Crusoe CEO Chase Lochmiller: Turning Stranded Energy Into Intelligence

Cold open:

Chase Lochmiller: People often have this perspective that you as the leader or you as the CEO only want to hear the good news. The good news is great. I want to hear it. But I care way less about the good news than I do about the bad news. So trying to run into those: What's going wrong? What are we bad at? How do we fix these things? What are the problems? How do I go resolve those? I think that is a critical characteristic of a CEO — that willingness to go seek out and run into the burning buildings, figure out the problems, and go try to help resolve them.

Intro:

Brian Halligan: Okay, everybody, today we have on Chase Lochmiller. He's the founder and CEO of Crusoe. Crusoe is building so many of the data centers that power the age of intelligence. He's a very professional CEO, and he talks all about the road from zero beginnings to a $31 billion valuation that he just closed. He gets into the nuts and bolts of scaling a very operationally intensive business. I think you're gonna like it.

​Main Conversation:

Brian Halligan: Chase, welcome to The Long Strange Trip.

​Chase Lochmiller: Brian, thanks for having me.

​Brian Halligan: We call this The Long Strange Trip because my journey as a CEO was a very long, strange trip. Tracking your career, you've had a long — maybe not strange, but interesting — trip. You were on track to become a professor. You became a hedge fund trader. You became a mountaineer, climbing Mount Everest, among other things. You're kind of an energy entrepreneur, at least through my lens, when you first got going, and now you're the world's best data center builder. Is there a through line in all of this, Chase?

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Chase Lochmiller: As a person, I've always been attracted to trying to solve hard problems. That's been the through line of my career: take on big challenges, solve hard problems that are exciting and inspiring to me.

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Brian Halligan: One hard problem is becoming a CEO, and scaling as a CEO is in and of itself a hard problem. What has surprised you about it? All of a sudden you're a CEO and you've got to build this company. What do people have wrong about the CEO journey?

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Chase Lochmiller: It can sometimes be misleading to take a snapshot of someone deep into it and assume it's some linear path to how you actually get there. I was having this discussion with another CEO. When you're a founder CEO, you have the benefit of the boiling frog syndrome. Right now things are really crazy at Crusoe. There's so much happening. Everything's happening very quickly, and the scale at which it's happening is crazy. When people get dropped into Crusoe and start working here, it's intense. There's a lot going on across the company. And there's a question of how you actually hold that all in one person's head.

When you're the founder CEO, you have so much context on the history of how you got here. And it wasn't always this crazy. When we first started, it was just me and my co-founder. It was just the two of us for quite a while. Then we had our first hire and our first incremental hires. When we were ten people, it felt crazy, but it's nothing compared to what it is today.

The journey of a founder CEO is that you have to continually be upping your game. You have to be continually investing in yourself to be able to scale if you want to have a scaled business. This is partially reflected at Crusoe: we have a core company value, "Live on the infinite growth loop." Nobody is a finished product. Nothing we've done here is a finished product. Everything is a work in progress. Every person is a work in progress. And every single day we try to improve on who we were yesterday. If you look at the compounding returns of that continuous focus on improvement, and you zoom back out over the course of a month, a year, five years, the results can be astounding.

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Brian Halligan: I actually had quite an interesting day today. I run something called the kids' table and the adults' table for Sequoia. It's basically getting a bunch of founder CEOs together to talk about their problems and try to help each other with the journey. We've got a bunch of them between 20 and 2,000 employees, all of them ripping, like really ripping. And I got a quote from one of the CEOs today: "My biz is becoming dizzyingly complex beneath me. How the hell do I keep up?" Do you have that feeling today, or did you have that feeling? I had that feeling.

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Chase Lochmiller: If someone were to take me off the street and parachute me in and say, "Hey, go run this company, Crusoe," I would absolutely, 100% have that dizzying, paralyzing anxiety feeling. I actually feel great about where we're at within Crusoe because I've been there for every step of the journey, and I've been able to surround myself with incredibly dynamic and capable leaders that I'm able to offload and trust a lot of responsibility and resources to.

We have a complex business because it's vertically integrated and spans a huge scope of different work streams. Everything from energy generation — bringing electrons online, building power plants, working with independent power producers and utilities — to building data centers, operating very large-scale AI factories and very small-scale AI factories, to building and operating a managed AI cloud platform with managed AI services. It's a whole wide spectrum of different employees. We have factories where we're manufacturing critical electrical equipment for data centers, and then we have AI researchers working on the best, most effective ways to serve and host AI models and manage the KV cache. And there's a whole bunch of different folks in between.

What's made me very scalable as a leader is that I've been able to find domain experts in each of these key verticals: energy, data centers, manufacturing, and AI cloud computing. If you look at the folks here at Crusoe, we have these critical areas of domain expertise where, individually, I can move around and go very deep with any individual. But I trust them a lot to be making the right decisions as we're scaling things. And everybody has at least a broad perspective of what we're doing at the macro scale and how each individual component, each individual leader, contributes to that broader vertically integrated AI infrastructure platform we're building.

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Brian Halligan: Trust is an interesting word. We talked about it on the call — I just finished a call before this. I said to everybody, how many people in your organization do you deeply trust enough to say, "You're the DRI on this thing that cuts across the whole org," and have deep trust? It was three to four people on average. Are you just a naturally trusting fellow? Did you have to learn to let go?

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Chase Lochmiller: I don't think my team would describe me as a naturally very trusting person. It's not that I'm hands off: "Go for it, go do whatever you want." That's not really my approach to management. It's really that I want to understand what we're doing in this vertical, where we have alignment on the direction we're headed. I get it, and I get how it influences the other pieces of the business. And then I hold my team accountable to go execute on what we agreed upon from a plan perspective.

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Brian Halligan: On that DRI topic, it seems to me that as CEOs grow, their orgs get bigger, and they struggle with getting things done across the orgs. At some point they're like, we need DRIs, we need to entrust those DRIs. And the bigger the orgs get, the harder it gets. You've got four different major orgs underneath you. How do you get someone that cuts across? How do you have many versions of you?

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Chase Lochmiller: We struggle with this problem just like any organization. Anytime you're trying to do something that is cross-org — pulling in resources from one team to work with another resource from another team — it just is complicated. We do have a program management function, which helps. But who's ultimately accountable for delivery of a lot of these things?

The way I find is, I run a staff meeting once a week that has a lot of the key executives and my direct reports in the meeting, and we cover things across the whole business. When there are pain points in how teams are working together, they surface in those meetings, and we try to address them. But there is an inherent tension in doing things that are cross-functional or cross-organization. We've had to figure it out, though. Being a vertically integrated business, having collaboration between those layers where you're transitioning across the stack is a critical function if you're going to be successful as a vertically integrated company.

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Brian Halligan: What have you learned about that? You must have skinned your knees on it. Any ahas other than the staff meeting?

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Chase Lochmiller: I was always used to working in smaller teams and smaller organizations. If I said something once, people kind of listened, and we worked in a small group and it all kind of worked itself out. I found that as soon as I'm getting sick of hearing myself say something, we're just scratching the surface of when I'm hitting the point where I'm saying it enough times.

That whole communication layer about getting people on the same page to march in the same direction — it's sometimes painful, the number of times you have to remind people of what we're doing and why we're doing it and who's doing what. But that's what it takes to get alignment. I think that is one of the challenges of running a bigger organization, and it's why there are always opportunities for startups: they can be more nimble, they can move quicker than bigger companies. We're trying to fight that inertia of a bigger company to be able to continue to move fast and capture the opportunity at this moment in time, when it's required to be a dynamic organization to succeed in today's business age.

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Brian Halligan: Your business is such that you have to go fast. You can't take your time. Most CEOs complain that as they get bigger, they slow down. Have you figured out ways to keep the pace up, or have you slowed down?

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Chase Lochmiller: It feels faster and crazier than it's ever been. At Crusoe, there are a lot of big things happening on a daily basis. So I would say we are continuing to move with incredible urgency.

I think Elon's probably the best in the world at this: trying to eliminate any sense of entitlement, eliminate any sense of "Hey, you should be comfortable. We made it. We're here now. We just have to coast." Elon has this superpower of simultaneously enabling people to believe that if they're successful, they're going to change the world, and there will be this incredible financial outcome and this incredible outcome that's driving massive impact — while also holding people accountable through the high pressure of, "We're going to go out of business tomorrow, and if you don't act with the greatest degree of urgency that you're physically capable of, we're going to die." Holding that tension is quite a superpower.

I would say that I'm not quite as extreme as Elon in driving this tension of "we're going to go out of business tomorrow" versus "the opportunity we have to change the world should inspire you to work hard." But I do think that threading that needle is an incredibly important thing to be able to drive a large organization to move quickly and with a high degree of urgency.

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Brian Halligan: Is this your first time running a company like this? Do you study other CEOs and try to borrow pieces of their playbook? Is Elon your guy — you're trying to borrow big pieces? Who do you look up to?

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Chase Lochmiller: It's kind of funny. Crusoe is now the largest company I've ever worked for. We recently surpassed 2,000 employees.

I used to read a ton of books across fiction, nonfiction, whatever I was interested in — wide-ranging things, from science fiction and technical books to novels and whatever the latest and greatest economist's book was. But I shifted when I started Crusoe. There was a period where I just binged every good business book recommendation anybody would give me. And I had the fortune of having a number of great mentors. I had a great coach who really helped me grow into becoming a leader of people, because I'd never been a leader of a big organization before starting Crusoe either.

It definitely took work. It took effort to get to where I'm at in terms of what it takes to be a good manager. It took making mistakes and failing and learning on the job and going on my own personal journey, my own personal path, to embed a lot of scar tissue that I could then leverage in the future. There are certainly mentors and people I look up to that I have closer relationships with. And I do very much look up to guys like Elon, who I think is one of the greatest entrepreneurs and greatest business builders and greatest visionaries that humanity has ever had.

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Brian Halligan: If you don't mind — what were some of those mistakes? What was some of that scar tissue that all the other CEOs out there are probably going to make the same mistake on?

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Chase Lochmiller: One of the things that struck me early on was, sometimes when you're a CEO, you're singularly focused on building this business, and you're watching what's happening out in the market. You're scrolling X or whatever news sources you have, and you see something else happening in the marketplace. You're like, "Hey, that other group is kind of trying to do the same thing I'm doing," or "I have this new competitor that just raised this big round." You're always looking over your shoulder. There's a bit of paranoia.

One of the great pieces of advice I got early on was: most startups die from suicide, not from homicide. It's not other businesses that kill you. It's you fundamentally not executing on the thing that's in front of you, not building the right culture, not attracting the right people, not focusing on the right business opportunity. Any real, meaningful business opportunity worth pursuing is not typically going to be a single winner-take-all business. If it's a good business opportunity, it probably means there's room for multiple winners. So if someone else is pursuing it, you should almost view that as a compliment, a validation of the business opportunity. But it's really up to you and your management team and the team you put together to execute against that opportunity — not be worried about how you're going to get killed by the competition.

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Brian Halligan: My paranoia would go up and down, a sine wave over time. If I were in your shoes, I'd be pretty paranoid right now. Are you? Where are you on your paranoia sine wave?

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Chase Lochmiller: I'm not really paranoid about competition. In certain regards, Crusoe is an infrastructure business, and we don't view it as a winner-take-all category. We think there are going to be a number of great businesses built here. Even groups that people would paint as competition to us, I view it as: there are far more ways for us to work together than to work against each other. I think the greatest opportunity of our lifetime is building the infrastructure layer of intelligence, and it's not going to be a winner-take-all opportunity.

One comparison I've often made is that this compute infrastructure layer of AI — or SI, I guess, is what people are calling it now, this infrastructure layer of superintelligence — has a lot of effective comparisons to the oil and gas industry. If you look at the value chain across oil and gas, it's typically broken down into three components. You have the upstream business, where people are actually drilling holes in the ground and pumping wells of oil and gas. You have the midstream business, where you're taking those raw commodities and transporting them from the wellhead to the natural gas processing plant or the oil refinery. And then you have the downstream business, which is processing those raw outputs from the earth and converting them into usable materials — gasoline or jet fuel or plastics, whatever it is — and ultimately selling that into the market. Within that stack, there are all these different margins that move up and down depending on the price of oil, depending on demand from consumers, depending on demand from businesses.

For us, we're trying to build an AI supermajor, in the same way that Exxon and Chevron are supermajors in the oil and gas industry. With that, you have this embedded risk management. Exxon very famously doesn't hedge their oil exposure, because when oil prices come down, their upstream business at the wellhead gets margin-compressed, but their downstream business at the refinery sees margins expand, because the raw input costs go down. And they have these natural areas of collaboration versus competition: they're competing with other upstream businesses, but when they have a pipeline in an area, they're serving other upstream businesses they may compete with. I think Crusoe is similar in that regard. We're willing to partner with businesses that we may compete with in other cases. But again, it comes back to this perspective that there are so many more ways for us to help each other than to work against each other.

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Brian Halligan: Can I say something weird to you?

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Chase Lochmiller: Yeah, please.

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Brian Halligan: In addition to my Sequoia work, I started an ocean fund called Propeller. And I heard a pitch yesterday from a company — I'm not sure about this company, or about this industry — mining rare earth metals from the ocean. Same analogy: "We're going to do an end-to-end." Exxon was the exact same company they talked about, as a super vertically integrated version.

Speaking of that, we invested in Blue Energy, and I know you know Jake from Blue Energy, building nuclear in the ocean. Can you talk about that? You've had a kind of journey with energy. It seems like you started with "there's wasted energy out there and we're going to put it to work," and you're still doing it. But it sounds like the Abilene facility is a lot of just natural gas. Where are you?

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Chase Lochmiller: At this point, Crusoe is very focused on activating megawatts for intelligence, and that requires all sorts of energy resources and all sorts of different use cases. At times it's natural gas. We're focused on trying to find and catalyze innovative new energy solutions. That can be things like Blue Energy, trying out new nuclear energy production technologies. We have another partnership with Aalo that we announced recently, where we're trying to bring to life the first SMR-powered AI factory at the Idaho National Lab. We've done stuff with behind-the-meter wind, behind-the-meter gas, behind-the-meter solar, with batteries. We've tried many different things.

We've gone to Iceland, which is this geological phenomenon — this land of fire and ice where you have very abundant, low-cost geothermal energy, very low-cost hydropower, not a lot of people, and very cheap, efficient cooling. Bringing the demand for power there via compute has been our philosophy, and that's really what we mean when we say we take an energy-first approach to building compute infrastructure. Norway is another great market for us, where they have a lot of low-cost hydropower that's being underutilized and can be built bigger than it is today.

We don't think it's a silver bullet. We think compute infrastructure will be ubiquitous to serve the infrastructure layer of intelligence that's ultimately going to power global economic development. So you need to use different energy solutions in different cases. We're really excited about a lot of the innovation taking place in the industry. Blue Energy is another great example: can we leverage the same steam turbine technology that's needed for both gas generation and nuclear energy to be a bridge between gas and baseload from nuclear power? All of these things we think are great. We think a lot of the development in new battery technology is really exciting — everything from what's happening with companies like Redwood Materials, repurposing used electric vehicle batteries and used lithium-ion batteries, to long-duration storage solutions like Form Energy and [Antora], which we think will be cost-effective 100-hour batteries. There's a spectrum of different things, and we view it as: we need them all. The demand from intelligence for energy is voracious, and it's really going to accelerate human progress as it has more access to energy.

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Brian Halligan: One of the things I find fascinating about you and your company is you started essentially in the Bitcoin mining industry — stranded energy, putting that to work. It was a really good business. You were cranking with it. And it sounds like from the beginning, you foresaw there's going to be a need for AI infrastructure, and you started building it out, and it rhymed. At some point you decided, we're going to sell off this Bitcoin mining business, which was most of our business. When did you make that decision? How did you tell your board? Take us behind the scenes on when that became a good idea in your head. That was a bold move.

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Chase Lochmiller: The thing was, I think externally a lot of people thought this was a pivot for us. But internally — and if you talk to any of our investors or any of our employees who have been here a very long time, they'll tell you — this was the plan all along: this energy-first approach to computing.

I had been doing research in AI as a quant portfolio manager. Then I was at Stanford for grad school, working in AI and doing a lot of work in computer vision and natural language processing. I was pretty AI-pilled early. One of the more influential things on me was Tim Urban's blog, Wait But Why. Everybody should go read that. There were a couple of pieces that were particularly influential on me. There was one about the path to superintelligence, and in it he espoused this thesis that these multi-layer neural networks were essentially really good nonlinear modeling mechanisms that, as they had more data and more compute, just got better and better at modeling whatever you're trying to model, whether it's natural language or computer vision or whatever it was.

I was playing that out and felt like AI was this meta-science that wasn't going to improve one thing. It was going to improve everything. I had this professor at Stanford named Andrew Ng, and he has this famous saying: AI is like electricity. Electricity is not good for one thing. If you ask someone what electricity is good for, it's not, "Oh, electricity is good to turn on the lights." Yes, it's good at turning on the lights, and it's also good at powering my computer and my car and heating my stove, and all these different things we take for granted with electricity. So it's not just one thing AI is good for; it's really good for everything.

I had high conviction on this fairly early. And I felt like if data and compute were the bottlenecks, ultimately compute becomes an energy problem. When you play that out and think about it at scale — and we'd seen this unfolding with Bitcoin mining — the original thesis for the business was: go find stranded energy that is otherwise being underutilized and bring a market to that stranded energy with compute. Instead of trying to bring stranded energy to a market where it can be bought and sold, bring the market to the energy.

That's what led us to our initial stranded energy resource, which was natural gas being flared in the oil field. Oil companies were drilling for oil; they produce natural gas as a byproduct; and absent a pipeline, they just light it on fire. It was a huge environmental liability. It was a waste product. They were paying money to dispose of it. It's a disaster, and it's still happening at scale today. Our solution was to bring these small modular generators and small modular data centers, utilize that gas on site, and use it to power compute infrastructure. Our first monetization engine for that was Bitcoin mining. It was the easiest way to take energy and turn it into money. And we created this great flywheel effect with the Bitcoin business.

There were definitely criticisms in the early days when I said, "Hey, I'm trying to do this AI cloud platform." People were like, "What are you talking about? Why are you spending any resources on that? You have this great thing. You're making all this money in Bitcoin. Why would you focus on anything else?" We tried a ton of stuff and we failed and we screwed a bunch of stuff up in terms of building out our first AI clusters. We were trying to figure out what the product looked like and who we were going to serve. I called a bunch of my friends who were researchers at universities, saying, "Hey, do you have a use for these GPUs that I'm powering from this gas in the middle of the Bakken oil field in North Dakota?" There were many different iterations of trying to get that business to life.

But the magic moment was really the launch of ChatGPT — November 30, 2022. That was the moment that changed everything. It led to all these new startups that were demanding the exact type of compute infrastructure we had been building, the exact type of solutions we had been building from a storage, compute, networking standpoint.

I had always felt — and I still feel this way — that Bitcoin and AI actually go together very well, because AI data centers do not consume energy the same way Bitcoin mining does. With Bitcoin mining, you can almost give it a fixed draw amount of power and say, stay at that power level and consume that, and it will be a very flat line. Then you can move it up and down depending on demand response and available energy. AI has a bit more variance in its overall power utilization. You see this when you're training big workloads, for inference and training, but you also have seasonality with cooling. You tend to have higher PUE during the day, when you're having to run your air conditioning units and your chillers more aggressively because it's hotter, than at night, when you have more natural cooling. Depending on the workloads being run on the clusters, things can ebb and flow a bit.

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Brian Halligan: I'm going to come back to you. So it was an AI company all along in your head. You made a decision to sell off what was a very good business. Why not just keep it? When did you broach that with the team? When did that become a good idea in your head? Did you get pushback?

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Chase Lochmiller: Part of it was we had a great partner, and we felt like the business we'd built would land in a really good home, which was NYDIG. Ross Stevens has become a good friend over the years, and Tejas Shah, who's the CEO there — just a deep amount of respect for that team. We felt like they were great people who would be great stewards of this business. And they had a lot of experience in natural gas: Stone Ridge has built out one of the largest natural gas businesses in the United States. So this intersection of people who knew and had operated natural gas assets at scale and were deeply involved in the Bitcoin ecosystem — we felt like they were great partners for that business.

But really, what drove me to divest that business was focus. We are doing a lot at Crusoe, and increasingly we were doing more. It felt like we were having to balance this tension between, do we allocate capital and resources and attention toward our Bitcoin business or toward this AI infrastructure business? We were also getting feedback from investors that it made the story too complex. They would say, "I love what you're doing over here on this AI business, but my firm is actually blocked from making any investments tied to crypto. Crypto is filled with fraud," and all these different things. So there were challenges to making the business focused, making it this category-defining company across vertically integrated AI infrastructure, and not having the distraction of being anything related to Bitcoin.

I am still personally a Bitcoin supporter and holder. I think it's an important thing to exist in the world as a non-state-controlled, decentralized, digitally native, open monetary ecosystem. But it was the right thing for Crusoe to go all in on AI infrastructure.

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Brian Halligan: One thing I'm noticing about you on this call — and I've watched you in other formats — is you're very polished, Chase. Most CEOs don't have your level of polish. Is that something you learned along the way? You said you had a coach. Did your coach help you with that?

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Chase Lochmiller: I had a coach, and we're still quite close. We're not working as closely together as we once did, but [Shane Metcalf] was a phenomenal coach for me. I learned so much from him.

Public speaking was never something that came naturally to me. It was something I had to work really, really hard at, because I just wasn't doing it. I'd given lectures at universities, but it wasn't something I was routinely doing. The quant space is a very technical industry. You're working with very smart people, but you're doing it in a very secretive way. You're very open with your teammates, and then you don't tell anybody in the world what you're doing, for fear that you might leak some of your alpha. So I was never out in the world presenting stuff.

It was something I had to work very, very hard at: just being prepared for what I was going to say and how I was going to say it. If you do it enough, you get practice, and at some point you stop having to prepare as much. Most things at this point I kind of just wing. There are certainly things that require a tremendous amount of preparation. But I think I'm often better off the cuff, because of how I think through things, and I've developed a good skill set of being able to explain what's in my mind fairly clearly to whoever I'm talking to.

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Brian Halligan: What else did you learn? First of all, should all the CEOs I work with hire a coach?

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Chase Lochmiller: Yes.

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Brian Halligan: Okay, interesting. What did you learn? What did Shane teach you, or what did he push you on?

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Chase Lochmiller: One of our investors, Felicis, has this really cool thing they do for companies, and I haven't seen anybody else do it. They have a budget for personal investment, essentially. It's meant for self-improvement — things like executive coaching and offsites, ways of upleveling yourself as a leader. They're like, "Look, we're making this big investment in the founder or the CEO, and we're betting on you being able to get better — that you're not a static version of yourself, that you're actually going to be a better version of yourself over the course of time as the business grows." I thought that was such a thoughtful approach to the investment, especially in venture, where the investments are so much about the people and the ability of the founder to scale up.

Shane, early days, just felt like a guy who always had the answer to the problem I was racking my brain on. He was as much a coach as almost a therapist for me.

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Brian Halligan: That's how I feel when I'm with CEOs.

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Chase Lochmiller: As much as a therapist.

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Brian Halligan: As a therapist.

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Chase Lochmiller: We really did have, and still do, a very special relationship that's very trusted. It's something you have to work at. You build this trust with a person, and even if it doesn't feel like you're making progress on any given session, you're laying the groundwork, laying this foundation, for when that really big thing does pop up. This person knows you so deeply. They know where your blind spots are. They know how you might be responding in a certain situation, and they know how to guide you to course-correct, to be able to rise to whatever occasion it is.

People say this, and I may sound like I'm repeating the common folklore, but so many of the problems with building companies are people problems. Being able to effectively navigate the people side of this is most of the challenge. You get these smart, ambitious, opinionated people — getting everybody to row in the same direction and agree on things, or if they don't agree, to commit to whatever pathway you're taking. That is always the hardest thing. As a CEO, sometimes the biggest challenges are: When do I keep believing in someone, and when do I decide, "Hey, we need to move on, we need a different person in this role"? Or how do we get two brilliant people to work together on something when they fundamentally disagree? I've just found the people to be the hardest thing — and also the greatest superpower, if you can get it right.

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Brian Halligan: People always said to me, you should hire slow and fire fast. I did the opposite, particularly on the fire side. It sounds like you've moved some people out. Did you do it too slowly? Did you ever regret it? What were the signals that pushed you over the edge?

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Chase Lochmiller: I think almost always there's a bias toward firing people too slowly. There's an inherent bias. So even if you're very responsive — I do think, for most CEOs, when you fire someone, you've clearly been thinking about it for a long time. And it's almost like when you started thinking about it, that was the right time to fire them. But it's hard.

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Brian Halligan: What signal are you looking at? Is it other people on the team saying this person's subpar?

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Chase Lochmiller: That's definitely a data point. But our job as a CEO is that you're reading this mosaic of information. You have all these little tidbits, often from very different parts of the organization — coming from someone super technical, coming from someone who's more of a people person — and you're amassing all these different pieces of information. It's up to you to make a judgment call about what the best decision is for the company.

I forget who published it — I think it was First Round Capital — but there's this really great blog about the startup laws of physics, and the crux of it is something along the lines of: people scale linearly, companies scale exponentially. So you have this dynamic where, even if you challenge your people to continue to grow and invest in themselves, if the company really grows the way you're setting out to as an ambitious leader, oftentimes the person who was the right person for that role at one point in time may not be able to grow and scale to be the person in that role two years later, when the company is ten times bigger.

That's a hard reality to face as a leader, because you end up in the trenches with these people. You end up working late nights, early mornings. You see these people really giving everything they have to the mission. And when you have those moments where the company outgrows the person, it's just hard, because you care a lot about these people on a personal basis, even if the best thing for the company is to find someone new for a specific role. Anyway, coming back to why I've fired people in the past: every case is a snowflake. Every single one is different. And it's ultimately up to you to make the judgment call about what's the right thing for the business.

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Brian Halligan: Two of my recent interviews: I interviewed Ali Ghodsi from Databricks —

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Chase Lochmiller: Love him. Great guy.

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Brian Halligan: — and he's basically had the same management team for ten years, with the exception that he turned over one person. And then [Dev Ittycheria] is a friend of mine, and coming on the pod, on average he turned over two per year on the exec team, for lots of reasons. I find that odd. They're in kind of similar businesses, they're both really good, and they're so different.

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Chase Lochmiller: Totally. Actually, my current COO and CFO worked alongside Dev at MongoDB for about a decade. So he wasn't one of the people that was turned over by churn.

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Brian Halligan: I mean, some of them leave.

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Chase Lochmiller: No, I totally understand. But look, I don't think there's any right answer. I've seen different things work. What I've found most effective for me is that if you have someone who's really struggling, the team recognizes it. We view it as: the team is ultimately there to win. I grew up playing competitive sports, and if you were on a team, you always loved your teammates. You had a strong and special bond that came from the locker room to the field. And if you had a teammate who was just struggling, or a weak link, and it led to the team's downfall, you knew the right thing to do was to replace that person with someone.

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Brian Halligan: It sounds like you're in the middle of those two.

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Chase Lochmiller: I'm in the middle of the two, for sure.

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Brian Halligan: Speaking of teams and people, one thing that is fascinating about your business — and I think about the culture we built at HubSpot, where people rhymed — is that in your organization, you have AI researchers and you have welders. How do you create a culture across all of them? Are they different cultures? How do you comp people across all of it? How does all that work?

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Chase Lochmiller: It's a great question. We've always felt like we've had an incredibly diverse culture, just from the people who are coming to help build this. One of our core values is tapping into the collective genius. No one person has all the domain expertise to deliver the full solution we're trying to bring to bear. We all can learn from one another, and all of us working together toward a cohesive solution is going to result in an amplified result that none of us could have achieved individually.

There have been critical innovations that have come from people like electricians who are wiring things up, which the researchers then benefit from in their specific use cases. How we think about the whole building management system — the operating system from the electron to the token — is something that really sets us apart.

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Brian Halligan: I read an article in the Journal about VCs and people in your industry presenting at conferences, and people are attacking them or protesting them. You're in the middle of a wave. It's an election issue around the data centers. I've heard your story on why it's good for communities and why it's great for humanity. Are you facing some of that heavy criticism yourself, and how do you deal with it personally? Do you have security? How tricky is this for you?

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Chase Lochmiller: The way I think about it is, when I look around at the people at Crusoe, these are all people who want to do good for the world. There's not a single person I've met at Crusoe who doesn't want to do good for the world. And I believe fundamentally that there is a right way to bring this infrastructure to life where everybody can benefit: from an energy standpoint, from a water usage standpoint, from a tax revenue standpoint, from a school and community standpoint, and then from the end use cases and how it's actually fueling human progress through the greatest technological wave we've ever experienced.

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Brian Halligan: I've heard you explain it. You explain it extremely well, and you make a lot of sense. I wish the rest of the AI leaders would explain it as well as you do. But for you, you must be catching a lot of flak.

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Chase Lochmiller: My major thing is, I always try to take a very principled approach to things. If I have high conviction in something I've built up from a set of ground-truth facts, I have no problem disagreeing with someone. I can try to poke holes into why I think someone else is wrong and why we're trying to do things the right way. But I do feel like it permeates the culture at Crusoe: people want to do this the right way. People want to do this as a good service to the world.

This has become a political issue, particularly around AI data centers, and there's so much misinformation out there. I've often said that the data center industry's biggest problem is a marketing problem. We haven't been able to get the truth out there. And to me, the truth is on our side. When you explain the truth — and I've been in these rooms, I go to these local communities, I meet with the county judge, I meet with folks in the communities where we're building infrastructure — when you sit down and really explain to them what's happening, and you're not coming at it from "Hey, I'm smarter than you, you've got to listen to me," it's, "Here's just what's happening, and here's how we're trying to do our very best to make it good for you and good for us and good for the world." When you have those conversations, people are receptive to it, independent of politics or political allegiances. People are receptive to authenticity and facts. So that's really our approach to this.

Now, am I worried from a security standpoint? Sure. We've had to increase our security footprint, given there are crazy people out there who want to create a big statement.

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Brian Halligan: I assume some of these rooms you're walking into, there are some hysterical people. What is that like, the first room you walk into where people are screaming and yelling at you? There's no training for that.

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Chase Lochmiller: Again, honestly, I think it's appealing to their humanity and understanding why someone may be saying what they're saying. I think it's listening to the facts. I often have very strong opinions, but I can always change them in light of new information and new facts. I think it's important to have that intellectual flexibility to say, "Hey, I had high conviction that we were doing things the right way. Upon learning this new thing, we should probably be doing this differently, and we could probably be doing this better." That's an inherent growth mindset we have here as a company, and that I've tried to channel as a leader: the ability to listen to these criticisms and try to filter out what is crazed hysteria that's unfounded in truth, and what's legitimate critical feedback that we should be using to become a better steward of these communities.

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Brian Halligan: Do you think having thick skin is a very important attribute for a CEO?

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Chase Lochmiller: 100%. Your job is to be the receiver of bad news very frequently, and then be able to think with a clear mind and make decisions in light of that bad news.

I think the other thing that's important for a leader — and frankly, something I'm always struggling with — is that as the company grows and gets bigger, I'm at a further distance from the individuals on the front lines of the company. So trying to close the gap, making sure I'm always approachable, that people can speak truth to power. You want to be in a position where people can voice their concerns and be heard, and in light of presenting truth, in the context of everything else that's happening, you can actually adjust the direction of your business.

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Brian Halligan: Do you have methods to encourage that, to make sure people will stand up to you? The 2,000th person you hire puts you on a pedestal. The 20th person is beating you up day to day.

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Chase Lochmiller: Honestly, it's mining for it, just asking for it relentlessly. I think when people see examples of you taking criticism and feedback, responding to it, changing your mind, it empowers people to be like, "Oh, actually, I should voice my concern."

People often have this perspective that you as the leader or you as the CEO only want to hear the good news. The good news is great. I want to hear it. But I care way less about the good news than I do about the bad news. So trying to run into those: What's going wrong? What are we bad at? How do we fix these things? What are the problems? How do I go resolve those? I think that is a critical characteristic of a CEO — that willingness to go seek out and run into the burning buildings, figure out the problems, and go try to help resolve them.

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Brian Halligan: These questions are for me, and I would imagine other people are interested. I've never met someone who climbed Mount Everest, and I'm really impressed. What is it like? What is the training like? What does it feel like when you get to the top of that mountain?

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Chase Lochmiller: In a lot of ways, a company culture is a reflection of the CEO's or the founder's culture, and that's really what's happened at Crusoe. We actually have a core company value: think like a mountaineer. It's this sense of cultural resilience and preparation and planning, and willingness to endure the expedition. A lot of that value, and the practices we've written for it, describe a lot of what it's like to climb Mount Everest.

There's actually this whole internal presentation I have around the various Everest trips I had, because I actually tried to climb Mount Everest once in 2014, and there was a big avalanche that occurred and ended up killing 15 Sherpas in the Khumbu Icefall. I came back and my wife was like, "Oh, thank God, that chapter is done, and you don't have to do this anymore." And I was like, "Look, this thing haunts me. It's all I think about. I have to go back." She's like, "You're insane. But if you're gonna do that, please do it before we have kids."

When I thought about it: I climbed on the south side, which is the Nepal side, through the Khumbu Valley. You trek up to base camp, and then you go from base camp to camp one, then camp two, camp three, camp four, and then you have this push to the summit. The two most dangerous areas on the mountain are from camp four to the summit, which is frequently referred to as the death zone — above 8,000 meters, so it's very intuitive why that's dangerous. You're at very, very high altitude, where humans really shouldn't be living. But the other most dangerous area is between base camp and camp one, which is called the Khumbu Icefall. That was the area where this disaster occurred when I was there in 2014.

The thing about the Khumbu Icefall is that it's a glacier that's falling. It's this beautiful, really cool ice jungle gym, but there are a lot of things that are just stochastic risk — things totally outside your control, where a rock falls or an avalanche occurs and, oops, you die. That was the type of risk where I was like, look, I know there are ways I can consciously train and prepare for the high elevation and manage my risk up there more effectively, and I know consciously I'm taking that risk. The risk I felt less comfortable with was the stochastic risk.

A traditional Everest expedition involves going from base camp to camp one, and you acclimatize on the mountain. You go base camp, camp one, back to base camp; base camp, camp one, camp two, back to base camp; up to camp three, back to base camp. You end up doing eight trips through the Khumbu Icefall — four round trips — on a typical commercially guided expedition. In order to de-risk that, my climbing partner and I actually designed a different approach to climbing Everest. We ended up going and climbing a bunch of mountains nearby and spending a lot of time at the summits of those mountains, so that we would acclimatize without taking the stochastic risk in the Khumbu Icefall. We only did one big acclimatization trip up Mount Everest and back to base camp. So we did basically four passes through the Khumbu Icefall instead of eight.

I was conscious of the risk I wanted to take. The planning, the preparation — we had to think through a ton of stuff: a lot of training, a lot of long-distance trail running, and a couple of different high-altitude training trips. But the point I want to get across is conscious risk-taking and intense planning and preparation really went into a very successful Everest summit in 2018.

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Brian Halligan: You worked so hard at it, and you wanted it so badly. What was the feeling inside of you when you got to the top?

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Chase Lochmiller: I almost turned around at this area called the Balcony. It's about 8,600 meters, and the summit's 8,848. So not too far from the summit in terms of elevation, but it felt impossibly far, and it was still dark out. We left camp four at 11 p.m., and it was still dark when we got to the Balcony. You feel terrible. I hadn't eaten much in the last 48 hours. I was dehydrated. I felt awful. My legs were cramping. And it was dark. My partner was really the person who inspired me to continue. I felt fine apart from those things, so I didn't feel like I was putting myself at risk.

Once the sun came up, and you start seeing the sunrise, and you're high up on this mountain, you're inspired by your surroundings. It was this elevation of your spirits, and it gave you the adrenaline to make the push through that final 250 meters.

When I got to the summit, my feeling was really one of just sheer awe for the universe — awe for being on the summit and experiencing the whole world around me. It was a really special moment, and it makes you feel small. There's something very interesting about having that sense of "I'm small, and I'm inspired by the world around me, and the magnificence of existence." That was my experience on the summit. It was beautiful. We had a very sunny day, so we spent about an hour at the summit, took a bunch of pictures, and really enjoyed this heroic moment of achievement.

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Brian Halligan: Congratulations on all your success. I'm rooting for you. You're a fantastic CEO. Thanks for coming on.

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Chase Lochmiller: Brian, thanks for having me. This was really fun.

Brian’s takeaways:

Brian Halligan: Okay, I hope you liked that episode with Chase. He is a very legit CEO scaling that business really well. I'll give you a couple of my takeaways.

My first takeaway is on him as a homo sapien. He's a person who really likes hard challenges, and when I recruit and I fund CEOs, that's definitely a quality that I look for.

I liked how he talked about just how much the CEO job changed. He had never done anything like that before. He's eight years into the journey, and man, he's a learning machine. He read a lot about it. He hired a coach. It sounds like his coach was really useful. I coach a bunch of Sequoia's CEOs, and some of it is giving them advice, but a lot of it is gaining context and listening to the problems and empathizing — really being like a therapist. So he benefited a lot from that.

The other thing he worked hard on, it sounds like, is his public speaking. He's very smooth, really articulate and smooth, and it sounds like that wasn't his default setting. He's had to really work at that. I think that's important. If you're up in front of your company, if you're up in front of investors, I don't think it hurts to be articulate and smooth.

I liked the way he talked about competition. He said something we used to say at HubSpot all the time: you're much more likely to die of suicide than murder. It was very much our case. It sounds to me like he's really into competition, and I think a lot of founders frown on that. We had major competition over many, many years with Salesforce.com, so I wouldn't shy away from that. The other thing I always did is I always got to know our competitors, just because you never know. So don't be afraid to reach out to your competitors and have coffee.

The last thing I took that I really liked: as the organization gets bigger — and I felt this at HubSpot — everyone wants to give you good news. You're the CEO, and they expect you want to hear good news, and you really want the opposite. You want to hear the bad news, and you want to train the organization to give you that bad news. So almost encourage people when they push back at you and when they give you bad news inside of a pretty good-size setting. I think that's a really important quality in CEOs.

The other thing that I think is an important CEO quality that he has — and you might too — is he has very strong opinions, as you've heard, but if the facts change, he's willing to change his mind. Being stubborn is a really tough quality in a CEO. It makes you quite hard to follow.

Anyway, those are some of my takeaways. I thought he was great. It's an amazing business. He's an amazing CEO. I hope you liked it, and I'll see you next time on Long Strange Trip.