Harvey\u2019s gross margin fell from about 50% at the start of this year to minus 50% by June as customer usage of its AI agents spiked, and turned positive again only after it released a model of its own built on Moonshot\u2019s Kimi K3. Abridge, Decagon, Ramp and Rogo are making similar moves, and Sequoia Capital and General<\/a> Catalyst are funding the shift.<\/p>\n Harvey\u2019s gross margin fell from about 50% at the start of this year to minus 50% by June, Bloomberg reported<\/a>, citing a person familiar with the matter. The legal startup is valued at $15.6B. Customer usage had spiked after a March update to its AI agents.<\/p>\n The cost was the models it rented.<\/p>\n Harvey has seen a twentyfold rise in token usage this year, according to the company. Both OpenAI and Anthropic now charge enterprises for model usage on top of base subscript<\/a>ion fees. Its founders knew the spike would not survive contact with those rates.<\/p>\n So it stopped renting.<\/p>\n In August Harvey released its first in-house model, post-trained on Kimi K3 from the Chinese lab Moonshot. Gross margins turned positive again after that launch and other changes to how it uses AI, people familiar with the work told Bloomberg. Harvey declined to comment on specific financials.<\/p>\n It is not alone.<\/p>\n Abridge is building a clinical model on Nvidia\u2019s open weights, and Decagon now routes 80% of customer queries through models of its own. Ramp raised $750M in June and is weighing training for the first time. \u201cIt made absolutely no sense a year ago,<\/em>\u201d co-chief executive Karim Atiyeh said. \u201cIt\u2019s starting to make a lot more sense now.<\/em>\u201d<\/p>\n Anthropic has noticed.<\/p>\n At an investor forum in its offices it showed a slide on startups building their own models, with a reminder that Harvey still needs Opus for its hardest tasks. Mistral\u2019s Arthur Mensch spent July arguing that closed models give providers immense leverage, and named Anthropic cutting off Windsurf while building Claude Code.<\/p>\n September made his case for him.<\/p>\n OpenAI moved to end its Cursor contract after SpaceX bought the company, citing past terms of service breaches by Musk businesses. European buyers have switching rights under the Data Act, but those cover a customer leaving a supplier, not a supplier leaving a customer.<\/p>\n Europe has its own Harvey.<\/p>\n Legora, in Stockholm, reached $100M in revenue inside 18 months and now serves more than 1,200 firms, and it has never said whose models it runs on. Not everyone thinks the answer matters. \u201cHaving your own model or not is such the wrong question,<\/em>\u201d said Menlo Ventures partner Matt Kraning. \u201cIn most cases, it tends to be a lot of cosplay.<\/em>\u201c<\/p>\n<\/p><\/div>\n If you liked the article, do not forget to share it with your friends. Follow us on\u00a0Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n If you want to read more like this article, you can visit our Technology category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n\n
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