Anthropic's internal AI use, at retail prices, now exceeds its employee pay (businessinsider.com)

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.

You have confused necessary and sufficient.

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.

Maybe, but it also reduces supply that can drive up prices

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.

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.

They have infinite money to burn so they aren't going to optimize.

I've seen that trivial changes to workflows can token usage by 30%. Repeat this a few times and my token usage has plummeted over the last few months.

Only outputting test failures instead of having agents read test run output in real time. Not having build logs get fed into context. Projects like UCL (unified context layer) so agents don't rediscover the same facts about a code base again and again.

Giving tools agent output modes so they only print out the minimal info needed for an agent to get work done.

When I hear a company has an absurd AI spend I assume they aren't even trying to reign it in.

It’s not opportunity cost. It would be opportunity cost if their employees not using it would lead to additional revenue. However, if Inwas to go to Anthropic and double my token usage Anthropic wouldn’t decline my money. If Anthropic’s employees would stop using Claude, their revenues wouldn’t increase by an equivalent amount.

Their revenues are not currently supply constrained.

It’s just a cost cost. If their employees stopped using these services they would simply need less infrastructure, and therefore save on the cost to build and run that infrastructure. It wouldn’t translate into an increase in revenue.

This is NOT the definition of opportunity cost. Please do not throw in random terms you don't understand. Opportunity cost is the value of the next best alternative you give up whenever you make a choice. WTF does it have to do with mis-classifying an expense?

That's API-list prices. They have an 80% margin over COGS.

Cost per equivalent output is dropping 10x every 18 months -> so in 3-ish years, if the trend continues, that will be $3k per employee.

Not bad. A lot of companies are already spending about that much or more on IT per employee.

Especially since that $3k bakes in an 80% margin. It's about $600 per year if you DIY at scale - which is about $50 per month - but at the $3k price, hardly anyone is going to.

In the West old-age dependency ratio (retirees per working-age adult) is climbing roughly 0.5 to 0.7 percentage points per year.

We've got to get 0.7% more productive for employees to keep the same quality of life (unless retirees get screwed, and since they vote and make up a huge portion of the voting block, I wouldn't count on that happening).

Further, more and more of the population has to transition into into elder care.

Unless we hit 3%+ GDP growth, us workers are probably going to see declines in quality of life (and we're probably not going to get those levels of growth)...

The extremely discounted internal cost promote waste, so there is always a room for improving efficiency, but that too has a cost.

If what you said was how taxation worked, a hand tool manufactuting company giving hammers they make for $1 and retailing for $2 to workers building a shed on their property would be increasing the workers' income tax bill by $2. Of course, in reality the workers get no income tax bill on the hammer given to them for work and the company can get a $1 tax writeoff from the opex of making the hammer.

Suppose a company could transfer an asset to an employee and have its value set as the employer's cost. A company could make a bunch of volatile investments and see which ones pay off. Then the ones that go south get sold back into the market as a tax loss and the ones that do well get transferred as compensation to employees at the purchase price instead of the current value, reducing the tax liability of both the employer (no taxable gain) and the employee (less taxable income). What would happen if any employer could do that with any employee and any asset?

Conversely, there is a separate carve out for "employee discounts", which is essentially the employer offering its employees its own products for something in the neighborhood of its own cost. Why? It's not in any way a principled accounting distinction, it's because it's harder to use for tax avoidance at scale, because then a soap company can give its employees a discount on soap, but people only need a finite amount of soap and then the soap company can't use it for cars and real estate and stocks.

>I wonder how much dog shit has crept into their codebase by this point.

You'd think they'd know not to shit where they eat… ?

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.

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

True, though that phrase understates the author's problem a bit, as it is surrounded with more wrong-words, indicating it's a wrong-idea rather than a slip of the tongue.

As you note, it's closer to office/travel expenses. Employee computers, licenses for software on those computers, licenses for SaaS stuff, paying for bandwidth, etc.