Inflation Heats Up, Anthropic Investor Day, Tesla Roadster Mania| Diet TBPN

John Coogan (0:00)

So, the market is mostly reacting to the Anthropic Investor Day numbers, but it's been in a decline for a long time, for the last month. Core weaves down something like 50% over the last month or so.

It's been rough in the AI trade broadly. And it's crazy that you can be growing at 45% quarter on quarter and still not meet expectations. But when people have had in their minds 10X every year, 10X revenue growth every year, and Anthropic goes to their Investor Day and says that Q3 revenue was 16.8 billion, which annualizes to 6, 7 billion, 67 billion. I don't know what they were doing there. That seems like a little bit of like, okay, I get it, it's like the Zoomer reference, but like this is serious financial, there's a lot of money on the line, can we not do like the meme thing right now? Anyway, they are in fact annualizing their quarterly run rate to an annual run rate of 67.2 billion, which is remarkable for a company that was doing a 10th of that a year ago.

But it's seemingly not enough because everyone in their minds was like, they're gonna have surprise to the upside, they're gonna throw up 90 But they really have been fighting fires on multiple fronts. There's like the meta business, which has pivoted over, they're probably using their own model now, and maybe there was that leak of an executive at Metta saying like, oh yeah, if we stop buying Anthropic, it could really mess up their IPO, that would be a shame. I would hate for a company to IPO at lower valuation than us since we're almost $2 trillion. That would be terrible. So it seemed like sort of a veiled threat in the media.

And then distillation, we actually got a number. So distillation is between 5 to 7 percent of revenue, which I think is a little bit lower than people were expecting. But it feels like the Anthropic team, David Sachs was celebrating this, that hey, there was this big problem. And one of the proposed solutions was like, bad open source, do all this crazy stuff, slow down. And David Sachs didn't want to do that. And then Anthropic came out and said, hey, like we did a lot of work. We deployed our own frontier technology to fight this. And we believe we have bought it. And we believe that we can shut down distillation. Pretty staggering that five to seven percent, you know, that's billions of dollars spent stealing from, because that's the value of the distilled tokens, which is pretty crazy that you can be at that scale of essentially fraud, like you're not supposed to be distilling, it's against the terms of service. And usually when you see somebody, oh yeah, there's somebody who's like scraping LinkedIn and then they're like reselling the data or whatever. It's like, yeah, they might have like a couple million dollars deployed into this scheme. But you're looking at five billion dollars of fraud, essentially, or run rate fraud, you know, something like that. But as they fight that fire, obviously, that's going to be a drag on revenue growth. If they open the floodgates and we're like, yeah, go distill away, you know, at least in the short term, revenue would be growing faster. But in the long term, there'd be much more competition on the frontiers.

Jordi Hays (3:25)

But it's certainly not as meaningful as some people on the internet thought it was.

John Coogan (3:29)

Yeah. I mean, there were like some trolls who were like, oh yeah, once you get rid of meta and distillation, company's going to be doing, you know, two billion dollars a year. And it was like, no, that's not going to be the case.

This is installed in many, many organizations. This is a mature go to market.

Jordi Hays (3:46)

The question now is what happens to the frontier of the open weights ecosystem, right? So there's a gap widen.

John Coogan (3:54)

Oh, because they're shutting down the distillation. Yeah.

Jordi Hays (3:57)

We'll see how effective it is. Being on the frontier just means you're getting distilled. If you're not getting distilled, you're not.

John Coogan (4:04)

That's the definition in your mind. It's like, unless you're getting distilled, you're not frontier.

Jordi Hays (4:09)

I think that's the most honest definition. Unless other people will spend a lot of money to try to emulate your model and recreate it, then you are not.

John Coogan (4:19)

That's a good reality check.

SPEAKER_3 (4:21)

Yeah. One thing is Meta released an open-source model today.

John Coogan (4:23)

Yeah.

SPEAKER_3 (4:24)

You spark open.