AI model costs are pushing startups towards cheaper open weigh

Harvey’s gross margin fell from about 50% at the start of this year to minus 50% by June as customer usage of its AI agents spiked, and turned positive again only after it released a model of its own built on Moonshot’s Kimi K3. Abridge, Decagon, Ramp and Rogo are making similar moves, and Sequoia Capital and General Catalyst are funding the shift.

Harvey’s gross margin fell from about 50% at the start of this year to minus 50% by June, Bloomberg reported, citing a person familiar with the matter. The legal startup is valued at $15.6B. Customer usage had spiked after a March update to its AI agents.

The cost was the models it rented.

Harvey has seen a twentyfold rise in token usage this year, according to the company. Both OpenAI and Anthropic now charge enterprises for model usage on top of base subscription fees. Its founders...

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