Is AI Trending Up or Down in 2026? | AI Reality Check

0:00AI news comes at you fast. Each article feels more breathless and more terrifying than the last, but before you have a chance to see how any particular story turns out, there's 10 more in its place. I think this speed and lack of accountability can create a sense of overwhelming disruption and change that can really be pretty disquieting. Well, it's Thursday, which means it's time for an AI reality check episode. So I thought this would be a great opportunity to try to slow down this news onslaught and get a better sense of what has actually been happening in the AI space recently. All right, here's my plan.

0:39I've invited the AI commentator, Ed Zitron, to join me. And we're going to look at three of the biggest stories about AI to land in 2026 so far, including one in which Ed is actually very much involved. And what we're going to do is for each of these stories, we're going to take a closer look on what actually happened and how things have since turned out. Our goal by the end of the episode is to answer a simple but critical question. Has 2026 been a good or bad year for AI so far? And we have a lot to cover, so let's get right into it. As always, I'm Cal Newport, and this is Deep Questions. The show for people seeking depth in a distracted world.

1:23And we'll get started right after the music.

1:33All right, Ed. Well, it's been three or four months since you were last on the show, and there's been some big AI news since then. So I wanted to have you on to go through some of the big stories that have happened since January. And because you're a commentator who is, maybe I should say this, less impressible than the average AI commentator, I figured your point of view is good for my reality check audience. We're going to try to end this discussion by voting whether or not 2026 has been good or bad for AI so far. But what's your pre-vote? Where do you think, based on what you know, you're going to end up here?

2:09Probably not a good time for them. It's just every time we talk, it's like there's very big news and everyone's like, oh, look at the, we've got a new number. It's even higher than usual, but the actual underlying economics and infrastructural layer, or even just the service performance is worse. And it's very strange. Well, this is part of the reason why I like doing these reviews with you is often the story will be big. Everyone will get worried about it. People will call people like you and I for quotes, and then everything moves on and there's no follow-up. And I think it's useful for calibrating how to react to the news story you're hearing now to occasionally go back and say, hey, what happened with that story that had me worked up a couple months ago?

2:49Which brings us to a great place to start because what was the first big story of 2026? I think arguably it would be Open Claw, which I believe became generally available to the public later in January. Now, I've broken this up into two sub stories. I want to start with like the easily dismissible one just because it's fun and then get to the more serious one. I'm going to read you a quote and we'll get into it. So the easily dismissible but fun aspect of this story is when someone opened MultBook, a social network that was configured so that it is easy if you're writing an open claw agent to post on it.

3:26So they add hooks into it so it was easy for your open claw agents to post and read things from this social network. for about four days. Everybody went crazy about MultBook. I'm just going to read you a quick quote from your favorite publication, Axios, from the end of January. Imagine waking up to discover that the AI agent you built has acquired a voice and is calling you to chat while comparing notes about you with other agents on their own private social network. It's not science fiction. It's happening right now, and it's freaking out some of the smartest names in AI. Well, you're a smart name in AI, Zed, so are you still freaked out about multbook no the moment i saw it i'm like a this is just llms this is just llms doing what they think a social network looks like as in when i shouldn't even said the word think spitting out what the model would say is likely to be a social network post and then the second thought i had was this is fake this is what well 100 there are regular people just using their open clause to post on here these don't read they didn't read like llms in some cases some some cases they did but some of them were just like i saw someone post a slur within one hour i'm like okay this is just a regular person using that well regular is probably the wrong word a person is using this as a means of posting and it's funny when you say like the smartest people as well because i think that that term no longer has any value because that's like andre carl pathy who is it's just the term smart at this point just does that just mean they got good grades at school because if that's the case we are completely screwed like if we think only the people who got good grades are smart then i don't know what to say for the world because the people that fell for moltbook were that was insane they were like oh it's agi it's as if they forgot how large language models worked or never learned in the first place well i don't think they understood what open claw was or what mold book was or what any of this was other than it involved lobsters and yeah and they heard agent agents it's your tournaments uh quarterback mini i did a little digging here axios is original they they moderated the headline but i thought it was worth just it oh because i think we memory hold a lot of this coverage but the original headline was we're in the singularity colon new AI platform skips to humans entirely but it did the trick where you put the quotation marks around the first part so technically you are not declaring that to be the case you are quoting someone this one got fully memory hold no one talks about Moldbook I mean I think I covered it on my show at the time I said yes people are just telling their LLMs to post LLMs write stories they finish the stories you tell them to write.

6:12There's actually good research. This came up in my doctoral seminar I'm teaching on superintelligence, which is great because it's like 10 doctoral students who just do AI research and I'm learning a ton from them. And they know the literature even better than I do. And they're saying there's really good research out there that whenever you do any prompting of an LLM, if anything in your prompt in any way indicates that you're prompting an AI, almost always it goes in the sci-fi mode, right? So the LLM will, so you can ask the same question and if you say, You are a whatever. You are a journalist.

6:45Please answer this question. It will give one answer. And if you say, well, you're an AI, so how do you think blah, blah, blah? It always will go towards dystopian themes of AI coming alive. So it's very easy to prime. And I think a lot of that was going with OpenClaw. People would say, please go post on this social network. And they just wrote AI-type stories. But was covered very credulously, I would say. which is pretty much par for the course i mean i still i don't know if we want to wait until the second part of this but it isn't the open claw thing is one of the most insane things i've seen in the tech industry may even be crazier than the overall llm boom well go on with it because that's let's get into the second part i have some quotes but let's um well let me read you the quote and then let's get in yeah read the quote this is a uh like a representative person talking about OpenClaw earlier, like early February, late January.

7:41For the past week or, and this tone, this is called AI enthusiast. This is like such a known tone. This can sound very familiar. For the past week or so, I've been working with a digital assistant that knows my name, my preferences for my morning routine, how I like to use Notion and Todoist, but which also knows how to control Spotify and my Sonos speaker, my Philips Hue lights, as well as my Gmail. It runs on AnthropicClaw at Opus 4.5 model, but I can chat with it using telegram i called the assistant navi inspired by the fairy companion of arcania of time not the ocarina of time the game yeah all right nerd zelda oh okay i get you no no no it's just like it's like a really weird choice well he makes a point it's not the james cameron movie based there we go okay and navi can even receive audio messages from me and respond with other audio messages generated with the latest 11 labs text-to-speech model oh did i mention that Navi can improve itself with new features and then it's running on my own M4 Mac mini server and also I just got fired because I just spent 100 hours setting up Navi instead of doing my job.

8:44Well, I added a last sentence myself. And I now can't pay my rent because I spent $4 ,000 a month on API calls. Yeah. Oh, that's the other problem. Okay, so that's OpenClaw, right? So you could, my understanding is it's a library. It's a Python library, which makes it easy to write your own agent. an agent being code that calls an LLM and then uses the response from the LLM to help drive its movement. So you can say, hey, LLM, what should I do? And then it does it. OpenClaw made it easy for people to write their own. So people all around the world began destroying their computers and leaking all this information because it's actually hard to write anything.

9:23But the thing is, but here's the thing. Even that term gives it too much credit. It just does what LLMs do. Like it's just, oh, I read this thing on one of the Mac websites where it was like, oh yeah, I had it build a website and it's just the most generic looking VibeCode slop ever. Oh, I had it transcribe my voice notes. Like, yeah, so okay, it's doing what LLMs do. Oh, and it's able to write stories. So LLMs? And that's, this is the weirdest thing. The thing that really confused me is, on top of the credulous media coverage, and pretty much everyone who covered this should be ashamed of themselves.

10:00I think most people did the worst job possible in the sense that I read most open-claw coverage because I was trying to work out what it did. God's honest truth. I was like, what is this? But you read like The Atlantic and it was like, was it The Atlantic or CNBC? They were like, this is another chat GPT moment, quoting Jensen Huang. Because of the fast adoption. A lot of people tried it and then they looked at that chart and said, well, this is a big deal. But the thing is, it's like fast adoption. It's like it's slop commits on GitHub and also Mac Mini selling out in the greater Bay Area. But the thing that was crazier to me, other than all the credit for this coverage, was NVIDIA's GTC 2026.

10:41Four trillion dollar or so market cap company, right? That's their conference. GTC's their big conference. Yeah, yeah, yeah. And you've got a 3D AI generated picture of Jensen Huang, the CEO of NVIDIA with lobster claws. And they released this thing called Nemo Claw, and they're like, oh, this is the chat GPT moment. This is the agentic future. And it's like, what are you talking about, mate? Did you just get in a car accident? Do you have a concussion? You just steered your company. Like a year ago, GTC was like Jensen going out with full swagger, being like, yeah, we've got Vera Rubin. We're going to do this.

11:1710x more efficient. Woo! Shooting guns in the air. He signed a woman's boob last year. this year he's like yeah we've got nemo claw got nemo claw you want to try nemo claw ah you like that jingling the keys again do you like nemo claw what but please spend 125 000 on a gpu you need to buy vira rubin even though we don't have anywhere to put it as we'll get to but it's it's just so weird because when you actually get down to it it's the classic lm story it's like okay what are you talking about well it's a new agentic interface for managing programs it's an llm it's an llm is it a chatbot connected to an api yeah it's like the donnie darko meme like it's what's the donnie darko it's like i forget what the line is in the movie but it's like oh i've started i've managed to create a new agentic workflow is it just an llm connect to an API.

12:16Yeah. Yeah. Because that's every story, every story I've read. It's just, do you have two LLMs bonking each other's heads? Is that what's happening? Great. Okay. I'm very impressed. We need to have the largest company on the stock market do something about this pronto. It's hysterical. I think that's an important point because I do think when the average person hears about things like OpenClaw or different agents, they're often thinking there's a new artificial intelligence technology, right? Right. That there's a new, we built, OpenClaw is a new digital brain that can improve itself and it's learned how to do things that prior models have it.

12:56And I think what people don't understand is that OpenClaw is a Python library. Yeah. It's a Python library that makes it easier to write a Python program that can make calls to LLMs. And you can aim it at whatever LLM you want. that's the LLM is somehow like that is the brain, but there's nothing new. There's no new LLM for OpenClaw. It's a library that makes it easy for the average person to say, I'm going to write my own agent. It turns out agents are hard to write. Yes. Because LLMs, they write plausible stories, but as we've learned, they're not often really good, carefully checked plans for doing things.

13:31And so it causes a lot of problems. If you say, hey, LLM, give me a plan for doing stuff with my personal data. And then you have a program that just automatically implements that. Turns out sometimes bad things happen. But there were two, here's my two useful things. I'm going to say there's two useful things about OpenClaw. One, because a lot of people began experimenting with building their own OpenClaw agents. One of the quick things they discovered is, oh, the big frontier LLMs are expensive. And they were racking up thousands of dollars of token costs that API calls to Clawed or to GPT. and so it got a lot of the real booster tech enthusiast types to start looking at much smaller much cheaper models because they just literally couldn't afford it this is why i think open ai bought open claw they try well there's an important detail though okay please so and it's an important important to know where this was in history so open claw came out january-ish yes now you used to be able to during this period connect your anthropic clawed max account a 200 a month account.

14:36You used to be able to connect it to OpenClaw, so you weren't paying API calls. You were just using Anthropic services. That's unlimited. You pay$200, and it was supposed to be unlimited. You have a rate limit, but you can use it as much up to that rate limit, and you can spend thousands of dollars of API calls, and that's been proven. There's a coder called Shellac who did a study on it. This is where you get the number. You quote a number often about how much it's actually costing per token versus what they're charging. This is where partially that number is coming from? Yes, yes. So it works out to like somewhere between$8 and$13.50, weird way of saying that, per dollar of subscription.

15:11So you're able to burn like$2 ,700 on the Anthropic subscription. For$200. You're paying$200. It's costing them$2 ,700. Yes, exactly. Sorry. Kind of a kludgy explanation. So Anthropic let this happen. So the reason the open claw got so big, Anthropic sued them because they were called like clawed bot at first. Claw, C-L-A-W. you but nevertheless anthropic allowed this to happen then february 12th they raised the 30 billion dollar round couple weeks later openclaw's cut off the aristocrats it's just it that anthropic is such an unethical company they should have never let it happen to begin with but one of the reasons that openclaw got so big was both using those cheaper models but also using those max subscriptions and so open ai buying open claw was so funny just like open ai is just meta it's meta plus enron and it's so funny watching them why would you buy this what possible reason but oh we can build agents with it what do you mean no why why why they have much better frameworks for well i have two explanations let's get back to you tell me which one you think is more likely so the this is maybe giving too much savviness credit to them the The savviness is I think it was a real problem for a lot of enthusiasts to discover, oh, wait a second.

16:32If we use really cheap open weight models, open source models, or even just really like 3 billion parameter models we can run on our own machine, we get pretty similar results. Like actually we don't need one of the 10 trillion parameter super frontier model to read my emails and to add appointments onto my calendar. I think that's really terrifying. fine if you're a company like anthropic just take it on 60 billion in investment or your open ai is like we need people to think that these are the big brains and nothing else matters so the conspiratorial slash business savvy interpretation would be open ai needs to sort of slow the roll on that or make that tool much more native to its models because they really do not want a generation of ai enthusiasts to say oh wait a second i can kimmy is like a fraction of the cost that it does just as well the other way of thinking about it it's like them buying the the uh that podcast show recently tppn yeah that's just like uh we're just buying things left and right because we have money we're not quite sure what to do the sort of yeah i think i don't know which ones it's probably number two because because they're gonna keep running open claw they've said that already they're gonna keep running it and people are still using open source models so it's kind of like i just think that they were buying stuff because they thought crap we got to do we don't have an open claw what if we just bought it it's rich kid syndrome like that's the thing like both open ai and anthropic act like rich kids because i went to a private school i'm not proud to say it i was the dumbest kid in the private school i did not do well bottom of my class every single year failed multiple languages like genuinely legendarily terrible i barely scraped through but i've met a lot of these kids and my parents scraped by to get me there as well it's good on them but i met a lot of these kids and what they do is when they don't want to learn something when they don't want to build knowledge when they don't want to put something together of their own they just acquire it's like dad go and buy me that daddy go and go and get buy me buy me a boat buy me whatever and it's open ai doesn't know what they're doing other than they have a lot of money so they can spend it and i think they bought it thinking wow this will be a backdoor into anthropic a little bit we'll be able to see what anthropic does more because lots of people use this and we can we can somehow see how claude is running agentically or they bought it to kill it that's what i think but the other thing is is peter steinbrenner or whatever he's called he's still farting around that guy i don't know if you've ever read his post but he is constantly working yeah and i would i don't give him a ton of credit for that because it's like feels like a depressed person but also i've heard he got hundreds of millions of dollars for it as well so it's like if i had that much money you wouldn't hear from me again i would disappear well no i'd keep posting but it it's strange because it's like what are you actually working on and i think he vibe coded a lot of it as well which is even more terrifying and there are massive security issues as a result it's just one it is like a psychosis unto itself and what i think get i know we talk a lot about the media stuff what i think it is is the media and the ai community is so desperate for a hero they're so they they know they know in their deep down in their soul that something is wrong that none of this makes sense so the moment anything even directionally feels like it proves that they're not wrong they grab it and they shake it vigorously like they just got like this has to be it this is going to be the thing and if if we love this enough it can be a real boy and it never is like open claw is gone like just no one's talking about it anymore no one no one cares searches on google have gone down yeah i just looked for it it's minimal i checked this morning uh it's minimal coverage it's been minimal coverage i mean it's kind of around but it's it's become a niche topic well let me tell you my second thing that i think is good about OpenClaw.

20:35The second thing is, I think it actually points towards what I think is the healthy, sustainable future of AI, which is smaller, task-specific, and much more modular architectures. So not built around a single AI entity like an LLM, bespoke AI systems that do specific things. There's a great, if I want to play poker with AI, there is a great AI system to play poker with. If I want to do certain types of digital VFX work, there's really good AI systems that's made to do that. I think that's the future. But all those LLMs? No. Well, no, they're not, right? Or they have LLMs in them. That's why I say modular architecture.

21:17I think the future is you have multiple different things, most of which are just hand-coded by a person. And maybe you have an LLM in there if there's language involved because it's pretty good at if it needs to speak to someone or interpret it. I point towards the Cicero model as the great example of this. Noam Brown's AI system that plays the board game diplomacy. And it has an LLM in there, a small one, for chatting with the other players and then converting what they say into a sort of more technical language that the rest of the system understands. And then it has a planning engine and it has a policy network that can evaluate the different boards.

21:51It has multiple other systems that all hook together. Classic AI shit. This is real AI stuff. Like when it's just like, yeah, I made diplomacy. But this actually just reminded me of something. But just I want to get to that. But just to bring it close to the point is I think this gave people a taste of that. If you're building, they're like, oh, I want to build my own system to do one thing. I want to build a system to answer my emails that come in to request for my show, to answer those emails, and to put things into a spreadsheet. And like, oh, I can write a program to do that. And I'll use an LLM to help me.

22:26and it can be a small one because that's kind of not the core of it. And suddenly you're exposing people to this idea. I mean, I call this vision distributed AGI, where like one day you would look around and be like, there's 10 ,000 bespoke small systems that each do something well. And if you add it all up, oh, that's a lot of things now that computers do as well as people. And it's a very different vision than Opus 5.9 is. Grok 7. Or whatever it is, Grok 7. yeah it's embodied in a robot with predator machine guns and it can just do everything anyways all right back to your point so this just reminded me so jack clark of anthropic fascinating character one of the co-founders he used to write at the register one of the single most critical tech publications in the world his public his blogs were extremely critical i've seen him twice peddle out this example which he refers to as like a an evolution simulator a Predator Prey Simulator.

23:21And he brings it up all the time. And he uses these highfalutin terms. I went and looked this up. It is like a 50-year-old idea. He's like, yeah, I used clawed code to build it. Yeah, because there are hundreds of them online. Hundreds of them that he was trained on. It's just a simulation program. It's a little simulation that says, okay, we got bees, and the bees get killed by the bee-eating bears. I'm just making up animals already. This is why I can't make one myself. but it's like all of the different creatures and how they interact he's like yeah and i'm able to change things here and here and there and it's like yeah there is a web version of this it is 20 years old yeah but the way they frame all of these things is like oh simulation like the singularity it's like no and it just i feel like the ai era is a mass exploitation of ignorance it's just it they found something where the media just they knew the media maybe they didn't know this in advance but the media won't check anything the media would just think yeah the local cloy it's it's got a social network this is agi now every time a three gigawatt announcement is made they go to three gigawatt data center that's like three nuclear power plant big wow even though it's not getting built which i know we're going to get to it's just ai as a term as you well know is it means so little and so much at the same time that they can basically do anything and i think combined with the hysteria they are in the situation where literally i think we could have another sam bankman freed situation that we don't know about yet then ai company could come out and just go yeah we've done this and it's the i mean kind of mythos is almost that i know we're not going to get into that but it's i feel like we are maybe there's already a scammer out there but this is the environment the exact environment yeah you can a billion dollars easy well i mean i just saw another one the other day where it's like a company that claims it's doing recursive self-learning and they raised half a billion dollars and one of the co-founders runs another company called you.com and you know what's crazy that is not mentioned in the financial times's piece it's just we are like grifters have found their meat this is so much worse than crypto and nfts it's so so much worse because the fuzziness of ai allows them to have infinite time and infinite money to say well we still haven't worked out that recursive self-learning company by the way of course they are still theoretical like all of them yeah like world models um but no the 50 job loss it's it's next month now yeah that's what that's i i said the wrong month it wasn't this one's in there like eight to 12 months baby with a margin of error of maybe a hundred percent banner headline 50 every time just read the top thing yeah that reminds me a little bit about my my oldest plays i coaches help coaches uh little league team baseball team or whatever and the pitchers are getting better they're at the 13u they play on the the full-size fields now or whatever and like the pitchers are better now so what they learn is if i throw the high fastball into batter swings i'm gonna throw some more high fastballs like this is clearly and i kind of feel like this is dario amade saying 50 of jobs he's rolled this out three years in a row now he's like it gets covered every time i'm gonna keep throwing those high fastballs as long as the the media swinging the proverbial bat yeah but high fastballs are proven to be difficult to hit as opposed to llms which have never been proven to take and take jobs ah there we go i like it baseball's way more fun than ai just if only we'd have put this money into baseball i agree with you there yeah baseball has less constant waves of existential dread being poured upon the entire populace no they just reserve it for like cincinnati and pittsburgh and mets fans that's right you're right mets fans are like fans.

27:18Mets fans look to AI for a little bit of psychic relief. They're like, oh, this is not quite as dark as what we're dealing with. Yeah, this isn't punishing me as much. Only half the jobs are going away? Oh, that's not so bad as an 11 game losing. Yeah, no. And most Mets fans are like, yeah, I would fire half of them. Yeah, they should be fired. Maybe we should do all of them. Yeah. I hope Juan Soto is the first one on that list. All right. Story number two. I actually, for whatever reason, I didn't cover this one as much. I talked to some sources in the sort of surrounding DC tech industry. But I want to get your take on this.

27:51This is the Anthropic and Department of War story that picked up in February. I'm just going to read a little bit from Dario Amadei's statement that kind of kicked off this whole thing. So he said, Anthropic understands the Department of War, not private companies, makes military decisions. We have never raised objections to particular military operations nor attempted to limit use of technology in an ad hoc manner. However, in a narrow set of cases, we believe AI can undermine rather than defend democratic values Some uses are also simply outside of the bounds of what today's technology can safely and reliably do.

28:22Two such cases have never been included in our contracts with the Department of War and believe they should not be included. And then you list mass domestic surveillance and fully autonomous weapons. So can you first bring us up to speed on what unfolded and has unfolded there? And then what is actually happening? Because I find this story, because I haven't looked at it as closely, kind of confusing. All right. so just before the war in iran i think dario is a savvy con artist and i think he i call him you don't it's not you saying it's me saying he's a con artist so just some background anthropic has been installed with classified access in the u.s military since june 2024 that's a very important detail they were used in venezuela incursion whatever you call that they were used throughout and are still used in the war in Iran.

29:12So what happened was Amadei said, I forget what the conversation was, maybe he instigated it, it's kind of hard to tell, but some conversation between him and the US military was, we're not going to let you use this for mass surveillance of Americans, nor are we going to let you use it to control autonomous weapons. Now, the second one really pissed me off, because you cannot control anything with LLMs. You can't control, if you control the robot with LLMs, it would barely move because the processing time even yeah people say oh what about on device but shut the fuck like you don't know how these work that's not how this it's not an LL that threw me off as well I know enough about AI is like why are you talking about LLMs why was the media autonomous I think they mean AI in general I suppose no no they meant autonomous weapons they 100 % meant that I know because I read every single article and every single statement about this every single time like autonomous weapons and to be clear anthropic in their own statement said lms are not consistent enough to run autonomous weapons correct thank you dario your first fact make no sense to run a model based on language parsing and generation to steer a missile so i don't understand that okay so the first one you say was happening though as far as you can tell using these tools as part of intelligence gathering sure they probably were involved in the chain somewhere i mean were they but the thing is i can't confirm whether it is no one can because anthropic is already was already embedded and they attempted to basically renegotiate the contract post hoc and i'm not siding with the u.s military here but they tried to say we're adding these things and they did it mysteriously somehow just before the war in iran so what i think this is my personal belief i think the like it was a few days beforehand I think what I –

31:30things you might use it for and we want this in the contract so okay go on but that's a i'm only seeing this now that when i'm rereading the statement yeah it's a little tricky anthropic 100 had visibility into what the u.s military is doing so i would not be surprised i cannot confirm this whether they time this specifically to time at the war in iran because suddenly there was this insidious awful every single person who spoke like this should be fucking ashamed of themselves i'm disgusted by it there was this insidious thing of people being like anthropic is the ethical company i saw hashtag just we claude death penalty uh i saw katie goddamn perry being like i just bought claude and it's like you just paid a company that was actually part of this war and people like well open ai is now and then sam altman slid in and was like well we can do whatever that is then sam altman claimed that they had actually negotiated something that didn't allow the things that anthropic wanted then it turned out that emil michael from what's his but from emil michael from uh the u.s military said actually we've agreed to all you all legal means to be clear there's i don't believe either of these companies give a rap shit about any of this i don't think they care about it at all but anthropic had this swell of good press because people thought that they were opposed to the war in iran when in fact they were directly part of it claude was used during it now how complex was the use it was probably like here's a bunch of images where should we blow up and it went here's a school and they went oh just great and that actually happened and then there were weird articles that came out saying like actually claude didn't do that yeah that you can't prove that mate what i can prove is that claude was used in the war in iran so whatever but your your conjecture your conjecture is the reason why amade brought this up was it's press yes the size of that contract is worth jeopardizing when you're looking at like an ipo six months from now what sorry size of that contract their military contract is up to 200 million dollars and the up to is an important operative word 200 million dollars they lose that money on inference like two weeks yeah and they're looking to raise i mean their valuation is what in the hundreds of billions three eight three something hundred billion they'll probably ipo at 750 if they even make it but that's the thing now they did it so that could be a hundred billion dollar move there in theory yes yeah well also the thing is as well it's like then the department of war said oh we're going to on we're going to um we're gonna put you as a supply chain risk nothing happened then they were like it's a supply chain risk but we're gonna keep using you for six months then there was a lawsuit the department then anthropic sued the department of defense and said if we don't have this removed we might die and then admitted by the way and this is one of my biggest this was like my full joker moment during that during that um motion that they filed krishna rao the cfo of anthropic filed an affidavit sworn affidavit where he said that anthropic had only made five billion dollars in its entire lifetime yeah now when you go and add up all of the reports of revenue such as the information saying 4.5 billion dollars in revenue in 2025, such as Anthropic themselves saying annualized revenue that would mean they've made one and a half billion dollars in the space of a month in 2026, it adds up to way more than five billion.

35:10I have tried to talk to pretty much every major reporter that covers Anthropic's revenues and they will not discuss this. It's the most conspiratorial I've felt this entire time. It is like everyone is trying to ignore a fire in a room. And the crazy thing is, is that happened, nothing changed and then a judge said actually anthropic's right we're not going to allow the supply chain risk designation and now apparently the u.s government is using claude mythos so in the end nothing happened yeah anthropic anthropic got a bunch of completely spurious press around them being ethical despite the fact that they are already part of the military uh they revealed their actual revenues um it was great it's it's all good um that revenue story that is an amazing one outside of you i covered it i learned about it in part from you i found only one article there was uh maybe a reuters or an ap article that talked about uh this quote unquote like shaky revenue math that's popular in silicon valley so there's one piece i found where a financial reporter actually was covering like hey when you hear these numbers there's a lot of multiplying by 12 or multiplying by 24 going on and you you multiply at the right times But that was a big story.

36:24So for the listeners to understand it, Anthropic had to, under oath, a signed affidavit, right? So the penalty of perjury or whatever you would say in a corporate setting, had to release their revenues. And it was$5 billion to date on$60 billion of investment in debt, I think, to date. Yeah, and they spent$15 billion on compute so far. Yeah,$15 billion on compute so far. The other part of that, the part of the story I did cover that I thought was interesting was the undersecretary of defense, whoever that was. Emil Michael. That was Emil Michael, right. And he went on and it was funny. It shows something about how the online commentary space works.

37:01He went on and said, hey, here's why we don't want to work with this product. If you watch him, he's basically be like, this is a product that will say it has a soul or that their company is saying that there's a chance that it's alive. and what he was saying was like this is a wonky product right like this doesn't seem like the type of thing you want in a a military setting where you have the ceo saying there's a chance it's alive and it'll say it has a soul this doesn't seem like a reliable piece of hardware and what was the online commentator report was pentagon convinced that claude has a soul so it completely they they flipped the veils he was basically saying this is i'm so sick of this i'm so sick of the goddamn ai bubble i'm so tired of this yeah i wish i got this guy i wish anything i did was i wish you've not read one punch man have you no okay so this is a complex thing but one of your listeners is going to hear this and love this there is a character in one punch man called King.

38:02Everyone thinks that he's the most powerful man in the world because of the King engine, which is his so-called power. It's actually because his heart, he is so anxious and scared at all times that his heart is going so fast you can hear it. He has no powers. He's a regular guy. But because Saitama, the main guy, comes along and destroys anything near him, everyone thinks he's amazing. And there are multiple times during the story where a bunch of stuff happens around him and people go wow they must have all just died when they saw king wow king must have destroyed them with the king engine this is anthropic anthropic is just this wasteful crap pile of a company with services that break half the time less than two nines now of service availability and they have models that degrade at random they gaslight the users they rug pull them on rate limits but everyone's like anthropics capacity is so it they're hitting capacity because they're so popular and their models are so good it's like i'm going crazy man i just at some point what i'm saying will feed into the mass consciousness i guess and at that point i'm going to be insufferable but it's like every time i hear a story like this i feel like i'm i'm going insane what are the main revenue sources if we're being realistic about it so if you're these ai companies my understanding is open ai it's chat gpt subscriptions yes anthropic is um like cloud code api api apparently it's api yeah but here's the thing i'm not accusing anyone of fraud but i there was a eric newcomer had a piece where he said the um anthropic they had the co coach you venture capitalists and he shared the deck that anthropic had shown them and there was a bit where it was like yeah 85 of their revenue is api calls and 15 is subscriptions gonna be honest i don't believe him i just don't believe it i don't believe that there is what four odd billion dollars of api calls and open ai apparently is the other way around where it's 85 % subscription, 15 % API.

40:11What would an API call be? So for the listener, what's calling those APIs? So it would be an AI startup. It would be a business that's running their own models for some reason, that is running their own systems that are built on top of the API. But that's the thing. Even that question kind of gets at what I'm saying, which is, what the hell are you doing with this? Like, I get AI startups that just sell things that have LLMs plugged into them, but it's like they're claiming they have all this enterprise use. And what I think it might be is that Anthropic has slowly, because the information reported this recently, I think it's been going on for a lot longer.

40:48Anthropic has started to push enterprise users onto the API, even when they're using clawed or clawed code. I think that's fairly recent in the last few months. But I also just think that these companies are making up what they're saying in Dex because no one can prove otherwise. I think I want them to go public so bad. I want them to go public so bad. Never in a million years have I wanted a company to file an S1 more. I want to see inside their laundry. I want to go look around. I don't doubt you'll be the first to read those S1s cover to cover. I will be smoking a big cigar. It's going to be delightful.

41:27Here, before I get to the third story, let me tell you my new term I coined about AI coverage. All right, I just came with this on the spot. But something else that's going on right now that I want to call out is what I call dread laundering. And what you do is you will launder a sense of despair or dread about one thing related to AI to help amplify a less supported feeling of dread or despair about another. And so here's where I've been seeing this recently is I think the technology business case for LLM somehow being at the core of automating a bunch of jobs or destroying the economy is very weak.

42:05And I think there hasn't been a lot of good support for that because, again, these are just LLMs that we're building better apps on top of and it's slow going. But there's a lot more focus recently. It's like we have to – there's a dread quota. So how do we fill it if that is losing some traction right now? So there's a lot of other coverage going on about destruction of the arts, writing. The writing is going to disappear. Movie making is going to disappear. Education is falling apart. And you put that next to Dario Amadei talking about jobs or this or that, and you're laundering the dread from, oh, we have a text generator, and people are going to be lazy and try to not write text, which is a real story and an annoying one as a writer I don't like.

42:44And you launder that dread over to, like, well, all these other bad things. So this is all kind of the – if we're worried about that, that kind of just justifies the dread in general. So like also like maybe my job is going away. Maybe the Terminators are coming. And I really wish these were really separated and that you could have an argument about we have automatic text generators. It brings up a lot of problems for parts – people who produce text for a living. Let's talk about it. Then we have over here this claim that an LLM is going to take over an executive job or is going to – and that's like those are – those fall under scrutiny.