Episode summary
Instinct Worth 30BN? | Microsoft Cuts 27,000 Jobs While Meta Taps Equity Markets for $95B CapEx
20VC
· · 1 hr · Hosts: Harry Stebbings · Guests: Jason Lemkin, Rory O’Driscoll
Summary
Anthropic’s S1 dominated the discussion, with the host and a guest arguing that the filing showed a business that is scaling faster and more efficiently than skeptics expected. They highlighted the company’s first-half revenue, strong margins, deep cash balance, and the unusual fact that most revenue comes from models less than six months old. The guest framed that as both a risk and an advantage: Anthropic has to keep inventing, but its capital intensity and speed may lock out weaker rivals.
The conversation then widened to the financing of the AI boom. The guest argued that debt is getting harder to place, so the market is “equitizing” the spend through equity raises at Meta, Google, SpaceX and Anthropic. That same pressure showed up in Microsoft’s voluntary buyouts for 27% of employees and Cloudflare’s 20% layoff, which the speakers treated as an early sign that AI capex will force headcount cuts as depreciation hits in 2027.
They also debated whether Chinese open-weight models are losing relevance in the U.S. after security issues around Qwen and DeepSeek, and what that means for providers like OpenRouter, Modal and Fireworks. Later, the focus shifted to whether Instinct merits a $30BN valuation, whether OpenAI is actually underpriced at $1.25TRN, and why investors are crowding into proven AI executives and speculative frontier bets alike.
Key takeaways
- The guest said Anthropic’s S1 was strong on revenue, margins, customer concentration, compute efficiency and cash, making skeptics carry the burden of proof.
- The guest warned that 70% to 80% of Anthropic’s compute costs are training, meaning the company must keep reinvesting heavily to keep revenue flowing.
- The guest argued AI financing is shifting from debt to equity, citing Meta, Google, SpaceX and Anthropic as firms willing to dilute to keep spending.
- The host and a guest said Microsoft’s 27% voluntary buyout offer is a sign that AI-era cost control is arriving through headcount cuts.
- The guest said Chinese open-weight models may be losing credibility in the U.S. after security concerns, which could pressure inference providers built around them.
Notable quotes
“I think folks are almost underestimating anthropic because um 5 years to IPO versus 24 for SpaceX”
“They just didn't lay it out that way because what you can do that in accounting, you can just put all the compute costs into one place”
“we're we're equitizing ing the issue. In other words, it was all debt”
“this is a way to like make it more humane. It's it's great for folks that were thinking of leaving anyway”
How the episode opens
As crazy as this may sound, I think folks are almost underestimating Anthropic. — There is one story that matters more than any other this week. Anthropic. They finally dropped their S1. This show we break down what you need to know, what you don't need to know, the questions that really come from it, and what we can expect when it comes to day one. And will there be the mega pop of all pops? This and so much more in the show today with Jason and Rory.
I think that the Chinese openweight models are pretty much over in the US. How much money is there for Instincts of the world? It feels infinite now.
I think we should put 20% of the fund into Open AI at the $1.25 billion round. Ready to go. Boys, we are back.
It is my favorite time of the week. And we have some big news to start with. Anthropic Files.
It's S1. It's the moment that we've been waiting for. 16.3 billion of first half revenue.
I just want to hand over to you, Rory, cuz whatever metric I give, you're going to say it was the wrong one to site.
No, I'm not. — So, so which ones were you drawn to and what is the takeaways for us from this?
It was a great ass one. And you know, um, all all frankly, all the haters and the worriers at least for now have to go pound sand. I mean the burden of proof is most definitely you know on the side of the naysayers.
In other words the these guys the S1 was great on almost every dimension and you know it'll be wildly wellreceived. I mean it was yeah you know it addressed I mean some pending open question still they didn't give the Q3 revenue number but you know it was great on C I mean on the overall revenue numbers unknown but they were amazing.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai capex
- ai debt financing
- anthropic ipo
- equity markets spending
- open-weight models
Companies and tickers mentioned
- MSFT
- META
- NET
- BILL
- BOX
- DOCU
- Algolia
- Talkdesk
- Owner
- RevenueCat
- Saleloft
- Anthropic
- OpenAI
- OpenRouter
- Microsoft
- Meta
- Cloudflare
- Bill.com
- Box
- DocuSign
- Scale
- WalkMe
- Modal
- Fireworks
- Instinct
- WarHounds
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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20VC, this episode and its artwork belong to Harry Stebbings. Octagon is not affiliated with the show; this page is an independent summary.
