Gavin Baker on Anthropic's S-1, GPU Prices, and SpaceX

This is our full interview with Gavin Baker. We discuss his biggest takeaways from Anthropic's S-1, the growing demand for GPUs and why compute prices keep rising, how SpaceX and Anthropic going public could unlock more capital for AI investment, the rise of AI agents, and why he believes Wall Street is underestimating the AI boom. TBPN is made possible by: Ramp - https://ramp.com Public - https://public.com Cisco - https://www.cisco.com Console - https://www.console.com CrowdStrike - https://www.crowdstrike.com Figma - https://www.figma.com MongoDB - https://www.mongodb.com NYSE - https://www.nyse.com Railway - https://railway.com Shopify - https://www.shopify.com/ Codex - http://openAI.com/codex Sign up for TBPN’s daily newsletter at TBPN.com Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://www.youtube.com/@TBPNLive

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

• 0:00Speaker 00

  Next guest is Gavin Baker from Atreides Management, the managing partner.

• 0:04Speaker 01

  I have heard of him before.

• 0:06Speaker 00

  Oh, he's been on the show before.

• 0:08Speaker 01

  The Baconator.

• 0:08Speaker 00

  We're gonna bring him into the TVP and UltraDome and catch up with him. How you doing Gavin? Good to see you.

• 0:14Gavin Baker?

  I'm awesome, man. Happiness is a choice. I'm only ever fantastic, awesome, superb.

• 0:20Speaker 00

  I mean, I completely agree. I love that happiness is a choice, but also it feels like this is a week to be extra happy. Like the Anthropic S1 went out and it seemed like a beat. It seemed like, like if you were worried, oh, the economics are not working secretly behind the scenes and there's gonna be some bombshell in there, the haters have been kinda quiet. Ed Zetron hasn't posted. Like, things are, you know, it seems like things are on track. But what has your interpretation been this week?

• 0:48Gavin Baker?

  I do think the Anthropic S1 was pretty clearly an upside surprise.

• 0:51Speaker 00

  Yeah.

• 0:52Gavin Baker?

  Um, the fact that they've only burned $10 billion.

• 0:55Speaker 00

  Yeah.

• 0:56Gavin Baker?

  The profitability, the cash generation, the unity economics, they're all very encouraging. Um, the, you know, I put it on X, but I just cannot believe that whatever it is, half of the Fortune 500 has adopted Anthropic. And it's 0.1% of their expenses.

• 1:17Speaker 00

  Yeah.

• 1:17Gavin Baker?

  It's just a wild stat.

• 1:19Speaker 00

  Yeah. The, the funny thing is that I read that, I read that as the, uh.

• 1:24Speaker 01

  Yeah, we can still hear you.

• 1:25Speaker 00

  No, no, we can hear you. Uh, I, I read that 50%.

• 1:28Speaker 01

  No.

• 1:29Speaker 00

  What?

• 1:30Speaker 01

  Yeah, yeah.

• 1:30Speaker 00

  Oh, just as like, like, okay, yeah, that's incredibly impressive for a company in just a few years to get the half the Fortune 500, the S and P 500 on as customers. But I was kind of like, what are the other half of the S and P 500 doing? I felt like every Fortune 500 would, or S and P 500 would be multi-product using everything. But there's a lot of companies that just haven't really gotten through the adoption hiccups of rolling out AI broadly. Maybe some of them are all in on Google or OpenAI, but by and large, I think some of them are just still figuring out how AI can be deployed in their organizations. Uh, but is that your read on it? That we're still sort of early on the diffusion story in enterprise?

• 2:09Gavin Baker?

  Yeah, very early. I mean, if anything, maybe earlier than I thought we were.

• 2:13Speaker 00

  Yeah.

• 2:13Gavin Baker?

  Um, and it's, I mean, it's just astonishing. Whatever the number is, 67 billion annualized, if you annualize the reported third quarter. Uh, the, um, you know, wherever the ARR is right now, but to be that big with such low penetration into the Fortune 500.

• 2:33Speaker 00

  Yeah.

• 2:34Gavin Baker?

  Is, it is pretty extraordinary.

• 2:37Speaker 00

  Yeah, totally.

• 2:38Speaker 01

  Yeah. How do you, how, how have you processed the, like, some of the criticism right now of the AI trade is that you have a very small number of companies driving the majority of the spend. I think if you can look historically and say that, that same dynamic probably played out with like social media ads where like a very small number of companies were driving a massive amount of the spend. And so you're gonna kind of see power laws in a lot of places. My read on it is that you have, like, there are companies based in San Francisco that are just a thousand times more obsessed with AI than, than, let's say, like the long tail of public company employees.

• 3:16Speaker 01

  And so of course they're gonna spend dramatically more and it's possible that that long tail never actually cares enough, but they sort of fade to relative obscurity. And you have the disruptors that are saying like, yeah, this technology is real, it works. It, it's not perfect yet. It's not like a drop-in coworker that will immediately, you give it a dollar and it'll give you $10 back. But it's very capable. And so if you obsess over it, and so that's been sort of my overall read. Like, I don't think it's necessarily, of course, you'd want a more diversified revenue base if you could. But in general, it feels very natural that all this spend is coming from a very small group of people that like, realize that something fundamental has changed and they're trying to take every advantage of it while the rest of the world is asleep.

• 4:02Gavin Baker?

  I might respectfully disagree a little. In S1, there are only 250 accounts spending more than $10 million. So actually, you know, somebody in the New York Times said that, you know, maybe 10 days ago, that 80% of their revenue came from eight customers. I was actually shocked how diversified their customer base actually was. And if you are, uh.

• 4:27Speaker 01

  Well, the, the number to me was the, the, something like 11,000 or 12,000 spending over $100,000. Like, that, that feels diversified.

• 4:34Gavin Baker?

  Oh, yeah.

• 4:35Speaker 01

  But I'm, but I'm talking about like the ramp data that's saying like, look, like 1% of companies are spending, you know, 90% of the dollars.

• 4:45Gavin Baker?

  Well, I, I mean, the ramp data is what it is, but we have much more authoritative data now from the Anthropic S1.

• 4:51Speaker 00

  Yeah.

• 4:52Gavin Baker?

  And it shows a very diversified spending base for Anthropic.

• 4:57Speaker 00

  Yeah.

• 4:57Gavin Baker?

  Now, maybe the ramp data is correct for AI overall.

• 5:00Speaker 00

  Sure.

• 5:01Gavin Baker?

  But the Anthropic S1, like relative to a thought that, you know, Meta was spending $10 billion.

• 5:06Speaker 00

  Yep.

• 5:07Gavin Baker?

  And there were these multiple billion-dollar-plus accounts that were driving it all. That just, it's much more diversified customer base for Anthropic. And then for the AI broadly, I do think that something that has happened since June is you've really seen, you know, first we saw OpenAI really accelerate in the summer. And has OpenAI accelerated? So did open weight, uh, models. And there are so many companies, you know, whether it's fireworks, whether it's Base10, whether it's Together, whether it's Modal, whether it's Pognition, that are at scale, really open weight first, and they're all growing faster than either OpenAI or Anthropic.

• 5:49Gavin Baker?

  And that was true when OpenAI was really accelerating in the summer. And it's still true in October, when Anthropic has had clearly a pretty big re-acceleration. Like, I just, I'm pretty skeptical that they would have put the, you know, the, you know, the blank space for the October ARR in the S1. If they didn't know it was gonna be pretty good.

• 6:11Speaker 00

  Yeah.

• 6:11Gavin Baker?

  Um, and I do think it'll be great for the market to get away from these monthly ARR things.

• 6:16Speaker 00

  Totally.

• 6:17Gavin Baker?

  But to me.

• 6:17Speaker 01

  Yeah, it's interesting.

• 6:19Gavin Baker?

  Yeah.

• 6:19Speaker 01

  Like, seeing the, the, the Modal's, the Base10's, the fireworks, the Together's, all out, uh, can probably, I feel like this is common knowledge. Basically, all, they've all been out in market. And so private markets investors have been getting these sort of updates. And, and a lot of these companies have been like, starting fundraises, growing dramatically from the period where they got their first term sheet to when they're actually like, pulling in capital. And so that, that data is like broadly, like I would say the East Coast is just not aware of that at all. Um, some of them are picking it up, but it's not like sort of common knowledge. Whereas on the West, I would say like, over here, people are like, yeah, these companies are, were already at scale.

• 7:02Speaker 01

  And then they're growing, you know, double digits just during the period of like, first term sheet to close, or like first close.

• 7:11Gavin Baker?

  Well, my firm Atreides led the last fireworks round, and it was actually hard to price it because they were growing so fast.

• 7:21Speaker 00

  Like, I thought we had a handshake.

• 7:22Gavin Baker?

  Yeah.

• 7:22Speaker 00

  Like, well, we've increased revenue.

• 7:24Speaker 01

  Yesterday's price is not today's price.

• 7:27Speaker 00

  Yeah, you're like, please, like, let's just get the deal done.

• 7:30Gavin Baker?

  I mean, literally, it's like the valuation was going, you know, the multiple was effectively going down, you know, every day.

• 7:36Speaker 00

  Every day. Yeah, that's crazy.

• 7:38Gavin Baker?

  And if anything, it feels like that ecosystem has accelerated and diversified.

• 7:44Speaker 00

  Yeah.

• 7:44Gavin Baker?

  Because earlier this year, Cursor was a real big driver for all those inference clouds.

• 7:48Speaker 00

  Yep.

• 7:49Gavin Baker?

  And I mean, I, the X cursor growth, I think, you know, is, is what's really extraordinary. And that's just because, you know, SpaceX has been insourcing the cursor compute.

• 7:59Speaker 00

  Yes. So on, on cursor SpaceX, like the post-merger integration, it feels like, uh, GrokBot has stepped forward in terms of capability. Is the key to growth there, um, like, we haven't seen the, the models from XAI like stunt on a particular benchmark, but the Cursor team has always been fantastic on product and distribution. Uh, in the prior era, Grok was putting up pretty remarkable results on the, on the benchmarks. But then there were all the political considerations and the, the product was banned in some companies. Um, it feels like GrokBot might be in a particularly different slot because they have that go-to-market motion through Cursor with the Cursor design team behind it.

• 8:41Speaker 00

  Is that what's driving growth there? What are you seeing on the GrokBot side that's actually showing, uh, acceleration in that product category?

• 8:49Gavin Baker?

  I mean, as a user, GrokBot is the most impactful AI product to me and to, and to our, you know, to the, to the, to the firm.

• 8:59Speaker 00

  Yeah.

• 9:00Gavin Baker?

  That we've had yet. Like, I, you know, I clued together all this stuff with Claude Code and like, really, you know, I'm sure it was user error on my part, you know? 50 years old, I'm doing my best. But GrokBot, it just makes it so easy. I think I'm up to like 17 GrokBots.

• 9:17Speaker 00

  Whoa.

• 9:17Gavin Baker?

  And every day I think of a new one to add. Um.

• 9:21Speaker 00

  Yeah, you're getting a layer of, uh, somebody, the, the senior manager, senior GrokBot. Um, how are you, how are you personally dividing, uh, AI agents across your personal life and your professional life? Because a lot of people will have like a family office with a personal assistant who manages, you know, getting gifts for their family members or planning birthday parties. And then separately, they'll have an executive assistant who plans their business travel and their calendar for work stuff. And it feels like we might be entering a world where those two merge together and you have one agent that does everything. But we also might wind up in a world where people are using GrokBot at work or Claude Code at work and then Instinct or Muse and Personal.

• 10:04Speaker 00

  And OpenAI has products in both. And they're sort of like a, an array, but it's a decision for everyone. How have you been grappling with it?

• 10:11Gavin Baker?

  Well, I guess you would say, I, I guess I have executive assistant privilege because my assistant Susan is exceptional.

• 10:17Speaker 00

  Yeah.

• 10:17Gavin Baker?

  And she, yeah.

• 10:19Speaker 00

  Not going anywhere.

• 10:19Gavin Baker?

  The need, you know, to, uh, yeah, I've, I've of course downloaded Instinct and played around with Muse.

• 10:25Speaker 00

  Sure.

• 10:26Gavin Baker?

  Um, but, and I could see they would be super amazing if, if I did have someone like, uh, Susan in my professional life, but I do.

• 10:36Speaker 00

  Yeah.

• 10:38Gavin Baker?

  But for the more professional use cases, I mean, Grokbot has just been transformative.

• 10:47Speaker 00

  Yeah.

• 10:47Gavin Baker?

  For me.

• 10:48Speaker 00

  Yeah, there is something.

• 10:49Gavin Baker?

  So much, yeah, so much of investing is making sure that the right information gets to the right person at the right time.

• 10:54Speaker 00

  Yep.

• 10:55Gavin Baker?

  And Grokbot is so good at that.

• 10:57Speaker 00

  Yeah. And there's also something so satisfying with the AI agents of like, it can be 10:00 PM on a Sunday and you can kick off like a real research effort that, yes, you could probably call someone on your team and say, I need you to, like, that would be crossing a professional line. All of a sudden, you'd be like, kind of a hassle of a work, of a boss, and people might not want to work there because they're like, yeah, he calls me every time he takes a shower. He has a shower thought and then I gotta work for six hours. But instead, the AI is like, yeah, boss, I'm right here. Oh, I'd love to look that up for you and spend a million tokens figuring out, you know, with the market size of something or other. But yeah.

• 11:36Gavin Baker?

  Well, my policy is actually anybody at Tredees is always welcome to call me anytime on the weekend. I try not to call people.

• 11:43Speaker 00

  Yeah.

• 11:44Gavin Baker?

  On the weekends. Yeah.

• 11:49Speaker 00

  So.

• 11:49Speaker 01

  Uh, how, uh, so I think like, you know, rewind, th- this week is, you know, Anthropic S1 week, and so there's, there's a lot of focus there. Last week, it felt like the focus was, like, the general attention was towards how much supply is coming online next year, how many gigawatts SpaceX is going to bring online. How are you, uh, what's your, what's your, you know, generally, you've maintained a sort of bullishness that, that some other people on the timeline have lost here and there. But how are you processing, like, how the, how the, how the industry can sort of absorb all of that supply if

• 12:32Speaker 01

  we hit the higher end of some of the ranges being discussed? And, and, and is it just Jevon's paradox, you know, again, and again, and again, uh, and again, until we finally, every, everyone says, like, you know, everyone likes to say it, but it's hard to fully internalize?

• 12:49Gavin Baker?

  Yeah, I think that's, I think that's right. It's, it's easy to say. It's, it's hard to internalize and believe. And October has kind of been a strange month because the price to rent, essentially any kind of a GPU, has gone up every day. So the spot market for compute is getting tighter. And it's not just the spot market. Um, you know, it is, I do love reading these primers on X from, you know, commodity and macro investors about these super complicated concepts called backwardation and contango and what they might mean for the forward curve of compute and the future price of compute. You know,

• 13:30Gavin Baker?

  these are contango, backwardation. Um, but, you know, Silicon Data, which I do think is, you know, my firm is an investor in them, but I, I do think they're the most authoritative data source. Carmen Lee, the founder, stood up at GTC and said that the compute market is now in contango. The, you know, the forward, it's not just that the spot market is tight. If you want a cluster a year from now, you have to pay a lot of money.

• 13:59Speaker 00

  Yeah.

• 14:00Gavin Baker?

  And this is, and this is maybe another, you know, discontinuity between public and private markets. But just the number of companies we have in our portfolio who are like, okay, we got a cluster of 4,000 Blackwells and, you know, and we got it in May or June of 26th, and we want to bring on another cluster of 4,000 in September of 2027. And they are shocked by how much more they have to pay in the future. And it's not like they're, everybody is unaware of this, everybody's aware of the supply that's coming on. But even with all of that supply coming on, it is hard for the companies in our portfolio

• 14:44Gavin Baker?

  to find compute even well into 27. So for, you know, all the commodity experts who are focused on backwardation and what that implied, I got news for you. We're not in backwardation anymore. And then I do think, as far as how much capacity is going to come online, one thing that I think is actually healthy about what's happened in these financing markets is I hope it concentrates capacity and supply in the competent operators where they can finance it through prepayments. Um, you know, you can kind of finance these GPU purchases two ways. By the way, CoreWeave is great. CoreWeave runs GPUs well. They bring them

• 15:26Gavin Baker?

  on. They, they are very, very good. They just sadly locked in a vast amount of compute and long-term contracts that are now way, way under market, you know, and I think they're doing.

• 15:40Speaker 00

  So they sold their, they sold their GPUs for fixed prices, and that's why they're getting hammered right now. It's not that they don't have compute. They're not bringing it on. They have the semi-analysis diamond tier. Everyone knows that the clusters work. They're good. They are reliable. But they just sold for too cheap and they should have hold, held on or had variable pricing.

• 16:00Speaker 01

  Is, is you think Elon studied that and said, like, we're not going to make that same mistake? And that's why they're adopting this more short-term contract model?

• 16:09Gavin Baker?

  I don't, Elon is a first principles thinker. I don't think he was probably studying CoreWeave or Nebius or really anyone else.

• 16:17Speaker 00

  Yeah.

• 16:17Gavin Baker?

  He was probably reasoning from first principles, but the conclusion he came to is prices are going up. We, if we are willing to sell into the spot market, we can have paybacks well under a year.

• 16:29Speaker 00

  Yeah.

• 16:29Gavin Baker?

  Get big prepayments.

• 16:31Speaker 00

  Yep.

• 16:32Gavin Baker?

  And that's, I think that's a better, probably, financing model for the market we're in. And what I also like about it, and by the way, CoreWeave, I think, is very aware of this. They're trying to get more spot exposure. They're trying to, you know, do less of these big, long-term offtake agreements. Um, but standing up a big GPU cluster, that's just bringing on the power, standing up a cluster, it's like running a Formula One team. And a bunch of people who have no real relevant experience, you know, whatever, they acquire some land and some power and then, you know, they get a

• 17:10Gavin Baker?

  zero down payment offtake agreement, um, from someone. And a lot of that is being cleaned up. And I think, um, you know, supply is being, what this is a forcing function to allocate GPUs to people who can actually bring on a cluster, energize the GPUs, run it well. Like, you know, running a Formula One team, it's like really hard. You gotta like, pack everything up, put it on a plane, go to a new city, unpack it, set it up, set the car up. You need all the people, you know, to like, you know, whatever, change

• 17:51Gavin Baker?

  the tires, to change the rear wing if you get in a collision, to, you know, do whatever needs to be done during the race, to do the strategy, to communicate with the driver. It's really, really hard. And it's not like, you know, some of these people, they don't have the relevant experience. You know, CoreWeave, Crusoe, Nebius, SpaceX, the big hyperscalers, you know, these are companies that can bring on GPUs and energize them and, and run them.

• 18:22Gavin Baker?

  But, and I do think something that was announced at GTC Berlin is actually pretty important for this, and that's that DSX pod, which is going to make it a lot easier, you know?

• 18:30Speaker 00

  Sure.

• 18:30Gavin Baker?

  Seven racks, it comes preassembled, you know, you just kind of literally plug it in and it works. And right now, when you get the GPUs, you know, maybe if you're, if you're SpaceX and you're really, really exceptional at execution in the physical world, you can get them energized quickly. But a lot of people, it takes them six months, you know, three months, six months to get them energized, really get them working. And if we can, through, you know, this new product from Jensen, um, get that time down, I think that, that's also healthy because that effectively takes a lot of working capital out of the market. You know, you have, as these numbers are getting bigger, if it takes six months to energize them, you know, that could be hundreds of billions of dollars of assets that are

• 19:14Gavin Baker?

  not generating revenue. So I think that's another, that's a product innovation that's going to help with this. But I think this is, um, you know, we, we will see who, who energizes GPUs in, in, in 27. I'm, I'm confident that the, you know, the companies I named, I think they're gonna. I mean, the future is always uncertain, but these are companies with a proven track record of execution.

• 19:40Speaker 00

  Yeah.

• 19:40Gavin Baker?

  And we'll see about others.

• 19:42Speaker 00

  So I have a follow up on that. One is just one click higher from the Neo Clouds or the Neo Labs. And there's been this speculation that Neo Clouds might, Neo Labs might sort of pivot into Neo Clouds. Is that dynamic going to look like they signed a multi-year off-take agreement with a Neo Cloud and then they want us to just sell into the spot market? That's what's going to happen?

• 20:01Gavin Baker?

  Yes, I mean, what Sarah Fryer said, and Sarah Fryer is an exceptional CFO. She said, you know, everybody made fun of us for signing all these compute commitments and we could sell them all at a three, four or five X premium.

• 20:15Speaker 00

  Today.

• 20:15Gavin Baker?

  And she was being literal.

• 20:17Speaker 00

  Yep.

• 20:18Gavin Baker?

  And so if you, if you signed a long-term compute contract.

• 20:22Speaker 00

  Yep.

• 20:23Gavin Baker?

  Really at any point prior to May of 2026, you are way in the money. You're buying compute for, you know, maybe 10 or 15, $10 or $15 a watt? And you could sell it at a massive premium to that today.

• 20:41Speaker 00

  Yep.

• 20:42Gavin Baker?

  And then the point, the point, you know, that Carmen made about, you know, the, the forward curve being in contango is actually really important and just like, it's not just that the spot market is tight today. You have to pay vast amount, even with all this capacity coming online, you have to pay a truly vast amount to bring on a cluster in mid to late 27. And I think that's something that just maybe public markets are not appreciating, even though, you know, it's not, all of this is public, you know, Sarah Fryer said that. You know, the, all these inference clouds have kind of given press releases. You hear a bunch of people on X talk about how hard it is to find compute into 27.

• 21:24Gavin Baker?

  Carmen Lee stands up and says, you know, like, the market in 27 is crazy strong. So it's all out there, but I think for whatever reason, it's not legible to the public markets.

• 21:36Speaker 00

  Sure.

• 21:37Speaker 01

  What, talk about your outlook on biology as a, as a, as an area that, that the labs are investing in. It feels very exciting and that there's, you know, tremendous potential, but I think that overall concern is around timelines. It's like, there's very real costs, like coming online, infrastructure costs and opportunities in biology seem like they're very real, but may take, you know, years to get these, you know, will almost certainly take years to get drugs in market and actually drive, you know, revenue that would then finance.

• 22:14Gavin Baker?

  Yeah, I mean, we'll, we'll see how long it takes. You know, Montana has an interesting new program for, for new drugs, which I think is helpful. But I think a really big unlock, we, we have a lot of compounds and people have used AI to figure out that you can use, um, may, maybe a drug that we've had for 50 or 60 years for a very rare disease that's devastating for like 10,000 kids a year and effectively cure that disease. And a friend of mine did this and it's, you know, it's, it's, it's his story to tell. So I'm not going to tell it, but AI has already saved a lot of lives. And I do think, you know, the AI industry, it's, you know, they're like negative five

• 22:59Gavin Baker?

  out of 100 from like a PR.

• 23:01Speaker 00

  100%.

• 23:04Gavin Baker?

  But they.

• 23:05Speaker 01

  We gotta be more like pharma, the popular kids.

• 23:08Speaker 00

  Yeah, exactly.

• 23:09Gavin Baker?

  Well, no, they need to start telling these stories.

• 23:12Speaker 00

  Yeah, yeah, yeah.

• 23:13Gavin Baker?

  Um, and by the way, are, you guys are coming to tomorrow X.

• 23:16Speaker 00

  We are, we are November 17th, 18th, we'll be there with you.

• 23:20Speaker 01

  Lineup is, the lineup is unbelievable.

• 23:22Speaker 00

  The lineup is crazy. Jensen Wong, David Solomon, Mike Rowan, Lisa Su, Stan Druckenmiller, so many more.

• 23:28Gavin Baker?

  Lee Bu, so many people.

• 23:30Speaker 00

  Yep.

• 23:31Gavin Baker?

  But the one thing I just want to say is, I get like 25 emails or texts today saying, hey, man, can I come to your conference? And the answer is you can just sign up.

• 23:42Speaker 00

  Yeah, you can just sign up.

• 23:43Gavin Baker?

  Anyone can come. Now there's going to be a security screen.

• 23:45Speaker 00

  Sure.

• 23:46Gavin Baker?

  Cause of some of the people who are coming and I do, you know, there are unannounced speakers that are, you know, comparable in caliber to some of those you referenced. Um, so we're going to have a lot of security at the conference and everybody's, you'll be screened, but you can just sign up. You do not need to ask me. You don't need to ask Antonio. You can just come. And it's like, the whole goal is to kind of democratize investing. And in addition to those companies, you know, we are, we're going to have Lynn from Fireworks, Chase from Crusoe, Scott from Cognition, we're going to have Max from Lagora. We're going to have a lot of these companies.

• 24:22Speaker 00

  Two in.

• 24:23Gavin Baker?

  Two in, two in from Base 10.

• 24:24Speaker 00

  Yeah.

• 24:25Gavin Baker?

  Um, we are going to have a lot of these CEOs there that are going to be on a stage and then we're going to have, you know, dozens of other private CEOs. And, you know, it's a, it's an attempt to kind of like open up the aperture of, you know, information for retail investors and democratize this. So like, if you're wondering about coming, just sign up. You don't need to ask me.

• 24:54Speaker 00

  Tomorrow X summit.com, not Gavin Baker's email. You can go to a URL.

• 25:01Speaker 01

  Once you're there, you can get, you can get Gavin to sign.

• 25:06Speaker 00

  And they will email you when you sign up. Yes.

• 25:10Gavin Baker?

  Yeah.

• 25:11Speaker 00

  Um, what, what, what do you think will change in the content and the conversation between last year's event and this year's event? What are you hoping to get across?

• 25:20Gavin Baker?

  Well, we did, this is the first time.

• 25:21Speaker 01

  This is the first one.

• 25:22Speaker 00

  Oh, sure.

• 25:23Gavin Baker?

  Yeah, yeah.

• 25:24Speaker 00

  Oh, sorry.

• 25:25Gavin Baker?

  I decided we're going to have, you know, we're going to have baysiders doing the fireside chats. Um, we're going to have, you know, management teams are going to have the opportunity, we've, if you were an active contributor on X, Substack, Reddit, you get to come for free.

• 25:40Speaker 00

  Yeah.

• 25:41Gavin Baker?

  Um, and then management teams are going to be able to do a breakout session with all of those X accounts. So if you're, if you're one of the, you know, four or 500, you know, kind of, you know, financial commentators that we've given a scholarship to, you're going to get, you know, a lot of management teams are going to opt in and you're going to be able to kind of have your own session with the management team to ask your questions. Then you're going to be able to go write what you learned for your audience. Um, and I'm, you know, I think we have a really high quality, you know, I mean, I, I, I picked most of them and you don't have to be bullish. You know, I want, you know, I love skeptics. I love bears.

• 26:23Speaker 00

  Yeah.

• 26:24Gavin Baker?

  You just, you just have to be polite and nice and constructive and you can be bearish while being polite, nice and constructive and you know, we're, we have loads of, we have loads of skeptics, we have loads of optimists. Like I think it's going to be great. And then I, I hope every CEO does, you know, uh, you know, kind of a hit on your show after they're on stage or before.

• 26:43Speaker 00

  Yeah.

• 26:44Speaker 01

  Um, I'm, I'm pretty excited about it. It might be the longest TVP on episode ever.

• 26:48Speaker 00

  I think so.

• 26:49Speaker 01

  Let's see. How do you deal with, how, how do you deal with, um, all the, uh, all the attention, positive and negative?

• 26:56Gavin Baker?

  Do you mean for me?

• 26:58Speaker 01

  Yeah, for you, for you. I know, I just feel like I, you, I, you, you talked about your, your mindset right at the beginning of the show, just, you know, you know, it's a choice to be happy, but, uh, I feel like when it comes, when the, the, the spotlight, you know, once every week shines directly on you, there's a lot of love, a little bit of hate sprinkled in there. The whole, the full spectrum of human emotions.

• 27:23Gavin Baker?

  We can call it what it is. I mean, there, there, there are a lot of, there are a lot of detractors, let's say. I would just say, look, Antonio, who I'm doing the conference with, he says being on X is an exercise in cultivated equanimity. I don't take any of it personally. I'm not on X to be right. I'm, right now I would, you know, I'm, I'm a responsible optimist, but I'm trying to be open-minded to new negative facts and constantly search them out. But I'm really on X, you know, to learn and I, you know, all of the hate, like I try to sift through it for, oh, wow, that is actually a very good, compelling, bearish argument. Um, you know, like there was an interesting post, I forget, it was like PE analyst or

• 28:06Gavin Baker?

  LBO analyst, and it just said, hey, you know, the fact that Anthropic is dedicating 74% of their compute to training, you could read it, and on the one hand, it's bullish because they could be generating a lot more revenue. On the other hand, if all this compute is being dedicated towards training and for any reason, somebody decides you need less compute for training, that's a lot of supply that could hit the inference market. And hey, wow, that's like a really interesting, you know, bearish perspective. And so, you know, um,

• 28:42Gavin Baker?

  I'm human. I don't like I'm human, but it's also just like, I'm here to learn. I want to get to the right answer. I'm sharing my views. If somebody shares and, you know, a helpful negative perspective, I try to thank them. I need to go like, think that that person, LBO analyst, I think it was. I didn't have time. Um. But yeah, it's, it's an exercise in cultivate cultivated equanimity. Can't, you, you, you can't, um. You can't take it personally.

• 29:12Speaker 00

  Yeah.

• 29:12Gavin Baker?

  But I do, I am trying. You know, doing what little I can, you know, his like Gavin Baker, you know, I don't have millions or tens of millions of followers. But I am trying to help paint, I think, a more optimistic vision for AI. Doing well, what I can to help the American public understand that, hey, like, you actually want a data center in your, in your town, you know, one of my favorite exchanges was, somebody said, well, I, I'll wait until they start building data centers at the wealthiest county in America. Well, Luden County is the wealthiest county in America. They have the highest per capita data centers.

• 29:52Speaker 00

  Yep.

• 29:53Gavin Baker?

  Um.

• 29:54Speaker 00

  Virginia, US East.

• 29:56Gavin Baker?

  Yeah.

• 29:56Speaker 00

  On Amazon.

• 29:57Gavin Baker?

  US East availability.

• 29:59Speaker 00

  Yep.

• 29:59Gavin Baker?

  So just understanding that, like, I understand why, you know, some people are worried. Um, there, there's been a lot of fear. There's, you know, that we've all seen scary movies. But a lot of awesome things are happening today.

• 30:12Speaker 00

  Yeah.

• 30:12Gavin Baker?

  Because of AI, for ordinary Americans, for blue collar Americans, for these small towns. We're re-industrializing America. We're, you know, massively increasing our electrical generation capacity, which is you cannot re-industrialize without power. That's job number one. So I think a lot of good things are happening and I'm just trying to do what little I can to at least tell that side of the story. And then be pretty balanced, like, you know, Anthropic, I called it like I saw it in the summer. They were losing market share.

• 30:44Speaker 00

  Mm hmm.

• 30:45Gavin Baker?

  I'm calling it like I see it in October. They are re-accelerating.

• 30:49Speaker 00

  Yeah.

• 30:49Gavin Baker?

  And gaining share.

• 30:50Speaker 00

  Yeah.

• 30:51Gavin Baker?

  Uh, the S one, it was an upside surprise to me. I'm trying to call balls and strikes.

• 30:56Speaker 00

  Sure.

• 30:57Gavin Baker?

  Cause my job is to just get it right.

• 31:01Speaker 00

  Yeah. Uh, Jordy.

• 31:03Speaker 01

  Yeah, and it's funny because, you know, people will get so flustered by, you know, seeing different posts on X, but imagine how boring X would be if no one ever took a stance.

• 31:12Speaker 00

  Oh, yeah.

• 31:13Speaker 01

  It was just like, well, it might be this.

• 31:14Speaker 00

  Yeah.

• 31:15Speaker 01

  It might be that.

• 31:15Speaker 00

  Yeah, yeah, yeah.

• 31:16Speaker 01

  And it might be this.

• 31:17Speaker 00

  No, no, no. Every post has to be, it's over or, or we're back. This is the best thing ever in the world. Cause then we can have a debate. At least you took a stand.

• 31:23Gavin Baker?

  Yes.

• 31:24Speaker 00

  Yeah, it's great.

• 31:24Gavin Baker?

  Yes.

• 31:25Speaker 00

  Uh, Jordy mentioned, uh, getting sharp on bio, starting to think about opportunities there. Uh, how deep have you gone in the AI stack? I saw a funny post that was like, you could spend all your time thinking about OpenAI and Anthropic and Google or, and then, you know, meet all the Neo clouds and uh, meet Lynn and Tuin and figure out what's going on in private markets, or you could just buy copper. And you could just sit there and hold copper, right? Cause like, it's almost a perfect proxy or something like that. But how far have you gone down into energy, infrastructure, commodities? Like, how, how sharp are you on those? How, how relevant or interesting is, are those markets to you, uh, in this world? Since they do seem adjacent.

• 32:05Gavin Baker?

  No, I pay close attention to all of those. I ran a diversified fund in my life for nine years. You know, I was an energy investor.

• 32:11Speaker 00

  Yeah.

• 32:12Gavin Baker?

  Um, you know, natural resources. I always, um, for many years I did, um, would do like kind of marketing meetings with the, uh, with the, uh, gold analyst at, at, at, uh, my, my prior employer, Fidelity. So I'd always, you know, knew about the merits of gold from a portfolio construction perspective, would always have it in the fund. By the way, just because it triggers people, I want to say it. I find it so amusing how upset gold bulls get at the idea of asteroid mining.

• 32:44Gavin Baker?

  The idea of asteroid mining.

• 32:46Speaker 00

  Oh, yeah.

• 32:47Gavin Baker?

  No one, no one has ever been, I've never gotten more hate.

• 32:52Speaker 00

  Yeah.

• 32:52Gavin Baker?

  Than from the gold crowd about the idea of asteroid mining and the, and the asteroid.

• 32:57Speaker 00

  Increasing supply.

• 32:58Gavin Baker?

  I mean, yeah. I mean, it was like, talk about a challenge to your world's.

• 33:02Speaker 00

  Wait, are, are they mad about that new alchemy startup?

• 33:05Speaker 01

  You have to, like, you need to imagine technological disruption, right? Like, look at the diamond industry.

• 33:11Speaker 00

  Yeah.

• 33:11Speaker 01

  Right? Like, if you, if you understood that, that technology disruption was possible, you probably built labs, like, you know, twenty years ago.

• 33:21Gavin Baker?

  Maybe you would have done something different with that, you know, with the diamonds in your family. But, um, but as far as, I mean, I do, we have spent a lot of time on like energy, on the industrial infrastructure, on, on natural resources. Um, but we have not made it a big part of the portfolio. We've done some things in private markets. As far as, um, trying to help with rare earths and, but this is not through acquiring mines. It's more, you know, the problem with rare earths, it's not that they're rare. It's that refining them is a very dirty process. You know, so we, we, we,

• 33:58Gavin Baker?

  you know, that we've invested in a company that, you know, has a chemical process for refining rare earths. And, you know, I actually think DARPA has done some pretty smart stuff. Like they kind of have a, a lot of different efforts around this. But yeah, I, I mean, I try to pay as close attention um, to all of it as I can because you, um, you know, as an investor, you, you, you never know where a weak but important signal is going to come from. And so want to cast as wide a net as possible, but then also kind of focus maybe a portfolio on the areas where I do feel like maybe we have the, the biggest competitive advantage as a firm. Um.

• 34:38Speaker 00

  How are you thinking about the evolution of like, the, the marginal capital decider sort of changing in 2027 potentially? Like, if you go back a couple of years, you have essentially like seed stage VCs making bets on these AI labs and then eventually some, you know, more uh, scaled up venture firms being important capital partners. Some of them have taken board seats, but they are not deciding the race now. It's big hedge funds, pre-IPO rounds, but we're coming up to a world where the Fidelities of the world, the insurance agencies are going to be involved. The insurance funds and sovereign wealth funds are going to be increasingly involved in financing the build out. Like, what does the next year look like?

• 35:23Speaker 00

  From a perspective of like, how we get the big dollars into the AI build out?

• 35:30Gavin Baker?

  I mean, I think you named all the big dollar sources.

• 35:33Speaker 00

  Yeah.

• 35:33Gavin Baker?

  And something that I think is pretty underappreciated is, you know, American mutual funds.

• 35:37Speaker 00

  Okay.

• 35:38Gavin Baker?

  You are limited in the percentage you can hold in a liquid asset.

• 35:42Speaker 00

  Sure.

• 35:43Gavin Baker?

  And so SpaceX and Anthropic.

• 35:46Speaker 00

  Yep.

• 35:47Gavin Baker?

  Going public.

• 35:48Speaker 00

  Yep.

• 35:48Gavin Baker?

  Is actually going to free up a huge amount of buying power.

• 35:53Speaker 00

  Interesting.

• 35:54Gavin Baker?

  In private markets.

• 35:55Speaker 00

  Yep.

• 35:56Gavin Baker?

  Um, once those are fully unlocked, because it's, they have to be public and unlocked.

• 36:02Speaker 00

  Interesting.

• 36:02Gavin Baker?

  So, um, I think you will see mutual funds, you know, and they, they, they've always been involved. You know, my former colleagues, Capital Research, D. Rowe Price, M. Sam, G. Sam, you know, Franklin Templeton. If I forgot anyone, I'm sorry. Um, I love you all.

• 36:23Gavin Baker?

  But like, they've been, they've been pretty involved. I mean, the sovereigns have been very involved, particularly, um, you know, particularly the ones in the GCC and particularly the ones in the UAE.

• 36:33Speaker 00

  Yeah.

• 36:34Gavin Baker?

  Like MGX, um, Mubadala, all the sovereigns there. I mean, Atreides and Valor, we co-led Crusoe with Mubadala.

• 36:41Speaker 00

  Yeah.

• 36:42Gavin Baker?

  So I think the, um, the UAE in particular has been extremely front footed.

• 36:47Speaker 00

  Yeah.

• 36:47Gavin Baker?

  With all their sovereigns with respect to AI.

• 36:50Speaker 00

  Yeah.

• 36:50Gavin Baker?

  Um.

• 36:51Speaker 00

  And now Apollo is taking a stake in Mubadala, uh, which sort of completes the, the cycle.

• 36:57Gavin Baker?

  Yes. Yeah. Um.

• 37:02Gavin Baker?

  But I mean, that, that's going to have to evolve, but it's also, I do think we're probably getting, has these underpriced, so all these clouds, they signed contracts at well below what are below market values. And has those contracts reprice higher? Has they bring on more compute with more spot like we discussed with, you know, the same thing that CoreWeave is, is, is trying to do. I do think you're going to see, like, there's a pretty big acceleration in the clouds last quarter. And, you know, forget relative to expectations, this or that, but I think you're going to see a pretty continuous acceleration

• 37:44Gavin Baker?

  in the sum of the big hyperscaler cloud revenue growth. The Neo clouds, that number is just going to continue to accelerate. And then, you know, it's, it's dropping down at very high margins so that, you know, operating cash flow is following. And then you're going to be able to, I think, finance probably more than people think of the 2027 build out. Um,

• 38:12Gavin Baker?

  out of cash flow.

• 38:13Speaker 00

  Hmm.

• 38:13Gavin Baker?

  Like, I don't know if we've seen the peak of external financing.

• 38:17Speaker 00

  Hmm.

• 38:17Gavin Baker?

  But, um, I think we're getting close.

• 38:20Speaker 00

  Hmm. Yeah, yeah, that's.

• 38:22Gavin Baker?

  And that'll be really helpful.

• 38:23Speaker 00

  Totally. Yeah. No, the, no one can complain about that. That's just, uh, yeah, investing in the future.

• 38:28Speaker 01

  AI skeptics will be.

• 38:30Speaker 00

  In a bad place.

• 38:31Speaker 01

  In a horrible place. We're going to have to check on, check on them. You're going to have to go around.

• 38:35Gavin Baker?

  And look, maybe I'm, maybe I'm wrong and, you know, but like, I will change my mind when the facts change and I'm just going to try and keep calling balls and strikes. And then trying to, you know, be an advocate to help understand ordinary Americans that this technology can and should be awesome for them.

• 38:53Speaker 00

  Yeah. Yeah.

• 38:55Speaker 01

  Yeah, I'm, I'm, I'm very interested to see how, uh, Anthropic and OpenAI, OpenAI becoming public companies, like impacts, like overall sentiment, specifically on X. Because right now you have such a small number of people that actually hold shares in these companies, right? And so like, maybe there's 50,000 people that have some incentive to be relatively optimistic, one, you know, or, you know, you should be able to see both the, the bull case and the bear case for, for any company. But when that changes and you have millions of people globally that suddenly can have exposure, how does sentiment change, right? And I think, I think people are going to be, I, I think it will be less, much less extreme.

• 39:39Speaker 01

  Once you have the, the, the sort of middle of the road investor has some exposure, right? And it's not like totally binary where like, very, very small number of people have exposure, like, and, and, and it's direct exposure, right? Cause if you happen to own shares through some retirement fund or through a hyperscaler or things like that. Um, it, uh, it's not the same.

• 40:00Gavin Baker?

  And maybe some of them will do what Elon did, you know? Every child in America is going to have a share of SpaceX.

• 40:04Speaker 00

  Sure.

• 40:05Gavin Baker?

  That's awesome. I think that's way better for America than setting up some foundation.

• 40:08Speaker 00

  Yeah.

• 40:09Gavin Baker?

  That, you know, a board or a bunch of bureaucrats are going to decide how to allocate the money.

• 40:15Speaker 00

  Yeah.

• 40:16Gavin Baker?

  You know, just give people the money.

• 40:17Speaker 00

  Yeah.

• 40:18Gavin Baker?

  Like, I hope, like.

• 40:19Speaker 00

  That's simple. Yeah.

• 40:20Gavin Baker?

  Let people make individual decisions.

• 40:22Speaker 00

  Yeah.

• 40:23Gavin Baker?

  And I would, you know, I would encourage more company and more, you know, more wealthy people in America to do what Elon and Michael Dell and, and of course, you know, my good Brad Kirchner.

• 40:34Speaker 00

  Yeah.

• 40:34Gavin Baker?

  Have done. Um, I think that's awesome for America and great for capitalism.

• 40:38Speaker 00

  Yeah. And it's, it feels so important that that infrastructure got built before the big liquidity wave, before SpaceX goes public so that it's there. And it's been tested and it's been implemented, rolled out, uh, so that, uh, anyone who wants to participate in that can actually go and like, take advantage of it. Uh, without needing to, you know, say, oh, it'd be nice if the government had a program that would let, let me give shares directly to the American populace. It's like, nope, it's there. It works. It's up to date. Like it's in the app store. You can go download it. Um.

• 41:07Gavin Baker?

  Yeah, just give, give people the money.

• 41:09Speaker 00

  Yeah.

• 41:10Gavin Baker?

  Give everybody a stake in capitalism.

• 41:11Speaker 00

  Yeah. No, I completely agree. It's great. Uh, well, thank you so much.

• 41:15Speaker 01

  We'll see you very soon.

• 41:15Speaker 00

  We'll see you.

• 41:16Gavin Baker?

  Yeah.

• 41:16Speaker 01

  TomorrowXSummit.com.

• 41:18Speaker 00

  TomorrowXSummit, November 17th, 18th, Austin, Texas. We'll see you there. Have a great rest of your day.

• 41:24Speaker 01

  Cheers, guys. Good to see you.

• 41:25Speaker 00

  Goodbye.