WEBVTT - Monologue: Annualized Revenues Are BS 0:00:01.840 --> 0:00:06.520 All Zone Media. Hello and welcome to this week's Better 0:00:06.559 --> 0:00:16.600 Offline Monologue. I'm your host ed ze Tron, and I've 0:00:16.640 --> 0:00:18.520 heard so many nice things from all of you about 0:00:18.600 --> 0:00:20.880 last week's Haters Guide to AI, and I really couldn't 0:00:20.880 --> 0:00:22.680 be more grateful. It was a labor of love and 0:00:22.880 --> 0:00:25.480 hate in some cases. I guess as we approach what 0:00:25.520 --> 0:00:27.920 I see as the precipice of this hysterical era, we're 0:00:27.920 --> 0:00:29.800 going to start seeing and hearing big tech and big 0:00:29.800 --> 0:00:33.320 model developers make intentionally vague statements with the intentive misleading 0:00:33.360 --> 0:00:35.960 you and the media. And I really want to be clear. 0:00:36.120 --> 0:00:37.920 I'm sorry there's going to be some maths in this, 0:00:38.159 --> 0:00:40.360 but it's necessary for you to know how people are 0:00:40.360 --> 0:00:43.599 trying to swindle you and the media too. So Microsoft 0:00:43.680 --> 0:00:45.880 kicked this off this week with this week's earnings breaking 0:00:45.880 --> 0:00:48.559 out annual revenue from their a Zeo cloud platform when 0:00:48.560 --> 0:00:50.440 they sell the means for people to run applications and 0:00:50.520 --> 0:00:53.680 organizations in the cloud but also bury their AI services, 0:00:53.760 --> 0:00:55.600 and they did this for the first time in history. 0:00:56.000 --> 0:00:58.280 This naturally led people to say that as yours growth, 0:00:58.280 --> 0:01:01.080 which is up thirty four percent twenty twenty four, when 0:01:01.120 --> 0:01:04.880 they didn't disclose it was driven by art official intelligence somehow, 0:01:05.000 --> 0:01:08.080 despite the fact that Microsoft intentionally stopped reporting on their 0:01:08.080 --> 0:01:10.839 own things their AI revenue in January when they said 0:01:10.880 --> 0:01:13.680 they had thirteen billion of annualized revenue, meaning about one 0:01:13.680 --> 0:01:17.120 point eight billion dollars a month, and God, that term 0:01:17.120 --> 0:01:19.039 annualized this is a tricky one. Also, by the way, 0:01:19.040 --> 0:01:22.319 they made over seventy billion dollars on Azure, so thirteen 0:01:22.319 --> 0:01:24.479 billion dollars of annualized revenue is actually not that much. 0:01:24.480 --> 0:01:27.240 But anyway, the term annualized this is a really tricky one. 0:01:27.480 --> 0:01:30.240 When you read or hear someone say annualized revenue, it 0:01:30.280 --> 0:01:33.800 means a particular month multiplied by twelve. However, what they 0:01:33.840 --> 0:01:35.959 want you to think is that annualized means that the 0:01:36.000 --> 0:01:38.440 company in question will make that much money in the year, 0:01:38.640 --> 0:01:41.320 in part because there isn't a single goddamn media outlet 0:01:41.360 --> 0:01:44.320 that seems capable of seeing through this. I should also 0:01:44.400 --> 0:01:47.280 be clear that annualized revenue is a one month snapshot. 0:01:47.480 --> 0:01:49.800 If I sell boxes at one hundred dollars apiece and 0:01:49.840 --> 0:01:53.080 sell three in June, I have thirty six hundred dollars 0:01:53.120 --> 0:01:56.560 in annualized revenue. That's three hundred dollars times twelve, because 0:01:56.600 --> 0:01:59.440 that's a year. But if I only sell a one 0:01:59.440 --> 0:02:02.120 box in j that means I have twelve hundred dollars 0:02:02.240 --> 0:02:05.680 in annualized revenue, which doesn't quite sound so good. My 0:02:05.840 --> 0:02:08.520 June annualized revenues of thirty six hundred dollars make it 0:02:08.560 --> 0:02:10.639 sound like I'll make that much in a year. However, 0:02:10.639 --> 0:02:12.520 if I also tell you that I only sold one 0:02:12.560 --> 0:02:15.280 box and I had twelve hundred dollars of annualized revenues 0:02:15.320 --> 0:02:18.840 based on July, you'd suddenly be more concerned, and quite 0:02:18.840 --> 0:02:22.520 concerned indeed, about the volatility of this box business. In 0:02:22.600 --> 0:02:25.720 simpler terms, annualized revenue is a deliberate attempt to hide 0:02:25.800 --> 0:02:30.119 something or mislead someone. Nowhere has this been more obvious 0:02:30.280 --> 0:02:32.640 than an open AI's recent leak of their twelve billion 0:02:32.680 --> 0:02:36.000 dollars in annualized revenue, which the information who I genuinely 0:02:36.040 --> 0:02:39.400 like and appreciate reported as somehow indicative of open ai 0:02:39.560 --> 0:02:41.640 being on track to make their twelve point seven billion 0:02:41.680 --> 0:02:44.720 dollars in revenue for twenty twenty five. Here's the thing. 0:02:45.200 --> 0:02:48.079 Twelve billion dollars in annualized revenue means one billion dollars 0:02:48.080 --> 0:02:51.560 in revenue in one month, which is genuinely a milestone, 0:02:51.919 --> 0:02:54.400 kind of impressive, at least it would be if open 0:02:54.440 --> 0:02:57.280 ai didn't burn up puts of eight billion dollars this year, 0:02:57.639 --> 0:02:59.520 even though I think they're probably going to burn more 0:02:59.520 --> 0:03:02.919 than that. But anyway, back in May, CNBC reported the 0:03:02.960 --> 0:03:05.800 open ai was up ten billion dollars in annualized revenue, 0:03:05.800 --> 0:03:08.560 meaning eight hundred and thirty three million dollars. And back 0:03:08.560 --> 0:03:10.680 in December twenty twenty four they were at five point 0:03:10.720 --> 0:03:14.200 five billion dollars in annualized revenue. And that's the thing. 0:03:14.400 --> 0:03:16.079 And by the way, five point five works out to 0:03:16.080 --> 0:03:18.240 about four hundred and fifty eight million dollars in the month. 0:03:19.040 --> 0:03:21.919 But that doesn't mean that they're going to hit twelve 0:03:21.919 --> 0:03:24.400 point seven billion dollars. In fact, best case scenario, this 0:03:24.440 --> 0:03:27.520 means that open ai has, by my calculations, made just 0:03:27.639 --> 0:03:30.560 over five billion dollars in total revenue through the end 0:03:30.560 --> 0:03:32.720 of July twenty twenty five. That's in the first seven 0:03:32.720 --> 0:03:36.520 months of the year. So anytime you see annualized revenue 0:03:36.560 --> 0:03:39.320 you should immediately be suspicious of whoever is leaking it. 0:03:39.680 --> 0:03:41.880 Open ai has likely leaked this number as a means 0:03:41.920 --> 0:03:44.320 of making people believe that they'll make twelve billion dollars 0:03:44.360 --> 0:03:46.200 or more. In twenty twenty five, they projected to do 0:03:46.320 --> 0:03:49.160 twelve point seven billion dollars, which would be a remarkable 0:03:49.240 --> 0:03:53.040 number that they're not even halfway towards reaching, despite what 0:03:53.280 --> 0:03:57.080 some people might be reporting. Now another company playing silly 0:03:57.080 --> 0:03:59.960 buggers with di figurers, of course, Anthropic, who have leaked 0:04:00.160 --> 0:04:03.240 so far this year, every single month of every single 0:04:03.240 --> 0:04:05.960 month other than April. It's kind of crazy. And they 0:04:06.400 --> 0:04:09.040 but they started in January when they leaked that they'd 0:04:09.080 --> 0:04:11.880 hit a billion dollars in annualized revenue, and then they 0:04:11.920 --> 0:04:14.040 are one point four billion dollars in February, and then 0:04:14.040 --> 0:04:16.719 two billion dollars annualized in March, and then three billion 0:04:16.760 --> 0:04:19.640 dollars annualized in May, and then four billion dollars annualized 0:04:19.680 --> 0:04:22.599 in June. One might believe this means that Anthropic will 0:04:22.600 --> 0:04:25.080 make four billion dollars this year, but the actual numbers 0:04:25.120 --> 0:04:27.160 work out to the company making no more than one 0:04:27.160 --> 0:04:30.279 point one five billion dollars through the end of June. 0:04:30.640 --> 0:04:32.479 And if you want to check my maths, you can 0:04:32.720 --> 0:04:35.400 billion dollars of ar will be eighty three billion, one 0:04:35.440 --> 0:04:38.960 point four one one six. Two billion would be one 0:04:39.000 --> 0:04:42.400 sixty six. Then May would be three billion annualized, so 0:04:42.440 --> 0:04:44.839 it it'd be two hundred and fifty million, and four 0:04:44.880 --> 0:04:47.240 billion ar would be three hundred and thirty three million. 0:04:47.480 --> 0:04:49.839 I'm saying this with the person that emails me is like, 0:04:50.440 --> 0:04:54.840 what are their numbers? Anyway? These are obfiscations, these are intentional. 0:04:55.040 --> 0:04:57.480 Anthropic has made no more than one point one five 0:04:57.520 --> 0:05:01.200 billion dollars through the end of June. Is not going 0:05:01.240 --> 0:05:03.960 to get them to four billion dollars without something ridiculous. Yeah. 0:05:03.960 --> 0:05:07.120 I saw a Bloomberg reporter, love your ed, but the 0:05:07.440 --> 0:05:11.679 saying maybe they'll hit nine billion dollars in annualized revenue 0:05:11.720 --> 0:05:15.200 this year as an absolute joke. Open Ai barely hit 0:05:15.279 --> 0:05:18.440 then they have all the it's just it's all deliberate 0:05:18.440 --> 0:05:20.839 and it's all intentional. It's also that you kind of 0:05:21.600 --> 0:05:24.039 watch the mouth are not the hands. It's so that 0:05:24.080 --> 0:05:27.080 you don't think too hard, because when you look at 0:05:27.080 --> 0:05:29.920 the actual numbers, open Ai has only made like five 0:05:29.960 --> 0:05:33.000 point five billion dollars this year. That's not They're not 0:05:33.120 --> 0:05:35.520 even to the lofty goals they have. They're not even 0:05:35.560 --> 0:05:38.320 halfway there, and Anthropics are one point one to five billion. 0:05:38.560 --> 0:05:41.240 These are not huge amounts, and they're dwarfed by the 0:05:41.240 --> 0:05:43.120 fact that each I think Open Ai is going to 0:05:43.160 --> 0:05:46.240 burn eight to probably fifteen billion dollars this year and 0:05:46.279 --> 0:05:49.000 that's after revenue, and Anthropic I think they're three to 0:05:49.080 --> 0:05:53.200 five billion dollars. It's an absolute joke. But you, you, 0:05:53.360 --> 0:05:55.520 the listener, I want you to know that all of 0:05:55.560 --> 0:05:58.600 this is intentional, as Anthropic is currently raising around as 0:05:58.680 --> 0:06:01.200 large as five billion dollars from the bone saw capital 0:06:01.240 --> 0:06:03.560 of the world, and the media is helping by obfuscating 0:06:03.560 --> 0:06:06.359 their actual revenue. Opening Eyes doing the same thing. The 0:06:06.360 --> 0:06:09.479 Information reported they're at seven point five billion dollars of 0:06:09.520 --> 0:06:12.599 the remaining well thirty billion that they actually have to raise, 0:06:12.640 --> 0:06:16.680 with soft Bank covering the rest. They're trying to hoodwink people. 0:06:17.240 --> 0:06:19.960 And I want you, the listener to know better. Agree 0:06:19.960 --> 0:06:22.360 with me, disagree with me. I've much rather you knew 0:06:22.400 --> 0:06:25.400 what these terms mean and why they're being used. And yes, 0:06:25.520 --> 0:06:28.240 there's going to be someone who says, annualize there's a 0:06:28.240 --> 0:06:31.520 fine term. People use it ethically, and that's true. You 0:06:31.560 --> 0:06:34.960 can use this term ethically. You can use this to say, yeah, 0:06:35.000 --> 0:06:37.160 if things keep up at this pace, will be at this. 0:06:37.680 --> 0:06:40.760 That's not what these fuckers are doing. They're doing this 0:06:40.760 --> 0:06:43.200 as a means of They're selling it to people that 0:06:43.279 --> 0:06:45.600 aren't going to think about it too hard, so that 0:06:45.600 --> 0:06:48.400 those people don't think about it much more than thinking, oh, 0:06:48.520 --> 0:06:51.120 open AA is going to make so much bloody money. 0:06:51.400 --> 0:06:55.360 Oh when Throbic's going to do that too. And it sucks. 0:06:55.560 --> 0:06:59.960 It sucks because this is being used to make people richer, 0:07:00.120 --> 0:07:03.000 to make Dario Amma Day and Sam Clammy Sam Altman 0:07:03.520 --> 0:07:07.320 more and more money, and it's really sad. It's sad, 0:07:07.360 --> 0:07:11.240 but it's also a sign that things are kind of deteriorating. 0:07:11.320 --> 0:07:13.280 And yes, there are going to be people that say, well, 0:07:13.320 --> 0:07:17.200 the revenue's going up, that means things are going well. Ah. 0:07:17.440 --> 0:07:19.600 In a situation where things are going well, these companies 0:07:19.600 --> 0:07:22.200 would talk about the real revenues. They wouldn't be playing 0:07:23.080 --> 0:07:27.600 weird card games and weird shuffling. Shuffling. Though, now, as 0:07:27.640 --> 0:07:29.600 I'm saying this is forgetting what you call the game 0:07:29.640 --> 0:07:31.920 with the cup on the ball, Someone's going to email 0:07:31.960 --> 0:07:34.200 me and make fun of me for this. I'm stupid. 0:07:34.240 --> 0:07:37.000 You don't get to do that. But in all seriousless 0:07:37.040 --> 0:07:39.600 they're doing tricksy things and they're doing it because they're 0:07:39.800 --> 0:07:42.720 trying to raise money. It's a classics windle, and it 0:07:42.760 --> 0:07:45.320 pisses me off to see because people are going to 0:07:45.360 --> 0:07:47.680 think that this is a victory for the AI boom, 0:07:47.880 --> 0:07:50.320 when in reality they're trying to hide something a little 0:07:50.320 --> 0:07:53.280 more grim than that, which is revenues are nowhere near 0:07:53.320 --> 0:07:57.440 their arrs they wish they were. And indeed, I think 0:07:57.480 --> 0:07:59.120 in the next six to twelve months we're going to 0:07:59.160 --> 0:08:02.360 see this sour or somewhat. I look forward to telling you, 0:08:02.400 --> 0:08:04.760 regardless of what happens, what's actually happening.