Techstrong Gang – January 21, 2025

Hey, everyone, do I have a tech job for you? You're watching Techstar Gang. Hi everyone.

Happy Tuesday. It's a new dawn in America. I guess maybe it's snowing in most of the country, though, at least the three outta four locations we have, uh, here on our show today.

So we hope you're well and enjoying this, this fine Tuesday. Um, Alan Shimmel, of course, here for Texture Gang. We've got some good stuff to talk about and we've got some good people to talk about it with.

Let me introduce you to our, our gang for today. First of all, joining us from snowy. That's right, snowy Austin, Texas.

Guy Coer FU analyst, vis visible impact, CTO Co-Founder. Hey guy, how are you warm over there? Uh, well, I'm wearing a sweater, which I don't do too often here.

It's not snowing at the moment, but we got over an inch last night, which is not quite snow apocalypse of a couple of years ago, but could be enough to send Ted Cruz back to Mexico. Who knows? It's quite unusual for Frost.

We, we, we could hope. We could hope. Um, all right, well stay warm and dry and safe, and we're glad to have you on.

Speaking of snow wear, it's minus something and still snowing our man in the Rocky Mountains. Mitch Ashley. Hey, Mitch.

Hey. It's the, it's the juxtaposition of more snow, but it's minus something, so it's hard to ski very long. It's when it's really that cold, you know?

Yeah, I know you people in Colorado, you'll ski in hell if you could. I mean, well, we're, We'll ski in shorts in minus whatever, but you know, that's Colorado. Yeah.

Good to be here. Absolutely. Good to have you here.

I'm glad you're warm and dry. Also, speaking of snow, they got some snow up where he lives too, and they all wanna move and make fun of Florida, our Chief Content Officer. So, Mike Ard.

Hey, Mike. How you doing? I'm doing well.

And you know, I'm getting all these usual summer, you know, kind of cruise packages, but one caught my eye. Somebody's out there marketing a four year cruise package with internet connection, so you could spend the next four years just cruising the wall. Don't think I haven't looked into it.

Uh, I think that's just another way of saying you're gonna drive in circles for four years. That's okay. As long as it's in international waters, I'm fine.

Mm-hmm. Um, but it's good to have you on mic and thanks for being here. And then the only sane one in the bunch joining us here in our Bo Ratone studio.

She is the Echo Insights Analyst and editor, our very own Bonnie Schneider. Hey, Bonnie, how are you? Doing well.

A not in snow and not cold. Yeah. Happy To be in Florida.

Yeah, Eric, you know, look, there's a trade off everything, but we're here, um, and you are here watching us. So let, let's jump right into today's text on gang. You know, Mike, I a sense of all, all getting aside about the inauguration yesterday, new administration, um, I feel a sense of Optima optimism building in the tech industry.

I don't know if it's a result of all those million dollar checks they've written to the Trump Inauguration committee, or it's the good economic news that kind of followed Joe Biden out of office in terms of unemployment and interest rates and inflation and, and what have you. But it, it's not just me. People I'm talking to, people I'm reading seem to be saying, Hey, maybe, maybe, maybe the pendulum is swinging.

We're gonna return. I'm not gonna say boom town, you know, but to a more normal footing. Yeah, there's some early data, and I do stress early, but, uh, the folks at COMT have put out a report saying that, um, based on their analysis of the Department of Labor statistics, that unemployment rate among tech folks is down, uh, about 2%, which is half the national average, and it's the lowest it's been all year in 2024.

Anyway, we're all kind of on pins and needles about 2025, simply because we're not entirely sure if we're about to have a trade war and what the impact that might be. But, you know, to your point about optimism, I mean, what are you hearing from folks? There's a lot of folks who we all know who are still outta work, but one of my theories is a lot of people are moving from big tech companies.

Maybe, you know, average companies that couldn't hire good IT folks in the past, and now that transitions occur Could be, well, I, I'll tell you, let me give you a couple of data points, and some of them are kinda random, but when I put 'em together, I, it's why I feel the way I do. First of all, my friend Jody Bonsai, I don't know you guys know Jody. Jody of course, is the co was the founder of AppDynamics.

He's also the founder of Harness Traceable ai. He has a his own incubator. This is what happens when you have a couple of billion dollar companies.

But, um, you know, Jodi wrote something interesting on LinkedIn the other day where he says he senses in his conversations with VCs and starter startups and founders, that the pendulum is swinging. That, you know, traditionally startups are very top line focused, right? And I've spent 25 plus years in the startup world, and I can verify that it's all about the top line, growing your revenue as fast as you can, establishing your place in the market.

And what we saw over the last two to three years, certainly with the interest rate Jack, is people didn't care about the top line anymore. They wanted to know if you were gonna be profitable, and if not, when would you be profitable? Companies started, tech companies started being sold for multiples of EBIT or not revenue.

Unheard of, unheard of in the tech world. And Jody, Jody says that we're now starting to see companies not, not disregard profitability, but focused more on top line. And what does that mean?

That means growing your business. That means marketing, that means product marketing. That means guy, take it easy.

Don't get too excited, but it means that people are gonna spend money on these things. And when we look at where the tech job bubbles been, yes, some IT folks got laid off, and how many software, real software developers, QA folks got laid off when you look, I think at most of the layoffs in the tech world, they were in what I call the softer areas, right? Tech vendors laying off marketing and product marketing and developer dev rail people and biz dev.

And, but not your hardcore tech tech. You don't see many data scientists on the breadline or on the unemployment line or stuff like that. And so with a return to going after revenue with a return of investment by VC saying, Hey, I need you to grow.

Here's money. I think you'll see the excess folks in that area, in those areas who have had a hard time finding jobs, getting jobs. And I, I think, I'm not saying happy days are here again, but what I'm saying, I think you're gonna see a, a, a distinct uptick in, in the tech hiring world as more AI projects come in.

We're gonna be building data centers. Yes, there'll probably be some sort of trade war tariffs situation with China. But let's face it, how much tech do we really sell in China?

Not even Apple. Is is that exposed anymore? I think most of our tech companies have cut their exposure there, Nvidia.

Yes. But the Chinese are gonna buy what they wanna buy, either directly or indirectly. So that money's gonna flow.

I think we're gonna see a big investment here. I think Europe, I think uk, right? I, I saw a recent report, actually, Daniel Newman put it it up on LinkedIn about data center distribution around the world.

Look, I think there's 11,000 data centers in the world according to this chart. We have about 5,200 of them with more on the way the UK is like right behind. Well, not right behind it's, but it's right up there with the leaders.

So that's the good news. It's not Sunday morning. I'm not knocking on your front door, but I do have some good news to tell you.

And, and that's kind of where I think about it. You know, I think Alan, in 2024, we saw some of the big, big layoffs, right? But, uh mm-hmm.

Facebook and people like that. And, and, but other companies did quote unquote tech layoffs, um, citing both over hiring because of Covid times, um, and, but also because of the promise of AI that's gonna replace people's jobs. So we're kind of pulling back on the number of people.

I think many of us thought that's premature, right? And that's been born out. We're not quite at the place where, you know, AI is replacing lots of jobs, at least not yet.

Um, when, to your point about who's, who's getting hired, it's interesting, there's two trends. One is very much around, of course, ai, ml, generative AI skills and, and data science, as you mentioned, of course, cloud skills. Cybersecurity is still up there.

I'm just looking at data from, from some different hiring companies. But also there's a real focus on, on, uh, Python because of its integration so well into ai, ml, PyTorch and everything else that, that it does very well, but also a big push for automation, uh, in, in the development SDLC, right? Trying to continue the DevOps, continue the improvements that we're making on the other end of the pendulum swing is at the same time, instead of looking for that purple unicorn with, you know, gray spots, we're looking for people who are flexible in their skills.

'cause we're in a time of transition, right? There's a lot of things happening all at once, doing more cloud development environments. We're working on ai, starting to do AI agents.

We're trying to figure out what AI projects to work on is still keep the, you know, keep the engines running in the steam room. So there's a lot of emphasis around, I need some people who can be flexible and adaptable as, as things change. So, you know, my, my advice to folks in the job market or, or working, is, yeah, pick one of these areas that, that are in high demand.

But also, you know, one, one of the best things, my, my toughest college professor in computer science told me was, the one thing that you need skill, you need to always have is your ability to learn and a thirst for learning. And if you do that, you'll stay up with tech and you'll always, you'll always have work because you'll be in, you'll be in the center of what's happening. And I think that was pretty sage of ice, at least it's helped me.

This is interesting. Um, uh, what you are describing, both of you, I think is a transfer of labor out of marketing and into engineering, roughly. And that is an idea of, I mean, one could cynically say, I would cynically say that four or five years ago, there were a lot of competing similar, listen, I made a lot of money doing this.

Going to everybody and saying like, your, your solution seems so similar. They sound so similar. You're describing them.

So, uh, kitty soccer, everybody jumping on particular areas, whether it was security or digital transformation, eventually ai. And so what would you naturally do? You would invest in marketing in order to find ways to distinguish what is actually a different, they're all different products.

They just sound similar. I, I actually have a different theory to propose though. Um, it, so, so this, this, my understanding of this analysis is it comes from the Bureau of Labor Statistics.

And CompTIA is doing, doing, you know, intelligent expert analysis on it around the unemployment rate, the unemployment rate from the Bureau of Labor Statistics. There are several unemployment rates. And the usual one is the number of people looking for work who do not currently have work.

So when you stop looking for work, even if you're self-employed or you've decided to retire, you're no longer counted. Now, one of the interesting economic stories, since the pandemic has been the jump in new business formation, that's entrepreneurship. It went up by, it's at a, it's at a rate a hundred thousand, uh, new businesses formed per year above trend.

I think it's per year, a hundred thousand above trend. This is unprecedented and unexplained. And it started in the pandemic.

And it's one of these things that actually endured after the pandemic. My belief is that it, it had become steadily easier and easier to start your own business and to get funding for it. But when the pandemic hit, suddenly everybody tried it.

They hadn't been, been too scared to try it before. And so we have a permanent change a little bit more towards, you know, maybe a little bit gig economy, but maybe a whole lot new business formation. And a lot of these folks laid off.

A lot of the folks in the tech industry, there's so much opportunity to do that sort of thing that could lower the unemployment rate as well. Um, I also wanna, it Was, it was, it was the TikTok creators come on, man. Mm-hmm.

Yeah, that's true. They're happy. Now, I was gonna say that in the sustainability and tech space, that's opened up a lot of jobs.

There's, um, a group called the Climate People that I, I met the founder a few years ago when it was just him and one other employee. Now he has several employees. He has tons of jobs I see all the time in the IT space for climate tech solutions.

So that's opening another venue for jobs. I, I, I think just to put a hundred thousand in context, by the way, I'm sorry. 'cause I'm, I always, you know, fault other people for doing this.

You're talking about a rate that was roughly 300,000 a year and is now roughly 400,000 a year growing at the same rate as it was before, but a hundred thousand higher. So that is a jump of like 35%. That's Huge.

Yeah. That's huge. Huge.

That's what I mean by unprecedented. I Wanna, I do wanna address the elephant in the room, right? So you got Benioff and Zuckerberg and, uh, Amazon folks running around saying, you know, ai, they're not hiring tech people.

They're gonna be like expecting their existing tech people to do more. And I, I, I'm not quite clear, do we think that that's actually going to happen? Or, you know, are we still gonna need all these tech folks?

'cause there's noise in the systems that says in the contract. I think that's more directional than it is reality today, right? I mean, you can't turn off hiring people or turn off the people that you have now and flip it over to ai.

We're just not at that place yet. Maybe there's a few areas where that's possible. You know, I think to me that's more of a signal where, where they think we're heading and what we're investing in that either supplement or augment or replace those kind of jobs.

AI is gonna create more jobs than it takes. Yeah. It's usually what happens.

So you're gonna have net net more people in there. Uh, Wait, wait, are you suggesting that some people just say things in the hopes of moving their stock price on Wall Street? I'm shocked.

No. I I, I think they, they mean what they say, but I think you're oversimplifying what they're saying. Mm-hmm.

What, what I heard Zuckerberg say is that they're gonna replace some mid-level engineers or mid-level developers with AI this year. That doesn't mean they're gonna hire more higher level engineers or developers, or more lower level or net net new people. I, I think the key here is growth overall.

And, and that, that's, that's the point. And, and guy that is, you know, you look at, you know, Israel fences itself, the startup country, Dublin in Ireland, huge tech centers. You look at places that are happening around the world.

Austin, Boston, they, We used to, I was just in West Africa. DA Dakar in West Africa has a little, well, They, they call culture happening here. Call it the tech horn.

It's the horn of Africa now. Yeah. But, um, the, the fact is entrepreneurship, you know, necessity is the mother of invention.

And when people don't have jobs, they look to make a living. And they'll, and many of them do start off with as gigs or consultants, some percentage, you know, more of a traditional startup thing that you look to raise money into. But even the gig and jobs, some of them will go away when those people get reabsorbed into the workforce.

Some of them will remain consultants, lifestyle businesses, some of them will create new jobs. Don't forget that the real engine for jobs in this country is not Google and Facebook and these large enterprises, the real engine for jobs in this country, or mid-level companies, small and medium con companies who are out hiring two and three people here and four people there. But there's a lot, 400,000 of them a year.

And that's where jobs come from in this world. It's not historic. Agree.

We, we've lived that. I mean, you and I have lived that Certainly. Absolutely, Mitch.

No doubt. I I, I would just point out one thing. I, so I, You, I, sorry.

I would just point out one thing, and I hope everybody's predictions come to be true, but in my experience, everybody starts out the new year with a significant amount of optimism. So let's cross your fingers and toes and hope it all plays out. No, Those are all those people who also are gonna lose weight work out every day.

I'll be the microme for a moment. We always say, we aren't gonna need X people anymore because y is gonna replace them Cloud, listen, don't please na name it, it, it rarely ever happens. And those jobs just evolve, and we need more of those people, And nobody needs to worry, because our next segment will bring all the doom and gloom.

Mike Watts. Yeah. All righty.

Hey, we're gonna take a break here on Text Drug Gang. And this guy says, we're coming back. com is the leading resource for news analysis and education on challenges facing the cybersecurity industry.

com covers all aspects of cybersecurity, including data security, DevSecOps, cloud security, application security, network security, security threats, and more. com has the largest selection of security content featuring breaking news, blog posts, podcasts, and more. com to learn more.

com. Home of security Bloggers network. All right, folks, we're back with our second blocking.

We're talking about whether or not there is this data center time bomb that's gonna explode in the back half of this decade because of AI and all of its demands for energy as a report out from JLL detailing the fact that it's not so much the number of data centers as much as it is just the simple movement of power to a new data center and the construction of transmission lines. Uh, the report seems to be indicating that we might see a 15 to 20% increase in capacity in data centers, but that wouldn't be nearly enough to meet the demands for ai. But at the end of the decade, guy, I know you've been following this space, what's your take?

Uh, well, uh, here we go, everyone. Um, this is a really, um, not the first, but a really new and clear, uh, report. Thanks Mike.

Um, about the coming, uh, uh, energy crunch. Um, our colleague Dave Nicholson and I discussed this maybe six months ago when we were trying to talk about when the shoe will drop. I mean, Dave's a great curmudgeon for us all talking about when's the shoe, when's the other shoe gonna drop on ai?

And, um, one of the, uh, likely sources of that, um, is lack of capacity. And most people think, oh, that's a lack of capacity in compute. You know, you need more GPUs, or you need, you know, new ways to use, uh, uh, CPUs or, you know, other chips.

That's a physical capacity, a compute capacity. Um, but you gotta power 'em. And man, like we have, we have a thousand watt GPUs now, um, starting to come online very shortly, put four of those or eight of those on a sled.

Um, now you're looking at a 20 kilowatt rack. Um, and you need 20 of those in order to either, uh, do inference and scale or more likely training. Um, there's a huge space race right now going on.

Um, this is not news to anybody around training AI models. There's also tuning of AI models. Um, and it's not just the big four or five, depending on how you count them doing those foundational model trainings.

Um, so yeah, uh, where are you gonna put all of this compute? How is gonna compete with Bitcoin? Uh, or I should say, you know, crypto, which is another, uh, big, uh, uh, uh, compute and power sucking workload that looks like it's only gonna expand at least in 2025.

Um, a lot of the, the solutions have been to place these, uh, data place new data centers next to natural power sources like, uh, like, uh, uh, water. Um, they're sustainable. Bonnie, I think that should warm your heart.

Um, a lot of them. Um, but, uh, they take time to go online. Listen, the science of data center construction, um, is deep.

It's been going on for a while. You don't just need power, of course. You need space.

You need connectivity. You need to be able to cool, um, you need to be able to cool within the data center. Uh, you don't necessarily have tons of space all over the place.

You need proximity sometimes to switches or to the network. Um, all of this comes to a head such that you have, of course, I mean, we've heard stories about, or we know about, uh, Amazon and Google and others making deals with, uh, uh, local power utilities to get preferential power delivery. I don't know how that's gonna play out politically.

Ultimately, uh, listen, we just had a mini snowpocalypse here in Austin. Everybody's still smarting from the power outages two years ago. Um, and talking about the Texas data grid, which, uh, power grid, which is, uh, it's own power grid, unusually from the United States.

Um, so all of these things, this is just the beginning in my opinion. These things are going to mount, um, as the racks become more dense, more power hungry at this point, or an AI workload. Um, 20 kilowatt racks are not really that big of a deal.

There's additional power needed to keep them cool and keep them operating. And all of these, like I said, they, they, they, they are beginning, I think, to come to a head. And that is what ultimately is going to, uh, create confusion and worry.

And maybe a little bit of backsliding in ai. That's what's gonna start it. Six months ago we said, is it gonna take six months, 12 months, 18 months?

We don't know. But we do think that's gonna happen. And that to me is what this is indicative of.

And it's not just ai. We have to remember that, uh, crypto got there before. Crypto is a huge power user, and I think arguably of limited, you know, sort of utility in the world.

So those two are gonna butt heads with each other. 'cause there's lots of people with lots of money riding on lots of crypto. Mm-hmm.

I'll add a couple of points to that. There's speculation in this business as well. And so when you hear about somebody talking about a $20 billion investment in land that they're gonna buy, they're betting that they can sell that land, but turns out the electric company doesn't agree and won't give them a connection to a transmission until they actually build the data center and have workloads to drive it.

So, um, there's some unusual activity in the system as one of the guys who we interviewed in the story put it. And that's adding another factor to this whole equation. But Alan, I know you think that this isn't gonna happen.

What's your take? Yeah, I say poppycock. Let me tell you something.

First of all, here's some more good news. And I'm the good newsman today. I just read an article about a, a breakthrough, uh, in, in the fusion nuclear fusion we've achieved the next, uh, another kind of milestone of, of along the way to commercial fusion, which could ultimately solve a lot of these issues.

Our alternative, you know, Stephen Foskett couldn't make it here today. He's our usual Tuesday gang guy. But yeah, I'll, I'll channel Stephen Foyer.

Solar keeps getting cheaper every year, right? And we're doing more and more in solar, but all getting aside, we missed Steven today, but alternative energies, well, you are here, guy, we don't miss you. But alternative energies, uh, tuning up existing energies, energies increasing.

Look, if there's a dollar to be made, people will make a dollar or a dollar and a half if they can. It's, but it's not a question of being able to generate enough power, it's being able to transmit it to the right places. Sounds like, Nick, you're Talking about killing many nuclear power plants next to data centers now, so that they're completely Self and, and exactly.

Let's give that a shot. We haven't built a nuclear power plant in this. Yeah.

I'm not against, I'm not against nuclear. I'm not against micro nuclear. We, we, we are not gonna build a nuclear power plan and bring it online in the next, within a five year window.

This Is not gonna happen. So then there's the data transmission that has to get there. All of this stuff takes time.

And it is, you know, I, I spoke, My poppycock is thrown at the, at, at, at the, at the, you know, all bubbles and unicorns and rainbows. com boom and bust, right? com bust, the internet will never take off if we don't have enough fiber.

We need higher speed internet. We can't use DSL. We need broadband.

We need broadband. We need broadband. Korea has crazy broadband compared to us.

The US is gonna fall behind in the broadband. And then, you know what happened? You had companies like level three and these other companies that were just sitting on oodles of dark fiber.

'cause we overbuilt our capacity for fiber to what was needed at that time after the dot-com bubble burst and nine 11 and and so forth. And we, we are just, we just started lighting up a lot of that fiber recently, right? Mm-hmm.

You get, it's the same thing here. I still Thinking a fiber optic connection to my house in Westchester County, York. We, we notice it every, I'm in Austin.

I can't get the, I can't get it either. Um, I was Gonna say, I think that that's Got last month. I'm Sorry.

No, that's fine. I think the effort obviously with leaning into renewal, new renewables and nuclear is growing for sure, for, for data center demand. And another movement that isn't going to offset the power need, but is trying to at least, um, mitigate some of the impacts is the efforts within the AI itself to be more efficient, more efficient to operate on, on smaller models, to be more localized.

That's something a trend I've been seeing through my interviews. So there's that, and then there's the uncertainty factor of, um, as guy mentioned, it coming to a head, you know, from when he predicted it six months ago, and then it happening again because there's an uncertainty in actually measuring this AI energy use and debate on, well, how much energy is it really using? So that hasn't been agreed upon by all the parties considered As well.

So I think that's something that's going to involve Necessity. Yeah. And and to be clear, you know, I think, I think, and to be a peacemaker, I think we're both right, Alan, we're just talking about different time windows.

I'm talking about that, that, that, you know, when the bubble bursts, so to speak, and then reality starts to set in, so to speak. And then I think I'm overstating that, and I think that's coming. I think there is a backlash coming, but I think you're absolutely right.

I mean, listen, people didn't stop using the internet because the bubble burst. They just stopped using some dumb internet, Or they stopped funding dumb internet. I'm sorry, go ahead, Mike.

More to the point. Yes. The One area of the report did not address, which I think may be more feasible, is, you know, if we can move more of this AI workload off of those GPUs onto things that are more energy efficient, that will buy us a lot of time.

And, but right now, most people don't seem to wanna do that because, But when you have necessity, necessity is the mother of invention. Yeah. Yeah.

But the problem is, is those chips aren't faster than GPUs, even though whatever claims there are. 'cause you go talk to people and they're like, the training and the performance of those new processors as alternatives to GPUs is not nearly good enough to make sure that the models perform accurately and at the level of performance required. So they're still investing in GPUs, so something's gotta happen on the chip side.

So let's talk about small language models for a second. Where did this, where did the small language model's idea come from? My opinion is that it came from a recognition among the CPU vendors.

The both the vendors most heavily invested in CPUs that, uh, they, they, they wanted the solution to the problem, their problem of all the attention going towards GPUs, small language models, the usage of small language models requires a level of sophistication in the use of AI that is largely absent currently. And we will get there. But one of the things that will help us get there is the pain and problem of not, or of using models that don't seem to work right.

Even though they're large language models or other more sophisticated models of not getting the capacity that you want and need to run the new service that you've been banking your business on. That's based on ai. Like that kind of backlash that will be the mother of the invention of not just the technology of the, I'm just using small language models as an example, but knowing how to use it properly.

We have been banging the drum on this particular show that AI does not replace people. It helps them to be more reliable and better, but they need to know how to use it. And the general sense is still AI is gonna replace people.

We will, we, you know, that'll play itself out in the market. These will all play out with market forces pushing and pulling and stretching and compressing, and somehow we'll find a way. You're really not letting me make this tomb and gloom like I want to.

No, I, because I, you know, look in Phil, the sea rises up and swallows us here in Florida. I'm just going to keep preaching the good news. And I, I do think we, you know, smart people find a way it forces efficiencies in the market, which is a good thing.

And look, I, I think, you know, beyond the CPU uh, folks, there's a lot of people who see good in small language modules, right? The LLM isn't the perfect tool for every job. Oh, absolutely.

And it was the mother of invention in a sense of the, the creation of the small language model, which has, I, I'm just, what I'm saying is you need to know how to use them. Small language models have limitations. They're not just, you know, you know what, what, what's the economy versions of large language models?

No. That's not how you should use No, no. I, I think of them as the specialists.

Hmm. Right. That that's what I think of them.

Anyway, let's take a break here. We're gonna come back. We've got a, a, a, a Bonnie, uh, echo Insights mm-hmm.

Uh, video to, to go over or report. Yes. All right.

You're watching Textron Gang. I'm Bonnie Schneider, sustainability contributor to the Textron Group. I'm excited to introduce you to a groundbreaking new initiative from Techstrong Research, the sustainability pulse meter.

The pulse meter offers valuable insights into how environmental responsibility factors into tech purchasing decisions for key players in the industry. Position your company as a leader in the industry and differentiate from your competitors with a sustainability pulse meter offered exclusively from Techstrong Research. Welcome back to the Techstrong gang.

You know, we talk a lot about cloud computing on, on tech strong, and I thought it was interesting to kind of take a closer look at the impact of cloud computing when it comes to sustainability, because it started off as more of a cost effective measure, but in the end, it's really helping to reduce carbon emissions. So let's take a look at some of the numbers and how this whole movement is evolving into something that is a big part of sustainability in tech. Hi everyone.

I'm Bonnie Schneider with your Ecotech Analyst Insights Cloud computing is delivering a surprising environmental victory. What started as a cost saving technology has emerged as one of the most powerful tools for corporate sustainability with companies slashing their carbon emissions by up to 77% after migration. What's the secret behind this?

Dramatic reduction. Instead of running their own data centers, companies share computing resources in highly efficient cloud facilities. Think of all the power wasted.

When traditional corporate data centers run servers around the clock, most operate at just 15% capacity while consuming full power Cloud services, by contrast, automatically scale resources to match actual needs. Eliminating inefficiency, the impact is far reaching. As more businesses migrate to the cloud, their collective energy savings adds up.

Cloud adoption has already prevented over 600 million metric tons of carbon emissions. This single technological shift can also result in a 50% reduction in it costs. What's fascinating is this environmental achievement is already transforming business metrics.

Cloud efficiency gains have become crucial performance indicators as sustainability reporting becomes standard practice for major corporations worldwide. So one of the reasons that this is important, and it's really, um, important specifically for 2025, because this is the first year that we're seeing so many regulations come, uh, from Europe. We're measuring carbon emissions.

So cloud computing is going to be, uh, something that'll be mentioned and talked about more as we're getting this reporting that'll be coming in globally for large tech companies. I think it's an interesting evolution for cloud computing. I, I don't disagree.

Um, you know, it's funny, we were just talking about we don't have enough energy, we've gotta be more efficient, we need more energy, we need more energy. And now we're talking about, well, this cloud computing makes a lot of carbon emissions, something's gotta give there, right? You, you, do you want to drill baby drill, right?

And, and emissions be damned, or, or do you, you know, try to thread the needle here with a higher efficiency and, and guy, guy, I, I'm interested, you know, you're, you're the resident Texan here. What do you think about that? Well, I, it's, it's what we saw all year last year at, uh, especially at the public shows, right?

Like, uh, like super compute. Um, the, uh, and I, and I think it's a trend I didn't really notice in the, in the silicon, um, a lot of emphasis on, uh, but maybe for, for, you know, reasons that were not so altruistic, uh, because fitting a lot more compute into the same kind of thermal power design that, uh, the server manufacturers or system manufacturers had been using before. Maybe that was more of a, just a technical challenge they had to address.

But I do think that, um, there has been maybe a change in an understanding, um, a recognition that, uh, one of the things that, uh, cloud is driving is a whole different way to, you know, build, host, deliver, and manage these workloads that people need to do stuff. Um, that is also cost re cost reducing. One of AMD's big stories at, um, at it was the, it was the show before Super compute, uh, open compute.

Um, one of their big stories was, you know, you could take a data center, a current standard data center with, uh, you know, 10 kilowatts per rack or eight kilowatts per rack, um, and reduce the number of servers by a factor of something like eight and get more compute, or get the same compute rather, um, with much denser configurations and using less power. And I think that that, um, and that relies on the, it's not just density in terms of physical density, it's density in terms of how much processing, how many workloads, how many threads, how much you can do on a single chip, on a single server, on a single rack. And so I do think that that's some, it's just, uh, Bonnie, I'm really, uh, you know, enthusiastic about, uh, your, your, uh, work here because it's sort of an unintended consequence.

And I guess I'm starting to get your sunny disposition, Alan. It's, um, it'll All be good in the end guy, don't worry. Yeah, It seemed so much like marketing for so long.

You know, the sustainability discussions seemed so much like marketing, not that they were untrue exactly, but they were just self-serving in that way. And I think between, um, the, the serious drive in Europe and the beginnings of a similar movement in Asia, um, I think that it's, it actually is more of a phenomenon and ba and more the basis of business decisions than it used to be. And every compute now is cloud compute for the most part in one form or another.

So, yeah. Yeah, I like it. I'm curious as to the degree to which this will be achieved, right?

Because not all cloud computing is the same. I have cloud computing where I've shared infrastructure and it's a public cloud, and naturally I'm gonna see a lot less energy consumption and better sustainability rates. It seems though, when I look at a lot of the numbers, most of the growth in the cloud is around these virtual private clouds, which are kind of more dedicated services.

So while I, I have no doubt they're more energy efficient than an on-premise environment. It's not like everything in the cloud is the same, and not everything has the same level of sustainability rates as a result. Well, we talked about this yesterday, Mike.

Um, uh, we talked about how, um, there's increasing diversity, um, and that, you know, maybe in a lot of ways these still are, are like, it's almost like we're maturing as a user base, and we're understanding better that you can place things in a lot of different places. Um, and there's a little bit of mobility and like, so, but my point ultimately being that, um, the, the overall technology supporting, whether it's a small provider in the UK for example, or a big hyperscaler, um, I think the trend generally is still in that positive direction, both on, because the demand of the customers and just, you know, because it solves a business problem for the provider. Yep.

I mean, even So, it's pervasive. Even taking the, the do good green aspect out of it, if you can be more efficient, and really that's what this car cutting carbon emissions comes down to, right? There's a higher level of efficiency if you could be more efficient.

It helps on all kinds of fronts. It, it helps on the AI power crisis. It helps on your bottom line.

It it, it does help the environment and, and that aspect of it. I mean, there's, there's a lot, there's millions of reasons, billions of reasons why we want to be more efficient in our use of energy, which leads to a reduction in carbon emissions. And, um, I think that'll continue.

Right? And the, the, I think if anything, the rewards will just be higher. I agree.

Higher. All right. Hey, I think that's gonna call a wrap on today's text on gang guy.

Stay safe, stay warm down there. You know, people aren't used to driving in the snow in Austin, Texas, so be careful, Mike. They, They, they called, I just wanna say in my area, they called a school day on Sunday for Tuesday, Just because it might, the Forecast was an anxious snow.

Yeah, well look a little different. And they were Completely correct because little different, the infrastructure here does not Yeah, Different, different in New York or Boston or Colorado. But hey, you know, when it gets cold here, people freak out.

It gets down into the forties, they're breaking out, you know, there's a run on milk at the grocery store. Um, we will be back tomorrow. We have a full day of text drawing tv following this.

So stay tuned. But until then, this is Alan Shimo for Textron Gang. We're out.