A $245 million compute deal is small by industry standards

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 23:05

   Because at the time, we had thought that $5 million was a lot. Compute does not work like other markets. A mid-sized deal in Compute is bigger than many venture funds' entire AUM. A mid-sized deal in Compute is bigger than all the money that will ever be made by a whole category of SaaS companies. So you just announced this $245 million contract, right? We were almost not going to announce that because I thought it was like, it just isn't that big of a deal in compute.

2. 23:31

   Like, it's not that large of a contract relative to other folks in the space. It is one that we take really seriously. It's one that's very important to us. Relative to the space, it is not that large. Like, we are not that big of a player in compute. How long do you think it took you to go from survival mode to expansion, trying to own more of that stack? Think about sort of the big vision of the company.

3. 23:51

   When would that have been? We're still in survival mode. Most of San Francisco compute has just basically been, okay, we have this cluster. Oh, shit, we don't have enough access to this cluster. We can't do the thing we want to do unless we like dive deeper and deeper and deeper and deeper and deeper. But you hit bottom eventually. Yeah, so bottom for us is probably like land and power. But even land and power, like there's stuff that goes into getting land and power.

4. 24:14

   I think there's more places that we can go. But the thing that's difficult here is we don't want to become a cloud. We're not a neocloud. How do you define a NeoCloud for folks who are not as plugged in? So I would say like a NeoCloud is somebody who goes and buys hardware and then sells the hardware. We don't do that. We do that for like test clusters. We do that for POCs. But we don't like the vast majority of our capacity is stuff where we're working with partners.

5. 24:41

   With the NeoClouds, would they work with you or are they just a whole different part of the ecosystem then? We think the NeoClouds will eventually work with us and we would like to work with the NeoClouds. We think we're very complementary to them. Because if we exist, then what happens is GPU clusters become wildly easier to finance. And that is the biggest constraint in setting up new clusters. It's just...

6. 25:00

   credit. The problem, though, is the neoclouds themselves can't make a forwards market like this because if you own the assets, you can't be the market. No one will trust you. It has to be an independent thing. Like Wall Street won't trust the market if it's manipulatable, basically. Thus, somebody needs to make it. And in order for them to make it, you have to make physical delivery, which means that somebody has to operate a GPU cloud or do many of the parts of operations of a GPU cloud. If you go out to build the capacity within your company to build GPU clouds, then you have to turn down the opportunity to be a GPU cloud.

7. 25:35

   And that is such a ridiculous financial incentive to not do that that almost everyone who ever looked like they were building a compute market either did one of two things. They either went up the value chain and they became a platform as a service company or they just became a GPU cloud because you make so much money to do that. To actually build a physically settled compute market, you have to be turning down money left and right, basically.

8. 25:57

   Is that where people might have historically thought you guys were crazy?