“I do believe that cost of producing code is approaching to zero, and that means hundreds or even thousands of offerings will exist in every shape, way and form we can imagine.”
What proportion of T does R need to be to see thousands of Ashbys appear?
Ashby is a good example to discuss because it is serious software for serious businesses, it isn’t a calorie counting app. Serious business expects so much more out of their suppliers than software, Ashby is so much more than a bunch of code.
So, a thousand people generate their own ashbys, then what? Are companies like Shopify and Ramp going to trust their ATS to some person who generated some software in a day?
I agree that the cost of building software has gone down a lot and that lowers the barrier to entry for building a software business. I completely disagree that the market could support even 10x the number of companies in each vertical, let alone 100x or 1000x.
You could clone Ashby today and go to Ramp and offer them a 50% discount on whatever they’re paying Ashby and there is zero chance you win their business. You could clone Ashby and the add 10x the features and go to ramp and offer a 75% discount and there is zero chance of you winning their business.
“What happens to the SaaS markets when the cost of code approaches zero?” … “Few people truly grasp how hard bringing a software product to market is.”
Are these related? The difficulty of bringing a software product to market has never been that it takes time to produce code. We’ve had the concept of MVPs for decades and pre-AI companies have raised hundreds of millions off of no code prototypes.
YC has always preached that you launch. Launch today. Launch as soon as is humanly possible. And learn. And iterate. You get something into the market as soon as possible. Spending years building the perfect software has never been the strategy pursued by technology startups, and not because of the time it takes, but because you need users to know what to build.
I think we could even go as far as to counter your argument. We know that constraints are powerful. Constraints force us to focus. Imagine you decide to build an ATS. You spend a bunch of money on Claude Code to generate hundreds of features, every little idea you can think of, you include it. You launch with the most complete ATS on the market. Ashby can’t hold a candle to the depth of your software. Do you have a better chance of success than if you had launched with a much smaller surface area, experimented, found the right area of focus, and iterated according to user behavior?
I encounter a lot of vibe coded software products that people are launching and I am not precious about code, a good product is a good product whether it was hand crafted over a decade by a thousand well paid programmers or generated in an afternoon by Claude Code from a laypersons prompt. I can name one single vibe coded product I pay for that is genuinely good software. All that the AI age has done is show that most of us absolutely suck at building products, and that even with free code, what we produce is garbage.
“How could the market afford to build and sustain each offering?”
I think you’re conflating build and sustain here. Nothing fundamental about business has changed. Sustaining a business isn’t about being able to generate code. Even in a world where code is free, how could the market sustain 10,000 Ashbys? Where are the customers coming from?
As a concrete example: how many customers does Jira have despite Linear being better software in every single way? Would generating 1,000 more Linears change Jira’s market position? Or Microsoft Teams, Teams is awful, there are so many better options. Will generating 1,000 more better options change Microsoft Teams’s position?
The subscriptions are not available to enterprise users. Enterprise users must pay per-token. A $200 subscription gives you roughly the equivalent of $1500 in per-token billing.
“I'm finding that coding agents can take me from a vague idea to a working solution, one with tests and documentation and that looks like a carefully considered project evolved over the course of many weeks... in less than an hour.
Even if the code is rock solid, there's a limit to how many projects like that I can sensibly care for - and if they're instantly abandoned, what value was there from creating them in the first place?”
Here is Simon questioning a fundamental belief held by the pro-LLM lobby. Would a paid shill question that?
Simon is, without question, an enthusiastic pro-LLM person. I disagree with what he says often, the product market fit post was a bad take. But I don’t believe he is shying away from sharing his thoughts when they’re not favorable to the industry.
Simon is very fascinated by AI and at times he can be a little too optimistic but he is generally balanced and his perspective evolves over time which can be seen in his writing.
Nerd who loves nerd things a little too much? Sure. Paid shill by Big LLM? Nah.
No, we know from the financials of these companies that API prices are close to being at cost and the individual developer plans are heavily subsidized (because they are roughly 10% of API cost per token[1]).
If plans were at cost and API pricing was marked up that would mean there’s a 90%+ profit margin on tokens and instead of raising money and talking about revenue, Anthropic and OpenAI would be talking about their obscene profits.
[1] the caveat is that the average plan user probably doesn’t use all of their quota, I guess maybe 30% is the average across all users.
That’s a very simplified view of HR. Human Resources does a lot of things. During the cash rich days a tech company HR department might end up doing a bunch of nonsense[1] but the fundamental value of the department is there and will continue.
HR is rarely involved in hiring decisions, that’s the responsibility of the hiring manager which is typically the new hire’s manager. At a very big company you might have HR screening applicants but that’s to save time for hiring managers.
[1] just as engineering ends up doing a bunch of nonsense when the money is flowing.
As people in tech we live very expensive lives but if you are in a major city and own your own home and have worked for a decade or more you probably have a lot more opportunity to retire today than you might think. Even with children, life can be much less expensive by moving to a low cost of living area. Often in online discussions about FIRE (Financial Independence, Retire Early) high income people will discuss needing many millions to retire, but you can retire on less.
Switching industries is a romantic idea but it is very difficult, especially going from the tech world with big money to the normal world with small money. You can still work to keep yourself busy but thinking about it as retirement will better help you plan. Going part time in tech is usually more sustainable than trying to switch industries.
A good place to start is thinking about what you want from life without work. Where do you want to be? Where does your partner and your kids want to be? What do they want out of life? From there you can assess the financial needs and plan accordingly.
The race is pretty much designed to be a difficult for horses as possible to give humans a chance. Except for the parts that are extremely difficult for horses, horses steamroll the human competitors.
I could be completely off the mark but I thought the non-exclusive license was necessary because Groq’s datacenter business uses the technology already? Nvidia acquired the assets but Groq needed to retain rights to use the technology for their own product.
I’m confused by the confusion. Groq licensed their technology (sold part of their business) to Nvidia for a large amount of money and distributed the spoils to their investors. Seems quite normal? But then the Axios article says…
“Existing shareholders will receive the remaining cash distributions and then have the opportunity to invest into a new company”
New company? But Groq still exists and continued to exist.
“The bottom line: Don't be surprised if this becomes a new transaction template in the AI private markets.”
A transaction template? I don’t follow what was novel about this situation. The Meta not-acquisition-acquisition of Scale seems more novel.
I guess I feel like Zach’s confusion is because of the way Axios has presented what is happening to Groq. Looking at why actually happened with Groq, it seems like Axios are reporting it weird.
Unless Groq really is starting a new company in which case I am equally as confused.
Hiring outside your network has always been difficult. A rigorous hiring process should be able to withstand the bad actors. Some people have a good eye for candidates, others do not. Impersonation should be the easiest problem to solve, i.e: if someone is claiming to be someone else based on their LinkedIn profile or website, you can ask that they verify it is theirs. If their profile itself is fraudulent, it will be obvious from their lack of connections and registration date. If you cannot confirm the person is genuine, move on to the next candidate. A good hiring process doesn’t pick people based on where they have worked.
Does it qualify as something fresh? I guess fresh to cinemas but it is well established IP that has a readymade audience. Certainly a risk compared to Spider-Man: Another Adventure Again but the risk was in the execution. A lot like the Slenderman movie. Something like Iron Lung would be a better example of fresh cinema?
Unfortunately, Meta’s ad business is so effective that they would need to charge hundreds of dollars per year for an ad free service just to keep revenue stable. I suspect anything less than $25 per month would be loss making for them.
The main problem is that premium subscriptions don’t generate that much revenue when compared to ads alone. The users who pay are the most valuable users to advertisers and the users who don’t pay are the least valuable. Discord generates about $1 in revenue per user compared to Facebook at closer to $100. For Discord at $1 per user, any subscription that’s a few dollars or more is probably paying for the lost advertising revenue, but it wouldn’t translate for Meta so they aren’t including ad free which drastically reduces the value.
I’ll be surprised if Meta’s subscriptions are as popular as Discord’s without being advertising free. Cosmetics are liked amongst Discord’s audience of nerds, but not Meta’s audience of normal people.
Very interested to see how this works out for Meta. Since they’re not excluding ads, it’s basically free money, so they may as well offer these subscriptions.
What proportion of T does R need to be to see thousands of Ashbys appear?
Ashby is a good example to discuss because it is serious software for serious businesses, it isn’t a calorie counting app. Serious business expects so much more out of their suppliers than software, Ashby is so much more than a bunch of code.
So, a thousand people generate their own ashbys, then what? Are companies like Shopify and Ramp going to trust their ATS to some person who generated some software in a day?
I agree that the cost of building software has gone down a lot and that lowers the barrier to entry for building a software business. I completely disagree that the market could support even 10x the number of companies in each vertical, let alone 100x or 1000x.
You could clone Ashby today and go to Ramp and offer them a 50% discount on whatever they’re paying Ashby and there is zero chance you win their business. You could clone Ashby and the add 10x the features and go to ramp and offer a 75% discount and there is zero chance of you winning their business.