For the last 2 years, startup wisdom has been that models will continue to get cheaper and better. Claude first, and now Gemini has shown that it's not the case.

We priced an enterprise contract using Flash 1.5 pricing last summer, and today that contract would be unit economic negative if we used Flash 3. Flash 2.5 and now Flash 3.1 Lite barely breaks even.

I predict open-source models and fine-tuning are going to make a real comeback this year for economic reasons.