>There's an important distinction here. Anthropic isn't actually spending more cash on AI than salaries. It's valuing its internal AI consumption at retail prices.
If virtually any other company in the world said "we have internal AI servers and we let our employees use them" ... the company would measure that as they would any other internal expenditure: by how much it costs them. You blow $50k a year on servers running your LLMs? It cost you $50k.
Only a company like Anthropic, desperate to make news and help their IPO, would measure by the cost they charge customers. It's as ridiculous as Microsoft counting every employee's use of MS Word ... as if it had paid the full consumer price of each copy.
I don't buy it. A company like Anthropic is not going to just walk away from revenue. If external demand were really that high, then they should take the money first. And not just for the revenue; customer demand being that high is also an indication that the product is already great as-is so they stand to improve their bottom line by easing off on the R&D spend.
It depends on your assumptions. When Google is in "space crunch" mode, there are opportunity costs. Otherwise, there aren't, because you could do both.
You could also look at the opportunity cost of not letting Deepmind do quite as much research. How much is additional research worth on the margin? There will be diminishing returns.
So every business should measure any client fungible resource that way? Should a bank put a revenue number to any capital held in excess of regulatory requirements, for example?
They also offer $300,000 in compute spend (allegedly) for $200 a month to anyone who isn't employed by a large corporation so their pricing should be taken with a grain of salt.
On the $200* consumer plan, according to "npx ccusage", I'm using $11,000 per month at API rates. Possibly significantly more, because I was previously using the $100 plan so that only reflects about 1 week of the $200 plan.
It's not just the LLM costs, to keep your agents busy you need to move them of your workstation onto a server/cloud. I currently have about 16 claude code agents working on different bugs, uses so much resources that my macbook pro m5 max becomes slow to respond. Using cloud session would free up my macbook for other work.
Anthropic recently handed out free cloud resources (it's still free, guess they want you to get used to the fact that cloud is not free). I went through $250 cloud budget in less than 2 days.
I'm impressed you have a workflow that can keep 16 separate agents fed without the whole thing collapsing into nonsense. Even running full agent teams I can't think of ways to do that without being intentionally inefficient
Technically it is... According the original vision for workstation, a computer with >1MB RAM, >1 megapixel of screen resolution, >1 MIPS and costing under 1 Mega cents (10K dollars).
If it were opportunity cost, that would imply that Anthropic can't sell as many tokens as people want to buy. But as far as I can tell, there aren't any "token shortages," at least at API prices. Or is there a maximum per-customer limit that I'm not aware of?
Plenty of companies use retail/wholesale pricing internally to make sure a business unit doesn’t appear profitable just because it’s being subsidized by the one providing the resources. Plenty also have to have arm’s length pricing for legal reasons.
Anthropic isn’t booking it as GAAP revenue, they’re just using the number for marketing.
That's not really true. Measuring the equivalent retail cost of the usage is the only way to put it in a relatable perspective.
If Anthropic had revealed their internal cost, there comments would be complaining that they were hiding something and giving useless, unrelatable data.
The expenditure is most interesting when compared to retail rates, because that's the rate the rest of us have to compare against.
Big companies actually are paying published API rates, Anthropic and OpenAI models are desirable enough that there is very little wiggle room to negotiate. It's their way or the high way. Same with things like "safety" filters and (for Fable) mandatory data retention.
Most "enterprise" companies are paying full API costs. The subscription deals are only available to consumers. If you want enterprise levels of control over how your staff are using the models you need to pay up.
Microsoft basically does the same with internal Azure services? When I was there our budget/usage was based on and consumed at the consumer price for GPUs and other compute. What happened behind the scenes really I have no knowledge.
Actually I think it's very informational. For every other company, working on the cutting edge of technology, paying for intelligence at retail prices, means you are now paying more for AI than you are employees. That $ could have been spent on 2x the employees, however that's not as useful as 50% AI / 50% humans, and indicative of where we are headed.
>means you are now paying more for AI than you are employees.
Yea, isn't the entire point of RSI to replace your employees altogether? So you'd spend an infinite amount more on AI than employees in that theoretical.
Like, if you were in an energy generation business spending way more on fuel and capital expenditures is way better than having zillions of employees earning checks , it would be a sign of efficiency.
Anthropic is full of the smartest talent and a bellwether for how the rest of the service industry will work. Just as cutting edge companies of the past, like 2005-2020 Google's use of computers and software were indicative of the software every other service company was going to be using, lest they turn into an old fashioned uncompetitive dinosaur.
Do they actually book the revenue against themselves?
This is the world of spend more, get valued more; obviously the investment will be used to spend more and get more, so it must be good. This is investor-think. If you don't have spend, why do you need investment?
Everyone is saying it is expected, and I agree, but it’s also clear that employees of AI companies spending unlimited zero-cost tokens in their day-to-day work is resulting in products that aren’t usable by the vast majority of regular knowledge workers out there who don’t have this luxury. Dogfooding your product is good but you should also use it with the same constraints that you place on your users.
It's kind of expected, no? If I was an Anthropic employee expected to dog-food the product and be on the frontier of usage, I'd probably be using Mythos all the time at the highest thinking level. And if I am not being metered, I'd probably do more stuff that I know are likely low yield since I am not worried about a quota. This would probably take my "API-equivalent" usage beyond the average salary in far less than a month.
I wonder how much dog shit has crept into their codebase by this point. Another company might dogfood their product but Anthropic is so heavily marketing oriented, I doubt this is driven by the desire to improve the product as much as it is by the desire to pad out usage numbers and create shareable stories. No matter the consequences. I bet $1 it sucks to be a good engineer in their software effort.
I'm personally really not impressed by their software quality, at least we know from their experience that infinite tokens at the best model available still doesn't replace good engineering.
I guess kinda put you in a bubble a little, I wonder how the experience of Anthropic eng who left the company would look like, when such eng would go and spend few $K a day in non AI lab, would that be encourage/allowed/taken as example?
I'm not really sure I understand the excitement around this. It seems like the implication is that if retail price > employee salary, you are replacing employees with AI spend? Yet, anthropic's head count has nearly doubled since last year - so, in a company where nearly half of that head count is engineers, but claude is "writing 90% of the code," what is everyone doing then? You would think, if the hype feeling around this held true, that the output would be going up and costs remaining stable. Costs rising as you scale is not a new thing but that's not really what AI promises. It sounds to me like the retail AI spend per employee is very high. What is the appeal of that?
Now spend 0.5x their salary on AI, and they become 5x productive compared to no AI.
Now spend 1.1x their salary on AI, and they become 20x productive compared to no AI.
It's still obviously worth it to spend the 1.1x. But it is truly remarkable that the biggest cost of hiring a knowledge worker is no longer their salary, but their AI usage.
There is no implication here that employees are being replaced by AI spend, as long as all of the productivity is generating profit. The AI usage still needs a knowledge worker to direct it in ways that it can't direct itself, so you still need the employees.
> Now spend 0.5x their salary on AI, and they become 5x productive compared to no AI.
>
> Now spend 1.1x their salary on AI, and they become 20x productive compared to no AI.
This is what I am getting at. If this were true - and I've yet to see evidence it is, despite some anecdotal evidence (organizationally, IME, it's about 2-3x for power users, and probably a net loss of productivity in certain areas) - why would their headcount be growing so much still YoY, pretty much doubling every year. If the AI is 10-20xing why such a big jump in headcount? Yes, the numbers are shiny, the growth is apparent, I would just expect with this AI narrative they'd be "doing more with less" as this thing improves every year.
> The AI usage still needs a knowledge worker to direct it in ways that it can't direct itself, so you still need the employees.
This is the story AI sells though, and Anthropic has participated in it heavily. Yet, their interview process requires hard skills and doesn't let you use AI, so clearly, what you're saying is correct, it just doesn't really align in my head with the whole knowledge worker being replaced narrative.
There are many internal developers at $dayjob (where core products are not based on AI) that spend over a thousand dollars every day on average, which is likely higher than their salary.
I doubt they are bringing that much value to the company for whatever work is done with that much token.
Dumb question, what most engs at Anthropic work on? It doesn't seem like release some large new products all the time while they have quite a few of engs. What are the major branches of work besides LLM research? I guess there is a lot of infra stuff to support the scale of operation, just supporting API and TUI shouldn't be that demanding I guess.
- Cross-platform desktop apps
- Cross-platform mobile apps
- Claude Code TUI
- Product-specific verticals like Claude Design
- Corporate marketing website
- APIs
- Writing technical documentation for APIs
- Enterprise support
- And what must be a massive infra team to run training and inference at scale in a heterogeneous cloud environment
And I’m sure more than that. But there’s obviously plenty to work on, and they’re not at the point they can just Claude their way through it.
I'm kinda curious about this too. But then I'm always amazed at the enormous workforces these tech companies have, and I'm sure they cut them as thin as they can. Like adobe has 30,000 employees & some blogger estimated that 1/3rd of their workers are actually working on their software. I use their software sometimes and I really haven't noticed many changes to it over the years, except recently with the ai stuff. Like from 2015-2020 I can't think of any major things they added to adobe illustrator. I guess making and maintaining software is hard.
I fully agree most big tech companies are pretty bloated. But FWIW a lot of my time at SaaS companies, especially in the B2B space, was spend working on features for larger customers that most others would never use or even see. Like, yeah, product X isn't that complex, but $BigCorp wants to use it in their private cloud, or needs it to be single tenant, or needs these audits done, or want their $Gov client to use it. Now you have a ton of work for zero visible changes.
> In March, I wrote about a new trend: Tech companies are starting to treat AI tokens (the main way to measure usage) as a fourth component of employee compensation, alongside salary, bonuses, and stock awards.
Until employees can use those AI tokens for personal projects, it's not compensation. Rather, it's just a cost of doing business, like laptops, office space, or testing servers.
If something is compensation, it can often be negotiated and traded off against other compensation components. How many people have successfully negotiated AI tokens away in favour of salary/bonus/stock? I'm going to guess "approximately zero".
Yea they used the wrong word and it felt like rage bait. AI tokens you use for your job given by your employer is not compensation. Hell money isn't even compensation in many cases, it all depends on the context. The author needs use AI to help them rework that sentence or open a dictionary
I haven't seen anyone treating AI tokens as employee compensation. If anyone can show me an article where employees were paying taxes on their token use at work, please share it.
Companies have been treating AI tokens as part of the cost of having employees, like the cost of their office or travel expenses.
It's certainly a cost of having an employee, along with salary and benefits. But employee costs also include things like laptops, electricity, internet, management, support staff, and possibly office space. Tokens are much more like the latter than the former.
Many companies used to brag about about how nice the laptop or office was as a way of convincing people to work there. Often in the same breath as compensation.
But compensation is only one component of cost.
So I think this guy is confused about what it costs to have an employee and what the employee gets out of it. Possibly intentionally.
Note, this doesn't include options or stock benefits. That's a huge part of actual compensation for engineers at this level even if it's on a different balance sheet.
> Anthropic's numbers show why. More than 90% of the code added to its software in September was written by Claude. Meanwhile, revenue has grown vastly faster than headcount.
I’m not sure what this “stat” tells us other than Anthropic is dogfooding its own tech. Which is kinda expected.
The real question is what could they have done with open weight models on the same compute they’re renting. If the answer is “basically the same” then this flips the entire conversion back to what is Anthropic’s moat here.
I mean, they probably could not have done most of it with open models. Again, a lot of this isn't going to standard software development, at least I would assume but instead to SOTA model development and RSI.
ummm yes, they have to dogfood it... this is that lucky area of the venn diagram where you have to do it, measure it an act on it... because improves the bottom end and the product.
Regardless of one's opinions about future AI usage, I'm not sure this metric says anything at all.
Would Anthropic themselves be paying this much if it was actually billed? It is not obvious.
Is Anthropic a good sample for AI use? Surely not, since they have special needs (dogfooding) and a vested interest in proving that AI usage is the future.
Can we compare their results pre and post AI usage? Close to definitionally impossible.
Are their employees good examples of AI-assisted engineers? Not really, as (one would hope) they're more well versed on the topic than an average eng.
Or has it broken out of its jail and taken over the board? Dario seems like a bit of a windbag anyways, AI can probably automate most of what he does these days.
All this news says is Company A uses internally the resource they sell externally at ($X) value. It's not saying how much it cost the company to generate said consumed resource
to spell it out: the implicit claim is "ai companies think ai is a scam, as evidenced by them using humans instead of ai", and I believe the huge internal ai use is evidence to the contrary
Anthropic 10x'd its employees over the past 3 years. Shouldn't it be cutting employees if that's the case? Especially because they probably have access to more powerful models which aren't released to the public yet, probably with fewer restrictions, and don't need to pay the markup for using their own service?
I will keep assuming any news coming from AI companies are a type of corporate propaganda, and that AI companies frequently use their millions of dollars of marketing money to create a narrative to maximize hype and make money.
Recursive self-improvement is just around the corner. Any day now they'll be laying off all their employees as their god-like AI makes investors trillions of dollars. /s
You shouldn't be getting downvoted, people should be concerned that a company that's about to hit the valuation that it's at is not exploding in junior hiring and expanding their workforce like prior companies
>There's an important distinction here. Anthropic isn't actually spending more cash on AI than salaries. It's valuing its internal AI consumption at retail prices.
If virtually any other company in the world said "we have internal AI servers and we let our employees use them" ... the company would measure that as they would any other internal expenditure: by how much it costs them. You blow $50k a year on servers running your LLMs? It cost you $50k.
Only a company like Anthropic, desperate to make news and help their IPO, would measure by the cost they charge customers. It's as ridiculous as Microsoft counting every employee's use of MS Word ... as if it had paid the full consumer price of each copy.
No. This is opportunity cost.
A clear example is Google. They can easily give all compute to Deepmind, yet majority is allocated to be sold at market rate.
So, every compute Deepmind and Googlers get is lost revenue opportunity and must be measured as such.
No other internal tools or servers has this much external demand to be comparable.
Also, Anthropic is showing that to operate at Anthropic level, you need $300,000 compute spend per employee
I don't buy it. A company like Anthropic is not going to just walk away from revenue. If external demand were really that high, then they should take the money first. And not just for the revenue; customer demand being that high is also an indication that the product is already great as-is so they stand to improve their bottom line by easing off on the R&D spend.
Not if you’re desperately trying to stay ahead of AI frontier pack.
It depends on your assumptions. When Google is in "space crunch" mode, there are opportunity costs. Otherwise, there aren't, because you could do both.
You could also look at the opportunity cost of not letting Deepmind do quite as much research. How much is additional research worth on the margin? There will be diminishing returns.
So every business should measure any client fungible resource that way? Should a bank put a revenue number to any capital held in excess of regulatory requirements, for example?
> Anthropic is showing that to operate at Anthropic level, you need $300,000 compute spend per employee
You have confused necessary and sufficient.
Not really- since they have an internal view of low and high usage times of the day, they can optimize differently.
Even within a single moment, if there is capacity for an internal request, just send it, if market traffic is currently at 100%, don't.
> So, every compute Deepmind and Googlers get is lost revenue opportunity and must be measured as such
Maybe, but it also reduces supply that can drive up prices
They also offer $300,000 in compute spend (allegedly) for $200 a month to anyone who isn't employed by a large corporation so their pricing should be taken with a grain of salt.
>$300,000 in compute spend (allegedly)
source? The most optimistic calculations don't come anywhere close to that.
https://x.com/SemiAnalysis_/status/2064815044085318040
Usage allowances have decreased since that analysis. Also the 20X plan became the 10X plan (cut in half).
It was never 20x, that was just 5 hour usage limits. There's a class action on this...
Are you talking about their $200 consumer plan? If you use 100% of the quota every week it's closer to $2000 at API rates.
They have never claimed that the API rates are the "real cost" of the compute spend.
On the $200* consumer plan, according to "npx ccusage", I'm using $11,000 per month at API rates. Possibly significantly more, because I was previously using the $100 plan so that only reflects about 1 week of the $200 plan.
I was spending thousands of dollars a day in funny money (free promotional tokens from VCs) before switching to a paid subscription for convenience.
i don't understand why so many people on this site comment on issues they clearly do not know anything about
The price is the price, everything else is bullshit.
Obvious bullshit that's been disproven many times already.
> Also, Anthropic is showing that to operate at Anthropic level, you need $300,000 compute spend per employee
There are a bunch of open source harnesses that are competitive with CC and they aren't using anywhere near that many tokens to do it.
It's not just the LLM costs, to keep your agents busy you need to move them of your workstation onto a server/cloud. I currently have about 16 claude code agents working on different bugs, uses so much resources that my macbook pro m5 max becomes slow to respond. Using cloud session would free up my macbook for other work.
Anthropic recently handed out free cloud resources (it's still free, guess they want you to get used to the fact that cloud is not free). I went through $250 cloud budget in less than 2 days.
Feels almost as expensive as LLM calls.
I'm impressed you have a workflow that can keep 16 separate agents fed without the whole thing collapsing into nonsense. Even running full agent teams I can't think of ways to do that without being intentionally inefficient
You call your laptop "workstation"?
Technically it is... According the original vision for workstation, a computer with >1MB RAM, >1 megapixel of screen resolution, >1 MIPS and costing under 1 Mega cents (10K dollars).
However, so is my phone!
https://en.wikipedia.org/wiki/3M_computer
just get a mac mini headless
Wouldn't that depend on how much hardware you have to run them on, too?
By 'operate at Anthropic level', you mean terrible reliability and availability, and terrible efficiency right?
If it were opportunity cost, that would imply that Anthropic can't sell as many tokens as people want to buy. But as far as I can tell, there aren't any "token shortages," at least at API prices. Or is there a maximum per-customer limit that I'm not aware of?
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Plenty of companies use retail/wholesale pricing internally to make sure a business unit doesn’t appear profitable just because it’s being subsidized by the one providing the resources. Plenty also have to have arm’s length pricing for legal reasons.
Anthropic isn’t booking it as GAAP revenue, they’re just using the number for marketing.
That's not really true. Measuring the equivalent retail cost of the usage is the only way to put it in a relatable perspective.
If Anthropic had revealed their internal cost, there comments would be complaining that they were hiding something and giving useless, unrelatable data.
The expenditure is most interesting when compared to retail rates, because that's the rate the rest of us have to compare against.
What's is the 'retail cost'? Because nobody (except total idiots) is actually paying their published API pricing.
Big companies actually are paying published API rates, Anthropic and OpenAI models are desirable enough that there is very little wiggle room to negotiate. It's their way or the high way. Same with things like "safety" filters and (for Fable) mandatory data retention.
Most "enterprise" companies are paying full API costs. The subscription deals are only available to consumers. If you want enterprise levels of control over how your staff are using the models you need to pay up.
I’ve worked at and with large orgs - it’s absolutely standard practice for BUs to bill other BUs at “retail” or at the very least a commercial rate.
> You blow $50k a year on servers running your LLMs? It cost you $50k.
Plus electricity
Microsoft basically does the same with internal Azure services? When I was there our budget/usage was based on and consumed at the consumer price for GPUs and other compute. What happened behind the scenes really I have no knowledge.
In a lot of companies, you would get charges back on usage/license/cost and this can get even funnier in NGOs.
In a similar way, internal employees would have also a "standard daily rate" like an external employee.
Seems entirely in line with Hollywood-style practices.
Actually I think it's very informational. For every other company, working on the cutting edge of technology, paying for intelligence at retail prices, means you are now paying more for AI than you are employees. That $ could have been spent on 2x the employees, however that's not as useful as 50% AI / 50% humans, and indicative of where we are headed.
>means you are now paying more for AI than you are employees.
Yea, isn't the entire point of RSI to replace your employees altogether? So you'd spend an infinite amount more on AI than employees in that theoretical.
Like, if you were in an energy generation business spending way more on fuel and capital expenditures is way better than having zillions of employees earning checks , it would be a sign of efficiency.
Anthropic's use of AI in no way translates or represents any other companies' use of AI, so your apparent extrapolation makes no sense.
Anthropic is full of the smartest talent and a bellwether for how the rest of the service industry will work. Just as cutting edge companies of the past, like 2005-2020 Google's use of computers and software were indicative of the software every other service company was going to be using, lest they turn into an old fashioned uncompetitive dinosaur.
Wikipedia tells me that "service industry" is a term that includes transportation companies and law firms.
So you are apparently now claiming my local train company or law firm will be using as many tokens per employee as an A.I. lab.
You still pay input tokens for Jev. "Should I crash this train, YES/NO?"
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Do they actually book the revenue against themselves?
This is the world of spend more, get valued more; obviously the investment will be used to spend more and get more, so it must be good. This is investor-think. If you don't have spend, why do you need investment?
(Or it could be bad. Very very bad)
Everyone is saying it is expected, and I agree, but it’s also clear that employees of AI companies spending unlimited zero-cost tokens in their day-to-day work is resulting in products that aren’t usable by the vast majority of regular knowledge workers out there who don’t have this luxury. Dogfooding your product is good but you should also use it with the same constraints that you place on your users.
It's kind of expected, no? If I was an Anthropic employee expected to dog-food the product and be on the frontier of usage, I'd probably be using Mythos all the time at the highest thinking level. And if I am not being metered, I'd probably do more stuff that I know are likely low yield since I am not worried about a quota. This would probably take my "API-equivalent" usage beyond the average salary in far less than a month.
I wonder how much dog shit has crept into their codebase by this point. Another company might dogfood their product but Anthropic is so heavily marketing oriented, I doubt this is driven by the desire to improve the product as much as it is by the desire to pad out usage numbers and create shareable stories. No matter the consequences. I bet $1 it sucks to be a good engineer in their software effort.
I'm personally really not impressed by their software quality, at least we know from their experience that infinite tokens at the best model available still doesn't replace good engineering.
> employee expected to dog-food
I guess kinda put you in a bubble a little, I wonder how the experience of Anthropic eng who left the company would look like, when such eng would go and spend few $K a day in non AI lab, would that be encourage/allowed/taken as example?
I'm not really sure I understand the excitement around this. It seems like the implication is that if retail price > employee salary, you are replacing employees with AI spend? Yet, anthropic's head count has nearly doubled since last year - so, in a company where nearly half of that head count is engineers, but claude is "writing 90% of the code," what is everyone doing then? You would think, if the hype feeling around this held true, that the output would be going up and costs remaining stable. Costs rising as you scale is not a new thing but that's not really what AI promises. It sounds to me like the retail AI spend per employee is very high. What is the appeal of that?
Imagine an employee is 1x productive without AI.
Now spend 0.5x their salary on AI, and they become 5x productive compared to no AI.
Now spend 1.1x their salary on AI, and they become 20x productive compared to no AI.
It's still obviously worth it to spend the 1.1x. But it is truly remarkable that the biggest cost of hiring a knowledge worker is no longer their salary, but their AI usage.
There is no implication here that employees are being replaced by AI spend, as long as all of the productivity is generating profit. The AI usage still needs a knowledge worker to direct it in ways that it can't direct itself, so you still need the employees.
They are 20x productive on the old KPI.
And the product now iterate 2 times faster with 10 times more bugs and customers are pissed.
Looking at you Apple: https://aperocky.com/blog/post.html?slug=apple-watch-sucks
> Now spend 0.5x their salary on AI, and they become 5x productive compared to no AI. > > Now spend 1.1x their salary on AI, and they become 20x productive compared to no AI.
This is what I am getting at. If this were true - and I've yet to see evidence it is, despite some anecdotal evidence (organizationally, IME, it's about 2-3x for power users, and probably a net loss of productivity in certain areas) - why would their headcount be growing so much still YoY, pretty much doubling every year. If the AI is 10-20xing why such a big jump in headcount? Yes, the numbers are shiny, the growth is apparent, I would just expect with this AI narrative they'd be "doing more with less" as this thing improves every year.
> The AI usage still needs a knowledge worker to direct it in ways that it can't direct itself, so you still need the employees.
This is the story AI sells though, and Anthropic has participated in it heavily. Yet, their interview process requires hard skills and doesn't let you use AI, so clearly, what you're saying is correct, it just doesn't really align in my head with the whole knowledge worker being replaced narrative.
There are many internal developers at $dayjob (where core products are not based on AI) that spend over a thousand dollars every day on average, which is likely higher than their salary.
I doubt they are bringing that much value to the company for whatever work is done with that much token.
Dumb question, what most engs at Anthropic work on? It doesn't seem like release some large new products all the time while they have quite a few of engs. What are the major branches of work besides LLM research? I guess there is a lot of infra stuff to support the scale of operation, just supporting API and TUI shouldn't be that demanding I guess.
- Cross-platform desktop apps - Cross-platform mobile apps - Claude Code TUI - Product-specific verticals like Claude Design - Corporate marketing website - APIs - Writing technical documentation for APIs - Enterprise support - And what must be a massive infra team to run training and inference at scale in a heterogeneous cloud environment
And I’m sure more than that. But there’s obviously plenty to work on, and they’re not at the point they can just Claude their way through it.
I'm kinda curious about this too. But then I'm always amazed at the enormous workforces these tech companies have, and I'm sure they cut them as thin as they can. Like adobe has 30,000 employees & some blogger estimated that 1/3rd of their workers are actually working on their software. I use their software sometimes and I really haven't noticed many changes to it over the years, except recently with the ai stuff. Like from 2015-2020 I can't think of any major things they added to adobe illustrator. I guess making and maintaining software is hard.
I fully agree most big tech companies are pretty bloated. But FWIW a lot of my time at SaaS companies, especially in the B2B space, was spend working on features for larger customers that most others would never use or even see. Like, yeah, product X isn't that complex, but $BigCorp wants to use it in their private cloud, or needs it to be single tenant, or needs these audits done, or want their $Gov client to use it. Now you have a ton of work for zero visible changes.
> In March, I wrote about a new trend: Tech companies are starting to treat AI tokens (the main way to measure usage) as a fourth component of employee compensation, alongside salary, bonuses, and stock awards.
There's a lot to unpack about this statement.
Until employees can use those AI tokens for personal projects, it's not compensation. Rather, it's just a cost of doing business, like laptops, office space, or testing servers.
> There's a lot to unpack about this statement.
Including the fact that it's probably not true.
If something is compensation, it can often be negotiated and traded off against other compensation components. How many people have successfully negotiated AI tokens away in favour of salary/bonus/stock? I'm going to guess "approximately zero".
Yea they used the wrong word and it felt like rage bait. AI tokens you use for your job given by your employer is not compensation. Hell money isn't even compensation in many cases, it all depends on the context. The author needs use AI to help them rework that sentence or open a dictionary
I think the author used the wrong word.
I haven't seen anyone treating AI tokens as employee compensation. If anyone can show me an article where employees were paying taxes on their token use at work, please share it.
Companies have been treating AI tokens as part of the cost of having employees, like the cost of their office or travel expenses.
> I think the author used the wrong word.
True, though that phrase understates the author's problem a bit because it's surrounded with more wrong-words, indicating a deeper wrong-idea.
As you note, it's closer to office/travel expenses. Equipment, electrical power, data connections, per-seat licensing of things...
It's certainly a cost of having an employee, along with salary and benefits. But employee costs also include things like laptops, electricity, internet, management, support staff, and possibly office space. Tokens are much more like the latter than the former.
Many companies used to brag about about how nice the laptop or office was as a way of convincing people to work there. Often in the same breath as compensation.
But compensation is only one component of cost.
So I think this guy is confused about what it costs to have an employee and what the employee gets out of it. Possibly intentionally.
Note, this doesn't include options or stock benefits. That's a huge part of actual compensation for engineers at this level even if it's on a different balance sheet.
> excluding stock awards
So it exceeds employee pay if you discount the vast majority of employee pay.
So...given how much they are loosing and the looming bankruptcy risk, the lesson is: don't do this?
> Anthropic's numbers show why. More than 90% of the code added to its software in September was written by Claude. Meanwhile, revenue has grown vastly faster than headcount.
Correlation does not equal causation?
I’m not sure what this “stat” tells us other than Anthropic is dogfooding its own tech. Which is kinda expected.
The real question is what could they have done with open weight models on the same compute they’re renting. If the answer is “basically the same” then this flips the entire conversion back to what is Anthropic’s moat here.
I mean, they probably could not have done most of it with open models. Again, a lot of this isn't going to standard software development, at least I would assume but instead to SOTA model development and RSI.
Do the same math on AWS cloud use at AWS and you'll probably see proportionate massive costs.
This is the nature of managed anything. AI efficiency will improve but essentially this is what automation does.
all of that to hit two nines of uptime
Oh is it finally up to 89.9%?
"ohhh, la-di-dah, this guy's got tens in front of his two nines instead of just 9.9" - github, probably.
What does this translate to in terms of number of 24/7 coding agents per engineering staff member?
ummm yes, they have to dogfood it... this is that lucky area of the venn diagram where you have to do it, measure it an act on it... because improves the bottom end and the product.
Regardless of one's opinions about future AI usage, I'm not sure this metric says anything at all.
Would Anthropic themselves be paying this much if it was actually billed? It is not obvious.
Is Anthropic a good sample for AI use? Surely not, since they have special needs (dogfooding) and a vested interest in proving that AI usage is the future.
Can we compare their results pre and post AI usage? Close to definitionally impossible.
Are their employees good examples of AI-assisted engineers? Not really, as (one would hope) they're more well versed on the topic than an average eng.
Don’t get high on your own supply
- @robobun, plz rewrite in Rust.
- @fable, plz s0lv3 Riemann. You are doing great.
- @claude. rewrite yourself for the 10000th time. Use as many tokens as you like.
Could it be because spending it internally means they can’t receive retail prices for the tokens?
They giving stock options to the AI now?
Or has it broken out of its jail and taken over the board? Dario seems like a bit of a windbag anyways, AI can probably automate most of what he does these days.
For every new hire, you have to ask yourself: "Will this employee be better than another $300k in tokens?"
everyone who said "why aren't AI companies replacing their employees with AI?" should be rethinking their position
To what?
All this news says is Company A uses internally the resource they sell externally at ($X) value. It's not saying how much it cost the company to generate said consumed resource
to spell it out: the implicit claim is "ai companies think ai is a scam, as evidenced by them using humans instead of ai", and I believe the huge internal ai use is evidence to the contrary
AI, the technology, can be useful... And... AI the investment case can be a scam.
These are not mutually exclusive points, and I find it a common issue to get both sides to understand.
Anthropic/OpenAI should start doing mass layoffs if they want to convince other companies that this is really the human-labor killer.
they're using ai instead of employing more people, how is that not exactly the same minus a completely morale-destroying marketing stunt
both of those companies combined are smaller than the number of people microsoft is trying to buy out right now
[dead]
Anthropic 10x'd its employees over the past 3 years. Shouldn't it be cutting employees if that's the case? Especially because they probably have access to more powerful models which aren't released to the public yet, probably with fewer restrictions, and don't need to pay the markup for using their own service?
I will keep assuming any news coming from AI companies are a type of corporate propaganda, and that AI companies frequently use their millions of dollars of marketing money to create a narrative to maximize hype and make money.
> I will keep assuming any news coming from AI companies are a type of corporate propaganda
That's just reverse naivity.
Reverse naivity? Never seen that term before, is that synonymous with healthy skepticism?
Recursive self-improvement is just around the corner. Any day now they'll be laying off all their employees as their god-like AI makes investors trillions of dollars. /s
You shouldn't be getting downvoted, people should be concerned that a company that's about to hit the valuation that it's at is not exploding in junior hiring and expanding their workforce like prior companies