You spend a lot on R&D to develop your bug, which at the end of the day is just a very complicated sequence (DNA vs model parameters), and then you expend a ton of capex (or rent someone else’s capital equipment) to produce a relatively commoditized product (a drug, a protein, food…) at as large scale and low cost as you can.

But that also makes the case for government subsidization + bailout, if you accept it as a capability critical to national security, but one that may not be profitable to run within the US on its own merits.