Harvey’s Margins, Are Insects Worth More Than Humans?, Meta Tests Human Help for Muse | Diet TBPN
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Why are the hosts emphasizing safety in AI and financial markets?
Uh Jordy his hat game has evolved. He's now wearing the Fedora with the Blackstone cap on top, which I assume can only mean one thing. It means that your top priority is safety in
financial markets.
Financial markets and the financialization. No, but also
ma safety as well.
Oh, you care about both. I care
about both. So
you want to accelerate the AI build out safely.
Safely.
Yes. I I thought it was I thought it was you're gonna blend the two and you're like, look, I want insane private credit deals, trillion dollars of of capital to flow into the AI build out, but I wanted to do do it safely. Every contract investment grade. I
want to prioritize safety on the whole frontier.
Okay.
Safety around the models, the capital markets. Safety and financial.
In the capital markets. Got it. Okay, okay. I'm I I'm seeing I'm seeing where you get there. Anyway, you wanna do Harvey first? Well, it's uh Okay people are people are taking shots at Harvey. So it started with Samuel Bowl. I won't stand for it. No, I like Harvey. We we we've talked to some lawyers that use Harvey. Seems like a great product. We also had Logora on the on the on the show just uh last week, had a good time with them. Seems like a very competitive space, but the the headline that grabbed attention, they say track changes. Harvey's gross margin fell from about 50% to negative 50% by June as agent token use spiked 20 fold on rented open AI and anthropic models. Bloomberg reports. And so So It seems really bad.
Like you don't really don't want negative gross margins as a software company, as a tech company. As
any company.
As really as any company, actually. You don't want to be selling a dollar for fifty cents. And that's exactly what they did in June, basically. That's what they were doing. They were selling Tokens at negative gross margins. Not good, but there's way more details in the actual reporting. So you should go read the Bloomberg report. So the first thing is like cost did explode, but it was on the back of more product usage, which is good. They're growing ARR. We'll get into that. Uh and token consumption increased 20x this year. So basically, they are feeling the reasoning era, the agentic era, one job, one process in Harvey is generating a lot of. more too.
Had seat based pricing. Yep. And then AI got a lot better, so every seat was just using it way more. Very simple. But
it's not it's not just using it more. It's that your the lawyer might be saying the exact same thing as they did a year ago. They might say, review this. But instead of like one-shotting it with no reasoning, they went to reasoning, which generated way more tokens. And then they went to agents. So they were like, Okay, it's actually gonna fan out, look at everything across your firm, all the other records that you have, all your different policies and MD files, like everything that you have is gonna Going to be worked through this agent, and so you're generating way more time. Yeah. So that created negative gross margins. But the good news is that they're already back to positive gross margins, which is in the Bloomberg article.
Kind of criminal not to repurpose that because it really makes it look like they are running at negative gross margins. They had a negative 50% gross margin in June, uh, but they are back to positive gross margins. Uh, they changed their model usage, of course. There's a whole bunch of Models that are cheaper and better. uh for certain things and they actually fine-tuned an open weight model. So they did post training on an open weight model and they're calling it Harvey Tenet. And there's some interesting details there. I want to debate with you on like the value of that, where that goes but first.
Gabe, one of the founders of Harvey responded.
I was
What caused Harvey’s gross‑margin collapse and how did the company recover?
He said the
hardest thing about building Harvey is doing what's best for our customers despite immense pressure to do what's easy. The easy thing would have been to force our customers into consumption pricing before they were ready and serve them worse models to protect our margins. We chose to help our customers transition on a timeline that works for them and give them the best models in the meantime, even though it hurt our margins.
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Chapters
8 chapters
1
Why are the hosts emphasizing safety in AI and financial markets?
0:01–3:21
2
What caused Harvey’s gross‑margin collapse and how did the company recover?
3:21–8:24
3
How does Harvey’s team balance customer‑first decisions with margin pressure?
8:24–11:58
4
Why do some argue that insects’ aggregate suffering outweighs human suffering?
11:58–16:59
5
What thought‑experiment do the hosts use to picture an AI‑doom scenario?
16:59–20:27
6
How is Meta testing human‑in‑the‑loop agents for its Muse assistant?
20:27–23:19
7
What are the strategic advantages of Amazon versus Meta’s Muse in the AI‑agent market?
23:19–28:43
8
What are the key takeaways and upcoming announcements before the episode ends?
28:43–33:09
Speakers
3 identifiedMore from TBPN
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