Anthropic Files Confidentially for IPO in Race With OpenAI

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1:57The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio. Anthropic has confidentially submitted draft paperwork for a public listing, potentially leapfrogging longtime rival OpenAI in the race toward a Wall Street debut as soon as this fall. The company in a blog post today said, quote, the number of shares to be offered and the price have not yet been set. I want to bring in Ed Ludbo. He's the co-host of Bloomberg Tech every day at 11 a.m. Wall Street time. He joins us from the San Francisco Bureau. So, Ed, this comes just days after we learned about this monster.

2:32I believe it was a Series H round for Anthropic, close to a trillion dollar valuation. I looked at the blog post from the company. Not much in there. Just telling us that they filed confidentially for this. Did we learn anything about numbers or any more about their books? I mean, literally not. you know as you outlined they said that they're not disclosing the size of the offering the price range just that it would be dictated by market conditions but you know the timing when a company files confidentially they have a choice they don't have to do a big blog post they don't have to say anything and Anthropic did choose to say something so you know that kind of got it out there.

3:15It is unusual, let's say. It's pretty extraordinary that it was within four days of that round. And I think you've already struck the kind of key point, which is that they just closed the Series H at a$960 billion post-money valuation. So it takes into account the$65 billion that they raised. But it puts us on this kind of three-way path, SpaceX, Anthropic Open AI to have$3 trillion club IPOs in the calendar year based on the existing reporting. How much does this confidential IPO really leapfrog Anthropic ahead of OpenAI? Well, so when Anthropic closed the Series H, by the way, Series H, for those listening and watching around the world, it's just in alphabetical order the number of rounds that they've done uh h the most recent you guys can count on your hands how many letters into the alphabet that is while i give the rest of my answer um you know the a psychological milestone from that was that the post money and pre-money valuation put anthropic above open ai as the world's most valuable ai startup if you don't consider spacex to also be an ai startup because of course, when SpaceX merged with XAI, that transaction valued the whole entity at 1.25 trillion.

4:39There is some chatter in the market, of course, about the timing of all of this. Last week, wasn't I on the show last week, Tim? You remind me. Yeah, many times. Talking about OpenAI was supposed to be filing confidentially last Friday or this Monday. And I'm not misspeaking right. OpenAI, separate from Antropic. And to the best of my knowledge, it hasn't happened yet. And so like a part of it was also how much did OpenAI and Anthropics study SpaceX's S1 when it flipped public, had all that detailed information and decide, all right, we can do this too. So we're also learning, Ed, and I promise we'll get to SpaceX at some point, but you're going to stay with us.

5:15We're also learning that Salesforce has a stake in Anthropics worth about$5 billion after repeatedly investing in Anthropics over the last few years, because this company has raised$65 billion and it's just in its most recent round. By the way, H is the eighth letter of the alphabet, if you're counting along. $965 billion round. Are we going to hear more and more about this? How much everybody's stake is worth as it goes to that IPO? $965 billion valuation in a$65 billion round. But the other thing about it is the chronology and how quickly things are happening is so important. I think March, They'd only just closed the, what letter comes before H in the alphabet?

5:59You guys fill that in for me. Right, great, Series G. They'd raised an equivalent amount of money,$35 billion, at a$350 billion valuation. And many of the participants were in both. So to answer your question, yes, with time, you can form a better understanding of the cap table. Typically, in quite obscure regulatory filings, it's only those that own a 5 % stake or greater that you hear about until it comes time to an IPO itself when it kind of comes out in the wash, the proportionate size of each one. But remember, with Anthropic, Amazon and Alphabet, the parent of Google, have made absolutely serious financial commitments to this company in terms of investment and also offered them a lot of compute in lieu of cash as part of that arrangement.

6:50I do want to get to SpaceX and just, you know, hearing you speak about this, Ed, and just talking about the astronomical amounts of money that are being raised for these markets. I'm wondering if you can talk a little bit about some points raised in today's Bloomberg Big Take about how much retail money is going to flow into these IPOs. The big take today, of course, specifically about SpaceX and in part about how retail investors can actually tap into this IPO and get exposure. Well, you know, a sort of background story, historic story was Elon Musk talking about how Tesla, which is another publicly traded company of which Elon Musk is the CEO, those retail investors, those loyal to Tesla having some kind of preferential access to a SpaceX IPO when it came around.

7:44And there's nothing solid or codified yet in the reporting that that will be the case. you know the most interesting and recent proxy was the cerebrus ipo were actually a very very small allocation went to the retail investor lots of people were disappointed um so so there's whether elon musk follows through on that prej or not some news that came out this morning is that about five percent of the offering will go to employees family of employees and friends of employees but what i would say is that any ipo historically of that scale that's a pretty standard thing to do. So the red headline hit the terminal and lots of people made a lot about it.

8:20But actually, if you look back at the history of the tech IPO market, it happens a lot. So in the big take you're talking about, there's a really interesting scenario, which is, well, what if you are a really committed investor of Tesla? Or something also interesting, Tim and I spoke about on TV the other day, Bitcoin. Would you have to liquidate some of your holdings there to participate in a SpaceX IPO anyway. And that would put you in an interesting spot because you're like, oh, there's actually a lot of connection between those three entities, SpaceX, Tesla and Bitcoin, and make you think a little bit more.

8:54And I love how the big take kind of outlines that consideration. Yeah. And I guess there are also questions about, you know, what it looks like for for the indexes, for QQQ, for the S &P 500. And, you know, I'm not going to say a breaking of the rules, though critics might say a breaking of the rules. They might make adjustments. Yeah. Why does everybody want a piece of these? Because, you know, it looks great going up, but that's not a guarantee here. No, it's not a guarantee. I mean, you know, again, the reporting is that SpaceX will seek to raise$75 billion at a valuation we reported last week that's nearer to$1.8 trillion, but previously at two or above$2 trillion.

9:40So there's the mathematics of the offering. But actually, if you just take a step away from like this is an IPO and that's how IPOs work, the company offers a percentage of itself, a certain number of shares at a certain price range. there is a bigger picture and like lots of investors that I speak to that own quite a lot of this private company already would say well I see this by the end of the year and certainly by the end of the decade being a three trillion dollar company or a five trillion dollar or even a ten trillion dollar company and they just have conviction that that will be the case and so if that were to be the case if that assumption is realized then from a pure weighting perspective just like we see with NVIDIA now, any move in, even modest in that name, will have an impact at the index level.

10:24And the difference is, is that this is a rocket AI and satellite connectivity company all at the same time. And that's a bit new. Well, we're doing more with Ed. We're doing more with SpaceX, with retail investors. Charlie Wells is going to be joining us on the other side as well. Stay with us. More from Bloomberg Business Week Daily coming up after this. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently.

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12:40stories that matter. Listen to Bloomberg Daybreak each morning on Apple, Spotify, or anywhere you listen. This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130. I want to go back to our coverage of the SpaceX IPO. We have been talking to Ed Ludlow. He's the co-host of Bloomberg Tech. He's out there in San Francisco. Also staying up late for us, we really appreciate it, is Charlie Wells.

13:20He's from California, but he lives in London. He's Bloomberg News reporter, and he joins us from London. Charlie, I want to start with you. And it's a special treat to have you on the program because our afternoon program often means that you can't join us because it's so late where you are. Um, you, you're diving into what's happening with retail traders, uh, who have been exposed over the last few years to funds that have traditionally only been given access by, um, let's say accredited investors, people with over a million dollars in investable assets. But increasingly you have funds from the likes of Kathy Wood or, or Robin Hood or others that do offer what they say is exposure to private companies.

14:06How does that work? Yeah, it's really interesting, Tim, because basically we're at this moment where we're kind of getting all this fervor and excitement about IPOs. And then we also have this kind of evolution of retail trading, right? We know that's been kind of stacking up over the past five years. We've seen an increase in retail volumes, significant increase in retail volumes from about 15 % to about 20%. And then you also have the fact that companies are staying private for longer. So you get this kind of trio of facts coming through and then some products that are hitting the market or that have really been hitting the market over the past couple of years, but sort of give that everyday person who's not accredited, who doesn't have, you know, six figures, seven figures to invest access to some of these pre IPO companies to some of these kind of venture style firms.

14:54And there's a real fervor for them right now. And there's a lot of kind of Reddit conversation about this. There's a lot of social media conversation about this, about, you know, everyday people who want to get in, who want to kind of get access. They're talking at the water cooler about SpaceX. They're using Claude. They're using OpenAI. And they feel like the economy around them is changing. They want to get in. And so a lot of these funds, a lot of them are closed-end funds, kind of give them a way to do that. And Charlie, tell us about kind of what your reporting has uncovered about some of the limitations of these funds, because, of course, there's no such thing as a free lunch on Wall Street.

15:36What? What do you mean? No, you're totally right. You're totally right. And, you know, there were a lot of teachable moments in some of the investing activities of these people. I think in the story that I wrote recently, I talked to a father and a son, and they started investing in one of these closed-end funds that gives people access to OpenAI, to SpaceX, to Anthropic. And basically, the deal with this fund was that there was a six-month lockup period, right? So retail investors could get involved. They have to pay much higher fees and say to a standard ETF, and they also have to lock up their money for six months.

16:13And so there was a moment when this fund was just skyrocketing in value. And the 19-year-old son calls up his dad and just goes, okay, wait, I put in 2K? I now have 76K? Am I rich? And the dad has to kind of remind the child, the kid, he's 19, he's not a child. No, like you can't sell yet, right? And this is kind of a demonstration of the evolution of retail trading to kind of emulate the private markets, to emulate kind of institutional money a lot more than it has in the past. So this is kind of retail starting to learn what some of those limitations other investors deal with on an everyday level.

16:51Charlie, there's also fees, and you write a lot about personal finance and investing and the way that fees can eat into future returns. With a product, a closed-end fund such as this, and there are a few that you mentioned here, what do critics say about the fees? yeah i mean the issue is that they would compound right and so there's a sense that like you know if you're paying higher fees and kind of you know standard index fund it's going to over time really compound and i think that also kind of gets to the point of kind of risk return right so i think one of the reasons a lot of retail investors want to get into these funds is because they feel like they've been missing out they feel like a lot of these kind of vc style investments have been gatecapped.

17:30And this is a kind of extension of the democratization of retail trading. But then if you think about it, you're taking on the risk of an earlier stage company, and then you're also having some of the potential returns being eaten into. That kind of brings about questions about how much you're actually getting out of this. And then another risk that a lot of skeptics brought up, kind of tying that again, as I was reporting this was, by the time these stakes are getting to retail, It's pretty late in the cycle of these companies that everyone is so excited about. So there's questions like, have you kind of missed the boat?

18:04Yes, you're getting SpaceX. It's not publicly traded yet. That's cool. But it's also a lot later than, say, what a VC would be getting and what they would be kind of getting the upside from. So I think that kind of has brought a lot of skepticism from people kind of outside the Reddit channels. Yeah, I'm glad you went there. And that's exactly where I want to bring in Ed Ludlow. He's the co-host of Bloomberg Tech. He's out there in San Francisco. It's just a short drive from Sand Hill Road where many of those legendary venture capitalists, Ed, are based. And you're looking at this, I know, from the venture capitalist angle.

18:38We were just talking about the Series H. Was that right? Yeah, Series H round that Anthropic had raised. And the fact that they announced this just days ago and now they're already on the path to having an IPO. what is the what do you hear from from venture capitalists about retail sort of trying to replicate their success because we hear about all the home runs and the grand slams that these vcs and these legendary vcs had but they'll be the first to say listen there are a lot of duds for investments that we've made and they're not all going to be a winner well the the capital uh uh approach of a VC is like across a curve.

19:20So you make lots of investments and over the life cycle of those startups, many of them are net zero. They fail or they never amount to anything. They never achieve anything. Some of them are acquired very early by a bigger company. Some of them go on to do IPOs where if you invested in a SpaceX very early, you are getting many, many X returns, your initial investment, especially if you invested early and then again over a series of rounds, either through the primary and secondary markets. You know, the retail investor consideration in a case like SpaceX, it probably isn't going to move the needle.

19:58For one, you know, there's a difference between economic ownership and then voting power. So in this case, pre-IPO, Elon Musk has 85.1 % voting control of SpaceX anyway. And those names that are at the top of the cap table after him, Fidelity, Founders Fund, Sequoia, Google, they've been there for a long time. And so they participate in the IPO through the offering. But also you'll see like cornerstone investors come in like BlackRock, someone like that who says, OK, I'm muscling into this IPO and I'm going to buy a few billion dollars worth of the offering up front on IPO day. that squeezes out the retail investor unless there's a very big specific allocation, which as we talked about before the break, in this case, we just don't know yet.

20:44Charlie, when you talk to the proponents of these funds, when you bring up the lockup period, the higher fees, the risk of investing in a company that's maybe more speculative than a company that's already public. What is their response to those limitations? Basically what they say is, look, you know, we're democratizing venture capital, right? We're bringing this to more people. Isn't that a good thing? And I think we could spend a lot of time talking about whether or not that's a good thing. But they basically say, look, yes, our funds are higher than if you were investing in like an S &P index fund, but our fees are still cheaper than someone would have to get in a very standard, say, venture capital fund.

21:28So they talk about that. They talk about of the evolution, right? So some of the people will say, you know, this is early stages. We're in kind of the early innings of the kind of, you know, private era of markets. And as people learn more, as more investors, as more retail investors come in, there'll be more transparency, fees will come down. I think you could, you know, really dig into some of those questions. And I think others have said, and, you know, this was the head of Robin Hood Ventures, who, you know, they have a product out that is similar, where you can get exposure to, say, open AI, talking about how, you know what, this could be risky, but it's less risky than say starting, you know, from, you know, day one of a startup that like we are bringing people much later stage companies and they're not going to get as much upside, but they're also not going to get as much risk.

22:13And so from the people who are going to bring these funds to market, you get this, you know, realization of, yes, these are different, they're more expensive. They're not going to give you those 10x returns that a VC is going to get, but you still get some exposure. And this is something new. Why don't we try this out? These are the whales right now, Ed. These are the ones that are getting all the attention. These are the ones that are getting a lot of the oxygen right now. But for venture capitalists who you speak to, where are they putting their money? What's the sort of second derivative of a public anthropic, of a SpaceX, and of an open AI?

22:49The thing is that SpaceX in particular, but also Anthropoc and OpenAI are very mature companies now relative to what's happened in the last 12 calendar months. SpaceX was founded in 2002, is that right? Maybe prior to that. People have been on this journey with them where they've just done a lot in the private market. So applying that thesis elsewhere, there are other companies that are looking at orbital data centers but there is also an acceptance that you need to have a lot of capital and a lot of scale to make orbital data sense make sense. So like one of those companies is StarCloud, for example.

23:31They have an H100 NVIDIA GPU on board a satellite computing in orbit right now, but they're nowhere near the economic might of SpaceX. So like you can apply those. The frontier lab thing is getting very interesting because if we bring it back for one moment to the Amphropic confidential filing today and you compare and contrast Amphropic is a is a customer of SpaceX AIs right they're renting compute for more than a billion dollars a month in the end they'll also compete with each other as two frontier model labs that want to sell AI software to enterprise companies and OpenAI is exactly the same race and so like somebody at some point is going to have to pick a winner that doesn't really answer your question how do venture capitals play the rest of the field.

24:14If you're like Sequoia, for example, with SpaceX, you've had to adapt and grow and raise funds and keep to stay up there because the bigger phenomenon that's happening now in this game is it's the mutual funds, sovereign wealth funds, and those kind of legacy Wall Street private growth equity names that are coming in and muscling in in later rounds. So that's a factor you've got to think about. Guys, going to have to leave it there. Appreciate both of you joining us. Ed Ludlow is going to be having a conversation a little later this week, out in San Francisco with Anduril co-founder, Trey Stevens.

24:48That's a little later this week. That's at the Bloomberg Tech Summit. I don't know if there's going to be tickets still, Ed, but you can watch it on Bloomberg.com and on the terminal. And Charlie Wells joining us, Bloomberg News Reporter. Check out his story on the Bloomberg Terminal and at Bloomberg.com. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Copper advanced in New York and London to kick off a crucial month ahead of the Trump administration's deadline to make a fresh determination on launching U.S.

25:27import levies. In the meantime, Goldman raised its end-of-the-year copper forecast by more than 10 percent as it sees U.S. stockpiling and weaker-than-expected mine supply keeping the market tight. Its analyst wrote in a note that copper will finish 2026 at$13 ,735 a ton versus a previous forecast of around$12 ,465 a ton. So we're curious what Andrew Groves is seeing right now. He's chairman of Copper Intelligence, which focuses on mineral exploration and acquiring and developing high-grade copper assets in the Democratic Republic of Congo. He joins us here in the Bloomberg Businessweek studio.

26:04Thanks for joining us, Andrew. How are you? Very well. Thank you very much for hosting me, having me here first time. Yeah, welcome. It was interesting. So let's just start kind of high level about where you kind of see the forces driving the copper market right now and how AI plays into all of that. I think there's a number of factors driving the market and you've got to start with the supply issue always. And, you know, over the last 10, 20 years, you've had a dearth of mining investment in the source of raw materials, whether it's existing mines upgrading the mineral reserves or finding new deposits.

26:38And then you've, so there's been a complete lack of that. And then you have the existing mines. A lot of them, especially in South America, have declining grades. So if you look at some of the mine grades in Chile in that you're running at 0.9, 0.7, 0.8 percent, that means you've really got to move 100, 110 tons of dirt to produce one ton of copper. And how much does it cost to move that 100 tons of dirt when you look at fuel costs, human costs, vehicle costs, et cetera, et cetera. So you've got that issue in the supply side. And then obviously on the demand side, you've got these hyperscalers requiring, what is it, 50 odd thousand tons of copper per unit.

27:19So you multiply that over a whole series of hyperscaler data centers being built out. In terms of regions of the world where you are most bullish is is it fair to say it would be drc i'm very bullish on the drc on the on the basis it's very very underexplored and historically it's been in constant conflict which is why it's probably underexplored correct and the new uh government under felix that's coming in this second term where he's not in a coalition with kabila he's um done an exceptional job there's a lot of investment going in the country roads been built you go into Kinshasa a lot of infrastructure being built buildings and a lot of mining investment you had 32 plus billion dollars of mineral exports last year the highest ever for the for the DRC and it's on track to do probably in excess of 50 billion this year so huge amount of investment in copper but what's exciting about Congo is the copper grade so if you look at the average grade in Congo is running two three four some deposits six percent means you've got to move a lot less dirt to produce the same ton of copper than you do in a lot of these South American jurisdictions.