The Tokenpocalypse Is Here

0:00Emanuel:The most annoying thing in the world is when software is like cute. Microsoft made this change years ago where like if you have a crash, you're like, uh-oh, something bad happened. It's like, shut the f*** up. What's the error code? What's the error code? Because I'm going to have to like plug it into Google.

0:21Hello, and welcome to the 404 Media Podcast, where we bring you unparalleled access to hidden worlds, both online and IRL. 404 Media is a journalist founded company and needs your support. To subscribe, go to 404media.co. As well as bonus content every single week, subscribers also get access to additional episodes where we respond to the best comments. Gain access to that content at 404media.co. Also, remember to subscribe to our YouTube channel where you can watch all of our episodes. Subscribe at youtube.com slash at 404media.co. I'm your host Joseph and with me are two of the 404 Media co-founders.

1:02The first being Sam Cole.

1:04Emanuel:Hello. And the other being Emmanuel Mayberg. Hello. So Jason's not here. He's probably on a private jet somewhere. If you have read the website at the time of recording, you'll know what that's referring to. I won't spoil it. Go read that really, really good article if you want and you should. But otherwise, I'm sure you all will speak about it. next week on the pod. I don't think I'm here next week. But Jason will fill us in there for sure. Sam, do you want to take us through this one? Yeah. So this first one, we have a set of stories that kind of go together. So the first one is by Joe. The Tokenocalypse.

1:48Emanuel:Tokenpocalypse? Dude, I know. Tokenopocalypse? I even considered... Well, this was the hardest bit. It's the Tokenpocalypse. Tokenpocalypse. Tokenpocalypse is here. Companies are scrambling to stop spending so much on AI. I feel like we have coined a few token-related words. Did we coin token maxing? Or was that an existing term? Emmanuel, what do you think? I believe the brain geniuses at the AI companies actually came up with that. Okay, fine. All right. So we'll give them that. On this one, I thought I coined it. I thought I coined tokenpocalypse. And then I think I Googled it after the fact.

2:29I found TechCrunch should use it in a headline a few days before. Fuck. It's in the air. Yeah.

2:39Emanuel:So we're introducing some new words here. We're tokenmaxing. We're tokenpocalypsing. So do you want to just define what we're talking about when we're talking about the tokenpocalypse? Yeah. So in my definition, after coining this term days after TechCrunch and presumably some other people, the reason I kind of use this term is that something has really, really shifted in the AI industry where we've had companies rushing to adopt AI in all sorts of forms. Maybe that's in coding. Maybe that's agentic AI in their businesses as well and whatever. And companies have sort of been doing this, maybe not regardless of the cost, but it's been presented to them as like cheap, right?

3:28Oh, well, this is cheaper than people. You do your subscription or whatever it is to an AI company every month, every year or whatever. Maybe if you're an enterprise, you get a big deal. But there's this shift happening where now there's much more emphasis on the cost of individual tokens, which is basically user usage metrics, right? So now you'll have companies like GitHub being like, we're actually going to charge you per token. And all of a sudden, companies are realizing, oh, AI actually costs us a lot of money. And we're burning through these tokens, which we'll talk about in a bit. So that's why I use that term.

4:08And I think that's why other people are using it as well. There's this big paradigm shift where, oh, this isn't actually just automatically saving us money. We now have to figure out, shit, how do we stop spending so much money on these tokens, basically?

4:24Emanuel:Yeah, which is... I mean, it's rich because of the last few months. Jason wrote a story that... And we'll get into just the ways that this has been working in the last few months. But Jason wrote a story a couple months ago about token maxing and how that was the thing in March and April to be bragging about how much token spend you have or these leaderboards that we can get into in a bit. But before we do that, this story that you wrote involves audio that you obtained from a consulting company called Accenture. And I think if you're in tech, you know what Accenture is. But I even when I was editing the story, I was like, what are we even...

5:04Emanuel:Are we talking about Accenture's token spend or Accenture is consulting on token spend? So can you just walk us through like, what... How does Accenture come into play in this particular story? What's their place in the token mania, I guess? Yeah, I mean, who knows what Accenture does? Yeah, it's one of those. I think that's an open question. Yeah, obviously, they're a consulting giant. And they've done stuff like work on content moderation for Facebook, right? Like a significant amount was outsourced to Accenture back in the day. And they will fulfill this role where they come into companies and be like, Hey, we can help you optimize this task or we can cut off expenditure on this resource or whatever it is.

5:55And in this particular case, they are talking about two things. They are talking about token spend inside Accenture itself, but also with their clients. They clearly have visibility into what their clients are doing and what their clients are saying. In this audio, it doesn't mention any specific clients. We can't play you the original audio for source protection reasons. But they do say like, well, we're seeing this sort of thing inside and outside with our clients as well. But Accenture... I mean, we'll talk more about this in a minute. but it's funny how they position themselves sort of as the problem in the first place and the cure where they've told companies, you need to get on AI, you need to do this as quickly as possible.

6:45And then it's like, oh, wait, all of these companies are spending a bunch of money on tokens and maybe we can help with that.

6:51Emanuel:Yeah, weird how that works. Weird how consultants keep getting away with it. So yeah, like you said, this is based on audio that you had obtained and it was the audio is from an internal meeting. and so obviously they're discussing things that they don't necessarily want the wider public to hear or are not ready to discuss in public but there's one part that's pretty key to the conversation and it's coming from Justice Kwok who is the agentic AI strategy lead at Accenture that's a hell of a title but in the audio Justice says we're seeing from some of the data internally at least it's actually not our engineers that are driving the token consumption.

7:35Emanuel:It's a lot of the non-engineers that are doing some of those behaviors that we're talking about in the meeting. So what are the behaviors? What are the non-engineers that Justice is talking about actually spending tokens on? Yeah, it's a funny piece of audio because it actually starts with a joke. And it's kind of hard to describe that in an article. It starts with very sarcastic comments. So Justice, who you just introduced, is preparing to present in this meeting. And then someone interrupts Stuart Henderson, who's a very senior person in Accenture. And he jokes that, oh, you have these slides, but I hope you didn't use AI to just convert a PDF into Markdown and all of that sort of thing.

8:20And then Stuart says, quote, I'm learning that's one of the big token chewers, turning PDFs into Markdown. is that right? Which obviously, as I said, is a joke, but then leads to a pretty serious question. And then that's when Justice replies with, yeah, that's actually the behavior that we've been seeing. So I found this fascinating for a few different reasons. The first, obviously, I love that term token chewing. I mean, that is a consultant-ass term if I've ever heard one. Maybe Emmanuel or Jason have heard it when they've looked into token maxing or whatever, but I never heard that before.

8:54So I liked that. But just the idea that it really undercuts that narrative that, oh, this explosive use of AI is all about supercharged 10x engineers or whatever, using AI to produce mountains of code, and then we can ship products faster or whatever. Here, it seems to be non-technical employees do non-technical tasks like converting a PDF into a PowerPoint. And it's kind of like the here-mitted meme that actually, it just isn't all that sophisticated. And to be clear, this isn't to say that AI is not being used in clawed code or codex or whatever to make a bunch of code. Obviously, it is as well.

9:40But we've entered this more mature stage of AI being in companies where the reality is setting in. It's like, oh, people are just using for a bunch of dumb fucking shit, basically. And hey, it might be a time saver. But converting PDF into a PowerPoint might save you 30 minutes, if not more, it depends how much of a perfectionist you are with your slides. But there's going to be a cost to that down the road that I think people are only just starting to realize. Yeah. And then, I mean, Justice goes on and says more broadly that they're really seeing what they call a rapid escalation in AI token spend.

10:21I think they say soaring token spend as well. Maybe stuff isn't dire, but it's to the point where obviously, Accenture sees an opportunity here and they're having internal meetings and then we're hearing about it as well.

10:35Emanuel:Yeah, it's just lazy. It's just the laziness of it all is wild. I mean, you can get AI to summarize your PDF for you, read it for you, now turn it into slides. It's like, what is your job actually? Especially for Accenture, who a lot of people made this joke in the comments, Like Essentia's whole thing, if you're being a bit mean to them or whatever, is making slides, basically. A bunch of consultants just make slides and now apparently they're not even doing that. Yeah, amazing. Incredible, incredibly lucrative career, I guess. So yeah, not to over-explain the joke of it all, but it's just so...

11:09Emanuel:We see this over and over. It's like the AI is kind of hollowing out our ability to do anything yourself. It's like, can we not make a grocery list for ourselves anymore? Can't turn... Can't read a PDF anymore. Can't read anything anymore. have to have it summarized, have to have it turn into slides. You slop those slides over to somebody else. Maybe they're using AI to read the slides, recording the meeting, summarizing for you later. I don't know. So yeah, it's trying to put some value into an already fake job, I guess. So this, like we hinted at earlier, is part of a much wider trend that we're seeing around AI.

11:47Emanuel:A couple months ago, we had token maxing, We had bragging about token use and spend. And now we're seeing companies scaling back. So just quickly, what are some of the companies that are actually talking about this outside of Accenture and talking about charging customers or scaling back employees using AI? I mean, the first big change, which I think I mentioned, was GitHub moving to a token model. And that happened, I think, at the start of June. and we're recording this at the end of June. And that's when we've seen, I think, a bunch of media coverage and also for us, like a bunch of leaks from various companies where, oh wow, that took no time at all to start impacting people where the change comes in June 1st.

12:38And then halfway through the month and then towards the end of the month, we have all of these leaks, including some of which will be in an article that we'll publish after this podcast is actually out. But sort of the biggest one, I think for me, is probably Uber, where they capped employees' use of AI tools like CloudCode and Cursor as well. That came after the Uber CTO said the company had blown through its entire AI budget in just a matter of months. Walmart as well, I think stopped people using tools recently. So a bunch of massive, massive companies are either trying to find a way to save money, and we'll touch on that in the next story, or they're just putting the brakes on it entirely.

13:31On the token maxing stuff, I think Emmanuel might be better at that. What do you think, Emmanuel, about how this sits in with that whole idea of everybody wants to use AI as much as possible?

13:45Emanuel:I think we'll probably get into this a bit more definitely in the story that we're about to publish. But when we talk about the story in the next segment, I think it's just... Employees are in a very contradictory... They're getting very mixed messages. On the one hand, it's like AI is going to change everything. You have to use it all the time. It's going to make you 100 times more efficient. And that is now overlapping with, but please don't bankrupt the company because we're spending way too much money on it. And I'm trying to think about if I've ever experienced myself such a corporate 180.

14:25Emanuel:And I'm guessing it may be. It's like if you imagine one of those pivots to video where they're like, we need everything to be video. It's video all the time. And then you wake up one morning and they're like, we don't have the money to shoot anything and get crews. But even that is more simple than this. They're just getting completely conflicting messages. I don't know how you're supposed to navigate that, to be honest. yeah that's a good analogy i think or it's the closest i can think of is you know we're we're shifting strategy this way oh wait we can't actually fund that strategy but we still expect you to like perform and do the work with these tools that you don't have which is just lovely um and just one last thing on this story because i think it is so good um a couple months ago the financial times reported that accenture started forcing people to use AI or risk missing out on promotions.

15:18Emanuel:So it's not just like, we really want you to use this. It's if you don't use it, you will not grow in this company. You will not ever get a better paycheck, get a better role. You will be stuck where you're at. Or I assume probably the implication is we're going to let you go because you don't fit in here anymore. And at the time, a spokesperson told CNBC, our strategy is to be the reinvention partner of choice for our clients and to be the is client-focused, AI-enabled, great place to work.

15:46Emanuel:And then later in the audio, Justice Kwok says, Accenture plans to formally launch a product called Token IQ, which I'm sure is like some kind of throttling mechanism for the token use for employees, but we don't know yet, right? Yeah. Yeah, because I mean, there's a bunch of other stuff in the audio that I didn't really get into because it does just like get probably a little bit too in the weeds and boring for listeners. But basically what they do go on to say is like, there's all of these different ways that we might be able to curb token spend. And that's like putting budgets in place, user controls and that sort of thing.

16:22And I don't think it's as serious as obviously like the content of like chat bots where we have this big problem where there aren't guardrails and fucking chat bots are telling people to kill themselves and all of that sort of thing. Obviously, it is not as bad as that. But there's an interesting parallel where chatbots didn't have the guardrails for that. And it did all sorts of horrible, potentially unexpected behavior. Here, AI tools have rolled out and there haven't been guardrails in place to stop companies spending millions of dollars or something on LLMs or burning through their tokens or whatever.

17:01So there's an interesting constant there where these tools are coming out and there might be a chatbot, it might be a coding tool, but you don't have these guardrails in place. And now Accenture can position itself after telling its clients to adopt AI as quickly as possible. We can help you deal with what Justice calls token economics. I think they're the start of the audio. They're introduced as token ops as well. This is a whole thing now where they're making sort of umbrella terms to talk about just this part of the AI industry. There are people now dedicated just to figuring out how do we not spend so much money on tokens and that sort of thing.

17:46Justice actually makes the point that the guardrails weren't there. That's just not me making this point. He's making that as well. And now we're in the position to be able to do that ourselves, which is incredibly convenient for a consulting giant, obviously.

18:03Emanuel:Interesting how it works. Okay, let's take a break and then we'll come back and talk about a very related story, but I don't know, a little bit even funnier, even more absurd. So we'll be back.

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