It would be VERY BAD if we gave politicians arbitrary veto power over who IPOs and who doesn't. The threat of corruption should be obvious.
I'm not even going to say it is a bad investment, it might be a once in a lifetime opportunity. But if the current public information isn't enough to dissuade a buyer then that investor is sophisticated enough that they can wait 2 more quarters after the IPO before buying.
For sure it's not a lifetime opportunity for a regular guy. I expect it to have a similar dynamics as Uber after IPO.
All that's really happening is that they're borrowing from a source of debt that's completely off the books: software quality debt.
That is the steel wall they are set up slam into at 100mph. Just because tech debt isn't on the books doesn't mean it isn't a force that can halt growth.
It'd be like if we passed 1 million new laws to regulate commerce. That's good for business right? The only thing better would be ten million new regulations
Can you be more specific? Are we talking about technical debt that Anthropic itself took on, or that its customers took on?
At normal startups, tech debt slams the brakes on product growth, but it takes a lot of years for it to happen. At Anthropic, they’re speed running tech debt, but they also have AI to help them navigate it. Will it be a problem? Don’t know, looking forward to finding out.
I plan to invest a (relatively small) amount of money in Anthropic's IPO. The amount of money I plan to invest is so small (around 1–2% of my total portfolio), the downside is minimal – if it crashes to zero, I've lost 1–2%. I don't see how this is "irrational" for me to do–if I want to do it, the risk is something I'm aware of and can handle. I don't think two quarters of financial results is going to change anything, because I'm doing it based on vibes, not based on stock fundamental analysis.
And..
> because I'm doing it based on vibes, not based on stock fundamental analysis.
So it seems that you do agree that you're not acting rationally, but you're okay with that as its contained.
The thing is: if enough people do what you're planning to do, the market is basically broken. Early investors will be getting back healthy returns, based on making ludicrous investments in a very risky business that still hasn't been validated at all. Basically a Ponzi scheme.
With more data, analysts might be able to raise more severe warning flags, that might deter people like you from investing.
Or Anthropic might actually take over the entire economy, and holding its stock might be the only worthwhile economic activity left for us, mere humans. :-)
Ponzi scheme is a type of fraud in which the fraudster misrepresents whats happening with your money. Investments in stock market or crypto happen with knowledge of the risks and people buy and sell them freely. Maybe they feel similar to you because a Ponzi scheme is pretending to be an investment, which is the fraud part.
No, I don’t agree I’m “not acting rationally”. How do you define “rationality”?
And rationality is defined as the opposite of whatever is doing things "on vibes" is. You said it yourself, you are going with the vibes on your investment instead of reasoning and logic. And with so little information as there is about Anthropic's IPO reasoning and logic to invest are hard to come by.
Have you ever heard the story of Buridan's ass? A perfectly rational donkey placed precisely midway between two bales of hay; it has no logical reason to prefer one to the other, so instead of picking one, it starves to death. That donkey was irrational, not through lack of logic, but through having too much of it. The donkey who picks which bale of hay to eat first based on vibes is more rational than the donkey which completely rejects vibe-based decision making.
I bought US$350 of stock in some random Australian microcap because my dad worked there in the 1980s. Worst case scenario I lose US$350. And I get to have some fun conversations with my dad. What’s irrational about that?
First time?
Then the investor can invest in something else if it doesn't have enough information about Anthropic to invest in it.
And if bubble pops only after, we get exactly situation VC want - they get reward while everyone else eats the losses they caused.
Now bailing out somebody who over-invested in Nvidia but also holds the world's retirement savings... now that's something I can believe.
> Notably, the Financial Crisis Inquiry Commission (FCIC), tasked by Congress with investigating the causes of the financial crisis, cited moral hazard as a component of the crisis, arguing that many factors, including deregulation in the derivatives market in 2000, reduced federal oversight, and the potential for government bailout of "too big to fail" institutions all played a role in increasing moral hazard in the years leading up to the collapse.
https://en.wikipedia.org/wiki/Moral_hazard#Connection_to_the...
Didnt the US govt cause the crisis by refusing to regulate derivatives because their donors didnt want it to be regulated.
The actual problem wasn't really regulatory, it was that they made a change to a complex system and nobody noticed what the implications were until it was already a Problem.
What happened was, mortgages were always considered safe loans, because if the borrower defaults then you repossess the house and sell it to recover the principal. Meanwhile banks would only make loans to people with good credit, because even if you can repossess the house, doesn't mean you want the trouble. So if you looked at the past, holding mortgages was a good investment.
Then they started allowing the banks to sell the mortgages to investors and for the investors to buy insurance against defaults. Which is fine if the investors/insurers are doing their homework and buying loans that are going to be paid back, but mortgages were considered safe, so they were basically not paying attention. There was a thing where they had some bundles of mortgages rated as AAA when they shouldn't have been, but that was more of a scapegoat for the institutional investors who should have known better to blame somebody else after things started going south.
The actual cause was this: Once the banks started selling mortgages to investors, they no longer cared if the borrower would pay it back, because now that's the investor's problem -- and the investors weren't paying attention. Meanwhile as soon as the bank sells the mortgage, they have the principal back from the investor and can go loan it out again and then sell that mortgage. And while this is happening the government is encouraging it because look at all of these new home owners. So now you have the banks giving mortgages to everybody regardless of creditworthiness, and that's what really caused it.
Because doing that creates a housing bubble, as all the people who can't actually afford a house can now bid up the prices by taking out a loan they won't be able to pay back. And the housing bubble in turn invalidates the assumption that if the borrower defaults you can recover the principal by repossessing the house, because now when the bubble pops, people end up underwater on their mortgages. The value of the house crashes and is now less than the loan principal. So when those borrowers start to default, the investors holding those mortgages and the insurers insuring them were lined up to get smashed. Oops.
Mortgages were given to people with no documentation allowed people to lie about their income and get loans they couldn't afford. That was alright because they had low introductory rates/payments they could afford. The market was getting more expensive and you could refinance to a better loan when you're LTV was more favorable before the balloon payments hit.
Those were the loans that were rated AAA.
Once the market growth slowed just enough to not allow the refinancing before the balloon payments, the defaults started, at first slowly then all at once.
If you're going to make a point of it then don't leave out the part about how it happened.
What they were doing was, they'd take a block of subprime mortgages and split them up into tiers. Basically they'd agree to wait to see who defaulted and then the top tiers would get all the mortgages people actually paid back and the bottom tiers got the ones they didn't. If 10% of the mortgages defaulted then anyone who bought at the 10th percentile tier gets all the defaults and everybody else gets paid. If 20% of them defaulted then the ones who bought the 20th percentile tier lose too, but the 30th percentile tier still gets paid.
The highest tiers were rated AAA, because for them to lose you'd have to have preposterously high default rates.
Then we started seeing preposterously high default rates.
Although I'm sure this is mostly predicated on my political bias, I'm also reasonably confident that your analysis is as well. I'm not sure you're as aware of it though
Still... something strikes me as just... well... morally wrong about that.
(sarcasm marker, because there really are people who think like that)
Acting like the only people who had these loan obligations were actively doing something wrong is a total myth.
Meanwhile Wells Fargo, who gave loans to dead people to meet quotas, was made whole and then fined a few token dollars.
The people who defaulted on their mortgages did so because they couldn't afford them. The reason they got a loan that they couldn't afford was because they lied about either their income or their debts while getting the no-doc loans.
The failures in process that led yo the industry allowing people to lie to them without verification is another part of the story but it's completely dishonest to act like the people getting the loans they defaulted on had no agency.
No, they were offered loans at incredibly low rates that would be unaffordable if they rose at all. A large part of the scandal was about how the banks were offering loans to people that couldn't really afford them not that people were lying to get those loans.
People forget why the retail banks were bailed out: because they're an essential service that is used on a daily basis! Imagine if you woke up one day and heard that Amazon was bankrupt, and therefore all AWS storage was going to be offline for 30+ days, and if a buyer could not be found the hard disks would be sold off at auction with no opportunity to retrieve your data.
(a much smaller version of that happened: https://news.ycombinator.com/item?id=49285418 )
And, yes, from this we can infer which tech companies are "too big to fail" and therefore would be bailed out if ever at risk of imminent bankruptcy and shutdown: the cloud companies. AWS, Google, Microsoft, and probably Cloudflare as well.
The Intel "bailout" was more like the General Motors one, good old fashioned manufacturing protectionism.
Americans should also note that almost all other countries with bank failures had comparable bailouts. A few exceptions: Iceland (failure of Kaupthing forced the UK government to bail out some local authorities who were banking with them!), and Cyprus ("bail in" with loss of money in high value accounts, basically because the EU deemed the country to be too deep in dodgy foreign money to be worth saving).
Destruction isn't the opposite of bail out, it's just destruction. The government is obligated to do what society wants. From this destruction would come creation by freeing up capital to do more productive things than waste money chasing fantasy rather than providing free school lunches or free university instead (you know the actual things that would generate economic value).
Not how the rule of law works!
Literally nobody said this.
Let's not act like the VC world is against creative destruction when it comes to enriching themselves, there's no reason why the public can't destroy things to benefit society either.
Everyone gets audited financials before the De-SPAC process occurs.
Like I would ban controlling share classes. I guess there could be an exception if they had an aggressive conversion provision that turned them into normal shares as the company grew.
You also omit an important constituency in your formulation. Corporations are extended limited liability with the idea that it will benefit the public. The government absolutely should be taking steps to ensure that this is true.
Any reason why? To be honest, they never sit well with me either, but not sure what my argument would be for banning them. All investors are well aware of what they're putting their money into.
Otherwise you're subsidizing oligarchs by cutting investors off from kicking the board the next week if/after it's caught acting against the share holders.
"Founded to help our country respond to the Great Depression, we’re the agency that protects investors from misconduct, promotes fairness & efficiency in the securities markets, and facilitates capital formation for those looking to hire, innovate, and grow."
It's an IPO, the P is public. The information needs to be consumable by the public. The level of knowledge that can be expected of a random IPO stock buyer isn't the same as that of a VC or private fund.
And that's exactly where the SEC comes in. The 1930s went wrong enough, no point in doing a 2030s repeat.
Public-stock buyer or IPO buyer? The latter tend to be sophisticated.
I absolutely agree. But it's entirely irrelevant, because there's no "must be this (hand gesture) sophisticated to buy IPO stock" rule.
Legally, no. Practically, all underwriters have account minimums and tenure requirements. The only exception is direct listings.
I'd wager that the 95th percentile, and maybe the 99th percentile anthropic IPO participant, by volume, is a more sophisticated stock evaluator than either you or me.
The only way to respond to that is to let them crash but then you have an even bigger problem: OpenAI will have an actual monopoly on frontier models in the West.
Are we to believe the only reason they aren't making a profit is because of competitive pressure? Why would I believe they don't have the same structural issues as Anthropic? That should certainly be the base case assumption even if there wasn't so much evidence of the same kinds of deals and problems.
They have to raise prices and lower expenses or there's no advantage to being a monopoly. I don't think corporate customers will pay higher prices and I see no evidence that they're actually capable of lowering expenses.
They're welcome to stop training anytime and show us how efficient it is to do inference only.
And that you couldn't subsequently do antitrust against OpenAI.
> “Run-Rate Revenue” is an operating metric that refers to the estimated annualized value of our revenue-generating activity as of a measurement date, calculated as the sum of (i) our consumption-based fees during the trailing 28-day period ended on the measurement date, multiplied by 13, and (ii) our aggregate monthly subscription fees as of the measurement date, multiplied by 12. For purposes of calculating Run-Rate Revenue, consumption-based fees and subscription-based fees are derived from customer usage and active subscriptions.
> trailing 28 days multiplied by 13
I’m not aware of a year that has 13 months of 28 days? Why would you ever calculate it this way?
If day of the week is important you get more consistent results this way.
I don’t have a particular point of view on this but the people acting like this is weird or some big deal have clearly never spent much time with financial filings. There are much weirder scheduling things than this. Some companies split their reporting quarters up in unbalanced ways for instance.
If they make, say, 10x more on weekdays than weekends, using a 30 day month with two extra weekdays overestimates annual revenue since it translates to a year with 264 weekdays as opposed to 260.
That's about a 1.5% increase.
Footnotes are not some minor FYIs. In financial literature, they’re just a formatting choice. They’re fully part of the document.
Adjusted revenue figures are reported all the time for many different reasons, there is absolutely nothing special about this and I've not heard ANY financial analyst explain why GAAP is a better number here. You are salivating over a total nothing-burger.
Also, if you didn't hear, their Q3 results were spectacular and were included in an amendment today.
I'm not an Anthropic fan-boy and I won't be buying their offering but you've picked just about the two least relevant things in this offering to complain about.
The reasons to be skeptical of this offering is what is described in the TFA: Anthropic is committed to spending 900 billion on compute over the next decade and if they can only profitably employ 80% of that it will utterly ruin them. Dario is putting all the chips on number 12. If he is right though - and inference usage explode by 1000x Anthropic has so much scarce compute locked up that they will do very, very well.
People will learn risk-aversion vicariously, or end up living with the consequences of an inflated hubris. =3
Not that I think that applies here, just that they go beyond making sure everything has accurate filing and disclosure etc. and do have some mandate to look into the business models themselves in some cases.
I point to the pandemic response as a recent example of where the government completely failed to inform the public of what was going on, what was known, and what was unknown.
> gave politicians arbitrary veto power
:-) That ship has sailed for USA (at least for the time being and its trailing smoke is visible from far away)
Gensler spent his entire time at the SEC doing exactly that type of adjudication.
Wasn't his war against SPACs' limited financial disclosures and conflicts of interests, i.e. the way companies went public, versus against any issuer per se?
Not clear to what this sentence refers
Is it suggesting the government agency in charge of approving regsitration statements is comprised of "politicans" with "arbitrary veto power"
That would be false
Is it suggesting that the submission argues for changing the laws of the United States to give "politicians arbitrary veto power over who IPOs and who doesn't"
That would also be false
Is it some sort of "straw man" argument
The comment (reply) seems to be arguing the same thing as the submmission. The reply argues the SEC's role is to ensure "adequate visibility". The submission argues the SEC should take an active role in ensuring such visibility with respect to Anthropic's registration
If one wants to argue against the crux of submission,^1 then this is not difficult. But that's not what this sentence is doing
1. That Anthropic's registration statement is materially deficient, i.e., incomplete or inaccurate. He cites 15 USC 77h{b) but he doesn't indicate where Anthripic's statement falls short of meeting 77g and 77aa. As I understand it, the remedies in 77h were initially created in response to fraud in sale of penny stocks and the registration of "blank check companies"
Further, 77h doesn't determine "who IPOs and who doesn't". It determines _when_ a company can "IPO", i.e., only after filing a complete and accurate registration statement. Nothing stops Anthropic from filing an amended statement. The IPO is only "blocked" temporarily; it's delayed
That's VERY GOOD.
Right? Right.
Then they’ll take your money and piss it away because A) it doesn’t belong to bureaucrats; so they’re spendthrift
B) bureaucrats are not gonna use what they buy; so it’s shit