00:19:31 · Jordi Hays, John Coogan
[00:19:31] S0: go to figma.com/make and just start building various products. Tyler has been using Figma Make to make a product that we'll be releasing very soon. [00:19:41] S1: Very excited for that. We will we will announce that soon. So from the earnings call, given the strong demand for our cloud products and services, we now expect to invest 85,000,000,000 in CapEx from '25 2025, up from a previous estimate of 75,000,000,000, just a 10,000,000,000 incremental investment. Absolutely massive. Our updated outlook reflects additional investment in servers, the timing of delivery of servers, and an acceleration of the pace of data center construction primarily to meet cloud customer demand. The challenge Pichai cautioned in an answer to an analyst question is that it takes a while for these investments to come on board. So of course, the risk is like you overbuild, but there's certainly no evidence of that given the massive backlog. So the other interesting thing that Ben dips his toe into. So Ben Thompson, Mr. Stratechery, famously does not get caught up in trade deals and non CEO employee shifts. [00:20:42] S0: They're below his line. [00:20:43] S1: They are below his line. They're below his line. But he had to chime in on the CFO change that happened at Google. So he says, I'm always hesitant to delve too much. I like that he's throwing in a delve. You know it's not written by a It's bait. But he's baiting. Yeah. [00:20:58] S0: He's baiting for sure. He's like how dare you accuse. Yeah. He's like you can go back and look at how many times I've used
00:20:58 · Jordi Hays, John Coogan
[00:20:58] S0: He's baiting for sure. He's like how dare you accuse. Yeah. He's like you can go back and look at how many times I've used [00:21:04] S1: Dell for millions of I created Dell. I coined that word. [00:21:08] S0: There's a YC company called Dell [00:21:12] S1: Oh, yeah. [00:21:13] S0: Yeah. As well So that's doing [00:21:16] S1: he says, but it's interesting that the goo that the earnings call was Ruth Porat's last one as CFO. Porat earned a lot of plaudits for getting Google spending under control in the late twenty tens, but what seems clear in retrospect that is that 52,500,000,000.0 that Google spent on CapEx in 2024 was too little. And so he's kind of like, you know, noodling on this idea that maybe the CFO was too cautious going into an AI boom. [00:21:48] S0: You could lose your job [00:21:49] S1: over that. Called a maybe Ruth Porat was calling top signals like us. It looks terrible. Fortunately, we don't lose our job and we There's [00:21:57] S0: nothing wrong with calling top signals. [00:22:00] S1: There there there's something wrong [00:22:01] S0: with underinvesting. Water if you're calling specifically calling the top. Yes. Trying to identify top signals [00:22:07] S1: Yes. [00:22:08] S0: Is more of a meta game.
00:22:08 · Jordi Hays, John Coogan
[00:22:08] S0: Is more of a meta game. [00:22:09] S1: Yeah. Yeah. Yeah. So, basically, Google, it it it does seem like Google under invested in CapEx in 2024 based on demand, wound up with that massive backlog, missed on top line, couldn't couldn't make enough money, couldn't generate enough revenue, had higher margins, that's great, but but didn't deliver on the cloud side on on the actual scale. So Ashkenazi's Ashkenazi's calls, meanwhile, have repeatedly reiterated that Google Cloud is particularly supply constrained. They don't have enough servers. And the company has now surprised investors twice in six months with the scale of its CapEx plans. Let's go. Says, this, in my opinion, is incredibly bullish for Google. Go back to this, the disruption lens, which we were kind of noodling on earlier. The exact avenue from which you would expect management resistance to a disruptive innovation to flow is from the is the CFO office. Like the CFO should be resistant to disruptive innovation. And when you look at the history of companies that got disrupted, the CFO is saying, we have a good business. Let's just keep printing cash. Like this new thing, let's not worry about it. Let's not Nokia [00:23:17] S0: CFO. Exactly. Are you guys seeing the numbers?
00:23:17 · Jordi Hays, John Coogan
[00:23:17] S0: CFO. Exactly. Are you guys seeing the numbers? [00:23:20] S1: Yeah. But, like, for a lot of those companies that got disrupted, it's like they were printing cash, high dividends for decades even after the disruption happened. The next, the iPhone comes out. And in order to actually do something to compete, they have to completely go into start up mode. They have to burn a ton of cash, cut their dividend, stop stockpiling cash, issue debt, do a ton, raise more equity maybe. Like, they have to become a new product development company, and it would be very, very difficult, usually. [00:23:48] S0: BlackBerry's annual revenue in 02/2005, 1,900,000,000.0. BlackBerry's They completely BlackBerry's annual revenue in 2024, 580,000,000.
00:23:48 · Jordi Hays, John Coogan
[00:23:48] S0: BlackBerry's annual revenue in 02/2005, 1,900,000,000.0. BlackBerry's They completely BlackBerry's annual revenue in 2024, 580,000,000. [00:23:59] S1: It's a cybersecurity company now. They bought a couple cyber security assets while they were valuable, while they were like, you know, while the stock was up. And then eventually, they wound down the phone business and just kind of became a cyber security company. Because obviously they had a ton of enterprise contracts because BlackBerrys were sold into like large enterprises as you know, work phones. Very few people had BlackBerrys as like everyday phones. But so they had all those, they had like solid sales team, solid connections, bought a new asset and were able to continue the business even though obviously it's not the company that it once was. So Ben Thompson goes on to say there's a there does seem to be a major shift in mindset in terms of the company's willingness to lean into AI, particularly for a segment Google Cloud that even in the best case scenarios is significantly lower margin than the company's core business. What's interesting about that margin point, however, is that it too is another reason to be bullish on Google's prospects. Google is the only company we talked about the TPU thing. They're the only company with an at scale ASIC alternative to NVIDIA's GPUs which should give them a meaningful cost advantage to that end to the extent that cloud compute [00:25:13] S0: At scale [00:25:13] S1: to a
00:25:13 · John Coogan, Jordi Hays
[00:25:13] S1: to a [00:25:13] S0: point where they've they're gonna be able to support SSI. SSI. Which is crazy. Not just their own needs. [00:25:18] S1: And then and then there's also another question [00:25:20] S0: in the sorry. The dynamic that's interesting is, like, OpenAI needs to massively scale infrastructure and and as we covered earlier this week commit to spending tens of billions of dollars with with Oracle. Yep. And their revenue today doesn't support that. Obviously, their their growth trajectory is absolutely insane. But OpenAI being in a position where they are competing head on with Google for this very very critical consumer use case, search knowledge retrieval [00:25:50] S1: Yep. [00:25:51] S0: And ultimately usefulness. It is a extremely tough position for OpenAI to be in.