1 min lesson
Pillar 3 - R&D efficiency & strategic partnership
Use two rows in "Pillar 3 - R&D efficiency & strategic partnership" to state the practical decision rules.
Step 1 of 2
The third pillar is where you stop being a cost reporter and become a thought partner. The job is to help senior leaders decide which experiments and investments are worth their GPU-hours - and to keep R&D spend from being confused with the cost of serving the product.
The first discipline is not conflating two very different kinds of spend. Production inference is COGS: the cost of delivering the product you already sell. R&D is investment: training runs and experiments that may or may not pay off. They are governed, budgeted and judged on different terms.
- What it is
- Production inference (COGS)
- Compute to serve live users - tab, agent, completions
- R&D spend (investment)
- Training runs, evals, experiments, research
- How it scales
- Production inference (COGS)
- With DAU and usage - more users, more cost
- R&D spend (investment)
- With ambition and bets, not directly with users
- How it's judged
- Production inference (COGS)
- Gross margin and cost per active user
- R&D spend (investment)
- Expected value vs. cost and opportunity cost
- The mistake
- Production inference (COGS)
- Letting it silently erode margin as you grow
- R&D spend (investment)
- Treating speculative bets as if they were fixed overhead
| Production inference (COGS) | R&D spend (investment) | |
|---|---|---|
| What it is | Compute to serve live users - tab, agent, completions | Training runs, evals, experiments, research |
| How it scales | With DAU and usage - more users, more cost | With ambition and bets, not directly with users |
| How it's judged | Gross margin and cost per active user | Expected value vs. cost and opportunity cost |
| The mistake | Letting it silently erode margin as you grow | Treating speculative bets as if they were fixed overhead |
Conflating these two is one of the fastest ways to give a leader a misleading margin picture.