Better Offline - The Enshittifinancial Crisis: Part Two

Episode Date: January 21, 2026

In part two of this week’s four-part Better Offline Enshittifinancial Crisis special, Ed Zitron walks you through how companies like AMD, Broadcom and NVIDIA are swindling stockholders with the help of analysts and the media, and how decades of easy returns for venture capital are an existential risk to the future of startup fundraising.This series was a ton of work, so please support me by subscribing to my premium newsletter - here’s $10 off your first year of annual https://edzitronswheresyouredatghostio.outpost.pub/public/promo-subscription/84rt762qen Read along with the newsletter version for links! https://www.wheresyoured.at/the-enshittifinancial-crisis/ YOU CAN NOW BUY BETTER OFFLINE MERCH! Go to https://cottonbureau.com/people/better-offline and use code FREE99 for free shipping on orders of $99 or more. --- LINKS: https://www.tinyurl.com/betterofflinelinks Newsletter: https://www.wheresyoured.at/ Reddit: https://www.reddit.com/r/BetterOffline/  Discord: chat.wheresyoured.at Ed's Socials: https://twitter.com/edzitron https://www.instagram.com/edzitron https://bsky.app/profile/edzitron.com https://www.threads.net/@edzitron Email Me: [e-mail] omnystudio.com/listener for privacy information.

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Another podcast from some SNL late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and head writer, Streeter Seidel, help an a cappella band with their between songs banter.

Where does your group perform? We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and friends on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Your husband is not who you think he is. Your body is not what you thought it was.

Your identity is formed by a secret history. I'm Danny Shapiro. And these are just a few of the stunning stories I'll be exploring on the 14th season of Family Secrets. He kind of shoved me out of the way and said, move. And he went out the front door and he jumped in a car and drove off. And that was the last time I saw him. Listen to Season 14 of Family Secrets on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Your 20s can be so exciting, but they can also be really overwhelming, confusing, and honestly, just kind of lonely.

May is Mental Health Awareness Month and the psychology of your 20s is breaking down the science behind the biggest roadblocks we face. I was six years into my career, the 80-hour weeks and just the first one in, the last one out, and I ended up burning out. There was a large chunk of my 20s

that I was just so wanting to be out of that phase out of my skin and I just like really regret not living in the present more. You don't need to have everything figured out right now. You just need to understand yourself a little bit better. Listen to the psychology of your 20s on the IHeartRadio app, Apple Podcasts, or wherever you get your podcasts. AllZone Media.

I'm better offline, and this is Ed Zittron. Wait, chip. That's right, folks. We're here for part two of our multi-part series about the final casualty of the inshittification process, the financial markets. You see, we're in a world where, because companies can no longer stimulate growth by just script-mining their individual and business users, they've now resorted to just lying. And lying's an interesting word because they will claim, we're not lying. We

used words to vaguely avoid telling you the truth. Or we were technically true in what we say. There are various kinds of lies that don't have to just be, I told you something that was not categorically yes or no false. I mean, you've spoken to other people, but they will say this for legal purposes. So fine, it's not technically lying. It's just bullshit. But I think it's important. to give you some examples and to talk about how analysts and the media simply allowed these lies to propagate unchecked. Let me set the scene. Our story begins on September 10, 2025. I was for some reason in Los Angeles that I can't remember. Maybe a concert, maybe an interview, truly don't know. Oracle announced its unfillable, unpayable, $300 billion deal with Open AI, which they didn't have

the capacity to serve and Open AI didn't have the cash to pay them. And this led to a 30% or more bump in stock price. Analysts who should ostensibly be able to count called it momentous and said they were in shock. On September 22nd, 2025, CEO Safra Katz stepped down. She stepped down from Oracle. Nobody seemed to think that was weird or suspicious or worrying. This was meant to be the beginning of the AI, like Boom 2. I mean, we kind of already are in the AI, but this was meant to be the even more bigger one, right? Why would you step down? Why would you step down? Why would you step down and then have two guys? Like, two different, they have co-CEOs. Very sorry to my friend Jim, but co-CEOs don't usually do well. Look at Blackberry.

But anyway, two months after that, Oracle's stock was down 40%, with investors worried about Oracle's growing CAPEX, which is surprising, I suppose, if you didn't think about how Oracle would build the data centers to serve the $300 billion deal. makes me feel insane when I say these things out loud, but just to be clear, anybody who traded on that got burned. Now, another thing happened on September 22, 2025. Invidia announced what they called a strategic partnership to invest up to $100 billion and build 10 gigawatts of data centers with OpenAI with the first gigawatt to be deployed in the second half of 2026. Just a few questions from me personally, where would the data centers go? How would OpenAI afford to build them? How would Open AI build a gigawatt in data centers in less than a year? Don't ask questions, pig. Back in your cage. Now, Nvidia's stock bumped from 175.3 to 181 dollars in the space of a day,

said that very normally moving on. And the media wrote about the story as if the deal was done, with CNBC claiming that, and I quote, the initial $10 billion tranche was expected to close. within a month or so once the transaction had been finalized. I read at least 10 stories that said Nvidia had invested $100 billion in Open AI. Analysts would go on to say that Nvidia was locking in Open AI, and I quote again, to remain the backbone of the next-gen AI infrastructure, and that demand for Nvidia GPUs is effectively baked into the development of Frontier AI models, and that the deal strengthened the partnership between the two companies and validated Nvidia's long-term growth numbers with so much volume and compute capacity.

Others would say that Nvidia was enabling Open AI to meet surging demand. Three analysts, Raskorn at Bernstein, Luria at DA Davidson, and Wagner at Aptus Capital, all raised circular deal concerns, but they were in the minority, and those concerns were still often buried under buoyant optimism around the prospects of the company, and nobody just fucking saying the words, hey, no one can afford any of the Oracle can't afford to build it, they don't have the capacity, they thus can get paid by, Open AI. Open AI doesn't have the money, but Nvidia, this deal also doesn't make sense. You know, it feels like Open AI is just promising everyone's stuff they can't afford. All of these

things seemed like very obvious questions, but people just kind of clap the hands and went, fuck yeah, we're doing AI even more now. But then there was this other thing about the Nvidia deal. It's this wincy teeny-weeney-weeney-win-win-win-win-win-win-wincy little problem. One little problem, everyone, about the Nvidia deal. The deal that everyone said was done, it was a letter of intent. It said so in the announcement, and on Nvidia's November running, it said that it had entered into a letter of intent with an opportunity to invest in OpenAI. It turns out the deal didn't exist and everybody fell for him. Nvidia hasn't sent a dime and likely won't. A letter of intent is also known as a concept of a plan.

A little over two weeks later, on October 1, 2025, Reuters reported that Samsung and S.K. Hynix had signed letters of intent to supply memory chips for OpenAI's data centers, with South Korea's presidential office saying that said chip demand was expected to reach 900,000 wafers a month, with, and I quote, much of that from Samsung and SK Hynex, which was quickly extrapolated to mean around 40% of global DRAM output. Stocks in both companies, to quote Reuters, soared, with Samsung climbing 4% and SK Hynex, more than 12% to an all-time high. Analyst Jeff Kim, of KB securities said that, and I quote,

there have been worries about high bandwidth memory prices falling next year on intensifying competition, but such worries will now be easily resolved by the strategic partnership, adding that since Stargate is a key project led by President Trump, wrong, lie, there also is a possibility that partnership will have a positive impact on South Korea's trade negotiations with the US, which is, just to be clear, total and utter bollocks. It's wank, it's crap, it's nonsense, poop from above, all the technical terms. Donald Trump is not leading Stargate.

Stargate is a name used to refer to data centers built by OpenAI, by which I mean other people building them for OpenAI. KB securities is around $43 billion of assets under management. This is the level of analysis you get from these analysts. This is how much they know. there are people that study Jojo's Bazaar adventure that have more economic analysis than any of these fucking people. Most Star Wars fans who have just memorized all the names of the glupp shittos of the world have better analysis than this. But nevertheless, you'd think, right, that these companies have made all this noise and they've talked about this stuff, the presidential office, all involved, you'd think we'd be able to get a whiff of that on their earnings course, right? Well, on SK-Hinex's October 29th, 2025 earnings call, weeks after the announcement,

its CEO, Kim Wu-Hun, was asked a question about high bandwidth memory growth by SK Kim from Daewa Securities. And I quote, so this is SK Kim asking the question. Thank you very much of taking my question. It is on demand. Now there have been a series of announcements of GPU and A6 supply cooperation between big techs and AI companies, fueling expectations of further AI market growth. Then against this backdrop, what is the company's outlook on high-bem-with-memory demand, as well as a broadening of the customer base?

SK-Hinex, thank you for the question. Now, with upward adjustment in big-techs capex and increasing investment by AI companies, the high-band-with-memory market, even by a conservative estimate, will keep growing at an average of over 30% for the next five years. I will point to our recent letter of intent with open AI for large-scale, RAM supply as an example of the very strong demand for AI as well as the need to secure AI memory based on HBM more than anything else when developing AI technology. That is it. That is the only mention of Open AI. That's it. No other mentions. Otherwise, SK Hynix has not added any

guidance that would suggest that its DRAM sales will spike beyond overall growth, where it's already grown because everyone's running out of RAM thanks to fucking AI. Other than mentioning that it had, and I quote completed year 2026 supply discussions with key customers. There is no mention of OpenAI in any earnings presentation. Now you may think, Ed, there were two companies. He said two company names. There were Samsung as well, right? Well, on Samsung's October 30th, 2025 earnings score, Samsung mentioned the term DRAM 18 times and neither mentioned Open AI nor any letters of intent of any kind. In its Q3 2025 earnings presentation, Samsung mentions it will that I quote, prioritize the expansion of high band with memory four business, with differentiate performance to address increasing AI demand. Great place to mention OpenAI, right? Yeah, that would be if the money existed and they were going to do anything. Now, analysts do not appear to have noticed a lack of revenue from an apparent deal for 40% of the world's RAM. Oh, well, Pobody's Norfolk, right?

My frustration you hear in my voice is that I'm a guy with a Google Doc. I'm not a financial analyst, but I appear to be able to do what they're doing because I'm able to fucking read. Both Samsung and S.K. Hynix's stocks have continued to rise since, and you'd be forgiven for thinking this deal was something to do with it, even though it was not. But silly season was not yet over. However, and on October 5, 2025, AMD announced that it had entered a multi-year, multi-generation agreement with OpenAI to build six goddamn gigawatts of data centers, with the first one-gigawatt deployment set to begin in the second half of 2026, calling the agreement definitive with terms that allowed Open AI to buy up to 10% of AMD's stock. Festing over specific milestones that started with the first gigawatt of data center development, said data centers would use AMD's yet to be released MI450 GPUs, the deal would per Reuters bringing tens of billions of dollars of revenue. Now, I know, hate to be an asshole, right? I know,

I'm always on this shit, right? Yeah, where would those data centers go? How much would they cost? How would Open AI pay for them? Would the chips be ready in time? Silence, worm! How dare you ask questions? How dare you? Are you asking questions? Number go up. Number go up. Look, look at number go up. AMD shares searched by 34% with the analyst Dan Ives of Wedbush who appears to dress like the San Diego Padre's City Connect jerseys, saying that this was a major valuation moment for AMD. As in the side, I've said that Invidio would benefit from the Metaverse in 2021 and told CBS news on November 22nd, 2021 that and I quote, the Metaverse was real and that Wall Street was looking for winners. were they then? Now, one more thing that AMD's November earnings, a month after that announcement, might be a barn burner full of remaining performance obligations from Open AI. Things that Open AI would be paying them those tens of billions of dollars of revenues, right? In fact, CEO Lisa Suu said that AMD expected this partnership will significantly accelerate its data center AI business and with the potential to generate well over $100 billion in revenue over the next few years in the announcement. And here's how AMD's 10-Q filing referred to it, and I quote.

As of September 27, 2025, the aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one year was $279 million, of which $139 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance applications does not include amounts which have an original expected duration of one year or less. Now, I don't know about you. I did not. I didn't do economics in school. I didn't do anything like that. Didn't do well at maths in school. But $279 million seems lower than over $100 billion. So I guess just no revenue from Open AI, no revenue of any kind, I guess. Now, AMD did raise guidance by 35% of the next five years and there's, they're trailing 12-month revenue is $32 billion. Tens of billions of dollars would surely lead to more than a 35% boost,

because that would be like $11 billion. That's just $11 billion. That's a lot less. That's a lot less than $100 billion. I don't know. Guess all that was for nothing. No follow-up from the media, no questions from analysts, just a shrug. We all move on.

They were at CES. Greg Brockman came on. AMD's Lisa Sue said something about Yotterflops, have really just pissed me off to think about. Still nothing. Anyway, AMD stock is now down from a high of $259 bucks at the end of October to around. Let's see, AMD stock type this in.

About $231 right now. Everybody who traded in based on an analyst and media comments got fucked. Another podcast from some SNL late night comedy guide, not quite. Unhumor me with Robert Smygel and friends, me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman,

help make you funnier. This week, my guest, S&L's Mikey Day and headwriter, Streeter Seidel, help an acapella band with their between songs banter. There's that worst singer in the group? The worst? Yeah. Me. Is there anything to the idea that because you're from Harvard,

you only got in because your parents made a huge donation. The group. The yard birds, right? That's the name. The Harvard yard, but they're open. Do you have a name suggestion? We're open. Since you guys are middle-aged.

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That's Iheartadvertising.com. Hey, everyone. It's Ryder Strong and Will Ferdell from PodMeets World. And now the Pod Meets Twirled podcast. We're two men who were completely clueless to reality TV, who now have covered Dancing with the Stars, traitors, and we're gearing up for the season finale of Survivor. So yeah, now we're experts.

I know we annoyed a lot of our listeners by our severe lack of survivor knowledge. That is the point of the show. I'm just going to remind you. I have watched some Survivor. I obviously haven't watched enough. Did people not like it? Like what was just because we? Yeah.

We'll be recapping the big conclusion of the 50th season. From the final attempts at gameplay to the desperate pleas of finalists to a bunch of Ha, who. Ah, ha, ooh. Again, we are experts. So make sure to tune in to Pod Meets Twirled for all our Survivor 50 takes. Listen to PodMeets Twirled on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. This week on Crimless, we're joined by our first ever guest.

Sorry, our first ever human guest. I don't think I could be in the same room with Shamrock the parrot. I'd be too nervous. That's right. The very funny Will Farrell joins Rory's. Scovel and me, Josh Dean, for an episode dedicated to the many crimes committed by people also named Will Ferrell. They called to his fellow officer for the nippers.

What are the nippers? Very good question. No, I was thinking, would that be a good name for like a salad dressing? Simple assault. And it's a play on word, salt? Maybe not. I say we invest and we see. There's only one way to know.

This did not amuse the cops. By the way, normally the cops are amused. But this did not amuse the cops. cops. Will even comes clean about some of his own crimes. I didn't get caught. You know why? If you don't want to be suspected of anything, you whistle as you walk. Listen to crime lists on the Iheart radio app, Apple Podcasts, or wherever you get your podcast. Now, let's go to my favor of them. And that's a little company named Broadcom. So back on September 5th, Broadcom said in its earning school that it had a $10 billion order from a mysterious customer,

which analysts quickly assumed was OpenAI, leading to Broadcom stock popping 9% and gradually increasing to a high of a $369 on September 10th, before declining a little until October 13th, when Broadcom announced a ridiculous 10-gagawatt deal with OpenAI, claiming that it would deploy 10 gigawatts of OpenAI design chips with the first racks to deploy the second half of 2026 and the entire deployment completed by the end of 2029.

So three fucking years for 10 fucking gigawatts. Just to give you an idea, it's about two and a half years a gigawatt right now, and that's for OpenAI slush fund projects, the ones that have all the money and none of the oversight. Now, the same day, President of Semiconductor Solutions, Charlie Cowus, added that said mystery customers actually not OpenAI. And I quote, I would love to take a $10 billion purchase order from my good friend Greg Brockman, CEO of OpenAI, Kowas said. He has not given me that purchase order yet. Nevertheless, Broadcom stock popped 9% on the news about the 10 gigawatt deal, with CNBC adding that the companies have been working together for 18 months. And because it's Open AI, nobody sat and thought about whether somebody at Broadcom was saying, well, open AI has yet to order these chips yet, and whether that was a problem. In fact, the answer to how does Open AI afford this appear to be they'd afford it when it came to analysts.

Now, I'm about to read you a quote that is so funny when you realize that this is someone who makes, like a shit ton of money. Ahem. The 2026 timeline set out by OpenAI for the buildout is aggressive, but the startup is also best positioned to raise funds required for the project, given the heights of investor confidence, said Gajjo, Seville, an analyst at e-marketer. Financing such a large chip deal will likely require a combination of funding grounds,

pre-orders, strategic investments, and support from Microsoft, as well as leveraging future revenue streams and potential credit facilities. Hogwash. just complete, complete bollocks. Insane that people pay these analysts. Bullshit. Okay, so just let's just break this down. Financing such a large chip deal,

so 10 gigawatts, you're going to be looking at, so $50 billion a gigawatts. You're looking at half a trillion dollars. So to do this for this aggressive build-out, which was 10 gigawatts in three years, just not possible. They would fund this by pre-orders, pre-orders for what, exactly?

because pre-orders would be then pre-ordering something from Broadcom. Not really sure how that fixed the problem. Strategic investments from whom? Just funding, I guess. Support from Microsoft. Funding, again, I guess. I don't know why Microsoft be paying for that. As well as leveraging future revenue streams and potential credit for...

What? What does that mean? Saving money? Doing like a revenue trade deal? Like, what are you talking about? Anyway, you don't need to worry because OpenAI solution to this was far simpler. It didn't order anything. During Broadcom's November earnings call, where Broadcom revealed that the $10 billion order was actually from Anthropic, another LLM startup that burns billions of dollars, which was actually buying Google's TPUs from Broadcom.

And he also added that Anthropic had made a second $11 billion deal. Analyst somehow believed that Anthropic is positioned to spend heavily, despite being yet another venture-backed wealth. recipient in the same flavor as Open AI. All right. Right, sorry. Okay. Broadcom, you may be wondering about the 10 gig-watt deal, though, because there was earnings, right? Well, Broadcom CEO, Hock Tan, said that he did not expect much in 2026 from the deal, and guidance did not change to reflect it. Now, what was great about this as well, and I linked to this in the newsletter, I really need you to go and look up how Hock Tan had the conversation, because someone asked him for more detail, and he just straight up said, like, I don't want to. I don't want to. I don't want to. I

to talk about it. It rocks. I honestly fucking love that. Anyway, Broadcom climbed to a higher $412 a share leading up to its earnings and I imagine it did so based on people trading on the belief that Open AI and Broadcom were doing a deal of some sort together, which does not appear to be happening.

While there is an alleged $73 billion backlog for Broadcom, every dollar from Anthropic is utterly questionable. Now, some of you might say, Ed, we can't just automatically distrust public companies. Actually, yes, we can. I'm doing it right Now, whenever a company says litter of intent as Nvidia and SK Hynix and Samsung did,

it's important to immediately stop taking the deal seriously until you get to a specific word, contract. Not agreement or deal or announcement, but contract, because contracts are the only thing that actually matters. A great example of this is in Nvidia's last earnings, they said they would be investing up to $10 billion in Anthropic, right? You'll notice that that was in the middle of November, it's now January, and we haven't heard boo about it. It's probably because nothing's fucking happening. And also that phrase up to as well means that it will be however much Nvidia wants to invest, if at all. They only just did their intel investment. Anyway, whenever they say these terms, you need to just get suspicious. It's time. It's time to stop

trusting them. Because they've played enough hide the sausage for one epoch, I think. It's time that everybody, analysts, the media, members of Congress, the fucking Pope, I don't care, to start treating these companies with actual suspicion and to start demanding timelines. Like I said, Nvidia and Microsoft announced that $15 billion investment in Anthropic. Where's the money? Why does the agreement say up to $10 billion for Nvidia and up to $5 billion for Microsoft? Where's the money? Where is it? We haven't heard shit about it since. What we have heard is that Anthropic is raising either $10 billion or $25 billion at a $350 billion valuation. Where'd the money go?

Where'd the money go from those fucknots? Where'd they go? Sorry, Jensen Huang for calling you a fucknard. All right? You're acting like one though, mate. Anyway, these deals are announced with the intention of suggesting there is more revenue and money in generative AI that actually exists. Furthermore, it is irresponsible and actively harmful for analysts in the media. to continually act as if these deals will actually get paid

when you consider the financial conditions of these companies. As part of its alleged funding announcement with Invidia and Microsoft, Anthropic also agreed to purchase $30 billion of Azure Compute, which is, for those of you who don't know, the compute cloud platform, the competitor to Amazon Web Services and Google Cloud that Microsoft runs. It also agreed to, Anthropic, agreed to spend tens of billions of dollars with Google Cloud. It ordered $10 billion of chips from Broadcom earlier into,

2025 and apparently another $11 billion of them in the last fiscal quarter. How does Anthropic pay for them? How? Anthropic allegedly burned $2.8 billion last year, 2005, though I think they burn much more, and raised $16.5 billion in funding before Microsoft and Nvidia's imaginary money. How are investors tolerating Broadcom not directly stating the future financial condition of this company is questionable? Has Broadcom created a reserve for this deal? If not, why not? up. Anthropic will make no more than $5 billion in 2025, I'm sure of it, and raised about $17.5 billion, with another $2.5 billion coming in debt. How can it foreseeably afford to pay $10 billion, $11 billion or $21 billion, considering its already massive losses and all those

other obligations I mentioned? Will Jensen Wong hand over $10 billion so that Anthropic can hand it straight to Broadcom? I don't think so. I realize the counter argument is that the companies aren't responsible for the counterparty's financial health, but my argument is that it's the responsibility of any public company to give a realistic view of its financial health and revenue sources, which includes no to give a chunk of its revenues from a startup that can't afford to pay for its orders. There's no counter for that. Anthropic cannot afford to pay Broadcom 10 billion dollars right now or $11 billion in a few months. Where is the money coming from? They're allegedly raising $25 billion. Great. So that should leave them with $4 billion to pay for what?

$30, $40, $50 billion of compute costs? I don't know. Again, I ain't no mathematician, but I can put those numbers together and I can say that's a pretty big minus again. I'm not even trying to be sarcastic here. The things I'm saying are actually very rational. They're very reasonable. Anthropic, even if they raise $25 billion, cannot pay even like a quarter of the things they've agreed to. Their existing revenue sources, even if they made $20 billion in 2026, which they will not, by the way, they are absolutely. I just don't believe them about their revenues at all or any of the estimates. But the problem is that in any bubble, being really stupid and ignorant works right up until it doesn't. And however harsh the dot-com bubble

might have been, it wasn't harsh enough and those who were responsible were left unpunished and unashamed. And that guaranteed that the cycle would happen again, and then it would be worse. I want to be really abundantly clear about what's happening. Every single stock you see growing because of AI outside of those selling RAM and GPUs is actually growing because of something else. Microsoft, Amazon, Google and Meta all have other products that are making the money and are still growing. AI is not growing them, and because analysts and investors in the media do not think about things for two seconds, they have allowed themselves to be beaten down and turned into supplicants for future public stock growth. Investors have allowed themselves to be played and the results will be worse than the dot-com bubble bursting by several echelons.

And perhaps the biggest victims will be venture capital, which is existentially threatened by the AI bubble, but the actual victims will be regular people who made the mistake of trusting analysts or anyone who told them to invest in the markets. But I'm going to be really simplistic for a second. I am skeptical of AI because everybody loses money. I believe every AI company is unprofitable with margins that are getting increasingly worse as they scale and as a result, none of them will be able to get acquired or go public. This means that venture capitalists that have sunk money into AI stocks and private AI stocks, I should be clear, are going to be sitting on a bunch of assets under management, AEM,

the same assets they collect fees on because that's how venture capitalists make money, that will eventually crater or go to zero because there will be no way for any liquidity event, so taken in public or get selling someone, to occur. This is at a time of historically low liquidity for venture capitalists, with pitch book estimating that there would be only $100.8 billion in venture capital funds available at the end of last year. Venture capitalists raise money from limited partners, who invest in venture capital with the hope of returns that outpace investing in the public markets. Venture capital vastly over-invested in 2021 and 2022 as well, and this was also a problem with private equity.

In simple terms, this means that these funds are sitting on tons of stock that they cannot shift, and the longer it takes for a company to either go public or required, the more likely it is the VC or the PE firm will have to mark down its value to something more realistic. This is so bad that, according to Carter, as of August 2024 and that C-A-R-T-A, some of you can't understand how I talk. As of August 2024, less than 10% of VC funds raised in 2021 have made any distributions to their investors. That's handing any kind of cash out. In a piece from September 2025, Carter also revealed that about 15% of funds from 2023 have generated any disbursements as of Q2 2025, and the median net internal rate of return was a median 0.1%, meaning that

at best, most investors got their money back and absolutely nothing else. And just to be clear, you don't invest so you can get an exact amount. You don't give someone a dollar, wait four years, and then get a dollar back. That's not investing. That's just putting money in a box. And in fact, investing in venture capital has kind of fucking sucked for a while. According to Carter, as of the end of Q2, most VC funds across all recent vintages, that's after 2018, had a TVPI somewhere between 0.8x and 2x. TVPI I'll get to in a second. But there are some areas where standout TVPI are surfacing.

TVPI means total value to paid in capital, or the amount of money you made for each dollar invested. So if you invested a dollar, 0.8x would mean you got 80 cents back, and if you invested a dollar, you'd get $2 and $2.2.00. Hope that makes sense. Now, there's a chart in the newsletter version of this episode, which I encourage you to check out. but it tells you that for the most part, VCs have struggled to provide even money returns since 2017.

A decent TVPI is 2.5x, and as you'll see from the chart, things basically collapsed since 2021. Companies are not going public or being acquired at the same rate, meaning that investor capital is increasingly locked up, meaning that limited partners are still waiting for a payoff from the last bubbles, let alone this one. Now, Carter would update the chart in December 2025, and things would somehow get worse. TVPI soured further, suggesting a further lack of exits across the board. The only slight improvement was the median IRA, which rose from 0.5% from funds from 2021 and 0.1% for funds from 22.

Those are still real fucking terrible. Those are absolutely astonishing. I mean, a good IRA is ideally like 15, 15. to 20%, not 0.5%, I don't know. But in simpler terms, we are looking at years of locked up capital, even venture capital, cash starved and a little desperate. Another podcast from some SNL late-night comedy guide, not quite.

Unhumor me with Robert Smygel and friends. Me and hilarious guests from Jim Gaffigan to Bob Odenkirk, to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and head writer, Streeter Seidel, help an a cappella band with their between songs banter. There's that worst singer in the group? The worst? Yeah.

Me. Is there anything to the idea that because you're from Harvard, you only got in because your parents made a huge donation. The group. The yard birds, right? That's the name. The Harvard yard, but they're open. Do you have a name suggestion?

We're open. Since you guys are middle aged. One erection. Listen to humor me with Robert Smigel and Friends. on the IHeart radio app, Apple Podcasts, or wherever you get your podcast. Huber me. I need some jokes to make me seem funny. Run a business and not thinking about podcasting, think again.

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That's 844-8-4-I-Hart. Everyone, it's Ryder Strong and Will Ferdell from PodMeets World. And now the PodMeets Twirled podcast. We're two men who were completely clueless to reality TV, who now have covered Dancing with the Stars, traitors, and we're gearing up for the season finale of Survivor. So yeah, now we're experts. I know we annoyed a lot of our listeners.

by our severe lack of survivor knowledge. That is the point of the show. I'm just going to remind you. I have watched some Survivor. I obviously haven't watched enough. Did people not like it? Like what was just because we? Yeah.

We'll be recapping the big conclusion at the 50th season from the final attempts at gameplay to the desperate pleas of finalists to a bunch of ha, hoo. Ha ha, ha, who. Again, we are experts. So make sure to tune in a pod meets twirled for all our Survivor

50 takes. Listen to Podmeets Tworrell on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. This week on Crimless, we're joined by our first ever guest. Sorry, our first ever human guest. I don't think I could be in the same room with Shamrock the pair. I'd be too nervous.

That's right. The very funny, Will Ferrell joins Rory Scovel and me, Josh Dean, for an episode dedicated to the many crimes committed by people also named Will Ferrell. They called to his fellow officer for the nippers. What are the nippers? Very good question.

No, I was thinking, would that be a good name for like a salad dressing? Simple assault. And it's a play on word, salt? Maybe not. I say we invest and we see. There's only one way to know. This did not amuse the cops. By the way, normally the cops are amused.

But this did not abuse the cops. Will even comes clean about some of his own crimes. I didn't get caught. You know why? If you don't want to be suspected of anything, you whistle as you walk. Listen to Crime List on the Iheart Radio app, Apple Podcasts, or wherever you get your podcast. The worst part is that all of this is happening during a generational increase in the amounts that startups need to raise thanks to the ruinous costs of generative AI and a negative margins

of AI-powered services. Now, I'm going to quote myself from a December 5th newsletter called The Ways the AI Bubble Might Burst. Kursa, Anthropics' largest customer and now its biggest competitor in the AI coding sphere, $2.3 billion in November after raising $900 million in June. Now, these are for 2025. And I should add, these are on revenues of $83 million in the month of, I think, November or October, because they said annualized revenues of $1 billion is dogshed. Butplexity, one of the most, and I say this hesitantly, popular AI companies, raised $200 million in September after raising $100 million in July, after seeming to fail to raise $500 million in May, after raising $500 million,

million dollars in December 2024 for a fucking search engine. Cognition raised $400 million in September after raising $300 million in March. Cohere raised $100 million in September a month after it raised $500 million. That's a lot of money. And that's a lot of money in a very small amount of time. And that's taking money away from everyone else because they need that money. You need the money to invest in the startups. But none of these companies are profitable, nor do they have a profit.

path to an acquisition or IPO. And why do you say? Why? Why do you are scared? You're being so horrible. Well, it's because even the most advanced AI software companies ultimately prompting open AI or Anthropics models, meaning that their only real intellectual property is those prompts and their staff. And whatever they can build around the models they don't control, which has been obvious from the meager acquisitions we've seen so far. Another fun fact, Anthropic ended up cutting off people that work to XAI that were using cursor from using their models. So just to be clear, cursor, completely different company. Anthropic, if you work at a company at Anthropic doesn't like, and I know we don't like Elon Musk, I get that,

but if Anthropic can arbitrarily cut off their models from somebody's completely independent product, just because they're deciding to cut off a competitor, they're just going to broaden the term competitor to mean anyone they don't like, anyone that gets in the way. Now, WinSurf, which was allegedly being sold to Open AI last year, ended up selling its assets to cognition in July 2025, with Google paying $2.4 billion just to hire its co-founders and this nebulous licensing agreement, similar to the thing it did with Character.a.i,

where it paid $2.7 billion to rehire Nome Shazir, who, he was one of the authors of The Attention Is All You Need Paper that started this farce, license its tech, and pay off the stock of its remaining staff. This is also exactly what Microsoft did with inflation. collection AI and it's co-founder Mr. Suleiman, who, and I quote someone who messaged me recently, is a huge fucking asshole. Now, Mr. Suleiman, if you hear this, I'm just quoting someone that works for you. If they're saying that about you, perhaps it's worth asking, why are people calling me a big fucking asshole? I don't know, Mustafa. Come on the show and ask me

yourself. Now, Open AI's acquisitions of Statsig, $1.1 billion, I.O. product, $6.5 billion, and Neptune, $400 million, were all in stock. Every other major acquisition of this era, WIS, Confluent, even, Informatica and so on, is either someone trying to pretend that something is related to AI, like Wiz, or trying to say that a data streaming platform is heavily AI-related because AI needs data, which may be true, but it doesn't mean that AI companies are selling. And they're not, by the way, which is a problem. As 41% of US venture dollars in 2025 went to AI as of August,

and according to Axios, the global number was around 51%. A crisis is brewing. Nerd lawyer, back in October, wrote about the explosive growth of secondary markets, and I quote, enter the secondary market, a once niche corner of venture capital that has transferred into a primary liquidity mechanism. What's remarkable is how quickly this market is matured. At least five major venture funds have hired full-time staff dedicated to manufacturing non-traditional exits, As Hans Swilden's CEO of Industry Ventures explained, all the brand name funds are all staffing and thinking through liquidity structures.

And professional buyers have flooded in. Megafuns specialising in secondaries have raised unprecedented amounts. Lexington raised a record $23 billion, while Harbourvest, Ardian and Collar Capital have raised funds in the $10 to $20 billion range. In simpler terms, there are now hot potato funds, where either another limited partner buys another's allocation, the companies themselves buy back their stock, or the stock is resold to other private investors who are building venture capital firms out of shit the venture capitalists can't sell.

You see him where the problem might be, eventually someone's going to be, it's like bomber man. It's not good. Now, from the same nerd lawyer piece, and I quote again, and they're not alone. The secondary market is projected to handle $122 billion in assets in 2025, yet that still represents just 1.9% of the total unicorn value, as an aside of unicorn is a company worth a billion dollars. There's six plus trillion dollars in untapped liquidity potential. As an aside here, that's a really nice way of looking at this. The transformation of the secondary market from emergency tool to standard operating procedure represents the most significant structural shift in venture capital

since the rise of unicorns. It's not a temporary fix. It's a permanent evolution driven by misaligned timeframes between fund life cycles 10 years and company maturation, 11 plus years. I read that it's not just a temporary fix thing. I'm like, is this AI? Anyway, back to quoting. For better or worse, this is the new reality of startup funding. VCs can no longer afford to simply spray and pray and wait for exits. They need active liquidity management strategies. And that fundamentally changes what kind of companies are getting funded and how. I'm just going to be honest, that lost part's bullshit. I wrote this in the newsletter. that last part is wang. This is not changing anything about what companies get funded or how.

They're still funding these unprofitable monstrosities. Nothing has changed. And I would argue this piece frames that as a positive when the reality is far grimmer. Venture capitalists are sitting on piles of immovable equity in companies worth far less than they invested at. And the answer it appears is to find somebody else who is able to buy the dead weight. I assume because they're stupid? Like, I mean, I realize someone is going to say, well, actually it means maybe they see it, maybe they can afford to hold it for longer. No. No, if you're buying anything since 2021, you're probably getting swindled. And according to newcomer, only 1,117 venture funds closed in 2025, down from 2100 in 2024, and 43% of dollars raised went to the largest venture funds

per the New York Times and pitch book, suggesting limited partners are becoming less interested in pumping cash into the system at a time when AI startups are demanding more capital than has ever been raised. How long can the venture capital industry keep handing out $100 million to $500 million to multiple startups a year? Because all the signs suggest that the current pace of funding must continue in perpetuity, as nobody appears to have worked out that generative AI is inherently unprofitable, and thus every single company is on the Silicon Valley welfare system until somebody or everybody gives up, or the system itself cannot sustain the pressure? I've read too many people make off-handed comments about this being like the dot-com boom and saying that lots of

startups might die, but what's left over will be good, and I hate them. I hate them so much. I hate them both for their flippancy and for their ignorance. None of the current stack of AI companies can survive on their own, meaning that the venture capital industry is holding them up. If even one of these companies falters and dies, the entire narrative dies with it. If that happens, it will be harder for other AI companies to raise, and even harder to sell an AI company to somebody else, and if you can, you'll be selling it for less. This is a punishment for a decade plus of hubris, where companies were invested in without ever considering a path to profitability. Venture capital has made the same mistake again and again

and again, believing that because Uber or Facebook or Airbnb or any number of other companies founded nearly 20 years ago were unprofitable at some point, with paths to profitability, I might add, it was totally okay to keep pumping. Pumpening, pumping. I'm just saying. it pumping up companies that have had no path to profitability, which eventually became, had no apparent business model, see the Metaversal Web 3, which eventually became, have negative margins so severe and valuations so high that we will need an IPO at the market cap higher than Netflix at minimum. This is Silicon Valley's rot economy. The desperate growth at all costs attachment to startups where you, and I quote, really like the founder, where, and I quote again,

the market could be huge, who knows if it is, and where you just don't need to worry. about profitability because IPOs and exits were easy. Yeah, you see, venture capital used to be real easy because we were still in an era of hypergrowth. You could be a stupid asshole who doesn't know anything, but there were so many good deals and the more well-known you were, the more likely you'd be brought them first, guaranteeing a bigger payout, guaranteeing more LP capital, guaranteeing more opportunities that were of a higher quality because you were a big name. It wasn't about being smart or knowing the fundamentals, it was about being handed things. It was easier to make a valuable company too. Easier to get a good.

get funded and easier to sell because the goal was always get funded, grow as large as possible, or, well, go public. And here's the thing about that as well. There were just more ideas. There were more ideas to do. Like I said, with the rockcom bubble, there were more things that people could create. That's the thing. That ideas are a finite source. And when you incentivize this kind of thinking, you eventually stop incentivizing good ideas. You incentivize growth. And as a result, Venture Capital encouraged growth at all cost thinking above everything else. In 2010, Ben Horowitz said, and I quote, that the only thing worse for an entrepreneur than startup hell, which was bankruptcy, is startup purgatory. And I quote, when you don't go bankrupt, but you fail to build the number one

product in the space, that's purgatory. You have enough money with your conservative burn rate to last for many years. You may even be cash flow positive. However, you have zero chance of becoming a high growth company. You have zero chance of being anything, but a very small technology business. From the entrepreneur's point of view, this can be worth than startup hell since you're stuck with the small company. What a fucking noxious, ugly, horrifying thing to say. Let me put it like this. If you want a good business that people like and it's profitable and you have good, your employees like it, your customers like it, that's a good company. That isn't hell. And if you think that way, you're a fucking psychopath. You're an actual nutter. And this

Poisonous theory sadly paid off for him in that startups got used to building high growth, low-margin companies that would easily sell to other companies to the markets themselves. Right up until it didn't, of course. Per nerd lawyer, IPOs have collapsed as an exit route, along with easy-to-raise capital. Per pitch book, since 2022, 70% of VC-backed exits were valued at less than the capital put in, with more than a third of them being startups buying other startups in 2024. The money is drying up as the value of VC's assets is decreasing, at a a time when VCs need more money than ever because everybody is heavily leveraged in the single

most expensive funding climate in history. And as we hit this historic liquidity crisis, the two largest companies, Open AI and Anthropic, are becoming drains on the system that, in a very real sense, are participating in a massive redistribution of capital reserved for startups to one of a few public companies. No, really, hear me out. Open AI is trying to raise as much as $100 billion in funding so it can continue to pass money to one of a few public companies, $38 billion to Amazon Web Services over seven years, $22.4 billion to CoreWeave over five years, and $250 billion over an indeterminate period on Microsoft Azure. If successful, OpenAI's Venture Telethon will raise more money than has ever been raised in a single round, draining funds that actual startups need.

Anthropic has agreed, as I mentioned, to over $70 billion in computer and chips deal across Google, Amazon and Broadcom, and that's not including this Hutt-Ate compute deal that Google is backing that I don't even really, want to think about. Think about it just real simple for a second. Instead of venture capital going to startups, you know, early stage companies taking a risk, that money is going to open AI and Anthropic so they can hand it to big tech. This is big tech stealing from Silicon Valley and to see it as anything else is naive. And this money will come from what remains a venture capital, private equity, and whatever hypers will hand over. Yet elsewhere, even the money that goes to regular startup, is ultimately being sent to those hypers.

That AI startup that needs to keep raising $100 million in a single round isn't sending that cash to other startups. It's mostly going to OpenAI, who sends it to Microsoft, Amazon, Corweave or Google. Anthropic, who sends it to Google, Microsoft or Amazon, or one of the large hyperscalers, such as Amazon, Microsoft or Google. Silicon Valley didn't birth the next big tech firm.

It incubated yet another hyperscaler-level parasite, except instead of just spending money on hyperscalor services and raising money to do so, both Anthropic and Open AI actively drain the venture capital system as well, as they both burn billions of dollars and need those billions of dollars to keep running the models so that the AI startups can pay them. By creating something that's incredibly expensive to run, so destructively expensive to run, they can naturally create startups more dependent on the venture capital system, and the venture capital system has no idea what to do other than, say,

just grow, baby. Both open AI and Anthropics models might be getting cheaper on a per million token basis, but they use more tokens which increases the cost of inference, which in turn increases the costs of startups doing business, which in turn means open AI, anthropic and all connected startups lose more money, which increases the burn on venture capital. This is a doom spiral, one that can only be reversed through the most magical and aggressive turnaround we will see in history, and it will have to happen in the next year without fail. And it won't. It's not going to happen. And to find out why you just have to join me tomorrow for part three of the inshitter financial crisis. I'm Better Offline. This is Ed Citron.

Fuck! Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Osowski. You can check out more of his music and audio projects at Mattisowski.com. M-A-T-T-O-S-K-I.com. You can email me at EZ at Better Offline.com or visit Better Offline.com to find more podcast links and, of course, my newsletter. I also really recommend you go to chat. Where's Your Ed dot at to visit the Discord and go to our slash Better Offline to check out our Reddit. Thank you so much for listening.

Better Offline is a production of Cool Zone Media. For more from Coolzone Media, visit our website, Coolzonemedia.com or check us out on the IHeartRadio app, Apple Podcasts, or wherever you get your podcasts. podcast from some SNL late night comedy guy, not quite. Unhumor me with Robert Smygel and Friends, me and hilarious guests from Bob Odenkirk to David Letterman help make you funnier. This week, my guest, SNL's Mikey Day and head writer Streeter Seidel, help an a cappella band with their between songs banter. Where does your group perform?

We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and Friends on the IHeart Radio app, Apple podcasts, or wherever you get your podcasts. Your husband is not who you think he is. Your body is not what you thought it was. Your identity is formed by a secret history. I'm Danny Shapiro, and these are just a few of the stunning stories

I'll be exploring on the 14th season of Family Secrets. He kind of shoved me out of the way and said, move. And he went out the front door and he jumped in a car and drove off, and that was the last time I saw him. Listen to Season 14 of Family Secrets on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Your 20s can be so exciting, but they can also be really overwhelming, confusing, and honestly, just kind of lonely. May is Mental Health Awareness Month, and the psychology of your 20s is breaking down the science behind the biggest roadblocks we face.

I was six years into my career, the 80-hour weeks, and just the first one in, the last one out, and I ended up burning out. There was a large chunk of my 20s that I, like, was just so wanting to, like, be out of that phase out of my skin. And I just like really regret not living in the present more. You don't need to have everything figured out right now. You just need to understand yourself a little bit better. Listen to the psychology of your 20s on the IHeart radio app, Apple Podcasts, or wherever you get your podcasts. This season on Dear Chelsea, with me, Chelsea Handler, we have some fantastic guests like Amelia Clark. When like young people come up to me and they want to be an actor or whatever.

My first thing is always, can you think of anything else that you can do? I'd rather be disappointed in. Do that. David O'Yello. I love this podcast, whether it's therapy or relationships or religion or sex or addiction or you just go straight for the guts. Dennis Leary, Gaten Matarazzo from Stranger Things, Tena Mongeu, Camilla Morone, Carrie Kenny Silver, and more. Listen to these episodes of Dear Chelsea on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. This is an IHeart podcast, guaranteed human.