Erik Bernhardsson on Why Sandboxes Hit a $300M Run Rate
Modal CEO Erik Bernhardsson explains how AI sandboxes became a $300M run-rate business and why post-training changes developer compute.
Modal CEO: Has Open-Source LLM Inference Peaked? | What Happens to the Cost of Compute
With Harry Stebbings, Erik Bernhardsson · Monday, November 2, 2026
Modal co-founder and CEO Erik Bernhardsson joins Harry Stebbings to discuss scaling Modal past $1B in ARR, the economics of AI inference, and why pure token reselling is a race to the bottom. Bernhardsson outlines why traditional software gross margins are gone in AI, how Modal aggregates compute across 25 neo-clouds, the explosive growth of AI sandboxes, and why both open-source and proprietary models will see exponential demand.
Key takeaways
- Modal launched its sandbox feature in 2023 as an experiment, but the product surged to a $300M run rate by mid-2025, accounting for one-third of the company's total revenue. Read more →
- Pure token reselling carries zero switching costs, forcing API providers into an immediate price war. Read more →
- GPU lead times currently sit at three to four months, forcing infrastructure teams to forecast demand through exponential or straight-line aggregate customer extrapolation. Read more →
- Jason Lemkin claims open-source model inference peaked because frontier closed providers cut their API prices. Read more →
4 articles from this episode
Erik Bernhardsson on Why Selling AI Tokens Fails
Modal CEO Erik Bernhardsson explains why 90 percent software margins are dead and how infrastructure bundling protects pricing.
Erik Bernhardsson: How Modal Buys GPUs Across 25 Clouds
Modal CEO Erik Bernhardsson explains how to forecast GPU demand, aggregate compute across 25 neo-clouds, and prepare for falling hardware costs.
Erik Bernhardsson Says Open-Source AI Inference Has Not Peaked
Modal CEO Erik Bernhardsson explains why open-source and closed LLMs will grow 5x to 20x, debunking claims that open-source AI inference peaked.
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