Invest Like the Best with Patrick O'Shaughnessy
00:54:47 · Gavin Baker
[00:54:47] S2: has more iron. I literally had, I thought it had I mean, that's like eighty years ago. That's wild. I literally thought spinach had more iron. That's just-- That's amazing. Crazy. Yeah, you wanted something new every day. Yeah, same thing though. Yeah, it's the same thing, and it's just, so somebody just needs to tell the truth. I feel like the industry, geez, maybe if nobody else is gonna do it, like, I'll do it. There needs to be some sort of foundation, maybe it's a PAC that runs ads during the Final Four, during NFL games, during college football games, Data center that signed this pledge in your community, your power prices are gonna go down. They're almost certainly going to contribute to the community in a material way. You're gonna see a massive influx of super high-paying blue-collar jobs that are going to persist, and I think a lot of people thought that they were one-time, and they're just not. Like, there's for sure a spike, and then that moves to the next data center, but there is an ongoing need for RMA and then upgrades at these data centers and technology is changing, so you're gonna have more- Jobs, you're gonna have cheaper power, you're gonna have a wealthier community, there's gonna be no impact on water, no impact on the environment, but it's easy to build the data center ten miles out of town, you know? That story needs to be told along with-- We heard a story, I think we talked about it last time, about how AI is increasingly really saving lives, curing rare diseases. I think it was at ASCO this year, the vibe was like, "This is the most scientific breakthroughs we've ever seen at a single conference, and for sure some of that is due to AI. And so we need to tell those stories, like, you know, if you have a sick child, sick parent, a sick loved one, like AI meaningfully increases the odds of them recovering. Everybody needs to tell this, and I think people out here, all of this is so blindingly obvious to them, they can't process that this is a true but wildly divergent view from most Americans. The industry really needs to tell its story better. New York, it just feels like it's the first to MIDI, and even in some of these deep red states that are super pro-growth, they're just like, "Hey, you guys aren't doing a good job telling your story. We can't tell your story.
00:57:13 · Gavin Baker
If you tell your story, though, we can retell it, but like, you're the experts." If you don't speak your own truth, no one else will. What have we missed? I do think something that is missing from all of this conversation about compute is what is going to happen when you put these SRAM-based accelerators that aren't constrained by HBM D-RAM and are often made on older nodes that aren't competing with like the latest and greatest GPUs. When you disaggregate inference, people talk about prefill and decode, but decode is two parts: attention and feed-forward network. Work and like the ultimate holy grail is if you could do prefetch on one chip that probably doesn't have HBM D-RAM, do the attention on a super high-powered chip with HBM D-RAM, and then do the feed-forward network on one of these SRAM chips. But like the ROI on adding these SRAM accelerators to the existing installed base of compute and new compute, but like what we're seeing is you do better You just can't beat SRAM in particular for that feed-forward network, and no matter how much you try to get the ratio of compute to HBM, DRAM to SRAM on the chip correct, the workloads are always changing and there's different workloads. Being able to disaggregate into these three parts, this is gonna be really, really positive for the ROI on AI.
00:58:37 · Patrick O'Shaughnessy, Gavin Baker
[00:58:37] S0: For some reason, I just thought of a funny question, which I love the framing of Game of Thrones versus all these people. Can you imagine a player that isn't currently on everyone's mind becoming relevant at like the major Game of Thrones scale? Like, that could be like Micron all of a sudden, someone that becomes as important as Anthropic, OpenAI, Microsoft, Amazon. So like a dark horse. Like LiPU is probably a dark [00:58:58] S2: horse. Lit at Fireworks, she is an absolute killer. I think our friend Scott Wu, Cognition is kind of- [00:59:09] S0: You're here to that one. [00:59:10] S2: Yes. I think those are the most obvious names [00:59:17] S0: What about SpaceX? What's it been like watching that be digested by public markets, at least initially? Do you think the market understands it as a company, the most important new company to be public?
00:59:26 · Gavin Baker
[00:59:26] S2: It doesn't really feel like it does. The fundamentals have gotten better since the IPO, like Rock 4.5, the Cursor acquisition. Cursor has clearly accelerated meaningfully. They've shown over the last three years they can bring on more compute faster than anyone, at lower prices, and now we know that they can even adjusting for the spot first contract gap, their big advantage was they came into the market, hit those spot highs. And in a strange way, like one of the more bullish things for compute, is they put a vast amount of compute into the market overnight, and it wasn't even really a blip. It was like the market just utterly absorbed it. The freight trade didn't slow down at all. A Substack writer, well, Fonda AI, they think that SpaceX is gonna try and bring on eight gigawatts of compute over the next eighteen months. So, eight gigawatts over the next eighteen months. I won't bet against Elon, but I mean, that would be a truly incredible feat. Rates have gone up since they signed those last contracts, not down, and they're monetizing at something like fifty billion a gig. And Consensus estimates for next year are $73 billion. So forget Starlink V3, forget Starlink direct-to-cell, Grok 4.5 and Cursor, I think that the sum of that probably hits a $10 billion ARR pretty quickly. Forget all of that. You know, forget the core base Starlink business. If they bring on anywhere near that The consensus estimate is seventy-three billion, and that's eight gigs at fifty billion a gig, and obviously that wouldn't all be lit up at the beginning of '27, and it seems very implausible to me, like I almost don't believe the Funder report But to this day, the only companies that have brought on more than five hundred megawatts of power in a year are the hyperscalers, CoreWeave, Cruso, and SpaceX. And SpaceX has kind of brought on the most, the fastest, at the lowest cost, and then people do actually really like their clusters. But again, it's kind of like the market is gonna need to- See that. That would not be the market's interpretation of SpaceX today. No, no. And it does feel like, you know, there's this big New York hedge fund short case on it, and I think they think the spot price for compute's gonna go down ninety percent, and you're gonna bring on all this compute, it's not gonna generate, you know, nearly as much revenue as you think. Maybe.
01:01:56 · Gavin Baker, Patrick O'Shaughnessy
But I also wanna be really clear, like, I've seen Elon's companies do really impressive things. The Funder AI report of eight gigawatts in eighteen months. Uh, and Like it's available to everyone, I think one of Elon's phrases is we specialize in making the impossible late. I never heard that, that's great. Yeah, um, but, you know, there's like kind of a lot of truth to that. Yeah, yeah. But I just think very little is built in, from my perspective, to that stock for the amount of compute that they might be able to bring on. And again, I don't think it's anywhere near eight, and it's gonna be really hard. And energizing these GPUs is really hard, but they've been good at it, and it doesn't feel like that's in estimates or really in people's thinking. [01:02:44] S0: I'm thinking about that funny meme that says SpaceX, the data center company. Oh, hundred [01:02:48] S2: percent, [01:02:48] S0: yes, [01:02:49] S2: absolutely. And then I would also just say Like, I did spend a lot of time at Starbase, and Orbital Compute feels more real every day. [01:02:59] S0: Pretty cool to see that Starship landing the other day, though. Pretty cool. To see the Starship
01:02:59 · Patrick O'Shaughnessy, Gavin Baker
[01:02:59] S0: Pretty cool to see that Starship landing the other day, though. Pretty cool. To see the Starship [01:03:02] S2: landing, and it's, you know, it is funny, our friends at Benchmark, they funded Starcloud, and I don't know, last time Starcloud is an orbital compute company that, like, SpaceX is kind of partnering with. Mm-hmm. They're gonna, I think, let them use the Starlink laser technology, which is really important for orbital compute. But I Guys were pretty smart and they're not coming from the Elon ecosystem at all, and they chose to fund an orbital compute company at a decent valuation without the internal launch costs that SpaceX gets. To me, that's a good like, hey, am, am I crazy? Am I crazy? And it's like, well, maybe I'm crazy and maybe Elon's crazy and maybe Bichmarc is also crazy and maybe the SpaceX engineers are also crazy, but man, that just doesn't seem that probable to me. Should we say whose offices we're in? Yeah, we're sitting in the, we're sitting in the Benchmark office table. Yes, this is their famous table for their famous dinners. So thank you, Benchmark. Thank you, Benchmark, for this episode. Thanks, Fisher. Yes, thanks, Eric. Uh, and, and she, we should thank Ball. Eric coordinated for me, so he gets a special shout out. Okay, thank you, thank you, thank you all the partners. Thank you, Eric. But I mean, we will see where all of these stocks are in a year. The great thing is, time will tell. People are gonna be right or wrong. The future's probabilistic, but it's an exciting moment.