00:00I think with Anthropic, you know, that they're just kind of looking for as much detail as they can get
00:05about the kind of revenue model, the momentum behind it.
00:09Obviously, we've been hearing data points recently that, you know, we're kind of back end of last year,
00:14then maybe the annualized revenue run rate was around the kind of $10 billion market could be closer to $50
00:20billion by the end of the year.
00:21And where they are on that pathway and what the economics of the business look like.
00:28Yes, it's similar to SpaceX, you know, you just kind of live off breadcrumbs and suddenly you get a big
00:34download of data that kind of really helps you to understand the business model more.
00:38Matthew, we characterize OpenAI and Anthropic as being in a race, but is it actually like that?
00:45If you have Anthropic going public before OpenAI, does that mean there's less demand for OpenAI's IPO?
00:51Yeah, you know, I think it's definitely right to characterize this as a race, regardless of what the companies might
00:57say.
00:57Yeah, you know, these are huge numbers that companies are raising and we don't know yet how much either of
01:03these companies will look to raise.
01:04But, you know, if SpaceX is looking to raise $75 billion and Google's out there looking to raise $80 billion,
01:10it's going to be in the tens of billions of dollars.
01:12And there's only so much capital out there.
01:15And so, you know, I think it's definitely better to go earlier than later.
01:21Yeah, because if you go later, you're at risk that either the capital flow has dried up or that those
01:28IPOs that went before you didn't go so well or the market's taken a bit of a turn.
01:32And so you're kind of left, you know, maybe either having to accept a lower valuation or a small amount
01:38of money.
01:39So I think going sooner is always better than going later when you're raising money.
01:45I'm an old EV to EBITDA guy.
01:47Maybe I'll go a little price to free cash flow, but I don't know how you're going to value these
01:51AI stories.
01:53Do you think the market is going to be valuation sensitive at all or is it just you take what
01:59you get?
02:02I think it's a little bit of both, but I mean, yeah, you know, I mean, what have we got
02:06to play with?
02:06Nothing really more than EV to sales.
02:10And they're pretty eye-watering multiples, even on that kind of forward multiple trillion dollars.
02:16Anthropik's going to be on about 20 times sales.
02:18So, you know, you are having to extrapolate many years out to kind of reconcile that with an EBITDA multiple
02:28or an earnings multiple.
02:30And there's clearly a huge number of assumptions you're having to put in to get to those kind of forward
02:35estimations.
02:36So, yeah, it's a kind of a moonshot trade really, isn't it?
02:41So that, you know, you're kind of buying into the fact that in some way, shape or form, these companies
02:46that are coming to market are going to be the foundational businesses of the next 30, 40, 50 years of
02:53technology.
02:54And, yeah, you know, it's going to work out eventually for you.
02:59Remember peg ratios and eyeballs and all the different metrics that people used to come up with during the dot
03:04-com bubble days?
03:06Feels like total addressable market is a new one for this era.
03:10So, Matthew, before we say goodbye to you, as people, investors get ready to partake in these IPOs, they're likely
03:19going to lighten up in some of their exposure to existing tech holdings because otherwise they have too much concentration
03:24risk.
03:25What kinds of companies are most at risk then?
03:29Yeah, I mean, it's a good question, isn't it?
03:31I mean, you know, it could be everything from, like, you know, NVIDIA, TSMC.
03:40You know, I think you're kind of clearly going to be needing to think about companies where you have had
03:45great performance and that perhaps you're kind of prepared to do a bit of profit taking.
03:50You know, maybe taking the view that actually, you know, even if you sell a bit of NVIDIA intrinsically, you're
03:56kind of going to get some benefit and some indirect exposure by kind of playing it through one of these
04:01other names.
04:01So, yeah, it's a tricky one.
04:03But I think, you know, probably a lot of portfolios are already inherently kind of fairly concentrated.
04:08So, you know, given the numbers we're talking about, you're going to be having to look at these, like, mega
04:13cap names to kind of trim exposure.
04:15Thank you, Joe.
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