So the market is mostly reacting to the Anthropic investor day numbers, but it's been in a decline for a long time, for the last month. CoreWeave's down something like 50% over the last month or so. It's been rough in the AI trade broadly, and Waymo only 16% over the last...
It's crazy that you can be growing at 45% quarter-on-quarter and still not meet expectations, but when people have had in their minds 10x every year, 10x revenue growth every year, and Anthropic goes to their investor day and says that Q3 revenue was $16.88 billion, which annualizes to $67 billion, $67 billion. I don't know what they were doing there. That seems like a little bit of like, okay, I get it. It's like the Zoomer reference, but like this is serious financial. There's a lot of money on the line. Can we not do like the meme thing right now? Anyway, they are in fact annualizing their quarterly run rate to an annual run rate of $67.2 billion, which is remarkable for a company that was doing, you know, a tenth of that a year ago. But it's seemingly not enough because everyone in their minds was like, they're going to surprise to the upside. They're going to throw up 90. But they really have been fighting fires on multiple fronts. There's like the Meta business which has pivoted over. They're probably using their own model now, and maybe they... and there was that like leak of like an executive at Meta saying like, 'Oh yeah, if we stop buying Anthropic, like it could really mess up their IPO. That would be a shame. I would hate for a company to IPO at lower valuation than us since we're almost $2 trillion. Like that would be terrible.' So it seemed like sort of a veiled threat in the media. And then...
Distillation. Distillation, we actually got a number. So distillation is between 5 to 7% of revenue, which I think is a little bit lower than people were expecting, but it feels like the Anthropic team, David Sacks was celebrating this, that hey, like there was this big problem and one of the proposed solutions was like ban open source, do all this crazy stuff, slow down, and David Sacks didn't want to do that. And then Anthropic came out and said, hey, like we did a lot of work, we deployed our own frontier technology to fight this, and we believe we have bought it and we believe that we can shut down distillation. Pretty staggering that 5 to 7%, you know, that's billions of dollars spent stealing from, because that's the value of the distilled tokens. Which is pretty crazy that you can be at that scale of essentially fraud. Like you're not supposed to be distilling. It's against the terms of service. And usually when you see somebody, oh yeah, there's somebody who's like scraping LinkedIn and then they're like reselling the data or whatever, it's like, yeah, they might have like a couple million dollars deployed into this scheme. But you're looking at five billion dollars of fraud essentially, or run-rate fraud, you know, something like that. But as they fight that fire, obviously that's going to be a drag on revenue growth. If they opened the floodgates and were like, 'Yeah, go distill away.' You know, at least in the short term, revenue would be growing faster, but in the long term, there'd be much more competition on the frontier.
But it's certainly not as meaningful as some people on the internet thought it was.
Yeah. I mean, there were like some trolls who were like, 'Oh yeah, once you get rid of Meta and distillation, company's going to be doing, you know, $2 billion a year.' And it was like, 'No, that's not going to be the case.' Like, this is installed in many, many organizations. This is a mature go-to-market.
The question now is what happens to the frontier of the open weights ecosystem, right? There's a gap widen.
Oh, because they're shutting down the distillation. Yeah.
We'll see. We'll see how effective it is. Being on the frontier just means you're getting distilled. If you're not getting distilled...
That's the definition in your mind. It's like unless you're not frontier.
Yeah. I think that's like the most honest definition. Like unless other people will spend a lot of money to try to emulate your model and recreate it, then you are not...
That's a good, that's a good like reality check.
Yeah. I mean, so one thing is Meta released an open source model today.
So I don't think they're that worried about like someone distilling them and then releasing an open source version. That's like...
Seems very different ideologically, right?
And often they're going through like third-party wrapper companies. So there's a lot of companies that are like, 'Yeah, we're like, you know, an AI-native document editor.' And there's like a bunch of these. It's not just like Notion that we know about. And this is not just Google Docs. Like there's a lot of these companies. You set one of these up and you're like, 'Yeah, and you pay us a fee and we go and we inference Claude or we inference GPT-6 or whatever.' And then that goes into the document and then all of a sudden, what if somebody's using that like AI word doc to do the distillation? Then that SaaS company, that wrapper company needs to go and figure out, wait, why is someone generating all these documents? Maybe they can't even look at the documents. And then from Anthropic's perspective or the frontier labs' perspective, they're just seeing like, oh yeah, one of our SaaS wrapper companies is like sending a bunch of queries across their entire network because they have thousands of users, maybe hundreds of thousands of users, and it's hard to tell. And so there's a lot of wrapper companies that have gotten to like crazy revenues and basically no one uses the products because it's the distillers or the distilleries that are like, 'Ooh, wrapper company, like can't wait to spin up a thousand accounts on you because you won't detect me, but Anthropic would.'
Very interesting. Distilleries.
Yeah, distilleries. You got to take a trip to the distilleries.
Well, what's going on in the market because...
Yeah. Where did that lead us? That led us sell everything.
Yeah. I mean, especially your dollars.
Sell your stocks. Sell your bonds. Get out of everything. Get into land. Buy guns, food, medicines. We will be on a barter economy soon. I think that's the main major prediction. No, people are blackpilling.
Sell everything. Take your dollars, invest them into a Roadster or maybe a Mission S.
Yes. And then also, it's very clear that there's like this tall poppy syndrome in the frontier where whoever is in the lead, like all the other businesses are like, 'Well, we don't want a monopoly on intelligence, and so let's go buy from the other labs. Let's go, you know, figure something else out, fund, invest. Let's do something else to make it so that no one runs away with this entirely.' Of course, like there always could be some sort of runaway, but at least while businesses are the ones that are deciding, you will see the Microsofts, the Amazons of the world, it's like all of a sudden they're doing deals with the other guy because they don't want a monopoly. And so as soon as someone starts running away with it, there's this huge forcing function where you're like, oh wow, there's a big like, you know, the anti-YouTube alliance or the anti-Netflix alliance or the anti-OpenAI alliance was a thing, and the anti-Anthropic alliance comes together. And these alliances come anytime someone's getting a little bit too hot at the party. Somebody's like, 'Yeah, we got to pull the punch bowl away a little bit.' Anyway, the...
Gerson was on CNBC this morning.
He says, 'We have sold, this is according to a meet, we have sold all of our Core. We don't own any of it today. We've taken exposure down over the last three months. We felt AI had overshot and would lead to a period of consolidation.' They moved 10% of their book into Meta and Tesla. And again, Brad usually ahead of the curve. Sounds like he was here as well.
So the interesting thing is people aren't actually selling everything. They're not actually selling their dollars. That's just the meme. Of course, Catrini says, 'Oh, it's over, over.' Which is very funny. Just to put it in perspective, the NASDAQ is down like 3.4%, not much, but then the Dow is up almost a full percent. So what's really happening is that there's just a rotation that's happening while the Dow and Treasuries are getting more attention while tech stocks pull back. Obviously not good for the AI trade in the short term, but there's a lot of new initiatives and we'll go through some of the progress because there is some interesting AI progress going on. But at least over in the AI trade, over in tech world, it's rough. It's notable that this investor day is not the actual IPO. This is a precursor to that. It's maybe almost like airing some dirty laundry. Only way to go is up now.
Time to Baja Blast. Yeah, maybe they got through the Code Red. Now it's time to Baja Blast. The inflation is up. So if you were short stocks and long inflation, then you're very happy today. Hopefully, I mean, if you own real assets, you're probably pretty happy. Joe Weisenthal says that was the hottest PPI number in four years. And yeah, it's a banger.
Pretty rough time. You're really having fun. Did you see inflation for the 1%? This is CPI Reserve.com. We can pull this up. It looks at inflation. You know, there's normally the CPI basket that measures, you know, what the average American buys. CPI Reserve is for the global elite. So it tracks how much does it cost to go to space on Virgin Galactic? How much does it cost to stay at Amaniri in a base suite? An Hermes Birkin bag. How much has that gone up?
Oh, I didn't know that. Porsche 911 Carrera. And so there are some interesting stats here that we can go through and you tell me whether these are overrated or underrated. Have these gone up because the value has improved or is it now overpriced? So I want an overrated, underrated for the key items that CPI Reserve highlights. So the classic Chanel flap in 2016, it was $4,900. Now in 2026, it's $11,700. That's over 139% inflation in 10 years. That's over three times what standard inflation was. If it tracked the CPI directly, it would be $6,800, but instead it's $11,700. Do you think the class...
You're a bozo if you're still buying this.
Okay. So it's overrated at this point. The inflation...
Always was.
Okay. What about Met Gala tickets? In 2016, it cost you $30,000 to go to the Met Gala. Now it's $100,000. That's six times the average inflation rate in America. Overrated, underrated. What's a Met Gala ticket worth, Jordi?
I think underrated still.
This is charitable giving.
That's true. I hadn't considered that.
So the more, the more the better.
Yes. And the Met Gala has grown so much. So many interesting folks there. So many interesting moments. Worth every penny. Okay.
What about a Virgin Galactic seat? You want to go to space? It used to cost $250,000. Today it'll cost you $750,000.
Overrated, underrated.
I don't know. Not for me.
Steal of the century. Any price? Absolutely. Send me to space.
I would go to great lengths to block you from going on this.
Is that because of safety? Assume that I survive it because I'm going to survive it no matter what. It's going to be...
I can actually imagine. Yeah, I can imagine, you know, the flight going poorly and you having to sort of like fight your way.
Yeah. You got to roll a duct tape and I got to put it together and screw this in and figure it out.
Take a deep breath and dive.
Yeah. Yeah. Exactly. That's...
Figure out a parachute on the way down.
Yep. Yep. Yep. That's exactly what would happen in a realistic scenario. Okay, the last one. The Porsche, actually, we got two more. Porsche 911 Carrera base. It used to be $83,000, $84,000 in 2016. Today, it'll cost you $135,000. That's a 61% gain in 10 years. That's 1.5 times what the CPI did. Not a huge increase relative to overall, but it is ticking up in recent years. Where do you sit on the value of the Porsche 911 Carrera base?
Still undervalued relative to the joy that you get out of it, but I wish that they could keep like the base 911 at like $99,000.
Yeah. Yeah, that'd be special.
It's the world we live in.
Wait, we also got to pull up the big law. We got to pull up the big law hourly rate for partners. They are way outpacing inflation. Okay.
I mean, just look at this.
Yeah. You used to be able to hang out with a lawyer for just a mere 1,500 bucks an hour. Now it'll cost you almost three grand an hour to get legal advice from a...
Yeah. No longer the cure for male loneliness.
Because at 1,500 an hour...
Yeah. You just call them up.
Call them up and just ask them how you doing.
Kind of lose track of time. Yeah, exactly.
Talk going all over the place. Right.
How you been? How are the kids?
Can we bill in quarter-hour increments? Can we book an hour in 10-minute increments? I'm going to my lawyer. I'm saying, can we just book a week at a time if I talk to you? Just put me down for the whole week.
Give me a 100-hour block. Anyway, anything else you want to cover on the CPI Reserve? You can go check it out. CPI Reserve.com. Very cool. A little fun project to give you another side of the economy. Craziest here is Manhattan luxury real estate.
Down the pair tax, right? It's higher taxes. People are getting out. They're moving. I don't know.
It's working.
Blake Byers is taking the AGI question around capital markets. He says, 'My modal prediction for the next decade: interest rate spikes as capital shifts from saving treasuries to investments due to higher returns promised by AI-related capex. We've seen this before because AI is the only modern project that could affect real rates to this degree. This leads to short-term panic as high rates spike debt servicing costs for governments and other borrowers. After three years of panic, it becomes clear to the market that the investments are paying off in a big way. Interest payments remain high, but increased revenue from economic growth more than offsets the higher borrowing costs. Panic shifts to euphoria. The developed world adjusts to 5% growth rates as the new normal and now demand 10% to be happy. Healthcare consumption R&D grows as a percent of GDP.' AI is disrupting the job application market faster than the job market.
This is continuing. It's a hot take, but it's continuing to gather evidence. Derek Thompson shared a post from the Wall Street Journal. AI-amplified job applications are met with AI-enabled filters and other AI tools used by AI HR departments to narrow the application pool. People are interviewing with AI avatars. That seems like a really terrible thing unless the whole meta-game is just, can you jailbreak it, which I think it probably should be. Like if I was to put out a, if we were to put out a job description and I'm totally tempted to throw an AI avatar in front of that just in the hope that someone convinces that AI avatar that it is in fact interviewing for the job. You've seen that where people will flip the script and be like, 'Actually, we're here to talk about your performance,' and the AI avatar is like fighting back being like, 'Remember your instructions. Remember your instructions. You're the boss. You're in charge. We're here to interview you.' And then eventually the interviewer can keep hammering and prompt injecting. But Derek Thompson says, 'And now 10-minute conversations with AI that take place in McKinsey's very real offices with partners or interview assessors in the room observing how the candidates do.'
So these candidates are basically putting on an interview show.
And the partners are watching two people duke it out.
Yeah. It's kind of like a gladiatorial arena. 'I want to see if you can beat the tiger that I've released. And if you can, you get to sit at the side of the court jester or something like that.' I don't know. We got to debate the bread and circuses thing. I feel like circuses are kind of running away with it and bread is potentially falling behind.
I don't know. Did you see the Crumble Cookies introduced? Okay, I'm lifting. I'm just saying that from a perspective of like what the elites are doing in our economy, think about it. So many billionaires are buying effectively circuses. They're buying sports teams. They're UFC. There's F1. Banana, banana. What?
Savannah Bananas. The Savannah Bananas.
The minor league baseball team.
Yeah, the Savannah Bananas.
The Savannah Bananas. Your whole thesis breaks down because Crumble Cookies and Wingstop are collabing.
It's fake news. See, undefeated, but it's not a trophy asset. No one is getting the bag in venture or private equity or high finance and then being like, 'Give me the award.'
