Bloom Energy CEO: Why We Aren’t in an AI Capex Bubble | Energy Sovereignty & The Future of Power

To lose is something I simply cannot contemplate. There's nothing that I do where I put effort, I put time, and I think of failure as an option.

A revolution. And I would call AI absolutely a revolution. It's almost a hockey stick on a hockey stick. Clearly, electricity becomes the key factor.

Electricity in the world is a $5.5 trillion market. Last year, our revenues were 2 billion.

When power is democratized, access is not restricted by people who are in power. And that's true democracy. I would say don't short the US. Don't short Silicon Valley.

Thank you so much for having me. It's a great honor to be here.

To lose is something I simply cannot contemplate. There's nothing that I do where I put effort, I put time, and I think of failure as an option. Before starting the company, I did the Mars missions and there you cannot call a plumber on Mars. You cannot fix something along the way. So what you do is you think through let me think about the 10 big things. A boom can happen and it ruins your life. Then you say, 'Okay, I'm going to mitigate that by every possible workaround because something's going to happen.' So, I hate failure, but the way I deal with failure is risk mitigation. Think about things that can go wrong and prepare ahead of time for a plan around it, for a workaround because bad things can happen. You can fall down. Falling down is not what I'm concerned about. It's about the getting up.

The really hard experiences are what shape you, what you're really made of. It's very easy to feel like you're a hero when everything is going well for you. These hard experiences, as hard as they may be, if you just learn from it and look forward, don't look in the rearview mirror. When you're driving, you're looking through the windshield. You're looking forward, okay? You just look in the rearview mirror only to learn not to play the bad movie again and again. You know, if that was a bad experience for you, it's like watching a bad movie. Why would you play the bad movie again in your mind? Which is what you do, right? It is so nonsensical. Learn from it. Look forward. Believe that tomorrow is always going to be better than today. And at a minimum, life gets easier when you have that attitude.

So if you look at my 2001 PowerPoint presentation, which was the pitch to Kleiner Perkins, who was my first investor, John Door, the summary page puts out a data center. It puts out a bloom box powering the data center, the waste heat providing the cooling for the data center, and it being connected to nothing else. And what we're doing today, the reason it's becoming the darling is those data centers are finally waking up and saying this is the right solution for us. For me, the period between 2001 and now the 25 years was never a question of if. It was a question of when and how soon.

There was not a single night I went home and worried about the company surviving or doing well or whether I had made a mistake jumping into this field. There were several days there were several times where the company had existential threats to it that we had to overcome. But in my mind again failure was never an option. So, I really never once worried about when we wake up tomorrow morning, are we going to be better off than we were the previous day?

Sure. Um, so I'm a technologist. I used to be a rocket scientist. So here I am starting a company. And when I started the company, if you had given me, if you had said PNL, Eida, all those, you know, financial terms, I wouldn't even know what that meant. And I learned along the way. So here I am. I know how to build one-off and really well because that's what we did for the space missions. That's what we did in our university labs. So we built this one-off, two-off of the first bloom boxes that are out there working at Google other places doing very well. After we built the first five, me and the engineers said we can now hand it off to manufacturing and ask them to make it. And little did we know our engineering intent, our design intent, everything we knew had to be written up in such elaborate terms in terms of manufacturing instructions for somebody who is just a technician who does not know the engineering content but will do exactly what they're being told to make these boxes. So here we build the next 10, the next 20. They're all going out in the field and failing spectacularly. And it's a shock because in those early days, they're expensive first units. Reputation is on the line. So I go, this cannot scale. So I just stop production. I call my board and I say, I need help. I need people to come and help me tell me how to do manufacturing. I don't know. So, one of the people that come is Andy Grove who became a great friend and a mentor and a valley legend. And then there are some other manufacturing gurus. One of them was on my board. So, we were asked to compile all the data we had. So we have three ring binders after three ring binders. Now we're talking about the time when we still used paper for everything, right? So we had them all packed. We had an entire executive team sitting on one side of a large boardroom. These great advisors sitting on the other side including Andy Grove. And we had dinner ordered and we had all these stacks. We're thinking we're going to stay up all night until we get to solving the problem. So we all sit down and as soon as we start talking I don't know that we finished the first sentence and he says can you stop for a minute and he says can everybody else in the room leave from the executive team other than KR. And so I have this group of luminaries sitting on the other side and me sitting on this side looking it almost looks like a firing squad. And then Andy says what's wrong? So I begin to explain what I think may be wrong. He says, 'No, no, no. Stop. What's wrong?' I say something else, thinking that I didn't get through to him properly. And after the third time, he's like, 'K,' he just leans over and he says, 'I want to know what's wrong with you.' And it shocks me. It just shocks me for a moment. I sit back and I go, 'I'm trying to build a great device that's going to be beneficial to people. I don't know what's wrong with me.' And he says, 'You're such a smart guy. You built this technology that's just absolutely amazing. If you walk the floors and talk to the people out there, they're going to tell you why it's not working because they don't understand what they're building. Have you talked to people and have they told you what they don't know?' And it dawns on me that I've never done that. Then he says, 'I know all these other guys want to go through those training binders. None of us know your product better than you. If you're smart enough to design it, you'll be smart enough to figure it out. Don't waste your time listening to everybody else and me. Go figure it out.' That was the best piece of advice I ever got.

Great question. So, this is not just about the shop floor. What Andy Grove was teaching you was you need to have the empathy to be able to relate to every aspect of your business. And when you develop that empathy and when you practice that empathy by walking on the floor talking to your shop floor team members who are building your product, they will tell you things and the things they tell you are going to make the difference between you being a good company and a great company. You do the same thing with your customers. You don't tell them why your product is great and they should buy. You go there to find out what is their pain and what problems do they want you to solve for them. That's empathy. Then you design your product accordingly. And here's what I can tell you. Our shop floor employees walking there talking to them and telling them why it matters, telling them why what they do matters. So when we have our all hands meetings or forget the all hands meetings if you're having a dinner party with executives when I toast these days I always remember to say we're toasting right now this great champagne or whatever it is that we're toasting but we're able to do this because there are some technicians on the floor right now. Nobody is policing them, but their pride, their dedication, they're building an amazing product. Let's toast to them.

People confuse markets, stock prices and infrastructure and secular changes. The stock market is going to go through whatever it goes through. Any revolution, and I would call AI absolutely a revolution, that's going, it's almost a hockey stick on a hockey stick, right? Technology itself, digitization itself was on a hockey stick in terms of us going from the mechanical age infrastructure to the digital infrastructure. AI has come and put a hockey stick on that hockey stick. So that's what we're experiencing. Anything going at that speed, will it have bumps along the road? Will it have pauses along the way? Most probably yes. You know, we don't know of anything else in human history of this scale and this magnitude, but the trajectory, the normal course after the course correction, is still going to be this phenomenal course. I absolutely believe so because for the first time in human history we are manufacturing intelligence. When was the last time any person anywhere in any civilization said we have too much intelligence, let's stop.

Which was the scarce resource.

Wisdom. You know, AI is not going to give you wisdom. AI is not going to give you happiness. AI is not going to give you empathy to relate to people the way you need to. At the end of the day, a bot giving you counseling, it's not going to be the same as you and me sitting here talking to each other, looking at each other, understanding the facial expressions, relating to one another. So, humans are social animals. When you look at what you do today, what's the single biggest bottleneck that you face most consistently? The single biggest bottleneck that I would say we face in terms of introducing a new concept into society is the friction associated with new ideas. Right? On a big macro scale, it is for good reasons. Very large infrastructure in the world has been designed and regulated to move slowly. We are entering an age where that huge amount of regulation that intentionally creates friction in the process, which was beneficial in the past, becomes an impediment to our growth. And I'm particularly sensitive that I'm here in the European continent.

Yeah. Yeah. Absolutely. Absolutely. I mean you get A+ for

Look, in an asymmetric world where not every player views regulation and growth at that level, I don't think I would agree with him. If that was a global phenomenon and everybody on the planet agreed that we will throttle and move at a particular speed, that's a different story. But that's utopia. That never happens. So being left behind because a particular country, a particular geography throttled it when somebody moved at breakneck speed becomes a real detriment to the region that throttled it. Is there a chance that the US will be left behind because of the regulatory permitting provisions that are in place when viewed in context against Asia or China in particular where they have amazing model development and the permitting and regulatory environment is honestly not inhibiting them at all. If everything else were equal, what you're saying would absolutely be true. But the creative prowess, the innovative entrepreneurial spirit that you see in the United States is still a major trump card that the US has over any other place in the world today. And I would say that human spirit is going to be able to overcome whatever other obstacles we have. So I would say don't short the US. Don't short Silicon Valley.

Never a good idea.

It's not paid well.

Society globally? I would say the largest bottleneck would be bringing the people who are left behind to some level of parity. There'll always be gaps, but what's happening for the first time in human history, it's not even in technology history, in human history, is next to air, water, shelter, food, electricity becomes almost a necessity for a young kid being born today to have a decent modern life in this digital world. And there's significant swaths of this world that don't have access or affordability to that power. And I think when we look 5 years from now, the need to bring that level of access and affordability is going to be super important. We're both in slightly rarified air in terms of the events we go to, the people we spend time with. Candidly, I just see a smaller and smaller number of people make more and more money.

I wouldn't disagree with you on the number of people, the fewer number of companies that are going to make an unbelievable amount of financial success out of AI. However, there is no known methodology to raise all boats in the world than technology. Technology has been the best equalizer in the history of mankind. Just think about infant mortality. Think about hunger. Think about clean water. Think about healthcare and the number of things we're able to cure. It is technology that's brought all that to most people in the world. There is probably no force in the world other than technology that has done that to so many people at such large scale. Is there inequity between the best healthcare and the lowest healthcare? The answer is yes. But has the healthcare of every living person on the planet gotten a lot better than it was because of the technological advances? The answer is yes.

Here's the thing about companies tech ownerships, right? The top 20 most important companies. That list changes every 10 years in the US. It's so unlike the EU where practically new companies have rarely come up and displaced existing old companies. I see the world more and more being not monopolized by single large companies. You know, Microsoft used to be considered a monopoly and everybody was afraid of it. No longer. Google was considered to be the monopoly. No longer. So I don't see regulation having to come in. The only thing regulation can do in my opinion is stop that innovative culture. So if the government took major equity shares in a company and because of that provided unfair access for those companies to its products and its people, by definition they're stopping the startups who have better ideas to come and compete for it. I think free competition. Go back to the first question you asked me, winning and losing. You want to win and if you want entrepreneurs to win, you have to give them at least a sense that they're playing in a level playing field.

I think there are many ways to come around it. Taking equity is the question you asked. I don't think that's the right model. But let's get to what the core issue is, right? The core issue is no new technology that's come along ultimately created less jobs. I don't think AI is going to be anything different. But when new technologies come along, even from the agrarian revolution to the industrial revolution, the transition generation suffers, there's collateral damage because we are creating so much wealth. Is there a way to take a portion of that wealth and make sure that the people caught in the transition don't have to suffer as collateral damage? There should be a construct that's for the political figures to figure out, right? There should be a construct and I'm completely for that because these are people for no fault of their own. You know, we in Silicon Valley said everybody learn how to code because if you don't know how to code, you don't have a future. Okay. Suddenly comes AI and we are saying you coders have no future.

Yeah. Why are you doing that? Right. So I think as a society, as a technology industry, I think we should be empathetic to taking care of those people.

Here's what's interesting, right? We're manufacturing intelligence as we spoke about and there's never been a more high value product manufactured with electricity than intelligence. So the input into the factory, unlike a chemical factory where all these raw materials or other things come in and you process, the input into this factory is simply electricity and data, and data is everywhere. So the only real cost input coming in is electricity. The machines are the chips, the output is intelligence. So this is the single largest input and that input today is not abundant, right. So clearly electricity becomes the key factor. So herein I see it slightly differently. I believe the fact that electricity became so important for this critical industry that knows how to move at speed and scale is going to mean that since Edison, almost 150 years later, we are going to create a new construct for electricity in the world that's more digital electricity as opposed to the mechanical age electricity. Okay. And that digital electricity for many reasons I can walk you through is going to be more efficient. It's going to be cleaner. It's going to be more reliable. And when these large companies that have the resources to allow that kind of new electricity to happen at scale, it's going to trickle down to the masses everywhere. Sub-Saharan Africa and Bangladesh, to just use examples of countries that are in the developing basket, are going to benefit from this, just like an airbag comes in a very expensive car initially and within a few years you see it in every car and it improves everybody's lives. So I'm super optimistic that if we look back 20 years from now, we will say AI was the best thing that happened because of which electricity abundance happened to everybody on the planet. AI is just a catalyst, a stepping stone and an accelerator.

Mhm.

Look, we have developed a technology which does not use the traditional power supply chains and the technologies we use are more akin to computer electronics and hardware, right? It's a solid state device that makes the electricity. So even at the tens of gigawatts, we will be single-digit percentages of the total supply chain that already exists to make other devices of similar nature. So when Steve Jobs comes and shows his first smartphone, nobody says, 'Will you build 5,000 of these or 10,000 of this next year?' It's in the millions. And there's a supply chain that knows how to scale very fast. That's the supply chain we're going to rely on. And that didn't happen by accident. The company was built to light up the planet. That was the mission of the company. So everything we did in the company, including our manufacturing lines, were built for one day being able to scale and scale fast. Now we are just opening that chapter and executing to that. It's all about execution. And execution at that scale is not trivial, is not easy, just like I learned the very first time I had to build a product with Andy Grove. So but what I'm still here to talk about that story which means we are good learners. We learn how to get up when we fall.

Exactly.

Yes. So look, here's what happens, right? If you want to build a 2 gigawatt data center, it's going to take you more than a year and a half to build a green field. There's an entire supply chain for that, including construction workers to supply chain parts related to that data center. They're all being stressed right now. There's a lot of copper that goes inside a data center. There's a supply chain issue related to that. There's a lot of cooling that goes inside a data center. There's a supply chain issue related to that. The trades people required to build these extremely large centers. There's a supply chain related to that. So, it takes 12 to 18 months minimum to build something like that. We can stand up that power faster than they can build the data center. So, our goal at Bloom is to say power should not be a bottleneck if you

rely on us. So what are our constraints? Number one, can they build it in time their data center? Can we get the permits? And the third part is we need gas. That gas supply needs to be able to come in, right? Those are the big bottlenecks. I don't see us delivering the product as the bottleneck right now.

That's what Bloom's about. That's the Bloom story. We believe that bringing power to the edge has to happen. That is the digital transformation of electricity. And we are the only purpose-built, purpose-created company that created a technology and a platform that comes to the edge.

What they don't see today is in a world where everything is digital, having power outages for any reason is unacceptable. That's like not having air to breathe because God forbid somebody is doing a surgery. That's going to be a robot relying on all the data, everything coming electronically and not having power at that moment is not an option. If you have all the transportation logistics driverless and there's a chaos, you cannot rely on some large data center far away with latency because by then enough damage has happened. You cannot afford the latency. So that needs to happen on the edge. So when everything in life depends so intimately on that power not going off, a pole and a wire running across hundreds of miles capable of disruption by mother nature, capable of destruction by bad actors, whether it's cyber or a physical attack, cannot be the only way that lifeline is delivered to you. So power has to be at the edge without a question for us to realize the entire dream of the digital transformation.