--- title: AI model costs are pushing startups towards cheaper open... description: Legal AI startup Harvey saw gross margins collapse from about 50% to minus 50% by June as token usage rose twentyfold under OpenAI and Anthropic's usage-based... canonical: https://daily.dev/posts/ai-model-costs-are-pushing-startups-towards-cheaper-open-weigh-fclgcbzsi twitter:card: summary_large_image twitter:site: @dailydotdev og:type: website og:site_name: daily.dev og:title: AI model costs are pushing startups towards cheaper open weigh | daily.dev og:description: Legal AI startup Harvey saw gross margins collapse from about 50% to minus 50% by June as token usage rose twentyfold under OpenAI and Anthropic's usage-based... og:url: https://daily.dev/posts/ai-model-costs-are-pushing-startups-towards-cheaper-open-weigh-fclgcbzsi og:image: https://api.daily.dev/og/posts/FcLgcbzsI.png og:image:alt: AI model costs are pushing startups towards cheaper open weigh og:image:width: 1200 og:image:height: 630 og:locale: en --- > ## Documentation Index > Fetch the complete documentation index at: https://daily.dev/llms.txt > Use this file to discover all available pages before exploring further. # AI model costs are pushing startups towards cheaper open weigh **[The Next Web](https://daily.dev/sources/tnw)** · 3 min read · 0 upvotes · 0 comments ## Summary Legal AI startup Harvey saw gross margins collapse from about 50% to minus 50% by June as token usage rose twentyfold under OpenAI and Anthropic's usage-based enterprise pricing. Margins turned positive again after Harvey launched its own in-house model in August, post-trained on Moonshot's open-weight Kimi K3. Other startups including Abridge, Decagon, and Ramp are making similar moves toward building on cheaper open-weight models, backed by investors like Sequoia Capital and General Catalyst. Anthropic has flagged the trend internally while noting Harvey still needs Opus for hard tasks, and Mistral's CEO has argued closed-model dependence gives providers leverage, citing OpenAI ending its Cursor contract after SpaceX's acquisition. Not everyone agrees the shift matters: a Menlo Ventures partner called the emphasis on owning a model largely "cosplay." ## Full article daily.dev links to this article rather than hosting it. Read it at the original source: ## Questions this post answers ### Why did Harvey's gross margin turn negative before improving again? Harvey's gross margin dropped from about 50% at the start of the year to minus 50% by June because token usage rose twentyfold while OpenAI and Anthropic charged enterprise usage fees on top of base subscriptions. Margins turned positive again after Harvey launched its own in-house model in August, post-trained on Moonshot's Kimi K3. _Teams weighing rented frontier models versus training their own can track these cost shifts on daily.dev._ ### What model did Harvey build its own in-house AI on? Harvey post-trained its own model on Kimi K3, an open-weight model from the Chinese lab Moonshot, releasing it in August. The move followed a twentyfold rise in token usage and helped restore gross margins that had gone negative under OpenAI and Anthropic usage-based pricing. _daily.dev helps developers evaluating open-weight base models like Kimi K3 stay current on real deployments._ ### Why did OpenAI end its contract with Cursor? OpenAI moved to end its Cursor contract after SpaceX acquired the company, citing past terms of service breaches by Musk-affiliated businesses. European buyers have switching rights under the Data Act, but those rights cover a customer leaving a supplier, not a supplier terminating a customer relationship. _Developers relying on a single AI vendor can follow contract and access risk stories like this on daily.dev._ --- Tags: [#openai](https://daily.dev/tags/openai), [#anthropic](https://daily.dev/tags/anthropic), [#kimi](https://daily.dev/tags/kimi) [View this post on daily.dev](https://daily.dev/posts/ai-model-costs-are-pushing-startups-towards-cheaper-open-weigh-fclgcbzsi) ```json {"@context":"https://schema.org","@graph":[{"@type":"Organization","@id":"https://daily.dev/#organization","name":"daily.dev","url":"https://daily.dev","logo":{"@type":"ImageObject","url":"https://daily.dev/apple-touch-icon.png","width":180,"height":180},"sameAs":["https://twitter.com/dailydotdev","https://github.com/dailydotdev","https://www.linkedin.com/company/daily-dev-ltd"]},{"@type":"WebSite","@id":"https://daily.dev/#website","url":"https://daily.dev","name":"daily.dev","publisher":{"@id":"https://daily.dev/#organization"},"potentialAction":{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https://daily.dev/search?q={search_term_string}"},"query-input":"required name=search_term_string"}}]} {"@context":"https://schema.org","@type":"TechArticle","headline":"AI model costs are pushing startups towards cheaper open weigh","url":"https://daily.dev/posts/ai-model-costs-are-pushing-startups-towards-cheaper-open-weigh-fclgcbzsi","mainEntityOfPage":{"@type":"WebPage","@id":"https://daily.dev/posts/ai-model-costs-are-pushing-startups-towards-cheaper-open-weigh-fclgcbzsi"},"datePublished":"2026-09-21T17:40:00.505Z","dateModified":"2026-09-21T18:13:53.858Z","description":"Legal AI startup Harvey saw gross margins collapse from about 50% to minus 50% by June as token usage rose twentyfold under OpenAI and Anthropic's usage-based...","image":"https://media.daily.dev/image/upload/f_auto,q_auto/v1/posts/e3e096a7839373dd91722db6ea81d7f2?_a=AQAEuop","thumbnailUrl":"https://media.daily.dev/image/upload/f_auto,q_auto/v1/posts/e3e096a7839373dd91722db6ea81d7f2?_a=AQAEuop","isAccessibleForFree":true,"articleSection":"The Next Web","inLanguage":"en","publisher":{"@type":"Organization","name":"daily.dev","url":"https://daily.dev","logo":{"@type":"ImageObject","url":"https://daily.dev/apple-touch-icon.png","width":180,"height":180}},"author":{"@type":"Organization","name":"The Next Web","logo":"https://media.daily.dev/image/upload/t_logo,f_auto/v1/logos/tnw","url":"https://daily.dev/sources/tnw"},"commentCount":0,"discussionUrl":"https://daily.dev/posts/ai-model-costs-are-pushing-startups-towards-cheaper-open-weigh-fclgcbzsi","interactionStatistic":[{"@type":"InteractionCounter","interactionType":{"@type":"LikeAction"},"userInteractionCount":0},{"@type":"InteractionCounter","interactionType":{"@type":"CommentAction"},"userInteractionCount":0}],"keywords":"openai,anthropic,kimi","timeRequired":"PT3M"} {"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https://daily.dev"},{"@type":"ListItem","position":2,"name":"The Next Web","item":"https://daily.dev/sources/tnw"},{"@type":"ListItem","position":3,"name":"AI model costs are pushing startups towards cheaper open weigh"}]} {"@context":"https://schema.org","@type":"FAQPage","@id":"https://daily.dev/posts/ai-model-costs-are-pushing-startups-towards-cheaper-open-weigh-fclgcbzsi#faq","mainEntity":[{"@type":"Question","name":"Why did Harvey's gross margin turn negative before improving again?","acceptedAnswer":{"@type":"Answer","text":"Harvey's gross margin dropped from about 50% at the start of the year to minus 50% by June because token usage rose twentyfold while OpenAI and Anthropic charged enterprise usage fees on top of base subscriptions. Margins turned positive again after Harvey launched its own in-house model in August, post-trained on Moonshot's Kimi K3. Teams weighing rented frontier models versus training their own can track these cost shifts on daily.dev."}},{"@type":"Question","name":"What model did Harvey build its own in-house AI on?","acceptedAnswer":{"@type":"Answer","text":"Harvey post-trained its own model on Kimi K3, an open-weight model from the Chinese lab Moonshot, releasing it in August. The move followed a twentyfold rise in token usage and helped restore gross margins that had gone negative under OpenAI and Anthropic usage-based pricing. daily.dev helps developers evaluating open-weight base models like Kimi K3 stay current on real deployments."}},{"@type":"Question","name":"Why did OpenAI end its contract with Cursor?","acceptedAnswer":{"@type":"Answer","text":"OpenAI moved to end its Cursor contract after SpaceX acquired the company, citing past terms of service breaches by Musk-affiliated businesses. European buyers have switching rights under the Data Act, but those rights cover a customer leaving a supplier, not a supplier terminating a customer relationship. Developers relying on a single AI vendor can follow contract and access risk stories like this on daily.dev."}}]} ```