Oracle Rips, Larry Ellison's 1997 Vanity Fair Article, Global Fertilizer Crisis | Diet TBPN

0:00John Coogan:So, Oracle had earnings yesterday and it was an absolute blowout. The stock's up 10%. The God candle. The God candle. I like that. It's still way down from the crazy highs of last September. So, it's a$470 billion company now. Not bad. But not quite the almost$1 trillion company that it was last year. But they're still up over the last 12 months. So, they've sort of ridden this crazy curve up. but the stock basically doubled, then it sold off by half, but it's ticking back up. And the main thing is that like, you know, was it overhyped, underhyped? I don't know. But this earnings was important because a lot of people were worried about the CapEx, the infrastructure build out, was there gonna be demand?

0:43John Coogan:What was the timing of buying GPUs? Timing was the big thing. Yeah.

0:46Jordi Hays:Because when you had that initial, like the announcement around the RPO last year, the criticism was, hey, you're basically gonna try to build AWS in like two years.

0:58John Coogan:Yeah.

0:58Jordi Hays:And no one, like, I mean, obviously the market at the time was quite excited about it, but there was some concerns around just how aggressive the timeline was. And so seeing them hit their timelines at this stage is super important.

1:12John Coogan:Yeah, it was like 500 billion of RPO, which is like, that's AWS size numbers. And that's a lot of what I think is going on here. That's actually the dynamic. Like the market is demanding another AWS. And so let's go through the top line numbers first. So analysts estimated$86.7 billion on revenue. Oracle said that they will hit$90 billion for fiscal year beginning in June. Now, people don't care as much about the top line number. Everyone's obsessed with infrastructure business, the infrastructure business. So the previous quarter showed growth of 68%. That's not bad. Analysts said this quarter we're looking for 79%.

1:53John Coogan:and Oracle delivered 84%. So they beat estimates, that's why the stock popped, of course. The infrastructure business is particularly important for two key reasons. So first, Amazon, Microsoft, and Google, like there's more than just them when it comes to hyperscalers, but they are unique among hyperscalers in that they have AWS, Azure, and GCP. They have true cloud platforms, cloud infrastructure platforms. OpenAI does not yet, Meta does not yet. Meta is a hyperscaler, like they build huge data centers, But they don't have this flexibility that comes with operating something like AWS. And so who signed big deals with Oracle?

2:31John Coogan:It's OpenAI and Meta. And fortunately, those deals are going better than people expected. People were worried. And people were saying, is Larry going to get caught holding the bag? Well, it looks like things are penciling out so far. So Meta and OpenAI both have massive ambitions around AI. They both signed on with Oracle to ramp up data center capacity. The Oracle is just this extra burst of CapEx capacity in the system, and they're ramping up. So$50 billion in CapEx in the current fiscal year, and they're consistently outpacing analyst estimates. In the fiscal third quarter, analysts predicted$14 billion of CapEx.

3:05John Coogan:Oracle spent$18.5. So Larry is certainly opening the pocketbook, digging for coins in the couch cushions, but we'll get into the long-term implications of like, what does this mean for becoming over leveraged debt, you know, drawing down on cash flow? there's actually a lot of interesting structure going on within the financials that shows you, even though he's definitely risk-on, definitely AGI-pilled, all full tilt ahead into the build-out, it doesn't feel like financial recklessness because of the structure of the deal. So the second reason that infrastructure is so important right now that I think people on the outside are sort of missing is that compute is still growing exponentially.

3:42John Coogan:But AI adoption curves often look like S-curves. And so the classic one is consumer LLM usage. So OpenAI came out with ChatGPT and the numbers were just like insane. It was like 20 million users overnight and then 100 million and then 200 million. And it was just like, okay, this curve is going completely vertical. We're going exponential. But of course, there's only 8 billion people on earth. And a lot of them just don't use really computers apparently because meta over two decades has only gotten three and a half billion users to use like the whole suite of apps including everything so just whatsapp you can just be a DAU of Instagram and you count in that like we all everyone in this room counts in Meta's DAU for sure even if you're like I'm not really that big on Facebook or I'm not that I don't use whatsapp that often like you definitely they gotcha except for half the human population which is not on meta platforms for a variety of reasons some geopolitics some economic but But basically, there's going to be a slowdown.

4:45John Coogan:So OpenAI shot up to basically a billion MAU, monthly active users. The official number that's getting trotted around right now is 920 weekly active users. But everyone behind the scenes says, yeah, they're well past a billion. And so that curve is slowing down. There's just no way you can be like, yeah, actually, we're expecting 10 billion ChatGPT users next year because there aren't 10 billion people. So there's going to be deceleration in consumer AI usage.

5:13Jordi Hays:Sufficiently aligned superintelligence might want to stimulate the growth of the human population. Good take.

5:20John Coogan:Good take. Yes. You go to chat GPT and it says like, hey, I know you've been thinking about having a fourth kid. You should do it. And here's why. Maybe. But at least for now, we are seeing deceleration. And I think for just a lot of people, they're like, yeah, I use AI. I have an app on my phone, maybe Gemini, maybe Claude, maybe OpenAI, maybe ChatGPT. I use it. Maybe I use Grok. Maybe you see it, you know, vended into different systems. I interact with it on Instagram. But, like, I'm in, but I'm not, like, blown away by the growth of this thing because everyone started using this a year ago and we're still all just using it.

5:56John Coogan:But compute is scaling very differently because when we went from LLMs and ChatGPT to reasoning models, that probably 10x the amount of tokens that people were generating with 01. And then once GPT-5 came out, the reasoning models became much higher usage rates. And then the agents framework, the open clause, the codexes and the cloud codes, that all did another 10x in token volume. 10x is like a very rough number, but it's basically growing exponentially. So you have these double exponentials.

6:25Jordi Hays:Yeah, just the way to think about it, instead of you coming into ChatGPT to do some type of query, you're effectively one person can effectively multiply themselves by 10, 20, and then it's just constantly using it all day long, all day long, all day long.

6:42John Coogan:The actual experience surface area and the number of people that are trying AI for the first time is decelerating because everyone's tried it. But compute is still 10Xing. So token consumption per user is exploding, and OpenClaw and agents like Codex and ClockCode are also an early part of the S-curve. adoption. So we're still in that exponential. They're melting GPU fleets. There was some viral bear posting about how Oracle was in financial trouble because of the economics of their infrastructure bets. So naturally, they have to buy the GPUs before they can rack them and sell them as infrastructure.

7:19John Coogan:This is business 101, but people were maybe surprised by that or something. There was a whole press cycle about this. And it seemed very silly at the time. And I think everyone was like, yeah, this is exactly what we expected.

7:29Jordi Hays:But a lot of people from the people that brought you the one gigabyte data center similar similar crowd potentially but

7:36John Coogan:There was a lot of fear around that and some of that is is legitimate because if if gpus depreciated really quickly Oracle had to buy the gpus they had to send the money to nvidia a year in advance And then it took them two years to get them into data centers and actually do the do the deals and all this stuff That would have been a squeeze on cash flow for sure, but that's not what happened We have some hard data on profitability now, and Oracle is, first up, they're on or ahead of schedule with 90 % of the capacity deliveries, and that means happy customers. And then second, gross margins actually improved, so guidance was 30%, and they hit 32%.

8:14John Coogan:So Oracle's AI infrastructure is profitable the moment it comes online, and they're also increasing that backlog. They increased the backlog of RPO, remaining performance obligations, to$553 billion. dollars. So customers are happy, they're ramping, and overall the demand is just flowing in the right direction. Companies and consumers are happy to pay for AI tools and LLM tokens. Labs and AI inference providers are happy to pay Oracle for infrastructure without crazy delays. And this means Oracle doesn't need to get into dangerous financial engineering territory where they need to go crazy negative cash flow, issue a bunch of equity, issue a bunch of debt.

8:50John Coogan:And we saw the God candle print the kobe sc letter shared oracle stock surges over eight percent after beating earnings and posting a 44 jump in cloud revenue they also had some comments on the sas apocalypse

9:03Jordi Hays:from the earnings hall you've all heard the thesis that new companies coding quickly using ai will spell the death of sas i don't agree with that at all i do think that ai tools and their coding capabilities would be a threat if we weren't adopting them but we are and very rapidly oracle is using the best AI coding tools and the best developers. The use of AI coding tools inside Oracle is enabling smaller engineering teams to deliver more complete solutions to our customers more quickly. We are building brand-new SaaS products using AI and also embedding AI agents right into our existing application suites.

9:36Jordi Hays:By embracing AI with small engineering teams, we have built three brand-new CX applications. Let's give it up for customer service. And our new website generator. They said, in fact, we just used the website generator to build and launch the new Oracle website. Dogfooding, let's go. How does it look?

9:52John Coogan:It's beautiful.

9:54Jordi Hays:It's amazing. It looks AI generated.

9:57John Coogan:It's very good. It opens with just eight buttons. Cloud, multi-AI database, multi-cloud AI database, AI data platform, cloud at customer.

10:08Jordi Hays:You might not like the design of this, but this is peak. This is peak performance. Look at this.

10:13John Coogan:Look at this. I like the way the buttons lay out horizontally is particularly crazy. So we need to go back in time to understand Larry Ellison. Because in 2013, Vanity Fair wrote a profile about Larry Ellison that is absolutely unhinged. I've never seen a profile like this about a tech CEO. At the time, he was easily the richest man in California with$6 billion. dollars. Oracle CEO Larry Ellison, co-founder of the world's second largest software company,

10:44Jordi Hays:is Silicon Valley's most - This is from the June 1997 issue.

10:49John Coogan:This is a 1997 issue. This has been uploaded to Vanity Fair in 2013. Sorry. This is from 1997. So right in the heat of the dot-com boom, things are just kicking off. We are far from the crash. Everything is awesome.

11:03Jordi Hays:Genuinely incredible that back then you could be the richest man with a paltry six billion.

11:09John Coogan:It's crazy. That's like an aqua hire these days. It actually is. Love from. I know. Oh yeah, love from. I was thinking of Windsor. The fact that we're thinking of multiple is insane. He was easily the richest man with six billion dollars in California. Oracle CEO Larry Ellison, co-founder of the world's second largest company, is Silicon Valley's most notorious playboy and a sportsman of the first rank who flies fighter jets and races world-class sailing boats. But his burning ambition is simple, if naive. Bring down Bill Gates. They were in a bitter rivalry at the time. As Ellison moves to add Apple Computer to his anti-Microsoft arsenal, Brian Burroughs locates the fragile psyche behind the bravado.

11:50John Coogan:Michael Jordan is streaking down the court on a fast break as Larry Ellison, sitting seven rows up from courtside. Weird, right? Is that a better seat? I don't know enough about basketball.

12:02Jordi Hays:I just think six billion. Maybe he wasn't liquid.

12:04John Coogan:Maybe he just couldn't afford the actual courtside seat. It seems crazy, right, that he's seven rows up. Although, I don't know, he's having fun because he's at the United Center in Chicago. And he begins enthusiastically telling the story of Rupert Murdoch. Rupert Murdoch's severed fingertip. This is a crazy story. I had no idea that this happened. It happened when Murdoch was crewing on Ellison's championship sailboat, the Sayonara, making coffee and handling minor chores during a race off the south coast of Australia in 1995. You're just like the guy who's just going to hang out and like, hey, you don't really know anything about this.

12:39John Coogan:You're just on this boat for fun. Make me coffee. And it's Rupert Murdoch, which is insane.

12:43Jordi Hays:We got to shake Rupert's hand. I didn't notice any missing. We're going to get to that. I didn't notice any missing fingertips.

12:49John Coogan:So just as the race ended, Murdoch made the mistake of grasping an overhead rope, which promptly shot through his hand, ripping the tip off of one of his fingers. He didn't say anything. He just kind of put his finger in his mouth, sucking on it, Ellison says, chuckling. I can't remember who picked up Rupert's finger, but we picked it up and put it in a plastic bag and put him in the chase boat. That night, after successful emergency microsurgery, there's microsurgery, I guess it wasn't that big of a deal, but that seems insane that they had to reattach this finger, They do the emergency microsurgery at an Australian hospital.

13:29John Coogan:Murdoch amazed Ellison and his crew by making it to the after party. And then several days later, by crewing again on a race to the Tasmanian capital of Hobart. And Rupert Murdoch, it's not like he was 25 in 1997. I'm pretty sure he was in his 50s. He's 95 now. Yeah, so he must have been, he must have been. Almost closer to 70. Yeah, wow, that is incredible. Of course, Ellison says with his little boy's grin, that doesn't alter the fact that his coffee was horrible. I mean, the man runs a great company, but his coffee sucks. It's incredible. Over the course of the Bulls pounding of the Indiana Pacers, Ellison, who grew up on Chicago's tough South Side and remains an avid Bulls fan, breaks into lusty cheering and joking boasts.

14:17John Coogan:I can do that, he shouts after one thunderous Jordan dunk. Such a crazy heckle. You'd be heckling Michael from the seventh row. You didn't upgrade to the front courtside seat, but you're still heckling none other than Michael Jordan. To gossip about nearly every power player at the nexus of technology and communications in the 1990s. His arch rival, Bill Gates. His best friend, Steve Jobs. His business partner, Mike Milken. Mike Ovitz, Ted Turner, Murdoch. He just piloted his Cessna Citation into Chicago's downtown Migs Field from New York, where he spent the previous day in meetings with Viacom's Sumner Redstone, Intel's Andy Grove, and Ray Smith of Bell Atlantic.