The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:21:15 · Harry Stebbings, Erik Bernhardsson
[00:21:15] S1: Is there a price at which it doesn't make sense for you? Of course there is, but at what point [00:21:20] S0: I don't think so. I think, in fact, like, we're actually more long than we're short GPUs because we we can charge a higher price to our customers. Like, there's effectively a market price, and it's, like, different dynamics because we lock up longer term reservations and and rent them out on a slightly shorter duration. But, you know, if if the underlying price goes up, people are also willing to pay more. [00:21:36] S1: What happens to the price over time? H100s were meant to depreciate and Yeah, go I [00:21:41] S0: have no idea. Actually, it's funny. Well, dude, if [00:21:45] S1: you have no idea, what am I meant to have? [00:21:48] S0: Did you see Jensen yesterday? He was in London, actually. Asked him this question. He's like, well, obviously, like, supply is gonna catch up with demand eventually, and then we'll see what happens with pricing. It might happen in a year. It might happen within five years. He said exactly the same thing I always tell people. Like, gravity. Hardware prices always go down in the very long run. Right now, we're in a very... You know, there... There's a supply shortage, and, you know, that means that the prices have gone up. They may continue to go up for another year, two years, five years. I don't know. But eventually, they will come down.
00:21:48 · Erik Bernhardsson, Harry Stebbings
[00:21:48] S0: Did you see Jensen yesterday? He was in London, actually. Asked him this question. He's like, well, obviously, like, supply is gonna catch up with demand eventually, and then we'll see what happens with pricing. It might happen in a year. It might happen within five years. He said exactly the same thing I always tell people. Like, gravity. Hardware prices always go down in the very long run. Right now, we're in a very... You know, there... There's a supply shortage, and, you know, that means that the prices have gone up. They may continue to go up for another year, two years, five years. I don't know. But eventually, they will come down. [00:22:15] S1: How early are we? Because I, you know, I run Instinct for everything. I have over a 100 automations on Instinct doing things that are just absolutely wild, from buying concert tickets to planning shows to helping with medication for my mother. The amount of compute I am using is Jevons paradox times a 100. Yeah. If that is equivalent for actually many people in society Yeah. Because it's accessible within WhatsApp and what... How early are we there?
00:22:15 · Harry Stebbings, Erik Bernhardsson
[00:22:15] S1: How early are we? Because I, you know, I run Instinct for everything. I have over a 100 automations on Instinct doing things that are just absolutely wild, from buying concert tickets to planning shows to helping with medication for my mother. The amount of compute I am using is Jevons paradox times a 100. Yeah. If that is equivalent for actually many people in society Yeah. Because it's accessible within WhatsApp and what... How early are we there? [00:22:41] S0: I think we're very early. It's... I think you're saying the same thing. I mean, yeah, Jevons power, whatever. Like, I think there's just so much latent demand for these things. And, you know, I I think, you know, eventually we're gonna start to run up against these capital constraints. Right? Like, there's rates that are going up. Like, we just can't build data centers fast enough. Maybe that's good. I don't Like I think in a way, like, you know, it's a guarantee against like overbuild, which... But I also don't know if we can overbuild these things. There's just so much demand for it. [00:23:06] S1: I don't think you can overbuild in the next five years. Probably not.
00:23:06 · Harry Stebbings, Erik Bernhardsson
[00:23:06] S1: I don't think you can overbuild in the next five years. Probably not. [00:23:09] S0: No. I think what could happen is like people realize, Instinct is a good example. Like, allegedly, they don't charge or they don't make revenue yet. So I think it's a good example. But, like, clearly Instinct can make a ton of money in the future. But so, you know, that's a dynamic in the market. There's a lot of companies that are not yet making money yet, and they're using a lot of GPUs. They just have to eventually start to make money. But, like, that that lag could take a while. Right? And and that... We might run up against that. [00:23:34] S1: You mentioned the specialization that comes within the inference market, and we we spoke about NVIDIA there. We're seeing more and more specialization within the chip market. Is NVIDIA's business today stronger than ever or actually weaker than ever as you see the fragmentation of the market into very specialized players from Cerebras to Etched to OLX to Fractile that weren't there before? [00:23:55] S0: I think you're... Try to phrase it as, like, one versus the other. My my view is, like... I think Erik Visher was actually... It's funny. Like, it's the same thing. Like, all of these things are gonna grow. Like, I think NVIDIA is gonna keep growing. They're gonna keep shipping amazing chips. I think there's also gonna be, like, Cerebras and all these etched and all these other ones, like, shipping specialized chips, and they're also gonna grow. So I I think there's gonna be markets for all of it.
00:23:55 · Erik Bernhardsson, Harry Stebbings
[00:23:55] S0: I think you're... Try to phrase it as, like, one versus the other. My my view is, like... I think Erik Visher was actually... It's funny. Like, it's the same thing. Like, all of these things are gonna grow. Like, I think NVIDIA is gonna keep growing. They're gonna keep shipping amazing chips. I think there's also gonna be, like, Cerebras and all these etched and all these other ones, like, shipping specialized chips, and they're also gonna grow. So I I think there's gonna be markets for all of it. [00:24:16] S1: So why is Cerebras down 30%? I don't know. [00:24:18] S0: I don't follow, really, the stock market. [00:24:20] S1: You don't follow the stock market? [00:24:21] S0: No. I I mean, like, a very passive, you know, buy the index, mostly because of my own time. Like, I don't feel like I have the energy to follow the stock market. [00:24:28] S1: To what extent is CUDA the moat that everyone says it is for NVIDIA?
00:24:28 · Harry Stebbings, Erik Bernhardsson
[00:24:28] S1: To what extent is CUDA the moat that everyone says it is for NVIDIA? [00:24:31] S0: I actually, I think it's a little overstated. I don't think CUDA itself is the moat. CUDA is actually kind of annoying to work with. It's like a pretty low programming model. But I do think all the NVIDIA, the ecosystem is. Like, I think all the kernel optimizations and all the stuff that, you know, like Torch always supports NVIDIA much better than anything else. The open source engines like vLLM and SGLang because of that, they always support it much better. So like everything is NVIDIA first today. And that's probably going to continue. It's like funny for the last like fifteen years I've been saying, you know, like next year is the year of non NVIDIA accelerators. It never keeps happening. I'm always wrong. NVIDIA has just, you know, shown to to be incredibly good at having that staying power and just dominating the market. We'll see. I mean, there's, like, Trainium, there's TPUs, there's AMD. There's a lot of other stuff that does look quite good, and they're catching up. But, you know, I still think they're quite behind. [00:25:22] S1: To what extent are the Neo Clouds a friend? Because they're partnered with you in a lot of cases, I'm sure, as you mentioned, I think 25, you said, or a foe? You know, I had the founder of Nebius on, and he was like, we're coming for the inference market. We need to own full stack. And I don't mean that against him. I totally understand it. But are they friends, or are they they foes?