All Zone Media.

Hello and welcome to this week's Better Offline Monologue.

I'm your host ed ze Tron, and I've heard so many nice things from all of you about last week's Haters Guide to AI, and I really couldn't be more grateful.

It was a labor of love and hate in some cases.

I guess as we approach what I see as the precipice of this hysterical era, we're going to start seeing and hearing big tech and big model developers make intentionally vague statements with the intentive misleading you and the media.

And I really want to be clear.

I'm sorry there's going to be some maths in this, but it's necessary for you to know how people are trying to swindle you and the media too.

So Microsoft kicked this off this week with this week's earnings breaking out annual revenue from their a Zeo cloud platform when they sell the means for people to run applications and organizations in the cloud but also bury their AI services, and they did this for the first time in history.

This naturally led people to say that as yours growth, which is up thirty four percent twenty twenty four, when they didn't disclose it was driven by art official intelligence somehow, despite the fact that Microsoft intentionally stopped reporting on their own things their AI revenue in January when they said they had thirteen billion of annualized revenue, meaning about one point eight billion dollars a month, and God, that term annualized this is a tricky one.

Also, by the way, they made over seventy billion dollars on Azure, so thirteen billion dollars of annualized revenue is actually not that much.

But anyway, the term annualized this is a really tricky one.

When you read or hear someone say annualized revenue, it means a particular month multiplied by twelve.

However, what they want you to think is that annualized means that the company in question will make that much money in the year, in part because there isn't a single goddamn media outlet that seems capable of seeing through this.

I should also be clear that annualized revenue is a one month snapshot.

If I sell boxes at one hundred dollars apiece and sell three in June, I have thirty six hundred dollars in annualized revenue.

That's three hundred dollars times twelve, because that's a year.

But if I only sell a one box in j that means I have twelve hundred dollars in annualized revenue, which doesn't quite sound so good.

My June annualized revenues of thirty six hundred dollars make it sound like I'll make that much in a year.

However, if I also tell you that I only sold one box and I had twelve hundred dollars of annualized revenues based on July, you'd suddenly be more concerned, and quite concerned indeed, about the volatility of this box business.

In simpler terms, annualized revenue is a deliberate attempt to hide something or mislead someone.

Nowhere has this been more obvious than an open AI's recent leak of their twelve billion dollars in annualized revenue, which the information who I genuinely like and appreciate reported as somehow indicative of open ai being on track to make their twelve point seven billion dollars in revenue for twenty twenty five.

Here's the thing.

Twelve billion dollars in annualized revenue means one billion dollars in revenue in one month, which is genuinely a milestone, kind of impressive, at least it would be if open ai didn't burn up puts of eight billion dollars this year, even though I think they're probably going to burn more than that.

But anyway, back in May, CNBC reported the open ai was up ten billion dollars in annualized revenue, meaning eight hundred and thirty three million dollars.

And back in December twenty twenty four they were at five point five billion dollars in annualized revenue.

And that's the thing.

And by the way, five point five works out to about four hundred and fifty eight million dollars in the month.

But that doesn't mean that they're going to hit twelve point seven billion dollars.

In fact, best case scenario, this means that open ai has, by my calculations, made just over five billion dollars in total revenue through the end of July twenty twenty five.

That's in the first seven months of the year.

So anytime you see annualized revenue you should immediately be suspicious of whoever is leaking it.

Open ai has likely leaked this number as a means of making people believe that they'll make twelve billion dollars or more.

In twenty twenty five, they projected to do twelve point seven billion dollars, which would be a remarkable number that they're not even halfway towards reaching, despite what some people might be reporting.

Now another company playing silly buggers with di figurers, of course, Anthropic, who have leaked so far this year, every single month of every single month other than April.

It's kind of crazy.

And they but they started in January when they leaked that they'd hit a billion dollars in annualized revenue, and then they are one point four billion dollars in February, and then two billion dollars annualized in March, and then three billion dollars annualized in May, and then four billion dollars annualized in June.

One might believe this means that Anthropic will make four billion dollars this year, but the actual numbers work out to the company making no more than one point one five billion dollars through the end of June.

And if you want to check my maths, you can billion dollars of ar will be eighty three billion, one point four one one six.

Two billion would be one sixty six.

Then May would be three billion annualized, so it it'd be two hundred and fifty million, and four billion ar would be three hundred and thirty three million.

I'm saying this with the person that emails me is like, what are their numbers?

Anyway?

These are obfiscations, these are intentional.

Anthropic has made no more than one point one five billion dollars through the end of June.

Is not going to get them to four billion dollars without something ridiculous.

Yeah.

I saw a Bloomberg reporter, love your ed, but the saying maybe they'll hit nine billion dollars in annualized revenue this year as an absolute joke.

Open Ai barely hit then they have all the it's just it's all deliberate and it's all intentional.

It's also that you kind of watch the mouth are not the hands.

It's so that you don't think too hard, because when you look at the actual numbers, open Ai has only made like five point five billion dollars this year.

That's not They're not even to the lofty goals they have.

They're not even halfway there, and Anthropics are one point one to five billion.

These are not huge amounts, and they're dwarfed by the fact that each I think Open Ai is going to burn eight to probably fifteen billion dollars this year and that's after revenue, and Anthropic I think they're three to five billion dollars.

It's an absolute joke.

But you, you, the listener, I want you to know that all of this is intentional, as Anthropic is currently raising around as large as five billion dollars from the bone saw capital of the world, and the media is helping by obfuscating their actual revenue.

Opening Eyes doing the same thing.

The Information reported they're at seven point five billion dollars of the remaining well thirty billion that they actually have to raise, with soft Bank covering the rest.

They're trying to hoodwink people.

And I want you, the listener to know better.

Agree with me, disagree with me.

I've much rather you knew what these terms mean and why they're being used.

And yes, there's going to be someone who says, annualize there's a fine term.

People use it ethically, and that's true.

You can use this term ethically.

You can use this to say, yeah, if things keep up at this pace, will be at this.

That's not what these fuckers are doing.

They're doing this as a means of They're selling it to people that aren't going to think about it too hard, so that those people don't think about it much more than thinking, oh, open AA is going to make so much bloody money.

Oh when Throbic's going to do that too.

And it sucks.

It sucks because this is being used to make people richer, to make Dario Amma Day and Sam Clammy Sam Altman more and more money, and it's really sad.

It's sad, but it's also a sign that things are kind of deteriorating.

And yes, there are going to be people that say, well, the revenue's going up, that means things are going well.

Ah.

In a situation where things are going well, these companies would talk about the real revenues.

They wouldn't be playing weird card games and weird shuffling.

Shuffling.

Though, now, as I'm saying this is forgetting what you call the game with the cup on the ball, Someone's going to email me and make fun of me for this.

I'm stupid.

You don't get to do that.

But in all seriousless they're doing tricksy things and they're doing it because they're trying to raise money.

It's a classics windle, and it pisses me off to see because people are going to think that this is a victory for the AI boom, when in reality they're trying to hide something a little more grim than that, which is revenues are nowhere near their arrs they wish they were.

And indeed, I think in the next six to twelve months we're going to see this sour or somewhat.

I look forward to telling you, regardless of what happens, what's actually happening.