Seeing a lot of tricks similar to how ridesharing companies tried to be "profitable" before going to IPO. Caveat: Thing have materially improved but really Uber is carried by its insane Ads margins
The idea of removing model training from your costs is a little wild tbh.
The profitability of being able to serve a query wasn't really under question (nor is the margin expected to be anything less than 80%+) I think.
> The idea of removing model training from your costs is a little wild tbh.
Yeah, I didn't believe they'd claim something like that. But yes indeed, from the article:
> Anthropic's gross margins are above 80% before accounting for revenue shared with distribution partners, including Amazon (AMZN.O), opens new tab, and the cost of training its model,
Is this how all AI companies calculate if they're profitable or not, by removing the highest costs? What a circus.
> Anthropic has told shareholders that its adjusted operating income will be positive for a second straight quarter, the Financial Times reported on Sunday, citing multiple people with knowledge of the matter.
Note this claim is about „operating profit“, which commonly is the revenue - operating expenses (COGS, rent, payroll). This does not include RnD cost.
>Anthropic's gross margins are above 80% before accounting for revenue shared with distribution partners, including Amazon (AMZN.O), and the cost of training its model, the newspaper said.
Gross margin is typically (revenue - COGS) / revenue. Thus, both statements above seem generally in line with commonly accepted accounting standards.
Typically R&D is not part COGS. It’s absolutely part of the bottom line when you will typically recognize the cost over some period of time to try to get a true picture of the business.
It’s also easier to strip it out of the picture to think about how much it costs to serve the next token. If you can have great economics to serve the next token (profitable) you can always figure out ways to further reduce your R&D costs.
Now they are absolutely intertwined but I don’t think this is ever as big of an issue that people make it out to be. Replace token with any widget, this is how businesses measure themselves.
This is how all companies calculate gross margins, which is why they're called gross. Gross profit is revenue minus the cost of goods sold. For example, if you sell wheat for $1 and spend $0.20 of labor and raw materials (e.g. fertilizer) to grow it, your gross margin is 80%. This will not include equipment like tractors. AI companies, like all others, include this in their quarterly reports because they are legally, professionally, and customarily required to.
The real circus is commenters on HackerNews thinking this number means Anthropic is cooking the books or that it's actually profitable. Gross margin is meaningless for an AI company, since most of their expenses are R&D and infrastructure (the two things excluded from gross margin), but they have to report it anyway.
The way I read it, they are convincing the investors that they can fool the larger population convincingly. At the end of the day the investor term is misnomer for big institutional investors, given that these people are managing other people money where they always make out a certain percentage of fees despite the outcome.
I still question it. It's very light on details by just casually dropping they have 80% margins. I smell bullshit on this.
It is certainly not above them to play accounting tricks to pretend to be anywhere near profitable.
If you create a machine that can turn a dollar into 5, you don't dillute ownership of the machine, you use your fabulous profits to expand production. Anthropic, on the other hand, raises money like crazy, and seems desperate to IPO.
I think part of the big push to "slow down AI development" is to add some sort of regulatory pressure that will give them sort cover to train less models and slow their burn rates
I can’t count the number of times I’ve heard variants of ‘they’re losing money on every query’ and ‘I’m getting 10k worth of tokens for $200’ over the last year. People clearly believed serving margins were -ve
> idea of removing model training from your costs is a little wild tbh
It's one of several metrics and tries to estimate steady-state profitability. It's the only one being leaked because it's the most sensational one. But don't assume cash-flow profitability is negative just because you don't know it.
Well then you haven't listened to Ed Zitron or any of the other AI bubble doomers. His contention is that its worthless and they lose money on every query.
But isn't he taking all the costs into account, that created the experience? Rather than just literally the inference/serving infrastructure? Bananas way of calculating things if so, doesn't match reality at all.
Zitron is worthless–lying about numbers and not correcting the record when you're called out means you aren't trustworthy. Worse than that if you directionally agree with him, which I do.
I think the evolution of the harness and ability to preserve loop context outside the context window has made running these kinds of agentic experiences easier.
sorry so many buzzwords to say, the capabilities to do this kind of work are more accessible and easier to manage, so now it works!
Good to see, and agree they were severely overhyping their product back then.
The average person is not using a calendar and is not getting more than 1 relevant personal email per week.
Most people use their personal email extremely sparingly and it is inundated with promotional / account-related materials which are already handled rather deftly by most mainstream email providers
The average kid in an average suburban public school is not getting this amount of digital communication. If they are, they still aren't using a Google Calendar and are managing the complexity in much simpler ways (paper calendars)
I think they mean the parents.
I got 5 emails from the kids school today, and have regular calendar events related to the kids.
So yeah this is for parents
To be fair I do get fucking hammered by school emails, and not just school school but dance school.
But like, an AI would just tell me what’s in the email and ask me what I want to do about it which is almost always ignore it and I know what’s in the email because I have eyes.
lol no one is getting personal emails, maybe some people get one every few months, but most probably never (not taking into account other than order/shipping confirmations, login codes, etc)
First of all, the average parent is definitely doing some volunteering, at least in the US. From rec sports to scouts to church stuff to local committees, it's very rare for someone to be totally checked-out on all those counts.
And as a bit of anectata: I play two sports and my child plays multiple. Every single one of those groups or teams relies on email, even when other modes of communication are layered on.
I don't see you publishing something which further reduces the memory footprint?
Given the project is open source, have at it! See if you can help improve it instead of complaining. This is a significant improvement and a cool project!
I run actual Winamp for my music streaming, and windows task manager claims it's using 4.1 MB.
Even that seems pretty high, but whatever, but given y'all are spending hundreds of mbs, I think I'm ok. Yes, spotify has features my subscription music service doesn't have... but the one I use lets me stream with Winamp.
I'm not complaining and it is a cool project (from what I can tell). But I think it's fair to say 200 MB memory usage is a lot without providing source code as a proof. Just by feel when you recall what were computers capable of when they did not have 100s of MB to spare.
For what its worth, if you believe Meta's product does do this damage, the other products which do similar things should also abide by it.
It helps simultaneously "level the playing field" but also protects consumers.
If the courts stated ruling is hinged on consumer protection then this seems fair. Any competitor which doesn't follow suit is likely opening themselves up to a similar lawsuit which would cost a similar order of magnitude of damages (so it is in the interest of the competitors to do take these actions)
The idea of removing model training from your costs is a little wild tbh.
The profitability of being able to serve a query wasn't really under question (nor is the margin expected to be anything less than 80%+) I think.
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