Derek Thompson

Meta, Google, Microsoft, the big boys, how close are they to aligning spending and revenue in the AI space?

Or how far, I guess you could say, on the other hand, how far are they from seeing what could be plausibly called AI revenue catching up with AI spending?

I feel like people who remember 2006, 2007 are feeling their eyes start to twitch as you talk about this general law that, I love the way you put it.

It's kind of like, you know your behavior is unethical if you try to keep it a secret.

You know your economic activity is bubblicious if you try to dress it up in financial opacity.

Let's talk about just exactly how this works.

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.