00:08:12 · Jordi Hays, John Coogan
[00:08:12] S0: Over 10,000 spending over a 100 k. [00:08:14] S1: Over... Yeah. Over 10,000 spending a 100 k. And net revenue retention is 900% on those. So they got in early in 2024, 2025. And then all of those companies scaled up. So maybe they had a smaller subscription, smaller. They were using the APIs here and there. And then we went to the token maxing era. They were in the right place. And so many companies scaled their spend that on average, it was basically a 10x increase Yeah. For organizations. But that makes sense. We've all seen this as, you know, more and more people are like, Hey, it's not just like the early adopter on the team that has an AI agent running all the time. It's actually spread to everyone. It's spread to the marketing organization, the operations teams using it. And so these services are going out all over the place. They have more than half of the Fortune five hundred spending over a $100,000 annually. That actually felt low to me. Obviously, it's really impressive. Like, it's great. But I'm sort of... Like, I I was under the assumption that all of the Fortune five hundred was spending a lot on, like, every single model. Yeah. And I would have said, oh oh, of the Fortune five hundred, 100 k annually. The Fortune five hundred is probably spending 100 k annually on open source models and OpenAI and Google and Microsoft and Anthropic. Like, I [00:09:28] S0: would Got to ask assume what what that half is, what they're up to.
00:09:28 · Jordi Hays, John Coogan
[00:09:28] S0: would Got to ask assume what what that half is, what they're up to. [00:09:31] S1: I mean, some of them might just be in industries that don't write any software really. But it feels every company in the... If you're in the Fortune 500, you have It's some [00:09:40] S0: kind of bearish anywhere anywhere you put it. [00:09:42] S1: It is... Do know I do know... [00:09:44] S0: I was... This was maybe six months ago, but I was talking to someone at a Fortune... Relatively high up at a Fortune 500 and they said that they had... They were basically running like boilerplate Gemini that like the whole the whole org had access to and that was like their AI tool. Were telling everyone, just use this. Yep. And so there's there's I'm sure examples of that.
00:09:44 · Jordi Hays, John Coogan
[00:09:44] S0: I was... This was maybe six months ago, but I was talking to someone at a Fortune... Relatively high up at a Fortune 500 and they said that they had... They were basically running like boilerplate Gemini that like the whole the whole org had access to and that was like their AI tool. Were telling everyone, just use this. Yep. And so there's there's I'm sure examples of that. [00:10:09] S1: Yeah. Yeah. Yeah. Just... And so yeah, maybe maybe you see like 50% has spending over 100 k on Anthropic and then there's some there's some slice that's on OpenAI, some slice on Gemini and Google and then some slice on some other section of the market. But I mean, it's odd because like even Meta who has their own is probably spending over over 100 k annually on Anthropic. I have to imagine that that Google employees, some of them have access to Anthropic models to the tune of 100 k. And so that was sort of interesting. The other interesting update was on the distillation revenue. So coming out of the Investor Day, it felt like we finally got a number on how much of this revenue is distillation, how much of it might go away if Anthropic figures out how to prevent distillation. And the number that was floated was five to 7%. Totally reasonable. It was not like a it's over moment. It was like, oh, like that's significant. It's crazy that companies that these that these distilleries are I don't know if that's the right word, but we're gonna go with it. That these distilleries are are willing to spend like 5% of $70,000,000,000 ARR.
00:10:09 · John Coogan, Jordi Hays
[00:10:09] S1: Yeah. Yeah. Yeah. Just... And so yeah, maybe maybe you see like 50% has spending over 100 k on Anthropic and then there's some there's some slice that's on OpenAI, some slice on Gemini and Google and then some slice on some other section of the market. But I mean, it's odd because like even Meta who has their own is probably spending over over 100 k annually on Anthropic. I have to imagine that that Google employees, some of them have access to Anthropic models to the tune of 100 k. And so that was sort of interesting. The other interesting update was on the distillation revenue. So coming out of the Investor Day, it felt like we finally got a number on how much of this revenue is distillation, how much of it might go away if Anthropic figures out how to prevent distillation. And the number that was floated was five to 7%. Totally reasonable. It was not like a it's over moment. It was like, oh, like that's significant. It's crazy that companies that these that these distilleries are I don't know if that's the right word, but we're gonna go with it. That these distilleries are are willing to spend like 5% of $70,000,000,000 ARR. [00:11:20] S0: It's way less than some of the the peanut gallery on X would like to say. Yeah. Half their revenue. Half
00:11:20 · Jordi Hays, John Coogan, Mark Swan
[00:11:20] S0: It's way less than some of the the peanut gallery on X would like to say. Yeah. Half their revenue. Half [00:11:24] S1: their revenue is just... That's ridiculous. But still, it's crazy that there are companies out there or like, I don't even know what you call them, like bot farms, organizations, like... Distilleries. They're distilleries. They're illegal distilleries. Like they're criminals basically. They're TOS violation companies. But they're networks. They're organized. And what's interesting is that it's not just, you know, oh, some enterprising scrappy data broker sales guy like figured out how to like puppeteer a couple clawed accounts and sneak some tokens out and like resell them into like somebody who's selling it to Kimmy or whatever. It's like, no. People are deploying like billions of dollars to this strategy and it seems pretty organized. [00:12:06] S3: Yeah.
00:12:06 · Mark Swan, John Coogan, Jordi Hays
[00:12:06] S3: Yeah. [00:12:07] S1: At the same time, the wrinkle that we got from the s one is that that 5% to 7% number that was leaked out from the Investor Day, it's not explicitly listed as distillation revenue. It's just terms of service violation. So it could be people that are doing adult content or cybercrime or hacking or bio weapon development, anything that's going to get you banned. I don't I would imagine that the vast majority of it is still distillation because what else is going to generate that many tokens than that much revenue. But it is worth noting that it's not entirely distillation attack. I like that we still have the Christmas trim up. It's very very good. The other one. Speaking of Christmas. There apparently is a war on Christmas going on. And and it and it's hurting Anthropic significantly. We have some real numbers on how much Christmas hurts the AI trade. It's apparently 20%. So API consumption, effectively revenue in December for the last two weeks will be down 20% as as engineers, as vibe coders, as startups, as everyone goes on holiday, they're celebrating Christmas, people will be [00:13:20] S0: buying... Well, there's been some speculation. Obviously, they announced what their ticker is gonna be ant during during the road to Christmas. [00:13:29] S1: Yes. [00:13:30] S0: But if you put the, you know, the the dollar sign Yes. It looks like the start of Santa. Saint. And so speculation It's that they're related. [00:13:39] S1: Yeah. [00:13:39] S0: It's a sort of... Yeah. It's an... It's kind of a nod to