1 00:00:00,080 --> 00:00:03,197 It seems like your worldview is compatible with somebody who says uh 2 00:00:03,280 --> 00:00:06,877 we're like 10 years away from a world in which like we're generating trillions. 3 00:00:06,960 --> 00:00:08,157 >> That's just that's just not my view. 4 00:00:08,240 --> 00:00:12,477 Yeah, that is that is not my view. Like I I so so I'll like I'll like make 5 00:00:12,560 --> 00:00:14,957 another prediction. It is hard for me to 6 00:00:15,040 --> 00:00:17,757 see that that there won't be trillions 7 00:00:17,840 --> 00:00:20,957 of dollars in revenue before 2030. Um 8 00:00:21,040 --> 00:00:26,077 like uh I can I can construct a plausible world. It takes maybe three 9 00:00:26,160 --> 00:00:28,717 years. So that that you know that would be the end of what I think it's 10 00:00:28,800 --> 00:00:33,517 plausible like in 2028 we get the the real country of geniuses in a data 11 00:00:33,600 --> 00:00:37,197 center. You know the revenue's been been go you know the revenue has been going 12 00:00:37,280 --> 00:00:39,757 into the maybe is is in the low hundreds 13 00:00:39,840 --> 00:00:43,677 of billions by by by by 2028 and and and 14 00:00:43,760 --> 00:00:47,757 then the country of geniuses accelerates it to trillions you know and and we're 15 00:00:47,840 --> 00:00:51,117 basically we're basically on the slow end of diffusion. It takes two years to 16 00:00:51,200 --> 00:00:54,157 get to the trillions. that that that would that that that would be the world 17 00:00:54,240 --> 00:00:55,677 where it takes until that would be the 18 00:00:55,760 --> 00:00:58,717 world where it takes until 2030. I I I 19 00:00:58,800 --> 00:01:01,517 suspect even composing the technical 20 00:01:01,600 --> 00:01:03,117 exponential and diffusion exponential 21 00:01:03,200 --> 00:01:05,837 will get there before 2030. So you laid 22 00:01:05,920 --> 00:01:08,877 out a model where anthropic makes profit 23 00:01:08,960 --> 00:01:12,957 because it seems like fundamentally we're in a computed world and so it's 24 00:01:13,040 --> 00:01:14,717 like eventually we keep growing comput. 25 00:01:14,800 --> 00:01:18,877 No, I think I think the way the profit comes is again and and you know, let's 26 00:01:18,960 --> 00:01:22,077 let's just abstract the whole industry here. Like we have a you know, let's 27 00:01:22,160 --> 00:01:25,677 just imagine we're we're in like an economics textbook. We have a small 28 00:01:25,760 --> 00:01:28,957 number of firms each can invest a 29 00:01:29,040 --> 00:01:31,757 limited amount in you or or or like each 30 00:01:31,840 --> 00:01:34,237 can invest some fra fraction in R&D. 31 00:01:34,320 --> 00:01:36,397 They have some marginal cost to serve. 32 00:01:36,480 --> 00:01:40,077 the margins on that the profit margin the gross profit margins on that 33 00:01:40,160 --> 00:01:44,877 marginal cost are like very high because because because inference is efficient 34 00:01:44,960 --> 00:01:48,557 there's some competition but the models are also differentiated there's some 35 00:01:48,640 --> 00:01:53,037 there's some um you know companies will compete to push their research budgets 36 00:01:53,120 --> 00:01:57,437 up but like because there's a small number of players you know we have the 37 00:01:57,520 --> 00:02:01,037 what is it called in the corno equilibrium I think is what the what the 38 00:02:01,120 --> 00:02:05,997 small number of firm equilibrium is it the point is it it doesn't equilibrate 39 00:02:06,080 --> 00:02:10,077 to perfect competition with with with with with with 40 00:02:10,160 --> 00:02:14,717 zero margins. If there's like three firms, if there's three firms in the 41 00:02:14,800 --> 00:02:19,197 economy, all are kind of independently behaving behaving rationally, it doesn't 42 00:02:19,280 --> 00:02:22,717 equilibrate to zero. >> Um, help me understand that because 43 00:02:22,800 --> 00:02:26,637 right now we do have three leading firms and they're not making profit. Um, and 44 00:02:26,720 --> 00:02:29,037 so what what uh yeah, what what is 45 00:02:29,120 --> 00:02:32,557 changing? Yeah. So the the again the 46 00:02:32,640 --> 00:02:37,757 gross margins right now are very positive. What's happen what what's 47 00:02:37,840 --> 00:02:41,037 happening is a combination of two things. One is we're still in the 48 00:02:41,120 --> 00:02:43,677 exponential scale up phase of compute. 49 00:02:43,760 --> 00:02:46,557 Um so what basically what that means is 50 00:02:46,640 --> 00:02:49,597 we're training like a model gets trained 51 00:02:49,680 --> 00:02:51,357 it costs you know let's say a model got 52 00:02:51,440 --> 00:02:54,637 trained that costs uh a billion last 53 00:02:54,720 --> 00:02:58,157 year um and then uh this year it 54 00:02:58,240 --> 00:03:02,237 produced uh $4 billion of revenue and 55 00:03:02,320 --> 00:03:06,237 cost $1 billion to to uh to to to 56 00:03:06,320 --> 00:03:10,077 inference from. Um so you know again I'm using stylized number here but you know 57 00:03:10,160 --> 00:03:13,037 that would be 75% you know gross gross 58 00:03:13,120 --> 00:03:15,677 gross margins and you know this this 25% 59 00:03:15,760 --> 00:03:19,517 tax. So that model as a whole makes $2 60 00:03:19,600 --> 00:03:24,797 billion. Um but at the same time we're spending $10 billion to train the next 61 00:03:24,880 --> 00:03:28,397 model because there's an exponential scale up and so the company loses money. 62 00:03:28,480 --> 00:03:32,717 Each model makes money but the company loses money. The equilibrium I'm talking 63 00:03:32,800 --> 00:03:36,397 about is an equilibrium where we have the country of geniuses. We have the 64 00:03:36,480 --> 00:03:38,157 country of geniuses in a data center, 65 00:03:38,240 --> 00:03:42,797 but that that um model training scale up 66 00:03:42,880 --> 00:03:46,877 has equilibrated more. Maybe maybe it's still it's still going up. We're still 67 00:03:46,960 --> 00:03:51,437 trying to predict the demand, but it's more it's more um leveled out. If you 68 00:03:51,520 --> 00:03:55,117 enjoyed this clip, you can watch the full episode here and subscribe for more 69 00:03:55,200 --> 00:03:58,480 clips. Thanks.