Neoclouds scale by pre-selling GPU capacity

Transcript

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

1. 28:24

   Are there any learnings that you get from some of these NeoClouds? like, I don't know, like Nebius or whatever, and like the way that they're doing things versus like what you're doing? I think one of the things that, you know, is very interesting with neoclouds is like, how can they expand so quickly? I think actually the most crazy example is like Nscale, which went from like nowhere to like you know, having like, you know, whatever, hundreds of billions of dollars in the pipeline despite barely having any capacity. How can neoclouds grow so fast? I mean, there's like, you know, and basically the answer is like, you know, and this might be obvious but like what they do is like they go out to like you know it's not big or court or opening out some some big buyer or whatever is it basically say like hey do you

2. 29:07

   want to buy like five years of chips you know sign this contract we give you a good rate and then they take that contract and then they go to you know wall street and say look we got this like you know big buyer you know they committed to 10 billion dollars worth of chips uh we just need the money right now and then they go and raise the money and then they like you know go to like Supermicro and Dell or whatever and NVIDIA and like get the hardware and then they install it and then you know now they have like you know deliver it to the customer right so you have this like very nice sort of financial construct where you can basically sort of pre-sell things that you haven't even bought and that means you know you can scale up extremely fast and so that's what we've seen with these NeoClouds is they can scale very very well I think modal because we've

3. 29:49

   always had a little bit more of a PLG focus and and not the sort of you know ability to lock in long-term contracts in the same way, it's a little bit more challenging from a financial perspective to scale that fast, even though I think, you know, in the long run, like we'll get to the same point. But I think that's been kind of a fascinating thing to see with these NeoClouds and especially like CoreWeave and those big ones, very, very savvy with, you know, how they raise money and how to, you know, think about GPU as collateral for loans and all these things.

4. 30:18

   What's the relevance of, like, I forget who it was, but like some like financial company was like oh we're gonna make oh i think it was nvidia actually they were like we are going to turn gpus into an asset class is that just because like they need to raise money and they're like trying to figure out where to get the money from like what's the relevance of that i mean there's a bunch of startups i don't know if you're thinking about that there's like silicon data and compute exchange and like orn and and a few other ones that are like basically like trying to get to like you know creating price indices and indexes and and trading derivatives and things like that i think it's interesting like i think with compute like it does there are a number of challenges with compute as an asset class like it's definitely not as homogenous as other asset classes uh you have

5. 31:03

   different network and different locations and and different disks and cpus and all kinds of stuff and reliability i mean that being said like you can say the same thing about oil and like we kind of created like you know relatively commoditized you know tradable assets out of oil it remains to be seen. I do think at the scale where we are with the sort of AI data center GPU deployments, we do need to be a little bit smarter with risk hedging and how we share risks and having more insurance and things like that.

6. 31:35

   So I'm very happy that people are thinking a lot about this. That being said, I'm not entirely sure if we're going to see GPUs becoming whatever, the Henry Hub-like like, you know, Brent crude type, like, you know, super commoditized, like, tradable asset.