Inside the Factory Using Rocks & Sunlight to Fix AI's Power Problem | Exowatt

Most announced data centers will never get built. The ones that do are running on gas generators. And the US grid has no answer for what's coming. Hannan Happi, CEO & Co-Founder of Exowatt, joins Sourcery for a rare facility tour of their 40,000 sq ft Miami HQ — walking us through the tech, the team, and why the AI power crisis is far worse than the headlines suggest. Exowatt has raised $140M from a16z, Felicis, Sam Altman, Leonardo DiCaprio, Starwood Capital, Thrive Capital, and more, all betting on a deceptively simple idea: concentrate sunlight with Fresnel lenses, store the heat in rocks at 1,000°C, and dispatch electricity on demand. 24 hours a day, no grid required. Their P3 system is built from sand, dirt, and steel. Like a large magnified glass and a rock. No lithium. No cobalt. No China. Target cost: 1 cent per kilowatt hour. Timestamps (00:00) What is Exowatt? The solar backbone for AI data centers (01:30) Why the US grid simply cannot handle what's coming (02:00) Tour begins: Welcome to Lighthouse Miami — 40,000 sq ft facility (02:45) The P3 explained: three elements, one shipping container (04:00) The founding story: Atomic venture studio and the modular hypothesis (05:30) Why solar thermal hasn't followed solar PV's 99.6% cost decline — until now (07:00) North star: 1 cent per kilowatt hour and where they are today (11:00) Inside the world's largest solar simulator — the sun, indoors (13:00) The Fresnel lens up close: a giant magnifying glass for the sun (15:00) "It's rock science" — the 5-year-old explanation of how it works (17:30) Domestic raw materials (sand, dirt, steel) as the real competitive moat (24:30) The phantom data center problem: most announcements won't get built (26:00) From 100 MW to 10 GW: how data center scale exploded in 3 years (30:00) Funding breakdown: $140M, a16z, Felicis, Sam Altman, Leonardo DiCaprio (37:00) Lessons from Tesla: remove parts, iterate fast, build better 𝐒𝐏𝐎𝐍𝐒𝐎𝐑𝐒 • Brex https://brex.com/sourcery—The modern finance platform, combining the world’s smartest corporate card with integrated expense management, banking, bill pay, & travel. https://brex.com/sourcery • Turing https://turing.com/sourcery—Turing delivers top-tier talent, data, and tools to help AI labs improve model performance—and enables enterprises to turn those models into powerful, production-ready systems. https://turing.com/sourcery•VCX https://fundrise.com/vcx—VCX is the public ticker for private tech, allowing investors of all sizes to invest in venture capital. View The Portfolio athttp://GetVCX.com http://getvcx.com • Deel https://www.deel.com/sourcery—Deel is the global people platform that helps startups hire, manage, pay, and equip anyone, anywhere. Trusted by more than 35,000 fast-growing companies, Deel is the people platform that just works, so teams can scale without the chaos. Visit: https://www.deel.com/sourcery • Public http://public.com/sourcery–Investing platform Public just launched Generated Assets https://public.com/generated-asset, which lets you turn any idea into an investable index with AI. With Generated Assets, you can build, backtest, refine, and invest in any thesis with AI. Gone are the days of one-size-fits-all ETFs. https://public.com/sourcery https://public.com/sourcery • Merge https://www.merge.dev/?utm_source=sourcery&utm_medium=sponsorship&utm_campaign=2026-03-31_influencer_sourcery—The leading provider of customer-facing integrations and agentic tools for frontier LLMs, Fortune 500 organizations, and B2B SaaS companies. Visit:https://merge.dev https://www.merge.dev/?utm_source=sourcery&utm_medium=sponsorship&utm_campaign=2026-03-31_influencer_sourcery Follow Sourcery for the latest updates! https://www.sourcery.vc/ Disclosure Paid Endorsement. Brokerage services by Open to the Public Investing Inc, member FINRA & SIPC. Advisory services by Public Advisors LLC, SEC-registered adviser. Crypto trading provided by Zero Hash LLC, licensed by the NYSDFS. Generated Assets is an interactive analysis tool by Public Advisors. Output is for informational purposes only and is not an investment recommendation or advice. See disclosures at public.com/disclosures/ga http://public.com/disclosures/ga. Matched funds must remain in your account for at least 5 years. Match rate and other terms are subject to change at any time.

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

• 0:00Molly O'Shea?

  So what is ExoWatt?

• 0:03Speaker 01

  ExoWatt is developing the solar backbone for the AI infrastructure. So think of this as like a solar panel, but that has a built-in battery. One of the elements of our product is actually a Fresnel lens. This essentially focuses the light coming in from the sun onto the battery material. It gets very hot and then stores that energy. So what ExoWatt is really doing, our mission is to build a solar backbone. It's really important because if you think about the AI race is so intense. It's now time to power, right? I need power. I don't care how you make it. If you talk about a gigawatt data center, that's almost a million US households of energy. And the grid is just really not built for that.

• 0:46Speaker 01

  The most important thing is, at the end of the day, the raw materials that we use, sand and dirt and steel, right? And so you don't have to go import something from China. Really the vision and ideas to scale this to the millions and billions of units and build it better, faster, cheaper, and don't take no for an answer.

• 1:16Speaker 01

  Welcome to ExoWatt Miami.

• 1:18Molly O'Shea?

  Thank you. Thanks for having us here. So what is ExoWatt?

• 1:23Speaker 01

  So ExoWatt is developing the solar backbone for the AI infrastructure. So we're powering data centers that require enormous amounts of power with solar energy that's available around the clock, which is not something that people usually think of when they think sun, because the sun goes down at the end of the day. But we've developed a technology that we'll show you today that allows us to capture that energy and make it available and dispatch to around the clock to power baseload applications like data centers.

• 1:53Molly O'Shea?

  Amazing. So we're gonna do a little tour around the office. I did see the little model in there.

• 1:59Speaker 01

  Yes.

• 1:59Molly O'Shea?

  Could we go check that out? And it looks like you have merch too.

• 2:02Speaker 01

  Yes, we do. You wanna start there?

• 2:05Molly O'Shea?

  I definitely do.

• 2:06Speaker 01

  Yeah, okay, cool. Yeah, please come in. So our flagship product is called the ExoWatt P3. And so this is a desktop model, as you said. And essentially, as you can see, it's a modular system. Each module the size of a standard shipping container. And it's made of three elements. That's why it's called the P3. So the three elements are the optical table, so these lenses. And then you have the heat battery and the PC or the power conversion unit, all in this kind of container. And the idea is that we capture energy from the sun throughout the day. These lenses are tracking the sun. And then they're focusing that light onto a series of rocks, right? That's the heat battery.

• 2:50Speaker 01

  And then that energy is then transferred via an air loop to the engine, which produces electricity. So think of this as like a solar panel, but that has a built-in battery. And that essentially you can scale linearly to any project size. So if a data center customer needs 100 megawatts or a gigawatt or however many gigawatts, you just stack these next to each other. And kind of the hypothesis behind ExoWatt is that none of the elements of what we're doing here are net new. People have been using lenses, you know, centuries long ago. The engine technology that we use is very established and old as well. And essentially what we're using to store the energy is ancient as time. So it's essentially rocks.

• 3:34Speaker 01

  And so none of that is new. What's new really about our approach and our hypothesis is making this in a modular fashion, making this in a factory, and then scaling the production to millions and ultimately billions of these, which ultimately allows us to go down the cost curve and generate electricity at our ultimate goal of one cent per kilowatt hour. And so that's why we started the company. That's kind of been the goal of Northstar from the beginning. And now we're on a track and a path to get there.

• 4:01Molly O'Shea?

  How did you actually found the company and who was involved?

• 4:05Speaker 01

  Yeah.

• 4:06Molly O'Shea?

  And why Miami?

• 4:07Speaker 01

  Yeah, interesting story. So we started here because I moved here from San Francisco after I sold my last company to work with Jack and Chester at the Atomic team. So Atomic is a venture studio. They start a bunch of companies internally. And so I moved in as a founder in residence back in 2022 and started working with Jack, ideating around what could become Exowatt. Really, the hypothesis was the modularity. So we knew solar technologies, especially solar PV and solar thermal are established technologies. Solar PV has actually been really successful in coming down the cost curve. If you look at the trajectory over the last 50 years, the cost of making a solar panel has gone down by 99.6%.

• 4:53Speaker 01

  But solar thermal hasn't gone down that trajectory because most of the time people have built very large projects. And so we said, like, there's an opportunity to take that modular approach to solar thermal, which actually is contrarian, right? Because a lot of people say, you know, if you think about thermodynamic systems, you always want to build the largest system possible, right? That's why you want to build the largest rocket. You want to build the largest engine. You want to build the largest thermal mass. Because the larger the system is, the better the thermodynamic efficiency. So to go and say like, we're going to build a small modular thermodynamic system is kind of contrarian and counterintuitive. But we actually saw the benefits of doing that because we can very much control the costs

• 5:36Speaker 01

  and make that a process that we can replicate over and over and have a learning curve over similar to solar PV. And so that's kind of was the hypothesis. And we didn't really have any sense of what is the product or what it's going to look like. So what you see here and the future iterations, they're nothing we dreamt of. It was basically a process of iterating. So we went through various prototypes. We went through 50 different configurations. To even come up with this one and we've continued to iterate on that. And every time the approach we've taken is like, how do we get to one cent per kilowatt hour? Which is, by the way, for context, like, you know, electricity prices probably where you're at or where we're here at for residential customers are anywhere between 13 to 20 cents a kilowatt hour.

• 6:21Speaker 01

  For commercial customers, it could be as low as eight to 15 cents a kilowatt hour. So to get to one cent a kilowatt hour is insanely, insanely low. And if you think about data centers, they're signing contracts as, you know, on the mid-range 20 cents a kilowatt hour, up to 30 cents a kilowatt hour. So they're really desperate to get power and really want to solve this. And we saw a path to doing it sustainably. So we saw a path to doing it, by the way, in the US, right? This is before tariffs were issued and before all the policy was an issue. We said, in order to get to that cost, we need to manufacture domestically. We need to source domestically. We need to make this using raw materials that don't come from China, that are not rare minerals. And all of that is what we continue to iterate on.

• 7:04Speaker 01

  So every configuration that we design, we looked at the bill of materials or the BOM. And we asked ourselves, what can we eliminate from this? How can we make this simpler? And the same approach you see at SpaceX, right? Or at Tesla. So that's where I was before my last company. So that like that constant iteration on, let's remove parts, let's make it simpler. Let's scale the manufacturing is what has led to this. And yeah, we'll kind of show you the real product outside.

• 7:34Molly O'Shea?

  Okay.

• 7:34Speaker 01

  Yeah.

• 7:34Molly O'Shea?

  Amazing.

• 7:36Molly O'Shea?

  Sorcery is brought to you by Brex, the financial stack trusted by more than 30,000 companies, including one in three venture-backed startups in the US. Nearly 40% of startups fail because they run out of cash. Brex is literally built to help founders avoid that. Unlike traditional banks that let your money sit idle, shipping away out it with fees, Brex's designs help you spend smarter and move faster. Their all-in-one solution combines checking, treasury, and FDIC protection into one powerful account. You can send and receive money globally at lightning speeds. Twenty times the standard FDIC coverage through their partner banks and even high yield from day one. But same day and even same hour liquidity, access your funds anytime.

• 8:21Molly O'Shea?

  Companies like Scale AI, DoorDash, Service Titan, Hims, Anthropic, Flexport, Robinhood and Plaid, trust and use Brex. Start today at brex.com/sorcery. That's B R E X dot com slash sorcery. In today's high-speed business world, staying ahead means using the smartest tools possible, including the powerful capabilities of artificial intelligence. Meet Turing Intelligence. Turing builds customizable AI systems designed to solve your mission-critical challenges, no matter your industry. From expert guidance to tailored projects, Turing helps top companies realize AI that's more capable, more adaptable and more effective. With Turing, discover how AI can accelerate your business growth.

• 9:05Molly O'Shea?

  To learn more, visit turing.com/sorcery, spelt S O U R C E R Y. That's turing.com/sorcery.

• 9:14Speaker 01

  All right, cool. So we're now standing in what we call Lighthouse Miami. So we were, we got out of the swag room.

• 9:23Speaker 01

  And so Lighthouse Miami is what we established here in Miami. It's about a 40,000 square foot facility where we have most of our engineering team, some light manufacturing, and we have the showroom back there that I'll show you outside. And we started out here after moving two times in Miami. We've been constantly kind of outgrowing our space. And I think we're at the limit of this space too, so we might have to move out of here soon as well. But we call it the lighthouse because one of the elements of our product is actually a Fresnel lens. And so as I was telling you, the Fresnel lenses are used, one of the applications for them is in an actual lighthouse.

• 10:02Speaker 01

  So you can kind of use the Fresnel lens two ways. You can take lights that's coming from a like a wide source, like the sun, and then focus it on to one point. Or alternatively, you can take a point source and kind of beam it out. And that's what lighthouses do. So we call this the lighthouse because we actually added some light to it before this. It was dark. And yeah, it's really cool space now that the team's using to do our development and testing and also other functions are here as well. So what we're going to do is We're gonna start actually in the second warehouse, so we have two warehouses here. And I'll show you some of the components that go into what makes the P3.

• 10:44Speaker 01

  And then we'll walk across to the other side and go outside and see the the production units that are out there. For context, this is one of the earlier prototypes that we built, just the the, you know, actual version of that model that you saw there. And we're right now using it as a history piece and a

• 11:03Molly O'Shea?

  Is this the actual size?

• 11:05Speaker 01

  Yeah, yeah, yeah. So this is a 40-foot shipping container. Essentially, this is of course now empty and we're not using it. We're just using it as you can see every year, just to write down the names of the folks who've joined us. So hopefully

• 11:18Molly O'Shea?

  Yeah.

• 11:19Speaker 01

  We'll keep on going. All right.

• 11:23Molly O'Shea?

  Fun.

• 11:27Speaker 01

  Do you play padel?

• 11:29Molly O'Shea?

  Yeah.

• 11:30Speaker 01

  So this is Ultra.

• 11:31Molly O'Shea?

  That's Ultra? Oh, so we're in Magic City?

• 11:33Speaker 01

  Exactly.

• 11:34Molly O'Shea?

  Oh, that's amazing.

• 11:35Speaker 01

  Yeah, so this is the largest padel court in Miami, of course.

• 11:38Molly O'Shea?

  Oh, that's so fun.

• 11:40Speaker 01

  Yeah, so on this side, we originally started doing some light manufacturing and assembly. Now we've repurposed it to extended R&D. One of the coolest things we set up here is this kind of room here I'll show you. This is a solar simulator. This is the largest solar simulator of its kind in the world. So it's state of the art. And what that means is we essentially have the sun indoors, so that allows us to do 24/7 testing. So I can show you what it looks like. That's an image of it from

• 12:13Molly O'Shea?

  Do, can you, can you get tan in there? Can you also use it as a

• 12:17Speaker 01

  Yeah, you can get very tan, yeah. Yes.

• 12:25Speaker 01

  Inside here.

• 12:29Speaker 01

  And they're doing some construction on it. You see, you have these lamps essentially, and they're going to be beaming light. It gets so hot that the paint will actually chip off. Yeah, people don't expect to see a company like this in Miami.

• 12:46Molly O'Shea?

  No, I'm used to this in El Segundo. It's actually, I'm getting very excited right now. I'm like, is that a CNC machine?

• 12:52Speaker 01

  Yeah, people are like, wow, you could do this in Miami?

• 12:55Molly O'Shea?

  That's so cool.

• 12:56Speaker 01

  Yeah, whenever we say we're in Miami, people think we're at the beach and, you know.

• 13:01Molly O'Shea?

  Well, this is hardcore.

• 13:04Speaker 01

  So I want to show you the lenses here, just to begin with.

• 13:10Speaker 01

  So this is, again, as I mentioned, it's called a Fresnel lens. So this is the first element of our system. What a Fresnel lens is, is think of it as a giant magnifying glass. So you have this curvature of the lens. And if you flatten it, you kind of get these grooves. So if you touch this, you feel that there are some groove strips. So that's kind of corresponding to the curvature of the lens. And so this essentially focuses the light coming in from the sun onto the battery material. It gets very hot and then stores that energy. So essentially, our battery is a heat battery. And what that means is we're heating up rocks, right? And then storing that energy in formal heat,

• 13:52Speaker 01

  which is very cheap as compared to doing lithium ion or any other type of electrochemical battery. And you don't have to get lithium or magnesium or cobalt or any of these other fancy chemicals. So that's why we chose a heat battery. And this allows us to, essentially, as I said, capture the incoming light in form of heat, stored in form of heat over longer durations, up to five days per cell, and then dispatch it around the clock for data center applications. And so the way we do that is...

• 14:25Speaker 01

  You can see some units here in the back.

• 14:29Speaker 01

  So we have these blowers. So the blowers are, think of it as like your oven, right? When you, when you put something in connected mode, there's a fan spinning that's basically blowing air through the system. That, they're blowing air through the rocks and then they're bringing it to our engine. So that's the engine. One of the engines brings it to the engine heat exchanger. And then that's essentially a stirling engine. I'll show you what a stirling engine is. It's a very simple engine, a 200 year old technology, very reliable. Hundreds of millions of hours of runtime on it. And that's what produces electricity. And so you kind of combine these together, string them along, and then you can get to any power profile or any energy profile you need.

• 15:08Speaker 01

  The simplest way of explaining the technology is like the five year old version is imagine if you're out in the woods or at the beach and you find a rock, right? And you grab the rock and you have a magnifying glass in your pocket. And then you hold the magnifying glass to the sun and then you heat up the rock. The rock's gonna get hot. You just wrap that in a blanket and put it in your pocket. That's kind of your battery. And then you stick a stirling engine on it, which I'll show you. And that's gonna basically just start running based of that, based of that heat differential and make electricity. So that's, that's really what we do. It's not really the rocket science.

• 15:42Molly O'Shea?

  But it's rock science.

• 15:44Speaker 01

  It's rock science, exactly. Yeah, yeah. Now, so we'll show you some of the rocks as well.

• 15:50Molly O'Shea?

  I love a good dad joke.

• 15:56Molly O'Shea?

  So what are the, what are the rocks? Like what type of rocks are they?

• 16:00Speaker 01

  You could use any kind of rocks. So we have developed a specialized rock that could handle the temperature profiles and go through the cycles a lot. But we're maintaining the rocks at about 800 degrees Celsius to 1000 degrees Celsius. So that's, you know, equivalent about 2000 degrees Fahrenheit. And you can use any rocks, riverbed rocks, you could use fancy ceramics. There's, there's nothing that's necessarily a secret to what kind of rocks you use. What's, what's really important is how you transferred its heat to it, make sure that you've done testing to make sure that the rocks don't break over time and they can handle the cycles. And that's a lot of the testing that we've been doing and have done and developed our material around it.

• 16:44Speaker 01

  But the most important thing is if you think about the raw materials that we use, at the end of the day, it's essentially... Sand and dirt and steel, right? And so the sand is essentially quartz that's converted to the lenses, to the insulation that we use, to even the rocks essentially. And same with the dirt. And then the steel is just for the enclosures and the engine parts. And really nothing fancy about it. And that's really one of the key value props here is that you can make this domestically using very simple raw materials and you don't have to go import something from China. And it's really important because if you think about we're building the backbone

• 17:29Speaker 01

  of our AI infrastructure on borrowed technology, right? And so we're trying to do this here domestically. And I think we're just getting started, so we have lots of room to grow. But there's a very clear path to how we can support data center growth and in general, other power applications, heat applications, industrial applications at the multi-gigawatt scale very soon. This is the other side where we do a lot of R and D. Just to tell you why I said this is a production studio. So this room you see here, this was a projection studio. So this is where the projector was. That's the kind of opening where the projector was projected. And inside there was like a movie, like a cinema, yeah, screening studio, yeah.

• 18:12Speaker 01

  So anyways, we've got lots of various R and D components here that I can talk you through. But the main highlight is if we go outside, we can show you actually

• 18:23Molly O'Shea?

  Oh, wow!

• 18:24Speaker 01

  How all this comes together. We're currently maintaining some of the machines, so all of it is not running. But I'll show you kind of the elements of it as we go outside. Again, you ask like, why in Miami? People don't expect to see this in Miami. But the fact is, first of all, you have this sun, which you wouldn't otherwise have in San Francisco all the time. Second of all, you've got a lot of great talent because South Florida is actually the center of a lot of the energy activity in the US. Like the largest energy company, renewable energy company in the country is here. And then you've got a lot of data center developers also in South Florida as well. So we've got lots of great talent, lots of great investors. And yeah, lots of great stuff to show you here.

• 19:07Speaker 01

  But I'm going to put on my sunglasses because otherwise I'll get a headache.

• 19:12Speaker 01

  But yeah, so what you see here is how this all comes together. So you've got the lens table at the top, right? So each one of these is sitting on a 20-foot skid. So inside, you saw a 40-foot skid, which now downsized it to a 20-foot skid for ease of handling and manufacturing. And then that light is getting focused onto the battery cells or the rocks that's essentially in these enclosures. And then we blow air using the blowers that you saw into this first shipping container here. That's essentially where the PC, the power conversion unit, the engine sits. And then that air gets looped back in. So it's not like we're taking ambient air and then heating it up and then making electricity out of it. It's actually that we are cycling the air every day about 200 degrees Celsius.

• 19:57Speaker 01

  So we're going from 600 to 800, 800 to 1,000 degrees Celsius, and that's what's helping run the engine. So it's high temperature, but not extremely high temperature, where you've seen some companies make batteries that are 2,000 or 3,000 degrees Celsius. So this is what we have today. And then the optical table, again, of course, tracks the sun. Right now, this is not hooked to the grid, but rather our EV chargers.

• 20:31Speaker 01

  You can see the Rivian charger here. Oh, wow! If we go to the other side, I'll show you some other cool test stuff that we're doing.

• 20:42Speaker 01

  If you come inside here,

• 20:45Speaker 01

  we have these containerized engine test stands. So these are test stands that can run around the clock for our various engines. They're currently, as you can see, fixing one of the test stands. But we build these because then they can be separated from the building and we can run them all the time without having to worry about any, like, security or safety issues. And here you have another test stand, which is used for essentially various temperature profiles that we run the battery at. And I'll show you what's inside here when we go inside.

• 21:22Speaker 01

  So this is an engine running.

• 21:28Speaker 01

  You can see the engine at the very far back. If you come around, that thing at the far end is the engine. And then all these pipes are just blowing hot air into it. So this is inside that shipping container that I showed you is a similar setup, where we're just getting the hot air from the battery cells, the rocks, into the engine. Right now, this is just doing it from the ambient, using heaters. Yeah. We can, uh, close this for safety.

• 21:57Molly O'Shea?

  It's so cool. It's like every time you open a different container, there's like a little city in.

• 22:00Speaker 01

  Yeah, yeah, exactly.

• 22:02Molly O'Shea?

  Surprise. Quick note before we keep going. I've been investing on Public for a while now, and it's a really solid platform that combines stocks, bonds, options, and crypto with incredible AI tools that let you do things like build a completely custom investable index from a prompt. Right now, Public will give you an uncapped 1% match when you transfer your portfolio. Check it out at public.com/sorcery. Public, investing for those who take it seriously. Paid for by Public Investing. Full disclosures in the description.

• 22:31Molly O'Shea?

  V C X by Fundrise, the public ticker for private tech, allowing investors of all sizes to invest in venture capital. View the portfolio at getvcx.com. That's getvcx.com. Founders ship faster on Deel. Set up payroll for any country in minutes. Hire anyone, anywhere. Get visas handled fast and get back to building. Visit D E E L dot com slash sorcery. That's D E E L dot com slash S O U R C E R Y. Enterprise AI runs on Merge, the AI infra platform for integrations, agent tooling, and model orchestration, so your teams ship product, not plumbing. Mistral, Dropbox, and Drata already trust Merge in production.

• 23:15Molly O'Shea?

  Start building at merge.dev.

• 23:17Speaker 01

  We have rocks here, lots of rocks. I'm not collecting them, yeah.

• 23:26Speaker 01

  Yeah, if you come here to the left.

• 23:31Molly O'Shea?

  Gosh, this space is huge.

• 23:33Speaker 01

  Yeah, it's about, as I said, 40,000 square feet. So, as I mentioned, this is kind of what we're talking about, various rocks. This is what you heat up and store the energy in, and essentially the rest of the stuff you see also. This is our materials lab. We have various kind of devices here for testing. We have ovens, we have all sorts of microscopes and everything else, but we have a...

• 24:01Speaker 01

  Where's our cabinet? Yeah, we have various rock samples, as you can see here as well. But yeah, this is essentially

• 24:12Speaker 01

  how the XO at P3 works, and really the vision and ideas to scale this to the millions and billions of units. We started productionizing this first generation that you saw outside last year, and now we're working on the next generation that's even simpler and cheaper, and gonna scale that significantly this year to ship to some of our hyperscaler customer projects. We've been very fortunate to have a backlog of over 10 gigawatts at this point, working with the leading hyperscalers. And I know that sounds like a lot, but you know, the pace at which data centers are now building, it's not a lot in four years. When we started the company three years ago, I remember, and I was new to the data center world, like, a big data center,

• 24:57Speaker 01

  I think the largest data center at that point was 100 megawatts. And like a rack was like 50 kilowatts or 100 kilowatts at most, or even less than that. And, you know, when we were talking to customers, it was like, "Oh, we're building in 25-megawatt blocks," or something like that. And then... As time went by, the kind of large data center became like a gigawatt, and then recently now it's become 10 gigawatts, right? And it keeps on growing, and then the racks keep on getting more energy dense, from like 50 kilowatts to now, people are building racks that are a megawatt, which is insane. And sometimes people say, well, I don't think people contextualize how much energy that is.

• 25:40Speaker 01

  So if you talk about a gigawatt data center, that's almost a million US households of energy. So if a data center says, "I'm building a 5 gigawatt data center", they're basically building a city that's 5 million households, and they're building in a very tiny footprint. Although not so tiny, the funny thing about data centers is when they start talking about buildings in acres, you can start realizing how big these buildings are. So like a 5 gigawatt data center itself, the building, not the power infrastructure, nothing else, is going to be 5,000 acres.

• 26:13Molly O'Shea?

  Oh my god.

• 26:14Speaker 01

  So that's just the building for the data center. And then you have all the other infrastructure around it. And I don't think people really appreciate how big these buildings are, because historically, data centers were built normally around urban, suburban areas. That's why you have a lot in Virginia, and in North Carolina, and Chicago, and other places like that. Because the biggest data center was maybe 100 megawatts. Typically, data centers were like 20, 30 megawatts. And the typical approach was, well, I'm going to build a data center. I don't really have to think about power, because I'm just going to plug it into the grid, and there's going to be power. It was really not, never this constraint of power as an equation. And now, as data centers have become bigger and bigger and bigger, and the hyperscalers want to invest more and more,

• 26:58Speaker 01

  as you've probably seen, like the Googles of the world and so on and so forth, they're planning on investing a trillion dollars in capex in data centers over the next couple of years. That means that you have to consume more power, and the grid is just really not built for that. And what that means is the data centers now have to get how to bring their own power online. Because it's also important that, you know, when you plug in a data center, it consumes a lot of power from the grid, which also means... You and I, as ratepayers, will have to pay for that additional infrastructure that has to be built to support that. And I think that's become a big issue today in the US where, you know, these data centers are being built

• 27:37Speaker 01

  and they're harming the communities, increasing the energy prices, they're taking the scarce resources that the communities have like water. And now we're seeing a shift to building data centers that are no longer connected to grid. Two or three years ago, it would have been a sin or impossible to tell a data center customer, we're going to make a behind-the-meter power generation asset. Behind-the-meter being like, or off-grid being, you're not connected to grid, you're not flowing through the grid. But, you know, over the last year, you've probably seen that's become, you know, norm and unfortunately, most of these customers are using natural gas generators to power the data center because it's available and, you know, that gas is, whatever, you just burn some gas and you can make electricity.

• 28:19Speaker 01

  It's certainly not cheap, it's of course not sustainable. And as you can, if you think about the context of like the war we're in right now, it's not really a good idea to bet your data center power on a gas backbone. So what Exowatt is really doing, our mission is to build a solar backbone, which is free energy, right? The sun is free, it's available, you can power the entire US 100,000 times over with tiny speck of land of solar panels. Even Elon Musk famously said that a couple of years ago and a couple of times. And the only kind of pushback sometimes we get is like, well, solar takes a lot of land.

• 28:57Speaker 01

  But the reality is we have so much land, 41% of the US is empty, like zero people live there, according to the Census Bureau. So land is really not a constraint. I think it's going to be also good for the communities to not go build data centers in the metro areas where people live and it's going to affect them, affect their health, affect their energy prices, to go to these barren land areas and build these data center projects. And just recently, we launched an initiative that we call Exorise, which is to go develop these land sites and build multi-gigawatt data centers on top of them. So that's something that we're super excited about. Our Chief Data Center Officer, Nick, who recently joined us, is leading that effort.

• 29:40Speaker 01

  And you'll be hearing a lot of those projects coming online in next year. I would say we'll have some news there for sure.

• 29:48Molly O'Shea?

  Wow. So in terms of the funding side of ExoWatt, how much have you raised to date and who are your investors?

• 29:55Speaker 01

  Yeah, we've been super fortunate to have the best investors back the company. So as I mentioned, we launched it from a venture studio called Atomic. They initially gave us the pre-seed funding, if you will. And then in 2024, we came out of stealth and we launched our, raised our seed round, which was led by Catherine Boilat and Reece and Sam Altman.

• 30:16Speaker 01

  And then later that year, about six months later, we raised our Ceres A. And that was led by Felices and then 8090 and MVP. So in total, we've raised about $140 million over the last two years. And it's been great. I mean, we've got tons of great investors with tons of knowledge about the industry. It also very deep pockets to help us scale the business. But if we think about how do we take this to the next level? And how do we deploy multi-kilowatts scale projects? We'll need even more funding. And so we're going to be making some announcements on that front very soon as well.

• 30:53Molly O'Shea?

  Oh, interesting.

• 30:54Speaker 01

  Yeah.

• 30:56Molly O'Shea?

  That's exciting.

• 30:57Speaker 01

  Yes.

• 30:57Molly O'Shea?

  So with investors like Sam Altman, how are you working with strategic partners? And I don't know if it extends just to OpenAI, but these other hyperscalers that are customers, how are you strategically being involved and what have you learned from them?

• 31:13Speaker 01

  Yeah, I mean, we've been very fortunate to be able to talk directly to all the hyperscalers, learn about their needs, learn about kind of how we can support them and have relationships with all of them. We haven't announced any of these products publicly, the commercial projects that we have with them, but hopefully soon we can talk about them as well. But it's been, it's been a learning experience for me. I have an energy background. I understand how power works. But just how data centers consume power has been a learning experience for us. And I think it's also been a shifting. evolving story, just as I said, just where they take power from is one topic and then how that power is consumed is another topic.

• 31:54Speaker 01

  And especially when you think about data centers not only consuming a lot of power, but if it's a it's a inference data center or training data center, they also consume that in a not necessarily base load way. So people think, oh, data centers are base load means like you have a flat load. But it's not like that. It's like going like this all the time. And and there's there's a lot of power electronics that you have to develop to actually handle those transients. And we've been learning about that and and developing our own kind of solutions towards that as well. And yeah, we're really excited to support these hyperscalers in their projects that are coming online next couple of years. I really hope that we can scale our business as fast as possible to do that, to to build this sustainable infrastructure, because

• 32:39Speaker 01

  otherwise, we're going to be left with tens or even, yeah, tens of gigawatts of mad gas burners that are going to last for another 20 years. And they might be a quick fix now, but I think the hyperscalers know they're going to pay a price for this later, both in terms of penalties for emissions and and also just the cost of energy that's going to go up. So the sooner we can get this to the market and scale it in a very significant way, the better everyone will be off.

• 33:10Molly O'Shea?

  And then they'll start their carbon offset campaigns a little bit more to make up for that.

• 33:16Speaker 01

  Yeah, that's an unfortunate fact that is kind of like gone out of the vocabulary of all the hyperscalers is there's no more like sustainability is our is our priority. You know, it used to be one of the objectives, but it's now time to power, right? I need power. I don't care how you make it, you know, squeeze penguins if you have to, and I need the power. And then, and then second to that is like the cost of power. Um, but that's all, to be honest, very secondary at this point. You know, data centers are in so desperate, the AI race is so intense. That cost is kind of like secondary for the most part. And then third, fourth and fifth are other things probably. And then six or seven is now like, I want to make sure it's sustainable.

• 34:01Speaker 01

  Um, and that's not a fortunate thing. It doesn't have to be that way, but we're here to fix that.

• 34:07Molly O'Shea?

  Given, and you did mention this a bit beforehand, but given you're so close to the actual build out of these data centers. You understand where they are in this uh, cycle and adoption and that kind of thing. What are the biggest misconceptions or I guess hidden truths about where we are right now? In the world of data center adoption?

• 34:31Speaker 01

  Uh, yeah, I think um. There, there's a lot of headlines about data center projects being planned or initiated. I don't think all of them are actually happening. So there's a lot of like phantom data centers that are being um. Announced, let's call it that way. I think um, data centers are definitely in a rush to get online fast. They do have massive supply chain constraints. Uh, two years ago was maybe Nvidia GPUs, now it's power. Um, and now it's actually not even hardware, it's actually labor. So the biggest kind of challenge for data centers today is are there aren't enough construction workers to build a data center. So you have to like import people from other states to a site to build a data center.

• 35:17Speaker 01

  And uh, being an electrician these days is actually a very uh, high paying job. Because there aren't enough electricians to even twist wires and, and you know, just hook things up. So I think um.

• 35:30Speaker 01

  You know, some people always think that there's a bubble and this all is going to go away. But the reality is if you look at the capex budgets and the spend that's happening from the hyperscalers, it's very large and it's it's pretty much planned for next couple of years. So I would say until 2030, there's no doubt that this is going to continue to scale at this rate. The question is like, what happens after 2030 and is it going to continue beyond that? But data centers are super expensive, by the way. You could kind of say, rule of thumb, one gigawatt data center or per gigawatt, you have to spend about $50 billion of capex, which is an insane number to think about, right?

• 36:12Speaker 01

  You know, I was talking, when you talk to folks in the industry, you're like, yeah, it's the same numbers more or less that we had like three or four years ago. It just has a couple more zeros behind it. It just becomes larger and larger and larger to the point where even the hyperscalers want to go get debt to fund this because they don't want to, you know, maybe they don't even have the capability to fund this from their from their balance sheets. But yeah, the data center build out is happening. I think what we're trying to really influence is to do, make sure that it's done sustainably. We're trying to make sure that it's done outside of urban and suburban areas where it could affect the communities. You know, I talked about the energy crisis. The other aspect is really health. If you think about they're burning diesel, they're burning gas.

• 36:56Speaker 01

  In the gigawatts, this is going to have a real health impact for people living around those data centers. So where I think we've got the kind of solution here, now it's really about scaling and adopting it at scale and bring this online very quickly.

• 37:15Molly O'Shea?

  So through all of this and building ExoWatt to what it is today, what were the biggest lessons that you learned early in your career?

• 37:25Speaker 01

  Yeah, I mean, as I mentioned, I used to work at Tesla for the launch of the Model S when the Fremont factory was getting built and it was it was amazing, eye-opening experience. Tesla wasn't a popular company. We had to fight for a lot of currents to uphill to get there, but kind of really the lessons learned were to, first of all, have an amazing, dedicated, mission-focused team. Like, I think that's the primary ingredient that actually got Tesla through. The second one is to build a great product that customers really want and enjoy, and that's something I also learned at YC, right, from Sam, build something people want. And then really, hardware is hard, so you want to try to figure out how to create the

• 38:10Speaker 01

  shortest feedback loops possible and learn from that as fast as possible and scale that as fast as possible. And that's kind of why we chose this modular approach, instead of going and building a giant infrastructure project and saying, "Well, we need 10 years and a billion dollars to get to our first demo site." We said, "Let's build the smallest thing, learn from that, iterate quickly, and build a next generation, next generation, do that quickly and fast." And then the last thing about, you know, everyone coming out of Tesla, you know, you're obsessed with vertical integration, you want to build everything a house. We haven't done that to that extent yet. We've started working with contract manufacturers because we know we need to scale fast, quickly, so they have that infrastructure. But, you

• 38:51Speaker 01

  know, Elon really taught us how to vertically integrate everything and build it yourself and build it better, faster, cheaper, and don't take no for an answer, yeah.

• 39:01Molly O'Shea?

  Amazing. Well, it's awesome to see everything that you've built and not only like how cool it is to be involved in this next generation of the AI supercycle, but do it in a sustainable way and create a ton of jobs here in Miami.

• 39:14Speaker 01

  Yes, yeah, exactly. That's the other thing I forgot to mention about data centers. Data centers build out itself create some construction jobs, but after it's built, there's not a lot of jobs that are required to maintain it. But we're building factories to build the infrastructure for those data centers, and those are going to create tens of thousands of jobs per factory. So I'm really excited about that as we continue to vertically integrate into the future to create a lot of jobs for all the communities that we're going to be building with.

• 39:43Molly O'Shea?

  Amazing. Thanks so much.

• 39:44Speaker 01

  Thanks so much for coming, Molly.

• 39:47Molly O'Shea?

  Hey, it's Molly. If you enjoy our interviews, check out our newsletter, sorcery.vc, where we deliver a once a week top deals and tech headlines email, and also go deeper on our podcast interviews. Subscribe to Sorcery today. And don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.