Product Economics for AI-First Companies
AI-first companies face a unique paradox: your core value proposition is your biggest cost center. Every query costs money. Every hallucination creates liability. Every model dependency creates risk.
Margin Erosion
Every AI interaction costs money. Unlike traditional SaaS (95%+ gross margin), AI-first products operate at 40-70% margins. At scale, this compresses valuation multiples.
Model Dependency
Building on GPT-4, Claude, or Gemini means your core capability is controlled by someone else. Price changes, deprecations, and capability regressions are existential risks.
Hallucination Liability
When your AI gives wrong information to a customer, who is liable? AI Hallucination Debt compounds invisibly until it creates a crisis.
Unsustainable Unit Economics
Most AI features are margin-negative when fully loaded costs are included (inference + retrieval + monitoring + error handling). The AUEB calculator reveals this.
How I Help AI-First Companies
- → Model AI unit economics before and after launch using the AUEB calculator
- → Identify which AI features to convert to deterministic code (Evergreen Ratio)
- → Implement AI governance through Exogram integration
- → Audit model dependency risk and create multi-provider strategies