00:01Santosh Rao is head of research and partner at Manhattan Venture Partners.
00:06Let's start with Anthropic.
00:08Warning investors that advanced AI could pose this existential risk to humanity.
00:13How seriously should we take that warning?
00:17Well, absolutely. The potential of these models to really disrupt everything is huge.
00:23And it's been well telegraphed.
00:25But will it go there? There are risks to everything.
00:27The risks to drinking. The risks to nuclear bombs. The risks to everything.
00:31But it's still there. So what we need is controls.
00:35We need to manage it.
00:36You can't just let it go because it has the potential to do everything.
00:40And they have to disclose that.
00:42And this is not an official S-1 filing yet.
00:44This was just a prospectus.
00:45I mean, the final S-1 filing can have some more fine tuning.
00:49But yes, that's well telegraphed.
00:51And we've seen some cases already.
00:54So we should take it seriously.
00:56Keep in mind that it has the potential.
00:58But when it comes out, there will be guardrails.
01:01And there will be some liabilities associated with everything.
01:05So I think everybody will be careful at that point.
01:07The company is also telling investors it could lose tens of billions of dollars
01:11while spending hundreds of billions.
01:14How long can the AI industry keep spending at this scale?
01:19Well, as long as there is money coming in.
01:21People are willing to spend it.
01:24They need the money.
01:25I mean, this is something.
01:26This is revolutionary.
01:27It's a tectonic shift in the way we will live our life.
01:31So I think it's going to take a lot of compute power, a lot of spending.
01:35Yes, they will continue to spend.
01:37And the people who are spending have free cash flow.
01:40And when their balance sheet becomes weak, then it becomes an issue.
01:45But at this point, it's being well funded.
01:46There is money in the bank.
01:48There's money coming in.
01:49And so they'll continue to do it at this point.
01:52But there's the other side to it.
01:54There needs to be some positive improvement in the revenue side,
02:00in the models, in the other areas.
02:02So we don't want the balance sheets to get disrupted of all these big six companies,
02:07big seven companies, because they're the hyperscalers rather.
02:11So there is a check on the other end.
02:13But at this point, there is room to grow.
02:16There's room to spend.
02:17And they're doing it.
02:18So when you're looking at that valuation then of around $2 trillion,
02:23what does it tell us about how investors are pricing the future of AI?
02:28Yes.
02:28So I think $2 trillion is just penciled in.
02:33I don't think that's the final number.
02:36It'll probably be less.
02:37I've seen a lot of IPOs in the past as well.
02:39They just put some number.
02:41When they do a filing, they have to put some number.
02:43But the final number comes out much later.
02:45But it's going to be big, regardless.
02:47Whether it's $1 trillion, $2 trillion, it's a big number.
02:50So we need to really...
02:52I mean, we looked at SpaceX.
02:53SpaceX is not going to make money for a long time.
02:55But people are betting on the future, that things are going.
02:59And the same thing is going to happen here.
03:00People are going to buy it and leave it there because they think this is going to change.
03:04And there's open AI behind it.
03:06So I think that's also there.
03:07So that might put some limit as to how much money goes into Anthropic.
03:12But people do want to get in here.
03:14They want to be part of this revolution.
03:15And you will see tremendous interest in there.
03:17And profitability is way down the way.
03:21But the improvements, the models, the quality and amazing work going on,
03:26people want to be part of it.
03:28No one wants to be left behind.
03:29Santosh Rao from Manhattan Venture Partners.
03:32Thank you very much.
03:33Thank you very much.
