So You Want AI Compute as Compensation?
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Broadcasting intimate details and useless information from an undisclosed location in New York City. The Last Show with David Cooper If you're a tech worker at a big tech company, why take all your compensation in cash when you can be paid in computation? Let me explain. Silicon Valley has invented a new perk of the job. It's not stock options, it's AI tokens. Your paycheck now partly powered by computer processors crunching numbers for you. What the heck is going on with this story? Let's discuss it with Alistair Barr, a reporter and author of the Tech Memo newsletter at Business Insider. Alistair, welcome to the show. Thanks for having me. So to me, this is a sign that the AI bubble is about to burst.
But before we get there, okay, what exactly is AI compute as compensation? And who in their right mind working at a tech company would want that rather than just cash or stock options or a bonus or money?
What is AI compute as compensation and why is it trending?
Yeah, I usually just want cash for everything. But yes, AI compute. Everyone's probably heard of ChatGPT and generative AI. So there's a version of that for when you're a software coder and it has become very, very good. And if you're a software engineer and you want to do more and produce more code and better code, You can use these AI coding tools to do it. And that's really taken off, I would say, in the last three or four months, especially. And then the problem is if you're an engineer and you're using these AI coding tools, they use a lot of computational power. And if you're a company, the company has to pay for that. And if you use it a lot, that money can get very, very large amounts of money.
And so if you're the CFO or if you're the manager of the team and you're like, okay, well, I'm already paying you $500,000 in stock and cash and stuff. And then you just racked up a $500,000 like AI compute bill the last year. Okay. We need to basically, we need to change something and put that into the whole compensation pie. I'm going to come up with a simple contrived example. I'm an engineer working on some software and there's like a really deep bug in there. And I see a couple error messages, but I don't understand the bug. And so I ask a really deep, really power intensive AI tool to find my bug, tell me about how it's happening so I can potentially fix it. How much money in electricity and computer power are we talking here to answer these questions using these AI tools?
Is it like $5 of electricity or more like $5,000? How expensive is it to run these computational models on code? I did a story last year actually about people using tools like Cursor and also just the original Claude Code. And these are, again, AI coding tools that software engineers have really jumped on. Some of these people, I called them inference whales, basically like people who use these things a massive amount. They were racking up bills of $20,000, $30,000 a month on these things. So if you add that up over a year, that's a lot of money. And you add, if you have a hundred engineers, that's a lot of money. Yeah, I did study math in university, but that's more than $5 at least, just doing a little napkin calculation here.
But is the average engineer performing at a high level using these computationally intensive tools? Are they racking up bills that sort of mirror their own salaries? Are companies really needing to factor this into how much it costs to have an employee at a company? I think you're right to ask that question. My story was basically that I've seen over the past maybe month or so that a lot of people who I kind of respect on Twitter and other social media and the AI circles have been discussing this as an emerging issue. So I don't think right now that the CFO of some big tech company that we all know is already baking in, but they're beginning to discuss it.
Who would prefer AI tokens over cash or stock options?
And it's basically saying we should do this because... To your point about a bug code fix, if there's a really large code base and you decide, yeah, I'm going to let Claude Code or some other one of these tools go to town on this code base and check it.
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