David Cahn: Why Servers, Steel and Power Are the Pillars Powering the Future of AI | E1186

David Cahn is a Partner @ Sequoia Capital, one of the great venture firms of the last 5 decades. Before joining the Sequoia partnership, David led Coatue’s venture business as a General Partner and COO where he led investments in Hugging Face, Runway and Supabase. David also joined the boards of Weights & Biases and Replit.
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Timestamps:

(00:00) Intro
(04:41) Exploring AI's Impact: Two Critical Questions
(08:09) Impact of Conscious CapEx Overspending in AI
(12:02) Reconciling Compute Cost and Its Future Importance
(17:35) Is Model Progression Outpacing Data Center Development?
(21:38) The Future of Vertical Integration in the Compute Stack
(24:26) Facebook's Unique Position Without Cloud Revenue
(28:51) Core Bottlenecks in AI: Compute, Algorithms, or Data?
(30:41) The Future of Chip Pools & Nvidia's Product Roadmap
(32:26) Key Considerations for Steel Supply & Demand Dynamics
(37:48) The Risks & Benefits of Open vs. Closed AI Models
(40:00) China's AI Progress: Behind or Underestimated?
(45:03) Lessons in Deal Selection from Leading AI Companies
(46:55) Leading at 27 & Working with Top Companies
(54:07) How Sequoia Welcomes & Empowers New Partners
(01:02:04) Ranking Core Pillars of Venture: Sourcing, Selecting, Servicing
(01:08:06) David’s First Deal
(01:09:23) Quick-Fire Round
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In Today’s Episode with David Cahn We Discuss:

1. AI’s $600BN Question:
What is the $600BN question in AI today?
Is it possible to believe “AI will change the world” and “Capex levels are too high” at the same time?
Why do the cloud players have to act now? When does the Capex reduce for them?
How does Meta not having a core cash cow in cloud change the way they can respond?
Why is all the risk today being borne by the large incumbents? Why is that good for startups?
How will we see Satya and Zuckerberg change their narrative towards their Capex spend to the public markets?

2. The Data Centre is the Most Important Asset:
Why does David believe that data centre is the most important asset?
What does he mean when he says “servers, steel and power” are the pillars of AI?
What happens when the development of models outpaces the construction of data centres?
Why does David believe no one will ever train a frontier model on the same data centre twice?

3. The Biggest Opportunities in AI:
Why does David believe the biggest opportunity right now is in the build-out of data centres?
What does the supply chain look like for the build-out of data centres? Who are the winners?
Why does David believe the biggest opportunity in finance is in creating new debt instruments that will allow the largest incumbents in the world to move this data centre spend off balance sheet?
Why does David believe that AI will drive more energy innovation than any policy has done?

4. The Secrets of Sequoia: Inside the Walls of the Greatest Firm in Venture:
What does David and Sequoia believe is the one definition of success in venture?
Who is the best at find companies in Sequoia? Who is the best at picking?
Why does David believe conviction, not picking is the hardest part in venture?
How do Sequoia want to shape and mould every investor in the firm?
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