> The distinction in the US before 2011 is that couldn’t buy health insurance as an individual, hence it was a benefit dependent upon being employed. Post 2011, health insurance became attainable without an employer.
More than 30 million people had individual health insurance in 2010. If it were useless, 30 million people would not have paid $5k - $10k per year for it out of their own pocket.
Which European countries have a healthcare system similar to the American system? A system that has "insurance" (e.g: The Netherlands, Germany) is no less "free" healthcare than a system without insurance (e.g: England) or a system that will "send you a bill" like France. "Free" healthcare means that the patient will never need to worry about the cost of their treatment because it is covered by the system (whether through taxation, reimbursement, insurance does not matter). How many people have been bankrupted by healthcare in Europe?
You're just flat out wrong, it was not "basically inaccessible". Tens of millions of people had individual health insurance prior to the ACA, over 30 million in 2010, averaging 10% of all insured people from 2000 to 2010. The ACA, while very important and valuable legislation, only increased the number of individually insured people by around 25%.
Democracy isn't to blame, capitalism is. The mega corps have every incentive to dodge the costs of their negative externalities and they have them money to lobby for that. The "reasonable" citizen supporting growth with caveats will be drowned out by the mega corp and their mega wallets. The loud NIMBYs are the only group that have any chance of stopping the negative externalities which they achieve by blocking the growth. Your enemy isn't the NIMBY, your enemy is the mega corp, the NIMBY is your ally, they are the backstop.
What are you basing that on? The ACA did not make individual insurance legal, it was already legal and widespread, it was not dependent on employment. The ACA made improvements, the ACA made individual insurance more accessible.
Healthcare is "free" across Europe, including in The Netherlands. The choice of The Netherlands' to structure their system as mandatory insurance doesn't change the nature of it, it is free at the point of service with the mandatory insurance costs paid for by the government when someone is unable to pay themselves.
The conclusion you're drawing does not follow. Canadians can be frustrated with the Canadian healthcare system and also believe it to be adequate when compared to the U.S. healthcare system. Canadians who are surveyed about healthcare typically say: the system is broken and needs to be fixed AND the socialized nature of it must be protected. Canadians are unhappy with underfunding, Canadians want more funding, they do not want the U.S. system.
The Dutch system and the U.S. system are not comparable. Health insurance in the U.S. is a “free market” that the government dabbles in with a little policy here and there. Health insurance in The Netherlands is controlled by the government, it is heavily regulated.
The U.S. has waitlists too? The U.S. makes people wait based on how much money they have, socialized healthcare systems make people wait based on an assessment of need. The latter is obviously better, even though it is not perfect. You’ll find that most everyone living with socialized healthcare believes it to be adequate when compared to the U.S. system. Adequate does not mean without flaws, adequate doesn’t mean available on demand, adequate means has good outcomes. Very few countries with a similar economy have as poor healthcare outcomes as the U.S.
I think that is correct, and exactly why these purported margins are nonsensical. If Anthropic's reported $50 billion in revenue is majority per-token billing, and tokens have a margin of 80%, that would put Anthropic's profit at $30 billion on per-token usage. Where is that $30 billion going?
And conversely, let's look at the amount Anthropic are spending on compute. Anthropic has just started paying SpaceX $1.25 billion per month for compute. At an 80% profit margin that would mean Anthropic is going to be bringing in $6.25 billion per month... that's more than their current reported revenue.
And that's just one contract for compute. We know that Anthropic also pay Google ~$3 billion per month for compute (based on their committed spend of $200bn over 5 years) which is $36 billion per year. At $36 billion per year on compute with 80% margins that would put revenue at... $180 billion.
Add in their spend with Amazon and Microsoft, Anthropic are spending at least $4 billion per month on compute, or $48 billion per year, all but equal to their revenue. If margins on tokens are 80% and an estimated $37.5 billion of revenue is per-token revenue, that needs just $7.5 billion of compute per year, less than $1 billion per month.
The numbers just don't add up. If margins are 80% and they have $48 billion per year in compute spend, revenue should be over $200 billion.
If the 80% margin made any sense whatsoever, Anthropic would be printing money, yet they're losing money, and have only been profitable for one month based on some financial engineering (pre-commitments billed after the fact to reduce their costs during one month).
My guess is margins are closer to 20% than 80%. That's the only way any of the numbers can make sense.
You’re missing the point. Anthropic are bringing more compute online by renting it and then they are creating the demand for it by increasing the limits on fixed cost plans. Anthropic are increasing their spend on compute without increasing revenues. I’m not guessing that, it is part of their announcements!
“First, we’re doubling Claude Code’s five-hour rate limits for Pro, Max, Team, and seat-based Enterprise plans.
Second, we’re removing the peak hours limit reduction on Claude Code for Pro and Max accounts.“
Every one of these plans is a fixed cost. Anthropic doubled their limits without changing the price. Even if inference is wildly profitable and these plans aren’t subsidized, they’ve just cut the profitability in half.
And the non-plan usage that is being paid for directly is paid for monthly. If they can sell $1 of compute as $10 of inference then they have $9 the next month to spend on more compute. Of course the capital markets would want to give them money if that were true but they would have no reason to take it.
Why would a net 30 business need to borrow hundreds of billions over many years? Anthropic currently spends an estimated $5bn/month on compute so at most they need to float $5bn, but if they’re making 90% margins on compute, that $5bn would be paid for… within a couple of days. Where is the hundreds of billions of dollars?
A good manager doesn’t ask what you want to get better at, they ask what they can do for you. A manager who asks these sort of dumb questions is just going through the motions, you should do the same, say whatever they want to hear and then don’t think about it again. You can, alternatively, try and make them into a better manager by changing the question but they might not be receptive.
The entire economy could be entirely powered by AI and use less compute than is being used today. You're projecting the amount of compute used by coding while subsidized onto other industries, but that doesn't translate.
Speak to some of these legal technology companies and ask them 2 questions:
1. How much is your AI spend on coding?
2. How much is your AI spend on AI within your product?
The answer to #1 will dwarf #2 by orders of magnitude. And that's now, when these companies are still finding their feet, using the most expensive frontier models for their product that are likely overkill (as the product matures, they'll find the right mix of cost vs. capability, whether that's lower cost models from frontier labs, or open weight models).
Put simply, compute does not scale with economic value. A task you bill $500/hour for could be done in 2 seconds by an LLM vs. a task a developer bills $500/day for could take an LLM 10 minutes. Same dollar value, huge disparity in compute.
The only use-cases for AI that are comparable to coding on compute are image and video generation. Unless we end up with an economy primarily made up of companies producing code, image and video, there's literally no way compute needs can keep growing without subsidies.
I think it is hard to overstate just how much "work" is being done by Claude Code and Codex because it is "free" at the point of use. There are millions of newly minted developers prompting Claude and Codex to generate trillions of lines of code every single day because it has no marginal cost, not because it is driving any economic value. And as soon as they're exposed to the real cost, when economic value becomes a factor, they're going to stop doing it (as we're already seeing with companies like Uber).
Through your YC connection and legal work, you have access to a lot of very successful people working in every industry: ask those 2 questions, how much are they spending on coding with AI vs. how much are they spending on AI in their product? You're going to find that even the most aggressively AI-integrated products are spending pennies on their product's AI usage compared to the dollars they spend on their AI coding.
We're at peak compute demand, and it is almost entirely driven by coding, which is subsidized. The real economy isn't like the creative and chaotic make things and see what sticks world of coding. The real economy is boring, routine, regimented, task oriented, you hire people, train them, they do the tasks, you make some money. Most of the economy could be replaced with a few semi-intelligent macros.
Yes, AI is coming to every industry, you're right, but it isn't going to explode compute demand, it is going to make these industries more efficient, it is going to reduce costs, not shift them to compute, because $1 of compute can do more than $1,000 of a human in most industries.
We can come back to this comment in a couple of years. I bet we'll be using less compute then than we are today.
but your contention is they are profitable on inference. Why would they need to raise money to get their hands on compute if they're making money on compute? There's no upfront costs for Anthropic, Anthropic don't own or build compute infrastructure, they just rent access to compute owned by someone else, such as the $15bn/year SpaceX deal they signed recently (which they used to create more demand without increasing revenue).
Anthropic aren't building out the data centres themselves, they're renting/leasing/borrowing from companies that are doing the actual spend on building out infrastructure. And the data centre companies aren't spending their own money, they're borrowing too (hence Apollo investing in data centres). Anthropic are paying SpaceX ~$1.25bn/month right now for access to more compute, that's $15bn a year, more than what these supposed margins would require in total spend (based on current revenue estimates).
The SpaceX deal is a great example of Anthropic creating demand, i.e:
> We’ve agreed to a partnership with SpaceX that will substantially increase our compute capacity. This, along with our other recent compute deals, means that we’ve been able to increase our usage limits for Claude Code and the Claude API.
They committed to spending $15bn per year with SpaceX and then increased limits for customers on fixed cost plans, creating more demand without any increase in revenue.
So, sure, it's not necessarily that they are raising money because they are unprofitable, but no alternate explanation makes any sense. The argument that could maybe made in favor is based on announcements like this one:
> Today, we are announcing a $50 billion investment in American computing infrastructure, building data centers with Fluidstack in Texas and New York, with more sites to come. These facilities are custom built for Anthropic with a focus on maximizing efficiency for our workloads, enabling continued research and development at the frontier.
You might conclude from that, Anthropic are financing Fluidstack's build out, but they're not.
Just after that announcement, Fluidstack raised $830 million to build out data centres, none of the money coming from Anthropic. Fluidstack are currently rumored to be raising another $1bn. Anthropic's "$50 billion investment in American computing infrastructure" is just committed spend on renting compute from Fluidstack, a commitment that Fluidstack then use to raise money to actually deliver it. If Anthropic making money hand over fist, they wouldn't need to raise for committed spend.
And thus we return to the original question, how does future demand translate to spend? Actual handing over of dollars?
Your contention is they're spending it on what, exactly? Leaks put OpenAI's training spend at single-digit billions so that can't be the machines they're building, and they (OpenAI + Anthropic) are famously renting/leasing/borrowing compute through varying-degrees-of-circular deals... so what's the machines they're building?
Looks like it’s behind a paywall. I’ll take their word for it that semi analysis now estimate it to be 80%. That makes my point even stronger, if that number is true, where is the money? The report says that Anthropic generate over $50bn in revenue so at 80% margins that gives $40bn in profit. Where is that money? If they’re generating $40bn in profit, even after accounting for very high employee compensation and training costs… they should have tens of billions in profit, yet they’re out raising tens of billions instead. Where is the money going? And if only 20% is their actual inference costs, where are all these compute providers going to make their money? The world is at compute capacity on, what, $10bn in revenue?
The simple question to ask is, if it is so profitable, where is all the money going? If Anthropic have 90% margins on API usage and API usage is $50bn+ in revenue per year, where is the $45bn going? Why do they need to raise so much cash, constantly?
> The distinction in the US before 2011 is that couldn’t buy health insurance as an individual, hence it was a benefit dependent upon being employed. Post 2011, health insurance became attainable without an employer.
More than 30 million people had individual health insurance in 2010. If it were useless, 30 million people would not have paid $5k - $10k per year for it out of their own pocket.