Intro: [00:00:00] You are listening to Cool Air Hot Takes.
Charlie Jelen: Welcome, welcome to Cool Air Hot Takes. This is a podcast about anything and everything from the world of HVAC. Energy in the Built Environment. Well, we're your hosts. I'm Charlie Gellin. And I'm Dan Gentry. Every couple of weeks we get together and we bring you the latest in HVAC headlines. This week we've got an expert interview with Matt Caldwell.
Matt is the director of AI and cloud data centers at Hyper. Hyper is a manufacturer of low voltage electrical equipment, and they've got a, a bit of a unique approach on how they do that. They have a distributed manufacturing model.
Dan Gentry: Oh, interesting.
Charlie Jelen: I believe Matt said he, they, they are the Airbnb of electrical data center infrastructure.
Oh,
Dan Gentry: that's new. I like it. Mm-hmm.
Charlie Jelen: We're going to get into why Matt thinks this moment in the AI race is more consequential than anything we've seen since the space race.
Dan Gentry: Geez. Sounds hot, take worthy.
Charlie Jelen: [00:01:00] And then of course, we end every episode with the stat of the day,
Dan Gentry: but first we need to kick things off with some, uh, some leftover hot takes.
Charlie Jelen: Yeah, we had, we had some, uh, teased them a bit, huh? Some cliffhangers from the last episode. I'll start. Uncle
Dan Gentry: Tom.
Charlie Jelen: So we had two of them, right? Yeah. It's Uncle Tom and broadband Jesus.
Dan Gentry: Yes.
Charlie Jelen: Right. Okay. Uncle Tom's hot take. This is good. So my uncle Tom, he's my uncle in-law's, my wife's uncle. Okay. Uh, but we're very close to that side of the family.
Every, you know, Christmas, Thanksgiving, whatever, we go up, we hang out with them and they always have great stories because they own re. What I've found out about owning a restaurant is that you end up being the jack of all trade for everything unless it's severely broken. But you end up with like this, this level of understanding of all the systems going around.
And HVAC is obviously a big component of that, especially like on the kitchen side, you've got a lot of exhaust. You've gotta make sure that's conditioned and you're, you're bringing in the right amount of air and then obviously you have. Customers, your clients, you gotta keep 'em, you gotta keep 'em comfortable.
And so they were asking me [00:02:00] questions about the work that I do and stuff that I'm working on. And Tom offered up, uh, you know, he's like, you know how we used to, uh, do test and balance, you know, back in the day, like how we used to know if. The HVAC systems were working.
Dan Gentry: This would be good.
Charlie Jelen: I was like, no, how'd you do that?
It's like, well, we'd go out by the front door, we we'd turn the HVAC unit on, we'd go out by the front door and take a hit off of a sig and you'd blow it in that front door and you, you'd make sure that it was going out a little bit.
Dan Gentry: That's the positive pressure
Charlie Jelen: test. Yeah. If, if not, you know, you go tweak the damper up there and, and get it dialed right in.
So I like that. Thanks Dr. Tom. Appreciate
Dan Gentry: that article, Tom. That is a good one.
Charlie Jelen: Mm-hmm.
Dan Gentry: Uh, back in the olden days.
Charlie Jelen: Yeah. Mm-hmm.
Dan Gentry: Yeah. Next one. This was from a listener. It was, uh, sent into our inbox and the title of the email was Broadband. Jesus has blessed the world with energy net.
Charlie Jelen: I like that. I, I wanna know who broadband Jesus is, and I, I would like to know what energy net is as well.
Dan Gentry: I, I too. So it was very interesting. [00:03:00] So Derek Knight sent this in, so thank you Derek. And, uh, this is what he says, the internet notification, and that is, that does have a little red line under it. So I'm not sure if that really is a word, but internet
Charlie Jelen: ification,
Dan Gentry: I get it, of the grid will transform the world of energy distribution from the bottom up.
Every electronic device with a battery will exist as an energy asset within a microgrid, nested in a multitude of microgrids and intermediated by software instead of physics.
Charlie Jelen: Okay. Who's okay, but But who's broadband? Jesus.
Dan Gentry: I don't know. I think that the title is. For us to click on.
Charlie Jelen: Well, you got some clickbait there going,
Dan Gentry: but, uh, it sounds what I took from this, does this mean like when your, my example came to as when your cell phone is plugged in at home?
Charlie Jelen: Yeah.
Dan Gentry: It becomes an asset to the.
Charlie Jelen: Yeah. I think the best commercial I've seen that people can relate to is the F-150 Lightning [00:04:00] commercial. It's an EV truck. It's a full battery, right? And it pulls in and then the owner plugs it in and then the power goes out.
Dan Gentry: Oh.
Charlie Jelen: In their house. And then the truck powers the home.
Oh, so it's got the same
Dan Gentry: thing.
Charlie Jelen: Yeah.
Dan Gentry: That is. It's interesting,
Charlie Jelen: but that's the same concept is like anything that has a battery could potentially be a grid asset.
Dan Gentry: You think this is like really gonna happen?
Charlie Jelen: Uh, yeah. Yeah, yeah. Yeah. Maybe not down to your phone, but for sure larger batteries will be. Yeah.
Dan Gentry: Hmm.
I think it's pretty cool
Charlie Jelen: because you can already see, like you can buy stoves today, like induction stoves that have built-in batteries.
Dan Gentry: I, I just learned something on the podcast today.
Charlie Jelen: There you go. There you go. Listener. We're we're full, full of hot takes and, uh, full of information today. Uh, speaking of information, we got more coming at you.
Here comes your HVAC headlines,
Intro: HVAC. Headlines your news today.
Dan Gentry: All right, listener, [00:05:00] it's eight o'clock in Bangalore. Did you use Bangalore?
Charlie Jelen: I've already, I think I've
Dan Gentry: used that one. It's five 30 in, uh,
Charlie Jelen: Bangor.
Dan Gentry: It's five 30 in Bangor, Wisconsin. There's a small town. As you can hear, you have a different voice with, uh, HVAC headlines today because my co-host, uh, well, he's a busy guy.
He's a very busy guy, and so he punted these to me. So we're gonna see how this goes.
Charlie Jelen: Oh, I gotta say, I'm very excited about this. It, it feels very different being on the other side of this, just not knowing what's coming my way. Just can't wait to comment.
Dan Gentry: The tables have turned uhhuh.
Charlie Jelen: I'm excited
Dan Gentry: up. First we have.
Should your HVAC company have a mascot?
Charlie Jelen: A hundred percent. I like this one already. What do you think, give me some of the big, uh, brand names out there. What do you think their, uh, mascots would be?
Dan Gentry: Well, that's what I'm struggling with. Is it like a snowflake or is it like a, [00:06:00] a thermostat? I,
Charlie Jelen: I think of it like if it was like a, an actual mascot, like one that you could, that you would see at a sporting event like train.
Who would train be? Who would carrier be? Who would York be? We gotta get like a, a bracket challenge of best mascots for HVAC companies.
Dan Gentry: That's a great idea. 'cause we don't see 'em in our industry. I can't think of, you know, we got logos and all that kinda stuff, but Who's got,
Charlie Jelen: yeah. Yeah. Logos, we've got taglines.
Hard to stop train,
Dan Gentry: you know, stuff like that. We could have like a choo choo train.
Charlie Jelen: Oh yeah, yeah, yeah.
Dan Gentry: I think we used to have that actually back
Charlie Jelen: in the day. Oh, that would be, oh dude, that's a, that's a spot on mascot for train for sure. Yeah. Like a cool looking train, like running down the tracks.
Dan Gentry: So the verdict is, I guess we should have company mascots.
Charlie Jelen: I like that. I'm all in.
Dan Gentry: Our second headline today is, um. These ones that I kinda like. I like these, uh, crime associated ones. So this one is man accused of selling metal from rooftop. HVAC units in [00:07:00] Winnipeg is charged coming to us from Global News up in Canada. The one line that I liked that I took out of this is a 30 5-year-old man is facing dozens of charges after police alleged.
She stole and sold metal components from rooftop HVAC units across Winnipeg. Causing approximately $500,000 in damages.
Charlie Jelen: Whoa, whoa.
Dan Gentry: Like,
Charlie Jelen: okay,
Dan Gentry: so I'm just curious, what the heck do you, what are you doing to, that's a lot of stuff. If you're just stealing parts, I'm guessing copper off of rooftops or something.
Charlie Jelen: Well, the gentry headlines are, are definitely, are definitely top notch.
Dan Gentry: All right. Up next we have our guest interview with Matt.
Charlie Jelen: Danny, boy, I've got some good news. I've got some bad news.
Dan Gentry: Well, what's the bad news?
Charlie Jelen: Unplanned downtime costs industrial manufacturers as much as $50 billion a year. Ah, [00:08:00] an overwhelming 82% of companies have experienced at least one unplanned downtime incident over the past three years with most suffering, two or more.
Dan Gentry: Ouch. Please share the good news.
Charlie Jelen: TA process, chillers from train are engineered for tough industrial environments, providing the critical cooling needed to help maintain manufacturing operations. They're designed to be low maintenance and sustain long operating times, and the Trane Nationwide Service Network provides additional peace of mind against the unexpected.
Dan Gentry: Ready to learn more? No problem. Our experts are here to help you figure out the right model and capacity for your unique application. Just reach out and we'll make sure you get the perfect fit for your cooling needs.
Charlie Jelen: All right, listener. If you've been to a data center conference in the last. Five years, you have probably met this guest. He has over 33,000 followers on LinkedIn. Uh, he travels more than anyone I know, but still manages to find time to spend with his family, including his two kids. [00:09:00] I also heard that one of those kids was helping you with a little PR work at a recent conference, which is very cool.
Outside of family, he likes golfing, skiing, and being a true new Englander loves boating. Welcome to Cool Air, hot Takes Mr. Matt Caldwell.
Matt Caldwell: Thank you Charlie. Appreciate the intro. And yes, I've got a 9-year-old son and a 18-year-old. Uh. Daughter who's off in school, she's a sailor. I was taking her to Salt Lake on my way out to PTC and she's like, you know, dad, I don't have to go to school for another week, so why don't I tag along to Hawaii?
And I was like, all right, well if you're out there, I'm gonna put you to work. So I, uh, I had her, you know, work in the room and networking and uh, talking to, uh, people like Connie from crane data centers. And if you know Crane at all, they're big on sustainability. Mm-hmm. Connie and Alexis became quick friends and, uh, Connie's working on getting, uh, the next generation of data center talent into the industry.
Charlie Jelen: Love it. Alright, well, we'll probably hit back on the sustainable side, but before we get into that name of the show is Cool Air Hot [00:10:00] Takes. We ask all of our guests that come on to bring a hot take. It could be from your personal life, your professional, anything in between. Matt, what'd you bring for us today?
Matt Caldwell: So I, I actually woke up in a cold sweat at 5:00 AM this morning thinking, oh, I gotta come up with a hot take. And, uh oh no. Stared at the ceiling for a little bit. And I came up with something which is, I think the AI race that we're in today with China is bigger than the space race of the US first Russia back in the sixties.
Dan Gentry: Whoa.
Matt Caldwell: And here's my rationale behind that statement. Back in the sixties, technology and the economy was largely decoupled. So if Russia had gotten to the moon first mm-hmm. It would've sucked. It would've been a blow to America's ego and the technology race and all of that, but we would've got past it.
Right now, we're so intertwined with China and the the global economy to, you know, quote Tom Friedman, the world is flat, right? Mm-hmm. So if we lose this race. Essentially we are operating [00:11:00] on China's technology platform going forward, or they're operating on ours. So I think this, this AI race is substantially more consequential to us as Americans in the US than the space race was with Russia back in the sixties.
Charlie Jelen: What's the equivalent of landing on the moon?
Matt Caldwell: That's a good question. I think it's just gonna be eventually some technology is gonna come and it's gonna be like, okay, everything is built on this. And we're probably a few years away from that and I think we have a technological advantage right now.
Charlie Jelen: Mm-hmm.
Matt Caldwell: Being the US I think we probably have an 18 month headstart on this, and if we take our foot off the gas, we're gonna be regretting it going forward.
Charlie Jelen: You can draw a lot of like the magnitude of what's going on right now, comparing it to the space race and how big of a deal that was for the country at the time.
Let's get into the professional side. You've been in the industry for 20 plus years. You work at a company called Hyper Now what do you guys do?
Matt Caldwell: So hyper is a leading manufacturer for low voltage electrical equipment. So think everything on the electrical one line with the [00:12:00] exception of UPS and generator.
So Switchboards, pdu, STS, RPPs, and also modular, uh, modules and skids. So essentially hyper is tackling this market because we can build at speed and scale and quality, and that is something that's unique to our business model that I'm sure we're gonna get into later. But. It's, uh, it's an exciting time. I feel like I'm at, uh, like an Airbnb or Uber on the ground floor.
Charlie Jelen: So walk us back a little bit though. You, you rattled off a bunch of different names of electrical components. Mm-hmm. A bunch of three letter acronyms. Yeah. For the average listener out there that is not every day inside data centers and inside, especially the electrical infrastructure, walk us through the basic framework of, of a data center, especially on the electrical side.
Matt Caldwell: Yeah, so if you picture the, uh, data center, especially now we're getting into, okay, if you have power and land and network connectivity, fiber, everybody thinks they have a data center. So coming in from, you [00:13:00] know, the land development, you have power coming to the building, you have basically a powered shell.
And that's where, you know. The mechanical equipment, heat rejection, stuff like chillers are gonna operate out in the mechanical yard. You're gonna have switch gear, medium voltage switch gear there to take the high voltage electrical into the building. And then within the four walls of the building you have, you know, a tenant fit out for whatever their application is and hyper operates in that environment.
So basically. From where the power comes into the building downstream to the rack, all that electrical infrastructure to take that power and distribute it to, you know, the servers, the GPUs, the, the CPUs at the rack level. That's where we operate and it's exciting in that space now. And I'm gonna kind of pivot from my, my hyper role and just kind of talk about some of the things that we were talking about when I was at Trane, which is the pivot from air Cool.
To liquid. Cool. I'll kind of give a, uh, a quick story here. [00:14:00] So I think it was three or four years ago now, I was at a dice event in New York and the panel discussion was on liquid cooling and the panel was very bearish on this. And the question was, when is, uh, liquid cooling gonna become mainstream? And their answers were anywhere between 15 to 50 years.
And so when they're done speaking, I, um, I, you know, Adam walked around, says, does anybody have any questions? I'm like, yeah, I'll take the mic. So I go, first of all, I'm taking the under on all of your bets here, but secondly, I wanna rephrase the question. What is the rec density that's going to precipitate.
Liquid cooling to the rack as the preferred method of cooling. And I got answers anywhere from, you know, 50 kw to 70 or 80 kw, which seemed absurd at the time.
Charlie Jelen: Mm-hmm.
Matt Caldwell: But since then, I mean, that was only three, four years ago since then with GPUs and when NVIDIA's done, we're now talking about 500 KW per rack, one megawatt.
[00:15:00] Two megawatt racks. It's the rack densities are just going through the roof and it's, uh, requiring a new way to think about it. So on the power side, we're still in, um, low voltage ac, but I see that pivoting as well. When we get to these. Super high density racks of half a meg, one meg, two MEG racks. We're going to have to change the electrical topology from low voltage JC to medium voltage JC direct to the rack, or 800 volt dc.
There's going to have to be a fundamental change there.
Charlie Jelen: What does hyper do differently in the space? Because in my mind, you know, like coming at it from, from my side of the industry, we'll call it like the chiller side, the mm-hmm. Air cooling side, the liquid cooling side, the players there are all the OEMs.
Matt Caldwell: Mm-hmm.
Charlie Jelen: Why is it different on the electrical side where hyper is, is in the spot where they're coming up or doing something different or doing something new? Are you a new OEM or are you doing something differently?
Matt Caldwell: We're an OEM. We build our own [00:16:00] equipment, we design our own equipment, we, it's our gear.
The difference is that there are some major players in the industry, which are also partners of ours 'cause we're sourcing, you know, breakers and, and components from those players as well. But they have a fixed amount of manufacturing capacity and a standard catalog of products, right? You want vanilla, strawberry, or chocolate.
We can find a build slot somewhere in there for you. But
Charlie Jelen: chocolate is the answer. Chocolate's always the answer.
Matt Caldwell: Chocolate's definitely the answer, but what if you want whipped cream and sprinkles on your chocolate ice cream? Right.
Charlie Jelen: Alright,
Matt Caldwell: so, um, you know, they have a massive amount of production capacity, but they also have capacity agreements with large.
Hyperscalers and large colos. So when you're asking what your, what the lead time is, you're basically trying to cherry pick, build slots out of their existing line, that sort of thing. So hybrid does a few things differently. One, uh, we're not vanilla, chocolate, strawberry. We have our own UL lab. We engineer our own equipment.
So when a customer [00:17:00] comes to us and says, Hey, you know. I like that chocolate box, but I'm trying to fit into this space or this configuration or whatever special requirement they have. We have the ability to custom design that equipment and build it at scale for them. So our engineering ability to be agile is one of the differentiators.
Secondarily, this is really the secret sauce here. Is that our production capacity is highly elastic. And what I mean by that is most manufacturing is, if I wanna increase capacity, I gotta raise capital, I gotta put a shovel in the ground. It's an endeavor. So if I have 60,000 square feet of final good assembly and I have 10 quotes out to the market, the first person that says yes.
Basically shuts me down for the next several years 'cause I'm not gonna be able to take those additional orders.
Dan Gentry: Mm-hmm.
Matt Caldwell: So Hypers model is different in that I, I'd reference like Airbnb or Uber, that same sort of [00:18:00] network model. So we own the process, we own the quality control, we own the engineering, but we don't own are the four walls of the building.
Mm-hmm. So. What that means is we go to adjacent high tech industries, think automotive, aerospace, robotics, find stranded capacity in North America. We. Enter into partnerships with what we call satellites and we get 20 to 35% of their production capacity. It's our process, it's their labor, it's their four walls, but we come in and do the quality control to make sure that it's built to our standards.
What that means is that when we have those 10 quotes out there and one person says yes, and, and maybe we get two or three more that say yes, and now we're starting to reach the capacity of our existing network, which currently includes 15 manufacturing locations. If we need additional capacity, we have 40 additional sites that are in some phase of prequalification.
So for us to increase our capacity, we [00:19:00] just gotta say yes to somebody that wants to work with us, and it takes us two to three months to spin up that facility.
Charlie Jelen: Yeah.
Matt Caldwell: So we can just add additional satellite. Without the capital or time constraint of going out and building another factory.
Charlie Jelen: Yeah. So you've got, you basically have like two teams, one team that's going out looking for more manufacturing partners.
Mm-hmm. And then the other team that's going to look for people that want the capacity.
Matt Caldwell: Absolutely.
Charlie Jelen: Got it.
Matt Caldwell: And going out and finding the people that need more capacity has become pretty easy. Everybody, everybody out there. Is there
Charlie Jelen: something going on? Something
Matt Caldwell: we should know
Charlie Jelen: about? Yeah. No, I'm kidding.
Matt Caldwell: You know, when I tell people that we can deliver the quantities that they're talking about, I'm talking about hundreds of pieces of equipment every month for, you know, 18 to 24 months. Mm-hmm. They're like, you can do all of this. That doesn't make sense. And then we have to walk them through our manufacturing process for them to understand like.
Wait. Yeah. You guys can actually do this.
Charlie Jelen: Yeah, that's, that is really interesting. So what's your bottleneck then? [00:20:00] Is it finding partners?
Matt Caldwell: The question that people most have is like, yeah, that's fine. You're doing final assembly. But what about critical components, right? Yeah. Mm-hmm. What about the breakers?
What about the transformers? What about the controls? And that is also not an issue for us because we have multiple, uh, suppliers for all those equipment, and we can walk our customers through that. So as an example, let's just look at breakers. Major breaker, uh, manufacturers in the industry. Schneider, Siemens, A BB Eden, all of our equipment is UL listed with multiple suppliers for every critical component.
We had a customer who was standardized on Square D breakers. We're building PDU for them. We get to the testing of a batch of pdu, and the breakers are failing in our testing. So we go back to Schneider and we're like, Hey, you know. Uh, we're running into an issue with these breakers. It turns out it wasn't just those breakers, it was an entire batch of breakers in the industry.
They had to do a recall on them. So that gave [00:21:00] us the ability to go back to the customer and be like, Hey, here's the deal. The breakers were bad. If you still want square D breakers, it's gonna be a three month delay for us to deliver to site, because we got to this point, we identified an issue. Schneider acknowledges an issue.
There's a breaker recall. But we, you all listed this piece of equipment with other, other vendors. We can switch to Siemens and still meet your delivery dates. Do you want to wait with the Square D breakers or are you okay with Siemens breakers? And they're like, we need this on site for this date. Go ahead, switch it over to Siemens.
Great. Switch it over to Siemens Breakers. Hit our ROJ date. You know, one square D got their act together. They came back and said, hey, yep. Uh, our breakers are good now. Went back to the customer, Hey, would you like to switch back to square D? They're like, yep, not a problem. Seamlessly went back to Square D.
Yeah. So that ability, that agility, just to be able to switch between critical components like that, gives us the ability, and these are all upfront conversations with the client just being like, Hey, transparency to what's going [00:22:00] on.
Charlie Jelen: I like that the comparison to Airbnb is really good.
Matt Caldwell: You want a comparison to, uh, Domino's or uh, Amazon?
Charlie Jelen: Sure.
Matt Caldwell: So when you order roll of toothpaste from Amazon or a pizza from Domino's, how much visibility do you have to the tracking of that product or that pizza?
Charlie Jelen: A high level.
Matt Caldwell: High level, when you order a million or half million or million dollar piece of electrical or mechanical gear in the data center industry, how much visibility do you have to that piece of equipment arriving on site,
Charlie Jelen: uh, two days before it ships to your site?
Matt Caldwell: Yes, that's the right answer, right? Once all the contractors are there, once the crane's there, all of that, right? So hyper has this platform called Hyperspace, and think of it as like a Domino's pizza tracker. So you y
Charlie Jelen: pizza's in the oven,
Matt Caldwell: your pizza in, do you that?
Charlie Jelen: That's so good.
Matt Caldwell: You order a PDU from hyper.
You get an app on your phone, you can [00:23:00] see when the order's entered. You can see when all the critical components arrive on site. You can see when the build starts. You can see what phase it's in of the build process. You can see when it's complete. You can see the test when it's completed and the test data, you can see it getting on the truck.
And see it being delivered to the site. And at any point along that way, you can see it go from green to yellow to red. So let's just say somebody in the manufacturing plant drops a wrench in it. It cannot go into the next phase, it goes to red. If it cannot go to the next stage in the process, you'll see that same time when hyper sees it, because we had to build this model.
If you think about our distributing manufacturing model, we've got 15 sites all over the country. If we needed visibility into what's going on in all these sites, right? We do have hyper personnel that are checking the quality and that are there, but we need the ability to see if it's not going to the next phase.
We need visibility into [00:24:00] that, right? Mm-hmm. So we created this tool for hyper as a digital platform, digital first, and then we're like. Why would we not give that visibility to our clients? So you as a customer can see it going through that process.
Charlie Jelen: That's cool. I like that. As you kind of look forward here, as AI is going like crazy and you hear people chatting that, you know, is this a, is this a bubble?
Is there an AI bubble? Is this all gonna get overbuilt? And then we're gonna have a bunch of stranded assets. Where do you guys stand on that one? How do you view that?
Matt Caldwell: Oh, it's definitely a bubble. I'm shorting the whole industry. I'm kidding. Um, it, it's not a bubble. And I can give you. Two data points that I'm tracking that will indicate if it starts slowing down or, or it pops.
Mm-hmm. The first is vacancy rates for data centers. They're low single digits, which is essentially zero. So if it was a bubble, you'd be building data centers and there wouldn't be anything in there. [00:25:00] You're building on spec. Right? So think about the.com era, right? Um, you had all these technology companies that are building data centers based on some future projection.
I wanna build this huge data center. I'm gonna use a small fraction of it on day one, but I'm gonna grow into that. So during the.com era, the vacancy rates would've been. Astronomical. 'cause you're just building on spec, right? You're building data centers, you're building fiber connections. You're building all this on some future growth and basically overshot the market dove down and it took almost a decade before you reached the point where you'd absorbed all that capacity for.
Fiber for data center capacity, everything else. Mm-hmm. And then we kind of grew from there. So you had some companies like, you know, Cisco, Amazon that took a huge hit that, that were able to cover, and then you had just a slew of companies that just got thrown into the wood chipper and never, uh, never came out of it.
Right. Right. Um, what we got going on today is the opposite demand outstrips supply. If you can make a valid [00:26:00] case on how you can build a data center, if you can prove I've got land, I've got fiber, I've got a plan on how to build and operate this. There's a buyer out there. There's no shortage of demand in this industry.
And as long as we're not over building, right. So as long as we're still in that slow single digit realm of vacancy where data centers are leased before there's a shovel in the ground. Mm-hmm. I think we're okay. I think it's gonna be where. We see two or three quarters, that's what I'm looking at, right?
For two or three quarters if we see that vacancy rate tick up. And then on, um, the other metric is lease rates. So if you think microeconomics 1 0 1, supply and demand prices are gonna go up as long as demand outstrips supply and lease rates have been going. So if you see lease rates top off or go down, vacancy rates start to creep up for two or three quarters.
That's where I'm gonna start taking chips off the table. But until then, any [00:27:00] discretionary income is just going straight into the, uh, usual suspects of, uh, the people or companies that are gonna benefit from this ai.
Charlie Jelen: Nice. I like it. We're always looking for hot stack tips on the show.
Matt Caldwell: Sure. I would say along those lines, there's the hyperscalers or Mag seven companies, right?
Charlie Jelen: Mm-hmm.
Matt Caldwell: That are a little more diversified. You know, Google has search, Microsoft has enterprise meta has social media, Amazon has e-commerce. Like those companies are fine. Basically, AI and data centers are kind of a growth engine for an existing business. If you want like a good roll of the dice, I would look at the neo clouds.
I think those, like the core weave type companies are the ones that have significant upside. But you know, if the AI bubble bursts or it flattens out, the business structure isn't very forgiving. They don't have anything to fall back on like the big guys.
Charlie Jelen: I like it. All right. There you go. Listener.
Matt Caldwell: Yeah.
Charlie Jelen: Matt, what's your email so you can get all the angry stock tips? No,
Matt Caldwell: I'm just kidding. Yeah, I, I should probably, can [00:28:00] you put a disclaimer there that's like Matt has, does not know what he's talking about. Do not take his advice, his financial advice, or anything like that, because
Charlie Jelen: we'll put the disclaimer for sure.
As you look ahead, what does the next five years look like? You've been in this long enough and you're talking about stories from four years ago where liquid to chip wasn't even a thing yet. What's the next, in your opinion, what's the next five years look like?
Matt Caldwell: I think it's a continuation la boom. I don't see this thing slowing down in the next three to five years.
I think we're going to just see a continuation of aggressive data center builds. I think the, the biggest X factor is on the power side, so we've pretty much reached the limit of the utility infrastructure. A lot of data centers now are doing, uh, behind the meter onsite generation, and then the next. Step is how quickly can we pivot into nuclear with SMRs that is going to drive.
It's not going to be demand. Demand's not gonna slow di down. Demand's gonna keep going through the roof. The only thing [00:29:00] regulating the growth is really on the power side. There's other challenges. There's labor, there's supply chain, there's other stuff. But really the big bottleneck in the data center industry is that power connection for data centers.
How are you gonna get power? We gotta, I mean, we can keep going down the path of onsite generation, but eventually we're gonna run out of natural gas and other, uh, fuel sources. So really we are, we're probably in a race to get to nuclear in the next. You know, 3, 5, 7 years in order to keep the trajectory that we're on.
That would probably be the, the biggest risk factor in my opinion for the overall data center industry was, would be, um, how can we manage that power supply?
Charlie Jelen: Love it man. Thanks for coming on. I enjoyed that conversation a ton. Appreciate it.
Dan Gentry: Hey Charlie. Temps getting a little warmer outside. You know what I'm thinking about.
Charlie Jelen: I know you're thinking. Sun's out, guns out ready for summer.
Dan Gentry: Oh yeah. Show by the beach. Fire up the [00:30:00] grill. You know how it roll. But also I'm thinking VRF.
Charlie Jelen: Oh, well really for real? You're serious about this?
Dan Gentry: Yeah, I mean, look, Trane Mitsubishi Electric VRF systems deliver flexibility, energy savings, and advanced zoning.
How awesome. Right? And Trane helps me evaluate key factors like building type, occupancy patterns, zoning strategy, and ventilation needs. I'll be able to make an informed decision from the start. Ah,
Charlie Jelen: you really are serious about this.
Dan Gentry: You know, I always give it to you as straight Charlie. Zone comfort, zero guesswork.
Learn more at trane.com/vrf.
Matt Caldwell: Here comes Joe
Charlie Jelen: Stat of the day
Dan Gentry: of the
Charlie Jelen: day. The day. Sta of the day.
All right, listener, it is time for your stat of the day. And we have two stats of the day, stats
Dan Gentry: of the day
Charlie Jelen: and stats of the day, and both of them came from, uh. Topics that Matt brought up in our interview. All right. And [00:31:00] then our, our wonderful producer, Mel, brought 'em out and she highlighted 'em. So they, they work really well.
So one of the things that we talked about with Matt is his company Hyper has this app platform that lets you know exactly where your product is at any time. Through the manufacturing process.
Dan Gentry: Pizza tracker,
Charlie Jelen: you have 100%. Yes. He compared it to the Domino's Pizza tracker. And I tell you what, I remember it to this day when that first came out, and you could go online and look to see where your pizza was, and then you could also pick like the music that went with it or like the sound that went with it.
And there was a rock and roll version.
Dan Gentry: Forgot about
Charlie Jelen: that. It was great. It was like, your pizza's in the oven. It's like Ozzy Osborne telling you your pizza's going. Uh, but anyways, so in honor of that. Domino's delivers an average of 1.5 million pizzas a day globally.
Dan Gentry: Wow.
Charlie Jelen: I would not have guessed that. 1.5 million a day.
That is insane. That's so much pizza.
Dan Gentry: That's a lot of pizzas, man. You know what? I wish I had my little, I heard of [00:32:00] McDonald's burgers like dude.
Charlie Jelen: Stat
Dan Gentry: enough with the McDonald. Wish I could have busted out. It's like a whatever. It's like a thousand burgers a second or something like that. But you know, we all know how I feel about that.
Charlie Jelen: Yeah. Ask your guy, Aaron, how you know he can get you those McDonald's stats
Dan Gentry: and information on new and upcoming sandwiches.
Charlie Jelen: Yes. Which totally need that info on a daily basis. Second one. Second one that brought up, he compared the AI race to the space race.
Dan Gentry: Okay.
Charlie Jelen: All right, and so that's an honor. This one, the Apollo program.
It cost roughly 288 billion in today's money.
Dan Gentry: Whoa.
Charlie Jelen: Yeah, that one, that one caught me off guard.
Dan Gentry: I did not see that coming.
Charlie Jelen: No,
Dan Gentry: that's very interesting. 'cause I mean, yeah, I don't think you would think, obviously it's not cheap to. Flies a rocket. But you know, you think about, wow, I would've guessed like if I were to guess like $200 million or [00:33:00] something, I don't know.
Charlie Jelen: Yeah. Not a quarter of a trillion. No.
Dan Gentry: It's a lot of money.
Charlie Jelen: Yeah. I wonder what the current Artemis two trip is costing.
Dan Gentry: Well, that, I was thinking that. I'm like, I wonder what that
Charlie Jelen: costs. Yeah. Well next time listener, we'll get that one for you.
Dan Gentry: Alright, thanks for listening to this episode of Cool Air Hot Takes, and also thanks to Matt for coming on for the interview. Thank you very much. Remember new episodes drop on Tuesdays every two weeks. Leave us a comment on Spotify or
Charlie Jelen: YouTube. Leave a review on Apple. A big thank you to Derek Knight for sending us his hot take.
That was a good one.
Dan Gentry: And remember, we've got merch. Send us your hot takes to cool air.hot takes@trane.com. If we feature it on the show, you might see some of that merch in your mailbox. Until next time, stay cool and keep those takes [00:34:00] hot.
