The Information's TITV AI Profitability Problem, Silicon Valley Longevity Boom, MeritFirst’s Hiring Strategy | Oct 8, 2025
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Oct 8, 2025 Todd Olson, Founder and CEO of Pendo, shares insights into the heightened anxiety among tech founders in the thriving AI market. He emphasizes the importance of staying focused on fundamentals, despite the excitement surrounding AI advancements. Olson notes a shift in software usage patterns, with AI acting as a co-pilot, yet highlights more cautious growth forecasts. In addition, the conversation touches on merit-based hiring strategies from MeritFirst, aimed at reducing bias and validating candidates through real work assessments.
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AI Profitability Is A Cost-Capability Mismatch
- Many AI apps struggle to price for healthy margins because token and GPU costs are high.
- Founders expect costs to fall but current model capability demands keep spending elevated.
Frontier Models Drive An Arms Race
- Newer frontier models raise capabilities but also increase token usage and cost per task.
- Startups feel forced into the arms race to stay competitive on bleeding-edge models.
Price By Usage Or Outcome, Not Flat Fees
- Optimize pricing to reflect value rather than subsidize usage with flat fees.
- Consider usage-based tiers or outcome pricing to align unit economics with token costs.