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**Adam Jacob:** Totally. Yeah. |
**Adam Stacoviak:** You know what I mean? So, I mean, that shows there's a problem. |
**Jerod Santo:** Cost optimization. Yeah. |
**Adam Stacoviak:** Yeah. Cost optimization. And then now you've got this pushback to say "Let's actually reexamine, first principles of this problem set. Do we really need to be in their cloud? We need a cloud... Why not our cloud?" |
**Adam Jacob:** Yeah. And what's going to happen - all of those trends are happening all at the same time. So we're going to figure out, okay, AI brings a new interaction model to the table. It brings capabilities that didn't exist before to every layer of this stack. A good example was we're building a continuous deli... |
And that loop is the loop that the people who are going to be building those internal infrastructures have now. So when you think about it as "Oh, they're going to go back--" There's a version of the story where they're going backwards, where what's happening is "We're putting my backpack on, and I'm going back to data... |
**Adam Stacoviak:** Yeah, the black boxes are actually the bug, not the feature. You wanted the magic for a bit there, right? |
**Adam Jacob:** You needed it. |
**Adam Stacoviak:** You're like "Great. We need magic. We need it right now, because we don't have the money or the talent to do the magic. We need the magic." |
**Adam Jacob:** I have friends who started this company called iLike. You won't remember iLike, but iLike was one of the first music services on Facebook. It was one of the first Facebook apps, and it was a music sharing Facebook app. And they were the first viral Facebook app. And they literally had to beg our friends... |
\[20:08\] We used to have to deliver the web tier to you. I don't have to deliver web tiers very much anymore. I just throw it to a CDN and I move on with my life. So if it's talking to my data center in the backend, a lot of that bursty load doesn't actually happen the same way it used to. Right? And we just haven't q... |
So yeah, I don't think the cloud repatriation thing is going to happen by going back to the way we've been doing it. It's going to happen because we're literally going to invent a new way of working, and we're going to be like "This thing's sick, and it works with gear, and it has a totally different, new loop." |
**Jerod Santo:** Who's going to build it? Is it the people who are going back to the old way, but don't want the old way anymore, and so they're doing it for themselves, and now they're going to abstract tooling, because they want the new way of life on their own stack? I'm thinking of Rail, and -- |
**Adam Jacob:** DHH? |
**Jerod Santo:** Yeah, that's what I'm thinking of in particular, but I don't know if he's necessarily going to build it, but... Is it going to be someone like that, or is it going to be somebody who is trying to just solve that one problem? |
**Adam Jacob:** I don't know, it's hard to say. If it happens like the old school happened, it'll happen because the practitioners will do it. And they'll do it inside their houses kind of quietly, and then eventually they'll all meet up in some kind of weird Cambrian explosion of realizing that they all do it this sam... |
I was talking to somebody who built Docker, and they used to go into Solaris shops, and the Solaris heads would be like "I'm never using Docker. I have zones. Miss me with your subpar technology." |
**Jerod Santo:** \[laughs\] |
**Adam Jacob:** And you know, we'll do that to them. We'll be like "I don't need Docker. I've got zones." And eventually, your zones are just running Docker instances. |
**Adam Stacoviak:** You still have Docker file syntax, you still have container file syntax... Docker's not going to go -- it's embedded forever into the fabric of ops. |
**Adam Jacob:** Yeah, but we all had that -- I had that argument, too. I was like "Why would you do that? You need configuration management." And they're like "Nah... Sure, grandpa..." |
**Adam Stacoviak:** \[laughs\] "We don't need configs..." |
**Adam Jacob:** If it's going to be like that, you know... And so maybe it'll be some of us, some of the people who have come before, who still have the spark in us, and we go figure out how to innovate in this way... Or it's going to be people who don't, and they'll do it... I don't know which one it'll be, but... You... |
**Jerod Santo:** Yeah. I was thinking, like, what if there was a brand new Digital Ocean that was starting in 2026, and -- |
**Adam Jacob:** Yeah. |
**Jerod Santo:** ...that might be the kind of entity that produces something like this. |
**Adam Jacob:** \[24:00\] Totally. It would. But think about Oxide, who's close to this already, in that they took the cloud paradigm and they stuck it in the data center. |
**Jerod Santo:** Right. |
**Adam Jacob:** I wouldn't put it past them to ratchet it one notch further, and go "Wait, why are we stuck trying to give you the clouds paradigm if we could deliver you a better one? What if we delivered you a better user experience than the cloud?" |
**Adam Stacoviak:** They're already first-principaling everything, so why not? |
**Adam Jacob:** Right. So why not just keep going? And I don't know the answer to that, I don't have any secret inside Oxide knowledge or whatever, but... |
**Adam Stacoviak:** We don't either. |
**Adam Jacob:** ...but it's a good example of how -- I would argue those guys are the old school. Nobody would look at Bryan and be like "Bryan's not old school engineering at this point." But I wouldn't put it past them. They've shown a remarkable capacity to change... So I don't know where it's going to come from. |
What I've become is more convinced that it's more real than people are giving it credit for, and it's also worse than most people think in terms of its capabilities. Most of us are just not getting good results out of the AI work that we're doing, because we fundamentally misunderstand how it works kind of as a technol... |
**Adam Stacoviak:** Yeah, or even build something new, and then Anthropic or OpenAI releases a new thing on top of the kind of base frontier models most people are using, and it changes the game anyways. It's constantly in motion in some sort of -- we were just talking this morning about skills. And I'm like "Gosh, I j... |
**Adam Jacob:** Well, it has slightly different use cases, has slightly different capabilities... This is back to it being early innings. It feels late. There's so much noise, there's so much money, everybody's like "There's a bubble..." I saw a very convincing presentation from a bunch of investment bankers that there... |
**Jerod Santo:** What's their central premise? |
**Adam Stacoviak:** Yeah. I was going to say, give us the TL;DR. |
**Jerod Santo:** Give us the central premise. |
**Adam Stacoviak:** What's the juice? Give us the juice...! |
**Adam Jacob:** The central juice was that if you look at the forward multiple the market is paying for the growth numbers that are being put up, the actual revenue growth numbers, that they're actually relatively modest in historic terms. Like, they're actually not giving them growth multiples that are beyond mortal m... |
**Adam Stacoviak:** Like in '22. 2022, things were crazy. |
**Adam Jacob:** Yeah. 2009, 2001... 1999... It's not pets.com. |
**Adam Stacoviak:** Yeah. |
**Jerod Santo:** Sure. |
**Adam Jacob:** It's not InfoSpace, where the emperor literally had no clothes except hype, but we hyped ourselves to a market cap bigger than Microsoft. That was a bubble; that was going to explode. In this case there's a lot of money moving into it, a lot of venture capital cash moving into it. That's all true. Priva... |
\[28:08\] So their analysis was basically "Look, in the main, the way the market's reacting is in line with the actual growth curve that's happening, and it's being relatively modest around the values that they're paying in multiples." And then everywhere else is depressed. |
**Jerod Santo:** That's true... |
**Adam Jacob:** So if you're not in those sectors, then your value multiples are down. And so it doesn't feel great, and so you look at it emotionally and you're like "It's a bubble." |
**Jerod Santo:** Well, and that sends more money into that particular space as well, right? Because there's less -- |
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