I'm surprised people think LLMs, a thing which mainly excels at advertising, spam and writing code is going to generate that much economic activity.

except for you know the enterprise customers who won't change their code and will pay to run old inefficent hardware just to keep from dealing with upgrades?

I'd agree. but also that's too scary. and the bottleneck is the massive manual change control process since there's no automation around any of this. :) Why take risk when you can spend money and take no risk

Saner companies ask the same question about models from their own country too.

It's called AWS. Bedrock is right there. Price or data policy is never the issue. The models themselves are the problem -- most large US companies are not going to touch them. Source: directly involved in these discussions. You can downvote as much as you'd like but you can't ignore the facts.

Some suits with no understanding of how LLMs work are scared that the models might hack them, or believe that they'd have to send data to China because they do not know that open models can be run on your own infra.

Do you trust OpenAI with your code, data, PII? What makes you so sure it's not all part of the next training set anyway?

AI may get so commoditized for certain use cases that you will not even be able sell inference at a profit. AI might be bundled in with other services, just like cursor bundles in their own AI model for auto complete with their editor. I.e. cameras might have AI for image recognition bundled in etc.

Agreed, this is where google is really, really set up to win the market. They can combine gemini subscription with a moderately more expensive google workspace and steal MSFTs entire $50 billion enterprise productivity software market. MSFT is quickly trying to get copilot in a good enough state but without TPUs I think itll be tough for them to serve a good enough model at a price people will accept.

The American big boys are hoping to create "labor as a service" rather than sell tools. You don't hire an accountant that uses Claude, you hire Claude and it just does everything, without the visibility of current agents. They'll need to make it remote and obfuscated to protect their secret sauce from distillation and reverse engineering. It'll be really expensive, and be focused on enabling rich business types and upper managers.

Any IT cost center will send to the lowest bidder. This isn’t intellectual property: it’s annoying shit that is an unwelcome cost of doing business. China might copy our tedious scripts? Will they make a product out of it? Can I buy it and fire my IT staff? Great! Not everyone using AI is using it to code core value IP.

There are plenty of expenses in this order of magnitude that are not tied to direct increases in productivity. I think it may become a serious hiring impediment for companies to be really skimpy on these budgets for example.

Which organizations? Uber is not representative of any trend beyond big tech and VC over funded startups.

Nearly no one is doing anything that is “only possible with AI”. This doesn’t seem like a relevant calculation. People spend on AI as an investment in their current productivity.

I agree, outside of the AI bubble, there's a lot of wait-and-see happening in the B2B world right now, I'd say we're currently 6-8 months into that 14 months.

> Don't ask LLMs for big changes > Review everything and point them in the right direction Sorry upper management doesn't care. That's an engineering problem that you need to solve.

Do you think companies are gonna be like?: Wait a minute. We didn’t save money by adding AI. We just added an expense. Now we have to pay for employees AND AI.

Why there are so many people that still believe that AI coding is a fad? It's something that started less than two years ago and companies are already paying thousands per seat. I know one that gives you 5k per month. Which other tool went from nothing to this level of acceptance so quickly?

> Because companies are betting that this spending will allow them to reduce cost by firing people. I've never worked at a company that didn't have a technical backlog measured in years.

It's so fucking bad. I'm watching a team try to maintain a huge dashboard/control application that interfaces with a large amount of hardware using solely AI workflows. Literally nothing works, all the timers/time counters are different across the pages, constantly commands hardware to do stupid shit, breaks during critical moments/in front of clients. Eventually mgmt had to institute change freezes for high profile events because the team was breaking too much shit all the time. The average C suite dipshit doesn't realize that the performance drops off a cliff once your project is more than some fraction of the context window so they will make pretty dashboards all day long but once you need to cover all the edge cases of a real system it all explodes. AI isn't trained on the type of software style we'll need to create systems using AI, it's trained on how we used to write software. It doesn't reuse code or elegantly structure annoying, it just adds more code until the thing builds and passes some fake tests, even if half of it is functionally dead/unused.

That's just a non sequitur. "companies are already paying thousands per seat" has zero correlation with something being a fad or not. There are much more reasonable rationales explaining why companies are acting the way they are than "because AI coding is not a fad"

Can you name a service that charged companies thousands/seat/month that turned out to be almost or completely useless? There's lots of random services sold to corporates that are not very useful (all the random benefits besides health care, life insurance, and other big-ticket items), but the per-seat charge of those is much smaller.

Google Jam Board (and other digital whiteboards) had high upfront capex and lowish opex. Probably close to the price for how often they were used before being killed off. Same with the MS surface(?) tables (not tablets). I saw load of companies buy into the hype and then discard.

There are so many. Can I start with Oracle databases?

Oracle DBs have powered enormous numbers of applications and economic value.

Companies love to waste money on that kind of service, before this website became everything about AI, every week someone would post how they saved a gazillion dollars by leaving vercel or AWS to self hosting as an example.

So you think AWS is a fad?

Not a service, but do you remember Scrum Masters? We had them as full time employees not so long ago. Pure fad.

Hah. Great example actually. But far less common than AI afaict.

Every consultant ever, but to be fair that's not per seat.

Oracle and some company wide Microsoft licenses.

These are clearly useful.

> Can you name a service that charged companies thousands/seat/month that turned out to be almost or completely useless? The Concorde turned out to be fad (not "useless" - which was your reframing.) Touted as the future of travel, each seat cost about $20,000 of today's dollars, but it turned out even at those high prices people and companies were willing to pay per-passenger, supersonic trans-Atlantic air travel is not economically viable, and was discontinued.

It's just silly to claim it has zero correlation.

"as most arguments don't apply to today's world" makes me want to roll my eyes so hard at you. The vast majority of problems we had with building complicated systems are all still just sitting there. People are speedrunning relearning things we've known about software engineering for decades. The more things change, the more they stay the same.

> It might keep at that level, increase even more, or drop down Bold prediction. :) I think anyone predicting a drop or near-term flattening is not thinking beyond the online bubbles where these tools are discussed. In a local tech meetup a lot of the normal companies are barely coming online with AI tools at their company, and even then with very low limits.

Fear of loss to competitors embracing a technology creates a fear driven adoption. Let me ask you this: is any technology worth so much break-neck adoption without first seeing clear evidence of ROI? No. The adoption is irrational.

All of the articles and CFO’s saying so, and companies like Uber cutting back on AI spend.

perhaps the personal computer? Companies were spending 3-5k (10-15k inflation adjusted) on every employee for just hardware. everyone making comparisons to the dotcom bubble seems misguided. this is clearly computing 2.0 imo

The question you always have to ask is what problems does it directly solve. I personally think most of the current problems in software development and really the world at large are not time-bound problems but alignment issues, and all an LLM can really do there is be some 3rd party oracle that gives you an answer without needing other humans to agree with you.

I agree with you. I think that if we're talking about actual reliable problem solving, we have to be discussing robotic / drone systems. Software is as complex as you want to make it, and always has been.

I think the right comparison is the invention of the microprocessor. At that time people were grappling with a lot of the same things we are today - would it automate jobs away, would it transform education and the work place, etc.

I still believe Scrum is a fad and yet companies have been spending obscene amounts on to push it down developers' throats for decades now.

> Which other tool went from nothing to this level of acceptance so quickly? NFTs? My company had nothing to do with blockchain but I ended up working on NFT integration regardless.

Why are there so many people who mistake simple anecdotes for actionable data? Why do the majority of businesses fail rather than succeed?

Because we have spent a lot of time and money using AI to generate code and have been unimpressed with the results. As for why they got accepted so quickly 1) the industry's long running desperation to deskill computer programming 2) the addictive psychology baked into LLMs "That's an elegant solution! Shall I ... ?"

The massive misalignment in large companies is no secret. But neither is the fact that when someone comes to cut, they also have no idea of who is doing load bearing work that matters, and who doesn't. I look at recent cuts around my large corp, and it's clear they are made at levels that have no visibility of the ground, and are uninterested in said visibility. Obvious mistakes that are worse than what claude would have told you (yes, I asked Claude to pretend to make the budget cuts in our org y looking at the same data an exec could probably get. They were better than what happened) I think it's a general problem, but in my rare conversations with execs nowadays, they seem rather uninterested in improving their decision making there. The actual performance of the organization does not appear to be all that relevant to them.

How much more software does Uber need? Unless they are iteratively replacing expensive vendors and optimizing other headcount costs?

The problem isn't really Uber, Microsoft or Nvidia, it's all the smaller none IT companies that also have developers on staff. They are screwed. $1500 per seat per month is just way to expensive, but they also can't afford to build and maintain their own on-premise solution. If Microsoft can't afford to run CoPilot for their own developer, what chance does any of their customers stand? If the large, well founded IT companies in the world believes the current AI cost is to high, then Anthropic, OpenAI and CoPilot have no actual customer base. AI is then relegated to very profitable niche business, but that can't fund the R&D for the models.

$18k a year is a non starter in most companies. Ive seen companies balk at Intellij.

Why are smaller non-IT companies "screwed" because they can't pay out the nose for their developers' AI usage? They're non-IT companies, developers are presumably not on their critical path, or not their bottleneck. Developers can keep on writing code the old way, or doing it with a more reasonable AI spend. I don't see how this "screws" any company.

"Windows XP+Dell" should have been in quotes. It's similar to the way enterprise productivity software was developed, packaged co-designed with hardware, and sold on an 18mo upgrade cycle assumption. It's not literally windows xp.

There's waayyyy too much money betting on that not happening, to the point I feel there'll be regulations popping up for "safety reasons" etc to ensure the big players control this.

>WTF did Uber build with all of that spend? How did it meaningfully impact their revenue in a positive direction? Uber (and quite a few bay area companies and startups) can afford to spend that money. There is no expectation of profit, Uber lost ~62B and growing: https://uberlosses.com/

As much as I love to hate on Uber, that website is from 2022. Uber has been profitable since 2023. It's profit margin seems to have stabilized around 10%. The real economic crime is losing at least $40bn over 10 years scaling a business that ended up having retail profit margins (i.e. low profit margins).

Just to put this in context. If every company did this, all over the world, with that same limit, we are talking about something around $45B monthly in revenue for all AI companies to share.

It is not only for devs https://openai.com/index/codex-for-every-role-tool-workflow/

So, are companies paying that amount for people at other roles to use it?

That's a bold assumption. Increasing costs by roughly $18 000 per employee worldwide is highly unlikely. For reference even at FAANG in Europe, that would be a 7-15% cost increase for a senior developer. More like 15-30% for non FAANG and even more for non-European markets.

I don't think it's a bold assumption, but I also don't think the assumption would lead to the conclusion. 1. Why it's not a bold assumption: it's a bit shocking now. But in two years or so, many/most companies will realize this is the cost of doing business. Just like people are ok with using Outlook, or Office 365, or (in the case of Wall Street) Bloomberg terminals, people will realize that developers will need AI coding assistants. 2. Why the conclusion does not follow from the assumption: if the limit is set at $1500/developer/month, it does not mean all developers will use it. Companies will set incentives for people to not be very wasteful. It is more likely that on average developers will consume $100-200 worth of tokens per month, and there will be some outliers who will consume 10, 100, or 1000 times as much, but they'll be few.

BigCo's are not using the plans we are using, they can't.

> A $1,500 monthly limit per tool strikes me as a rational policy response to over-spending,... > I noted that my own token usage comes to about $1,000/month against each of Anthropic and OpenAI - which currently costs me just $100 per provider thanks to their generous subsidized plans for individual subscribers. This whole article seems to me like Multi level marketing "businesses" where 'Diamonds' have made their money by promoting MLM in seminars and telling hopefuls at bottom that "Buying AI subscription now is their one shot to be a winner in life" Perhaps there is something to MLM vs LLM to create a FOMO effect.

If the premium models are just about 10% better - that could justify the price vs. self hosting a ~0.5-1T open weights model. Remember that utilization of these huge racks will not be 24h/7, and these are usually not GPU intensive shops that would train models on the spare compute. With prices of 100-200k USD and north with ~2 years lifetime, that would be hard to justify financially. Self hosting could easily amount to ~1000 USD a month amortized across many developers. In rush hours - there will be hard rate limits. Would that 1500-1000=500$ monthly USD justify the 10% decrease in "AI Productivity" ? I guess not. In most cases. For everyone that asks me around, I'd say that in short term, unless there's a really good reason to self host these coding assistant models, then the big 2/3 coding assistants providers are the better choice. No one got fired from licensing claude code.

This week an S&P 20 company with previously unlimited Claude limits also set a $250/mo/person limit; though its unclear to me how widely the limits are being enforced, may be the case that its just non-software engineers. Do with this info what you will.

It means Uber thinks they can sustain that level of expense. Whether engineers at Uber are representative of the rest of the work force is an easily debatable question.

It's among a wave of fresh "non-insane" takes on AI in the enterprise. Maybe we can reel things in to a sustainable level before a giant bubble bursts.

Uber is in the business of experimenting with robotaxis and automated food delivery. They can't say that $0 per employee is the appropriate amount for AI spending. So they capped it, perhaps in order to "send a signal" that is eagerly picked up by the AI boosters. There is no signal. Uber does not work any better since AI. They still want to promote AI, so they chose the highest number that doesn't bankrupt them so the press and AI promoters pick it up as the new price anchor. Probably they'll quietly reduce the number more soon.

Related: Uber’s COO says it’s getting harder to justify money spent on tokenmaxxing https://news.ycombinator.com/item?id=48268871 Uber torches 2026 AI budget on Claude Code in four months https://news.ycombinator.com/item?id=47976415 Corporate America Is Starting to Ration AI as Cost Skyrockets https://news.ycombinator.com/item?id=48335388

What is the point of allowing a developer to spend $18,000 a year on AI subscriptions? Can't they hire a decent developer who is capable of producing a quality solution faster? Clearly, these decisions are all made by high-level management team. I was recently talking to an HR person from a European company, and she goes: 'We are forcing our developers to use AI coding agents, but they are still kind of hesitant.' This person had never written a single line of code, nor did she know what software engineering is. For these people, using AI coding agents = faster delivery without breaking anything.

I would not be surprised if they have engineers vibecoding 2-3 projects each simultaneously, nonstop, on largely un-moderated review-suggest-iterate-test feedback loops. All the code gets summarized and fed into their manager's agent contexts, probably duplicated several times across levels and departments, with some generated back-and-forth emails pinging around the org chart, eventually generating 2-3 long-winded reports that nobody will read chock full of generated visualizations that can all get consolidated into a generated slide deck that they'll show (maybe, at some point) to a handful of humans with more money than a human brain can conceptualize to demonstrate all of the innovation they're doing. I am increasingly convinced that many of these companies are dead trees whose only function is to burn money lest it fall into the hands of the peasantry.

They want to replace employees with AI, then replace paid AI with unpaid AI. Their wet dream was never automation. It was zero marginal cost labor. And that dream is starting to rot.