Today's current thing (Aug 22)
Also: Joe Weisenthal, Kimball Musk, Jeffrey Katzenberg, and Jessica Livingston are on the show today.
Happy Friday, we are live. The current thing is the market ripping after Jerome Powell hinted at a rate cut this morning, but we think you should be paying more attention to neocloud companies like Crusoe (see below).
Also, TBPN intern Tyler asked all the SOTA LLMs to rank their taste in music and we published their responses on our Substack — check it out.
Ok, here’s John’s run of show. 👇
Let’s talk about neoclouds
The stock market is ripping today, and the Dow is now on track for its first record close this year (let’s go). The news is so subtle here. Powell didn’t cut rates, he didn’t say he was GOING to cut rates, he just said that if inflation goes up and the labor market weakens, “it could prompt the Fed to support economic growth by reducing rates.”
Powell said “inflation” 55 times during his (now transcribed) Jackson Hole speech, and the market clearly interpreted it as a signal that the Fed is ready to cut rates if cracks begin to show in the economy. This is one of the big reasons I’m optimistic about the potential of a bubble developing: stock market corrections are usually shorter if the Fed has the ability to lower rates quickly in response.
The Jackson Hole summit is the Fed’s annual gathering of central bankers, economists, financiers, and a few reporters. But one guest (kind of) stood out. Yesterday, Crusoe CEO Chase Lochmiller called in from a lovely log cabin he vaguely described as being in Jackson Hole to announce an acquisition. Given how hard I know he works, I imagine Chase wasn’t out there mountain biking (also, Bloomberg reported yesterday that Chase is raising at a $10B valuation SIZE GONG INCOMING!).
I had two takeaways from talking to Chase: first, I don’t know nearly enough about data center technology (I know KV cache optimization matters a lot, but I have no idea how it actually works). Second, neoclouds are in an interesting position during this particular phase of the AI boom. They’re either going to get steamrolled by the hyperscalers, or maybe one neocloud pulls away from the rest. But I feel like this is an extremely positive sum market: hyperscalers are spending tens of billions on capex, and neoclouds are being valued in the tens of billions too. AI is proving additive across productivity, entertainment, and the broader economy.
So as an American, the neoclouds pump me up. We’re doing the reindustrialization meme — new companies are making big things at scale! At the same time, the neocloud market isn’t a monolith, and again, appears to be at a turning point. Dylan Patel recently laid out four possible paths on a recent episode of the No Priors podcast:
Move up the stack. Offer inference APIs and services (e.g., Together, Nebius). CoreWeave is rumored to be acquiring Fireworks for this reason.
Go massive. Build at gigawatt scale like Crusoe. Few players can pull this off.
Settle for “commercial real estate” returns. Just rent out capacity at modest margins.
Go bankrupt. Slash prices unsustainably to fill GPUs, delaying failure but not avoiding it.
It’s such a fascinating industry to me, and feels way more important to spend time on than minor market moves on the back of hints of (maybe) future rate cuts (potentially).
Today’s lineup
Odd Lots’ Joe Weisenthal at 12:15 PM
Jeffrey Katzenberg and Kimball Musk at 12:30 PM
Y Combinator Co-Founder Jessica Livingston at 1:00 PM
In other news…
Chipotle announces burrito drone delivery partnership with Zipline…
OpenAI files to subpoena Meta, says Musk and Zuck discussed potential takeover bid…
Dylan Patel: “Elon’s Ani is really messing up on monetization”…
Trump taps Airbnb co-founder for new USG Chief Design Officer role…
John Travolta’s private airport estate lists for $10M…
a16z: “Questioning [AI startup] margins is a boring cliche”…
→ Response: “We Have No Idea How to Value the AI App Layer”…
Cracker Barrel rebrand ruffles feathers…
Meta gets approval for massive gas plants to power its biggest data center in rural Louisiana…
Rumor: battery backup power co. Base Power raising $500M at $3B pre…
Teslas in China to use DeepSeek for in-car voice assistant…
Apple in “exploratory discussions” with Google to power Siri with Gemini…
WSJ: “I toured America’s Priciest Home for Sale”…
Jon Wu: “Here’s how not to f*** up” your startup’s announcements…
Timeline
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