Evidence receipt / preference
Published · transcript-backedErik Bernhardsson: preference
16 Feb 2024 Latent Space Truly Serverless Infra for AI Engineers - with Erik Bernhardsson of Modal
“I mean, I don't like, I just think for like a capital efficiency point of view, like, do you really want to tie up that much money and like, you know, physical hardware and think about depreciation and like, like, as much as possible, like I, you know, I favor a more capital efficient way of like, we don't want to own the hardware because then, and ideally, we want to, we want the sort of margin structure to be sort of like 100% correlated revenue in cogs in the sense that like, you know, when someone comes and pays us, you know, $1 for compute, like, you know, we immediately incur a cost of like, whatever, 70 cents, 80 cents, you know, and there's like complete correlation between cost and revenue because then you can leverage up in like a kind of a nice way you can scale very efficiently.”
Source trail
Everything needed to verify it.
- Speaker
- Erik Bernhardsson
- Attribution
- Verified speaker
- Claim type
- preference
- Recorded
- 16 Feb 2024
- Publisher
- Latent Space
Transcript context
…I really wanted to put you in a room with Isocat from Poolside. Yeah. Because he has the complete opposite view. Yeah. It is great. I mean, I don't like, I just think for like a capital efficiency point of view, like, do you really want to tie up that much money and like, you know, physical hardware and think about depreciation and like, like, as much as possible, like I, you know, I favor a more capital efficient way of like, we don't want to own the hardware because then, and ideally, we want to, we want the sort of margin structure to be sort of like 100% correlated revenue in cogs in the sense that like, you know, when someone comes and pays us, you know, $1 for compute, like, you know, we immediately incur a cost of like, whatever, 70 cents, 80 cents, you know, and there's like complete correlation between cost and revenue because then you can leverage up in like a kind of a nice way you can scale very efficiently. You know, like, that's not, you know, turns out like that's hard to do. Like, you can't just only use like spotting on demand instances. Like over time, we've actually started adding a pretty significant amount of reservations too. So I don't know, like reservation is always like one step towards owning your own hardware. Like, I don't know, like, do we really want to be, you know, thinking about switches and cooling and HVAC and like power supplies? Accessory recovery. Yeah. Like, is that the thing I want to think about? Like, I don't know. Like I like to make developers happy, but who knows, like maybe one day, like, but I don't think it's gonna happen anytime soon. Yeah. Obviously, for what it's worth, obviously, I'm a believer in cloud, but it's interesting to have the devil's advocate on the other side. The main thing you have to do is be confident that you can manage your depreciation better than the typical assumption, which is two to three years. Yeah. Yeah. And so the moment you have a CTO that tells you, no, I think I can make these things last seven years, then it changes the math.…
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