The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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?
00:25:22 · Harry Stebbings, Erik Bernhardsson
[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? [00:25:42] S0: I feel like everyone in Startup Planning is like a friend and a foe at the same time. They have this, like, weird sort of, you know, relationship with everyone. I I think some of the top neoclouds, Nebius included, they are trying to move up the stack. I'm personally somewhat skeptical. I think it's, like, very hard to be good at, like, your core business and also trying to move into different market at the same time. Why would [00:26:00] S1: it be hard for them? Like, what's the bare case on them being able to move into the inference layer efficiently? [00:26:05] S0: I mean, I'm biased, but, like, we spent the last five years building an incredibly complex infrastructure stack. [00:26:10] S1: I think it's very, very hard to replicate what we built. What was the hardest thing?
00:26:10 · Harry Stebbings, Erik Bernhardsson
[00:26:10] S1: I think it's very, very hard to replicate what we built. What was the hardest thing? [00:26:13] S0: All the code and everything around the file system, the container runtime, the scheduler, like building the system that can place millions of sandboxes every minute, scale up and down many thousands of GPUs, you know, power hundreds of thousands of tasks running concurrently. These are these are very hard engineering problems. I I mean, I'm I'm an infra geek. Like, I love that shit. It's so much fun to work on it, but, like, these are hard problems. [00:26:37] S1: Is Nebius a better business than CoreWeave? [00:26:39] S0: I actually don't know. Like, I I don't know. I I think they're both, like... They're they're executed extremely well, both of them. I have a tremendous respect for what we've done. I think at the at the end of the day, like, the thing that I have the most respect for is actually more on the financial engineering side. They're very good at that of [00:26:52] S1: stuff. Why do you say that? [00:26:53] S0: Because I think a lot of the constraint for building a Neo Cloud very quickly is on the financial side. You need to be very good at... You go lock in like a long term customer contract, then you go raise a bunch of money against it, then you go buy the chips, then you deliver the chips, and then you pay off the debt, like over the next few years. Doing that sort of dance with the financials, like it's kind of an interesting game. And CoreWeave has done it exceptionally well. It's a capital game. It's a financial game.
00:26:53 · Erik Bernhardsson, Harry Stebbings
[00:26:53] S0: Because I think a lot of the constraint for building a Neo Cloud very quickly is on the financial side. You need to be very good at... You go lock in like a long term customer contract, then you go raise a bunch of money against it, then you go buy the chips, then you deliver the chips, and then you pay off the debt, like over the next few years. Doing that sort of dance with the financials, like it's kind of an interesting game. And CoreWeave has done it exceptionally well. It's a capital game. It's a financial game. [00:27:18] S1: When you move a layer beneath them, we spoke about Jeff, who obviously worked with Modal, we've seen incredible movement from the open source community, which has been exciting. Yeah. But then you also see Haiku and Anthropic's newest models being incredibly performant and incredibly cheap. What's the benefit of open models if frontier models are almost as cheap and as efficient?