Someone else already replied to you politely explaining this from another angle, but for some reason you not to engage with him.

Do you build computers by ordering random parts off Alibaba and complaining when they are deficient? You are complaining that you need to RTFM for a piece of high tech?

I can use another sector, biotech, as an example. The sequencing industry spends billions of dollars designing and selling the next generation of sequencers, along with collecting more and more data. They are still actively researching and developing new platforms. The end goal (product) of biotech is ultimately to produce a medicine. Pharma is in the business of end products. You can spend billions on sequencing and never produce a new medicine.

Shovels = sequencing

End product = medicine

That has nothing to do with the cost or availability of shovels. As a biology major, you could choose to go into sequencing or go into medical research.

AI is a tool. For what? In the future, who knows--isn't that the big question at the moment, about whether the investments are justified and so on. But other businesses will presumably purchase and use these AI services. OpenAI can spend $500 billion, but how are they going to recover the cost (short of AGI demolishing HFT or the like, or simply taking over the world) without another business buying it and using it to create value in the form of end products.

Shovels are typically B2B.

End products are B2C.

OpenAI doesn't need anything from (the proverbial) you. Also, I stated in the title, "Currently". We aren't talking about doomsday AGI situations where AI exists as the end-all of humanity, and the point is just to own it. For current investors and labor, the model appears to be that these large companies sell their AI services.

I would consider selling shovels to be anything that can be classified as "hard tech". No, hooking up a LLM to a wrapper doesn't count. That comes next.

I would split up applications into two distinct types: mini-shovels and end products.

As an example of a mini-shovel, consider a shop that sells toys. They have to manage and track their inventory. Someone spins up an AI system to automatically input sales data, update inventory, and place orders for low stock. That saves on staff time and costs. The person who made this AI system goes around selling it, primarily in a B2B fashion. Yes, this "application" helps the toy store a little, but it's not really serving the main purpose of getting people to buy toys.

The end product application is a little more obvious. A toy designer with no manufacturing skills uses AI to prototype complex 3D patterns, iterate, and come up with an ingenious mechanical design. He proceeds to sell that toy directly to customers (B2C) or to toy shops (B2B). The use of AI is irrelevant to the final paying customer.

Of course, it can be more nuanced. The inventory system IS the end product for the software designer. Mini-shovels can become obsolete in an instant, too, but they could have slightly deeper moats depending on industry inertia among an unsophisticated client base. The market scope and dynamics are also very different for B2B versus B2C.

I am seeing a lot of mini-shovel applications, the typical low-effort examples like building a AI-based financial advisor, a new AI-based writer assistant and so on. I assume that it's more difficult to tell how much AI is being used in end products (other than obvious AI art on printed shirts and such), especially if people have no incentive to talk about it.

I'm kind of thinking at the moment that both true shovels and quality end products are difficult. Mini-shovels are easy, and that's why they are a dime a dozen at the moment, but I'm not really seeing their value for creator or clients. I can see that you might be able to make a quick buck, though, if that's your thing.

So, what's your take HN? Shovels, mini-shovels, or end products?

Comments URL: https://news.ycombinator.com/item?id=42869336

Points: 6

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