AI/LLMs Plagiarism vs. Inspiration

[Dannyalcatraz]

No, he is claiming their Contribution Margin P&L is profitable. This is not misleading in the least. It’s a different financial view and consideration. He never claimed that under GAAP that he was profitable, in fact just the opposite.

The problem remains that Contribution Margin P&L is primarily used for internal metrics. Talking CM P&L while discussing profitability in interviews & press releases is misleading at best. It’s more suspicious if you downplay or don’t contextualize it with overall P&L.*

Gross Margin

• Used for company-wide, higher level reporting
• Fixed overhead is included
• Used by external parties to measure overall profitability
• Is included in external reporting
• Difficult to exclude costs; all COGS are included

Contribution Margin

• Used at a product-level, internal analysis
• Fixed overhead is excluded
• Used by internal management to determine operational strategies
• Strictly an internal reporting metric
• Easier to exclude costs when shifted between variable and fixed

If you’re talking to potential investors (“external parties”), Contribution Margin P&L is not the gold standard. While pros, regulators, competitors and experienced investors might be able to properly assess certain risks based on your CM, they’re not everyone. And even they will be asking for further information.





* I will concede that Amodei’s interviews tend to do the former more than the latter. That may be indicative that he’s being enthusiastic and optimistic as opposed to being deceptive. That doesn’t make me more inclined to believe him, though.

 

[FrogReaver]

The problem remains that Contribution Margin P&L is primarily used for internal metrics. Talking CM P&L while discussing profitability in interviews & press releases is misleading at best. It’s more suspicious if you downplay or don’t contextualize it with overall P&L.*


If you’re talking to potential investors (“external parties”), Contribution Margin P&L is not the gold standard. While pros, regulators, competitors and experienced investors might be able to properly assess certain risks based on your CM, they’re not everyone. And even they will be asking for further information.





* I will concede that Amodei’s interviews tend to do the former more than the latter. That may be indicative that he’s being enthusiastic and optimistic as opposed to being deceptive. That doesn’t make me more inclined to believe him, though.

I think there's some new stuff here, so I'm going to go ahead and reply.

I think the disagreement comes down to treating “profitability” as if it’s a single concept. In Finance it isn't. Finance uses multiple profitability lenses because each one answers a different question.

• GAAP profitability - Is the whole company profitable?
• Contribution margin - Is scaling profitable?
• Gross margin - What is the cost structure?
• Unit economics - Is each user profitable?

So when a Big Tech CEO talks about contribution margin, they’re not replacing GAAP - they’re answering a different question, one investors care about: “Does adding more users make money or lose money?”

That’s why companies like DoorDash, Uber, Lyft, and Netflix report contribution margin style metrics externally. It’s not deceptive, it’s the standard way to talk about marginal profitability.

Your point about context is fair - any metric can mislead if you pretend it answers a question it wasn’t designed for. But in this case, it seemed he was clearly providing context around why his company still had merit despite having negative total profitability.

I get being untrusting of him and Big Tech in general - I'm probably one of the biggest skeptics when it comes to CEO motives, but I don’t think this specific thing is evidence of deception. It’s just a different profitability lens being used to answer a different question.

Example Financial Reporting
Door Dash Financial Statements (see last 2 lines)

 

[Dannyalcatraz]

Your point about context is fair - any metric can mislead if you pretend it answers a question it wasn’t designed for. But in this case, it seemed he was clearly providing context around why his company still had merit despite having negative total profitability.

Like I said, in interviews, he comes across as hyper-enthusiastic instead of deceptive (to me).

But the financial press is definitely divided on whether Anthropic is investment worthy or not. (Though most agree that it’s one of the most likely to evade bursting due to the oft-predicted bubble.)

 

[FrogReaver]

But the financial press is definitely divided on whether Anthropic is investment worthy or not. (Though most agree that it’s one of the most likely to evade bursting due to the oft-predicted bubble.)

Yea, I'm not saying they are a good investment. I have no idea. But I know analyzing any big tech business while it's still in growth and market domination phase is much different than analyzing most any other type of company. It's always astronomical debt and chasing user counts and then one day flipping the switch and increasing monetization (ads, tracking info about you and selling it, subscriptions to use it add free or more powerful versions, etc).

Alot of companies with that model do fail. But the ones that make it tend to make it real big.