Ramp economist Ara Kharazian: 45% of US businesses use AI (not the Census's 8%), and SF's 996 culture is real

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Time is money, save both, easy to use, corporate card, bill pay, accounting, and a whole lot more. Good to see you, Ara. How you doing, guys? Great to see you. Thanks for having me again. Thanks for hopping on. So much data data driven chaos in the timeline. Yeah, I want to talk about 996.

But first, let's start with this data that it's completely over and no businesses are going to be using AI because if you look at the trend line, we went from 12% to 10%. If you track that out on the line, it's going to be 0%. No, not that one. It might be negative 50% of of businesses using AI.

You're talking about the AI adoption data from census. I am talking about the census AI adoption data folks that brought you the department of motor vehicles. Yes. Yes. The real expert. What was your reading?

I've talked I've I've been thinking about the census AI adoption data for a long time because we have our own measurement of it with ramp data. Yep. That's. comdataindex. Yep.

Uh what I don't like about the census measurement and why I think it might be underestim underestimating AI adoption is that the question that they have written is not the right way to measure AI adoption. Essentially, the way the census measures it is they ask businesses, do you use AI to produce goods and services?

And that makes sense because they wrote the question back in like 2023 when we weren't really sure what AI was going to look like. But AI to produce goods and services, that's first of all, that's econ speak, right? That's how economists talk to each other. Yeah. Well, yeah.

And even if somebody technically like in my view, if somebody provides any type of services to somebody and they use AI call transcription, like someone on their team is like recording calls and like transcribing with AI. That to me like qualifies as I literally had leveraging AI.

In 2013, I was running a consumer package goods company. Our business was making protein shakes. That was the physical good that we produced. But we also would transcribe all of our all of our calls. And so were we using AI to produce goods and services? I would have said absolutely.

We're using we're using linear regression and we're projecting out our financials. We're doing all sorts of stuff that fits in the bucket. But yes, to your point, uh it's you're a forwardinking business leader. Sure.

And and that makes sense, but most people reading that think, oh, am I literally using AI to produce widgets on my factory floor? Yep. Yep.

It's it's the kind of question that doesn't really capture the way that AI in the past three or four years of its development has more or less has mostly been adopted by businesses for back office tasks. Yep.

So, and you know when you look at that 10% it's I think most people would say yeah for most businesses that's pretty low. Forget you know tech forward businesses just in general. Yeah.

So, the overall number of like 10% of American businesses using AI, that seemed ridiculously low to me because uh just consumer LLMs like CHP are at like 50% adoption amongst American adults.

And so, it it just doesn't math with me that someone would be uh that four out of five Americans would be using chat GBT and then walk into work and be like, nah, I'm not going to use AI for my job. Uh but yeah, what I'm more interested in is like why do we think that there's a peak and then a fall-off at all?

My theory was like maybe these big companies are getting sold on you got to use AI to produce goods and services. They try and roll out some zombie change management strategy where they're Oh, remember the CL the CLA CEO like did this big thing?

I'm going to use AI for everything and then he ended up saying like take it back. Yeah. And so people are pretty pretty good. Yeah. So, did you have a read on that at all? Well, there's a few things. One, the sample sizes for these surveys are actually pretty small. They run these surveys every two weeks. Yeah.

And uh you know, like most government survey collection, particularly if it's run every two weeks, you're going to get some mixed differences in who responds. Sure. So, that's part of it. I think some of it just might be some noise in the data set because it did come back up in the most recent read. Yep.

It wasn't that much of a decline in the first place. Uh so, you could write it off as as a noisy data.

The second thing is that it's not unreasonable to think that the fact that this was conducted in the summer might mean that even at the businesses who responded to the survey, the person who responded to that survey at that business might be different. Yep. Totally.

This is another reason why I really don't like business surveys is that they try to capture what a business is thinking, which is a large complex organization, but they require one person at that business to answer the question.

Easy for you to say you've got tens of thousands of businesses and their actual purchasing behavior. Yeah. So flip it over. What is the data actually saying about uh the level of AI adoption in the business world? Uh when we look at ramp spend data, AI adoption is up.

AI adoption is now about 45% of businesses in the US. Uh it varies by sector. Yep. So adoption is much higher in tech and finance. About 70% of tech firms on our platform adopted AI in some paid form. I still think that's probably pretty low.

capturing free usage or capturing employee usage on their own personal accounts. But then even in restaurants for example, we see 20% adoption of AI and I think that's likely and what does that mean in the restaurant context?

It's it's it's like they pay that could be they're paying for chat GBTs like pro plan or they're using a like marketing materials like developing like a you know I mean I've seen menus that have AI generated images.

That's not my favorite example, but a much better example is is designing a Facebook ad that uses an AI generated image or copy that really speeds up a lot of the work that a restaurant owner otherwise has to do. I mean, these restaurants and firms often have really small staffs. Yep.

And so, I've talked to some restaurant owners who use RMP, for example, and talked to them about how they use AI. And for them, for the most part, it does automate a lot of the sort of not just back office work, but a lot of the work that lets them get back to work of doing the restaurant work that they want to do.

Okay. So, uh, let's flip it over to the 996 phenomenon. There's been some spicy quotes on the timeline talking about how 996 working on Saturday is super trendy. Everyone's doing it. Uh, what does the data say? So, does everyone know what 996 is in the audience?

I don't I don't think our I think everyone knows, but break it down for us. Anyway, 996 I is a is associated with Chinese working culture, though I believe it's actually illegal in China now, though I think it's still often practiced. Uh and work 9:00 a. m. to work 9:00 a. m. to 9:00 p. m. 6 days a week. Yeah.

Uh, and then it it kind of seems like it's caught fire in in Silicon Valley and tech culture in this whole like wellnessoriented run fast, lift heavy, marry early, work 9 a. m. to 9:00 p. m. 6 days a week and just focus on your business. Yep.

Um, and most of the stories have been vibes based like it's just people in startup world talking about what they're doing. It's true. It's actually happening. It shows up in the question is how will you know a founder works 996? They'll tell you. They'll tell you. Yeah.

But I mean, a lot of people were wondering, is this a LAR? Is this is this something where yes, Saturday is for working? It's for about posting about how you're working, but you're saying that the data actually suggests that there is business activity happening on Saturdays in startups at an increased rate.

Well, in the one specific way we looked at it in this one, we looked at who's, you know, employee cards. So, we're not necessarily just looking at founders. We're looking at just people at the company. Yep.

Um who are more or less expensing business meals or like late time meals on Saturdays or like Door Dash takeout, other things like that. A lot of the criticism that I've gotten today on the timeline has been like, "Oh, well, you can't tell if maybe some people are saying it's fraud.

It must be these people who are fraudly using their business cards. " Like, sure. I want you to read my post because in my post I found it it's just SF. Oh, yeah. This isn't happening in New York. Interesting. This isn't happening in Austin. Interesting. It's not happening in Miami. This is just an SF thing.

And it's also really new. This wasn't happening last year. Wow. Perfectly coincides with when people started talking about the 996 cultural movement. Fascinating.

Unless if you want to argue that oh frauds this whole this I mean it really proves it really proves there's no such thing as a free lunch because in these cases the employees are getting a free lunch but they had to work on Saturday to get it. Yeah. It's one of the worst ways to do fraud.

It's like, here's my $20 Chinese food. Yeah. Yeah. Yeah. Yeah. Okay. So, uh let's think about going deeper in this analysis. How else could we uh unpack this? One way I'm thinking is well, uh meals make a ton of sense. If you're working late, you expense a meal.

But also there's just the normal business activity that like you might sign up for a new so marketing software on a Tuesday. You might also sign up for it on Saturday.

Uh if you're doing that on Saturday, that's probably even less likely to be fraudulent because why are you putting your credit card down with our latest sponsor Turbo Puffer?

because uh you know you if you're signing up for a database tool and you're putting your credit card down uh now maybe they run the credit cards at a different time. Who knows? But I'm wondering if there's a if there's a a a layer to the onion that you could pull back there.

Are there any other uh data points that you think you'd be looking at in the next few weeks that might uh help you crystallize this and really really uh steal up your position for the for the haters?

So the point you're making is really good because there's someone else who really interesting reply I got was someone who works I guess in credit risk and one of the big signals they had about whether or not an application for their I guess finance software product was fraudulent was whether or not the application was submitted on a weekend.

Yeah. And they started looking into all of the ones that they got on weekends and most of them were false positives at least the ones from SF. Totally anecdotal information from from SF. Oh. Oh. Because people because it's fraud everywhere else, but in SF it's the grind.

I mean, this is this is really bad for everyone but SF because it shows that the great lock in is really only happening in San Francisco area. It's it's a local phenomenon. It's not actually people in New York. Oh. Oh, great lock in. Great lock in. Okay.

So, going forward, uh, yeah, we got to look at at if business software uh, purchases are up in San Francisco on the weekend. I also want to know if it's going to spread if we're going to have some mimemetic contagion and we're going to see the great lock in potentially spread to New York. That would be likely for me.

I want to know Miami. Austin might need to get a little bit colder in New York for potentially potentially. Um anyway, got a little bit close to it, but not maybe a quarter the effect size. Wow. Hu huge. And it was only after 800 p. m. It wasn't like in our chart for for SF like it really is starting at about 9:00 a. m.

10 a. m. Wow. Uh what about uh what about timing? You said this is a new phenomenon in San Francisco. Uh if you scroll back the timeline, when do you start seeing a takeoff of this 996 culture in San Francisco? Over the last 6 months. Six months. It's that recent. Wow. Yeah, that's fantastic. We don't see this.

We don't see this in 2024 really at all. That's crazy. I feel like 2024 was definitely a year where people were were working, but I guess it just picked up a whole new whole new gear. That was before the current capital wars began. Yeah.

When we had this idea, I was I really didn't expect to see anything because when you it's pretty rare to see these kinds of spend shifts in any demographic. Yeah.

Especially like when I looked at it nationally, it was completely unmoved because most people don't really change something as worn in as their eating habits that often even, you know, tech employees or workers. So, I really I really didn't expect to see anything.

And the only time you would expect to see something like this is a pre to postpandemic trend. 2019 to 2021, a bunch of public and private data sets started to show shifts in where and when people were eating, right? A really classic one from the pandemic era was uh movement from outside the city center.

So, you know, people were spending much less time downtowns and then suburbs started seeing a lot more activity. That was a really popular one during the pandemic period. But after the pandemic, you really stopped seeing this kind of shifting. Most people kind of set in their ways and things were back to normal.

So, the fact that we saw this, only saw it in SF and that it was so recent is pretty rare and shocking. Last question for me on on the the 996 question. Um, part of it is not just the six, not just Saturday, but the 9 to 9.

Are you also seeing or or do you think there's it's worthwhile to look into uh what's happening from 5:00 p. m. to 900 p. m. Because that's also the hallmark of the 99 is that it's not like 9 to5 6 days a week.

It's it's 9 to9 and so uh you should expect more employees expensing food late night on a Tuesday on a Wednesday on a Thursday on a Friday because they're they're working longer hours. And so is there a way that we can measure the weekday hours worked by San Francisco employees?

Yeah, one of the really great data sets for this would probably be GitHub commits. Oh, GitHub commits. Yeah, we gota got to call up uh we had the CEO of GitHub on. We should ask him to pull something. Yeah.

Uh, and then of course there's a public data set, but uh, I think that's mostly for open source projects and and I don't know if the I I know that there's like a heat map of when people commit, but it's only by day. I don't think it's by time. So the the data would probably be internal, but uh, I don't know.

I mean, it's a Redmond Washington company, so I don't know if they're going to put something out, publish it, that says that San Francisco is outworking uh, Redmond. You know, that might be uh that might be a little controversial for for for Microsoft to do. Uh anyway, uh thank you so much for hopping.

Anything else to share? Are we good? Thanks guys for having me. Subscribe to my Substack. eonlab. substack. com. eonlab. substack. com. We'll throw it before anyone else. Thank you so much for hopping on the stream. We'll talk to you later. Have a great rest of your day. Cheers. Bye.