Baker says Google was first cloud provider to stop competing with independent infrastructure software providers.
“But they try and force the open source infrastructure build themselves. And I think Google was the first one to realize, like, Hey, this is kind of silly.”
Baker argues Google was first cloud provider to embrace rather than compete with third-party infrastructure software.
“B, there's a lot of money to be made just in providing these primitives. Let's stop trying to compete with these independent infrastructure software providers right on top of the cloud.”
Baker reports Larry Page has said internally he is willing to go bankrupt rather than lose the AI race.
“Larry Page has evidently said internally at Google many times, I am willing to go bankrupt rather than lose this race.”
Baker explains Google pays Broadcom a 50 to 55 percent gross margin for back-end chip design and Taiwan Semi management.
“And the managing Taiwan Semi is like stamping out that house like Lennar or, you know, D. R. Horton. And for doing those two latter parts, Broadcom earns a 50 to 55% gross margin.”
Baker says AI is the first time in his career that being the low-cost producer matters in tech.
“And this is really important because AI is the first time in my career as a tech investor that being the low cost producers ever matter.”
Baker explains Google pays Broadcom 50-55% gross margins for back-end TPU design and Taiwan Semi management.
“I think part of that is, so Google, let's say the TPU, so there's front end and back end of semiconductor design, and then there's dealing with Taiwan Semi.”
Baker argues Google has a temporary pre-training advantage as the lowest cost producer of tokens using advanced TPUs.
“So I think Google for sure has this temporary advantage right now from a pre training perspective. I think it's also important that they've been the lowest cost producer of tokens.”
“@jukan05 4 gigawatts this year and another 4 next year per this report. Spot price for compute has gone up since they signed their Anthropic and Google deals.”