You haven’t shared enough data to tell whether there was a financial payoff for the firm or not. The consultant is a fixed cost to the firm, so saving consultant time doesn’t necessarily translate directly to higher margins nor revenue per worker.
Are the consultants delivering more billable hours per person now?
All sorts of reasons why the answer to that may be: no.
The firm charges a fixed fee to the client. The client doesn't see anything different from what they got before, the firm increased their gross margin overnight.
Yes, assuming the consultants are salaried like most, you can increase gross margin while operating margin stays flat. The question still stands — did revenue per consultant increase for this firm?
Uhm, no. The OP makes specific claims wrt to AI and financial payoff; you offered up a case study, with incomplete data, as possible evidence that AI is generating these financial payoffs. I'm asking questions to uncover the data necessary to reconcile your case study against the actual claims from OP.
> Even if they were FTEs, it would mean the consultants could do ~3x the work.
Could. But again, are they? That's the whole point of Apollo's claims: people keep saying AI can or could increase capital efficiency, but it's not showing up in any actual financial results.
You're extrapolating a 3x increase in throughput from the optimization of a single process that exists in a whole business system. Given your background, I don't think I have to explain to you why that doesn't make sense.
Also, do we think the S&P 493 is so incompetent that they'd miss these optimizations? Or is it more likely that this firm you're referencing is a small inefficient player, and the S&P 493 already realized these efficiencies decades prior without AI?
> you offered up a case study, with incomplete data, as possible evidence that AI is generating these financial payoffs.
You're confusing the original article and the parent comment I replied to. I think the Apollo article is way off, BUT I have very intimate knowledge with very concrete numbers of a use case where AI has a very clear and definable ROI.
> Could. But again, are they?
YES. That's what I'm telling you. They just implemented the system. The contractors spend less time on each project which means they have more time to do another project. How is that so hard to understand?
> You're extrapolating a 3x increase in throughput from the optimization of a single process that exists in a whole business system.
Are you deliberately being obtuse? The company very clearly drives ~$5k additional profit per project. They do hundreds of similar projects.
> Also, do we think the S&P 493 is so incompetent that they'd miss these optimizations? Or is it more likely that this firm you're referencing is a small inefficient player, and the S&P 493 already realized these efficiencies decades prior without AI?
I never made any of these claims, why are you saying I did?
This assumes the client is oblivious to the fact that they are paying the same for 12 hours of work as they used to pay for 40 hours of work.
For non-technical clients that may well be the case for a while, but I suspect even the most non-technical clients will eventually realize they can claw back a good portion of the efficiency as discounts.
I'm negotiating some contracts where I could do the work in-house for about 1/20th of the previously-reasonable vendor cost. I'd rather not do it, so I'm happy to pay 1/20th plus a reasonable percentage above that, but that's the limit. The vendor can accept that, or goodbye.
Interesting times on vendor contract negotiations these days.
> I suspect even the most non-technical clients will eventually realize they can claw back a good portion of the efficiency as discounts.
If the outcome is the same then the fees shouldn't matter to the client in the long run. Said differently, if the client who pays the management consulting fee gets the same return out of the service, why do they care?
Now, what may end up happening is that some other management consultant vendor in the market comes in an says "ya know what we're willing to do the same work for less" (which means their margin goes down). This could indeed drag their pricing down.
> Interesting times on vendor contract negotiations these days.
> Said differently, if the client who pays the management consulting fee gets the same return out of the service, why do they care?
At least at every company where I've been in charge of my vendor contracts, I am always grilled by management on how we can lower the cost of the contract and whether we are getting maximum efficiency from each vendor. There is huge pressure every year to find ways to lower the cost.
> there are still diamonds (in the rough) in this drop that perhaps should be looked into.
Right, and for some reason that "trillion dollar" company with mathematicians on staff didn't "look into" their own results. Almost like they don't care about engaging with the actual community they're dumping on.
Meta hired Dina Powell McCormick into a position directly under Zuckerberg after the election and appointed Dana White to their board of directors. Is that enough water?
Similar experience at the Arizona Hot Springs, we sat in there nestled between a slot canyon as the sunset and the moon came out. Magical. One of the most memorable experiences of my life.
The hours-long hike back through the desert in the dark of night though, kinda scary. Felt like we were walking on Mars.
I’m not sure why this point keeps coming up — if your service/product is so popular that it’s capacity-constrained, then the answer is to raise prices, not degrade service, because the demand should be inelastic.
Raising prices also has second order effects, like consumer and business expectations around how widespread the tech can be. Valuations depend on it being reasonably affordable to roll out on a much more massive scale than today. If people get the impression that it seems too limited to very rich people (200 is affordable for a North American / Western European professional), the impression about the trajectory will change.
Cool that he's writing about this publicly, but for someone that's so business-minded I find it odd that he never renders any of these AI experiments in terms of ROI. Hard to find any signal in those posts on whether it's profitable to automate these processes with AI vs. alternatives.
That's a fair criticism for some of it, but in a lot of cases I try to automate things that don't have alternatives because they're unique to me (e.g. all the brands I own in my fund have one bank account but need to be tracked separately for investor payback purposes, so I have a Claude skill that takes all of my transactions and assigns them to the various Google Sheets ledgers I have).
In other cases I'm doing stuff that's complex enough that there's no real "alternative" at this point that doesn't involve hiring one or more people and working with them for an extended period. My next set of posts is going to be about my latest acquisition and how AI redesigned a Shopify store then designed and launched Meta ads, all of which only took a couple of days but is going to easily push revenue up by something like 40% this year. The money made is great, as is the money saved on people I would've hired to do this sort of thing, but the real cherry on top is that even hiring someone would've required me to spend waaaaay more time than I did here. So big ROI on the money but also the time, which is arguably more important, since time savings permit me to acquire more brands.
Ah, so it’s ”No Silver Bullet” (1986) [1] all over again.
Thinking out loud here...
AI mainly helps reduce accidental complexity. It can help one understand essential complexity, but essential complexity must still be paid.
You describe doing the essential, irreducible part. And that’s specific to your needs, depends on the problem you’ve chosen, understanding reality of your domain, evaluating tradeoffs, and being accountable for the outcome.
> We managed to swing a couple of the county commissioners who were in favor of it before and were not in favor of it after hearing about the constitutional issues as well as the cyber security issues that flock doesn't really care about.
Do you not see the problem here?
Pasco County has a $2.2B annual budget. These county commissioners have the financial resources, organizational access to expertise, and time to focus on these problems.
Do they really need an under-resourced citizen to inform them about the constitutional issues after deployment? And then they just say “Aw shucks, whoopsies, now I see the light.”
I don’t think it’s fair to call this learned helplessness (a lingering belief after the threat has vanished) when we’re facing off against an active, persistent adversarial threat.
Your county commissioners didn’t make a “whoopsies” when they took a deliberate, informed action against your interests.
Furthermore, it’s unsustainable to require citizens to pour significant time and energy into forcing their representatives to faithfully represent them. That quite literally defeats the purpose of a representative governing body.
The actual quote and topic is far different than you’ve portrayed it. Here’s the actual quote: “ yet the company says that it expects to make $11.6 billion in 2025 and *$100 billion by 2029*, a statement so egregious that I am surprised it's not some kind of financial crime to say it out loud.” from https://www.wheresyoured.at/oai-business/
He goes on to specifically discuss how unrealistic $100B by 2029 is given that OAI is structurally unprofitable.
The fact that you’re skewing your misinterpretation of what he said so much shows your own bias I’m afraid.
This is another case of missing the forest for the trees. In the scope of what Zitron is talking about, the difference of >$2 billion of revenue doesn't make a difference of his overall point of it not being close to enough to cover their spending.
I follow Zitron but the way he talks has been grating and it is even more obvious how biased he is when he has guests on. As if he's trying to lead them into agreeing with his more extreme claims.
That being said, why does this blogger get a pass at this criticism of just being blanket "wrong" when the point of the quote is still very much valid in context? It seems to be the same in the next article, quoted from Ed's blog with the same point. Is this more evidence of being "wrong" or did he correct a previously wrong value and came to the same conclusion (which seems reasonable to me in context)?
It seems like this blogger is guilty of the same criticisms he has against Zitron. They seem eager to find where Zitron is wrong, exaggerating the value of when he misses the mark and without looking at big picture. Then they make sensationalist claims based on those findings.
You’re missing the bigger picture concepts of value exchange vs. value extraction and how those magnify power differentials in groups.
> I feel no more entitled to exclusive use or credit for my ideas as used by AI
Do you feel you have the right to decide whether to exchange your ideas or not?
> if I had talked to someone at a conference who went on to be influenced by my ideas to do something good after forgetting my name.
Yes, you’ve decided to share that information freely with that person. Do you decide to share every idea or thing you do for free with everyone? Why or why not?
> The prospect of all human ideas accumulating inside a machine that makes these ideas accessible
Right now, this idea of “a machine” is trending towards private ownership — an extractive process that does not incentivize further contribution.
Accessibility is no longer determined by you, you don’t have a decision point on the production side (deciding whether to share) nor the consumption side (guaranteeing access). We might even say your rights have been reduced.
It should be obvious to see how a healthy society is built upon value _exchange_ over _extraction_. Extraction typically leads to destruction… by definition.
> Do you feel you have the right to decide whether to exchange your ideas or not?
If I've said something around someone else or posted it online, then I don't feel I have a right to someone's use of that information, no.
> Yes, you’ve decided to share that information freely with that person.
And you decided to make this post on a forum that an AI is certainly scraping as we speak. If you don't want anyone or anything to "extract" your ideas then don't express them. We never would have left the caves if everyone had that mindset, but it's your right.
You keep saying "extraction" as if something is taken from you whenever a machine learns from you, but it's not a zero-sum situation.
Scenario A: Alex tells Sam that PHP 8 has added union types. The world gains 1 point of value because Sam has gained 1 point of value.
Scenario B: Alex tells Sam that PHP 8 has added union types, and a robot overhears it and tells 10 people. The world has gained 11 points of value.
Are the consultants delivering more billable hours per person now?
All sorts of reasons why the answer to that may be: no.
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