AI is Draining America’s Energy & Is Nike's Dominance Over?

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0:29Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, New York to Paris in three hours. We, as Supersonic Air Travel, plots its grand return. Then Nike is getting lapped by the competition right now. Is the sportswear giant no longer the top shoe dog? It's Monday, March 25th. Let's ride.

0:55With March Madness in full swing, Morning Brew thought we'd join in on the fun with a bracket of our own. It is not about basketball. It is about the greatest invention of all time. The esteemed selection committee, which was me and Toby and a couple other employees here, selected 64 inventions from human history that will compete for the top prize. Contenders will advance through the bracket from a fan vote. So it's all up to you. You can vote at Morning Brew's main social media channels at Morning Brew on both Twitter and Instagram. And the first round gets underway today at about 10 a.m. Eastern.

1:30You might be curious about the number one seeds. They are the wheel, fire, electricity, and the internet. Toby, what are some first round matchups you're keeping your eye on? Those are powerhouses, but here are some matchups I'm looking at from every region. In the north, I think email in the 14 seed could make a run just because the audience is morning brew readers. They kind of love email. The matchup I have my eye on is beer versus the lawnmower in the three versus 14. They both compliment each other so well. Why do we have to pick one? Moving to the South, I'm most excited about the 2-15 matchup, which is penicillin versus snorkel.

2:04I just love the fact that we exist in a universe where those two get to square off. I think the committee criminally underseated coffee in the West region. We put that in the 8th seed, and I can see it pulling off the upset of electricity if it makes it to the Sweet 16. Finally, in the East, I'm all in on the air fryer in the 11th seed. It's up against toothbrush, but my toothbrush never gave me a perfectly crispy salmon filet. But please join in on the fun. Go follow us at Morning Brew. We'll be posting at 10 a.m. Eastern today. It's going to be a great time, so we hope to see you there. Now let's hear a quick word from our friends over at Factor.

2:41Neil, I don't know how I never put this together, but Factor is named Factor because the most important factor in your overall health and wellness is food. I, too, am a little shocked you never put two and two together. Wait, you're saying you knew this the whole time? Of course I did. JK, no, I'm just making you feel bad. I had no idea either. Thank you. I was reading an interview with the co-founder from a few years ago, and I was proud that I learned that. I also learned that Factor is obsessed with nailing the, quote, time to mouth. Ah, the TDM. I'm familiar. Yes, Factor's time to mouth is two and a half minutes.

3:13Simply grab one of their meals from your fridge, fresh, never frozen, toss it in the microwave, and voila, restaurant-quality nutrition in under three minutes. Still can't believe you didn't know why it was called Factor, Toby. I've been doing these ads. If you want to get a taste of the best time to mouth in the biz, head to factormeals.com slash morningbrew50. Then use code morningbrew50 to get 50 % off. That's factormeals.com slash morningbrew50 with code morningbrew50 to snag a 50 % discount. Race the rudders. Race the sails. Race the sails. Captain, an unidentified ship is approaching. Over.

3:49Roger. Wait. Is that an enterprise sails solution? Reach sails professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at linkedin.com slash campaign. Terms and conditions apply. If the U.S. power grid was in orange, big tech companies are squeezing every last bit of juice out of it, seeds and all. There is just insane demand for power in America right now, and we're not producing enough of it.

4:26In Georgia, demand for industrial power in the next decade is about 17 times higher than recently forecasted. And utility providers project they will need double the amount of power over the next five years than previously anticipated. A lot of it comes down to the rise of AI and the power-hungry data centers needed to train these models. The nation's 2 ,700 data centers are eating up 4 % of the country's total electricity output, which is forecasted to grow to 6 % by 2026. According to one forecast from a key energy conference last week, by 2030, the surge in AI means U.S. data centers may gobble up more power than all households in the country.

5:09toss in the demands of crypto mining operations. And you have two extremely power hungry industries that are putting immense strain on our already strained grids. Yeah, this reminds me of the Froyo boom in the 2000s, except data centers don't taste as good and they consume a lot more electricity. Just fascinating how these new types of data centers, data centers have existed for a long time for cloud computing and things like that. But the ones that power large language models that allow large language models like ChatGPT, Gemini, all the ones that the big tech companies are rolling out are facing huge constraints because of transmission lines.

5:43It's just kind of an interesting thing that the world, the natural resources that we have, or our built environment is really putting a huge blocker on the potential development of AI. A lot of these kind of quotes I read from people familiar with the power industry was about how do we get the forecast for the power needed so wrong? And it is because we've had these unexpected industries pop up. I mean, the transitions to, from gas powered vehicles to electric power vehicles, EVs, was already going to put a ton of strain on. Then AI kind of came out of nowhere and added another immense strain.

6:16You also have the crypto industry, which, I mean, 10 years ago, people weren't forecasting to be a big energy suck, but it is right now. So all of a sudden you're forecasting these power, I mean, the Georgia stat of 17 times higher. It's insane. How are you off by a factor of 17 times? They don't know. They were freaking out. They were like, how do we get this off by a factor of 17? There's also another layer here, which is EVs, Bitcoin mining data centers, but also just general factories. There's a huge factory boom right now in the United States, thanks to the Inflation Reduction Act is doling out hundreds of billions of dollars in subsidies.

6:48And we have factory investment in the United States that's at a 50-year high. There are 155 factories coming online or being expanded right now in the country, and that's also putting further strain on the grid. So you have just a triple, quadruple whammy going on, putting a lot of strain on power supplies in the United States. Potentially a fifth whammy is the fact that all the good spots at the power lunch table are already taken. It used to be that you put your data centers near these major cities with a lot of tech workers, good internet connection, places like the Silicon Valleys of the world.

7:21But those places are long tapped out. There's no space to add more data centers there. So now companies are turning to places like Columbus, Ohio, Altoona, Iowa, Fort Wayne, Indiana. And these places don't necessarily have the grid in place to support these very power-hungry operations. So it's kind of a good and bad thing because you want to bring some sort of economic development to your area. But you also don't want to put this immense strain on your grid, which you haven't forecasted for. Yeah, there's also great concern that this this strain on the grid will reverse or delay our transition to green energy.

7:54There are a bunch of states that have proposed new gas fired power plants to be able to handle the demand or have delayed the phase out of coal plants. So there is a very important and interesting climate change angle here. But we have to move on. How incredible would it be to board a plane at JFK, throw on Dune, and then land in London before the movie's over? Sounds like science fiction, but it may become reality soon because supersonic air travel is so back. More than 20 years after the final flight of the Concorde, a company called Boom Supersonic is trying to make sonic booms great again.

8:28On Friday, it hit a major milestone in its quest to return commercial supersonic aviation to the skies, taking its prototype aircraft XB-1 on a successful test drive in the Mojave Desert. The XB-1 is what's known as a demonstrator. It's just a small prototype to try out some things. And it barely got over 280 miles per hour on the flight, well short of the speed of sound Mach 1, which is about 760 miles per hour. but eventually hopefully by the end of the decade boom hopes to build a much bigger plane called the overture that can shuttle people between new york and london at 1.7 times the speed of sound taking just over three hours toby are you hyped i am hyped but the hyped come with a lot of asterisks here because again it is cool to see a plane in the air but this is nothing close the actual plane that they eventually hope to build because they aren't even testing out the engines that they hope to use right now.

9:20These had kind of normal engines that have been in service for several decades. They're hoping to develop a new engine called the Symphony for their Overture aircraft. There's a little, I don't know, symphonic play there for you people. But it is interesting because they've recently kind of scrapped their partnership with Rolls-Royce, who they were using to help develop the engines. Now they're going at it alone. So there's a lot of question marks around this, but the general thrust of it is very exciting because yeah, who doesn't get excited for supersonic air travel? I know, and if you are plugged into the aviation industry, people talk about the Concorde in hushed tones.

9:58It's really this mythological aircraft that came online in the 70s and did the transatlantic crossing, set the record for the fastest crossing of the Atlantic by a civil aircraft in 1996. It flew from New York to London in two hours, 52 minutes. It actually happened. And it was retired in 2003 after a glorious run. The economics didn't work out actually at all. It was way too expensive, way too lumbering. There was also a fatal crash involving the Concorde. So I think there's a general, there's a lot of enthusiasm about bringing something like this back in a more economical way because supersonic air travel is really tough to make the financials work out.

10:35Yeah. And the financials still quite are quite adding up for me because the overture seats are right around 64 passengers compared to, I mean, An Airbus A380 can take over 853 people across the Atlantic. Also, the Boomjet absolutely guzzles fuel at this insane rate. So who knows if you can... I mean, I still see the same problems that confronted the Concorde confronting Boom here. It was good for Boom, though, too, because part of the reason why you need to have these test flights is not only just to show you're making progress, but it's also kind of a fundraising tool. The CEO cited SpaceX as kind of the blueprint for stuff like this.

11:12You do a test flight. Maybe it goes well, maybe it doesn't, but you have to show you're testing, you're making progress. And so this was the first step on that, even if it was an undersized aircraft without the real engines in place. Let's move on. Nike is in a slump. It's losing market share to competing brands like On and Hoka in the running market. Its recent signature basketball shoe launched with Devin Booker was a bit of a flop. And its stock is down 16 % over the last year compared to a 40 % jump for its rival Adidas. it's a classic case of relying too much on the classics. Analysts covering Nike say, while other brands have innovated, Nike just kept leaning on classic silhouettes like the Jordan 1 highs and Dunk Lows.

11:53It doubled the number of Air Jordan 1's release on its sneakers app over the last four years and tripled the amount of Dunk Lows released in that same time period. Neil, too much nostalgia, not enough innovation. It's been enough to put a dent in even Nike's unshakable allure. Right, so Nike reported earnings last week and did not excite at all. Sales were pretty flat and its stock continued its downturn 7 % last week and its stock is down 40 % over the last three years amounting to$130 billion wipeout. Right now, CEO John Donahue is undergoing a major restructuring. They cut 2 % of their workforce.

12:32They're trying to cut costs of$2 billion over the next few years. So they kind of recognize that they're completely off their game right now. Yeah, they're off their game. And I think part of it is that they haven't been innovating in the right areas. I mean, I will say in the running market, they still have captured the top end performance. Like their Nike Alpha Fly, their marathon shoe, their race shoes are still probably ahead of all the other brands. But kind of those middle of the line shoes, your daily trainers, the thing that most normal runners buy, they really haven't updated or innovated on their legacy.

13:06the Nike Pegasus has been around for years now, and it's kind of the same shoe as it was even a decade ago. And while you have things like On, who has their crazy new cloud cushion technology, it feels more innovative, feels more exciting to people. And so that's part of the reason too why Nike's kind of taking a step back saying, okay, we're going to stop releasing the same old classics, the same old Jordans, the same old Nike Dunks, and try to introduce some more innovation back into the company, because that's kind of what it's been known for over the years. Right. They're kind of getting laughed right now by Hoka and On as people start to wear running.

13:39Running shoes is a huge growing market, not only for people competing and athletes like you, but they are just wearing them to the office now. And as COVID has turned the office into a little more of a casual place, they did. Nike did get a big win in Europe, though, when Germany said it was switching its kit sponsor or its kit manufacturer, which is a fancy way of saying jerseys from Adidas, which is crazy because Adidas is Germany. It's been the kit supplier for 70 years and they're switching to Nike, which set off a huge kerfuffle at the highest levels of the government. They accused the German National Football Association of sort of not being patriotic and switching to an American company instead of Germany.

14:19So I don't know if you want to call that a win for Nike, but it definitely is. I don't know if it'll like actually move the needle in any way, but it is kind of an interesting situation. I think it is a major coup for them because Germany is Adidas. I cannot believe that they let themselves lose the bid to it. Apparently Nike literally doubled the amount that Adidas was paying him. So I guess money talks and you want to develop the Football Association more. Nike also, though, is in a bit of a row with the English national team because they put a cheeky update to the English national flag on the back of England's jerseys.

14:55They added some blue and some purples in the flags. And a lot of politicians were like, listen, you don't mess with the flag, bruv. You keep it red. we do not want any blue. We do not want any purple here. It's a national flag for a reason. So either there, it is interesting because the euros are coming up, which is a big European soccer tournament with national teams. So we're seeing kind of these kits come out. So it is a bit of a microcosm of the larger Nike versus Adidas war right now. Adidas has a little bit of a leg up, but obviously Nike, uh, it never quite goes away up next. Stick around to learn about the most grueling running race in the entire world.

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16:45Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with EpGliss. Before starting EpGliss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EpGliss and visit epgliss.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Welcome to Winners of the Weekend, where Toby and I share two people from the week's news that are on top of their bracket pools. I won the pre-show contest, which is appropriate because my winner is Jerry Seinfeld. Now, what's the deal with Jerry? Well, he started off in stand-up comedy, then made a hit sitcom, and yada, yada, yada.

17:24He's now a billionaire. Bloomberg calculated that Jerry's fortune has hit$1 billion, mostly thanks to syndication deals from Seinfeld that brought him$465 million. He also has made$100 million from touring since the 80s, $94 million from a Netflix streaming deal, and has about$40 million worth of real estate holdings. Bloomberg didn't even factor in Seinfeld's epic car collection to his net worth, but one estimate revealed that he owns over 150 cars collectively valued at$100 million. Meanwhile, a separate analysis into Newman's financials found he's$500 ,000 in debt. That's gold, Neil. Gold. I was trying to keep track of the amount of Seinfeld references that even I, a non-fan, picked up, and I think I was at 405 there, so congrats on that.

18:11This was also not only an interesting look into Seinfeld's finances, but also an interesting look at how these billionaire stats are calculated, because it takes all those income streams, the syndication deal, the Netflix deals, touring deals, and then it also factors in the performance of the MSCI World Index, which is what it sounds like, an index that tracks certain large cap stocks from 23 global developed markets, and basically says that if Seinfeld had put his cash in that market, how much would it appreciate? Which I I didn't know was part of the billionaire factor because I thought you just say, all right, these are the income streams.

18:46You add it all together. But it factors in kind of the investment performance side of things. So that was an interesting angle to this billionaire status from Seinfeld. He might not even be the most the richest person on the Seinfeld cast, though, because Julia Louise Dreyfus, her dad was a mogul. It was a billionaire. He's worth four billion dollars at the time he died a few years ago. So she is actually super rich. Oh, interesting. Yeah, no, she's like comes from a billionaire family. I know we don't get to talk about Seinfeld very often. So any other references you want to get out of your system right now?

19:16Or was that good enough for you? No, just one. I got it out of my system. But one thing I thought was funny, Seinfeld had an interview with the New York Times in 2012 and he goes, I like money, but it's never been about the money. But this is a guy who does sort of relish wealth. I think that's a fact. I don't blame him. My winner of the weekend is the ultra runner Jasmine Paris. On Friday, Jasmine became the first woman to complete the Barkley Marathons, which is world-renowned as one of the hardest, most grueling, most soul-shatteringly difficult races you can ever participate in. It requires participants to run through 100 miles of rugged Tennessee wilderness with a time cut off of 60 hours.

19:56Paris ended up completing the race with 1 minute and 39 seconds to spare. Only 20 people have ever completed the 100-mile version of this race, and now Jasmine is one of those. There are no words to describe how hard this race is, Neil. It's a five loop course. When Jasmine set off on the fifth and final loop, she became the first woman to ever accomplish even that feat, let alone finish. But she got it done. I was surprised at how many people were kind of clued into this. And you were saying you were receiving lots of texts from your friends saying, did you see this Barkley Marathon thing? It does kind of have a allure and a legend of its own right now.

20:30And there was a documentary about it a few years ago. and Lazarus Lake, who is the mythological figure, very Santa bearded guy who runs the competition, is kind of doing a little more media so people are more aware of this. But a few years ago, no one had any clue what was going on. But this is just so wrapped up in so much lore. Lazarus Lake, to start the signal of the race an hour before it starts, the runners have no idea when, he blows a conch shell and that signals one hour before the start. And then the start of the race, it's not no one shoots a gun at the air. He lights a cigarette and then they are off into the wilderness.

21:05There's no actual map of the course. They have to rely on compasses alone. And the way they know they're on the right track is he's placed 10 to 15 books throughout the loop. You have to tear off a page of the book that corresponds to your bib number. My favorite part of it too is applicants must submit an essay explaining why they wish to compete. And in addition to a dollar and 60 cent entry fee, again, just so many random little wrinkles to this. I am not penning my essay anytime soon. This race has the equivalent of 60 ,000 feet of ascent and descent, which is twice the elevation of Mount Everest.

21:37Just notoriously difficult. And Lazarus Lake, the race founder himself, has been on record saying, I don't think a woman will ever be able to finish this. A lot of people are like, why do you say that, Lazarus Lake? But he said, based on times, women tend to be 12 % slower and over the ultramarathon distance. Clearly, that turned out to not be the case because Jasmine absolutely crushed it. in. I was just fired up because I love whenever the running and ultra running community gets a little extra press. It's March, and whether you are a basketball diehard or got roped into your office pool by Kyle for marketing, let's talk about some of the madness that's emerged from the first weekend of the tournament.

22:12On the men's side of things, we had some early Cinderella stories with Oakland University taking down the three-seeded Kentucky Wildcats and 14-seeded Yale downing Auburn. When the dust had settled on Thursday night's opening game, it had drawn the highest average audience since 2015 per Nielsen. Oakland versus Kentucky had the largest audience for an opening round game since Zion Williamson's led Duke against North Dakota State in 2019. On the women's side of things, the number one seed Iowa and Kaitlin Clark cruised through their first round matchup, but last year's NCAA champion LSU is facing some extra scrutiny after its coach Kim Mulkey, who used a press conference to threaten to sue the Washington Post, who is publishing an unfavorable story about her in the coming days.

22:57Neil, there are tons of storylines to this year's tournament, as always. Where do you want to head first? Let's start with Golki Mania. This was a senior at Oakland who jacked up a ton of threes and helped Oakland beat Kentucky. What happened to him in the span of 12 hours after that particular game I think shows the power of marketing and virality and name-image likeness deals that have kind of allowed college athletes to make money now. Barely the Nets hadn't come down on that game when he already signed an NIL deal with TurboTax. He's an accounting major and he put out a deal with them. He grew his Instagram following from 500 followers to over 50 ,000.

23:40He's already making money through endorsement deals. So the NIL machine works so fast these days was something I just didn't realize. I mean, he still had a game to play. And in between practice, he's filming TurboTax commercials. One brand that I think has capitalized very well on the recent NIL rule update is Buffalo Wild Wings, where Buffalo Wild Wings has this deal where if you're at a BW3s during the March Madness and the game goes to overtime, everyone gets six free wings in the restaurant. So they've been signing players on teams who go to overtime legit less than 24 hours after the game ends to NIL deals.