Oil Market Turbulence, Sundar's New Comp Package, TBPN Weather Report | Diet TBPN

13:37John Coogan:You know, one jitter in the economy.

13:40Jordi Hays:And it's a huge component. You know, people on the coast, people in tech don't have a good sense for this, right? If gas, gas, for a lot of people, gas could quadruple and they wouldn't really notice it.

13:52John Coogan:No, no.

13:52Jordi Hays:But if you actually look into the average American, how gasoline fits into their budget, it's a meaningful component of their monthly budget, so they feel it super intensely. It's variable cost.

14:04John Coogan:There are so many different ways where a lot of Americans go on driving vacations. That obviously is directly impacted by gas prices. And then also just psychologically, there's something about filling up at the gas tank where you see the number ticking up, and you're doing that on a every week basis or so, that it's just so visceral. It's this thing that you have to stop and then go experience and watch the money flow out of your account like in real time. It's very visual. It's very interactive.

14:33Jordi Hays:Yeah, I remember I must have been probably 18 at this point where I would just go and I would like for a long time, I just put it, I'd like, you know, prepay for a certain amount of gas. I got 20 bucks. I got 20 bucks.

14:44John Coogan:Let's see how much I got.

14:45Jordi Hays:And I felt like really, like I felt like the king of the castle once I just put my card down and let it run up. Yeah, yeah, yeah.

14:52John Coogan:But in AI circles, the discussion has been much more focused on RSI now is the new acronym that everyone's focusing on. Not AGI. AGI is here. We know. Artificial General Intelligence. We passed the Turing test. But can they recursively self-improve? Are they RSI? Are we in RSI now? Is it a coming? Is this going to be a fast takeoff? Is this going to be a slow takeoff? Well, something's taken off. Dylan Patel said, being in SF is like being in Wuhan right before the pandemic. Something is happening. It's going to hit everywhere, but so few people know it. So he's sort of echoing that something big is happening.

15:27Jordi Hays:The irony is that George Hots hitting the timeline to raise money makes me more bullish on acceleration. Yeah. Because if not, he's obviously not historically been a huge fan of venture capital.

15:42John Coogan:Well, he's not raising from traditional VCs, he said. So he said, this is from Tiny Corp. If Tiny Corp was raising$20 million at$200 million valuation, who'd be interested? Business model is basically this. Buy an$11.5 million building with five megawatts of power, link in our Discord. Wait for AMD to launch the RDNA 5 96 gigabyte cards, mid-2027. Pre-order 3 ,000 cards. Hopefully we can negotiate for$2 ,500 each. Build$520 ,000 tiny boxes with six of the cards in each box, run all the Chinese LLMs, make$600 ,000 per month revenue selling tokens on OpenRouter. Market depth is there. This is 1 % of OpenRouter.

16:28John Coogan:Improvements to TinyGrad yield revenue improvements. Due to how power is priced in Oregon, it's only like$50 ,000 for the electric bill before the four megawatts, before they price for peak, not usage. We get like 3C kilowatt hour power, 3 cents per kilowatt hour. We can also make$100 ,000 per month leasing co-location space to Kama. Building and cards paid off in three years max, investment made back, low risk of being undercut since we're using consumer GPUs and running the cheapest colo you can believe. If someone chill wants in, I'd do it. I'm not going to hype fake tech, but demand for tokens is going to skyrocket.

17:09John Coogan:Look at the open claw install numbers. With crazy good optimizations, we could potentially get 3x more from the machines, and we have electricity for 3x more machines, 5.4 revenue per month, then continue to scale from there, custom chips, et cetera. He's starting a neocloud, or he's starting a, yeah, he's going to be serving tokens. There is an immense amount of desire for this binary moment. This is the singularity. This is HCI. This is ASI. The RSI is here. This thing is happening right now, and there's before and after, and everything has changed. And he just doesn't see it that way, I think.

17:45John Coogan:I think he sees it much more like the internet, the mobile phone, like other technologies that have been rolled out. Continuum. Electricity. Yes, there is like a before and after, but you can only really, you know, define the period by maybe a decade, and you need a few decades to understand that moment. And it's very hard to go back and, you know, there is like the iPhone moment, and there is like, you know, the first launch of, I don't know, AOL. Like, I don't even know what the iPhone moment of the internet was, just because it was sort of a slow rollout. It's clear that the AI industry continues to grow and continues to need more and more power and compute, as we've seen from George Hatz's new project.

18:22John Coogan:That means large data center campuses. But if they're not in random office buildings that George is picking up on the cheap, they're probably going to be built with construction equipment. So what does this mean? they don't just drop from the heavens. They require building, which requires oil, but how much oil? And is oil a serious, is a serious oil shock enough to impact the AI build out in a meaningful way? Spoiler alert, basically now. Live GPU clusters in the United States do not use much oil directly. Only 0.6 % of U.S. electricity in 2024 came from petroleum. We're much, much more dependent on natural gas.

18:59John Coogan:Something like 42 % of US electricity is natural gas. And so America ramped up natural gas production significantly over the past two decades. A lot of that was in reaction to the wars in the Middle East. Hey, we need to be less dependent on foreign oil. We need to be energy independent. And so you have the fracking boom, the natural gas boom. And that's where a lot of our fossil fuels come from today, I believe. Data centers only consume a single digit percent of US electricity. So you're looking at 0.6 % of a few percent is like the actual impact. So the short-term impact of high oil prices should be very limited on AI.

19:38John Coogan:When you're talking about building new capacity, building new data centers, oil is a little bit more involved. So diesel powers, trucks, trains, boats, barges, generators, pumps, compressors, excavators, and tons more construction equipment. Petroleum is also broadly used for plastics, polyurethane, and solvents that all worked their way into the data center supply chain. The biggest problem is delaying already tight schedules because of narrowly available components going out of stock. The price of oil goes up. There's one marginal factory that can't produce one ingredient that goes into the rack and that slows things down.

20:14John Coogan:You have to wait a week while you find another supplier that that stuff can add up to just a little bit of a delay. This happened during COVID and the industry was already experiencing something similar with transformers. And so you don't want products getting stuck in transit or going out of stock. But the bigger problem and the one that people should be talking about, and I think you were debating with Dan Primack at Axios about this, is macroeconomic. So higher prices, higher oil prices lead to higher inflation. If the Fed has to raise rates to control inflation, capital formation for mega projects gets a lot harder.

20:43John Coogan:So JLL has this estimate. The next 100 gigawatts of data center capacity could require about$870 billion of new debt financing. And so using this rough number, every extra 50 basis points of borrowing cost on$870 billion is$4.35 billion in annual interest expense.

21:07Jordi Hays:The question right now is the hundreds of billions of dollars of sovereign AI projects in the Middle East, right? I think a lot of those people are going to be like, do we want to send billions of dollars of GPUs? Over there.

21:19John Coogan:And then also the money coming here is another thing where you might want to spend it elsewhere. Have you been noticing that it's been hotter in Los Angeles? I have. Downtown Los Angeles is forecasted to approach 100 degrees Fahrenheit on Thursday and Friday.

21:33Jordi Hays:Which is why we're going to do the weather. We have a new segment for you today. We're doing the weather on TBPN. We have our very own Ben.

21:43John Coogan:We have Ben.

21:44Jordi Hays:Hello, guys. How are you?

21:45John Coogan:We're doing great. Tell us about the weather. What's happening?

21:48Jordi Hays:Well, I want to start off by saying, as you can see, the weather today for the low of today is going to be 75 degrees Fahrenheit up there, high of 100 degrees Fahrenheit down there. But there's something I actually wanted to point out that I saw and I thought that was quite interesting. As you can see up here, there's a localized low pressure area up there and a localized high pressure area right down there, if you can see that right there. Does that mean rain? That's not normally an issue and not a cause for concern, and it's not very common for this time of the year. However, today later in the afternoon these two areas are gonna collide and they're gonna hit each other Really?

22:17Jordi Hays:And what that's gonna cause is a barometric pressure inversion. Okay, it might sound a little bit scary But I guarantee there's no cause for concern All that means is that hot air rushing in from the west is gonna collide with that cold air Rushing in from the east and it's gonna cause a bunch of turbulence in the sky moving all the airwaves around and oscillations in the sky However, I want to add one more point. A byproduct of this effect is that all that humidity that dropped after that hot air moved to the bottom is gonna raise up because the water cycle, you know, evaporation and stuff. It's gonna raise up into the sky, into those clouds.

22:48Jordi Hays:It's gonna cause big clouds in the sky. And eventually all that water's gonna fall down onto the ground. We're gonna have big rain later in the afternoon.

22:55John Coogan:It's just, wait, it's actually gonna rain in LA?

22:58Jordi Hays:Yeah, it might sound crazy, but I just want it for all you guys at home, I'd definitely try to step outside with a jacket today, maybe a hoodie just in case the rain comes. Don't try to be a big shot.

23:07John Coogan:I'm fact checking you right now and the weather app says it's going to be sunny all week. Is this just complete fake news?

23:13Jordi Hays:Those are the numbers my team gave me.

23:15John Coogan:This is complete fake news. This is the fakest news I've ever heard. All that cold, the transatlantic current.

23:22Jordi Hays:John, I don't trust your app. I trust the weather.

23:26John Coogan:Apple says it's not going to rain the entire month. There's zero chance of rain.

23:32Jordi Hays:Did you look at the transatlantic current? No. The transatlantic current. Precipitation.

23:36John Coogan:Zero inches today. Zero inches tomorrow. Zero inches on Wednesday.

23:39Jordi Hays:John, you're really going to trust an application that was probably vibe-coded yesterday over Ben, who's doing the weather. How did he get here?

23:50John Coogan:What happened here?

23:53Jordi Hays:If you look right there, you can see a localized high-pressure area.

23:57John Coogan:I think this is an over-eager weatherman who's just looking for drama in the most boring weather market in America, which is Los Angeles.

24:04Jordi Hays:I think this is the most important story in the world. This is ridiculous. You guys can look at the jet streams. They're coming in from the west.

24:12John Coogan:I don't want to hear any more mumbo-jumbo about jet streams. Get out of here.

24:15Jordi Hays:You're done. Great work, Ben. Thank you, Ben. This is the future of the weather. We have a weatherman who gets into a live altercation with one of the other hosts. We need to talk about the wealth of Sundar Pitch AI. Pitch AI. Sundar Pitch AI. It's a new pay deal worth up to$692 million.

24:35John Coogan:Is this like 10 times what Tim Cook's making? No, it must be over time, right?

24:39Jordi Hays:I mean, Cook's making around$70 a year combined.

24:44John Coogan:So if he works for 10 years, he makes what Sundar makes in three? We've been advocating for this, so this is good. Advocating for this. Yeah, no, no. We're in support, but...

24:51Jordi Hays:Yeah, Google has increased Sundar's potential pay to$600 million. $692 million over the next three years.

24:55John Coogan:You know that Tim Cook dropped this in the Apple board members group chat as soon as it hit. He was just like, dude, this is a cool article. You should read this.

25:03Jordi Hays:Yeah, he just drops it in. Just drops it in.

25:04John Coogan:Yeah, exactly.

25:06Jordi Hays:The bulk of his package comes in performance units with a target value of$126 million split evenly into two launches. It could pay out as much as twice the target, a quarter billion, if it outperforms significantly or nothing, if it lags behind. Got to beat the S &P 100. Pichai will receive Waymo stock with a target, stock in Waymo with a target value of$130 million and$45 million in Wing Aviation. That's their drone delivery platform. Platform. Again, both can pay out up to 200 % of the target.

25:40John Coogan:If he delivers and the company does well, he should be richly rewarded. Stick a fork in it. Turn out the lights. Hasta la vista. Say it any way you'd like. The simple truth is the Mag 7 trade is over. Finito. I love Barron's writing. Dead. The collective stock market outperformance of those seven tech icons. Alphabet, Amazon.com, Apple, Meta Platforms, NVIDIA, Microsoft, and Tesla is now a thing of the past. The group may still do okay, and some of the individual stocks may even kill it, but the slam dunks set it and forget it run circles around the market era of the mag seven is gone with the wind the actual argument was the growth to value narrative the loss of cash flow as they increasingly invest in capex that the the financials will look very different there'll be a margin compression that type of thing it's not an unreasonable take but it is it's just funny the way it's written sundar pachai took over as ceo in august of 2015.

26:36John Coogan:he's going on 11 years in the seat google's market cap has increased almost sevenfold from half a trillion to 3.6 trillion briefly topping 4 trillion in January. This surge has made the Indian born 53 year old former McKinsey consultant a billionaire. He joined in 2004 and made his name developing the Chrome browser and leading the Android division. He had been criticized for being too slow to adopt AI at the search giant, allowing open AI to release the first hit product, ChatGPT, in late 2022, but has since bounced back, releasing cutting edge AI models and integrating the technology into its dominant search engine.

27:14John Coogan:Yes, he's done very, very well on that front. Pichai has also navigated a duo of antitrust cases brought against Google's search and app store businesses, avoiding the worst case scenario of forced breakup. A third lawsuit is pending against the advertising network. Pichai last got a stock award in December of 2022, worth$218 million, which was structured in the same way. his earnings are topped up by his personal security costs, which rose to 8.3 million in 2024. Earlier in the week, he sold 32 ,500 Class C shares, an average price of$303, worth roughly $10 million. The Bloomberg Billionaires Index estimates that he has sold about$650 million in stock since becoming CEO.

27:58John Coogan:They still own, along with his wife, he owns 1.67 million shares of Google worth half a billion at the latest stock price. And Google's founders, Sergey Brin and Larry Page, still control the company through their ownership of super voting class B stock, which gives them 56 % of decision making power. Interesting. I think you gotta give Miami - Paper hands? Oh.

28:22Jordi Hays:He sold 650 million of stock?

28:25John Coogan:No, no, no. He sold that, but he's, oh, and he only owns half a billion. So yeah, he sold more than that.

28:32Jordi Hays:I'm just saying, hopefully he put it all into video.

28:36John Coogan:But he's getting topped up. And he's diamond handings the new brand. I know. I'm just saying.

28:41Jordi Hays:I'm just saying. Looking at the stock chart since 2015 when he became CEO, he would have done pretty well just to not do anything and trust his own process. The owner of Four Loko is exploring a sale of a storied alcohol brand. Sources say the parent company of Four Loko, the canned alcoholic beverage that became a college campus sensation in the late 2000s before being reformulated under regulatory pressure is exploring i cannot believe they nerfed for loco you can just imagine the trajectory of the

29:12John Coogan:united states if it hadn't been nerfed and then straight downward really yes it was so bad it was so the people were having like heart attacks yes it was terrible so really for loco was a 24 ounce can, so twice the size of a normal alcoholic beverage.

29:28Jordi Hays:Trey, the birthday boy, says it was amazing.

29:30John Coogan:It was amazing, okay. The original formulation was twice as big as a normal can of Bud Light or Miller Light or Coors Light, your normal beer, something that you would grab. And then instead of it being 3.2 % alcohol or 4.5 % alcohol, it was like 10 % alcohol. It was the strength of like wine almost. And so a single Four Loko was like four or five beers in one can. And then they also added like 200 milligrams of caffeine. You would become incredibly intoxicated and inebriated, but then also incredibly stimulated from all the caffeine. And that spelt doom for many people. People would be very high functioning, but completely inebriated and discombobulated.

30:13John Coogan:And so they would, you know, get into all sorts of trouble.

30:17Jordi Hays:The discombobulator.

30:18John Coogan:It was the discombobulator. It was also wildly illegal from an FDA perspective. You can't mix alcohol and caffeine in a single product. That's just a rule.

30:28Jordi Hays:They're looking to and potentially will capture somewhere around$400 million on the sale.

30:36John Coogan:The brand value. So people, it's hilarious that they're working with J.P. Morgan on this. That's wild.

30:41Jordi Hays:Here's what the CMO had to say. For over a decade, our sales have been leading the flavored malted beverage market by embracing bold innovation, unconventional marketing, and a risk-taking attitude that delivers results year after year. I think that's a good place to call it.

30:57John Coogan:Thank you.

30:58Jordi Hays:Thank you. Goodbye. Cheers.