The AI Daily Brief: Artificial Intelligence News and Analysis - Anthropic Raising at a $20B-$30B Valuation

Episode Date: October 4, 2023

Just a couple weeks after announcing their big Amazon deal, Anthropic is out fundraising again with a $2B round that is reported to have Google's involvement and is seeking a $20B-$30B valuation. Before that on the Brief, a Mr. Beast deepfake ad scam; Morgan Stanley says 40% of workers impacted by AI in the next 3 years, and more. TAKE OUR SURVEY ON EDUCATIONAL AND LEARNING RESOURCE CONTENT: https://bit.ly/aibreakdownsurvey ABOUT THE AI BREAKDOWN The AI Breakdown helps you understand the most important news and discussions in AI.  Subscribe to The AI Breakdown newsletter: https://theaibreakdown.beehiiv.com/subscribe Subscribe to The AI Breakdown on YouTube: https://www.youtube.com/@TheAIBreakdown Join the community: bit.ly/aibreakdown Learn more: http://breakdown.network/

Today on the AI breakdown, we're discussing reports that Anthropic is raising new money at a $20 to $30 billion valuation. Before that on the brief, Morgan Stanley thinks that more than 40% of workers could be impacted by AI in the next three years. The AI breakdown is a daily podcasted video about the most important news and discussions in AI. Go to Breakdown.network for more information about our Discord, our YouTube channel, and our newsletter. The world's biggest YouTuber has taken to his socials to warn people of a deep fake scam. that uses his likeness, a video of him in fact, to try to get people to send money in exchange for an iPhone. Basically, the video claims that Mr. Beast is giving away 10,000 iPhones for just $2 each,

and that if you're seeing this ad, you're one of the lucky winners. If you're watching this video, you're one of the 10,000 lucky people who'll get an iPhone 15 pro for just $2. I'm Mr. Beast, and I'm doing the world's largest iPhone 15 giveaway. Click the link below to claim yours now. Now, of course, this ad was not created by Mr. Bees, but by artificial intelligence. Bees tweeted, lots of people are getting this deepfake scam out of me. Are social media platforms ready to handle the rise of AI deepfakes?

This is a serious problem. Matthew Kobach tweeted, First AI scam I've been served as an ad. I wonder if social media platforms are prepared for this. This fake Mr. Bees could just as easily be a fake Trump or Biden. Now, some argued that this was going to get worse with the rise of open source AI, which is part of the subject of our main episode, A Reverend Labs co-founder, Rahul Sude said,

It is a problem, but this will only get worse with open source AI as not everyone runs with high integrity. This is another reason why AI companies should be a protected class in the U.S. And regulation should be designed to protect and foster innovation here. Now, of course, this isn't the only news we've had recently about a celebrity warning of a deep fake ad using their likeness as part of a scam. Over the weekend, Tom Hanks posted to his 9.3 million Instagram followers, that, quote, there's a video out there promoting some dental plan with an AI version of me, I have nothing to do with it. CBS anchor Gail King also posted a video with the big text on top

of it fake video and said, people keep sending me this video and asking about this product and I have nothing to do with this company. I posted this video promoting my radio show on August 31st, and they've manipulated my voice in video to make it seem like I'm promoting it. I've never heard of this product or used it. Please don't be fooled by these AI videos. I think it's safe to say that the game of deep fake whackamol has officially begun. Now, moving over into the world of labor, everyone has a sense that artificial intelligence is going to have a big impact on the economy and the jobs market. The question is just how much? Well, a new report from Morgan Stanley analyst says that 44% of the labor force is likely to be affected by artificial intelligence in the next

three years. They estimate a $4.1 trillion economic effect on the labor force. The note read, we see generative AI expanding the scope of business processes that can be automated. At the same time, the input costs supporting Gen. AI functionality are rapidly falling, enabling a strongly expansionary impact to software production. As a result, generative AI is set to impact the labor markets, expand the enterprise software tam, and drive incremental spend for public cloud services. More subjectively, Janet Yellen, the U.S. Treasury Secretary, also added her thoughts on AI, saying that its, quote, unbelievably rapid development, could have a big impact in boosting the economy. Now, she noted that American productivity has gone down. Earlier this year, Fortune published

a piece American worker productivity is declining at the fastest rate in 75 years. Yellen said that the explosion of AI could supercharge productivity. She said the progress in this area is unbelievably rapid and it could make a significant difference. Now overall, she positioned AI as part of a larger shift through which she said we're restoring U.S. leadership in science and tech. Of course, in order to have all of those productivity gains, we have to help people actually learn about AI and adapt to the new AI economy. And on that front, it seems that LinkedIn is doubling down. TechCrunch writes LinkedIn goes big on new AI tools for learning, recruitment, marketing, and sales powered by OpenAI. Now, LinkedIn is at a steady drip of new AI products.

Back in March, for example, it announced AI-powered writing suggestions that were for both posts as well as for direct messages. And recruiters have also reported seeing a series of tests around job description support using AI, and that appears to be getting a little bit formalized with this latest set of announcements. The company announced something called Recruiter 2024, which is a new AI-assisted recruiting experience. Basically, what it allows for is recruiters to use more conversational natural language to try to hone in on the type of employees that they're looking to find. In addition to helping recruiters refine their searches, Recruiter 2024 will also have more suggestions outside of what recruiters might think that they are conventionally looking for.

Over on the learning side, there is a new AI chatbot that they're calling a learning coach that will give advice around soft skills to job seekers, job switchers, and current professionals. Many are speculating that if this learning coach has positive results, it might be extended to recommending content from LinkedIn's extremely large catalog of learning videos and other educational resources. Finally, both the marketing and sales aspects of the platform will also get an AI upgrade. Like so many of the other big tech social platforms, the marketing tools are having AI integrated specifically with a new product called Accelerate, and on the sales side, their new AI features promise to help salespeople find the right context more efficiently. While the cynical take on all this might be that this is just throwing the AI kitchen sink at everything LinkedIn does, I sort of think that that's just a phase that we're in right now,

where basically every company is going to be experimenting with artificial intelligence across the suite of what it does, in an effort to see where it actually makes a difference and where it doesn't. I'm not sure which of these are going to stick, but I think that the trend line of trying all these AI features is pretty clear. Now, not all the news in AI land is particularly great. One of the bits of news that contributed over the summer to a sense that AI hype might be dying dead. were job cuts at once buzzy startup Jasper AI, and now on top of that, the company has cut the internal value of its common shares by 20%. The company had previously raised a venture

round at a $1.5 billion valuation back in June. Now, in many ways, while Jasper started as exemplary of the Silicon Valley excitement in AI startups, it had instead come to represent something very different, which is a warning that just slapping a user interface wrapper around someone else's technology might not be the way to long-term success in this rapidly evolving space. Now, while this valuation cut has not been confirmed, it is clear that there is some turbulence inside the company. Last Thursday, for example, they announced that CEO and co-finder Dave Rogan Moser was stepping down, and former Dropbox president Timothy Young would be replacing him. Bringing it back all the way around to where we started with deepfakes, one of the potential

answers that has been posited to the inevitable rise of deepfakes has been AI watermarks. In other words, technological solutions to identify content as having been created by artificial intelligence. Now, there are a lot of different approaches to watermarking, some that are visible to the human eye, some that are invisible. But new research from the University of Maryland suggests that whatever solutions we have right now, they are not sufficient. As Wired summed it up, researchers tested AI watermarks and broke all of them. Computer science professor, Shohelphazi said, we don't have any reliable watermarking at this point. We broke all of them. Now, one take on this, of course, is that watermarking is just useless, but another take is just

to understand that there are limitations to how effective they are. Jonas Gepping points out that watermarks were never likely to solve the issue of AI being created adversarially that was purposefully meant to deceive. As he writes, it is unreasonable to expect watermarking to prevent instances of targeted misuse like fake news campaigns. This is an important message to policymakers who sometimes seem like they're looking only for easy answers. If nothing else, between this and the Mr. Beast news, it's very clear,

just what a challenging cat and mouse game this is likely to be. But for now, that's going to do it for today's AI breakdown brief. Thanks, as always, for listening or watching, and I'll be back soon with the main AI breakdown. Welcome back to the AI breakdown. Well, Anthropic has dominated the news for the last week, and interestingly, they are back in the headlines again. Today, we're going to talk through the new report, as well as explore what it says about the state of the competition for foundation models.

Now, just to bring you up to speed with recent developments, on September 20, 25th, Amazon and Anthropic announced a major collaboration that included an initial $1.25 billion investment into Anthropic that could be expanded up to $4 billion, as well as a collaboration with Amazon Web Services. Andy Jassy tweeted, excited to share we're expanding our collaboration with Anthropic. AWS will now be Anthropics primary cloud provider and help build, train, and deploy its future foundation models on Traneum and Infercia chips. Many very reasonable people then started to outline the new parameters of the AI battle, as Microsoft plus OpenAI, Google plus DeepMind, Tesla plus XAI, meta plus its internal meta AI, and now

Amazon and Anthropic. Now, one thing that Anthropic was clear on was that, as they put it, as part of the investment, Amazon will take a minority stake in Anthropic. Our corporate governance remains unchanged and will continue to be seen by the long-term benefit trust in accordance with our responsible scaling policy. In some ways, I read that as them specifically saying this isn't quite as close as, for example, Microsoft and OpenAI might be. Well, putting a fine point on that is this new report from the information that Amazon is talking about a fresh $2 billion round that would be led by Google and others. Now, it's important to note that Google is already an investor in Anthropic. In 2022, Google bought around 10% of the company. Now, the previous fundraise for Anthropic from March,

which was, of course, before this Amazon investment, had valued Anthropic at around $4 billion, but according to the information sources, the company is now seeking a valuation of between 20 and 30 billion. If they were to get that, it would represent a 200x multiple on the company's current $100 million revenue run rate. Now, just by way of comparison, should they successfully complete this raise at that valuation, they would be at a significantly higher ARR multiple than even OpenAI at this reported $80 to $90 billion round, given that OpenAI is now reportedly at a billion dollar annual run rate.

Now, that's said, Anthropics revenue is apparently growing fast. Sources close to the company said that by the end of this year, Anthropic is projecting that will generate revenue at a $200 million annualized rate or around $17 million a month, and that by the end of next year, it hopes to be at a $500 million annualized rate or more than $40 million a month. Importantly, one of the reasons that they're projecting that amount of growth is this deeper tie-up with Amazon, which will see Amazon's bedrock push anthropic to cloud customers in a more direct way. Now, in terms of how much Amazon is setting the valuation, apparently their investment was done in the form of a convertible note, which turns into stock

at the next fundraising round. The information sources also made it seem like a big, deal for Amazon was the ability to get their specialized server chips into a major player like Anthropic as a way to start competing against Nvidia's GPUs. Kind of stating the obvious the information writes, if Anthropic raises more money from Google, it would raise questions about how the startup plans to split its allegiance between the two rival cloud providers. Now, one interesting thing that could explain why these companies are trying to raise so much money so fast comes from Anthropics Pitch Deck, which reportedly reads, we believe that companies that train the best 2025-26 models

will be too far ahead for anyone to catch up in subsequent cycles. In other words, that there is a very distinct moment in the history of the evolution of the artificial intelligence space that will mint winners and losers, and that effectively right now is the only chance anyone really has to compete. Now, of course, the other interesting dimension to this battle is the degree to which all of these big tech companies have different philosophies on how the AI space in general.

general should evolve. As we reported recently and once again from the information, apparently a lot of the tense conversations happening behind closed doors in Washington, D.C., have to do with what the right approach to open source AI will be going forward. Here's how the information summed up the friends and foes of open source AI. In the pro-op open source column, they put meta and data bricks. They summed up meta saying, says licenses are not appropriate for current generation of AI models, released LAMA2 a cutting-edge open-source LLM over the summer. And indeed, it appears from this reporting and from just basically any other conversation that we've read, that part of what has put such a fine point on this question around open source is how fast it's evolving thanks to initially the leak of Lama

1 and then the release of Lama 2. Moving back to where company stands, Databricks, they say, says open source AI should not be unduly restricted by regulation. Now, somewhere in the middle are Microsoft and Google. Microsoft, they write, has supported requiring companies to obtain licenses before releasing models, but released FI-1.5 in Open Source LLM in September, and Google, they say has not indicated whether it supports requiring government approval for launching open source LLMs. Its last open source release was in December 2022. In the companies that are against open source AI, Anthropic and OpenAI share common cause here. OpenAI, the information says, wants companies to obtain government approval before releasing highly capable AI models. It points out that they have

not open sourced in LLM since 2019. And in fact, Sam Altman has said explicitly that they were wrong about their approach to open source AI. Anthropic, the information characterizes as opposing open source cutting edge AI, supports independent evaluation for safety of models prior to release, including by the U.S. government, has not open sourced its AI. Now, as the article points out, this is not just a principal question about whether open source should be allowed or not. In fact, it's much more of an implementation question of answering things like, if policymakers agree that some models are too powerful but other models aren't, how are those lines drawn? What is the process for determining whether a model is too powerful or not? Now, one of the folks who also thinks that we

shouldn't be as open as we are with open source AI, is former Google DeepMind co-founder Mustafa Sullyman, who's now the co-founder and CEO of Inflection. Last month, he put out a book called The Coming Wave, Technology Power and the 21st Century's Greatest Dilemma. In August before his book came out, he started up controversy by tweeting, The Last Century was defined by how quickly we could invent and deploy everything. This century will be defined by our ability to collectively say no to certain technologies. This will be the hardest challenge we've ever faced as a species.

It's antithetical to everything that has made civilization possible. to date. For centuries, science, and technology have succeeded because of an ideology of openness. This culture of peer review, critical feedback, and constant improvement has been the engine of progress powering us all forward. But with future generations of AI and synthetic biology, we will have to accept that this process needs an update. Figuring out how to delicately do that without trashing innovation and freedom of thought will be incredibly hard. But left unchecked, naive open source in 20 years time, will almost certainly cause catastrophe. Physicist and AI founder Kevin Fisher writes, The Voice of an Authoritarian, Why Combinator

President Gary Tan said, lost me at banning open source and matrix multiplication. Bad look and feels grifty. Now, John Carmack, the former CTO at Oculus, had a more nuanced review of the book. He tweeted, this is written without any wild-eye fear-mongering, and I like some of the historical perspectives, but he is clearly a status. He previously worked in government, expresses concern for the government almost as often as concerned for people, and wants to see powers expand in scope and across national borders. There is an undercurrent of, we obviously can't let the peasants have crossbows. I also don't like the bundling of biotech risk and AI risk. It feels like a big tent play to raise more concern and grow more levers of power. At the end, he suggests making high-end open-source

AI work illegal and imposing censorship on the dissemination of prohibited AI research. Cheers for openly saying what you want instead of leaving it all vague, but I am not aligned. Stability AI CEO Amad Mastok quote tweeted that tweet and said, I agree largely with John here and would actually go a bit further. Almost every argument I've seen made against open source AI is ignorant of history, logic, and technology. Those who give up the liberty this technology will enable for supposed safety will get neither. When someone asked him then why he had signed the statement saying mitigating the risk of extinction from AI should be a global priority, Imod responded, the danger of AI extinction is a threat that should be considered a global

priority just in case. It is not nuclear level tech overall and things like data set transparency and open source mitigate threats. Closed AI controlled by states with no alternative is the danger. Among people that agreed with Imod included Epic Games founder Tim Sweeney who said, agreed. It's a new generation of unprincipled company leaders lobbying the government to prevent upstarts from competing with them. Thanks for keeping stability open. Now, this is obviously a growing contentious conversation. And when it comes to what normal people think, I thought subroshi.eat Eath had a really honest point. They wrote, most of us simply do not understand the topic well enough to make any real judgment, which is a bit scary considering how huge the consequences

might turn out to be. Can't blame people for being cautious. Now, the reason that I think it's worth revisiting this conversation around open source and AI safety in light of a large, anthropic rays, is sort of summed up by a point made on September 25th by Roon, who wrote, Anthropics splitting off, without a doubt, accelerated AGI-I timelines. The point that he was making is the irony that Anthropics leaders left to OpenAI because they were concerned about their approach to AI safety, but in so doing simply increased competition, which almost inevitably will lead to faster evolutions in the space. I've called this before competitive accelerationism.

It's quite clear from all this fundraising activity that the battle is getting more, not less intense, and that means that creating calm middle space for nuanced conversation about these questions is going to get nothing but harder. Hopefully we can create at least a little bit of that here in our small corner of the AI world. Lastly, one little side note for those of you who follow both crypto and AI, an incredible denou ma to the FTX story is that among all of the crazy random dragons treasure hoard of assets, as Michael Lewis put it, that Sandbank-Madfried had between his personal accounts, Alameda and FTX, was an investment in Anthropic. If this deal goes through, and Anthropic is able to raise at that $20 to $30 billion valuation that puts the stake

that FTCS owns at between $3 and $4.5 billion. It doesn't completely do it, but it comes fairly close to covering the hole owed to FTX customers. How wild is it to think that among the two big November 22 events, the collapse of FTC and the launch of Chachybt, the tailwinds from the latter, might be so powerful that they help clean up the mess of the former. Pretty fascinating stuff, guys. But for now, that is going to do it for today's episode. If you enjoy it. If you like the AI breakdown in general, I would so appreciate it if you would subscribe wherever you listen to podcasts and leave a rating or a review. It makes a really big difference to how new people find the show, and I appreciate each and every one of you who has taken the time to do that.

Until next time, guys, peace.