00:25:15 · S5, Max Read, Rob Copeland, Erin Griffith
[00:25:15] S5: It's time to innovate at the speed of AI without compromising control. That's OutSystems. Take a look at what happened with one global retailer during a period of massive expansion. They used OutSystems to build AI agents to automate invoicing and translation processes, shifting 95 of their daily store operations to a new digital app, saving thousands of hours of manual work. OutSystems gives you the flexibility to deploy how you want and the governance to do it safely. Own your agentic future. Learn more at outsystems.com/nyt. That's outsystems.com/nyt. [00:25:52] S1: We're back on Hard Fork with finance reporter Rob Copeland and tech writer Erin Griffith. We've just been talking about Billy Evans. And now I've asked my guests to bring a piece of news that they are tracking this week, and tell us a little bit about why they think it's important. Rob, what are you following this week, and why is it important? [00:26:08] S2: So I am all of a sudden obsessed with this company you haven't heard of called CoreWeave. CoreWeave is a [00:26:14] S3: I know CoreWeave. [00:26:16] S2: Oh, pardon me, Erin. But your own topic. [00:26:20] S1: Tell me tell [00:26:21] S3: me about AI infra. [00:26:22] S1: Yeah. Tell me about CoreWeave, Rob.
00:26:22 · Max Read, Rob Copeland, Erin Griffith
[00:26:22] S1: Yeah. Tell me about CoreWeave, Rob. [00:26:24] S2: So CoreWeave is an AI middleman, essentially. What they do is they buy the compute, the processors, they stick it into warehouses, and they lease the space to companies whose names you might have heard of, like Anthropic or these other AI huge startups. The problem is that to grow so fast, they've taken on just a huge amount of debt. They have something like $70,000,000,000 in in liabilities across 51 different data centers, and their stock is all of a sudden in a free fall. Their debt, they're starting to have to pay twice as much to service the debt. It's just a classic Wall Street financing story of a company that grew and grew and grew and grew and just assumed the market would go one direction up. And spoiler alert, there's always another side. [00:27:15] S3: Do you think that they're a canary in the coal mine for, like, all of this crazy infra spend that's been happening over the last four years? [00:27:24] S2: They're definitely an early sign of that. What I will say is that everyone, myself included, is super into AI as a tech story, as a, you know, what can muse do. But Sure. From my seat, it's a financing story as much as anything else. These companies have said that they need to borrow as much as $10,000,000,000,000 to get this to work. We're nowhere near even beginning that climb, and we're already starting to see the market shake a little.
00:27:24 · Rob Copeland, Max Read, Erin Griffith
[00:27:24] S2: They're definitely an early sign of that. What I will say is that everyone, myself included, is super into AI as a tech story, as a, you know, what can muse do. But Sure. From my seat, it's a financing story as much as anything else. These companies have said that they need to borrow as much as $10,000,000,000,000 to get this to work. We're nowhere near even beginning that climb, and we're already starting to see the market shake a little. [00:27:50] S1: So this is not the kind of thing, in your estimation, where CoreWeave could go down, but everything else... The line keeps going up into the right? [00:27:57] S2: No. This is very much... They're a proxy for a certain part of the market at large. The financial aspect of this story, we're going to see play out, in my opinion, faster than the technological side. [00:28:09] S3: And I think this, like, really ties into... I mean, I'm working on a story on this now. This ties into Anthropic's IPO as well. Like, because everyone's looking to Anthropic to see, is this demand for AI unlimited, or are there kind of limits, or is it elastic? And that, you know, people are are... Have limits on what they're willing to pay because that then trickles down to the likes of CoreWeave. Right? [00:28:32] S2: And we say trickles, by the way. Anthropic is so huge, this $1,500,000,000,000 or so offering. CoreWeave is a $40,000,000,000 company. This isn't, like, trickles down to a nobody. This is a... These are real sized companies. [00:28:45] S1: Right. It's not Himanthus.
00:28:45 · Max Read, Rob Copeland, Erin Griffith
[00:28:45] S1: Right. It's not Himanthus. [00:28:47] S2: It... It's not. Well, shots fired over here at [00:28:52] S1: the Hard Fork Studios. Roughly 10,000 Himanthuses. Exactly. [00:28:55] S2: And we saw even this week at Ken Griffin, one of the most famous hedge fund investors, said that he thought that we're in an AI bubble. When you start hearing that from my seat, you just start waiting to see, you know, what falls first. [00:29:08] S1: Well, that's a cheery piece of news, Rob. Thank you. Erin, what are you tracking this week? [00:29:12] S3: I'm interested in Elon Musk's empire consolidation continuing. Ever since SpaceX decided that it was going to rush into the public markets, there's been speculation that the whole point of it is to set the company up so it can more easily merge with Tesla. And so earlier this week on SpaceX's earnings call, Elon Musk basically confirmed that. He said, you know, they're setting up committees of independent directors to explore a potential merger between giant SpaceX and giant Tesla. And he had this really amazing quote that was, because I'm a conflicted party, I can't actually be in the discussions, which is like just... For someone in that position, you know, it's very, very funny to me. [00:30:04] S1: Someone should make a three hour documentary about this guy. [00:30:08] S3: Four. Four hours, in fact, is the Musk documentary. Rob, I'm sure you have pretty strong views on this as well, so I'd love to hear your thoughts.
00:30:08 · Erin Griffith, Rob Copeland
[00:30:08] S3: Four. Four hours, in fact, is the Musk documentary. Rob, I'm sure you have pretty strong views on this as well, so I'd love to hear your thoughts. [00:30:17] S2: Well, my strongest view as always, and this is copyright, reporters make terrible securities analysts. So, you know, you don't listen to us. What I will say is we all laughed at x AI and SpaceX merging earlier this year. It was a hugely positive thing for the IPO. It's it's worked out by every possible standard so far, so it's it's easy to to laugh at this stuff. I do have a [00:30:42] S3: The track record of Musk, you know, consolidating his empire is is just... Is exactly that story going all the way back to when Tesla bought SolarCity. You know, everyone was kind of mad about it. It made no sense. He's just using one of his good businesses to rescue a struggling business. But like you said, it it has it has really all worked out for him in the end. And so I think people seeing that track record are very willing to give him the benefit of the doubt. And really what's driving this, I think, is that Elon Musk does not have does not have control of Tesla in the same way that he does of SpaceX. And so, you know, shareholders are able to push back a lot more. They have a little bit more leverage than they do with SpaceX. And so I think merging them would give him the opportunity to kind of get that control back. And if he wants to throw a ton of money and lose a ton of money in the short term on, you know, investing in robots for Tesla, he he has more runway to do that if he's got more control, I think.
00:31:39 · Max Read
[00:31:39] S1: I want to share my story that I'm tracking, which is that Joel Kaplan, Meta's global policy chief, is leaving the company after fifteen years. Kaplan is, to me, least, really fascinating figure. He's a Scalia clerk. He participated in the infamous Brooks Brothers riot during the two thousand elections. And probably most famously to people who aren't, like, you know, committed Facebookologists, he was a close friend... He's a close friend of Brett Kavanaugh and sat behind the Supreme Court justice during his confirmation hearings. This is, of course, when Christine Blasey Ford accused him of rape. But his role at Facebook has been a sort of conservative whisperer. You know, Facebook, for the first ten years of its existence, fifteen years of its existence was... Probably got more criticism from the right than it did from the left. And there's all these sort of, in my opinion, sort of manufactured controversies about censorship and shadow banning and trending topics. And Kaplan's legacy, I think, was helping them navigate through those mostly by shifting the company externally and internally a little bit to the right. And, you know, it would be sort of satisfying, I think, to imagine, you know, if you if you are politically on the left, satisfying to imagine that Kaplan is leaving because the Republicans are gonna get blown out in the midterms. But it seems much more likely that he's just leaving because it's been fifteen years, and the job is probably exhausting, and he's made a bundle of money, and why stick around?