I used to not understand as well, but then a friend asked me a question: "When Claude recommends a book, why doesn't it just link directly to Amazon and get a referral fee?"
I believe what investor's are chasing in LLMs is the same thing that Zuckerberg was chasing in the metaverse: not a new "technology" a new medium. The key insight in the development of the web was that a few companies can effectively control the entire thing (at it's peak both FB and Google basically had their tendrils on every page out there).
Apple's mobile play showed that their seeing the value in the fact that mobile was a brand new medium early on. This lead them to having control over a market that Google had some play in, and Facebook really couldn't get a hold on.
LLMs represent a new opportunity. The answer to my friend's question is very likely: "Because they eventually want to sell you the book through them". Sure there's not much of a moat, there wasn't much of a social media moat back in the day either, but eventually there will be a few winners and those winners will divide what may very well be the next "mobile" or even "web".
I already spend more and more of my online time chatting with Claude about various thing, most of the books I've ordered in the last few months came from conversations with Claude. I can absolutely imagine a world where AI is how I accomplish most of my purchasing, precisely because right now AI is not rotten with SEO spam. That will of course change, but likely not in exactly the same way the web changed.
There's a very likely future where Claude/ChatGPT/DeepSeek become iPhone/Android/Huawei, what investors are hoping is that they can make it Claude/XAI/DeepSeek (or some variant), because owning a piece of that can effectively be even bigger than owning a large amount of stock in early Amazon.
Yeah but that last paragraph is the crux of it: No one is using Grok. They have no path to profitability. They have very low traction among consumers, and even lower traction among enterprises. Their CEO seems to think that copy-pasting code into a web browser is a good strategy for attracting programmers. Its most common usage is on X where people say "@grok is this true", which is fine, except its unclear if anyone is actually paying for that. Over the past week, OpenRouter has been processing ~125M x-ai/grok-3 tokens per day; compare that to anthropic/claude-sonnet-4 @ ~45B/day and openai/gpt-4.1-mini @ ~5B/day.
Yeah its only one somewhat specialized source, but its a big one. The only time anyone talks about Grok or xAI is their now-annual accomplishment of taking the intelligence crown, for about a month, before OpenAI comes out and beats them, then Anthropic comes out and beats them, then Gemini comes out and beats them, then DeepSeek crashes the stock market because china scary, then we repeat again. These things are so damn fungible now that it startles me that any investors would touch any of these companies at their current valuations.
The future where Claude/ChatGPT/DeepSeek become the next iPhone/Android/Huawei is only going to happen if these companies make hardware and traditional software operating systems. OpenAI is trying. But, by the way, one of those companies on the right side is already doing that and has a world-leading AI strategy (Google), so I'm not convinced the status quo is as disruptable as some people think.
I wonder to what extent it matters… but, Musk has mostly lead companies where he comes with a new competitor against incredibly stagnant competition, right? (banking, cars, rockets). He seems to have a strategy of convincing some young engineers to work really hard on a neat new idea. That, combined with the stagnant competition, produces a sudden dramatic leap past the competition that gets people interested.
LLMs were already the hot-shit new tech that was attracting a ton of excited talent. What’s xAI got to offer that OpenAI doesn’t? Training off a mediocre social media network I guess.
The difference is, his stagnant competition in the AI space is way, way less stagnant than Boeing and Ford. OpenAI, Anthropic, and Google are not stagnant; they're the hottest companies out there paying million dollar salaries.
> I used to not understand as well, but then a friend asked me a question: "When Claude recommends a book, why doesn't it just link directly to Amazon and get a referral fee?"
How much do I pay to make it recommend my book, rather than your book?
Interesting enough my friend's background was in SEO so this topic also came up, and currently one of my books does show up immediately when asked about the subject!
The early days of Google felt very similar to the current state of LLMs. The web at the time was filled with the laziest keyword spam, search results where awful. Then Google changed all that (hard to even imagine today): you nearly always got the results you wanted without garbage. Early Google fought spam pretty aggressively, old time HNers might recall when the Genius lyric site was caught gaming the system (more aggressively than standard SEO) and was permanently punished in Google results. Similarly early Facebook was actually pretty pleasant, just a way to catch up with old high school classmates, I don't even remember ads in the early versions.
My guess is LLMs will follow a very similar path, but because it is a new medium it won't evolve in exactly the same way. I suspect once the major players are established there will be no more SEO, but rather major advertising agreements behind the scenes. One nice thing about SEO is that anyone could do it, sadly I think we'll soon be back in a world where only big players really matter.
To be clear, I don't have any fantasies that "this time it will be better!" I'm pretty certain we'll see the same enshitification cycle play out, but I'm trying to enjoy at least being on the less-shitty part of the cycle for a moment.
I believe what investor's are chasing in LLMs is the same thing that Zuckerberg was chasing in the metaverse: not a new "technology" a new medium. The key insight in the development of the web was that a few companies can effectively control the entire thing (at it's peak both FB and Google basically had their tendrils on every page out there).
Apple's mobile play showed that their seeing the value in the fact that mobile was a brand new medium early on. This lead them to having control over a market that Google had some play in, and Facebook really couldn't get a hold on.
LLMs represent a new opportunity. The answer to my friend's question is very likely: "Because they eventually want to sell you the book through them". Sure there's not much of a moat, there wasn't much of a social media moat back in the day either, but eventually there will be a few winners and those winners will divide what may very well be the next "mobile" or even "web".
I already spend more and more of my online time chatting with Claude about various thing, most of the books I've ordered in the last few months came from conversations with Claude. I can absolutely imagine a world where AI is how I accomplish most of my purchasing, precisely because right now AI is not rotten with SEO spam. That will of course change, but likely not in exactly the same way the web changed.
There's a very likely future where Claude/ChatGPT/DeepSeek become iPhone/Android/Huawei, what investors are hoping is that they can make it Claude/XAI/DeepSeek (or some variant), because owning a piece of that can effectively be even bigger than owning a large amount of stock in early Amazon.