AI Doesn't Have ROI

https://www.wheresyoured.at/ai-doesnt-have-roi/

by crescit_eundo • 2 months ago

64 50 2 months ago

cmiles83• 2 months ago

Companies are slamming the brakes on AI in a massive reversal that’s unlike anything I’ve seen in the last 25 years in tech.

6 months ago it was use AI all the time go! Now companies are putting use limitations in place, strict budget controls, and the wagons are circling around various “AI labs” teams that cost a ton and have shown little to no ROI.

It was all fun and games until the bill arrived. Now it seems there’s a mad rush for AI companies to IPO before the music truly stops.

Insanity2• 2 months ago

Yeah, there's just this massive wave of AI delusion turning into disillusion. Writing code was never the slow part of enterprise development. We've made the slow part _somewhat_ faster, trading off quality in turn all while burning hundreds of thousands of dollars in tokens.

It's no surprise that when ROI remains elusive (it's hard to measure for any knowledge work) and costs are skyrocketing that the C-suite wants to slam the brakes.

alain940402• 2 months ago

Not my experience at all. One slow part was coding. AI takes care of that. But more importantly, the slow part was iterating through concepts, ideas, and prototypes. I thought people on this site embraced lean startups and agile development. AI really helps make that feedback loop 10X faster. I can do an experiment, show it to coworkers and get feedback in a morning, for something that would have taken me almost a week in the past. So now we can try a lot more options, whereas before, we kept getting hit by the sunk cost fallacy: I spent a week on this, I really don't want to start again from scratch with this other approach that may or may not be better.

procgen• 2 months ago

Demand is high and will remain so. Supply just needs to catch up.

cmiles83• 2 months ago

Honestly that’s the trap that’s increasingly looking like it will blow up this whole thing. Nobody can point to any viable revenue pathway that justifies the amount of capital investment underway, all while folks are increasingly slamming the brakes on things.

Theres an extremely ugly financial picture developing that those with full blown AI psychosis appear unable, or simply are unwilling, to see.

bpt3• 2 months ago

Demand for a magic box that solves your problems at a low cost will always remain extraordinarily high. Supply is the hard part, because it will never catch up.

Some people believed LLMs were that magic box for a time, and that time is coming to an end if the parent poster is correct.

KolibriFly3• 2 months ago

Well, the history of cloud computing shows that infrastructure usually becomes cheaper over time. But it’s still unclear whether this rule applies to reasoning models.

scotty79• 2 months ago

That's because AI went from something they needed to internally promote to something you'd have to pry from cold dead hands of the trailblazers.

vanuatu3• 2 months ago

I've seen many cases where AI led to ROI with high margins (maybe not enough to justify the entire industry capex though), but they usually share similar features

- AI is a component of a larger product sold

- The product improves the metrics that customers care about, typically autonomously

- The customer is paying for the outcome, regardless of whether or not the product had AI in it

'Copilot' style AI features are much harder to measure ROI on, because they are typically further away from the base metrics that make it easy to measure ROI, and are typically used for specific tasks in a long web of other tasks within a professional job

watwut• 2 months ago

What are those many cases you have seen? In which industry?

vanuatu3• 2 months ago

i work at a company that automates front and back office workflows (being vague on purpose)

all industries, all are willing to pay 10s of millions even with the tech being somewhat immature

mrhottakes3• 2 months ago

Another poster that has definitely seen all the impressive AI results but can't/won't specify.

skydhash3• 2 months ago

The AI results comes from a different company. In Canada. You wouldn't know it ;)

vanuatu3• 2 months ago

the results are in the revenues of appied ai companies!

sidewndr46• 2 months ago

Care to share examples ?

stevenjgarner• 2 months ago

Yes it does - the ROI is replacing the global labor market => the replaced workers stop earning income. They cut spending. The businesses they used to patronize see revenue decline => the company that fired its workers to save money discovers that its customers were, in aggregate, other companies’ workers. Revenue growth stalls => dead economy [1]

[1] https://news.ycombinator.com/item?id=48324712

Ratelman3• 2 months ago

I've seen legitimately good outcomes with AI - a backlog has been cleared, features that were left on the cutting room floor have been pulled back in AND delivered all thanks to the use of AI coding tools. AI workflows have brought down processes from weeks of human processing to a couple of minutes with human oversight - and the revenue that it unlocks more than covers the AI bill. This is within a large corporate company - the "No such story exists for AI" feels overplayed. Sure, the wave of (quoting the article) "braindead executives, imbeciles and middle management hall monitors that don’t do any real work" might be bigger than with previous hype cycles because AI as a tool does enable pseudo-intellectualism, but the article overstates its case. I know, 1 counterpoint doesn't make a strong argument - but there's no reason the way we're applying this as a tool can't provide the same gains within other organisations - am I missing something/being delusional/huffing copium?

righthand• 2 months ago

Yeah if your Csuite and managers are brain dead and pushing psudeo-intellectualism then how do the workers produce the same gains? My boss can’t even be bothered to project plan and half my company jumps at the idea of hiring a contractor for $15k-20k instead of understanding and implementing work themselves. Then cite efficiency as the reason, efficiency for what ROI?

Ratelman3• 2 months ago

I get where you're coming from, was shocked when I left a relatively well organised corporate and did work at a relatively older company with a ton of legacy systems - when I asked what the strategy was they explained the structure to me - at the year end results they highlighted that they hit targets of cost cutting and saw this as an achievement, the whole narrative was around how its a tough economic environment (the presentation was literally all about things happening in the world - nothing about things they did/projects they delivered/value they added...) - they also had more project managers than engineers and wondered why projects kept missing deadlines- they hoped AI would solve their problems - but you can't get ROI in a space like that where your engineers are using AI to patch the ship to keep it afloat while the project managers think they're in an airplane and are trying to get it off the ground...

mrhottakes3• 2 months ago

What company?

Ratelman3• 2 months ago

A financial services company in Africa

paxiongmap• 2 months ago

I'd probably characterise it as more as "AI doesn't have the massively transformational ROI that all the AI salespeople said it would and now I have to pay for my tokens and the humans I though I could replace at the same time". The idea AI would be running whole companies below some weird godlike CEO who won because they were clever just pushed an attractive narrative for the investor class.

I am very bullish on AI as a tool, but not as a way to completely restructure the economy overnight. Doing things is hard, and better tools don't make fundamental problems about change go away.

I read this today which really resonated and is relevant: https://deadsimpletech.com/blog/attack-on-competence

_aavaa_2• 2 months ago

AI is more expensive today than it was three years ago, and it is not getting cheaper. Sam Altman’s comments about “intelligence too cheap to meter” were lies. NVIDIA’s Blackwell GPUs didn’t make it cheaper, and its Vera Rubin GPUs won’t either. Google’s TPUs won’t do it, Amazon’s Trainium or Inferentia chips won’t do it, Vera Rubin CPUs won’t do it, OpenAI’s chips won’t do it, and no, DeepSeek won’t do it either.

Has this man ever heard of Jevon’s paradox?

Also all of these claims are objectively wrong today because the goal posts for what AI have been moving this whole time. The models we have today do more, are faster, smaller, and cost less than what was available 3 years ago.

KolibriFly3• 2 months ago

This is exactly what is happening right now. Models are becoming more efficient but at the same time users are starting to tackle tasks they previously didn’t even try to automate.

But Jevons paradox explains the increase in consumption, but it does not necessarily answer the question of business profitability

_aavaa_2• 2 months ago

Maybe, maybe not. But his argument here is about cost, not profit. And on the cost front he is objectively wrong, and could easily see this if he cared to look. But he won’t since that would prevent him from making his bombastic content.

mgh2• 2 months ago

axegon_2• 2 months ago

Brilliant article. This is something I've been thinking about for a while. Up until around 2020 I used to work at a company that lived off of games and the economy was, you guessed it, micro-payments. I was the one in charge for developing the system that allowed the people in charge of monetization to configure the games based on your skill to squeeze the most out of you. Suffice to say, it worked great. Fundamentally the business model for all games was identical: cash for virtual currency. Here's the catch: you never knew if spending 50 bucks would make a big difference and you had no way to measure it. In a nutshell, it almost made a difference but just not enough so your brain would go "well what the hell, here's another 50" (classic sunk cost fallacy). And the business knew that and actively exploited it. All the AI slop that is happening now is the evolution of the same thing: exchange cash for virtual currency(tokens) in exchange for immeasurable results and the inevitable "just a few more tokens". Congratulations, you've been played.

AndrewDucker• 2 months ago

This is known as "Intermittent Reinforcement" and is the most powerful kind of conditioning.

axegon_2• 2 months ago

Unfortunately(given the circumstances), I know.

zelias• 2 months ago

I agree with Ed, but am curious if these massive data centers would instead get used to mine cryptocurrency after a crash.

Not that I think that they _should_, that's all a farce as well, but it is something I could see others trying to use these data centers for.

vrighter• 2 months ago

i don't think the gpus are up to that task

WarmWash• 2 months ago

The author conveniently (or perhaps wasn't even aware) left out this quote from Uber's CFO

"What we have done is we have tempered the pace of hiring, and we -- and this is broadly across the company, but specifically from an engineering standpoint -- the hiring ramp we have for the remainder of the year is significantly lower than what we thought it would be when we came into this year."

Uber's response looks to be cutting the number of engineers that generate tokens, not to cut the AI that is generating them. These headlines about Uber are not the victory people are portraying it to be.

josefritzishere• 2 months ago

My office is tapping the brakes on AI. The ROI is just not there.

matltc• 2 months ago

One can (maybe, probably) disable copilot completely in vscode: chat.disableAIFeatures

https://github.com/microsoft/vscode/issues/309947

I am considering pinning whatever the earliest version in which this setting was introduced. I can't think of a single feature VSCode has implemented in the last three years that I couldn't go without. The binary for 121 is like 50% larger than 120.

KevinMS• 2 months ago

Please, flagging posts, and downvoting comments, you disagree with is not how we do things around here.

KolibriFly3• 2 months ago

It seems to me that both sides are starting to drift into extremes. Some promised the replacement of half of office workers, while others are now saying that AI doesn’t create any value at all. The reality is somewhere in between

tim333• 2 months ago

Also the article seems to be mixing two different things. The pricing as in

allowed to burn thousands of dollars of tokens on a $39-a-month subscription

and whether the AI is worth it if you do pay what it costs.

I always thought the burn thousands of dollars of tokens without paying bit was unsustainable and harmful for the environment, electricity bills, investors and the like.

But I think it can do worthwhile stuff even if you pay. Like a small job I did was to get the emails of conference attendees off a website. It was tricky as they didn't want to be scrapped so I chatted to gemini and it helped figure out how to use tampermonkey and wrote a script. It was probably <$1 tokens and saved a couple of hours of mucking around. There must be a lot of things like that.

AI Doesn't Have ROI

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