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Stories from Tomasz Tunguz. Show all stories · All sources
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Price War in the Chip Aisle
Five frontier models now sit within five points of each other in terms of intelligence, but their cost per unit differs by 3.8x. Google, which has built chips alongside its models for more than 15 years, prices lowest; Microsoft & OpenAI are now chasing the same advantage, & pricing should keep deflating even as frontier margins hold.
The Theory 2026 AI Survey Results
Theory's second annual AI in Practice Survey finds four results that surprised us : 43% rate security a top pain against the 10% who say its tooling delivers value, 45% of teams route queries across models, Cloudflare hosts 62% of agent sandboxes, & 48% now read production logs with coding agents.
Sales in the Age of AI
On Tuesday, October 20th at 10 AM Pacific, Office Hours will host Bardia Shahali, VP of Sales at Granola, for a conversation on what the sales organization should look like in the AI era. We’ll talk about : Why AI-era sales teams run smaller, and how far quotas have moved from traditional SaaS benchmarks. How faster ramps and larger deals change who you hire and how you compensate reps. How to structure go-to-market when the product spreads on its own.
A Change in AI Strategy
AI models have reached commodity status as prices fall 41% while token usage surges 50%. To win relative share, labs should partner & resell models, control the user interface where distribution becomes the moat, & capture routing data to reduce the cost of training future models.
How to Automate Inbound
Vercel’s COO on how the company actually built an inbound sales agent: a 125-line prompt written by the top SDR, six weeks of human QA, & the moment the prompt grew to 1,000 lines & had to be replaced by 14 rules in code.
Inference Is the Most Important Market in Software
AI inference is set to surpass the database market to become the most important market in software, reaching ~$350b by 2027. This shifts software unit economics: usage dwarfs platform fees, gross margins compress below classic SaaS norms, and infrastructure becomes the dominant component of COGS.
Do We Grow Software or Do We Design It?
Explores the contrast between organic 'growing' of software via vibe-coding and deterministic 'designing' via state machines and formal verification.
The Fastest Growing Market in Tech isn’t AI
Tokenized real-world assets are the fastest-growing market in tech, compounding at 53% a month versus 25% for Anthropic. Stocks & commodities trade on blockchains 24/7, IPO pricing happens weeks before listing, & Allium now powers Bloomberg's RWA terminal dashboard.
Segmentation Drives Market Share Wins in AI
Like two SailGP boats in San Francisco Bay, Anthropic & OpenAI are vying to be the next multi-trillion public company & adding complexity to their strategies beyond technical one-upmanship. Technology innovations marked the pre-2026 era : thinking models, bigger models, RL environments, agents, harnesses. This year, business model innovation is more important, evident in two waves of the data. Both are segmentation moves : the same models, aimed at different buyers & priced to match.
How GPU Prices Can Double While AI Gets Cheaper
GPU rental prices doubled in six months while inference prices kept falling. The reconciliation is efficiency : the hinge that turns scarce silicon into cheap intelligence.
Thinking in Systems, Shipping in Loops
AI has removed the typing from software engineering & left the system design. DHH told Rails World that writing code by hand is no longer economically productive ; Artemis engineers merged 16 pull requests per day by August, & Lauren Tan ships 2,000 a month. The craft of fitting code together by hand is over ; what remains is designing the loop that decides whether the output is right. Donella Meadows's three properties of great system design, resilience, self-organization & hierarchy, describe how those loops are built.
The Most Important Market in AI is the Middle
AI prices are collapsing, but the competition is not at the frontier. Anthropic held the Opus line at $5 & $25 across five releases while OpenAI cut Luna 80% then 50% again, & open models now run a majority of token volume at an 86% discount to closed models. The most capable model, Fable 5.1, commanded only 3.7% of gateway spending in its first twelve days. Demand is a normal distribution with a fat middle, & as intelligence per dollar explodes the tokens may shift to commodity.
AI Comes for the If Statement
Machine-native models replace human-facing text generation with zero-token typed execution, cutting inference costs by orders of magnitude for basic programming primitives.
The Harness Margin Opportunity
A UC Berkeley study finds the harness sets the price of an answer : GPT-5.6 Sol costs 71% less on Pi than on Claude Code, the same model returning the same result, & none of the 42 harness comparisons shows a statistically significant quality difference. Two startups bidding on the same $250k contract earn 38% & 75% gross margins depending on what they built around the model, & the cheaper one pays back its sales cost in half the time.
When Inbound Sells Itself
Vercel took its inbound sales development team from 10 people to 1.25. Jeanne DeWitt Grosser, COO of Vercel, shared this on our Information interview together1 : “We had 90% automation of sales development for inbound. And our support agent that we’ve home-built handles 93% of all support cases… In both of those cases, the total annual infrastructure bill is in the singl
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