Evening all

I just read Personio has cut about 6% of its staff. Coincidentally today news broke that a VP of Finance with experience in public politics and syndicating complex government coalitions may be looking. Application inbound?

While I wonder what the CV of a former finance minister may look like, I share my musings.

Cheers
Philip

Chart Art

The picks and shovels of the ChatGPT Era. Data centres and Grid Infrastructure. I especially am a fan of data centre HVAC solutions as cooling these GPU hubs makes up to 30% of the energy cost, which are about half of the operating cost. I did some simple back of the napkin scribblings comparing direct cooling, liquid cooling and traditional cooling methods. Subject to assumptions the math shows: EBITDA improvement potential of up to 300bps through more effective cooling:. Some data centre adjacent ventures on top of mind that pique my interest:

• Qarnot

• Immersion4

• Coolgradient

• JetCool

I am not the only keen one. Blackstone just issued a great little note highlighting the opportunity data and the resulting need for power may offer to investors.

Over the past five years, the number of US-leased data centres has increased 17 times, driven by the rise in cloud computing and AI. This year alone, 5,000MW of capacity is pegged to go online in the US. But with Europe having the FLAP(D) centres, growth is certainly a global phenomenon. In terms of capex this translates to: USD 1tn in the US and an additional USD 1tn globally. In the next five years. With all that capex and AI causing GPU density per server to skyrocket—think additional heat, risk of thermal runway, higher outage frequencies—power demand is a looming bottleneck. Pre-data centre boom, the US demand for power had been stagnant for the past two decades. Now: Regions—particularly the hub in Virginia—are expected to experience power demand growth of up to 39% until 2030. Lots of solutions proposed to abating grid chaos. Energy storage systems and modular nuclear reactors (X-Energy just raised USD 500m with Amazon in the lead. Strategic bet? You bet) are only some.

Speaking of Power and the need for solutions — such as energy storage — Germany just experienced what is called a doldrum period. Those familiar with the duck curve in intermittent energy will have also heard — if the wind does not blow and the sun does not shine, solar and wind farms will not serve to supply. I agree there was very little sunshine in Germany yesterday (I still carry SPF 50+ strategically with me at all times). But no wind? I must have missed that. Alas as output slumped, prices for the energy surged to up to EUR 800 MW per hour. For context: About 10x the average.

US Unicorn creation is outpacing IPO volumes, with AI driving massive cloud growth. This aligns with the trend of tech zombiecorns—check out an article I wrote on the state of AI for more details on this. But for those without five minutes to spare, here’s the math: there are currently 1,000 US tech Unicorns. Assuming a recovery rate of 40 software IPOs in the US per year (remember: most of these IPOs aren’t minted unicorns ), even with these overly optimistic assumptions, the IPO backlog—if it doesn't grow—would take about 25 years to clear (CrunchBase actually puts the number at closer to 50 years). We love perfection but assuming it does not go over perfect, the unicorn inventory poses some difficult questions to investors.

The BoE cut rates by 25bps.

But JPow could not let England take the headline in today’s central bank bonanza. Power Pivot Powell aka Mr. Money Printer cut rates by another 25bps (base rates now between 450bps and 475bps). That should not be a shocker, albeit some market voices criticise this, warning of underlying strength in the economy on the back of which further cuts could fuel runaway inflation. But more striking: His stance on the president elect. If asked to resign, he will not (watch the full 45 minute CNBC press conference to her him utter a beatuiful NO here). That gives him a runway until May 2026, when Trump can propose a new Fed chair. I am excited to see Jerome deliver some more Jackson Hole speeches. Whats next? UBS estimates another 25bps cut in December and a neutral Fed for January. Deutsche aligns and believes there will be a skipped cut.