AI Is Getting Smarter, But Can We Still Afford It?

Why your AI startup might be profitable on paper, and dead in the water by next year.

Imagine paying 10x more for something that used to cost pocket change.

Not because of a scam, but because AI got a whole lot smarter

That’s exactly where we are right now.

Just a year ago, using AI felt manageable. You paid per “token” — tiny chunks of text in and out — and the costs? Predictable. Clean. Linear.

But that predictability is gone.

We’ve now entered the era of reasoning models and agentic AI. These systems don’t just respond, they pause, evaluate, and problem-solve. They think before they speak.

And that thinking? Comes with a serious price tag.

“The cost of compute has gone from fixed to wildly variable. No one really knows how to charge for it anymore.”

— RK Anand, Co-founder of Recogni

That line hit me hard.

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In today’s paid edition, we’re unpacking what most founders overlook and what you can do right now to stay ahead:

1. The biggest mistake founders make when pricing AI (and how to fix it)

2. How your traction might be hiding unsustainable costs

3. What agentic models actually mean for your margins

4. Four brutally clear questions to bulletproof your monetization strategy

This is just the surface. To go deeper and get the full playbook, unlock the full post by becoming a paid subscriber.

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If you’re a founder, especially a first-time founder, this isn’t just a technical shift.

This is a business model shift. A runway shift. A pricing crisis waiting to happen.

So, what changed?

Before, AI systems were like vending machines: input → output. Simple exchange. Easy to track.

Now, we’ve moved into chain-of-thought models that don’t just spit out answers. They calculate. They reflect.

They “pause,” the way you do when asked to multiply 25 × 75 × 42 without a calculator.

That pause? That thinking time?

It now requires massive infrastructure, energy, and compute, which means unpredictable, ballooning costs.

Now layer on agentic models, AIs that work together like a team of overachievers on Slack, bouncing requests back and forth.You input a request. They ping each other, collaborate, delegate tasks, and then deliver a polished result.

Except now?

Your $1 user request quietly racked up an $8 compute bill. Most startups don’t see it coming.

You’re focused on growth and getting press, but behind the scenes, your compute bill is quietly exploding. And if you don’t catch it early, it could wipe out your margins before you ever raise Series A

So what do you do?

Here’s what every founder should audit this week:

1. Where are you using AI?

Are you using it to solve real user pain or just to impress investors?

2. Are you pricing based on value, not just usage?

Move beyond charging for access. Charge for outcomes. For results. For ROI.

3. What happens at 10x user growth?

Does your cost scale linearly or exponentially?

4. Are your users clear on what they’re paying for?

Explain the economics. People are more likely to pay when they understand what they’re really getting. RK predicts an explosion of agentic models over the next 12–18 months, and along with it, a wave of startups folding under infrastructure costs they never planned for.

That doesn’t have to be your story.

If you build cost-awareness into your roadmap now, you’ll outlast the flashy AI tools and build deeper trust with the people who matter, your users.

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Next week, we’re going deeper.

I’m breaking down the biggest monetization mistakes founders are making, how to MacGyver smarter pricing, and what to actually do if your AI costs are eating your product margins alive.

We’re not just here to talk about trends.

We’re here to help you build something that lasts

See you in the next one,

Keith

Inspired by my conversation with RK ANAND, watch here!

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PS: This journey is messy, unpredictable, and still unfolding in real time. But you don’t have to figure it out alone. That’s exactly what Liftoff is for.