Better Offline The Hater's Guide To The AI Bubble, Pt, 2
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Jul 24, 2025 Delve into the financial struggles of generative AI as major players like Anthropic and OpenAI seemingly undermine their own customers. Uncover the misconceptions equating generative AI with cloud infrastructure, and explore the challenges tech startups face in navigating funding hurdles. The podcast critiques misleading AI marketing narratives, highlighting the gap between hype and actual performance, and calls for careful assessment of AI's future societal impact amid rising skepticism.
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Generative AI ≠ Cloud Infrastructure
- Generative AI and large language models (LLMs) are not infrastructure like Amazon Web Services (AWS).
- LLMs act more like a feature atop cloud infrastructure, lacking AWS's versatility or profitability.
LLM Startups Struggle Financially
- Most companies built on large language models earn little and are deeply unprofitable.
- Only a handful exceed $100M annual revenue, showing limited market size and profit potential.
Cursor's Unsustainable Growth
- Cursor rapidly grew to $500M ARR by selling a product at unsustainable loss.
- To survive, it restricted user access and raised prices, angering customers.