The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:24:15 · Thomas Sohmers
[00:24:15] S0: I I... You're right. I think the greatest advantage The US has in that regard is that there's still a lot of land, a lot of places that do not have all the same levels of restrictions. I don't agree with a lot of things of most, you know, administrations of my lifetime, But the the current administration gets attacked for saying, like, they're destroying our our environments and and, you know, destroying national parks, etcetera. The vast vast majority, 90 plus percent, I don't know the exact numbers of national federal land is just open empty desert in in the West that is not part of a national park or anything. And the fact that there are so many restrictions to utilizing, you know, BLM land for building data centers where it's literally hundreds of miles from from any, you know, populated area. My great state of Nevada has plentiful geothermal, solar, all these green energy technologies, and we could, you know, build, you know, nuclear and other things in the middle of the desert where it won't impact anyone. And that there's restrictions to that is completely absurd to me. And I will say, there there has been some political will and and push to solve these things. But literally just in the past year, you have, you know, Republican governors and and other politicians that at least had part of their platform to be pro growth and all these things backing away because they see from their own, you know, political base being anti data center based on completely false premises. And and one of the points I wanna go back to that you brought up was, like, that people would have higher electricity costs. Like, this is the most basic supply and demand. If we increase generation capacity and no one's saying we wanna be taking energy from what's reserved for people's homes. Like, one of the regulatory problems I see is is power companies have to have this offer of of energy availability that is baked into cost and and capabilities for everyone. There there is absolutely zero cases where a data center could be potentially pulling power from anything that's already been allocated. So that's just impossibility. And all these data centers that are getting built right now are coming with generation capacity that covers their own use and beyond that.
00:26:20 · Thomas Sohmers, Harry Stebbings
And we're just not allowing them to hook up to the grid, where they could actually be lowering the prices for everyone. And then you've got people on the power company side, like, they're lobbying against new generation capacity because that will actually... You know, market forces will... More more capacity will will decrease prices, which would be good for consumers. So it's a very wonky market. [00:26:42] S1: What percentage of data centers that are planned will be completed, do you think? [00:26:48] S0: From the major providers, I think... I would say that the capacity that they have planned, they may be in different locations. I mean, you... You've had some local communities that have successfully stopped facilities going in there, but then those data centers just move. I don't think a year ago, the major data center builders and operators were thinking that the political problems were as bad as they were. And so there is a lot more effort being put into education in in those communities now, which I think will, you know, turn the tide a bit. But, I mean, it's also just going to mean mean that those data centers move to locales that aren't going to have those problems as well. And like I said, we've got large tracts of land that can support it. So I I... I'm I'm not too worried that it's going to be, like, an existential threat in capacity build out. And then, of course, there's space if, Elon's successful. [00:27:37] S1: Do you believe that space is a viable alternative truly, or is it conference talk and lip service to justify a market cap?
00:27:37 · Harry Stebbings, Thomas Sohmers
[00:27:37] S1: Do you believe that space is a viable alternative truly, or is it conference talk and lip service to justify a market cap? [00:27:44] S0: I think something can start as one thing and turn into something else. I I would never ever bet against Elon. I I I mean, I I I primarily bet for Elon. If you asked me a year ago, I just would not have thought that there would be a good reason for it in the near term because it's gonna be cheaper, easier, etcetera, to build on land. I also think there's great alternative technologies, company we're partnered with, and I'm good friends with, the the CEO, is is a company called Panthalassa that's building ocean based data centers. Basically, a very interesting pumped hydro solution in the middle of the ocean. So there are alternatives that don't require going to space, I think, long term. Part of the the reason I'm I'm long term big believer in space data centers is I just think we're going to need to have a space economy for humanity to live up to its long term potential. [00:28:31] S1: Love that. Totally agree. I'll never bet against Elon. If we think about, like, the cost of intelligence being tied to the cost of energy, how should we think about energy as a bottleneck moving forwards? To what extent is it? We mentioned policy and regulation being a core bottleneck. Is energy a bottleneck moving forwards or less than people consider?
00:28:51 · Thomas Sohmers
[00:28:51] S0: I think there's two pieces to it. I mean, one, positron is trying to deliver more compute, more capabilities per watt per megawatt. And so, you know, sort of on our base case, we can turn, what you would have spent 500 megawatts with NVIDIA equipment and do that on a 100 megawatt. I don't think that's actually going to mean that you're only going to build a 100 megawatt facility. You're still going to build the maximum amount of compute that you can. You're just getting more tokens, more intelligence per, jewel. And so if if I go back to the long term thinking, you know, I think assuming humanity continues for hundreds, thousands of years, everything turns into an energy problem. And you can go back to thousands of years and and just look at the progression of mankind. Fundamentally, that is a perfect track of our ability to produce and use energy, discovery of fire up to, you know, nuclear power plants. The the simple tongue in cheek answer to your question is all progress is gated by energy. And even if there's energy available, it may not be economical, and so it won't be done. So I... Actually, I would say the bigger limiter than just saying that energy, like our ability to build and produce energy, we've got plenty of technologies and capability to do it. I would say we have got way more economic limitations. It's like, how much debt is the world willing to take on to build out everything over the next couple years? It ties into energy. It ties into the infrastructure itself, etcetera. So I think economics is a much, easier sort of scapegoat to pit.
00:30:16 · Harry Stebbings
[00:30:16] S1: I mean, people are already very concerned by the levels of debt being taken out in the debt cycle. Do you think their concerns are justified, and then do you share them?
00:30:24 · Thomas Sohmers
[00:30:24] S0: I think we've got a major sovereign debt problem that masks a huge amount of second and third third order elements in the financial system. Just the the inflationary consequences of government that that can print, you know, infinite amounts of its own currency. And the fact that we are... As we're already seeing the treasuries and, you know, the greater bond bond markets that there is greater and greater perceived risk of the most, quote unquote, risk free asset, I think will trickle down to all elements of the financial system. And so when people worry about Oracle's debt and and credit rating, I'm like, I believe in Oracle's business model and and ability to execute and and do everything a whole lot more than United States government. It's just the United States government can, issue its own currency and also has guns and nukes to, take tax revenue. So my biggest economic concern there is that there will be a more acute specific crisis that that arises out of the compounding of national debt leading to devaluation of the currency that has all of the consequences downstream rather than, like, I'm really not worried about any of the companies in the AI debt stream not hitting their revenue targets. I'd... Like, if the past three, four years have shown, we're accelerating every aspect of these businesses in terms of revenue profits and how they are improving the productivity and value downstream.