From @ttunguz on how Anthropic is borrowing from Google's early strategy:
"If you have a really good business, what you want to do is look at all the people who have businesses around you, and make all of those products free so that more people end up using your product.
That’s called "commoditizing the complements". You commoditize everything that’s complementary to you.
Let’s make this concrete. If you’re Google and you make money when people click on search ads, you want to make it so that people click on as many ads as possible.
What did they make free? Well, it used to be you paid for email. Okay, email was now free. And then it used to be that you paid for video hosting, because video hosting was really expensive. But then they bought YouTube and made that free.
And it used to be that you would pay a license to have an operating system on a mobile phone. Then they bought Android, and then they made that free. And then it used to be that you would buy a dedicated GPS device to navigate your car from one place to another, and then they ended up buying Keyhole and making Google Maps and Google Earth free.
And then they bought all these books and scanned all of them and put them in the index. So it was just driving more and more searches. Google Docs, same thing.
So you’re just using the internet more. By virtue of the fact that you’re using the internet more, and it was free, so there was less friction, you would go to Google more. And then you would get more ads, and Google would make more money.
If you’re Anthropic, you can run a very similar strategy. Anthropic is selling inference. They are selling a prediction of an AI system.
There was all this workflow software in the previous decade. Maybe it’s legal software, or finance software, or accounting. I’m just picking categories at random.
But you don’t to charge per seat anymore. That’s silly, because the amount of money people will pay per seat is maybe $500 per month, compared to the amount of inference they’ll buy, at $2,000 a month.
Just give away the $500 seat, and have them buy more inference. You’ll make a whole lot more money, and you'll also have less competition.
I’m just observing from the outside, but that’s a very game theoretical optimal way of maximizing when you have a really phenomenal business.
Anthropic wants to make sure everything else is free, so there are as many inference queries on their products as possible."
