Complexity Investing & Semiconductors (with NZS Capital)

**Ben Gilbert** (0:00)
Okay. Excitement. Fun.

**Brinton Johns** (0:05)
Brevity.

**David Rosenthal** (0:09)
I love it.

**Ben Gilbert** (0:10)
For brevity is the soul of wit.

**David Rosenthal** (0:17)
Is it you? Is it you?

**Ben Gilbert** (0:30)
Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert and I'm the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.

**David Rosenthal** (0:44)
And I'm David Rosenthal, and I am an angel investor based in San Francisco.

**Ben Gilbert** (0:49)
And we are your hosts. On our TSMC episode, one of the 65 sources that we used was an episode of The Knowledge Project with Brinton Johns and Jon Bathgate. Brinton and Jon are public equities investors at a hedge fund called NZS Capital, and they spend a lot of their time researching semis. It was packed so full of great content that I actually watched it twice to make sure that I understood everything.

**David Rosenthal** (1:15)
It was so good.

**Ben Gilbert** (1:17)
It was awesome. And then in a wild coincidence, the very next week, even before we shipped the TSMC episode, David and I were at Capital Camp. Great event organized by Patrick O'Shaughnessy and Brent Bishore. And we ran into Brinton in person. And I was like, I recognize that guy. What do I recognize him from?

**David Rosenthal** (1:33)
It was like the Spider-Man GIF.

**Ben Gilbert** (1:35)
It was like, you!

**Brinton Johns** (1:36)
No, wait, you!

**Ben Gilbert** (1:38)
Very, very much so. So after like nerding out the whole rest of the event on TSMC, geopolitics, semis, we decided to have Brinton and Jon on Acquired. And on this episode, we actually didn't even get into semiconductors for the first hour, since it was so fascinating to hear about their investment principles at NZS. And I've said this many times on the show, but yet again, new frameworks that have totally changed the way that I think about the world.

**David Rosenthal** (2:03)
It's frameworks all the way down, Ben. It is.

**Ben Gilbert** (2:06)
This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (2:11)
So Crusoe, as listeners know by now, is a clean compute cloud provider, specifically built for AI workloads. NVIDIA is one of their major partners, and literally Crusoe's data centers are nothing but racks and racks of A100s and H100s. And because Crusoe's cloud is purpose-built for AI and run on wasted, stranded, or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (2:37)
Yes, we talked about that on our ACQ2 episode with Crusoe's CEO, Chase Lockmiller.

**David Rosenthal** (2:42)
The other element that makes Crusoe special is the environmental angle. Crusoe, of course, locates their data centers at stranded energy sites. So think oil flares, wind farms that can't use all the energy they generate, etc. And uses that power that would otherwise be wasted to run your AI workloads instead.

**Ben Gilbert** (3:00)
Yep. Obviously, it's a huge benefit for the environment and for customers on cost since Crusoe doesn't rely on the energy grid. Energy is the second largest cost of running AI after, of course, the price you pay NVIDIA for the chips. And these lower energy costs get passed on to customers.

**David Rosenthal** (3:17)
It's super cool that they can put their data centers out there in these remote locations where quote-unquote energy happens, as opposed to the other hyperscalers such as AWS and Google and Azure who need to build their data centers close to major traffic hubs where the internet happens because they are doing everything in their clouds.

**Ben Gilbert** (3:33)
Yep. If you, your company, or your portfolio companies would like to use the lower cost and more performant infrastructure for your AI workloads, go to crusocloud.com/acquired, that's crusoecloud.com/acquired, or click the link in the show notes. Now, as always, this is not investment advice. We almost certainly hold stocks that we talk about on this episode. So do your own research, make your own decisions, but love the frameworks that we dive into with Brinton and John. So without further ado, onto our conversation. All right, well, listeners, we want to introduce you to NZS Capital, their investing philosophy, and partially because we think they're a fascinating firm, similar to Honam of Altos or Hamilton Helmer of Strategy Capital. But also the deeper David and I have dove down the rabbit hole the last week of reading all the papers they published, we feel like we've gotten a lot smarter. And so we basically just want to expose the world to more and more of that. So Brinton and John, welcome.