B (2:45)

Companies essentially are taking these really aggressive bets not just to compete in the market but to stay ahead of these quote unquote authoritarian adversaries like out of China. This is a reference because China's really accelerating their AI development. And the challenge, according to Amadeo Amadei, is that some firms are not, quote unquote managing that risk. Well, I think this sets up a tension that is kind of has this classic bubble look to it. There's these strong long term, you know, fundamentals, but they're also combined with these short term incentives that push companies to overextend. I think all of the growth they're seeing is very rapid and, and the trajectory of AI kind of hides the fact that the industry has not yet proven the return on investment curve for frontier model development or also for a lot of the compute expansion. Like we see OpenAI doing these multi billion dollar compute and you know, building out these huge data center projects. And so I thought, I think a lot of this is kind of a bit of a timing trap. Amodei spent a lot of his answer discussing the lag time between investing in data centers and then actually when you see the returns on that investment. I think the economic value of AI might really abrupt or gradual, but the data center construction timelines are fixed, right? They're very capital intensive, they're very unforgiving. He said, quote, there is a genuine dilemma that we try to manage as responsibly as we can. Then there are some players who are yoloing who put the risk dial too far. And I'm very concerned. So I think with all of this, you know, saying that these certain companies are yellowing, he's obviously referring to OpenAI.

B (4:25)

I think he's critiquing them in a large way because of these massive infrastructure deals that they're building. They don't know how much demand they will necessarily have. They're kind of forecasting and maybe in the future we'll be like, wow, they were geniuses for spending all that money back then and we really need it now. But, you know, it's definitely seems like a massive risk. But also, like, if I was to give a bullish spin on that as well, for my personal opinion, it is that they're able to raise a ton of money right now because of the way the market is and investing that into data centers, which are, you know, I mean, these are essentially an asset that is not. If it's not useful to them, it's useful to others. So I think by investing in data centers, like, they're just building out their portfolio, their assets, their valuation, because those are just tangible things that are worth a lot of money. So I do think those are. Data centers are very worthwhile to invest in today. If they're trying to build them faster and if they're, you know, overspending in order to try to speed up the process beyond what the market would typically, you know, compensate them for, then I think that's, you know, obviously not sound business practices. But assuming they're doing that in a responsible way, I think those might be good investments. But this is what Amadeo said. He also, he kind of talked about the industry's anxiety. Everyone's kind of worried about this chip depreciation timeline. GPUs continue to work for a lot of years after they're, you know, after they're created. But I think the rate that new models are coming out is making the old ones economically obsolete, which is definitely an issue. He said the issue is not the lifetime of the chips. The issue is new chips come out that are faster and cheaper, and so the value of old chips can go down somewhat. That's interesting. We talk about the depreciation of chips over at Google or over at Meta. There was a lot of controversy that Meta was cooking the books and, you know, depreciating their chips on too long of a timeline, saying that they were useful for longer than they were. Well, the chips themselves makes a great point, are quite useful. It doesn't mean that, like, the new chips are so much faster and cheaper that it essentially makes the old ones useless, even if they're technically capable of continuing to compute things. I think if a company over invests in hardware, they lose the competitive value before it's fully monetized. And I think the economics of these frontier models can unravel very quickly if that happens. So Anthropic, Dario says, is taking a really conservative approach to chip assumptions. They're modeling much weaker scenarios to avoid being caught upside down by rapid hardware cycles. I mean, this is a great way for him to say that they're approaching it. Also, they're growing much slower than OpenAI and they have less users than OpenAI. So to be fair, you know, taking a more conservative approach is also, they have a more conservative growth rate of their company. What I will say is that Anthropic's revenue has grown at a pace that not many tech companies have seen. So when you Compare it to OpenAI, you're like, oh, they're smaller than OpenAI, but they're still crushing basically everybody else. They, they went from $0 to $100 million in 2023. They then went from $100 million to a billion dollars in 2024 and they're projected to hit 8 to $10 billion by the end of 2025. So you know, we go 0, 100 million, a billion, 10 billion, like every year. It seems like they're growing at a very, very rapid pace. I will say that all of these numbers put Anthropic among definitely the fastest growing startups in history. But Amadeo or Amadei said that even with all of that, it would be, quote, really dumb for them to assume that that trajectory is going to continue indefinitely, which I do think is a valid point. He said, I don't know if a year from now it's going to be 20 billion or if it's going to be 50. It's very uncertain. I try to plan conservative, conservatively, I plan for the lower side of it, but that's, that is very disconcerting.

B (8:10)

I think right now he's kind of underscoring how little visibility even the leading AI companies have on demand curves, the enterprise adoption speed, or even the durability of usage based revenue. Right? Like, it's so interesting to see someone that just went from 0 to 100 million, 100 million to a billion and a billion to 10 billion be like, I don't know if we're going to be at 20 billion or 50 billion in a year. Like, it's so crazy. But also it's, it's true. It just goes to show that even the people leading these top companies don't know. I actually appreciate how candid he was about that because I feel like with OpenAI, Sam Altman almost like tries to appear like he's like a, you know, like this wizard, this fortune teller. He's like, yeah, if you saw the things I saw, like things are going to be crazy. That's why we got to spend all this money on all these data centers. But at the end of the day, they don't really know. They're just like, hoping and guessing and, you know, making, making bets. So I do appreciate how candid the CEO of Anthropic has been. I think all of this, all the conversation that he, he recently had, inevitably, inevitably drifted towards OpenAI. He never named them specifically, but last month OpenAI had this big public relations mess where the CFO suggested that the US government should backstop the company's infrastructure loans. A lot of people were very critical of that. They had to walk back the statements. He, you know, when, when asked about a lot of this, said that he said competitors who, quote, like big numbers or are constitutionally inclined to take enormous risks landed heavily. He said, quote, we think we're going to be okay in basically almost all worlds. I cannot speak for other companies. So it seems like he is taking shots at OpenAI. Doesn't know if they're going to be okay. Obviously there's his main competitors who's talking his own book. But I think at the end of the day, I appreciate his candor and I appreciate how candid he was with all of this, how he's, you know, says he doesn't know where they will be in a year. But obviously you can see Anthropic is one of the biggest players. They're growing. They have carved out a huge niche among developers and enterprise that is very loyal to them and really appreciates their product. So at the end of the day, I think they're going to do just fine. Fine. Hey, if you enjoyed the podcast today, it would mean the world to me if you could leave a review wherever you listen to your podcast. That's over on Apple. Drop some stars if you're on Spotify. If you wouldn't mind hitting the about tab and leaving a review as well. Really helps out the show to. To be found by more amazing people like yourself. And I really appreciate all of them. Also, make sure to go try AI box AI if you want to see all the latest AI models in one place. Thanks so much for tuning in and I'll catch you in the next episode.