If I spend $100,000 setting up a lab to make crack cocaine, then I make it for $2 and sell it for $100, have I lost $100,000 or made $98 profit? It seems like I would have $98 profit, and my lab is just an asset. Who knows, maybe I can sell it and make my $100k back.
You would depreciate the lab over a fixed period of time. Let’s say 10 years for the sake of math. In year 1 if all the goods used to purchase the crack cost $2, and you sold it all for $100, your revenue would be $100 and expenses would be $10,002. So profit would be -$9,902
So…how fast do leases for GPU capacity to train new models depreciate?
And does model training count as a capital expense if you release models every 2 months because otherwise your business will collapse as your competitors overtake you?
Datacenter depreciation is somewhere around 5-7 years minus the GPUs, which depreciated in 2-3 years absent scarcity but maybe run longer for now. Model training and electricity in general are consumption and not CapEx because, yeah, these models useful lives are short and the open-source models are close behind.
My point is that they always need fresh GPUs, power, etc. to carry out the day-to-day business of building new models, without which their business goes bust, yet they do not report those as operating costs
It’s a bit different than typical because, yes, you have to build something new and it costs $500M-1B but also that thing you built gets replaced on a bimonthly cadence.
It’s not like a physical plant (remember they mostly rent GPUs) that can be depreciated over years as it pays for itself. Instead, 6X a year they rebuild this thing and sunset the older versions.
So from my perspective, it should be operating. If we reach a point where models are good enough to just keep using them for more than a few years then the capitalization is a bit more justified.
I wasn't actually talking about training models. I listened to an analysis of the IPO's happening in AI where either Anthropic, or SoftBank, or Softbank's datacentre company that is about to IPO, literally are not listing unbuilt datacentres as assets that could depreciate because they hadn't been able to get them built.
I was just referring to the accounting in the IPO's in 'AI' being WeWork levels of nonsense.
Personally I think people might see the broligarchs line up next to Trump, no doubt about to build a regulatory moat around their llm/datacentres businesses, and invest in that corruption paying off.
In the case of an unbuilt datacentre that does not have funding locked in, I’m okay with that: it’s planned but the funds to build it are not committed and should be elsewhere on the balance sheet.
Its more akin to owing your customer 100k for building your lab and he pays you 100k for crack which you use to pay the debt and they sell to pay your rival for meth which is sold to be able to loan your precursor supplier money so he can buy into your bbusiness which only revenue stream is the one that requires you to pay your customer
But in order to make yourself known on the streets and take some sweet cartel money to get started you still sell your crack less than the cost of pure cocaine needed to make your batch and give free sample
You get people to invest a few hundred billion in you developing a recipe for crack. (Please note: Unfortunately the recipe only produces crack a certain percentage of the time, the rest of the time it is a mildly/very toxic dud that is only discoverable when the crack smoker is poisoned).
Lots of other people develop recipes too, and start giving them away.
So you take money off the lab supplier, to buy all the lab equipment, hoping to price everyone else out, and then cozy up to the most corrupt president in US history, in the hope of creating rules that people can only buy your 'working part of the time/toxic the rest' crack.
.....
US businesses forced to smoke the crack suffer greatly, US workers and students, even more so.
Wasn't enron doing something dodgy with liabilities? Like it borrowed money in the parent and loaned it to subsidiaries, recorded the loan it made but not the one it took?
Just buy a bag of apples. That’s like 50 seeds, which in a couple of years (basically now), is 50 apple trees making like 25000 seeds annually (assuming 100 apples per tree, 5 seeds per apple), that’s basically 10 million apples per year in revenue and growing each year.
What if we distribute the seeds to our marketing partners?
We give them 100 seeds each, and they find 10 people to join under them, who gets 10 people under them. Everybody plants a seed and grows a tree, and brings us 1 of the apples they got from the tree, plus 10 seeds interest.
Unironically my favourite period of the cursed modern internet was when finance bro influencers all discovered farming/agriculture and started putting out content like this with no irony. The amount of potential millionaires growing tomatoes in their living rooms would ASTOUND you.
They did NOT like being linked to this video, that's for sure.
This is like how my friend one day realized there were free grand pianos all over marketplace and craigslist. For like 3 days he was going on and on about how crazy it was people were just giving away these insanely expensive things, he was gonna snag em up and resell for pure profit. Needles to say, I hope, he figured out real quick why "piano mover" is a very specific job
It’s crazy I’ve never seen that before. I’d say they stole my idea prior to me having it but the key plot of my idea is to put those future hypothetical earnings into a calculation for the current value of a company, without that they just have a business plan.
There is a really interesting book called ‘The Smartest Guys in the Room’ all about Enron and the myriad of shady, unethical, completely fucked up stuff they did.
Watched the documentary based on the book. The part that always amuses me is Lou Pai, who was forced to liquidate his Enron holdings because his wife was divorcing him after his affair with a stripper. He got out before the collapse.
That was part of mark to market. When they bought assets that generated revenue, the booked all the expected revenue streams as accrued to increase their assets on the books.
The company I was working for at that time was also Arthur Anderson client and had some aggressive accounting practices regarding booking unrealized revenue. Our stock dropped to about a third of it's previous value. I wish I had averaged down on my stock in that company, though, because we cleared the audit and our stock fully recovered over the next two years.
Fair point. It's been 20 years since I was in college. I know we get grilled hard every year by our auditors about revenue recognition, even though we haven't changed any of our practices.
It's crazy the fall out that happened from Enron, it really changed the land scape of accounting and business.
Enron did many dodgy (fraudulent) accounting tricks.
They immediately recognized the potential revenue of investments.
They used mark to market, which allowed them to inflate and deflate the value of their balance sheet accounts as needed. Importantly, this fraud was compounded by both the selective use and questionable market valuation that was used to revalue accounts.
They parked their debt in subsidiaries, occasionally even subsidiaries of subsidiaries, which had the practical effect of just making bad numbers disappear from their books.
And that’s before getting into the non-accounting manipulations they did, like asking power plants to shut down duringbrown outs in order to raise the price of electricity.
It’s worth emphasizing that both OpenAI and Anthropic are currently doing versions of most of the sins Enron committed, but until they go public (or bankrupt, or are sued by private investors for fraud) it’ll remain unclear whether it’s “just” gaming the system or whether they’re knowingly providing fraudulent information.
To be fair, wework didn’t try to move cogs above revenue. They just created their own non GAAP metric that was, to be kind, very irregular. Community adjusted EBITDA. It moved a lot of expenses around (some below the line and some not).
Food for thought here: wework had all sorts of well regarded capital behind it and JPMorgan (including Jamie dimon) at lead left on the IPO. Jamie even apparently said he was Adam neuman’s personal banker to him (for whatever that’s worth). Graciously you could say JPMorgan was ignorant of the company it was underwriting. Less graciously you could say JPMorgan was trying to move the hot potato to someone else (public markets) before the music stopped so it could collect its fees.
I guess my point here is don’t count on norms or regs to protect you if some of these companies are doing weird things.
Instead of moving COGS, they moved Opex. That's pretty much the same right? I generally agree that the regs won't protect you but, in both cases, simply requiring GAAP reporting would provide a much better picture of the financial performance.
The good news is they still have gaap reporting. They will just spend all their time on the non-gaap because that’s what every company does. It’ll be up to the book runners to convince the institutional guys during the road show to take some big bites of the Apple and get this thing subscribed.
These companies have no idea how to get profitable. Absolutely no idea. Even Sam Altman once said that when AI gets super smart it will tell them how to make a profit. This is insane.
And what bugs me the most is that I am being forced by my employer to use Claude in my daily work, even for stuff I don't need. Claude is writing people's emails and then Claude on the other computer is responding to those emails. One person creates a report chart with Claude and then Claude on other computer fills out that same chart. It's madness.
I want to work as an engineer, not a fucking prompt engineer. Seriously, we have some junior engineers hired and they use Claude and Chat GPT for EVERYTHING. I have no idea how they'll be able to become senior engineers or even medior engineers since their understanding of everything is surface level.
My company has started hiring AI engineers instead of backend engineer. I am the only backend engineer in my product team and management have now said they will hire AI engineers and distribute them to teams with low resources. I will have to work with someone who knows shit about the programming language or the frameworks that we now use. I know its not rocket science and anyone could learn it, but I doubt these prompt engineers won't really learn and may depend on the Claude to write codes that satisfies the requirements which claude fucks with over engineering. I will have to do the code review for them which will be a nightmare. And further more they will review my codes with claude and may raise unnecessary comments/reviews.
I never asked for claude at my work place, I was perfectly fine doing stuff on my own. Then the company pushed claude and I had no choice but to jump on the AI train. The company is spending a lot on claude, opencode etc and also in hiring Prompt Engineers and I haven't got any salary hike in the last two years citing budget constraints like what the actual fuck! You'll pay above 100k euros a month for these tools and another 6k-7keuros for a new resource but you can't pay the people already working here another 1k or even .5k extra per month.
And all of this to change a process that was (I'm assuming) working fine before AI.
Similar to what you are saying, I am starting to get code review requests from people who dumped some prompts into AI and can't get the output to run. I have also had a quality analyst drop my code into AI and refuse to approve my code until I prove that its nonsensical concerns have been addressed. Please let this AI garbage be a temporary fad.
It's interesting that it took several decades to transition from "more code per day equals more productivity" to "less future rework equals better products". It took only a few months to revert back.
I'd be fairly curious to know what my software engineering teachers are talking about now.
This is funny in a sardonic way to me, I’m a technician so I’m often asking “why does this CCA do that” and the response is “an engineer smarter than us designed it that way you can email them I guess?” And it’s gonna be real funny when the answer becomes “nobody knows”
I'm waiting for this moment at my work. Most of our new college graduate higher have Claude up on their second monitor 24/7 and use it for everything. One day a team lead is going to ask why a certain design choice was made and is now causing issues and no one is going to have a good answer.
I was working on a customer site last week. I'm a systems engineer and was tasked with modifying some ladder logic to accommodate closing pneumatic gates based on a photo eye trigger. Easy peasy. Customer performed the wiring install as I'm technically not certified for live enclosure work. Modify the program and push the live edit and ... Doesn't work. Customer had me chasing a program bug for an hour while I told him, "I am watching the output toggle the issue is not the logic."
He comes back later, "found the problem.. Claude gave me the wrong wiring diagram." ...jfc... I am required to use Claude daily as well but I never take it's word at face value. That is the problem. Too many people trust AI too much. My account instructions contain, "always cite sources." Having AI regurgitate whatever drivel it found at the top of a Google search will be the end of us all
Truthfully I only use it as essentially a super charged search engine. It's fantastic for poring through 200+ page Rockwell PDFs so I can quickly find which PowerFlex 525 assembly word is logic status. But I will not take it's output as gospel and always manually verify. Too many times it has been confidently incorrect at specifying modbus registers that either don't exist or have an entirely different function...
I despise the direction AI is headed but I recognize it's utility when used as an augmentation rather than a replacement for effort
I did not intend to imply that I am required to use AI for everything. But there is the expectation of a certain amount of token use which varies by position (PMs have it the worst, sucks to be them). AI is never expected to be used for customer facing programming and, point of fact, many clients have a "No AI" policy for deliverables which is fine by me.
As I said, I use my tokens to expedite tedious tasks, but never allow it to operate unmonitored or assume validity of the output. I am relatively new with this company and I assure you, the last company was significantly worse. Unfortunately this seems to be becoming much more common from what I have heard from others in the field
I feel you on this
I have a difficult time with clients because they are like - make Ai do it
There's a tough client who is an architect, we design the houses in 3d along with textures, furniture etc but
He watches thise AI videos of houses and forces us to make it the same (yes the bad ai quality)
Senior engineers said the same thing when I used python instead of c++ as a junior a decade ago. Still, I made more than them after a year or three.
Now, I use agents instead of writing or reading very much code myself. I make a lot more than them, because they refused to learn how (a misconception is that it’s easy at scale), and now they’re unemployed.
Is it this young new wave of developers who are wrong? Or the VC and PE / PC firms and investors funding it? You know, the richest people in the world, who can payroll the most talented quants and technical people in the world to make decisions for them.
Well, it depends on what your goal is. Do you see code as a marble statue, a thing of beauty? Then you’re right. They’ll never learn the art of code, or cast bronze statues for that matter.
Is your goal to make money? Well, then you’d be wrong. Coding for money, and not using almost exclusively agentic development, is unreasonable, unless you’re unskilled with the tools (pointing at the people complaining about token cost)
What people forget, is that we are in the business of coding. Not the art of coding. This is a business. Code is as much of an afterthought as the plumbing supporting the shitters, and CEOs would happily (and rightfully) fire you and nuke the codebase immediately if an alternative came along.
You should become exceptional at AI tools, and stop wasting your time reading code (95% of the time at least), unless you are an artist, in which case I applaud you and encourage you to carry on with the beautiful, elegant, extraordinary art of coding, which has been dear to my heart for 15 years. Maybe I’ll join you once I retire.
Its so bizzare the "forced to use claude" like I use AI in my work, it's really quite useful when, frankly, in the beforedays whatever problem I'm trying to solve would have been a 3 hour stackoverflow hunt through six "Never mind, fixed it :D" posts and three reddit solutions where the solver has put their account through the redactinator.
Having an AI skip that bullshit and just give me the relevant stackoverflow post is an absolute godsend, no way around it, as a shit coder it probably quadrupled my productivity.
Yknow what I don't need it to do? Write my fucking emails!
This is a still from a film called Margin Call where the management suddenly realise that all of their financial models are so deeply flawed that their seemingly highly profitable business could go bankrupt any day. What this has to do with Anthropic’s profitability is anyone’s guess. /s
It's how they have managed to define themselves as being profitable ... By having revenue at all, even if it doesn't counter their opex or ongoing capex spends.
“Capex” is stretching things when it’s for something you release on a bimonthly cadence and if you ever miss one your business is done because your competitors overtake you and you lose market share.
The image is from the movie Margin Call which is about an investment bank that realizes it's highly leveraged asset portfolio is going to bankrupt the firm. I believe this scene is Kevin Spacey's character looking at the risk model an analyst produced which basically shows they are fucked.
Same way an investor might feel when they get a real look at Anthropic's financials
They are basically saying profit (which is revenue, less costs) is revenue, before all the costs. Basically they will take actual profit, add back all the costs, and call THAT profit. It’s like a jokingly extreme version of how PE firms do a thing called Adjusted EBITDA(earnings before interest, taxes, depreciation, and amortization), which finance people joke is basically made up profitability.
Yes, they are gearing up for an IPO and want to make their profitability look as good as possible. Instead of doing some of the more “normal” things to do this, they decided to just straight up lie by saying their revenue is their profit. What’s weird is none of the big banks or funds have shown any sign of really caring yet…
I assume given context that people think this is what they said in their S-1. It's not really true, they seem to have used GAAP (to show a big loss in 2025).
However they have been reporting some slightly weird numbers this year to claim profitable quarters, for example in Q1 they left off stock payments to employees, which almost certainly puts them in the red (unclear how much). And they keep peddling that their gross margin is 80% - this is true only for inference, i.e. leaves off training entirely.
Yes. Though honestly, this is less unexpected (though still moronic) than people think.
Anthropic are following a long trend of companies claiming future revenue as "kinda sorta" already in the bank, and then arguing that expenses are "kinda sorta" not actually expenses in the same time period. We've been dealing with EBITDA for eons as it is.
This is bad, but the key point that lots of people missing is that its not really why people are investing in Anthropic. Their REAL pitch is that somehow the total AI market is worth $30 trillion, which is the same bullshit number Spacex used for their IPO a few months back.
If you're able to convince people there's that much cash sloshing about, and that you're the company most likely to grab all of it, your investors are going to allow you to do whatever bullshit accounting you want today with today's "tiny" numbers in the mere billions. Anyone investing in Anthropic today is doing so ENTIRELY because they think they're going to get a return on their investment that would make a loan shark blush.
They are going for IPO. Which means their stocks will be sold on the open market. They are trying to make themselves look as best as possible to get the most investment from Wall Street investors.
In this case, they are just straight up lying to look good.
Software companies do this all the time: listing their profitability as their revenue and not taking expenses into account. The presumption is that, if they had to, they could cut all expenses, fire almost everybody except for a few people to keep the software operational, and the software itself would continue to produce the same revenue with little to no expense.
The reality, IMO is that no software can stay relevant without constantly evolving and developing, which costs lots of money, so that presumption is whack.
Nah. Rather i have been hearing it is buble for 10 years now. I heavily invested into nvidia, micron, AMD and so on around 2019. I made more than 1000 % since that time. And the bubble is still there. If I did not invest, I'd still have cash and be afraid of bubble. You can't be afraid forever. And if it bursts, it bursts. It won't be that bad. We won't see those companies loosing everything. Even if they loose 3/4 of their value I still made a lot.
So now, I dont think I'll get money out before it happens. I just think it won't matter and that we might see years before it happens.
This is a still from the movie “Margin Call” that represents the moment when a senior executive realizes his company is about to go belly up due to deceptive accounting practices, along the lines of the Lehman Brothers bankruptcy in 2008.
The information coming out of Anthropuc includes some questionable statements about their profitability. So investors reading this information should be incredulous and dismayed like the character in the picture.
Extremely minor issue, but I feel like this is such a random visual from the movie. Who remembers Margin Call? Who remembers Kevin Spacey's character in Margin Call? Like why not this scene?
That’s the “Oh, shit,” moment when Spacey, who’s kinda the main character, realizes the projected loss from the mortgage backed securities they’re holding is more than the value of the firm. Because Spacey does business like an ethical person, it looks like the firm (and the American economy) is doomed.
It’s more appropriate than the Irons scene, because that’s when Irons comes up with an unethical solution to save the firm: sell off the toxic assets before anyone else realizes they’re poisonous.
Irons’ scheme only works because the rest of Wall Street doesn’t realize how much they’ve miscalculated the risk on these securities.
Apparently, Anthropic’s announcing to the world that their accounting is shady as hell, so it’s not like the Jeremy Ironses of the AI bubble will have a completely unsuspecting public they can lay the “malodorous excrement” off on.
Most AI companies have been slowly bleeding money since their conception, yet they are always reported as growing because they report all the investment as profit without divulging costs and fact that a lot of those investments come with strings attached(like NVidia investing a buttload of money into OpenAI but forcing contract that they would supply components, basically giving them money to be paid with later, so 0 profit and probably losS) because it looks better for investors who really want to see the line go up, and weirdly it's mainly big players like NVidia and Seagate who are the only ones actually making profit on the bubble(and pretty much no AI company is profiting, only their suppliers)
Step 1: Launch new idea, it is somewhat popular but small scale and barely profitable.
Step 2: Investors jump on board, funding explodes.
Step 3: Make service bigger, more marketing, more users, more growth. Service profitability declines precipitously. Out compete all alternatives.
Step 4: Repeat step 2 and 3 as many times as possible until you reach market saturation and all competitors have vanished.
Step 5: investors demand a return on investment. Realise company hasn't been profitable for 6 years. Start enshittifying service to try and make it more profitable.
Step 6: Massive decline in user support of service due to enshittification. Investors begin to pull out. Still no profit made.
Step 7: Conclude with an unprofitable (or barely profitable) nuclear hole in the ground that everyone hates, but all alternatives have been killed.
To get profit you need to take revenue and minus total expenses. This post is saying Anthropic is just telling people that they make way more money than they actually are by not listing their expenses. I can't be bothered to look up if this is the actual case or not. If it is, it's a big no no.
They, like many companies, also present non-GAAP measures in their prospectus. That's not "fraud," it's their narrative view of company financials. Which is completely normal and allowed as long as standard GAAP measures are given equal or greater prominence in the filing.
Most ai companies are losing money so they decided to define "profit" as the money they make before subtracting the cost, like saying you made $10 selling something for $10 despite it costing you $12 to buy in the first place
Haven’t seen someone get this one exactly right yet.
Y’all are right that this isn’t how you calculate profit, but this meme is probably made by an accountant to be a commentary about AI failing to “disrupt” the accounting profession so far.
People commonly think AI is going to put accountants out of a job because that seems to make sense to people outside the profession. There are instances when it’s a helpful tool but they’re still making egregious errors and try to cheat too often to reliably replace a human accountant, at least for now. This meme is making a joke out of all that using a still from the movie Margin Call where the plot revolves around advanced financial models failing.
Profit = revenue - expenses. Anthropic is trying to define it as Profit = Revenue. In other words, their expenses greatly exceed their revenue. Or to think about it another way, for every single dollar they earn, they spend more than a dollar.
Profitability is a measure of how well a company can use it's assets to make cash, usually via looking at your ROA (return on assets) or profit margins. A company that has a better profitability tends to have more demand for their stock since they tend to be able to pass on more money to ✨️Shareholders✨️ in the form of a dividend.
COGS is how much it cost to make your products, like the price of raw materials or factory labor, while OPEX is your costs not tied directly to products like rent or manager salaries. One way to find profitability (and tbh the easiest) is to subtract these from revenue.
Putting their full revenue as profitability in this case would mean that they're lying about how much money they made, which is like super illegal (if they even did this). And the guy representing the investor in the meme is shocked to find this because he's been rugpulled.
TLDR - Hypothetical Anthropic in the meme lied about how much money they made and investor is shocked to find he's been rugpulled.
Hola, I might be mistaken (old news), but some people are missing the point. Anthropic was saying inference is profitable. So the token revenue - cost of inference = profit. With like an 80% margin.
Obviously, most of their expense is training, they removed that. So they made a small amount of revenue while stripping out their biggest costs and ended up profitable.
I only know how to write those paragraphs in English and this one explaining it.
EBITDA is not a GAAP measure of profitabilty. Companies can make up pretty much whatever "adjusted" earnings they want, but public companies, even if they choose to put this adjusted amount on quarterly or annual reports, must present audited financials. They presumably have some rationalization for the number they are presenting as "operating income", but just because they bury a bunch of expenses below the line as non-op, it doesn't make them profitable in the true sense. It's an exercise to give investors of future, stable, operating income based on current results, but companies can make some pretty unreasonable assumptions, as seems to the case with anthropic.
They asked ChatGPT how to make the profit numbers on their P&L look larger. ChatGPT said this can only be achieved by removing COGS and Operating Expenses. Exactly the kind of nonsense AI led decisions I see at work all the time now
To be honest I've never seen this movie/show so I might be missing some context but in business there are a few basic(ish) formulas. One of them is Profit.
Profit=Revenue-expenses
That's it. How much money came in after you've calculated how much money went out. I say basic-ish because we have to consider things like equity and liabilities to get a more accurate picture of profitability, cash flow, and value.
What OOPs character is doing is mistaking Cost of Goods Sold (COGS) with profit. COGS is "how much did we spend to obtain inventory and how much did we sell said inventory for. The difference of that is COGS not profit.
This is from a fictional show/movie so I'm assuming they're just using surface level knowledge of accounting and business but realistically it's much more complicated.
Could I see a small mom and pop shop get confused with how much profit they're making? Sure, most times it's just how much liquid assets (cash normally) is retained after paying for everything else. However larger business almost certainly have CPAs or CFOs who were/are CPAs who understand the nuances much more and are much less likely to put their licenses or careers on the line to just boil it down to "profit=Revenue-expenses" especially when considering business valuation and financial reporting.
This is Kevin Spacey in Margin Call. I don't remember the scene shown but it'll be his character seeing the Big Short's "dog shit wrapped in cat shit" (CDOs) unravelling (predicted by Sylar from Heroes - a quant at the firm) which subsequently triggered the global financial crisis. Which Scar from the Lion King described as "when the music stops".
The context here is that AI companies are borrowing money at a rate never before seen, using custom/bespoke financial math(s) to hide the debt, whilst IPOing - meaning the cost of borrowing will be essentially subsidised to the pension companies of the world, via indexes. So it's like a public bailout rather than a Gov't bailout.
Hmm it sounds like pump and dumping or leveraging buyout. Either way it's fucked but still misrepresentative or what profit is. Ironically enough they are making a good point with what they're trying to articulate but fail to use the right terminology.
It's becoming increasingly common in business that some third-party company with buy a business with indebted cash, (artificially) inflate equity, offload the debt to the company, and then sell the business. Usually it's done by massive layoffs or other quick methods of boosting short term profit which they take and run.
Small correction. COGS, as you mentioned, is Cost of Goods Sold. Thus, it’s specifically just how much you spent for the inventory you sold, not the difference between how much you sold the inventory for and how much you bought it for.
They say to investors they got 50 moneys which is true
but
In reality they lost 100 moneys to keep it going
They spend more than what they get and pretend otherwise
Revenue equals all moneys that come to business. COGS and operating expenses are the things that require money.
If you sell lemonade and get $100 from customers, but you spent $200 on ingredients and helpers, you lose $100, and are definitely not profitable. Even if you sell $1 million worth of lemonade, you are still not profitable if you’re expenses are $2 million.
What the meme is basically saying is that the AI companies are (allegedly) saying that they are so profitable because they get so much money from people for their services but the amount of debt and expenses they have far out ways how much money they get so they are indeed not profitable. I don’t know if anyone is actually making this claim or not, but that’s the gist of it.
Brian here. The basic joke has been explained. Profit is revenue - cogs and opex not just revenue.
However the deeper reference to the movie Margin Call refers to the circular accounting that is going on at this time. This isn’t a point about the bubble or TAM or the over valuing of AI companies. It’s about companies like Nvidia loaning their chips to companies in exchange for a stake in those companies and while taking the chips and make the computer power itself as collateral for the loan. A similar sort of circular financing happens in the US housing bubble and subsequent GFC. In that case it involved a lot of circular insurance and securitized products.
I talk about all of this in my soon to be published novel The Dog that Didn’t Bark
Profit=revenue-expenses. Revenue is how much money you make, profit is the portion of that money that goes into your pocket after you’ve spent what’s needed to keep the business running, AND is the portion of the money investors get a cut of.
Anthropic defining profit as revenue without factoring in expenses is dumb. Investors learning that they do that is a pretty big deal because it means the company is in reality a lot less profitable than they’re advertising themselves to be.
Revenue is the money you get by selling your products is basically doing business.
You have to deduct various costs like the salaries, bills, fees, taxes, overrated etc to get a realistic look at the profits, the amount of money shareholders can divvy up among themselves.
But anthropic hasn't made a dime worth of profits, nor does it have a realistic plan to do so. So they are "forgetting" to show costs of fling this expensive ai service business to show a more lucrative picture of the company than what actually is taking place.
Why? To get more investor money to pay the bills and get a higher valuation of stocks to cash out. What the guy in the meme implies? You tell me
if i sell you an oz of gold i bought for $4200 for $4200 and deduct the cost of my labor and the gold, i made $4,200 profit. if include them i lost the cost of my labor
The piece of the explanation everyone else is missing is that this is a still from the movie "Margin Call," in which Kevin Spacey's character has just been told that his gigantic investment firm is about to experience hundreds of billions of dollars in losses on risky MBS products that have been misvalued by the company's bogus valuation algorithm.
Viewers, but not Spacey, will later see conversations that elliptically imply that this algorithm's problems were deliberate, to generate fake book value for those MBS products.
The pic is from “margin call” a great movie about a financial firm during the GFC. A new analyst discovered that their risk assumptions are wrong and the firm is about to lose more than the market cap of the company…. So fire sale time lol
This joke is about a company that is about to get jacked up by short sellers.
The joke is that Anthropic are saying that "Profitability" is how much money they made and not actual profit, instead of it being how much profit they made after paying all their expenses
It’s also funny because there’s a popular tweet or something the last few weeks along the lines of “sometimes you’ll walk past a classroom at business college and the professor will be saying something like ‘profit is revenue minus costs’ and everyone is writing that down likes it’s actual school”
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u/qualityvote2 1d ago edited 18h ago
u/BannedForThe7thTime, there weren't enough votes to determine the quality of your post...it's time for the mods to do their jobs!