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BG2 · 3 min instead of 1 h 21 m · Jun 11, 2026
Frontier labs capture the revenue, but open source may carry most tokens
Gavin Baker
Atreides Management
Brad GerstnerHost · Founder & CEO, Altimeter Capital
Started Altimeter with under $3M in 2008; an early backer of Snowflake.
About this segment
Baker argues that most economic value accrues to frontier models while most tokens may run on open source. Harvey's routing setup is the example, and the group links it to the earlier debate that frontier revenue would be competed away.
From “The SpaceX IPO, Fable 5, AI Capex Update & Market Check w/ Gavin Baker, Andrew Fox & Clark Tang”, Jun 11, 2026. Watch the full episode
“Frontier might be 90% of the economic value. Open source might be 80% of tokens.”
Takeaways
- Frontier may hold 90% of economic value while open source carries 80% of tokens
- Harvey fine-tuned an open model with a router and beat Opus at lower cost
- High-value work like coding stays on frontier; back-office work gets routed to cheap models
In this episode
Full episode- 24:49Orbital compute could cut a gigawatt's cost from $60B to $30B4:19
51:01Frontier labs capture the revenue, but open source may carry most tokens2:43
- 1:04:07Why $1.5T of AI CapEx can still pencil out against $300B of revenue3:07Up next
Transcript
Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.
- 51:04
The majority of economic value may continue to accrue to the frontier. And man, has it ever accrued to the frontier thus far? and for sure the first six months this year, but the majority of tokens consumed in the world may be open source. And they are, today. Yes, and I think that this current state is likely to persist. Harvey had a great blog post that they put out on X and they used, and it's just amazing how everything gets out of date like in five days, but they use their own proprietary legal data to do reinforcement learning and supervise fine tuning with fireworks on an open source model and then they used a router and a router being something that picks which model you send which query to and which model you use to check which model and they got better outcomes than opus for either 4.7 or 4.8 at a lower cost yes and i think that
- 51:58
is the future and the reality What the reality is, they were still consuming a lot of Opus, but a majority of the tokens they were processing probably were in their own open source or own model. We hear the same thing. We did an enterprise survey that we'll post of 300 companies. Which ones were optimizing? So these are folks who are kind of looking at model routing and saying, we're going to send certain tokens over here.
- 52:22
Which ones are thinking about optimizing? Which ones aren't optimizing yet? And then what is their expected use of frontier model tokens? right? And they're all expecting to consume a lot more, even though they're already in the process of optimizing. Think of it in the context of JP Morgan. If they're doing some back of the house stuff, right, on customer service or whatever, they may very well use an open source model. Now, I think they're loathe to use Chinese open source models. So they're waiting on kind of US open source models to, you know, be able to really deliver the bang that they need. But my hunch is for these enterprises, a lot of that back of the house stuff will get rooted there. That will probably be a majority of the tokens, but I think the really high value stuff, you know, coding as
- 53:02
an example, they don't want to write second tier code. I think the vast majority of that will continue to be on the frontier. You don't need Albert Einstein to book you a trip. You don't need Albert Einstein to do KYC. But this is the debate we had literally at this table two years ago. However, if you just look at the revenue curves, right, what folks concluded when they said that. They said, therefore, the frontier models will not accrue most of the revenue. And what we're seeing right now, it's 90% of the revenue. That has been decisively wrong. Probably more than 90%, and it may continue to be decisively wrong. Frontier might be 90% of the economic value. Open source might be 80% of tokens. Something that I think is very important