The Enshittifinancial Crisis: Part Three

0:00This is an iHeart Podcast. Guaranteed Human.

0:31Such good feelings. Can you hypnotize someone into sleeping with you? I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. Mind Games, a new podcast exploring NLP, a.k.a. neurolinguistic programming. Is it a self-help miracle, a shady hypnosis scam, or both? Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Hello, hello, all my people. What's up? It's Questlove. Recently, I had the opportunity to sit down with the one and only A$AP Rocky. He reflects on his journey from Harlem roots to global icon status and discovering the hip-hop origin of his name.

1:14The ledge was on the TV. Rakim had the Buckethead Kangol join on. Pops was like, that's Rakim. That's who you named after. I just, damn the f***ing f***ing swag. But listen to the Questlove show on the iHeartRadio app, Apple Podcasts, or wherever you get your podcast. A new year doesn't ask us to become someone new. It invites us back home to ourselves. I'm Mike Della Rocha, host of Sacred Lessons, a space for men to pause, reflect, and heal. This year, we're talking honestly about mental health, relationships, and the patterns we're ready to release. If you're looking for clarity, connection, and healthier ways to show up in your life, Sacred Lessons is here for you.

1:58Listen to Sacred Lessons with Mike Delaroach on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

2:09Hi, I'm Ed Zetron, and welcome to Better Offline.

2:24That's right, folks. We're back for the third part of our four-part series about the terminal stage of the inshittification process, the inshittification of the financial markets. So far, we've talked about the inshittification of the stock market, the complicity of the analysts and the media, and how venture capital will be the canary in the coal mine for any eventual collapse. Venture capital is both the perpetrator and the victim of the AI bubble, and it's worth exploring how it came to this point. Now, hang on. on these channel boys folks we haven't seen values this big in a long time these are the biggest numbers we've ever seen they're simply tremendous open ass maybe with 830 billion can you believe that they lose so much money but folks we don't mind clammy sam open they call him clammy or tells everybody he's going to give them 1 billion dollars and we love him data centers are going to have the biggest deals we've ever seen even even if we have to work with dario sorry to those of you who don't like that voice it was only about 30 seconds you see right now ai startups are big exciting news for the limited partners funding large language model companies things feel exciting because the value of the assets under management aum are going up which is nothing dodgy per se but it's just how vcs value things and if they're valuing ai stocks well that's how their fees are getting paid because the thingies they've invested in are worth more money and now limited partners are paying them a percentage so they can sit in an apartment that costs too much not see friends because they just sit online posting for 11 hours a day yeah and then they can lose all the money in the future i guess investing early in open ai allows a venture capitalist or even an asset manager like blackstone which invested in 2024 to say it has a big holding and a big increase in its AUM ai stocks make venture capitalists who bet on them two years ago look like geniuses on paper you got in early on open ai anthropic cursor cognition perplexity or any other company that loves to burn several dollars per dollar of revenue you have a big beautiful number the biggest you've ever seen and your limited partners need to pay you a fee just to manage it venture capital has not seen valuations like this in a long time and on paper it feels a lot like a lot of vcs got in on companies worth billions of dollars right on paper that is On paper, Cognition is worth$10.2 billion, Perplexity$18 billion, Cursor$29.3 billion, Lovable$6.6 billion, Cohere$6.8 billion, Replit$3 billion, Glean$7.2 billion.

4:45Mass evaluations of companies that all basically do products that OpenAI or Anthropic or Amazon or Google or any number of Chinese companies are already working to clone. They're all losing lots of money too and have no path to profitability of any kind. But right now the numbers are simply tremendous, folks. I've heard venture capitalists tell me that there are times when they have to agree to invest with little to no information or know that they'll lose the opportunity to another sucker. I mean, investor. I've heard venture capitalists say they don't have any insight into finances, but we love the numbers, folks.

5:18They're simply tremendous. We love it. Let me tell you how not tremendous they are. I had a source recently suggest that nobody who invested past OpenAI's$100 billion valuation have any information rights. And what that means is they literally do not know anything about the company. They don't know anything other than what the company will tell them, and the company doesn't have to tell them shit, which means they don't know the revenues, they don't know the costs, they only know what new ridiculous stat Sarah Fryer, CFO of OpenAI, has farted out. They posted recently that$20 billion annualized revenue.

5:52yeah i think that's complete nonsense but they want to do that so that you go open ai made 20 billion dollars in 2025 fuck that i don't even think they made 10 now venture capitalists would argue of course that they'd say i'm insane they they would say they would think me mad and they would say that the growth is obviously there while pointing to whatever startup has made 100 million dollars in annualized recurring revenue which is 8.3 million dollars a month by the way all while not discussing the underlying operating expenses. The idea, I believe, is that the current spate of AI spending is only set to increase the next year, and that will somehow lead to fixing the margins, I think?

6:34Venture capitalists staunchly refuse to learn anything other than invest in growth and then profit from growth, even if profiting from growth doesn't appear to be happening anymore. In reality, venture capital shouldn't have touched LLMs with a shitty stick because the margins were obviously blatantly bad from the very beginning. We knew OpenAI would lose$5 billion in the middle of 2024. The same venture capital climate would have fucking panicked, but instead chose to double, triple, and quadruple down. I believe that massive valuation drawdowns are a certainty for AI companies. And by that, I mean, these companies will end up being revalued and the number will be smaller than the big number everybody fell in love with.

7:14Look, venture capitalists, I got to ask you a question. What happens if OpenAI dies? Do you think this will make investors interested in funding or acquiring other AI startups? How much longer are we going to do this? When will venture capital realize it's setting itself up for a disaster? And what exactly is the plan? OpenAI and Anthropic will suck the lakes dry like an NVIDIA GPU named after Nancy Reagan. How is this meant to continue and what will be left when it does? The answer is simple. There won't be any money for venture capital for a while. Those AI holdings are going to be worth at best 50 % if they retain any value at all.

7:52Once one of these startups die, once there's a major casualty, a panic will ensue, sending venture capitalists scrambling to get their holdings acquired, by which I mean sold to someone else, until there's little or no investor interest left. Why would limited partners ever trust venture capital after this? Why would anybody? Because based on the past four years, it doesn't appear that venture capital is actually good at investing money. It just got lucky year after year until there were a few ideas that they could sell for hundreds of millions or billions of dollars. And now we're out of them.

8:22We're out. I think we're out. I think there's probably still some, but I think the era of the unicorn might be dead for a while. Venture capital believed it knew better as it turned its back on basic business fundamentals, starting with Clubhouse, crypto, the metaverse, and now generative AI. Yet they're far from the only fuckwits on the dickhead express. Because yes, I am going to talk about data centers. Per Bloomberg, there were at least$178.5 billion in data center credit deals in the US in 2025, rivaling the$215.4 billion invested in US venture capital in 2024 and the$197.2 billion invested in US venture capital through August 7th, 2025, and over$100 billion more than the$60.69 billion of data center deals done in 2024.

9:12That's really worrying. It's like more than 100 % more. I'm very worried, and I'm going to tell you why, using a company called CoreWeave that I've been actively warning people about since March. And I get a little crazy around CoreWeave because I have I've had the CoreWeave conversation a lot, and I've seen people straight up just steal the title of my articles as they come to this realization six to seven months later. But CoreWeave is a mess, and CoreWeave was obviously always a mess. And everyone has been saying CoreWeave's fine because they went public. CoreWeave is not fine. All right? Let's talk about CoreWeave.

9:56CoreWeave is something called a NeoCloud. It's a company that builds data centers by renting out and they build data centers, they fill them full of GPUs and they rent them to people. They rent something called AI Compute. And as I explained a few months ago, they do so by building data centers backed by endless debt. And I quote myself. Saying up a NeoCloud is expensive. Even if the company in question already has data centers, as CoreWeave did with its cryptocurrency mining operation, AI requires completely new data center infrastructure to house and cool the GPUs. And those GPUs also need paying for.

10:28And then there's the other stuff, like power, water, and the other bits of the computer, the CPU, the motherboard, the memory, the storage, and the housing, and the power supply, and all that good stuff. As a result, these NeoClouds are forced to raise billions of dollars in debt, which they collateralize using the GPUs they already have, along with contracts from customers which they use to buy more GPUs. CoreWeb, for example, has$25 billion in debt on an estimated$5.35 billion in revenue, losing hundreds of billions of dollars in a quarter. You know who also invests in these neoclouts? NVIDIA, the people who make the GPUs.

11:04NVIDIA is also one of CoreWeave's largest customers, accounting for 50 % of its revenue in 2024, and just signed a deal to buy$6.3 billion of any capacity that CoreWeave can't otherwise sell to someone else through 2032, an extension of a$1.3 billion deal from 2023 reported by the information. Oh, and NVIDIA was the anchor investor of CoreWeave's IPO, putting in$250 million. CoreWeave is also one of the largest providers of AI compute in the world and its business model is indicative of how most data center companies make money. In fact I'd argue that they are probably doing better because they have the backing of everyone.

11:40Now you may think that's a too big to fail thing. Not really. It just means that they're kind of the village bicycle of AI compute. Grossness aside let me explain how this works. First CoreWeave signs contracts such as its$14 billion deal with Meta or its$22.5 billion deal with OpenAI before it has the physical infrastructure to actually service them. It then raises debt using this contract as collateral, orders GPUs from NVIDIA. Those take three months to arrive and then another three months to install, at which point monthly client payments begin. And I should also add that that's kind of taken out of deferred revenue that the customer has already put down.

12:16To really simplify this, data center developers are raising money months up to a year before they ever expect to make a penny of revenue, not profit. In fact, I can find no consistent answer to how long a data center takes to build, and the answer here is pretty important because that's how the money is going to get made from the data centers we're building fucking everywhere. You may also notice that monthly payments in the chart that I linked, which I should have mentioned, begin at 6 to 30 months, a curious and broad blob of time. You see, data centers are extremely difficult to build, and the concept of an AI data center is barely a few years old, with the concepts of hundreds of megawatts in one data center campus entirely made up of AI GPUs barely two years old.

12:58GPUs? Which means basically everybody building one is doing so for the first time, and even experienced developers are running into problems. For example, Core Scientific, CoreWeave's weird partner organization it tried and failed to buy, that is truly different despite the similar name has been trying to convert its denton texas cryptocurrency mining data center into an ai data center since november 2024 specifically so that core weave can rent it to microsoft for open ai this hasn't gone well and this is when things get weird the wall street journal reported a few weeks ago that denton had been racked with several months of delays thanks to rainstorms preventing contractors and pouring concrete concrete i'm going with it.

13:38It's concrete now. We're calling it concrete. I originally within this script wrote down that this was a plausible thing. I thought that this was normal. However, I should add something. This may actually be bollocks. So I'm a psycho and I went and I looked up weather in Abilene, Texas. And it turns out that there were like 11 days with rain total. and there was only, I think on June 3rd and September 22nd, there were rainstorms or thunderstorms of any kind. I think there are only two days where rain was over 0.1 inches. The people I've talked to about this deal are saying it wouldn't be weather, it would actually just be money.

14:22Nevertheless, those are things that are stopping them building a 260 megawatt data center and that's fucking nothing compared to the gigawatts that OpenAI claims to want to build. And what this means, by the way, is that CoreWeave can't actually get paid by OpenAI because per its contract, customers don't have to stop paying until the computer is actually available. This is a very important deal to know for literally any data center development you've ever heard of or seen.

14:56What if mind control is real? If you could control the behavior of anybody around you, what kind of life would you have? Can you hypnotically persuade someone to buy a car? When you look at your car, you're going to become overwhelmed with such good feelings. Can you hypnotize someone into sleeping with you? I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. NLP, aka Neuro Linguistic Programming, is a blend of hypnosis, linguistics, and psychology. Fans say it's like finally getting a user manual for your brain.

15:32It's about engineering consciousness. Mind Games is the story of NLP, its crazy cast of disciples, and the fake doctor who invented it at a New Age commune and sold it to guys in suits. He stood trial for murder and got acquitted. The biggest mind game of all? NLP might actually work. This is wild. Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

16:23It's like, damn, that was a f***ing guy swag. Rocky offers a window into not only a boundary-breaking artist, but as a man committed to fusing creative ideas, community, and remaining unapologetically himself. Have you ever gotten roasted for any of your outfits? For sure. Some people don't be getting the vision. Look, they can roast me, they can cook me, they can deep-fry me, they can saute whatever they want. There's nobody who can f*** with my fashion sense and my taste is impeccable. I'm just like I impress myself a lot It's an amazing conversation One you definitely don't want to miss So listen to the Questlove show On the iHeartRadio app Apple Podcasts Or wherever you get your podcasts Run a business and not thinking about podcasting?

17:10Think again More Americans listen to podcasts Than ad-supported streaming music From Spotify and Pandora And as the number one podcaster iHeart's twice as large as the next two combined So whatever your customers listen to, they'll hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business? Think iHeart. Streaming, radio, and podcasting. Let us show you at iHeartAdvertising.com. That's iHeartAdvertising.com. Every January, we're encouraged to start over. But what if this year is about slowing down and learning how to understand ourselves more deeply?

17:47What if this year is about giving ourselves permission to feel what we've been holding and knowing that it's okay to ask for help? I'm Mike De La Rocha, host of Sacred Lessons. This is a podcast for men navigating stress, emotional health, fatherhood, identity, and the unspoken pressures we're taught to carry alone. We talk honestly about mental health, about healing generational wounds, and about learning how to show up with more presence and care. If you want a healthier relationship with yourself and the people you love, then Sacred Lessons is the podcast for you. Listen to Sacred Lessons with Mike De La Rocha on America's number one podcast network, iHeart.

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18:41As of Corweave's Q3 2025 earnings, they're sitting on$1.1 billion in deferred revenue, that's income for services not yet rendered, up from$951 million in Q2 and$436 million in Q1 2025. This means deposits have been made, but the contract is yet to be serviced. Now, I'm also a curious little creeper, so I went and found the 921-page$2.6 billion DDTL, it's Delayed Draw Term Loan 3.0 Loan Agreement, between CoreWeave and banks including Morgan Stanley, Mitsubishi UFG, and Goldman Sachs, and in doing so, I learned something. Well, first of all, OpenAI appears to have net 360 payment terms from CoreWeave, meaning that it can literally pay a year from invoice.

19:26Second, CoreWeave is required to maintain something called a contract realization ratio of 0.85 times, meaning that CoreWeave has to make at least 85 cents of every expected dollar or it is in default of its loan this is important to note because it means that if say open ai decides not to pay up in a year call weave will be up shit creek without a paddle now i apologize that suggests that call weave isn't already up shit creek or that it might have a paddle of some sort buried inside nvidia's latest earnings on page 17 there's a little clue and i quote in the third quarter of fiscal year 2026 we entered into an agreement to guarantee a partner's facility lease obligations in the event of their default.

20:07The agreement allows our partner to secure a limited availability facility lease backed by our credit profile in exchange for issuing us warrants. The maximum gross exposure is$860 million, which is reduced as the partner makes payments to the leaser over five years. The partner has placed$470 million in escrow and executed an agreement to sell the data center cloud capacity, mitigating our default risk. Credit where credit is due. Eagle-eyed analyst JustDario caught this in November, but in CoreWeave's condensed consolidated balance sheets, there sits a$477.5 million line item under restricted cash and cash equivalents non-current.

20:42Though this might not be NVIDIA's escrow, this number shifted from$617 in Q1 to$340 million in Q2, it lines up all too precisely. And who else would NVIDIA be guaranteeing? In any case, CoreWeave is likely to get the best deals in data-centered debt outside of Oracle, It has top-tier financiers, who I'll get to in a little bit, the full-backing of NVIDIA, who is both an investor, customer, and apparent financial backstop, and also CoreWeave as a customer of theirs, and the ability to raise debt quickly. CoreWeave's deals are likely indicative of how data-centered financing takes place, and those top-tier financiers, they basically beat in every single deal.

21:22It's actually really worrying when you lay it all out, which is exactly what I'm going to do. So who's actually paying for this shit? I went and dug through a pile of 26 prominent data center loan deals, including the proposed$38 billion debt package that Oracle and Vantage data center partners are raising for Stargate, Shackleford and Wisconsin, Stargate, Abilene, New Mexico, and of course, SoftBank's$15 billion bridge loan, which I included for a reason that will become obvious shortly, and multiple core weave loans. I found a few commonalities and forgive me, I'm about to say a lot of names and numbers, so you might want to pull up the newsletter to read along with it like a sing-along now blue owl blue owl we love blue owl folks they were present in every single stargate deal other than the 38 billion dollar deal that's being raised by vantage that is yet to close blue owl was also involved in the 1.3 billion dollar australian data set in a debt package by virtue of owning stack infrastructure remember that name mufg muvg also mitsubishi ufj financial group is their full name but i like in Muvg was present in 17 out of 26 of the deals including three separate Corwee financing Stargate New Mexico an 18 billion dollar deal the alleged Stargate 38 billion dollar deal SoftBank's bridge loan which they had to raise by the way to fund OpenAI and a 5 billion dollar green loan package for Vantage data centers who you might have just heard me say.

22:45JP Morgan Chase was involved in eight deals and they were involved in some of the largest too Corweave's October 2024 financing, their third delayed draw term loan, and November financing as well, the funding behind Stargate Abilene, the$38 billion Oracle deal, and Blue Owl's acquisition of IPI Partners in 2024. And yes, they were also part of SoftBank's bridge loan. Now, let's not forget Deutsche Bank, who have never done anything dodgy ever. Do not Google what Deutsche Bank has done with banks or particular fellas. Deutsche Bank, they're involved in SoftBank's bridge loan and three smaller deals, a data center in Seoul, Corweb's 2024 debt, Corweb's November financing, and a data center deal in Latin America, as well as a$610 million data center project in Virginia and a billion euro data center project in Germany that was invested in with NVIDIA.

23:34BNP Paribas, seven deals, Corweb's delayed draw turn loan three, Stargate New Mexico, Stargate Wisconsin and Texas, IPI partners of Blue Owl, that data center deal and so and another data center in Chile Morgan Stanley you remember Morgan Stanley don't you well they were in eight of these fucking things call we've October 2024 loan loan three November loan Stargate New Mexico Stargate with Vantage the 38 billion dollar one I just talked about and one with EQT edge connects well they I don't I don't need to go into detail it's another fucking data center oh and they were also in SoftBank's bridge loan which they needed to to find open ai now here's another name that you're going to hear in the future smbc sumitomo mitsui banking corporation i must say the japanese not on the name of fucking company anyway they're in seven deals all notable core weaves ddtl 3.0 and november financing loans stargate new mexico stargate texas wisconsin that's that 38 billion dollar one a data center in rowan maryland also involving muvc td securities and hsbc as well as data center deals in Chile and Latin America that you've already heard about.

24:41Oh, and guess what? Soft banks, bridge loan, which they use to invest in OpenAI. There are a lot more data center deals than these, but I wanted to tell you exactly how centralized they are. I also really need you to know how worrying that is because literally every part of this pie is being funded by like eight to nine banks. If OpenAI is raising money for a date, well, they wouldn't raise it. It would be Oracle or CoreWeave or have you racing for a data center. One of these people is in it or companies. They're not people. It's really worrying. It's worrying how centralized this is. And the largest deals, such as the$38 billion Stargate Texas Wisconsin deal or the$18 billion Stargate New Mexico deal, both involved Goldman Sachs, BNP Paribas, SMBC and MUFG.

25:29And all four of those companies have at some point funded CoreWeave. In fact, everybody appears to have funded CoreWeave at some point. Citibank, Credit Agricole, Societe Generale, Wells Fargo, Carlisle, Blackstone, Blackrock, Barclays, Magnetar, and Jefferies, to name a few. And if you've been watching the news recently, you may have heard that term, word Jefferies, to refer to the company that invested in first brands and their exposure. Anyway.

26:07What if mind control is real? If you could control the behavior of anybody around you, what kind of life would you have? Can you hypnotically persuade someone to buy a car? When you look at your car, you're going to become overwhelmed with such good feelings. Can you hypnotize someone into sleeping with you? I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. NLP, a.k.a. Neuro Linguistic Programming, is a blend of hypnosis, linguistics, and psychology. Fans say it's like finally getting a user manual for your brain.

26:43It's about engineering consciousness. Mind Games is the story of NLP, its crazy cast of disciples, and the fake doctor who invented it at a New Age commune and sold it to guys in suits. He stood trial for murder and got acquitted. The biggest mind game of all? NLP might actually work. This is wild. Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

27:34It's like, damn, that f***er got swag. Rocky offers a window into not only a boundary-breaking artist, but as a man committed to fusing creative ideas, community, and remaining unapologetically himself. Have you ever gotten roasted for any of your outfits? For sure. Some people don't be getting the vision. Look, they can roast me, they can cook me, they can deep-fry me, they can saute whatever they want. There's nobody who can f*** with my fashion sense and my taste is impeccable. I'm just like I impress myself a lot It's an amazing conversation One you definitely don't want to miss So listen to the Questlove show On the iHeartRadio app Apple Podcasts Or wherever you get your podcasts Run a business and not thinking about podcasting?