Run the Numbers
00:37:08 · CJ Gustafson
The total purchase commitments and lease agreements are blank here, and I'd hate to be the least accounting person at that company. T's and p's. Potential red flag. So the risk section is... I'm not gonna lie. It is robust. My dog's even growling. It's so robust. So here are the five that I would pay attention to. I'll try to do in plain English for you. The first one, everything is connected to everything. So quote, many of the risks we face are interconnected and may compound or trigger cascading adverse effects across our business, which could amplify their overall impact. That is scary. So it's like a vortex of hell. Their own example, a bad copyright ruling forces them to retrain or limit their models, which hurts revenue, which makes it harder to pay for compute, which could trip covenants on their credit facility and trigger cross defaults elsewhere, like the broader US economy. Have you seen the big short? That was a good movie. Quote, because these and other risks may interact in complex and unpredictable ways, we may not be able to foresee or effectively manage all potential consequences. Two, the chips come from Taiwan and the power comes from regulators. So it's pretty nuts to me that an island about the size of Maryland and Delaware combined is like the linch pin for the AI economic engine. By most estimates, TSMC makes about 90% of the world's most advanced chips in the filing lists, the exposure and how earthquakes and typhoons and tensions with China and all that stuff could really impact the supply chain. And they say efforts to build capacity elsewhere remain in early stages on power. By the way, they need deals with utilities and grid operators plus sign off from public utility commissions. Not in my backyard. Three, the bills show up before the buildings do so quote large upfront investments and long term payment commitments must be made months before facilities become fully operational. It's like building a big ass house. Most of the big compute deals are non cancelable by the way. So if you're in for a penny, you're in for a pound. And they left that part blank. Thank you. Number four, copyright is still alive. Why you? There was this case, Anthropic spent millions of dollars buying print books. They ripped off the bindings and cut out the pages and scan them one by one then threw the originals away.
00:39:23 · CJ Gustafson
So picture like a first edition of The Great Gatsby going under the paper cutter. That would truly make my second grade librarian, Mrs. Walters, weep. The judge actually said the scanning was totally cool, but wasteful. This 1,500,000,000 they paid to settle with Bart's in 2025 was actually for the pirated books they downloaded virtually. The bigger risk now is fair use not holding up for AI training in other cases and that spiraling down and forcing them to change their models. Number five, your vote does not really count for much. So the long term benefit trust, the LTBT, elects a majority of the board and the founders hold 50.1% of the vote. The filing says the structure may effectively eliminate the ability of holders of our class a common stock to influence important decisions, including a change in control. So nobody is pulling a Kendall Roy here and overthrowing the board. Some honorable mentions. Quote, we have a limited history selling consumption based access, says the largest usage based company in the history of the world. Free tiers might not convert and users may choose to use our free offerings indefinitely. Like my friend, Kyle Poyer, give him shit if you talk to him. He doesn't pay for any chatty, petty, or Anthropic. He's cheap. Next, they flag unfavorable media coverage as a risk. So, yeah, I mean, give me a TBPN deal and I'll make CFOs fucking love you. Good news though. They get the green light on the following. No material weaknesses in internal controls, no going concern language, nearly 132,000,000,000 of cash and short term investments, and no single customer over 10% of their revenue. Cap table. There are five classes of common stock. Two of them are a single share. I've... I don't think I've ever seen that. Class a, that's what you're gonna buy in the IPO if you want it. One vote per share that doesn't really count. Class n, same economics as class a, but no vote held mostly by strategic partners like Amazon and Google, that makes sense. Converts the class a when sold to someone unaffiliated. This is also stock that funds the 5% public benefit fund. Class t, one share held by the LTBT Alexa majority of the board. They did a one for 1,000 reverse split to get it down to exactly one share. Class f, one share held by an LLC owned by the seven co founders. That someone that carries 50.1% of the vote. That doesn't seem to be permanent.
00:41:40 · CJ Gustafson
Voting power passes to common stockholders, once fewer than three co founders remain. Classy, that one's for the employees who are not founders. Who owns this? Interestingly, no institutional investors show up on the plus five percent table. Amazon and Google mostly hold non voting class n, so they don't have to be listed. The seven co founders each hold about 240,000,000 class a shares. All seven are listed as selling something. If you are close to securing the bag, make sure you secure the bag. Ownership percentages are blank along with how much they'll sell. The co founders have each pledged 80% of their equity to philanthropy. So how the execs get paid? Dario CEO, 18,000,000 total in 2025. That was 654 k in salary, 9,300,000 of RSUs and 4,000,000 of options. 2,700,000 of personal security. He definitely needs that. 97,000 of personal private air travel required by security program. That's like one flight to Florida and back. 1,150,000 from the spread on shares he sold back in June 2025 tender offer. Daniella Amodi, president, 16,400,000 with the same salary and equity as Dario. Krishna Rao, their CFO. 720 k total in 2025 with no new equity that year. His 2026 base salary is 1.25. So he's gonna make more in cash than Dario and Daniela's 915,000. He's also getting company paid security right now. The company paid 2,500,000 each to cover Dario and Daniela's HSR antitrust filing fees, which they owed because of how much stock they hold. The severance in here, they get fired, is twenty four months of salary for Dario and Daniela and twelve months for Rao, plus a year of accelerated investing, which is actually worth way more. The board has seven directors. The trust will elect four of them, and the co founders elect the other three. Reed Hastings of Netflix fame, Chris Liddell, who is not Chuck Liddell, the UFC fighter, someone named Voss and someone named Yasmin of Spark Capital alongside Dario and Daniela. Valuation. The price range is blank, but the reporting as bankers pitching about 2,000,000,000,000, roughly double the 965,000,000,000 series each from five months ago. They're also sitting on about 132,000,000,000 of cash and short term investments before a dollar of proceeds come in. So they're doing okay. Enterprise value is closer to 1,870,000,000,000 after factoring for that. So what does 2,000,000,000,000 buy?
00:43:55 · CJ Gustafson, S1
Really depends on what number you pick. Pick a card, any card. So trailing twelve month gap revenue through June. So this is the most intellectually honest version. So 19,700,000,000. That will get you to 101 x multiple. Wow. If we go off our back into TTM revenue through September, with some assumptions, that's 35,000,000,000. That's only 57 x revenue only. Q two revenue times four, that's 46,000,000,000 or 43 x. The 65,000,000,000 run rate reported for July, that brings it down to 31 x. The 100 to 120,000,000,000 year end run rate investors expect per the Financial Times gets you to a paltry 17 x. I mean, multiples anywhere from like 17 to 100, depending on whether you believe the run rate or the gap. And if you strip out the cloud providers cut from the gross booked revenue, every one of those multiples goes up by about a fifth. Remember? Because they say it's gross. For context, here's what recent names landed in our breakdown this year. So SpaceX asked for 60 to 70 x forward revenue. Cerebras came out around 50 x when it was said and done. Enscaler is asking about 90 x in its run rate at the time. Palantir trades around 36 x today, but earlier this year, they traded at a 100. Nvidia is around 18 x at the time of our SpaceX piece when we published that. Miscellaneous stuff a note. First, they listed their threads account just in case you need to contact them. That was in the contact section. Number two, they switched auditors year before filing. They dismissed Grant Thornton engaged in October 2025. [00:45:22] S1: Sponsor the pod.
00:45:23 · CJ Gustafson
[00:45:23] S0: They cut the vest and cliff in half. In January 2026, they changed the one year cliff to six months on all stock options they hadn't hit yet, which is a nice recruiting move. Their boomerang rate is super high. So of the employees who left, they wanted to keep 19% came back. You know, apologies and shout out to Societe Generale. Is it Societe Generale? They were listed in the fourth row of the 22 banks. This bank caught astray by me in my SpaceX breakdown, but I gotta say, you punch above your weight class. So the bull case is basically the efficiency section that I went through. This business is growing 10 x a year with 900% net revenue retention. If you price it like based on their run rate, you're only looking at 20 to 30 x multiple, which is less than what CrowdStrike and Cloudflare get on forward revenue with a fraction of their growth. On trailing gap revenue though, you're paying about 95 x. That's a lot more than Palantir for a company that buys its compute from Amazon, Google, and Microsoft, who sell competing models on the same clouds that resell Cloud. And it all hinges on my number one question, which is whether the use cases keep showing up as fast as the price per task keeps falling. And finally, never let your company be worth a dollar more than it is actually worth. They said it, not me. Remember, none of this is investment advice. I wrote it at my kitchen table full of pancakes with my dog Walter waiting for a bite that he never got. Do your own homework. This is for information and entertainment purposes only. Wishing you a short stack, a long lockup, and the real maple syrup. Peace. Run the Numbers is a Mostly Media production. Yelling an intro by Fat Joe. Artwork by Meg D'Alessandro. Nothing said on this podcast is intended to be business or investment advice. It's the sole opinion of me, a guy who feeds his dog way too much ice cream and has a history of net operating losses. LOL. If you like this podcast, hit subscribe and give us five stars. It'll take like two seconds and our algorithm overlords love it. Drink water, call your mom, and have a great day. Peace.