Latent Space: The AI Engineer Podcast
00:41:34 · Shawn Wang, Jamin Ball
[00:41:34] S1: Yeah. [00:41:34] S0: Quantity has gone way up. Yeah. And I think you're gonna see the same thing with people buying and serving models and tokens. [00:41:42] S1: Yeah. So so generally pro support of that, I I do want to remind people that that is a true objective fact. This is not, like, VC bullshit. Like, this is, like, actually how the the businesses are running. Okay. And it it is surprising to us Yeah. That that I get while... Yeah. We we read about this in theory, but, like, to actually see this in financials is, like, really ridiculous. [00:42:03] S0: You'll continue to see it. Think about JEV and decision models. And the price point of, Hey, instead of you want a binary classifier, you don't need a language model to do that. Just go use a decision model. Super cheap, super efficient. I think you're gonna continue to see efficiencies like that. You know, I go back to S3 and EC2, AWS's big initial products, storage and compute. You've seen 99% price reductions in both of those services from the day they were launched. But like what's happened to the EC2 and S3 business or just the broader storage and compute, more CPU compute, it's gone up exponentially. I mean, all the hyperscalers reported today, they're all over a $100,000,000,000 run rate businesses today, if they were individual companies. Google Cloud's grown over a 100%. It was just crazy. Azure's growing almost 50. Amazon reported today, we're recording on Thursday, 39, almost 40%. Like, these businesses are just accelerating and growing at It's crazy.
00:42:59 · Shawn Wang, Jamin Ball
[00:42:59] S1: East mode. It's crazy. You should drop everything you're doing and just go start one of these Yeah. Yeah. Yeah. It's October 29 for those those keeping track. And and, yes, a fun personal anecdote. I was in my hedge fund when... The day they broke out am... AWS from Amazon. No kidding. And at the time, we were not long Amazon because we were worried about AWS margins. Yeah. And also, like, oh, is it just startups? And what if, like, you know, we go through a startup winter and, like, all that? Yeah. It was so nonsensical. So, like, it it... The the funny thing about finance is that you can do all these works and make worse decisions. Yeah. Yeah. Yeah. We definitely did that. [00:43:36] S0: Totally. Totally. I mean, that... That's the thing. Like, market timing's impossible. Like [00:43:42] S1: And also fixating on the wrong thing Yeah. Which a lot of people are are having to encounter for the first time. That's right. You have 2,000 data points that were released Mhmm. In this thing. Mhmm. And you will fixate on one thing, and it'll be like, that is that is the everything you need to know. And, like, well, no. Like, you you lost sight of the bigger picture.
00:43:42 · Shawn Wang, Jamin Ball
[00:43:42] S1: And also fixating on the wrong thing Yeah. Which a lot of people are are having to encounter for the first time. That's right. You have 2,000 data points that were released Mhmm. In this thing. Mhmm. And you will fixate on one thing, and it'll be like, that is that is the everything you need to know. And, like, well, no. Like, you you lost sight of the bigger picture. [00:43:57] S0: Yeah. I mean, that's that's for me. I mean, again, there's a lot of things that I believe that others would disagree with me on. Yeah. But I believe there's one question that matters, and that's can Anthropic stay at the frontier? Yeah. And to me, if I believe the answer to that question is yes, and I think everything they've done historically has demonstrated that, I think they'll build a great business and will continue to. [00:44:14] S1: But... Okay. But then, like, there's a right price for that.
00:44:14 · Shawn Wang, Jamin Ball
[00:44:14] S1: But... Okay. But then, like, there's a right price for that. [00:44:17] S0: Of course, of course. And this is not like, will it be priced right or this or that? That's more of, hey, if you're able to take a longer term view on will the business be successful over time, I think to me that's the most important question. Now, you think the IPO price is cheap, expensive, just right, I mean, we don't even know what that's going to be yet. Prices can change at public companies for idiosyncratic reasons, reasons based on individual company performance, or they could change for macro correlated risk. Like the reality is, if Anthropic went public a month ago, the big route that you've seen in public markets recently, especially in semis and the AI trade, Anthropic would also be down, even if the business was doing well. So stocks can go up and down based on individual company performance as well as just market beta. Exact... Exactly. [00:45:02] S1: Exactly. So, you you should be prepared for those kind of discussions if you're getting into this. I think... Actually, just as a side question, there's a lot of these, like, nonpublic market trackers of the stock, like like, here's my proxy of OpenAI stock. Here's my proxy of Anthropic stock. Do you guys put any weight into that or, like, zero? You think? [00:45:21] S0: I don't. Yeah. Yeah. I don't. [00:45:22] S1: Yeah. I'm just... I... I'm wondering if I should pay attention to those things more closely because they they do give some indication of, like, well, here's the stock price reaction when the model just reacts.
00:45:22 · Shawn Wang, Jamin Ball
[00:45:22] S1: Yeah. I'm just... I... I'm wondering if I should pay attention to those things more closely because they they do give some indication of, like, well, here's the stock price reaction when the model just reacts. [00:45:32] S0: I mean, it might it might show some market sentiment. [00:45:34] S1: Yeah. [00:45:34] S0: Right? But I think RAMP had some data. I think I copied a RAMP chart the other day. I mean, this was Anthropic spend Yeah. On some of their most recent models. The dark blue is Opus five five. And like, hey. What what the ramp data shows is People switch. Yeah. Exactly. And and with with Opus five five, you saw some reacceleration. And so would it surprise me if you saw a reacceleration of revenue and run rate in October, and October won't be in q three, that's the first month of q four? No. It wouldn't surprise me because I do think a lot of the third party data is showing and suggesting that.
00:45:34 · Jamin Ball, Shawn Wang
[00:45:34] S0: Right? But I think RAMP had some data. I think I copied a RAMP chart the other day. I mean, this was Anthropic spend Yeah. On some of their most recent models. The dark blue is Opus five five. And like, hey. What what the ramp data shows is People switch. Yeah. Exactly. And and with with Opus five five, you saw some reacceleration. And so would it surprise me if you saw a reacceleration of revenue and run rate in October, and October won't be in q three, that's the first month of q four? No. It wouldn't surprise me because I do think a lot of the third party data is showing and suggesting that. [00:46:08] S1: Yeah. Well, so... Okay. Let me... This this chart is super interesting. Right? Because you you just said, like, when you when you say stay at the frontier Mhmm. There's different levels of that. Yeah. Stay at the frontier, meaning we're one of the top two, one of the top six, one of top 20, whatever. Mhmm. Mhmm. Usually, people mean top two. Yeah. Usually... But sometimes you can expand and say top six. Yeah. Yeah. Google now has a has a claim Yeah. To be a number one in some metrics. Totally. Meta doing super, super well. SpaceX doing super, super well. Yep. Not at... Not number one. Right. But number three, number four. Yeah. You could say that. Yeah. So look at that, like, summer slump in Yeah. Anthropic revenue. Yeah. Was that because OpenAI was briefly ahead?