Legora's tech chief says tokenmaxxing is a 'really stupid way' to encourage AI use

• Legora's tech head said there are better ways to gauge AI usage than tokenmaxxing.
• He said that demo days and hack days are more efficient ways of showing people how AI can be used.
• Tech firms are now questioning tokenmaxxing costs and reassessing giving employees free rein.

There are far better ways to encourage AI use than tokenmaxxing, says Legora's chief technology officer.

"A lot of people, say, get a leaderboard and bring up token usage at performance reviews," said Jacob Lauritzen on an episode of the "20VC" podcast released on Saturday. "That leads to tokenmaxing, which is people just burn tokens just to look good."

"That's a really stupid way to do anything," he added.

Tokenmaxxing refers to using tons of AI tools like Claude, Codex, and Cursor to boost productivity and get ahead on internal AI use dashboards and reviews.

Lauritzen, who joined the legal AI startup in 2024, said that more intelligent ways to use AI include hack days or demos where employees can show others what they're building and the efficiency gains they have achieved.

"Reward them for being effective and efficient and having more output, not for necessarily using AI," he said.

That said, Lauritzen added that fast-growing companies like Legora have a lot to lose when they don't use AI.

"Is it worth us spending a ton of tokens to learn if it maybe gives us 20% efficiency for us? Yes, we have a really high opportunity cost," he said.

Lauritzen's comments come at a pivotal moment for the tech industry, as it moves from tokenmaxxing to token capping. Some tech companies are wondering if the dashboards they implemented as motivation to play around with AI are backfiring — and finance departments are increasingly concerned about how much it all costs.

Last week, Uber said it has limited all employees to $1,500 in monthly token spend per AI tool, after the ride-hailing company blew through its AI spend budget earlier this year.

Last month, the Financial Times reported that Amazon shuttered an internal dashboard that tracked AI use after some staff performed tasks to climb the leaderboard.

An Amazon spokesperson told Business Insider that the unofficial dashboard "was never intended to promote the use of AI for usage's sake."

At a Bloomberg conference last week, Andrew Feldman, the CEO of Cerebras Systems, said that the idea of giving employees unlimited tokens was "boneheaded from the get-go."

"You don't need a Ferrari to go to the grocery store, right? Use a lower-cost open source model," he said about being more efficient with tokens. "What we're learning is how to shop at Costco."