Dr. Jon KrohnWhy Your AI Agents Burn Billions of Tokens (with Tyler Cox and Ish Shah)
synopsis
Ish Shah and Tyler Cox, distinguished engineers in the office of the CTO for Dell Technologies' client group (Dell is among the episode's listed sponsors), argue that agentic AI makes token bills grow faster than token prices fall. For heavy users, moving agent workloads from per-token cloud APIs to owned hardware can save most of the cost and pay back within months. Their figures come from Dell's own lab and from Signal 65, a research firm Dell works with. Shah stresses throughout that the exact savings "depend" on the workload.
Agents and adoption. Shah defines an agent as an LLM given abilities that let it act beyond the chat tab. Citing Signal 65, he says over 90% of enterprises have deployed agents in some form. He describes IT leaders squeezed between executives reading about AI and junior staff demanding tools, while still expected to keep 99.999% uptime on shrinking budgets. His own workflow runs several agents side by side in a terminal multiplexer; the waste comes when one hangs for hours waiting on a single approval.
Choosing models. Shah currently reaches for Grok for speed and for Codex for thoroughness, which he likens to a Rottweiler that burns through his token allowance. He credits Claude and Claude Code with driving enterprise adoption over the past 12–18 months, and names Fable 5.1 as Anthropic's latest model. He warns that labs now train to beat benchmarks, and the host recommends internal evals for repeated tasks. Cox describes a Dell framework, started 18 months ago, that runs new open-weight models across 10 platforms and places them on Pareto curves of speed against intelligence.
Why tokens explode. Cox calls tokens the atomic unit of compute; Shah says that at about $50 per million output tokens they are "the gas". Shah's weekend project, a Pokémon-style game starring his dogs, used about two billion tokens because agents spawn sub-agents that enlarge the work. Citing METR's autonomy chart, he invokes Jevons paradox: as capability rises, usage outruns any fall in token price.
The economics of owning hardware. Cox's lab pushes hundreds of millions of tokens a day through local systems and avoids about $160,000 a year in cloud spend. Its main machine is a GB300 workstation costing over $100,000, which Shah says broke even in three months. Shah notes a middle option, on-prem servers, before deskside machines. The Signal 65 work they cite reports savings up to 87%, 93% for a T2 tower supporting about 20 coding agents, payback in as little as two months, and over a million dollars of equivalent tokens over a system's life. The host's figures run from 28–71% for low-complexity knowledge work to around 90% for code generation. Shah argues that the jagged frontier makes this viable: open-weight models such as Kimi, Qwen, GLM and Inkling are good enough for much of the work.
The offering. The guests describe Dell's deskside agentic AI as three hardware tiers bundled with Nvidia's NemoClaw stack, whose OpenShell layer sandboxes agents with fine-grained permissions, along with security and management tooling and services to help customers get started. The use cases they cite are capping developer token bills, healthcare research, university teaching labs, and keeping sensitive data local. Shah says setup is no longer hard, though he notes that may not have been true 6 months ago.
- Sub-agents and Jevons paradox make token use explode. Shah, a Dell distinguished engineer, says he burned about two billion tokens in a weekend building a Pokémon-style game for his wife, because agents spawn sub-agents that work faster but enlarge the pie of work; at frontier prices of $50 per million output tokens, that is the cost of agentic work. Even as tokens get cheaper, he argues, rising capability keeps raising usage. The host adds that METR's autonomy chart has gone off the scale since Mythos-class models.
- Pick models by trade-off and internal evals, not leaderboards. Shah says he currently uses Grok for speed and Codex for thoroughness, and that Claude and Claude Code have driven enterprise adoption over the past 12–18 months; he warns labs now "benchmax". Cox describes Dell's internal model evaluation framework, which places new open-weight models (Hugging Face recently passed 3 million public models) on speed-versus-intelligence Pareto curves across 10 platforms for a customer's use case.
- Running agents on owned hardware can cut costs sharply. Cox says his lab's GB300 workstation (over $100,000 on dell.com) avoids about $160,000 a year in cloud tokens for five to 10 people, and Shah says it broke even in three months. Dell-commissioned Signal 65 studies, as the guests and host relay them, show savings up to 87%, up to 93% for a T2 tower supporting about 20 coding agents, payback in as little as two months, and in the host's figures 28–71% for low-complexity knowledge work rising to about 90% for code generation. Shah says the direction and magnitude matter more than the exact number, which "depends".
- A jagged frontier means most tasks don't need frontier models. Shah uses a frontier model for his game's artwork but a smaller one for its engine code, and names Kimi, Qwen, GLM and Thinking Machines' Inkling among open-weight options close to the frontier. The host notes the frontier is sharpest where training data can be simulated and verified, such as maths and code.
- Dell's deskside agentic AI pairs hardware tiers with Nvidia guardrails and services. The guests describe tiers from a GB10 or T2 (exploration), to multi-GPU towers running models up to about 500 billion parameters, to GB300 and T6 systems for trillion-parameter models and hundreds of agents. These run Nvidia's NemoClaw, whose OpenShell sandbox gives fine-grained agent permissions, along with Dell's own deployment services. Cox says customers mainly want to cap developer token bills running to millions of dollars a month and to keep sensitive data local.