The Coming Boom

Last night, I was at Louis Basque in Reno for dinner. They seat people family style there. I was seated next to two gentlemen. Both were grads of Cal Poly and “programmers”. I think that is too simple a word to say what they did for a living, but describing their roles would take the better part of a novel. One worked for a FinTech startup. They are building a full-stack solution for asset managers. The other worked for Amazon ($AMZN)

Allow me to digress to politics for a moment. Both were voting for me in the Republican primary, which was nice. So, were the rest of the people at the table who were celebrating their mom’s 82nd birthday. She was with the Republican Women of Reno and remembered me. She valued experience, and the entire family was voting for me, too.

I chatted at length with the computer guys.

Of course, our conversation went immediately to artificial intelligence. They were telling me how they integrated it quickly into their individual jobs. They also articulated how their companies were integrating it into everything.

They have used all the various platforms, but they use Anthropic’s Claude the most. I relayed a story to them. An entrepreneur I backed to a successful exit in a company told me he programmed 8 AI agents to program a company. He then programmed an AI agent to oversee the 8 AI agents. He built an entire company in one week that would have taken him a year.

The computer guys were not surprised at all by that.

One of them told me that they were getting almost 5x more output from engineers and programmers in their firm after utilizing and implementing artificial intelligence. Another interesting thing that happened to their jobs is that they are also working more, not less.

We think about AI taking away jobs. However, because AI is such a force multiplier per employee, there is a demand to hire more high-quality employees!

What is limiting their ceiling?

The cost of tokens. In a professional business situation, when you use a platform like Claude, you have to “spend” tokens to use the platform. Tokens cost money. Mark Benioff, the CEO of Salesforce, said they are spending well over $100MM per year on tokens as they integrate AI into their platform.

At some point, there will be middleware that instructs AI to use cheaper AI models so customers can save money.

Compute. AI needs compute inventory. That means more high-powered chips and data centers.

The race is on between chip companies to develop even more powerful computer chips. A friend of mine who started one of the top chip companies is still at it, designing new chips. He thought he would be traveling and fly fishing by now, but he is enjoying the challenge.

There is a lot of disinformation about data centers. Frankly, the data center businesses have done a poor job of communicating, but I see that starting to change. There is an organized leftist movement to stop data center buildout. Leftists are never interested in progress.

The objective statistics on data centers are abundantly clear and empirical. Data centers contribute millions in tax revenue to states without increasing the cost of power. They are also very efficient in their usage of water.

Data centers create hundreds of jobs when being built. They create hundreds of jobs after they are built. But they enable companies to create thousands of jobs. It’s not just about the jobs at the data center. It’s also about all the jobs companies create because data centers exist.

Power rates do not go up.

If we let American technology move forward, America will BOOM as we have never seen it boom.

Why do I assert this?

I think it’s because of my generation’s place in human history. My generation was born at the tail end of the baby boom. When we went to college, there was no Apple, Dell, or Microsoft. I programmed in Fortran on punch cards. We had to adjust to all that after we entered the workforce. We saw the internet happen and remember dial-up. When Netscape was released, it was a revelation, and it unleashed the power of the internet. We saw the mobile phone and cloud computing happen.

We aren’t afraid of technology because we adapted as it advanced. We know that technological advancement creates far more jobs than it eliminates.

Generally, it takes thirty years for innovations to manifest themselves in the broader economy. I think artificial intelligence will go significantly faster than that. Listening to those two engineers tell me how it has affected their production and jobs confirms it.