Episode summary
Tenacity's Ben Narasin on AI buildout: This will be bigger than electricity
Summary
Ben Narasin argues the AI boom is still in its early infrastructure phase, with Anthropic’s reported 45% sequential revenue growth and a possible $1.5 trillion IPO valuation underscoring how fast leading AI companies are scaling. He says Anthropic is “the fastest growing business from a revenue standpoint of all human history,” and adds that its revenue reportedly went from 9x growth last year to 11x this year, a pace he says is unlike anything he has seen.
Narasin is constructive on the long-term opportunity but cautious about where investors enter. He says venture money is being sucked into two extremes: giant AI firms raising huge rounds and a flood of smaller “me too” AI startups that are hard to fund. He also warns that financing the buildout is constrained by long lead times for turbines, backup generators, chips, permitting, and data centers, even if the demand will eventually be there.
He frames the AI buildout as a generational technology shift, comparing it to railroads and electricity. In his view, public markets are behaving like venture investors by concentrating only on the best names, while an OpenAI IPO likely comes next year, with growth likely to slow before the market broadens out again.
Key takeaways
- Ben Narasin says Anthropic’s revenue growth is unprecedented, with the company reportedly up 45% quarter over quarter and scaling from 9x growth last year to 11x this year.
- He expects the AI buildout to take much longer than investors assume because of bottlenecks in turbines, backup generators, Nvidia chips, permitting, and data-center construction.
- Narasin says AI will create plenty of demand and “will be bigger than electricity,” but he expects a shakeout among weaker companies along the way.
- He thinks public markets are acting like venture investors by only funding the strongest names and ignoring everything else until sentiment improves.
- Narasin expects an OpenAI IPO next year, and says he would prefer to see other AI companies get a chance before growth cools too much.
Notable quotes
“THIS IS THE FASTEST GROWING BUSINESS FROM A REVENUE STANDPOINT OF ALL HUMAN HISTORY”
“THEY NINE X THEIR REVENUE LAST YEAR, AND THEY'RE GOING TO 11 X IT THIS YEAR”
“IT'LL BE LIKE THE CALIFORNIA RAILROAD. IT'LL JUST TAKE A LOT LONGER THAN YOU THOUGHT”
“THIS WILL BE BIGGER THAN ELECTRICITY”
“I THINK IT'S NEXT YEAR”
How the episode opens
Goes on sale in stores and ships to customers next friday. Apple's stock is up more than 25% this year, in fact, up 28% year to date. — An Anthropic telling investors this week that its third quarter revenue climbed 45% from the prior quarter. As it prepares for its highly anticipated ipo, where it's reportedly now targeting a $1.5 trillion valuation. Join us on the latest ai news in the state of the ipo pipeline is Tenacity Venture Capital founder and general partner Ben Narasin, and the market took that pretty well down from two to to 1.5.
Yeah. If you go back even a couple of months ago, they were talking about maybe only hitting a trillion and then it got to 2 trillion. It's a bouncing ball.
You know, Anthropic is a fascinating company in so many ways. But at the end of the day, we can't forget the fact that this is the fastest growing business from a revenue standpoint of all human history. And one of the things that's novel about it is they nine x their revenue last year, and they're going to 11 x it this year.
So to do that at scale, I've quite literally never seen that. You usually see decay in the growth.
You are. I wouldn't say you're ecstatically bullish, but you're kind of sanguine about even where valuations are. Although you looked at a lot of companies and only how many did you look at and you only invested in one.
Yeah. The worst I've ever had is I looked at 10,000 pitches over two years and funded six, but I've only funded. So I'm in deal docks right now on a deal. And that'll be the first deal I do in roughly 15 to 18 months.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai buildout
- anthropic ipo
- ai revenue race
- ai ipo market
- tenacity venture capital
Companies and tickers mentioned
- Tenacity Venture Capital
- Anthropic
Watch the episode
Watch “Tenacity's Ben Narasin on AI buildout: This will be bigger than electricity” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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