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Chapter 1: What is the significance of the AI economy in 2025?
Okay, so they call it artificial intelligence, but the AI economy is very, very real. From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Risdell. It is Tuesday today, January 27th. Good as always to have you along, everybody. We're going to spend the program today recapping a quick trip I took a couple of weeks ago.
Morning, everybody. Hey, Kai. How are you? Good morning. Welcome to the Bay Area.
Thank you very much. That's Marketplace's Megan McCarty Carino. You hear her here and you hear her on Marketplace Tech. She was my ride at the airport up in San Jose. Tell me why I'm here. Maybe get on a plane at like 8 o'clock this morning.
You want to talk AI, you want to talk AI and money, you've got to come to the Bay Area.
Fair enough. We started our series the other day trying to figure out whether AI is getting too big to fail because there is massive spending happening, massive borrowing, too, to finance the data center boom. I went to one in L.A. Megan talked to people about their not so good feelings about our AI future and the tradeoffs that come with it.
But the thing is, the AI future is already happening in Silicon Valley. There's a lot going on here. There's data centers. There's energy. I want to back up for a minute. What does it feel like here, AI-wise? I mean, all the rest of us here about AI is, oh, my God, data centers and power and water and all those things, chat GPT and blah, blah, blah. What does it feel like here in Silicon Valley?
My answer might be a little counterintuitive. I mean, it's definitely like on everyone's, you know, the tip of everyone's tongue. You see it everywhere you go. The billboards are everywhere.
We passed a couple of those billboards literally just outside the airport for both biggies like Google Gemini and for smaller companies neither Megan nor I had ever heard of.
In terms of the boom on the ground, I grew up here. I've been through a lot of these cycles.
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Chapter 2: How is Silicon Valley shaping the future of AI?
This is the boom time.
Right. Where are we going? What are we doing? We should say here, by the way, you're not driving as we're talking. Other people are driving.
No, I would not be able to engage in such complex idea.
So where are we going? What are we doing?
Well, we're headed to an AI startup called Tiny Fish AI, which we thought was an appropriate place to check out, you know. Let's go.
There are literally thousands of AI startups all over this country. According to PitchBook and the National Venture Capital Association, AI startups got $222 billion in venture capital investment in 2025. That is 65% of all US VC dollars that year. Tiny Fish, the company we're visiting, got about $47 million worth of that.
And yes, that is small potatoes compared to the big fish like Anthropic and OpenAI. But for artificial intelligence to pay off in the way that investors are betting it will, it's going to take a whole ecosystem of companies using it. And that's why we came here to a kind of suburban office park in Los Altos. It looks a little bit like a Chipotle, though, with those umbrellas and stuff. Indeed.
That's what I'm saying. We walked into an office with a fish tank in the lobby, and we met Sudheesh Nair, the co-founder and CEO of TinyFish. Hi, I'm Kai.
How are you? I'm Kai Sudheesh. Nice to see you. Nice to meet you. I'm Megan. Very good to meet you in person.
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Chapter 3: What challenges are AI startups facing today?
I'm just doing a little math here. So this is a 430,000 square foot building. So give or take this is 100,000 square feet, this space?
Correct.
Plus or minus? Correct. Now a big empty room. How long until it's literally humming with activity?
I think the go live on this is 2027. And you're waiting on what? It's a mix of things. Obviously, we have to work very closely with the municipalities and the utility grid when power is delivered. So our job is to make sure we work with SVP, Silicon Valley Power in this case, to make sure we deploy the infrastructure, the timing, exact the right time where the power is delivered.
Chapter 4: How does Tiny Fish AI contribute to the AI ecosystem?
And then we turn that up based on when that is available.
So you can't do anything until you get electricity in here, right?
It's a challenge if you don't have power for a data center. So we have to wait for the timing of that. It's very much not a demand topic. There is a kind of insatiable demand for data center capacity wherever they can get it.
So is the availability of power an issue anywhere else besides here?
I think power, it will be the issue moving forward as it relates to data centers.
Power is already the issue. One study from Carnegie Mellon in North Carolina State found that nationwide energy costs could rise 8% by 2030 because of data centers. And in some parts of the country, like Virginia, which is the AI data center hub, that cost increase could be more than 25%.
So what's a bigger concern for the data center business right now? The idea of, you know, say a bubble pops and demand decreases or just the challenge of meeting the demand that you have now with the constraints in electric transmission?
That's a good question. I mean, I think those are both challenges and opportunities, quite honestly. I mean, at the moment, demand is one where it's pretty frothy. We do see a continued trend of more consumption. Data is becoming more and more valuable. It's almost like the new oil, if you think about it, in terms of value proposition.
We've been really consistent in saying that we see a real home and need for AI, but we also see a real home and need for other work streams that are going to come as a core part of our clients' requirements.
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Chapter 5: What role do data centers play in the AI economy?
Also, as we mentioned, Megan's been doing a whole lot of reporting on AI infrastructure over at Marketplace Tech.
We're going to take kind of a trip down memory lane.
Like going on a vintage manhole cover hunt for a look at technology booms of the past.
So we're just going out in the street.
We're just going out in the street, real briefly.
Also visiting a place that has been called the Winchester Mystery House of the Internet.
It's kind of spooky down here.
And trying to figure out if electrical vehicle trash can become AI data center treasure.
I drove an EV for quite a long time. I don't think I ever pictured what the actual battery pack looked like inside my vehicle. Yeah, they're not that beautiful objects. They're just kind of a little black skateboard. It's not a high-design object, no. With a bunch of red and black wires coming out of it. But this is really the core of an electric vehicle.
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