AI out-of-office tool cost Retool $10,000 a day, CEO says

McKinsey: only 37% of firms see measurable AI EBIT lift

David Hsu, CEO of San Francisco-based enterprise software company Retool, told the WSJ Leadership Institute’s Technology Council Summit on Tuesday that a colleague at his company had configured an AI tool to handle out-of-office email replies automatically. The setup was processing millions of tokens daily, Hsu said, generating a $10,000-per-day bill that he characterized as “really shocking.”

“There’s little question that companies are seeing ROI on their AI investments,” Hsu said at the summit. Still, “it’s really hard to know what AI use case is actually going to have value or not, a priori,” he said. “And so really the only strategy you can take is you have to enable a lot — and then you have to kill fast and also invest further.”

Kate Smaje, McKinsey’s senior partner and global leader of technology and AI, spoke on the same panel and offered a more measured take on ROI. More than 80% of users she has studied tell McKinsey they get personal productivity gains from AI — that they can write emails faster and feel their day goes better, Smaje said.

“The ROI is incredibly concentrated at the moment,” Smaje said. “And what you find is most people, like 80% plus, will say, I get personal productivity out of this, right? I can write my emails faster, I feel like my day is, you know, better, etc. I get the personal benefit.”

“But if you then translate that down to, OK, is there something that the CFO can actually see, did you actually get measurable EBIT uplift [referring to the financial metric for earnings before interest and taxes],” Smaje said. “That number drops very, very fast to about 37%.”

“So I think the reality is, no, most people are not getting value from it, but those that are are incredibly concentrated, and it’s about learning what they do differently,” Smaje said.

Measuring and managing the return on AI investments is a perennial focus for CFOs, according to Walden Siew, WSJ CFO Journal bureau chief and author of the Morning Ledger newsletter. Siew said he was struck by several comments from corporate executives speaking at the summit.

In the same newsletter, Siew reported that a broad measure of American incomes reached a record high last year, according to an annual Census Bureau report. Upper-income households fared well and women’s pay gained ground compared with men, the report said. The report sheds light on how Americans fared during President Trump’s first year back in office, but also before the war in Iran led to soaring prices at gas pumps and higher inflation, Siew wrote.

“This is a signal that the economy may be finally finding its groove coming out of the pandemic,” Wells Fargo economist Shannon Grein told the Journal. But, she noted, the gains haven’t been evenly felt.

Wells Fargo CFO Mike Santomassimo, speaking at an investor conference, said of the American consumer: “There is still quite strong spending across the board, and it has just not been changing really at all.”