# GPU clusters can fail in ways buyers may not expect

Markdown copy of https://realalpha.app/s/gpu-clusters-can-fail-in-ways-buyers-may-not-expect/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Evan Conrad](https://realalpha.app/builders/evan-conrad/) · Evan Conrad is CEO and co-founder of SF Compute. · Founded SF Compute, a GPU cluster exchange where buyers can resell unused compute time on contracts they can exit.
- Host: [Alex Konrad](https://realalpha.app/people/alex-konrad/) · Founder & editor, Upstarts Media · Ran Forbes' Midas List for ten years and co-created its Cloud 100 list; founded Upstarts in 2025.
- Show: Upstarts
- Episode: [The Accidental YC Founder Solving AI’s GPU Crisis | SF Compute’s Evan Conrad](https://realalpha.app/v/uYzQxxAD41g/), Oct 29, 2026
- Moment: 7:15 to 10:53 of the episode (4 min), playing on https://realalpha.app/s/gpu-clusters-can-fail-in-ways-buyers-may-not-expect/; the episode from there: https://realalpha.app/v/uYzQxxAD41g/?t=435

## Quote

> “We've seen data centers that were **literally chicken coops**. We've gotten hit by a monsoon at one point and got flooded during a site visit.”
> — [Evan Conrad](https://realalpha.app/builders/evan-conrad/) at [8:04](https://realalpha.app/v/uYzQxxAD41g/?t=484) · Upstarts

## Takeaways

1. A cluster can be unusable because of installation or networking errors.
2. SF Compute says it must get involved before hardware is purchased.
3. Operating the cluster makes physical delivery more dependable.

## About this segment

Evan Conrad recounts clusters with faulty power, broken networking, and even a flooded data center. Those failures convinced SF Compute it had to operate the full service, not just match buyers and sellers.

From “The Accidental YC Founder Solving AI’s GPU Crisis | SF Compute’s Evan Conrad”, Oct 29, 2026. [Watch the full episode](https://realalpha.app/v/uYzQxxAD41g/)

## Transcript

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

[7:20](https://realalpha.app/v/uYzQxxAD41g/?t=440) is we immediately realized that nobody knows what they're doing. What was the moment that you felt that way? We've had clusters that we were working with. other folks on that when they arrived they browned out because they were installed in the wrong data center and so they had voltage issues that caused the cluster when you ran a burn in or ran linpack on it would basically fall apart we've had clusters where the infiniband fabric was broken in a way that was unsellable to customers the party that owned it wasn't aware we then fixed it for the party. And then they broke contact with us and walked away with cluster on the moment we fixed it. We've seen basically everything that can go wrong. We've seen data centers that were literally chicken coops. We've gotten hit by a monsoon at one point and got flooded during a

[8:19](https://realalpha.app/v/uYzQxxAD41g/?t=499) site visit. It's just the number of things that can go wrong when you're deploying a GB cluster is very high. And early days of SF compute, when we were just trying to buy capacity, what happened is basically like first we were the AI lab then we were trying to sublease it then we would go deeper into the stack to figure out like how do we solve this particular problem and we just kept doing that until we eventually ended up at the bottom where we realized okay no you can't actually do this unless you operate the entirety of the service the benefit of that from the financial perspective is if you're operating the entirety of the service but also it's not on your balance sheet somebody else's then what you can do is you can offer an actual commercial forwards market.

[8:58](https://realalpha.app/v/uYzQxxAD41g/?t=538) One of the ways to think about this is in the power market. Electricity is just straight up super complicated. It doesn't work like soybeans. You need an operator, like a great operator, basically, in order to turn it into like a valuable commodity. That's what we do. Sometimes this is called physical delivery. That's another way to think about San Francisco Compute is we're the only physically settled compute market.

[9:19](https://realalpha.app/v/uYzQxxAD41g/?t=559) And by physical settlement, we mean we do all of the functions of a cloud, but we ourselves are not a cloud. Can you explain what that means? We don't own the hardware. And what we do is we work with people who want to own the hardware for financial reasons, and then we're their partner for operating the cloud portion of what they're doing. But it's not ours. They set the prices, they determine how the rules work, and so on.

[9:39](https://realalpha.app/v/uYzQxxAD41g/?t=579) And if they want, depending on if they've sold it or not sold it, they can recoup the capacity. Can you give me just a quick hypothetical situation to maybe make this more tangible for folks? So someone wants to buy thousands of GPUs from NVIDIA. like they want a bunch of Blackwell GPUs to set up a new cluster so they buy that hardware do they then call you and say we need help setting this up? Or what's the next step? If you come to us today, almost certainly, we will want to be involved in what you're buying. It's very easy to fuck up a purchase of a supercomputer. And many of the problems happen right when you are designing the bill of materials, like what you're going to literally buy. And so we typically get involved before anything is purchased. We then do a consulting period with somebody where we help them avoid really common

[10:24](https://realalpha.app/v/uYzQxxAD41g/?t=624) mistakes. An example is putting the wrong thing in the wrong cluster, or like putting a cluster in the wrong data center. Once the hardware is installed, we then take over and operate it like a cloud for that partner. We can either then sell that capacity to a customer. We can sell it to their customer and just operate it for them and they don't have to ever, like nobody has to know San Francisco Compute exists. Or we can operate it for them on their behalf for like a portfolio company or a grantee or something like that.