Speaker 1: Z Media hellyone, Welcome to this week's Better Offline monologue.
Speaker 1: I'm your host ed Zetron. Sorry I missed last week's
Speaker 1: monologue everyone, I was sick, and in truth, I'm still
Speaker 1: kind of sick, but the work is important. I also
Speaker 1: want to thank all of you have sent very kind
Speaker 1: words via the email inbox and they've read it. I
Speaker 1: really do appreciate you so much, and actually that's a
Speaker 1: good place to start. Everything's rough. As you know, you've
Speaker 1: seen everything, the horrors are many. Remember to be there
Speaker 1: for the people close to you, and as isolated as
Speaker 1: the world might make you feel right now, there are
Speaker 1: millions of people feeling exactly like you. Our subreddit, our
Speaker 1: slash Better Offline is a great place to start, as
Speaker 1: I assure you that if you feel that isolation, the castigation,
Speaker 1: the irritation by the push to put ai and everything,
Speaker 1: you are anything but alone. We are feeling it. I'll
Speaker 1: admit I've been kind of reeling myself. I've had family
Speaker 1: stuff to take care of, all while being sick for
Speaker 1: the best part of what is now three weeks. I
Speaker 1: think it's tough to take a break when you have
Speaker 1: so much to do, especially when the stuff you have
Speaker 1: to do involves keeping up with the current events, and motherfucker,
Speaker 1: we are in an event heavy era. I missed the
Speaker 1: premium newsletter for the first time in months. In a
Speaker 1: monologue for the first time since we started doing them,
Speaker 1: felt guilty, which is ridiculous. You'll all tell me off
Speaker 1: for saying it, But this show is built on sincerity,
Speaker 1: so I'm going to say anyway, So give yourself a
Speaker 1: little bit of a break. Everything is fucking rough, not
Speaker 1: me though, not taking one of those don't get those now.
Speaker 1: As I wrote in this week's newsletter, which I called
Speaker 1: the beginning of History, things appear to be reaching a
Speaker 1: breaking point. Let's catch up. A few weeks ago, Anthropic
Speaker 1: and the Department of Defense got in an argument because
Speaker 1: Anthropic wouldn't allow them to use Claude for domestic mass
Speaker 1: surveillance or to control autonomous weapons, the former of which
Speaker 1: is a stretch of what an MS can do, in
Speaker 1: the latter of which is totally out of their capabilities.
Speaker 1: As a result of this flimsy defiance, Anthropic was designated
Speaker 1: a supply chain risk by the Department of Defense. This
Speaker 1: immediately led to a depressing amount of people doing bullshit
Speaker 1: we stand with Xanthropic Jesui Claude commentary suggesting that this
Speaker 1: company was in any way ethically opposed to blowing things up.
Speaker 1: Let me be blunt about how wrong you are if
Speaker 1: you think this way. Anthropics Claude LLM was used in
Speaker 1: the war in Iran. It isn't clear how, but it's
Speaker 1: more than likely it was handled a bunch of data coordinates, images, targets,
Speaker 1: and so on and asked what to do. This does
Speaker 1: not mean it is powerful, or accurate, or really anything
Speaker 1: other than a means of escaping the responsibility for choosing
Speaker 1: who to kill. Dario Amerday really make no mistake about this.
Speaker 1: Loves war, enables war, and is a full supporter of
Speaker 1: the US military, and I quote using AI to defend democracy,
Speaker 1: which can mean literally anything that America wants it to.
Speaker 1: Just look at the history of fucking America. Similarly, Clammy
Speaker 1: sam Altman immediately swept in to take Anthropics business once
Speaker 1: the DoD kicked Anthropic out. And I want to go
Speaker 1: into the nitty gritty because it's weeks old, but from
Speaker 1: what I can tell, chat GBT will support all legal uses.
Speaker 1: It's I really just fucking despise everyone involved. Here. I
Speaker 1: think they're absolutely disgraceful. I think Sam Altman's muling bullshit
Speaker 1: online about claiming he didn't actually agree to all legal
Speaker 1: uses and would go to jail. You know what, Sammy,
Speaker 1: if you go to jail, I'll come visit you, you little shit.
Speaker 1: Yet something interesting happened as a result of all of
Speaker 1: this bullshit. Anthropic Soap who will designate the supply chain
Speaker 1: risk filed the lawsuit against the Department of Defense to
Speaker 1: fight him, and in doing so had to include a
Speaker 1: sign and a sworn affidavid from its chief financial officer,
Speaker 1: Krishna Rao, which revealed, and this stunned me, that Anthropic
Speaker 1: has had five billion dollars in lifetime revenue to date,
Speaker 1: with to date referring to March ninth, twenty twenty six.
Speaker 1: Now this flies in the face of basically every reported revenue,
Speaker 1: including the information story and I like the information, I
Speaker 1: pay for it. But this is important. That Anthropic had
Speaker 1: made four point five billion dollars in twenty twenty twenty five,
Speaker 1: and Anthropic's own statement that it had hit fourteen billion
Speaker 1: dollars in annualized revenue on February twelfth, twenty twenty six,
Speaker 1: which works out to about one point one six billion dollars. Interestingly,
Speaker 1: Anthropic also revealed it it's spent ten billion dollars on
Speaker 1: model training and inference, which is the process of creating
Speaker 1: an output in the same period. Now, the exact phrase
Speaker 1: was exceeding five billion dollars to date. And my god,
Speaker 1: my god. If your argument there, Boosters is oh, yeah,
Speaker 1: well that could mean six billion or seven billion, right,
Speaker 1: shut the fuck. I'm sorry. Can you please? Can you
Speaker 1: put down the show? When Williams You've been eating for
Speaker 1: a fucking second. And think Anthropic is incentivized in this
Speaker 1: case to say it's making a lot of money because
Speaker 1: all of this is in a filing begging the government
Speaker 1: to not remove its ability to monetize public sector work.
Speaker 1: But pretty much war, I really need to be clear.
Speaker 1: I've been arguing with people about this for days. If
Speaker 1: you add up all the annualized revenues, you get six
Speaker 1: point sixty six billion dollars spooky, probably more if you
Speaker 1: include missing months and such. It's very obvious that Anthropic
Speaker 1: is misleading people because I don't know. I trust this
Speaker 1: CFO in an affidavit far more than the leaks of
Speaker 1: annualized revenues. I don't see the same alarm in the
Speaker 1: tech journalism world or the business world. I just don't
Speaker 1: see it. I don't see anyone giving much of a
Speaker 1: fuck about this, despite this very likely meaning everybody has
Speaker 1: been misled for years. Let's simplify. Anthropic has raised more
Speaker 1: than sixty billion dollars, with thirty billion dollars of that
Speaker 1: arriving on or around February twelfth. It made five billion
Speaker 1: dollars in revenue time and spent ten billion dollars in
Speaker 1: training and influence costs a loan. Just think about that
Speaker 1: for a second. Previously, before that new money, they'd had
Speaker 1: thirty billion dollars, they spent ten billion on influence in training,
Speaker 1: and they made five billion dollars of revenue. So just
Speaker 1: I guess like tens of billions of dollars just fucking
Speaker 1: annihilated there. This company's a dog. It's very obvious that
Speaker 1: its leaked revenues have either been inflated or outright lies.
Speaker 1: And in the end, Anthropic is just kind of a
Speaker 1: piece of shit. You know what, It's time for a
Speaker 1: little rant. And while I think you'll all enjoy this,
Speaker 1: this is really targeted at those be that are yet
Speaker 1: to be swayed by my arguments. I hear all of
Speaker 1: this crap about AI changing everything, but where's the proof? Wow,
Speaker 1: anthropic managed to turn thirty billion dollars into five billion
Speaker 1: dollars and start one of the single most annoying debates
Speaker 1: in history. Where's the money? Who is actually getting a
Speaker 1: profit out of AI? In video? The companies that make
Speaker 1: RAM because it doesn't seem to be the company's buying
Speaker 1: the GPUs. It doesn't seem to be the AI companies either.
Speaker 1: I don't think it's true. But if you believe it,
Speaker 1: you believe that code is truly being automated away to
Speaker 1: what end? What are the actual documented economic effects we
Speaker 1: can point to, and what are the actual meaningful changes
Speaker 1: to the world. Also, are you not a little bit
Speaker 1: concerned about how much code might be written that people
Speaker 1: do not read, let alone understand. Because I'm learning a
Speaker 1: little bit about code right now, very slowly, learning to code,
Speaker 1: and the more I learn, the more I realize that
Speaker 1: it's important to understand what it fucking does. But you
Speaker 1: know what AI boosters, If you're listening, I don't know
Speaker 1: how many of you do, but please, if you talk
Speaker 1: about the magic of AI and why we should be
Speaker 1: excited about AI. I need you to start talking today
Speaker 1: and use real data. Something from today, please. You are
Speaker 1: legally banned from saying the words soon or in the future.
Speaker 1: All of my stuff has to be in the present,
Speaker 1: So your should to point to one thing from today,
Speaker 1: from today's models that even remotely justifies burning and nearly
Speaker 1: a trillion dollars and filling our Internet full of slop,
Speaker 1: and creating the moral distance from an action that might
Speaker 1: have blown up a fucking school in Iran, and empowering
Speaker 1: the theft of millions of people's work, and having to
Speaker 1: hear every fucking day about Sam Altman and Dario Amma
Speaker 1: day to terrifyingly boring and annoying oaths with no culture
Speaker 1: and no whimsy in their wretched little hearts. Oh wow,
Speaker 1: So you can code a clone of an open source
Speaker 1: software project, all set up with an LM that may
Speaker 1: or may not get the code right? Do you really
Speaker 1: need this? Is this really impressing you? I want to
Speaker 1: be clear that my position is sincere. I do not
Speaker 1: see a path out of this for large language models.
Speaker 1: I have sat and thought about how I might be
Speaker 1: wrong far more than I've searched for how I might
Speaker 1: be right. This industry cannot sustain itself and is not
Speaker 1: in any way trending towards viability, let alone profitability. This
Speaker 1: is not a game for me. I am not on
Speaker 1: a team. I think you are all cresting the wave
Speaker 1: of the end of the software industry's growth era. I
Speaker 1: think you think Sam Moltman is your friend. I think
Speaker 1: you think open ai is your sports team. I think
Speaker 1: you think large language models are something you need to
Speaker 1: align with. I think you think this is fucking fun.
Speaker 1: It isn't. It's a waste. Open Ai and Anthropic are
Speaker 1: not selling great software. And even if you somehow think
Speaker 1: that they are, their software business sucks absolute ass. Anthropics
Speaker 1: spend two dollars for every dollar it made just on
Speaker 1: training and inference, and that's before sales and marketing. That's
Speaker 1: before real state, and that's before the actual people. That's
Speaker 1: not just crap, it's shit. How much of what you
Speaker 1: love about AI is actually rooted in the present. Are
Speaker 1: you having fun? I'm having fun because I enjoy writing
Speaker 1: and reading my podcast. If I worked in the technology
Speaker 1: industry full time right now, I'd want to cry my
Speaker 1: fucking eyes out. It's a depressing, ugly time where bosses
Speaker 1: talk endlessly about stuff that doesn't work and force their
Speaker 1: work is to push it on their customers, all while
Speaker 1: losing money. It's a fucking cult built on debt and theft,
Speaker 1: and I'm sick of hearing about it, and even more
Speaker 1: sick of hearing that I should be scared of it.
Speaker 1: I'm not scared of AI. I'm scared of the financial
Speaker 1: apocalypse that come. I recently read a terrifying stat the
Speaker 1: other day from Apollo's Asset Sorry, Apollo Asset Management's John Zito,
Speaker 1: who said that between twenty eighteen and twenty twenty two,
Speaker 1: software accounted for thirty to forty percent of private equity
Speaker 1: leveraged by outs, the specific era in which venture capitals
Speaker 1: stopped providing reliable returns and private equity's own growth started
Speaker 1: to slow. Worse still, the largest software leveraged buyouts of
Speaker 1: twenty twenty one to twenty twenty four were financed with
Speaker 1: anywhere from fifty percent to ninety percent debt. In very
Speaker 1: simple terms, p firms brought brought into software companies, and
Speaker 1: bought software companies they believe would grow forever, pumping them
Speaker 1: full of debt, taking on debt to buy them, and
Speaker 1: did so based on the growth trajectory of software companies
Speaker 1: from twenty five to twenty eighteen, a completely different era
Speaker 1: when there were tons more lands to conquer and tons
Speaker 1: of growth ideas still left to build. I that was
Speaker 1: a weird noise, but I'm going to keep it. We're
Speaker 1: past that. I think we're running out, if we haven't
Speaker 1: run out already. As I said a few years ago
Speaker 1: in the rod Com bubble, I believe we're at the
Speaker 1: end of software's hypergrowth era, and the come up and
Speaker 1: has begun, with forty six point nine billion dollars of
Speaker 1: software debt now distressed, which means likely to be paid,
Speaker 1: unlikely to be paid even. All of this has also
Speaker 1: been happening as software growth has slowed across the board
Speaker 1: because there are only so many things you could sell
Speaker 1: and only so many people to sell them too. Genera.
Speaker 1: IFAI was meant to be the solution here, it was
Speaker 1: meant to be the panacea that would restart growth in
Speaker 1: the software sector, allowing software as a service companies to
Speaker 1: upsell their clients, create new SaaS companies that venture capital
Speaker 1: and private equity could invest in, and usher in that
Speaker 1: new era of hypergrowth. Instead, large language models are unprofitable,
Speaker 1: lack significant renovative features that make selling new software possible,
Speaker 1: and outside of open AI and anthropic do not appear
Speaker 1: to have much revenue potential at all. Most businesses don't
Speaker 1: even break out their specific AI revenue. IBM literally just
Speaker 1: stopped doing so, and eight percent of their generative AI
Speaker 1: revenue was consultancy services hawking it to people that didn't
Speaker 1: really need AI, but they needed to start doing AI
Speaker 1: because their shareholders would kill them. But here's a good example.
Speaker 1: Sales Force, which makes tens of billions of dollars a year. Well,
Speaker 1: they revealed that they had eight hundred million dollars of
Speaker 1: anualized revenue for their agent force chat bop. That works
Speaker 1: out to about sixty seven things million dollars a month.
Speaker 1: That's boopy. That's dogshit. And if you disagree, you don't
Speaker 1: know fucking finance, and you're living in a dream. But
Speaker 1: who is the dreamer? We are both at an end
Speaker 1: and a beginning, a reckoning for decades of hubris and
Speaker 1: a punishment for those who believe that all software would
Speaker 1: grow in perpetuity. I don't know what happens next. But
Speaker 1: I do know that we're at the beginning of history,
Speaker 1: and that looking at the past as a way of
Speaker 1: confirming your biases about everything is a mistake. You need
Speaker 1: to start looking at the fundamentals. If you don't, if
Speaker 1: you're a booster, if you're an AI fan listening to this,
Speaker 1: if you're someone that writes about tech, and you're still
Speaker 1: in the aim, you need to start proving your arguments
Speaker 1: because when this collapses, and I'm confident it will, you're
Speaker 1: going to look like a fucking idiot. Now, some of
Speaker 1: you might be not so bad, there are many of
Speaker 1: you that won't. Many of you have taken a kind
Speaker 1: of middle ground, a centrist position. We all know how
Speaker 1: those work out. It's time to start looking at the fundamentals,
Speaker 1: and it's time to stop looking at the dot com bubble,
Speaker 1: or looking at uber, looking at whatever little myth you
Speaker 1: have to pretend that all of this is going to
Speaker 1: work out if you can prove me wrong. I look
Speaker 1: forward to reading it or hearing it, but it's been
Speaker 1: years and nobody appears to have tried. I really don't
Speaker 1: know what will happen next, but I'll be here to
Speaker 1: explain what I know. Every single week. Thank you for listening.