an astonishing 29 percent of [execs] had no idea where the growing costs associated with AI were coming from.
The headline combined with the quote just make me laugh so much, I love it
an astonishing 29 percent of [execs] had no idea where the growing costs associated with AI were coming from.
The headline combined with the quote just make me laugh so much, I love it
It's particularly funny because I'm pretty sure AI companies are still selling the service below cost to try to retain market share (and drive small competitors out of business). They just aren't taking quite as big a loss on every token with the increased prices.
Pretty much the model for so many internet services or streaming services.
So, they're earning money on token generation but not overall (including training)?
Openai had 2025 6billion in revenue and 20 billion costs on compute. So just to run the models to get 6billion they need to pay 20billion r&d and marketing etc get on top of that
I’m sure there’s a term for it but this is like when a company keeps securing funding from investors so they keep growing to try to outpace costs with the illusion that you’re profitable when in reality you’re not. Just like WeWork.
Venture capital
No, my understanding is that they're bringing in revenue on token generation, but it's exceeded by the costs of token generation (running data centers, so, electricity and cooling). They definitely want to make a profit on token generation, but they're afraid that raising costs that high too quickly would drive customers to switch to other providers. So they've reduced the amount they're subsidizing token costs, but not switched over to making a profit.
I can't find a good citation for this, though, so it's possible I'm mistaken. They also have huge costs associated with buying new GPUs and building new datacenters, so they're operating at a massive loss either way, and it's a little hard to find articles which tease apart the two aspects.
In any case, operating at a massive loss for the first few years is practically standard operating procedure in silicon valley at this point, and sometimes it eventually leads to a profitable, even wildly profitable, business (e.g. Amazon). But it does require a steady stream of investors and a steadily increasing market valuation. That's...we'll have to see what happens on that front.
Yeah it’s basically the enshitification model
Have you heard about "Tokenmaxxing"?
Since many AI companies didn't have a reasonable limit on the number of tokens for the amount of money you paid, companies started telling their employees to use as many tokens as possible. LLMs improve with more tokens (although there are diminishing returns).
So users tried to exploit the 'lure offer', and AI companies had to change the billing. It's still below the real cost, but no longer this insanely expensive option.
Someone should remind those soggy, arrogant execs that down here in the developer trenches we survived web services, software as a service, outsourcing, and off-shoring. We're still here after all that and we'll still be here after AI.
Some of these people are so out of touch that they'd have to spend a decade in the trenches before they might even begin to get an inkling that something is up.
Case in point: Bezos went to space and wasn't humbled by the overviewer effect because his ego is literally larger than the planet he lives on.
he literally opened a champagned bottle on a recovering alcoholic(shatner) he pretends to be human.
I swear, execs are some of the most gullible people on earth. I know some of them, and none of them are very bright, just very greedy.
They're not selected for intelligence, but for sociopathy.
I think it’s more sociopaths rising by being sociopaths and then promoting gullible idiots they can use and control with no issue, then blame when shit goes wrong
And nepotism.
And cronyism.
Coming from the upper-middle and upper class and having attended the right schools and become mates with the right people is very highly correlated with becoming a top level executive.
My lesson in this came really early in my career. One of our execs was selling vapourware. Just promising our product, that we hadn't made yet, could do literally anything. Then he insisted we build it on this platform he must have had shares in the way he pushed it, only it was also vapourware and didn't do half the things it said it did.
He found it utterly inconceivable that a company would sell a product that didn't do what it said despite doing the exact same thing himself. He was completely delusional.
As we've seen with Donald Trump and George W. Bush, if you're wealthy enough or in an aristocratic social group, you fail upwards.
And if you always fail upwards, it's very easy to not gain the skills to succeed.
Man, if all it takes to be a CEO is to make stupid decisions, they should just hire me. I’m the master at that.
Just wait until all the technical debt has to be paid as well.
I know what you mean, but the tech debt problem will never get resolved.
Of course but the cost can be mitigated. I've seen an AI built project and the outcome is that you pretty much have to continue using AI to continue development because it's borderline incomprehensible for humans. When AI fails to continue development you scrap the entire project and start from scratch.
I imagine all companies that allowed AI to go wild in their codebase have a lot of components that need to be rebuilt from the ground up.
In theory, completely rewriting legacy software with AI could be a great thing - doing so every 3 or 4 years, allowing newer and better AI to tackle the task, optimizing for every development made in technology or standards.
However, this still requires human minds to define, guide, and verify these projects. AI opens up possibilities for better development, but executives seem determined to fritter away such potential by axing the human element.
It is like a certain story...


You forgot that AI cannot "rewrite legacy software".
Otherwise it's a nice thing to fantasize about 😁
I don't know how much AIs can be useful on big ass projects, but it def was useful for me when i had to look at the code of a project i made 1 year ago, i was so much worse at writing code and it was such a mess that ultimately i used an AI agent to rewrite it
Do i feel dirty? Yep
Has it saved time? YES
The tech debt always gets paid one way or another. Either preemptively, as part of ongoing maintenance; or after a data breach in the subsequent lawsuit and settlement; or in the slow, inexorable trickle of increased infrastructure costs and lost business from slow dependencies and ineffectual bandaid solutions.
I already see lots of boutique consultancies popping up specifically saying they will fix tour slop code bases. Developers and doctors will never run out of work.
I'm not sure fixing it will be possible.
They will have to trash a bunch of it and rewrite entire modules and components from scratch.
I’ve seen as AI keeps iterating over enhancements and bug fixes, the spaghetti code gets worse and worse over time. At some point only the AI understands its own code, as it is too much garbled nonsense for a human to trace through. Eventually that becomes too much garbage for the ai to trace through. And then that’s where you end up.
The idea that this can be some kind of non-deterministic abstraction layer between pseudo code and actual code is absurd.
And people realize they don't understand the output anymore or the architecture. AI isn't creating anything new either.
Well, we should automate everything that can be automated - for the benefit of everyone. Last part is something not seen on worldwide scale ever, just yet
It happens every couple of decades with AI. Since it's a broader field than most people think, we have a pretty long cycle of a new development looking exciting, people getting way too excited and optimistic, the development being exactly what it was promised to be, and then people getting disappointed and avoiding anything with the AI label. Then we decide that because we're used to this new thing, it can be used in stuff as was originally appropriate but it no longer qualifies as AI, because "that's not AI, it's just ___".
The people who have never done the work love more than anyone else to talk about how the work should be done better and cheaper.
Broadly this sentiment stands for most professions.
You'd think the cocaine-snorting classes would understand that only the first hit's free.
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