The Bootstrapped Founder

390: When to Choose Local LLMs vs APIs

79 snips
May 16, 2025
Explore the intriguing debate between local AI models and API solutions. Dive into the pros and cons of each approach, including insights from personal experiences. Understand how to balance privacy concerns with data processing needs and the impact on business decisions. This conversation is a must-listen for anyone navigating the evolving landscape of AI applications!
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ANECDOTE

Early Local AI Commitment

  • Arvid Kahl initially believed in running all AI tasks locally to keep costs low and control tight.
  • He publicly shared his benchmarks and cost comparisons during this phase.
INSIGHT

Scale Favors API Providers

  • Scale economies make big cloud API providers cheaper for large workloads than local hardware.
  • Managing 50,000 podcast episodes daily showed local models couldn't efficiently scale.
ANECDOTE

Transcription on Budget Server

  • Arvid ran transcription on a low-cost $25 server successfully for small workloads, taking a few minutes per minute of audio on CPU.
  • This worked well for async tasks like transcribing short audio clips without costly GPUs or API calls.
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