AI is for rich people
In a Nutshell
AI is becoming prohibitively expensive for frontier models, with prices rising rather than falling—high-performance tokens now cost significantly more than before, and the richest companies and individuals can afford usage levels that everyone else cannot. This creates a structural divide where top AI talent and compute cluster inside a few organizations like OpenAI and Anthropic, leaving outsiders and new graduates with little access or opportunity. The practical takeaway is to use cheap AI strategically for rapid experimentation and iteration, but accept that meaningful scale remains gated behind wealth and institutional affiliation.
These notes were generated by AI and may contain inaccuracies.
Peter Steinberger, the inventor of Open Claw who works at OpenAI, shared a screenshot of his dashboard showing his token consumption. In the last 7 days, he spent $250,000 on tokens. In the last 30 days, he spent $1.3 million on tokens. This spending occurred during a science experiment where he explored how software would be built in the future if tokens didn't matter.
The notion of building technology without considering costs is compared to a crack dealer asking how society would look if crack were free. Similar logic is applied to housing construction—if wood didn't matter, the housing crisis would supposedly be solved. The same flawed reasoning is used regarding Elon Musk's rocket ships: if gravity didn't matter, the cost problem would disappear.
The common belief that AI tokens will follow a Moore's law trajectory and become free is identified as one of the biggest deceptions in the industry. Two separate pricing charts exist: lower-end models have seen prices decrease or stay roughly the same, but the high-performance models required for meaningful work have seen prices increase significantly.
The price of tokens for advanced models has been rising. From GPT 5.4 to 5.5, token prices doubled. With Anthropic's Opus 4.7, the price remained the same as 4.6, but a new tokenizer was introduced that produces 35% longer responses, effectively increasing cost. OpenRouter conducted a study showing that GPT 5.5 costs 49 to 92% more than GPT 5.4.
The idea that AI will become cheaper and accessible to everyone, enabling the same level of usage as Peter Steinberger, is challenged. The trend indicates that AI costs are increasing rather than decreasing, and there is no indication this will change.
Andrej Karpathy announced he is joining Anthropic to gain access to their models. He expressed feeling left behind due to limited access to Opus 4.7 under open access policies and felt he needed to join the company to stay competitive.
Anthropic and OpenAI are positioned to become the dominant employers in the AI field as access to frontier models becomes increasingly restricted to those within these organizations.
Eric Schmidt, former CEO of Google with a net worth of $30 billion, delivered a commencement address at the University of Arizona. He encouraged graduates to "Say yes to the rocket ship," referring to AI. Every time he mentioned AI, the crowd booed. He stated that when someone tells you to get on the rocket ship, you don't ask which seat. The audience reaction highlighted skepticism and frustration among graduates about opportunities in AI.
The speech is critiqued for ignoring the fact that the AI rocket ship already has limited seats occupied by figures like Dario and Sam. The graduates are portrayed as being told to board a vehicle that has already departed, with no remaining opportunities for them.
For an 18-year-old without hundreds or thousands of dollars to spend daily on tokens, the recommended approach is to use AI strategically to iterate toward product-market fit quickly. This allows testing market demand before investing significant time in manual coding. A personal example is given: an app that took a full year to develop manually years ago would now take half an hour with AI assistance, enabling faster learning from failures.
Mitchell Hashimoto, founder of HashiCorp (acquired by IBM) and creator of the terminal app Ghostty, observes that many companies are experiencing AI psychosis. These companies are optimizing for fixing issues quickly rather than preventing issues, because AI tends to create bugs while being effective at rapid fixes.
Companies often pursue features that theoretically should increase revenue but frequently fail to improve the bottom line. The preference is shifting toward shipping slightly buggier products in one-tenth the time and fixing issues afterward rather than investing more time upfront to reduce bugs.
Airbnb CEO Brian Chesky stated on a podcast that as long as you are a smart person willing to adapt and change regardless of how AI develops, you will be fine. This view suggests that increased productivity from AI tools may lead to a need for more people rather than fewer.
The fundamental issue that AI is being developed by and for the wealthy, with no incentive structure to make it cheaper or more accessible, is acknowledged as unresolved. There is no comforting narrative offered about how this situation will improve for everyone. The only recommended action is to put on the turtleneck and forward deploy yourself.
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