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Why Everybody Is Losing Money on AI
Hello and welcome to another premium newsletter. Thanks as ever for subscribing, and please email me at ez@betteroffline.com to say hello. As I've written again and again, the costs of running generative AI do not make sense. Every single company offering any kind of generative AI service — outside
Generative AI has a massive problem that the majority of the tech and business media has been desperately avoiding discussing: that every single company is unprofitable, even those providing the models themselves. For example, a Cursor user found themselves burning nearly $4 in the space of a few minutes creating a Todo file for the model to follow. I will also go into how ludicrous the economics behind generative AI have become, with companies sending 100% or more of their revenue directly to cloud compute or model providers.
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