Run the Numbers
00:10:34 · CJ Gustafson, Ali Hussain
[00:10:34] S0: Something I've seen in 2026 is the proliferation of this mystical creature called a credit, but I've also realized that a credit is not a credit is not a credit, depending on what you're talking about. What are you seeing? [00:10:46] S1: I think that's right. I think I get on calls all the time, and I have to clarify three times over, similar to what you just said, on what a credit is. Is it happening? Absolutely. Is it my favorite part of how this is all happening? No. Just mostly because it's creating [00:11:02] S0: And how did we get here with credits? Because my layman's term view of the world with this is we were just struggling for a clean proxy of value because there was so much stuff going on with AI, with all the other services bundled in, used the word bundling earlier, that was happening beneath the surface. [00:11:21] S1: Honestly, I think it's probably one of the early companies started to be most prolific in getting this pricing across the board, and some creative person in finance or rev ops just started to push the credit model. Similar to you, I can't, from like a common sense standpoint, know why this got so commonplace in the market. [00:11:39] S0: I think like there's some person who worked at Snowflake in like 2011 who came up with this and doesn't get credit for it. No pun intended. So much of this architecture...
00:11:39 · CJ Gustafson, Ali Hussain
[00:11:39] S0: I think like there's some person who worked at Snowflake in like 2011 who came up with this and doesn't get credit for it. No pun intended. So much of this architecture... [00:11:50] S1: The good news is it's created a level of familiarity, and I think this is why it's passed on so quickly is, like, the foundation of how flake and AWS and Databricks and all sold five to ten years ago has now laid the foundation for how Inference AI moves. It's just just made this the mass standard, and it's also created this challenge for not companies with the balance sheet of Amazon or Snowflake that could put tens of millions of dollars of building tooling and teams against this, to a mass market problem where a $30,000,000 technology company selling credits to RV parks now has to go through this. [00:12:30] S0: There's some dude at a Kearny Street dive bar right now screaming to his friends, I invented the credit. And they're like, sure you did, John. Get out of here. [00:12:38] S1: You ever find him or her, you and I will let them on this podcast. [00:12:42] S0: Ali, do overages create the wrong customer incentives?
00:12:42 · CJ Gustafson, Ali Hussain
[00:12:42] S0: Ali, do overages create the wrong customer incentives? [00:12:46] S1: You'd be surprised right now, CJ, how few people charge for overages. Everyone puts in a contract, but I've been amazed by how few folks actually act on it. If we're looking at it through that lens, I do think it creates the wrong incentive, because there's no penalty to hitting the overage in a lot of organizations today. And the argument I often hear is it creates an awesome opportunity at the renewal, and we're fine with it. And I think in a bull or in a frothy market, that's fine, but it certainly has a huge impact on the gross margins. Overages are fine, but you have to have very prescriptive rules or guidance or an agreement on how to handle it. And you have to then have tooling that can instantly bill an invoice for it, or at least provide clarity on if it leads to another tier or an early renewal, or some other way to ensure that the commercial incentives are aligned. Aligned. [00:13:43] S0: Maybe talk about just tracking overages because my theory is that most overages don't get charged just because there's not the infrastructure in place to to even meter it and catch it, and it ends up in... Resulting in revenue leakage. Folks
00:13:43 · CJ Gustafson, Ali Hussain
[00:13:43] S0: Maybe talk about just tracking overages because my theory is that most overages don't get charged just because there's not the infrastructure in place to to even meter it and catch it, and it ends up in... Resulting in revenue leakage. Folks [00:13:56] S1: have it tracked somewhere, but not in a digestible way. Back to what you and I have talked about in another episode, like, to me, this is a finance and accounting, not a rev ops or sales or product problem. And I think this transition of making that very clear has created a lot of poor process and revenue leakage. Now the green light is, I think, people are now realizing this is a new type of infrastructure you need around your finance and accounting stack. And so I do think we're drastically catching up. But I've had the privilege to work with a lot of pretty well known companies that are probably bleeding tens of millions of dollars on this. And these aren't multibillion dollar These are companies at a 100 or $200,000,000 run rate. They have 10% of loss, just lack of finance and accounting, yet fully getting a grasp of this overage problem. [00:14:49] S0: I wanna talk about agentic commerce for a second here. It's it's been top of mind for me because I heard Matthew Prince, the CEO of Cloudflare speak at Primaries Conference in New York recently. He hit us with this stat that web traffic now by agents has surpassed web traffic by humans, which absolutely freaked me out. If we're gonna have agentic commerce going on, is that gonna push companies towards real time usage pricing?
00:14:49 · CJ Gustafson, Ali Hussain
[00:14:49] S0: I wanna talk about agentic commerce for a second here. It's it's been top of mind for me because I heard Matthew Prince, the CEO of Cloudflare speak at Primaries Conference in New York recently. He hit us with this stat that web traffic now by agents has surpassed web traffic by humans, which absolutely freaked me out. If we're gonna have agentic commerce going on, is that gonna push companies towards real time usage pricing? [00:15:14] S1: I think so. I mean, I think it's gonna at least create a lot more efficiency in how pricing happens and how deals are negotiated. I think a lot of people assume agentic commerce just has to do with the pricing alone. It has a lot to do with how things are marked up, how terms are negotiated. Deals move from agreement to closed won or closed lost. And so I think the speed and velocity is about to pick up. But I also think there's a human control in it that is also just inevitable for some time. And so even if the agents want to move fast, there's open question of how fast can they align with the humans. And so my bear case is is that the agents may get quite good, but the same things that bring down orgs like bureaucracy and cross functional coordination start to feed themselves into how agentic commerce work. And so that's where I think we're gonna see an early accelerant, maybe in a more consumer environment. I think it's gonna create new types of opportunities and challenges, but the speed of which this all moves, I think, is gonna take a little bit more time.
00:15:14 · Ali Hussain, CJ Gustafson
[00:15:14] S1: I think so. I mean, I think it's gonna at least create a lot more efficiency in how pricing happens and how deals are negotiated. I think a lot of people assume agentic commerce just has to do with the pricing alone. It has a lot to do with how things are marked up, how terms are negotiated. Deals move from agreement to closed won or closed lost. And so I think the speed and velocity is about to pick up. But I also think there's a human control in it that is also just inevitable for some time. And so even if the agents want to move fast, there's open question of how fast can they align with the humans. And so my bear case is is that the agents may get quite good, but the same things that bring down orgs like bureaucracy and cross functional coordination start to feed themselves into how agentic commerce work. And so that's where I think we're gonna see an early accelerant, maybe in a more consumer environment. I think it's gonna create new types of opportunities and challenges, but the speed of which this all moves, I think, is gonna take a little bit more time. [00:16:25] S0: Yeah. On the b to b angle, I would argue that purchasing power of these larger companies could pull everything back towards contracts and volume discounts. And dude, just send me a net 45 invoice, and we'll settle up from there.