Latest / The Punch List / Construction layoffs, data centers overheating, US politics slowing Texas.

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Construction layoffs, data centers overheating, US politics slowing Texas. · The Punch List

• 0:00
  Data centers used to be 10% of this market. Right now they're 60% of this market. If I were to pull
• 0:05
  all the data centers pending out, the number would show compression of about 3.5%, grew from 600
• 0:12
  billion to 680 billion, while the total construction fell down from 1.7% of total.
• 0:17
  Contractors have hit a graph ceiling because construction layoffs is hitting the lowest level
• 0:22
  since 2000. Governor Abbott directed to halt all permits until the utility regulator,
• 0:28
  Ercot, completes an audit. Do I think this is going to have any meaningful slowdown in terms of
• 0:33
  development in Texas and data centers? I think this has election signaling and politics all over
• 0:39
  it. Welcome to the Punch List Podcast, the number one podcast in the world for architecture,
• 0:45
  engineering, construction. Joined today by TC and Canova.
• 0:52
  Where in the world are you? Both of you now. Still staying afloat
• 0:59
  in Berkeley, California. Still in India in beautiful Bangalore. Visiting my plan office. Are
• 1:05
  you kidding? I'm in Menlo Park, California. Bay area. Uh, TK.
• 1:12
  Um, are you still getting like, a baby by your mother, or is she making food? Uh,
• 1:19
  ironing your underwear? What? What's what's a what's a visit home in Bangalore?
• 1:26
  No, I'm not at home. I'm in. I'm at a hotel. That's over. Bathing by my mother is
• 1:33
  over. Um. Yes. I'm acting like a functioning right now. You know about the past?
• 1:41
  Yeah. I was interested in talking about the past, John Watts. I'm very fascinated by your story
• 1:47
  of how you kind of came into real estate development. So tell us that story and also tell
• 1:54
  us, if not that, what would have been the alternate career path for you? Yeah,
• 2:01
  well, I think for me, you have to. That's a good question. Um,
• 2:08
  I have to look back at kind of the different phases of my life. And if I'm honest with you, it
• 2:13
  was what I thought I would do was different. And it depended on the phase of life that I was in at
• 2:18
  the time. As I kind of grew up, and so I grew up in a small town in Kentucky, and I went to college
• 2:24
  there, and I studied finance in college. So I thought I was going to be in banking or some type
• 2:30
  of financial job. Uh, I thought that was like the path. And then, um, I went to but I went to
• 2:37
  law school after that. And so for a period of time, I thought I was going to practice corporate law
• 2:43
  or transactional law, some kind of intersection of my financial, um, interest in the
• 2:49
  law. And towards the end of law school, I decided that that wasn't what the the path that I was
• 2:55
  going to take. So I took the bar exam just as a backup. And then, um, I got the opportunity
• 3:02
  to work for the president of the United States. So I had this, like, moment in time where I got to be
• 3:09
  working in a presidential administration. And so there was a moment there that I thought, okay,
• 3:15
  maybe I will live in Washington, D.C. and like, lobby the government or, you
• 3:21
  know, run for political office. I'm really glad that's not what I did. But, uh, after that,
• 3:28
  I went and worked for in a private equity firm and then real estate development. And I think it's
• 3:34
  like, oh, that's kind of all over the place. But if I think about all those sets of experiences, I
• 3:39
  think they kind of led towards real estate development because it's financial, it's legal,
• 3:46
  it's regulatory. It's getting, you know, things approved, interfacing with the government to get
• 3:52
  large projects approved and small projects approved. So I think things happen for a reason.
• 3:57
  They lead you on a path. And I mean, I've been doing this now for a long time. Um, you know, almost
• 4:03
  15 years in kind of real estate. So, you know, you land where you need to land. Uh,
• 4:10
  and, um, that's that's my story. Right? So, yeah, I don't know what I would want.
• 4:17
  I thought when I was also in, like, middle school and high school, I wanted to be like a talk show
• 4:22
  host. So I'm living that dream now. There you go. I'm not very good at it, but I'm, you know,
• 4:29
  get it? You guys are helping me realize that dream. Love it. Uh. I'll I'll I'll add one thing
• 4:35
  about John. As someone who's sat across the table from John negotiated things. His legal knowledge
• 4:43
  is very handy. He's one of the only clients where I actually had a lawyer with me the whole time.
• 4:49
  And paying for it. If I had to threaten John that, hey, you'll have to pay me for this law because,
• 4:55
  you know, it's as a construction project manager, I don't have the chops to do the legal. Yeah. Back
• 5:00
  and forth with John, I'll say that. And I don't have the technical expertise. I've acquired some.
• 5:06
  But, you know, uh, I always admired that about you. Took your background as a structural engineer,
• 5:13
  and you could really look at the fundamentals of a building and think about it as we designed it.
• 5:18
  So there's such a good correlation between the good correlation between politics,
• 5:25
  law, lawyer ship and construction. Right. I see a lot of overlap between these three. So
• 5:32
  when you do not want to pursue politics, is it a now thing or is it is it a forever thing? I don't
• 5:39
  want to pursue politics forever. It's a forever thing. I mean, I appreciate people who, um, are
• 5:46
  thoughtful politicians and want to get in there for the right reasons. And I would say there are a
• 5:50
  lot, but I just don't. It's not something that it's not a career. It should not be a lifetime thing.
• 5:56
  I'm kind of a. I kind of subscribe to the notion of like, you come in. You do your service and you
• 6:03
  get out and you know, you it's a you know, it's not your your main thing. Um, I think you need I think
• 6:10
  the best politicians are ones who have, um, a background in something else in the private
• 6:15
  sector or a they're a doctor or they have real, you know, life experience and they draw
• 6:21
  upon that to inform, you know, their views. So the Founding Fathers as well.
• 6:28
  Interesting. Uh, but yeah, never say never, man. I mean, who knows? You might be you might be
• 6:34
  devolving back into it for some time. Pretty pretty confident now. Okay. Well all right,
• 6:42
  thank you for that. Uh, and we'll sharing about ourselves. So number one story
• 6:48
  today is just construction growth numbers that came out for August and September and,
• 6:55
  um. Interesting data here. TK. You want to walk us through it? Yeah, yeah. So before I start,
• 7:02
  just to lay it out right, the, um, the construction, uh, spending projections
• 7:08
  by, uh, Census Bureau, they're almost flat. But what they're hiding is the
• 7:15
  reason they're about to stay flat is mostly due to data centers, which is not a tailwind at this
• 7:21
  point of time. It's a gale, right? It's just totally carrying the industry. So,
• 7:28
  um, let's look at the data here a little bit. And then, uh, I would love to hear everyone's thoughts
• 7:33
  here. This is the Census Bureau report, but the two major columns to watch is, uh,
• 7:40
  annualized, uh, spending in August of 2025. And then what's projected, uh, August
• 7:46
  of 2026. Right, a year apart. So it has gone down a little bit by
• 7:53
  1.7%. But here's what's concerning to me. And then, uh, would like to
• 8:00
  open it up and hear you guys concerns or thoughts. So on residential we are
• 8:07
  looking at about a 5% reduction, which is huge given that that number is almost
• 8:13
  $900 billion. The other big loser seems to be manufacturing, which is down
• 8:20
  19.2% from 211 billion to 170 billion. And like we
• 8:27
  talked about, the biggest winner is office, which has gone from 120 billion to 150 billion.
• 8:33
  And so the way census works is data centers sit in the office category. And right
• 8:40
  now, like back in the day in 2020, data centers used to be 10% of this market. Right now they're
• 8:47
  60% of this market. So almost all of this upswing is coming from data centers right now.
• 8:54
  There they are at about 85 billion out of this $150 billion number. And that's what's
• 9:01
  carrying this report right now. Um, we'd love to hear your thoughts on this and
• 9:08
  I'll share mine as well. I mean, first of all, this is a loose projection. Uh, not a
• 9:14
  tight one, but it tracks though it tracks properly because our data centers.
• 9:22
  So office today, as we said today, last month, analyzed our data center spend is about 84
• 9:28
  trillion, sorry, 84 billion, which tracks to what the industry is saying as well. I mean, they have
• 9:35
  commissioned 150 billion of that, but 84 is happening, right? So that tracks um.
• 9:43
  I'm not too worried about residential because if you go down and see a multi-family is
• 9:50
  0.6% decline, it's almost flat. So it's 115 billion annualized.
• 9:56
  Uh, single family has dropped. And that's primarily because of,
• 10:04
  uh, the interest rates. I mean, if you if you get the interest rates down, this will bump up again,
• 10:11
  right? And and, uh, within this residential. Right. So
• 10:18
  it's 88, 82 of 82 billion of residential, right, which is single family multifamily. The
• 10:24
  third line that's not there is is home home improvements. Whenever single family goes
• 10:31
  down, home improvements go up. So people are always thinking, I cannot buy a home next year. Let me
• 10:37
  upgrade the home I'm living in. So that's where the spend goes up a lot. So there's a
• 10:44
  huge spend happening in home improvements compared to single family, but the family's flat
• 10:53
  dataset is an interesting one. You know, it's I mean, this data is not cut the right way for us to
• 10:58
  analyze, and we can't cut the data in the private players per se. But my hunch is
• 11:05
  that the large developers, the AR 50, uh, 20 or 50 somewhere in that range
• 11:13
  are getting a lot of demand to build data centers fast. And they are
• 11:20
  picking up that demand. And because they're picking up the demand. The demand is so huge in
• 11:27
  terms of growth. I have a feeling there's no data to prove it, but I have a
• 11:33
  feeling that they're leaving behind some commercial healthcare education to do data
• 11:40
  centers, and that could be an opportunity for a mid or small size GC to step up
• 11:46
  and go upmarket and grab that. You know, um,
• 11:53
  I like the optimistic outlook. Um, and, and not to sound like a pessimist, but here's,
• 12:00
  here's, here's my concern and I and actually I'm more concerned about the small to mid-size
• 12:06
  general contractor him. Okay. So so today what we can factually agree on is data
• 12:13
  centers are is what's carrying the market, just like we talked about in a previous podcast. If I
• 12:18
  were to pull all the data centers pending out, the number would show compression of about
• 12:24
  3.5% on. Because here's the other thing. We make a big deal about data center, but
• 12:31
  they're actually a very small part of the overall construction dollars as well, which I'd love to
• 12:37
  share a graph to show that. But regardless, it's not. It's $85 billion, which is not nothing. Um,
• 12:43
  with a projected increase in the future. So now let's do a projection.
• 12:50
  Right now, projection. Like we've talked about where the data centers are today. If I were to
• 12:56
  project out, data centers are going to keep increasing their share of office space is going
• 13:02
  to keep increasing. The squeeze we are seeing in other markets. I,
• 13:09
  I think it's going to get worse. And here's why I feel it's going to get worse. Interest rates are
• 13:15
  going up. Supply chains are going to get messier and messier. Tariffs don't seem to
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  be like on a on a downward trend or on a downward trajectory, at least not in the immediate
• 13:28
  future. All these things hit the little guy harder than the big guys in the
• 13:35
  general contractor world. Also, all these things make Developers who do most
• 13:42
  of these residential build outs shy away from investing? I mean, I mean, I'd love to hear John's
• 13:49
  thoughts on this as well. Um, as to what that's going to do to developers. But that's what I
• 13:55
  feel. I think they're going to get smaller and smaller piece of the pie, and that's gonna
• 14:03
  have a larger impact on the small and midsize GC than on the big GCS.
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  And they got to be thinking about their future. They've got to be finding ways. How do they
• 14:15
  attract talent in this market? All the holding that's happening of capable people is also on the
• 14:20
  data center side. Yeah. When I look at that list, uh, two things stand out. One
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  is on the power side, up almost 10%, I assume, on the nonresidential construction
• 14:34
  that's tied to the data center development. Um, that's probably. I'd like to see that trend over
• 14:41
  the last couple of years. And then, um, where is in this list? Uh, industrial, like
• 14:48
  traditional industrial, small bay, large bay, industrial. Is that on the commercial or the
• 14:52
  manufacturing? Uh. That's manufacturing. Yeah. So that's that's a major drop off. I mean, that was
• 14:59
  really a really hot thing. You know, during and post Covid. Um,
• 15:07
  that has seen a a massive drop off. Um, and we should dig.
• 15:13
  Why? One thing I would clarify, John, just for our viewers as well, the way Census Bureau treats this
• 15:19
  is offices where work is done and data centers are considered places where work is done. That's
• 15:25
  why it's in office category, commercial or where goods are sold. So it's a lot of retail store
• 15:30
  development. That's what that is. And then manufacturing is where industrial resides, where
• 15:35
  you're building things and any place where you're building things. So that's just how Census Bureau
• 15:40
  things through things. And that's what these numbers represent when they say that. Yeah, I mean,
• 15:46
  I think all these numbers track to what we're seeing, what I've, what I've heard at the industry
• 15:52
  conferences over the last several weeks in terms of the residential side, the data centers.
• 15:59
  Uh, nothing surprised me about this other than the, you know, really steep drop off in the
• 16:05
  manufacturing category. I just didn't realize it was that the contraction was that large. Um,
• 16:12
  on the debate between the large and the small GSEs. I mean, uh, I'm
• 16:19
  not sure how that breaks down, other than it makes sense that maybe if the larger guys are are
• 16:26
  distracted and pursuing the the data centers, that there could be more traditional work for the
• 16:32
  midsize or smaller ones. But I tend to think the large guys can sop that up too, when demand is
• 16:38
  just down generally. So, um, it's tough out there right now. I mean,
• 16:45
  there's this there's a good news and bad news. Uh, let me share the bad news first.
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  Uh, first one in the mid guys. I mean, TK was right. I was just looking at the data here.
• 17:00
  So the top 400 contractors grew from, let's call it 600 billion
• 17:06
  to 680 billion. Their total revenue. Right. So it's 2.2 trillion overall. Uh, the
• 17:13
  top four guys grew from 600 million to 680 billion, while the total construction fell down
• 17:20
  from very small percentage, 1.7%. Right. So which means the big guys are increasing
• 17:27
  their market share compared to small guys. And that's the bad news, right? The good news is, uh,
• 17:34
  which is an opportunity for the small contractors, and the midsize is the top four.
• 17:41
  Contractors have hit a craft ceiling of skilled labor resources. Right.
• 17:48
  So if you are a midsize contractor and you have you, you you, you form good tie
• 17:55
  ups with midsize subcontractors who have really good craft
• 18:02
  labor available with them. You can do magic and you can outcompete, uh, the large
• 18:09
  guys who are busy building data centers or, or or big office buildings in, uh, in smaller office or
• 18:15
  smaller hospitality jobs.
• 18:22
  What do you. Think reaction to that? Um, you know, so so
• 18:29
  I'm gonna I'm gonna digress a little bit here and then um, and hopefully try to answer this
• 18:36
  question. Um, first thing is I the, the craft ceiling that
• 18:43
  we're talking about getting hit. It's, it's the same for the small guys do. And it's probably
• 18:49
  worse for them because they don't have. They have they have lesser ability to attract top
• 18:56
  talent there because the work is not long term enough, and it's not high enough as compared to
• 19:02
  what large guys are pursuing, at least today. Yeah, I agree with that. I agree with you. And and so so
• 19:09
  again, I, I feel like it's it's a little bit more of a bad news for, for, for them. And what I'm
• 19:16
  trying to see if I can pull here is my concern also becomes backlog.
• 19:22
  So so so people who are building data centers, larger jobs have more predictable backlog.
• 19:28
  Predictable backlog means they can hold manpower in an assumption that there will be more future
• 19:35
  work. This is another luxury small to mid guys don't have. I really
• 19:42
  do think there needs to be a big. If I if I were running a construction business right now and I
• 19:47
  was a small to mid guy, I would be really beefing up my brick on site to build
• 19:54
  that backlog because that's going to be the name of the game to build predictability, because once
• 20:00
  I have predictability, I can I can go after the skilled labor I can have. Because what the way GC
• 20:07
  business works is like, you know, as our viewers also know, you need to have a strong cadre or core
• 20:13
  team of strong foremen who can go run a job and you have to hold on to them. And even even if you
• 20:19
  don't have work, you want to hold on to them. And for that you need to have backlog. So backlog is
• 20:25
  the name of the game. I wish there were reports out there. Uh, if there is a backlog report on
• 20:31
  where backlogs are by this split, you know, for for for like non data center work
• 20:38
  split. You know this is so point on tick about the about the
• 20:45
  volume of people. Because that's the last thing you want to do is like like not have people when
• 20:51
  the demand comes back. Uh uh and. Well are you seeing that
• 20:58
  that there is not layoffs tied to this, that people are holding, uh, people back and keeping
• 21:05
  them on payroll until the demand comes back? That's that's exactly what I want to kind of, uh,
• 21:12
  this is a good progression to our next topic, which is, uh, that's happening is
• 21:18
  construction. Layoffs is hitting the lowest level since 2000. Right. I mean,
• 21:26
  uh, layoffs are All time low. And that's because people know that the demand will will
• 21:33
  rebound, uh, when the interest rates go down and when the interest rates go down and the demand
• 21:40
  rebounds, they want to make sure that they have the authority people with them. Right. So
• 21:46
  so yeah, that's uh, it's a 49, 46% drop drop on layoffs compared to a year ago.
• 21:54
  Like that's huge. Yeah, I think that's a positive sign. And confidence. Yeah. Set aside
• 22:01
  set aside interest rates. I think that's just a view that people feel that the demand is,
• 22:08
  is either coming or here and going to come back. That's a very positive sign that the
• 22:14
  industry is it's it's a it's a sign that the, you know, of the realities of the worker shortage, but
• 22:20
  also that they think that they can hold on. They're seeing it. There are two
• 22:26
  50,000 open jobs like the one new hire there. I mean, there's a backlog of people who want to be
• 22:33
  hired. And I mean, I urge all the tradesmen or people who
• 22:40
  want to get into trades, like there are schools being opened up. Uh, Metta has opened a school, a
• 22:47
  school for trades to, to train them on the job and the real life job, uh, for four months and then
• 22:54
  get them, like, learn how to how to lay a cable, how to lay a fiber, how to do all that stuff. I mean,
• 23:00
  there's a lot of trade schools being opened up, and, uh, these jobs can be filled up pretty fast.
• 23:06
  Yeah. I mean, and the thing is, I wonder if this report does this breakdown
• 23:12
  so, so lot. I think a lot of the trade partners, uh, or subcontractors, whatever you
• 23:19
  might want to call them, they, they have, they have the ability to serve or like hit
• 23:26
  most of these, like like an electrician, like the concrete guys and all that. Right. So I think, I
• 23:32
  think what this is a vote of confidence for is the overall construction that will go on in the
• 23:38
  market. Um, it's hard to break it down by being sector specific.
• 23:45
  I wish there was a report that did that, um, in a more detailed way. But I would
• 23:52
  say on a positive note, I, uh, I did see this backlog report that I was able to pull
• 23:59
  up. Let me let me pull this up here. No, I mean, so so so
• 24:05
  so what this is showing is backlog in months, right? So again, August 2012. And this is by ABC. So
• 24:12
  this is a this is not government but uh, ABC is associated
• 24:19
  uh, basically general contractors, very, very uh, Associated Builders and contractors. So it's a
• 24:25
  very reputed organization, um, considered fairly reliable, have large membership. So.
• 24:31
  Um, so this is ABC's projection. Uh, they are in August. They have actually
• 24:38
  seen for commercial and institutional backlog go up by 0.5. Uh, sorry by 0.2
• 24:45
  months. So it's kind of. The number means the higher the number means they have, they have more,
• 24:50
  uh, uh, dollars booked already for construction structures. Okay. Yeah. So that means I have
• 24:57
  eight and a half months worth of work booked today. I can keep my whole army,
• 25:04
  uh, employed for next eight and a half months. But this is where it gets interesting and kind of
• 25:10
  runs counter to what I was saying. So. So let's let's look at this. So under 30 million,
• 25:17
  it has gone up from last year the backlog.
• 25:24
  But the only thing to argue on my behalf, I'll say, like I when I was talking about small guys, I was
• 25:30
  talking about people who do, uh, projects that are worth sub 10 million, which is which is where I'd
• 25:37
  be interested in seeing what's going on there. Um, but over 100 million, it's gone
• 25:44
  down. And that might be that might be biased to the membership also for ABC. So I'm not going to
• 25:50
  hold that accountable. Like AGC has has a bigger membership or for large contractors. So though I
• 25:56
  think you can knock out a data center in 12 months anyway. So, you know, I don't know how much,
• 26:02
  um, the backlog would be there, but it just feels like larger people building larger
• 26:09
  projects have a smaller backlog, or at least it has reduced somewhat. And then they have another
• 26:16
  one, the construction confidence Index. Um, it's actually more now Then it used to
• 26:23
  be last year. I mean, two things are very clear from this, right? Which is one. Um,
• 26:30
  if you do like, let's summarize this point about what should a small or midsize GC do in today's
• 26:36
  environment and what's happening in the environment today. Right. What's happening today is
• 26:41
  the larger GCS are winning larger jobs and they're growing faster.
• 26:48
  You, as a smaller mid-sized GC can seize this opportunity, uh, to win the smaller breadcrumbs of
• 26:55
  the larger GCS which are leaving behind for you, which will be bigger projects for you.
• 27:02
  Uh, if you establish a good recon team and go after the opportunities more and more,
• 27:09
  if you see some good partnership with subcontractors to have good demand and and hence
• 27:14
  the stability of labor. And if you keep on holding your best project managers and executives, uh,
• 27:21
  and, uh, super in attendance with you. Right. So, so keep your employee base as
• 27:28
  loyal and as retained as possible. Keep on doing more brick on work. Keep on having a good
• 27:34
  relationship with the subcontractors. And and go slightly prior to a slightly upmarket. Try to go.
• 27:41
  Try to win. If you're doing a civilian job, try to find a 5 million job. Try to find a six minute job.
• 27:48
  Uh, you might be able to get it because the bigger guys might be leaving it behind. So
• 27:55
  just do these four things, and you might. You might actually use this as an opportunity versus, uh, a
• 28:01
  bust. I mean, I'm gonna say it again, backlog is key, especially when when the market has these, these
• 28:08
  shifts happening. Right. Like between between different sectors. The distribution like like I
• 28:13
  said, um, office uh, when we, when we used to look at the office market Data centers used to be 10%
• 28:20
  and now they're 60. So there is a shift definitely happening there. And and your predictability
• 28:27
  is completely depending dependent on having a solid backlog, which is what recon team's job is.
• 28:35
  Final topic. State of Texas Governor Abbott directed the Texas Commission on Environmental
• 28:41
  Quality to halt all permits until the utility regulator, Ercot, completes an
• 28:48
  audit. Um, in terms of, you know, capacity and demand, I think, uh.
• 28:54
  So, look, this has been talked about. I'll just say it. My take is we're, uh, a month
• 29:01
  out from the November elections. I think this has election signaling and politics all over it.
• 29:08
  I don't think it's meaningful. Do I think it's probably, uh, meaningful that they do audit their
• 29:14
  capacity and make sure they can provide power in Texas for all this data center development? Yes. Do
• 29:21
  I think this is going to have any meaningful slowdown in terms of development in Texas, of data
• 29:25
  centers? No, I think this is. I'm calling it today in early October. This is all
• 29:31
  politics. The fundamental thing is we there needs to be more power capacity. I mean,
• 29:39
  yes, we have seen like, well, we were just talking about it having a 10% increase. Well, it needs to
• 29:44
  be more like. Yeah. Just to find that gas in Texas. I totally agree, there needs
• 29:51
  to be more power capacity. Yeah, I'm just saying and I'm not disputing that they probably need to
• 29:57
  make sure that they have enough. I think this is all election stunt by Abbott to
• 30:03
  give people cover that. Hey, I did a little bit of I addressed your concerns about AI and data
• 30:09
  centers by putting on a little pause, but I think it's convenient that it's a month out. I think it
• 30:14
  will fizzle and melt away after the election. Of course it is. I mean, Abbott was the strongest
• 30:20
  advocate of data centers. He caught so many of them in Texas. Like Texas is the biggest
• 30:27
  beneficiary of data centers movement period this year. So it is
• 30:34
  I. Can I can envision a room with people sitting around being like, okay, we gotta figure out some
• 30:40
  way to throw them a bone here. But like, what can we do? That really doesn't do anything. And that's
• 30:45
  we need an audit. Okay. Like that's like that's like corporate and government 101 to
• 30:52
  do something but do nothing. Right. But you know, what's the the meta point is important though,
• 30:58
  which is, uh, why were data centers marketed the wrong way? And what
• 31:05
  are the data center developers doing to market it the right way? Right. So we
• 31:12
  we busted the water myth. The water consumption myth. Sometime back in the pot as well. Like if you
• 31:18
  have like the AI leaders speaking of doom and the world dying
• 31:24
  and all that stuff, like, uh, who do people put their aggression back into
• 31:32
  the manufacturers of these, this AI now? See, as as Trump says.
• 31:38
  But who is who is the man? Where is the temple of AI?
• 31:45
  It's the data centers. Right. So? So you just kind of blast blast that as consumers,
• 31:52
  right? So that's a very easy one. But these different centered developers are AI labs have to
• 31:59
  do a better job communicating why they are good for those economies. And I think Dena Powell
• 32:05
  McCormick did a great job. She she advocates for meta. And uh, Wadena came
• 32:12
  in the came in the all in summit and give a nice talk she's advocating in the Congress, in the
• 32:18
  white House as well. They ran a good experiment in one city. I forgot the cities, the
• 32:24
  counties name them. Uh, it was in Louisiana. Yes. Louisiana? Yeah. So that.
• 32:31
  So that city, uh, was failing by. By failing, I mean, it
• 32:38
  was lower growth. Young kids were going out of the city to bigger towns and bigger cities to get
• 32:44
  jobs. Uh, teachers were not getting paid more. Uh, schools were dying. Now comes
• 32:50
  the the data center. There is huge, uh, like the city's treasury gets filled up
• 32:57
  with money. And guess where? Guess where does that treasury get distributed to
• 33:04
  school teachers? Now school teachers are getting got paid like $50,000 a year
• 33:11
  apiece First teacher more. Uh. Last year.
• 33:18
  So getting $50,000 checks more beyond what they're earning, which might be like 60, 70 K.
• 33:25
  Like, it's a huge bonus. There were teachers from other cities saying, do you have a job in your
• 33:31
  city? Like, I would love to teach here. Like, like the huge demand of teachers coming in. The city is
• 33:37
  flourishing back. They have more taxes. Like like talk about those things that that made the city
• 33:43
  come back into action. Right? Spring back into action. Like that kind of communication needs to
• 33:49
  happen more and more for the cities to, uh, and the and the citizens in those cities to to feel
• 33:56
  good about this. Yeah, let's let's be practical here. You know, there are places to put
• 34:03
  large data centers in their places, not to put large data centers. There are places all over
• 34:07
  America that want this. Uh, that story is not being told. My hometown just got
• 34:14
  awarded a massive data center on a on a piece of federal land that was a former
• 34:20
  nuclear uranium enrichment site. It has massive power capacity. It's already a major
• 34:27
  industrial site. They've been searching for years of what to do with this thing. Um,
• 34:34
  you know, it's been decommissioned. It's been recommissioned. This is a win win. I mean, there are
• 34:39
  people there that don't want it for sure, but by and large, the community wants it. It's going to be
• 34:44
  a massive capital influx. There's going to be new jobs. It's going to be repurposing a site that was
• 34:51
  essentially dead. And that's a win win. There are other places around the country that want this.
• 34:58
  Let them have it. Let them go for it. Let them compete for it. That that is a winner for all of
• 35:02
  us. Let's not try to ram these things down into communities where they don't want it, but in
• 35:06
  places where they do. Let's go. And I also think the other positive spin here,
• 35:13
  and is not even spin as just good news is, I think it's great that some of the smartest people in
• 35:20
  the entire world with a massive profit motive. Frontier Labs and
• 35:26
  Data center developers need to solve the power issue in the power generation issue in America.
• 35:33
  Let's let them rip. We need new. We need a generation before the data centers. We need to
• 35:39
  upgrade our distribution. China has massive, more, uh, generation than we do for all their
• 35:46
  industrial capacity that we don't have anymore. Let's go. Let's build it. Let's let this be the
• 35:52
  catalyst for it. Um, let's reactivate old nuclear sites. Let's do al, let's go all in on this thing
• 35:59
  and get the benefits of this new technology. You're so right. I mean, Industrial Revolution was
• 36:05
  more based. This will be power based. And if China
• 36:12
  increased the power capacity in the last five years, what US had overall absolute
• 36:19
  like the increase in capacity in China for the last five years was as what, US has a total
• 36:23
  capacity. That's how big they have gone and let them rip. I like that statement. I also like the
• 36:30
  fact that for the first time, these rich people are not adding wealth on just the
• 36:37
  coasts. They're adding wealth across the US. Like the building hard assets. Yeah, I'm middle
• 36:44
  of nowhere. Towns are getting rich for the first time compared to the coasts. Only New York and San
• 36:50
  Francisco and L.A. got rich before. Right now we have all these small cities getting rich. So
• 36:58
  let's go. Let's do it. Yeah. You know, this ties into our discussion about the trades.
• 37:05
  Look, I think it's better. There needs to be more
• 37:12
  people. Not like me, you know, law school and a finance degree and push a paper
• 37:19
  pusher. We need people who can design and build things in the real world. That is better for
• 37:25
  society. It's better for our country. You know, big trends like this generate demand for that,
• 37:32
  both on the design side and the engineering side. And then the implementation side. Let's go. It's it
• 37:38
  gives this next generation a chance to do something different. Um, and so let's let's embrace
• 37:45
  it. I mean, I'm all for building more more power for sure. I'm still not clear on
• 37:52
  how the small towns get rich, but that's, uh, that's probably a separate topic that we should cover
• 37:59
  because I. I'm still. Not kidding. I appreciate everyone to, uh, go online. Go see
• 38:06
  Dina Powell McCormick's All in Summit video. Uh. Like, it's not just her. She
• 38:13
  brings in, uh, people from that city to speak. Uh, so you hear the real stories? That's the other
• 38:19
  part. The people who are getting the benefits should come out and speak about it. Or we should
• 38:24
  give a chance to for them to speak about it. That resonates more than this. Rich people are talking
• 38:29
  at the top of their voice, right? Because that doesn't help anyone. Awesome. Well, guys, I think
• 38:34
  this was, uh, a thoughtful discussion today and, um, looking forward to again next
• 38:41
  week. And, um, TK, you coming back soon or you're just going to stay there forever
• 38:48
  mid October. All right. Well, we'll be excited to see you in person. Kind of uh,
• 38:56
  great to see you and talk soon. Yeah, yeah. Let's catch up soon. And some guys. See you
• 39:03
  guys.