I found something in Anthropic’s IPO filing that made me laugh out loud.
Then I read it again, because I wanted to make sure I hadn’t misunderstood it.
Anthropic makes Claude, the artificial intelligence assistant that can help you write an email, explain a confusing document, or organize a project.
The company wants to sell shares to the public.
Before it can do that, it has to give investors a document explaining the business, its finances, and all the things that could go wrong.
That last part took 94 pages.
For comparison, SpaceX’s (SPCX) first filing had 38 pages explaining its risks. And that company launches rockets into space.
When I told you Things Are About to Get Silly, I was talking about new ways to trade stocks and CEOs getting upset about them.
I wasn’t expecting this.
Anthropic warns that advanced AI could pose “catastrophic or existential risks to humanity.”
In plain English, that means something terrible could happen to people, possibly threatening our survival.
It ends by warning that this “could adversely affect our business, financial condition, and results of operations.”
Well, yes. I would imagine it would.
If humanity disappears, getting customers to renew their subscriptions is going to be a challenge.
You can probably cancel the marketing meeting, too.
There Isn’t Enough Insurance
Then there’s the insurance problem.
Anthropic warns that a terrible AI event could cause so much harm that one insurance company might not be able to cover it.
Even the whole insurance industry might not have enough.
Imagine being a fly on the wall in that meeting with the insurance agents.
“Yeah, sorry. There just isn’t enough insurance out there. You could combine every insurance company in the world, and they still wouldn’t have enough to cover the disaster you could produce.”
What do you even say to that?
You’re trying to buy business insurance, and the conversation is about whether the entire insurance industry has enough money to cover what you’re building.
A Warning Is Not a Prediction
The wording is funny. The possible harm is serious.
We can laugh at the way a sentence sounds while still wanting the people building this technology to do their jobs carefully.
But there’s a lesson here for anyone who invests, even if you’ve never bought a stock in your life.
A list of things that could happen is different from a prediction about what will happen.
Think about the safety talk before an airplane takes off.
The crew explains the oxygen masks and emergency exits. That doesn’t mean they expect to use them on your flight. It means you should know about them before you leave the ground.
Buying shares works a little like that.
You need to understand the risks before you put your money in. But reading the warnings won’t tell you whether the share price will rise or fall tomorrow.
A company can build something amazing while investors pay too much to own a piece of it. Another company can face real problems and still see its stock rise.
The business and the price of its shares are connected, but they aren’t the same thing.
That’s why I want to understand what I’m buying, what I’m paying, and how much money I could lose.
A great story doesn’t answer all those questions. Neither does a scary one.
So how am I preparing for this one? With an open mind.
I was impressed with how the SpaceX IPO went. The stock has held in pretty well, and the market seemed to absorb that offering without much trouble.
To me, that’s encouraging as we look ahead to Anthropic going public.
And I’m more optimistic heading into this one than I was heading into SpaceX.
But, for now, I’m just having some fun with the S1.
When the thing starts trading, I’ll let the price help us decide what to do with it.