Ed Zitron's style isn't for everybody, I understand that. But if these numbers, and the direction they're going in, are correct... to me this points to a significant AI bubble deflation coming soon. It just isn't sustainable, it seems.
replies(2):
"coming soon" is also really over simplistic. you would have missed some of the greatest tech companies in the past 20 years if you evaluated startups based on their early-year revenue vs infra spend
like sure i have a dog in this fight but i actually want the criticism to sharpen my thinking, unfortunately yours does not meet that bar.
they spend 104% of revenue on ONE cloud provider and costs scale linearly with revenue growth. assume zitron didn't pull these numbers out of his ass.
educate me how this isnt selling $20 bills for $5. you're a smart dude; i myself aint seeing the "sustainable business practices" here
pull up Uber's financials leading up to IPO. unsustainable and everyone knew it. they work it out after because they burned money and eventually achieved a sustainable moat. this is why venture exists. HN doesnt like venture which is, well, ironic given the domain we're on.
a better negative argument i'd rather see looks like this - "ive run these aws numbers against the typical spend path of pre IPO startups who then later improved their cost baseline and margin profile and even after accounting for all that, Anthropic ngmi". thats the kind of minimum sophistication you need here to play armchair financial analyst. ed zitron, and everyone involved in this entire thread, incl myself, have not done that because we are lazy and ignorant and dont actually care enough about seeking the truth here. we are as unprepared to analyze this AWS spend as we are to understand their 1b -> 10b revenue ramp in 2025. you havent done the work and yet you sit here and judge it unsustainable based off some shitty "leaks". dont pretend that ed's analysis is at all meaningful particularly because he conveniently stops where it supports his known negative bias.
But Zitron's analysis is as incorrect or irrelevant as ever. The problem is just that as usual there is so much tripe that it's impossible to rebut it all.
The way I'd think about this leaked data is that it's giving us a reasonable upper bound on the fully loaded R&D compute cost for Claude Sonnet 4 - a product that will be making $7 billion in revenue with very good unit economics. Other than that, this just tells us that Anthropic, just like the other frontier AI lab, will be spending as much on training as they can.