Compute access could become a barrier to new companies

Transcript

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

1. 1:18:29

   election, the big buyers, so Google, Anthropic, XAI, have reserved basically all the compute in the country for years and all the chips reserved for years. All TSMC's capacity, they don't do multi-year contracts, but if they did, it would be locked up for years. And so if you want a thriving entrepreneurial America, you have to have some kind of a right to compute. And the government hasn't even begun to tackle that yet. Maybe that'll be a big election item in a couple of years where you can't innovate if you don't have access to compute and the compute is completely sold out to five or seven big, big companies. That's not a really comfortable America. It's almost like Rockefeller era again. And the DOJ has been basically doing nothing the last couple of years, too. That's why, from my perspective, the nightmare scenario

2. 1:19:23

   is a repeat of what happened with nuclear energy in this country, where we went through 50 years of nothingness or space exploration, for that matter. I really, really don't want to see a 50-year gap in technological progress due to a moral panic, doubly so an unnecessary moral panic. One of our pilot clients tried to get us set up on one of the clouds and went through the whole application form. And then we're told, I'm sorry, you're not big enough as a customer. We're only focusing on really big customers. So they're like, wow, what are we supposed to do? So the compute shortage is starting to show up in very STARK.

3. 1:20:00

   reality very quickly. It sure is, man. We got our NBL 72. It's a 72 GPU, GB300 NVIDIA machine. Comes online on Feb 1. But we had to use inside contact, you know, Cush Bavaria, our good friend at ORN. Without his help, we wouldn't have been able to get it at all. Because yeah, everything's reserved by it. And some of the, you know, the NeoClouds there, they're having a rough month, But they're like modal is just killing it, just huge growth.

4. 1:20:30

   And so, you know, they're also buying up everything they can see. So there's a lot of competition for compute out there. And that's sort of gotten lost in the news flow this week. And it's not going to slow down, right? This is going to be like three to five years, seven years of this. Yeah, I would maybe do the requisite financial disclosure. Dave and I have financial interest in Orn. Sorry, Slim.

5. 1:20:52

   I would say, though, the market wants to clear. And if supply of compute is going to be restricted, demand certainly doesn't seem to be going down. Demand is going through the roof. So that should, microeconomics 101, one would expect the price of compute to go up. But that's, again, that's healthful. If the price of compute starts to skyrocket due to political or other restrictions on construction of data centers, that will create overwhelming new opportunities, whether it's offshore, underwater, underground or in space or in space.

6. 1:21:28

   I think that that will be the market sending a clear signal to both legislators and also to data center developers where they should be allocating scarce capital. And that's very helpful. It's pretty hard to find an analogy in history, though, where you could starve the entire startup world for lack of one resource. You know, like you could kind of point to oil or you could point to like access to machine shops or I don't know.

7. 1:21:57

   I really struggle. Nuclear energy, nuclear energy and the uranium supply chain is basically completely controlled by the NRC, at least in this country. And IAEA more broadly is a monitoring apparatus. this. If superintelligence or GPUs get regulated like uranium, I think that would be a nightmare scenario. Yeah, yeah. Even that analogy, though, this is like a million X. It's the same thing, but imagine a million or a trillion X, more urgent and more important version of the same thing.

8. 1:22:29

   Because AI is just so general. purpose. Access to power is really important. If you're industrial, you're trying to create something new. It's very foundational. If I cut off your access to power and you had to go back to firewood, you're pretty much screwed at birth. But you would have to have deprivation of all forms of power to be equivalent to deprivation of access to a data center. It's just that big of a deal. And I don't think, you know, a lot of companies don't realize yet you will not be able to operate like even a bakery if you're deprived of AI. You know, you won't be able to advertise.

9. 1:23:08

   You won't be able to do your logistics. You won't be able to do your ordering. You just, you won't be able to operate because the neighboring bakery that does have access to AI will operate with at least a 30, 40, 50% operating margin advantage. And so it's like, it's that foundational if you're deprived of it because it's sold out to somebody else. You're just so screwed. There was a joke that went around a few years ago from Maslow's hierarchy.

10. 1:23:30

    And then underneath it, you had a layer of Wi-Fi. And underneath that, a layer of battery. Now we need a layer of compute as the foundational starting point for all of that. You know who does the best speech I've ever heard on this topic? Mike Saylor from MicroStrategy. He was accepting the Ayn Rand Award. Yeah. Atlas Shrugged. And oh, my God, was he eloquent. But he basically said, look, if the U.S. took away your citizenship, you would find another place in the world to live and you would live a reasonably happy life.

11. 1:24:04

    Maybe not what you wanted, but you'd be reasonably happy. If Google, Apple and Microsoft cut you off from access to all of their products, you would be unemployable in any country in the world and completely and totally obliterated as a human being. That's the world we've moved into without really talking about it. So now, of course, AI, you know, if AI gets locked up by five companies, it's the next level of that same speech.

12. 1:24:29

    Really, I don't know if it's online anywhere, but if you can find it, Mike is just, I didn't even describe it well. It's absolutely online, and I was there for that. Maybe you were there as well for that, Dave, with Peter also. Oh, yeah, I forgot. Yeah, yeah, we were all there. I'm sorry. The counterpoint would be that if you have all the open weights available and you can do that, but you just need the compute, Because then you want to have a local model, you can run that, but you just compute becomes the absolute constraint and then underneath that power, obviously.

13. 1:24:57

    Yeah, you don't want to get deplatformed from all the GPU.