Life, we’re told, is governed by certainties. Immutable laws. Two plus two is four. Monday follows Sunday. The Cowboys are out of the playoffs once the preseason ends.
And, in the world of finance, cash is king.
Most retellings of the late-90s dot-com bubble stop there. Investors mistook eyeballs for earnings and clicks for cash.
But that’s a poorly constructed caricature.
Consider eToys, whose brief but volatile history is recounted by Robert Shiller in Irrational Exuberance. Like many of its peers, the online retailer hit the scene in 1997 and went public a mere two years later, its valuation topping $8 billion. As Shiller notes, the year before eToys’ IPO, “sales were $30 million.” Sure, the valuation was astronomical – 267 times trailing revenue, for God’s sake – but revenue wasn’t zero. It also wasn’t stagnant: $30 million quintupled to $151 million by early 2000.
No matter, in the end. eToys “filed for bankruptcy and was delisted from NASDAQ in March 2001.”
I recalled the eToys saga as I read coverage of Anthropic’s draft prospectus in last week’s Financial Times – coverage that revealed “close to a quarter of [Anthropic] revenue last year [came] from just two clients.”
A startling figure, but not the first the paper has printed. As the FT reported just one week prior, Yale’s Aleh Tsyvinski – analyzing data from OpenRouter – found that only 22.5% of Anthropic users were still engaging with its models one year on.
In Tsyvinski’s sample, continued use of Anthropic was less likely than getting “heads” on a coin flip.
Tsyvinski wasn’t explicitly measuring revenue retention, to be fair. And if you really want to put me in my place, you can simply remind me that Anthropic ain’t eToys. Everything about the former – its addressable market, its revenue, its growth – dwarfs the latter.
Even a Luddite like me must admit Claude’s capabilities are more impressive than online Elmo purchases.
Those points conceded, we ignore the lesson of eToys at our peril. Cash today doesn’t guarantee cash tomorrow. Anthropic customers can walk away, taking meaningful revenue with them. And however unlikely you may have found that scenario a week ago, these new data haven’t reduced the odds.
Cash may indeed be king. But sometimes it’s the king of wishful thinking.