Huawei

**David Rosenthal** (0:00)
Intros for tonight.

**Ben Gilbert** (0:02)
Oh yeah, I wrote up a little thing that's based on exactly what you texted me that I kind of like the idea of.

**David Rosenthal** (0:10)
Great, great.

**Ben Gilbert** (0:11)
But what I'm thinking is, tell me if you like this. Welcome to season five, episode one of Acquired, the podcast about technology acquisitions and IPOs. I'm Ben Gilbert, and I am the co-founder of Pioneer Square Labs, a startup studio and venture capital firm in Seattle.

**David Rosenthal** (0:34)
And I'm David Rosenthal, and I am a general partner at Wave Capital, an early stage venture capital firm that focuses on marketplaces based in San Francisco.

**Ben Gilbert** (0:43)
And we are your hosts. Today we are covering China's largest private company, Huawei. The company is the second largest smartphone manufacturer in the world. Now, they're only behind Samsung, and they recently pulled ahead of Apple. They also happen to be the world's largest telecom equipment manufacturer, among other things. Now, David, the company has had a pretty wild last 12 months.

**David Rosenthal** (1:09)
That would be putting it mildly.

**Ben Gilbert** (1:11)
Yes. Borrowed from doing business with US companies, federal prosecutors have filed charges of wire fraud, and their CFO was arrested upon landing in Canada last year. Oh, and the layoffs last week of hundreds of workers in the US went down amidst the trade war. So what is going on with this company, and how did we get here?

**David Rosenthal** (1:32)
Yeah, well, that's what we're here to talk about. And this is going to be fun. This is a little bit of an experiment for us here at Acquired. This is obviously not an acquisition nor an IPO. And in fact, there is a interesting ownership structure of Huawei, which we will get into. But we felt like this is such an important moment for tech, for international relations, and it was critical for all of us to really dig into and understand. And we certainly wanted to. So here we are.

**Ben Gilbert** (2:00)
And speaking of understand, it's a thing that I didn't understand before starting to do this research. And I would imagine most folks in the tech ecosystem kind of feel the same way. This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (2:14)
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** (2:40)
Yes, we talked about that on our ACQ2 episode with Crusoe's CEO Chase Lockmiller.

**David Rosenthal** (2:45)
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** (3:03)
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** (3:20)
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** (3:36)
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. All right, David, now on to the episode. And as you put it well, I think in the pre-show, we don't actually know how this one's going to turn out, and that's pretty exciting for us here at Acquired.

**David Rosenthal** (4:02)
Yeah, a little bit nervous. But makes it all the more interesting. All right. Well, history and facts of Huawei.
We rewind, as we so often do here on Acquired, back to the early 1980s. It was a great time. I was being born shortly after then. Close to the mid-80s.

**Ben Gilbert** (4:23)
The most important part of the episode.