Compute scarcity favors Big Tech after midterms, says The Information's Jessica Lessin

0:10 STOCKS TUMBLING YESTERDAY FOLLOWING THE DEMOCRATS MIDTERM WINS. HYPERSCALERS THOUGH ROSE THE STOCKS MOVING MOVES HIGHLIGHTS A RENEWED DEBATE OVER HOW DEMOCRATS IN CONGRESS MAY OR MAY NOT CHOOSE TO SCRUTINIZE BIG TECH, AND ESPECIALLY AI, RIGHT NOW. JOINING US IS I CALL HER THE QUEEN OF THE VALLEY. JESSICA LESSIN IS HERE, FOUNDER AND CEO OF THE INFORMATION. MORNING. WHAT DO YOU THINK POST MIDTERMS, THE THE IMPLICATIONS ARE AND WHAT ARE PEOPLE IN THE VALLEY SAYING ABOUT ALL OF THIS?

0:38 >> SO PEOPLE IN. >> THE VALLEY ARE CALLING THEIR CLOSEST DEMOCRATIC VC FRIENDS AND TRYING TO MAKE UP FOR SEVERAL YEARS OF HAVING GONE THE OTHER WAY. BUT, YOU KNOW, I THINK THE VOTERS HANDED AT LEAST THE BIG TECH COMPANIES A GIFT BY BASICALLY SAYING, IN THE SHORT TERM, IT'S GOING TO BE HARDER TO GET NEW COMPUTE. IF YOU HAVE IT, IT'S WAY MORE VALUABLE AND YOUR MARGINS ARE GOING TO BE BETTER. >> SO YOU THINK THIS IS FOR THE TECH INDUSTRY, OR AT LEAST THOSE WHO HAVE IT. IT'S GREAT.

1:03 BUT IF YOU'RE A SUPPLIER, FOR EXAMPLE, TOUGH, TOUGH. >> TOUGH, NVIDIA TOUGH. OBVIOUSLY THE NEO CLOUD IS TOUGH. IF SORT OF ALL YOUR EXISTING BUSINESS IS BAKED INTO YOUR VALUATION TOUGH, I SHOULD SAY. THERE ARE A LOT OF OTHER ASTERISKS THAT COULD BE BAD FOR THE BIG TECH COMPANIES IN TERMS OF OTHER REGULATION AND SO FORTH. BUT ON THIS QUESTION OF DATA CENTERS, WHICH WAS THE QUESTION, YOU KNOW, I THINK IF YOU'VE GOT COMPUTE, IT'S GOING TO BE A LOT MORE VALUABLE.

1:30 >> ANY IMPLICATION FOR THIS EXPECTED IPO FROM ANTHROPIC THAT'S COMING? >> WE'LL SEE. I MEAN, ANTHROPIC IS A BIG BUYER OF COMPUTE. I THINK THE NUMBERS ARE GOOD ENOUGH FOR IT TO GET OUT WHERE IT WANTS TO, BUT I THINK. >> WILL THIS SLOW ITS GROWTH? WILL IT SLOW EVERYBODY'S GROWTH? >> WE DON'T KNOW, IS THE HONEST ANSWER. AND I THINK THERE'S SO MUCH SCRUTINY ON MARGINS AS THERE SHOULD BE. AND SO COST OF COMPUTE GOING UP FOR ANTHROPIC.

1:55 NOT A GOOD SIGN OVERALL, ESPECIALLY RELATIVE TO OPEN AI. IT'S A PRETTY EFFICIENT BUSINESS. >> THE ELECTION'S OVER. HOW LONG DOES IT TAKE BEFORE EITHER PARTY REALIZES IT'S JUST A LOSING TRADE TO BE AGAINST AI? AND EVEN EVEN WE GOT TO FIGURE OUT A WAY TO DO DATA CENTERS. AND YOU SEE WHAT THEY'RE YOU KNOW, SOME OF THE COMPANIES ARE TALKING ABOUT NOW, WE'LL PAY FOR EVERYTHING. WE'LL MAKE SURE THAT, YOU KNOW, WE'LL TALK TO COMMUNITIES, WE'LL PROVIDE JOBS.

2:21 BUT I MEAN, IT'S GONE NO MATTER WHAT. AND FOR AN ELECTION, YOU MIGHT SAY ONE THING, OKAY, BUT ARE WE ALREADY THERE WHERE THEY'RE LIKE, YEAH, WE SAID THAT, BUT WE'RE WILLING TO WORK WITH THE INDUSTRY. >> I THINK THE INDUSTRY IS BIG ENOUGH NOW THAT IT'S A LOT OF DIFFERENT THINGS, RIGHT? ARE THESE PROJECTS GOING TO STILL GET APPROVED? YES. ARE THE BIG TECH COMPANIES GOING TO PAY MORE, PAY MORE TO THE CITIES, PAY MORE TO THE TOWNS? YES. BUT RIGHT NOW THE THE RHETORIC IS PRETTY AGAINST THEM. AND SO I THINK IT'S GOING TO TAKE A BIG CHANGE TO CHANGE THE RHETORIC.

2:50 BUT I THINK PROJECTS WILL GET DONE. >> I THINK YOU'LL SEE THOSE WHO HAVE PROJECTS BE ABLE TO SCALE THEIR EXISTING PROJECTS MORE EASILY, BECAUSE THEY'RE ALREADY HAVE REACHED THOSE AGREEMENTS. DO YOU. >> EXPECT DEMOCRATS TO CONTINUE TO TALK NEGATIVELY ABOUT AI AND DATA CENTERS? >> ABSOLUTELY. >> IT'S I THINK THAT'S THE. >> LEAST POPULAR, LEAST POPULAR. >> THAT'S GOT A HALF LIFE, SIX MONTHS OR A YEAR. THERE'S NO WAY YOU CAN STAY IN THAT CAMP.

3:16 >> WELL, I THINK LOOK, THESE TECH COMPANIES HAVE TO PROVE A COUPLE OF THINGS. THEY HAVE TO PROVE THAT THEY CAN BUILD PRODUCTS, NOT JUST THAT MAKE BUSINESS WORKERS MORE PRODUCTIVE AND WEALTHIER, BUT ALSO CHANGE THEIR LIVES IN POSITIVE WAYS. AND THEY HAVE TO BUILD TRUST AND STOP HAVING ALL THESE CYBER ATTACKS. >> I WANT TO KNOW BEHIND THE SCENES WHAT YOU THINK IS HAPPENING AS IT RELATES TO SO MANY OF THESE COMPANIES THAT THAT BASICALLY ROTATED, MAYBE OVER ROTATED IN A VERY BIG WAY.

3:43 HARD PIVOT TOWARDS TRUMP, TOWARDS MAGA. I'M THINKING ABOUT MARK ZUCKERBERG. I'M THINKING I CAN GO DOWN THE LIST. >> ABSOLUTELY. >> THEY HIRED LOBBYISTS THAT ALL LIVED IN THAT UNIVERSE. THEY HIRED LOTS OF PEOPLE, RIGHT? YEAH. DO THEY ROTATE IN SOME OTHER WAY OR ARE THEY ARE THEY CALLING ALL OF THEIR FRIENDS RIGHT NOW SAYING, WE GOT TO FIND SOME, SOME DEMS WHO CAN BECOME FRIENDS? HE'S NOT GOING. SO I KNOW. >> THE FIRST THING IS HE'S NOT GONE. SO SO THEY'RE STILL CLOSE.

4:10 THEY'RE KEEPING THOSE TIES. BUT ABSOLUTELY. LAST NIGHT ON MY WAY OUT TO DINNER, I GET A CALL FROM A VENTURE CAPITALIST ON THE WEST COAST AND SAYING, MY PHONE IS OFF THE HOOK BECAUSE I'VE BEEN ONE OF THE ONLY ONES WHO STILL VERY CLOSE PUBLICLY TO THE DEMOCRATIC PARTY. THIS PERSON IS GOING TO WASHINGTON, D.C. TO GO MAKE THE CASE FOR, YOU KNOW, SOME OF THESE COMPANIES. ABSOLUTELY. BUT BUT THEY HAVE BEEN QUIETLY HIRING UP DEM LOBBYISTS BEHIND THE SCENES. THIS DIDN'T SURPRISE THEM, BUT THEY'RE REALLY TRYING TO REBOOT, THOUGH.

4:39 >> DO YOU I MEAN, FROM A IN THE CROSSHAIRS, THERE'S CLEARLY A SENSE THAT ELON MUSK AND HIS COMPANIES ARE GOING TO BE CHALLENGED BY THIS. >> ABSOLUTELY. >> WHO ELSE HAS CHALLENGED WHO'S NOT CHALLENGED? IS IT GOING TO IS IT THEATER OR IS IT MORE THAN THEATER? WHATEVER YOU THINK. >> IS CHALLENGE. I MEAN, I THINK CRYPTO'S CHALLENGE, WHICH ISN'T QUITE BIG TECH, BUT THERE'S A LOT OF NERVOUSNESS AROUND THAT RIGHT NOW. WHEN YOU LOOK AT THE DEMS WHO COULD BE LEADING THESE KEY COMMITTEES, I THINK, YOU KNOW, SORT OF EVERYONE WHO'S BEEN STANDING ON THE PODIUM NEXT TO TRUMP IS EXPECTING, YOU KNOW, TO BE DRAGGED BEFORE IN SOME WAY. BUT MUSK IS REALLY IN THE CROSSHAIRS.

5:18 >> BUT WHAT DOES THAT MEAN? >> I THINK IT MEANS IT'S A GREAT QUESTION. I THINK IT MEANS HEARINGS. I THINK IT MEANS ALL SORTS OF PROBES. AND THEN THE QUESTION IS, YOU KNOW, NO ONE THINKS THAT THERE'S GOING TO BE ANY SWEEPING REGULATION OF ANY SORT. BUT IF THE DEMOCRATS CONTINUE THIS INTO THE NEXT ADMINISTRATION, YOU THINK BACK TO WHAT THE BIDEN MUSK RELATIONSHIP WAS LIKE, WHICH IS ACTUALLY HOW WE GOT TO THE POSITIVE TRUMP MUSK RELATIONSHIP. SO THERE'S A LOT LEGISLATIVELY THAT COULD BE VERY TOUGH FOR THESE COMPANIES.

5:49 >> AND WHEN THEY ANSWER THESE QUESTIONS, WHAT DO YOU THINK THEY'RE GOING TO SAY? >> MEANING IT WAS A GOOD QUESTION. YEAH. >> WHAT WHEN THEY'RE ASKED YOU GAVE MONEY TO THE BALLROOM. YOU DID THIS. YOU DID. THAT IS THE ANSWER WE GIVE TO EVERYBODY AS THEY'VE BEEN SAYING. OR THEY'RE GOING TO SAY, YOU KNOW WHAT? YEAH, WE WE, WE WENT TOO FAR. >> I DON'T THINK THEY'LL SAY THAT. I THINK THE RESULT IS A LOT OF EMBARRASSING TEXT MESSAGES. YOU KNOW, A LOT OF EMBARRASSING SIGNAL CHATS. LIKE I THINK YOU HAVE SEEN THIS BENDING OF THE KNEE TOWARDS THE TRUMP ADMINISTRATION. THAT PROBABLY ISN'T GOING TO BE A GOOD LOOK AGAINST A DIFFERENT BACKDROP. I THINK THAT'S LARGELY WHAT THEY'RE GOING TO BE CONTENDING WITH OPTICS WISE.

6:28 >> AND THEN FINALLY, OPENAI ANNOUNCING THIS SORT OF PLAN TO TRY TO CHANGE THE PERCEPTION OR IMAGE OF DATA CENTERS AND THEIR ROLE IN THEM AND PUT OUT SOME ETHICS POLICY AND EVERYTHING ELSE. HOW FAR DOES THAT GO? >> I DON'T THINK REBRANDS WORK. I UNDERSTAND WHY THEY'RE TRYING TO DO IT, BUT I THINK THE PROOF WILL BE IN HOW THESE COMPANIES ACT IN THEIR COMMUNITIES, HOW THEY ACT WITH THEIR CUSTOMERS, AND. >> WHERE DO THEY SIT RIGHT NOW?

6:54 I MEAN, THEY'RE NOT GOING PUBLIC, NOT YET NEXT YEAR. THEY'RE RAISING MONEY, BUT NOT AS MUCH AS THEY HAD PLANNED FOR, IN PART BECAUSE I THINK THE VALUATION OF ANTHROPIC MAY NOT BE AS MUCH AS THEY HAD PLANNED FOR. WHAT DOES THAT MEAN LONGER TERM FOR FOR OPENAI. >> LOOK, OPENAI HAD A REALLY TOUGH BEGINNING OF THE YEAR, AND THEY DID TURN IT AROUND AS THEIR ENTERPRISE SALES GREW. IF THAT CONTINUES, I THINK THEY'LL BE IN A GOOD PLACE TO HAVE A SOLID SHOWING. IF THEY IMPROVE MARGINS, THOUGH, I THINK THEY HAVE HISTORICALLY REALLY GONE FOR SCALE VERSUS MARGINS. YOU KNOW THAT ROUND. MY SOURCES SAY IT WAS MUCH MORE