Run the Numbers
00:06:44 · CJ Gustafson
Aggregate committed spend of more than blank running through 2045. How you gonna leave us hanging like that? Employees 5,300, up from 940 at the end of twenty twenty four. Imagine being in that Slack channel, like, who are all these people? TTM revenue per employee is over 6,600,000, up from 1,400,000 a year earlier. That is crazy. The offering, the price range and share count are blank. Goldman, Morgan Stanley are joint representatives, then JPMorgan, Citi Barclays, and Wells Fargo, and another 22 banks. It's a controlled company with five classes of common stock, which we will go over. They did it 10 for one split on September 17. I'm gonna level with you. This was the best shareholder letter I've ever read. And I have to admit, even if it was written by Claude, I don't really know. This thing slaps. It goes from we will try to cure cancer, to here's why you might not want to buy this, to an explanation of what exponential really looks like, and why they're going to make some investments that look, quote, irresponsibly large on paper, but are justified in this new world. This really... This letter really had it all. Quote, we believe that AI is one of the most consequential technologies in human history. If managed well, it could rapidly accelerate scientific innovation, greatly increase economic growth rates, bring cures for major diseases within reach and solve problems that have resisted generations of human effort. They lead with the scientific angle, cure diseases and extend life. I think that's very thoughtful positioning versus potentially killing us all. And they namedrop a bunch of diseases that they hope to cure, which is dope. That's awesome. Then they hit you over the head with the four things they want any investors to understand. The potential of AI, the risks, how Anthropic is built differently, and the ways in which our behavior may differ from that of a purely profit maximizing company. Quote, we believe that the impact of an exponential and machine cognition will be vastly greater even than that of the exponential in computer chips. Where it ends up is what they call a country of geniuses in a data center. Millions of virtual agents with the ability revolutionize every area of human endeavor. And boy, oh, boy, is that a weird ass statement to put in there? They hit us with this anti sell.
00:08:59 · CJ Gustafson
Before starting the IPO process, we spoke to many business leaders who had gone through a similar process in the past. One piece of advice, which we heard in slightly different forms from multiple people stuck with us, never let your company be worth a dollar more than it is actually worth. But like also value us at Qtroian. What they're saying here is the same thing that they do in recruiting where candidates get like this anti sell pitch of like, it really sucks to work here. You know, you do not wanna work at Anthropic. Then they warn you of surprises coming down the pike. So if it first would be spending, business bets that derive from AI's wild exponential trajectory but seem strange or unorthodox in isolation, and on the public good side, decisions that depart from profit maximization in order to appropriately balance the public good. Quote, Anthropic will often make forward investments, especially in compute that may seem irresponsibly large at first glance. Hair cover, they compare it to pharma where you get these huge upfront r and d investments, and they only make sense later in light of the returns from successful drugs. Except for Anthropic, it's a similar process that's occurring much faster and on a much larger scale. Their stated approach is to, quote, be bold but sane. They've also committed to keeping Claude free of advertising. That's a that's a weird choice to, like, say, we're not going to do this one, like, major business model that has funded a ton of the innovation in the economy. And they say there may be time that they choose to advance more slowly than they could, even if that puts us at a competitive disadvantage. They sign off asking you as a prospective owner to quote, not to think of your purchase in purely transactional terms. I left thinking I would buy a used Chevy Avalanche from them. A refresher where Anthropic sits in the AI stack. So if you read our n scale s one breakdown, you've seen the five layers of AI. So first, got power, so that's the electricity itself in the grid or generated on-site, or maybe nuclear. Then you got land and data centers, the buildings, the cooling, the grid connections that turn power into usable space for servers, then you get the chips, the GPUs and other accelerators plus the networking gear that ties them all together, all those bungee cords.
00:11:13 · CJ Gustafson
Then you get cloud software, the layer that schedules jobs and keeps the hardware running. And five, the models and apps. You get an Anthropic, OpenAI, and everyone building on top of them. So Anthropic lives at layer five. It rents most layers one through four from the Amazons, the Googles, the Microsofts of the world, and it trains in... Serves cloud across four chip families. You got Amazons, Googles, Nvidia's, and AMVs. But it's starting to reach down the stack, and what I is they're gonna vertically integrate here. They call it Anthropic direct, leasing chips directly and hosting them in dedicated facilities operated on their behalf, which now puts equipment leases and committed power costs on their own p and l. The filing also mentions guarantees to developers to get data capacity built. Quote, as we continue to build out our own computing infrastructure and further vertically integrate across the compute supply chain.
00:12:07 · S1
[00:12:07] S1: Remember when pricing was simple? One product, one subscription, one invoice every month. Those days are over. The AI economy is changing how everything gets bought and sold. We're seeing usage based pricing, hybrid contracts, and something called a credit. The finance systems built for vanilla subscriptions weren't designed for this. This isn't just a RevRec problem anymore because outdated revenue architecture can kill a great pricing idea before it ever reaches the market. RightRev lets you recognize revenue in whatever shape it comes in. Whether you're launching consumption credits or testing entirely new commercial models, RightRev gives finance the flexibility to support whatever pricing model comes next. So product teams can keep on innovating and finance teams can keep pace. If you're architecting revenue for the AI economy, learn how RightRev can help. Visit rightrev.com/cj. That's me. That's right rev.com/cj. A wise man once told me that every startup is really just a loosely functioning disaster. Ain't that the truth? Your startup needs a little extra support. And let's be honest, who doesn't need a little help now and then? You're in for a pleasant surprise with Fidelity. Fidelity Private Shares helps early and growth stage companies stay investor ready with cap table, data room, and scenario modeling all in one place. A messy or missing cap table might not just slow you down, it could cost you your next fundraising round. VCs are flooded with pitches, and if your equity is confusing or missing, they'll move on fast. Fidelity Private Shares gives founders the structure and simplicity to focus on what actually matter, building your company. If you stay investor ready, you don't have to get investor ready. Check out fidelityprivateshares.com to learn more. That's fidelityprivateshares.com. I got news for you. The ERP category is finally getting disrupted. If you haven't heard of Rilla yet, please pay attention. It's the AI native ERP built specifically to replace NetSuite, and it's already won over hundreds of finance teams. Their mission is to make these zero day close a reality, and they're actually doing. We're talking teams closing the books at 01:35PM on the first day of the month. Companies like Windsurf, Mercor, and hundreds of others run their entire finance stack on Rilla.
00:14:20 · S1
Revenue recognition, close management, multi entity, native Stripe, and Salesforce integrations, whoo, Everything a scaling company needs. They've got 5.0 star... Five zero. Wow. Five zero stars on g two. They're backed by a 16 z and Sequoia, heard of them, and CPA led implementation that get you live in forty five days. That is simply unheard of in the ERP space. If your books aren't running as fast as your business, check out Rillet. Book a demo at rillet.com/cj. That is rillet.com/cj. That's me.
00:14:48 · CJ Gustafson
[00:14:48] S0: How are they making money? They're making a lot of this money. There are four model classes. They get the mythos, mythos, mythos, including fable, opus, sonnet, and haiku. Each one sits at a different point on what they call... I love I love this. The capability cost speed curve. Customers use the smart expensive ones for coding and agents and route these simple shit to the cheap fast ones. I forgot my password. I forgot my login. They charge two ways. The first is pay for intelligence. Customers pay for usage metered in tokens and price by model. This was 80% of revenue in the first half of twenty twenty six. And subscriptions, Clouds apps on a monthly or annual plan for enterprise and prosumers like myself with terms of twelve months or less, this was the other 20%. The two models feed each other because when a subscriber runs out of the usage in their tier, they can move up a tier or buy more intelligence directly, which turns that subscription revenue into usage revenue. And that's why the usage revenue is far outpacing the subscription revenue. A growing number of enterprises also sign non cancelable annual or multi year contracts with minimum spend commitments in exchange for a committed price list. So like to lock in with certainty what you're gonna pay. These mostly show up as usage revenue too. So they sell it through what they call surfaces. Claude platform, the building blocks or developers put Claude inside their own products. Claude code, the coding agent, Claude co work, the knowledge work agent, which they started merging with Claude dot ai in September. Let's talk about distribution, which they called the fusion. Much of the diffusion of Claude has been organic because prosumers use it in their own personal life and then eventually they bring it to their company life. By the time the sales team from Claude is there, they're already using it in some way, shape, or form. They're looking to get better pricing. The biggest benefit to the go to market is that it's available through all three major cloud providers. So a customer can buy inside the AWS, Google Cloud, or Azure relationship they already have. And Anthropic keeps the contract with the customer and pays each cloud a fee, a vig, a rake. And then there's the old fashioned channel model via consultants, the Accenture's, the Deloitte's, the KPMG's, and PWC's of the world.