Isn’t this true of like everything AI right now?
We’re in the “grow a locked-in user base” part of their rollout. We’ll hit the “make money” part in a year or two, and then the enshittification machine will kick into high gear.
We’re in the “grow a locked-in user base” part of their rollout.
An attempt at that. It will be partially successful but with AI accelerators coming to more and more consumer hardware, the hurdles of self-hosting get lower and lower.
I have no clue how to set up an LLM server but installing https://github.com/Acly/krita-ai-tools is easily done with a few mouse clicks. The Krita plugin handles all the background tasks.
Yeah, it’s basically like early days of cable, Uber, Instacart, streaming, etc. They have a lot of capital and are running at a loss to capture the market. Once companies have secured a customer base, they start jacking up the prices.
in this case there isnt customer base for AI, only ceo and c-suites are.
There is a lot of top down shit, but there is definitely bunch non c-suite enterprise customers out there. A lot of product managers are curious about this shit.
There are billions of free users available. All they need to do is strip-off few excellent features of their free model and hide it behind a pay wall annnnd voila these free users have now became their paying customers!
I doubt it, LLMs have already become significantly more efficient and powerful in just the last couple months.
In a year or two we will be able to run something like Gemini 2.5 Pro on a gaming PC which right now requires a server farm.
Current gen models got less accurate and hallucinated at a higher rate compared to the last ones, from experience and from openai. I think it’s either because they’re trying to see how far they can squeeze the models, or because it’s starting to eat its own slop found while crawling.
https://cdn.openai.com/pdf/2221c875-02dc-4789-800b-e7758f3722c1/o3-and-o4-mini-system-card.pdf
Those are previous gen models, here are the current gen models: https://cdn.openai.com/pdf/8124a3ce-ab78-4f06-96eb-49ea29ffb52f/gpt5-system-card-aug7.pdf#page10
That’s one example, but what about other models? What you just did is called cherry picking, or selective evidence.
when this bubble pops it’s gonna be horrific.
google, meta, ms, so many more leveraged out huge investments in datacenters. nvidia is propping up whole segments of the fucking economy.
https://www.wheresyoured.at/ai-is-a-money-trap/
it’d be fun to watch if I could isolate myself from the chaos that will ensue, but we’re all gonna get fucked by the aibros, it’s only a question of which segment of the economy blows up first.
A lot of startups whose entire business model relies on OpenAI’s small model API calls costing under $1/Mtok, are going to go bust when OpenAI finally runs out of money and ramps the cost up tenfold.
good point, it’s all been artificially priced to get users onboard then dedicated.
Yep it’s blitzscaling. Run it at a loss until it’s a necessity, then charge whatever the hell you want. They’re blitzscaling our right to intellectual property and our right to work.
blitzscaling
TIL there’s a word for it. Thanks
How does it impact your right to work?
ive seen a ton of billboards of startup AI comp in west coast, i assume every new one that appears on these billboards, the old ones go under.
It would be just cheaper to self-host something for the whole company then? Open-source AIs are there and they are very much competitive with proprietary solutions.
If you want OpenAI level response times you might be surprised how expensive self-hosting gets.
Yeah I’m getting real dot com bubble vibes from all of this.
I think the fallout is going to be much larger.
It would probably be fine if there was someone competent in Whitehouse to manage the fallout.
But since there isn’t, you are very likely correct.
Yep, the only thing I’m 100% confident about in this whole mess is that Trump will find some heretofore unimagined way to make it worse.
the shitwad is consistent I guess…
They will manage the fallout just like the sub-prime crash and PPP program, with huge cash transfers straight to the wealthy.
fuck. and that idiot is all in on cryptocoin and other idiocy. fuck.
Came here to see if someone had mentioned Ed Zitron’s blog. His last two pieces on the AI bubble are fantastic reads.
pretty sure someone here linked it, it’s a long read and worth it.
Any chance you have a link,?
Thanks buddy!
Damn. We’re looking at another recession when this bubble bursts, aren’t we?
Just great.
recessions work themselves out. I’m worried it’ll pitch us into a worldwide depression coupled with trump’s tarriff bullshit.
it’s the 1920s all over again. smoot hawley fascists and clouds of war
Hopefully sooner rather than later, and maybe Elon can stop poisoning a neighborhood in Memphis with Grok
yeah that’s one of the more egregious examples, basically a methane factory that eats prodigious amounts of water and power, all in process of giving us MECHAHITLER.
what’s not to love?
The electrical industry is going to have a real bad time.
yeah secondary knockon effects - once nvidia realizes it’s not going to actually sell 5 gpus per human being, the datacenters for them evaporate, then the power production to feed those datacenters becomes pointless…
an effective administration would mandate all renewable energy for this purpose, so when it implodes they could at least derive a benefit from the expanded production… but no, trump will have them build coal plants for it all. or like grok, methane powered generators fml
and they are even considering extremely expensive nuclear plants to power them.
bringing old reactors online may end up an overall positive (say, if the ai bubble pops soon but the reactors still come online and displace fossil sources) but I’m dubious about smr’s still. it just seems like more chances for radionucleotides to get smeared everywhere if they become ubiquitous.
Man I cannot fucking wait until this stupid goddamn bubble pops
Me too. I can then go back to 3D printing quantum blockchains out of room temperature superconductors in my private space station with Katy Perry.
I find that hard to believe right up until the point you mentioned Katy.
If she’s good enough for Justin, she’s good enough for me.
And what happens when a bubble bursts? Did the internet die when the dotcom bubble burst, or is that just when it really started to get going?
I share most of your sentiments against AI, but a bubble popping won’t make it go away, and it won’t even rectify it to be more to people’s likings (i doubt it). It takes more than just waiting around to accomplish that.
Im so tired of this stupud fucking refrain. Cause we all know how housing got so mich better after 08 and how we dont have any more dot coms and how the internet got so much better since that bubble. You people have no idea what your even asking for.
the bubble pops and then everything comes back, in an “improved” version. Imagine: ChatGPT with ads and sponsored answers.
Just like that one black mirror episode.
The problem is that when a bubble pops and exposes the problem, the government leaders should take the opportunity to fix the problem so it doesn’t happen again.
Instead they bail them all out, so there are not only no consequences to their actions, they are literally rewarded with unimaginable wealth. What about this strategy would induce them to change their ways, over doing it all over again, and getting rewarded again?
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This is the thing I don’t understand about businesses like Cursor. They take two other companies products (Claude and VS Code) and smash them together and sell the result at a loss. How is that much of a business when basically what you’ve got is something that could have been a VsCode plugin.
if valley had fresh ideas for profitable business, they wouldn’t go full into ai in the first place. lol
big brained sfba ceos try to make reality in the image of scifi that they misinterpreted when they watched it 15 years ago, and go around building torment nexii. behold, disruption! (snow crash|ready player one|who knows what else)
You disrupt the market and wait until someone buy you out for huge woads of cash
Surprise! 🎉
Yeah, this has been reported on multiple analysis over time. Until something in the hardware space changes, it’s gonna be an unprofitable business.
Well, just keep pumping in the billions until the bubble bursts and we can look for the next fad, to do it all over again, right?
I have an idea guys what about like a big cloud we can put all our data in ?? Guys CLOUD. ITS SO GENIUS. CLOUD.
This ai shit is the exact same thing (also it isn’t ai. And I hate that we keep calling it that. )
It is a chat bot. It is a good compared to the chart bots we had in the past, but still a chat bot.
The reason it can be used for programming is because programming language is still a language.
They only seen to forget that programming languages were already invented to be a bridge between human and a machine language, but being able to do software engineering is much more than just knowing programming languages.
This makes me wonder, anyone knows how good are those tools at creating assembly code? I don’t program in assembly, but I know that the “language” is very simple, but you actually need to be constantly aware of the state of the system.
I’d suspect the low “density” of context makes it prone to hallucinations. You need to load in 3000 lines to express what Python does in 3, so there’s a lot of chances to guess the next token wtong.
I was gonna say that, probably the higher the abstraction level the best it is for LLMs to reason about the code, because once learned it’s less tokens.
It’s been the same way with every AI tech at far. They run down the hype cycle and you get the classic AI winter while academics tinker until they find the next upgrade. Just now they’re plowing billions into this because “this time it’s different”. Or they just needed something to keep the tech bubble gravy train rolling.
Isn’t this just the tech industry. Run at a loss. Eat VC money. Wait. Wait.
Some how you become normalized and suddenly important Next thing you know you’re raking profit.
Like the guy that has no friends who nobody really likes. He won’t go away. He just sticks around. Nobody ever told him to fuck off. So he’s just part of the group.
after crypto, and Now AI, they will be chasing whatever faux tech that comes out next.
and then you go on linkedin and all the middle manager tech bros will hail it as the second coming.
Yep, and they were helped a lot after the 2008 financial crisis when interest rates were dropped super low and loans were cheap. That’s a major reason why the market has been screaming for the fed to cut the interest rate as much as possible.
Yes, this is part of the business model. The goal is to get everyone addicted to their service, then jack the price up to profitable margins. It’s the same model Netflix and Amazon used. Bothe services lost money for over 10 years before becoming profitable.
YouTube as well.
When this bubble eventually bursts, and it will, the economic fallout is going to be catastrophic.
first truly positive use for ai
I’m skeptical of AI coding as it exists today, and while I’m bullish on long-term prospects for AI writing software, am very dubious that simply using LLMs is going to be the answer.
However.
Startups typically do lose money. They’ll burn money as they acquire a userbase — their growth phase — and transition to profitability later. I don’t think “startups in area X tend to be losing money” is terribly surprising.
Ed Ziltron has a good piece regarding whether the losses are “just another startup” or something more. I am very much leaning towards “burning money at an insane rate just to give the impression of growth”.
you’re VERY justified in feeling skeptical, I’m seeing it first hand, you’re correct.
I’m a consultant/freelancer and I’m booked for the rest of the year and well into the new year with jobs that pretty much consist of me reviewing and cleaning up AI slop.
Most of my clients are startups and small companies that went full in on AI and vibe coding. Now they’re discovering that their attempts to save a few bucks by leveraging AI, cutting devs, etc is costing them more that what they envisioned on saving. The stuff they’ve built with AI doesn’t scale, is full of exploits, and breaks quickly. With the recent Tea App thing many of my clients are now in a panic because they essentially did the exact same thing. They don’t want their startup to be next in the news because some rando came across their house with the front door left open by AI.
the tech debt is massive, It’s costing many of these places more to fix their vibe coders/AI mistakes than what it would have originally cost if they just used a solid dev team. Make no mistake, I’m charging them a good amount also.
All if it could have been avoided though. They could have continued to use their LLM’s if they had all just kept a leash on it. if they dismissed the concept of vibe coding. A good chunk of it could have been avoided if the person feeding the prompts simply REVIEWED the code before hitting enter. I’m not kidding, IF they just LOOKED at what was being spat out things would be different. none of them did. they just trusted the AI to be smarter because they were lead to believe it was.
how do you book software work so far out? for some reason my software clients seem to all want their stuff yesterday
I’ve been doing it for like 20+ years now so I have a very solid client base and very solid referrals. All my new clients now are referred to me by previous/existing clients so it gives me the luxury of booking well in advance.
I appreciate your response!
The issue is mostly energy costs though. Startups do lose money; to hiring new people, marketing, etc… But in this case the entire business case loses money a the moment, and without any significant breakthroughs they likely will keep losing money like that.
Ok, but it isn’t just startups burning money here like there’s no tomorrow - it’s also major industry leaders (Microsoft, Facebook, Apple, Google, Nvidia, etc.) dumping hundreds of billions into infrastructure and development of a tech that has, so far, shown 0 positive returns for anyone and everyone. Everyone involved is pouring in money like it’s going out of style, largely because they see this as a potential pathway to infinite profits down the line, just as long as THEY are the ones to get there first; consequences be damned. WHEN this bubble pops, not IF, it’ll be messy. Extremely messy.
In other words, they want to hook up users and companies, make them dependent, and then rise up the prices severely while finding ways to process and incorporate all of the data they’ve gathered in ways that will probably involve automating the jobs of the users themselves.
aka enshittification
This is the best argument I’ve heard in favour of vibe coding
Basically, the only reason some of these vaguely functional AI tools actually work okay is because they haven’t been ruined with inevitable monetisation yet.
Already the cost is quite high. A prolific dev can easily burn 100usd a day in tokens and they have not even started to enshitify.
Some of the cost to run these models will come down a bit if Nvidia gets some actual competition which I’m sure will happen in the medium to long term because the hyper scalers definitely don’t like paying Nvidia’s AI ransom and the Chinese don’t want to be beholden to a company the US can influence.
We will see which happens first.
MS already said as much, thier generative AI isnt profitable at all.
Good. Costs is the key point to get rid of it.
