2117 - How the Internet's Bandwidth Revolution is Shaping the Future of AI with Dan Caruso

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1:05with us right now it's dan caruso dan you are the managing director of caruso ventures your website is dan-caruso.com your new book is just hitting the store shelves right now uh it is called bandwidth the unstool the untold story of ambition deception and the innovation that It shaped the internet age and.com. Boom. Dan, it's great to have you. Thank you, Josh. I'm looking forward to this chat. Yeah, yeah. Well, you have a bit of an intro with Lance Armstrong with the book as well. Must read for anyone who believes in pushing boundaries and defying expectations. Well, Dan, I know you're also the founding CEO of Zio Group.

1:53Do you mind maybe just sharing a bit about your work and what you do? Yeah, absolutely. So Caruso Ventures is a single family office where, among other things, we do direct investing in tech companies in Colorado and including some deep tech categories like quantum and space tech. But my career was spent as a serial entrepreneur, creating the bandwidth that all of us take for granted in our everyday lives. So from very early on, as I graduated from college, all the way through 2020, when I sold my company, Zale Group, I was part of a series of companies who really shaped the internet era, building out fiber networks, creating internet infrastructure.

2:37And frankly, the entrepreneurs behind this, the stories, the intertwined stories behind them is among the craziest set of business adventure that has ever happened in the history of business. The biggest boom ever, the biggest bust ever, and then the slow climb back and rebirth of the industry itself. So I was able to tell the story from the firsthand point of view, being part of it early in my career at a more junior executive level. And then as we navigated through being one of the most influential leaders within the industry. Yeah. Dan, back in the day, I have to imagine this is obviously, you know, I'm looking at, you know, the title of your book and some of the imagery.

3:24And I'm wondering if you ran into this often back in the day where maybe in those early days when we were thinking about bandwidth specifically. And I'm wondering if there were people that were advocating for more of a future safe, you know, making decisions that are going to be a little bit more future safe in terms of like what our capacity is going to be. And I'm wondering if you experienced other people that pushed back on that and said, that's way too expensive. Come on, we're not going to need that. And, you know, here we are in a world where, you know, the data that we're expected to push over the web is just incredible now.

4:05I mean, even just examples like, you know, for an 8K video that we're doing and that, you know, that doesn't even include, you know, that's just like streaming entertainment. You know, there's so many things that are going on behind the scenes. Do you mind giving us just a glimpse into that world? Yeah. When the Internet came onto the scene, most of us didn't really know what it was, even as we started to use it. But then it became so obvious that the internet was going to change kind of the course of human evolution on a global scale, that the problem wasn't convincing people to invest in that, it was the polar opposite.

4:46The trend was so powerful, so obvious, not unlike AI is today, that everyone wanted to invest in it. Everyone. They just wanted to raise money. They wanted to contribute money into companies. And it got way out ahead of itself. And that's why the bandwidth boom, coinciding with the dot-com boom, became the biggest boom in history. So late 1990s, early 2000s, billionaires were being created almost on a day-by-day basis on paper, only to see in the early 2000s, everything fall apart dramatically. The biggest bust that ever happened in the history of boom busts in the entire world. Trillions of value were destroyed.

5:29within about a year or two, nearly every company that was once worth billions of dollars, sometimes, you know, 50 billion, sometimes over a hundred billion would turn out to be worth nothing a year later. And it wasn't just that people lost money. It's that bad behavior was exposed. And what kind of bad behavior? The kind that puts you in jail for a lot of years. So I had bosses that spent the better part of the rest of their lives behind bars, what they did during that bandwidth boom that got exposed during the meltdown itself. Yeah, yeah. Well, Dan, you know, today, you know, in the age of, you know, just rapid, both evolution and accessibility of AI-enabled tools, that has got to be an impact, that's got to have an enormous impact on what you talk about in your book.

6:25Like where we're going now. Yeah. The good news for all of us is because of this bandwidth boom, tons of fiber was built by lots of companies. And the fiber that was built is desperately needed to this day. And as you said, AI is driving a whole new wave of demand that really is just beginning. And then quantum. Yeah. I was hoping that was going to be my next question was quantum, which I'm sure you've got your eye on as well. Exactly. So quantum is going to layer on top of that. And together, it's going to cause another just seismic change in the way people live and experience the world, the way they work.

7:05And all that's going to require more and more and more bandwidth. So the fiber networks we built, two of the companies I was involved with are the two companies that hold the most fiber and bandwidth to this day. One is now branded as Lumen. It was level three that I was part of that became part of Lumen. and others, my company, Zale Group, that we founded in 2007, took public in 2014 and sold in 2020, but remains to this day one of the biggest providers of kind of fundamental bandwidth to support AI and all really new technologies. Will it be enough? No. There's more of the networks that will be enough, but at the edge, when we're building out fiber into more and more locations, that's going to be required because AI right now is more, we think of AI, it's these data centers that have a bunch of GPUs processing a bunch of information, but AI is going to move from there into the everyday network.

8:04And when it does, which is soon, we're going to need more fiber to support the edge of AI. Yeah. Well, Dan, what is the, before we get into that, But I was trying to think of like what I want to talk about the book. And I also want to talk about, you know, what types of investments are you doing today? Or in other words, like how do you work? And, you know, are you are you working? Are you looking at additional companies to invest in? I mean, what's on your radar? Yeah, we are a very active investor, mostly using my own capital. I did well during this whole cycle, as you can imagine. And so we're very focused on Colorado because we have an edge in Colorado.

8:50We're one of the best known investors in Colorado. And although we'll invest across multiple different sectors, we're almost certainly the largest quantum investor. And quantum in Colorado is a big deal. Colorado's the global leader in the field of quantum. And Colorado is also one of the global leaders in space tech. So we're also invested in multiple space tech categories. But then there's other companies we're invested in that are more, if I could call it traditional venture capital categories that are more software or fintech related. But we're really enjoying investing in the deep tech sectors as well.

9:29Well, I think it's one more question before I get back to the book here. And that is here we are just starting the year 2025. what predictions do you have or maybe not even just a prediction but what do you have your eye on and what would you imagine other leaders particularly you know those that are entrepreneurial those that are active in tech those that you know want to be to where the puck is going what would you recommend that we be doing, not just, you know, and staying up to date on trends and so forth, but in our day-to-day lives and in our companies and with our people and our organizations and customers, what would you recommend?

10:19Yeah, from an investment category, a lot of us are looking at AI saying, damn, I wish I would have invested in AI five years ago, because look what happened. So they feel like they missed that big opportunity or they were lucky and invested in that big category. And I was saying, what's next? What can I invest in? That's going to do five years from now what AI did this past year. And the answer to those questions is quantum. So if you want to invest in front of a gigantic trend, quantum is an area that you should begin paying attention to. It's like AI five years ago. So you're going to have to think I'm not, you know, right before it's going to jump up dramatically, but it's getting in front of something that's a certainty and will be seismic.

11:05But my big prediction for 2025, which I posted on LinkedIn, sticking my neck out a little bit, is I think 2025 is going to be known as the year that the government finally came clean with us on life forms that they know about that are outside of the world we know. So UFOs that are confirmed and intelligence that goes along with them. So I think the government - We'll see. Listen, Dan, I got to tell you, at this point, anything is possible, right? I mean, with the seismic changes that we're seeing, you know, this living in Moore's law around AI and quantum, I've learned it's probably not to presuppose that I know more than anybody else at this point.

11:59I think at this point, I think those of us in leadership probably just want to stay open, you know, to what's coming down the pike and to be ready and ready to do it because not everyone is. Dan, I want to talk about bandwidth, your book. Who should be buying this book? Who should be reading it? And what would you expect this transformation to take place when they read it? Because it sounds like it's packed with a lot of really compelling stories. Yeah, it's written as business nonfiction that reads like a novel. So it's meant to be, style-wise, Barbarians the Gate, if readers are familiar with that, listeners are familiar.

12:39So exciting stories that put you in these situations. the story is ironically the biggest the biggest boom and bust ever has never really been captured in a complete story which seems odd but it was somewhat overshadowed by.com.bomb even though that was the tip of the iceberg but the iceberg was bandwidth that's where all the money was invested that's where all the money was lost and that's where bad people did bad things and ended up punished for it but it's also where heroes were there throughout. Not all were successful, but you could see both the pioneers that created the initial internet backbone, the tycoons that funded the first build-outs of the fiber networks, all of the Wall Street influence, including how Wall Street did things that they shouldn't have been doing, which led to Sarbanes-Oxley, and then how those, including me, took advantage of the meltdown and was able to take this industry, create a lot of value because the need for internet never changed.

13:45It's just the investment got ahead of itself. So a lot of takeover battles, hostile battles, IPO stories, flashing kind of executives. It's just as a fun read and one that will also provide a lot of lessons for anyone who cares about building up a business of materiality. it needs to be an hbo series i think it could be because it is kind of like succession yeah like uh you know that's the style of saying i would try to bring the characters to life it doesn't focus on the technology it focuses on the characters the leaders and kind of you know tries to make that approachable regardless of what your business is and whether or not uh you don't need to understand anything about the internet or technology or about the the people who were playing into this incredible investment opportunity as entrepreneurs, as investors, and then seeing who won, who lost, and who just barely scraped by.

14:44The book is currently, as I'm looking at it right now, the number one new release in electrical fiber optics. Your website is, I just had it up here, is dan-caruso.com. And that's where there'll be links to the website or links to the book you could buy in hardcover right now. Dan, you know, to our friends that are listening right now, I mean, how can they work with you? Are there any opportunities to engage with you? Are there, you know, maybe some of the companies that you're invested in, you know, are there opportunities that folks should be paying attention to the work that you're doing? Yeah, absolutely.

15:27Our portfolio companies are listed on our website. So you certainly can find them and see which ones match up. Our investment is almost exclusively restricted to Colorado, but we're over a wide range. But we invest in companies that are national and global companies. So if there's something that catches your eye, I'm easy to reach out to. Of the companies that you're invested in right now, which ones are you kind of excited about? Well, we had one of our quantum companies just raise money right before the end of the year at a really nice upround valuation called Inflection. The other three quantum companies in the portfolio are all doing very well.

16:08There's a space tech company called Agile that's just killing it. There's Outside Inc, which is a media company for outdoor activities that's doing extraordinarily well. there's a number of these companies probably the one I'm most proud of at least proud of the CEO I featured him on my podcast which is called the the Bear Roars is a guy from Lebanon called Toters company we backed and he has built his with 25 million investment he's built his business of 500 million of revenue where all of the revenue is in Lebanon and Iraq so he tells how he did that while the war was going on you know facing we all think about facing adversity, but not the kind where you have to run up to the mountains to get away from missiles striking you while running your business, which is essential for the people of his country.

17:01So I just dropped that podcast a few weeks ago, and it was just fascinating to hear his story. Yeah. So to our friend that's listening right now, listen, go search for the name of the podcast. It's called The Bear Roars. Would you mind just sharing a little bit about that, Dan? Yeah, there's a couple different themes there. One is really about innovators, like entrepreneurial innovators. A lot of them are Colorado-based, but some, like the example I gave, are outside of Colorado. And the other is a companion to the book, where I feature executives who were part of this big bandwidth journey telling their firsthand accounts of what they went through.

17:36So we're starting to drop the bandwidth portion of that to coincide with the launch of the book. Yeah, you have had some phenomenal, yes, on your podcast, which again, you can just, whatever app you're listening to this podcast in, you can find the bear roars on Spotify, Apple Podcasts, Amazon Music, YouTube, et cetera. Okay, so Dan, your website, once again, dan-caruso.com. The book is imminently, as of when we're recording this, hitting the shelves. It's on Amazon, Barnes and Noble. So I guess, you know, any kind of final comments, you know, thoughts on, you know, here we are in 2025 and, you know, the work that you're doing.

18:21You know, obviously, there's probably some folks that might benefit from reaching out to you or Caruso Ventures. One final call to action here. Yeah, I think entrepreneurs and for-profit businesses are doing more to contribute to our world than anything else, any political institution, any nonprofit. I think they take a backseat to those of us who are building businesses, creating jobs, creating economic opportunity that really proliferates throughout the world. So all you entrepreneurs out there know that you're doing work that matters way beyond just to your investors or your family or your employees.

19:01You're helping to make the world a better place for everyone. Yeah, indeed. Dan Caruso, Managing Director of Caruso Ventures. You're the author of the book, Bandwidth, The Untold Story of Ambition, Deception, and the Innovation to Help the Internet Age and.com Boom. That is available now on Amazon and everywhere else. And again, the website to connect with you personally is dan-caruso.com, which again, there's a link to Caruso Ventures so you can see some of the work that you're doing and who you're doing it with. Congratulations on all your great work, Dan. And it's been a great conversation.

19:39Thank you so much for this. All right, Josh. Thank you.

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