The Twenty Minute VCCerebras CEO on the Future of Data Centres, Token Costs & Memory | Should US Companies Sell to China
EVERY SPOKEN WORD
55 min read · 11,204 words- 0:00 – 2:18
Intro
- AFAndrew Feldman
We can't build data centers fast enough to keep up with demand. We have a twenty-five billion dollar backlog. If demand stays high, we're gonna continue to see memory shortages for at least the next several years.
- HSHarry Stebbings
I'm so excited to welcome a dear friend, Andrew Feldman, founder and CEO of Cerebras. Last week, Cerebras went public, the largest semiconductor IPO ever. The price went from a hundred and eighty-five dollars to three hundred and eleven dollars. They got over five and a half billion dollars. Today, we deep dive on the future of chips, the future of US-China relations, the future of data centers and energy. This was an incredibly wide-ranging conversation.
- AFAndrew Feldman
I think it has been Nvidia's strategy to try and create competitors for the traditional hyperscalers. They have funded and backstopped and over-allocated to the neo-clouds. They have created a dependence, which is probably not healthy. So over time, the history of our industry is a massive reduction in the cost per unit compute. For hard problems, there is no upper bound to how much faster you wanna be.
- HSHarry Stebbings
Ready to go? [upbeat music] Andrew, dude, it is so lovely to have you on the show. I have to say, I was, I was quite emotional last week when I saw the IPO, 'cause you are one of the kindest, greatest people. I, I love getting to know you. I so appreciate our relationship. And so to see it culminate last week with the IPO was really special. So congratulations for last week, dude.
- AFAndrew Feldman
Aw. Thank you so much. Those are really kind words, and it was a really exciting day for, for the company and the team and, uh, the people who'd, who'd believed in us and, and who backed us for, for a decade. And, uh, that-- it was great. Thank you for, for, for saying those nice things.
- HSHarry Stebbings
Not at all. And I was, I was thinking, like, in terms of this conversation, how I wanted to structure it. And I, I always get back when I have amazing people like you on the show, which is Eleanor Roosevelt's kind of statement of, you know, not very intelligent people discuss other people, uh, mediocre people kind of discuss current events, uh, and then intelligent people discuss the future and ideas. And so I thought I'd grapple with my own ideas and wrestle with your incredible brain to help me understand where we're at and
- 2:18 – 7:35
Is There an AI Infrastructure Bubble?
- HSHarry Stebbings
where we're going. I wanna start with, on the one hand, we look at the, the landscape, then it's like, oh my gosh, an AI infrastructure bubble. And then on the other hand, we look at, you know, Jensen Huang last night, he comes out and says we're gonna be spending three to four trillion on AI infrastructure by twenty-thirty. How should I balance the, "Ooh, there's an AI infrastructure bubble," with this appreciation of three to four trillion dollars spent by twenty-thirty?
- AFAndrew Feldman
I've been thinking a lot about this. I, I think when you look at other bubbles, and you look at bubbles in the past, uh, and I, I was in one in, in the late nineties when we built out a-an enormous amount of fiber optics. And you sometimes have economists who, who maybe think it's relevant to look at 1880s, the building out of, of rail. [laughs] I'm not, not sure that's relevant, but, um, what I see is that there was a penchant to believe that if we built it, they would come. The infrastructure build-out was way ahead of demand, and that was true in railroads. That was true in, uh, fiber optic cabling. And in a strange way, that is the exact opposite of where we are with AI. The infrastructure build-out is behind demand. We can't build data centers fast enough to keep up with demand. We have a twenty-five billion dollar backlog. Nvidia has a backlog. Uh, AMD has a backlog. Others have backlogs. Um, they have backlogs because we can't get data centers built fast enough. And it's not that we're building on the come. We're not building ahead of demand. We're building behind demand. And that is a very different observation than, uh, those who say there's a bubble. I don't think they've really gotten their head around the fact that we are trying to keep up with demand, not the other way around. And I, I don't think that's a characteristic of a bubble. When you are trying with your infrastructure to keep up with what people want today, not in the future, today, and their demands are growing over time.
- HSHarry Stebbings
Is it ultimately a good thing that we are meted in our ability to build out data centers because it almost tempers the demand? If we were able-- and Gavin Baker said actually kind of the delays and the permitting and the challenges that are incurred today actually help because if you were able to have it all today, all of demand would be met with all of supply, and that would actually be a challenge.
- AFAndrew Feldman
Well, I, I-- look, I think, uh, sometimes the world is like I was in my twenties the first time I went to Vegas and went to the buffet, right? You, you eat so much you feel sick for days, right? [laughs] It's all in front of you, and you just gorge yourself. I, I think the market can sometimes be that. And I think Gavin is an extraordinarily thoughtful think-- sort of guy about this. I think we are being metered. We also know that the reason you put meters on a freeway is because it makes the, the freeway traffic smoother, and it avoids hiccups. Um, that's exactly what metering is designed to do. And so he-- I think he used that, that analogy extremely thoughtfully. One of the advantages that OpenAI has was that, uh, and I think one of Sam's brilliances, was that he saw an exponential growth, and he saw what that would mean in a year or two to the demand for compute, and he wasn't afraid by it. He went out and took action, and perhaps others couldn't believe it, or they were looking at the same demand, sort of steep exponential growth, and like, "Well, we can't need that much. You can't need tens of gigabytes. That-- my mind hurts if you do that." Whereas what OpenAI did is they went out and they're like, "We're gonna contract for it here and here. We're gonna get power. We're gonna get data centers. We're gonna sign uppoor hardware, and an, an ability to, to believe your data in a exponential growth environment out a year or two or three i-is, is a superpower.
- HSHarry Stebbings
Can-- do you get rewarded for that insight if you can just buy it from Elon now on demand?
- AFAndrew Feldman
I don't think they can buy the same thing from Elon on demand. They bought down rev gear.
- HSHarry Stebbings
I'm sorry. I've learned from doing this show for a long time, I can ask stupid questions. They, they bought down rev gear? What is that?
- AFAndrew Feldman
Yeah, they bought a-- they, they got H100s. They didn't get the B200s. They didn't get the most current. They didn't get the-- They are a generation and a half, maybe two generations behind. So th-th-this was not a great deal. It was a good deal for Elon. He had them w- sitting around, but they were forced to take action in a deal that I think was, was not the ideal deal they wanted. It was a deal that was available.
- HSHarry Stebbings
Going back to what we said about kind of the delay in data centers and data centers being a constraint, I just hear everyone say, "Well, memory. Memory is the shortage too, Harry, and that's why we're seeing an increase in cost, you know, four, five X in certain cases."
- AFAndrew Feldman
Yeah.
- HSHarry Stebbings
Is memory-- Is that true? How should we think about memory being the shortage as well?
- AFAndrew Feldman
Well,
- 7:35 – 9:35
Memory Shortages Will Last Years
- AFAndrew Feldman
look, when-- what, what's happening here is there is such extraordinary growth in demand that it is putting pressure on all parts of the supply chain. Memory after TSMC, which is right after fab space, memory is number two item in this, uh, number two item that's needed. And what's happened is there are only three companies that make the memories GPU use. We don't use that memory. But that HBM is made by Samsung and Micron and Hynix, and they couldn't keep up. And so the prices shot through the roof. I mean, Micron is producing numbers where they have eighty, eighty-five percent gross margins. I mean, they're getting software gross margins on making memory. Um, yeah, I, I think it's extraordinary. Um, that is a limitation for all GPUs, but not us. We don't use it.
- HSHarry Stebbings
Again, going back to my idea of what the future looks like, what should one expect from that? Does it ease? Does it ease over time, or what happens to the cost?
- AFAndrew Feldman
Well, I, I think the, the, the challenge here is that, that these are extremely, uh, lumpy items, right? You, you can't just add a little bit of manufacturing capacity at a fab. You, you have to build a fab for forty billion dollars, and it takes five years to build. So if you see demand explode, you cannot respond quickly. All you can do is fill your factory. Once your factory's filled, you gotta build another factory, right? It's a, a step function in your ability to meet that demand, and the step is huge and takes years. And so if demand stays high, uh, they are-- we are gonna continue to see memory shortages for at least the next several years.
- HSHarry Stebbings
Do you think we will see a peaking of demand? You've seen so many different-
- AFAndrew Feldman
N-n-not if
- 9:35 – 11:33
2025: The Year AI Became Actually Useful
- AFAndrew Feldman
AI continues to improve in usefulness. I mean, what, what's happened here i-is, and, and this is something that I ha- I haven't heard others sort of talk about, is that somewhere in twenty twenty-five, the models got smart enough to be really useful. Before that, Harry, these were sort of, sort of a novelty. AI was like, "Cool," and then nobody used it. Remember, we, we make AI with training, and we use it with inference. And so once the, the AI we made, twenty twenty-five-ish, first half, got smart, we began using it. And this explosion in demand that Jensen described, all right, and that we very much agree with i-is happening, that's because people are using it every day, and they're using it on more and more problems. They're using it on harder problems, and it is sweeping through different demographic groups. It's not just twenty-eight-year-olds in Silicon Valley. It's my eighty-five-year-old father. It's, right, it's eleven-year-olds, my eleven-year-old niece. It is, right, it is sweeping through demographic groups, and they're using it all the time. And th-that is what's driving this demand. And so, um, if we continue to find ways to make the AI, the frontier models smarter and more useful, we'll keep using it. The demand will continue to, to con- on this sort of exponential curve.
- HSHarry Stebbings
Y-you've compared past cycles before in this conversation. Sarah Friar said about, um, kind of cloud providers can be, uh, similar into some perspective to what we're seeing today in terms of frontier models, and she said that last night. Uh, to what extent do you think you see the commoditization there, and they essentially become utilities versus differentiated providers with meaningful moats?
- 11:33 – 16:34
Will Frontier Models Commoditize Like Cloud Did?
- AFAndrew Feldman
I think it has been Nvidia's strategy to try and create competitors for the traditional hyperscalers. I, I think that has been a strategy of theirs. I think they have funded and backstopped and over-allocated to the neo clouds. I think, um, I, I think they're-- they have created a dependence, which is probably not healthy. But I, I think the truth is, is that what, what AWS and Azure offer is extremely useful for most enterprises. They offer credibility and legitimacy. They offer security. They offer layers of different software for different parts of your organization. If you'd like to enter in the AWS world, you can enter with Bedrock. You can use tools like SageMaker. You, you have a collection of different ways to, to enter.And you can store your data there. You, you have your S3 instance. I mean, you, you can have an entire offering. And I, I think that is really valuable to a segment of the com-- of the, of the, of the market. I think there might be other segments of the market that are like, "Give me cheap compute. I don't care about anything else." And in that case, your strength as a, as a hyperscaler becomes your weakness. You have the security, you have the other layers of software, and you have some of the costs that are associated with that. And if people don't want that, if you don't care about leather seats, [chuckles] right? And there are leather seats in the truck, there's extra cost in the truck. And when you buy the truck, right, you, you find somebody who's got a truck that's got Naugahyde seats, right? I mean, it, it's exactly the, the-- Our business, just 'cause it's wrapped up in technology, is no different than any other business. It is, it's segmented. There, there's value. That value comes at a cost. You have to make that value. The hyperscalers make the value. They make the value through software, through security, through having rules about their data centers, about the security, physical security, the various security checks they put in. Those are enormously valuable, um, to most parts of the market, but not all.
- HSHarry Stebbings
You said about the costs there. When we look forward, how do the costs of your business change significantly over time? We, and we spoke about the cost of memory going up 5X. If we look at the COGS in five years' time, how do you think they will look most significantly different?
- AFAndrew Feldman
Well, the, the cost of the increase in memory has been very good for us because w-we don't suffer it, right? This has given us opportunity, right? We, we use SRAM, and there's no shortage of SRAM. Uh, the cost of SRAM hasn't changed. Um, and you know, n-no SRAM maker, 'cause TSMC etches it into your chip while they're making the logic. Um, uh, there are no extra margins to, to, to pay for the, pay, pay the HBM maker. And so, uh, we have been advantaged in this environment. We have been advantaged by the fact that there are constraints on CoWoS at TSMC. We don't use CoWoS. We are advantaged by the fact that we're at five nanometer, and the three nanometer node is the most oversubscribed. Uh, and so we, we have-- Our supply chain is advantaged on these dimensions. Um, but they, uh, a-and others are paying the price. The, the price of, of GPUs has gone through the roof.
- HSHarry Stebbings
And so to my question on COGS, do we see, like, a plateauing of COGS in terms of it can't get cheaper, and this is the stable state? Do we see a meaningful reduction? How do-
- AFAndrew Feldman
I think what, what happens over time, Harry, is, is that we, all of us, we, we improve our designs. The designs deliver more Tokens per unit time. They deliver faster Tokens. Now, we, we are 15X faster because of architectural reasons. We will continue to, to improve over time. Nvidia, they will continue to improve over time. I believe the gap will widen between our performance and their performance. But all of us, the whole industry, us, Nvidia, uh, AMD, Qualcomm, Arm, everybody's chips will be better in three or four years than they are today. They will produce more per unit power, and they will produce more per, per dollar cost. So over time, the history of our industry is a massive reduction in the cost per unit compute.
- HSHarry Stebbings
I was chatting to a friend who's, is a, a, a phenomenal mind, and he said that Google will become the lowest cost producer of Tokens because they own the full stack, from TPUs to data centers, networking, power procurement. Do you think that's right, that that full stack ownership will lead to their highest margin, lowest cost ability?
- 16:34 – 32:53
Can Google Win by Owning the Full Stack From TPUs to Tokens?
- AFAndrew Feldman
There are, uh, pros and cons with that strategy, right? Uh, the pro is you have everything from the ground, right, land, all the way up to Tokens. The downside is you can only sell your TPU to yourself. And historically, volume mattered a lot, and so your m-market is constrained by your own demand. Whereas if you were able to sell to the whole market, you might have more, more demand and be able to drive down the cost. It's an open question. G-Google is threatening that argument. I think your friend's argument is reasonable, but there has historically been a, a challenge if you only have one customer yourself for your hardware. And, uh, that has historically limited the size of the opportunity landscape for you.
- HSHarry Stebbings
Do you think they should sell to external customers?
- AFAndrew Feldman
I think you are already seeing them step outside of their own data centers for this exact reason, right? What it says in your friend's construction is our ability to sell hardware is constrained by our ability to build data centers. Now, one can imagine a world where you don't want that constraint. You would like to be able to sell hardware to anybody's data center. A-And so I, I think these arguments are extremely complicated, um, rarely unfold in, in a simple form. Um, but it is true that when Google or when Cerebras puts our equipment in our own data center, right, we have a, a significant advantage over a NeoCloud because NeoClouds are buying hardwareWith gross margins of 70, 80% for Nvidia. So the hardware in those data centers, and then they have to make their margin. That's not what Google's doing. That's not what we're doing. 'Cause I mean the dramatic fee of a vanity when you look at a Nabius or a CoreWeave or any of the others. I think CoreWeave has been an extraordinarily innovative company. I think they've solved, uh, a, a series of, of financial challenges with really innovative sort of financial engineering. They were the first to, to, to, to use that very innovative way. They get enormous credit for that. They have been extremely good at sort of rapid deployment, which itself is a really important skill in, in this environment. Um, I, I don't know about the others, um, but I think all of us have challenges as our business grows, and I, I think they have produced really interesting things through creativity. Now, it's different creativity than, than, than what I have. Um, but, uh, they've gotten paid for real innovation in, in, in financial, uh, thinking.
- HSHarry Stebbings
Speaking of real innovation, I, I saw the post about you running Kimi K two point six.
- AFAndrew Feldman
Yeah.
- HSHarry Stebbings
Six point seven X faster than the next fastest GPU cloud.
- AFAndrew Feldman
Right. We, we posted it while one bozo in a-- at an analyst firm was on TV saying we couldn't do it. I mean, if ever there was, if ever there, there, there was a, a, a sort of example of being empirically proven dead wrong, to have these numbers posted while you are on TV saying, "They can never do it," it was perfect. I was-- I, I enjoyed that. I'm a collector of examples of people being dead wrong. Um-
- HSHarry Stebbings
[laughs] You should be-
- AFAndrew Feldman
My wife, my wife has a list of when I'm dead wrong, so I, I've sort of embraced this and collect it.
- HSHarry Stebbings
You should be a venture investor, my friend. With a portfolio of thirty, you'll be dead wrong a lot. [laughs]
- AFAndrew Feldman
You have, if you're lucky, eighty percent of your portfolio where you were dead wrong. If you're lucky.
- HSHarry Stebbings
You should do if you're doing it right, yeah.
- AFAndrew Feldman
Right. That's right.
- HSHarry Stebbings
Yeah. I agree with that. How important was that for you? And is there a stage where actually it doesn't matter being that increment more important? Like six point seven times. This is so much more important. It's not twenty percent more important.
- AFAndrew Feldman
That's right. You know, I, I think for hard problems, there is no upper bound to how much faster you wanna be, nor the value of speed. If in three minutes we can solve problems that, that take others twenty minutes, then think of all the extra problems we get solved, and think of if I'm your competitor, and I'm solving your hard problems in three minutes, and you're taking twenty, imagine over a day or a week. You get, you get smoked. You will be smoked in this, in this example. And that is the way this is f-- going. Um, speed is of the essence, and it's true in coding, it's true in agentic flows, it's true in every part o-of the, uh, of the AI landscape. I mean, we just ask you this question. How big is the market for a slow search?
- HSHarry Stebbings
[laughs]
- AFAndrew Feldman
Really. H-It's zero. How big is the market for dial-up, for slow internet? Right. How much would I have to pay you? Let's try turn it around and say there's a negative market here. If I gave you a thousand dollars a month to have slow internet in your home, right, you wouldn't take it. A thousand dollars a month, you wouldn't take it. That's how impossible it is to engage with an important technology slowly. Why do we believe the inference will be any different? There'll be zero market for slowing them.
- HSHarry Stebbings
I am kinda pushing them. When you power Codex and you're able to be so much faster, if you're Claude Code, are you not like, "Ah, bugger"?
- AFAndrew Feldman
They are. Like, you have to be.
- HSHarry Stebbings
Are you able to sell to them also? Again, please tell me to sod off.
- AFAndrew Feldman
Oh, no, no, no. Look, I, I think, uh, r-right now we are digesting one of the largest deals in the history of Silicon Valley. [laughs] Right?
- HSHarry Stebbings
You're like, "For fuck's sake, give me a break. I've just signed a twenty billion dollar deal. You want more?" [laughs]
- AFAndrew Feldman
You know, while we were on the road, some investors would ask. They'd say, "Oh, you're heavily concentrated. You have a big portion of your business with OpenAI." And, and we say, "I talked to you a year ago when I had a billion-dollar deal with G forty-two," and you said, "You're heavily concentrated. You have a billion-dollar deal with G." Said, "I come back to you in a year with a twenty-plus billion dollar deal, and you tell me the same thing."
- HSHarry Stebbings
But with a different customer as well. [laughs]
- AFAndrew Feldman
With a different customer. With a different customer. And I, I tell everybody that the, the way you get good at, and the way you have succeed with many customers of size is first you win one. The, the, the way to catch, right, big customers is first catch one and learn, build the muscle, change your supply chain, learn how to work with a large customer. Then you're in a position when the next one comes to, to have a chance to win, and what's more, chance to keep them happy once you've won. And then once you have that muscle, you're in a position to go out and win the next one.
- HSHarry Stebbings
It is a huge deal.
- AFAndrew Feldman
It's a huge deal.
- HSHarry Stebbings
What are the biggest challenges in fulfilling it? And with the greatest of respect, do you go to sleep at night going, "Ooh, that is quite a lot"? [laughs]
- AFAndrew Feldman
[laughs] Look, I, I think, uh, what has happened, and Sam said this. He said, he said, "The first time people used G-GPT," I think it was, what, four something. They said, "Oh, this is amazing." And the next day they're like, "How come it's not faster?" [laughs] The, the rate at which you get accustomed to something and then want betterIs amazing in our industry. And it used to be the case that 20 megawatts was a lot, and then 100 megawatts was a lot, and then a gigawatt was a lot, and now we're running around looking for multi-gigawatt facilities. [laughs] A-and that's-- in any other time, 750 megawatts would've been a mind-boggling amount. And now we're like, "Yeah, we got that." [laughs] Right? I-- it is the, the, the change in mentality over the last year or two for everybody in our industry has been sort of extraordinary. Five years ago, if you'd have said, "We're engaged in a, in a multi-gigawatt build-out," right? You th-think about what Crusoe is doing or think about some of the other cool companies, what, uh, SoftBank Power is doing and what some of these groups are doing, and you say, "That'd be delusional," five years ago. And right now it's like, "Oh, another one? Yeah, that makes sense. I mean, we should try and get our UAE star gate at five gigawatts. Oh, yeah, yeah, no problem. That seems reasonable." [laughs] Yeah, that's what's happened. It's this extraordinary, extraordinary sort of change in thinking.
- HSHarry Stebbings
If we are nonchalant to multi-gigawatt build-outs-
- 32:53 – 33:10
Data Centers & Local Communities
- AFAndrew Feldman
I, I do worry about it. Those are, those are people, and they have families. I think there are sort of two views, Harry. I, I think to date, most of the layoffs were AI washed. Th-they were because we did boneheaded hiring du-during
- 33:10 – 38:15
AI Layoffs
- AFAndrew Feldman
COVID. It is actually because a great deal of productivity gains has been, have occurred over the years that we're just now harvesting. The ability to gather information from across the organization to synthesize it and put it in one place is now changing what it means to be middle management, right? The, the role of information gatherers and presenters is being eliminated. The ability for us to automate roles, and none of this is AI yet, right? Th-that is really ninety percent, ninety-five percent of what the, in my view, what the, the terminations, uh, have been about. It's easy to, to, to put them under the umbrella of AI. Now, AI is starting just now to have meaningful enterprise impact. But if, if you are an engineering organization that can't see how to take advantage of vastly more productive engineers, I don't think you're long for this world. I mean, the list of things I want our engineers to do is fifty times as much as we have engineers, right? If, if we get-- As we get more productive, we do more things. We're gonna hire more engineers. We're not gonna hire less engineers. Um, and-
- HSHarry Stebbings
Can, can I ask you, we, we, we saw Benny also say that he spends three hundred million a year on Anthropic, which, uh, equates to about three point eight percent of developer salaries on Anthropic. To make it justify the valuations that we're seeing for these companies, it needs to be twenty percent. Do you have any concern in that movement from three point eight percent to twenty percent?
- AFAndrew Feldman
No. I mean, I, I think if you look at... I mean, I've never done this in any detail, but if you look at what we pay hardware engineers, and you look at what the tools which we-- the EDA tools they use, I bet you're much closer to fifteen or twenty percent than two or three percent. What's happened is, historically, software engineers use very low-cost tools, and hardware engineers use extremely expensive EDA tools. And so, uh, that's interesting, isn't it? I mean, I, I, I think we-- the cost of bugs in hardware is so high that we became accustomed to using many expensive tools. And in software, we threw people at the problem rather than tools. And a-as AI becomes more productive, I certainly don't see a problem where software engineers are using fifty or a hundred thousand a year each in tokens. There are forty-seven million software engineers in the world. I mean, that's five trillion dollars j-just in software engineering token use.
- HSHarry Stebbings
What-- We, we mentioned hardware engineers. We mentioned software engineers. What role does not exist today that you think will be incredibly commonplace in three to five years?
- AFAndrew Feldman
So I, I've been a, a, a part of, over the past twenty-five, thirty years, several technical transformations that produced jobs in companies that didn't exist. Prior to the mid-nineties, the role of CIO didn't exist. CIO arose as a role with Cisco, with their sort of rise to dominance, as prior to the mid-nineties, the amount of enterprise networking was de minimis. There was a role that was often VP of telco infrastructureThat job is gone. We don't have a phone system. Like, we don't have phones on people's desk. They call me on my cell phone, right? That job disappeared completely, gone. And companies that built the PBXs, like Rolm and all these other-- That business has shrunk to nothing. Now, later, what happened in the '90-- in, in 2000s, right, with the rise of Palo Alto Networks and these other security, the role of CSO never existed prior to that, all right? And what you're gonna see is the, the rise of roles that reflect the governance of AI in companies. Now, some companies have chief AI officers. I don't know if that's what it is. But as these technologies sort of become important in companies' life, new jobs emerge, jobs that never existed before. New organizations exist, uh, where there were none, and previous ones disappear. I, I think the role of HR changes fundamentally. The, the part of AR-- HR that just, that answered questions, that provided information about benefits, that, that disappears. A-AIs can, can answer all your questions. Uh, they can provide better answers, faster answers, more thoughtful answers. Um, it becomes something different. The management of people becomes something different. I think there are all sorts of other parts of, of, of organizations that have fundamental changes, um, because AI can answer the questions that they used to answer.
- HSHarry Stebbings
Do you agree the biggest inhibitor to enterprise adoption of AI is data structure and data cleanliness preventing-
- 38:15 – 44:04
The Real Blocker to Enterprise AI Adoption
- AFAndrew Feldman
No. No, the biggest are, are lawyers. I think-- No, really. I, I think the security apparatus and the lawyers who, when they don't understand the technology, say, "No, we can't do it," right? They're in the saying no business, and entrepreneurs are in the getting it done business. And the, the reason that, uh-- and there's a reason for this, that your security apparatus and your lawyers, I mean, every-- They're in jobs that everybody just blames them, right? No credit, no credit, failure, blame. No credit, no credit, no failure, blame. I mean, that's their life, and it's brutal. It's brutal.
- HSHarry Stebbings
You're selling it so well. [laughs] Sorry, you're running away.
- AFAndrew Feldman
If you listen-- go into being a CISO, uh, uh, uh, it's brutally hard. Um-
- HSHarry Stebbings
We had a year where nothing happened. Well done. [laughs]
- AFAndrew Feldman
[laughs] That is their dream. I mean, every day their phone doesn't ring, they're, it's like, "Oh, made it through another day." But when confronted with new technology, because their payoff structure is such that they're in the business of trying to avoid risk, they are a drag on adoption of new things, and you see this across the board. And lawyers don't have a contract for it. There's no precedent. That's in a business of backward-looking precedent. You wanna make a lawyer uncomfortable? I know your girlfriend's a lawyer. Ask her to work in an area with no precedent. They don't know what to do. Their whole training is about what has everybody else done before? How do we synthesize this? How do we work within those rules? So I, I think the, the widescale adoption and use of AI, um, in organizations is today limited by security and, uh, legal. I think once they agree, "We need to do this. We-- Here, here are the rules we will use," um, there's a huge amount of productivity to be gained. Then you are immediately constrained by the way you chose to husband and marshal data, the way you chose to organize data over years. And so companies like, or organizations like Mayo Clinic that have been on a thirty-year quest to organize data at-- they are at a huge advantage. Same with companies like GlaxoSmithKline.
- HSHarry Stebbings
Yeah.
- AFAndrew Feldman
And other companies who, who haven't perhaps been as disciplined, as thoughtful about the organization of their data, uh, are at a disadvantage.
- HSHarry Stebbings
On the security and the provisioning side, do you think we will see industries tip like legal has done, where the biggest firms in the world are now going, "Oh, shit, we need legal. Our clients are saying we need... Sorry, we need AI. Our clients are saying we need AI, Harvey or LawGora." And I'm not gonna get into which one, but, like, there's two options, boom. Do you think all industries will follow the tipping, or do you think most will follow the slow agreement that it's the new normal?
- AFAndrew Feldman
I, I think, uh, what's happening is the leaders are tipping. I, I think even Jensen told a story that, that he was battling with his own internal lawyers around the use of, I think it was Cursor, and finally he just decreed, "We're gonna, we're gonna do it." And I, I think I got that right, but somebody on, on here will correct me for sure if I got it wrong. But, um, I, I think at some point, leaders weigh the productivity gains against the unseen boogeyman of risk. And the problem with unseen boogeymen is sometimes they're actually real, [laughs] right? Not often, but sometimes, and that, that's the problem. What does he call him in, in John Wick? Baba Yaga. John Wick is the guy you send to kill Baba Yaga. Uh-huh.
- HSHarry Stebbings
I'm just-- You know, I think for me, yeah, I'm not that young anymore, but I'm definitely, uh, capable of exercising brain.
- AFAndrew Feldman
I know you're in your sixties, but you look good.
- HSHarry Stebbings
Yeah, it's, it's the facial moisturizing routine. We mentioned, um, security, permissioning, legal, everything in between. They get even more freaking nervous when it's open source, like they shit the bed. How do you think about that? I see more and more companies, especially in the Valley, really push the boundaries on with frontier and then try and get as close as possible with open source given the cost advantages. Is that the future, and what does that mean?
- AFAndrew Feldman
Look, I, I think we as a, as an ecosystem have made real progress in sort of the, the legal, uh, gunk around open source. But-it-- the result has been a complexity that hurts your head. And if you, if you ever want to, to dive down a rat hole that has sort of n-no bottom, begin a discussion with lawyers about open source software. And th-there's no end to the depth and the boredom w-which you will suffer a-as you head down this hole. This is made doubly worse by some of the best open source models were made by Chinese companies. And, uh, and they're exceptionally good models. KimiK2, DeepSeek, Qwen, the, the GLM, these are extraordinarily good models. They're not quite as good as the closed source models, but they're exceptionally good models. And I, I think that is a case of, uh, people trying to decide, uh, whether it makes sense to, to, to save money. Uh, they have been, you know, easy for us to adopt, to, to demonstrate extraordinary speed on. Um, it, it's a hard problem. I mean, I don't envy the, the, the legal team and, and the security groups that are thinking about these things. But the truth is, the tidal wave is so big and the demand is so high that they, they often just get, get washed over.
- HSHarry Stebbings
Do you think we should be selling chips to China as a result?
- AFAndrew Feldman
No.
- 44:04 – 47:00
Should the US Be Selling Chips to China?
- AFAndrew Feldman
No. I, I think, um, I, I think, uh, l-let's remove all of us that are self-interested, and e-even though I'm arguing against my self-interest, right? Um, if you remove me and you remove Jensen and you remove Lisa and you remove everybody in the chip industry, and, and you say, "If we sell to, to somebody in the security business," and you ask this question, "If we sell leading-edge technology to China, will their military use it?" Everybody says yes. There is no debate on that point. Their military will use it. Okay. You ask a second question, which is, "If you sell our leading-edge technology, will they, will their government use it through their industry to compete with us, all right, i-in an advantaged way?" The answer is also yes. In that-- And so th-that's where I stop. There's complete agreement that those two things are true by everybody in the security business and outside of the chip business. And now, you can say that keeping them in our ecosystem is the best way to manage that problem. That's one argument, and there's some merit to that. There is keeping them from building their own, their own ecosystem is something that's in our interest. There's real merit in that. I don't agree with either of those arguments, but, but they're real arguments and they have real merit. They are, at least today, our industrial adversary. And, uh, as you travel the world and you see sort of the results of some of their industrial policy, they, for example, the, uh, driving down the cost of solar, driving down the cost of lithium batteries, and the results it's had in their auto industry, and the fact that you travel the world and you see Chinese cars, um, and fewer and fewer American cars, uh, they, they're an industrial adversary. And I, I don't love that. I, for years, did business with extraordinary entrepreneurs there at, at Baidu and at Tencent and DD and all these companies, and they're every bit as good as anybody in Silicon Valley. And I would love a, a world in which they weren't an industrial adversary and instead we were working together to solve real problems. But the state of the world is the state of the world. If it's an industry, as American industry, we sold fewer chips and we didn't sell them to China, I'm just fine with that.
- HSHarry Stebbings
People would argue back and say exactly as you said that, "If, if we don't sell to them, they'll, they'll build their own capabilities. He's not gonna forget it, and then we won't control it." Why, why do you not think that's a credible argument?
- AFAndrew Feldman
I think the, the, the, the chip industry r-requires you to go through TSMC, and TSMC requires you to go through ASML or, or Samsung. I think there are r-r-reasonable choke points to manage those challenges. I think the strategy
- 47:00 – 53:48
Why Europe Can't Build Great Tech Companies
- AFAndrew Feldman
in any case is even those I think who, who disagree with me would, would suggest that, uh, y-you don't wanna sell them your cutting-edge technology. You wanna keep them down rev. I'd like to keep, keep my, my industrial adversaries more than down rev.
- HSHarry Stebbings
With that, how important is it that we onshore TSMC-like capabilities and companies given Taiwan's vulnerability to China?
- AFAndrew Feldman
We have problems in the US in long-range policy.
- HSHarry Stebbings
Huh.
- AFAndrew Feldman
Policy that endures more than a single administration, right? We have problems building infrastructure that is clearly needed and crosses municipality lines. So, uh, let's look at things China has done extremely well. Their power infrastructure is extraordinary. And in the US, we are a patchwork of nineteen fifties technology if we're lucky, and that's really bad. What, what was the, the, the fundamental question? I lost my train of thought. I'm sorry.
- HSHarry Stebbings
It was how important is it that we onshore TSMC capabilities given the vulnerability?
- AFAndrew Feldman
So there, there are things we don't do well, and, uh, o-one of them is thinking about long-term consequences of, uh, decisions like not investing in fabs in the US. I mean, we didn't just lose the fabs, we lost the surrounding ecosystem. We lost the packaging expertise. We, we, we lost a whole set of, of surrounding, uh, strategic jobs and industry, and it is extraordinarily important we get it back. And I've been saying that for a decade and a half, that not the CHIPS Act, not subsidizing Intel, not... It's important that, that we have cutting-edge fabs in the US.And that we, uh, surround them with cutting-edge packaging technologies, and these are a strategic asset.
- HSHarry Stebbings
If I said that you have one policy change that you could usher through with no resistance, what would it be?
- AFAndrew Feldman
Um, I, I would allow TSMC and, uh, Samsung, uh, both to, uh, a 20-year period free from all local and league-- local ordinances, all of them, to build fabs in their desired location in the US. If that's Arizona, that's great. If that's Texas, that's great. Twenty years, no local rules, no... Allow them to build fabs. And I, I would say that w-we use the same rules we use in Taiwan. Don't, don't build garbage. U-use exactly the same construction techniques and rules, et cetera, that you, that you've built fabs successfully elsewhere in the world. But local ordinances are disastrous and not intended to cover pyramids, right? Fabs are modern pyramids, Harry. I mean, they are the greatest things humans make in manu- in the manufacturing world by far. Nothing's close.
- HSHarry Stebbings
Can I ask, Andrew, I sit here in London, should I be worried? And you have the best frontier labs in the US. You have amazing open source and amazing manufacturing capabilities in China. What, what does Europe really have? We've kind of failed on the model front. Mistral is the leader, but sadly no, nowhere near others. Should I be worried?
- AFAndrew Feldman
You should be worried at the pattern, the pattern of sort of l-lack of success across a range of technologies. It, it's not just that, that the leading AI companies are-- Most of them are in the US, but the leading chip companies, but the leading software companies, right? Of course, there's some examples, SAP and, and some others. But there has emerged in Europe a, uh, a sort of be afraid of it, then regulate it, tax it, or sort of mentality that, that works against entrepreneurship. And, and I think Europe, uh, and this isn't true across the board, and clearly there are pockets outside of Cambridge and, and in London and, and in, in Stockholm, where the guys at Lovable are doing really interesting stuff. And there, there are all sorts of counter examples. But on the whole, given its population, the opportunity to do vastly better on the innovation front across industries is sitting there unexercised. And, uh, that, that I think is, is a worry.
- HSHarry Stebbings
How much of your business do you think will be in Europe in five years' time?
- AFAndrew Feldman
I think along with this, they have been slow to adopt new technologies. Not only have they been sort of slower to invent new technologies, but they've been slower to adopt new technologies. And so I, I think the fastest adoption will not be in Europe, I, I think. But in the, the two and a half to three to five-year range, it, it'll be a meaningful portion. Is, is that in line with your experience? I mean, my experience is from a long way away and from visiting regularly and talking to customers. Is, is that your experience?
- HSHarry Stebbings
Application layer, no. I think we have some of the world's best companies, whether you're ElevenLabs or you're Synthesia-
- AFAndrew Feldman
Sure
- HSHarry Stebbings
... or you're DeepMind. Uh, I think 100% on the infrastructure, on the chip side, on the model side, unwaveringly so. So y-yes, in large part with a little bit of nuance, which you, to be fair, added there with Lovable and so hot, hot spots. So I think we're totally aligned there in, in respect.
- AFAndrew Feldman
I think you've done real work to, to, to argue against that. Hats off to you and the others in the venture community. I, I think capital plays an important role. I think a culture in which it's okay to fail plays a role that, that, that is, uh, not traditionally in Europe. Careers are at one company and are long, and that breeds a, a conservatism. I think one of the most powerful parts about Silicon Valley is the absence of a stigma if you try to do something extraordinary, crash and burn. Um, VCs don't hold it against you. They'd ask you what you learned, and o-often it's a great experience and a credit to you. I, I think that is something that, that I've not... I don't understand it, its history, but it's clearly present.
- HSHarry Stebbings
Can I ask you before we do a quick fire?
- AFAndrew Feldman
Sure.
- HSHarry Stebbings
You mentioned the IPO at the start. You timed the IPO with the greatest of respects, in my mind, to absolute perfection. Before a space X IPO, before Anthropic or OpenAI. Was that strategic and deliberate with the greatest of respects, or was it relative luck?
- AFAndrew Feldman
No,
- 53:48 – 57:10
Timing the Cerebras IPO: Luck or Strategy?
- AFAndrew Feldman
let, let me share. It was 100% deliberate. We tried to go public a year and a half earlier, and we couldn't get it done because we bumped into Cepheus. We-- We're ten years old. We tried to get public for years. Um, it, it was 100% luck and grit and sort of a relentlessness and an unwillingness to fail. And I, I think that, uh-
- HSHarry Stebbings
But did you have in your mind the other IPOs and when liquidity would be best, excitement would be highest?
- AFAndrew Feldman
Did, did we know, uh, when we set the date that chips would be on a run and that it was impossible for, for, for xAI and OpenAI and et cetera to get public before? We didn't know any of that when we set the date. Um, but what we did know, uh, w-was that we had a chance to be the first and only AI pure play in the entire market. There's only one, and that's us. And we had a chance to bring an extraordinary growth story to public market investors who had been shut out. We, we tried again and again, and that's how you get lucky, Harry. [chuckles] It is smart, hardworking people, relentless work. Th-they get lucky occasionally. TheyThey, they find the perfect time.
- HSHarry Stebbings
Should you be investing in companies building on top of you? You said about trying and trying again. You know, Jensen said before that he wishes there were companies he'd invested in and about, about me investing in the ecosystem around Nvidia. Do you think Cerebras should be investing more aggressively in the application layer built on top of you?
- AFAndrew Feldman
I think that's an opportunity that's newly available to us.
- HSHarry Stebbings
Mm.
- AFAndrew Feldman
I, I, I think, uh, probably not with venture dollars or traditional venture dollars, right? I, I, I think you have to think very carefully about y- your investors. Um, I, I think when you're using venture dollars, the question is, should we be investing in them or should our venture partners be inve-investing in them? With public dollars, the, the, the mandate is different and your investors have different access. And so, uh, the opportunity for, for us to do really interesting things with our, our, our customers and our partners grows. That includes acquiring companies, that includes investing in companies, that, that includes different structures of partnerships, and we, we have to explore them all.
- HSHarry Stebbings
You mentioned the multiple times trying to go public and the persistence. What do you know now about going public that you wish you'd known when you were trying multiple times?
- AFAndrew Feldman
No, look, I, I think what happened was, uh, we bumped into a, a CFIUS challenge that was sort of, sort of obstructionist. And, uh, the-- there were sort of unnamed concerns that, that never got articulated, that, that sort of lived in the ether, uh, about, uh, some of our, our large customers. Um, and then we got a new government, and those concerns disappeared, and we were able to move through it really quickly and thoughtfully with a, a really fair resolution. And by the way, a resolution that we had proposed a year earlier.
- HSHarry Stebbings
Is the Trump administration unwaveringly better for business? Again, I say here in the UK.
- AFAndrew Feldman
Yes. Unwaveringly
- 57:10 – 58:53
Is the Trump Administration Better for Business?
- AFAndrew Feldman
better for business. Um, you know, there are things I agree with, there are things I disagree with in this administration, but unwaveringly better for business. You gotta be at bat taking swings, and you've gotta be building every day. When we got public, we were a much stronger company. We had larger sales. We had-- We're further down our roadmap. We had better customers. And so y- you sort of have to separate. You know, we, we, we, we, we didn't get public because of CFIUS, but we kept building the business, and the business got better and better and better, and that gave us the opportunity to try again. And that's, I think, the message to, to your builders, to your audience who, who, who builds companies is a lot of stuff will happen that is not in your control, right? There'll be bad times. There'll be... Right? And, and there'll be... You know, I was raising money in the summer of two thousand and eight. Yeah, that's right. That look on your face is exactly right, right. Summer two thousand and eight, Bear Stearns falls apart in March. Lehman Brothers is exploding in September. VCs didn't wanna put money to work. And you know what the only thing we could do? We could keep trying and keep building.
- HSHarry Stebbings
I was eleven. I was playing Pokémon, dude. [laughs]
- AFAndrew Feldman
Yeah. That's right. When, when you were out in nappies, uh, we, we were out raising money. Uh, uh, and what you can do is r-run with the things you can control, and you are always stronger if you keep building. And if you keep adding customers and you keep moving your technology forward, you keep adding space between you and your competitors, that's what you can control. Good times, bad ti- that's what you're in charge of.
- 58:53 – 1:07:34
Quick-Fire Round
- HSHarry Stebbings
I have to move into a quick fire 'cause I, I-
- AFAndrew Feldman
Sure.
- HSHarry Stebbings
Uh, number one, dude, what have you changed your mind on most in the last twelve months?
- AFAndrew Feldman
As you prepare to go public, the, the number of people who call you and try and sell you stuff i-is insane. Just suddenly developing a presentation whi-which should cost twenty thousand dollars is a two hundred thousand dollar project. Suddenly you get twenty emails a week about wealth management. Suddenly you get, uh, just the garbage that, that sort of... It's like wh- when you get married, Harry, it's the same. You want a photographer to do a corporate event, three thousand dollars. You want a photographer to do the exact same thing, only you call it a wedding, three times as much. Same for a caterer, same for everything, right?
- HSHarry Stebbings
Why?
- AFAndrew Feldman
'Cause you can't put a price on love.
- HSHarry Stebbings
[laughs] I know you're watching.
- AFAndrew Feldman
That's the same reason. No, be-be-because, um, they can. And that's something that I didn't expect, and it's sort of uncomfortable. Uh, i-it's sort of the number of people trying to take a little nibble of your IPO and get paid on it. That was a surprise to me. I, I didn't really think carefully about that prior to getting out the door.
- HSHarry Stebbings
I mean, as you touched on Europe from an American's perspective, if I touch on America from a European's perspective, there's always a take. It's like it's always about the money in America, the transaction, the money, the money, the, the e- Oh, it's like oof. In other-
- AFAndrew Feldman
No, the-- We, we have a problem with that in our society. I think that's right.
- HSHarry Stebbings
Yeah.
- AFAndrew Feldman
I, I think it is both the, the source of some of the drive and the entrepreneurship a-and some of the source of, of the uncomfortableness.
- HSHarry Stebbings
How, how did money change you as an entrepreneur? It changed me as an investor. I go for way bigger upside. I'm not so fearful of losing money.
- AFAndrew Feldman
I grew up on the Stanford campus, and the only currency was intellectual horsepower.
- HSHarry Stebbings
Hmm.
- AFAndrew Feldman
My dad's tennis match, he played doubles every Saturday and Sunday, and there were like six or eight guys in rotation. And I look back, and four ended up with Nobel Prizes, and one had a Fields Medal.
- HSHarry Stebbings
[laughs]
- AFAndrew Feldman
Right? Yeah. William Shockley lived next door to us. Dude invented the tran-transistor. And what we knew about him growing up was on Halloween, he gave full-sized candy bars. [laughs] That, that was what we thought about as kids. After I sold my last company, nothing changed. Nothing. Um, uh, nothing's changing now. I, I think what's made me proud, what made me proud in my last company is we, we made 100 millionaires. What made me proud in this company so far is we've made 800 millionaires. And th-that, if you, if you don't like doing that, you have no business being CEO. If you don't like delivering for your team, you're not a real leader. And, uh, that feels good every day here.
- HSHarry Stebbings
800 millionaires?
- AFAndrew Feldman
800 millionaires.
- HSHarry Stebbings
Yeah, that must feel pretty great.
- AFAndrew Feldman
Feels pretty great. And these are people who bet, many of them bet long periods of their career with us, right? I mean, and maybe you get 35 years in a career as a top working engineer. Many of these guys have been with me for three or four companies. Some of them have been here eight, nine, nine and a half years.
- HSHarry Stebbings
We've spoken before on off record about kind of personal lives. I'm intrigued. When you are a public company CEO and you're going public, the world wants a piece of you. You're public now. You're public. Any advice on how to sustain an amazing marriage and an amazing relationship while also being a public company CEO and going through that process?
- AFAndrew Feldman
I, I would say that pick a wife with patience. Pick a partner, a husband or a wife, partner, um, who understands wh-what it is to, to be an entrepreneur. I, I don't think, you know, I look at my co-founders and, and our leaders. It, it is every day when you're a leader of a, of a startup, a pressure test on your soul, every single day. And if you're a real leader, when you are 30 people, at a little, a little company picnic, you look out and what you see are mortgage payments and braces that need to be done that you're responsible for, and that doesn't change. And, uh, I, I think that if you really believe that, and you, you hold that in your heart every day, you carry real weight with you. And I, I think, uh, you have to share that with your partner so they understand. It's really hard if they don't. I think almost everybody, and, and maybe your, your, your partner has felt this, and I think every CEO I know has told the story of their partner telling them that they're more lonely when the-- you're sitting next to them thinking about work, and your mind is just ripping on work, than they were when you weren't in the house. And I, I, I think th-th-that what we do is a family thing. There's a price to be paid in how often you see your wife. I mean, I'm on the road three weeks a month. I mean, put it this way, uh, Emirates Airline sends me a Christmas basket. [laughs] This is an Arab airline sending a Jewish guy a Christmas basket. You know how frequently you have to fly for that to happen? It takes a toll, and I, I think you have to think really hard about how to put some credits back, 'cause otherwise they're just a stream of debits against your relationship.
- HSHarry Stebbings
Final one for you, dude. What's the kindest thing anyone's done for you? You know, we see a lot of, uh, whether it's your investors publishing on, um, you know, IPO day and, "Oh, I met Andrew once at a coffee shop." You know, "Oh, I opened the door for him once. That was Paul at Cerebras." Um-
- AFAndrew Feldman
Yeah.
- HSHarry Stebbings
What's the kindest thing?
- AFAndrew Feldman
I think, uh, and, and this is for y-you, Harry, and, and the VCs, is to have empathy for how hard our job is. And I think one of the, the things that I was really lucky with was we had a board that, that understood they didn't need to put more pressure on us, that if the pressure doesn't come from within, all right, they bet on the wrong people. You know, hardware is, is extraordinarily difficult. And we had, and, and we attacked a problem that had never been solved. And we had an 18-month period where we were spending $8 million a month and we couldn't build it. Yeah, $8 million a month we were burning for 18 months, and we couldn't solve the technical problems. You know what it's like to have a board meeting every six or eight weeks and come back and say, "Nah, I can't do it. Still can't do it"? Um, and th-they were-
- HSHarry Stebbings
Did, did you doubt yourself at that point? 18 months.
- AFAndrew Feldman
Of course. I, I think there's this myth that CEOs don't doubt theirselves if it's not driven by relentless fear of failure. Of course. Of course you do. But I believed in the methodology we were using. I believed that, that each time we failed, we learned a little bit, and we didn't fail the same way again. And that, that where it started, we failed in the first two seconds, and then, then a year later we were failing at, at an hour. And each time, we, we did a full failure analysis each time in every single one we failed at, and for 18 months. And I think, uh, that's some of the proudest work of my career was that problem. And nobody else to this day has solved it. Nobody else knows how. And I, I think you can imagine, getting back to your previous question, I wasn't a peach at home. [laughs] Right? Like I, I, I, I wasn't chipper. I wasn't light. I wasn't happy. I was failing every day at work, every single day, and for a long time. And I, I think if you want to attack hard problems, you have to come to grips with that. You have to learn to manage it. You have to surround yourself by people who, who, who you believe in, who w-you want in the boat when the hardest problems are, are present. And I had all of those things. Um, and my wife was an extraordinary partner.
Episode duration: 1:07:44
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Transcript of episode 6EOwSXE3Xws
