TMTB: Dylan Patel on Invest Like the Best

Some good quotes in this one so sending out…

Token Economics & Demand Explosion

“We’re spending $7 million a year on Claude Code at the current rate versus our salary expense being in the neighborhood of $25 million. We’re north of 25% of spend on Claude Code as a percentage of salary. If this trajectory continues, we’ll spend more than 100% by the end of the year.”

“Anthropic has gone from $9 billion in revenue to $35–40 billion now. Probably by the time this airs, $40–45 billion. Their compute has not grown to the same degree. Even if you assume all incremental compute went to inference, their margins are at a floor of 72%. At the start of the year, leaked funding docs showed 30-something percent gross margins. Where on earth does a business grow margins like that?”

“A 4.6 Opus tier model — let’s just take diffusion of this technology, ignoring models getting better. By end of year, the economy would spend $100 billion on that tier of model. That’s a linear extrapolation, not exponential. To get the exponential, you need the better models.”

“Anthropic could double their pricing on Opus and I would continue to pay, and I bet most users would continue to pay.”

“Current 4.6 Opus tier models — a year from now, my spend for the same quality would probably be like $70K. I bet it’ll be 100x cheaper. But that’s irrelevant, because I’m going to be using a way better model which can do way better things.”

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On Memory Prices