Kavitta Ghai wants her startup’s engineers to spend more tokens.
The 29-year-old cofounder of Nectir started setting minimum quotas for Claude Code use. First it was at least $100 in tokens a week, then $200. Now, the expectation is that her engineers each spend a couple thousand in AI tokens a month.
The strategy has been successful, Ghai said. Some of Nectir’s senior engineers were previously skeptical of AI coding tools; now, they call it their “army of coders,” she said.
But she doesn’t think Nectir is “tokenmaxxing,” the buzzword du jour for techies racing to spend as much as they can. “We don’t really play into the Silicon Valley trends,” Ghai said. “We live in our own world, and we’re competing against ourselves.”
Across Big Tech, engineers are racing to spend as many tokens as possible. A token is a measure of AI compute. The more tokens burned, the more the engineer employs AI tools. Employees at Meta reportedly competed on a token leaderboard before it was taken down.
What of the little guy? Startups are an edge case: relatively tiny teams that want to be on the cutting edge of tech but might not have the same money to spend. Some startup leaders told Business Insider that big token bills helped them succeed. Others scoffed at the idea, preferring to stick to the lower-cost subscriptions.
The startups spending big on tokens
Aron Solberg doesn’t want the competition of a token leaderboard — but he does want the mindset behind it.
The 44-year-old cofounder of Risotto sees token spending as a “force multiplier” for a small team. The company uses OpenAI and Anthropic’s models, and said it spends $4,000-5,000 per month on tokens. Six months ago, Risotto says he spent one-tenth of that sum.
“It’s trending up a lot,” Solberg said.
“There’s an old adage that rings true,” he said, whether it was for hiring new employees or spending liberally on tokens: “You’ve got to spend money to make money.”
Quang Hoang is similarly spending big. He wrote in an email that his startup, Vybe, has an “unlimited credit policy” and was thinking about minimum quotas.
Investors are also incentivizing spending — and might foot the bill.
Hoang tells founders he invests in to allocate “at least their salary amount to tokens.” (Nvidia CEO Jensen Huang made headlines last month for saying he would be “deeply alarmed” if one of his $500,000 engineers did not consume at least $250,000 of tokens.)
Accelerators like Y Combinator offer free token credits to their participants. “At YC, we let our engineers let it rip,” CEO Garry Tan wrote on X. Those credits help some founders to spend big. These founders aren’t tokenmaxxers, but do believe that there are productivity benefits.
Traverse cofounder Lance Yan believed in Tan’s message: “We usually just let it rip.” The 19-year-old said he uses the best models with the maximum effort, not worrying about the costs. Between his Claude Max subscription and the credits that offered by YC, he can spend big without hitting a limit.
He’s not a fan of rationing tokens. “That’s stupid,” he said. “You’re just harming your own startup.”
26-year-old Boris Skurikhin said that the YC credits helped his startup Docket get off the ground. He’s mostly run through them now, except for the models he uses less frequently.
Skurikhin said he noticed a 10x increase in productivity in his own work when he used the tools. “It is expensive to build with tokens,” he said, but “not as expensive as having another engineer.”
Many of these startups are in the AI game, after all. Nectir’s Ghai said that token spending instilled “AI literacy” — something that’s especially important, given their product.
“The team itself needs to be the best versed at it first, before we try to go sell it to anyone else,” she said.
The startups saying no to tokenmaxxing
Rishabh Sambare wishes he could spend more on tokens.
The 23-year-old cofounder of Gale prefers to build with Zed, an AI IDE similar to Cursor, but can’t stomach the company’s usage-based pricing. The subscription deals from OpenAI and Anthropic are so deeply subsidized that he uses them instead.
“It sucks, because I hate their products,” he said, calling Zed “more polished and less buggy between releases.”
Sambare is Gale’s only engineer, though the company often has 2-3 interns. He hasn’t hit a rate limit, but one of his interns has. They got him a second subscription, he said; it was still far cheaper.
These subscriptions — sending $100 to $200 to Anthropic for its “Max” tiers or $100 to OpenAI for its “Pro” plan in exchange for a stable of discounted tokens — were popular among the founders I spoke to. Hassan Ismail, the 24-year-old founder of Argos Research, said the Claude Max subscription was a “no-brainer,” and that all five team members have a $200 a month subscription.
Others were more philosophically opposed to the trend. Weave’s Brennan Lupyrypa didn’t mince his words: “It’s extremely stupid for any company to be tokenmaxxing.”
Weave is still spending big on tokens because it doesn’t want to “kneecap” its engineers, its 25-year-old founding engineer said. The company set up a notification for when an engineer hit $500 in token spending a month; Lupyrypa said most hit it within two weeks.
But Weave doesn’t incentivize the spending itself, which Lupyrypa said was the wrong proxy. He predicted the downfall of tokenmaxxing within the next three months. “CFOs won’t be happy,” he said.
Still, some tokenmaxxers hold strong. I asked Risotto’s Solberg about these token-hesitant founders. He said that they likely hadn’t found their product-market fit yet.
“It makes complete sense to spend a lot of money on tokens, because you know that the growth is coming soon after,” Solberg said. “If you’re a venture-backed business, that’s what you signed up for.”
Read the full article here
