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Exploring the frontiers of Technology and AI
Ejaaz:
Imagine spending years designing, building, perfecting your app or product only
Ejaaz:
for an AI model to come along and build an identical replica in seconds.
Ejaaz:
Well, this is exactly what Anthropic has achieved.
Ejaaz:
They have the best coding AI model clawed in the world.
Ejaaz:
And they've fended off multi-billion dollar attacks from the likes of Google and OpenAI.
Ejaaz:
In fact, they're so good that they've 10x their annual revenue three years in a row.
Ejaaz:
They're on track to achieve $10 billion in rev this year and they're projecting
Ejaaz:
$70 billion in revenue by 2028, which is just insane.
Ejaaz:
But if that still hasn't convinced you, get this.
Ejaaz:
50% of AI prompts today are just people vibe coding and 80% of those people, they're using Claude.
Ejaaz:
But here's the crazy plot twist.
Ejaaz:
Anthropic superpower isn't that they have the best coding AI model in the world.
Ejaaz:
It's what you can do with that coding AI model. Hear me out.
Ejaaz:
Imagine never having to open an app or a website ever again.
Ejaaz:
Claude just generates the exact digital experience that you desire.
Ejaaz:
Imagine not needing to scroll endlessly looking for the perfect pair of shoes that you want to buy.
Ejaaz:
Claude just generates the UI and presents you with a buy now button that you
Ejaaz:
just click and it completely evolves the way that humans interact with the internet.
Ejaaz:
Now I wish that this was the only good thing that Anthropic was good at.
Ejaaz:
But unfortunately, there's so much more. In fact, Microsoft and NVIDIA are investing
Ejaaz:
around $15 billion in Anthropic, and they're winning the enterprise market share as well.
Ejaaz:
All of this on the fact that the or rather the rumor that they're going to IPO
Ejaaz:
next year at a crazy valuation, which might just mean that Anthropic is the
Ejaaz:
best investment opportunity in the recent decade.
Josh:
Yeah, this episode kind of stems from the idea that I think more people are
Josh:
bearish on Anthropic than they should be.
Josh:
And it mostly comes from a misunderstanding because I'd place myself in that category
Josh:
I hadn't cared that much about Anthropic. I heard a lot of headlines about them
Josh:
being kind of bearish and decelerationist, and it rubbed me the wrong way.
Josh:
But upon doing the research for this episode, it became clear that there's actually
Josh:
some really interesting,
Josh:
advantages and cool opportunities that exist inside of Anthropic for an investment
Josh:
opportunity, but also for just personal productivity and use cases on a daily basis. It's very cool.
Josh:
So before we get into that, I want to set the origin story, kind of do some
Josh:
context setting for the cast and characters here.
Josh:
You could think of Anthropic as kind of the rebel house that walked out of OpenAI.
Josh:
We like to do the Game of Thrones talk.
Josh:
OpenAI was the king house. Dario and his sister, Danielle Amode,
Josh:
were actually senior leaders at OpenAI, the company.
Josh:
And in fact, on screen, we're showing one of the founding papers that he wrote while he was at OpenAI.
Josh:
So if OpenAI is how stark, then Anthropic is like this group of ex-Starks that
Josh:
said, yeah, we're just going to go build our own kingdom over there on the other
Josh:
side of the hill. Now, why did they do this?
Josh:
The divide comes from the underlying ethos of what we see Anthropic talking
Josh:
about a lot, which is safety.
Josh:
And a hot take is that safety, their obsession with safety isn't actually a break,
Josh:
but instead it's their enterprise sales strategy in disguise,
Josh:
which we're gonna get into because a lot of the market is enterprise sales and
Josh:
they require a serious amount of safety and constraint that a lot of models don't actually have.
Josh:
So Dario, he has this kind of heretic belief in Silicon Valley where he thinks
Josh:
benchmarks, they're mostly Cope and that coding is the only benchmark that matters.
Josh:
And through this foundational value set, we start to see where Anthropic shines, EGS.
Josh:
And I think that's probably where I'm going to pass it off to you to talk about
Josh:
how impressive some of these models have been recently, particularly around
Josh:
the unique advantage that they have, which is coding.
Ejaaz:
Yeah, I mean, I'm with you, Josh, that I was also a hater of Anthropic.
Ejaaz:
I just always saw them as kind of like a corporate NARC model.
Ejaaz:
And I kind of like dismissed coding primarily because that's not the majority
Ejaaz:
of the activity that I do on a daily basis, right?
Ejaaz:
Versus some like software engineering oriented friends that really see the benefit of this model.
Ejaaz:
And then I came across this crazy stat in prepping for this episode,
Ejaaz:
which is, Josh, just last year, the percentage of tokens.
Ejaaz:
So that's ai tokens the the stuff that you kind of fuel with prompts that composed
Ejaaz:
of coding um guess guess what that percentage might have been oh
Josh:
Man uh coding 30.
Ejaaz:
It was 12 last year oh wow okay and now 12 months later it's 50 and called code
Ejaaz:
accounts for 80 of that right so um that was the latest stats release whoa hold
Josh:
On pause there wait so 80 of 50 of the tokens that are being generated,
Josh:
are now generated by one company.
Ejaaz:
Correct.
Josh:
Oh, man. Okay. Whether it's through cursor.
Ejaaz:
Whether it's through some kind of integrated development environment or through
Ejaaz:
Claude Code directly, which is like primarily where people are going to, to Vibe Code.
Ejaaz:
80% of that is Claude Code, which is just an insane stat and such a rapid rate
Ejaaz:
of increase over the last 12 months.
Ejaaz:
This is stats from the recent report from Open Router.
Ejaaz:
Shout out to Alex Atala. We did an amazing episode with him a few months back.
Ejaaz:
Definitely go check it out. But the main takeaway from this,
Ejaaz:
Josh, is that they have the best coding model.
Ejaaz:
And it's not like this is an old coding model. This got released,
Ejaaz:
I think, a week and a half ago in the aftermath of Gemini 3 Pro's kind of like
Ejaaz:
crazy entrance where it just broke every single benchmark, including coding
Ejaaz:
So Anthropic released this model and said, hey, hey, we're still the kings here.
Ejaaz:
Step back. And I think this summary from McKay Wrigley, who is a guy,
Ejaaz:
Josh, you were telling me this before, who gets access to these models kind
Ejaaz:
of well in advance of them being released.
Ejaaz:
So he gets to test them out and really give an in-depth review.
Ejaaz:
So what we're reading here is, you know, something that is really practical and true to the bone.
Ejaaz:
He explains the kind of bigger picture with this coding model.
Ejaaz:
The main one being that it just allows autonomous development of pretty much anything.
Ejaaz:
I think a lot of people look at Anthropic and they think, oh,
Ejaaz:
they're just the coding model.
Ejaaz:
I don't want to use it. It's got nothing to do with me because I don't code.
Ejaaz:
And what the argument that he's trying to make in this post here effectively
Ejaaz:
is if LLMs enabled you to write words autonomously and then the first iterations
Ejaaz:
of Claude allowed you to code,
Ejaaz:
then this latest Claude Opus 4.5 release will be the enabler for AI agents.
Ejaaz:
It'll allow them to autonomously do work for you.
Ejaaz:
All those crazy kind of examples that we've come up with in the past now become
Ejaaz:
a reality with this new model.
Josh:
Yeah, one of the things that I found shocking, well, outside of that stat,
Josh:
that 80% of 50% of tokens are anthropic, is that people don't care because people
Josh:
don't use it. And I find myself in that bucket.
Josh:
But when you read reviews like this, when you see those numbers,
Josh:
you start to realize that even if you're not using it directly,
Josh:
this is a massively large deal.
Josh:
And one of the things that he mentioned in this post is just the revenue growth.
Josh:
And it starts to make sense now that we have these pieces where the first year
Josh:
was one to a hundred million.
Josh:
The second year was a hundred million to a billion. The third year,
Josh:
one billion to 10 billion.
Josh:
Can they go to a hundred billion? Well, they're projecting 70 billion.
Josh:
So maybe not another 10 X, but this massive gargantuan improvement in revenue
Josh:
year over year because they have this monopoly.
Josh:
And as I was reading through this review, and we're not going to go through
Josh:
the whole thing because it's fairly long,
Josh:
This is a developer who is completely in awe over the fact that the entire paradigm
Josh:
has kind of shifted in a way that wasn't previously possible.
Josh:
The new model introduces this thing called planning mode. And if I was playing
Josh:
around with it a little bit because I was just fascinated to see how it works,
Josh:
where EJS, if you've ever done deep research in open AI, you'll recognize that
Josh:
you share the prompt of what you want, but then it asks follow-up questions
Josh:
to kind of make sure that you're doing the right prompting and make sure that
Josh:
you're getting the right result that you want.
Josh:
What planning mode does with Claude is it does the same thing.
Josh:
So if you have a query, if you have a prompt, and you want it to be one shot,
Josh:
you want to just say what you want and get it on the back end,
Josh:
the new version actually has a path of getting this.
Josh:
And it seems to me that this is the public sentiment everywhere that...
Josh:
In a way, Claude almost has a monopoly on code, where if you really genuinely
Josh:
want the best model in the world at writing code, this new 4.5 model from Claude is it.
Ejaaz:
I particularly like this sentence that he writes here, where he describes Opus 4.5 like Waymo.
Ejaaz:
He says, you tell it, take me from A to B, and it takes you there.
Ejaaz:
After a few of these experiences, your brain realizes, oh, okay,
Ejaaz:
we live in this world now, and now you're hooked.
Ejaaz:
So in the same way that Waymo, you can step into a Waymo car and it autonomously
Ejaaz:
takes you from site A to site B,
Ejaaz:
he explains it in the same way that Claude code can kind of take you from problem
Ejaaz:
set that you described to it to an output in a matter of seconds.
Ejaaz:
And that's super powerful. Your point around the prompting stuff,
Ejaaz:
Josh kind of reminded me of this concept of meta-prompting, where you kind of
Ejaaz:
write a prompt to ChatGPT or to Claude, and you're kind of like,
Ejaaz:
hey, make this prompt sound better.
Ejaaz:
Write this in an expert way. Try and say what I'm trying to say.
Ejaaz:
And the LLM kind of evaluates your prompt and then rewrites it and then submits
Ejaaz:
it to itself. And it's this kind of like recursive momentum that Claude has
Ejaaz:
really sort of nailed in the coding vertical, right?
Ejaaz:
And then I kind of think of another thought that Andre Carpathy came up with
Ejaaz:
a while ago where he says the new language of coding is actually English, right?
Ejaaz:
And we see this development of people getting really, really good at prompting
Ejaaz:
and they structure it in such a way that it's kind of like a hybrid between
Ejaaz:
the English language and coding.
Ejaaz:
And I see kind of like the future of AI coding, not just being this thing that
Ejaaz:
is just kind of relegated specifically to software engineers and those who have
Ejaaz:
a certain software engineering background, but anyone and everyone can get access to it.
Ejaaz:
It just kind of like converges into this specialized form of the English language,
Ejaaz:
which is both kind of like
Ejaaz:
unnerving in a way because it's kind of like undiscovered in uncharted territory,
Ejaaz:
but really, really enabling once you figure out that, oh, that can unlock so
Ejaaz:
many other things if like now any kind of like 10-year-old can figure out how to code.
Josh:
Yeah. And maybe it's also helpful to explain why coding has become the default
Josh:
interface, because I think it's not really obvious when you talk about Andre's
Josh:
quote where English is the final language.
Josh:
Well, natural language is great for asking questions, but code is great for actually doing things.
Josh:
So we're converging on this pattern where like a user will describe their intent in English.
Josh:
The AI turns that into code. And then the code is the interface to everything,
Josh:
to data, to APIs, to payments, to UIs, to all of that.
Josh:
And actually on the topic of UIs in particular, EGIs, I know you have some takes
Josh:
on this that I would love to hear about because your idea of what the future
Josh:
of UI is, and for those who aren't familiar,
Josh:
user interface is basically when you engage with an application,
Josh:
the way the app looks and feels and functions, that is the user interface.
Josh:
But Ijaz, you have some interesting takes on the future of UI and what that's
Josh:
going to look like as it relates to Claude in particular. Yeah.
Ejaaz:
Yeah, so I think this is the number one ball case for Anthropic.
Ejaaz:
It isn't the fact that they have the best coding model in the world.
Ejaaz:
It's what that coding model enables.
Ejaaz:
And it's this term I've been kind of playing around with called ephemeral UI or ephemeral AI.
Ejaaz:
And what I'm describing here is, well, typically people are used to navigating
Ejaaz:
to websites, going on apps, scrolling on their phones, tapping icons.
Ejaaz:
I argue that in the future, apps don't exist, Josh.
Ejaaz:
Websites don't exist. Scrolling doesn't exist.
Ejaaz:
All that happens is your AI listens to what you want and it generates a user
Ejaaz:
interface personalized to exactly what you're asking for in milliseconds.
Ejaaz:
So it generates the website from scratch where it didn't exist before you prompted.
Ejaaz:
It generates the buy button.
Ejaaz:
Heck, it might even create a product that didn't even exist before that you
Ejaaz:
can click order and then it sends it to a manufacturer or factory in the real
Ejaaz:
world where a bunch of robots or people create it and then deliver it to your door a few days later.
Ejaaz:
Now, this was kind of like crazy to wrap my head around.
Ejaaz:
And I found this really great tweet here that I'm showing you from Justin Murphy,
Ejaaz:
which kind of captures the excitement.
Ejaaz:
I'm going to read an excerpt for it. Claude code is personal AGI.
Ejaaz:
You can't use this thing for more than a weekend without realizing it's completely over.
Ejaaz:
At first, you make a graphic user interface app and you're like, okay, cool.
Ejaaz:
Then you're like, wait, graphic user interfaces are a waste of time.
Ejaaz:
Let's just make a terminal app.
Ejaaz:
And then you're like, wait, apps are a drag.
Ejaaz:
What if I just ask Claude Co to do the thing directly?
Ejaaz:
Works immediately. And then you're like, damn, now asking Claude Code to do stuff feels like a drag.
Ejaaz:
Can I maybe have Claude make a system that says this stuff for me?
Ejaaz:
And he goes on and on and on and he reaches the end point where he's like,
Ejaaz:
oh my God, this is going to completely change the way that we interact with
Ejaaz:
the internet and the digital world that exists today.
Ejaaz:
We're not going to open up our laptops and navigate to a website or a browser.
Ejaaz:
We're going to have just AI funnel this entire thing for you.
Ejaaz:
Josh, is anything that I'm saying makes sense? Like, it's hard for me to wrap
Ejaaz:
my head around. So I can imagine it might be similar.
Josh:
Yeah, this makes total sense. In fact, my question, like, is not whether this is correct or not.
Josh:
It is, is Claude the company that will be able to do this?
Josh:
So it seems like at the limit, when you're exploring, like, where are the outer
Josh:
bounds of where AI goes to?
Josh:
The end state is probably something similar to photons in, photons out.
Josh:
Meaning, like, you get sun from the sky, it turns into intelligence through
Josh:
a transformer and it just outputs some sort of information,
Josh:
What does that information look like? Well, is it text on a screen?
Josh:
Is it a visual interface?
Josh:
Is it audio? Is it all of the above? And what we're seeing on screen here is
Josh:
Andre Carpathy, who is the legend that we all know and love.
Josh:
He is describing one possible thing, which is just what you were talking about
Josh:
is, is this dynamic creation of user interfaces. Now, I just want to note the
Josh:
fact that this is a Google example and not an Anthropic example,
Josh:
which is where my one little bit of concern comes in.
Josh:
So Anthropic is unbelievably good at coding models, large language models,
Josh:
which traditional LLMs, they predict text token by token, kind of like left
Josh:
to right. And they rely heavily on prior tokens too.
Josh:
So like, it's just, it's a very linear way of thinking.
Josh:
But what Google is doing and what some of these other companies are doing that
Josh:
have more of a physics-based approach versus a code-based approach is this thing
Josh:
called diffusion models, which instead of relying on tokens,
Josh:
they kind of diffuse everything and they start with noise and then they iteratively
Josh:
refine the entire output all at once. So it's much faster. It's much more dynamic.
Josh:
It feels like it's appropriate for building these types of user interfaces.
Josh:
I think you're right in the sentiment. I'm not sure Claude is going to be the one to get there.
Josh:
And that's kind of where I start to find little pieces of doubts in this thesis
Josh:
is, well, Claude's great for code and code has a huge marketplace,
Josh:
but there's a lot more in the world that will be impacted by AI that is not written by code.
Josh:
Like in the world of atoms, like any sort of visuals that we're doing,
Josh:
anything that's not built by code.
Josh:
Claude isn't really there. But is that a problem? Probably not.
Josh:
I mean, hey, what was the number? 80% of 50%?
Josh:
That is a huge number and the revenue isn't slowing down.
Josh:
So maybe what we're seeing here, and I think this is probably what we're seeing
Josh:
here, is again, we talk about this all the time, the narrowing of focus and
Josh:
scope in these AI companies where Google has a real world reality model.
Josh:
Claude is focusing highly specifically on coding. And right now, they're the best by far.
Ejaaz:
Maybe Anthropic ends up providing the fuel for this next iteration or evolution of UI, right?
Ejaaz:
So maybe they won't end up building the user interface that people interact
Ejaaz:
with or whatever app surfaces this to people, but they supply the code.
Ejaaz:
They supply the engine to kind of harness and power this. And hey,
Ejaaz:
that's like a very, very valuable thing, right?
Ejaaz:
If they can create their kind of like own market monopoly on a layer between
Ejaaz:
GPUs and AI apps and they sit in between them and they funnel everything between
Ejaaz:
them just through their own coding model.
Ejaaz:
That's a pretty valuable company as is. The other thing that really impressed
Ejaaz:
me about what they've been able to build, Josh,
Ejaaz:
is this coding model was built without the billions and billions of dollars
Ejaaz:
worth of resources that Google and OpenAI has.
Ejaaz:
Remember, OpenAI is a $500 billion company or private company.
Ejaaz:
It's the most expensive private company that we know of right now that's been
Ejaaz:
like officially confirmed.
Ejaaz:
And they have so much in funding, capex funding from their investors, right?
Ejaaz:
Google, on the other hand, is a cash cow. They get so much money from all their
Ejaaz:
other profitable businesses that they could just plow it into AI and make all
Ejaaz:
of the AI apps free, right?
Ejaaz:
And we saw that with Gemini 3 Pro coming out, that they just smashed all benchmarks.
Ejaaz:
Despite that, Anthropic, with lesser funding, with lesser support,
Ejaaz:
was able to pull out a better coding model.
Ejaaz:
And what's impressive about this now, Josh, is that they're being funded a hell of a lot more.
Ejaaz:
In fact, they're starting to make some pretty big expenditures.
Ejaaz:
This news was released this week
Ejaaz:
where they signed a $52 billion deal to purchase 1 million Google TPUs.
Ejaaz:
That's Google's version of their own GPUs.
Ejaaz:
And the reason why this is super interesting is TPUs specifically are built
Ejaaz:
for very specific purposes, very specific functions.
Ejaaz:
An anthropic specific function, as we've been saying repeatedly on this episode, is coding.
Ejaaz:
I see this as a direct means for them to extend their lead and strengthen their
Ejaaz:
moat as the leading coding AI model provider.
Ejaaz:
This is pretty impressive when you take it to the fact that it's not just Google
Ejaaz:
getting involved in this, Josh.
Ejaaz:
It's also all the other Game of Thrones participants. You've got NVIDIA and
Ejaaz:
Microsoft investing $15 billion.
Ejaaz:
I have a crazy fact for you, Josh. What do you got? Guess the percentage of
Ejaaz:
ownership that Google has of Anthropic.
Josh:
Just guess. Wait. So, again, I cheated in the research for this.
Josh:
It's outrageous. 14% of the company is owned by Google.
Ejaaz:
Yes.
Josh:
That is so much of the company. Which is funny because, I mean,
Josh:
Anthropic just wired Google $52 billion for a TPU order to cut their influence bill by two thirds.
Josh:
So, again, like you said, this is very incestual. There is a lot of incest going
Josh:
on. In fact, there's another person on the cap table, which I also learned, which is fascinating.
Josh:
And that company is named Amazon, who owns somewhere between 15 to 19 percent of Anthropic.
Josh:
So between Amazon and Google, one third, they own one third of Anthropic,
Josh:
just about, which is an outrageous amount.
Josh:
And it made me laugh because, again, so much of this industry,
Josh:
so much of this AI bubble,
Josh:
for lack of a better word, is built on top of these reoccurring Lego blocks
Josh:
where every house in the Game of Thrones, it's all very incestual.
Josh:
They're all related. They all have interpersonal relationships.
Josh:
They all have a vested interest in the other person succeeding.
Josh:
So when Anthropic is wiring,
Josh:
$52 billion to Google. Well, Google owns 15% of the company already.
Josh:
And they're going to help Anthropic cut their inference bills by two thirds
Josh:
because TPUs are very efficient.
Josh:
And like, it's all this self-fulfilling loop, hopefully upwards in a rising
Josh:
tide that lifts all boats.
Ejaaz:
It's really funny. Anthropic is kind of like the golden child that's getting
Ejaaz:
spoiled by his parents and all the aunties and uncles. You've got NVIDIA that's
Ejaaz:
saying, hey, please take my GPUs.
Ejaaz:
In fact, do you want to know a stipulation of the $5 billion investment in Anthropic
Ejaaz:
that Jensen specifically put forward to Dario?
Ejaaz:
It was the fact that they would dedicate an entire NVIDIA team towards designing
Ejaaz:
their next model of Claude.
Ejaaz:
So Claude5 is going to be co-signed by NVIDIA because he was so anxious about
Ejaaz:
Google TPUs taking over his market share for Anthropic specifically, right?
Ejaaz:
Then you got Google coming in with 1 million TPUs, and then you got the Amazon
Ejaaz:
investment, which means that their Tranium chips, which they just announced
Ejaaz:
last week, is also going to train Anthropic.
Ejaaz:
There is no means for them to lose from an infrastructure perspective.
Ejaaz:
It's theirs to basically lose, and it's just an insane thing to see.
Ejaaz:
But they're being even more aggressive. It's not just GPUs that they're focusing, Josh.
Ejaaz:
Did you see this news leak from the information this week, I think they're going
Ejaaz:
on a acquisition spree, dude.
Ejaaz:
They're going to start acquiring a bunch of developer companies to further strengthen
Ejaaz:
not only their coding AI mode, but the application layer that developers will end up using as well.
Josh:
Yeah, okay. So this is interesting to me because what's the constraint that every company faces?
Josh:
They don't have enough CPUs. They don't have enough compute,
Josh:
whether it be energy or they can't get enough GPUs from Jensen.
Josh:
They're compute constrained. It feels like Anthropic is kind of compute flooded.
Josh:
They have an abundance of options they they don't feel constrained by compute so,
Josh:
The question I'm asking myself is if like, hey, if you give the king of coding
Josh:
a mountain of chips and ask what happens, well, my bet is they just continue
Josh:
to solidify the coding lead.
Josh:
And as they do this, they will continue to climb the stack into probably more
Josh:
enterprise apps, more directly up against other companies like OpenAI. So this is their way in.
Josh:
Are they going to compete on a broad scale across all the features? No.
Josh:
But as a focus on code, if they continue down this route, I mean,
Josh:
that monopoly on coding tokens is like pretty serious. And as the number of
Josh:
tokens goes up every quarter, I mean, like Dario said, they're on pace to $70 billion of revenue.
Josh:
That's like a tremendous amount of money. So it seems like they're in a really good spot.
Ejaaz:
Okay, so if I were to get a gut check between the both of us right now,
Ejaaz:
Josh, I would say we're pretty bowled up, right? Would you agree?
Josh:
I am bullish. And if I am bullish, then surely there's a way for me to see some
Josh:
upside in this, right? Based on the rumor mill.
Ejaaz:
Well, that's the puzzle piece that's been missing for so long,
Ejaaz:
right? Like it's one thing for our listeners to listen to this and be like, okay, great.
Ejaaz:
Anthropik's an amazing company, but it's another thing to be like,
Ejaaz:
well, I can't invest. They're a private company.
Ejaaz:
Well, the rumor mill has been churning as it always does every single week.
Ejaaz:
And apparently Anthropik is filing for an IPO as soon as next year.
Ejaaz:
Now, some have even said, Q1 of next year. I think they are probably too bullish.
Ejaaz:
But somewhere in the kind of realm of 2026 is where we might see one of the
Ejaaz:
biggest IPOs. And that's not a phrase that I came up with.
Ejaaz:
That's coming directly from the Financial Times.
Ejaaz:
Dario is separately trying to raise and confirm a $300 billion private valuation
Ejaaz:
of Anthropic with the aims of going public.
Ejaaz:
If it does, Josh, I think this might be one of the best AI investments that
Ejaaz:
we've seen in the recent decade, right?
Ejaaz:
We haven't even got an OpenAI IPO. And I think they might even IPO later.
Ejaaz:
And there's a few reasons why Anthropic is going to IPO as soon as this.
Ejaaz:
And it's, well, actually, it's one main reason.
Ejaaz:
They're becoming profitable way sooner than any other AI lab.
Ejaaz:
Like you said, they're projecting $70 billion by the end of 2027.
Ejaaz:
And the main reason why they've been able to do this is because they've dominated
Ejaaz:
the enterprise AI market.
Ejaaz:
So if all things go on and they keep on following this pattern of 10Xing their
Ejaaz:
revenue for the last three years, and they do it for another fourth and fifth
Ejaaz:
year, then they're the likely candidate for a crazy IPO.
Josh:
Yeah, it's like if you missed AWS and you missed early NVIDIA,
Josh:
then Anthropic really is one of the only shots left to own a pure play in AI
Josh:
infrastructure and the coding story at scale.
Josh:
Like this is really one of the earlier opportunities to get in at any of these
Josh:
companies under a trillion dollar valuation, which is outrageous to say,
Josh:
but that's probably the reality.
Josh:
And I guess if I'm thinking about how to evaluate this, whether I would want
Josh:
to invest or not, it's if you're evaluating Anthropic on their ability to create
Josh:
a coding model. They're fantastic.
Josh:
Revenues are high. They have a clear path to expanding. I mean,
Josh:
$70 billion is an outrageous number for a company this young.
Josh:
Outside of coding, it's not that interesting. I'm not sure where the applications
Josh:
lie, but coding is so large.
Josh:
And again, I'm trying to wrap my head around 80% of 50% of all tokens generated.
Josh:
It's like such a huge number. And so much of the world runs on code that having
Josh:
a pseudo monopoly on that for now is a really big opportunity and i guess like it,
Josh:
Depending on the valuation, I mean, like OpenAI had a trillion. That seems high.
Josh:
Anthropic, maybe lower. I mean, they're planning to raise the $300 billion.
Josh:
What's the multiple on that prior to IPO? I don't know.
Josh:
But it's going to be interesting. Ejaz, what is your take on the public offering?
Ejaaz:
Well, before we do it, do you want to hear another crazy stat,
Ejaaz:
Josh? You've been loving the 80% and 50%, right?
Josh:
That's such a huge number. Because the number of tokens is going straight vertical.
Josh:
And if they're owning a majority of that, that's huge.
Ejaaz:
Well, not only that, like the percentage of those tokens that are just going
Ejaaz:
towards Vibe coding is increasing.
Ejaaz:
It 5X'd over the last 12 months from 12% to 50%.
Ejaaz:
But get this, if you look at just clawed code, siloed as its own product,
Ejaaz:
it is the new quickest product to reach $1 billion in annual recurring revenue.
Ejaaz:
It did it in under six months.
Ejaaz:
That title now is owned by Anthropic.
Josh:
Yeah, that's insane. And the numbers are not going, they're not slowing down.
Josh:
That was the thing, like that 1 million to 100 million 100 to a
Josh:
billion billion to 10 10 to 70 it's outrageous
Josh:
they have i mean according to that number 40 percent of all tokens generated
Josh:
they don't need to spend as much money because they're getting the google tpus
Josh:
and tpus are two-thirds more efficient than gpus so they can do this all at
Josh:
a lower cost and they have this efficiency and the company is it's presumably
Josh:
smaller at scale in terms of employees and it is this whole perfect storm,
Josh:
if you are into code and if you are bullish on code for Anthropic.
Ejaaz:
But Josh, what's the bear case for this? Like, how will Anthropic...
Ejaaz:
Like, this sounds all great if it pans out like it is.
Ejaaz:
But I feel like there's a few obstacles that Anthropic kind of needs to navigate
Ejaaz:
before it kind of, like, fulfills that sentiment. Do you have a bear case for us?
Josh:
I mean, the bear case for me, at least, is that they're just good at code.
Josh:
You don't really want to use Cloud for anything else. Maybe writing.
Josh:
But again it doesn't have they
Josh:
have no diffusion model they have no real world physics engine
Josh:
they don't really process things multimodally they don't
Josh:
do images or videos or voice really and
Josh:
they kind of have small signs of this here and there but they are really hyper
Josh:
fixated on this one thing and that is to their benefit because they earn this
Josh:
monopolistic advantage in the marketplace but in the case that there is an innovative
Josh:
breakthrough let's say ilia who works at safe super intelligence basically a
Josh:
funded research lab that has raised tons of money with no product.
Josh:
Their only job is to come up with unique innovations in how you create models
Josh:
to give you better outputs.
Josh:
And if a company like Ilias comes out with the breakthrough that is able to
Josh:
leapfrog Anthropic in terms of how well it's able to code at a cost per token that's lower.
Josh:
I mean, that completely shatters the business model. So there is a lot of fragility built into this.
Josh:
The upside to this is that, well, they're a enterprise company.
Josh:
They're not really selling to us i mean sure their their
Josh:
users are developers and coders but they're oftentimes you can
Josh:
think of kind of like an aws their their enterprise sales software it's
Josh:
going to companies and companies are slower to to move
Josh:
and to pivot so they are building this moat so i think the bear case is probably
Josh:
that coding isn't a sticky moat and they're one breakthrough away from having
Josh:
this moat crumble but in the case they're able to retain this moat which is
Josh:
40 of all tokens like they are in really good shape going forward i'm curious
Josh:
if you agree disagree where you're you You kind of stand on this.
Ejaaz:
I agree with you on the delivery part.
Ejaaz:
I'm not convinced that Anthropic is going to be the one to turn that vision
Ejaaz:
of coding to ephemeral UI that we described earlier towards the end consumers, the end users.
Ejaaz:
I don't think they're like a consumer product company.
Ejaaz:
I think they're more developer-oriented and enterprise-oriented, as you described.
Ejaaz:
But I don't think that's a bad thing at all, because the more that I think about
Ejaaz:
it, Josh, I see coding as a very necessary substrate to build AI apps.
Ejaaz:
So in the same way that NVIDIA GPUs, and they own the market monopoly on those,
Ejaaz:
are the substrate needed to build the AI model in the first place,
Ejaaz:
I think Anthropics coding capabilities,
Ejaaz:
their coding engine, will be the substrate needed to build any and all future AI apps.
Ejaaz:
And people will kind of like, as long as they maintain this monopoly,
Ejaaz:
kind of paid the Pied Piper.
Ejaaz:
They'll pay the toll in order to get access to frontier level coding AI.
Josh:
And I guess at the very end of the limit, the final question would be,
Josh:
is there going to be apps?
Josh:
Like I think about OpenAI's hardware device next year, where there's no screen
Josh:
and like, I don't know, it's gonna be weird.
Josh:
But I think we could probably leave it at that where Anthropica is doing good things.
Josh:
And this is kind of like the, the explainer as to why they are more important
Josh:
than I think most people perceive, ourselves included.
Josh:
I mean, prior to doing the research for this episode, I was much more bearish
Josh:
on Anthropoc just because of the sentiment around them. They were kind of known
Josh:
as the decelerationists.
Josh:
And I didn't love that. They were super into safety.
Josh:
And while that's still true, they are undeniably generating tremendous amounts
Josh:
of real world value for people like us, for companies like Google and Amazon,
Josh:
and for the whole world who writes code.
Josh:
So in that, You have to admire what they're doing and the growth of this unbelievably impressive company.
Josh:
I mean, that's really, that's all it is. That's Anthropik.
Ejaaz:
Yeah, well said. Now, for the astute listeners of this show,
Ejaaz:
some of this information might have sounded familiar to you,
Ejaaz:
but that's because you read our essay in our record-breaking newsletter,
Ejaaz:
which was released two weeks ago, where we wrote about the bull case for Anthropik.
Ejaaz:
If you guys aren't signed up or subscribed to the Limitless Newsletter, you definitely need to.
Ejaaz:
We'll link to it in the description below.
Ejaaz:
And for the 80% of you that still
Ejaaz:
aren't subscribed but watch this show week in week out it would mean the world
Ejaaz:
to us if you subscribe and sign up um josh do you have any latest stats for
Ejaaz:
subscriber count i saw that we were up like a couple hundred over the last couple of days
Josh:
We're getting subs quickly so thank you for subscribing please if you have not
Josh:
pressed the button and turn on the bell next to it which will it'll actually
Josh:
notify you every time an episode comes out the three times a week we try to
Josh:
keep them short if you if you watch all three episodes per week there is not
Josh:
much that you're missing in the world of AI. You are caught up at the frontier.
Josh:
In fact, you are even in front of the frontier because Ejaz,
Josh:
like you said, a lot of times in the newsletter or sometimes in these episodes,
Josh:
you will hear us talk about, and I'm very proud of this point because I'm like,
Josh:
okay, we're actually doing it.
Josh:
You'll hear us talk about these things prior to them being the mainstream news.
Josh:
Like even just last week, we had our space episode about AI data centers.
Josh:
And over the weekend, it became this huge fallout where Kathy Wood was talking
Josh:
about it. Elon was talking about it. They were building new theses.
Josh:
And we had just discussed the entire bull case for it earlier in the week.
Josh:
So if you want to be early, if you want to be right, if you want to be on time,
Josh:
or at least, you know, we're going to try our best to be right.
Josh:
But if you want to be early to the information, please subscribe to the newsletter,
Josh:
subscribe to the podcast, do all the good things, share it with your friends.
Josh:
And yeah, we'll be back again for the next episode in a few days. We'll see you guys then.