Nick Gerace
On Fallthrough
“The thing that's pretty interesting about the Anthropic S1 is that a lot of the loss recorded in it is equity related. And from what I understand, potentially most to all of it could convert to common shares when the IPO actually happens. So their actual performance is maybe much better than a lot of initial headlines imply… There's nothing from the outside looking in that seems to indicate that API versus plan pricing is existential risk to the business.”
Fallthrough · Hands-On Engineering Podcasts · November 2026
Context
The hosts had been discussing churn in OpenAI and Anthropic subscription plans and whether flat-rate plans will survive. Nick, who says he is not a business expert, gives his read of Anthropic's S1 filing. It speaks directly to the Anthropic IPO and valuation-skepticism debate.
Transcript
It's interesting. I uh wonder if it's an experiment of some kind, but why would they need to perform that experiment? It's interesting. Yeah,
…like little bits of research that I think Luna would be great at. So I think there is a world where more people consume less usage by using those sorts of models and then where you can actually go and reasonably use API billing as an individual and not have to pay like a tremendous amount of money.
…giant compute obligations. There's the valuation already assumes they're going to see massive growth, whereas there's a counter argument to be made that like they've all already are starting to saturate a lot of it. So all this pull-through obligations they have to fulfill and will the demand. Meet that. That's like a different story. But the biggest thing I've learned from reading that is there's nothing from the outside looking in that seems to indicate that API versus plan pricing is existential risk to the business. I mean, again, I'm not on the inside. I just read the S1. I read summaries about the S1. But to me, that conversation is done and dusted. I think, I think you'll see a bunch of plan tweaking, like we've already talked about, but the plans going away. The second you introduce API pricing, some people might hit the bricks. And yeah, local LLM, I would say, might be stalling a little, particularly…
Yeah, I think it would make people go to Gemini and to Muse, right? Like they can't get rid of API pricing because most people, I think most people go and they just be like, I'm just going to get a fund from Google. Like Gemini is not so much worse. Like if the option is like, I have to do API…
you can also gate products and betas and previews around subscriptions too. Like there's like, it's a little bit more of like an interesting product suite play as well from my perspective. Again, outside looking in.
And like the lay person is not going to is not going to use API pricing. Right. They're, they're just absolutely, they're going to use like the lower ones. And I think I saw something. I don't know if it was a random tweet where someone was like, most of the subscription revenue comes from the plus…
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