Not everyone seems to be buying Elon Musk’s vision for orbital data centers.
Masayoshi Son, the founder and CEO of Softbank, argued at a recent shareholder meeting that constructing data centers in space won’t do much to chop costs and can take too long when “within the battle for AI, the subsequent few years can be way more necessary than what might occur a decade or so from now.”
On the newest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane, and I discussed Son’s remarks as a part of a broader discussion that included OpenAI’s plans for custom chips, chipmaker Groq’s recent $650 million funding, and rather more.
Kirsten noted that it’s “very ironic” that Son is playing the skeptic here, given SoftBank’s “long history of untamed bets.”
Sean, meanwhile, said that when Musk talks about “making a constellation of satellites — satellites that must be replaced every few years as well — to make up an ‘orbital data center,’” he’s just “guaranteeing that rather more business” for SpaceX.
Keep reading for a preview of our conversation, edited for length and clarity.
Sean O’Kane: Listen, neo-clouds are the brand new oil, and everybody who desires to generate income is pivoting to a neo-cloud. I’m proud to announce that TechCrunch is now a neo-cloud, give us all of your money.
I mean, that is the thing you do. It looks like there are such a lot of players which can be compute constrained, so anybody who has a shot at having the ability to lease out that compute is taking it, whether that’s Groq, an organization that was semi-hollowed out by Nvidia, or Allbirds, which went out of business and and emerged from it as a brand new neo-cloud provider as a substitute of selling shoes — Tim Fernholz did an interview with the brand new CEO of of that recent effort that I might definitely recommend people go read.
Or whether you’re SpaceX, where your idea was: I’m gonna construct an AI platform that’s gonna have an addressable market the dimensions of U.S. GDP, but before we get there, we’ll just rent out our compute. And we saw this proceed to occur with SpaceX, where it’s not as big because the deals that they’ve struck with Google or Anthropic, but they simply signed one other deal, [their] first post IPO deal, to rent out compute to a different smaller player. They’re continuing down that road.
You understand, I can see this being a business for Groq within the near term. The query with all of those is how durable is it in the long run.
Anthony Ha: If we’re talking about SpaceX and their AI business and data center business, we also should discuss these comments that Masayoshi Son, the CEO of SoftBank, made recently, where he mainly said: What’s the point of knowledge centers in space? Which is an issue we’ve asked on this show.
And it speaks to, again, this sense within the industry of being really, really compute constrained — they should construct as many data centers as possible, [and] there’s all types of explanation why that’s proving to be difficult here on Earth, so perhaps space is the reply. But I feel Son makes some pretty fair points about: All these items we’re talking about, even when all of it works — and the prices are going to be very, very serious to make it work — this will not be happening for years and years and years, so this will not be an answer to any immediate problem, as far the present need for data centers goes.
Kirsten Korosec: I just wish to indicate that SoftBank has a protracted history of constructing wild bets. I feel it says something when Son comes up and asks the query that a number of people have asked.
I mean, there are a number of VCs and founders [who] have been swept up into the thought of orbital data centers and it looks like suddenly everyone’s on board. When just a few years ago, I feel, if someone had mentioned that, it might get slapped down just a little bit. So I do think it’s a crucial a part of the method that somebody who has a fairly high profile is asking that query. But it is extremely ironic to me that he is the one asking it, because in case you have a look at his pitch deck, they’ve thrown a number of money at some pretty daring ideas.
Sean: WeWork! Listen, we’re going to be saying this for so much over the subsequent couple years. The thought of putting this stuff in space goes to be an interesting engineering challenge and positively an interesting economic challenge.
Anthony, what you said is certainly right to a certain extent. Elon Musk is a one who hates red tape and you recognize, there aren’t any NIMBYs in space so after all he’s going to try to do this.
To me, it comes all the way down to: The business because it stands now for SpaceX, especially its launch business, is just overwhelmingly reliant on Starlink. The explanation that they’re 80 or 90% of the launch market globally will not be simply because they’ve done all this stuff which can be higher than just about every other launch provider across the globe, it’s also because they’ve Starlink that’s driving up that number. Should you remove Starlink from the equation, they might be closer to — I don’t know, perhaps 20% or 30% of the launch market, or 40%, however it actually wouldn’t be 90%.
And while you discuss making a constellation of satellites — satellites that must be replaced every few years as well — to make up an “orbital data center,” quote unquote, you’re just guaranteeing that rather more business in your launch business. And I just can’t stop myself from coming back to that time.
Kirsten: I would like to actually quickly say that [SpaceX’s] other big business is renting out their compute, by the best way. So back to the chip conversation. We’ve come full circle.
Anthony: Certainly one of the opposite themes which will run through this episode is this concept of talking your individual book. This will not be a brand new phenomenon. Executives at tech corporations, or another company, what they’re predicting for the long run is ultimately the long run that’s going to be advantageous to their business.
But I feel it’s something that’s just at all times price remembering once we’re having these conversations about big AI corporations, since it is that this moment of incredible uncertainty, and we’re all wondering: What does the job market appear to be in the long run? What effect is that this going to have on the environment? What are the abilities I would like to learn?
All these AI CEOs or AI investors, all of them have thoughts on that. And it’s not that they’re improper or that they’re being deliberately misleading, but in each case, there’s an asterisk to those predictions. In Musk’s case, he’s talking about something that will be superb for SpaceX’s business. In SoftBank’s case, they’re very, very heavily invested in data center projects here on Earth. Sam Altman is the opposite notable figure who’s rolled his eyes a bit on the orbital data center idea — and again, he and Elon Musk obviously have a protracted and complex history together.
All of which is to say that there’s just no objective, impartial observers here. It’s all these individuals with baggage and tremendous amounts of cash at stake.
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