Decoder with Nilay Patel
00:15:03 · Nilay Patel, Joey Brookhart
[00:15:03] S2: dumb question about that? Yeah. Why? Like this is I think the heart of my sort of curiosity about the industry right now is if you enabled some bleeding edge technology that could revolutionize the entire world. At some point, the most profitable thing to do is to just go play it out in all the different verticals, right? It is not to go make the next one and it's actually run efficient model in legal services and medicine and wherever else that there hasn't been diffusion of AI yet. And so that this idea that you always have to be at the frontier, that Anthropic always has to be competing with Google and OpenAI and whoever else. I get it right from their self conception. But from a business point of view, an AI enabled business is going to throw out more money and spend more money with me, the AI provider, and that isn't necessarily related to being at the frontier. [00:15:55] S4: Yeah, think there's a few portions of that, you know, four new verticals, and this is like very cyber specific, if an adversary is using frontier model, you need to be defending with a frontier model. Things like when we talk to some enterprises, it's not like email summary where I can run that on open source or Sonnet. There are just certain verticals where having mean, if you were in a legal case as a defendant, would you want your lawyer using a non frontier model if the [00:16:23] S2: prosecution Oh, yeah, got was bad news for you about what's going on in the legal market right now. Yeah.
00:16:23 · Nilay Patel, Joey Brookhart
[00:16:23] S2: prosecution Oh, yeah, got was bad news for you about what's going on in the legal market right now. Yeah. [00:16:29] S4: So, you know, there are certain areas, yes, that are more, you know, the competitive dynamics do dictate that. And I, you know, I think from a go forward perspective, we've seen this with like open source too catching up. The demand will be there. I think Dylan says this a lot, like the demand will always be there for frontier intelligence, especially in competitive And there are certain tasks, think as you go towards more labor replacement versus labor augmentation, where that also is the case, you know, at the same time, they are getting more vertical. If you go look at like job postings or what they're hiring for, you know, putting out more of these SKUs in areas, and there's a lot of beta testing going on, like Claude for Financial Services, Claude for Legal. Their cyber program, they're giving away $2.50, or sorry, 25 ks of credits per month for people in their cyber program. So that'll be a huge SKU for them in 'twenty seven. Those verticalized areas and then ones that are specifically where you need to be, know, it's more adversarial, should say, or competitive, are kind of the main reasons why. But I think we can both agree there's areas like email summary and work that definitely doesn't need to happen.
00:17:39 · S0
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00:18:50 · S1, S5
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00:20:40 · Nilay Patel
[00:20:40] S2: I'll just make a dumb comparison to the iPhone. It's iPhone season, I just reviewed the iPhone Duo. Apple keeps the iPhone looking the same for several years now. Right? They build all of the tooling for the new iPhone and then they just reuse it for two or three or four models to get all the value out of that investment back before they move on to the next thing. Apple puts out a new iPhone, they keep selling the old iPhone for a while to get more value out of that investment and that development program. The AI industry does not seem to be doing that. Right? All of their emphasis is on developing the next new thing, deprecating the old thing pretty fast and moving you on to the to the new expensive product, which at the same time they're building the next new expensive product. At some point it feels like that will rationalize, right? That there will be something that is worth just collecting margin from while they go invest in the new thing. And I just can't figure out where Anthropic sits in that cycle.
00:21:30 · Joey Brookhart
[00:21:30] S4: I mean, we do see this, know, open source token volumes are picking up and there's a lot of areas, yes, where the open source models have become good enough. And I think on a go forward basis, you're like, okay, was that because of distillation? And then the Frontier Labs have some defensibility actually going forward. Or I think when we talk to clients too, it's how do we actually think about Frontier versus open source on this debate, or even non Frontier? So something like a Sonnet type model, if you want to do the iPhone 18 versus the SE type analogy. We do see that dynamic, obviously open source is a question of how much can that take? And then two, because we're so early in these verticals, we don't know what's going to be fully agentic. There's no human in the loop for actually human in the loop where, yes, you can do, you know, where the harness actually has, I should say, some value and defensibility to it. The kind of, you know, big area I'd look at here, especially when we talk to enterprises today, is, yeah, only the coders are allowed to use the frontier models at a lot of these enterprises. If you're a non coder, you are some of these companies just limit you to Sonnet if you're a, you know, a cloud, an Anthropic company. And I think that's reflective of how, you know, management views, and wants to budget for this, like what for Frontier Intelligence is actually worth to them in certain areas. Like in my financial analyst brain, you know, Claude could not build a good financial model, you know, six months ago. It's getting better if you connect it to the right areas. But we've gone from something where, okay, I needed a junior analyst six months ago, maybe I don't as much anymore, and then will I have a full junior analyst at my disposal anytime or multiple pretty quickly if I have unlimited budget or token budget? And I think we just look at that across you know, every vertical and and like major job category.