The AI Backlash Is Getting Stupider. But Also Smarter.

**Nathaniel Whittemore** (0:00)
The anti-AI conversation is somehow getting dumber and more productive at the same time. This week, a centrist governor who just a year ago was touting AI investment in the state reversed course entirely to sign an extremely strong executive order that makes it much harder for data centers to get built in his state. We also saw a commercial go viral that features a former NFL star turned podcaster sending his urine to a data center. There is no doubt that American animosity towards data centers is at a high and politicians are recognizing it. And yet, as OpenAI voluntarily pauses their training and that governor that we were just mentioning before chose an executive order with specific criteria that data center builders could meet instead of a blanket moratorium, I actually think that there's way more positive progress on the horizon than it might seem right now.
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All right, friends, quick announcements before we dive in. One thing that I wanted to flag coming up next week, if you have listened to any of my recent episodes on graph engineering or loops, we have got a practical webinar and workshop for you. The premise is that your AI can do a lot more than it's probably doing. If you set it up for success, it can work until the job is done. In this session, we're going to take the sort of agentic loops that developers and software engineers are already using and make them applicable for Knowledge Workers of all stripes. The first 60 minutes will be a live session led by Newfar Gaspar that explains loops, shows a real loop live in action, explains graph engineering and has time for Q&A. Then in the next 30 minutes, we'll have a hands-on lab where you can design a loop for your own work. This is completely free at happening next Wednesday, August 26th at 2 PM Eastern. If you register and can't make it, we will send you the recording as well. All the information will be on aideallybrief.ai and I'll see you next Wednesday.
We kick off today with a story that really got my goat yesterday but is relevant even if I disagree with the tone of the reporting because of how it's being received on Wall Street. The TLDR is that the two major AI labs, OpenAI and Anthropic, of course, are facing increased scrutiny after reports around their revenue this week. OpenAI recently told investors that they'd surpassed a $40 billion annualized revenue run rate while Anthropic told investors they had reached $65 billion. Both numbers seemed pretty positive at first, showing that revenue was still growing quite strongly despite a summer slowdown. However, capturing the zeitgeist of the pre-IPO period, where as many folks are looking for reasons to not be enthusiastic as they are to pump the numbers, the skeptics think that they've found some weaknesses underneath. On the OpenAI side, the Wall Street Journal dropped a piece called OpenAI's second quarter sales show tepid growth compared with Anthropic. OpenAI had told investors they saw 18% revenue growth across the entire second quarter to reach 6.7 billion in revenue. However, citing sources familiar with the matter, the journal wrote, its operating margins sank further into the red, pushing the company farther away from profitability ahead of a much anticipated initial public offering. So that is factually accurate. So where's my beef? While you, being a smart individual who decided to turn on this show today, might notice that we're pretty deep into August right now, and that the second quarter ended at the end of June. If we are trying to understand a momentum story, is it perhaps worth asking what has happened in the subsequent seven weeks since the quarter ended, especially in the context of an industry which moves as fast as AI does? What the journal says about that is the one line, OpenAI has told investors that its growth rate has picked up since the launch of a set of new models in July, the people said. But not only does that minimize that this entire new period has been subsequent to the release of a frontier model, but it also suggests that our only sources for this information are the same anonymous sources that they had for the rest of it. But that's not true. OpenAI executives have been sharing precise numbers. CFO Sarah Fryer has been running around giving precise details, and Greg Brockman on CNBC told Andrew Sorkin that July revenue had grown 20 percent month over month. Not including those very out in the open details only serves to reinforce a narrative. If you ever wonder why people have trust issues when it comes to mainstream media, it's crap like this. But however you feel about my beef with that, it is telling that the Wall Street Journal is finding resonance with increased scrutiny around these companies' reported numbers. That is an important signal in terms of understanding where the market is heading into this pre-IPO period.