Speaker 1: All Zone Media. Hello and welcome to this week's Better
Speaker 1: Offline Monologue. I'm your host ed ze Tron, and I've
Speaker 1: heard so many nice things from all of you about
Speaker 1: last week's Haters Guide to AI, and I really couldn't
Speaker 1: be more grateful. It was a labor of love and
Speaker 1: hate in some cases. I guess as we approach what
Speaker 1: I see as the precipice of this hysterical era, we're
Speaker 1: going to start seeing and hearing big tech and big
Speaker 1: model developers make intentionally vague statements with the intentive misleading
Speaker 1: you and the media. And I really want to be clear.
Speaker 1: I'm sorry there's going to be some maths in this,
Speaker 1: but it's necessary for you to know how people are
Speaker 1: trying to swindle you and the media too. So Microsoft
Speaker 1: kicked this off this week with this week's earnings breaking
Speaker 1: out annual revenue from their a Zeo cloud platform when
Speaker 1: they sell the means for people to run applications and
Speaker 1: organizations in the cloud but also bury their AI services,
Speaker 1: and they did this for the first time in history.
Speaker 1: This naturally led people to say that as yours growth,
Speaker 1: which is up thirty four percent twenty twenty four, when
Speaker 1: they didn't disclose it was driven by art official intelligence somehow,
Speaker 1: despite the fact that Microsoft intentionally stopped reporting on their
Speaker 1: own things their AI revenue in January when they said
Speaker 1: they had thirteen billion of annualized revenue, meaning about one
Speaker 1: point eight billion dollars a month, and God, that term
Speaker 1: annualized this is a tricky one. Also, by the way,
Speaker 1: they made over seventy billion dollars on Azure, so thirteen
Speaker 1: billion dollars of annualized revenue is actually not that much.
Speaker 1: But anyway, the term annualized this is a really tricky one.
Speaker 1: When you read or hear someone say annualized revenue, it
Speaker 1: means a particular month multiplied by twelve. However, what they
Speaker 1: want you to think is that annualized means that the
Speaker 1: company in question will make that much money in the year,
Speaker 1: in part because there isn't a single goddamn media outlet
Speaker 1: that seems capable of seeing through this. I should also
Speaker 1: be clear that annualized revenue is a one month snapshot.
Speaker 1: If I sell boxes at one hundred dollars apiece and
Speaker 1: sell three in June, I have thirty six hundred dollars
Speaker 1: in annualized revenue. That's three hundred dollars times twelve, because
Speaker 1: that's a year. But if I only sell a one
Speaker 1: box in j that means I have twelve hundred dollars
Speaker 1: in annualized revenue, which doesn't quite sound so good. My
Speaker 1: June annualized revenues of thirty six hundred dollars make it
Speaker 1: sound like I'll make that much in a year. However,
Speaker 1: if I also tell you that I only sold one
Speaker 1: box and I had twelve hundred dollars of annualized revenues
Speaker 1: based on July, you'd suddenly be more concerned, and quite
Speaker 1: concerned indeed, about the volatility of this box business. In
Speaker 1: simpler terms, annualized revenue is a deliberate attempt to hide
Speaker 1: something or mislead someone. Nowhere has this been more obvious
Speaker 1: than an open AI's recent leak of their twelve billion
Speaker 1: dollars in annualized revenue, which the information who I genuinely
Speaker 1: like and appreciate reported as somehow indicative of open ai
Speaker 1: being on track to make their twelve point seven billion
Speaker 1: dollars in revenue for twenty twenty five. Here's the thing.
Speaker 1: Twelve billion dollars in annualized revenue means one billion dollars
Speaker 1: in revenue in one month, which is genuinely a milestone,
Speaker 1: kind of impressive, at least it would be if open
Speaker 1: ai didn't burn up puts of eight billion dollars this year,
Speaker 1: even though I think they're probably going to burn more
Speaker 1: than that. But anyway, back in May, CNBC reported the
Speaker 1: open ai was up ten billion dollars in annualized revenue,
Speaker 1: meaning eight hundred and thirty three million dollars. And back
Speaker 1: in December twenty twenty four they were at five point
Speaker 1: five billion dollars in annualized revenue. And that's the thing.
Speaker 1: And by the way, five point five works out to
Speaker 1: about four hundred and fifty eight million dollars in the month.
Speaker 1: But that doesn't mean that they're going to hit twelve
Speaker 1: point seven billion dollars. In fact, best case scenario, this
Speaker 1: means that open ai has, by my calculations, made just
Speaker 1: over five billion dollars in total revenue through the end
Speaker 1: of July twenty twenty five. That's in the first seven
Speaker 1: months of the year. So anytime you see annualized revenue
Speaker 1: you should immediately be suspicious of whoever is leaking it.
Speaker 1: Open ai has likely leaked this number as a means
Speaker 1: of making people believe that they'll make twelve billion dollars
Speaker 1: or more. In twenty twenty five, they projected to do
Speaker 1: twelve point seven billion dollars, which would be a remarkable
Speaker 1: number that they're not even halfway towards reaching, despite what
Speaker 1: some people might be reporting. Now another company playing silly
Speaker 1: buggers with di figurers, of course, Anthropic, who have leaked
Speaker 1: so far this year, every single month of every single
Speaker 1: month other than April. It's kind of crazy. And they
Speaker 1: but they started in January when they leaked that they'd
Speaker 1: hit a billion dollars in annualized revenue, and then they
Speaker 1: are one point four billion dollars in February, and then
Speaker 1: two billion dollars annualized in March, and then three billion
Speaker 1: dollars annualized in May, and then four billion dollars annualized
Speaker 1: in June. One might believe this means that Anthropic will
Speaker 1: make four billion dollars this year, but the actual numbers
Speaker 1: work out to the company making no more than one
Speaker 1: point one five billion dollars through the end of June.
Speaker 1: And if you want to check my maths, you can
Speaker 1: billion dollars of ar will be eighty three billion, one
Speaker 1: point four one one six. Two billion would be one
Speaker 1: sixty six. Then May would be three billion annualized, so
Speaker 1: it it'd be two hundred and fifty million, and four
Speaker 1: billion ar would be three hundred and thirty three million.
Speaker 1: I'm saying this with the person that emails me is like,
Speaker 1: what are their numbers? Anyway? These are obfiscations, these are intentional.
Speaker 1: Anthropic has made no more than one point one five
Speaker 1: billion dollars through the end of June. Is not going
Speaker 1: to get them to four billion dollars without something ridiculous. Yeah.
Speaker 1: I saw a Bloomberg reporter, love your ed, but the
Speaker 1: saying maybe they'll hit nine billion dollars in annualized revenue
Speaker 1: this year as an absolute joke. Open Ai barely hit
Speaker 1: then they have all the it's just it's all deliberate
Speaker 1: and it's all intentional. It's also that you kind of
Speaker 1: watch the mouth are not the hands. It's so that
Speaker 1: you don't think too hard, because when you look at
Speaker 1: the actual numbers, open Ai has only made like five
Speaker 1: point five billion dollars this year. That's not They're not
Speaker 1: even to the lofty goals they have. They're not even
Speaker 1: halfway there, and Anthropics are one point one to five billion.
Speaker 1: These are not huge amounts, and they're dwarfed by the
Speaker 1: fact that each I think Open Ai is going to
Speaker 1: burn eight to probably fifteen billion dollars this year and
Speaker 1: that's after revenue, and Anthropic I think they're three to
Speaker 1: five billion dollars. It's an absolute joke. But you, you,
Speaker 1: the listener, I want you to know that all of
Speaker 1: this is intentional, as Anthropic is currently raising around as
Speaker 1: large as five billion dollars from the bone saw capital
Speaker 1: of the world, and the media is helping by obfuscating
Speaker 1: their actual revenue. Opening Eyes doing the same thing. The
Speaker 1: Information reported they're at seven point five billion dollars of
Speaker 1: the remaining well thirty billion that they actually have to raise,
Speaker 1: with soft Bank covering the rest. They're trying to hoodwink people.
Speaker 1: And I want you, the listener to know better. Agree
Speaker 1: with me, disagree with me. I've much rather you knew
Speaker 1: what these terms mean and why they're being used. And yes,
Speaker 1: there's going to be someone who says, annualize there's a
Speaker 1: fine term. People use it ethically, and that's true. You
Speaker 1: can use this term ethically. You can use this to say, yeah,
Speaker 1: if things keep up at this pace, will be at this.
Speaker 1: That's not what these fuckers are doing. They're doing this
Speaker 1: as a means of They're selling it to people that
Speaker 1: aren't going to think about it too hard, so that
Speaker 1: those people don't think about it much more than thinking, oh,
Speaker 1: open AA is going to make so much bloody money.
Speaker 1: Oh when Throbic's going to do that too. And it sucks.
Speaker 1: It sucks because this is being used to make people richer,
Speaker 1: to make Dario Amma Day and Sam Clammy Sam Altman
Speaker 1: more and more money, and it's really sad. It's sad,
Speaker 1: but it's also a sign that things are kind of deteriorating.
Speaker 1: And yes, there are going to be people that say, well,
Speaker 1: the revenue's going up, that means things are going well. Ah.
Speaker 1: In a situation where things are going well, these companies
Speaker 1: would talk about the real revenues. They wouldn't be playing
Speaker 1: weird card games and weird shuffling. Shuffling. Though, now, as
Speaker 1: I'm saying this is forgetting what you call the game
Speaker 1: with the cup on the ball, Someone's going to email
Speaker 1: me and make fun of me for this. I'm stupid.
Speaker 1: You don't get to do that. But in all seriousless
Speaker 1: they're doing tricksy things and they're doing it because they're
Speaker 1: trying to raise money. It's a classics windle, and it
Speaker 1: pisses me off to see because people are going to
Speaker 1: think that this is a victory for the AI boom,
Speaker 1: when in reality they're trying to hide something a little
Speaker 1: more grim than that, which is revenues are nowhere near
Speaker 1: their arrs they wish they were. And indeed, I think
Speaker 1: in the next six to twelve months we're going to
Speaker 1: see this sour or somewhat. I look forward to telling you,
Speaker 1: regardless of what happens, what's actually happening.