How I Invest with David Weisburd
00:26:26 · Matthew Harris
[00:26:26] S0: They're separate questions. I think that you have a focus question within a lab like Anthropic about given a fixed level of compute, where are they gonna spend their time? It could be that the level of compute is too low for them to even entertain starting a law firm. I don't think that will be the reason they don't start a law firm. But I do acknowledge that the differential access to compute is going to be perhaps the prime battlefield in the next five years. I would argue the prime battlefield in the last five was talent and leadership. That it was about having the best researchers, having the best research agenda and the best leadership that separated the wheat from the chaff. But I think it gets a little bit more mechanical here forward if you have the compute to train the most impressive model in the shortest period of time, I think that's going to create compounding advantage. And so the chess move here about one of the three big ones getting ahead and then getting lapped by another. And by the way, here comes Meta and Google and their resources, I think, is among the more fascinating things I've ever seen, particularly when you nuance it by all the external players, the private credit industry, infrastructure investors, insurance company balance sheet and what they're funding, the chip companies and how they're picking favorites or not picking favorites or buying companies to secretly compete. I mean, it it really I wish I could buy the book that'll be written three years from now.
00:28:01 · David Weisburd, Matthew Harris
[00:28:01] S1: There's a lot of layers of complexity there, and I'm tempted to double click on a bunch of them. But let's just keep it to OpenAI in Anthropic today. What's the game theory between them and how they're looking at making these massive investments in compute? [00:28:18] S0: There are a lot of games being played. The original game, I think at both companies, is about advancing the state of artificial intelligence and actually achieving generalized artificial intelligence. And that has become a little muddier as capitalism has kicked in both for the individuals running these companies, more so in the case of Anthropic than OpenAI, but also just their competition itself and the human desire to win and not be second place. And then these massive cap tables who have unambiguous goals, which are just to make as much money as possible. So I think the original game of being first to artificial general intelligence has been subsumed in a revenue and profits game, or at least complemented by it.
00:29:09 · David Weisburd
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00:31:03 · David Weisburd
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00:32:20 · Matthew Harris
[00:32:20] S0: Doing so, the agendas have definitely shifted. OpenAI was more aggressive out of the gates in terms of being having audacity around funding. They raced ahead. Anthropic caught up both with the product and now more recently with their ability to go get capacity. I think Elon is the best of the three at this at that particular game, both of building data centers specifically, but also about sort of just, you know, world building in people's minds and attracting vast capital to vast projects. So of the three, I think on the data center game, I actually think the advantage sits with Elon. OpenAI versus Anthropic. They have a lot of business puts and takes right now. Think one of one one announcement here recently that I think was underreported on was OpenAI opening up model usage within codecs. So OpenAI wants to be a bunch of different things. They want to sell the most tokens and their most expensive models, but they also want to be the most popular, you know, coding tool. And they made a really strategic decision, which is to let people who are using Codex to code more efficiently use open source, open weight model tokens in addition to just open AI token. And that is a stark departure from the historical, you know, cursor sells to Elon and the models shut off access to their models to cursor. That's where we were quite recently. And now in a few weeks, we're in a place where at least OpenAI has said we want to win at the horizontal application layer, which means we have to go multi model architecturally. So I really like that move. I think it's genius, actually. And I think they're still going to sell a lot of OpenAI tokens into codex in the same way that ostensibly and actually Microsoft was open architecture with its OS. You could use WordPerfect. You could use Lotus one, two, three. You could use freelance graphics. But over time, the market share shifted to Microsoft Word, Excel and Power Point because they own the playground, they own the operating system. And that was just a massive advantage, even if they weren't overtly bundling them in a way that triggered the regulators and in a way that actually forced lock in. We'll see what Anthropic does, but these are the kind of chess moves that are happening right now that I think make this such a fascinating place to watch.
00:34:54 · Matthew Harris, David Weisburd
I mean, there's a rumor going around the valley right now that both companies are going to shut off API access to vertical apps. That's a paranoid rumor that I don't think makes any sense because the API businesses are their biggest businesses. So how would that work? [00:35:12] S1: What's the incentive? [00:35:13] S0: Well, the incentive would be you can only get the frontier models from applications they build. And so if you're Goldman Sachs and you're buying an AI, you know, application layer tool and you can go to a, you know, you can go to Hebia, but you know, they can't get anthropic tokens or you can use anthropic for finance and get, you know, those sweet, sweet anthropic tokens. That would be the logic. Again, I'm I'm skeptical. I think that's it. That would be a bad business decision. And OpenAI has just shown they're actually going the other direction, much more open architecture versus closed. But these are the kind of theoreticals that are getting mooted right now. And I think it's just a student of both business history and military history. It's like, you know, catnip. [00:36:02] S1: I didn't wanna disclose, my investment in Anthropic because I wanted to hear hear unfiltered unfiltered opinion, but let's assume that goes public at reported $2,000,000,000,000. I don't have any insider information on that. How do you think about the valuation and what will be the drivers on whether that's overvalued or undervalued?