# GPU procurement remains a fragmented, informal market

Markdown copy of https://realalpha.app/s/gpu-procurement-remains-a-fragmented-informal-market/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Erik Bernhardsson](https://realalpha.app/builders/erik-bernhardsson/) · Erik Bernhardsson is co-founder and CEO of Modal. · Co-founded Modal, the high-performance cloud for AI teams; previously led Spotify's music recommendation and data infrastructure teams.
- Host: [Jacob Effron](https://realalpha.app/people/jacob-effron/) · AI Investor, Redpoint Ventures · Growth investor in Abridge, Ramp and Physical Intelligence; ex-Flatiron Health.
- Host: Pat Chase · AI Investor, Redpoint Ventures
- Show: Unsupervised Learning
- Episode: [Modal CEO on the Future of Inference, the Chaos of the GPU Market & Origins of the Sandbox Bet](https://realalpha.app/v/HJDekXH-h5c/), Oct 28, 2026
- Moment: 1:23 to 5:22 of the episode (4 min), playing on https://realalpha.app/s/gpu-procurement-remains-a-fragmented-informal-market/; the episode from there: https://realalpha.app/v/HJDekXH-h5c/?t=83

## Quote

> “we probably do like **two compute deals every week** at this point, if not three.”
> — [Erik Bernhardsson](https://realalpha.app/builders/erik-bernhardsson/) at [1:49](https://realalpha.app/v/HJDekXH-h5c/?t=109) · Unsupervised Learning

## Takeaways

1. Modal makes two or three compute deals each week.
2. Supply comes from 25 cloud providers and keeps expanding.
3. Reliability and location complicate price comparisons.

## About this segment

Modal closes two or three compute deals a week and aggregates supply across 25 clouds. Informal sourcing, uneven reliability and location make capacity hard to compare.

From “Modal CEO on the Future of Inference, the Chaos of the GPU Market & Origins of the Sandbox Bet”, Oct 28, 2026. [Watch the full episode](https://realalpha.app/v/HJDekXH-h5c/)

## Transcript

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

[1:25](https://realalpha.app/v/HJDekXH-h5c/?t=85) What's it like for you guys finding compute in the market today? It's pretty rough. I mean, like, you know, not rough in the sense that, like, we can actually find compute. I think there's a little bit of a misconception that, like, we're sort of, we are certainly scarce, you know, in terms of compute in certain ways. But, like, there is capacity you can get. You just have to look a little bit further, accept higher prices, accept longer terms, et cetera.

[1:49](https://realalpha.app/v/HJDekXH-h5c/?t=109) And we do that a lot. I mean, we probably do like two compute deals every week at this point, if not three. And so we keep, you know, stacking up, you know, more and more computing. And I really think that's the beauty of modal is we can aggregate all this demand and manage the capacity in aggregate much more efficiently. And the valid problem of modal has always been like, don't think of my capacity.

[2:10](https://realalpha.app/v/HJDekXH-h5c/?t=130) Like we handle all of that, like annoying stuff, the sort of the day-to-day knife fighting of getting capacity. We work with 25 different clouds at this point and adding more all the time. How much of like an organized marketplaces compute these days versus like the Wild West, like random people that somehow have capacity and, you know, late night text messages? It's a lot of late night WhatsApp groups and like it's pretty unorganized.

[2:33](https://realalpha.app/v/HJDekXH-h5c/?t=153) Like, I mean, I went to GTC last year or so earlier this year in San Jose, the NVIDIA big conference they were doing. And it was like an open air drug market, but like GPUs, like you're just like walking around, like talking to people, trying to get GPUs and, you know, meeting people in hotel lobbies and you know exchanging numbers and you know i mean at some point we i think we got connected with someone who had gpus because i think our vp of sales cousin was golfing with someone and we got connected like there's many such cases like like it's very far from an efficient market i mean some people are working on this and i think over time i get a little bit more efficient but it's very heterogeneous like compute comes in many sort of different chips or forms. So I also feel like structurally, like it will not like it

[3:20](https://realalpha.app/v/HJDekXH-h5c/?t=200) will be a little bit like sort of unwieldy for a long time. Like it's just not something you can like sort of buy and sell in an exchange because it's not like a fungible contract. Yeah. I mean, the key differences being like, I guess, the kind of actual powered shell or size of the cluster and like the chips themselves or to your point, there's a lot of people have been trying to build like, hey, you know, compute as this fungible single asset that you could build the marketplace around what are some of the kind of the key differences you observe i think a lot of it's actually boils down to reliability i mean first of all it's like you know differences in like disk and networking and of course cpu and memory and things like like all these things vary and region or like location like they're all over the world

[3:59](https://realalpha.app/v/HJDekXH-h5c/?t=239) We have GPUs in the U.S., of course, all over the U.S., but we also have GPUs in Indonesia, all over Europe, et cetera. So location is one of those big factors, but also reliability. And that's another thing we do exceptionally well. We aggregate all this capacity, and then when neoclouds die, or when they have failures, which they often have, because some of these are former crypto miners who haven't really thought about, you know, running a 24-7 operation, we can just take it out of rotation.

[4:32](https://realalpha.app/v/HJDekXH-h5c/?t=272) Or like when GPUs fall off the bus or whatever, like in many cases, we just file a ticket automatically and someone goes and looks at it. Have you found the data providers, the companies that provide pricing for GPU and that sort of things, have you found them to be helpful? I think moderately helpful. I think the pricing less so than just their ability to connect with a lot of providers. I don't fully trust the pricing today, but I think some of these providers are actually very good at like, you know, knowing all the neoclouds and we work with them sometimes to get connections with cloud providers.

[5:02](https://realalpha.app/v/HJDekXH-h5c/?t=302) The pricing, I think over time will get more accurate. Like our internal pricing does not match what we see publicly when we buy capacity. But I think over time, hopefully, like we will have more efficient like external indices. I think that would actually be very useful. You've been on this like rocket ship journey these past years. And so lots of things we'd love to dig into