The Truth About Corporate AI Spending (It's Not What You Think)

Growth Newsletter: https://levelingup.beehiiv.com/subscribe Need marketing help? Visit: https://www.singlegrain.com/ and https://npdigital.com/Want to recruit great marketers? Find them here: https://marketingschool.io/hire Accenture found some staff spending $1,000 a month on AI, so it set a $29 monthly limit per employee, and Eric and Neil both think the cap is smart. They point out that reported AI revenue can be gross rather than net, then cite Ramp's AI spend index, where the median is $11. They agree a policy needs exceptions for people who prove value, while Neil shares how he downgraded his ChatGPT plan. The back half covers two-slice teams, Bending Spoons' model of cutting most of a company, and Evernote going from 433 staff at its peak to about 30 today. They close on Berkshire Hathaway's $330M stake in Bending Spoons and the 41% jump in the stock. Spend with a reason. Key takeaways◾Accenture's $29 cap is smart, but proven high spenders should get exceptions◾Most people pay for top models to do basic work, so match the model to the task◾Evernote went from 433 staff at its peak to about 30 under Bending Spoons Chapters00:00 Accenture caps AI spend at $29 a month00:23 Did staff really spend $1,000 a month?01:53 Reported AI revenue is often gross, not net03:31 Ramp's AI spend index: median is $1104:14 Set a policy, then talk to top spenders04:56 Exceptions for people proving value05:45 Neil downgrades his ChatGPT plan06:39 A 45-minute AI session that is worth it08:26 Two-slice teams, not two-pizza teams09:30 Pirate and architect: coordination drag10:25 Small teams ship faster12:00 Meta's 200 people out of 70,00012:39 Bending Spoons: a private equity model14:04 A layoff post that also launches features15:24 Evernote: 433 staff at peak, about 30 now16:18 Why public markets accept deep cuts17:07 Berkshire's $330M stake, stock up 41% 𝗔𝗕𝗢𝗨𝗧 𝗧𝗛𝗘 𝗖𝗛𝗔𝗡𝗡𝗘𝗟Welcome to Marketing School, one of the top business podcasts with over 61 million downloads. Each episode delivers actionable marketing tips and strategies from two entrepreneurs who truly practice what they preach. The show is hosted by Eric Siu, founder of Leveling Up and Single Grain, and Neil Patel, co-founder of Neil Patel Digital and recognized by Forbes as a Top 10 Marketer. 🎙️ Learn More About the Hosts Eric Siu – Leveling Up: https://www.youtube.com/@LevelingUpOfficial Neil Patel: https://www.youtube.com/@neilpatel 📩 Free Resources Ubersuggest: https://www.ubersuggest.com/ Answer The Public: https://www.answerthepublic.com/ ✅ Subscribe for Daily Marketing Insights!

• 0:00Speaker 00

  Finding customer information shouldn't mean digging through emails, call notes, and spreadsheets. HubSpot Starter Plan brings all of those details together, so it's easier to track what's happening with every deal and what to do next. It pulls information from calls and emails. Then it gets to work, logging and summarizing them. Right after your call ends, HubSpot pulls next steps from your call notes and drafts suggested follow-ups. And it stays up to date for you, so you can build demand, win more deals, and spend less time on repetitive work. Your records, insights, and next steps are ready for you to act on. And you don't have to miss a beat searching for any of it. Try the Starter Plan for $10 a month. Learn more at hubspot.com. So Accenture, they found out that most of their, I think they're averaging like $1,000 per head in terms of AI spend.

• 0:39Speaker 00

  So they're limiting employee AI spend to $29 per month per employee. What do you think about that?

• 0:47Speaker 01

  I think it's really smart. And there's two reasons. One, $1,000 really adds up. I'm assuming you're talking about $1,000 a year, not a month, right?

• 0:57Speaker 00

  I think it's a month.

• 1:00Speaker 01

  You sure?

• 1:01Speaker 00

  Some of it was going up to a month. So I don't think they were saying everyone was, but because they saw some employees going up to like $1,000 plus a month, they're setting the limits on it. And let me pull up this post for you, so you can actually see it. So let me share my screen. All right, Neil, do you see this?

• 1:19Speaker 01

  You're right, $1,000 monthly tech mean.

• 1:22Speaker 00

  Yep.

• 1:23Speaker 01

  And now $29 a month per person.

• 1:26Speaker 00

  Yeah, so you've been promoted to consumer. Okay, go ahead, continue.

• 1:32Speaker 01

  Uh, I think it's smart. Um, even in my organization, I've heard direct hand from engineers that I trust and get poached from other bigger corporations, that they're just like, a lot of these models are just expensive. And some of the older ones do just as well, and I don't know why people need all these advanced models to do basic stuff, because that's the reality. Most people are paying for the most advanced models to do the most basic stuff, and it doesn't make sense. And then the next thing is, is there's so many open source solutions now that can get a lot done for free. You don't need to end up spending an arm and a leg. Yeah, you may need a better PC or computer or setup, but that's much more palatable for corporations than it is to spend $1,000 a month.

• 2:14Speaker 00

  Dude, you know what I'm just thinking about right now? Like, because Anthropic and OpenAI haven't IPO'd yet, right? So when companies really figure out how to optimize this, I wonder how it affects them down the road. But that's a completely different conversation, so.

• 2:26Speaker 01

  Uh, they released a revenue recently, right? You saw the OpenAI revenue numbers?

• 2:30Speaker 00

  16 billion on Anthropic Q3, I think. Yeah.

• 2:34Speaker 01

  Correct.

• 2:34Speaker 00

  Which is.

• 2:35Speaker 01

  And then they're like, they're gonna get to 100 run rate.

• 2:37Speaker 00

  Yeah.

• 2:38Speaker 01

  But the, the interesting thing when they call revenue, revenue is not always all revenue. Some of these players have deals with other providers who provided them a lot of the infrastructure, money, or whatever, maybe, where they're getting a percentage of the revenue. So it's like eBay. eBay, Eric May sells some Pokemon cards on eBay. Okay? And these Pokemon cards that he had since he was a kid may go for $1,000. eBay's revenue from that is not $1,000, even though that product sold on eBay for $1,000 bucks.

• 3:11Speaker 00

  It's GMV.

• 3:12Speaker 01

  Yes. eBay's stake or percentage that they may keep, maybe 5% I'm making up, I don't know what eBay actually takes, so let's call it $5. eBay's real revenue is $5 per transaction, or for that transaction. And it's the way these guys are reporting numbers and tracking them and putting it out to market varies a lot. Because they're not public, they can do whatever they want, but the moment they're public, people will look at how much is your real revenue and what are you collecting?

• 3:41Speaker 00

  Well, actually, I mean, again, we don't have to go deeper into it, but I think I was reading something in passing where Anthropic's gross margins are like 80, 85%, but then, you know, operating revenue is like 11% or something. But let's go back to the $1,000 real quick. So I think there's, there's caveats for this, okay? So again, Accenture is saying, okay, um, they're seeing some employees spend $1,000 a month, which is a lot of money. Um, and they're converting everyone to $20 a month. Now, Rapp, we're talking about Rapp earlier. So Rapp actually has an AI spend index, okay? So the median spend is $11, okay? So they're saying, okay, we're gonna give you like 3X the median spend, which is like, if you do the math on it, it's like, okay, that's pretty good, right? Um, and so I think as long as you're slightly above the median spend and then,

• 4:23Speaker 00

  but you're not limiting your best people, maybe your best, as long as your best people can justify and they can prove that they're driving revenue or they're saving money on it, then great, right? But there has to be a process for it, because you can't just let everyone YOLO and do whatever you want. Now, the cool thing about Rapp too, Neil, this is not a Rapp sponsorship, but the cool thing is you can connect your, your accounts, and then you can see how much people are spending on average in your company, who's spending the most. And then I think you just need to have conversations with those people. So I don't think it's like a, I think it's cool to blanket, like, set a limit for everybody, but then the people who do want to take it to the next level and are proving value, you should let them do it. So I think it's a yes and situation.

• 5:02Speaker 01

  Yeah, I, I agree with you. And even though Accenture is saying it's limited to $29, if someone would bet me $1 million, I would bet that Accenture is not limiting every single employee to $29. And there's some people who can get exceptions if you wanted to go over, like engineers or people like that, because they must have some engineers doing some projects, and they're okay with them spending more. But just as a general corporate policy, they're just saying, hey, $29 is your limit, and then for certain departments, certain people and roles, they have no choice but to spend more, and that's okay.

• 5:35Speaker 00

  I, I agree with that. There needs to be a corporate policy for these things, because remember what I just said earlier? If you have 6 billion people in the world that are just barely using this stuff, and you have 1 to 2 billion that are using it as a glorified chatbot, what do you think's gonna happen in a company like Accenture, where they have, you know, tens of thousands of employees? The vast majority of people are not gonna be using it in a smart way, and that's gonna be costing the company too much money. But there's gonna be 0.2% of people that are using it in a smart way. You let those people. Frictionless Growth Marketing, hosted by Sonya Thompson, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Frictionless Growth Marketing, hosted by Sonya Thompson, shows how modern brands grow by removing the friction in their marketing and customer experience that pushes customers away every single day, often without leaders even realizing it. Each episode delivers practical insights, real brand examples,

• 6:20Speaker 00

  and conversations with marketing leaders, showing brands how to win with the new rules of growth, identity-driven marketing, cultural relevance, and frictionless customer experiences. Listen to Frictionless Growth Marketing wherever you get your podcasts. Said more. All right, so I wanted to take a moment to tell you about my podcast co-host, Neil's agency called NP Digital. And they work with a whole host of global companies or a global organization. Also, Neil has SEO tools such as UberSuggest and Answer2Public. All you have to do is go to npdigital.com to learn more, and we'll see you on the other side.

• 6:54Speaker 01

  Dude, did I tell you I downgraded my ChatGPT subscription?

• 6:58Speaker 00

  Your own?

• 7:00Speaker 01

  Yeah, my own. I downgraded.

• 7:01Speaker 00

  I love that you spent the time to actually do that. How much are you paying a month now?

• 7:05Speaker 01

  Uh, I, I don't know how much I'm paying. I believe I was paying around $200 a month before. I could be off on the number, but I'm pretty sure it was somewhere around 200, because I would always get an email from my assistant being like, Neil, can you go get me the receipt? They didn't email it to you. We need it for accounting purposes. I'd be like, all right. Uh, and then I downgrade. I'm like, man. I'm like, I now really only use ChatGPT as a glorified search to do like research and stuff. And I'm like, why the heck am I on the highest plan for this? So I downgraded it. I think it's like $20 a month or 29 or something like that. I could be off on the pricing, but I know it's not 50 a month, and I know it's not free. It's that pricing that's in between there, but it's not the highest plan.

• 7:48Speaker 00

  Dude, I love my ChatGPT now. I was driving to see my dad last week, right? So when you drive to Arcadia, it's good, it's like 45 minute drive, 40, 45 minutes. I just called Dudu, and I was just talking for 45 minutes. And I was like, okay, what about this? What about this? Okay, can you move this forward over here? Can you advance this over here? This is like, we were just going back and forth.

• 8:06Speaker 01

  Isn't Dudu your muse?

• 8:08Speaker 00

  They're both called Dudu. So Dudu is Muse and Dudu is also my Dot too. They're both called Dudu. So, uh, anyway, so that's my OpenAI Dot. And like, it, it's really good, because I'm like, oh, we're trying to make these ChatGPT plugins right now. Okay, we're trying to do this redesign over here. We're trying to do this over here. Oh, can you hand this over to Sean over here? Can you do this, right? So I'm like, I'm just going back and forth with it. It's like you just talking to like an employee on your team for 45 minutes, and it's just getting stuff done. So, um, that to me is worth it, but I'm not on the 500 plan. I'm only on the $200 plan.

• 8:37Speaker 01

  There's a $500 plan?

• 8:39Speaker 00

  They just added a $500 plan, yeah.

• 8:42Speaker 01

  Wow. Yeah, I should actually check to see what plan I'm on. I, I know it's the cheaper plan.

• 8:49Speaker 00

  I'm sure yours is 29.

• 8:50Speaker 01

  I'm on plus. What's plus?

• 8:52Speaker 00

  $100, I think?

• 8:54Speaker 01

  Plus, 20, 20 a month.

• 8:56Speaker 00

  Uh, well, yeah, they brought it down a little bit.

• 8:59Speaker 01

  Yeah, this is great. Yeah, let's see all plans. Oh, yeah, you're right. So, oh, they have an $8 a month plan? Expand access.

• 9:08Speaker 00

  No, at a certain point, saving money is not worth it. That's diminishing returns.

• 9:15Speaker 01

  Eric knows me really well. I'm like, ooh, I can save even more.

• 9:19Speaker 00

  Okay, so this guy, uh, how do you pronounce his name, Neil?

• 9:23Speaker 00

  Sujay?

• 9:25Speaker 01

  Sujay? Yeah, I have no idea, but it sounds right.

• 9:29Speaker 00

  Okay, alright.

• 9:29Speaker 01

  I should know how to say his name, but I don't.

• 9:31Speaker 00

  Yeah, you should know how to say it. So this guy says, I got a lot of pushback for saying that one product manager and one engineer can now be the entire team. Now, Dan Shipper has a name for it, the pirate and the architect, right? So it used to be, remember, um, Amazon's Jeff Bezos, he used to say, he used to say, uh, two pizza teams, right? We want to have two pizza teams. Now today, it's two slice teams, okay? So you can only get two slices for the team. So let me play this video real quick.

• 9:56Speaker 02

  And I've started to come to you is you really want to use very, very, very small teams. For a long time, the standard for team size was the two pizza teams. So that's like eight to 10 people. That's what Jeff Bezos came to. I think in the AI age, I call it a two slice team. Like you want one or two people max. You can get so far so fast with one or two people that anything more, there's a lot of coordination overhead and there's different visions and it just doesn't work. One or two people is really, really great. And I think the, the composition that works for us, and I, I think it's starting to work for other people is I call them pirates and architects. So one person on the team is the pirate. They are slot cannons who are absolutely obsessed with finding value. That's, that's me. Like I'm just out there just doing lots and lots of stuff and I'm throwing it away and it's all messy, but I'm going to find something really interesting. And then architects are people who are like looking at a messy system, like maybe something that I built that's completely vibe coded and trying to help shape it into something that's valuable and beautiful and extensible. And pairing those types of people together, I think is very, very powerful in AI.

• 10:39Speaker 00

  So I think this is interesting, Neil, because we have, um, we have our agent builders team right now, right? And then everyone has their own project. So most people are just working on their own, on a project. Maybe, maybe there's someone else paired with them. But we have one team where there's four or five people on it. That team is the slowest one. Because there's so much drag that comes from coordination and so, so has so much like, you know, if you have five ideas, I have five ideas, someone else has five ideas and then Noah has five ideas too. That's 20 ideas and everyone wants to get their ideas forward, right? So I like, I like this whole idea of a pirate and an architect because I'm probably more of a pirate where I just like throwing spaghetti against the wall. And then you do need an architect that can help you shake this stuff into like a, like clay into like a little like castle or something like that.

• 11:21Speaker 00

  But I do, I have found firsthand experience that when you, when you have, start to have more than two people building these things, it starts to get really complex. And there's politics start to build even at such a small size. So.

• 11:34Speaker 01

  Dude, I'm, I'm, I'm with you. Uh, I do like the smaller teams. I was talking to one of my team members the other day. They're like, you used to run Uber Sess back in the day. How'd you do it? I was like, with very few people. Fewer people means faster deployment. I do think in product and engineering and design, a lot of that stuff is definitely true. I do believe, uh, when you start getting into complex situations like finance and banking, small teams don't work out. Like Bank of America found out that through Claude, that there's tons of bugs. So they hired a thousand contractors to fix all the security bugs. You need a big team and you better crank that out really fast and fix all those bugs, especially because it's related to finance.

• 12:18Speaker 01

  But on the flip side, for some business cases, you know, when you're doing, let's say a merger and acquisition and you're trying to buy a company. You know, you, you can't buy a company with a two-person team. And I know the example there, they were not saying for M and A. But you'll need a finance person, you need a legal person, you need a person who actually knows the business really well. Someone who understands maybe account management, if it's in marketing, someone who understands, you know, just looking at, um, their delivery and seeing if they actually have a really good product or service, just churn rate, right? That gives them some data on that as well. Someone in sales to analyze their sales process and if they do a good job. Cause then you can figure out where to fix a lot of this stuff, but that usually requires more than a two-person team.

• 13:03Speaker 01

  But I know in that video, they're mainly talking about, you know, building products.

• 13:09Speaker 00

  Yeah, I, I think it depends, right? Like earlier, we're just talking about Meta having 200 people on that super AI team. By the way, they have 70,000 people. 200 divided by 70,000 is point 002857. I have my calculator.

• 13:21Speaker 01

  They have how many people on the, the team?

• 13:24Speaker 00

  200 people on the AI team, 200 people out of 70,000 employees total at Meta, right? And then even the way Mark Zuckerberg was talking about, it's like, yeah, it's like this, this elite team and they just want to move quickly. And to your point, like 200 of 70,000 is, is really not that much, but that's what it takes to move lightning fast, right? And he wants that team to move lightning fast. Um, so there's that. But then I wanted to bring you up another thing over here. Cause we're talking about private equity. Okay. So bending spoons, would you say bending spoons is kind of more like a private equity type model?

• 13:54Speaker 01

  It is purely a private equity type model, hence Berkshire Hathaway popped in money and then the stock popped like 40, 50% in one day.

• 14:02Speaker 00

  So check this out. So bending spoons. Okay. I don't know if you saw this, but this guy Federico who works at bending spoons are based in Milan. So, uh, you know, Italian guy, right? So today we're laying off a large part of the Airtable team. So remember they bought Airtable and I think they got a good, like a decent deal on it. So what bending spoon does is they bought Evernote, they bought Airtable, they, what else did they buy, Neil? Do you remember? Oh, okay. Vimeo, Evernote, Eventbrite.

• 14:25Speaker 01

  Vimeo, Evernote.

• 14:27Speaker 00

  AOL.

• 14:27Speaker 01

  They're on the right side.

• 14:28Speaker 00

  AOL. Yeah. We transfer. Yeah. Meetup. Yeah. So they buy these struggling tech companies from the past. They used to be iconic tech companies, right? Like Eventbrite, um, Meetup, AOL, Evernote, right? So he's like, look, today we're laying off a large part of the Airtable team. This is not a reflection of their work, but a reflection of our deep belief that small teams ship more and better. For Airtable, better is about to look like a new core team shipping your top request monthly, upgraded, did, you know, this and that. New performance at infra teams. Okay. To everyone leaving, thank you. If you're hiring, these are excellent people and worth the call. So before you react, Neil, let me tell you why this is such a tone deaf, um, you know, post. Because instead of like, I even posted here, I was like, I was like, dude, where, where are all these people that you're laying off?

• 15:12Speaker 00

  Like, give me a list of those people, right? Um, and, but it's like, it's just like, yeah, you know, these are excellent people and worth the call. It's like, how do I know who to call? Um, and this is like, why are you even announcing your new product features? When you're talking about a layoff, like those should be separate things.

• 15:27Speaker 01

  Totally agree. I'm like, this is a terrible message. I don't know who wrote this. Uh, I'm assuming they're at bending spoons.

• 15:33Speaker 00

  He leads product at bending spoons.

• 15:35Speaker 01

  I, I, I just looked up how many employees Airtable has. This is from a Google AI overview. It says 800 or so. I'm, I'm guessing they're laying off more than 50% is my guess. I don't have any stats or data, but when they say a large part. Bending spoons model is you gut, you increase profit. This is what private equity does. And this is why people say private equity is not the place where, this is where companies go and their innovation dies. And I, I really do agree with that, you know? And people always talk to me about innovating and we have a lot of people on our team who try to innovate. And my co-founder and I are like, so if you're telling me this is going to be a, a new thing, is anyone doing that?

• 16:17Speaker 01

  And usually because of AI, people move so fast these days, they're like, yeah, there's these other companies that are doing it. They're really tiny. And my co-founder and I usually just shoot an email and it's like, let's just see if one of these companies will sell to us. It'll be easier.

• 16:31Speaker 00

  Yep. By the way, Neil.

• 16:33Speaker 01

  That is not where you go to innovate.

• 16:35Speaker 00

  So let's call something out real quick. Okay. Evernote back in the day, right? So Evernote used to be like the number one note taking company. Okay. So Evernote's peak headcount was roughly 433 employees. Guess how many people are running Evernote, um, today?

• 16:48Speaker 01

  30.

• 16:49Speaker 00

  Exactly 30. Okay. So that's 7%. They cut, they cut 93% of staff. Okay. And they're doing, that is their playbook, right? Airtable, like by the way, the core Airtable team, they're all on a hyper agent now. So they spun that off from Airtable and they sold Airtable, right? So the core Airtable team, they're already in a hyper agent. They've already sailed off to somewhere else. So they're okay with, with, you know, cutting the rest. Um, so anyway, that's the model, cut 90, 95% or so, just have 20 to 30 people running it. And then the thing, the way they run bending spoons is they have, um, different product managers, different engineers, they're kind of working on different projects and they're just kind of moving around. So it's, it's, it's interesting for them, you know? So.

• 17:26Speaker 01

  Yeah. What's interesting as well is when you're publicly traded, most people can't cut too deep. Okay. But their model and the public markets know this is buy companies that aren't high flyer growth companies anymore. And just gut them and then you just take a cash flow pay, uh, model, right? Money is money. People are happy with just cash flow. If you're publicly traded and let's say you're focusing on something that's core, like a Microsoft, a Google, a Lassian, whatever it may be. If you announce that you're cutting 95% or 90 or 80%, the market will be like, something's wrong and it can actually hurt your stock price more.

• 18:04Speaker 01

  Bending spoons is in a different model. The market accepts it and they're like, oh yeah, this is great. Cut, cut the fat. This is what we expect.

• 18:11Speaker 00

  Dude, this is interesting. Neil's right. So Berkshire put, uh, 30, 330 million into it yesterday. So sparked a share rally. So by the way, year to date.

• 18:19Speaker 01

  Yesterday, they put it a while ago.

• 18:21Speaker 00

  Reuters said it's one, one, one day ago. So this is probably some wrong Google overview or whatever, but, um, market cap 32 billion. They're up 25% in the last six months or so. So not bad for what they are.

• 18:32Speaker 01

  Yeah.

• 18:34Speaker 00

  Are you sure, Neil? Here, let me show you this to you. Like either I'm wrong or.

• 18:36Speaker 01

  October 13th.

• 18:39Speaker 01

  It's October 13th.

• 18:40Speaker 00

  Three days ago, three days ago. Yeah. So this is just like later news. Bending spoons skyrocket 41% as Berkshire Hathaway makes 330 million. Okay. I see. Oh, and this is from their CEO, Abel, Greg Abel, right? So.

• 18:52Speaker 01

  Yeah. Yeah. The reason I know the dates is a lot of times when I see this, I'm like, man, you know, I, I, I, no one knew that they were going to do it or also it'd be insider trading. I then go and look at the options chain and I'm like, oh, if I put in money at this price, how much would I have made? I was just curious, right? So it was pretty good.

• 19:10Speaker 00

  Anyway. All right, guys. So that is it for today. Um, we hope you have a great day and we will see you tomorrow.