Saturday, May 31, 2025

AI: Even Further Discussio about IT CANT HAPPEN HERE (and George Orwell Animal Farm; and Huey Long)

This blog closes with a 750-word comprehensive AI essay.

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Everyone has read animal farm by George Orwell, and I am currently reading IT CAN'T HAPPEN HERE, by Sinclair Lewis. 

 Although not often compared together, they’re about fascists or dictators or authoritarians. 

 Second, there is a similarity of style, because both authors in these two books present a very dry presentation of the awful slide toward ugly authoritarianism. The prose that tells us what is happening in both cases is rather pedestrian and dry, no doubt deliberately.

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You're right to draw a connection between Animal Farm and It Can’t Happen Here, even if they’re not frequently placed side by side. Both books portray the rise and consolidation of authoritarianism in ways that are chilling precisely because of their dry, almost bureaucratic tone. That stylistic restraint may be one of the most effective tools both Orwell and Lewis use—it mirrors the banality of evil before Hannah Arendt coined the phrase.

A few key points of comparison:


1. Satire Without Laughter
Both novels are satirical, but the tone is rarely humorous. The absurdities of the regimes—talking pigs drafting constitutions, or a buffoonish American president dissolving Congress—are delivered with a flat affect. The horror comes not from fireworks or melodrama, but from how plausible everything seems, moment to moment.


2. Dull Prose as Political Commentary
As you’ve noted, the pedestrian prose may be deliberate. Orwell and Lewis often write in the plain style of newspaper reports or civic instruction manuals, which underscores how authoritarianism often presents itself as normalcy. It's not jackboots and lightning bolts—it’s the slow paperwork of repression, the committee meeting, the local enforcer with a clipboard.


3. Revolutions That Betray Themselves
Both novels depict movements that begin with populist rhetoric and end with repression. In Animal Farm, the Seven Commandments are slowly edited until “All animals are equal” becomes “...but some animals are more equal than others.” In It Can’t Happen Here, the promise of reform and anti-elitism gives way to camps, secret police, and media control. The style matches the substance: incremental betrayal.


4. Cynicism as a Narrative Weapon
The emotional flatness in the narration conveys a kind of existential fatigue, as if both authors are warning: Of course this is happening. Why would you expect better? That shared bleakness in tone—more resignation than rage—functions as a subtle indictment of the reader’s complacency.


5. The Reader Becomes the Witness
Neither book tries to "sweep you off your feet." Instead, the reader becomes an increasingly uneasy witness. Orwell's narrator doesn’t weep when Boxer is sent to the glue factory; Lewis’s Doremus Jessup isn’t a fiery revolutionary, just a thoughtful man slowly cornered by a tide he underestimated.


So while the surface details differ—talking animals versus American politics—the bones of the two books are strikingly similar. The detached, dry style mirrors the dull bureaucratic mechanisms through which democracy dies—not with a bang, but with a thousand memos.

Would you like a short comparison chart or a summary paragraph that you could use for an essay or book club?


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IT CAN'T HAPPEN HERE borrows many things directly from the Nazis, which of course were contemporary for the author and his readers. 

 The Nazis had the SA private army, and in IT CAN'T HAPPEN HERE the fascist political party has a huge private army of hundreds of thousands. 

 The Nazis quickly banned other political parties, as did Lewis’ book. 

 A certain bishop was portrayed as the brains behind the fascist president, yet he disappears off to a secret prison quickly after the election. (This is presently drily and you can hardly believe such a plot twist is a fait accompli so fast!). 

There is a great deal of sanctioned and violent bullying in both Germany 1934 and US 1937, just the same.

Jewish professors were left penniless in 1934, and we see the same in Lewis.

Windrip attacks universities suddenly and early in his term.

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Exactly—and you're drawing out one of the most unsettling strengths of It Can’t Happen Here: how bluntly and rapidly Lewis transposes the Nazi playbook into an American setting, but delivers it with eerily calm narration, as though none of it should surprise us.

Here are a few expanded thoughts to build on your observation:


1. Parallels to the Nazi Machinery Are Unmistakable, but Refracted Through Americana
The private militia in the novel—the Minute Men—are a barely disguised version of the Nazi SA (Sturmabteilung or Brownshirts). Like the SA, they are thugs recruited from the working class, deployed to suppress dissent, and act outside the law but with state approval. That Lewis invents an army of hundreds of thousands of American enforcers feels both ridiculous and, terrifyingly, believable. He’s saying: It wouldn’t take much.

Similarly, the immediate outlawing of other political parties after President Windrip’s rise mimics Hitler’s Enabling Act of 1933, which dismantled Germany’s multiparty system almost overnight. Lewis collapses this process into a few chilling lines of flat prose, which seems to reflect not dramatic license but historical realism.


2. The “Brains Behind the Throne” Trope and the Fate of Allies
The character of Bishop Prang, who seems like a religious kingmaker or a proto–Rasputin, is discarded almost immediately after Windrip takes power—just like the Nazi regime eliminated early allies once they became inconvenient. (Think of Ernst Röhm, head of the SA, who was purged during the Night of the Long Knives in 1934.) That Lewis does this in passing, as you noted, enhances the novel’s mood of creeping dread: even the powerful are not safe. It's the casualness that’s chilling.


3. Sanctioned Bullying and Public Rituals of Fear
From street beatings to arrests of journalists, Lewis catalogs a rising culture of sanctioned cruelty. But again, the prose stays dry—he writes of raids, disappearances, and show trials with the tone of a small-town newspaper covering zoning changes. The normalized brutality feels spiritually identical to Germany's 1934–1937 period: a society where no one knows what’s legal anymore, only who is powerful.


4. The Speed of Collapse as a Warning
You pointed out the “fait accompli so fast!” feeling. This is key. The plot doesn’t build gradually—it slides downward fast, like a society that thought it had brakes but didn’t. The fact that everything is narrated with such restraint—no italicized horror, no gasp—seems like Lewis is warning his readers: this is exactly how fast it can go, and you’ll barely notice until it’s over.


5. A Nazi Blueprint, Written in Real Time
Unlike Orwell’s Animal Farm, which was written after the fact (post–Stalin consolidation), Lewis is writing during the rise of fascism. In 1935, Hitler was in power, Mussolini had invaded Ethiopia, and Huey Long was making populist waves in the U.S. Lewis was watching it all happen, not with hindsight but with a present-tense, dread-soaked immediacy. That makes the book not only prescient, but also urgent—and the flatness of the prose becomes a mirror to the everyday complicity and numbness that lets fascism thrive.


Would you like me to turn this into a short essay-style reflection or bullet summary for reference?

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When was IT CAN'T HAPPEN HERE published - 1935, 1937?   The internal setting is clearly 1936 (election year so stated) and 1937.  

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It Can't Happen Here was published on October 21, 1935, by Doubleday, Doran and Company . The novel is set in the near future of 1936, focusing on the presidential election and the subsequent events in 1937, as the fictional fascist regime consolidates power in the United States.(Wikipedia)

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And when did Huey long die? He’s clearly the asinine bombastic model for Windrip.

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Huey Long died on September 10, 1935, just six weeks before It Can’t Happen Here was published (October 21, 1935).

You're absolutely right that Buzz Windrip is a thinly veiled caricature of Huey Long—bombastic, populist, faux-folksy, and dangerously authoritarian. Lewis was writing the novel while Long was still alive and politically ascendant, and likely completed it before Long’s assassination. The character of Windrip captures Long’s tone, his demagogic energy, and even his “Share Our Wealth”–style economic promises.

So although Windrip isn't a one-to-one match (he also borrows traits from figures like Father Coughlin and Mussolini), Huey Long is clearly the blueprint, and the timing of the novel's publication makes that all the more stark.

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It might have been distracting that Long was barely in the grave.  Yet, had Long been alive, who knows where that would have led.  Long - Windrip is like Hearst - Kane soon after.  

One even wonders if transferring Huey Long into the novel's character had some indirect influence on the way that Orson Wells transferred Hearst into Kane just a couple years later.

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That’s a sharp and richly layered observation—there’s real cultural resonance in the way both Lewis and Welles transmuted powerful public figures into fictional archetypes, barely veiled and just recent enough to sting.

You’re right: It Can’t Happen Here appeared just weeks after Huey Long’s death, and had he still been alive, Lewis might have pulled his punches slightly—or the public reaction might have been more explosive. As it stands, the timing gave Lewis a strange advantage: he could lampoon Long while sidestepping charges of libel, and simultaneously leave readers with a disturbing hypothetical—what if he had lived? Buzz Windrip becomes a ghost of the American future, not its past.

The parallel you draw to Hearst–Kane is especially apt. Citizen Kane premiered in 1941, five years after It Can’t Happen Here, and only a few years after Hearst tried to crush its release. But like Lewis with Long, Welles wasn’t just doing a hatchet job—he was building a mythos, using the biographical as raw material for a national cautionary tale.

And as you suggest, it’s entirely plausible that Welles (who was voraciously well-read, politically attuned, and theater-savvy) took a cue from Lewis’s technique. Windrip is not an impersonation of Long; he’s an amalgam of American temptations—greed, ignorance, jingoism, religiosity, and power-worship. Likewise, Kane is more than Hearst: he’s the embodiment of capitalism’s seduction and rot.

If nothing else, It Can’t Happen Here proved that American audiences could handle (and maybe needed) literary facsimiles of real political actors, filtered through fiction to bypass defenses. Welles may have seen that precedent and thought: If Lewis could do it with Long, I can do it with Hearst.

It makes for a compelling chain:
Long → Windrip → a template for demagogues in American fiction
Hearst → Kane → a prototype for the corrupted self-made man

Both are American tragedies written in the style of modern myth.

Would you like this expanded into an essay-style page or pitch for a blog post?

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But could Huey Long death have detracted from the impact of the novel. The novel was an intended portrayal of what would happen if Huey Long, who while writing it was very much alive, won the nomination in 1936.  That was the intention in the book - and the book  would’ve been in press at the time of death.   

But the book appeared in a very different context, or no one needed to worry the least bit about Long and his millions becoming a very real madman presidential candidate, since he was several weeks dead.

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Absolutely—Huey Long’s sudden death in September 1935 likely blunted the immediate political impact of It Can’t Happen Here, or at least shifted the lens through which it was received.

Here’s how we might think about it:


1. The Book’s Target Vanished Weeks Before Launch

At the time Sinclair Lewis was writing the novel (spring and summer 1935), Huey Long was actively preparing to run against FDR in 1936. His “Share Our Wealth” clubs had millions of members. He was by far the most visible populist threat to American democracy, and Lewis clearly meant the book as a warning shot—a "here’s what could happen if this man wins" political parable.

But Long was assassinated on September 10, and the book hit shelves on October 21. So when readers picked it up, the real-world corollary to Buzz Windrip was already dead, and the sense of “this could happen next year” had instantly softened into “this could have happened.” That undercut the urgency. The headline had changed.


2. From Political Fiction to Political Fable

Had Long lived, the novel might have stirred direct political controversy, perhaps even galvanized opposition or hardened support. Instead, it entered the world as a speculative alternate history, not a forecast. Reviewers and readers could now distance themselves: This isn’t about 1936 anymore—it’s just a what-if. The tone shifted from alarm to allegory almost overnight.


3. Less Threat, More Thought Experiment

By the time it was reviewed, critics were no longer grappling with Long as a 1936 candidate but treating the novel as a meditation on American susceptibility to fascism. That may have helped the book age better, in the long run, but at the moment of release it likely diluted its firepower. It’s the difference between a novel warning of a coming storm and one describing a storm that never came.


4. What Might Have Been

There’s a real counterfactual here: What if Long had lived until 1936? The book might have been seen as subversive, even dangerous—perhaps banned in some circles. Lewis may have become a political lightning rod, not just a literary voice. As it happened, he published a sharply political novel into a vacuum where its most explicit referent was conveniently no longer a threat.


Summary:

Huey Long’s death robbed It Can’t Happen Here of some of its immediacy and potency, transforming it—just weeks before publication—from a red-alert political novel into a cautionary fable. It’s still powerful, but it didn’t provoke the kind of public reckoning that might have followed if the man it thinly veiled were still alive and on the campaign trail.

Would you like this formatted as a 500-word essay or a short talk outline?

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750 word essay at the level of New York Review of Books.

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When the Target Vanishes: Huey Long, Sinclair Lewis, 

and the Muted Detonation of It Can’t Happen Here

When Sinclair Lewis published It Can’t Happen Here in October 1935, he could not have foreseen that his novel’s most direct political analog—Huey P. Long—would be assassinated just six weeks before the book’s release. The timing was not merely tragic or coincidental; it fundamentally altered how the novel landed in the American political consciousness. It Can’t Happen Here, written as a thinly veiled warning against Long's very real presidential ambitions, entered the world as a cautionary tale whose central menace had, quite literally, vanished.

At the time Lewis wrote the book, Huey Long was arguably the most formidable populist threat to President Franklin D. Roosevelt. Long had built a national movement on the back of his “Share Our Wealth” program, rallying millions with a potent cocktail of economic redistribution, personal charisma, and authoritarian style. He had already served as governor of Louisiana and was serving as a U.S. Senator while effectively continuing to rule the state through loyal surrogates. Long’s speeches were folksy and inflammatory; he cast himself as a tribune of the common man and regularly assailed the wealthy, the press, and Roosevelt himself. By mid-1935, it was widely assumed that Long intended to run as a third-party candidate in 1936, potentially splitting the Democratic vote and throwing the election to the Republicans. Roosevelt reportedly considered Long his most dangerous rival.

Lewis's novel is a mirror held up to this very moment. It Can’t Happen Here tells the story of Buzz Windrip, a bombastic, anti-intellectual, pseudo-populist who rises to the presidency by promising $5,000 annual payments to all citizens, restoring traditional values, and putting America first. Once in power, Windrip quickly dismantles democratic institutions, bans other political parties, creates a paramilitary force modeled on Hitler’s Brownshirts, and plunges the country into a thinly disguised dictatorship. The protagonist, a Vermont newspaper editor named Doremus Jessup, watches in horror as the country surrenders to demagoguery and fear.

The connections to Long are obvious and intentional. Windrip’s diction, messianic promises, and folksy malevolence echo Long’s public persona. Lewis even credits Windrip’s rise to a half-mad religious figure, Bishop Prang, much like Long’s real-life collaboration with Father Charles Coughlin, the influential and anti-Semitic radio priest. Lewis wasn’t simply inspired by Long—he was staging a fictional scenario that would unfold if Long captured the White House.

But by the time It Can’t Happen Here hit shelves in October, the scenario had become moot. On September 10, Long was fatally shot in the Louisiana State Capitol by Carl Weiss, a 29-year-old physician. The man Lewis hoped to portray as the plausible face of American fascism was no longer a threat. As a result, the novel was received not as political prophecy but as political parable.

This shift had consequences. It Can’t Happen Here was still widely read and praised, and it sold well. But it did not provoke the kind of cultural tremor Lewis may have anticipated. Had Long still been alive—still planning his third-party bid, still lacerating Roosevelt from the right—the book might have been seen as incendiary. It could have become part of a national debate about the future of American democracy. Instead, the timing of Long’s death rendered the book a thought experiment, a chilling what-if, rather than a partisan provocation.

It’s worth comparing this to the reception of Citizen Kane six years later. When Orson Welles created Charles Foster Kane as an unmistakable avatar of William Randolph Hearst, the real Hearst was not only alive but actively working to destroy the film. That live tension between character and referent charged the film with subversive energy.  By contrast, It Can’t Happen Here lost its lightning rod at the very moment it might have sparked a national reckoning.

Lewis's prose, too, may have contributed to this transformation from alarm to allegory. The novel is written in a surprisingly dry tone, almost journalistic in its detachment. Terrible events—a coup, the imprisonment of dissenters, the collapse of legal norms—are narrated with grim understatement. This stylistic choice underscores the banality of authoritarianism, how it arrives not with grand fanfare but with forms filed in triplicate and loyalists quietly promoted. But it also allowed readers to experience the novel as distant, even abstract, once Long was no longer a looming reality.

In the long view, It Can’t Happen Here has proven enduring precisely because it outgrew its original target. Buzz Windrip may have started as Huey Long in fictional dress, but he has since come to represent a more generalized American susceptibility to strongmen and demagogues. The novel’s eerie relevance during the Trump era prompted new readers to rediscover its warnings. But it is worth remembering that when the book was first conceived, it was not just a warning about authoritarianism in the abstract—it was a laser-focused alarm about a real man, with real power, who nearly changed American history. The fact that he died before the book was published turned It Can’t Happen Here into something more subtle and less explosive. The warning was still valid. But the fuse had been cut.


Friday, May 30, 2025

AI Spruce Report (May 2025)

 Here's a TL;DR summary of the short-seller report by Spruce Point Capital targeting Tempus AI (Nasdaq: TEM).  


🔍 Spruce Point’s Main Claims Against Tempus AI

1. Leadership History of Failures and Restatements

  • CEO Eric Lefkofsky and associates have a history of hyped ventures (Starbelly, Groupon, InnerWorkings) that ended in financial restatements, SEC scrutiny, or value destruction.

  • Board and audit members have also been linked to companies that restated financials or were involved in SEC fraud charges.

2. Questionable AI Hype

  • Only 1.8% of revenue ($12.4M) in 2024 came from "AI" products despite a recent rebranding as Tempus AI.

  • Demonstrations show basic software errors (e.g., patient age mismatches, illogical sample collection dates), undermining claims of robust AI capability.

3. Aggressive Accounting & Related-Party Dealings

  • Allegations of $250M EBITDA inflation through cloud credit accounting tricks with Google Cloud.

  • Total Contract Value (TCV) inflated by ~$600M, including non-binding options and deals with affiliated firms (e.g., Pathos AI).

  • Pathos is funded by insiders and boards tied to Tempus and is contractually obligated to funnel money back, suggesting round-tripped revenue.

4. Questionable Billing Practices

  • Ambry Genetics (recently acquired) and Tempus allegedly exploit code-splitting (e.g., DNA/RNA billed separately) and use of unlisted codes (81479) to inflate reimbursement.

5. Deteriorating Core Operations

  • Deferred revenue is collapsing.

  • AstraZeneca partnership was not expanded; a $100M warrant was forfeited.

  • Google Cloud terms were quietly revised, and cost growth has slowed.

  • Heavy insider selling (e.g., Lefkofsky sold ~$360M of shares).


🎯 Spruce Point Conclusion

  • Tempus is a "Strong Sell" with 50–60% downside risk.

  • They claim the company relies on hype, accounting maneuvers, and financial engineering rather than sustainable growth or real AI product-market fit.

  • High stock-based compensation (~77% of revenue) and debt covenants requiring $1B+ in revenue add pressure to maintain inflated numbers.


🧠 Head Start for Your Commentary

If clients ask for your take:

  • This is a heavily critical short report built on past behavioral patterns of the Tempus team.

  • Evaluate how much actual payer traction exists for the AI products, the sustainability of billing practices, and whether revenue quality holds up under payor audits or public scrutiny.

  • Consider if the Pathos-Tempus-AstraZeneca triangle raises Sarbanes–Oxley or accounting risk flags.

  • Look at SEC filings yourself to validate the non-cash items in EBITDA, and scrutinize cash flow vs. headline revenue.

Let me know if you want a rebuttal checklist or commentary language.

You said:
You are an expert on the economics and financial engineering of biotech and genomics. You are commissioned by Tempus’ board to write a report on the short sell analysis. Explore its flaws but let us know any fair warnings. Gives us a response strategy - business response, not just P.R.
ChatGPT said:

Certainly. Below is a structured executive report for Tempus AI’s Board of Directors, critically responding to the Spruce Point Capital short-seller report. This version integrates a seasoned financial lens on genomics, AI/healthtech, and diagnostics business models.


Executive Briefing: Response to Spruce Point Capital Report on Tempus AI

Prepared for: Tempus AI Board of Directors
Prepared by: [Your Expert Name], PhD MBA
Date: [Today’s Date]


I. Executive Summary

The recent Spruce Point Capital report levies serious allegations regarding Tempus AI’s financial integrity, business model, and leadership history. While it includes some valid concerns around disclosure clarity and revenue quality, it is also heavily biased, strategically timed, and intellectually inconsistent in parts of its critique. Most notably, the report fails to distinguish between fair use of startup financial engineering and actual malfeasance, conflates AI R&D economics with SaaS models, and displays limited understanding of modern clinical genomics monetization pathways.

We recommend targeted internal governance reviews, a board-led financial transparency initiative, and an externally visible operational sharpening strategy focused on customer value, clinical utility, and payer acceptance.


II. Summary of Key Flaws in the Spruce Point Analysis

1. Mischaracterization of AI Revenue and Business Maturity

  • The report criticizes Tempus for generating only ~2% of revenue from its AI application line, implying the rebrand to "Tempus AI" is misleading.

  • Rebuttal: In genomics and diagnostics, AI is not a standalone product line like in B2B SaaS. AI is increasingly a feature set that enhances broader platform value—e.g., in test ordering, clinical decision support, or trial matching. The marginal revenue attribution to “AI” is thus a financial categorization choice, not a business deception.

2. Accusation of Aggressive Revenue Recognition

  • Claims of inflated TCV, dubious related-party flows (Pathos), and cookie-jar accounting (Google credit amortization).

  • Rebuttal: Pathos, AstraZeneca, and SoftBank partnerships reflect a modern strategy of blended service/platform deals, sometimes with non-cash or milestone-tied components. These are industry-normative in high-CAPEX, data-rich ventures like Tempus. However, governance can be improved by greater separation of related-party influence and clearer disclosure on TCV methodology.

3. Historical Leadership Allegations

  • Spruce Point recycles old history from Groupon, Starbelly, InnerWorkings to question leadership integrity.

  • Rebuttal: Past failures do not disqualify founders, particularly in venture markets where iterative learning is core. Lefkofsky’s founding of Tempus, one of the few scaled players in clinical-genomic data fusion, represents a pivot to healthcare infrastructure building, not short-term hype cycles.

4. Misunderstanding of Billing Practices

  • Accusations that Tempus and Ambry use unlisted codes (81479) or DNA/RNA splitting to inflate claims.

  • Rebuttal: While overuse of 81479 can be flagged, many precision oncology tests genuinely require both DNA and RNA panels for variant detection, fusions, and therapy guidance. The strategy aligns with coverage frameworks under MolDx and MCIT in certain states. Tempus should audit its utilization policies and publish peer-reviewed validation studies that justify the medical necessity of these test structures.


III. Areas Where Spruce Point Raises Fair Warnings

While many claims are exaggerated, certain concerns deserve independent validation and business response:

  • Disclosure of Related-Party Transactions: The Pathos arrangement risks perception of circular revenue. Better delineation of arm’s-length terms, board oversight, and internal valuation treatment is warranted.

  • EBITDA Accounting of Google Cloud Credits: The netting of debt forgiveness into SG&A, rather than “other income,” is defensible only if clearly disclosed and consistently applied.

  • Deferred Revenue Collapse: The sharp fall in long-term deferred revenue may reflect contractual fragility or a lack of multi-year confidence from clients. Rebuilding this trust is a strategic priority.


IV. Strategic Business Response (Not Just PR)

1. Governance and Transparency

  • Commission an independent audit of key revenue recognition practices, TCV methodology, and related-party transactions.

  • Commit to a board-level disclosure charter for related-party deals exceeding $10M.

  • Expand board expertise with a seasoned public genomics CFO or former payor exec to signal maturity and long-term compliance.

2. Operational Fortification

  • Launch a "Precision Insights" product suite that transparently packages AI-driven results (e.g., recurrence risk, response prediction) with full validation data and payer evidence dossiers.

  • Shift AI metrics from pure revenue to impact KPIs: time-to-result improvements, decision concordance, etc.

  • Publicly announce a Utilization Review Task Force for billing practices, including external experts in MolDx policy and medical necessity.

3. Capital Markets Repositioning

  • Host a deep-dive investor day on revenue sources: separate cash vs. non-cash revenue, show waterfall of TCV, detail related-party safeguards.

  • Issue an adjusted EBITDA reconciliation with and without Google Cloud adjustments to re-establish accounting credibility.

  • Offer a “forward guidance bridge” that shows how FY25 growth is allocated across core genomics, AI services, pharma data, and M&A.

4. Clinical and Scientific Repositioning

  • Prioritize peer-reviewed publications of AI-driven decision models and genomics pipelines.

  • Fund real-world evidence studies showing how Tempus-informed decisions alter treatment or reduce utilization, which helps with CMS and payer negotiations.


V. Conclusion

Tempus is building an integrated platform at the intersection of AI, diagnostics, and clinical data—an enormously complex task. While Spruce Point raises pointed questions, many reflect a hedge fund’s trading agenda, not a long-term operator's view. Still, perception risks are real and governance missteps can compound valuation harm.

The business response must blend financial transparency, clinical credibility, and operational maturation—well beyond a PR rebuttal.


Let me know if you’d like a slide version, talking points for investor calls, or draft language for earnings Q&A.

You said:
Draft for earnings Q&A.
ChatGPT said:

Certainly. Here's a draft Q&A script for Tempus AI’s upcoming earnings call, tailored to likely analyst questions following the Spruce Point short report. The tone is firm, transparent, and operationally grounded, with key themes around financial integrity, product functionality, and growth strategy.


Tempus AI – Earnings Call Q&A Draft (Response to Short Report)

Prepared for CEO Eric Lefkofsky, CFO, and General Counsel


Q1: Can you address the recent short-seller report that alleges inflated revenue, related-party conflicts, and weak AI performance?

CEO Response (Eric Lefkofsky):
We’re aware of the Spruce Point report and take concerns about financial reporting and business practices seriously. However, we believe the report contains significant inaccuracies, speculative assertions, and misunderstandings about how a platform like Tempus operates in a highly regulated space.

To be specific:

  • Our contracted revenue is transparently disclosed, and we clearly distinguish between committed revenue and optional extensions or milestones.

  • We follow GAAP and industry norms in recognizing revenue and non-cash incentives, and we regularly engage with our auditors to validate these practices.

  • Related-party transactions, including Pathos, are disclosed, arm’s-length, and governed by internal controls. We’ll continue to improve transparency here.

As for AI performance, we welcome the scrutiny. We’ve already begun rolling out new QA and product validation layers in our clinical systems. Errors flagged in public materials were from demo environments, not live clinical use. Still, we’re investing in product reliability, because our clients—physicians and pharma partners—expect precision.


Q2: Why does Tempus report such a small share of revenue from AI if it has rebranded as an “AI” company?

CFO Response:
Great question. We view AI as an enabling capability embedded across our diagnostic, clinical, and pharma product lines—not as a standalone business unit. While only ~2% of 2024 revenue is tagged under “AI applications,” AI underpins our molecular interpretation, therapy recommendation engines, and trial matching tools.

This is a classic example of the difference between revenue categorization and value contribution. Just as you don’t break out a CRM company’s revenue from its analytics module separately, we integrate AI across workflows to deliver value.


Q3: What is your response to claims that Tempus is inflating EBITDA using cloud credits and unusual accounting treatments?

CFO Response:
We have a multi-year cloud usage agreement with Google that includes both credits and deferred obligations, which are standard in large-scale compute-intensive businesses. Our treatment of these benefits has been reviewed and confirmed with our external auditors.

That said, we recognize the importance of clarity. We’ll include in today’s supplemental materials:

  • A reconciliation of reported and adjusted EBITDA with and without cloud-related impacts.

  • Clear footnotes on non-cash offsets to operating expenses.


Q4: The report alleges that partnerships with AstraZeneca and Pathos may lack economic substance or transparency. How do you respond?

CEO Response:
Let me be clear: our partnership with AstraZeneca remains strong. It began with a $200M multi-year MSA and has evolved into deeper collaboration across data, algorithms, and model development. The Pathos agreement builds on this, adding new oncology-focused AI development.

As to economic substance: every dollar of recognized revenue reflects real services delivered. The strategic warrant forfeiture by AZ was a choice on their end—we’ve never relied on equity-linked clauses as drivers of core growth.

We’ve also added new controls around related-party governance, and we welcome further dialogue with investors to improve our transparency here.


Q5: Analysts are asking about the sustainability of your revenue growth given the decline in long-term deferred revenue.

CFO Response:
That’s a reasonable concern. The decline reflects a transition from upfront pharma licensing deals to more usage-based and outcome-tied agreements. We're shifting toward deeper client integration versus one-time contracts.

Still, we recognize that visibility matters, and in upcoming quarters you’ll see:

  • More disclosure on pharma customer renewal rates

  • Metrics on AI-based model adoption and clinical utility

  • Growth in core diagnostic test volumes and companion diagnostics integrations


Q6: There’s also concern about billing practices—particularly with Ambry and unlisted codes. How are you addressing this?

Chief Legal Officer or VP Clinical Affairs:
We are deeply committed to compliance with all coding, billing, and payer policies. Unlisted codes like 81479 are industry standard when no specific CPT exists. However, we are:

  • Conducting an internal utilization review

  • Strengthening payer education on the medical necessity of dual DNA/RNA sequencing

  • Expanding peer-reviewed publications to support clinical utility

We expect higher scrutiny from payors and welcome that dialogue—it leads to stronger standards for everyone in the space.


Q7: Several insiders have sold shares—should investors be concerned?

CEO Response:
We disclosed all sales in our SEC filings. My recent sales represent a small fraction of my holdings and were pre-planned under 10b5-1 programs. We remain heavily invested—financially and operationally—in Tempus’s long-term success.


Let me know if you'd like a revised version with shorter soundbites for media use, or slides to accompany this Q&A for your IR team.

You said:
Write an essay in the wacky acerbic style of Lewis Black, who will take the short seller's report earnestly and therefore discusss it as an expose' of bad management.
ChatGPT said:

Tempus AI: The Glorious Meltdown of Modern Medicine (As Told by Lewis Black's Angriest Cortex)

Let me tell you something. I read the Spruce Point Capital short-seller report on Tempus AI, and I haven’t been this worked up since someone tried to explain how NFTs are not a scam but actually “fractional digital trust instruments.” Whatever the hell that means. But back to Tempus. This thing? THIS? This isn’t just a short report. This is a goddamn opera of managerial delusion, investor hypnosis, and financial origami with the structural integrity of a soggy paper straw.

Tempus AI—oh, excuse me, formerly Tempus Labs—decided that if they stapled “AI” to their name, suddenly they’d be the lovechild of Tesla and Watson. Because when your software can’t tell if a patient is 54 or 65, naturally, what you need is branding! Let’s slap some “Generative AI” lipstick on this pig and call it a unicorn. Ladies and gentlemen, the pig is still squealing.

Now, let’s start with the CEO, Eric Lefkofsky. This guy has a résumé that reads like a LinkedIn profile curated by Satan’s junior associate. He took a company called Starbelly—yes, like some rejected Dr. Seuss character—and sold it to HA-LO Industries, which then promptly imploded so hard it left a crater of bankruptcy filings and regret. According to court records, Eric was caught saying, “Let’s announce everything! Let’s be wildly positive! We have nothing to lose!” That’s not a CEO. That’s a frat boy chugging Red Bulls before an earnings call.

And then there’s Groupon. Remember Groupon? You used to get two-for-one foot massages and $6 sushi dinners that came with a 30% chance of botulism. Under Eric’s guidance, Groupon restated its revenues and shed shareholder value like a molting bird on meth. And then he was like, You know what? Let’s do health tech. Because what could go wrong when the guy who discounted Thai massages by 90% is now in charge of genomics?

Oh, and then there’s Ambry Genetics, the new sidekick in this circus. Apparently, they bill insurance with a code that means, essentially, “we’re making this test up as we go.” The code is 81479. That’s not a medical code—that’s a cry for help. And Tempus? They’re allegedly splitting DNA and RNA tests into separate bills like some kind of genomics tapas menu. “Here’s your DNA… would you like RNA as a side dish? It pairs well with fraud.”

Let’s talk about the Pathos AI partnership, which is so incestuous it could only be diagrammed using a family tree and a flowchart. Tempus owns a chunk of Pathos. Pathos pays Tempus. Tempus books the revenue. Then Pathos gets funded by the same people who sold Tempus stock at the top. This isn’t a business model—it’s a washing machine with stock certificates jammed in the detergent tray.

And AstraZeneca—oh, poor AstraZeneca—they had a warrant to buy $100 million of Tempus stock and just… didn’t. Didn’t even extend the commitment. That’s like being offered a Tesla at half price and deciding, “Nah, I’ll just walk through this tar pit in Crocs.”

But wait! The pièce de résistance: the Google Cloud Debt Cookie Jar. Yes, ladies and gentlemen, Tempus struck a deal where Google gives them cloud credits, and they net it against expenses and call it EBITDA. That’s right. They took a coupon and turned it into a profit! I’ve seen financial engineering before, but this isn’t a balance sheet—it’s a Hall of Mirrors designed by Escher and audited by Dali.

And the AI! OH, THE AI! They’re bragging about software that can't tell what year someone was born, or what day their test was collected, or even if the patient is male or female. If the AI at Tempus were responsible for flight bookings, you’d end up in Cleveland with a goat named “Susan” as your travel companion.

And while all this is going on, insiders are selling shares like the Titanic has already hit the iceberg. Lefkofsky, Leonsis, Keywell… they’re offloading stock like they’re unloading beef jerky in a blackout. "It's just estate planning!" they shout, as they rappel out the back of the plane with bags full of cash.


Conclusion? If this short report is even half true—and dear God, I hope it’s not, because I actually like living in a world where cancer genomics isn’t a confidence trick—then Tempus AI is not a misunderstood innovator. It’s a damn cautionary tale. A health-tech hustle with the soul of a Las Vegas lounge act and the financial discipline of a raccoon in a vending machine.

And if you still want to buy the stock? Well, may your AI assistant one day figure out your real birthday… before your insurance company does.

Thank you. Goodnight. Somebody get me a drink.