Token Series Part 1 | How AI Created a New Budget

CJ Gustafson (0:00)

It's a brave new world. This is not your grandfather's finance. We are embarking on a new way of doing business, so I had to take out the old CFO Batphone and get my friend Ali Hussain on the phone. Ali, who owns AI Spend inside the company? What are you hearing?

Ali Hussain (0:17)

It's a big debate right now, CJ. This problem is much bigger than just what the CTO can do anymore.

CJ Gustafson (0:24)

Are you paying for more than one LLM provider?

Ali Hussain (0:27)

I'm paying for more than I have fingers on my hand, I have no, it's a pretty normal situation here. The volatility and the number of tools we're now seeing, I think it's just getting way too complicated. OpenRouter, which was acquired by Stripe, maybe the most prolific acquisition we've seen in the AI era, just in terms of multiple, it's a way to help CTOs and engineering leaders administer this cost to the org. My hot take is...

CJ Gustafson (0:58)

Is this thing on?

Ali Hussain (1:01)

Yesterday's price is not today's price.

CJ Gustafson (1:12)

Probably to start 2026, we still had a lot of companies out there with these, what they would call experimentation budgets.

And it was, hey, just activity for activity's sake, see what you can build, try to just show that we are learning here. Companies are heading into 2027, saying we need to have a real plan around how we incorporate AI into our product, how we invoice and collect for the job to be done and how we price that product. Companies suddenly have a major new variable cost. We're calling it inference, and that is behaving very differently from traditional software spend. Maybe just to start there, what are you hearing from customers? Yeah.

Ali Hussain (1:54)

I think in this new world, the reason it's a new world is not that we've changed the word, it's still AI.

But the difference to your point was it was exploratory. These were side budgets which CFOs, CEOs, Borgs were saying, look, let's get every function, particularly engineering, but I think it started to sprinkle in other departments throughout the last 24 months to test and try. But I think the turning point is now we've passed the threshold of materiality.

The cost of this is showing up pretty universally, and it's not just isolated to product and engineering. I think it's opening up new types of questions on, how do we get here so fast? How much does this actually cost? What do we actually find valuable?

CJ Gustafson (2:43)

Well, from a first principles perspective, Ali, who owns AI spend inside the company? What are you hearing?

Ali Hussain (2:50)

It's a big debate right now, CJ. I think if you asked this question this time last year, it would typically be some type of technical leader. It would be the CTO for larger organizations, maybe someone who owns IT or the CISO.

I think for the first time, there's this big question on, is this a technical lead CTO cost for the entire company, which to be fair, it has been in other domains like cloud for a lot of companies, or is this now a real CFO and finance problem? I don't actually know if the verdict is out. The best example I have is we have two big products that came out, OpenRouter, which was acquired by Stripe, maybe the most prolific acquisition we've seen in the AI era just in terms of multiple.

I think that product is highly used, and the philosophy of Stripe has always been the engineering team.

And I think it's a way to help CTOs and engineering leaders administer this cost to the org.

And on the other hand, we saw our friends at Ramp slowly thereafter announce their own offering, which very much felt like it was geared towards the finance and accounting leader. And so I think the jury is still out. I'm excited to, throughout this episode, kind of talk through who we think wins.

But I think I'll start by saying the answer has not yet been resolved in the market.

CJ Gustafson (4:11)

It makes me feel like I'm aging a bit, and it may be the fact that I have three small children, they don't let me sleep. But I remember when I was working at a company that was moving from perpetual licenses to cloud. And as part of that journey, I saw our gross margin just get completely annihilated. Now it was still like plus 75%, but I was used to something that was over 90%.

And that's because we had all these cloud costs in there. I think there was this initial volley back and forth, like who's going to own this? Finance, who's on top of AWS, GCP, Azure, or is it going to be the CTO and this new infrastructure team? And I think the finance team actually not gave up, but they conceded it. I don't know if it's the same right now for AI costs.