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LLM Inevitabilism

(tomrenner.com)
1619 points SwoopsFromAbove | 1 comments | | HN request time: 0.215s | source
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lsy ◴[] No.44568114[source]
I think two things can be true simultaneously:

1. LLMs are a new technology and it's hard to put the genie back in the bottle with that. It's difficult to imagine a future where they don't continue to exist in some form, with all the timesaving benefits and social issues that come with them.

2. Almost three years in, companies investing in LLMs have not yet discovered a business model that justifies the massive expenditure of training and hosting them, the majority of consumer usage is at the free tier, the industry is seeing the first signs of pulling back investments, and model capabilities are plateauing at a level where most people agree that the output is trite and unpleasant to consume.

There are many technologies that have seemed inevitable and seen retreats under the lack of commensurate business return (the supersonic jetliner), and several that seemed poised to displace both old tech and labor but have settled into specific use cases (the microwave oven). Given the lack of a sufficiently profitable business model, it feels as likely as not that LLMs settle somewhere a little less remarkable, and hopefully less annoying, than today's almost universally disliked attempts to cram it everywhere.

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alonsonic ◴[] No.44570711[source]
I'm confused with your second point. LLM companies are not making any money from current models? Openai generates 10b USD ARR and has 100M MAUs. Yes they are running at a loss right now but that's because they are racing to improve models. If they stopped today to focus on optimization of their current models to minimize operating cost and monetizing their massive user base you think they don't have a successful business model? People use this tools daily, this is inevitable.
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ehutch79 ◴[] No.44571007[source]
Revenue is _NOT_ Profit
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throwawayoldie ◴[] No.44571163[source]
And ARR is not revenue. It's "annualized recurring revenue": take one month's worth of revenue, multiply it by 12--and you get to pick which month makes the figures look most impressive.
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jdiff ◴[] No.44571311[source]
Astonishing that that concept survived getting laughed out of the room long enough to actually become established as a term and an acronym.
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1. singron ◴[] No.44571756[source]
So the "multiply by 12" thing is a slight corruption of ARR, which should be based on recurring revenue (i.e. subscriptions). Subscriptions are harder to game by e.g. channel-stuffing and should be much more stable than non-recurring revenue.

To steelman the original concept, annual revenue isn't a great measure for a young fast-growing company since you are averaging all the months of the last year, many of which aren't indicative of the trajectory of the company. E.g. if a company only had revenue the last 3 months, annual revenue is a bad measure. So you use MRR to get a better notion of instantaneous revenue, but you need to annualize it to make it a useful comparison (e.g. to compute a P/E ratio), so you use ARR.

Private investors will of course demand more detailed numbers like churn and an exact breakdown of "recurring" revenue. The real issue is that these aren't public companies, and so they have no obligation to report anything to the public, and their PR team carefully selects a couple nice sounding numbers.