Baker references Robert Smith's claim that software is better than first lien debt.
“Robert Smith is the CEO of Vista Equity Partners, brilliant man. And he famously said software is better than first lien debt.”
Baker argues that whether AI buildout is funded by debt or cash flows is critical for bubble risk.
“And a very important distinction we will come to is whether or not that build out is funded out of debt or cash flows. It's a critical distinction for AI.”
Baker compares current AI buildout to internet bubble risks if debt-funded rather than cash flow-funded.
“So if supply and demand get a little bit out of whack, things can unwind very, very, very quickly. That's what happened in the Internet.”