Anthropix CEO Dario Amodei has warned of the quote unquote YOLO risk taking in the AI industry.
He talked about the AI bubble and his thoughts on where his company stood, where other companies stood on this, and framed this in a really interesting way.
I have not heard from many other CEOs before since.
So today on the show we're going to talk about what Anthropix CEO thinks about the current state of AI, what we're moving into in the future and the state of the quote unquote AI bubble that we see today.
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All right, let's get into what Anthropic's CEO was saying.
This all happened at the New York Times Dealbook Summit.
The CEO of Anthropic, Dario Amadei.
He gave one of the most candid assessments of kind of this financial AI bubble.
He was talking about what are some timing errors in the industry, what are some unwise risks.
I think in the process of all of this he threw a lot of shade at an unnamed rival that obviously is opening AI, but he never actually said their name.
So the big question that he was asked is AI in a bubble.
And he says that the answer is a lot more complicated, rather than just saying you know, the whole sector is overvalued or underpriced.
He made, I think, what I would call a much subtler argument.
He said that he remains fundamentally bullish on the long term economic potential of AI.
But he also stressed that the timing of when value materializes is not very certain.
He said that the uncertainty is, you know, creating kind of these operational and financial dangers.
Here's a direct quote.
He said, quote, there is an inherent risk when the timing of the economic value is uncertain.
Companies essentially, are taking these really aggressive bets not just to compete in the market but to stay ahead of these quote unquote authoritarian adversaries like out of China.
This is a reference because China's really accelerating their AI development and And the challenge, according to Amadei, is that some firms are not quote unquote managing that risk well.
I think this sets up a tension that is kind of has this classic bubble look to it.
There's these strong long term fundamentals, but they're also combined with these short term incentives that push companies to overextend.
I think all of the growth they're seeing is very rapid and the trajectory of AI kind of hides the fact that the industry has not yet proven the return on investment curve for frontier model development or also for a lot of the compute expansion.
Like we see OpenAI doing these multi-billion dollar compute, you know, building out these huge data center projects.
And so I think a lot of this is kind of a bit of a timing trap.
Amode spent a lot of his answer discussing the lag time between investing in data centers and then actually when you see the returns on that investment.
I think the economic value of AI might look really abrupt or gradual, but the data center construction timelines are fixed right.
They're very capital intensive.
They're very unforgiving.
He said, quote, there is a genuine dilemma that we try to manage as responsibly as we can.
Then there are some players who are YOLOing who put the risk dial too far, and I'm very concerned.
So I think with all of this, you know, saying that these certain companies are YOLOing, he's obviously referring to OpenAI.
I think he's critiquing them in a large way because of these massive infrastructure deals that they're building.
They don't know how much demand they will necessarily have.
They're kind of forecasting.
And maybe in the future we'll be like wow, they were geniuses for spending all that money back then and we really need it now.
But, you know, it's definitely seems like a massive risk.
But also, like if I was to give a bullish spin on that as well.
From my personal opinion, it is that they're able to raise a ton of money right now because of the way the market is, and investing that into data centers, which are you know.
I mean, these are essentially an asset.
That is not.
If it's not useful to them, it's useful to others.
So I think, by investing in data centers, like if they're just building out their portfolio, their assets, their valuation, because those are just tangible things that are worth a lot of money.
So I do think those data centers are very worthwhile to invest in today.
If they're trying to build them faster and if they're overspending in order to try to speed up the process beyond what the market would typically compensate them for, then I think that's obviously not sound business practices.
But assuming they're doing that in a responsible way, I think those might be good investments.
But this is what Amadeo said.
He also he kind of talked about the industry's anxiety.
Everyone's kind of worried about this chip depreciation timeline.
GPUs continue to work for a lot of years after they're, you know, after they're created.
But I think the rate that new models are coming out is making the old ones economically obsolete, which is definitely an issue.
He said the issue is not the lifetime of the chips.
The issue is new chips come out that are faster and cheaper.
And so the value of old chips can go down somewhat.
That's interesting.
We talk about the depreciation of chips over at Google or over at Meta.
There's a lot of controversy that Meta was cooking the books and, you know, depreciating their chips on too long of a timeline, saying that they were useful for longer than they were.
Well, the chips themselves, he makes a great point, are quite useful.
It doesn't mean that, like the new, chips are so much faster and cheaper that it essentially makes the old ones useless, even if they're technically capable of continuing to compute things.
I think if a company over invests in hardware, they lose the competitive value before it's fully monetized.
And I think the economics of these frontier models can unravel very quickly if that happens.
So Anthropic, Dario says, is taking a really conservative approach to chip assumptions.
They're modeling much weaker scenarios to avoid being caught upside down by rapid hardware cycles.
I mean, this is a great way for him to say that they're approaching it.
Also, they're growing much slower than OpenAI and they have less users than OpenAI.
So, to be fair, you know, taking a more conservative approach is also they have a more conservative growth rate of their company.
What I will say is that Anthropix revenue has grown at a pace that not many tech companies have seen.
So when you compare it to OpenAI, you're like oh, they're smaller than OpenAI but they're still crushing basically everybody else globally.
They went from $0 to $100 million in 2023.
They then went from $100 million to $1 billion in 2024.
And they're projected to hit $8 to $10 billion by the end of 2025.
So, you know, we go $0, $100 million, $1 billion, $10 billion.
Like every year, it seems like they're growing at a very, very rapid pace.
I will say that all of these numbers put Anthropic among definitely the fastest growing startups in history.
But Amadeo or Amadei said that even with all of that, it would be quote really dumb for them to assume that that trajectory is going to continue indefinitely, which I do think is a valid point.
He said, I don't know if a year from now it's going to be 20 billion or if it's going to be 50.
It's very uncertain.
I try to plan conservatively.
I plan for the lower side of it.
But that's that is very disconcerting.
I think right now he's kind of underscoring how little visibility even the leading AI companies have on demand curves, the enterprise adoption speed or even the durability of usage based revenue right.
Like it's so interesting to see someone that just went from zero to 100 million, 100 million to a billion and a billion to 10 billion be like I don't know if we're going to be at 20 billion or 50 billion in a year.
It's so crazy, but also it's true.
It just goes to show that even the people leading these top companies don't know.
I actually appreciate how candid he was about that, because I feel like with opening eyes, Sam Altman almost tries to appear like he's this wizard, this fortune teller.
He's like, yeah, if you saw the things I saw, things are going to be crazy.
That's why we've got to spend all this money on all these data centers.
But at the end of the day, they don't really know.
They're just like hoping and guessing and, you know, making making bets.
So I do appreciate how candid the CEO of Anthropic has been.
I think all of this, all the conversation that he recently had inevitably inevitably, drifted towards opening eye.
He never named them specifically, but last month OpenAI had this big public relations mess where the CFO suggested that the US government should backstop the company's infrastructure loans.
A lot of people were very critical of that.
They have to walk back the statements.
When asked about a lot of this, he said competitors who quote, like big numbers or are constitutionally inclined to take enormous risks, landed heavily.
He said, quote, we think we're going to be OK in basically almost all worlds.
I cannot speak for other companies.
So it seems like he is taking shots at opening.
I doesn't know if they're going to be OK.
Obviously, there's his main competitors who's talking his own book.
But I think, at the end of the day, I appreciate his candor and I appreciate how candid he was with all of this, how he says he doesn't know where they will be in a year.
But obviously, you can see Anthropic is one of the biggest players.
They're growing.
They have carved out a huge niche among developers and enterprise that is very loyal to them and really appreciates their product.
So at the end of the day, I think they're going to do just fine.
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