Episode summary
Midas List VC: Why Anthropic Has a Secret Moat
How I Invest With David Weisburd
· · Hosts: David Weisburd · Guests: Hans Tung
Summary
Hans Tung says he chose Anthropic over OpenAI because he saw a stronger feedback loop, especially in the developer ecosystem around Claude. He argues that the smallest business at the time, the API layer, mattered most because developers using it would make the model better, which in turn would attract more developers. He compares that dynamic to Google inside Yahoo, TikTok’s recommendation engine, and Airbnb’s ability to learn from user behavior, calling it a durable moat built from the wisdom of the crowd.
He extends that framework to broader AI investing, saying the best companies may not be the ones with the biggest consumer brand but the ones that own the most important loop: developers, workflow, or the system of record. Hans Tung also argues that physical AI may be especially attractive because most of the world economy is tied to physical industries, where specialized models can emerge more easily than one model that rules everything.
The conversation also turns to why founders and investors need intellectual honesty, long time horizons, and the willingness to be different. Hans Tung says immigrant and first-generation founders often have an advantage because they are accustomed to being outsiders, and he credits his own investing career to learning from failure, changing his mind, and staying open to being wrong.
Key takeaways
- Hans Tung says Anthropic’s developer ecosystem, not its consumer visibility, was the key signal that it could compound through a positive feedback loop.
- He argues AI moats will come from being embedded in workflows and improving with usage, like Google in Yahoo or TikTok learning from user behavior.
- Hans Tung believes physical AI could produce many winners because most of the world economy outside the U.S. is still tied to physical industries.
- He says immigrant and first-generation founders may have an edge because being an outsider can build the resilience to think differently.
- Hans Tung says the best investors and founders must be intellectually honest enough to update their priors when the market changes.
Notable quotes
“The API business for anthropic in 2024 was their smallest business in terms of revenue size”
“you can see a lot of developers pinging claude for codes for things and cursor and lovable and others are growing rapidly on top of that”
“what I saw with Tik Tok. This is what I saw with Airbnb”
“the fact that so many developers were using it, it can get smarter from how why so many people smart people using it”
How the episode opens
Pon, you've been on the Midas list several times. You're one of the top VCs in Silicon Valley. And several years ago, you had a chance to invest into Open AI and Anthropic. You chose Anthropic. What made you choose to invest in Anthropic at the time?
I've been a consumer investor most of my life because the era I've been in uh where as an investor overlap with the rise of mobile internet, not only here in the US, but also in Asia. And so it's very easy for people who make money from the things that you have done serve you well to continue the same paradigm. Um so when come between open AI and uh Anthropic both were amazing companies at the time.
Um you know this is 2024. People would assume that I would just pick the biggest consumer play at that time in AI and the fastest growing consumer play ever. Um but with nonopropic what we saw uh was something that was to us very interesting and to me personally a consumer internet uh kind of um uh signal that wasn't obvious to people.
The API business for anthropic in 2024 was their smallest business in terms of revenue size. But what is interesting about that business you can see a lot of developers pinging claude for codes for things and cursor and lovable and others are growing rapidly on top of that. Um, for someone who's more of a aspiring historian, remember uh the Intel inside what Google did with Yahoo's traffic and so forth being embedded in something else and get the benefit of the crowd keep on paying you for things over time.
You can imagine as I did that collab will get quote unquote smarter because of different folks, different developers in different verticals asking them for codes and each one needs to be tailored over time tailored more towards that vertical.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai moats
- llm network effects
- vc thesis
- physical ai
- prosumer signals
Companies and tickers mentioned
- ABNB
- COIN
- PTON
- Anthropic
- OpenAI
- Notable Capital
- Qiming Venture Partners
- Bessemer Venture Partners
- Airbnb
- Coinbase
- Peloton
- Slack
- ByteDance
Watch the episode
Watch “Midas List VC: Why Anthropic Has a Secret Moat” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
