“Comment number two is: therefore, I can use a cheaper model, does not follow from comment number one. If you and I are competing startups … are you going to choose a dumber model to compete with me? In competitive equilibria, you wouldn't. You would always pay 10 times more for the smartest model.”

Invest Like the Best (Patrick O'Shaughnessy) · Money & Markets · November 2026

Context

The host pointed out that most coding tasks seem saturated, yet people still spend heavily on frontier tokens. Casado argues that competition pushes everyone to the smartest model, so frontier pricing holds even as needs flatten.

Listen to the episode → More from Martin Casado → More Money & Markets quotes →

Transcript

Invest Like the Best (Patrick O'Shaughnessy) Around 18:54 into the episode

Martin Casado

…intelligence, or the market starts slowing down for another reason? Nobody knows the answer to that. I think there's a very real world where the value comes crashing back down into open source. And we'll see a shift that we've never seen because software has always had a long tail of retention.

Patrick O'Shaughnessy

…And the typical answer is very, very high percentage. That's been the biggest market. And yet, it still seems like people are spending like crazy on Frontier tokens to do coding, which it seemed a little at odds. Like, if I can do it with a six-month-old model or something that's vastly cheaper.

Martin Casado

…enough tokens. I've automated 95% already, so I can't automate anyone. And I think that we're getting pretty close to that. Comment number two is: therefore, I can use a cheaper model, does not follow from comment number one. So, if you and I are competing startups, we've got Martin Startup, we've got Patrick Starpace. We've got competing startups. And because we're in competitive equilibria, are you going to choose a dumber model to compete with me? In competitive equilibria, you wouldn't. You would always pay 10 times more for the smartest model. Yeah, always, always, always. And so, there's this very open question of: will you saturate tasks so that you don't need a smarter model? And I think it's very hard to do that in a Darwinistic economic equilibria when you're actually competing. And some of them may, but I think at the end of the day, it's about can you get software out faster? Can you make it better? And can you compete in a…

Patrick O'Shaughnessy

Say more about your personal experience with that, what you're doing with it, what you're learning from that experience.

Martin Casado

My new Grock is so funny. I mean, the home

Patrick O'Shaughnessy

automation thing going on. Oh,

Speaker names come from our own diarization. The position is estimated from where the line sits in the episode.

More from Invest Like the Best (Patrick O'Shaughnessy)

“I can't really think of many times in history where an easy strategy turned out to also be a good strategy long term. So I think that's the interesting thing about this market: if everybody believes that's an easy way to make money, it's probably not a great way to make money.” — Ramtin Naimi, Invest Like the Best (Patrick O'Shaughnessy)

“I think there was going to be like two or three great Neolabs. And now there's probably 80 or 90 Neolabs that have raised somewhere between $1 to $5 billion. … We met a Neolab a couple of weeks ago that was raising $1 billion, I think this was their second round of financing, and they were going to spend the entire billion next year on compute for one training run. And they said they would probably need to raise another $5 billion throughout next year.” — Ramtin Naimi, Invest Like the Best (Patrick O'Shaughnessy)