Decoder with Nilay Patel
00:43:57 · Nilay Patel
[00:43:57] S2: Obviously, Anthropic is not the only company that's going IPO, opening eyes right next to them. They've delayed theirs. You mentioned earlier, Anthropic is much more enterprise focused. I think OpenAI for a long time thought that Google wouldn't react to them and they would just take the search business away and everything would be fine. Google obviously reacted for better or worse, searches now, AI overviews. Looking at the Anthropic S1, what are you looking ahead to in OpenAI's? Because they are a more consumer facing company.
00:44:27 · Joey Brookhart, Nilay Patel
[00:44:27] S4: Yeah. So OpenAI was sixty forty consumer, 60% consumer, 40% enterprise at the end of Q1. That didn't flip for the first time until January or August to be enterprise focused. And what they'll tell you is enterprise business, the consumption business, because it was so consumer and subscription focused, consumption, this consumption business that's 80% of Anthropic's revenue, just the token business, that didn't take off till a release of five point six. Oh, and then with Astra. And those are really great models. OpenAI took the majority of actual net new ARR in Q3, but it's going to take some time because I think what's been publicly what's been in The Wall Street Journal, like negative 100% EBIT margins versus we're seeing positive 11% here, there's some differences, some pretty big differences in the business model where they just haven't they just don't monetize at the same rate that Anthropic does. And that's a little bit because the business makeup, the verticals, that consumer versus enterprise split, that's changing. And I think what they'll tell you is, they see a really good Q4, they have a much stronger enterprise sales function than Anthropic has, so I'd expect them to come up but I don't think the financials are going to look as good as this even when they S1 maybe in early twenty seven. [00:45:41] S2: Do you think that's why they delayed it to get their financials looking better?
00:45:41 · Nilay Patel, Joey Brookhart
[00:45:41] S2: Do you think that's why they delayed it to get their financials looking better? [00:45:44] S4: Yeah, I think they're, you know, they had a really strong Q3, enterprise grew 100% quarter over quarter versus the total business was 77%. So I think you get another strong quarter of enterprise here. If Opus five point five didn't take a ton of share, that, yeah, it it'll put them in a much better position to kind of tell the story. [00:46:04] S2: There are some other turns here between now and when Anthropic actually goes public. They're going to do a roadshow, there'll be some pricing events. What are you looking for from Anthropic?
00:46:11 · Joey Brookhart
[00:46:11] S4: They did an Investor Day two or three weeks ago, and where they did give some more color. You know, I think they'll kind of walk through that why Q3 was so weak. And there were, you know, Meta was a very, very large customer, you know, probably over 10%. I think what's been publicly reported is they went from 60,000 cloud code seats down to 30,000. These token volumes didn't disappear, they just shifted to Meta's internal models. They started cracking down on anti distillation, Anthropic did, and that was 5% of revenue prior, and I think they said 5% to 7% of revenue in the S1 and stuff against their terms of service. What's here on the road shows a lot of this October acceleration after OPUS 5.5. I think we believe kind of they're back on track. If they were doing, you know, 10,000,000,000 of net new ARR per month in Q2, and that fell down to 4,000,000,000 in Q3, you know, kind of that they're getting back on that eight to 10, you know, pace here in Q4. And then too, I think people want to hear about these new verticals, about, you know, specifically cyber. I think they're doing some patching, you know, until they have that full cyber SKU rolled out, but they're definitely monetizing cyber today for, you know, vulnerability code scanning. They're not small contracts, I should say, with existing customers. So I think they'll start to message that in what kind of the 2027 ARR growth path kind of looks like. The other thing too is expectations management, keeping numbers low enough, not talking It's about
00:47:33 · Nilay Patel, Joey Brookhart, S3
[00:47:33] S2: hard NGIs do expectation management when your risk factors are like, we could pose an existential risk to all of humanity. [00:47:40] S4: Right. And so saying you do that, you know, you're gonna achieve AGI at some point. We're gonna replace everyone's jobs. But then too, trying to keep numbers low enough for q four and and to beat, you know, have this massive beat the first quarter you become public and have a very nice, you know, a decent guy for '27. It'll be a nice mix of a seesawing between, you know, that long term vision and short term, you know, expectations management. [00:48:04] S2: There's a lot going on. Joey, this has been great. We're gonna have to have you back as these companies barrel towards actually being public and their economics become much more visible. Thank you so much for being on Decoder. [00:48:14] S4: Yeah. Thank you so much. [00:48:17] S2: I love you and Joey Brookhart for joining me and thank you for checking out this episode of Decoder. To get new episodes every Monday and Thursday, subscribe to our YouTube channel at DecoderPod and find us on TikTok and Instagram under [00:48:27] S3: at DecoderPod for more fun stuff we put out almost every day. [00:48:30] S2: If enjoy you this episode, please send a link
00:48:30 · Nilay Patel, S3
[00:48:30] S2: If enjoy you this episode, please send a link [00:48:32] S3: to it to someone you think you might like it. It really helps us grow the show. You can also subscribe wherever you get your podcasts. Decoder is production Verge and part of the Vox Media Podcast Network. The show's producers are Greg Ott, Kate Cox, Nick Statt. This episode was edited by Ursa Wright. Our editorial director is Kevin McShane. The Decoder music is right break master cylinder. We'll see you next time.