Derek Thompson

I've seen you talk about this in other interviews.

I think it's really important to understand how these data centers are being built and specifically how it's not as simple as, oh, Meta just has a line item in their overall spending that says, and then we bought a bunch of land near Ashburn, Virginia and built a data center there.

What's happening is the hyperscalers like Meta are getting together with the private equity firms like Apollo, and they're both putting money into this box, right?

These special purpose vehicles.

And that box is the thing that's investing in these data centers.

Just take me through exactly how this works.

Let me try to restate this so I understand it.

So Meta wants to build these gigantic AI data centers.

These projects cost tens of billions of dollars altogether.

Even though Meta's rich, they don't want to just borrow all the money the normal way.

They don't want the spending necessarily on their balance sheets.

So they solve the problem by creating this special box, as I put it.

Meta puts some assets into the box.

Another private investor puts some money in the box.

And now that box, that special purpose vehicle, is going out, borrowing money, paying for construction, and owning the data center.

Right.

Um, on the surface, I guess you could say everyone's happy, right?

Meta gets money without messing up its balance sheet.

The investors get, you know, high returns, I guess, without obvious risks, because they're basically working with meta.

Um, but what happens if we build too many data centers, right?