Gavin Baker on Anthropic's S-1 surprise, compute market going into contango, and why AI diffusion is still early

Speaker 2: You can go from one to the other in just a few minutes. Our next guest is Gavin Baker from Atrades Management, the managing partner. I have Heard of him. He's on the go before. The Baconator. We're gonna bring him in to the TBP and Ultradome and catch up with him. How are doing, Gavin? Good to see you.

Speaker 3: I'm awesome, man. Happiness is a choice. I'm only ever fantastic, awesome, superb,

Speaker 2: phenomenal. I mean, I I completely agree. I love that happiness is a choice, but also it feels like this is a week to be extra happy. Like, the Anthropic s one went out, and it seemed like a beat. It seemed like like if you were worried, oh, the economics are not working secretly behind the scenes and there's gonna be some bombshell in there, the haters have been kinda quiet. Ed Zetrin hasn't posted. Like, things are... You know, it seems like things are on track. But what is your interpretation been this week?

Speaker 3: I do think the Anthropic s one was pretty clearly an upside surprise. Yeah. The fact that they've only burned $10,000,000,000. Yeah. The profitability, the cash generation, the unit economics, they're all very encouraging. The... You know, I put it on x, but I just cannot believe that whatever it is, half of the fortune 500 is adopted in profit and it's 0.1% of their expenses. Yeah. It's just a wild stat. Yeah.

Speaker 2: The the funny thing is that The Internet just come I read that I read that as the Yeah. We can still hear you. No. No. Yeah. We can hear you. I I read that 50%.

Speaker 1: No. What?

Speaker 2: Yeah. Yeah. Oh, just as like like, okay. Yeah. That's incredibly impressive for a company in just a few years to get to half the fortune five hundred or the S and P five hundred on as customers. But I was kind of like, what are the other half of the S and P five hundred doing? I felt like every Fortune five hundred would... Or or S and P five hundred would be multiproduct using everything, but there's a lot of companies that just haven't really gotten through the adoption hiccups of rolling out AI broadly. Maybe some of them are all in on Google or OpenAI. But by and large, I think some of them are just still figuring out how AI can be deployed in their organizations. But is that your read on it that we're still sort of early on the diffusion story in Enterprise?

Speaker 3: Yeah. Very early. I mean, if anything, maybe earlier than I thought we were. Yeah. And it's... I mean, it's just astonishing. Whatever the number is, 67,000,000,000 Yeah. Annualized. If you annualize the reported third quarter, the... You know, wherever the ARR is right now. But to be that big with such low penetration into the Fortune 500 Yeah. Is crazy. It is pretty extraordinary.

Speaker 1: Yeah. Totally. Yeah. How do you... How how do you process the... Like, some of the criticism right now of the AI trade is that you have a very small number of companies driving the majority of the spend. Think I if you can look historically and say that that same dynamic probably played out with like social media ads, where like a very small number of companies were driving a massive amount of the spend. And so you're gonna kinda see power laws in a lot of places. My read on it is that you have, like, there are companies based in San Francisco that are just a thousand times more obsessed with AI than the than the say... Let's say like the long tail of public company employees. And so of course they're gonna spend dramatically more. And it's possible that that long tail never actually cares enough, but they sort of fade to relative obscurity. And you have the disruptors that are saying like, yeah, this technology is real. It works. It's not perfect yet. It's not like a drop in coworker that immediately, you give it a dollar and will give you $10 back. But it's very capable, and so if you obsess over it. And so that's been sort of my overall read. Like, I don't think it's necessarily... Of course, you'd want a more diversified revenue base if you could. But in general, it feels very natural that all the spend is coming from a very small group of people that like realize that something fundamental has changed and they're trying to take every advantage of it while the rest of the world is asleep.

Speaker 3: I might respectfully disagree a little. In S1, there are only 250 accounts spending more than $10,000,000. So actually, know, somebody in the New York Times said that, you know, maybe ten days ago that 80% of the revenue came from eight customers. I was actually shocked how diversified their customer base actually was. And

Speaker 1: if you are... Well, the the number to me was the the... Something like eleven or twelve thousand spending over a $100,000. Like that that feels diversified. Oh, yeah. But I'm but I'm talking about like the ramp data that's saying like, look, like 1% of companies are spending, you know, 90% of the dollars.

Speaker 3: Well, I I mean, the ramp data is what it is, but we have much more authoritative data now from the Anthropic S1. Yeah. Yeah. And it shows a very diversified spending base for Anthropic. Yeah. Now maybe the ramp data is correct for AI overall. Sure. But the Anthropic S1, like relative to a thought that, you know, Meta was spending 10,000,000,000. Yep. And there were these multiple billion dollar plus accounts that were driving it all. That just, it's much more diversified customer base for Anthropic. And then for the AI broadly, I do think that something that has happened since June is you've really seen, you know, first we saw OpenAI really accelerate in the summer and has OpenAI accelerated so did open weight models. And there are so many companies, you know, whether it's Fireworks, whether it's Base ten, whether it's Together, whether it's Modal, whether it's Cognition that are at scale really OpenWeight first and they're all growing faster than either OpenAI or Anthropic. And that was true when OpenAI was really accelerating in the summer. Yeah. And it's still true in October when Anthropic has had clearly a pretty big reacceleration. Like, I just... I'm pretty skeptical that they would have put the, you know, the you know, the blank space for the October ARR in the s one if they didn't know it was gonna be pretty good. Yeah. And I do think it'll be great for the market to get away from these monthly ARR things. Totally. But to me... Yeah. It's interesting.

Speaker 1: Yeah. Like seeing the the the modals, base tens, the fireworks, the together's all out. You can probably... I feel like this is common knowledge. Basically, all... They've all been out in market. And so private markets investors have been getting these sort of updates. And and a lot of these companies have been like starting fundraises, growing dramatically from the period where they got their first term sheet to when they're actually like pulling in capital. And so that that data is like broadly, like I would say the East Coast is just not aware of that at all. Some of them are picking it up but it's not like sort of common knowledge whereas on the West, I would say like over here, people are like, yeah, these companies are... We're already at scale and then they're growing, you know, double digits just during the period of like first term sheet to close or like first close. Well,

Speaker 3: my firm, Atreides led the last fireworks round, and it was actually hard to price it because they were growing so fast. Like, we thought we had a handshake. Yeah. Like, well, we increased revenue. Yesterday's price is not today's price. Yeah. You're like, please, like, let's let's just get the deal done. Yeah. Lock it. I mean, literally, it's like the valuation was going... You know, the multiple was effectively going down, you know, every day. Every day. Yeah. That's crazy. And if anything, it feels like that ecosystem has accelerated and diversified. Yeah. Because earlier this year, cursor was a real big driver for all those inference clouds. Yep. And I mean, the x cursor growth, I think, you know, is is what's really extraordinary enough just because, you know, SpaceX has been insourcing the Cursor compute. Yes. So on on Cursor

Speaker 2: SpaceX, like the post merger integration, it feels like Grokbot has stepped forward in terms of capability. Is the key to growth there... Like, we haven't seen the the models from xAI, like, stunned on a particular benchmark, but the Cursor team has always been fantastic on product and distribution. In the prior era, Grok was putting up pretty remarkable results on the on the benchmarks, but then there were all the political considerations, and the the product was banned in some companies. It feels like Grokbot might be in a particularly different slot because they have that go to market motion through Cursor with the Cursor design team behind it. Is that what's driving growth there? What are you seeing on the GrokBot side that's actually showing, acceleration in that product category?

Speaker 3: I mean, as a user, Rockbot is the most impactful AI product to me and to and to our... You know, to our... The... To the to the firm Yeah. That we've had yet. Like, you know, I clued together all this stuff with Claude code and Yeah. Like really, you know, I'm sure it was user error on my part, you know. Sure. 50 years old. Yeah. I'm doing my best. But Grok Bot, it just makes it so easy. I think I'm up to like 17 Grok Bots. Woah. And every day, I think of a new one to add. That's good.

Speaker 2: Yeah. You're giving me a layer of, somebody, the the the senior manager, senior Grock bot. How are you how are you personally dividing, AI agents across your personal life and your professional life? Because a lot of people will have, like, a family office with a personal assistant who manages, you know, getting gifts for their family members or planning birthday parties. And then separately, they'll have an executive assistant who plans their business travel and their calendar for work stuff. And it feels like we might be entering a world where those two merge together and you have one agent that does everything, but we also might wind up in a world where people are using GrockBot at work or Clogcode at work and then Instinct or Muse and Personal and OpenAI has products in both. And they're sort of like a... An array, but it's a decision for everyone. How have you been grappling with it?

Speaker 3: Well, I guess you would say I I I guess I have executive assistant privilege because my assistant Susan is exceptional. Yeah. And she... Yeah. Exactly. I'm not going anywhere.... Felt the need, you know, to... Yeah. I've I've of course downloaded Instinct and played around with Muse. Sure. But... And I could see they would be super amazing if if I did have someone like Susan in my professional life, but I do. Yeah. But for the more professional use cases, I mean, Grock Bot has just been transformative Yeah. For me. Yeah. There is Like so much as... Yeah. Yeah. So much of investing is making sure that the right information gets to the right person at the right time. Yep. And Grockbot is so good at that. Yeah.

Speaker 2: And there's also something so satisfying with the AI agents of, like, it can be 10PM on a Sunday, and you can kick off, like, a real research effort that, yes, you could probably call someone on your team and say, I need you to... I mean, like, that would be crossing a professional line. All of a sudden, you'd be, like, kind of a hassle of a work... Of a boss, and people might not wanna work there because they're like, yeah. He calls me every time he takes a shower. He has a shower thought, and then I gotta work for six hours. But instead, the AI is like, yeah, boss. I'm right here. Oh, I'd I'd love to look that up for you and spend a 1,000,000 tokens figuring out, you know, with the market size of something or other. But... Yeah.

Speaker 3: Well, my policy is actually anybody at a tradies is always welcome to call me anytime on the weekend. I try not to call people Yeah. On the weekends. Yeah.

Speaker 1: So... How... So I think, like, you know, rewind. This week is, you know, Anthropic s one week, and so there's there's a lot of focus there. Last week, it felt like the focus was, like, the general attention was towards how much supply is coming online next year, how many gigawatts SpaceX is gonna bring online. How are you... What's your, you know, generally you've maintained a sort of bullishness that some other people on the timeline have lost here and there. But how are you processing how the industry can sort of absorb all of that supply if we hit the higher end of some of the ranges being discussed? And and and is it just Jevan's paradox, you know, again and again and again and again until we finally... Every everyone says like, you know, everyone likes to say it, but it's hard to fully internalize.

Speaker 3: Yeah, I think that's I think that's right. It's it's easy to say. It's it's hard to internalize and believe. And October was kind of been a strange month because the price to rent, essentially any kind of a GPU has gone up every day. So the spot market for compute is getting tighter. And it's not just the spot market, you know, it is... I do love reading these primers on x from, you know, commodity and macro investors about these super complicated concepts called backwardation and contango Yeah. And what they might mean for the forward curve of compute and the future price of compute. You know, these are contango backwardation. But, you know, silicon data which I do think is, you know, we're... My firm is an investor in them but I I do think they're the most authoritative data source. Carmen Lee, the founder, stood up at GTC and said that the compute market is now in contango. Mhmm. The... You know, the forward... It's not just that the spot market is tight. If you want a cluster a year from now, you have to pay a lot of money. Yeah. And then this is and this is maybe another, you know, discontinuity between public and private markets. But just the number of companies we have in our portfolio who are like, okay, we got a cluster of 4,000 Blackwells and, you know, and we got it in May or June '26 and we wanna bring on another cluster of 4,000 in September 2027. Yeah. And they're shocked by how much more they have to pay in the future. And it's not like they're... Everybody is unaware of this. Everybody's aware of the supply that's coming on. But even with all of that supply coming on, it is hard for the companies in our portfolio to find compute even well into '27. Mhmm. So for, you know, all the commodity experts who are focused on backwardation and what that implied, I got news for you. We're not in backwardation anymore. Mhmm. And then I do think as far as how much capacity is going to come online, one thing that I think is actually healthy about what's happened in these financing markets is I hope it concentrates capacity and supply in the competent operators where they can finance it through prepayments. You know, you can kind of finance these GPU purchases two ways. By the way, CoreWeave is great. CoreWeave runs GPUs well. They bring a lot... They they are very very good. They just sadly locked in a vast amount of compute and long term contracts that are now way way under market.

Speaker 2: You know? And I should keep doing So they sold their they sold their GPUs for fixed prices, and that's why they're getting hammered right now. It's not that they don't have compute. They're not bringing it on. They have the semi analysis diamond tier. Everyone knows that clusters Yeah. Work. They're good. They are reliable,

Speaker 1: but they just sold for too cheap, and they should have hold... Held on or had variable pricing. Is is you think Elon studied that and said, like, we're not gonna make that same mistake, and that's why they're adopting this more short term

Speaker 3: contract. Yeah. Don't... Elon is a first principles thinker. I don't think he was probably studying CoreWeave or Nevious or anyone Yeah. He was probably reasoning from first principles. But the conclusion he came to is prices are going up. We... If we are willing to sell into the spot market, we can have paybacks well under a year. Yeah. Get big prepayments. Yep. And that's I think that's a better probably financing model for the market we're in. And what I also like about it and by the way, CoreWeave I think is very aware of this. They're trying to get more spot exposure. They're trying to, know, do less of these big long term off take agreements. Mhmm. But standing up a big GPU club, bringing on the power, standing up the cluster, it's like running a Formula One team. Yeah. And a bunch of people who have no real relevant experience, you know, whenever they acquire some land and some power and then, you know, they get a zero down payment off take agreement from someone. And a lot of that is being cleaned up and I think supply is being what this is a forcing function to allocate GPUs to people who can actually bring on a cluster, energize the GPUs, run it well. Like, you know, running a Formula One team, it's like really hard. You gotta like pack everything up, put it on a plane, go to a new city, unpack it, set it up, set the car up. You need all the people, you know, to, like, you you know, whatever. Change the tires, to change the rear wing if you get in a collision, to, you know, do whatever needs to be done during the race, to do the strategy, to communicate with the driver. It's really, really hard if... And it's not like, you know, some of these people, they don't have the relevant experience. You know, Corweave, Crusoe, Nebius, SpaceX, the big hyperscalers, you know, these are companies that could bring on GPUs and energize them and and run them. But... I do think something that was announced at GTC Berlin is actually pretty important for this and that's that DSX pod, which is gonna make it a lot easier, you know. Oh, sure. Seven racks. It comes preassembled. Yeah. You know, you just kind of literally plug it in and it works. Yeah. And right now, when you get the GPUs, you know, maybe if you're if you're SpaceX and you're really, really exceptional execution in the physical world, you can get them energized quickly. But a lot of people, it takes them six months, you know, three months, six months to get them energized, really get them working. And if we can through this new product from Jensen, get that time down. I think that's that's also healthy because that effectively takes a lot of working capital out of the market. You know, you have as these numbers are getting bigger, if it takes six months to energize them, that could be hundreds of billions of dollars of assets that are not generating revenue. So I think that's another that's a product innovation that's going to help with this. But I think this is you know, we we will see who who energizes GPUs in in in '27. I'm I'm confident that the, you know, the companies I named, I think they're gonna I mean, the future is always uncertain, but these are companies with a proven track record of execution. Yeah. And we'll see about others. So I have a follow-up on that.

Speaker 2: One is just one click higher from the Neo Clouds or the Neo Labs and there's been this speculation that Neo Clouds might NeoLabs might sort of pivot into NeoClouds. Is that dynamic gonna look like they signed a multiyear offtake agreement with the NeoCloud, and then they want us to just sell into the spot market? That's what's gonna happen?

Speaker 3: Yes. I mean, what Sarah Fryer said Yeah. And Sarah Fryer is an exceptional CFO. Yeah. She said, you know, everybody made fun of us for signing all these compute commitments and we could sell them all at a three, four, five x premium. Today. Yeah. And she was being literal. Yep. Yep. And so if you if you signed a long term compute contract Yep. Really at any point prior to May 2026 Mhmm. You were way in the money. Yep. You're buying compute for, you know, maybe 10 or fifth... 10 or $15 a watt. Yeah. And you could sell it at a massive premium to that today. Yep. So... And then the point the point, you know, that Carmen made about, you know, the the forward curve being in contango is actually really important and just like... It's not just the spot market. It's tight today. You have to pay vast amount even with all this capacity coming online. You have to pay a truly vast amount to bring on a cluster in mid to late twenty seven. And I think that's something that just maybe public markets are not appreciating even though, you know, it's not all of this is public. You know, Sarah Fryer said that. Yeah. You know, the... Yeah. Yeah. All these inference clouds have kind of given press releases. You hear a bunch of people on X talk about how hard it is to find compute into '27. Yep. Carmen Lee stands up and says, you know, like the market in '27 is is crazy strong. Yeah. So it's all out there but I think for whatever reason, it's not legible to the public markets. Sure. Jordan? What... Talk about your

Speaker 1: outlook on biology as an area that the labs are investing in. It feels very exciting and that there's tremendous potential, but I think the overall concern is around timelines. It's like there's very real costs coming online, infrastructure costs, and opportunities in biology seem like they're very real, but may take years to get these, you know, will almost certainly take years to get drugs in market and actually drive, you know, revenue that would then

Speaker 3: finance. Yeah. I mean, we'll we'll see how long it takes. You know, Montana has an interesting new program for for new drugs, which I think is helpful. But I think a really big unlock, we have a lot of compounds and people have used AI to figure out that you can use maybe a drug that we've had for fifty or sixty years for a very rare disease that's devastating for like ten thousand kids a year and effectively cure that disease. And a friend of mine did this and it's his story to tell, so I'm not going to tell it. But AI has already saved a lot of lives and I do think, you know, the AI industry, it's, you know, they're like negative five out of 100 from like a PR.

Speaker 2: A 100%.

Speaker 1: But they... We gotta be more like pharma, the popular kids. Yeah. Exactly.

Speaker 3: Well, no. They need to start telling these stories. Yeah. Yeah. And by the way, are... You guys are coming to Tomorrow X. We are. Of course. We are. November seventeenth,

Speaker 2: eighteenth. We'll be there with you. The lineup is the lineup is unbelievable. The lineup is crazy. Jensen Huang, David Solomon, Mike Rowan, Lisa Hsu, Stan Druckenmiller, so many more Lipitons. So

Speaker 3: many people. Yep. But the one thing I just wanna say is Yeah. I get, like, 25 emails or texts today saying, hey man, can I come to your conference? And the answer is you can just sign up. Yeah, you can just sign up. Anyone can come. Now there's going be a security screen because of some of the people who are coming and I do, you know, there are unannounced speakers that are you know, comparable in caliber to some of those you reference. So we're gonna have a lot of security at the conference and everybody's... You'll be screened. But you can just sign up. You do not need to ask me. You don't need to ask Antonio. You can just come. And it's like the whole goal is to kind of democratize investing. And in in addition to those companies, you know, we are... We're gonna have Lynn from Fireworks Yeah. Chase from Crusoe Yeah. Scott from Cognition. We're gonna have Max from Lagora. Yeah. We're gonna have a lot of companies. Base 10. Two and two and from Base 10. Yeah. We are gonna have a lot of these CEOs there that are gonna be on a stage and then we're gonna have, you know, dozens of other private CEOs and, you know, it's a... It's an attempt to kind of like open up the aperture of, you know, information for retail investors and democratizes. So like, if you're wondering about coming, just sign up. You don't need to ask me.

Speaker 2: Tomorrow x summit dot com, not Gavin Baker's email. Yes. You can go to a URL.

Speaker 1: On the public or you can get you can get Gavin

Speaker 2: to sign And they will email you when you sign up. Yes. Yeah. Yeah. What what what do you think will change in the content and the conversation between

Speaker 3: last year's event and this year's event? What are you hoping to get across? We did... This is the first time. This is the first one. Oh, sure. Yeah. Yeah. Oh, sorry. Yeah. Yeah. I'm excited. We're gonna have, you know, we're gonna have bysiders doing the fireside chats. We're gonna have... You know, management teams are gonna have the opportunity. We've... If you were an active contributor on X, Substack, Reddit, you get to come for free. Yeah. And then management teams are gonna be able to do a breakout session with all of those ex accounts. If you're you're one of the, you know, four or 500, you know, kind of, you know, financial commentators that we've given a scholarship to, you're gonna get, you know, a lot of management teams are gonna opt in and you're gonna be able to kinda have your own session with the management team to ask your questions, then you're gonna be able to go write what you learned for your audience. And I'm... You know, I think we have a really high quality, you know, I mean, I I I picked most of them. And you don't have to be bullish. You know, I want... You know, I love skeptics. I love bears. Yeah. You just you just have to be polite and nice and And you can be bearish while being polite, nice, and constructive and you know, we're... We have loads of we have loads of skeptics, we have loads of optimists. Like I think it's gonna be great and then I I hope every CEO does, you know, you know, kind of a hit on your show after they're on stage or before. Yeah.

Speaker 1: I'm pretty excited about Might be the longest TBPN episode ever. I think so. Let's see. Yeah. We... How do you deal with how how do you deal with all the all the attention, positive and negative? That mean me? Yeah. For you. For you. Oh, man. I just feel like I... You I... You you talked about your your mindset right at the beginning of the show. Just, know, you know, it's a choice to be happy. But I feel like when it comes... When the spotlight, you know, once every week shines directly on you. There's a lot of love, a little bit of hate. There's...

Speaker 3: Whole the full spectrum of human emotions. We we can call it what it is. I mean, there there there are a lot of there are lot detractors, let's say. I just say, Antonio, who I'm doing the conference with, he says being on x is an exercise in cultivated equanimity. I don't take any of it personally. I'm not on x to be right. Mhmm. I'm... Right now, I would, you know, I'm I'm a responsible optimist, but I'm trying to be open minded to new negative facts and constantly search them out. But I'm really on x, you know, to learn and I, you know, all of the hate, like I try to sift through it for, oh, wow, that is actually a very good compelling bearish argument. You know, like there was an interesting post. I forget it was like PE analyst or LBO analyst, and it just said, hey, you know, the fact that Anthropic is dedicating 74% of their compute to training, you could read it. And on the one hand, it's bullish because they could be generating a lot more revenue. On the other hand, if all this compute is being dedicated towards training and for any reason, somebody decides you need less compute for training, that's a lot of supply that could hit the inference market and hey, wow, that's like a really interesting, you know, bearish perspective. And so, you know, I'm human. I don't... Like I'm human, but it's also just like I'm here to learn. I wanna get to the right answer. I'm sharing my views. If somebody shares a helpful negative perspective, I try to thank them. I need to go like think that person, LBO analyst I think it was. I didn't have time. But yeah, it's an exercise of cultivated equanimity. You can't can't take it personally. Yeah. But I do... I am trying, you know, doing what little I can, you know, has like Gavin Baker, you know, I don't have millions or tens of millions of followers, but I am trying to help paint, I think a more optimistic vision for AI doing what what I can to help the American public understand that, hey, like, you actually want a data center in your town. Know, one of my favorite exchanges was somebody said, well, I'll wait until they start building data centers in the wealthiest county in America. Well, Loudoun County is the wealthiest county in America. They have the highest per capita data centers. Yep.

Speaker 2: Virginia. US East. Yeah. Amazon....

Speaker 3: US East available also. Yep. So just understanding that, like, I understand why, you know, some people are worried. There... There's been a lot of fear. There's, you know, there... We've all seen scary movies, but a lot of awesome things are happening today Yeah. Because of AI for ordinary Americans, for blue collar Americans, for these small towns. We're re industrializing America. We're, you know, massively increasing our electrical generation capacity, which is you cannot re industrialize without power. That's job number one. So I think a lot of good things are happening and I'm just trying to do what little I can to at least tell that side of the story and then be pretty balanced. Like, you know, Anthropic, I called it like I saw it in the summer. They were losing market share. Mhmm. I'm calling it like I see it in October. They are reaccelerating Yeah. And gaining share. Yeah. The s one, it was an upside surprise to me. Yep. I'm trying to call balls and strikes Sure. Because my job is to just get it right. Yeah.

Speaker 1: Jordan... And it's funny because, you know, people will get so flustered by, you know, seeing different posts on x. Sure. But imagine how boring x would be if no one ever took a stand. Oh, yeah. It was just like, well, it might be this. Yeah. It might be that. Yeah. Yeah. Yeah. And it might be this. No. No. Every post has be that. It's over or or we're back. This is the best thing ever in the world. Because then we can have a debate. At least you took a stand. Yes. Yeah. It's great. Yes. Jordy mentioned,

Speaker 2: getting sharp on bio, starting to think about opportunities there. How deep have you gone in the AI stack? I saw a a funny post that was like, you could spend all your time thinking about OpenAI and Anthropic and Google or... And then, you know, meet all the neo clouds and, meet Lynn and Tuan and figure out what's going on in the private markets, or you could just buy copper. And you could just sit there and hold copper. Right? Because, like Yeah. It's almost a perfect proxy or something like that. But how far have you gone down into energy infrastructure, commodities? Like, how how sharp are you on those? How how relevant or interesting is the... Are those markets to you, in this world since they do seem adjacent?

Speaker 3: No. I pay close attention to all of those. I ran a diversified fund in prior life for nine years. You know, I was an energy investor. Yeah. You know, natural resources. I always... Many years, did would do like kind of marketing meetings with the with the gold analyst at at at my my prior employer Fidelity. So I'd always, you know, knew about the merits of gold from a portfolio construction perspective would always have it in the fund. By the way, just because it triggers people, I wanna say it. I find it so amusing how upset gold bulls get at the idea of asteroid mining. Like, it is the idea of asteroid mining. Oh, yeah. No one no one has ever been... I've never gotten more hate Yeah. Than from the gold crowd about the idea of asteroid binding in the in the asteroid space....

Speaker 2: That's so funny. I mean, it was like, talk about a challenge to your world's view. Wait. Are are they mad about that? It's it's one of those things you have to... Like, you need to imagine technological

Speaker 1: disruption. Right? Like Oh, look at the diamond industry. Yeah. Right? Totally. Yes. Absolutely. If you understood that that technology disruption was possible, you probably

Speaker 3: built labs, like, you know, twenty years ago. You would have done something different with that, you know, with the diamonds in your family. But but as far as... I mean, I do... We have spent a lot of time on, like, energy, on the industrial infrastructure, on on natural resources, but we have not made it a big part of the portfolio. We've done some things in private markets as far as trying to help with rare earths. Mhmm. And but this is not through acquiring minds. Yeah. It's more you know, the problem with rare earths, it's not that they're rare, it's that refining them is a very dirty process. So we we've we've you know, that we've invested in a company that you know, has a chemical process for refining rare earths and you know, I actually think DARPA has done some pretty smart stuff. Like they kind of have a lot of different efforts around this. But yeah, I mean I try to pay as close attention to all of it as I can because you you know, as an investor, you you you never know where a weak but important signal is gonna come from. And so I wanna cast as wide a net as possible. Mhmm. But then also kind of focus maybe the portfolio on the areas where I do feel like maybe we have the the biggest competitive advantage as a firm.

Speaker 2: How are you thinking about the evolution of, like, the the marginal capital decider sort of changing in 2027 potentially? Like, if you go back a couple of years, you have essentially, like, seed stage VCs making bets on these AI labs and then eventually some, know, more scaled up venture firms being important capital partners. Some of them have taken board seats, but they are not deciding the race now. It's big hedge funds, pre IPO rounds. But we're coming up to a world where the fidelities of the world, the insurance agencies are gonna be involved, and the insurance funds and sovereign wealth funds are gonna be increasingly involved in financing the build out. Like, what does the next year look like from a perspective of, like, how we get the big dollars into the AI build out?

Speaker 3: I mean, I think you named all the big dollar sources. Yeah. And something that I think is pretty underappreciated is, you know, American mutual funds. Okay. You are limited in the percentage you can hold in a liquid asset. Sure. And so SpaceX and Anthropic Yep. Going public Yep. Is actually gonna free up a huge amount of buying power Interesting. In private markets Yep. Once those are fully unlocked because they have to be public and unlocked.: Interesting.: So I think you will see mutual funds, you know, and they they they've always been involved. You know, my former colleagues, Capital Research, Price, M Sam, G Sam, you know, Franklin Templeton. If I forgot anyone, I'm sorry. I love you all. But like they've been they've been pretty involved. I mean, the sovereigns have been very involved, particularly, you know, particularly the ones in the GCC and particularly the ones in The UAE. Yeah. Like MGX. Mubadala. Mubadala, all the sovereigns there. I mean, Atreides and Valor, we co led Crusoe with Mubadala. Yeah. So I think the The UAE in particular has been extremely front footed Yeah. With all their sovereigns with respect to AI. Yeah.

Speaker 2: And now Apollo's taking a stake in Mubadala, which sort of completes the the cycle.

Speaker 3: Yes. Yeah. But I mean, that that's gonna have to evolve. But it's also I do think we're probably getting... Has these underpriced... So all these clouds, they signed contracts at well below what are below market values. And has those contracts reprice higher? Has they bring on more compute with more spot like we discussed with, you know, the same thing that CoreWeave is is is trying to do. I do think you're going to see... Like, there's a pretty big acceleration in the clouds last quarter. Mhmm. And, you know, forget relative to expectations this or that, but I think you're gonna see a pretty continuous acceleration in the sum of the big hyperscalers cloud revenue growth, the neo clouds, that number is just going to continue to accelerate. And then, you know, it's it's dropping down at very high margins so that, you know, operating cash flow is following. And then you're gonna be able to, I think, finance probably more than people think of the 2027 build out out of cash flow. Like I don't know if we've seen the peak of external financing but I think we're getting close. Yeah.

Speaker 2: Yeah. That's... And that'll be really helpful. Totally. Yeah. No. No one can complain about that. That's just, yeah, investing in the future. AI skeptics will be...

Speaker 3: In a bad place. In a horrible place. We're gonna have to check on check on them. For sure. You're gonna have to go around. And look, maybe I'm maybe I'm wrong and, you know, but, like, I will change my mind when the facts change and I'm just gonna try and keep calling balls and strikes. And then trying to, you know, be an advocate to help understand ordinary Americans that this technology can and should be awesome for them. Yeah. Yeah. Yeah. I'm I'm very interested to see

Speaker 1: how Anthropic and OpenAI OpenAI becoming public companies, like, impacts, like, overall sentiment, specifically on x. Because right now, you have such a small number of people that actually hold shares in these companies. Right? And so like, maybe there's 50,000 people that have some incentive to be relatively optimistic. One, you know, or you know, you should be able to see both the bull case and the bear case for for any company. But when that changes and you have millions of people globally that suddenly can have exposure, how does sentiment change? Right? And I think people are gonna be... I think it will be less... Much less extreme once you have the sort of middle of the road investor has some exposure. Right? And it's not like totally binary where like very very small number of people have exposure like... And and and it's direct exposure. Right? Because if you happen to own shares through some retirement fund or through a hyperscaler or things like that,

Speaker 3: it... It's not... Maybe and maybe some of them will do what Elon did, you know. Every child in America is gonna have a share of SpaceX. Sure. That's awesome. I think that's way better for America than setting up some foundation Yeah. That, you know, a board or a bunch of bureaucrats are gonna decide how to allocate the money. Yeah. You know, just give people the money. Yeah. Like I hope, like... That's simple. Yeah. Let people make individual decisions. Yeah. And you know, I would, you know, I would encourage more company and more, you know, more wealthy people in America to do what Elon and Michael Dell and and of course, you know, my friend Brad Kirchner Yeah. Have done.

Speaker 2: That's great. That's awesome for America and great for capitalism. Yeah. And it's... It feels so important that that infrastructure got built before the big liquidity wave, before SpaceX goes public so that it's there and it's been tested and it's been implemented and rolled out so that anyone who wants to participate in that can actually go and, like, take advantage of it without needing to, you know, say, oh, it'd be nice if the government had a program that would let let me give shares directly to the American populace. Like, nope. It's there. It works. It's up to date. Like, it's in the App Store. You can go download it. Yeah. Just give give people the money. Yeah. Everybody stake in capitalism. Yeah. No. I completely agree. It's great. Well, thank you so We'll see you very soon. We'll see you. Yeah. Tomorrowxsummit.com. Tomorrowxsummit, November seventeenth, eighteenth, Austin, Texas. We'll see you there. Have a great rest of your day. Cheers, guys. Good to see you. Goodbye.