No. This is opportunity cost.

A clear example is Google. They can easily give all compute to Deepmind, yet majority is allocated to be sold at market rate.

So, every compute Deepmind and Googlers get is lost revenue opportunity and must be measured as such.

No other internal tools or servers has this much external demand to be comparable.

Also, Anthropic is showing that to operate at Anthropic level, you need $300,000 compute spend per employee

I’ve worked at and with large orgs - it’s absolutely standard practice for BUs to bill other BUs at “retail” or at the very least a commercial rate.

Plenty of companies use retail/wholesale pricing internally to make sure a business unit doesn’t appear profitable just because it’s being subsidized by the one providing the resources. Plenty also have to have arm’s length pricing for legal reasons.

Anthropic isn’t booking it as GAAP revenue, they’re just using the number for marketing.

Microsoft basically does the same with internal Azure services? When I was there our budget/usage was based on and consumed at the consumer price for GPUs and other compute. What happened behind the scenes really I have no knowledge.

That's not really true. Measuring the equivalent retail cost of the usage is the only way to put it in a relatable perspective.

If Anthropic had revealed their internal cost, there comments would be complaining that they were hiding something and giving useless, unrelatable data.

The expenditure is most interesting when compared to retail rates, because that's the rate the rest of us have to compare against.

In a lot of companies, you would get charges back on usage/license/cost and this can get even funnier in NGOs.

In a similar way, internal employees would have also a "standard daily rate" like an external employee.

Seems entirely in line with Hollywood-style practices.

Actually I think it's very informational. For every other company, working on the cutting edge of technology, paying for intelligence at retail prices, means you are now paying more for AI than you are employees. That $ could have been spent on 2x the employees, however that's not as useful as 50% AI / 50% humans, and indicative of where we are headed.

Do they actually book the revenue against themselves?

This is the world of spend more, get valued more; obviously the investment will be used to spend more and get more, so it must be good. This is investor-think. If you don't have spend, why do you need investment?

(Or it could be bad. Very very bad)

Imagine an employee is 1x productive without AI.

Now spend 0.5x their salary on AI, and they become 5x productive compared to no AI.

Now spend 1.1x their salary on AI, and they become 20x productive compared to no AI.

It's still obviously worth it to spend the 1.1x. But it is truly remarkable that the biggest cost of hiring a knowledge worker is no longer their salary, but their AI usage.

There is no implication here that employees are being replaced by AI spend, as long as all of the productivity is generating profit. 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.

I wonder how much dog shit has crept into their codebase by this point. Another company might dogfood their product but Anthropic is so heavily marketing oriented, I doubt this is driven by the desire to improve the product as much as it is by the desire to pad out usage numbers and create shareable stories. No matter the consequences. I bet $1 it sucks to be a good engineer in their software effort.

> employee expected to dog-food

I guess kinda put you in a bubble a little, I wonder how the experience of Anthropic eng who left the company would look like, when such eng would go and spend few $K a day in non AI lab, would that be encourage/allowed/taken as example?

- Cross-platform desktop apps - Cross-platform mobile apps - Claude Code TUI - Product-specific verticals like Claude Design - Corporate marketing website - APIs - Writing technical documentation for APIs - Enterprise support - And what must be a massive infra team to run training and inference at scale in a heterogeneous cloud environment

And I’m sure more than that. But there’s obviously plenty to work on, and they’re not at the point they can just Claude their way through it.

I'm kinda curious about this too. But then I'm always amazed at the enormous workforces these tech companies have, and I'm sure they cut them as thin as they can. Like adobe has 30,000 employees & some blogger estimated that 1/3rd of their workers are actually working on their software. I use their software sometimes and I really haven't noticed many changes to it over the years, except recently with the ai stuff. Like from 2015-2020 I can't think of any major things they added to adobe illustrator. I guess making and maintaining software is hard.

Until employees can use those AI tokens for personal projects, it's not compensation. Rather, it's just a cost of doing business, like laptops, office space, or testing servers.

It's certainly a cost of having an employee, along with salary and benefits. But employee costs also include things like laptops, electricity, internet, management, support staff, and possibly office space. Tokens are much more like the latter than the former.

Many companies used to brag about about how nice the laptop or office was as a way of convincing people to work there. Often in the same breath as compensation.

But compensation is only one component of cost.

So I think this guy is confused about what it costs to have an employee and what the employee gets out of it. Possibly intentionally.

I think the author used the wrong word.

I haven't seen anyone treating AI tokens as employee compensation. If anyone can show me an article where employees were paying taxes on their token use at work, please share it.

Companies have been treating AI tokens as part of the cost of having employees, like the cost of their office or travel expenses.

> There's a lot to unpack about this statement.

Including the fact that it's probably not true.

If something is compensation, it can often be negotiated and traded off against other compensation components. How many people have successfully negotiated AI tokens away in favour of salary/bonus/stock? I'm going to guess "approximately zero".

I mean, they probably could not have done most of it with open models. Again, a lot of this isn't going to standard software development, at least I would assume but instead to SOTA model development and RSI.

Oh is it finally up to 89.9%?

To what?

All this news says is Company A uses internally the resource they sell externally at ($X) value. It's not saying how much it cost the company to generate said consumed resource

Anthropic/OpenAI should start doing mass layoffs if they want to convince other companies that this is really the human-labor killer.

You shouldn't be getting downvoted, people should be concerned that a company that's about to hit the valuation that it's at is not exploding in junior hiring and expanding their workforce like prior companies

I will keep assuming any news coming from AI companies are a type of corporate propaganda, and that AI companies frequently use their millions of dollars of marketing money to create a narrative to maximize hype and make money.