25 chunks · 21 episodes
...nvert what had to be opex before into capex. Pay a fixed cost once and now that marginal cost evaporates. Tools that you use always have this shape. Writing didn't necessarily have this use as a tool, because the person you want to be affected...
...nds on this distribution. At least, for subscriptions to things with meaningful marginal cost. If every subscriber consumed 100% of their allowed use, the system would fall apart.
...e fixed cost of finding and doing the logistics for a project now dominates the marginal cost of executing the project. All rind, no pulp!
LLM marginal cost will stay high even as token cost declines. That's because of Jevon's Paradox. As the cost gets cheaper, we'll use them for even more things. Anythin...
...od of the community" is hard to motivate more than a few idealists on. AI has a marginal cost, which means there will already need to be infrastructure, perhaps we could use that.
I agree with this analysis that fixed-fee AI subscriptions can't work. The marginal cost is too high, and the value created by them is too high for users to ration their usage.
...l phone networks. Extremely capital intensive to build out, but then much lower marginal cost to operate. Though inference has much more marginal cost than cell phone networks. The actual service depends somewhat on quality, but they're all wi...
...t need to raise $1B Who's in?" ARR being the most important metric assumes zero marginal cost. That was a good assumption in the world of Saas. But it's a bad assumption in AI!
...he physical storage space to hold it, you have continued access to it with zero marginal cost. Superficially looks the same, but one is way more fragile than the other!
...ding tools that charge a high margin for hosting of the final app (despite zero marginal cost), but not for the creation of the app (despite significant marginal cost).
One of the reasons tech took over the world was zero marginal costs. But that doesn't apply to LLM-powered tools!
... necessary but not sufficient condition for user-alignment. Is it just the zero marginal cost that leads to engagement maxing? Attention is all you need… a neverending force of gravity not just for training LLMs but for business models too.
When a product has a non-trivial marginal cost but is free, then there's some ulterior motive that might arbitrarily misalign with your interest.
The last era of software was based around zero marginal costs. In a world of zero marginal cost, there are only three consumer business models[adz]. Hardware. Charge a premium on the hardware, and lock people i...
...going to cost you non-linearly more. Many possible uses won't be viable at that marginal cost of quality.
...t is because software is expensive to write, cheap to run. High fixed cost, low marginal cost. Over time prices tend to reduce to the marginal cost of production. Over sufficient time, with sufficient competition, software thus reduces down to...
...ue than you earn. This is a trap for products with an LLM feature to avoid. The marginal cost is non-trivial!
... change, you can't charge as much as you want for it. There has to be a change (marginal cost to the creator) to have a sustainable extraction of marginal price. If there isn't, it's unsustainable harvesting. If there is, it's regenerative. In...
...ee text and vibes. You could hallucinate the translation code once (at non-zero marginal cost) but then run it cheaply in the future (like other software, effectively zero marginal cost).
...s: Hard to build: expensive fixed cost that requires specialized knowhow. Free: marginal cost can be supported by advertising Easy for a user to try: Just a click away Not deeply sticky: very little meaningful state for a user in the system th...