AI Summary
5 min readJensenGate and Anthropic's IPO w/ Ed Elson
Anthropic's IPO has been one of the ugliest rollouts in recent memory. The company originally wanted to go public at a $2 trillion valuation despite plans to spend roughly $800 billion over the next several years, with nearly $500 billion of that coming in the next three years alone. After filing and then retracting documents, the valuation range has settled somewhere between $1 trillion and $1.4 trillion — and even that required bringing in Google, Nvidia, AMD, Broadcom, Micron, Microsoft, and TSMC to buy $26 billion worth of shares to support the price.
The disappearing income statement
The initial optimism around Anthropic came from its Q2 numbers, which showed operating losses coming down 70-75% year over year. For a moment, that looked like an answer to the question of whether the LLM business actually works. But as Ed Elson explains, those numbers told almost nothing about what the business would look like next year. When Q3 numbers emerged, revenue growth had slowed, costs had exploded, and the company disclosed $895 billion in future commitments spread over an indeterminate period.
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What you'll learn
- 1 (04:03) **Introducing Ed Elson** - Host Ed Zitron brings on Ed Elson from Prof G Markets to break down the Anthropic IPO mess and the Jensen Huang scandal.
- 2 (04:14) **Anthropic's IPO Rollout is a Disaster** - The company filed and retracted its IPO documents, pricing between $1 trillion and $1.4 trillion, down from a hoped-for $2 trillion.
- 3 (05:36) **Q2 Was a Phantom Quarter** - The strong Q2 numbers that excited investors represented a company that no longer exists, built on discounted SpaceX compute.
- 4 (07:27) **Anthropic Gets a Backhanded Compliment on Transparency** - Elson argues Anthropic is less dodgy than peers because it didn't use non-GAAP adjustments to claim profitability.
- 5 (11:15) **The Math Stops Working** - Revenue growth is slowing to 15-25% quarter-over-quarter while compute costs are skyrocketing toward $100-150 billion annually.
- 6 (14:21) **The Music is Getting Quieter** - Investor sentiment is shifting from euphoria to anxiety, and AI companies are dangerously dependent on capital markets.
- 7 (16:26) **OpenAI is in Even Worse Shape** - If Anthropic's IPO is struggling, OpenAI's path to going public seems nearly impossible.
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Guests on this episode
Show Notes
In this week's Better Offline, Ed is joined by Prof G Markets’ Ed Elson to talk about the Anthropic IPO, the mid-terms, hauling fraudsters in front of congress, and Jensen Huang’s tryst with a Chinese spy.
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