If you are trying to indicate that revenue is somehow not a key indicator of a successful business, or that somehow revenue growth is not the primary indicator used to derive Anthropic's eye-popping valuation for IPO, then I think you have lost the plot.

Revenue alone is not enough as we saw in the dot com crash. Scalable, profitable growth is required.

That is true, but not even really connected at all to the comment I was replying to. Revenue is indeed an indicator of a successful business.

Additionally, the Anthropic S-1 does indeed show scalable profitable growth. This is perhaps the most shocking thing in the S-1, to me.

No, not when that business spends more than it makes to bring in that revenue.

A better way to phrase your thinking might be that revenue is an indicator of demand.

The issue here is that they've not really tested what happens to demand when the prices moves to where it needs to be to cover the cost of keeping the lights on.

See here: https://news.ycombinator.com/item?id=50315574

>People should really look at cash flow statements instead of just earnings. Anthropic published one and their cash flow was positive for the first half of this year.

The dot-com era had a lot of companies with high valuations and zero revenue. That was the main problem.

If you go just by operating income, they showed they can be profitable in Q2, and the operating loss in Q3 is fairly small (in relative terms. For every 32 dollars in revenue they lost one dollar). They haven't shown wild profits, but nobody expects them to. Any money they make has more value when it's reinvested into growing their market share and growing the market, making next quarter's numbers look better. And imho they have solid enough financials that they can make the bleeding stop if the money faucet turns off

All of that isn't very newsworthy though. We knew all that from the Q2 numbers. What is interesting is that reinvesting all their profits to make the number go up in the next quarter didn't work as well this time as it did all the other times

I'm unconvinced they have a moat that will allow them to ever show wild profits though. They are constantly 6 months ahead of open weight models. Their potential customers are perfectly able to wait them out. They'd need a government enforced cartel against open weights at this point for me to not view the IPO as a plain and simple cash out.

Some of my nephews ran a hugely successful pokemon card selling business (for ten year olds). I later found out that their mom was buying all their card packs for them to open and sell.

They stopped when the free packs stopped coming and they needed to finance their own.

Revenue is the one number that indicates how interested customers are in your product. What would you have us measure, then?

There is no company on earth that can run on customers being interested alone, you also need to offer a product they can afford at a prices that generates profit.

Right now, I could start a business selling gold bars for $1 a piece. There would be more people interested in that than Anthropic.

Yes, revenue shows people's interest and willingness to pay for the product. That's exactly what it is.

ANT also has positive gross margins, so they aren't selling gold bars for $1.

I don't understand why people on HN treat ECON101 like some fringe theory every time this is discussed. This is basic stuff.

Gross margins just means that they make more in revenue than their operational costs to offer the product (i.e., electricity, salaries, etc).

They have yet to release a model that has made more in revenue than it cost to develop...and each new generation costs more to develop than the preceding generation. Costs increases outpace revenue increases with every generation, across the industry, and LLM-based cash flows are highly negative even at Google and Microsoft.

Customer use of LLMs is decreasing after quarters of growth. Execs were all in on pretending LLMs were the future until the WSJ/Stanford report revealed what everyone outside of tech already knew: LLM use has not correlated with any measurable productivity growth in any non-programming industry. (And arguably, the same is true in tech as well: LOC has increased but quality has dropped, so the net change to productivity is de minimis.)