Long Strange Trip: CEO to CEO with Brian Halligan
00:16:50 · Brian Halligan
[00:16:50] S1: My paranoia would go up and down sine wave over time. I think if I were in your shoes, I'd be pretty paranoid right now. Are you... Where are you on your paranoia sine wave?
00:17:02 · Chase Lochmiller
[00:17:02] S0: You know, I'm not really paranoid with competition. I mean, you know, in certain regards, like, you know, Crusoe is an infrastructure business, right? And there are... We don't view it as a winner take all category. We think there's going be a number of great businesses built here. And I think, you know, even people that... Even groups that people would paint as competition to us, I view it as, like, there's far more ways for us to work together than to work against each other. I think, you know, the the the greatest opportunity of our lifetime is building the infrastructure layer of intelligence. And it's, again, it's not going be a winner take all opportunity. And one kind of comparison that I've often made is that, you know, I kind of view this compute infrastructure layer of AI and or SI, I guess, as people are calling it now today. This infrastructure layer of of super intelligence is is really... There's a lot of effective comparisons to the oil and gas industry. And if you look at if you look at the value chain across the oil and gas industry, you know, it's typically broken down into three components. You have upstream business, where people are actually drilling holes in the ground and and and pumping wells of oil and gas. You have the midstream business, which is where you're taking those, those raw commodities and and transporting them from the wellhead to natural gas processing plant or the oil refinery. And then you have the downstream business, which is actually processing those raw outputs from the earth and then converting them into usable materials, whether it's gasoline or jet fuel or plastics or whatever it is, then you're ultimately selling that into the market. And within that stack, there's all these different margins that move up and down depending on the prices of oil, depending on the demand from consumers, depending on the demand from businesses. And for us, I view it as we're trying to build an AI supermajor in the same way that Exxon and Chevron are supermajors in the oil and gas industry. And with with that, you sort of have this embedded risk risk management where, you know, Exxon very famously doesn't hedge their oil exposure. Because when oil prices come down, their upstream business at the wellhead, those margins actually get compressed.
00:19:09 · Chase Lochmiller, Brian Halligan
But their downstream business at the refinery, those margins actually expand because the raw input costs costs actually go down. And, you know, they they they have these natural areas of collaboration versus competition where they're competing with other upstream businesses. But when they have a pipeline in an area, they're serving other upstream businesses that they may compete with. And I think Crusoe is kind of similar in that regard. We're willing to partner with businesses that we may compete with in other cases. But again, it comes back to this perspective that I just feel like there's so many more ways for us to help each other than for us to work against each other. [00:19:47] S1: Can I say something weird to you? [00:19:49] S0: Yeah, please.
00:19:49 · Chase Lochmiller, Brian Halligan
[00:19:49] S0: Yeah, please. [00:19:51] S1: In addition to my Sequoia work, I started an ocean fund called Propeller. And I heard a pitch yesterday from a company, and I'm not sure about this company, but... Or about this industry, is mining, you know, rare earth metals from the ocean. And same analogy, like, we're gonna do it end to end, and we're gonna build an... Exxon was the exact same company that they talked about as a super vertically integrated version. Speaking of that, we invested in Blue Energy, and I know you know Jake from Blue Energy building nuclear in the ocean. Can you talk about that? Like, you're... You've had a kind of a journey with the energy ops. It seems like you started in just, like, there's there's wasted energy out there, and we're gonna put it to work, and you're still doing it. But it sounds like the Abilene facility is a lot of just natural gas. Like, where where are you?
00:20:48 · Chase Lochmiller
[00:20:48] S0: At this point, you know, Crusoe is very focused on activating megawatts for intelligence, and that requires all sorts of energy resources and all sorts of different use cases. At times, it's natural gas. You know, we're we're focused on trying to find and and and catalyze innovative new energy solutions that can be things like Blue Energy. They're trying out new nuclear, you know, energy production technologies. We have another partnership with Oklo, that we announced recently, where we're trying to bring to life the first, SMR powered AI factory at the Idaho National Lab. We've done stuff with behind the meter wind, with behind the meter gas, with behind the meter solar, with batteries. We've many different things. We've gone to Iceland, right, where Iceland's this sort of like geological phenomenon that it exists, but it's this land of fire and ice where you have very abundant, low cost geothermal energy, very low cost hydropower, and not a lot of people and and very, you know, cheap, efficient cooling. And and bringing the demand for power there via compute has been our philosophy of, and and that's really what we mean when we say take an energy first approach to building compute infrastructure. Norway is another great market for us, where they have a lot of low cost hydropower that's being underutilized and can be built bigger than it is today. And so we don't think it's a silver bullet. We think compute infrastructure will be ubiquitous to serve the infrastructure layer of intelligence that's ultimately gonna power, global economic development. And so you need to use different energy solutions in different cases. And and so we're really excited about a lot of the innovation taking place in the in in the industry. And, you know, Blue Energy is another great example of, like, you know, can we leverage the same steam turbine technology that, you know, is is needed for gas generation to basically... That... That's needed for both gas generation and nuclear energy to be a sort of bridge between gas and and and baseload firm nuclear power. All of these things we think are great. We think a lot of the development in new battery technology is really exciting. Everything from what's happening with companies like Redwood Materials that are repurposing used electric vehicle batter...
00:23:16 · Chase Lochmiller, Brian Halligan
Batteries and used lithium ion batteries to long duration storage solutions like Form Energy and Antora, that we think will be cost effective hundred hour batteries. And so there's like a spectrum of whole different things, and we kind of view it as like we sort of need them all. The demand from intelligence for energy is voracious. And it's really going to accelerate the human progress as it has more access to energy. [00:23:43] S1: One of the things I find fascinating about you and your company is you started essentially in the Bitcoin mining industry with stranded energy, putting that to work. And it was a really good business. You were cranking with it. And it sounds like from the beginning, you sort of foresaw there's going to be a need for AI infrastructure, and you started building it out. And it rhymed. At some point, you decided we're going to sell off this. Most of our business is this Bitcoin mining business. When did you make that decision? How did you tell your board? Take us behind the scenes on when that became a good idea in your head. That that was a bold move.