Anthropic’s Slowing Growth Could Weigh on IPO Valuation, Cursor Investigates AI Training Data

Akash Pasricha (0:13)

Welcome, everyone, to The Information's TITV. My name is Akash Pasricha. It is Thursday, October 15th. Today is the last day to vote for us in the Signal Awards. We would love your support. We are nominated in the Most Innovative Video Podcast category. The link is in the show notes. It's right there. Go click it for us. Or you can vote at vote.signalaward.com.

Today on the show, we have got Anthropic's latest financials for you. We also have a scoop on the data privacy questions that are being raised inside Cursor. And we're going to close out the show with a conversation about what Silicon Valley history might tell us about where open source AI is headed. It's going to be a fun show, so let's get right on into it.

Anthropic isn't yet a public company, but it might as well be. The company held an investor meeting this week, disclosing third quarter financials which quickly were leaked. Our senior reporter covering Anthropic, Cory Weinberg, got a hold on the numbers as always. Welcome back to the show. It's great to have you here. Tell me about this investor meeting that happened yesterday.

Cory Weinberg (1:23)

This was Anthropic's probably most public pre-IPO moment, I would say. They gathered hundreds of investors in a room in their headquarters and spent hours walking through the business, walking through their vision of what was ahead, and of course, walked through what everyone cared about, which was, let's get to the meat, let's get to the numbers.

And the numbers are in isolation, incredibly impressive. So this is a company that in the third quarter generated 16.8 billion in revenue, which was, if we were sitting here a year ago, and we were talking about that as a quarterly number for Anthropic, we'd, like, you would have told me to, like, retake this because it didn't make any sense. Like, this is a huge number in isolation. Of course, where we are at right now in generally, like, the AI trade is everyone is sort of hyperfixating on every little decimal point, on every little sort of question of whether a company like Anthropic is meeting huge expectations or not and so there's been, like, a bit of a frenzy over these numbers.

Akash Pasricha (2:52)

What about the growth profiles, Cory? So the growth is remarkable. We should just say that. I mean, any company that can post more revenue in a single quarter than they did all of last year is pretty staggering.

If you look at the growth from last quarter to this quarter, I think it was a little north of 40 percent this quarter on an annual basis. Last quarter, it was double. So, I mean, look, big numbers all around, but is there anything to make of this or were investors concerned at all?

Cory Weinberg (3:23)

Yeah, I think just when we're at a moment right now where so many AI stocks have traded up so high based on the expectations that AI is going to completely transform white collar work, especially, but all types of work. And I think it's sort of built into the prices of a lot of companies, including Anthropic and OpenAI, that this tremendous growth is going to continue. And I think you saw yesterday, and this has been building for a little while, this question of can this growth that Anthropic saw early in the year really fend off some of the very real questions that have sort of been raised in recent months around how much are some of their biggest customers cutting them off for various reasons, you know, like Meta, like Cursor, like Microsoft, and how much of the revenue that Anthropic has is generated from like unsustainable means. And so in one way, that's also a practice known as distillation, which we've written about a lot and has gotten a lot of attention, where essentially companies are paying Anthropic and training their own models sort of by taking clods answers essentially.

This is a popular practice in China in particular. And so you have like these kind of typical questions around, okay, how much are your customers actually going to keep using you? And are there kind of methods in which like this revenue is just not going to be sustainable? And those are going to be questions for every company going in, or a lot of companies going into an IPO. But with Anthropic, this is just a, you know, this is a company that's gone from zero to a trillion in five years. And so the expectations are just humongous.

And you know, so I think like people are focused on the headwinds a little bit more than you would expect given the growth of this company. Right.