00:08:24 · Ron Biscardi, Anthony Pompliano
I guess we'll start to see what shakes out and which states kinda raise their hand and say, hey. We'd love for you to put your data center here. But, yeah, my guess is if they drag their feet, I think that this industry is just moving entirely too fast. They're not gonna they're not gonna sit around for twelve months to wait and see what happens. I think I think in AI years, that's like an eternity. [00:08:49] S1: Well, know what's funny is, obviously, Elon Musk, SpaceX has talked about doing these orbital data centers. I think at first, was kind of a joke. Then all of a sudden, was like, well, maybe we can do this. Now they are betting a portion of their company on being able to actually build, launch, and, and operate these. But when you see this, it kinda almost feels like that's the natural conclusion. Well, like if the people on earth are gonna give us a hard time, we'll do it off the earth. Right? [00:09:14] S0: And exactly. [00:09:15] S1: Look, I don't know. Maybe it's better. Maybe it's worse. You know, there... There's all kinds of trade offs in terms of the latency or, you know, all of sudden there becomes a lot of space traffic, you know, which is something that people don't yet talk about, but I think it'll become a big, big issue. But from that perspective, like, is that kinda what happens? It's just entrepreneurs figure out a solution regardless of what the politicians do?
00:09:33 · Ron Biscardi
[00:09:33] S0: Oh, I I have no doubt that that the engineers at SpaceX are working triple time to figure out how to get data centers, like, working in orbit as fast as possible. Because Tesla's... Tesla and SpaceX, their entire future is tied into the success of AI. I mean, in a in a major way. I mean, I own a Tesla. I own a model y. I absolutely love this car because I don't really drive anymore. This self driving is so amazing. I literally get in the car. I hit the self drive button. It takes me where I need to go. It's definitely a better driver than me. It has three sixty vision. All of that's happening because of AI. And as more and more people use these tools, it just creates greater and greater demand. So I'm sure that SpaceX is gonna do that. By the way, there's really not a latency issue. There's actually much more of a latency issue in the terrestrial. Like, if you think about the cell phone system, the number of hops that your call has to get through and the number of devices is enormous compared to what it would be if you were end to end through the SpaceX network that they've they've talked about building. So, you know, especially with the laser technology, they've already demonstrated they can... They know how to do in the current Starlink network. I don't think latency will be a problem at all. There's a bunch of other engineering issues they have to figure out, but I I suspect if if they can get that working in the next three years, call it, I think it becomes a serious competitor. Because once you get it working, now it's just a matter of how fast can we build these satellites and launch them into space. And with the Starship platform getting closer to becoming a production vehicle, they'll be able to launch. I I think one Starship can put up the equivalent of, like, three falcons worth of satellites. You know, they'll be deploying... I think it's around a 100 satellites per launch. And if he can get Starship launching as frequently as Falcon, which is right now, I wanna say they're doing about a 100, a 110 launches a year, tripling the capacity on each one of those launches would really make SpaceX a serious competitor in that space. So I I have no doubt that they are working overtime to solve that problem.
00:12:00 · Anthony Pompliano
[00:12:00] S1: Let's keep talking about these institutional investors and kind of how they're feeling about the market. If we stay on the AI theme before we get to maybe crypto or other things, what about Anthropic? Anthropic was supposed to come out at 2,000,000,000 or, excuse me, 2,000,000,000,000 with a t. Mhmm. And now they're gonna come out at 1,500,000,000,000 or so. We saw OpenAI. They were gonna raise 30,000,000,000. Now it looks like they're gonna try to raise 20,000,000,000. Are are these companies kinda cooling off a little bit? Are institutional investors souring on them in any way, or are they just as excited about, you know, the leading large language model labs?
00:12:30 · Ron Biscardi
[00:12:30] S0: Well, I'll say this. The the, you know, the market is moving so fast. It's always hard to know where... Exactly where the sentiment is. And you know, you've seen a little bit, I would say more concern in the market as to whether or not we're in a bubble and how close to the bubble bursting if we are in a bubble. But then this election result, I think primarily as a result of what will now be divided government, sent the stock market on a tear yesterday. So it it is hard to really know, but I can tell you this. Venture investing, which is where Anthropic sits, right, they they were a venture funded company, venture funds have had an incredibly hard time. The top top funds, this doesn't apply to the top funds, can pretty much always raise money. But as an asset class, venture has had a really hard time raising money for really the last three or four years, and it's primarily because their funds couldn't achieve liquidity on the on the investments that they made, even the ones that were really successful. I mean, SpaceX is actually a great example of this. SpaceX is about twenty years old. So here you have this company that in any other era of our stock market over the last hundred years would have gone public like fifteen years ago probably. Didn't go public because of the the change in our public markets and this whole process and and also the availability of capital in the private markets has been so much larger. Companies are just staying private much, much longer. But what it's created is a lot of anxiety for the institutional investors who are used to... You know, if you're an institutional investor and you like your venture fund and you you generally invest, call it $10,000,000 per fund, what you're counting on by fund three and fund four is that funds one and two are starting to exit their investments and you're taking the cash flows from those investments and you're recycling them back into the future funds. Well, if those cash flows don't materialize, you know, now you need to find other sources of cash. You know, if you're a pension fund, it's the retirees or... Not the retirees, it's the future retirees who are paying into the plan. Wherever your cash flows are coming from, they're not coming from your investment portfolio.
00:15:01 · Ron Biscardi
That has been a huge issue which really hurt the ability of, I would say, illiquid funds, private equity, private credit, and maybe not private credit as much because they do cash flow more, but venture, I think, was the most hurt by this dynamic. And we saw at our our cap intro events over the last three years, venture funds had the hardest time even getting meetings with institutional investors because they felt like I can't keep putting as much capital into this illiquid asset class that doesn't return money fast enough to me. Well, with the year we've had in the IPO market with SpaceX obviously leading the way, that whole dynamic shifted dramatically. And and I saw it literally across two events. One I held in late February where venture funds really, really struggled to even get meetings. Then I had another event in New York in June, completely different scenario. Venture funds were the belle of the ball. They got a ton of meetings and we saw, wow, there's this huge renewed interest, obviously very much tied to the timing of the SpaceX IPO, I'm sure. So I think with Anthropic going public, my expectation is that that momentum that started mid year should absolutely carry through. And we are seeing it in another event that we're throwing in Austin in a couple of weeks where we've got thousands of people coming in to meet with tech CEOs. So I do think there is still tremendous interest in... Look, if you want the best investment returns, you have to be a tech investor, generally speaking. There are pockets where really smart investors create other strategies that may perform for a period of time. But generally speaking, the best investments in history have come from technological innovations driven by companies like SpaceX and Anthropic. So my expectation is that this is gonna run a fair amount longer. Another, I'd say, difference in this particular era of tech investing is that these AI companies are generating tremendous amounts of cash flow or I should say revenue. Anthropic's revenue growth is like nothing we have ever seen from any company in the history of business. That's really, really unique. I'm a business guy who grew up in the .com era. And I remember to this day how we would meet companies that had no revenue, really no customers, but they had a ton of eyeballs hitting their website and they were raising millions and millions of dollars.
00:17:41 · Ron Biscardi
In the midst of that, a lot of us were looking at it saying like, this is crazy. Like, this has to be a bubble. This can't go on forever because sooner or later, you have to generate revenue to survive as a business. That's not the case in this AI era. These companies are incredible revenue generators. So it's it's a real... It's a really interesting twist to figure out, well, is it really a bubble? If you go from 0 to 16,000,000,000 a year in revenue in four years or five years, whatever it's been, that that company should be worth a lot of money. Now I don't know if it should be worth 2,000,000,000,000, but but it is certainly an incredibly valuable asset. So investors, I think, are are trying to figure out all of these, you know, different dynamics. And it... It's... My my guess is that venture is gonna be a really strong asset class for at least a few more years.