E396: The Future of Compute, Data Centers, and AI

0:00You look at Venezuela, for example, they have the largest oil reserves. You take that away, the government starts collapsing. And I think the same way is true for compute going forward. It's a national strategic commodity that needs to be treated that way and needs to have a market built around it. You're trying to size the market. How do you go about sizing market-like compute? The projection is$7 trillion. If you take a look at the world today, where is most of the money being poured into? It's all in data centers. Every single sovereign wealth fund, every single private equity firm, any person with capital has an investment somehow into a data center project.

0:33And that just shows the sheer of construction that we are going to be doing in the next few years.

0:46Kush, you're founder and CEO of Oren, and you created an exchange for data compute. Why create that? We basically create an exchange for compute. The reason is we think compute is going to become the next commodity of the future. Every enterprise today, and if you look back 100 years from now, everything was powered by oil, right? The clothes you wear, most of the enterprises, the largest ones, were powered by some sort of form of oil, whether that's jet fuel or crude oil or any refined form of that. And I think today, the largest economic input for our society is going to be compute, and whether that's as a usage of like AI or different tools off of that.

1:23So we think there needs to be a liquid market that exists for compute the same way exists for any other commodity. Commodity markets in general exist mostly for people to hedge away the risk of the commodity. That's the base case. What's the base case for compute? It's probably the same reason, right? Today, enterprise's largest cost, people talk about, oh, we're spending this many dollars on tokens. We're spending this many dollars on compute. Compute will become the largest cost for any enterprise in the next five, 10 years in the future. And there needs to be the same way to sort of hedge away that risk.

1:56Maybe you could explain to a layman who your early customers are and why are they using Orn. Take any inference provider, for example, right? Their demand is very spiky. You don't know when someone's going to click generate on your application that you're building. And so the inference providers need to serve their customers in a very spiky way, right? People come in and buy tokens a lot for one hour. They won't buy any for the next hour. So that demand inherently needs to be hedged in a way that it's a futures market. Because you have to be buying on demand or in like a month to month sense or a week to week sense, where you have to buy in short term chunks because you don't know what the long term outlook is compared to many different companies like OpenAI or Anthropic, where they have like a base level of compute.

2:37I think that we work primarily with a lot of the inference providers today. Maybe you could double click on why compute is such a volatile market today and whether you expect that to continue. Today, look, demand outpaces supply by a lot. And so that creates a huge gap. And it's just a simple supply and demand economics question about what has happening in the market. Volatility in the market just depends based off of what's happening in a day-to-day sort of sense. It's like, hey, this cluster just came online. Then maybe supply increases a bit and so demand decreases. And then also, if a new model comes out, usually demand outgrows supply by a lot.

3:12So there's a lot of factors like that that take place in the market. The reason we think computers probably more a commodity in the world sort of thinks of it this way. If you look at the war in Iran, the one thing that they're also targeting now is oil fields and data centers. So clearly, I think the world starts to realize that compute is a very strategic asset as well. If you take a step back and you think about why is compute a strategic asset, you think, well, if all the country's applications and all their data infrastructure is built on this compute, If you knock out that compute layer, you now have applications that are not working, businesses that are not being productive.

3:50And the country starts to grow at a slower pace than a country that has access to compute. Exactly. And it's just like a commodity market, right? You look at Venezuela, for example, they have the largest oil reserves. You take that away, the government sort of starts collapsing. And I think the same way is true for compute going forward. It's a national strategic commodity that needs to be treated that way and needs to have a market built around it. Maybe you could talk about the stack and AI, who the different players are and where you plan on. You can kind of think of it in like five different verticals.

4:21I think it's the easiest example that people use. So there's the whole application layer companies. So think of like Harvey, Lagora, Replit, Cursor, all these companies that build applications on top of the models. Then there's the model layer companies. So you can think of these as like OpenAI, Anthropic, XAI or SpaceX now. and those sort of companies that build these models. Below them, we say that there's the infrastructure companies, right? And so you take a look at these and these are like CoreWeave, Nibius, Crusoe, AWS, GCP, Azure, all the cloud sort of platforms. Below that, there's usually construction or co-location facilities that help turn that energy from a greenfield into a co-location data center.

5:07And so think of those servers as like Brookfield, for example, is a really good data center. Yeah, exactly. They build the actual physical shelves of the data centers. It's just construction at the end of the day. And then below that is all the energy companies. So you look at like Bloom Energy, for example, is one of the largest ones or SB Energy. GE is a huge one that they've been building turbines now for data centers. And so that's kind of like the stack that we look at today. A lot of the money today is being poured into all these like application layer companies, right? And obviously, below the stock, there's the chip companies.

5:37I forgot to mention those, like the NVIDIA, AMD. That's at the very core. And who needs to hedge their compute them on? It's the model companies and the sort of data center companies. That's the stock that we play in right between both of those. And the main reason is because the model companies are the ones that buy a lot of the compute and they sell tokens off of that. And then the data center companies are the ones that are selling the compute itself. They're the farmers. in the, if you think about commodity market, like who's buying corn and then who's selling corn, the farmers are the data centers and the buyers of the corn are the model companies.

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7:32All of it lives inside the AlphaSense platform, trusted by 75 % of the world's top hedge funds alongside filings, broker research, news, and more than 240 ,000 expert call transcripts, turning raw conversations into comparable, auditable insight. Take advantage of AlphaSense AI-led expert calls now. The first to see wins. The rest follow. Learn more at alpha-sense.com slash how I invest. It's interesting because these markets exist in relationship with each other and they influence each other. The recent example is Colossus sold a lot of its offtake to Anthropic in this famous deal between Anthropic and SpaceX.

8:13And because of that, invariably, SpaceX could build more data centers because now they've de-risked that asset. Do you see that happening in terms of compute? There's going to be a lot of bilateral deals done between large corporations. And there's also going to be a market that exists for compute. And so there's like sort of two, today you would say a lot of the compute being sold is between these like large bilateral deals. But that takes away many startups that exist today that, hey, we need capacity. Like we're not the size of Anthropoc. And so there's a need to be a market that exists for them to get that compute.

8:43I've been thinking a lot about how to think about compute innovation and a post-AI future. And I oftentimes come back to this David Deutsch, beginning of infinity. In the beginning of infinity, David Deutsch argues that innovation is infinite. Why? Because as you have more and more innovation, it starts to combine with each other and create products. Now you have 10 new innovations that combine with other 10 new innovations that create new innovations. And those innovations could combine with every other innovation. Do you believe that to be true? I definitely think so. And I think all these new things that are going to be created have to be powered by some sort of compute, right?

9:19I think compute is the fundamental resource that is powering all the innovation today. And so that's what we're focused on. A lot of people see what SpaceX is trying to do in the future with orbital data centers and data centers in space. But what about in the present? What's the timeline in the next couple of years? And how does more compute go online given so much demand. The next couple of years, you see the headlines, and that's one thing, but there's a lot of things that happening on the ground. And so there's a bunch of data centers being built. Exact number might be like three to five gigawatts, but a lot of compute passing coming online in the next year and the next year after that.

9:54And that number has been growing, I think, double every single year. So there's gonna be a lot more data centers on Earth too, before we get to space. And I kind of have the Sam Altman opinion of this where he's like, Like data centers in space will exist, but it's going to take around 10 years to do so. Data centers on Earth are going to be the first ones that begin to come up and exist. A lot of investors are weary of data centers. They see these enormous pools of capital going online from Blackstone, Apollo, name your large private equity firms. And they think that there's a bubble. What do you think about that?

10:27If you just look at prices of chips that are six years old or even four years old for the hopper series, the price has been going up over time just because of how much demand there is. I think the fundamental question is you just look at the data. For the past year, AWS has kept their A100 Ampere series chips in their data centers the last six years, and they've been all rented out fully all the time. There's literally just no availability in the market for chips that are this old. So clearly there's a lot of demand that exists, and investors should just look at the data. You're talking about the depreciation schedule.

11:00So a lot of companies depreciate these chips over five years, meaning that in theory, in year five, they should be worth zero, but they're actually going up in value. Yes. Today, you can buy a H100 server for 180k. And that's basically the same prices you would have got it for when you bought it new. I think the new ones go for 220k. I think two things can be true. I think every market is prone to bubbles. Why? Because there's this memetic copying. This private equity fund does a data center fund. Another one does a data center fund. And at some theoretical point, you are going to have a bubble.

11:37But in this case, there's so much need for compute. It may not come for a decade. The demand right now for compute is so large that supply just isn't there. Everyone says we're compute constraint, we're compute constraint, we're compute constraint. And that's true across the whole market. These LLM wars are insane. It's now June, 2026. How do you look at the ecosystem and what are the implicit strategies by the different competitors? I think OpenAI has taken a really good approach where they have secured a lot of compute capacity. Sam has done an incredible job of getting compute capacity before anyone else in the market.

12:14And that's why you have OpenAI just leading in terms of how much compute they have available, how many data center partnerships they have available, and how many gigawatts they have online. Anthropic has sort of been behind on this, right? They haven't had the same partnerships that exist for the compute side, and they've been compute constrained for a while. I think recently with this new SpaceX deal with Elon and his team, they've been able to catch up to OpenAI a bit, but I still think OpenAI is far ahead in terms of Anthropic on the amount of compute that they have available for their clients, and they're able to train their models and all sorts of things.

12:44At the end of the day, it's whoever has the most resources, in my opinion, will be able to win this race. Support for today's episode comes from Square, the all-in-one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Checkout is fast, receipts are instant, sometimes I even get loyalty rewards automatically.

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14:30I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Checkout is fast, receipts are instant, sometimes I even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are, in store, online, on your phone, or even at pop-ups, and everything stays synced in real time. You could track sales, manage inventory, book appointments, and see reports instantly, whether you're in the shop or on the go.

15:03And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square checking. They also have built-in tools like loyalty and marketing to your best customers keep coming back. And right now you can get up to$200 off Square hardware when you sign up at square.com slash go slash how I invest. That's S-Q-U-A-R-E.com slash go slash how I invest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today. Support for today's episode comes from Square, the all-in-one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place.

15:45Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Checkout is fast, receipts are instant, sometimes I even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are in store, online, on your phone, or even at pop-ups and everything stays synced in real time.

16:19You could track sales, manage inventory, book appointments, and see reports instantly whether you're in the shop or on the go. And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square checking. They also have built-in tools like loyalty and marketing to your best customers keep coming back. And right now you can get up to$200 off Square hardware when you sign up at square.com slash go slash how I invest that's s q u a r e.com slash go slash how I invest with Square you get all the tools to run your business with none of the contracts or complexity run your business smarter to Square get started today.

16:58How much of a factor is Colossus? They went from creating a data center in three months to one month to two weeks. They just seem to be continuously improving. It's incredible. I mean, Elon's obviously done an incredible job of being able to build data centers faster than anyone in the market. And that's led to a lot of advancements, not just for XAI or Space XAI, I think what he calls it now, but also other companies that he licensed those data centers out to. For example, Cursor now has been able to train their Composer 2.5 model off of their SpaceX AI data centers. And Anthropik is the newest sort of customer for them.

17:32So you can kind of see that more and more of these players are becoming neoclouds even. We talked about orbital data centers a decade from now. A lot of net new energy sources are coming online as well, nuclear and solar. Maybe you can map that world for us. The US has been behind on energy compared to when you look at China for a long time. And that's probably the large bottleneck today that you face when building out a data center, right? I think there's a decent amount of capital that's available today. Maybe that changes in the future. But there's also not enough energy that just exists. Powered land is such a scarce resource to come by now, given all these data centers.

18:07Land that's next to an energy source. Exactly. Energy source, or that you can create a sort of on-prem, behind-the-meter energy source off of, either using turbines or their own sort of generators. Depends on what the actual build-out is. But I think that's going to help a lot in terms of building out as many data centers as possible because all this stuff requires energy. And so we just need to improve our energy infrastructure in the US specifically. You guys just raised with Andreessen Horowitz. You're trying to size the market. How do you go about sizing a market? The projection is like$7 trillion.

18:37It's large enough. I think the easiest way to see is if you take a look at the world today, where is most of the money being poured into? It's all in data centers. Every single sovereign wealth fund, every single private equity firm, any person with capital has an investment somehow into a data center project. And that just shows the sheer amount of construction that we were going to be doing in the next few years. You had multiple firms that were interested. How did you go about picking Andreessen Horowitz? I mean, we liked the Andreessen team probably the most out of all the other firms. They've been the most helpful.

19:11And then Chris Dixon, Mark, Ben, and our partner Ali has done an incredible job that's sort of keeping us on track and focused. And they also have been incredible advisors for us from all the firms that we had available to choose from. I think Andreessen Horowitz is by far the best. And they've done such an incredible job for us so far on all sorts of things. And tell me about what it means to raise in June, 2026. It's funny, we started the company back in September. It's been like nine months now. And it was funny because the round was fully oversubscribed and people were asking Wayne and I to buy secondaries from us.

19:45and we were laughing because we're like, yeah, we just haven't invested any of our shares. How are we going to like - We don't even have shares. Yeah, I don't have anything to sell. I don't know what you're asking for. So I think the growth for us has been so incredible and such a fast time. And a lot of that just becomes how much effort we've put in and how much we've focused on quality. I think our biggest factor is, a lot of people in this market have tried to do what we do before, but just haven't figured out what quality metrics you need in this. I think the biggest part is the index that we create, that we track, it's all transaction data.

20:16We don't mix it with offer data. We don't give you indicative pricing. And that may be why our index goes up and down and it's a higher volatility than some other indices. But at least you know that this is real transactions. Ground truth. It's what people are paying for compute, not what someone in the market says that compute should be worth. You guys are transacting on what our mutual friend, Dr. Alex Wisner-Gross calls the the innermost loop of the economy, the most strategic part of the economy. How do you think about things like regulation, public policy, and those kind? A lot of people are trying to stop the data center buildup because they're scared of a lot sorts of factors.

20:53I think the biggest thing is like job loss that people are scared of. Like, hey, like this data center is going to power what replaces me in the future. Regardless, the reason why America needs to sort of stay ahead in this data center race is like, if we don't do it, China's going to do it. They're already building out data centers. They have the chips now to do this. and they have their own model companies. And so it's kind of just a race between two countries and two sort of ideologies, whether you want a sort of surveillance-based data center and models that you don't know actually where the data's going, or they're based in America.

21:22At least you can trust that these models are not sort of spying on you, are not injecting code into your enterprise and different things. It's the hard pill to swallow, which is, yes, things will be crazy. Things will be unpredictable. Nobody could predict. Not even Elon Musk knows what's going to happen. And yet we have to push forward, not only push forward, but push forward at breakneck speed in order to win the AI. America has the largest capital markets in the world. And that's probably our biggest advantage compared to any other nation. And we need to leverage those capital markets in the same way we've done so with all sorts of other resources.

21:54And so we're trying to help advance that by helping create capital markets for compute. And how old are you? 22. So you're 22. You just started last September. Talk to me about building a company. How has that been? It's pretty funny. So a lot of our engineering team is around like my age, like 25. Some people are 20, 21. But our go-to-market team and people that have been in the industry for a while and our legal team is obviously much older than we are. It's a little weird when like you come into the office and there's like people that are probably like twice my age asking like, what do we do next?

22:25I was like, oh, this is like, this is weird. And then we've had to put, it's been interesting though. And it's a lot of like learning for us. And we focus so much off of like hiring the right people for the right job. Like talent is what the company is today. And that's the most important thing. And so we say we're always hiring. And it's partly true. If there's the right person that comes along, it's always hiring. But it's also maturing very quickly. It's learning how to get deals done and how to negotiate with people and get all sorts of things that you just you don't learn in college. So it's just things that you kind of have to learn the real world.