Lambda's Stephen Balaban on data center misinformation, US energy sovereignty, and why offshoring compute would be a national tragedy

Speaker 3: While we're missing

Speaker 2: couple

Speaker 3: of folks here.

Speaker 1: Jordan, not going to let it down.

Speaker 2: Next we have Stephen from Lambda coming back on the show third, fourth, fifth time. Who knows? Stephen, good to How see are doing?

Speaker 7: Hi. It's so good to see you.

Speaker 2: Great to see you.

Speaker 3: Been too long.

Speaker 2: Okay. So we were talking to Jordan Schneider about this China backed AI bot farm. He was kind of brushing it off and I can see both sides of the discussion. You know, there's been just a couple reports, 200 accounts here, a few 100 accounts here. He was saying that China doesn't have a long history with infer interference politically. What are you seeing? What are you, what are you identifying just in the broader debate?

Speaker 7: So I I think that it's really important to not get lost in sort of, is this a Chinese bot farm? And just focus on bad facts and just bad information.

Speaker 2: Sure.

Speaker 7: Because, you know, that's the fundamental thing, right? You know, misinformation is like most readily solved by just disproving sort of, you know, and just showing showing what's real and what's not.

Speaker 2: Yeah. Yeah. I mean, the big number that I saw most recently was polling on data centers, terrible broadly. But after telling somebody that you're polling that data centers recycle water much like a car wash recycles water, they added that phrase, then the net approval score improved by like 30%. So people with that extra context change their whole opinion in just a few seconds. Is that what you're saying?

Speaker 7: Yeah. Yeah. A 100%. So for for example, the vast majority of new AI factories that are being built Mhmm. Are completely recycling the water and using a dry cooler. It's a closed loop water system where the water never even leaves the facility at all. So that's the vast majority of a lot of these new data center builds. And so that's just completely different from the old technology, which is being described, is a heavier water consumption, which is evaporative cooling. And so that's like a fact that most people should sort of, you know, kind of look into. The other one is

Speaker 3: Well, the the problem is is people that are aren't really interested in tech but maybe are afraid of AI. They're not proactively sitting there being like, I gotta go. I I got a free five minutes here. I'm gonna go

Speaker 2: Get the

Speaker 3: I'm gonna wanna I wanna go get the facts

Speaker 7: diligent research online. Yeah. Really read

Speaker 3: And there's no and and and Yeah. Just looking on looking on YouTube Yeah. And just AI negativity or content that is negative towards AI gets a 100 x the the reach. Right?

Speaker 2: Yeah. There's always been a negativity bias on YouTube. I mean, you you you could say, you know, the like like, here's the history of this company or you could be like, the shocking downfall of this company. And the shocking downfall will always get more.

Speaker 3: Yeah. Taylor Lorenz says, making anti AI content on YouTube is not only profitable because you'll get a zillion views on anti AI slot, but also because there's a litany of these sort of AI safety orgs that quietly pay you massive amounts of money for undisclosed propaganda. I didn't realize love

Speaker 7: that Taylor Yeah. Friends that's really now back And in the I'm I'm I'm team America. I'm team re industrialized. Right? I've got the

Speaker 2: I love it. The sweater.

Speaker 7: Re industrialized sweater for it. And so, I think the interesting facts about it are this. Mhmm. One, from the jobs perspective.

Speaker 2: Mhmm.

Speaker 7: Yeah. Look, this is not going to be the same level of job production as an automotive plant or steel mill. But these are still net new jobs.

Speaker 3: Yeah.

Speaker 7: And so, you know, for example, we've got a data center out in Kansas City and 300 folks worked on it during the construction period and 50 full time jobs. Many of these making over a $100,000 a year. Mhmm. What are you I I would I would ask to somebody who's against it, what are you going to say when you sit down at a dinner table with these 50 families that this data center is supporting and say, well, no, I don't think you should have that job because I don't want an AI data center. When they're the same people who are using the data center to go on post on YouTube or to use the AI services.

Speaker 2: Yeah. Where do you sit on on local versus national regulation of data centers? Like, Sanders, obviously, has gotten a lot of attention for discussing the topic at the federal level. But it feels like something that, you know, just as like an American, it it feels much more comfortable if, like, yeah, there's a there's an area in West Texas that loves this stuff and they're gonna be into it. And then there's gonna be some communities that aren't and this should be handled by the local mayor and the and the and the and board at the town level and the voters should have a voice, but it should be contained to the community that's relevant.

Speaker 7: Yeah. So so first of all, absolutely. Look. That's how our system works. Let's just be clear here. Right? You know, this is not, there's not some sort of, you know, national eminent domain that's being pulled like we have with the construction of railways and other Sure. Other public goods.

Speaker 1: Yeah.

Speaker 7: This is decision making that is happening on the very, very local level. And some places are not going to want it. And some places are going to welcome business. Yeah. And some places are not going to welcome business. Some places are going to welcome data centers and others are not going to welcome data centers.

Speaker 2: Yeah.

Speaker 7: I think it's a perfectly reasonable thing. I think that should should members of the community have voice? Yes. Should property owners have a voice? Yes. Absolutely. Right? You know, somebody who's gonna have some any type of externality that's adjacent to the property, they should have a voice and and guess what? They do. Yeah. They've got ton of voice as a as a property holder. And and and I think that, you know, there will be reputation for communities that wanna welcome these amazing investments into their into their community. So for example, going back to that Kansas City data center, it's it's a it's a it's a 10,000 GPU data center. And we are going to over the next five years, at the very least, be paying $47,000,000 over five years in property taxes.

Speaker 2: Yeah. Yeah. This is infusion

Speaker 7: to to a to a community that we're working with.

Speaker 2: For

Speaker 7: sure. And so, I think that there's gonna be the communities which are really excited about it, know, communities who have already pioneered it like Loudoun County and Virginia

Speaker 2: Yep.

Speaker 7: And other companies or excuse me, other communities and other counties that wanna see lower rates

Speaker 2: Yep.

Speaker 7: And lower tax rates as well as, you know, lower utility rates. Because as evidenced by a bunch of research, communities that welcome data centers and industrial development and new power plants have lower rates.

Speaker 2: Yep. Of course. How are you thinking about the international puzzle? Because I know data center construction takes years to plan out. It's slow moving. But in general, when the environment in American business gets harsher. Historically, business leaders have off shored almost immediately. And I could imagine a lot of data center developers just saying, oh, don't want it here? Build in Mexico. Build it

Speaker 7: It would be

Speaker 2: know, in the West.

Speaker 7: National tragedy. It would be a national tragedy for in the just in the very moment where this country needs to rebuild our grid.

Speaker 5: Mhmm.

Speaker 7: And it's not just data centers. Everybody wants to drive EVs. Yeah. Everybody is starting to want to, you know, we're we're bringing on more solar than we have in the history of the country.

Speaker 4: Yeah.

Speaker 7: 80% of new megawatts coming online into the American grid are solar or storage.

Speaker 1: Mhmm.

Speaker 7: It's it's it's it's it's it would be an absolute national tragedy Mhmm. For this to go out, to go international, for it to go to, you know, whether it's whether it's, you know, overseas in outside of North America, into South America, into Asia Pacific. I want those jobs here in The United States. I want those investments you made here in The United States. AI is a national strategic asset in my opinion. Compute is a national strategic asset. And then most importantly, the way that AI is driving the development of the grid Mhmm. And I keep trying to talk about this, but it's it's developed the way it's about driving the development of the grid is gonna pave the way for more industrial onshoring to come back to The United States so that we can bring back whether it's different, you know, arc electric arc furnace mills for aluminum and steel, micro mills, turbine manufacturing, other types of high intensity yeah. By turbine manufacturer, mean specifically, like in canal smelting or Sure. You know, specialty metal smelting, where where there and there's a high energy input.

Speaker 2: Yeah. Yeah. I mean, you you go back to the it wasn't a Colossus was built in an old washing machine manufacturing facility that was out of business. If you all of a sudden have a lot more energy, a lot of more industrial capacity, maybe the washing machine manufacturer comes back and maybe that's good.

Speaker 7: And there's gonna be a lot more jobs because because by that, and it's a it's a huge virtuous cycle. And so I think it would be a real tragedy to have anything that was gonna end up pushing folks. And and and and I I really I really support building this stuff here in The US.

Speaker 2: Outside of the economic impacts, do you think that there's a national security value in having a data center in America or or compute in America for, like, control reasons? Like, AI is a powerful tool if it's in another country and that country says, well, actually, we're taking this and we're now under control of this. What is your model for how valuable that is from a national security perspective?

Speaker 7: So so I I you know, there's there's the soft one and then there's the hard one. The soft one is sort of how important is it to have values models that have values that align with American values and how patriotic is your model? I want patriotic models.

Speaker 2: Okay.

Speaker 7: And the second one is the hard one, which is what happens when they cut it off?

Speaker 2: Yeah. That's what I'm worried about.

Speaker 7: And we all experienced this when fable went away for a little bit.

Speaker 1: Oh yeah.

Speaker 2: Do you remember? Yeah.

Speaker 7: Do you remember that? And I remember, I called some people up. I said, wow. This is what it feels like to have sort of the equivalent of electricity cut off. When you have the intelligence cut cut off from Fable model. And I was vibe coding something at the time. I said, wow. This is what it feels like. Had to go back to Opus. And it felt like a huge step back. Thought I just thought to myself immediately, this is as much of a strategic

Speaker 2: Yeah.

Speaker 7: Asset as our grid is.

Speaker 2: Yeah. That's funny. Jordan, anything else here? I wanna hear

Speaker 3: What should people what should people expect from the debate or or just forward progress for the rest of the year on this issue? Like, it it is should we just expect it just keeps getting, decided on a on a local level? Is there is there

Speaker 2: There's It's going national. It's going national.

Speaker 7: Right now. And so I think that that's like the the noise the knob gets turned up a lot towards elections then it'll it'll it'll kind of go back down.

Speaker 3: Yeah. It's very it seems very unfortunate that politicians are just realizing on on both sides are just realizing that

Speaker 1: It's

Speaker 3: pop if issue. If I want votes, I I have to at least say that I'm against this thing.

Speaker 7: Yeah. No. No. So this is the interesting thing. There's a multiple races right now. For example, one in Kansas where they're the where where the steamfitters unions and the different workers unions are actually aligning on the pro data center side of things because there's so many jobs created, there's so many big deals that are created from these data centers

Speaker 2: Sure.

Speaker 7: That a lot of the labor unions are actually on the side of pro data center now. Oh, weird. Now, I

Speaker 1: and so so you look at look this up.

Speaker 7: Look up. There's a there's a Kansas City. I think it's gubernatorial candidate who's a Kansas governor candidate. And there's the steam the steamfitters union is is basically on the side of pro data center bill. And so, actually, I think that it's maybe a little bit all backwards sometimes from what people have been positioning. Because you know, you've hearing the media, oh, this is a this is

Speaker 2: a

Speaker 7: bipartisan anti data center movement. No, no, no. I think there's a lot of folks on both sides of it who, you know, are are are are being supportive. I think that you're gonna see the the volume not turned down after elections.

Speaker 2: Mhmm.

Speaker 7: And then finally, I think it's healthy debate and communities should have a decision about who they wanna work with. And that data center providers should be doing their best to not be influencing rates any direction other than bringing rates down for everybody, and being a good member of the community. Pay your taxes, participate in building ecosystem of of businesses around you, and, you know, continue to make great high paying jobs.

Speaker 2: What do you think the tech community, data center community needs to do to get ahead of what I think is coming after the water debate clears because the water debate, of course, comes from some, you know, mediocre miscalculations.

Speaker 1: But

Speaker 7: There's miscalculations and and also this misunderstanding of what is the total water consumption of things.

Speaker 2: Exactly. So I think a lot of people in tech sort of brush off the water. The water discussion is debunked, I think they're they're they're fair to do that. But, on energy, on natural gas production, there is some real data about where this all goes. If we continue to 3x compute for the next couple of years and we're powering that by natural gas, you could see headlines that track data center to emissions. This is how many plane flights a data center uses and it could become the next thing.

Speaker 1: So so so so so first of

Speaker 7: all, one, the debate is not something that needs to be won with the Silicon Valley Twitterati, exotic, whatever you want to call the people

Speaker 1: who's with

Speaker 7: their keyboards. It's it's the debate needs to won by the people who are in the communities affected by this.

Speaker 2: Sure.

Speaker 7: And so that's that's the first one. The second one is more than ever, like I said, 80% in 2026 is solar and storage. These are renewable things. That's actually where our grid is becoming more and more

Speaker 2: Okay.

Speaker 7: As we build this out. Yeah. And so I think that there's needs to be a lot more deregulation with regards to expediting interconnects. Yeah. Know, reconsidering, just just making it so that we can actually go back to building and getting connected into the grid. Yeah. So that way, a lot of this behind the meter stuff, which is less efficient. Right? You know, when you have a behind the meter, it's simple cycle as opposed to combined cycle natural gas, and it's less efficient. So we should really get to the point where we're encouraging grid interconnectivity and expediting that process. That's that's, I think, the number one point I would say from a policy perspective. But, you know, look, at the end of the day, every American consumes about 600,000 gallons a year of indirect water consumption. So next time you see a big number, divide by 600,000

Speaker 2: Sure.

Speaker 7: Gallons per year of indirect consumption that every one of us makes. Yeah. And then that will put things into perspective. I

Speaker 2: think that's that's

Speaker 7: a good starting point.

Speaker 2: Yeah. Yeah. I'm I'm wondering, yeah, where where where that goes because it does feel like it's worthwhile. I I agree with you on like you don't need to win the the the tech insider crowd first, but it does feel like the worst case scenario would be another error to the tune of two orders of magnitude around energy consumption or natural gas production. Because if the viral if the viral clip is every data center burns as much fuel as every car has produced since humanity started and that's off by three orders of magnitude or something, then Yeah. Then you're on you're fighting on your back foot as opposed to starting with, okay, they're already pretty efficient. Here's where we are regulating. Here's and and the New York Times has already dug into it. Here's the the environmental considerations. Here's what we abide by. And then and then, yeah, there'll be a discussion about energy use, but at least you can be grounded in the facts from the start.

Speaker 7: I I I totally I totally agree with you. But I think that the the other aspect of it is just to not set with, oh, well, emissions are bad.

Speaker 2: Sure.

Speaker 7: The most important thing is this. As a country, we have a graph that looks like this in terms of energy production. China's got a graph that looks like this for their energy production. And guess what? All of their energy is also solar now. The news the new stuff coming online. 80% plus of China's energy is solar and storage. Yeah. And so I think we need to get you know, the emissions will come down naturally as the grid transforms to more of a renewable and storage grid. Yeah. People don't really understand how much BESS and battery electric storage has been a huge godsend to the the grid.

Speaker 2: Sure.

Speaker 7: And there's I've already even seen I've I've driven through parts of the country where I've seen anti BESS. Anti battery electric storage Why? Things. And I think there's concerns and these are rightful concerns that like, okay, they might catch fire and, know, cause a fire or emit, you know, chemicals when they're on fire. But this is just like sort of, know, any industrial asset that's generating electricity has like some worst case scenario.

Speaker 2: Yeah. It's the same thing with your with your gas stove. If you leave it on, your your house might

Speaker 9: blow up.

Speaker 7: It's the same with the it's probably the same critiques if you were to go back to automotives. You know, cars in general Refrigerators. You know, when when they were first coming around. But the point is that like

Speaker 2: That's okay.

Speaker 7: That I think that that actually getting that graph back to where America's competitive in terms of generating energy energy, whether it's from renewables or otherwise, it's gonna inherently be 80% mostly renewables anyways from the trajectory that we're going in, I think.

Speaker 2: Yeah. Yeah. No. I mean, that's certainly, like, the the most optimistic view future is a lot of renewables. Very, very cool. Yeah. I have an

Speaker 3: idea, but I'm gonna DM it to you. Okay. Because I don't want it to I be

Speaker 7: don't want it to Thank you guys so much for having

Speaker 2: me Thanks for hopping on.

Speaker 3: Have a great weekend. To see you.

Speaker 2: We'll talk to you soon.

Speaker 3: Talk soon.

Speaker 2: Bye bye.

Speaker 3: Dark's too good. Okay. We are gonna come back and hit a lot more timeline tomorrow. Yeah. I can't wait.

Speaker 2: We'll see you tomorrow. Thank you for watching the show. Great to be back.

Speaker 3: We missed you guys.

Speaker 2: We missed everyone here.

Speaker 3: Loved seeing the whole cast of characters.

Speaker 2: Everyone's still in

Speaker 3: the chat.

Speaker 2: We love you all.

Speaker 3: Actually, why not? Five stars and Bobby Cosmic in there. We got Sean F over in the LinkedIn chat. Oh. We got Cooper as well.

Speaker 2: Acquired taste, the LinkedIn livestream. I like it.

Speaker 3: Yeah.

Speaker 2: Man of taste. Anyway, we will see Got

Speaker 3: Dan there.

Speaker 2: Tomorrow. We have a very special show for you and many more throughout the fall.

Speaker 3: And an honor and a privilege.

Speaker 2: We'll see you tomorrow.

Speaker 3: Goodbye. Cheers. Cheers.

Speaker 1: Boeing Flash.