Not everyone is buying Elon Musk’s vision for orbital data centers. Masayoshi Son, the founder and CEO of SoftBank, argued at a recent shareholder meeting that building data centers in space won’t do much to cut costs and will take too long when “in the battle for AI, the next few years will be far more important than what might happen a decade or so from now.” On the latest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane, and I discussed Son’s remarks as part of a broader conversation that covered OpenAI’s plans for custom chips, chipmaker Groq’s new $650 million funding, and much more. Kirsten noted that it’s “very ironic” that Son is playing the skeptic here, given SoftBank’s “long history of wild bets.” Sean, meanwhile, said that when Musk talks about “making a constellation of satellites — satellites that need to be replaced every few years as well — to make up an ‘orbital data center,’” he’s just “guaranteeing that much more business” for SpaceX. Keep reading for a preview of our conversation, edited for length and clarity. Sean: Listen, neoclouds are the new oil, and everybody who wants to make money is pivoting to a neocloud. I’m proud to announce that TechCrunch is now a neocloud, give us all your money. I mean, this is the thing you do. It seems like there are so many players that are compute constrained, so anybody who has a shot at being able to lease out that compute is taking it, whether that’s Groq, a company that was semi-hollowed out by Nvidia, or Allbirds, which went into bankruptcy and emerged from it as a new neocloud provider instead of selling shoes — Tim Fernholz did an interview with the new CEO of that new effort that I would definitely recommend people go read. Or whether you’re SpaceX, where your idea was: I’m gonna build an AI platform that’s gonna have an addressable market the size of U.S. GDP, but before we get there, we’ll just rent out our compute. And we saw this continue to happen with SpaceX, where it’s not as big as the deals that they’ve struck with Google or Anthropic, but they just signed another deal, [their] first post-IPO deal, to rent out compute to another smaller player. They’re continuing down that road. You know, I can see this being a business for Groq in the near term. The question with all of these is how durable is it in the long term. Anthony: If we’re talking about SpaceX and their AI business and data center business, we also have to talk about these comments that Masayoshi Son, the CEO of SoftBank, made recently, where he basically said: What is the point of data centers in space? Which is a question we’ve asked on this show. And it speaks to, again, this sense in the industry of being really, really compute constrained — they need to build as many data centers as possible, [and] there’s all kinds of reasons why that is proving to be challenging here on Earth, so maybe space is the answer. But I think Son makes some pretty fair points about: All this stuff we’re talking about, even if it all works — and the costs are going to be very, very serious to make it work — this is not happening for years and years and years, so this is not a solution to any immediate problem, as far the current need for data centers goes. Kirsten: I just want to point out that SoftBank has a long history of making wild bets. I think it says something when Son comes up and asks the question that a lot of people have asked. I mean, there are a lot of VCs and founders [who] have been swept up into the idea of orbital data centers and it seems like suddenly everyone’s on board. When just a couple of years ago, I think, if someone had mentioned that, it would get slapped down a little bit. So I do think it’s an important part of the process that someone who has a pretty high profile is asking that question. But it is very ironic to me that he is the one asking it, because if you look at his pitch deck, they’ve thrown a lot of money at some pretty bold ideas. Sean: WeWork! Listen, we’re going to be saying this a lot over the next couple years. The idea of putting these things in space is going to be an interesting engineering challenge and certainly an interesting economic challenge. Anthony, what you said is definitely right to a certain extent. Elon Musk is a person who hates red tape and you know, there are no NIMBYs in space so of course he’s going to try and do that. To me, it comes down to: The business as it stands now for SpaceX, especially its launch business, is just overwhelmingly reliant on Starlink. The reason that they are 80 or 90% of the launch market globally is not just because they’ve done all these things that are better than pretty much every other launch provider around the globe, it’s also because they have Starlink that is driving up that number. If you remove Starlink from the equation, they would be closer to — I don’t know, maybe 20% or 30% of
