Why Did Ben Horowitz Pass on Neoclouds?

Ben Horowitz says he passed on the neocloud business because it can turn into a dangerous arbitrage. He uses LoudCloud as the example. In 1999 bandwidth cost 1,500 dollars a megabit and was hard to get, so the company had to sign three-year contracts. By 2001 the price was 50 dollars a megabit. Hold that bandwidth with borrowed money and you are dead. The swing sits outside the entrepreneur's control, and it is not the kind of business he wants to fund.

He says the core of this AI cycle has still been working for CoreWeave. There is a shortage of supply, not a glut. Token prices have fallen. GPU prices have not. Data center space is getting more expensive because labor is scarce and the politics make the buildings hard to permit. Demand is not subsiding. Those are tailwinds, even while the debt market, on its own, is tough.