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All-In · 2 min · Oct 17, 2026

LoudCloud’s bandwidth contracts show infrastructure risk

BH

Ben Horowitz

  • Chamath PalihapitiyaHost · Founder & CEO, Social Capital

    Led Facebook's growth team; his firm backed Slack and AI chipmaker Groq.

  • Jason CalacanisHost · Founder & CEO, LAUNCH

    Early Uber angel; sold Weblogs Inc. to AOL; hosts This Week in Startups.

About this segment

Ben recalls LoudCloud locking in bandwidth at $1,500 per megabit in 1999, only to see the price fall to $50 by 2001. The experience explains why he avoids infrastructure arbitrage.

From “CoreWeave Crash, AI Trade Cracks, Anthropic IPO Red Flags, Bill Gates Doomer”, Oct 17, 2026. Watch the full episode

“In 1999, bandwidth was $1,500 a megabit. And you couldn't get it.”
BHBen Horowitzat 17:10 · All-In17:10

Takeaways

  1. LoudCloud faced a three-year bandwidth commitment when supply was scarce.
  2. Bandwidth prices fell from $1,500 to $50 per megabit by 2001.
  3. Ben says that kind of price risk is outside an entrepreneur’s control.
Watch 2:14 from 16:17

In this episode

Full episode
  1. 5:58CoreWeave’s main risk is refinancing its fixed-price contracts7:10
  2. 31:11AI can lower software prices while expanding software demand6:32
  3. 53:40Anthropic should prioritize compute runway over IPO valuation6:13
  4. 40:19Payback period is the key data-center risk metric2:56

  5. 16:17LoudCloud’s bandwidth contracts show infrastructure risk2:14

  6. 1:14:54A small model cut Coinbase fraud by about 30%2:07Up next
  7. 1:00:59OpenAI should have reset governance when it went for-profit2:04

Transcript

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

  1. 16:20

    Ben, let's just look. You and Mark were one of the pioneers, maybe the pioneer, of the neocloud business. I mean, you may just tell this quick story because I want to ask the question. Loud Cloud kind of popularized this idea that you could build these clouds and service customers this way. Yeah. But it's very interesting to me that you and Mark, as the kind of primogenitor, have passed on the whole space.

  2. 16:50

    So I want to know why. Well, it's because of this. I mean, so it can end up being like a very dangerous arbitrage business where, you know, you can get upside down easily. And so if you look at LoudCloud, just as an example, just here's a simple thing that happened to us. In 1999, bandwidth was $1,500 a megabit. And you couldn't get it. It was very hard to get it. And so you had to get a long-term contract, three years.

  3. 17:24

    by 2001 it was $50 a megabit so if you were holding bandwidth you you were you just you know and you borrowed money to get it you're dead you're dead so that you know that kind of thing is so out of the control of the entrepreneur and and so different than what we'd like to fund um that you know it just it scared it scared me to death now look i i think the core dynamic of AI has been working for CoreWeave, though, in terms of that, in that there's a massive shortage, not an overage of supply.

  4. 17:58

    So, those prices don't seem to, you know, token prices have gone down, but GPU prices have not. And so, things are going up, you know. And by the way, data center space is going up in price because even labor to build data centers is hard. The politics are making it hard to build data centers. So the whole supply chain price is going up and demand is not subsiding. And so those are very big tailwinds for CoreWeave, despite the fact that the debt markets, kind of independent of them, are tough.