All-In with Chamath, Jason, Sacks & Friedberg
00:00:00 · Jason Calacanis, David Sacks
[00:00:00] S0: Alright, everybody. Welcome back to what is, of course, the number one podcast in the world tweaking. All the mid podcasters out there, four or five years running the All-In podcast. It's episode two ninety five, and Sacks is back. Sacks is back. Sacks is back. How are doing, brother? [00:00:21] S1: Good. Good. I saw some fake news that Oh. You guys had stopped using the term super intelligence, you're getting some shade for that. [00:00:29] S0: Oh, I I... Listen, we're we're here for this week in super intelligence right now. I mean, the whole docus super intelligence. [00:00:37] S1: It was kinda ridiculous. [00:00:39] S0: Oh, are they [00:00:40] S1: And maybe I shouldn't Streisand it, but they were trying to say that we were using the term AI still instead of SI. [00:00:45] S0: Who was saying that? This is literally what the press is spending their time on? [00:00:51] S1: This is why it's such fake news. They've referred me. I wasn't even on the October 23 episode. [00:00:56] S0: Though. You do look very presidential there. Man, if [00:00:58] S1: only we're looking fake news. [00:01:01] S0: I mean, [00:01:02] S1: they're You asked tech for most influential tech podcast. Well, that's good. But, actually, we're not just a tech podcast. [00:01:06] S0: The number one podcast in the world. Give us [00:01:08] S1: a on the use of the term super intelligence. And then they try to say that I somehow was defying [00:01:14] S0: Wait. [00:01:14] S1: Wait. The president's instructions. [00:01:17] S0: Alright.
00:01:17 · Jason Calacanis, David Sacks, Chamath Palihapitiya
[00:01:17] S0: Alright. [00:01:17] S1: But I but I wanna clarify, it was not on the October 23 episode. [00:01:21] S2: So Gotcha. Gotcha. [00:01:22] S1: I'll be keeping you guys in line on this from now on. [00:01:24] S0: Absolutely. Well, we will get focused on super intelligence. With us again this week, your favorite organic farmer, Friedberg. How's OHalo doing? You've been pretty busy yourself. OHalo in Kenya this week. Lots of excitement. Lines of farmers trying out true potato seed. Your energy looks pretty good. You look like you got some good energy. And speaking of good energy, man, we had a fun time playing cards last week. That was a blast. Great dinner. [00:01:57] S2: You didn't stop talking for seven hours. [00:02:01] S1: It's sort [00:02:01] S0: of like the podcast. Yeah. I'm just like the podcast. [00:02:03] S2: It's unbelievable. It's unbelievable. We just kept time. Come on. [00:02:06] S0: Was a lot of [00:02:07] S2: mess. Talking. Affleck texted me after I'd never want Jay Cal in the game again. [00:02:12] S0: I can get out Affleck as a member of the group. [00:02:15] S2: It's gonna be Ben Affleck or you, and we pick him. So you're out. [00:02:18] S0: That's fine. You're never getting an offer. Fine, man. It's an upgrade. [00:02:21] S2: I mean, you just kept chirping for eight hours straight. It's unbelievable. He could not stop talking. [00:02:26] S0: Game for a long time, had a lot of material. I had I had [00:02:28] S2: It was a... It was really fun, though. It was really
00:02:28 · Chamath Palihapitiya, Jason Calacanis, David Sacks
[00:02:28] S2: It was a... It was really fun, though. It was really [00:02:31] S0: And Chamath Palihapitiya, everybody's favorite enterprise sales executive from the eighty ninety corporation. How'd you do this week? Did you hit did you ring the gong? Did you hit your quota? Or are you gonna have to work this weekend? [00:02:43] S2: Q 4 is off to a good start, but I never wanna count the chickens. [00:02:46] S0: Okay. That's that's good considering you whiffed Q 3. [00:02:50] S2: No. No. No. Q 3 was okay. We whiffed Q 2. Butchered it. Butchered it. Butchered it. [00:02:56] S1: That's why when I invested. [00:02:57] S2: All my fault too because I I forced forced these poor sales people to just only focus on the gigantic deals. [00:03:07] S0: You're learning. You're learning. [00:03:08] S2: I had to learn the hard way. [00:03:10] S0: You wanna get those singles and doubles and the people who pay on time and and who Will start projects. On time. [00:03:16] S2: We'll see in Ancest One, but like, you know, you can build a ginormous business with singles and doubles.
00:03:20 · Jason Calacanis
[00:03:20] S0: Absolutely, you can. Speaking of gigantic businesses, Anthropic, Ant dropped their s one, that's the document that outlines the nature of the business for an IPO, an initial public offering. And gotta ask the question, this seems to be the greatest business in the history of entrepreneurship. Goldman and Morgan Stanley are gonna lead the round, and they are targeting November 16, right before Thanksgiving for this IPO. We've been waiting for a long time. It's been delayed. The ticker will be ant, a n t, and they're aiming to raise, wait for it, $100,000,000,000. In other words, like, three months of compute and that would make it the largest IPO ever, suppressing SpaceX. They raised 85,000,000,000 back in June if you remember. And Polymarket says, our great partners at Polymarket say 78% chance Anthropic raises at least 95,000,000,000. The valuation, 1.5 to 2,000,000,000,000. Here's your Polymarket. Right now, it's saying between 1.75 and 2,000,000,000,000, market cap 31%. So, yeah, assume it's gonna be slightly under 2,000,000,000,000. The revenue is the story, Sacks, 16,300,000,000 in the first half of twenty twenty six. That is 14 x year over year. So in other words, the first six months of twenty twenty five, one fourteenth of what they did in the first six months of this year. Q two is gonna be a whopping 11,600,000,000, a 30 x jump over the last five quarters and almost as much as they made in the first half of the year. They say the TAM, the total addressable market for their tokens and services is 40,000,000,000,000. That's extraordinary. I don't know how they backed into that, but we'll talk about it. And they're projecting a 100,000,000,000 of ARR by the end of the year. Now, unspecified if that's annual reoccurring revenue or their annual revenue run rate, which is ARR, like a pirate. They've got a $112,000,000,000 in cash and a very unique ownership structure. Seven founders, yes, they have seven, are gonna hold 50.1% of the voting power through a single class f share. Sacks, is this the greatest business in the history of capitalism?
00:05:51 · David Sacks
[00:05:51] S1: It could very well be. I mean, I think this is probably gonna be the biggest venture outcome of all time, especially given the time in which this was created. I mean, is only a six year old company. I think the exit here is going to be on par with SpaceX's IPO, but SpaceX has been around for like twenty something years. So this is probably the fastest value creation of any venture backed company in history. And I don't know if you saw, but there was a tweet this morning about the distribution of wealth this is gonna create among the employees. Hundreds and hundreds of employees are gonna be making hundreds of millions of dollars and then thousands of employees are gonna be making $10,000,000 plus. I mean, this is gonna be an enormous wealth creation event like San Francisco and maybe all Silicon Valley has never seen before. Now, there's a few other data points in this s one that I think reflected the strength here. So number one is that this $80,000,000,000 loss number that we've heard so much about that the media's constantly been pumping and harping on as proof that Anthropic was either a fake business or that we were in this sort of whole bubble, That narrative basically just got completely refuted because it turns out that that $80,000,000,000 loss is a phantom number. It resulted from the fact that Anthropic had issued convertible notes So basically their infrastructure partners like Amazon and so forth. And as Anthropic's valuation increased, those convertible notes got recorded as a loss on the balance sheet and that flowed through into the income statement, but it's not a real loss. If they had just issued equity, that loss wouldn't be there. So it was not a cash loss. It's basically a fake number. And in fact, what was revealed in this s one is that Anthropic has been an extraordinarily capital efficient business. So they've raised something like, I think it was around a 110,000,000,000 roughly, and they've only spent about 9 or 10,000,000,000 throughout the entire course of this this business. And they still have, like you said, Jay Cal, about a 100,000,000,000 left of cash or cash equivalents on the balance sheet. So everyone thought based on the previous reporting that this was a huge loss making business. In fact, it ended up being a very capital efficient business.
00:08:12 · David Sacks
And then the other thing that you saw was that their margins have been improving. I think their gross margin is now something like 85. And what you see is that for a given task or capability, they're showing roughly 10x improvement year over year in their ability to deliver that task, the cost effectiveness of that task. It gets 10 x cheaper year over year and that allows them to cut the cost of that model or that task by let's call And it 50 so the consumer recognizes a huge cost savings, but they are able to realize an even greater savings because they're they're able to capture the rest of that efficiency in their margin. And that's what we basically saw is that, again, they're cutting the cost of their tokens significantly, but their margins are going up even faster because they're able to produce these models that are more and more efficient. And they call them compute multipliers. It's very interesting the way that Anthropic sees their business. The framework that Dario has is that there's raw compute, which are scaling very rapidly as well, as a result of better and better chips and more and more of those chips. And then there's the compute multipliers which are things like algorithmic improvements or better curation of the data or it can be things like better architectures, more, you know, MOE architectures, things make Yeah. All these models So they're able to give you the same answer for one tenth the cost or they can take those efficiencies and create greater capabilities. So this is what we're seeing is that that business is actually improving. And I think it is a little bit of a refutation to all the people who've been saying over the past year that they're getting commoditized away, that open models are basically putting them on a hamster wheel where they're basically going to zero on gross margin or that it's a business that only works because it's heavily subsidized by venture capital. In fact, I think there's a lot of reasons to believe that Anthropic has a pretty big lead. And if you believe that recursive self improvement has kicked in as they are claiming it has, then their lead could actually grow.