The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:07:48 · Chase Lochmiller
[00:07:48] S0: I think maybe one of the most difficult moments of change for me was in my life, I always had sort of the next thing planned before I left the previous thing. So what I mean by that is when I left high school, right, I knew exactly where I was going to college before, you know, the end of high school. When I left college, I knew exactly where I was going to work and, you know, what I was gonna do. And when I left my first job, I knew I was, you know, gonna work and going to grad school, and I had a job lined up even after that. When I left to go climb Mount Everest in 2018, I did not have a plan after that. You know, I had been... Had a reasonable amount of financial success in my life to that point, but I didn't have the thing planned. And actually having that void, that sort of emptiness, really was both challenging and empowering for me because it felt like I could do anything. It was sort of like a blank slate. I had thoughts of, like, maybe I'm just gonna invest my own money and just kinda, like, enjoy the rest of my life and not do much. But I could also start a company. And if I were gonna start a company, what what are the most most challenging things that I could, you think about tackling that are interesting and that I would be excited about pursuing on a daily basis? And that was kind of like the emergence of Crusoe sort of came through that chapter of difficulty and challenge of just nothingness. Right? Just having an empty empty slate. My job is to find signals that will determine a potentially great entrepreneur. And one the things that I find now is actually often richer entrepreneurs are better entrepreneurs because they're not worried about downside protection, and
00:09:21 · Harry Stebbings
[00:09:21] S1: they just see what is possible. How do you think starting Crusoe with a little bit of money and success already changed how you think about building it?
00:09:29 · Chase Lochmiller
[00:09:29] S0: Oh, I think it absolutely changed the way I think about building it. There's a bunch of psychological aspects to it. I mean, you could look at like Maslow's hierarchy of needs, you know, and just like it is empowering to know that like if I take risk and this all goes to zero, I'm still gonna be fine. I'm gonna be able to cover my rent and, you know, feed my family and cover these base needs that I may have in my life. When I was in university, I mean, I was convinced I was gonna become a theoretical physicist and likely a professor, and I was spending time doing research in basic science. Right? So I was I was doing research in physics both at MIT and then at Los Alamos National Lab. So early on in that journey, was, like, pretty committed to living this monastic life of, like, not really earning a bunch of money, but just having this life of discovery where I get to go discover the mysteries of the universe, and that that would be my my my life's work and pursuit. At some point, I realized it's a very slow moving industry, this industry of discovery. You know, it may be changing today because of AI, but at least at that point in my life, it was a very slow moving industry, I felt like I wanted to do something very fast paced. And I felt like I had sort of lost my life's purpose. Like, I was like, okay. I don't I don't feel like I have a purpose anymore. So absent having a purpose, I was like, man, I guess I guess I should get rich. Like, that's maybe the next best thing to, like, having a, you know, a monastic calling that you're devoted to. You know, I was looking around for different ways to to make money, and this headhunter found me and and recruited me in... Into this field of quantitative finance. And it was like, Hey, you're really good at solving math problems. If you come work in this industry, they just pay you a lot of money to, you know, solve math problems. I said, This sounds great. Sign me up. But I think once that need was met of like, Okay, I have enough money. Okay, what next? And I think to your original question of like, you know, starting from this position of strength of, you know, being an entrepreneur and actually having had some financial success, it's empowering to take bigger swings, empowering to take bigger risks, which can ultimately lead to bigger outcomes.
00:11:30 · Harry Stebbings
[00:11:30] S1: The final one before we actually get into what I plan to get into Yeah. Yeah. Is just picking up on... You said kind of the insurance element of mountaineering. Endurance is great in some respects, but it can also lead you to continue doing something you maybe shouldn't. And sometimes there is a right time to change course rather than persevere. You went through a very big change in the business, seemingly so from the outside. A lot of your investors said you always had the foresight actually that it would lead to where we are today. But seemingly, it's like a Bitcoin phase one, and then phase two is AI. Yeah. I don't wanna kind of really actually get into that maybe weirdly, but I wanna ask your advice, which is when asked, how do you advise someone when to endure, keep going, persist versus when to change tact and go down a different route? It's a great question.
00:12:17 · Chase Lochmiller
[00:12:17] S0: It's interesting investors that you spoke to validated this claim. But from the outside, it does appear to be a pivot. Internally, when we started the company, the goal was always to build an AI platform. That was what I had sort of spent my career working on with AI machine learning, you know, algorithms. And, you know, I've been a big user and early adopter of of deep learning for, you know, certain tasks. And I felt like it was this meta science that ultimately was gonna, you know, transform every every industry. And, you know, at that scale, compute becomes the bottleneck. Compute and data become the two bottlenecks. And, you know, what is the bottleneck for compute? Energy. So that was kind of the premise of starting the company. Now, we obviously weren't dedicating all of our resources towards building an AI platform day one. We were dedicating actually the majority of our resources towards monetizing waste energy with Bitcoin mining. That was kind of the the philosophy of of of starting the company and finding and seeking out these low cost abundant energy resources that we could monetize with compute. Bitcoin was the best monetization engine we had at the time, but we were building this AI platform from very, very early days. So when you think about at what point do I shift the resource allocation to this other thing that maybe I'm working on on the side, I think about the world in a very Bayesian approach, right? I don't think the future is deterministic. I think it's very probabilistic, and I sort of have a view of what the future is gonna look like. It's more certain if if you go out just a little bit of time. If you go out, you know, a further amount of time, you know, it gets a little bit hazier, but I still have a view of sort of what what things are gonna unfold. And what was happening with this AI platform was it was sort of a project that Chase had devoted some time and resources and engineering towards internally, and we were committed to, you know, exploring this pathway. But we had launched the Crusoe Cloud Platform in early twenty twenty two with our first set of paying customers. You know, before that we were working with a lot of researchers at MIT and Stanford and, you know, different groups trying to understand what's actually valuable for AI researchers, like from an infrastructure platform.
00:14:26 · Chase Lochmiller, Harry Stebbings
So we finally launched in early twenty twenty two. But the moment that changed everything was obviously 11/30/2022, the launch of ChatGPT. Right? This was like the tweet heard around the world, the, you know, the moment that just shifted everything in terms of like, okay, AI is here and, you know, there there are really interesting, you know, use cases that are gonna explode from from sort of this moment. And that was kinda like a moment where my view of the world shifted quite a bit. How so? I just felt there was gonna be far more demand for AI compute infrastructure solutions, and, you know, we were very well positioned by actually having launched that platform at that point. [00:15:03] S1: What did you do then differently immediately as a result?