This Week in Startups
00:05:01 · S0, Dave McClure
[00:05:01] S0: Okay. So when we're looking at the Anthropic revenue, this is companywide annualized revenue run rate. We just did a story about this in newsletter, actually. This is R as in a pirate, A R R. When you see that, which is not to be confused with ARR, with three Rs, annualized run rate is typically done by taking the last month or the last quarter and timesing it either by that period of time, twelve or four. And here what we're seeing is it's flat at 76,800,000,000 in ARR. And you see here, even on this website, they put ARR, which would lead you to believe it's annualized reoccurring revenue. Annualized reoccurring revenue is for subscription products like Netflix or your Verizon account, it's distinctly different than this. So what's your takeaway here? Obviously we see flat, but what is that based on? Where did they get that number? [00:06:03] S3: You looked at the growth from January to July, you'd be like, holy shit, that is crazy growth. That's almost hyperbolic. But then it tailed off a little bit, and people were wondering, like, why did that tail off? Was that because of OpenAI releasing models that were more competitive and taking share? Replit recently announced they've been switching their default to OpenAI instead of Anthropic. Is it because open weight models are taking share? I I would still say that Anthropic is [00:06:30] S0: Or maybe there's a data problem here. Like, maybe this website doesn't have who knows where they're getting their data from here?
00:06:30 · S0, Dave McClure, Ben Black
[00:06:30] S0: Or maybe there's a data problem here. Like, maybe this website doesn't have who knows where they're getting their data from here? [00:06:38] S3: Yeah. I think my partner just did a teardown of the Anthropic S1 and it still looks like they are growing. I think they added at least 5,000,000,000 of new revenue in the quarter. So I'm not concerned that Anthropic is not growing, but they're not growing as fast. And I think you'd kind of wanna look at that and, like, compare that to the CapEx spend. Can they just, you know, keep up with the spend that they're doing, and is that revenue gonna continue? They've previously been talking about $203,100,000,000,000 dollar kind of run rates by the end of next year. I'm not sure. I'm still a believer that they're gonna hit 300. I might I might guess it's gonna be between $1.50 to 200 next year. We'll see. Yeah. But they did kind of answer a lot of questions about profitability that seemed like they had profitability under control. I think I'm still a believer in Anthropic, at 1 and a half trillion, not at 2 or two and a half trillion. That's just my, you know, hot take. [00:07:35] S0: All right, Ben. Your takeaway when you saw the s one and, the ensuing discussions? [00:07:41] S4: When I saw the s one, I really was so impressed with how how much analysis could be done in such short period of time with a... With with AI. There are so many analysis, [00:07:51] S3: I can
00:07:51 · Ben Black
[00:07:51] S4: barely keep up with them all. It was like... In in my analysis. But, really, you know, when I... I read the s one who said, you know, we need new measures. I think, you know, this is really the first time we've had financials from a company that does what Anthropic does that are getting now to be, torn down by public market analysis... Analysts. And how the public market analysts, you know, I would say with private companies, this is the moment where the rubber hits the road. And right now, we're just seeing literally, like, the first inkling of all the... Of, you know, of the way that we're gonna analyze these companies. We're still just like what you did. We're trying to take SaaS analytical tools like ARR and slap them on a completely new type of business model. It's gonna take a while before I think that the world of business analysts catch up with Anthropic and OpenAI, where essentially, you're you're selling compute at some sort of margin, and you're selling it across multiple models that have different values and different costs, all of which are falling. And I frankly am not sure I understand this business yet. I think that's the biggest takeaway I have is that, you know, we have to have a whole new set of measures for these businesses that really help us understand what's going on because I think the s s one can be characterized in one way by one group of people, another way by another group of people, And who win the fray... Who wins the framing in the next two weeks is gonna determine whether or not 1,500,000,000,000 is a good number or not.
00:09:20 · S0, Dave McClure
[00:09:20] S0: This holiday season, don't miss your chance to turn just looking into just bought it. Make it easy for your customers to say yes on the spot. PayPal checkout is a trusted conversion engine fueled by 400,000,000 active PayPal and Venmo accounts. And when you add pay later, you turn holiday shoppers into regulars. 96% of Pay Later shoppers are repeat users. Give them Pay Later flexibility now, and it could help earn their loyalty all year long. PayPal is built for all business. Get started at paypal.com/business. PayPal Later data. Eight markets. March 2025 to February 2026. Repeat users defined as more than one Pay Later purchase in the past year. Yeah. Well, the framing's pretty obviously here. The revenue is surging. [00:10:07] S3: Absolutely. [00:10:08] S0: That's that's something we know, and they're profitable, and they've got a mountain of cash. If I look at those just three factors- [00:10:17] S3: Well, revenue is surging, but not as fast as it was earlier this year. [00:10:21] S0: As the number gets bigger, it slows down a bit. You can't expect a 10x on $16,000,000,000 It's not possible. It has never happened in the history of it. It's going to slow down. The revenue is extraordinary. It's the fastest growing company in the history of business. The cash position is extraordinary. They've barely touched their cash. So I look at this and say, we've got the greatest business in the history of capitalism ever built.
00:10:21 · S0, Dave McClure
[00:10:21] S0: As the number gets bigger, it slows down a bit. You can't expect a 10x on $16,000,000,000 It's not possible. It has never happened in the history of it. It's going to slow down. The revenue is extraordinary. It's the fastest growing company in the history of business. The cash position is extraordinary. They've barely touched their cash. So I look at this and say, we've got the greatest business in the history of capitalism ever built. [00:10:49] S3: Wait a second, Jason. The greatest business I thought you were saying last month was SpaceX. Isn't that still the greatest business? [00:10:55] S0: I don't know if I said that. I mean, I think it's the greatest entrepreneur across a series of different businesses. This is one business selling tokens and one business selling tokens to be profitable in, but this company was formed, I believe in 2021, revenue turned on in 2023. So to go from zero to whatever the annualized run rate will be after Q3 data comes out, 80, 100, etcetera, And to have a ton of cash and to be profitable at this point is just extraordinary. I thought they would have been losing a ton of money. I think this is the greatest business created by humans on planet Earth ever.
00:10:55 · S0, Dave McClure, D.A. Wallach
[00:10:55] S0: I don't know if I said that. I mean, I think it's the greatest entrepreneur across a series of different businesses. This is one business selling tokens and one business selling tokens to be profitable in, but this company was formed, I believe in 2021, revenue turned on in 2023. So to go from zero to whatever the annualized run rate will be after Q3 data comes out, 80, 100, etcetera, And to have a ton of cash and to be profitable at this point is just extraordinary. I thought they would have been losing a ton of money. I think this is the greatest business created by humans on planet Earth ever. [00:11:38] S3: I wonder if we're underestimating some stuff here though. I had dinner with my friend Aaron Battalion. He was formerly the CTO of Living Social. And he was saying, we're not even measuring the right stuff. He's saying with all the potential for you know, breakthroughs in mathematics, in medical, in a whole bunch of areas, there's potentially new lines of revenue that we're not even measuring. Like, what if, you know, either Anthropic or OpenAI solves cancer, like, where is this aging, figures out new breakthroughs in other areas. I I think D. A. Was actually suggesting there's some stuff, coming that people are are showing off their their lack of concern. [00:12:14] S2: We we we can talk about releases later maybe or or now, but I I was saying to Dave before this, the craziest thing that's happening, you guys may have heard about, is the AI engineers are now taking up smoking. And this has become a way of This is a very