Brew Markets (Morning Brew)

Why Spotify is Trying Two CEOs & Data Centers Demystified with Wes Cummins

Date: October 3, 2025
Host: Ann Berry
Guest: Wes Cummins (CEO, Applied Digital)

Overview

This episode explores two headline stock market stories: Spotify's surprising move to a co-CEO structure and the rapidly evolving world of data centers, especially with the surge of AI workloads. Host Ann Berry first analyzes the business implications behind Spotify’s leadership shift, comparing it with similar moves at Netflix and Oracle. The spotlight then turns to Wes Cummins, CEO of Applied Digital, to demystify the scale, economics, and community impact of modern data centers powering next-gen AI applications.

Key Discussion Points and Insights

1. Spotify's New Co-CEO Structure

• Spotify’s Announcement:
  Spotify co-founder Daniel Ek is stepping down as CEO effective January 1, elevating current co-presidents Gustav Soderstrom (product/technology) and Alex Norstrom (business) to co-CEOs. Ek will become Executive Chairman.
• Trend Comparison:
  Ann draws parallels with Netflix and Oracle, noting both have implemented or tried co-CEO models, usually aligning executives with complementary skill sets.
• Industry Skepticism:
  • The model can “double the horsepower or just mean no change at all.”
  • Risks include ambiguity of command and potential internal politics.
• Comment on Spotify’s Power Structure:
  • Ann points out that, per Spotify, Daniel Ek will still “determine capital allocation, map the long-term future of Spotify, and continue to provide support and guidance to a senior team,” which “sounds exactly like a CEO’s job description.”
  • Quote [03:47]:
    “In his own letter...he went out of his way to say, quote, ‘I will be more hands-on than some of my US peers who have a chairman title.’ In other words, he’s not going anywhere. He’s still the boss.” — Ann Berry

2. Data Centers Demystified: Interview with Wes Cummins

a. Data Center Metrics and Evolution

• Old vs. New:
  • Traditional centers (metro, video-serving) use low power density (~7kW/rack); AI "factories" require much higher power (~135kW/rack at Applied Digital).
  • Measurement is shifting from square footage to megawatts delivered.
• Quote [06:40]:
  “You really should be looking at the power loads of data centers when you’re measuring how large they are going forward.” — Wes Cummins

b. Applied Digital’s Shift from Crypto to AI

• Origins:
  • Built large-scale Bitcoin mining data centers (not a miner themselves).
• Strategic Pivot:
  • Proactively moved to “high performance computing” and “AI factories” before ChatGPT’s release, anticipating massive AI infrastructure demand.
  • Quote [10:09]:
    “It was proactive on our part...We did this pre-ChatGPT...We started building it ahead of having a customer. We spent close to a billion dollars...before having a customer.” — Wes Cummins

c. The "Field of Dreams" Bet and CoreWeave Deal

• Risky Strategy:
  • Invested in major facilities hoping demand would arrive (“build it and they would come”).
  • Landed CoreWeave as anchor client for 400MW of capacity.
  • Facilities feature leading-edge liquid cooling and energy efficiency.
  • Quote [12:37]:
    Ann: “So you took the strategy, which is a risky one, of build it and they would come, right?”
    Wes: “It was a field of dreams strategy for sure.”

d. Supply Chain and Client Relationships

• Who Brings What:
  • Customer (CoreWeave) procures servers, chips, and network gear; Applied Digital builds, maintains high-reliability facilities.
• Supply Chain Observation:
  • Predicts supply chain for chips will resolve more quickly than for data center build-out, which is now the true bottleneck.

e. Location Selection and Environmental Priorities

• North Dakota Focus:
  • Chosen for its cold weather (cooling efficiency), high energy production (incl. renewables), and minimal water use due to a closed-loop cooling system.
  • Locates next to substations with surplus power – beneficial for both the company and the local grid.
  • Quote [15:21]:
    “Cold weather...helps efficiency and to cool much more efficiently than you would [elsewhere]...drives the PUE close to 1 and 1 is perfect.” — Wes Cummins

f. Talent & Community Impact

• Workforce Development:
  • Mix of relocating experienced talent and training locals for technical roles, leading to higher wages and community revitalization.
• Community Engagement:
  • Generally strong local support due to economic benefits, job creation, and infrastructure improvements. Some outside resistance, mostly on environmental grounds.
  • Quote [20:15]:
    “We’ve worked really closely with the community, we’ve integrated into the community, we’ve created a lot of economic benefit, and we’ve been welcomed there really largely.” — Wes Cummins
  • Quote [23:26]:
    “We don’t use water. That’s one of the biggest pushbacks...And at Ellendale, we've actually lowered the power cost for MDU users by, I think, $5.3 million in 2023 and $5.7 million in 2024.” — Wes Cummins

g. Capital and Financing Structures

• Financing Model:
  • Transitioned to project- and asset-level financing (major partnership with Macquarie), leveraging equity to secure additional debt financing (like a typical real estate project).
  • Macquarie’s $5B equity translates to up to ~$25B total investment capacity.
• Ecosystem Observations:
  • Industry-wide, chip companies like Nvidia are financing customers (e.g., OpenAI) to ensure continued infrastructure build-out, raising concerns about “circular” investment patterns.
  • Wes contends this is necessary ecosystem priming, not a bubble—yet.
  • Quote [26:35]:
    “This is all new...the absolute scale and size needed...is truly an infrastructure business. AI is completely driven by the hardware that you can run...Nvidia is stepping in and being a leader in seeing the future...it validates OpenAI...[and] makes it easier for us to get banks to finance data center builds.” — Wes Cummins

h. Are We in an AI Data Center Bubble?

• Host Skepticism:
  • Ann points to high valuations, unprofitable new IPOs (like Fermi America), and the dominance of MAG7 (Microsoft, Amazon, Google, Meta, OpenAI, Nvidia, etc.) as signals of froth.
• Wes’s View:
  • Applied Digital has $11B+ in contracted revenue (15-year contracts) despite current losses, supporting a bullish view on future profits and long-term business health.
  • Quote [29:32]:
    “We have contracted $11 billion in revenue...500 million of NOI...locked in for 15 years. Of course we burn money now because we’re building massive projects...but [soon] we’ll ramp up significantly.” — Wes Cummins

Notable Quotes

• Ann Berry [03:47]:
  “In his own letter...he went out of his way to say, quote, ‘I will be more hands-on than some of my US peers who have a chairman title.’ In other words, he’s not going anywhere. He’s still the boss.”

• Wes Cummins [06:40]:
  “You really should be looking at the power loads of data centers when you’re measuring how large they are going forward.”

• Wes Cummins [10:09]:
  “We started building it ahead of having a customer. We spent close to a billion dollars...before having a customer.”

• Ann Berry & Wes Cummins [12:37]:
  Ann: “So you took the strategy, which is a risky one, of build it and they would come, right?”
  Wes: “It was a field of dreams strategy for sure.”

• Wes Cummins [15:21]:
  “Cold weather...helps efficiency and to cool much more efficiently than you would [elsewhere]...drives the PUE close to 1.”

• Wes Cummins [20:15]:
  “We’ve worked really closely with the community...We've created a lot of economic benefit, and we've been welcomed...It's been a fantastic partnership.”

• Wes Cummins [23:26]:
  “We don’t use water. That’s one of the biggest pushbacks...we’ve actually lowered the power cost for MDU users by, I think, $5.3 million in 2023 and $5.7 million in 2024.”

• Wes Cummins [26:35]:
  “This is all new...the absolute scale and size needed...is truly an infrastructure business. AI is completely driven by the hardware that you can run...Nvidia is stepping in and being a leader.”

• Wes Cummins [29:32]:
  “We have contracted $11 billion in revenue...locked in for 15 years...we’ll ramp up significantly.”

Important Timestamps

| Timestamp | Segment/Theme | |-----------|-----------------------------------------------------| | 00:31 | Episode market headlines & theme introduction | | 01:35 | Spotify’s co-CEO move and industry context | | 05:08 | Data centers: intro to core infrastructure topic | | 06:05 | Start of Wes Cummins interview (Applied Digital) | | 06:40 | Data center measurement: power vs. square footage | | 08:15 | Applied Digital’s transition: Bitcoin to AI | | 10:09 | The proactive strategy for AI data centers | | 12:37 | The risk and payoff: Field of Dreams bet | | 14:32 | Customer responsibilities: chips vs. infrastructure | | 15:21 | Why North Dakota? Cooling, energy, and location | | 17:28 | Talent pipelines and local economic impact | | 20:15 | Community engagement & local resistance | | 23:26 | Environmental impact: water and power savings | | 24:27 | Capital, Macquarie & project financing | | 26:35 | Is ecosystem-wide financing (Nvidia, OpenAI) a bubble?| | 29:32 | Bubble talk, revenue contracts, and business outlook|

Tone and Delivery

• Ann Berry maintains a smart, skeptical, but engaged and conversational tone throughout, asking probing questions, emphasizing the real-world stakes (for investors, communities, and the market), and keeping Wes Cummins both grounded and transparent.
• Wes Cummins is clear, candid, and practical—demystifying jargon, laying out the business mechanics, and forthright about both risk and opportunity.

For listeners:
This episode provides a rare, in-depth look behind the headlines—both at the boardroom calculus of one of the world’s biggest streaming companies, and in the hard realities and bets underlying the physical infrastructure of the AI era. Perfect for market watchers, tech enthusiasts, or anyone curious about the “plumbing” powering today’s digital economy.