Anthropic’s S-1 shows a broader customer base than expected

Transcript

From the transcript TBPN publishes with the episode.

1. 0:20

   I mean, I I completely agree. Else. I love that happiness is a choice, but also it feels like this is a week to be extra happy. Like, the Anthropic s one went out, and it seemed like a beat. It seemed like, like, if you were worried, oh, the economics are not working secretly behind the scenes, and there's gonna be some bombshell in there. The haters have been kinda quiet. Ed Zetrin hasn't posted. Like, things are... You know, it seems like things are on track. But what is your interpretation been this week?

2. 0:48

   I do think the Anthropic s one was pretty clearly an upside surprise. Yeah. The fact that they've only burned $10,000,000,000. Yeah. The profitability, the cash generation, the unit economics, they're all very encouraging. The... You know, I put it on x, but I just cannot believe that whatever it is, half of the Fortune 500 has adopted Anthropic, and it's 0.1% of their expenses. Yeah. It's just a wild stat.

3. 1:19

   Yeah. The the funny thing is that The Internet just read that I read that as the Yeah. We can still hear you. No. No. No. Yeah. We can hear you. I I read that 50%. What? Yeah. Yeah. Oh, just as like like, okay. Yeah. That's incredibly impressive for a company in just a few years to get half the fortune 500 or the S and P five hundred on as customers. But I was kind of like, what are the other half of the S and P five hundred doing? I felt like every Fortune five hundred would... Or or S and P five hundred would be multiproduct using everything.

4. 1:48

   But there's a lot of companies that just haven't really gotten through the adoption hiccups of rolling out AI broadly. Maybe some of them are all in on Google or OpenAI. But by and large, I think some of them are just still figuring out how AI can be deployed in their organizations. Is that your read on it that we're still sort of early on the diffusion story in enterprise?

5. 2:09

   Yeah. Very early. I mean, if anything, maybe earlier than I thought we were. Yeah. And it's... I mean, it's just astonishing. Whatever the number is, 67,000,000,000 Yeah. Annualized... If you annualize the reported third quarter, the... You know, wherever the ARR is right now. To... But to be that big with such low penetration into the Fortune 500 Yeah. Is... Crazy. It is pretty extraordinary. Yeah. Totally. Yeah.

6. 2:38

   How do you... How how do you process the... Like, some of the criticism right now of the AI trade is that you have a very small number of companies driving the majority of the spend. I think if you can look historically and say that that same dynamic probably played out with like social media ads, where like a very small number of companies were driving a massive amount of the spend. And so you're gonna kinda see power laws in a lot of places.

7. 3:01

   My read on it is that you have... Like, there are companies based in San Francisco that are just a thousand times more obsessed with AI than than the the say... Let's say like the long tail of public company employees. And so, of course, they're gonna spend dramatically more. And it's possible that that long tail never actually cares enough, but they sort of fade to relative obscurity. Mhmm. And you have the disruptors that are saying like, yeah, this technology is real. It works. It it's not perfect yet. It's not like a drop in coworker that will immediately, you give it a dollar and will give you $10 back.

8. 3:36

   Mhmm. But it's very capable, and so if you obsess over it. And so that's been sort of my overall read. Like, don't think it's necessarily... Of course, you'd want a more diversified revenue base if you could. But in general, it feels very natural that all the spend is coming from a very small group of people that like realize that something fundamental has changed and they're trying to take every advantage of it while the rest of the world is asleep.

9. 4:02

   I might respectfully disagree a little. In s one, there are only 250 accounts spending more than $10,000,000. So actually, you know, somebody in the New York Times said that, you know, maybe ten days ago that 80% of the revenue came from eight customers. I was actually shocked how diversified their customer base actually was. And if you are...

10. 4:27

    Well, the the number to me was the the... Something like 11 or 12,000 spending over a $100,000. Like that that feels diversified. Oh, yeah. But I'm but I'm talking about like the ramp data that's saying like, look, like 1% of companies are spending, you know, 90% of the dollars.

11. 4:44

    Well, I I mean, the ramp data is what it is, but we have much more authoritative data now from the Anthropic s one. Yeah. Yeah. And it shows a very diversified spending base for Anthropic. Yeah. Now, maybe the ramp data is correct for AI overall. Sure. But the Anthropic has one, like, relative to a thought that, you know, Meta was spending 10,000,000,000. Yep. And there were these multiple billion dollar plus accounts that were driving it all. That just... It's much more diversified customer base for Anthropic. And then for the AI broadly, I do think that something that has happened since June is you've really seen, you know, first, we saw OpenAI really accelerate in the summer.

12. 5:28

    And as OpenAI accelerated, so did open weight models. And there's so many companies, you know, whether it's Fireworks, whether it's Baseten, whether it's Together, whether it's Modal, whether it's Cognition, that are at scale, really open weight first, and they're all growing faster than either OpenAI or Anthropic. And that was true when OpenAI was really accelerating in the summer. And it's still true in October when Anthropic has had clearly a pretty big reacceleration. Like, I just I'm pretty skeptical that they would have put the, you know, the, you know, the blank space for the October ARR in the s one Yeah.

13. 6:09

    If they didn't know it was gonna be pretty good. Yeah. And I do think it'll be great for the market to get away from these monthly ARR things. Totally. But to me...

14. 6:18

    Yeah. It's interesting. Yeah. Like seeing the the the modals, the base tens, the fireworks, the together's all out... Can probably... I feel like this is common knowledge. Basically, all... They've all been out in market. And so private markets investors have been getting these sort of updates. And and a lot of these companies have been, like, starting fundraises, growing dramatically from the period where they got their first term sheet to when they're actually like pulling in capital.

15. 6:45

    And so that that data is like broadly, like I would say the East Coast is just not aware of that at all. Mhmm. Some of them are picking it up, but it's not like sort of common knowledge. Whereas on the West, I would say like Mhmm. Over here, people are like, yeah, these companies are... We're already at scale and then they're growing, you know, double digits just during the period of like first term sheet to close or like first close. Well,

16. 7:12

    my firm, Atreides led the last fireworks round, and it was actually hard to price it because they were growing so fast.

17. 7:21

    Like, we thought I thought we had a handshake. Yeah. They're like, well, we've increased revenue. Yesterday's price is not today's price. Yeah. You're like, please, like, let's let's just get the deal done. Yeah. Lock it.

18. 7:31

    I mean, literally, it's like the valuation was going... You know, the multiple was effectively going down, you know, every day. Every day. Yeah. That's crazy. And if anything, it feels like that ecosystem has accelerated and diversified. Yeah. Because earlier this year, cursor was a real big driver for all those inference clouds.