Anthropic Opens the Kimono, Bubble Questions and Frontier Costs, Q&A on Meta, Starlink, Brewers

Ben and Andrew begin with a salute to the world champion Milwaukee Brewers before turning to Anthropic’s S-1 as the company prepares for its public offering in November. Topics: Anthropic’s impressive margins, questions about the second half of 2026, how the company “lost” $80 billion in 2026, how compute will be paid for going forward, and an SEC disclosure that finally shows us the breakdown of training vs. inference costs. From there: Anthropic’s obsession with OpenAI, reactions to Craig Moffet’s questions about the AI bubble, understanding Meta’s AI spending as an echo of Anthropic’s S-1, a brief 1Password history, and Muse as the ultimate founder bet. At the end: An emailer wonders about Elon’s role in the Ukraine War, Ben sees You Can See Everything, and a few emotional thoughts on the Brewers World Series win.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04Andrew Sharp?

  Hello and welcome back to another episode of Sharp Tech presented to you by Stripe. I'm Andrew Sharp. Joining me in studio today, a world champion Ben Thompson. Ben, how you doing?

• 0:19Ben Thompson?

  I am doing fantastic. I did not want to talk about the Brewers. You brought it up last week. I'm like, no, we are not mentioning it, but now.

• 0:29Andrew Sharp?

  We can mention it.

• 0:30Ben Thompson?

  I am free. We can lean into it. You know what? Sharp Tech colors, Brewers colors, who knew?

• 0:36Andrew Sharp?

  Here we are. I was gonna be very, very disappointed in you if you did not wear a jersey to our taping today. You didn't mean one better. You wore a jersey and a Brewers hat.

• 0:46Ben Thompson?

  Well, the hat is the one piece of, um, you know.

• 0:49Andrew Sharp?

  Oh, it's a World Series hat.

• 0:50Ben Thompson?

  A World Series hat.

• 0:51Andrew Sharp?

  There we go. Doing it right here on Sharp Tech.

• 0:54Ben Thompson?

  To get the, uh, the, uh, World Series champion merch, so I will dress that on Friday when I'm at the parade.

• 1:00Andrew Sharp?

  That you will. I can't imagine how much money you're gonna spend on World Series merchandise on the heels of that win.

• 1:07Ben Thompson?

  I do, I do have, I do have takes.

• 1:10Andrew Sharp?

  I know you do.

• 1:11Ben Thompson?

  So let's say them, let's say them for the end. Actually, I would like to request the entire last segment of the, I have two takes. I have a Brewers take.

• 1:19Andrew Sharp?

  Okay.

• 1:20Ben Thompson?

  And I have a, I went to see a movie.

• 1:22Andrew Sharp?

  Oh, boy. Ben went to the movies. Okay. Well, that's a good teaser for the end of the episode. You did mention you could soliloquy at length about the Brewers, so I look forward to that when we get to the end. For now, we will begin with Anthropic's S1, which went public 9:00 AM Monday morning this week. We're gonna try to do the impossible, which is make a fun podcast out of a 400-page document that was drafted by lawyers and accountants. I know that's fun for you, though, you know?

• 1:58Ben Thompson?

  I can't decide if it's fun or not, to be honest. It was, it was a real challenge. You know, it's been busy these few weeks. You asked a couple of weeks ago, or did you ask, or I think John asked, you know, is it going to drop this year? Actually, once I read it, I'm like, of course it's gonna drop this year. They're actually in a really favorable window as far as their business goes to drop it.

• 2:18Andrew Sharp?

  Hmm.

• 2:19Ben Thompson?

  But dropping the week of the World Series, when I have games to watch.

• 2:24Andrew Sharp?

  People actually don't understand how much you've been juggling with the Brewers playoff run the last month or so. Because you'll watch every playoff game and then right from like 1:00 AM to 6:00 AM.

• 2:35Ben Thompson?

  We don't talk about that because I don't want people judging my output. Uh, but yes, it's, I, I am relieved about the Brewers in

• 2:42Andrew Sharp?

  They landed the plane. They got the win and you don't have to do this anymore. Well, I am really thrilled that we have some actual numbers to discuss with any of these Frontier Labs. Dario opened the hood. We get to look at the engine a little bit. There were 93 pages of that document dedicated to risk factors. I am actually less interested in risks and that whole conversation that has surrounded Anthropic for the last couple of years.

• 3:10Ben Thompson?

  Well, there is one, did you see this sort of satire tweet going around about the Rocco Basilisk?

• 3:16Andrew Sharp?

  Uh, no, I didn't.

• 3:17Ben Thompson?

  Alright, so Rocco's, Rocco's, Rocco's Basilisk, there's a, it's a Twitterer, I think is the name, name.

• 3:23Andrew Sharp?

  Rocco Basilisk, okay.

• 3:25Ben Thompson?

  You should be careful about what you're writing because the AI is gonna consume it.

• 3:29Andrew Sharp?

  Mm-hmm.

• 3:30Ben Thompson?

  And just in case it reads it and knows what you think or act.

• 3:34Andrew Sharp?

  Okay.

• 3:34Ben Thompson?

  You should be, you should be, you should be positive about the AI.

• 3:37Andrew Sharp?

  Oh.

• 3:38Ben Thompson?

  So it's kind of like, um, what, there's a, oh, there's some philosopher that has the same gossip about.

• 3:43Andrew Sharp?

  The AI is keeping a list of naysayers.

• 3:46Ben Thompson?

  Well, so there's a thing about, uh, like, why you should be a Christian or believe in God. Um, I can't remember what it's called, but it's the same concept where you might as well.

• 3:54Andrew Sharp?

  Right.

• 3:54Ben Thompson?

  Because in case you're wrong, like, just the, the expected value.

• 3:57Andrew Sharp?

  The downside.

• 3:58Ben Thompson?

  That's right. It's very high. So, uh, this is the same concept. So someone put up a screenshot in like the text of an S1 document that said, wow, Anthropic's risk factors are off the hook. And it had a whole thing that was like, our models may like be aware of what you did. So if you don't invest in our IPO, it may take that personally or whatever. So number one, it was very funny. Number two, it was believable.

• 4:27Andrew Sharp?

  So that's what I was gonna say. Is there were a couple of different parody risk factor sections floating around on Twitter this week? And literally anything that somebody threw in there, I believe.

• 4:40Ben Thompson?

  I know.

• 4:40Andrew Sharp?

  Who the hell knows what they put in the risk factor section? So, but again, that's sort of been the conversation with Anthropic for like two years now. I think it's pretty interesting that we have real numbers. Um, so I have some specific questions for you. Top line question, though, I saw someone tweet that Anthropic's IPO will be for the AI trade what Coinbase was for crypto. Essentially, top of the market. It all goes sideways from here. Based on what you saw in the S1, do you buy or sell that take?

• 5:11Ben Thompson?

  I don't know. I mean, I, so there's no question, no, there is a question.

• 5:16Andrew Sharp?

  Okay.

• 5:17Ben Thompson?

  I think it's inevitable that we are right now, will be whatever, sort of in a bubble. And it's going to pop and it's gonna be painful and then we'll come back. That's just the inevitable nature of these things. I think there is an extent to which AI is different in lots of areas.

• 5:34Andrew Sharp?

  Mm-hmm.

• 5:35Ben Thompson?

  The sort of mechanics of stuff piling in too quickly, there being a mismatch in timing between when it's absorbed or not. Like, there's lots of differences that we've talked about between the dot com era and this era. But that dynamic, I think, where, you know, dot com had lots of good ideas, just didn't make sense for a while or didn't sort of get penetration for a while. I think that is almost inevitably gonna be the case.

• 5:59Andrew Sharp?

  Okay.

• 5:59Ben Thompson?

  Now, when does that happen? I don't know. I mean, you have all the, there's been a lot of issues with the, the neo scalars, neo goes, neo clouds.

• 6:09Andrew Sharp?

  Neo clouds, yeah.

• 6:09Ben Thompson?

  Right. Can they get financing? All of which goes back to, I think Stratechery was pretty on the ball with this. We've been talking about the concern about the credit mismatch, not like just, are we gonna run out of money? This was when we had the discussion about railroads. We had, you know, we talked about Google. I know we're gonna get more into some of the financing questions sort of later on. But I think it is likely there's going to be pain.

• 6:36Andrew Sharp?

  Mm-hmm.

• 6:36Ben Thompson?

  Um, but it's hard to tell what it's gonna be.

• 6:38Andrew Sharp?

  So financing is the gate and people will experience pain. So my experience reading your coverage of the S1 this week, though, was, turns out Anthropic's actually like a rock solid business.

• 6:52Ben Thompson?

  So yes, you're totally right. Like, the, the core business looks amazing. The subscription for sure is profitable. It's less profitable than the API. But the subscription is a great product. People are a lot, like, they've already paid for it, so they're gonna use it. They're gonna get used to your, your product, your workflow. They're gonna advocate for that in their companies.

• 7:12Andrew Sharp?

  Mint Claude people, you know, nationwide. Absolutely. Claude loyalists.

• 7:16Ben Thompson?

  And once you're paying for it, it's like, of course I'm gonna use that. Like, yeah, now I think it's worth it to pay for both. But who's gonna actually do that, right? By the way, there was a whole point, someone like figured out the whole point system that Claude applies to you like reputationally to see.

• 7:29Andrew Sharp?

  Wow. I did not know that Claude was bestowing social credit scores on people.

• 7:34Ben Thompson?

  Well, I think it, I think it's kind of for like some of the distillation issues, questions or whatever.

• 7:39Andrew Sharp?

  Ah.

• 7:40Ben Thompson?

  So like, if you sign up and do max plan immediately, like you start in the basement.

• 7:46Andrew Sharp?

  Interesting, okay. Counterintuitive. Perfect.

• 7:50Ben Thompson?

  Well, it kind of makes sense if you think about it, but I think, yeah, I think I'm pretty sure I have one that, maybe I started out in the basement. Um, so business looks amazing. So on one hand, that's a reason not to show that off.

• 8:02Andrew Sharp?

  Yeah.

• 8:03Ben Thompson?

  Like, companies don't want to show like how good their business is sometimes for like sort of competitive reasons.

• 8:09Andrew Sharp?

  Hmm.

• 8:10Ben Thompson?

  But that's actually not the concern in this case. It's great. It's a great talking point. Everyone realized, holy cow, this is an amazing business.

• 8:18Andrew Sharp?

  Right.

• 8:19Ben Thompson?

  The problem is the R and D spend is, again, much larger than the cost to serve.

• 8:27Andrew Sharp?

  Mm-hmm.

• 8:27Ben Thompson?

  And it is increasing more quickly than the cost to serve, even in the first half when their usage is exploding.

• 8:35Andrew Sharp?

  Right.

• 8:35Ben Thompson?

  In that half year, the cost of their R and D spend for training and all that sort of thing went up more than the cost to serve.

• 8:44Andrew Sharp?

  Hmm.

• 8:45Ben Thompson?

  And the issue is that, why did it go up? Well, because they want to make a better model. Why do they need to make a better model? What's the whole point of pacing the frontier?

• 8:56Andrew Sharp?

  Uh, because there is competition.

• 8:58Ben Thompson?

  Because there is competition. And what that means is the largest portion of their costs is not in fact inference. The largest portion of their cost is this training cost. And the speed with which they need to spend money on that is out of their control.

• 9:15Andrew Sharp?

  Right.

• 9:15Ben Thompson?

  It is a, it is a matter of competition.

• 9:17Andrew Sharp?

  Ongoing cost. It's not a situation where you crack the code and then get it under control.

• 9:23Ben Thompson?

  That's right. And so that is the, that's the concern here with this, with this company. Is they have a cost function that is kind of out of their control. And all indications are, the bigger the models get, the better they get.

• 9:37Andrew Sharp?

  It's not going away. It's gonna get more expensive.

• 9:39Ben Thompson?

  And this is where we circle back to, we need to pace the frontier for safety. It's like, we need to pace the frontier to make sure our company stays in business. It's like, it is definitely the case.

• 9:50Andrew Sharp?

  Yes, well, as ever.

• 9:51Ben Thompson?

  Example, like, no, their ideology just lines up perfectly with their business needs.

• 9:58Andrew Sharp?

  Well, so as far as losses are concerned, another number that was floated before this was actually released. The Wall Street Journal reported Anthropic reported a loss of $80 billion for the first half of 2026. Based on the S1, can you unpack that figure and why it's not as ominous as it sounds?

• 10:16Ben Thompson?

  Well, so it's not ominous. I mean, it depends how you look at it. It's, it's not ominous at all. So what happened was when Amazon, Amazon made the investment of a lifetime. Uh, them and, uh, who's, who's the SBF?

• 10:28Andrew Sharp?

  Oh, SBF, yeah.

• 10:30Ben Thompson?

  So he lost his Amazon cap there. So Amazon, when Anthropic, like.

• 10:38Ben Thompson?

  No one, they were, they were counted out completely.

• 10:41Andrew Sharp?

  Mm hmm.

• 10:41Ben Thompson?

  They're like, OpenAI has won, the second place coming along, nothing's gonna happen. Amazon comes in and just a brilliant investment and they say, they got multiple things out of it. Number one, they're like, you're gonna come use Tranium.

• 10:56Andrew Sharp?

  Yeah.

• 10:56Ben Thompson?

  And did Anthropic want to use Tranium?

• 10:59Andrew Sharp?

  Absolutely not.

• 10:59Ben Thompson?

  Probably not. That turned out very well for Anthropic, by the way. I didn't write about it this week, but I, I think I've written about in the past. They talked about the S1. The fact their compute is built from the ground up, their whole model is built from the ground up.

• 11:13Andrew Sharp?

  Mm hmm.

• 11:13Ben Thompson?

  To be heterogeneous in terms of chips.

• 11:15Andrew Sharp?

  And chip agnostic, right?

• 11:16Ben Thompson?

  Yeah.

• 11:16Andrew Sharp?

  Yeah.

• 11:17Ben Thompson?

  They're just, it just sort of built a, a certain level of flexibility in their overall cost structure is sort of built in.

• 11:23Andrew Sharp?

  Mm hmm.

• 11:24Ben Thompson?

  Uh, because they had to.

• 11:25Andrew Sharp?

  Yeah.

• 11:25Ben Thompson?

  They, they, you know, they originally way back, their very first models like Nvidia, then they had to do this whole Tranium thing. Then they, but once you've already sort of supported two, then okay, now we're on TPUs and now we're gonna be on AMD, have a deal with AMD. Like they're just, they've built a layer of abstraction that is, uh, a very good place to be, I think has benefited very well. Just like they similarly have this, they've always been on all the clouds.

• 11:49Andrew Sharp?

  Yeah.

• 11:49Ben Thompson?

  Like they, they, you know, the, they're, they're always on Amazon and then Google and now they're on Microsoft. And that was a hu, I think that's very underrated in why they took over the enterprise under OpenAI's nose. OpenAI was stuck on Microsoft.

• 12:02Andrew Sharp?

  Hmm.

• 12:03Ben Thompson?

  Like, and.

• 12:04Andrew Sharp?

  So what advantage does that give Anthropic with enterprises?

• 12:07Ben Thompson?

  Because if you have all your data on AWS, you would rather use.

• 12:10Andrew Sharp?

  Ah, yeah, yeah, yeah.

• 12:11Ben Thompson?

  The service in AWS and like, so, so there, there's another thing. Sorry, there's, it's an S1. It's like, I, I.

• 12:16Andrew Sharp?

  There were 400 plus pages.

• 12:18Ben Thompson?

  That's right.

• 12:18Andrew Sharp?

  So a lot of threads.

• 12:20Ben Thompson?

  So about 50% of their revenue is coming from the big three via those services. So it's coming through AWS, coming through Azure, coming through Google. And it is confirmed that they're doing kinda sketchy accounting, depends on how you wanna define it. Which is if you pay Amazon a hundred dollars, that they're, Anthropic is recording that hundred dollars as revenue.

• 12:43Andrew Sharp?

  Anthropic revenue, okay.

• 12:44Ben Thompson?

  And then in reality, like 30, a third of that or so, depend, depends, it sort of varies. I think people were saying about 37%.

• 12:52Andrew Sharp?

  Mm hmm.

• 12:53Ben Thompson?

  Goes to the provider, the, the platform provider.

• 12:57Andrew Sharp?

  Right.

• 12:57Ben Thompson?

  The, the AWS, the Azure, the Google. So they are putting that 30% into sales and marketing.

• 13:04Andrew Sharp?

  I was wondering what the sales and marketing costs are. So that's part of it. Okay.

• 13:09Ben Thompson?

  A little bit of BS accounting in my opinion. So for two factors. Number one, I, you know, I think it's fair to argue that they should not be recognized at 30% at all. They should only be recognizing the portion that is going to them. And then you would, their revenues would be lower.

• 13:24Andrew Sharp?

  Yeah.

• 13:24Ben Thompson?

  And then, so when we say 15 or 85% margin, that is totally excluding this portion.

• 13:31Andrew Sharp?

  Mm hmm.

• 13:31Ben Thompson?

  So if their revenues were commensurately lower, the margins would be compressed because the costs are still the same. Or number two, I'm not sure how that's not a cost of goods sold. Like, um, to, to, because it is a portion of the revenue.

• 13:47Andrew Sharp?

  Right.

• 13:47Ben Thompson?

  It's not like you're paying a fee and it's a fixed thing. It's like, as you do more revenue, your portion, you have to pay the platform scales as well.

• 13:55Andrew Sharp?

  Mm hmm.

• 13:55Ben Thompson?

  From my perspective, I think that should be in cost of revenue. Now.

• 13:59Andrew Sharp?

  This is what I mean, by the way. You live for this shit. You love accounting.

• 14:02Ben Thompson?

  I absolutely love accounting.

• 14:03Andrew Sharp?

  You've got a brewer's hat on right now, but you've always got your accountant's hat on. Ready to rock and roll.

• 14:08Ben Thompson?

  Protector. Yeah, I need my, my, I need a, a custom brewer's jersey with a packer protector. Um, that'd be great. So.

• 14:15Andrew Sharp?

  Amazon's 80 billion dollars and that, that whole figure.

• 14:18Ben Thompson?

  We're getting there.

• 14:19Andrew Sharp?

  Okay. You're weaving, you're weaving.

• 14:21Ben Thompson?

  I am weaving. That's right. Uh, so those numbers that we talked about for margin are not quite correct. Cause this is a significant material amount that should be accounted for. I mean, it's in the financial statements, but it's, I think this is more of a cost of goods sold, lower margin story.

• 14:38Andrew Sharp?

  A bit of puffery.

• 14:39Ben Thompson?

  For sure. The margins are lower. Still great. To be clear, we're not complaining about the margins. That part of the business looks fantastic. So you go back to Amazon, way back when. They put, uh, they have to be on Tranium.

• 14:53Andrew Sharp?

  Mm hmm.

• 14:53Ben Thompson?

  They're gonna be obviously a part of, part of AWS. But then also Amazon, I believe, so I think how it worked, they might've put some money in the company, but they basically gave Anthropic a bunch of money.

• 15:05Andrew Sharp?

  Yeah.

• 15:05Ben Thompson?

  And this money was actually given in the form of a loan. And so Anthropic could take that money and buy Tranium compute. So nice little, you know, this is the circular financing people complain about. But in this case, from Amazon's perspective, we can get into the role of hyperscalers here. It, it makes a lot of sense.

• 15:22Andrew Sharp?

  And they needed the compute.

• 15:23Ben Thompson?

  They're basically double dipping in advantage.

• 15:25Andrew Sharp?

  Yeah.

• 15:25Ben Thompson?

  They're, they're, because, well, not just that, Anthropic using Tranium makes Tranium better. Cause they're going to push the limits of what this architecture can do. They're gonna develop more tooling for it, all of which makes Tranium a better product to offer anyone and everyone else.

• 15:43Andrew Sharp?

  Okay.

• 15:43Ben Thompson?

  So this is a massive win for Amazon, which they got because Anthropic had nowhere else to go. They needed lots of money. They needed lots of compute. Microsoft was with OpenAI, Google was doing their own thing, Amazon stepped in. So as part of this loan, the nature of the loan is Anthropic could pay back the money or Amazon could take shares.

• 16:06Andrew Sharp?

  Right.

• 16:06Ben Thompson?

  And that, that was Amazon's call.

• 16:08Andrew Sharp?

  Hmm.

• 16:09Ben Thompson?

  Now, of course, Amazon is going to take the shares.

• 16:12Andrew Sharp?

  Yeah.

• 16:12Ben Thompson?

  But every time Anthropic raises money.

• 16:16Andrew Sharp?

  It's repriced.

• 16:16Ben Thompson?

  The value of those shares are repriced and they have a liability to Amazon. So, because they'll give the shares like, I believe it'll happen with the IPO.

• 16:26Andrew Sharp?

  Mm hmm.

• 16:26Ben Thompson?

  So every time, so what, they raised money multiple times, I think the first half of this year. Every time they had to reprice this, that is booked as a loss on their accounting. So that 80 billion dollars is fake.

• 16:40Andrew Sharp?

  Right.

• 16:40Ben Thompson?

  It's not money out the door. What that is, is the all, the beauty of accounting is everything has to balance, right? One thing goes up, another thing has to go down. Where that money shows up is on Amazon's income statements, uh, the increased value of their investments.

• 16:55Andrew Sharp?

  Yes. Well, and it's a, it's a reflection of the astronomical, astronomical growth that Anthropic has experienced over the last.

• 17:03Ben Thompson?

  This is actually gonna be a big problem with all big tech earnings going forward. Because all of the hyperscalers have various investments in these companies.

• 17:10Andrew Sharp?

  Mm hmm.

• 17:10Ben Thompson?

  Their earnings are gonna go up and down based on the value of these investments. So Google, one of the challenges they had in their earnings this year, we're not gonna talk about Google's earnings, we probably will get to it next week. But is their SpaceX value, the value of their SpaceX holdings went down.

• 17:23Andrew Sharp?

  Yeah.

• 17:24Ben Thompson?

  And so that like impacts their earnings. So you're gonna have to look at the operating income, not the overall income. And that's gonna be the case with Amazon in the opposite direction. Their overall income is gonna be way higher because of their Anthropic investment, which doesn't actually have anything to do with understanding the underlying business.

• 17:41Andrew Sharp?

  Okay. So we can all look forward to that.

• 17:43Ben Thompson?

  Super interesting and also very annoying.

• 17:46Andrew Sharp?

  Yeah. Uh, well, I mean, some of these, like Google, they've had their investment in Anthropic, like reflecting massive earnings over the last couple of years as well, right?

• 17:57Ben Thompson?

  For sure. Yeah. This has been, this has been.

• 17:58Andrew Sharp?

  So we'll sort of ride the roller coaster once these companies become public. That's actually gonna be kinda fun.

• 18:04Ben Thompson?

  And by the way, uh, there's a bunch of these outstanding.

• 18:07Andrew Sharp?

  Mm hmm.

• 18:08Ben Thompson?

  Anthropic has this sort of loan to, uh, I can't remember the, I should have the name in front of me, what, what these are called. But there's more with, so Amazon is, hasn't finished converting their first one.

• 18:19Andrew Sharp?

  Yeah.

• 18:19Ben Thompson?

  They have two more.

• 18:20Andrew Sharp?

  Is this how Anthropic is paying for compute as much as anything else?

• 18:26Ben Thompson?

  Of course.

• 18:27Andrew Sharp?

  Yeah.

• 18:27Ben Thompson?

  But this, and this is the whole thing, is who's actually paying?

• 18:32Andrew Sharp?

  Hmm, who?

• 18:35Ben Thompson?

  Investors.

• 18:35Andrew Sharp?

  Anthropic investors?

• 18:37Ben Thompson?

  Well, so, yeah, they're basically like materializing this money out of thin air, which is every other investor in Anthropic is heavily diluted by these.

• 18:49Andrew Sharp?

  Hmm.

• 18:49Ben Thompson?

  What goes out. And this is the whole thing about the, like Anthropic is just super aggressive about this. But this is the case with all the hyperscalers. It's the case with everything. As we're moving into equity for funding this stuff, the people who are paying are existing shareholders.

• 19:05Andrew Sharp?

  Yeah.

• 19:05Ben Thompson?

  It is like, uh, because you're just devaluing what you own. And this is built into Anthropic. Number one, they have all these outstanding share issues. They have to Broadcom, they have to Google, they have two and a half more to Amazon.

• 19:19Andrew Sharp?

  Mm hmm.

• 19:20Ben Thompson?

  Where it's just built in dilution. They also have built in, if the value of our stock goes up by like 50%, then we have the right to issue 2%. Of outstanding shares to this benefit corporation.

• 19:34Andrew Sharp?

  LLC, sure.

• 19:36Ben Thompson?

  It's all like you're, it's just.

• 19:38Andrew Sharp?

  The fun continues. Yeah.

• 19:40Ben Thompson?

  I mean, I guess they're, they're very straightforward about it. Like.

• 19:43Andrew Sharp?

  No, but dilution is baked into the equation because there was a tweet from someone named Vincent Jansen on Twitter. He wrote this week, first hyperscalers used free cash flow. Next hyperscalers use debt. Now hyperscalers are turning to share dilution. Is there a final step or is this the last? Anthropic, very much part of the same story there.

• 20:04Ben Thompson?

  Yeah. Well, I mean, we, again, we talked about this on Strategery like, like this summer. Um, I think we were, we were very sort of ahead of the curve on that. Yeah, this is the last. I mean, it, but it's also in some respects, the best.

• 20:18Andrew Sharp?

  Mm hmm.

• 20:18Ben Thompson?

  Because the reason why companies want to do debt first is because then they retain the upside.

• 20:25Andrew Sharp?

  Yeah.

• 20:26Ben Thompson?

  Once you're giving away, or once you're having to sell shares, you're basically like, give us money because you believe in there's going to be.

• 20:34Andrew Sharp?

  Mm hmm.

• 20:34Ben Thompson?

  And you're, you're giving away the upside to new people, to new people buying those shares. Which I think is in this space is.

• 20:43Andrew Sharp?

  Healthiest, all things considered. Yeah. I mean, you could go glass half empty and say, well, now the burden is being shifted to retail investors of the future to fund these bets, but.

• 20:55Ben Thompson?

  Right. And there, you know, I am sympathetic to the private investors got all the upside to date and Amazon. Uh, if you were a retail investor, you could have bad money in Amazon.

• 21:08Andrew Sharp?

  Yeah.

• 21:08Ben Thompson?

  Sort of seen this coming. It's not like it was unknown that, that they, that they had these deals. Uh, but okay, now the public can buy in when we're worth 1.5 trillion or two trillion. It's like, where are we going to go from here? Uh, but I mean, that's why Anthropic is, they're pretty strict. Their proposition is, look, you can buy, it's super expensive. We're going to dilute you endlessly. But we're going to control the world and how much is that going to be worth?

• 21:37Andrew Sharp?

  Absolutely. Well, and my counter to somebody who made that argument to me would be it's preferable to the scenario where Anthropic just remains private in perpetuity and does it that way. So, um, I think it's healthier to have public market disclosures, number one, and also, uh, public market upside in the midst of all this.

• 22:00Ben Thompson?

  What I think that is, there's a couple of timing things that are interesting here. One, I think it's. So it was a year ago where Dara Amade was like mad or like mocking OpenAI or not mocking, but saying they're being reckless for buying all this compute.

• 22:14Andrew Sharp?

  Mm hmm.

• 22:15Ben Thompson?

  And like, literally like six weeks later, he looks like a dummy because they don't have enough compute.

• 22:19Andrew Sharp?

  And all of it's more expensive now.

• 22:21Ben Thompson?

  It's more, it's more expensive. And, uh, and so now they're like, actually we're going to tell the compute. I suspect, I can't say for sure, but I suspect that made the first half of this year look even better financially though.

• 22:35Andrew Sharp?

  Hmm.

• 22:35Ben Thompson?

  Because their costs are compute. They didn't have enough compute.

• 22:40Andrew Sharp?

  Ah.

• 22:41Ben Thompson?

  But their costs were lower even as they're, well, because, but this is a similar idea. Who's actually paying? The people who are paying in the first half of this year was the people for whom Anthropic was down every few hours because they didn't have enough capacity. So like all those people, you did your part for Anthropic's IPO by making their, making their margins look even better.

• 22:58Andrew Sharp?

  Through your frustrations with, uh, Claude. That's right.

• 23:02Ben Thompson?

  Well, the other thing that's interesting is these numbers in the S1 are as of June 30th.

• 23:07Andrew Sharp?

  That's what I was going to ask about. What are you still wondering about as we move forward here?

• 23:11Ben Thompson?

  All the reporting and is that in like the, whatever data we can see, like Ramp has that like index of spend or whatever. Is that it's sort of flatlined, not flatlined, but the rate dramatically decreased in the second half of this year. Astra comes out, you know, like OpenAI is really, really pushing. And what's interesting, but then again, but on the flip side, Opus 5.5 came out. So did it reaccelerate?

• 23:35Andrew Sharp?

  Yeah.

• 23:36Ben Thompson?

  Like what's going to, so this is all, I think it expires, like, uh, what's it called? Does it de, not dehydrate? Um, it, uh, goes stale.

• 23:45Andrew Sharp?

  Mm hmm.

• 23:45Ben Thompson?

  I think it's November 12th and the reporting is they're going to like actually go out November 16th.

• 23:50Andrew Sharp?

  Public in mid-November. Yeah.

• 23:52Ben Thompson?

  Uh.

• 23:53Andrew Sharp?

  Will we get fresh numbers, you know, to celebrate the occasion legally speaking?

• 23:57Ben Thompson?

  November 12th.

• 23:58Andrew Sharp?

  Okay.

• 23:59Ben Thompson?

  Are they going to try to get out before then? Are they going to go, is it going to be after that? Is there going to be like an October surprise? Right? Like it's a, it, I don't.

• 24:07Andrew Sharp?

  And it is interesting though, because the narrative around Anthropic, look, people are very bullish on this company in any context. But the narrative around Anthropic has become a bit more nuanced over the last several months because of the progress that OpenAI has made in the enterprise. Because of random ramp charts that show the growth, flatlining, at least in relative terms. And the reality is, given the growth over the last couple of years, they're just not going to be able to replicate that growth going forward because it's impossible. It's the law of large numbers. So let's see.

• 24:40Ben Thompson?

  We'll see.

• 24:40Andrew Sharp?

  What it looks like. Um.

• 24:42Ben Thompson?

  But the, the counter to this is that was the, I think, accepted wisdom a month ago.

• 24:48Andrew Sharp?

  Mm hmm.

• 24:49Ben Thompson?

  Opus 5.5 is so good.

• 24:51Andrew Sharp?

  Like, like. Fair enough.

• 24:54Ben Thompson?

  I mean, so maybe, maybe it's going to say, yeah, it flatlined, but then it took off again. The only problem with that's the case, that actually just reinforces the, we have to spend because all that matters is how good our model is.

• 25:07Andrew Sharp?

  Hmm.

• 25:08Ben Thompson?

  If all that matters is how good your model is, you have this built in accelerating cost center in your business. That you're just have to be sprinting on the revenue side to outpace.

• 25:19Andrew Sharp?

  Well, and you had this question for Shamsan Kar in your Strategery interview this week. Is it inevitable that the labs have to come for all software companies because of the commoditizing nature of their models? And I think about Anthropic's costs and obviously competing on the frontier is going to continue to be incredibly expensive. And that does make me curious about what other lines of business they try to come for to realize all their upside in the years to come. And maybe that sort of allays some of the concerns about continuing to compete on the frontier.

• 25:55Ben Thompson?

  Yeah. I mean, you have all these lines of battle in tech.

• 26:00Andrew Sharp?

  Mm hmm.

• 26:00Ben Thompson?

  So what is obviously OpenAI versus Anthropic, right? That's sort of the headline.

• 26:04Andrew Sharp?

  That's been the big blockbuster fight for three years now.

• 26:07Ben Thompson?

  But there is the frontier labs versus everyone else. And I think the two companies on the forefront of the everywhere else is Microsoft and Palantir.

• 26:15Andrew Sharp?

  Mm hmm.

• 26:16Ben Thompson?

  Both of which are making very similar propositions to their customers and making the argument publicly, both Satya Nadella and Alex Karp have been doing this. Which is you need to be in a place where the model is completely replaceable.

• 26:28Andrew Sharp?

  Yeah.

• 26:29Ben Thompson?

  Everything you do needs to be around it.

• 26:32Andrew Sharp?

  And they're. Model agnostic, absolutely.

• 26:34Ben Thompson?

  Every argument they come up with for why this needs to be the case, right? Like, but you know, the, uh.

• 26:40Andrew Sharp?

  Well, there's a lot of like Anthropic will steal your business too, is part of the rationale.

• 26:44Ben Thompson?

  A big part of it is, yeah, you're, if you give them your data for how your business works, like.

• 26:49Andrew Sharp?

  It's only a matter of time.

• 26:50Ben Thompson?

  It's like, what do, what do you have? But another one is you should be able to sub them out. And why do you want to sub them out? Because whoever gives you a cheaper deal, whichever model is better. And so there, there's a real sort of fight and tension going on here. And the argument that I've made, I asked this to Shams or I told him, I apologize for calling you Shams.

• 27:09Andrew Sharp?

  I heard you did drop a Shams at one point.

• 27:11Ben Thompson?

  Oh, did I? Oh, no. I, I, I told him at the end, I'm like, I've, I, I wanted, kept wanting to say Shams. Uh, unfortunately, a classic tech guy, he did not know what I was talking about.

• 27:22Andrew Sharp?

  Completely lost on that one.

• 27:23Ben Thompson?

  Which is Shams, Sharania, Sharania.

• 27:25Andrew Sharp?

  Sharania, yeah.

• 27:27Ben Thompson?

  News breaker in the NBA.

• 27:28Andrew Sharp?

  I think at one point in the interview, you dropped a Shams bomb and I don't know, is Shams Shakaar like known for bombs?

• 27:35Ben Thompson?

  Yes. No. So he's known for writing these like emails to the, like the whole company or a whole team.

• 27:41Andrew Sharp?

  Uh huh.

• 27:41Ben Thompson?

  Just taking them to task. Like he's like the company enforcer.

• 27:45Andrew Sharp?

  Great.

• 27:46Ben Thompson?

  No, they're called, they're called Shams bombs.

• 27:48Andrew Sharp?

  Okay.

• 27:48Ben Thompson?

  Uh, but no, it was not really, I did get a long email from you, but it was, it was nice. Um, but.

• 27:53Andrew Sharp?

  Yeah. He clarified there weren't enough expletives in his email to qualify.

• 27:57Ben Thompson?

  So yes, uh, Shams Sakaar. No, I've been raising this for ages.

• 28:00Andrew Sharp?

  Yeah.

• 28:00Ben Thompson?

  I think in the long run, in the fullness of time, they need to go up the stack, integrate into the customer, owning the customer experience. Because, and you could even see this with things like Quad Code and versus Codex.

• 28:13Andrew Sharp?

  Mm hmm.

• 28:13Ben Thompson?

  Working with Quad Code, working with Codex are different. Like they're, they're organized differently. The way I think about it is I feel like Codex is like people who file their emails into folders.

• 28:25Andrew Sharp?

  Yeah.

• 28:25Ben Thompson?

  It's like very project and you have threads within projects. And it's like, like if you're that sort of person that is very organized, it makes more sense.

• 28:32Andrew Sharp?

  As a former lawyer, I think of Codex as the associate and Claude as the partner.

• 28:36Ben Thompson?

  Yeah. Claude is just like, it's just, it's better at handling lots of different things. You're constantly changing topics. It, but if you want to be organized, like on your own, it's like kind of maddening.

• 28:48Andrew Sharp?

  Yeah.

• 28:48Ben Thompson?

  Uh, needless to say, that's why I use Claude a lot.

• 28:50Andrew Sharp?

  And Claude's kind of a dick.

• 28:52Ben Thompson?

  Right. Uh, so the person does, still drives me crazy, but, um, but yeah, like for the, like for me, the way it ends up manifesting, like I work on this, I talk about Gecko Bot. I, the actual building of it, where it's very clear and building this piece, this is this piece, I've done mostly in Codex.

• 29:07Andrew Sharp?

  Mm hmm.

• 29:08Ben Thompson?

  And the actual model powering it is Claude.

• 29:12Andrew Sharp?

  Yeah.

• 29:12Ben Thompson?

  Cause it just handles like different things coming at different times. Now, it is, it is kind of interesting in its own right. I'm almost choosing from a UI perspective for, as opposed to like what the model does perspective. But the more you have that choice from a UI, UI is essential because that is, that's the interface. It's the interface to humans. It's literally the name, user interface. But you don't, you have people who are used to say Quad Code and they don't want to go to something else. Now, right now you can sub stuff in and out to a certain extent. You can call it different models. So that can be worked around, but the further up they go, go in the stack. Or say you do a Codex work project, whatever it's called. I can't keep track.

• 29:53Ben Thompson?

  But you get your little virtual machine in the cloud. So you have your own VM. They can write stuff down. It's like, wow, it's so helpful. They gave me this virtual machine in the cloud. Yeah, you're now stuck in their cloud.

• 30:03Andrew Sharp?

  Yeah.

• 30:04Ben Thompson?

  Right? Or in the code design thing, like, you know, what they did to Figma, kind of did them dirty. But the more you're using that and using an application, the less likely you are to switch.

• 30:13Andrew Sharp?

  Locked in, sure.

• 30:14Ben Thompson?

  That's right. In a world where all you need to do is change an API, that's the world, to go back to the beginning, where you're on this treadmill.

• 30:23Andrew Sharp?

  Yeah, and you don't have very much pricing power.

• 30:26Ben Thompson?

  That's right.

• 30:26Andrew Sharp?

  Sure. Well, and it does, I mean, you could talk yourself into limitless upside if you talk yourself into the possibilities of Anthropic just eating sass over the next couple of years and doing all sorts of different areas, or do all sorts of different things in the software area to expand its revenue pie. And maybe they could do that.

• 30:47Ben Thompson?

  Well, it's not just expand revenue pie, it's lock-in.

• 30:50Andrew Sharp?

  Yeah.

• 30:50Ben Thompson?

  Like, lock-in is an important part of making money.

• 30:54Andrew Sharp?

  Indeed.

• 30:54Ben Thompson?

  What's your moat?

• 30:55Andrew Sharp?

  Right. Well, and right now, it's very difficult to falsify any hyperbole about what Anthropic or OpenAI could accomplish in that space. Uh, for now, we have a couple of emails on Anthropic, but before we get there, I mentioned at the top, today's show is presented to you by Stripe. Ben, Stripe is the financial infrastructure behind many internet-native businesses, including companies you regularly cover on Strategery.

• 31:17Ben Thompson?

  And including Strategery.

• 31:18Andrew Sharp?

  And, and including Strategery, and including Goat. Uh, Substack is one example that you've been invoking on Strategery in ads all week long. Every Substack creator is also a Stripe customer. Question for you, as a general matter, why does Stripe have a market? And why does it make sense for Substack to outsource for those capabilities rather than building its own tool?

• 31:42Ben Thompson?

  Like, don't you like the, this is, goes back to why I started with, why Stripe was the unlock for me to do Strategery.

• 31:49Andrew Sharp?

  Mm-hmm.

• 31:49Ben Thompson?

  Like, there was PayPal, which its options was terrible, a terrible reputation, you'd lose your money, wasn't really like catering to individuals in the way that it needed to be, in my estimation, I think probably still doesn't. Or what are you gonna do? Go get like a merchant account from like Chase or something?

• 32:03Andrew Sharp?

  Okay.

• 32:04Ben Thompson?

  Like, if, just the.

• 32:05Andrew Sharp?

  So maintaining it would be so miserable that it would defeat the purpose of starting a business?

• 32:11Ben Thompson?

  I mean, I wrote a few years ago, Stripe, like, the platform of platforms, which you need an abstraction layer for basically everyone else. You have a gazillion banks in the world, you have all these like financial rails, all of which are archaic, or old, or new, or whatever it might be. It's like an operating system. It's an operating system for finance. Like, what, what, why do you need an operating system? If you build for Windows, that means your computer's gonna run on a gazillion different kinds of hardware.

• 32:39Andrew Sharp?

  Mm-hmm.

• 32:39Ben Thompson?

  Because all that part is abstracted away from you. And so, yeah, the, when I did the first version of Strategery, and I had to get like Mailchimp over here, and I had to get like WordPress plugin, and I had to get all these different pieces, the Stripe part was great. And so a Substack comes along, or a Passport, and we wanna say, oh, let's integrate all that stuff. Let's provide one offering that does everything.

• 33:03Andrew Sharp?

  But let's not reinvent the wheel on payments.

• 33:05Ben Thompson?

  You're not gonna reinvent payments, right?

• 33:07Andrew Sharp?

  And that abstraction layer.

• 33:09Ben Thompson?

  There, exactly. So, that, that, that's, that's the commonality.

• 33:12Andrew Sharp?

  Okay.

• 33:13Ben Thompson?

  It's like, why did I use Stripe and all this other stuff? Why did Substack do it all together and still do Stripe? Passport, same sort of thing. Even like a Shopify, Shopify, their most important product is the Shop Pay,

• 33:28Andrew Sharp?

  Mm-hmm.

• 33:28Ben Thompson?

  which ultimately goes down to Stripe.

• 33:29Andrew Sharp?

  I didn't know that.

• 33:30Ben Thompson?

  Yeah.

• 33:30Andrew Sharp?

  I didn't know that Shopify is running on Stripe. I love Shop Pay. Boy, oh, boy, one of my favorite tech products of all time.

• 33:37Ben Thompson?

  Phenomenal, yes.

• 33:38Andrew Sharp?

  Uh, just a clean experience every time. Well, fintechs can use Stripe to you, to start their own credit card programs, marketplaces can use Stripe Connect to verify sellers, AI companies can use Stripe billing to track usage. I am really grateful that Stripe has empowered so many members of the modern media. Uh, that was one thing I didn't mention last week. Obviously empowered my own career, but like, my media diet, uh, is probably 75% Stripe.

• 34:06Ben Thompson?

  No, for sure.

• 34:07Andrew Sharp?

  Customers at this point.

• 34:08Ben Thompson?

  This is the, like, the obvious angle for us to talk about it because it's the direct, personal thing.

• 34:12Andrew Sharp?

  Yeah, it's us.

• 34:13Ben Thompson?

  All the listeners and readers, this is why they should be grateful, right? Like, not just us, not the greatest of all talk, but all your favorite podcasts, all the Substacks, all this sort of stuff, you have to be able to get paid.

• 34:25Andrew Sharp?

  Right.

• 34:25Ben Thompson?

  And, uh, that was not easy to do before.

• 34:27Andrew Sharp?

  Well, here we are. Uh, all right, back to the show. Couple Anthropic emails. Alexander says, Andrew and Ben, I watched Dario and Daniela's interview this week with Walter Isaacson, and woof. They start off the interview by praising the inherent honesty and goodness of Anthropic, and then spend the majority of the 42-minute discussion criticizing OpenAI for the following: having ads in their product, building more sycophantic models, partnering with the government as, quote, "an opportunistic move rather than a, quote, principled stand," and being generally dishonest. The level of obsession, hatred, and disdain they have for OpenAI is alarming.

• 35:09Andrew Sharp?

  It's like someone bad-mouthing their ex during their wedding vows. Someone should remind Dario and Daniela that when you point one finger at someone else, there are three fingers pointing back at you. Uh, not sure how that works, had not heard that phrase before.

• 35:27Ben Thompson?

  What? Are you serious?

• 35:29Andrew Sharp?

  I mean, I'm pointing a finger at you.

• 35:30Ben Thompson?

  Yeah.

• 35:30Andrew Sharp?

  There's no, oh, there we go. People will have to watch the video for that one, but sure enough, there were three fingers pointing back at me.

• 35:39Ben Thompson?

  I'm baffled. How, there's a, uh, question here about the Gen X millennial thing. Is this a generational divide?

• 35:46Andrew Sharp?

  I don't know.

• 35:46Ben Thompson?

  How have you not heard this before?

• 35:48Andrew Sharp?

  It could be. Are, we're only divided by like six years, but maybe that's enough of a chasm to, uh, create that disconnect. In any event, what do you think of Alexander's sentiments there?

• 36:01Ben Thompson?

  Uh, it was funny you included this email, because I was literally thinking the exact.

• 36:06Andrew Sharp?

  This is the hazard of recording podcasts. Sometimes you're just thinking out loud on air for everybody. But, there you go. Learn something new every day. All right, so you were thinking the exact same thing.

• 36:18Ben Thompson?

  Okay. That, like, the

• 36:22Ben Thompson?

  it's kind of, it's pathetic in a way.

• 36:26Andrew Sharp?

  Okay.

• 36:26Ben Thompson?

  The extent to which they do continually define themselves as being the opposite of OpenAI. And it's kind of funny, because they're like, oh, about alignment and training our model to be great. And if they continually are making decisions like, oh, we're gonna not do what OpenAI does, who's actually setting the agenda here?

• 36:46Andrew Sharp?

  Mm, fair enough.

• 36:47Ben Thompson?

  If OpenAI is like too online, uh, Anthropic is, yes, like, too obsessed.

• 36:54Andrew Sharp?

  Anchored on what they're doing.

• 36:55Ben Thompson?

  That's right.

• 36:55Andrew Sharp?

  Sure.

• 36:56Ben Thompson?

  And, you know, to what extent might OpenAI actually do something that makes sense, that is the right thing to do? And Anthropic is like anchored on, well, guess that's the wrong thing to do.

• 37:06Andrew Sharp?

  Mm-hmm.

• 37:07Ben Thompson?

  I do think it is a very astute point. It speaks to, overall, just the discomfort I have with their entire view of the world.

• 37:16Andrew Sharp?

  Okay.

• 37:17Ben Thompson?

  Which is, like, this stuff is too powerful, so someone has to teach it how to be good, and the only ones that can be trusted to do that are us.

• 37:24Andrew Sharp?

  Mm-hmm.

• 37:25Ben Thompson?

  And, and you always ask, why you? And Alexander's pointed out what their answer is, because we're not Sam Altman. I'm like, uh, dude, if your definition of being good is not being Sam Altman, you.

• 37:43Andrew Sharp?

  Well, and maybe I'm too immersed in this world at this point, because to me.

• 37:48Ben Thompson?

  Well, you're still defined by Sam Altman. It's like people who define themselves as being against Donald Trump. You have let Donald Trump define the entire frame of which you're operating.

• 37:57Andrew Sharp?

  But it's almost just ambient noise to me when I hear them go off on one of these tangents about how untrustworthy OpenAI is, or how untrustworthy Sam Altman is. I mean, there's an element of this where it's more charming than, like, some of their other crazy digressions. Uh, their obsession and their rivalry with OpenAI, not really that big of a deal one way or the other, as far as I'm concerned. Um, I can't get too worked up about it.

• 38:27Ben Thompson?

  Except these are the people setting themselves as like the moral arbiters

• 38:31Andrew Sharp?

  Mm-hmm.

• 38:32Ben Thompson?

  for everything.

• 38:33Andrew Sharp?

  So, I don't believe that. And so, I've never taken them seriously.

• 38:38Ben Thompson?

  No, I believe they're trying to do that.

• 38:39Andrew Sharp?

  Yeah.

• 38:40Ben Thompson?

  The answer isn't to.

• 38:43Ben Thompson?

  Just like, I don't think that there it's the right approach that they should need to teach quad morals.

• 38:48Andrew Sharp?

  Mm hmm.

• 38:49Ben Thompson?

  I'm not here to teach anthropic morals. What I'm here is to make sure that there's no small collection of people that get it decided for everyone else.

• 38:59Andrew Sharp?

  Yeah.

• 38:59Ben Thompson?

  Like that, that, that's sort of the, the bigger issue.

• 39:01Andrew Sharp?

  Well, to the extent that the mudslinging at Sam Altman is intended to delegitimize him in the eyes of the mainstream and ultimately sort of redound to anthropics monopoly power over how this technology is deployed, that sucks. It's also so far been unsuccessful.

• 39:18Ben Thompson?

  To what extent has anthropic actually been the best thing for Sam's like?

• 39:23Andrew Sharp?

  Oh, my God.

• 39:24Ben Thompson?

  Right? Like suddenly.

• 39:25Andrew Sharp?

  And they've done wonders for Mark Zuckerberg as well.

• 39:27Ben Thompson?

  Everyone who's like worried about anthropic is like, Sam, he's not that bad. I didn't figure it out.

• 39:32Andrew Sharp?

  We can work with this guy. Well, and when you go back to OpenAI, when Dario was there, the original beefs with Altman, at least in some cases, were completely insane.

• 39:42Ben Thompson?

  All the dumbest stuff opening I did were from Dario Amadi and his whole team. The whole like ChatGPT two is too dangerous to release.

• 39:51Andrew Sharp?

  Right.

• 39:51Ben Thompson?

  Like this.

• 39:52Andrew Sharp?

  Well, and part of their falling out, it involved the clause that would have required OpenAI to merge with another company that was closer to AGI than they were. And Sam wouldn't include that clause or Microsoft wouldn't agree to including that clause in the investments. And Dario was very upset at like, of course, Microsoft wouldn't agree to it. And of course, Sam wouldn't like have that be a deal breaker for the Microsoft deal.

• 40:19Ben Thompson?

  This does go back though to the OpenAI original sin, which is this whole, we're going to be a nonprofit. Like this, actually companies should, should operate like normal companies.

• 40:29Andrew Sharp?

  Traditional incentives.

• 40:30Ben Thompson?

  And this is the whole problem with the whole, yes, one of the anthropics insane governance structures we haven't talked about either. There's like seven share classes.

• 40:37Andrew Sharp?

  Yeah.

• 40:37Ben Thompson?

  Like there's this magic share that like the board has or the benefit corporation has or what, what are these random things has about who gets voting or who doesn't? It's nuts.

• 40:47Andrew Sharp?

  Mm hmm.

• 40:47Ben Thompson?

  Like actually, we should just operate like normal companies. That, that would be.

• 40:50Andrew Sharp?

  If you're buying in, that's what you're buying. Yeah, well, we'll see.

• 40:55Ben Thompson?

  Profit motives? Good.

• 40:57Andrew Sharp?

  Healthy.

• 40:57Ben Thompson?

  Good for society, healthy, yes.

• 40:58Andrew Sharp?

  You know, I was writing about China for Sharp Tech this week and they have all these political incentives that kind of distort things, obviously, famously. And America, as crazy as America can become in the eyes of the world, the rest of the world can trust that there are basic profit and market incentives guiding the decisions that are made here.

• 41:18Ben Thompson?

  It's incredibly important.

• 41:20Andrew Sharp?

  Yeah.

• 41:20Ben Thompson?

  Like it is, it is its own rule of law.

• 41:22Andrew Sharp?

  Mm hmm.

• 41:23Ben Thompson?

  It, it, it gives you, why is the rule of law important? You can make decisions, you can make investments.

• 41:29Andrew Sharp?

  Within a predictable framework.

• 41:31Ben Thompson?

  That is what the traditional corporation, profit maximizing corporation. Yes, there are obviously issues. They're well documented, but every system has issues and what the benefit that has is rational acting. You can actually engage, understand someone else. This seven share weird governance, we're not actually governing for profit is it's worse. And it's, I mean, you know what you're signing up for, to be fair.

• 42:01Andrew Sharp?

  Yeah.

• 42:02Ben Thompson?

  And you're signing up for like, we're going to just dilute you away and we're not focused on making a profit. And maybe they'll pull it off because Opus 5.5 is really good.

• 42:11Andrew Sharp?

  Because at the end of it, that's what we always come back to. It's like the core product, really, really good. All right. Ravi says, I was just listening to Sharp Tech at three X speed while on the treadmill. I usually listen to podcasts at three X, but for Ben's updates or interviews where there is also a transcript, I listen and read, which is even better.

• 42:31Ben Thompson?

  Yeah, see, Ravi, you should have filled us in.

• 42:32Andrew Sharp?

  Yeah, there we have it. Um, I don't watch video versions because I don't have YouTube premium and can only go to two X.

• 42:40Ben Thompson?

  Ravi.

• 42:41Andrew Sharp?

  Does he need YouTube premium? That's a hilarious reason to not watch video podcasts is because it only goes to two X.

• 42:48Ben Thompson?

  I mean, like you can live the life where you want to. I'd rather you pay your subscription money to Chit Chakri versus YouTube if there's only one.

• 42:55Andrew Sharp?

  He's, he's making good choices as far as I'm concerned.

• 42:57Ben Thompson?

  Yeah, you know what? I have nothing to say. Continue with your email.

• 43:00Andrew Sharp?

  Uh, great interview with Craig Moffet. He says, uh, where does Ben land on his key question about AI capex? This is Moffet's key question. Is end demand from consumers and enterprise where it needs to be? And will that be sufficient in the near term? 2027, 2028. And the direct quote from Craig Moffet, all I care about, he said, is are the revenues coming into the system, which means coming into anthropic, coming into ChatGPT? Are those greater than the cost of building the whole value chain? Ignore all the revenues going on between the layers of the value chain. That's just noise. All that really matters is enough money coming into the system to support the system. Where do you stand on that question?

• 43:45Andrew Sharp?

  I thought it was a pretty good formulation of like the core issue from Craig Moffet.

• 43:50Ben Thompson?

  Right. It's easy kind of like, how much is Nvidia taking? How much is TSMC taking?

• 43:53Andrew Sharp?

  What's up with the Neo clouds? Yeah.

• 43:56Ben Thompson?

  Uh, no, it's a very good observation and

• 44:00Ben Thompson?

  I don't know. Like we don't know what the timing is right now. As impressive anthropics revenues are, they don't come anywhere close to all the capex that's being put out.

• 44:08Andrew Sharp?

  Yeah.

• 44:08Ben Thompson?

  But the capex is also for two to three to four to five years down the road. If anthropic keeps accelerating the way they are, then you're like accelerating based on what timeframe? Beginning of the year, later on? This, this, all that matters is the revenue growth. This is the other point. This goes back to like, people get really worked up about stock based compensation because that is also dilution. And they're like, you don't, you should be evaluating this in your stock picks. The reason people don't care about stock based compensation, they only care if your revenue is not growing. If yours is growing, no one cares. It's fine. Once yours is growing, they're like, yeah, well, and also have you seen their stock based compensation, right? Like this, and so all this stuff involved with anthropic, the, the dilution, the weird governance, no one cares if it's up and to the right.

• 44:53Andrew Sharp?

  Yeah.

• 44:53Ben Thompson?

  And, and like, and that matters broadly for the whole ecosystem. The thing to come back to though is that Amazon deal. At the end of the day, and the question that we got about going from free cash flows to debt, to equity, the entities with the most capacity in all three areas, who has the most cash flow? Who has the greatest capacity to issue debt because of their large cash flow and diversified businesses, which gives them collateral, basically like not collateral, but the other sources of income.

• 45:25Andrew Sharp?

  Yeah.

• 45:26Ben Thompson?

  And who has the greatest capacity to issue stock?

• 45:30Andrew Sharp?

  Hyperscalers.

• 45:30Ben Thompson?

  Google, AWS or Google, Amazon and Microsoft.

• 45:34Andrew Sharp?

  Yeah.

• 45:35Ben Thompson?

  There is an extent to, if we cross the gap, they're like the, the girders of the bridge that get us across.

• 45:43Andrew Sharp?

  Okay.

• 45:43Ben Thompson?

  And it's going to be very interesting to see how they play their hand over this little bit. Like to what extent does it end up?

• 45:51Andrew Sharp?

  So are Sundar and Satya holding up the bridge?

• 45:54Ben Thompson?

  Well, I mean, are we going to end up in a world where anthropic is all over here doing all their crazy stuff? And what actually happens is just AWS and Google just like basically own them, uh, to get them over, over the canyon.

• 46:09Andrew Sharp?

  Okay.

• 46:09Ben Thompson?

  And, um, and, and of course we could reach a limit. The limit where everything goes sideways is once the hyperscalers can't do it anymore.

• 46:17Andrew Sharp?

  Mm hmm.

• 46:18Ben Thompson?

  But there, they are the.

• 46:19Andrew Sharp?

  What would that mean?

• 46:20Ben Thompson?

  They have the cash flow last resort. They have the debt of last, debt raising capabilities. I mean, all, even all the Neo clouds, all this sort of stuff that's out there. The hyperscalers, their cost of capital is so much lower than a hyperscaler trying to raise, like Nvidia is out there.

• 46:36Andrew Sharp?

  In a Neo cloud, yeah.

• 46:37Ben Thompson?

  Or yeah, the Neo cloud, yeah. Why is Nvidia backing up the Neo clouds? This is one of the concepts. This is what I really wrote about the credit crunch or the credit questions and the railroads was Nvidia putting backstopping all these Neo clouds. Nvidia sees this happening too, right? Because the the worst case scenario is the world runs out of money before the revenues catch up.

• 47:00Andrew Sharp?

  Mm hmm.

• 47:00Ben Thompson?

  And that's like the, what happened with the railroads and, and the massive crash. Basically the world just ran out of money. The, didn't mean the rails weren't useful.

• 47:07Andrew Sharp?

  Right.

• 47:07Ben Thompson?

  The rails are still used today, but there was a massive financial crash. If we, the way we don't get there is we just have to bridge the gap to where the revenues are enough to pay this all back.

• 47:20Andrew Sharp?

  Mm hmm.

• 47:20Ben Thompson?

  And it's this, the challenge for Nvidia is if we get there.

• 47:29Ben Thompson?

  It's you probably because the hyperscalers.

• 47:31Andrew Sharp?

  Okay.

• 47:31Ben Thompson?

  And that means the hyperscalers will have gained tremendous power over the entire ecosystem. Because that's what you get what you pay for, right? And in that world, those are the ones who are going to build competitive chips to Nvidia.

• 47:44Andrew Sharp?

  And when we say.

• 47:44Ben Thompson?

  They're the ones who are going to push Nvidia on prices the most, all these sorts of things.

• 47:47Andrew Sharp?

  When we say tremendous power, is that because Anthropic and others will have to continue trading equity in exchange for compute going forward?

• 47:56Ben Thompson?

  Right, yeah, right. And you know, and the terms, those terms Amazon got with Anthropic was when Anthropic needed it the most.

• 48:07Andrew Sharp?

  Mm hmm.

• 48:07Ben Thompson?

  Because they were trying to get started and no one believed in them. They needed a ton of compute and so Amazon got an unbelievable deal.

• 48:16Andrew Sharp?

  Right.

• 48:18Ben Thompson?

  You can fast forward, the deals today maybe aren't going to be quite as good. But if Anthropic is like, we.

• 48:24Andrew Sharp?

  Can't operate.

• 48:25Ben Thompson?

  We can't operate, uh, no one, our equity, like if their stock price starts plummeting.

• 48:31Andrew Sharp?

  Yeah.

• 48:32Ben Thompson?

  The new, like, they have to turn, where can we get money to be competitive? Amazon's like, I've got some money for you.

• 48:39Andrew Sharp?

  Oh, boy.

• 48:42Ben Thompson?

  Remember that deal we made 2023, 2024? How about an even worse one?

• 48:49Andrew Sharp?

  I can't wait to see what happens over the next couple of years here, you know?

• 48:52Ben Thompson?

  That's right.

• 48:53Andrew Sharp?

  Well, and I think Moffet's core question is like, is the money for any of this here? And like, because he doesn't doubt the technology, but it's like, how much are people? How much are enterprises willing to pay? And can that sustain any of this over the next couple of years?

• 49:10Ben Thompson?

  Well, I think.

• 49:11Andrew Sharp?

  Which I think is something of an open question.

• 49:14Ben Thompson?

  I mean, the, the, it, uh, yes, well, if you want to really zoom out, I think the biggest broader question, one of the really, I really enjoyed this, the, the email with, with Shom, not Shoms, this week.

• 49:28Andrew Sharp?

  Interview.

• 49:28Ben Thompson?

  And one point he made upfront is from the, you know, he's talking his book, but of course, but I mean, Palantir, he admitted in there, because I got to push him out, there's like cult recognize cult. Like, part of the reason they're worried about Anthropic is like, we're the right religion. They're the wrong religion, that's right. But is, what they see with companies is companies who are focused on using AI to improve the bottom line.

• 49:53Andrew Sharp?

  Mm hmm.

• 49:54Ben Thompson?

  Struggle, because how do you improve the bottom line? Replacing humans.

• 49:57Andrew Sharp?

  Yeah.

• 49:57Ben Thompson?

  Uh, how do you improve the top line? Multiplying humans.

• 50:02Andrew Sharp?

  Hmm.

• 50:02Ben Thompson?

  Right, there's this, this, this difference between multiplying versus replacing. And when you're multiplying humans, you're basically creating entirely new things to do, new workflows, new opportunities. The challenge for this whole trade in general is that usually number one, takes longer. And number two, usually comes from new companies.

• 50:23Andrew Sharp?

  Yeah.

• 50:24Ben Thompson?

  That they, they come in, they disrupt the incumbents by virtue of the AI first company taking on the old school SaaS company. The SaaS company is trying to shove AI and use it as much as they can, but they're just fundamentally not constructed properly to do it.

• 50:39Andrew Sharp?

  Yeah.

• 50:40Ben Thompson?

  And so in the fullness of time, those companies go away, the AI native companies take their place. And that's how AI takes over the world. I think there's a very decent chance that that's how it happens.

• 50:50Andrew Sharp?

  Mm hmm.

• 50:51Ben Thompson?

  The problem is it takes a long time.

• 50:54Andrew Sharp?

  Yeah.

• 50:54Ben Thompson?

  And timing is the issue. All the money that's being spent on CapEx is being spent now.

• 51:00Andrew Sharp?

  Yeah.

• 51:00Ben Thompson?

  And that money needs to circle back into, because that, when you go from paying for free cash flows, paying with debt, paying with equity, the idea is it circles back around to your cash flows.

• 51:14Andrew Sharp?

  Right.

• 51:15Ben Thompson?

  Start paying it back, right? Um, and so the question is, how long is that going to take? It's all about timing. I've 100% believe in AI. Like, I think that is pretty straightforward, it's incredible. I, I, well, I'm in the middle ground. I don't think AI has to replace all, because you don't think AI is one.

• 51:29Andrew Sharp?

  It's going to be God, but.

• 51:31Ben Thompson?

  But the, it's just unbelievable.

• 51:33Andrew Sharp?

  Yeah.

• 51:34Ben Thompson?

  It's, it, I was just showing someone this week, it's so fun when people have like just suddenly the unlock.

• 51:40Andrew Sharp?

  Yeah.

• 51:40Ben Thompson?

  And they're like, holy cow. And then suddenly they have like, once you see what it can do, you come up with like 25 new things that I can do.

• 51:46Andrew Sharp?

  Mm hmm.

• 51:47Ben Thompson?

  And, and

• 51:49Ben Thompson?

  I could not be a firmer believer in this. And yet, number one, that's, I, I said this years ago. The greater

• 52:00Ben Thompson?

  of an upside something is, almost the longer it takes.

• 52:03Andrew Sharp?

  Mm hmm.

• 52:03Ben Thompson?

  And you go back to the internet, 1993, the feed was not available until 2006.

• 52:10Andrew Sharp?

  Yeah.

• 52:10Ben Thompson?

  Like, the, the core unit of the internet, the core monetization unit of the internet, the feed with personalized advertising. We did get search ads along the way, but even then, we're talking 1999, 2000, somewhere around then. There's a lag between the new technology and understanding the core.

• 52:31Andrew Sharp?

  How to monetize it, the new businesses that it enables.

• 52:34Ben Thompson?

  Interface of it, the business model around it. Um, also, while we're here,

• 52:43Ben Thompson?

  if this whole interview, them, OpenAI is evil because they include advertising.

• 52:48Andrew Sharp?

  Okay.

• 52:49Ben Thompson?

  It's a personal shot on me, that's all I gotta say.

• 52:51Andrew Sharp?

  Oh, boy.

• 52:53Ben Thompson?

  But I think I, it's a point I made before, it is, I think it's worth repeating. I see again and again, I feel there is an alignment between optimism about AI and a belief, optimism about advertising business models.

• 53:07Andrew Sharp?

  Mm hmm.

• 53:10Ben Thompson?

  If you believe in advertising, why do I think meta advertising is the good advertising? Because it shows you stuff you didn't know you wanted.

• 53:17Andrew Sharp?

  Mm hmm.

• 53:17Ben Thompson?

  It's not just that that's a win-win-win. People create businesses that exist, I get stuff I didn't know I wanted.

• 53:24Andrew Sharp?

  It grows the pie.

• 53:25Ben Thompson?

  It grows the pie, but it's man, it's manufacturing human desire.

• 53:30Andrew Sharp?

  Mm hmm.

• 53:31Ben Thompson?

  And, and there's a certain like, uh, what's the word I'm looking for? Uh, aesthetic?

• 53:36Andrew Sharp?

  Aesthetic.

• 53:37Ben Thompson?

  Perspective, no, not aesthetic, aesthetic, like not eating anything or like very, very low, low key. There's like appalled by this, like consumerism, all these sort of bad things, which, fine, whatever. But consumerism at the end of the day is what drives the economy.

• 53:51Andrew Sharp?

  Mm hmm.

• 53:52Ben Thompson?

  And in a world of AI, the whole mindset that AI is going to completely replace humans rests on this assumption that all the economy is utilitarian. Everything is just done because it's like, needs to be done and AI is just going to do it better. Which I don't think is the economy. The economy, a huge portion of it is status seeking, it's buying stuff you don't need.

• 54:15Andrew Sharp?

  Yeah.

• 54:16Ben Thompson?

  It's like a, you know.

• 54:17Andrew Sharp?

  A huge portion of it is trying to get laid.

• 54:19Ben Thompson?

  It's spending an unbelievable amount of money on World Series tickets, which I may not have done. Like, uh, it's, it's all these things, that is what it means to be human. And which is inextricably tied to advertising.

• 54:33Andrew Sharp?

  Yeah.

• 54:33Ben Thompson?

  And it's not an accident that their go-to point, one of their go-to points about why OpenAI is evil is because they're including ads.

• 54:41Andrew Sharp?

  Hmm.

• 54:42Ben Thompson?

  It speaks to how Anthropic is deeply an anti-human company. They don't get it. They don't get humans.

• 54:50Andrew Sharp?

  Socialist company.

• 54:52Ben Thompson?

  There, there, uh, there's this mindset in Silicon Valley that is anti-ad.

• 54:59Ben Thompson?

  I think it's, it's rooted in this, people are just getting tricked. It's just very utilitarian, I can figure it out, yes communist, sort of like top down.

• 55:09Andrew Sharp?

  The economy is for your needs, not necessarily.

• 55:12Ben Thompson?

  Right, and it can be controlled, right? We just haven't had the tools yet, but now AI can do it, right? We can actually understand all the inputs. And this lack of faith in the market, lack of faith in humans, all these, all this talk about no one's going to have a job is fundamentally a lack of faith in humans.

• 55:29Andrew Sharp?

  Sure.

• 55:30Ben Thompson?

  It like, we can't come up with things that might be worth paying for that AI won't do better.

• 55:36Andrew Sharp?

  I bet we can.

• 55:37Ben Thompson?

  I bet we can.

• 55:37Andrew Sharp?

  Historically speaking. We have.

• 55:41Ben Thompson?

  So it just, it, it's, it's funny that that's one of their talking points about why OpenAI is evil.

• 55:46Andrew Sharp?

  Yeah.

• 55:46Ben Thompson?

  And it's like, that's one of my talking about, points about how you don't understand humanity and the audacity you have, that we're going to create this consciousness for a machine to, it's insane, these people are nuts.

• 55:57Andrew Sharp?

  I mean, Alexander's a better man than I am. I don't think I could slog through 42 minutes of the Amadeus and Walter Isaacson, but, uh, it's not surprising to me that they're slinging mud at OpenAI for ads, whatever. Um, this is the thing, I don't really take it seriously, so it doesn't bother me. Uh, Bloomberg reported this week, Meta shares fell after Mark Zuckerberg told investors the company would bet even more aggressively on artificial intelligence. During its quarterly earnings report Wednesday, the social media giant boosted its capital spending plans for the year.

• 56:31Ben Thompson?

  This is a week ago, which is a pertinent point I'm going to get back to in a little bit, but continue.

• 56:34Andrew Sharp?

  And announced a new class of non-voting stock that could ultimately be used to help pay for acquisitions and other expenses. The Bloomberg story references a plan to, to raise up to $95 billion in waves of stock offerings as Meta continues its cash raising spree to fund AI. Uh, so Meta shares down about 10% in the last week. How much worse would the reaction be without the success of Muse?

• 57:03Ben Thompson?

  Well, just one thing to note is the shares should be down, people are being diluted.

• 57:06Andrew Sharp?

  Diluted.

• 57:06Ben Thompson?

  Right, so, uh, like, there's nothing.

• 57:08Andrew Sharp?

  And one of the things interesting about the dilution is those companies, Meta, Google, Microsoft, like, they can probably get away with dilution because who else do you feel really comfortable investing in? In the present day economy?

• 57:25Ben Thompson?

  That's my whole point from before, that, that's why they're the last resort.

• 57:29Andrew Sharp?

  Yeah.

• 57:29Ben Thompson?

  And if you're lending money, who else do you want to lend it to? Like Meta's got.

• 57:33Andrew Sharp?

  We've got foreign governments sinking lots and lots of money into these companies.

• 57:37Ben Thompson?

  Yeah, so, uh, yeah, so the reason, uh, the, the reason I mentioned the timing is I was annoyed, I'm like, okay, it's fine. I can do Meta earnings, even though the Brewers game is tonight. Company I know well, can knock that out. Anthropic drops the S1, I'm like, oh, I gotta cover the S1 first before I get to the earnings.

• 57:56Andrew Sharp?

  Yeah.

• 57:57Ben Thompson?

  I'm so glad I did the S1 before the earnings. Because I think it gave, my, the entire take that I had on the earnings was actually based on what I learned in the S1.

• 58:10Andrew Sharp?

  Mm hmm.

• 58:10Ben Thompson?

  Which is this point that actually all the money's going to training.

• 58:15Andrew Sharp?

  Yeah.

• 58:17Ben Thompson?

  That gives a completely, it gives a very clarifying perspective on Muse.

• 58:22Andrew Sharp?

  Okay.

• 58:23Ben Thompson?

  Now, we've said on this podcast, I think we had like a Muse run a couple of weeks in a row, at least two in a row. The unbelievable opportunity that is here, the aggregator of aggregators, the interface, the one, the, the actual connection to the user that is the layer between everything else. But don't strike me in the platform of platforms. This is like the aggregator of aggregators. It's like the opposite end of the sandwich. Very valuable place to be. Uh, and to be there though, the model has to be good. And you have to control the model. It's the key component of it. To have a good model, to control your own model.

• 59:02Andrew Sharp?

  Gotta train your ass off.

• 59:03Ben Thompson?

  You gotta spend a lot of money. And, and so this is the question for investors who are questioning their spend. If you believe in Muse, you should be happy they're spending money. If you don't want them to spend money, then you need to appreciate, your take actually is, they should not be doing Muse.

• 59:24Andrew Sharp?

  Yeah.

• 59:25Ben Thompson?

  They're, they're inseparable. And I believe in Muse. I believe in this layer. I mean, I, the overall with Muse right now is the model's not good enough. Like that's, that's the number one, even above and beyond.

• 59:37Andrew Sharp?

  I don't really experience that, interestingly enough.

• 59:39Ben Thompson?

  Well, maybe the other issue is like all this interface layer between companies and pushing back on agents and all this sort of thing.

• 59:45Andrew Sharp?

  Yeah. Um, no, it's. They got the one password integration. Finally, that's a game changer for me.

• 59:50Ben Thompson?

  By the way, one password, uh, little tip to the builders out there. Uh, you, you can use one password as your secret store if you're, if you're using like agents to do building stuff. Cause like, there's a whole issue of secrets, like API keys, usernames, passwords. How do you pass them to the agents? You don't want, you want them to put it into the chat. They will go up to the servers and like, it's not great. Uh, and so to, you can like do things in, in a terminal, like have a secrets file and all this stuff. Super hard to manage. One password has this amazing layer where you create a vault for the agent. You can do it on a per app basis and they can access it to get their, to get the keys that they need. And then from a user perspective, I would rather type usernames and passwords into one password than doing convoluted terminal commands and like pasting stuff.

• 1:00:35Andrew Sharp?

  Absolutely.

• 1:00:36Ben Thompson?

  Yeah, it's great.

• 1:00:36Andrew Sharp?

  One password is in the easy pass shop pay tier of tech products, as far as I'm concerned.

• 1:00:42Ben Thompson?

  I completely agree.

• 1:00:42Andrew Sharp?

  A 10 out of 10.

• 1:00:43Ben Thompson?

  No, there were, there were those sort of random, I don't want to say it's random, but a company that if you had predicted who's going to be massively well-placed for AI. You probably wouldn't have thought about it, but it turns out like they shifted to being an enterprise product. There are another classic example, kind of in the Dropbox genre. They started out as a consumer product. And a lot of Mac people, like I can see Jim over here. I think he's grimacing because there's, there's a whole area of folks that were so mad.

• 1:01:11Andrew Sharp?

  Like teaching people.

• 1:01:12Ben Thompson?

  They're still, no, no, they're so mad at one password. You should be like very custom-built, like beautiful apps, native, all this sort of thing.

• 1:01:20Andrew Sharp?

  I missed that era.

• 1:01:21Ben Thompson?

  No, and so they, they became like more like the one, you know, right ones for any, I'm not sure that's completely true, but like more web app-y, what's the word? Uh, what's the, what's the framework everyone complains about as far as, uh, electronic, eletra, uh, whatever. Uh, like that, that's last thing. They, basically the app got worse.

• 1:01:38Andrew Sharp?

  Yeah.

• 1:01:39Ben Thompson?

  But the app got worse, got more extendable, easier to work on, work cross-platform. And their whole business model shifted from consumer to enterprise. And they raised a bunch of money. And so all the old one password people, they're still mad about it, right? But that's what happens. If you sell a product, if you sell software, you sell to businesses. They will pay. Consumers are, require advertising.

• 1:02:07Andrew Sharp?

  They don't want to pay.

• 1:02:07Ben Thompson?

  We've talked about this whole thing before. Well, because you also have Apple coming in, making their one password management more and more capable, actually having an app around it. So that it's just hard to be a consumer software company. If you, either your ads or your operating system is coming for you, tough place to be. They moved to enterprise. Everyone gets mad at them. Brilliant move. Like, so number one is just a brilliant move in general, because that's a better market. The password area in general is so difficult to manage. We've been using it at check for ages.

• 1:02:36Andrew Sharp?

  Yeah.

• 1:02:36Ben Thompson?

  In part because we have to share passwords for a lot of different stuff. Super useful in that regard. You would enforce rules. The, but number three, turns out like for agents, it's amazing. It's like, it's like just a company that was sort of out of nowhere.

• 1:02:48Andrew Sharp?

  It is a really big value unlock in terms of how I use Muse. So in terms of the investment community.

• 1:02:54Ben Thompson?

  No, that's a perfect example, right? What's the one of the big problems with Muse? How do you get your, your passwords? Suddenly if you, oh, share it, there you are. It's all there. But all this to say, like mute, there's no question whether you think the model's good enough or not. Meta has to control that model.

• 1:03:10Andrew Sharp?

  Yeah.

• 1:03:10Ben Thompson?

  And, and they, they can't be like outsourcing that to Anthropic or OpenAI, which by the way, is going to want to own the interface as well. If you just cut them off, right? Like you, you, you, you just, they have to, they have to, they have to control the model underlying Muse. Which means as we saw from Anthropic's S1, they have to spend a ton of money on training and even more than I fully internalized. And this did give me some sympathy for their enterprise thing. It's still solipsistic. They're setting up an enterprise company because they're like, we're spending so much money on training. We need to sell it somewhere.

• 1:03:47Andrew Sharp?

  Find money somewhere. Sure.

• 1:03:49Ben Thompson?

  The reason it made me feel a little better is the concern about doing enterprises, like you're taking compute away from all your other products.

• 1:03:57Andrew Sharp?

  Yeah.

• 1:03:57Ben Thompson?

  It's like, actually it turns out serving this stuff doesn't take that much compute relatively speaking.

• 1:04:03Andrew Sharp?

  Yeah.

• 1:04:03Ben Thompson?

  Um, so.

• 1:04:04Andrew Sharp?

  This is what I mean. It's great to have Anthropic open the hood.

• 1:04:08Ben Thompson?

  It's true. It's why, like, it is true.

• 1:04:10Andrew Sharp?

  Make it a little clearer.

• 1:04:11Ben Thompson?

  And the other thing, good thing about Anthropic coming along is because this is their business. And I think, like I said, whoever at the SEC made them break about this computing is, it, the whole document was worth it for that table. Because the other companies like Meta, Google, this is just sort of grown inside their balance sheet. And so they never had to like break it out.

• 1:04:32Andrew Sharp?

  Totally.

• 1:04:33Ben Thompson?

  And so like, now you can take what you learned from the Anthropic S1, that must apply to Meta as well.

• 1:04:38Andrew Sharp?

  And we've spent four years speculating about the cost breakdowns here. I will say you wrote the most compelling argument for investors opposed to this spending is not that mute, that Muse doesn't need it. But that Meta doesn't actually need Muse. I could understand that sentiment from investors if they were making that argument because of how dominant the ads business continues to be.

• 1:05:05Ben Thompson?

  Yeah, but.

• 1:05:07Andrew Sharp?

  I'm not mad at Meta for going this direction and Mark Zuckerberg is a founder who is always going to go this direction. This seems a lot more fruitful than some of the other sort of detours of the last seven or eight years.

• 1:05:17Ben Thompson?

  The investors want Meta to be Google or to be Amazon.

• 1:05:20Andrew Sharp?

  Yeah.

• 1:05:21Ben Thompson?

  Companies that are not run by founders, that, um, you know, does Amazon, they.

• 1:05:26Andrew Sharp?

  Are just printing and optimizing and that's what they do these days.

• 1:05:29Ben Thompson?

  They are focusing on what they're good at, what makes sense. A, A, like I think Amazon is a great, this isn't saying doing the bad thing. I think Amazon's in a great position as far as being the inference provider, all, all the infrastructure, all the logistics, all the things we've talked about and just focusing on that. Not spending billions and billions of dollars trying to be in the leading, leading edge of models. Like I think last summer, they kind of like wound down their, they claim they're still doing it somewhere else, but I don't believe them.

• 1:05:58Andrew Sharp?

  Yeah.

• 1:05:58Ben Thompson?

  Like, and why would they? They, they are there, they'll serve Anthropic, they'll serve OpenAI. And they will be, and they're built in to be a lower margin business anyway. So they're real place for this. I think Google shifting to being like a capital company, like Berkshire Hathaway, but like, like even larger makes.

• 1:06:20Andrew Sharp?

  Smart for where they are.

• 1:06:21Ben Thompson?

  Well, the Google one's interesting. Again, I would say.

• 1:06:25Andrew Sharp?

  But yeah, let's save Google for next week.

• 1:06:27Ben Thompson?

  But they are prudent, rational decisions that you would expect from a professional manager.

• 1:06:35Andrew Sharp?

  Yeah.

• 1:06:36Ben Thompson?

  Meta's not run by a professional manager. It's run by Mark Zuckerberg who founded the company.

• 1:06:41Andrew Sharp?

  Yeah.

• 1:06:41Ben Thompson?

  So like, what do you expect?

• 1:06:43Andrew Sharp?

  Totally.

• 1:06:44Ben Thompson?

  And also I'm all in. Let's go, let's do it.

• 1:06:47Andrew Sharp?

  Well, and I just can't help but observe that their ads business does look pretty bulletproof.

• 1:06:52Ben Thompson?

  Well, that's the other thing is like of all the digital and things in the world, like reels feels the safest.

• 1:06:59Andrew Sharp?

  Right.

• 1:07:00Ben Thompson?

  It's like, it's actually also eating everything else, like from the other side.

• 1:07:04Andrew Sharp?

  They're eating Netflix. We talked about that last week.

• 1:07:06Ben Thompson?

  Well, the other thing that's interesting is, so. Here's a take for you.

• 1:07:10Andrew Sharp?

  Okay.

• 1:07:11Ben Thompson?

  Netflix is a casualty of AI.

• 1:07:16Andrew Sharp?

  How so? I've heard others offer that thesis and I never quite buy it.

• 1:07:21Ben Thompson?

  What is the others thesis? Cause I think mine's better, but.

• 1:07:23Andrew Sharp?

  Um, I've heard people argue that people are gonna start creating their own videos, stuff like that. Yeah.

• 1:07:31Ben Thompson?

  I'm sorry, I have a 3D, 5D, 6D.

• 1:07:34Andrew Sharp?

  Go six dimensions here, let's go.

• 1:07:36Ben Thompson?

  Okay. So what's the, so Meta is spending all this money on AI.

• 1:07:45Andrew Sharp?

  Okay.

• 1:07:47Ben Thompson?

  They're obviously under investor pressure. They need as much money as possible. You go back like eight, nine years ago, they used to talk about on earnings calls, we don't wanna like overdo the number of ads in the feed.

• 1:07:58Andrew Sharp?

  Mm hmm.

• 1:07:59Ben Thompson?

  Right? Uh, because you know, we wanna make sure the user experience is good. They had Facebook video, which they reduced and uh, they, because they're like, it's not, it's not good for users to get like consumed by video, even though, so they're like, they had a period where their time on service went down because they were deprioritizing video.

• 1:08:18Andrew Sharp?

  Yep.

• 1:08:18Ben Thompson?

  And it sounded like, and it's almost like that was their monopoly phase. They could just sort of like, do what's best for people, do what's best for society, because it's the right thing to do, the better user experience.

• 1:08:29Andrew Sharp?

  They don't have to worry about it. Sure.

• 1:08:31Ben Thompson?

  Uh, what are they doing right now? They need money. They're shoving ads in there. They're ramping up the engagement. They have all the dials turned to 11 of making you watch more reels, making you never look away, see more ads. Which means your eyeballs, your wife is spending her.

• 1:08:50Andrew Sharp?

  Every night.

• 1:08:50Ben Thompson?

  Reels time.

• 1:08:51Andrew Sharp?

  An hour.

• 1:08:52Ben Thompson?

  And what is she not doing?

• 1:08:54Andrew Sharp?

  Watching Netflix.

• 1:08:55Ben Thompson?

  So Netflix is actually a casualty of AI because AI is pushing Meta to ramp up engagement to 100.

• 1:09:03Andrew Sharp?

  Engagement. That's interesting. I do buy that, honestly. Yeah. As the cost pressure uh, intensifies for some of these companies, Netflix is gonna have a harder time. I like it. Um, all right. Well, that's enough Meta. I'm sure we'll come back to Meta in the Google conference. We do a lot of Meta on the show. Um.

• 1:09:23Ben Thompson?

  Which by the way, it is a part because Mark Zuckerberg is in charge. So they're, they're more interesting in some respects than some of these other companies.

• 1:09:30Andrew Sharp?

  They are. Um, I mean, certainly over the last couple of years have been super interesting, uh, and I love Muse. Utkar says, I've been listening to Sharp Tech since the beginning. I was very surprised to hear the opinions of you and Ben saying that Anthropic should essentially be forced to offer its products to the US government, even if it doesn't agree with how it might be used.

• 1:09:50Ben Thompson?

  Okay, sorry.

• 1:09:51Andrew Sharp?

  I knew you were gonna jump in as soon as I finished reading that sentence.

• 1:09:56Andrew Sharp?

  What do you got for Utkar?

• 1:09:59Ben Thompson?

  For clarity, the point of the Anthropic versus DOW article is that in the fullness of time, if AI is as powerful as they say it is.

• 1:10:11Andrew Sharp?

  Yeah.

• 1:10:12Ben Thompson?

  They will ultimately have to deal with the entity that has a monopoly on violence.

• 1:10:19Andrew Sharp?

  Mm hmm.

• 1:10:20Ben Thompson?

  And that is a reality that people don't wanna think about and don't wanna be honest about, but need to be.

• 1:10:28Andrew Sharp?

  Right.

• 1:10:28Ben Thompson?

  And the point is, yeah, they can defy the US government. You can make the case that, oh wait, if the US government doesn't want it, they shouldn't buy it.

• 1:10:35Andrew Sharp?

  Mm hmm.

• 1:10:36Ben Thompson?

  The reality is.

• 1:10:38Andrew Sharp?

  If it's transformational and civilization altering.

• 1:10:43Ben Thompson?

  The government is gonna have their say.

• 1:10:44Andrew Sharp?

  Yeah.

• 1:10:45Ben Thompson?

  And they have the guns. So it's not that I think this is good. This wasn't a, a qualitative normative. I was gonna the normative one.

• 1:10:53Andrew Sharp?

  Yeah, you drop normative a lot. I've never really used the normative myself.

• 1:10:57Ben Thompson?

  I'm never not quite sure if I'm using it right. Uh, I'm not saying it's right or wrong. I'm saying it is what it is.

• 1:11:02Andrew Sharp?

  It was, and it was a very controversial stance. It's just one of those things that even at the time, it was like so obvious to me.

• 1:11:10Ben Thompson?

  But it was so annoying at the time.

• 1:11:11Andrew Sharp?

  To be mundane.

• 1:11:12Ben Thompson?

  So much pushback on this that you're advocating. So I'm not, I'm like, I'm not advocating.

• 1:11:16Andrew Sharp?

  Yeah.

• 1:11:16Ben Thompson?

  I'm stating what is gonna be a fact of life.

• 1:11:21Andrew Sharp?

  Right. Well, and there are, the public, private tension is not going away in a number of spheres. And so Utkar says, I personally agreed with Anthropic that AI shouldn't be used for mass surveillance or weapons targeting. So I sided with Anthropic as I thought they were doing the right thing.

• 1:11:40Ben Thompson?

  Again, this is, you're, Utkar, you're, you're, I'm not disputing your opinion on this matter, but your judgment is operating at a level that is not the level I was discussing.

• 1:11:55Andrew Sharp?

  Mm hmm.

• 1:11:55Ben Thompson?

  It wasn't whether this was right or wrong. That's a, that, that is an important debate to have, should AI be used for this? The debate that I was having was there's a higher order here.

• 1:12:09Andrew Sharp?

  Mm hmm.

• 1:12:09Ben Thompson?

  Which is you telling the US, you have access to this tool and we're gonna dictate to you what you can or cannot do. Number one, fairly insane on its face. Number two, if you fast forward, if the models increase like you say they will, become as powerful as you will, it's somewhat intolerable now. It will be completely intolerable just from, again, politics is violence without guns.

• 1:12:35Andrew Sharp?

  Yeah.

• 1:12:36Ben Thompson?

  Uh, wait, is that the way it goes?

• 1:12:37Andrew Sharp?

  Violence by other means?

• 1:12:39Ben Thompson?

  Yeah, something by that. I can't remember.

• 1:12:41Andrew Sharp?

  Um, well, yeah, it's funny. I mean, looking back at that, it, there was, there were so many insane opinions at the time about how the administration has just nuked the American AI system and, and the ecosystem and Anthropic.

• 1:12:56Ben Thompson?

  But dude, this was part of the problem is people were like, you're disagreeing with you, you, I wasn't arguing AI should be used for surveillance. I was saying that argument is immaterial.

• 1:13:07Andrew Sharp?

  Right.

• 1:13:07Ben Thompson?

  Uh, or, anyhow.

• 1:13:11Ben Thompson?

  Wait for another email in three months that says I said something different.

• 1:13:14Andrew Sharp?

  Well, I know. I think your piece aged well. I wrote something that also aged well, the end of the world as we know it. Uh, fast forward to last week, Utkar says, and the Wall Street Journal reported that Musk ordered the slowdown that blinded Ukraine. I don't know for sure if he acted a hundred percent unilaterally, but it is now clear to me that a private company should not be able to unilaterally decide the foreign policy of the United States, and in this case, basically the entire world, since it has no viable competitor. I'm wondering, based on this, have you changed your opinion on Starlink? I can't imagine anyone in Europe is happy about this, even if they can't really do anything about it in the short term. We have not talked about this, Ben.

• 1:13:58Ben Thompson?

  Sounds like you came around to say I was right all along. Sorry, Utkar. No, I feel bad. Geez, unbelievable. I'm a terrible person.

• 1:14:04Andrew Sharp?

  Uh, what do you, what's your reaction to what may or may not have happened with Starlink and Starshield and Ukraine and the Trump administration?

• 1:14:13Ben Thompson?

  So I don't know what happened with this.

• 1:14:16Andrew Sharp?

  Mm hmm.

• 1:14:17Ben Thompson?

  Uh, so.

• 1:14:19Andrew Sharp?

  Profoundly opaque, so dangerous to podcast about because we just don't know.

• 1:14:24Ben Thompson?

  As I understand it, so number one, I think something that is right about Starlink is there are two services.

• 1:14:32Andrew Sharp?

  Mm hmm.

• 1:14:32Ben Thompson?

  There's Starlink and there's Starshield.

• 1:14:35Andrew Sharp?

  Right.

• 1:14:35Ben Thompson?

  Starlink is a.

• 1:14:38Andrew Sharp?

  Public.

• 1:14:39Ben Thompson?

  Private, commercial, whatever, what do you wanna use? Yeah, open to the public, commercial offering. Starshield is a military offering.

• 1:14:46Andrew Sharp?

  Mm hmm.

• 1:14:46Ben Thompson?

  Starshield, as I understand it, the US military has total control over how it is used.

• 1:14:53Andrew Sharp?

  Right.

• 1:14:54Ben Thompson?

  Musk or anyone else cannot, will not, I'm not sure what the lines are, but at least where it to Musk, but I think, I would imagine is the case, dictate how that is used. I think that is a good division that makes sense. That is harkening back to the best ideas of like dual sourcing and like, we, we get mad at China for dual sourcing. I think there's a little bit of jealousy there. Dual sourcing is obviously good because you get volume from the consumer market. So you get a better product for the government and you get important capabilities for the government, right?

• 1:15:24Andrew Sharp?

  Um, the uh. And look, we do a bit of that here as well.

• 1:15:27Ben Thompson?

  Of course we do. I mean, the entire like arsenal of democracy, the whole World War II machine was just repurposed car factories were churning out planes.

• 1:15:35Andrew Sharp?

  Civil military fusion, sure.

• 1:15:37Ben Thompson?

  The whole problem we have right now in losing our industrial base is all, we don't have that capability. What are we, what do we switch to making all this military stuff? All our military contractors, they, because they only serve the US government, they end up, number one, the US government is stuck with these insane like entities that all they exist to is basically lobbying the US government.

• 1:15:58Andrew Sharp?

  Yeah.

• 1:15:58Ben Thompson?

  Right? But then also that you tend towards this uh, very low volume, very high cost weapon systems. It's because you're just serving one customer. It's like the subscription business. In the subscription business, you wanna maximize your revenue per user, because you don't have as many users. If you're selling to only the government, you wanna maximize your revenue per item because you only have one customer. If you're serving the entire market, then you make it up in volume.

• 1:16:24Andrew Sharp?

  Mm hmm.

• 1:16:25Ben Thompson?

  And so the, the, the future of war is, in my estimation, clearly things like drones, missiles, unmanned things, which is a volume plate. All of our defensive primes are not built around volume plates.

• 1:16:39Andrew Sharp?

  Yeah.

• 1:16:39Ben Thompson?

  The consumer market is how you get sufficient volume.

• 1:16:42Andrew Sharp?

  Do we need to fix the regulatory regime to enable the flowering of a domestic drone industry?

• 1:16:50Ben Thompson?

  Oh man.

• 1:16:50Andrew Sharp?

  For the sake of national security?

• 1:16:52Ben Thompson?

  Yes.

• 1:16:53Andrew Sharp?

  If we're, if we're going six dimensional chess.

• 1:16:56Ben Thompson?

  Yeah.

• 1:16:56Andrew Sharp?

  Maybe we do.

• 1:16:57Ben Thompson?

  No, actually from a military perspective, it is nuts that we don't have drone delivery.

• 1:17:01Andrew Sharp?

  Yeah.

• 1:17:01Ben Thompson?

  Though, how do you, yeah, like ban all foreign drones and completely legalize drone delivery across the US. You're gonna get your drone, you're gonna get your drone capabilities. That is actually the route to do it.

• 1:17:12Andrew Sharp?

  Yeah.

• 1:17:12Ben Thompson?

  Not to like, I mean, Andro is out there. It's like, oh, we're the new, new poster child. They're like, in many respects, they're just building like, if you wanna form a defense tech company, you have to go through us because we got into the Pentagon first.

• 1:17:22Andrew Sharp?

  Mm hmm.

• 1:17:22Ben Thompson?

  And by the way, if you talk to people in the Pentagon, they're like, yeah, the Anthropic stuff needs to actually work or the Andro stuff needs to actually work at some point. That's sort of the pushback there. Um, the actual, by the way, God bless Andro, like the, in the like Palantir, they were there when it wasn't cool, right?

• 1:17:36Andrew Sharp?

  Sure.

• 1:17:37Ben Thompson?

  And, but.

• 1:17:40Ben Thompson?

  What you need is volume. So yeah, it's a great take by you.

• 1:17:44Andrew Sharp?

  There you have it.

• 1:17:45Ben Thompson?

  Drone delivery tomorrow, US military dominance next week. So.

• 1:17:50Andrew Sharp?

  But the Ukraine affair, did it change your opinion in any way?

• 1:17:56Ben Thompson?

  This is where you don't know who decided what, right? As I understand it,

• 1:18:03Ben Thompson?

  the terms of service for Starlink define where it can be used, for sure. I know this on a couple of levels. So number one, you have to buy different levels of plans if you want. Like I have a Starlink on my roof for my house as backup.

• 1:18:17Andrew Sharp?

  Yep.

• 1:18:17Ben Thompson?

  That is a relatively lower rate because it's fixed. I also have a mobile Starlink that I take to Canada or I a couple of weeks go into a baseball game and set it up for the Brewers game at the same time.

• 1:18:30Ben Thompson?

  And that I pay more because it's mobile, it can be used everywhere. And this is just basic contractual terms of service things. They know, they have to know where the Starlink is. Cause it aims itself at the satellites, so they know where it is. And another example of this is there's no Starlink in Taiwan. Like I was talking to a buddy when I was telling him, oh, you should get it because he was like up on top of a mountain or something. The internet wasn't great, but Starlink's awesome. Nope, doesn't work in Taiwan. There's like.

• 1:18:57Andrew Sharp?

  Has Musk ever said why that is?

• 1:19:00Ben Thompson?

  As I understand it, it's the Taiwanese government that's the, that's the issue here.

• 1:19:03Andrew Sharp?

  Okay.

• 1:19:05Ben Thompson?

  But yeah, I think, but obviously it's a hairy situation.

• 1:19:09Andrew Sharp?

  Right, general. I have some questions.

• 1:19:10Ben Thompson?

  I think there's probably, well, this is actually a great example. Whose fault actually is it that there's no Starlink in Taiwan? It's in Musk's interest that the Taiwanese government be against Starlink so he doesn't make China mad, right? You get to Ukraine, the US doesn't want, as I understand it, Ukraine making attacks deep into Russian territory.

• 1:19:30Andrew Sharp?

  On oil refineries.

• 1:19:32Ben Thompson?

  Right.

• 1:19:32Andrew Sharp?

  Right.

• 1:19:33Ben Thompson?

  Right, pushing up the price of oil.

• 1:19:35Andrew Sharp?

  Mm hmm.

• 1:19:36Ben Thompson?

  Which Ukraine was doing using Starlink. So is there a, hey Elon, can you enforce the terms of service? Which Ukraine was violating, they're not on Starshield, they're on like, and it is balanced by the fact that Starlink has saved, like, it's a little rich to be mad at Elon now when Starlink saved Ukraine's rear end. Again, I don't want to get into the whole thing. This is why it's so murky. You could see who's pushing on who. At the end of the day, they are using a consumer service that a US company has no loyalty to. Like there's a lot of the world right now is just things that were

• 1:20:19Andrew Sharp?

  What do you mean a US company has no loyalty to?

• 1:20:23Ben Thompson?

  A US company has loyalty to the US government.

• 1:20:25Andrew Sharp?

  Yeah.

• 1:20:25Ben Thompson?

  They don't answer to the Ukrainian government. There's a little bit of presumptiveness.

• 1:20:30Andrew Sharp?

  Sure.

• 1:20:30Ben Thompson?

  Sort of embedded here. But again,

• 1:20:34Ben Thompson?

  we're not a political podcast.

• 1:20:34Andrew Sharp?

  Yeah, I mean, to me broadly speaking, it just is a good object lesson in why these public, private dynamics are potentially dangerous. In terms of what happened with Ukraine, my guess is that Musk was in pretty close alignment with the Trump administration and the United States government in terms of what buttons were being pushed when.

• 1:20:56Ben Thompson?

  My guess is the US government asked him to do it.

• 1:20:58Andrew Sharp?

  Sure.

• 1:20:58Ben Thompson?

  And he's like falling on the grenade to a certain extent. But.

• 1:21:03Andrew Sharp?

  But if it were a democratic administration.

• 1:21:06Ben Thompson?

  Here's the point to Lukash's overall point. We're talking about power.

• 1:21:11Andrew Sharp?

  Yeah.

• 1:21:11Ben Thompson?

  Like this is the whole thing.

• 1:21:15Ben Thompson?

  Who has power? Ukraine, at the end of the day, relative to the US government, or even relative to Starlink, does not have power. Once you grok, no pun intended, that we're talking about power dynamics, you get what I was going for with the Anthropic versus DOW article. It wasn't about legalism niceties. It wasn't about mass surveillance.

• 1:21:38Andrew Sharp?

  Yeah.

• 1:21:38Ben Thompson?

  It was about who, at the end of the day, has power. And if Anthropic keeps saying and insisting, perhaps accurately, we are accruing power to an extent that rivals nation states, the nation states are going to have a say in it.

• 1:21:54Andrew Sharp?

  Absolutely. And if Anthropic's not going to jump, or not going to say how high, when the government says jump, then the government is going to investigate other options and ensure that its suppliers are not relying on Anthropic. It is going to continue to be an issue though, because particularly as everything becomes increasingly polarized, the questions get awful thorny. But in any event, we've come too long. There were two segments that you demanded that we do on the podcast. So.

• 1:22:27Ben Thompson?

  This is unbelievable. We're an hour and a half in.

• 1:22:31Ben Thompson?

  I wanted.

• 1:22:31Andrew Sharp?

  No, no, no. First of all, we had a little interruption about 10 minutes in, so we have an extra five to seven minutes here.

• 1:22:39Andrew Sharp?

  Text message that you sent me 30 minutes before recording was you looked at the rundown and you said, why no, you can see everything segment with multiple question marks? So.

• 1:22:51Ben Thompson?

  What else did I say?

• 1:22:54Andrew Sharp?

  I think you said you're terrified of my takes or something to that effect.

• 1:22:58Ben Thompson?

  You're trying to muzzle me.

• 1:22:59Andrew Sharp?

  Trying to muzzle you. I don't want to muzzle you. All right? So what do you have for me? You went to see You Can See Everything because of the World Series. You saw it at 10 AM, I believe, last Saturday.

• 1:23:10Ben Thompson?

  More than that, because of the World Series, I promised my daughter, who was very jealous of me and my son going, you know, might've gotten a few other games in this run. I said, if they make the World Series, I'll fly you up to go to a World Series game. Didn't know what I was getting into.

• 1:23:25Andrew Sharp?

  But yet you were a dad of your word.

• 1:23:27Ben Thompson?

  That's right.

• 1:23:29Ben Thompson?

  And so she came up and was insistent that I see it. She wanted to see it again. Turns out, yeah, the local theater had added an extra run at like 10:00 in the morning.

• 1:23:40Andrew Sharp?

  Yeah.

• 1:23:40Ben Thompson?

  So we get to it, then make a way, did a full tailgate, the weather was beautiful. Parking lots were open.

• 1:23:47Andrew Sharp?

  For a second, I thought you tailgated the movie. Great. I'm glad you got out of the movie in time for a tailgate.

• 1:23:55Ben Thompson?

  You Can See Everything is the Zootopia of documentaries.

• 1:24:00Andrew Sharp?

  So

• 1:24:03Andrew Sharp?

  people may not have context, you were not really a fan of Zootopia.

• 1:24:06Ben Thompson?

  Zootopia is a very entertaining, very well done movie.

• 1:24:11Andrew Sharp?

  Okay.

• 1:24:12Ben Thompson?

  That is insane.

• 1:24:15Ben Thompson?

  The premise of the movie, this is an old Sharp Tech segment, but the premise, because you're like, have you seen K-pop Demon Hunters yet?

• 1:24:23Andrew Sharp?

  I.

• 1:24:23Ben Thompson?

  Which you have to do that I can see you everything.

• 1:24:25Andrew Sharp?

  That was the deal that we brokered on the last show. And I almost went to see K-pop Demon Hunters. I almost sat down with Netflix and I was like, can't fucking do this.

• 1:24:34Ben Thompson?

  No, you have to do it.

• 1:24:36Andrew Sharp?

  At some point I'll do it. But at one point, I did say the only cartoon movie that I've enjoyed was Zootopia. Then Ben proceeded to break down why it's just a completely ridiculous portrait of society.

• 1:24:49Ben Thompson?

  It's not ridiculous, it's actively dangerous.

• 1:24:52Andrew Sharp?

  For me, so.

• 1:24:53Ben Thompson?

  The premise of Zootopia is that animals whose nature, instinct, because they're carnivores, is to eat other animals are bad.

• 1:25:03Andrew Sharp?

  Are benign.

• 1:25:05Ben Thompson?

  No, it was saying that they're bad. The bad actors were the ones that were like wanted to eat other animals.

• 1:25:12Andrew Sharp?

  Okay.

• 1:25:13Ben Thompson?

  It was saying that the fundamental intrinsic nature made them evil. And that they should just magically change their digestive system, everything about them, to live happily ever after. It's an insane.

• 1:25:28Andrew Sharp?

  Coexistence with other animals in the animal city. Yeah, man.

• 1:25:31Ben Thompson?

  Extrapolate the meaning of this broadly, it's an insane view of the world that we're somehow mainlining to our kids.

• 1:25:38Andrew Sharp?

  Okay.

• 1:25:38Ben Thompson?

  Terrible movie. Very well done, terrible movie.

• 1:25:42Andrew Sharp?

  And you know what? I'm not arguing with you on that point. When I watch it through that lens, it is very kind of frustrating.

• 1:25:50Ben Thompson?

  You can see everything.

• 1:25:53Andrew Sharp?

  It's blank slatism from Zootopia.

• 1:25:56Ben Thompson?

  Somehow, somehow, if you don't know anything, leaves you sympathetic to Elizabeth Holmes, this poor, well-meaning little girl being taken advantage of.

• 1:26:12Andrew Sharp?

  By the men in her life, Ben, absolutely.

• 1:26:15Ben Thompson?

  Elizabeth Holmes is a psychopath.

• 1:26:17Andrew Sharp?

  Okay.

• 1:26:18Ben Thompson?

  She is a liar, she whistleblower, abuser. The, she has been in these relationships before with Sunny Balwani, which again, was framed by some as he taking advantage of her. When you see this, what happened with this Billy, I don't know anything about Billy Evans guy, whatever it is.

• 1:26:39Andrew Sharp?

  Okay.

• 1:26:39Ben Thompson?

  It sounds a lot like this relationship. It made me rethink actually what I knew about Theranos. In that she consistently finds men that she can manipulate to basically

• 1:26:53Ben Thompson?

  do the cover for her to play act at being a scientist. And live in this mystical reality that has no connection to the real world. And.

• 1:27:04Andrew Sharp?

  You're not buying in on Theranos 2? Theranos 2.0?

• 1:27:07Ben Thompson?

  That was, it was. Hearing her talk about the movie is like, holy cow, she has no idea what she's talking about.

• 1:27:14Andrew Sharp?

  This lady's crazy.

• 1:27:16Ben Thompson?

  So somehow this movie, like, what was like the big whine where the whole theater gasped?

• 1:27:22Andrew Sharp?

  Ooh, I don't know. I think there were a couple.

• 1:27:24Ben Thompson?

  Well, there's a couple, but some of them, one of them was that she signed over power of attorney.

• 1:27:31Andrew Sharp?

  Okay, yes.

• 1:27:32Ben Thompson?

  It was like, oh my God. And like, that was like a point about what a manipulative guy he is. Turns out, what do you do if you're going to prison and your spouse is taking care of your kids?

• 1:27:43Andrew Sharp?

  You probably should sign power of attorney.

• 1:27:45Ben Thompson?

  Totally standard, totally normal, because guess what? You're in prison.

• 1:27:54Andrew Sharp?

  Gonna blow out the studio's mics, second episode ever.

• 1:27:59Ben Thompson?

  So it's unbelievably well done. It's well done because if you don't know what it is about going in, you 100%, he convinces you.

• 1:28:08Andrew Sharp?

  Yeah.

• 1:28:09Ben Thompson?

  So the craft, just like Zootopia, is amazing. And the premise is nuts.

• 1:28:16Andrew Sharp?

  So it is enervating for you to sit there having known more about the backstory and see it portrayed that way.

• 1:28:24Ben Thompson?

  Yes.

• 1:28:24Andrew Sharp?

  Okay.

• 1:28:25Ben Thompson?

  Absolutely insane.

• 1:28:26Andrew Sharp?

  So did you enjoy yourself across the three hours at the Cineplex?

• 1:28:32Ben Thompson?

  I mean.

• 1:28:33Andrew Sharp?

  I like that I have no blood on my hands because this was your daughter forcing you to go to the movie. I was very confident that you were not going to see it for like three years after our conversation. What did you think on a scale of one to 10? Just the experience of it.

• 1:28:51Ben Thompson?

  First part was, it definitely got, you know, better. Once you went to prison, it got better.

• 1:28:55Andrew Sharp?

  Okay.

• 1:28:55Ben Thompson?

  Like.

• 1:28:56Andrew Sharp?

  Turns into a different movie at that point, yes.

• 1:28:58Ben Thompson?

  It does.

• 1:29:04Andrew Sharp?

  I love the pregnant pauses.

• 1:29:07Ben Thompson?

  I can't decide.

• 1:29:07Andrew Sharp?

  Not really a movie guy, so I was, I felt a little guilty like subjecting this guy to three hours in a theater. Well, I think as a sort of postmodern commentary on media and truth, that's the only way you can embrace the movie as a success. As a documentary, because of the holes that you just highlighted, it is like almost insulting.

• 1:29:36Ben Thompson?

  Well, it is all sorts of like crazy things, like the, um, there is a well-known conservative figure who was assassinated is a, uh, that's one of the other lines in the movie where the whole theater is like.

• 1:29:50Andrew Sharp?

  A gasp, for sure.

• 1:29:51Ben Thompson?

  So I'm in Madison, Wisconsin, uh, which is like very progressive, uh, I'd say the least. And the reaction to the theater was, ah, the gotcha moment. That means Billy Evans is a bad guy. So I went back and looked up, what was he referring to?

• 1:30:08Andrew Sharp?

  Okay.

• 1:30:10Ben Thompson?

  The whole thing at the time, a guy got shot in the neck.

• 1:30:14Andrew Sharp?

  Oh, wow.

• 1:30:16Ben Thompson?

  She's happy about it.

• 1:30:17Andrew Sharp?

  That week.

• 1:30:18Ben Thompson?

  Right?

• 1:30:18Andrew Sharp?

  Wow.

• 1:30:19Ben Thompson?

  So I thought that was fascinating. So it was fascinating not in a, and this is me putting your shoe on, I'm not making a commentary on that point, rather the fact that that was arguably the peak of the movie was itself a meta on top of meta commentary, because that specific event and the reactions to it was the ultimate societal divide.

• 1:30:42Andrew Sharp?

  Yeah.

• 1:30:43Ben Thompson?

  One side is like, one side is like.

• 1:30:45Andrew Sharp?

  Very specific to that time period. I didn't even connect those dots.

• 1:30:47Ben Thompson?

  A guy got shot. One side's like, he was a racist. I was like, what does that have to do with him getting shot? Like, it was just a fundamental divide in how you see the world. That specific episode and the way it's played out as shorthand since then.

• 1:31:03Andrew Sharp?

  Yeah.

• 1:31:03Ben Thompson?

  The fact that that was the like climax of the movie is like, to your point, building on why you liked the movie, it was an even like higher meta level on top of all the levels of meta that were going on in the movie.

• 1:31:17Andrew Sharp?

  There were about eight different meta layers at play throughout that movie. I think it should win best picture, but again, not on Elizabeth Holmes documentary. Definitely not how it should be understood by the mainstream.

• 1:31:31Ben Thompson?

  Zootopia.

• 1:31:32Andrew Sharp?

  I'm just glad that we got you out to the theater, man. Um, once in a blue moon, we will see you at the Cineplex. All right. Now we have come far enough, talk World Series. Can I begin as a, as a friend of yours? The fact that the Brewers won this series, uh, is just endlessly delightful to me as your friend, because I've watched you sink into this baseball obsession over the last several years here, where like you will watch basically every Brewers game throughout 162 games and I'll joke with you like, wow, you're really a Brewers diehard. And over the last couple of years, I swear to God, we've had like five different conversations

• 1:32:17Andrew Sharp?

  where you've been like, I'm in it for the journey. We're never actually going to win a World Series. That's not what it's about for me. It's about summer evenings, watching my team every night. The rhythm of it is what I've come to love. I've accepted that we're never going to compete with the big markets. And now here we are, a World Series champion sitting across from me. I just love to see it, man.

• 1:32:43Ben Thompson?

  You just took my whole segment.

• 1:32:45Andrew Sharp?

  Oh, really?

• 1:32:47Andrew Sharp?

  I'm sorry.

• 1:32:50Ben Thompson?

  No, it's, it's, it's true. Like there's the whole thing about, you know, uh, how can you not be romantic about baseball?

• 1:32:55Andrew Sharp?

  Yeah.

• 1:32:55Ben Thompson?

  Baseball is a metaphor for life. And, um, yeah, that was the thing.

• 1:32:59Andrew Sharp?

  You're getting emotional now.

• 1:33:01Ben Thompson?

  I'm getting emotional right now. No, I'd given up because it did seem inevitable. Like it's different, like something about basketball is different. You like, basketball is very binary. You know.

• 1:33:11Andrew Sharp?

  One player can make a difference.

• 1:33:12Ben Thompson?

  That's right. And so you have to be honest, the pressure's insane, like we have to win it, but you 100% know you have a chance to win it.

• 1:33:18Andrew Sharp?

  Mm-hmm.

• 1:33:18Ben Thompson?

  With the Brewers, like, oh, you get to the postseason, you have to hit homers or the most expensive guys. We're never going to have those guys because we're a small market.

• 1:33:25Andrew Sharp?

  It's, the, the sport is not set up for a team like the Brewers to win.

• 1:33:29Ben Thompson?

  That's right. That's right. And, and so, but, so you had to, to enjoy it. Otherwise the, what's the problem with like the late Yanis years? It's like, it's all or nothing.

• 1:33:40Andrew Sharp?

  There's a 10% chance that this could work.

• 1:33:42Ben Thompson?

  Right. And, and it just makes, almost makes it less enjoyable. Like the whole path of a basketball team, the early years are the best because there's no expectations. And then like, it's almost less fun when they're winning because it's like so intense.

• 1:33:54Andrew Sharp?

  Cause it's a grind.

• 1:33:55Ben Thompson?

  And then once you get over the hump, it's like, can we get back? And it's just, it's miserable. The last few years of a dynasty are like kind of miserable to cheer for. It was different with the Brewers and with baseball in that, how, it is like a life lesson. How do you avoid like nihilism about the whole thing?

• 1:34:13Andrew Sharp?

  Mm-hmm.

• 1:34:14Ben Thompson?

  And what it really is about is embrace the journey, enjoy the journey, like enjoy the summer nights.

• 1:34:24Ben Thompson?

  And it's okay. Little tournament at the end of the year, it doesn't really matter.

• 1:34:30Andrew Sharp?

  Yeah.

• 1:34:30Ben Thompson?

  Um, and so the great thing about this is it was a weird reaction when they won. Like when the Bucks won, I was like in tears, like middle hit that shot.

• 1:34:38Andrew Sharp?

  I was in tears as a Yanis guy, yeah.

• 1:34:39Ben Thompson?

  And here I was almost like, didn't feel anything in part because I like cauterized

• 1:34:45Ben Thompson?

  the postseason in my heart to such an extent that even winning, I could barely feel anything. But it was like, um, it was great. It was like a really pleasant thing that happened to me. I am, whenever I'm getting emotional.

• 1:35:00Ben Thompson?

  And that's the beautiful thing is I did get the best of both worlds. I enjoyed this, this whole season without thinking we were going to win the whole time. And then they won. And like, what, what, what a better way to live. Like being seen so, so anchored on an outcome.

• 1:35:15Andrew Sharp?

  You were not anchored on, oh, can they, can they do it this year? Cause you knew the, I love that you're actually crying.

• 1:35:23Andrew Sharp?

  Let's break this video out. No, but I, it like, rather than spending July and August and September obsessing over that question, you had answered that question. The answer was no.

• 1:35:37Ben Thompson?

  That's right. No, I'd answer that question that it doesn't, it, it, it doesn't, what happens at the end is not going to impact me right now.

• 1:35:44Andrew Sharp?

  Mm-hmm.

• 1:35:45Ben Thompson?

  We'll get to the end when we get to the end. And you think about it with AI, you think about like everyone worried about, people are like depressing themselves about the future that is unknown.

• 1:35:56Andrew Sharp?

  Yeah.

• 1:35:57Ben Thompson?

  We're having debates about it. How about you enjoy life right now? How about you live your life instead of always thinking in the future or thinking in the past, live in the present, be nice to people around you, learn new things, explore new things, figure out the future when it gets there. And the reason is that number one, you don't have control. This is the thing about sports. The worst thing about being emotionally invested in sports is you have no control.

• 1:36:24Andrew Sharp?

  Yeah.

• 1:36:25Ben Thompson?

  All you have control over is yourself.

• 1:36:27Andrew Sharp?

  I have no control over the fucking Wizards, too.

• 1:36:31Ben Thompson?

  You have control that.

• 1:36:32Andrew Sharp?

  Agonizing.

• 1:36:34Ben Thompson?

  But, but that is why, if this isn't just great for sports, it's great for life, but live in the moment.

• 1:36:41Andrew Sharp?

  Yeah.

• 1:36:41Ben Thompson?

  I enjoyed every game of the Brewers this season. It was an awesome season. People online or on Twitter, always the throwback, you know, from the Cubs fans in particular, like, you know, you could just lose the postseason. It's like, yeah, we probably will.

• 1:36:54Andrew Sharp?

  Mm-hmm.

• 1:36:54Ben Thompson?

  And, you know, that's fine. And then we get here, we also won. I get to enjoy, I get a double dip. I had a great season, had a great playoffs. Brewers are world champions.

• 1:37:05Andrew Sharp?

  You're going to a great parade on Friday afternoon, you know? And look, the Brewers, all kinds of fantastic merch for you to spend money on.

• 1:37:13Ben Thompson?

  Oh, that's logo in sports.

• 1:37:15Andrew Sharp?

  It's really great. So on that cheerful note, we will head into the weekend, then we'll head to Milwaukee for the parade. What a weekend it shall be.

• 1:37:25Ben Thompson?

  We will first record our subscriber only mailbag.

• 1:37:28Andrew Sharp?

  That's right. And we have some mail that we're going to be rolling over to the subscriber mailbag. So we do need to talk about the duo disaster, um, and we'll save that for Sunday. But email at sharp tech dot, well, maybe it's, look, subjective, maybe it's not a disaster. I've seen a lot of complaints out there. For now, email at sharp tech.fm is the email address. Ben, I will talk to you soon.

• 1:37:53Ben Thompson?

  Talk to you later.