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Comment on Techcrunch reports that AI coding tools have "very negative" gross margins. They're losing money on every user.

tal@lemmy.today ⁨3⁩ ⁨days⁩ ago

I’m skeptical of AI coding as it exists today, and while I’m bullish on long-term prospects for AI writing software, am very dubious that simply using LLMs is going to be the answer.

However.

Startups typically do lose money. They’ll burn money as they acquire a userbase — their growth phase — and transition to profitability later. I don’t think “startups in area X tend to be losing money” is terribly surprising.

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twix@infosec.pub ⁨3⁩ ⁨days⁩ ago
Ed Ziltrom has a good piece regarding whether the losses are “just another startup” or something more. I am very much leaning towards “burning money at an insane rate just to give the impression of growth”.

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rozodru@lemmy.world ⁨2⁩ ⁨days⁩ ago
you’re VERY justified in feeling skeptical, I’m seeing it first hand, you’re correct.

I’m a consultant/freelancer and I’m booked for the rest of the year and well into the new year with jobs that pretty much consist of me reviewing and cleaning up AI slop.

Most of my clients are startups and small companies that went full in on AI and vibe coding. Now they’re discovering that their attempts to save a few bucks by leveraging AI, cutting devs, etc is costing them more that what they envisioned on saving. The stuff they’ve built with AI doesn’t scale, is full of exploits, and breaks quickly. With the recent Tea App thing many of my clients are now in a panic because they essentially did the exact same thing. They don’t want their startup to be next in the news because some rando came across their house with the front door left open by AI.

the tech debt is massive, It’s costing many of these places more to fix their vibe coders/AI mistakes than what it would have originally cost if they just used a solid dev team. Make no mistake, I’m charging them a good amount also.

All if it could have been avoided though. They could have continued to use their LLM’s if they had all just kept a leash on it. if they dismissed the concept of vibe coding. A good chunk of it could have been avoided if the person feeding the prompts simply REVIEWED the code before hitting enter. I’m not kidding, IF they just LOOKED at what was being spat out things would be different. none of them did. they just trusted the AI to be smarter because they were lead to believe it was.

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- traceur301@lemmy.blahaj.zone ⁨2⁩ ⁨days⁩ ago
  how do you book software work so far out? for some reason my software clients seem to all want their stuff yesterday
  
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  - rozodru@lemmy.world ⁨2⁩ ⁨days⁩ ago
    I’ve been doing it for like 20+ years now so I have a very solid client base and very solid referrals. All my new clients now are referred to me by previous/existing clients so it gives me the luxury of booking well in advance.
    
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    traceur301@lemmy.blahaj.zone ⁨2⁩ ⁨days⁩ ago
    I appreciate your response!
    
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Dogiedog64@lemmy.world ⁨2⁩ ⁨days⁩ ago
Ok, but it isn’t just startups burning money here like there’s no tomorrow - it’s also major industry leaders (Microsoft, Facebook, Apple, Google, Nvidia, etc.) dumping hundreds of billions into infrastructure and development of a tech that has, so far, shown 0 positive returns for anyone and everyone. Everyone involved is pouring in money like it’s going out of style, largely because they see this as a potential pathway to infinite profits down the line, just as long as THEY are the ones to get there first; consequences be damned. WHEN this bubble pops, not IF, it’ll be messy. Extremely messy.

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ChairmanMeow@programming.dev ⁨3⁩ ⁨days⁩ ago
The issue is mostly energy costs though. Startups do lose money; to hiring new people, marketing, etc… But in this case the entire business case loses money a the moment, and without any significant breakthroughs they likely will keep losing money like that.

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