GPU markets can make compute easier to finance

Transcript

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

1. 1:16

   This is a really special moment for me. Tell our audience, who probably know broadly what is compute, but they don't know what San Francisco compute does, where are you playing in this space? We invented markets for supercomputing. So if you go buy a big GPU cluster today, you're going to be asked to place down a massive deposit that is your entire bank balance. The reason why you had to place that deposit in the first place is because the lender doesn't want to underwrite your credit risk as an AI lab.

2. 1:44

   To solve that problem, you have to get that lender comfortable with the asset value. You have to make them feel comfortable that GPU prices in the future will be what they expect it to be. If you do that, you don't have to pay the big deposit or a smaller deposit. To make that possible, you need a compute market to exist. To make a compute market exist, it has to be physically settled, meaning that somebody's operating in that cluster, and when you go to buy the compute in the future, you know what you're getting.

3. 2:10

   And that you can get it then. And that you can get it. To make a compute market and to make it viable for the rest of the world, it has to be independent. So it can't be done by the existing clouds. That's what we do. We're a physically settled compute market. We believe we're the only physically settled compute market. It's extremely difficult to do, and it solves the sort of key problem of scaling up compute.

4. 2:30

   mainly credit. Why are you guys the only ones doing it? Do people think you're nuts that this is the best approach? I think it's just very hard to do. A long time ago, we were this little AI lab that was trying to make audio models. We bought too big of a GPU cluster. And then we had about 500k in the bank. And our bill was about 400k a month. And we signed up for about 12 months, which meant that the first month went great. And the second month did not. And then every month, we would have to sell out our cluster or go bankrupt and because of that we went on this sort of long and perilous journey of trying to fix that and ended up inventing compute markets because of it when people go to buy gpu clusters today they run into a bunch of different problems that we hit i think a little bit earlier than maybe some other folks had hit it before

5. 3:16

   those problems are one if you go out to buy gpus everyone is sold out there isn't really on demand for GPU clusters today, it can't really be financed. If you go buy a new GPU cluster, you have to buy a new one, which means there's a lead time. That lead time is gonna be quite long because there's a physical process. It's not going to be click here to get a button, or click here to get a supercomputer.

6. 3:39

   You're gonna pay a massive deposit. You have to pretty much put your entire bank balance on the line, and you may even need to raise more money. So this is why folks raise big giant rounds at pretty high valuations relative to where they are. finally once your cluster is here the likelihood that you correctly predicted your demand unless you were extremely sophisticated is very low um you're either going to wildly overshoot it um meaning that you have too much capacity and you're gonna end up like us um in the beginning and you're gonna have to you're gonna figure out how to sublease it or you're just gonna go under or you're gonna undershoot your demand um and you're gonna look at all your competitors who bought tons of capacity, and you're going to say, shoot, I fucked up, and I should have

7. 4:24

   bought way more, that problem we think is all the same problem. It's just risk, and to solve that risk, we believe that you should make a compute market. For people who understand, okay, we need these GPUs, we need these clusters to be training