E127: Interview with CEO of Top AI Company Backed by Founders Fund and Khosla Ventures

In this episode of How I Invest, I sit down with Felix Ejeckam, Co-Founder and CEO of Akash Systems. Felix discusses how Akash is leveraging synthetic diamond technology to revolutionize cooling for high-power microchips used in AI servers and satellite communications. He shares insights on their $68 million CHIPS Act funding, the importance of U. S. semiconductor manufacturing, and Akash’s journey through tough times to becoming a leader in cutting-edge technology. A must-listen for anyone interested in semiconductors, AI, or transformative tech innovations.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Weisburd?

  I think a lot of companies or investors would like to replicate the process that you went about identifying new markets and executing against that. Talk me through the process. How did you gather the intelligence and the data in order to repurpose your technology?

• 0:16Speaker 01

  Paying attention to what your customers are saying very closely, paying attention to mega trends going on in the world. So folks who may be your customers, maybe not your customers today, but are they going to be potentially your customers down the line? So listening to these massive mega trends and knowing that you're going to intersect the world and the puck, where it will go to, not where it is today. I think that that's a key element to trying to position your company for where the world is emerging into. Otherwise, you just missed the boat.

• 0:57David Weisburd?

  So what is Akash Systems?

• 0:59Speaker 01

  Akash Systems is a company that uses synthetic diamond to cool down microchips. These are microchips that are so powerful that we are able to do things like what ChatGPT does or what a satellite does. Very powerful electronics. We're able to use synthetic diamond to cool them down and make them perform much, much better than otherwise. And when I say much better, I'm talking about in terms of raw power or efficiency. We've picked two products to start. One is the AI server, the types of systems that use GPUs, which you may have heard about. And then we have also picked satellite radios.

• 1:42Speaker 01

  These are very, very effective satellite communication systems that beam down from space data, such as you might see in your GPU, your GPS system when you pull up Google Maps to navigate your drive. We grow diamonds in the lab. These are synthetic diamond materials and we use these diamond materials to cool down these chips.

• 2:08David Weisburd?

  How much of the cost of a server chip has to do with heat and power?

• 2:13Speaker 01

  Oh my God, um, most of it. So in a typical data center, for example, something like forty percent of the cost of operating a data center, which is essentially a very large warehouse collection of servers, forty percent of the operating cost monthly is cooling, air conditioning, trying to reduce that heat. Uh, similarly, in your, you're something as small as your iPhone.

• 2:43David Weisburd?

  I've seen some pretty crazy numbers thrown out there in terms of market size for, for data centers, data warehouses, chips. How do you quantify the opportunity set for investors?

• 2:55Speaker 01

  We estimate our market size to be anywhere from two hundred to about four hundred billion dollars. Uh, keep in mind that we sell servers as well as satellite communication systems, a, a radio, uh, that fits into a satellite. It's about the size of a, of an iPhone, maybe twice the size of an iPhone. These systems sell for hundreds of thousands of dollars per unit. And so we estimate that our market is on the order of, uh, two to four hundred billion dollars. Uh, just looking at those two markets. Um, there are other markets which we haven't started to address today, but are in our roadmap, uh, such as you might have in EVs,

• 3:39Speaker 01

  electronic vehicles, uh, such as in smartphones, uh, communication systems, and not just in the phone, but also in the base stations that route the calls from phone to phone. And then, of course, in radar systems, which is used in, in defense. Uh, it's a radar is a kind of listening device that depends heavily on the kinds of cooling, uh, chips that we, that we make.

• 4:05David Weisburd?

  You just received sixty five million dollars from the CHIPS Act. Congratulations. Tell me a little bit about that.

• 4:10Speaker 01

  Thank you. We're excited about it. Uh, so we just received sixty eight million dollars in CHIPS funding from the government, the Department of Commerce's, uh, CHIPS and Science Act. And the funding is coming to To help us scale, scale our manufacturing and assembly of our products, namely the ones I just mentioned, the servers, the Diamond Cool servers, as well as the Sidlight radio systems. This funding will help us set up a plant, a semiconductor fab and assembly house in Oakland and just help us scale in terms of getting space, equipment, hiring people, and doing so as fast as possible.

• 4:54Speaker 01

  This is, this is non-trivial to do. There is a race right now to scale. All of us who are manufacturing gear in, in, in tech have a challenge in trying to scale. And this funding helps us address that. We just received as well a large customer order for, for servers.

• 5:17David Weisburd?

  We've seen bipartisan calls for onshoring critical technologies in the US and not to rely on foreign countries or foreign adversaries. Tell me a little about the CHIPS Act. Was that part of that effort? Or is this just a totally unrelated trend that you're seeing in the market?

• 5:37Speaker 01

  The CHIPS Act is absolutely connected to the bipartisan effort to try to bring back to the US manufacturing and assembly of semiconductors. We are extremely excited about that effort because the CHIPS Act helps us not only bring back manufacturing, semiconductor manufacturing to the US, but also shores up our national defenses. Okay, so being able to make your own semiconductors the thing that powers all defense equipment is an essential part of a country's national security. And we view our work to be very, very vital and central to that national security strategy.

• 6:20Speaker 01

  It helps us in securing our supply chain for all of our nation's major and critical economies. We will never again have to depend on other countries, certainly not our adversaries. To make the things that we need and and making these semiconductor chips and materials in Oakland is central to that. This is also a question of our economic security. We're building jobs. We're going to hire hundreds of people and on the order of four to five hundred new people in Oakland over the next four to five years. These are all things that every American is excited about, certainly on both sides of the aisle.

• 7:04Speaker 01

  And I should say that the hiring we're doing is going beyond California. We have a site in Texas that will benefit from this as well.

• 7:13David Weisburd?

  And you mentioned this space is really heating up. Obviously, there's a lot of demand from AI companies. Who are your biggest competitors and how are you guys differentiating against those companies?

• 7:24Speaker 01

  In the area of sort of high-powered, highly-cooled, high-efficiency servers, I don't think that we have any competitor at this point, certainly someone who we have to worry about in terms of performance. In any conversation with a customer, so far, we always win because of the the performance that we bring to bear. Just to illustrate that example of how diamond is so effective, we do this in front of customers, and every time since we do it, you know, people will just sort of light up even before we show how the server performs.

• 8:03Speaker 01

  If you don't mind, I'd like to show you how diamond works by by moving heat as rapidly as possible. This is a piece of this is a piece of diamond that we've grown in the lab. It's about half a millimeter.

• 8:18David Weisburd?

  Absolutely.

• 8:19Speaker 01

  Very, very thermally conductive, five times more thermally conductive than the next best material in nature, that being copper. I'm going to show you some ice cubes. And the ice, obviously, is cold. My hand is naturally warm, my body temperature. I'm gonna hold this ice and you're gonna watch as it slices into this ice cube as if it were butter. And my fingers are gonna feel so cold, you can't tell. But I can, I can tell you that that's what I will feel. But what you will see is the diamond's moving heat from my fingers into the ice cube rapidly. And that'll just be, and you'll see that because it just goes right in like butter.

• 9:04Speaker 01

  I don't know if you can see it. But yeah, it's going to right in. I just sliced it right there. I'll do this other one here so you can see.

• 9:12David Weisburd?

  So there's some thermodynamic factors coming into play here. So there's a transfer of heat from your fingers to the, to the ice and from your ice to your fingers with the diamond being a conductor.

• 9:26Speaker 01

  That is correct. And that's exactly the feature that we bring to bear in a server, in a diamond cool server, which, which we sell. And again, we're making a very big announcement next week. A big order, a massive order from a customer. Uh, one of the biggest, uh, uh, cloud AI compute companies in the world. Um, and this feature is what is making that possible.

• 9:50David Weisburd?

  Explain exactly, uh, how that works within a server, within a chip.

• 9:55Speaker 01

  So we take this diamond, uh, and, uh, and the diamond, the, the features of the diamond, the way we, we grow the diamonds, the dimensions of the diamond are all proprietary. And we use proprietary adhesives and we apply it to the GPU. Okay. So just like you saw with the diamond touching the ice, the diamond is, is, is on top of the GPU, the main heat source. Uh, we also do the same thing with other chips in the server. And because of that, because you have the diamond, uh, being such a great thermal conductor, it is able to spread the heat and reduce the temperature of the server. You reduce the temperature of the server, it means that your fans or your liquid cooling

• 10:40Speaker 01

  do not have to work as hard. The burden on those cooling systems is greatly reduced. In fact, we have found that we're able to reduce the electricity going into the fan, the cooling system by ninety percent. This is money going straight to the operators of the data centers, the folks who are paying the light bill. If you are doing inference work, it means you can overclock the GPU a lot faster. You can get more clock cycles. You can train your models faster, all because we're able to, by thermal conduction, extract the heat directly from the GPU to the diamond and then to whatever liquid cooling

• 11:24Speaker 01

  or other fan cooling systems that you may have in the server.

• 11:30Speaker 01

  And we do this demonstration for customers all the time.

• 11:33David Weisburd?

  We just had the US election. There's been a lot of exuberance in different parts of the tech ecosystem. From a business perspective, how does that practically affect Akash and your business?

• 11:45Speaker 01

  We're very excited because as far as we are concerned, the things that we extol, the virtues of our business, the fundamentals of our business have benefits that apply to all Americans, regardless of your political lineage, whether you're on the left or on the right, middle, if you're pro-business, pro-jobs, whatever you may feel. We think that there is universal appeal for our commercial security, our national security, for creating jobs, bringing manufacturing back to the United States so that it is not outsourced to our adversaries in China. There is universal appeal, and we have just received nothing but support

• 12:29Speaker 01

  from everyone who has heard our message. Folks who saw that we won the CHIPS Act have sent in very positive support to us, and we're excited about that.

• 12:39David Weisburd?

  I invested in 2019 in the Series A and then You guys had a tough time between 2020 and 2022. You did another round at that point. I'm very glad I reinvested then, but tell me about those times and how did that affect the organization?

• 12:56Speaker 01

  Those were tough times. I think it was, those were the COVID years, very difficult for everyone in the country. I think other than a handful of businesses, this was something that every country, every company had to had to grapple with. And the thing about these tough times, times of correction, is that it forces everyone to step back and think about your fundamentals. Do you have a distinctive technology or product that makes you stand out? These quiet times, as I call them, enable companies to slow down and get back to basics. What is your business plan? And that's what the COVID years enabled us to do.

• 13:38Speaker 01

  We then focused on literally making our products for space even stronger. And we're going to see some launches. Several companies are launching our satellites with our radios in in January, just a few weeks from now in April. But also, we started to extend our products, technologies into new markets, chief among them, AI and data centers. That wouldn't have, it wouldn't have happened had it not been for the quiet time afforded by the COVID years. That's what we did. We stepped back in a very disciplined way, developed some very new applications of our technology, went into the new markets that we could see coming down the pike, AI.

• 14:21Speaker 01

  And that's enabled us to to launch the products just a few weeks ago and to now sign this large contract with a with a major compute company that we'll be announcing next week.

• 14:32David Weisburd?

  I believe that organisms, when dealt with any kind of issues, either become anti-fragile or die. You're basically either growing or dying. How did that affect Akash Systems as an organization?

• 14:47Speaker 01

  I think that it affects organizations either positively or negatively depending on those basic business plan questions that I listed. Okay, so I think that in tough times, if you're not able to answer those fundamental business 101 questions of is there something very distinctive that has a 10x value proposition over competitors that you have? Is there a significant market size for that distinction that you have? I mean, you know, this like, you know, hundreds of billions of dollars in market size.

• 15:26Speaker 01

  Are you the very best team on the planet poised to deliver that distinction? If you're not able to answer these questions favorably, then I think you will struggle. If you do, then I think you have some very good years ahead. I think we've looked at, I read this recently, how a lot of our great businesses today were were born out of the tough times we've had when there's a correction, the corrections of exactly, exactly. That's usually the time when there's just a mental, there's mental space for people to just think calmly about big opportunities and these fundamental questions I described.

• 16:11Speaker 01

  Otherwise, when there's just a lot of euphoria and hysteria.

• 16:14David Weisburd?

  Recession.

• 16:16Speaker 01

  And this, a lot of slush money going around, it's easy for that type of hysteria to fund everything. And then these questions aren't really answered in a very disciplined way.

• 16:28David Weisburd?

  What would Akash Systems be if that bull market kept on going? Would it just be the wrong business? Would it just be one product? Like, what would have happened if there was no correction?

• 16:38Speaker 01

  If there's no correction, we were probably would have gone further with the space business and maybe the AI might have been pushed out a bit more into the future. Perhaps the world as we know it wouldn't have leaned in. I think AI was going to happen no matter what, but maybe a little bit more pushed out. I think that the. It's possible that the inspiration for the Chips Act wouldn't be there. Possibly this desire and belief to step back, hey, let's shore up our supply chain. Let's not be dependent on everyone in the world for our very vital microchips.

• 17:18Speaker 01

  I think that that those those questions would have been answered in a different way. And Akash, we would have evolved. I mean, we have some very smart people in our management team and throughout the company. I think we would have answered the questions well, given the circumstances that the world presents to us.

• 17:37David Weisburd?

  I think a lot of companies or investors would like to replicate the process that you went about, identifying new markets and executing against that. Talk me through the process. How did you gather the intelligence and the data in order to repurpose your technology?

• 17:55Speaker 01

  Paying attention to what your customers are saying very closely. Paying attention to mega trends going on in the world. So the folks who may be your customers, maybe not quite your customers today, but are they going to be potentially your customers down the line? So listening to these massive mega trends and knowing that you're going to intersect the world and the puck where it will go to, not where it is today. I think that that's a key element to trying to position your company for where the world is emerging into. Otherwise, you just missed the boat. I think having amazingly talented people around you, people that are even smarter than you

• 18:39Speaker 01

  in the things that you want to do is essential. I have an amazing team around me. Ty and Dan and Pimi, these are brilliant folks who are extremely good at what they do. And we're constantly challenging ourselves, asking ourselves the right questions. My VCs, Khosla and Kearney Jackson, Founders Fund, these are brilliant folks who just have been very helpful to us in making us, making sure that we answer the questions in the right way and that we steer clear. Of of the the potholes that can oftentimes sink a company that's trying to evolve out of some very difficult times. I mean, we essentially, the world had a forced mature event.

• 19:20Speaker 01

  You know, an event that sank most companies, most series A companies in the world. And to navigate that, you need some amazingly talented people. And luckily, we had that around the table.

• 19:30David Weisburd?

  There's this repeated concept in venture capital that you have to be non-consensus, right? I think a lot of the times, people don't really think about how painful mentally, economically could be to be non-consensus for several years. How are you guys able to kind of go against the grain and walk me through those difficult years where the market had not yet come to?

• 19:56Speaker 01

  As the founder, have to have conviction and belief in in in in fundamentals and in your core of of your value proposition. If you don't have that, then nothing else matters. You know, running with the herd is can be great when the herd is right in good times. But when times are tough, then I think having that contrarian view is what can can give lasting value.

• 20:33Speaker 01

  You know, because it's, you know, when everyone's moving left and you see opportunity by turning right, that's when you can make some serious bets. And it's interesting because there are different types of personalities, I find. You know, the types of, you know, engineers, smart people, PhDs that we interview, they're the folks who always are thinking of solutions, you know. It doesn't matter what problem they're faced with. Their instinct is to have ideas for for for moving forward, for solving the problem. And then there are folks I find who have an instinct for identifying the pitfalls, the problems lurking around the corner. Yes, there's a big opportunity here, but look at the 25 things that prevent others from achieving that.

• 21:18Speaker 01

  So let's not lose sight of these. I always want both at the table. I especially want the people who see those those risky uh hurdles lurking around, the things that are uncomfortable to talk about. We may not want to fess up to them and it's just a party pooper to bring up those issues when there's so much euphoria about an opportunity. I always want everyone at the table and and that nothing, because you know what?

• 21:48Speaker 01

  Uh, we are the most successful when we address every problem. In hardware engineering, electrical engineering and in in physics, um, problems don't just vanish unless you fess up to them and deal with them head on. They will be there forever. So, um, yeah, we just have to, you know, i- if if these problems are not being talked about, I get worried.

• 22:12David Weisburd?

  There's some kind of healthy mix of optimism and pessimism you need on every team. You need the entrepreneurs that see the ideal, how things could be. And then you need, as a second step, ideally, you need somebody to say, yeah, but here are the different things that we need to hear, the landmines to avoid, so that we could actualize that future.

• 22:33Speaker 01

  Yes. Yes, that's I totally agree with that. You need both.

• 22:38David Weisburd?

  What what's next for Akash?

• 22:40Speaker 01

  Uh, we've got a lot on our plate coming up in the weeks ahead. Uh, we're announcing this big order next week. Um, we're going to, there's a bunch of satellites going up with our radios in January. Um, we will start shipping the servers in Q1. There's another bunch of satellites going up with our radios in April. Uh, I think that next year, uh, we are on pace to have, uh, probably one of the fastest growing company, uh, uh, curves, uh, in in a very long time. And I can't, I can't even begin to imagine what 2026 might look like. Um, but it's just all about execution right now. It's, you know, go, go, go, go, go.

• 23:24Speaker 01

  Uh, build up as many servers as possible for this AI exponentially growing market that we see. And then starting to get some space hardware assets in in space. That's that's the future for us. I think that we see a place, a world where Akash could become the world's preeminent high-end server company in AI, period. I think that that's well within within our grasp. When I say future, I'm talking about like the next 12 months. Okay, so those are exciting things to look forward to.

• 23:56David Weisburd?

  This has been great and it's great to catch up and always inspiring to talk to Felix.

• 24:01Speaker 01

  Thank you.

• 24:01David Weisburd?

  Look forward to sitting down soon.

• 24:04Speaker 01

  Cheers.