Another aspect I haven’t seen discussed too much is that if your competitor is 10x more productive with AI, and to stay relevant you also use AI and become 10x more productive. Does the business actually grow enough to justify the extra expense? Or are you pretty much in the same state as you were without AI, but you are both paying an AI tax to stay relevant?
This is the “ad tax” reasoning, but ultimately I think the answer is greater efficiency. So there is a real value, even if all competitors use the tools.
It’s like saying clothing manufacturers are paying the “loom tax” tax when they could have been weaving by hand…
Software development is not a production line, the relationship between code output and revenue is extremely non-linear.
Where producing 2x the t-shirts will get you ~2x the revenue, it's quite unlikely that 10x the code will get you even close to 2x revenue.
With how much of this industry operates on 'Vendor Lock-in' there's a very real chance the multiplier ends up 0x. AI doesn't add anything when you can already 10x the prices on the grounds of "Fuck you. What are you gonna do about it?"
Yep and in a vendor lock in scenario, fixing deep bugs or making additions in surgical ways is where the value is. And Claude helps you do that, by giving you more information, analyzing options, but it doesn’t let you make that decision 10x faster.
We already know how to multiply the efficiency of human intelligence to produce better quality than LLMs and nearly match their productivity - open source - in fact coding LLMs wouldn't even exist without it.
Open source libraries and projects together with open source AI is the only way to avoid the existential risks of closed source AI.
The alternative is probably also true. If your F500 competitor is also handicapped by AI somehow, then you're all stagnant, maybe at different levels. Meanwhile Anthropic is scooping up software engineers it supposedly made irrelevant with Mythos and moving into literally 2+ new categories per quarter
Where's the evidence of competitors being 10x more productive? So far, everyone is simply bragging about how much code they have shipped last week, but that has zero relevance when it comes to productivity
I work at a 20-year-old mid-sized SaaS company. As long as the company has been around, product managers have longed for more engineers and strategies for engineers to ship features faster. As of around February, those same product managers across the org are complaining that they can't keep up with the pace at which engineers are shipping their features. This isn't just lines of code. This is the entire company trying to figure out how to help the PMs because engineers suddenly stopped being the bottleneck.
I don't know about 10x, but this could only happen if PMs suddenly got really lazy or the engineers actually got at least 1.5x faster. My gut says it's way more because we're now also consistently up to date on our dependencies and completing massive refactors we were putting off for years.
There are lots of reasons this could be the case. Quality suddenly changed, the nature of the work changed, engineers leveled up... But for this to have happened consistently across a bunch of engineering teams is quite the coincidence if not this one thing we are all talking about.
I feel like a lot of the AI advocacy today is like the Cloud advocacy of a few years ago or the Agile advocacy before that. It's this season's silver bullet to make us all 10x more effective according to metrics that somehow never translate into adding actually useful functionality and quality 10x as fast.
The evangelists told us 20 years ago that if we weren't doing TDD then we weren't really professional programmers at all. The evangelists told us 10 years ago that if we were still running stuff locally then we must be paying a fortune for IT admin or not spending our time on the work that mattered. The evangelists this week tell us that we need to be using agents to write all our code or we'll get left in the dust by our competitors who are.
I'm still waiting for my flying car. Would settle for some graphics software on Linux that matches the state of the art on Windows or even reliable high-quality video calls and online chat rooms that don't make continental drift look fast.
Read it as just a given rate. The number doesn’t matter too much here, if company B does believe claims from company A they are N times more productive that’s enough to force B to adopt the same tooling.
Either the business grows, or the market participants shed human headcount to find the optimal profit margin. Isn’t that the great unknown: what professions are going to see headcount reduction because demand can’t grow that fast (like we’ve seen in agriculture), and which will actually see headcount stay the same or even expand, because the market has enough demand to keep up with the productivity gains of AI? Increasingly I think software writ large is the latter, but individual segments in software probably are the former.
The cost is so small relative to the increase. The cost whining on HN is bizarre to me. Feels like everyone here is on an individual plan and has no understanding of what margins look like for actual business.
Meta pays $750k+ TC and makes far more profit/eng, do you think they care about $5k/eng/mo in inference? A 1.1x increase would be so significant that it would justify the cost easily, especially when you can just compress comps to make up for it
What? You don't think businesses do financial planning and calculations for profit margins?
Do you really think they go on vibes - "welp, this AI thing seems to improve developer performance, I guess. Heck, what's an extra 5k per developer anyways, amirite".
Well, maybe they really do in your neck of the woods. Explains a lot, I guess.
Yes most companies do in fact operate like this. There are tens of thousands of companies that will pay more for the best thing and call it at that, because the cost is dwarfed by what even marginal gains in quality unlock for the business.
