Chamath Palihapitiya said his software company is moving away from Cursor because it was spending too much on tokens
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Venture capitalist Chamath Palihapitiya expresses his concerns about rising AI bills.
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Palihapitiya said the software startup’s AI costs have tripled since November.
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Palihapitiya stated that costs increase every three months and said, “My income is not increasing.”
venture capitalist Chamath Palihapitiya He said he couldn’t believe how much the software startup spent on artificial intelligence.
“Our costs have more than tripled since Nov. 25,” Palihapitiya said in an episode of the “All-In Podcast” released Friday. “Between the enormous cost we pay with AWS, the cost we pay with Cursor, and the inference cost between Anthropic, we’re just spending millions.”
Palihapitiya said 8090, which he launched with the “goal of replacing/rewriting all the legacy software in the world,” tends to spend $10 million a year on AI costs. His concern about ballooning bills comes as the tech industry continues to digest how artificial intelligence is disrupting established fields like software engineering.
The biggest fear expressed by Palihapitiya is that while AI costs are increasing, 8090’s revenues will not grow at the same pace.
“The problem is that my costs are increasing 3 times every three months,” he said. “Not my income.”
Palihapitiya said the current system at X is partly funded by large venture capital firms, which are among the biggest backers of AI companies such as OpenAI and Anthropic. Some in the tech space have questioned the sustainability of the current approach, comparing it to the fact that Uber rides are cheap at first and then increase in cost over time.
“Thank you to the VCs whose massive investments will fund this all-you-can-eat token consumption,” he wrote.
Palihapitiya singled out Cursor, a popular AI coding tool, as the source of 8090’s biggest AI costs. He said Anthropic’s Claude Law was a much better bargain.
“We need to leave Cursor,” he wrote in X. “This is very expensive compared to Claude Code. The latter is equivalent and if you use the Pro plan you eliminate large Cursor bills for token consumption.”
Concerns about rising AI usage bills are still rising. OpenCode creator Dax Raad Recently, CFOs are becoming aware of the cost of AI bills, he said.
“Your CFO, you say every engineer now costs $2000 extra a month in LLM bills,” Raad wrote in X.
Palihapitiya said he suspects some of the 8090’s AI billings may be due to Ralph loops, a nickname for a usage technique that keeps feeding the same prompt back to the AI model until the problem is resolved. The approach takes its name from the “Simpsons” character Ralph Wigguma lovable fool who can be very persistent.
