Concentration Risk (wheresyoured.at)

16 pointsby crescit_eundo21 hours ago5 comments

skmurphy 19 hours ago

Key points

Concentration risk is any single exposure or group of exposures with the potential to produce losses large enough (relative to capital, total assets, or overall risk level) to threaten a financial institution’s health or ability to maintain its core operations. (from https://ncua.gov/regulation-supervision/letters-credit-union...)

80% Of OpenAI And Anthropic’s Enterprise Revenues Come From 1% Of Its Customers, Which Skew Heavily Toward AI Startups Subsidized By Venture Capital

Anthropic and OpenAI Are Dependent On Artificial Revenue Driven By Unprofitable Venture-Backed AI Startups For Billions Of Dollars Of Revenue

cma 18 hours ago

> 80% Of OpenAI And Anthropic’s Enterprise Revenues Come From 1% Of Its Customers, Which Skew Heavily Toward AI Startups Subsidized By Venture Capital

They add a note that:

> with the caveat that it doesn’t include massive players like Microsoft or major banks, and customers can opt out of being included in research.

skmurphy 17 hours ago

I agree, the headline lacks the nuance of what Zitron includes in the footnotes. What is your estimate of concentration risk of AI use in VC-backed startups? Do you think there is more enterprise use that is not captured and it's more like 40% or 20%. I am not trying to be argumentative, I am trying to get a sense of other viable alternatives.

cma 15 hours ago

I'm not sure how it would change it, the 1% firms number would probably get even more concentrated if you included Microsoft and trading firms like Jane Street (assuming they opted out), but the spend weighted share of VC backed companies would probably go down. However, large VC backed stealth companies may be more likely to opt out. And lots of Microsoft's spend might be on products and support/devops servicing demand from VC backed stuff.

From a recent Dwarkesh interview with Dylan Patel it sounded like Jane Street might be double digits of Anthropic's revenue, but I'm not sure where they sourced that.

skmurphy 14 hours ago

Microsoft and Jane Street are paying for AI out of profits, so that cash flow looks more sustainable than investor dollars flowing to frontier labs via VC-backed startups. But it's a good point that some of Microsoft's spend may also be the result of VC investment in startups. I guess the fundamental questions is if either OpenAI or Anthropic can find a sustainable model. Probably, but not in their current configuration.

The "we help you fire your people" messaging has been a catastrophe but there have clearly been breakthroughs in code generation with more to be discovered.

I suspect AI becomes more like the steam engine, the railroads, or electricity, transforming society but leaving it fundamentally recognizable. Reasonable men may differ.