# Anthropic Files for IPO, Giving Market A Glimpse Into Its Finances

An episode of [Bloomberg Tech](https://invisiblenetwork.ai/podcast/1611767434), 26 Oct 2026, 55 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/41764a4f-fc64-4e11-89ba-ae7c0030ab5e/e84e7a43-7bd6-4000-bc66-b4ef01695d02/audio.mp3?utm_source=Podcast&in_playlist=9caafc41-289c-4115-995d-ae7c0030ab75

Bloomberg’s Ed Ludlow takes a look at Anthropic's regulatory filing as the company prepares to go public under the ticker ANT. The S-1 revealed Anthropic's revenue and spending, along with its plan for an unusual corporate structure. Plus, venture investors are in line for a big payday when Anthropic goes public. Matt Murphy from Menlo Ventures and Byron Deeter from Bessemer Venture Partners discuss what they think happens next for the AI market. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios.
[0:04] Speaker 2: Podcasts.
[0:05] Speaker 3: Radio.
[0:06] Speaker 2: News.
[0:13] Speaker 4: Bloomberg Tech is live from the heart of Silicon Valley
[0:17] Speaker 4: with Ed Ludlow in San Francisco.
[0:22] Speaker 2: This is Bloomberg Tech. Anthropic has filed publicly for an
[0:25] Speaker 2: IPO and intends to list on the Nasdaq under the
[0:27] Speaker 2: ticker Ant, A-N-T. The filing gives us the deepest look
[0:31] Speaker 2: yet inside one of the world's biggest AI companies. The
[0:34] Speaker 2: growth has been extraordinary, but Anthropic tells its investors plainly
[0:38] Speaker 2: that growth will slow. At the same time, it's locking
[0:41] Speaker 2: in hundreds of billions of dollars of future compute spending
[0:44] Speaker 2: even though most of its revenue depends on how much
[0:47] Speaker 2: customers actually use Claude. And it's a big step for
[0:50] Speaker 2: an IPO that we report is on track to happen
[0:52] Speaker 2: in mid-November. Joining us now, Bloomberg AI reporter Shireen Ghaffari
[0:56] Speaker 2: and Bloomberg Chief Wall Street correspondent Shireen Adarajan. Shireen, the
[1:00] Speaker 2: moment's finally arrived. We'll go with the basics. What do
[1:03] Speaker 2: we learn? What's new here in this S1?
[1:06] Speaker 5: So we know that Anthropic is listing on the NASDAQ.
[1:09] Speaker 6: It's official.
[1:10] Speaker 5: We have some solid now revenue figures in the past,
[1:15] Speaker 5: as well as losses in line with what Bloomberg has
[1:18] Speaker 5: previously reported there. So no big surprises. But this is
[1:22] Speaker 5: the first real financial set that we're getting from a
[1:27] Speaker 5: pure play AI company.
[1:28] Speaker 7: Right.
[1:29] Speaker 5: So this is huge for people trying to analyze the
[1:32] Speaker 5: both extreme potential, but also risks and weaknesses in the
[1:35] Speaker 5: Gen AI business model.
[1:35] Speaker 2: That's what picks revenue in the first half of 2026,
[1:38] Speaker 2: $ 16. 3 billion versus $ 1. 2 billion in the same period a
[1:42] Speaker 2: year ago. We think that they will try to match
[1:45] Speaker 2: or exceed what SpaceX did in its IPO, Sri. Let's
[1:48] Speaker 2: bring in the Wall Street perspective. We know now who
[1:50] Speaker 2: the banks are on this deal and in what order.
[1:52] Speaker 2: Tell me what I need to know.
[1:54] Speaker 6: Well, Goldman Sachs is lead left, which does seem like
[1:56] Speaker 6: a bit of a surprise because I think there was
[1:58] Speaker 6: some expectation that Morgan Stanley could possibly be leading this IPO.
[2:02] Speaker 6: But Goldman Sachs lead left on SpaceX. Then they brought
[2:06] Speaker 6: the Google and the Alphabet equity offering into the market.
[2:09] Speaker 6: And now just look at the slate of announcements. And
[2:11] Speaker 6: I need to point that out because it is a
[2:14] Speaker 6: banner day for capital markets. You know, when you think
[2:16] Speaker 6: about investment banking, we go through periods of feast and famine.
[2:19] Speaker 6: But Monday morning today certainly seems like a period of feast.
[2:23] Speaker 6: Goldman was lead left on this Anthropic S1 announcement, the
[2:27] Speaker 6: $ 95 billion meta fundraising announcement that came through, as well
[2:31] Speaker 6: as structuring the $ 40 billion chip financing for SpaceX with Apollo.
[2:36] Speaker 6: That is over $ 200 billion of deals that is being arranged,
[2:40] Speaker 6: led by one bank. Yes, there are others, Morgan Stanley,
[2:43] Speaker 6: JP Morgan, and others are also playing a lead role
[2:46] Speaker 6: in many of those. But the fact that Goldman Sachs
[2:48] Speaker 6: takes top billing is a big day for the bank.
[2:51] Speaker 6: And honestly, As we go through the next few weeks
[2:55] Speaker 6: and as we head into the middle of November, this
[2:58] Speaker 6: will certainly be a big test. If they can execute
[3:00] Speaker 6: this properly, there were a lot of question marks around
[3:02] Speaker 6: SpaceX and how it would trade post the IPO. It
[3:06] Speaker 6: seems to have done just fine. If they can pull
[3:09] Speaker 6: that off with Anthropic, it would be a big success.
[3:12] Speaker 2: Shireen, there was a pretty clear warning in the risk
[3:16] Speaker 2: language about the impact of AI on humanity. Please explain it.
[3:20] Speaker 8: Sure.
[3:21] Speaker 5: So Anthropic has long been a company that's raised risks
[3:24] Speaker 5: about the consequences of this technology if it goes wrong.
[3:27] Speaker 5: And that was a message loud and clear in the
[3:29] Speaker 5: risk factors. The company said that advanced AI could pose
[3:33] Speaker 5: catastrophic or existential risks to humanity. that its models have
[3:37] Speaker 5: exhibited behavior including resisting shutdown, concealing and manipulating information, and
[3:42] Speaker 5: behavior resembling blackmail. So in essence, Anthroping is saying our technology,
[3:48] Speaker 5: if it does not have the right safeguards, if we
[3:49] Speaker 5: do not figure out the security, could end up potentially
[3:53] Speaker 5: wiping out humanity here, existential risk. And that is quite
[3:57] Speaker 5: notable for an IPO, not something you normally see in
[4:00] Speaker 5: an S1.
[4:01] Speaker 2: There are lots of things that are not in here.
[4:02] Speaker 2: There are no third quarter financials, really. There is no
[4:07] Speaker 2: total addressable market figure, Shireen, which SpaceX did include. It said,
[4:10] Speaker 2: here's the world we see in the far future. But
[4:13] Speaker 2: I think it's important for us to talk about the
[4:14] Speaker 2: founding group. So my read on it, Dario Amadei stays
[4:18] Speaker 2: as CEO. Surprise or not, Daniela Amodei stays as president
[4:22] Speaker 2: and chair of the board. And then there's this idea
[4:24] Speaker 2: that the seven founders have a voting control, essentially. Just
[4:29] Speaker 2: explain the confirmation, I guess, of the management team.
[4:32] Speaker 5: That's right. So Anthropic is a company that has seven co-founders.
[4:35] Speaker 5: They all remain at the company, a tight-knit group. And
[4:39] Speaker 5: this S1 solidifies that control and power that they have.
[4:44] Speaker 5: And that is what we're seeing in this new share
[4:47] Speaker 5: of stocks and that LLC that you mentioned.
[4:50] Speaker 2: Sri, I'm looking at kind of some of the financing
[4:53] Speaker 2: language in this. I know that the revolving credit line,
[4:56] Speaker 2: there's an update there. Maybe you could talk a bit
[4:58] Speaker 2: about that. But go also back to what you were
[4:59] Speaker 2: just explaining a moment ago. There isn't much in the
[5:02] Speaker 2: filing itself, but based on Bloomberg's reporting, this is now
[5:06] Speaker 2: a pretty tight window for Anthropic to do this IPO
[5:10] Speaker 2: by Thanksgiving.
[5:12] Speaker 6: Honestly, when you when you start getting into the second
[5:14] Speaker 6: week of December, that's practically when markets shut down. You
[5:17] Speaker 6: really don't bring new deals then. Now we know that
[5:20] Speaker 6: Anthropic is trying to pull this off the week before Thanksgiving.
[5:23] Speaker 6: And going back to your point on the S1 filing,
[5:25] Speaker 6: when I reach out to a bunch of investors this morning,
[5:28] Speaker 6: ask them for their first stake. A lot of these
[5:30] Speaker 6: top line numbers had been leaked into the market. we
[5:33] Speaker 6: had a sense of what they would look like. What
[5:36] Speaker 6: they really want to get are specifics on Q3 and
[5:39] Speaker 6: considering that this could be a mid-November IPO, will we
[5:42] Speaker 6: get a whisper number on the Q4 revenue expectations and
[5:46] Speaker 6: what is the pace of revenue growth? Is there going
[5:49] Speaker 6: to be significant deceleration? Because if that's the case, then
[5:52] Speaker 6: there will be a lot of pressure on Anthropic to
[5:55] Speaker 6: further trim their valuation expectations and perhaps raise even more
[6:00] Speaker 6: than $ 100 billion if this is what the window allows.
[6:04] Speaker 2: Okay, Bloomberg, Shireen Ghaffari, our AI correspondent, and Shireen Adarandran,
[6:07] Speaker 2: our chief Wall Street correspondent. Thank you very much. Let's
[6:09] Speaker 2: keep the conversation going. Joining us now, Gil Lurie of
[6:12] Speaker 2: DA Davidson. And Gil, let's just start with what you
[6:14] Speaker 2: feel you learned from the S1. Anything you feel is
[6:17] Speaker 2: new or has even changed the story around Anthropic?
[6:21] Speaker 9: Yeah, I'd say the most important things I saw are, one,
[6:25] Speaker 9: this is a profitable company. I think there's been a
[6:29] Speaker 9: lot of assertion that anthropic and open AI lose money,
[6:31] Speaker 9: lose money on every query. That is not the case.
[6:35] Speaker 9: Their revenue is about twice as much as their total
[6:39] Speaker 9: compute costs, including trading. And that was unclear from all
[6:44] Speaker 9: the leaks, and it is now very clear in an
[6:47] Speaker 9: SEC filing. The other thing is that they have $ 131
[6:50] Speaker 9: billion of cash in equivalents. That means that the IPO
[6:54] Speaker 9: is not an act of desperation. They actually have a
[6:57] Speaker 9: war chest that could last them for a while because
[6:59] Speaker 9: they're actually not burning through that much cash. The cash
[7:02] Speaker 9: flow statement is not in there, but this is a
[7:05] Speaker 9: company with not that much capex, which is to say—
[7:08] Speaker 9: They're actually in okay financial shape. The one thing I
[7:11] Speaker 9: do think that the reading of the S-1 will take
[7:15] Speaker 9: longer to understand, to wrap our heads around, is the
[7:18] Speaker 9: public benefit corporation aspects of this. That's not very typical.
[7:21] Speaker 9: It means that the company is saying we are not
[7:24] Speaker 9: just here to maximize shareholder value. We're also here for
[7:28] Speaker 9: the benefit of humanity, which we get to decide what
[7:31] Speaker 9: that means. That's the part that I think is going
[7:33] Speaker 9: to be a little bit of a tougher read.
[7:36] Speaker 2: I just want to put some numbers behind some of
[7:37] Speaker 2: the points that you were making on a macro level.
[7:39] Speaker 2: So cash and short-term investments was about $ 131 billion as
[7:43] Speaker 2: of June 30th on the balance sheet. Total assets, $ 147. 4 billion.
[7:47] Speaker 2: Total liabilities, $ 117 billion. And you said that this was
[7:50] Speaker 2: a company that is profitable. And what that looked like
[7:53] Speaker 2: in the second quarter was gap operating income of $ 974
[7:58] Speaker 2: million and gap operating margin of 8%. But the bit
[8:02] Speaker 2: that I want to get to... That I feel like
[8:04] Speaker 2: no one's talking about as much was the completely stark
[8:07] Speaker 2: and codified warning that growth is going to slow and
[8:11] Speaker 2: that it will just simply not be at historical levels
[8:14] Speaker 2: going forward. Is everyone pretty calm about that?
[8:19] Speaker 9: Well, I think we got the news that the third
[8:21] Speaker 9: quarter decelerated from the second quarter last week.
[8:25] Speaker 1: So we understood that. But just by definition, a company.
[8:28] Speaker 9: Can't multiply itself by 10 times every year. Clearly, it's
[8:32] Speaker 9: going to grow less than it did last year. It
[8:34] Speaker 9: was still disappointing that Q3 grew slower than Q2 in
[8:38] Speaker 9: terms of the revenue they added. It was really just
[8:40] Speaker 9: a feature of the fact that their market share was
[8:44] Speaker 9: almost 100% of the enterprise in the middle of the year,
[8:47] Speaker 9: and then open AI caught up, then open weight models
[8:50] Speaker 9: caught up. And therefore, their market share is now much
[8:53] Speaker 9: more moderate than that. And that's going to continue to
[8:56] Speaker 9: be the case. So as you were discussing earlier with Sharin,
[8:59] Speaker 9: it's very important that the fourth quarter guidance come in
[9:03] Speaker 9: at a nice growth rate, that there be 2027 guidance
[9:06] Speaker 9: for growth. Those are pieces that will come out during
[9:09] Speaker 9: the roadshow. They're not in the S1. And it is
[9:12] Speaker 9: important that they at least have continued growth, that they're
[9:15] Speaker 9: not peaking in terms of revenues.
[9:17] Speaker 2: The 3Q revenue number was not in the S1, but
[9:19] Speaker 2: Bloomberg had reported that it's $ 16. 8 billion, which is up
[9:24] Speaker 2: from $ 11. 6 billion in the second quarter and would represent 45%
[9:28] Speaker 2: sequential growth. But the overall trend is decelerating growth. The
[9:33] Speaker 2: numbers that jumped out at me is the cost of
[9:36] Speaker 2: compute and economics. So in 2023, compute was 10x revenue.
[9:41] Speaker 2: In the first half of this year, it was 55%
[9:43] Speaker 2: of revenue. That is positive, right? That's the direction of
[9:48] Speaker 2: travel you'd want to see.
[9:50] Speaker 1: Yeah, that's very positive.
[9:52] Speaker 9: Because again, it goes to the essence of the whole
[9:54] Speaker 9: AI trade depends on any model company, regardless of whether
[10:00] Speaker 9: it's Anthropic or the others that will emerge with OpenAI
[10:02] Speaker 9: and Google, etc., has to be able to sell that
[10:06] Speaker 9: compute that they're paying for at a higher price. And
[10:10] Speaker 9: right now, it seems like not only is that the case,
[10:13] Speaker 9: But the profit margin, that gross margin, the revenue over
[10:18] Speaker 9: compute is actually increasing right now. And that's a very
[10:22] Speaker 9: good sign for the AI economy because that has to
[10:24] Speaker 9: be the case for them to keep buying compute from
[10:28] Speaker 9: the hyperscalers and others. And so the hyperscalers and others
[10:31] Speaker 9: can buy semis, so they can buy semi-cap, so they
[10:34] Speaker 9: can buy construction energy, etc. The whole AI economy depends
[10:38] Speaker 9: on that margin. That's why, to me, that was the
[10:40] Speaker 9: highlight of this S1.
[10:43] Speaker 2: I would say, generally speaking, technology stocks are higher, right?
[10:45] Speaker 2: And while I don't draw too much of a causal
[10:48] Speaker 2: link between what we got in the S1 and the
[10:50] Speaker 2: fact that the SOX is up 3%, the NASDAQ 100, 1.4%,
[10:53] Speaker 2: there's a bit of life back in the AI trade,
[10:56] Speaker 2: I think. Sometimes, Gil, and I'd ask you to draw
[11:00] Speaker 2: on your experience in markets here a little bit, if
[11:02] Speaker 2: you would. It's as much about what you don't say
[11:05] Speaker 2: as what you do. There is no sort of big
[11:07] Speaker 2: TAM number in this document. SpaceX gave us a very
[11:11] Speaker 2: big TAM number just for AI, which was 26.5 trillion.
[11:15] Speaker 2: What do you make of that?
[11:18] Speaker 9: That that could still come out during the roadshow process.
[11:21] Speaker 9: And I would say that when they talk about their TAM,
[11:24] Speaker 9: they're not going to talk about the TAM for software.
[11:27] Speaker 9: They will either create a new number like SpaceX did,
[11:31] Speaker 9: or anchor to something along the lines of what SpaceX did,
[11:33] Speaker 9: or what they're more likely to say is, The market
[11:36] Speaker 9: for labor is tens of trillions of dollars. That is
[11:40] Speaker 9: the market we are addressing because we're going to make
[11:42] Speaker 9: people more productive. We're going to displace some labor. And
[11:46] Speaker 9: that's the addressable market. And that's obviously such a big
[11:49] Speaker 9: addressable market that it allows them a big runway for growth.
[11:53] Speaker 9: So I would still expect that to come out during
[11:56] Speaker 9: either the next iteration of the S1 or during the roadshow.
[12:00] Speaker 2: In the SpaceX S1, you know, it was the sort
[12:04] Speaker 2: of Elon Musk story. The risk factors very highly correlated
[12:08] Speaker 2: to Elon Musk's participation in the future endeavors of SpaceX.
[12:13] Speaker 2: There's less of that key man risk presented in this
[12:17] Speaker 2: filing based on the hours I've spent reading it so far, Gil.
[12:21] Speaker 2: You know, the seven founders get 50.1% voting control. Dario
[12:24] Speaker 2: Amadei stays as CEO. Daniela stays as president and chair
[12:28] Speaker 2: of the board. Do things like that matter when you're
[12:30] Speaker 2: about to try and pull off an IPO like this?
[12:33] Speaker 9: Oh, very much so. And they should matter to investors
[12:36] Speaker 9: because this is actually an unusual permutation, right? Usually the
[12:40] Speaker 9: controlling stake stays with one or maybe two founders. It's
[12:44] Speaker 9: in the case for Google. And here we're going to
[12:47] Speaker 9: have these seven people, not just Dario Amode and Daniela,
[12:52] Speaker 9: but seven people that are going to have controlling interest.
[12:54] Speaker 9: So that's a whole other dynamic of control. who's going
[12:57] Speaker 9: to want what and how are they going to vote
[13:00] Speaker 9: and what's the best interest. So this is a unique permutation.
[13:04] Speaker 9: But again, it has that big disclaimer that we often
[13:07] Speaker 9: have with these types of IPOs that you as a
[13:10] Speaker 9: shareholder will never get to a controlling interest. That is
[13:13] Speaker 9: always going to stay with the founders. And in this case,
[13:16] Speaker 9: there's going to be a new level of opacity around
[13:20] Speaker 9: what those seven people agree on, as opposed to knowing
[13:23] Speaker 9: what Elon wants or knowing what Mark Zuckerberg wants. Larry
[13:27] Speaker 9: and Sergey, here we're going to have to wonder what
[13:30] Speaker 9: those seven people agree on and whether there's going to
[13:33] Speaker 9: be some dynamics there of them not agreeing on things
[13:35] Speaker 9: and therefore changing the trajectory of the company. And again,
[13:39] Speaker 9: can't emphasize enough how they went through a whole section
[13:42] Speaker 9: about being public benefits, which means we're not always going
[13:46] Speaker 9: to maximize value. We don't want our share price to
[13:49] Speaker 9: trade above the value of the company. These are not
[13:52] Speaker 9: typical things. This is highly unusual. And investors, again, are
[13:56] Speaker 9: going to have to really get comfortable with that, that
[13:59] Speaker 9: they're going to trust this group of seven people to
[14:02] Speaker 9: decide what's good for humanity, to decide what's good for
[14:05] Speaker 9: the company, even if that doesn't mean maximizing shareholder value.
[14:10] Speaker 2: The mission or its stated public benefit is, quote, the
[14:12] Speaker 2: responsible development and maintenance of advanced AI for the long-term
[14:16] Speaker 2: benefit of humanity. And now everyone will try to model
[14:18] Speaker 2: for how you run the economics of a company and
[14:21] Speaker 2: the profit for shareholders with that public benefit in mind.
[14:25] Speaker 2: Gil Lurie of DA Davidson, really great having you with
[14:27] Speaker 2: us here on Bloomberg Tech. Thank you very much. Okay,
[14:29] Speaker 2: coming up, how are markets digesting AnthropXS1 news? The broader
[14:33] Speaker 2: competition for capital to fund the AI boom. There are
[14:37] Speaker 2: lots of other financial transactions out there in the market
[14:40] Speaker 2: this morning. This is Bloomberg Tech. Okay, Anthropic has filed
[14:55] Speaker 2: publicly for an IPO. Its S1 is out today. Fresh
[14:58] Speaker 2: numbers around one of the biggest bets yet on artificial intelligence.
[15:02] Speaker 2: There's a bit of life in the AI trade. It's
[15:05] Speaker 2: hard to know if what's driving market sentiment is specifically
[15:07] Speaker 2: what's detailed in the S1. We're also in this earnings
[15:10] Speaker 2: period where there's a more complicated picture, like where is
[15:13] Speaker 2: there still value? Where are the bottlenecks? Where is the
[15:16] Speaker 2: next phase of the AI build-out going to emerge? Laurie Keith,
[15:18] Speaker 2: Portfolio Manager at Parnassus Investments, is with us and has
[15:22] Speaker 2: the inenviable task of trying to make sense of it all.
[15:25] Speaker 2: Let's start with the S1. You know, it's a moment
[15:28] Speaker 2: that equity markets have been waiting for. And I guess
[15:34] Speaker 2: to start, what did we learn about the world that
[15:37] Speaker 2: these AI and frontier labs are operating in?
[15:39] Speaker 1: No, thank you.
[15:40] Speaker 2: I mean, it's great to be here, Ed.
[15:41] Speaker 3: I would say, you know, this is tremendous milestone that
[15:44] Speaker 3: we're seeing today as you're really seeing AI move from
[15:47] Speaker 3: these pilots and experimentation to to now focus on what
[15:51] Speaker 3: are the companies that can truly capture that economic value
[15:55] Speaker 3: going forward. And so I think there's no doubt that
[15:58] Speaker 3: AI is extremely transformational, it's exponential, and that's going to
[16:02] Speaker 3: create a huge opportunity, not only for some of the
[16:05] Speaker 3: frontier players, but also these downstream second-order beneficiaries that really
[16:10] Speaker 3: are participating in the build-out of AI.
[16:14] Speaker 2: It is specific to Anthropic, but I think a lot
[16:16] Speaker 2: of people had some concern about concentration risk the number
[16:21] Speaker 2: of parties that are so closely resolved and so when
[16:23] Speaker 2: i was going through the data and i just want
[16:24] Speaker 2: to bring it to the boombo tech audience i looked
[16:26] Speaker 2: at the customer data that they have there are almost
[16:28] Speaker 2: 12 000 customers that spend a hundred thousand dollars a
[16:32] Speaker 2: year with anthropic which is up for about 950 customers
[16:35] Speaker 2: a year ago so it's big growth in that kind
[16:37] Speaker 2: of cohort there are almost 1900 customers that are spending
[16:42] Speaker 2: a million dollars a year and then you can kind
[16:45] Speaker 2: of extrapolate out there from the midpoints of the market.
[16:47] Speaker 2: What does that tell you about where Anthropix growth actually is?
[16:51] Speaker 3: I mean, it's a good question. I think, you know,
[16:53] Speaker 3: ultimately what it shows, I think certainly there is this
[16:56] Speaker 3: insatiable demand. We've obviously seen really on the front foremost
[17:03] Speaker 3: in terms of engineering and coding compute needed in those
[17:07] Speaker 3: use cases. And as those broaden out into things like
[17:09] Speaker 3: customer service and other applications, we're seeing a number of
[17:13] Speaker 3: our companies that we're involved with really implement AI to
[17:16] Speaker 3: help drive efficiency and strengthen those competitive advantages. So I
[17:21] Speaker 3: do think we're still early days in terms of the
[17:23] Speaker 3: adoption of AI, but we think there's a tremendous long runway,
[17:27] Speaker 3: not only for the enablers, those companies that are leveraging
[17:31] Speaker 3: the compute and providing the chips, but also many of
[17:34] Speaker 3: these downstream players, such as in the infrastructure space, the
[17:37] Speaker 3: power and water infrastructure. There's a whole host of companies
[17:41] Speaker 3: that we think have very strong competitive advantages that will
[17:44] Speaker 3: benefit throughout the build out of this phase.
[17:47] Speaker 2: It is an extraordinary morning because Anthropic filed publicly for
[17:51] Speaker 2: an IPO, but Meta also detailed its plans to seek
[17:57] Speaker 2: up to $ 95 billion in equity. And on the credit
[18:00] Speaker 2: or the debt side, SpaceX agreed a quite complicated $ 40
[18:05] Speaker 2: billion chip financing deal with Apollo. The the umbrella point,
[18:10] Speaker 2: these companies will still need capital.
[18:12] Speaker 3: Absolutely.
[18:13] Speaker 1: For sure.
[18:14] Speaker 3: I think that it just sort of speaks to where
[18:16] Speaker 3: we are in the cycle. I mean, certainly we are
[18:18] Speaker 3: still very much in a capital intensive phase of this
[18:21] Speaker 3: build out. But again, looking at who are the actual beneficiaries,
[18:25] Speaker 3: both the first and second order beneficiaries are going to
[18:27] Speaker 3: benefit from the spinning. We see a whole host of
[18:30] Speaker 3: particularly interesting in the mid cap space where companies that
[18:33] Speaker 3: have essentially providing that infrastructure pipeline, the utilities that are
[18:40] Speaker 3: participating and expanding their grid, some of the water technology players.
[18:44] Speaker 3: We think all of them are going to really be
[18:47] Speaker 3: well poised to generate compounded earnings over the next decade
[18:51] Speaker 3: due to the spending that's going to be needed today.
[18:53] Speaker 3: And certainly, Moore's law, compute can be really driven by
[18:57] Speaker 3: Moore's law. But when you're thinking about establishing or building
[19:01] Speaker 3: out a new power plant or building a query, that
[19:05] Speaker 3: doesn't align with the speed of Moore's law. That takes
[19:08] Speaker 3: much more time. And frankly, that's a much longer tail
[19:11] Speaker 3: investment cycle. But we see a lot of particularly interesting
[19:14] Speaker 3: companies in that area.
[19:16] Speaker 2: Another data point I'm just going to put out there
[19:17] Speaker 2: because we haven't got to it yet is, for example, Anthropic,
[19:21] Speaker 2: which is a frontier lab, listed TSMC, the world's number
[19:24] Speaker 2: one chip manufacturer, as a risk factor in the supply
[19:27] Speaker 2: of those lead-ed chips that they need to compute. We
[19:31] Speaker 2: are in earnings. What have you learned about the AI
[19:34] Speaker 2: story specifically from the earnings that we've had so far?
[19:37] Speaker 2: I mean, it's a great question.
[19:38] Speaker 3: I think, you know, AI, there's been really a couple
[19:40] Speaker 3: themes that I would point out.
[19:41] Speaker 2: You know, first of all, I.
[19:42] Speaker 3: Would say, you know, earnings, you know, companies that have
[19:45] Speaker 3: been putting up really great numbers aren't necessarily being rewarded
[19:49] Speaker 3: for that.
[19:50] Speaker 10: Yet.
[19:50] Speaker 3: I mean, we're so early in the earnings cycle. I
[19:53] Speaker 3: think less than 25 percent of the companies on the
[19:55] Speaker 3: S & P and even mid caps are lower today.
[19:58] Speaker 3: But I think ultimately, you know, the valuations do matter
[20:02] Speaker 3: and expectations are high going into the earnings. So We
[20:06] Speaker 3: did see a company such as Lamb Research, which reported
[20:09] Speaker 3: last week. They actually had an excellent quarter, beat numbers,
[20:12] Speaker 3: raised guide. The stock actually just still fell back. Ultimately, though,
[20:17] Speaker 3: we think that is creating opportunities for some of these
[20:20] Speaker 3: really strong players that have strong competitive advantages, given their
[20:25] Speaker 3: positioning around advanced packaging, around memory within the equipment space.
[20:31] Speaker 2: Laurie Kiefer for Masters Investments. Thank you. What a morning
[20:35] Speaker 2: in the world of technology and finance news. OK, coming up,
[20:38] Speaker 2: we're going to bring you those details. So Meta seeks
[20:41] Speaker 2: to raise up to $ 95 billion to help funding its
[20:44] Speaker 2: AI spending. And then SpaceX looks at a very interesting
[20:47] Speaker 2: financing mechanism with Apollo. Got both of those when we return.
[20:50] Speaker 2: This is Bloomberg Tech. Meta wants to raise up to
[21:03] Speaker 2: $ 95 billion from selling common and preferred stock to support
[21:07] Speaker 2: its AI investments. Joining us now with the details, Bloomberg
[21:10] Speaker 2: Big Tech Editor Sarah Fryer. And this all relates to
[21:12] Speaker 2: what we first learned in earnings last week.
[21:15] Speaker 8: Yeah, so in earnings last week, Meta said that it
[21:18] Speaker 8: was going to be creating a new class of shares,
[21:21] Speaker 8: a non-voting class through a stock split, and that that
[21:24] Speaker 8: would happen in January. So part of this new offering
[21:28] Speaker 8: is going to be just the common stock. And part
[21:31] Speaker 8: of it is that is going to be that new
[21:33] Speaker 8: share class. And what Meta said about that, beyond raising
[21:37] Speaker 8: money for the AI boom, this is going to allow
[21:39] Speaker 8: them to bring in different kinds of investors, and it's
[21:42] Speaker 8: also going to allow them to let some stock get
[21:47] Speaker 8: sold without diluting or reducing the stake of Mark Zuckerberg,
[21:52] Speaker 8: the CEO of Meta. And just to remind everyone, Google
[21:57] Speaker 8: and Intel both made very rare stock offerings earlier this
[22:02] Speaker 8: year that were both oversubscribed. Google's was $ 85 billion. So
[22:06] Speaker 8: this is even bigger than Google's. And there's been a
[22:10] Speaker 8: lot more skepticism around metas. But it'll be very interesting
[22:13] Speaker 8: to see this come out alongside the anthropic IPO and
[22:17] Speaker 8: a bunch of other financial reasons.
[22:20] Speaker 2: Sarah Fryer, who leads tech coverage at Bloomberg. Thank you
[22:22] Speaker 2: very much indeed. Real quick, Elon Musk said that SpaceX
[22:25] Speaker 2: has closed a $ 40 billion equipment finance lease with Apollo
[22:29] Speaker 2: Global for the chips needed to fuel its AI ambitions.
[22:32] Speaker 2: SpaceX said in a filing that the fixed rate the
[22:34] Speaker 2: company will pay is yet to be determined. The deal
[22:37] Speaker 2: expected to close before the end of the year. The
[22:39] Speaker 2: lease is expected to start the first half of next year.
[22:42] Speaker 2: Anthropic has filed publicly for an IPO. It intends to
[22:45] Speaker 2: list on the Nasdaq under the ticker ANT. And what
[22:49] Speaker 2: I would say, without there being too much of a
[22:51] Speaker 2: direct link, there is some energy in the AI trade, right?
[22:55] Speaker 2: You know, people have had a little while to digest
[22:57] Speaker 2: that S1 filing, which hit about 30 minutes before the
[23:00] Speaker 2: start of the opening trade. And right now, the NASDAQ
[23:05] Speaker 2: 100 up 1.5%, the SOX up 3.4%. We also have
[23:08] Speaker 2: some breaking news crossing the Bloomberg terminal. Microsoft is offering
[23:12] Speaker 2: buyouts to 60,000 employees. Here with us for the story,
[23:16] Speaker 2: Bloomberg's Brody Ford. Brody, what do we need to know?
[23:18] Speaker 11: 60,000 is a lot of people, right? I mean, we've
[23:22] Speaker 11: seen a lot of tech companies try to shed their workforce.
[23:26] Speaker 11: The Metas, Googles, Microsofts of the world are betting that
[23:30] Speaker 11: they can do more with less people with AI and
[23:32] Speaker 11: their cash flow is strained from all this AI spending.
[23:35] Speaker 11: And so this is the latest strategy Microsoft is taking
[23:39] Speaker 11: to try to get some cost off his books.
[23:42] Speaker 2: Buyouts, they do that typically? Like what's the history of
[23:45] Speaker 2: how Microsoft handles this kind of reduction?
[23:49] Speaker 11: Very limited. They did a retirement buyout earlier this year
[23:53] Speaker 11: and that was the first large scale one we've seen.
[23:55] Speaker 11: To me, this is a bit friendlier version of the
[23:58] Speaker 11: Elon extremely hardcore Twitter buyout. A lot of people will
[24:02] Speaker 11: remember when he bought Twitter, he said, Okay, if you're
[24:05] Speaker 11: sticking around, it's going to get a little tougher from here.
[24:07] Speaker 11: And if not, you can take a buyout. That's the
[24:09] Speaker 11: energy I'm getting from Microsoft, right? They're saying we need
[24:12] Speaker 11: to be focused on this mission. And, you know, if
[24:15] Speaker 11: you're thinking about not being here, maybe you shouldn't be.
[24:19] Speaker 2: One thing I would point out is that as of
[24:20] Speaker 2: June 30th, Microsoft has 223,000 employees. So that buyout number,
[24:26] Speaker 2: like to me, that seems big. Bloomberg's Brady Ford with
[24:29] Speaker 2: the news that you need. Thank you very much indeed.
[24:31] Speaker 2: Let's get back to today's big story, Anthropix S1. There's
[24:34] Speaker 2: a lot we still need to go through in terms
[24:36] Speaker 2: of what Anthropix said about the future. Bloomberg venture capital
[24:39] Speaker 2: reporter Natasha Mascarenas is with us. I want to start
[24:42] Speaker 2: on actually some pretty specific disclosure they made about future
[24:46] Speaker 2: financing needs. And the reason that I want to get
[24:49] Speaker 2: through that is that, well, hold on, they're on the
[24:51] Speaker 2: precipice of a giant IPO, but they could not have
[24:54] Speaker 2: been more clear about how they see future financing, the
[24:57] Speaker 2: need to raise capital, et cetera. Absolutely.
[24:59] Speaker 4: I mean, Anthropic has around $ 141 billion worth of cash
[25:04] Speaker 4: right now as of June 30th.
[25:06] Speaker 2: Quite a lot.
[25:07] Speaker 4: But CEOs love to talk about IPOs being a fundraising event.
[25:10] Speaker 4: And so in this filing, Anthropic is reminding people that
[25:13] Speaker 4: it's going to need a lot of cash in order
[25:15] Speaker 4: to keep funding its endeavors. You know, at the same time,
[25:18] Speaker 4: we've been covering their fundraisers pretty rapidly in the private markets.
[25:22] Speaker 4: And now we're getting a heads up that that's absolutely
[25:25] Speaker 4: going to continue. They're going to need to fund it
[25:26] Speaker 4: through a variety of means.
[25:28] Speaker 2: So I think for the Bloomberg Tech audience, there's a
[25:31] Speaker 2: lot that is not in this S1, right? And it
[25:33] Speaker 2: will come when you get an amendment in S1A. But
[25:37] Speaker 2: one of them was what we look for is 5% ownership.
[25:40] Speaker 4: Right.
[25:41] Speaker 12: Right.
[25:41] Speaker 2: So you were on the show last week and you
[25:43] Speaker 2: detailed some of the big potential winners from this IPO,
[25:45] Speaker 2: particularly the venture firms that came in quite late. Explain
[25:48] Speaker 2: what's not there, but also what we do know.
[25:51] Speaker 6: Yeah.
[25:51] Speaker 4: So you're not going to see any of the venture
[25:53] Speaker 4: capital firms really that we talked about last week. So
[25:55] Speaker 4: we're not going to see the big shareholders like Iconic, Sequoia, GIC,
[26:00] Speaker 4: Menlo Ventures. There is one venture firm that's in the filing,
[26:04] Speaker 4: Spark Capital. Their general partner, Yasmin Razavi, is the only
[26:09] Speaker 4: board director from the venture capital world. They still are
[26:13] Speaker 4: not that above 5% stockholder name that we're looking for,
[26:17] Speaker 4: but Yasmin is noted as one of the few board
[26:20] Speaker 4: directors and has been a constant participant in Anthropix.
[26:25] Speaker 2: Private financing.
[26:26] Speaker 4: So the tiniest glimmer of a venture capital name in
[26:29] Speaker 4: one of the biggest venture capital exits of all time
[26:31] Speaker 4: we're anticipating.
[26:31] Speaker 2: Okay, Natasha, let me take this one. So what is missing?
[26:34] Speaker 2: We do not know the IPO size, the target range,
[26:36] Speaker 2: the price range, the valuation. There were no Q3 financials.
[26:40] Speaker 2: There was also no TAM number. Those kinds of things
[26:42] Speaker 2: will come. Something very interesting in the background, we just
[26:46] Speaker 2: did the big meta equity market raise and the SpaceX
[26:49] Speaker 2: financing with Apollo. OpenAI is trying to do a private round.
[26:53] Speaker 2: while all of this is going on. Just remind us
[26:55] Speaker 2: of that and why it's important.
[26:56] Speaker 4: Yeah, I mean, OpenAI is currently talking to investors about
[27:00] Speaker 4: raising at around a $ 1. 25 trillion valuation. This is happening
[27:05] Speaker 4: in the same days. And I'm sure for some investors,
[27:07] Speaker 4: the same back-to-back meetings this week.
[27:10] Speaker 2: And in simple terms, because there are people in common
[27:12] Speaker 2: on both cap tables.
[27:12] Speaker 4: Exactly, exactly. So crossover investors are looking at both opportunities.
[27:16] Speaker 4: My question, is there enough demand to fuel all of
[27:18] Speaker 4: these deals, the Anthropic IPO, the OpenAI private market? round and,
[27:22] Speaker 4: of course, the entire AI financing market.
[27:25] Speaker 2: Bloomberg's Natasha Mascarenas. It's been a busy, fun, bit chaotic
[27:29] Speaker 2: morning for all of us. Thank you very much for
[27:31] Speaker 2: being with us. Let's keep the conversation on Anthropix S1 going.
[27:34] Speaker 2: Rohit Kulkarni, Partner and Chief AI Officer at Burnham Park
[27:37] Speaker 2: Capital Markets is with us. Rohit, it's great to have
[27:39] Speaker 2: you back on the show. Let's just start with your
[27:42] Speaker 2: conclusion that you have drawn from reading this S1.
[27:47] Speaker 12: I would say the headline here is better than feared
[27:50] Speaker 12: and mildly positive. Given all the leaks and all the
[27:54] Speaker 12: information that thanks to people like you and many other
[27:57] Speaker 12: people on the street reported over the last couple of weeks,
[28:00] Speaker 12: there was growing fear. There was a wall of worry
[28:03] Speaker 12: that people were trying to climb as to. whatever Anthropic
[28:07] Speaker 12: says is probably going to lead to a down leg
[28:09] Speaker 12: in the market. On the other hand, what we saw
[28:13] Speaker 12: today was there were a couple of positive things. One
[28:16] Speaker 12: is the profitability is fundamentally built on pretty sound pillars.
[28:22] Speaker 12: For example, the gross margin is above 50%. That's an
[28:27] Speaker 12: encouraging sign. And the trend line is even more encouraging.
[28:31] Speaker 12: That takes off the existential issue of the table. And plus,
[28:35] Speaker 12: they have more than $ 100 billion of cash on the
[28:39] Speaker 12: balance sheet. So they have cut hundreds of billions of
[28:43] Speaker 12: dollars of ious you know that you've covered it yes
[28:46] Speaker 12: companies like google microsoft um amazon and broadcom and all
[28:51] Speaker 12: those guys they'll probably raise another tens of billions of
[28:55] Speaker 12: dollars so probably that threat of they going uh out
[28:59] Speaker 12: of business and unable to pay their bills is is
[29:03] Speaker 12: off the table now and that's why people are reacting
[29:05] Speaker 12: positively positive gross margins good trend line and lots of
[29:09] Speaker 12: cash on the balance sheet and they'll have more by
[29:11] Speaker 12: the end of this year so i think yes we'll
[29:14] Speaker 12: learn more about the pricing the valuation the annualized run
[29:18] Speaker 12: rate revenues all those things in the next two three
[29:20] Speaker 12: weeks but i think this is a very positive first step.
[29:24] Speaker 2: I want to get into the growth story there are
[29:26] Speaker 2: no 3q financials in there right but the reported number
[29:29] Speaker 2: this is what you were referring to a moment ago
[29:31] Speaker 2: we reported that the Q3 revenue was $ 16. 8 billion, about 45%
[29:36] Speaker 2: growth sequentially. But they say, we expect our revenue growth
[29:40] Speaker 2: rate to decline over time, in part because you're moving
[29:45] Speaker 2: out of the early stage AI adoption story. Everyone seems
[29:48] Speaker 2: pretty calm about that language.
[29:51] Speaker 12: I think when they talk about the number of customers
[29:54] Speaker 12: paying more than a million dollars, number of customers paying
[29:57] Speaker 12: more than $ 100, 000 per year, I think they already have
[30:01] Speaker 12: penetrated a pretty large customer base, to be honest. I
[30:04] Speaker 12: think where the next leg of growth comes from is
[30:08] Speaker 12: completely new products from what we have seen in the
[30:11] Speaker 12: last decade. 12 to 18 months. New products as compared
[30:15] Speaker 12: to coding, as compared to subscriptions. And we don't know
[30:18] Speaker 12: what those products are going to look like and we
[30:20] Speaker 12: don't know how much they're going to be successful from
[30:22] Speaker 12: those new products. So I think there's going to be
[30:24] Speaker 12: a leap of faith and to some degree a pretty
[30:27] Speaker 12: significant kind of benefit of doubt that investors would need
[30:32] Speaker 12: to give to this company for the valuation. That remains
[30:36] Speaker 12: to be seen where that comes from.
[30:37] Speaker 2: But you're right.
[30:38] Speaker 12: It is slowing down.
[30:40] Speaker 1: How much it slows down is the question now.
[30:44] Speaker 2: 11,900 customers are paying Anthropic $ 100, 000 a year, up from
[30:47] Speaker 2: less than $ 1, 000 a year ago. There are 250 customers
[30:51] Speaker 2: that are paying more than $ 10 million a year. The
[30:55] Speaker 2: economics are changing. We did talk about this at the
[30:57] Speaker 2: beginning of the show, but I want to go back
[30:59] Speaker 2: to it. In 2023, the compute cost was 10 times revenues.
[31:03] Speaker 2: In the first half of this year, it was 55%
[31:06] Speaker 2: of revenue. So clearly, massive improvement in economics. Is it
[31:11] Speaker 2: good enough for you? Very good, you say.
[31:14] Speaker 1: I think.
[31:16] Speaker 12: Because that translates directly into what revenue multiple people would
[31:20] Speaker 12: be willing to pay on their, let's say, 2028 revenues.
[31:24] Speaker 1: And if, which I.
[31:26] Speaker 12: Believe now they have provided sufficient data to let investors
[31:30] Speaker 12: be comfortable that, If our gross margins, if that amount
[31:34] Speaker 12: of money that we need to spend for every dollar
[31:36] Speaker 12: of revenue on compute is going to be less than
[31:40] Speaker 12: 20 cents, which means that gross margins could be as
[31:43] Speaker 12: high as 80%. I think then you get a very
[31:47] Speaker 12: significant upside to valuation, or at least the potential is
[31:51] Speaker 12: there on the table. Whether that comes at the end
[31:54] Speaker 12: of November or sometime next year, that remains to be seen.
[31:57] Speaker 12: But I think that the trend line, exactly what he said,
[32:00] Speaker 12: is as positive and it's a bit more surprising the upside.
[32:05] Speaker 12: Probably that's the core part of the story here.
[32:09] Speaker 2: How important is it? that Anthropic has not put a
[32:16] Speaker 2: TAM number in there. They haven't really told us anything
[32:19] Speaker 2: about a future that they see.
[32:22] Speaker 12: Yeah, I think, in my opinion, that was a smart
[32:27] Speaker 12: thing to do given all the reactions we had to
[32:32] Speaker 12: SpaceX TAM number. which were on the borderline of being
[32:38] Speaker 12: ridiculous and maybe having them having must privilege. In this case,
[32:44] Speaker 12: I feel kind of the way they're letting investors do
[32:49] Speaker 12: the math. They're letting people like us, you and me,
[32:52] Speaker 12: do the creative thinking here around how much value do
[32:57] Speaker 12: you put on intelligence and how do you monetize that?
[33:01] Speaker 1: I feel.
[33:01] Speaker 12: that's the open-ended exercise. And probably people will come up
[33:05] Speaker 12: with a pretty significant, if not TAM, but at least
[33:08] Speaker 12: addressable market number that this company continues to grow and
[33:12] Speaker 12: gets to hundreds of billions of dollars of revenues.
[33:16] Speaker 2: Rohit Kulkarni, Partner, Chief AI Officer at Burnham Park Capital Markets.
[33:20] Speaker 2: Thank you very much. Okay, coming up, we may not
[33:22] Speaker 2: have gotten the 5% ownership disclosures in the Anthropic S1,
[33:26] Speaker 2: but we do know there's going to be a windfall
[33:28] Speaker 2: for lots of early investors, people that have seen Anthropic
[33:32] Speaker 2: through this rapid phase of its growth. One of them,
[33:34] Speaker 2: Byron Dieter from Bessemer Venture Partners, joins us next. This
[33:38] Speaker 2: is Bloomberg Tech. Look, investors who backed Anthropic early are
[33:55] Speaker 2: going to get major windfalls from this IPO. That includes
[33:58] Speaker 2: Bessemer Venture Partners, first invested in the Claude Maker back
[34:01] Speaker 2: in 2024, not that long ago, and has put $ 650
[34:04] Speaker 2: million in over four rounds. Byron Theta from Bessemer Venture
[34:08] Speaker 2: Partners is very kindly with us. And look, the S1
[34:14] Speaker 2: carries a lot of information and sometimes a somewhat limited utility.
[34:17] Speaker 2: I just ask you what you want the world to
[34:20] Speaker 2: have learned from it. from the information that we got
[34:22] Speaker 2: in that filing.
[34:24] Speaker 7: Well, it's great to be with you on this exciting Monday.
[34:27] Speaker 1: And this is the one everyone's been waiting for.
[34:30] Speaker 7: We know that AI is the mega trend of the
[34:33] Speaker 7: next several decades. And this is the first opportunity to
[34:37] Speaker 7: truly get pure play software exposure. We've been having the
[34:41] Speaker 7: opportunity in the leading layers, the hardware, the infrastructure, and
[34:45] Speaker 7: this is the monster in the software side.
[34:48] Speaker 2: I think that you've talked about this being a sort
[34:52] Speaker 2: of an important moment of LP liquidity. Just talk about
[34:57] Speaker 2: the sort of broader effect that the anthropic going through
[35:00] Speaker 2: with this might have for the LP landscape in particular.
[35:05] Speaker 7: The industry has had massive growth, but record low DPI,
[35:09] Speaker 7: distributed capital. If you look at just this IPO market
[35:14] Speaker 7: of this year, it's three times larger in dollars, but
[35:17] Speaker 7: a third of the volume and almost no distributions, yet
[35:20] Speaker 7: SpaceX being the first unlock pending. And so everyone has
[35:23] Speaker 7: been waiting for Anthropic and potentially OpenAI next year. And
[35:27] Speaker 7: then a wave that follows. We do think this will
[35:29] Speaker 7: unlock floodgates into 2027 for more IPOs. but it's been
[35:33] Speaker 7: several years of record low distributions despite massive value appreciation.
[35:41] Speaker 2: This is a really difficult one, but what does the
[35:45] Speaker 2: timing of all of this and the filing itself tell
[35:49] Speaker 2: you in the world of the frontier labs, frontier AI,
[35:53] Speaker 2: what is or is not an IPO-ready company? How do
[35:56] Speaker 2: we know that they're ready?
[35:59] Speaker 7: So we have this unbelievable backlog of high quality companies
[36:02] Speaker 7: in the private markets right now. We're going to release
[36:04] Speaker 7: our AI 100 list in the next couple of weeks.
[36:07] Speaker 7: And spoiler alert, every one of those is a multi-billion
[36:10] Speaker 7: dollar entity. And this is the backlog that the public
[36:13] Speaker 7: investors haven't been able to tap into because they've remained private.
[36:16] Speaker 1: There's been this huge backlog.
[36:18] Speaker 7: No one has wanted to challenge Anthropic in this Q4 window.
[36:21] Speaker 7: There are narrow windows to begin with. You've got a
[36:23] Speaker 7: dancer on the election. You've got the holidays before Thanksgiving
[36:26] Speaker 7: or if you go after Thanksgiving. that narrow couple of
[36:29] Speaker 7: weeks before Christmas, and then 27 opens up. And so
[36:32] Speaker 7: there are not going to be a lot of folks
[36:34] Speaker 7: that try to go out anywhere near this Q4 event.
[36:37] Speaker 7: But into 27, we hope and believe a lot more
[36:40] Speaker 7: will follow and that there will be more activity for
[36:42] Speaker 7: public investors looking to participate in this massive AI wave.
[36:48] Speaker 2: I want to go into some of the warnings, which
[36:51] Speaker 2: in the form of risk disclosures. in this filing because
[36:55] Speaker 2: Bessemer is not only invested in Anthropic, right? You look
[36:58] Speaker 2: across the portfolio, you capture the broad spectrum of what
[37:02] Speaker 2: we call AI. So there's two things in particular. Anthropic
[37:05] Speaker 2: warns that open source models could pressure pricing, but also
[37:09] Speaker 2: specialized models could win out for particular workloads. Those are
[37:15] Speaker 2: all domains, Byron, that you're active in, you're invested in
[37:20] Speaker 2: outside of Anthropic.
[37:22] Speaker 1: Very much so.
[37:24] Speaker 7: And I think that what's important about those disclosures and
[37:27] Speaker 7: the market trends is to see how these all fit
[37:30] Speaker 7: together and operate together, is in that you will see
[37:34] Speaker 7: frontier models continuing to set the pace for the industry.
[37:37] Speaker 7: The best companies with the most advanced projects are absolutely
[37:40] Speaker 7: going to need and depend on them, and that's going
[37:42] Speaker 7: to be a strong and leading market demand for many,
[37:46] Speaker 7: many years ahead. In addition to that, you have the
[37:49] Speaker 7: ability to then layer on their degraded models at much
[37:52] Speaker 7: better unit economics and the Frontier Labs are going to
[37:56] Speaker 7: provide that for their customers as alternatives. In addition to
[37:59] Speaker 7: the open weights models that we've now had for several
[38:01] Speaker 7: years that will have an important role in this value chain,
[38:04] Speaker 7: And the specialized models that you note for things like
[38:07] Speaker 7: physical AI, we're just seeing this wave of physical AI
[38:09] Speaker 7: open up, but use cases like Waymo and autonomous driving
[38:13] Speaker 7: or Saronic and defense tech or med tech devices that
[38:17] Speaker 7: are going to completely transform the life sciences and healthcare.
[38:21] Speaker 7: Those are coming and those will likely be based in
[38:24] Speaker 7: part on these frontier models, but often use smaller models
[38:27] Speaker 7: that are very focused and specialized and deliver their own
[38:31] Speaker 7: value in important ways.
[38:34] Speaker 2: The company's duty bound to say, to tell investors about risks, right?
[38:39] Speaker 2: So we have the existential threat to humanity language in there.
[38:44] Speaker 2: How do you think the world should interpret that? You know,
[38:47] Speaker 2: you are first and foremost a private market investor. And
[38:49] Speaker 2: Anthropic has been consistent on that sort of debate, that
[38:53] Speaker 2: type of disclosure. But for lots of people, they just
[38:56] Speaker 2: read it and, you know, they get concerned. They go, oh,
[38:59] Speaker 2: you know, this is in there for a reason.
[39:03] Speaker 7: It is in there for a reason. The team led
[39:06] Speaker 7: by Dario had been very open in speaking about the
[39:09] Speaker 7: power and the risks and the responsibilities that come with
[39:12] Speaker 7: both of those elements over the last many years. And
[39:15] Speaker 7: in fact, since inception, one of the things that was
[39:17] Speaker 7: so inspiring to us when meeting with the team several
[39:20] Speaker 7: years back was how that was part of their founding principles.
[39:24] Speaker 7: And I've just got to say how thankful and appreciative
[39:26] Speaker 7: we are that it's this team that is leading this wave.
[39:30] Speaker 1: Because they are doing it in a responsible way.
[39:32] Speaker 7: And we have a lot of faith and comfort that
[39:34] Speaker 7: they will steer and navigate through this. But we also
[39:36] Speaker 7: appreciate the transparency in terms of what it comes with.
[39:39] Speaker 7: If you think about last week, there were dozens of
[39:41] Speaker 7: security breaches that were adjacent to AI technologies. Any one
[39:47] Speaker 7: of those would have been headline news for weeks a
[39:49] Speaker 7: year ago. And yet we do become a little numb
[39:52] Speaker 7: to the power that comes with this technology. We are
[39:55] Speaker 7: now harnessing it for good and for defense and for benefits.
[39:59] Speaker 7: But it will be a choppy time as society works
[40:02] Speaker 7: through this on every level, technologically, economically and otherwise.
[40:07] Speaker 2: Byron, Anthropic remains a PBC. The seven founders have 50.1
[40:12] Speaker 2: percent shareholder voting power. What do ordinary investors that might
[40:17] Speaker 2: participate here need to understand about why that is good
[40:20] Speaker 2: or bad to your mind?
[40:22] Speaker 7: Yeah, whenever there's a structure like this, you're giving the
[40:26] Speaker 7: founders and the executive team incredible leadership opportunity and governance.
[40:32] Speaker 7: And that is not a decision that investors arrive at lightly.
[40:37] Speaker 7: And yet it can be incredibly powerful when you have
[40:39] Speaker 7: the right leadership team in place. And you see that
[40:42] Speaker 7: time and time again. You saw it with SpaceX. You
[40:44] Speaker 7: see it with Facebook meta. And for these leaders to
[40:48] Speaker 7: accomplish their aspirations and to think over extended horizons, going
[40:52] Speaker 7: back to the Jeff Bezos comments with Amazon, willingness to
[40:56] Speaker 7: be understood for many extended periods and many quarters. That's
[41:00] Speaker 7: what we want as investors. We want companies that think
[41:02] Speaker 7: long term. And you can get both. You can get
[41:05] Speaker 7: a public market construct with long term thinking. And this
[41:08] Speaker 7: is one way to ensure that they have the ability
[41:10] Speaker 7: to do that.
[41:11] Speaker 2: Byron Dieter from Bessemer Ventures. Really appreciate you having on
[41:14] Speaker 2: the show. Thank you. This is Bloomberg Tech. Anthropix SEC
[41:28] Speaker 2: filing coming with a stark warning stating, quote, concerns have
[41:32] Speaker 2: been raised both within our organization that sufficiently advanced AI
[41:35] Speaker 2: systems could, if not developed, deployed, and operated with appropriate safeguards, oversight,
[41:41] Speaker 2: and security measures post-catastrophic or existential risks to humanity. Bloomberg's
[41:46] Speaker 2: AI reporter, Rachel Metz, has the cheery job of explaining
[41:49] Speaker 2: that to us and why it is important. Please.
[41:51] Speaker 10: Sure. I mean, the company has long said that it
[41:54] Speaker 10: is developing technology that it believes is both extremely capable,
[41:58] Speaker 10: but also, and this has been a theme for this
[42:01] Speaker 10: company in particular, that there are some serious risks to
[42:04] Speaker 10: the technology. And I don't think anybody thinks that there
[42:07] Speaker 10: are not risks to developing artificial intelligence in general, but
[42:10] Speaker 10: they've gone beyond, as we can see in some of
[42:12] Speaker 10: the risk factors.
[42:13] Speaker 2: So I would say there's a lot that's not in
[42:15] Speaker 2: this initial S-1, and with amendments we'll get those kind
[42:17] Speaker 2: of richer pictures, but we thought this existential threat would come, right?
[42:22] Speaker 1: Yes.
[42:23] Speaker 2: And they also talked about some examples where basically the
[42:26] Speaker 2: models behaved in ways that they didn't intend.
[42:30] Speaker 10: Yes, they have said that in a few cases, and
[42:33] Speaker 10: I also think it's worth noting that their risk factors
[42:36] Speaker 10: alone are like... almost 100 pages, which is a lot.
[42:42] Speaker 10: On the other side, one thing that I would note,
[42:44] Speaker 10: it sounds a little funny, but I think it is
[42:46] Speaker 10: worth noting if they're talking about the potential existential risks
[42:49] Speaker 10: of the technology that they are building, executives are saving
[42:53] Speaker 10: for retirement. They put money into their 401ks. They also
[42:58] Speaker 10: say in a little paragraph there that their employees get
[43:02] Speaker 10: life insurance policies or the access to them. So I
[43:04] Speaker 10: think it's important to sort of like think about all
[43:06] Speaker 10: those things, even though they might sound a little silly.
[43:09] Speaker 2: It's not as.
[43:09] Speaker 10: Though they're not planning for a future where people need money.
[43:13] Speaker 2: Yes, it sounds very much like they're planning for a
[43:15] Speaker 2: future where they stay at this company and continue to
[43:17] Speaker 2: work on AI. Bloomberg's Rachel Metz, thank you very much indeed.
[43:27] Speaker 2: I want to get the perspective of another relatively early
[43:29] Speaker 2: Anthropic investor, Matt Murphy from Menlo Ventures joins us. The
[43:33] Speaker 2: firm invested in Anthropic would spark a new generation of companies.
[43:37] Speaker 2: That was the thesis at the time. Let's get into it. Matt,
[43:42] Speaker 2: what do you want the world to learn, to take
[43:45] Speaker 2: from the S1? It is a financial document, right? And
[43:49] Speaker 2: there are lots of numbers and ideas in there. But
[43:52] Speaker 2: for those that don't know as Anthropic as well, what
[43:54] Speaker 2: is your hope that they now do know?
[43:58] Speaker 13: Yeah, I mean, I think there's been so much speculation
[44:00] Speaker 13: around the numbers and leaks here and there. So it's
[44:04] Speaker 13: just great that the document is out there for people
[44:06] Speaker 13: to digest the entire thing and make their own decisions.
[44:10] Speaker 13: I mean, some of the things that are obvious is
[44:13] Speaker 13: just seeing a company at this scale growing 10x year
[44:17] Speaker 13: over year with retention numbers that are hard to come by.
[44:21] Speaker 13: And the reality is in the public markets, your average
[44:25] Speaker 13: software company is growing at 10 to 15%. Your outlier
[44:30] Speaker 13: top 10% are growing maybe 30%. So to have a
[44:34] Speaker 13: company going public that's growing 10X at this scale is
[44:38] Speaker 13: extraordinary for all potential public market investors as they think.
[44:43] Speaker 1: About where to put their money around AI.
[44:45] Speaker 13: And then the other thing I'd say is There just
[44:48] Speaker 13: aren't that many places to invest in AI as public
[44:50] Speaker 13: market investors right now. As private market investors, as a
[44:53] Speaker 13: venture capital firm, we see many, many opportunities every day.
[44:57] Speaker 1: Maybe not as good as Anthropic, obviously.
[45:00] Speaker 13: But as public market investors, there's just not that many
[45:02] Speaker 13: places for your capital to go.
[45:04] Speaker 1: So this is an opportunity as people digest the S1.
[45:08] Speaker 2: So actually, this takes me back to private market investments, right?
[45:10] Speaker 2: You are first and foremost a private market investor. And
[45:13] Speaker 2: in some of the risk disclosures, it was interesting to
[45:16] Speaker 2: see Anthropic talk about the risk or the threat presented
[45:19] Speaker 2: by open source, by specialized models, like in the field
[45:23] Speaker 2: of biology. Those are, you know, across the AI stack,
[45:27] Speaker 2: those are all areas that Menlo is backing as well,
[45:30] Speaker 2: outside of its Anthropic investment.
[45:34] Speaker 1: Correct.
[45:35] Speaker 13: Yeah, I mean, you know, I think The risk factors
[45:38] Speaker 13: are in the S1, so people can digest those. I
[45:41] Speaker 13: think they have to be as comprehensive as possible in
[45:44] Speaker 13: any S1. I think the thing to understand more about
[45:49] Speaker 13: is where all the opportunity is coming from in this
[45:52] Speaker 13: AI ecosystem. It's still very early, so we're probably in
[45:56] Speaker 13: the second inning, not the ninth. I think as we
[45:59] Speaker 13: all look forward, it's where our the outsized returns going forward.
[46:04] Speaker 13: You just put up some logos on the screen of
[46:06] Speaker 13: other investments we're in, like Volvo, Legora, things like that
[46:10] Speaker 13: that are really breaking out in different application areas. And
[46:13] Speaker 13: the majority of those certainly use Anthropic. You mentioned open
[46:17] Speaker 13: source models, open waste models. There's been a boom in
[46:21] Speaker 13: those recently. And I think that's generally good for competition.
[46:25] Speaker 13: It keeps everybody on their toes. It gives the application
[46:28] Speaker 13: companies more more choice. It pushes the frontier model companies
[46:34] Speaker 13: to move faster and think about not one size fits all,
[46:37] Speaker 13: but a family of models, as you've seen Anthropic deliver.
[46:40] Speaker 13: So I think this is just showing signs of a
[46:43] Speaker 13: healthier ecosystem as we move into kind of more from
[46:47] Speaker 13: a land grab phase of the market or figure it
[46:49] Speaker 13: out phase into optimized scale, et cetera.
[46:54] Speaker 2: Matt, the history of when Menlo first got into Anthropic
[46:57] Speaker 2: is really interesting, right? Because their relationship with institutional money
[47:01] Speaker 2: is quite more recent than many people expect. But my
[47:03] Speaker 2: understanding is that this is Menlo's largest investment by far.
[47:07] Speaker 2: Sorry if it's a silly question, but will it be
[47:09] Speaker 2: your greatest return by far then, depending on the outcome
[47:12] Speaker 2: of an IPO?
[47:14] Speaker 1: Yeah, for sure.
[47:15] Speaker 13: I mean, you know, and that says a lot. You know,
[47:17] Speaker 13: we were early investors in Uber. We incubated Gilead in
[47:21] Speaker 13: our offices earlier. and so we we've had quite a
[47:24] Speaker 13: quite a number of really special companies but this is
[47:27] Speaker 13: by far both our largest investment and in our largest
[47:31] Speaker 13: return ever so it's you know it's it's exciting times
[47:34] Speaker 13: you you wait 25 years in the venture businesses which
[47:37] Speaker 13: is how long I've been in the business to hope
[47:40] Speaker 13: that something like this comes along and the really exciting
[47:43] Speaker 13: thing about this one is you and I already discussed
[47:46] Speaker 13: a little bit is it's it's not just about anthropic
[47:48] Speaker 13: or frontier models it's all the innovation that's spawning in
[47:52] Speaker 13: all these application companies.
[47:54] Speaker 1: And I think sometime back.
[47:55] Speaker 13: Half of next year, we'll see those companies start to
[47:58] Speaker 13: come to the public markets and the public markets having
[48:02] Speaker 13: access to that.
[48:04] Speaker 2: I'm trying to just come to a conclusion on the story.
[48:07] Speaker 2: You know, the story that the S1 paints is just
[48:10] Speaker 2: extraordinary growth right up until September 30th, at least the
[48:14] Speaker 2: first half of this year. But there is a pretty
[48:17] Speaker 2: explicit warning that growth at those levels just can't continue.
[48:21] Speaker 2: It will moderate. It will slow down. Is that something
[48:25] Speaker 2: to be calm about ahead of an IPO for Anthropic?
[48:28] Speaker 2: It's just going from early stage AI adoption to the
[48:31] Speaker 2: reality of the world we're in right now.
[48:35] Speaker 13: Well, I mean, you look at the numbers in the
[48:37] Speaker 13: S1 and it's amazing they were able to grow over
[48:41] Speaker 13: 10x at the kind of scale that they were at
[48:43] Speaker 13: in the kind of Q2 numbers.
[48:44] Speaker 1: That was the year over year.
[48:45] Speaker 13: You know, over 10X and all while, you know, getting
[48:49] Speaker 13: more efficient in terms of revenue per dollar of compute
[48:52] Speaker 13: and things like that.
[48:54] Speaker 1: So, you know, that says a lot.
[48:55] Speaker 13: I mean, in terms of the growth going forward, I,
[48:58] Speaker 13: you know, I'm not privy to those numbers and I
[49:00] Speaker 13: think the public markets will have to make their bet on,
[49:04] Speaker 13: you know, how that's going to play out. But again,
[49:05] Speaker 13: I think you also have to ask yourself as an investor, like,
[49:09] Speaker 13: is this a trend that's starting to asymptote and, you
[49:13] Speaker 13: Or are we in the early innings and there's so
[49:16] Speaker 13: much more ahead?
[49:17] Speaker 1: And I know where I stand on that, but everybody estimates.
[49:20] Speaker 1: make their own decision.
[49:21] Speaker 2: Menlo first invested in Anthropic in 2023, right? You led
[49:24] Speaker 2: the Series D, and I think you've participated in every
[49:28] Speaker 2: single round since. So you know the team, but it
[49:31] Speaker 2: is an unusual structure. They'll maintain a public benefit corporation.
[49:37] Speaker 2: The seven founders have a founder entity that will have 50.1%
[49:41] Speaker 2: shareholder voting power. And, you know, there are the long-stated
[49:47] Speaker 2: PBC public benefit goals, right? You understand that. What would
[49:53] Speaker 2: you say to potential public market investors that are coming
[49:56] Speaker 2: to understand it to try and model for it if
[49:59] Speaker 2: they're going to participate in this IPO or not?
[50:02] Speaker 13: Yeah, I mean, look, I think even when we made
[50:04] Speaker 13: our first investment in the Series C and then led
[50:06] Speaker 13: the Series D, Anthropix has always been the company most
[50:10] Speaker 13: committed to trust and safety, and that's really stood out
[50:13] Speaker 13: for them in the market and why they've really grown
[50:16] Speaker 13: into having the leading market share by a significant margin
[50:19] Speaker 13: in the enterprise.
[50:20] Speaker 1: So I think that's just part of who they are.
[50:25] Speaker 13: And as people digest that, then there's I think you're
[50:31] Speaker 13: in good hands with a company that cares about that
[50:33] Speaker 13: as much as they do. I think the structure of
[50:36] Speaker 13: the company, there are a number of companies where founders
[50:40] Speaker 13: have voting control of some kind. I remember that Elon,
[50:44] Speaker 13: Larry and Sergey at Google, things like that. And I
[50:46] Speaker 13: think with the technology this important, it's important that there
[50:50] Speaker 13: is maybe a different type of governance.
[50:52] Speaker 1: And so I think it's appropriate.
[50:56] Speaker 2: Matt, is there anything that you've seen in the public
[50:58] Speaker 2: filing this morning that you didn't know? What have you
[51:01] Speaker 2: learned today that's new to you?
[51:05] Speaker 13: Well, it's a long document, and I only got it
[51:07] Speaker 13: when everybody else did this morning, so I can't say
[51:09] Speaker 13: that I've had time to fully digest it.
[51:13] Speaker 1: But I would.
[51:14] Speaker 13: Say that I know most of what I saw in there,
[51:19] Speaker 13: and it just shows you what a special company is,
[51:22] Speaker 13: and even in the risk factors, it shows you how
[51:25] Speaker 13: how much they care about disclosing that and helping the
[51:28] Speaker 13: world think about both the risks of a company and
[51:31] Speaker 13: a technology like this, not a company like this, a
[51:34] Speaker 13: technology like this, but all the potential upside and impacts.
[51:38] Speaker 13: You mentioned life sciences, drug discovery, things like that, areas
[51:42] Speaker 13: that we're investing in, and Anthropic's certainly taking a leadership
[51:45] Speaker 13: role there. So I think that I'm very hopeful that
[51:48] Speaker 13: the narrative here switches from all the things that could
[51:51] Speaker 13: go wrong to more about all the things that could
[51:54] Speaker 13: go right.
[51:54] Speaker 1: We need a healthy balance in that.
[51:55] Speaker 13: And this is really the most disruptive and high potential
[52:00] Speaker 13: technology to do a lot of good in society.
[52:05] Speaker 1: Than I've ever seen. And we'll manage the risks and
[52:09] Speaker 1: lean into the pluses.
[52:13] Speaker 2: Managing the risks and operating is kind of like the
[52:15] Speaker 2: key takeaway for me. The number that jumped out at
[52:17] Speaker 2: me was that in 2023, compute costs was 10 times revenue.
[52:23] Speaker 2: the first half of this year compute cost was 55%
[52:27] Speaker 2: of revenue. So clearly like the economics have improved. Is
[52:30] Speaker 2: that just sort of operational acumen and what this management
[52:33] Speaker 2: team does?
[52:35] Speaker 1: Yeah.
[52:35] Speaker 13: I mean, I think, you know, when that's, that's a
[52:37] Speaker 13: really good new stat that they provided. Cause I think
[52:40] Speaker 13: people want to understand, you know, relative to what happened
[52:43] Speaker 13: with core weave last week or a couple of weeks ago, like, Hey,
[52:45] Speaker 13: are people getting too far over their skis or are
[52:48] Speaker 13: you getting leverage at scale? And I think this, you know,
[52:51] Speaker 13: this clearly shows that, but you know, Like, Anthropic's always
[52:54] Speaker 13: been a great story, going back to when I invested.
[52:58] Speaker 1: You know, they've always had to do more with less.
[53:01] Speaker 13: When I first saw the company in early 2023, they
[53:05] Speaker 13: had models that were comparable to and beating ChatGPT on
[53:09] Speaker 13: many dimensions.
[53:10] Speaker 1: And I think at.
[53:11] Speaker 13: That time, it was like 1,150th of the capital that,
[53:15] Speaker 13: you know, ChatGPT is, or, you know, OpenAI had raised
[53:18] Speaker 13: to get there.
[53:19] Speaker 1: So this is a company that's always competed well.
[53:22] Speaker 13: With special technology and to get a lot of leverage
[53:25] Speaker 13: out of their infrastructure to optimize compute. It's been amazing
[53:30] Speaker 13: to see the way they've scrambled through the year. It's
[53:32] Speaker 13: all kind of public information about how they managed to
[53:35] Speaker 13: get capacity from Elon and buy a bunch of TPUs.
[53:40] Speaker 13: It's just they're doing everything possible to secure compute.
[53:43] Speaker 1: And I think the.
[53:45] Speaker 13: Game has moved from just having the best model to
[53:49] Speaker 13: also having access to compute being able to deliver that
[53:52] Speaker 13: compute as efficiently as possible, and then really having the
[53:56] Speaker 13: best harness where you're delivering a special set of services
[54:01] Speaker 13: on top of your harness, like Cloud Code, Cloud for
[54:04] Speaker 13: Life Sciences, and things like that. So the model is
[54:07] Speaker 13: one thing, and that's what we get caught up a
[54:09] Speaker 13: lot in around open weight models and things like that.
[54:13] Speaker 13: But there's so much more to having a winning product
[54:16] Speaker 13: in this market.
[54:18] Speaker 2: Matt Murphy from Menlo Ventures, really great to have you
[54:20] Speaker 2: with us. Really appreciate your time. Thank you very much.
[54:22] Speaker 2: That does it for this edition of Bloomberg Tech. Anthropic
[54:26] Speaker 2: has filed publicly for an IPO. It intends to list
[54:28] Speaker 2: on the NASDAQ under the ticker ANT, and you can
[54:31] Speaker 2: recap all of our coverage on the podcast on the terminal,
[54:35] Speaker 2: as well as online on Apple, Spotify, and on iHeart.
[54:38] Speaker 2: Thank you for being with us. This is Bloomberg Tech.

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