Platformonomics TGIF is a weekly roll-up of links, comments on those links, and perhaps a little too much tugging on my favorite threads.
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CAPEX Clues: After the Press Release
I’m impressed only 40% of data center builds are behind schedule. That number is likely to grow given the many obstacles and shortages, mounting political opposition, and inexperience of developers (see Flipping the Bird below) impacting data center build-outs.
But this FT article highlights a bigger competitive issue: spelling. Are we really going to allow the English spelling of “centre” in a data center context? On what grounds does the FT/UK get to define anything in this space? US energy woes (see next two items) and barriers to building anything look trivial compared with the beleaguered UK.
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The Pain in New England is Real
The New York Times has joined the chat about New England’s failed energy strategy. Beyond the politicians’ obligatory attempts to deflect blame, this piece does a pretty good job itemizing New England’s many stupid energy decisions. Doomberg reminds us “in the battle between physics and platitudes, physics is undefeated”.
An advanced civilization should have abundant energy.
Release the (Electrical) Scapegoat!
This story sets off all kinds of warning bells. It is hard to believe anyone is seriously looking to build “large” data centers in Seattle, given high real estate and electricity costs. Few would confuse Seattle with the Texas panhandle.
Seattle City Light, the local electric utility, is owned by the city. Comrade Katie, our cosplaying socialist mayor, owns the means of electrical production! Thus she is responsible for providing cheap and reliable power.
The city-operated utility is not very efficient and charges some of the highest rates in what is otherwise a state with low electricity prices (abundant hydro FTW). Seattle City Light has announced double digit annual price increases are coming. The utility also needs to nearly double peak capacity from 2,000 to 3,800 megawatts in the next seven years, independent of any data center demand.
Meanwhile, this story from local newsletter The Seattle Times is sparsely sourced and appears under the ClimateLab byline, coverage which is “sponsored” by climate activists (but “journalism”!). Specifics can’t be shared due to “due to nondisclosure agreements” and no supporting information is available from the utility. This story was planted by Seattle City Light. Why?
If one were cynical about both Seattle City Light and Seattle Times energy coverage (guilty!), one might think they’re teeing up some misdirection away from utility mismanagement to scapegoat (non-existant) data centers for electricity prices set to accelerate for as far as the eye can see.
The Space Twitter IPO
Even a trillion dollar valuation looks tough on any valuation metric except the Price-Elon ratio.
Never Take a Dependency on Elon Musk: ElonCloud
Alternative headline: Once Trendy AI Companies from 2025 Team Up
Fractional CEO and rebooter of AI efforts Elon Musk seems to have spare terrestrial data center capacity to rent out., even as he makes the case for orbital capacity. Can you be a cloud provider as a side quest?
xAI’s capital expenditures were close to $13 billion last year, while revenue from xAI was $3.2 billion. That figure includes revenue from X, formerly known as Twitter, as well as from sales of xAI’s Grok AI models.
Twitter’s revenue has gone from ~$5 billion before Elon took over to ~$3 billion today, with xAI doing ~$200 million in AI revenues (some of which are probably transfer payments from Twitter). Against $13 billion in CAPEX. The Space Twitter S-1 is going to be so much fun.
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Flipping the Bird
Rare for one of my headline ideas to still be available at the end of the week.
Don’t be Cleveland: Snap Says “Bye Bob”
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A Warning to Seattle: Don’t Become the Next Cleveland, Don’t be Cleveland: Howard Schultz Says “Bye Bob”, Don’t be Cleveland: Seahawks Edition, Don’t be Cleveland: More Inebriation in Olympia, Don’t be Cleveland: Starbucks Says “Bye Bob”, Don’t be Cleveland: Amazon’s Exit, Don’t be Cleveland: Drunken State Spending, Don’t be Cleveland: Meta, Oracle, and Others Say “Bye Bob” (Ferguson), Don’t be Cleveland: What if the “Budget Emergency” was Spending, not Revenue?
Quick(er) Hits
UnfocusedAI: OpenAI investors question $852bn valuation as strategy shifts
Microsoft’s Perplexing CAPEX Pause: Microsoft Slowed AI Spending. Now It’s Playing Catchup. Were they/are they betting on an AI bubble popping?
Private Equity Pain: Private Markets’ Software Pain Is About to Get a Lot Worse, The Software Debt “Maturity Wall” Looms | Who Will Survive?
New York Times CEO: “So The Times is not anti-AI or any other tech”. No supporting proof points were offered.
Crossword Puzzle and Chocolate Chip Cookie Recipe CEO: “New York Times Games is the most up-and-to-the-right thing I’ve experienced in my career”.