Dario Amodei: observation

Transcript context

…This is a point I’m sure you would make, but diminishing returns on a genius could be quite high. More generally, what is profit in a market economy? Profit is basically saying other companies in the market can do more things with this money than I can. Put aside Anthropic. I don’t want to give information about Anthropic. That’s why I’m giving these stylized numbers. But let’s just derive the equilibrium of the industry. Why doesn’t everyone spend 100% of their compute on training and not serve any customers? It’s because if they didn’t get any revenue, they couldn’t raise money, they couldn’t do compute deals, they couldn’t buy more compute the next year. So there’s going to be an equilibrium where every company spends less than 100% on training and certainly less than 100% on inference. It should be clear why you don’t just serve the current models and never train another model, because then you don’t have any demand because you’ll fall behind. So there’s some equilibrium. It’s not gonna be 10%, it’s not gonna be 90%. Let’s just say as a stylized fact, it’s 50%. That’s what I’m getting at. I think we’re gonna be in a position where that equilibrium of how much you spend on training is less than the gross margins that you’re able to get on compute. So the underlying economics are profitable. The problem is you have this hellish demand prediction problem when you’re buying the next year of compute and you might guess under and be very profitable but have no compute for research. Or you might guess over and you are not profitable and you have all the compute for research in the world. Does that make sense? Just as a dynamic model of the industry? Maybe stepping back, I’m not saying I think the “country of geniuses” is going to come in two years and therefore you should buy this compute. To me, the end conclusion you’re arriving at makes a lot of sense. But that’s because it seems like “country of geniuses” is hard and there’s a long way to go. So stepping back, the thing I’m trying to get at is more that it seems like your worldview is compatible with somebody who says, “We’re like 10 years away from a world in which we’re generating trillions of dollars of value.”…

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