There are 1000 Chinese labs. They are involuting, they cannot coordinate and the state won't let them coordinate because the state wants domination, not actual profits for anybody. So the market forces are allowed to dominate.
Because of the basic huge recession going on in China, you can't actually make money in China doing China things. So they gotta gird up their export stuff and try to export. That entails strong relations with American companies, American PR, English stuff, etc.
If you want an essay about this from a VC, read this one
What a strange way to put it. Market forces are a good thing in a market economy. Only someone who secretly wants or hopes for monopolies would you say something to the contrary (a VC).
The party has done something about enormous involution in solar panels, for example (https://www.csis.org/analysis/chinas-solar-industry-upheaval...) and previously steel. They're planning something for cars. They don't on LLM because of the newness and the wish for preeminence.
Pouring 100% of your tech optimism, and probably portfolio, into a product that some say is about to get Wile E Coyote flattened by market dynamics would probably inspire serious market skepticism.
China has a different perspective on it, they believe that there is such a thing as harmful competition and they are willing to step in to stop it.
Enshittification and related problems can be a result of market forces just as much as they can be a result of monopoly/duopoly or a small cartel. Excess competition sometimes results in all firms scraping the barrel to squeeze out pennies, especially with technology (such as large online marketplaces) making pricing more transparent.
Marx actually predicted that ever-intensifying competition would destroy markets through overproduction, although he did not use the term involution.
Price wars are good even if they lead to more bad products on the market. If quality is important people will pay more for it and ignore the bad ones, if not then everybody saves some money.
The reason it doesn't work like that IRL is centralized marketplaces. If the winning strategy on Alibaba is low prices, bad quality and botted reviews to compensate then every seller has to do it to survive, because they can't get buyers outside the platform. That's not excess competition. It's a lack of competition just on a different level.
> The reason it doesn't work like that IRL is centralized marketplaces.
Well yes, that’s why I mentioned those specifically. But even if the marketplaces were split up, someone could create an aggregator to comparison shop and the same effects would apply. The problem for producers is that the Internet erases information asymmetry.
It’s also not just affecting low end goods, it’s a constant pressure on everyone, which is why many formerly upscale brands are seeing the same problems. It’s also a general problem with public companies, as large shareholders demand constant growth, as well as many private companies owned by PE where brands are stripped for short-term profits.
My experience is that the best low cost mid-tier products right now are coming from fronts like Vevor and Fanttik who do sourcing from noname factories in China. I’m not sure if their position is sustainable; it’s not like they have much of a moat. (I guess Fanttik has a team that adds some slick design to their otherwise utilitarian items.) If that model holds up then maybe that’s the future, but I suspect that they just have a temporary advantage thanks to a dual presence and connections in both the US and China.
I'd call it overcapacity instead. A lot of investment without capital discipline making sure there is actually return of investment leading to too much supply.
Not that OpenAI, Anthropic or SpaceX aren't doing the same.
At the 1000 foot level, this is just another part of the Chinese master plan that's been playing out for decades now. The master plan seems to be: train far more engineering and stem graduates than anyone else, let them loose in a dog eat dog capitalist garden and fertilise the garden with sprinkling government money. Hoped for outcome: their innovation will let China eat the world.
For comparison around 50% of China's graduates are in STEM, vs 20% in the USA. With China has a larger population the final outcome is: USA feeds their innovation pipeline with 800k new STEM graduates per year compared to China feeding its pipeline with 4M to 5M per year. In addition the Chinese government outspends the USA government on subsiding innovation in STEM by about 2 to 1 and the USA's subsidy rate has been shrinking since the Regan era. However, there is a caveat: USA private investment brings the total spend in both countries back to parity.
It seems the Chinese plan is working. The STEM garden is overstaffed. It produces far more than China can absorb internally, so they are forced to export their ideas and wares to the world. After decades of persistence China has become the worlds manufacturing powerhouse and now drives the development of 5G/6G, batteries, cars, and solar. China builds about 1000 large ships a year. The USA builds 5 to 8.
But as the article says, this comes at a cost. The intense competition makes life in China's dog eat dog STEM garden brutal. I guess that's the price a nation has gotta pay for world domination.
We don't have a recent ARR, and their ARR calculation has had irregularities. They really do seem to have eyepopping ARR growth no matter how you slice it, though, but I kind of imagine also eyepopping churn, because of the commodity nature of LLM, even if they claim top bottom and sideways that they decommoditized LLM.
I don't think ROIC on a company that creates superintelligence is infinite. Nothing can defy physical law, nothing can teleport, nothing can reduce the universe's entropy, nothing can go faster than C, so there are structural limits keeping everything finite. Infinities turn people nuts, generally.
> We don't have a recent ARR, and their ARR calculation has had irregularities.
What do you mean by ARR though?
Is there an Annual Recurring Revenue published at all?
They've published several Annualized Run Rates, but this is, basically, a bullshit figure you cannot trust because it can be made to say a lot of positive things based on one-off events.
They aren't the same and the latter is essentially always intended to at the very least paint a rosy picture.
because of the immortality of financial accounts and such, it's basically what's happened to the economy. ancient 100, 200-year-old trusts choking the viability of laborers doing anything and so on. especially bad in europe.
A tree experiences compounding interest. The longer it lives, the more ground it owns and the more its tall branches and leaves blot out the sun below, making it extremely difficult for any juvenile of its species to take root and mature beneath it.
This is why some conifers have pine cones that only release seeds when burned in a fire. For these species, evolution has determined it's not even worth trying to germinate unless it's likely a fire killed its parents and made space for them to grow. This is part of how we discovered wildfires are a critical part of some region's ecology. We managed to halt most forest fires and it ruined the natural rhythm of life there.
There's cowardice and there's weakness. Because of the reduced enrollment nationally and the successful attacks on grants, universities have to compete for students now and it will be more difficult to take stands, just as us software-touchers find it more difficult to take the kinds of stands we like to take as our positions on the job market become less ironclad. The strong do as they will and the weak do as they must, but that doesn't really prevent the weak from nursing grudges for later.
Joining to another crater-low birth rate society will not make anything better on that front. No pro-natalist policy I am aware of has actually worked, and I'm regrettably aware of quite a few.
The footnote which says that is the design durability against equipment failure literally begins:
> In the unlikely case of the loss or damage to all or part of an AWS Availability Zone, data in a One Zone storage class may be lost. For example, events like fire and water damage could result in data loss
I'm going to reword my Terms of Service this second to add "any military operation" next to "acts of war". But I'm sure we'll then have to demonstrate whether paramilitary are assimilated to the military.
> US refuses payout for soldiers who died in Iran 'because it isn't a war'
> In response to another question, Mr Vance rejected using the word “war” to characterise US operations in Iran, saying there was “no active shooting”.
If a senior leader at Doordash swore to God that your sandwich would 100% guaranteed make it to you, regardless of whether or not there was a car crash, then yeah, maybe you should complain
Yeah I agree with you. If they made a specific promise to some unlikely case out of their control, then I would expect compensation.
Did Amazon make such a promise? They didn't as far as I know. My understanding is they provide specific guarantees like given an AZ outage, your data is still safe (provided you architect correctly).
Correct analogy would be: they promised to make 3 copies of my sandwich, from 3 different restaurants, and deliver them by 3 different cars, taking different routes, in case one of them gets in a crash. But in this case all 3 restaurants were bombed by Iran!
Somehow I feel like the biggest post-apocalyptic problem will be the loss of home equity due to uninsured damage causing a collapse of financial markets.
Are you saying that most data loss happens because your data center gets blown up in a shooting war? Like, AWS is the first digital service provider to lose data in decades?
I'm saying that if you have eliminated more mundane failures like dying harddrives, cosmic rays and so on from your systems and your calculation ends up with 11 nines then actually those "force majeure" events are probable enough that they dominate whatever other residuals are supposedly hiding in those last 0.0000000001%.
The region has seen a bunch of wars in the last 100 years, so the annual war-rate is > 1%. Even if we generously add the assumption that only 1 in 100 wars affects a datacenter you can see that wars become a major source of correlated hardware failures that they need to solve to actually deliver that kind of reliability.
You don’t want to blend probabilities like this, because the tactics you use as a consumer vary between the two. If you consider 11 9s like “object AFR”, you might build systems that are resilient to very occasional single object loss. And it’s useful to know at what rate that might occur.
Whereas with these force majeure events you’d want a complete DR setup, and it’s typically an async recovery. Here it is useful to understand the fault domain (single server or single building or multi-building) so you can plan.
Blending the two numbers doesn’t help you build better against the systems. And the force majeure events are rare enough that they won’t happen … until they do. I’m not sure that knowing the precise probability that Iran would attack a gulf nation would change the fact that if they do, you need to have a DR story.
Seems like begging the question to me. You can't blend the numbers because amazon didn't blend the numbers.
If they did and miraculously still arrived at 11 9s then that would also cover things such as wars and natural catastrophes, e.g. because they do offsite backups internally.
I’m not saying you can’t blend the numbers, I’m saying you shouldn’t blend the numbers. Because one number doesn’t communicate what you actually need to know to build.
You want to know how reliable the service is in steady state. For example it’s useful to know that S3 is effectively lossless in steady state whereas EBS volumes have an AFR of about 0.1%. You build your apps very differently between S3 and EBS knowing this. You can build highly resilient applications on each, but you code them differently, informed by these design goals.
You separately want to understand the failure modes that will require you to fully recover from backup. For example knowing that cloud storage is resilient to everything but region failure would inform you that your backups should be out of the region, not just a bucket in the same region. You don’t get that perspective from just a 9s number.
The sales pitch should change from "probabilistically we will NEVER lose your data" to "you are most likely to lose your data due to wars, terrorists, software bugs, someone losing the master encryption key, the government forcing us to...".
Offsite backups are sadly rare these days, and aws sales is the main reason why.
Creative accounting works and is good because it works. If your customers give you more money because you lied to them, but it's legal, then it's good.
This is very on point. While I am not legally trained in US law, and especially not in any Middle Eastern law, I have a enough knowledge on the law in my country here where I live…
Invoking force majeure requires the entity to prove all three following to be true:
A. That the event was unexpected and therefore unavoidable.
B. That the event was outside the control of the entity.
C. That the event made it impossible for the company to resolve the issue.
War in the region is as you say rather common unfortunately. The fact that AWS is used by the IDF (https://www.972mag.com/cloud-israeli-army-gaza-amazon-google...) should be considered a factor whether or not their data centre became a more likely target or not. What remains is the ability or not for AWS to do multi-location reduncancy.
As someone who ran a tech company in Northern Ireland at a time when violence was much more common than it is today, I can tell you that our force majeure clauses always disclaimed liability for "riot, violent disorder, civil commotion, and acts of unlawful civil unrest and terrorism".
How could it be otherwise - do you expect AWS to have its own army and missile defence system?
The difference between you and Amazon is hundreds of millions of dollars in political donations and lobbying. Amazon certainly has the political connections to make defense of its datacenters a national security priority of the strongest military on earth if it made it a priority.
But if they want to design for extreme probabilities you need to account for tail risks, so their design should have included a missile defense system.
At some point you need to start worrying about asteroid defense too.
Hot take: if you have a service that is 11 nines reliable, but there is an underlying component whose reliability is lower, cap the nines to that component.
Near the beginning of my career, I talked to a greybeard who harrumphed at me discussing something-or-other and said "computer security is an oxymoron". I thought he was being too pessimistic, nowadays I realize he was right.
That's too pessimistic. But it is a spectrum. You can't guarantee 100% success against 100% of potential attackers, but it still matters how easy it is to get into something. There's a pretty big difference between a Windows 95 machine hooked directly to the internet and something like a fully up-to-date iPhone. The iPhone is still hackable, but in practice it's so difficult that you're unlikely to be targeted unless you get the attention of a national government.
It also requires actually caring about security and putting effort into it. These data breaches are usually systems where little attention was paid to security in the first place, and e.g. getting ahold of one user's password is enough to lose the game. Getting companies to care about security is really hard, but it does happen.
Real computer security IS possible but takes a lot of effort by very skilled and dedicated people. You don't hear about bank mainframes getting hacked often.
Skilled and dedicated people and an organization dedicated to maintaining a consistent level of security. Maintaining both of these long term seems to be the challenge for many companies.
My point was that computers are as secure as human(s) who programmed them were careful and competent. Computer security is ultimately human knowledge and reasoning competence (plus time/money tradeoffs, if made willingly)
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