Monologue: Anthropic Slows Down

Podcast Network Previews

0:00This is an iHeart Podcast. Guaranteed human.

0:30I'm Melissa Jeltson, host of the What Happened to Her podcast. We're kicking off the season with the Sandra Birchmore story, a case the police wrote off as a suicide in a snowstorm. Her family never bought it, and the man they suspected wore a badge. You never know who that devil is because he's wearing a disguise. Sometimes it's a police uniform. And you can get access to all episodes 100% ad-free

1:00with an iHeart True Crime Plus subscription exclusively on Apple Podcasts, available only to iHeart True Crime Plus subscribers. So don't wait. Head to Apple Podcasts, search for iHeart True Crime Plus, and subscribe today. The miles change how you move, but more importantly, they change how you show up for your life. I'm Emily Abadi. On the Hurdle with Emily Abadi podcast, I sit down with elite athletes, record holders, coaches, and everyday runners to unpack the mindset behind pushing through when things get tough. Because the discipline, grace, and grit you build out there on the pavement,

1:33that's what helps you show up as your best self everywhere else. I'd just love to say I never know who's watching. So you want to make sure you're you through and through, and you just stay true to who you are. Listen to Hurdle with Emily Abadi on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Do you love golf? If so, you should listen to 3-putt bogey. I'm Chuck Bryant from the Stuff You Should Know podcast. And I'm Adam Pranica from a couple of embarrassing hit Star Trek podcasts. And each week on 3-putt bogey, we're going to get into the bunker

2:04and get to the bottom of what is just so alluring and frustrating about the most beautiful game in the world. So whether you're someone who pipes it on the driving range, but freezes up on the tee box, or misses that 3-putt putt when everything's on the line, whether to laugh about it with you on 3-putt bogey, a podcast about two mid-handicappers, one great shot, and the 3-putt that spoils it all. You can listen to it now on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts.

2:34Meet the disruptors who are setting today's trends and discover those who are building what's next. People like Sebastian Yatra. Life is on the other side of fear. Introducing Global Flow with me, Dramos, a new podcast where I sit down with disruptors across music, entertainment, business, and tech to break down what they're building, get the blueprint to how they got there, all while trying to figure out what's coming next. Listen to Global Flow on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts.

Anthropic Q3 Leaks

3:07Hello and welcome to this week's Better Offline monologue. I'm your host, Ed Zitron.

3:16On Wednesday night, Anthropics Q3 numbers dropped through leaks from meetings with investors in preparation for its IPO, and boosters have been packing their lunches like they're Bud Dwyer on the way to a press conference. Why? Because despite hitting $16.8 billion in revenue, sales only grew by 46% quarter over quarter, which might seem like a lot, but Anthropics' entire sales pitch to investors and the general public was that its revenues were eternally parabolic, and based on the oinking and squawking

3:50from Twitter, the expectation was that it would hit $20 billion or more for the quarter. Another reason the hogs are so upset is that Anthropics neglected to include a new annualized run rate figure. A made-up number derived from multiplying, in most cases, a trailing 28-day period's worth of revenues by 13, specifically to make the company's revenues seem bigger and extrapolate growth in what I'd describe as a deeply deceptive way. The reason Anthropics neglected to do so is that it's likely that the number was lower

4:21than boosters expected. A few months ago, Bloomberg and others reported that said run rate had hit $65 billion at the end of July, which means that the expectations had them set anywhere from $75 billion to $90 billion, though I should add that these numbers are all complete bullshit and none of these articles ever explain how the number was derived and over what period it referred to. In fact, Bloomberg just says a short period, annualized. It's completely fucking useless. In any case, boosters have loved these big, beautiful numbers because they allowed them to

4:54express Anthropics' growth in terms that made things look far better than they were. A few months ago, multiple outlets had reported investors expected Anthropics' run rate to hit $100 billion by the end of the year, and now many of them are posting that's not going to happen with the tone of someone who found out their dog is dying.

Margins And Distillation

5:13The leak also revealed that Anthropics had an adjusted operating margin of 11% and adjusted gross margins of 85%. Adjusted is a term used to describe stuff that's not up to the standards of GAAP, generally accepted accounting principles, because it leaves out costs like stock-based compensation, R&D, or well, anything the company wants to, because it's non-GAAP. Nevertheless, some outlets are using this to suggest that Anthropics is approaching profitability, as in it would be profitable if it wasn't for all the expenses.

5:46Another wrinkle in the story was that Anthropics noted that 5-7% of its revenues came from distillation, distillation, as in Chinese model developers using its services to train their own models, meaning that anywhere from $840 million to $1.17 billion worth of its Q3 revenues came from its competitors building competing products and paying them for the privilege. Anthropics recently reported that it had taken measures to reduce these attacks, as they call them by more than 90%, which is good news on a competitive level but also means that its

6:19revenues have, for several years, been artificially inflated, probably by billions of dollars. This all puts Anthropic in kind of a bind. To match its current revenue growth, it would need to grow another 53.6% or so quarter over quarter, as its revenue base is now I assume about 5% lower, meaning it needs about $25.8 billion or so in Q4. Anything less than $20 is a fucking disaster, by the way. And per Ramp data, 80% of Anthropic and OpenAI's enterprise revenues come from the top 1% of

6:51its customers, with the vast majority of those being unprofitable, unsustainable AI startups, meaning that that growth will mostly have to come from venture-backed money losers in perpetuity. Ramp also reported last week that AI spend is falling despite rising usage at exactly the wrong time for all of this to be happening. And all of this times extremely poorly with

CoreWeave And Neoclouds

7:13an aggressive sell-off of better-offline turd-of-the-century CoreWeave, which has now reversed somewhat because of the dunces that bet on the financial markets, on NVIDIA CEO Jensen Huang saying that CoreWeave was in good financial condition and that NVIDIA did not need to backstop it, despite the fact that NVIDIA has already backstopped CoreWeave's leases and sunk billions of dollars into the company. I do not see these factoids in a single fucking story mentioning Jensen Huang's comments, because journalism is apparently too fucking difficult for everyone.

7:45And this pablum did very little to calm the bond market, despite the stock bursting a little bit by about 3% as I'm looking at it. CoreWeave's debt now trades at a yield of at least 14.6%, with its worst one trading at 15.47%, meaning that those closest to the actual money, the actual debt, the actual, you know, payments of stuff, are pricing CoreWeave's debt like the junkiest of the junk. I think the worst of the junk is like 17-20%, so some ways to

8:16run, but pretty damn junky. And as all of this boiled over, Gartner released a report saying that by 2030, 80% of neoclouds would have ceased operations, adding that forecasts for AI revenues in the next three years were trillions of dollars short of what it would take to have even a 12% return on invested capital. And I must be clear, the assumption that they have is that AI will make $3.5 trillion worth of revenue, and they're still trillions of dollars off. Just to be clear, AI's not even making $300 billion of annual revenue. People would

8:49know this if they fucking looked, including Gartner. Gartner has the resources. Why is no one fucking bothering? I feel like I'm taking crazy pills. And this was mere days after a Jeffries report came out that said that the most likely outcome of the so-called AI boom would be a massive capital destruction in the US. I just need to ask you a question. Is that good? I'm Melissa Jeltsin, and in my new podcast, What Happened to Her, I'm bringing you new stories

9:23and conversations every week. Stories about women whose deaths were too quickly ruled a suicide. She was starting to get worried and get scared for her safety. Stories of survival. The only difference between me and her, frankly, was a little bit of luck, because by all rights, I should be dead. Cases that everyone else called closed. They can't convict her, right? Like, she has so much evidence. These stories all start in the same place, with a woman failed by a system

9:57that didn't believe her, that didn't protect her, that didn't see her. No child should ever experience that. And we were babies. She did all of these brave things and came out and spoke. About it. And he got a year. You never know who that devil is, because he's wearing a disguise. Sometimes it's a police uniform. Listen to What Happened to Her on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Lisa, we should tell them about our new show. Oh my God, Lexi, we have a new podcast. It's called Don't Lie to Me.

10:30I'm Lexi Iwanu. We're two best friends, 22 years apart, but so close at heart. And I'm Lisa DiGiulio, the old one, which means we have wildly different references, occasionally different opinions. And at this point in my 50s, I've lived it all. I'm not going to get anywhere fighting. That is wild. I learned that about you today. Now in my 30s, being the founder of New Shoes, Good Taste is my business. And I've always got something to say. If men were just honest about this, there would be so much more peace in the

11:03world. We're going to talk about dating, relationships, beauty, getting older, and a little wiser. We're best friends, but we don't always agree. Because you told us how accommodating you are. Obviously, I would do what I think I could do to fight the fight, but there's only so much fight I can fight. Don't lie to me. Don't lie to me. Don't lie to me. Don't lie to me. Don't lie to me. Don't lie to me. Liar. Listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. I don't really care. On Big Lives, we take a single cultural icon.

11:38People like Jane Fonda, George Michael, Richard Pryor. And we pull apart the story behind the image. And we do this by digging through the BBC's vast archive. We're talking iconic moments in broadcast history. I'm not just a boxer. I'm educated. I can talk all week on millions of subjects. And forgotten interviews that change how we see these giants of our culture. Well, if changing the system from the ground up is revolutionary, then I'm revolutionary. We're here for the messy, the brilliant, the human version of our heroes.

12:10I mean, when I go on stage, I like to dress as slutty as possible because it makes me dance a bit for some reason. I'm Emmanuel Jochi. I'm Kai Wright. And this is Big Lives. Listen to Big Lives on the iHeartRadio app, Apple Podcasts, or wherever you get podcasts.

12:28Dear honeys, this is goodbye. In February of 2024, celebrated illustrator and children's book author Patra Mathers and her husband Michael mailed letters to dozens of friends and family members to let them know that they had died by suicide. By the time you get this letter, both Petra and I will be dead. Next stop, Wonderland. Petra and Michael were by all accounts healthy, happy, and in love. Why did they do it? And what did it do to the people they left behind? I would have given a million reasons to not leave this world had I known.

13:03I keep coming back to, I truly hope that Petra was a thousand percent on board with the plan. Do you think of him as having killed her? Yes, I do. I hold Michael responsible for my mother's death. I'm Leon Nafok. And I'm Alice Gregory. Together, we set out to interview everyone who got one of Petra and Michael's letters. As one married couple trying to understand another. Listen to Death of an Artist on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Welcome aboard season six of The Girlfriends, Flight or Fight, which takes place 30,000 feet in the sky.

13:41There's great food, comfortable chairs, and attentive stewardesses. The stewardesses were so beautiful. But in reality, the stewardess job is far less glamorous than it appears. It was the most sexist job I think you could have.

14:01In this era, the airlines told these stewardesses they have to be single. They had no good excuse for why they wouldn't let women be married. They have to be skinny. We were starving ourselves. And they have to be young. You would retire at age 32. But one day, a group of stewardesses said, This has got to stop. They risked it all, turning a fight for fairness into a revolution.

14:32Listen to The Girlfriends, Flight or Fight, on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

Media Failure On AI Valuation

14:40Anyway, markets in both the US and Asia puked a little on all of this bad news. Anthropix's growth had to be absolutely meteoric to warrant its supposed demands for a $2 trillion valuation, and to pay for its $413 billion worth of non-cancellable contracts. This company had been priced for perfection, and made promises contingent on achieving growth that, at some point, comes down to how much venture capital money its customers can raise and continue spending in ever-growing amounts for businesses that only lose money.

15:17You know, much like OpenAI and Anthropics. This has been a lot of fun to record. I will admit, I got a little stuck with the show for a bit. I hadn't been having as much fun as I wanted. I realize it's because I've not been showing my fucking contempt for these companies. I find all of them sickening. I find the people that inflate their egos and their balance sheets, at least with fake numbers, truly despicable. I find it contemptuous that the so-called journalistic professionals out there are still using run rates, that they're taking them seriously.

15:48I see financial analysts taking them seriously as well. I don't come from a finance background. I'm just a regular guy who read a lot of stuff. And let me tell you something. It is fucking disgraceful that the AI bubble has had anything based on these fucking elf numbers, this magical math of run rates. And to see the hogs braying so oinkily about the fact that we didn't get a new number is both vindicating and sickening. You motherfuckers should actually look at the real numbers.

16:19You should want real data. You shouldn't want elf numbers. You shouldn't want imaginary run rates. And any journalist listening to this, if you are still using run rates, you are failing at your job. Make no mistake, I am not mincing words here. If you're using them without a giant goddamn disclaimer saying that you don't have the underlying mattresses, the underlying way that they're calculated, I mean in bold and italics, like a warning sign on a pack of fucking cigarettes, you are failing at your job.

16:51That is just the truth. I know this might hurt your feelings, but your feelings need to be hurt for something to fucking change. Because when this explodes, it's going to be so much more harmful because it got inflated on these flimsy numbers. And you'll notice that everyone seems to freak out the moment real numbers come into the picture. The moment we learn the actual underlying financial conditions of these companies, people begin to panic. In a real industry, in something that actually is worth all this money, the real numbers would be good news.

17:25The real numbers would show you how well AI was doing. Yet whenever we get a real number, it sucks. It fucking sucks. And it continues to suck. It is fucking crazy. I put it in my newsletter this week. It's the annualized Enron rate. I love that title. I put it in there, but we don't know the financial profile of the vast majority of AI startups. We now have, what, nearly two years of Anthropics revenues.

17:56We don't have their costs for most of it. We have, thanks to me, the audited financials of OpenAI for 2024 and 2025. We don't have shit on perplexity or cognition. Cognition's worth $48 billion. And we don't know anything about P&L. We just have fucking annualized run rates. One billion annualized run rate. Who gives a fucking shit? I'm sorry for not being more eloquent about this. I know. But I just can't help myself. I can't help myself for having contempt for these fucking companies and the shitty ways in which journalists help inflate them.

18:34Inflate their egos. Inflate their financial profiles. Help them raise money. I have watched multiple financial outlets today run cover for both CoreWeave and Anthropic. That's not your fucking job. If you feel the instinct to tell a good story when things are going badly, as a journalist, you are no longer participating in journalism unless you are reporting. I mean actually reporting something. I don't mean I've looked at the adjusterated, I'm keeping it, adjusted operating margins and I found a good way of looking at it.

19:07I've done some napkin maths and I've come up with a new way the run rate could be good. That is not journalism. It's fucking marketing. So, forgive me if I'm a little bit fiery about this stuff. Forgive me if I'm calling people fucking idiots for doing this stuff. Forgive me for saying people are not acting in a professional way when they use these run rates. Forgive me. Actually, don't. I don't give a fuck. What I give a fuck about is the truth and I'm sick of hearing these fucking numbers. I am sick of the ways in which journalism is holding up these companies.

19:40It's not going to change a thing. And as I've said, as more real numbers come out, things will get worse because the actual underlying economics of AI do not work. And I know so many of you email me agreeing and I love it. I love you all. I truly do. And that is a reference to the menu if you're new here. And I'm just, I'm happy to have you, but I'm frustrated because even with this anthropic news, as I look over at my terminal, I thought, maybe this will push it over the edge. No, call weaves back up because Jensen fucking Huang said they're fine.

20:14This is how dumb the markets are. And of course, journalism, just copy-pasting that shit. No need to think. No need to consider. No need to have an opinion or even form any thought at all. Just put the story in the bag. That's all it takes. Well, guess what? Everyone who participated in that, without exception, don't care where you were, everyone who helped inflate these companies, when this shit explodes, it's on you. If you're listening to this and you're a journalist who's done this stuff, it's on you. You can still change things. You can turn against these companies. You can actually push back on the underlying rotten economics.

20:48You won't. Sorry, I know you won't. And if it's because your editors are telling you not to, please reach out and tell me because I'd at least like to know those of you who are being muzzled. But if you're not being muzzled, if your reason for using run rates is because you actually think they are a useful measurement, you're either ignorant or corrupt. You choose. I realize that was a little damning. I realize that was a little brutal. But I'm going to be honest. This is the show now.

21:18I have, I really let go of what made Better Offline great, which was the actual emotional connection with all of this stuff. I love airing the frustrations I have, ad-libbing a little as I have at the end of this. I'll be honest. I fucking love doing it. And you're going to really hear that in the next episode. I'm joined by an original guest of the show within the first like 10 episodes, maybe less. Tom Dottan. He wrote an amazing piece of Vanity Fair about Larry Ellison and his big wet son, David.

21:48And actually, Larry Ellison also has a daughter. I'm surprised I didn't know this. Anyway, it's one of the best interviews I've done. I think I just said interviews, but we're going to keep going. It's one of the best ones because I've just fucking let loose. And that's what I'm going to do with the show going forward. Because talking about the tech industry in this cold, calculated, ultra-financialized way, without having the disgust necessary to talk about these companies, it's just kind of wasting your time. That's a little harsh on me. Either way, I really enjoy hearing from all of you. Shoot me an email.

22:20Shoot me a glute on slub or a slub on glurt. Those are two different social networks and two different buttons you can hit on them. And I will catch you next week. I love you all. Lisa, tell them about our new show. We have a new podcast. It's called Don't Lie to Me. I'm Lexi Iwanu. We're two best friends, 22 years apart, but so close at heart. And I'm Lisa DiGiulio, the old one, which means we have wildly different references, occasionally different opinions. And at this point in my 50s, I've lived it all.

22:52Now in my 30s, being the founder of New Shoes, Good Taste is my business. Listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. I'm Melissa Jeltson, host of the What Happened to Her podcast. We're kicking off the season with the Sandra Birchmore story, a case the police wrote off as a suicide in a snowstorm. Her family never bought it, and the man they suspected wore a badge. You never know who that devil is because he's wearing a disguise.

23:23Sometimes it's a police uniform. And you can get access to all episodes 100% ad-free with an iHeart True Crime Plus subscription exclusively on Apple Podcasts, available only to iHeart True Crime Plus subscribers. So don't wait. Head to Apple Podcasts, search for iHeart True Crime Plus, and subscribe today. The miles change how you move, but more importantly, they change how you show up for your life. I'm Emily Abadi. On the Hurdle with Emily Abadi podcast, I sit down with elite athletes, record holders,

23:53coaches, and everyday runners to unpack the mindset behind pushing through when things get tough. Because the discipline, grace, and grit you build out there on the pavement, that's what helps you show up as your best self everywhere else. I'd just love to say I never know who's watching. So you want to make sure you you through and through, and you just stay true to who you are. Listen to Hurdle with Emily Abadi on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Do you love golf? If so, you should listen to Three Putt Bogey. I'm Chuck Bryant from the Stuff You Should Know podcast.

24:25And I'm Adam Pranica from a couple of embarrassing hit Star Trek podcasts. And each week on Three Putt Bogey, we're going to get into the bunker and get to the bottom of what is just so alluring and frustrating about the most beautiful game in the world. So whether you're someone who pipes it on the driving range, but freezes up on the tee box. Or misses that three foot putt when everything's on the line. Whether to laugh about it with you on Three Putt Bogey, a podcast about two mid-handicappers, one great shot, and the three putt that spoils it all. You can listen to it now on the iHeartRadio app, Apple Podcasts, or wherever you get your

24:58podcasts. Meet the disruptors who are setting today's trends and discover those who are building what's next. People like Sebastian Yatra. Life is on the other side of fear. Introducing Global Flow with me, Dramos, a new podcast where I sit down with disruptors across music, entertainment, business, and tech to break down what they're building, get the blueprint to how they got there, all while trying to figure out what's coming next. Listen to Global Flow on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

25:33This is an iHeart Podcast. Guaranteed human.