(upbeat music) - Developing data centers is becoming a major story here in central Illinois as companies look for land and resources to build these potentially large buildings.

Last week on "At Issue," we heard from an environmental organization that has major concerns about the implications of these buildings and the resources needed to run them.

Tonight we talk with data center and AI infrastructure expert, named Kirk Offel, and he is the CEO of Overwatch Mission Critical and he hosts the Data Center Revolution podcast.

We're gonna talk about the benefits and trade-offs of data centers with Kirk.

Kirk joins us now from Texas.

Good to see you.

Thanks for coming on.

- It's an honor to be here, Mark.

Thanks for having me.

- And Kirk, tell us a little bit about your background and your work with data centers.

- You got it.

Well, I appreciate the question.

So my background came from, I was born and raised on military bases and I lived on a military base till the end of the Cold War.

I myself went into the military and I found myself in the submarine community, where I got into a little bit of a technical background.

And I got outta the Navy in 2000 and found myself right in Silicon Valley, right at the beginning of what was called Web 2.0, basically.

That also ended up being about the same time as the end of the third industrial revolution and we launched right into the fourth.

So it was an exciting time for technology and I have worked in this emerging space, called data centers, not since the genesis, but since early 2000s.

So I've got a little more than 20 years of watching us build the internet of things, which led to E-commerce, and I had a front row seat at both cloud and now AI.

So I work for a company that is a technology incubator for labor.

So data centers are now a utility and we're building a workforce to be able to support the delivery of that utility so that we consumers can continue to use it for all the things that we do now, from social media to E-commerce and now AI.

- As you said, data centers are nothing new, but they've really been in the news the last couple of years as the data centers that people wanna build seem to be getting bigger and bigger.

Let's talk a little bit about the need for data centers.

Without getting too technical, why do we need these large buildings to help power our AI and cloud computing and things like that?

- No, that's a great question.

So I'll just invite everybody that's listening or watching to zoom out and think of data centers not as a building with four walls and a roof, but as a green field of brand new field of career opportunities that's limitless.

So why data centers and why all these things are taking place is simply, if you think about the adoption rate of emerging technology, specifically driven by the demand of AI, we've created on our own another utility.

So the first utility in a home was plumbing.

So we created a new trade for it called plumbers.

And the second utility in a home was gas.

We needed it for illumination and for cooking, and we created a career field for it called gas fitters.

The third was when we, during the second industrial revolution, we electrified the US grid and that created a whole nother need for talent.

And with that followed the electrician.

The fourth utility in a home was connectivity, came again in the second industrial revolution, and connectivity comes in, back then, copper, now today most likely fiber.

And for those types of careers, we created what's called a low voltage technician.

The fifth utility is if you add all of those up together, it's what gives you all of your technology compute capacity, which really started emerging in the mid to late '80s.

But without data centers, you have no cloud.

We are the sky for the cloud and now we're also the home for AI.

So this digital infrastructure has always been out there.

It's prevalent and it's been around since we've been using technology.

It's just now arriving onto the mainstream because the volume and velocity in which we build at now requires us to engage with these local communities, specifically around the way we embrace other utilities, most specifically energy, and the second would be the environmental impact or the way that we use water.

So because the demand of data centers and the size for them continues to grow, we are now on a collision course with a whole nother utility, which is energy, and now people are paying a lot more attention to what it is that we're doing.

As a byproduct of that, we didn't do a very good job.

In fact, I testified in Capitol Hill in January where I even spoke to the committee and said, "We've failed as an industry to communicate to these communities what it is that we're building."

'Cause today they only see us consumers, they see us as consumers of the utilities, and they need to see us not only as a utility ourselves, but we're a partner to the other utilities.

- I'm glad you put that into perspective.

I wanna ask you about some of the things that people have to say, the opponents of data centers have to say.

I'll just quote an early March Gallup poll.

The people who oppose data centers, about 50% of 'em say it's because of the effect on resources, like electricity and water.

22% say quality of life.

And they're usually talking about, you know, these data centers, the size of them, and them taking up land that they consider farmland or land that could be used for other things.

When you run into people who have issues with data centers, are those some of the same reasons that they share with you?

- Yeah, absolutely.

And this is the most important question, so I'm glad that we're having this conversation, because whether it's 50% of one group thinks this or 20% thinks that, 100% of them are right, every concern they have is valid.

And I'm glad that they're actually raising their hand.

If I wasn't an industry insider, I would be them.

I'd be the first one saying, "Why are you taking all of our energy and why are you consuming all this water and what are you doing for job creation, 'cause it doesn't look like much."

But we need to unpackage those things because they're right.

But if you look back where we are at today in AI is at the exact same place we were in the automobile industry after the automobile revolution 100 years ago.

And just to put that into perspective, we were still building Model T's till 1927.

So we are in our infancy in AI.

And if you think about cars, the very first automobiles that ever hit the street, first, there were no streets.

Second, they weren't safe.

It took decades before we introduced seat belts and even longer until we made 'em requirements.

Nothing put more strain on local infrastructure than an automobile.

It was heavy in pollution and it was massive in noise.

It was the last thing we want.

That's why we don't drive those types of cars today.

And the very first data centers we built, they were just as ugly and just as noisy and just as inefficient and had no, I'm not saying absent of all sustainability objectives, but it wasn't the priority because consumers, people like you and people like me that have eyeball content and video caching on our phones or the way that we use technology, we were growing in a way, like the automobile industry was, where it was becoming more hot rod.

People were playing with technology and we were adopting it in ways that never existed.

It took 27 years before one in four Americans adopted electricity from the time it was introduced.

It took five days before ChatGPT made 100 million users.

That took TikTok nine months, took Facebook probably four or five years.

So the adoption rate of emerging technology is faster and we're gonna be cycling through things faster.

But today, these people that are concerned about their impact of these data centers, they should be and they should be asking questions.

There are programs that are being shut down in Illinois right now, and they're not being shut down for the wrong reason.

They're being shut down for the right reason.

But I would just say we gotta be careful.

Okay, we shouldn't be letting developers that are cloaked and daggered in ultimate secrecy who want to come be neighbors in those communities that come in really with bad strategies.

It's not wise and it's not working for us to come into these communities under the cloak and dagger method of being some company that is so secretive that no one knows who they are.

But we have to be upfront and open and engaged with these communities.

And I'm gonna make, I'm gonna give you some history on the impact these projects make on these communities.

But I want to caution these communities on pushing back entirely.

We need to, as this industry is emerging into the mainstream, before any mainstream vertical can do that, it lacks governance, ethics, oversight, regulation, and ethics probably being the most important amongst them.

Well, we are growing into the mainstream as an industry now because of our demand of energy and the people that are paying attention to the way that we used to use water.

We used to cool these data centers with evaporative cooling, but the densities of this technology demand are so high now that for the same reason you can't put water in your radiator, we can't put water in data centers anymore.

Water doesn't, it can't absorb and reject heat fast enough, it'll boil.

So we have to use zero water designs on data centers now.

Now you can have a hyperscale data center of a couple hundred megawatts that uses the same amount of water as five homes in the US, but the amount of jobs it'll create will overshadow those things.

So the concerns that people have, the not in my backyard argument, the NIMBY argument, those are valid, but it's not to stop and that's not what America does.

This is what's called transformational infrastructure.

The very first transformational infrastructure program was the railways and there was a lot of resistance and pushback on the impact on the environment and what we were gonna do for energy.

The second was gas, I mean was, the way that we electrified the US grid.

Think about the pushback that people would've had when we were rolling electricity across the grid, connecting what is now the NFL cities of the United States, and that is now the backbone of the US internet.

So if you think about it, there are cities in Illinois today that we've never heard of because they were swept off the face of the state because they opposed the interstate highways, which came as a byproduct of the automobile revolution.

We're living in a cloud revolution and an AI revolution and this infrastructure, we don't want it to stop.

We want it to be done with governance and oversight and ethics, but we don't want these to stop because Illinois competes against 49 other states and you don't want those programs to go to either another state or another country where not only will that technology go there, but the jobs will follow.

- So Kirk, I'll give you an example here locally, a city right outside of Peoria called Pekin, they recently had a big controversy, and if you ask the residents of Pekin, and a lot of them will say, "Well, the Pekin government wasn't transparent enough in this whole process."

But long story short, there was going to be a data center built and now it looks like that's not going to happen.

There was so much animosity about the whole process and so many people against having that data center.

How do you now, you know, is an area like that ruined for future data centers?

Or how do you get the points you're trying to make across to people now that they've been through a process that they haven't enjoyed?

- Yeah, for sure.

And I would say this, I have empathy for that town and I don't blame what that town did, but I would tell that town that what they want to do in the best of their long term, and I'll give you some metrics, is the job, the objective should not have been to stop it.

It should have been to make it transparent so that anything that goes into their community is transparent.

The example that you just shared is a great example of what I was just saying, which was, the developer that had come in to try to buy that land was in absolute total darkness and secrecy to the community they were trying to go into.

That doesn't look like a partnership.

That looks like a penetration.

That is the wrong approach.

As an example, three years ago in this country, we lost two programs to what's called NIMBY, the same opposition you're seeing in that town.

Two years ago, we lost four.

Last year we lost 25.

So I do believe that there's some really organized people that have a message or a narrative that's really well written and it's going mainly unopposed.

And these towns and these communities are picking up on those narratives.

They should be slowing these communities down and these developers down, they should be bringing 'em to the light and forcing them to explain to the communities they live in what they're doing.

And I'll pause, but I hope I get the opportunity to explain to you what a gigawatt data center does to a community.

- I do wanna talk about that, but I also wanna talk about what happens if this trend continues of people saying not in my backyard and governments saying, "Yeah, you're right, this isn't good for us," whatever the reasons, where do we go with that trend?

I mean, if we just stop building these data centers, what happens to our businesses and you know, us surfing the internet and things like that?

- Yeah, that's a good question, but zoom out even further.

Let's not make the mistake of assuming that technology is a consumer product.

The very first data center ever built was in 1953 and it was built for and funded by the US Government for National Defense and Intelligence.

And if you pay attention to what's happening in technology right now, we didn't send troops to Iran, we used technology, and there's a reason why we just added a half a trillion dollars to a $900 billion budget to bring the Department of War's budget to 1.4 trillion next year because the AI is now simply too big to fail.

AI is not a consumer device, it's the most advanced weapon machine in tech ever built.

We are building the Manhattan Projects of our generation, and data centers are so new, we're working amongst the Henry Fords of our generation while we do it.

So this technology, it's now a national security defense issue and national security and defense item.

This technology will be heavily focused towards energy, healthcare, and national security.

There's these people that are saying, "Hey, we don't want this technology here."

They shouldn't say, "I don't want it here."

They should demand that they know what's going there and be a part of that as a collective.

But they gotta be really careful pushing these data center projects away because there are towns that that town competes against that will take it.

And what we have is the interstate highway program, primarily for military mobilization.

We put 10 roads north to south and 10 roads east to west throughout our country after the automobile revolution.

And those cities that pushed back on those roads, they don't exist anymore.

Because what happened was that road went in and jobs were created because of those roads and then service stations were created to supply much needed parts or fuel for those people that were using it.

Plus then came the hotels, then came the restaurants.

Those ecosystems were created as a byproduct of transformational infrastructure.

We saw it with the roads, we saw it with the grid, and we saw it with the railroads.

This is transformational infrastructure.

This is blue sky moment.

And everybody should be trying to figure out, how can I get a job in this space?

And I'll give you an example.

When we build a one gigawatt campus, that is four to 5,000 construction people that we're gonna need for five to seven years.

And when we're done building it, we're gonna leave 2,000, maybe 2,500 behind just to operate that facility when we do.

And for every one person we leave in that city to operate that facility, they create six domestic jobs in the market that they are working in.

Those are domestic jobs that could be first responders, teachers, people at the gas station, people at the chiropractor, all of 'em.

What I'm telling you is you don't want to push this infrastructure away, but you need to demand that you have more transparency into it because you are competing against other cities and the state of Illinois is competing against other states and we are competing against other countries for dominance in AI and we are in the middle of a cloud war.

This is the most advanced weapon machine in tech ever built.

AI's not going anywhere.

The genie's out of the bottle.

We just have to figure out how we're gonna build our kids and do career fields that are sustainable.

And what I'm gonna tell you is, we're building thousands of jobs along the way.

Think about a data center like you build a car.

There's people that build cars for a living.

I don't know anything about that.

There are people that make a living just operating them.

It could be FedEx, it could be your DoorDash, it could be your Uber, but then there's people that just fix cars or put tires on 'em, or the oil changes or the car washes.

We're creating an entire ecosystem.

When Henry Ford created a car, he didn't create a car, he created a 40 hour work week and an ecosystem where 75% of that were small businesses.

The data center industry is coming to the market and is gonna have the opportunity to create thousands of small businesses and thousands of new jobs.

But these communities don't know that 'cause we didn't do a good job explaining to them what we were building.

We were just telling 'em we were building a service for them like another utility.

But it's really a new career field and their kids need to be paying attention.

- So just to circle back a little bit, I wanna talk about something that people are worried about.

Our resources, the water that you mentioned that's needed to run these, the electricity that's needed.

Coming from a sales perspective, how do you overcome those objections of people who are worried about their- - It's a great question.

- Electric bills going up?

- Another great question.

So these are real conversations now and we, in every community, need to be having these conversations.

Let's talk about power first.

Okay, so there was a time where we would just be building data centers so small that we could just go tap into the local grid, like any major heavy industrial.

But now we build at such massive volume and velocity of scale that we have to go build what's called behind the meter.

So that means we're not gonna tap into your utility grid, but as a large consumer of energy in that market, we will come to the market and let whoever is buying power on the retail side have a better price point, because it's the difference between buying something at Costco and buying something at your local grocery store.

Wholesale pricing comes as a byproduct of large base load users, like data centers when they come to the market.

They're gonna demand such a large volume, and that price point, because the economy of scale will be better, will be eventually passed down to the local resident.

It won't immediately be put in that position.

But the beauty about data centers in your market is, if you're living in any town and they wanna put a data center in your market, the best thing you could do is demand that all the costs for the infrastructure gets pushed onto the developer.

I'm telling you, the developer's building a utility and it's like every other utility, we will pay for it as consumers, is it's, there's a reason why your Netflix went from 6.99 a month to 11.99 a month to 14.99 a month to 19.99 a month.

It's because they're investing in that infrastructure and we are paying for it as a service.

So if we want data centers to bring jobs and a tax basis of revenue to our communities, we need to force certain things upon them, and that should be one, build behind the meter first, but build it in a way that you could do a closed transition into my utility, which means not only are you adding more reliability to the utility, but eventually you could put more power capacity on the utility and bring the price of energy to the left.

You can move the needle to the left.

And on water, it's very simple.

Force the data centers that are coming into your markets to go to closed loop.

Closed loop means zero water design.

It means we use a fluid, like a glycol fluid or a mineral oil in our system, because it absorbs the heat and rejects it better than water can.

The only water that we would ever need at this point is called gray water.

That's the water that hits your drains and you don't want to touch ever again.

If we could have policymakers writing policy that allows us to collect rainwater, we could, but in most cities and states, you can't.

There's watershed protection acts.

Right now, if you wanted to go build a 500 mega, a $500 million data center in that market and go give your utility $100 million to pay for infrastructure, you can't.

Policy makers need to go rewrite new policy.

So the solution isn't to stop.

We didn't stop when we had this resistance and the same pattern on the railroads.

We didn't stop when we electrified the grid and we didn't stop when we put interstate highways together.

We just built them safer, smarter, and more sustainable.

I couldn't imagine getting in an automobile 100 years ago.

And it looks ugly compared to how safe and efficient they are now.

It's the same thing.

The first wave of data center sucked.

This wave that we're designing and building to now are actually really good.

And not only that, but they're creating hundreds of thousands of jobs.

We are 500,000 people short in the United States right now alone.

- Yeah, a lot of jobs being created, so the developers tell us, and a lot of property taxes collected with these big buildings being built.

We're running short on time, but I want you to tell us maybe, you know, debunk some myths that are out there that you see on social media especially that people may think of if a data center comes to their community, what's going to happen?

What are some of the myths out there that you'd like to debunk?

- Yep, I'll walk you through the major misconceptions that seem to be a pattern and then I'll talk about, there's typically always three, but there's a fourth that's right now and it's quote unquote "regarding a potential bubble."

People think they're gonna see another dot com correction.

So I wanna address all three of 'em.

The first one was energy.

We just talked about it.

It's very simple.

You don't want data centers to not go into your community.

You just want the developers to shoulder the burden of all the costs and protect your rate as a consumer, done.

Don't stop it.

Just force those things to happen.

I promise you the developers will pay the extra cost because they're just gonna pass it down to you as a service later on.

Second part is water.

Force the people coming into your market to do zero water designs.

They're building dog sanctuaries, dog rescues.

We're doing so many things in the communities that we operate in, we're just not telling anybody about it.

So from a water perspective, offer to pay more money for more water positive, meaning pay the money to go tap another aquifer for the community.

It costs very, it costs almost nothing, and they just send it back to us as a price of a service when we buy the cloud service or the AI service as any other utility.

The third part of jobs, people think that these projects don't create jobs.

Hey, maybe a couple hundred people will be there for six months or a year and then they leave.

No, that used to be the case.

Now the case is we're building at such massive volume and scale that programs like Stargate will take seven years to finish building.

And we're gonna put, we have 9,000 people on Stargate right now.

Do you know what the impact to the local community is for the cost of food at restaurants, the price of a hotel room?

Everything benefits, the local community will benefit and the small businesses are the ones that benefit the most.

So do we distill your utility?

No, we are now a partner to your utility and we can move the needle to the left.

Do we need your water?

No.

In fact, we'll tap aquifers for you and go to a zero water design.

We're already there because of the density requirements.

The third is, do we have jobs?

Thousands of jobs in the creation of it, which will take years.

Thousands of jobs of people that are gonna be behind it, operating it, and another couple thousands of jobs for people that are gonna stay back just to fix it when things don't work and someone has to go in there and repair it.

So there's thousands of jobs that come with it and they're all gonna be new apprenticeship type level jobs.

You don't need to go to college for what we do.

These are the only jobs that'll build back the middle class 'cause they don't require a four year degree and they have a very high overall total earning potential.

The last part again is the dot com bust.

Are we gonna see that again?

Because a lot of groups are concerned.

Let me tell you the difference.

Back then it was venture capitalists that put a lot of money through private equity, institutional lending into these companies, thinking that they were gonna have something.

And they spent a lot of money doing it and we saw the correction happen.

There will most definitely be another correction in about three to five years from now.

But the difference will be the people that are spending money now, they're spending their own cash.

It's Google and Amazon and Microsoft and the hyperscalers like them, like Oracle.

They're spending their own money.

They're not spending VC money.

So the market correction won't come because it's their own capital and they're depending on us, the consumer, to adopt their technology, which will be able to continue to have the demand for us to build more data centers.

They're betting on this and now we're doing it because the government just stepped in and said we're spending 500 billion on top of our Department of War budget for this year.

And they haven't announced it's all going to AI, but there's a large portion of it that will.

- Well, it's continuing to evolve on a daily basis here in Illinois, I know our politicians are looking at a bill that would make these developers pay for their own energy.

And that's something- - That's it.

- They'll be voting on soon.

- And they'll do it.

They'll do it, and then they'll create the jobs in those communities, 'cause these are incredible, high paying jobs.

I've been in this industry since the genesis of it, I feel like, but since 2000 when I got out of the Navy, this industry has evolved so much and it has created so many jobs and there's no college degree for data centers.

Whatever you'd be learning in your freshman year would be obsolete by the time you graduate.

I would tell everyone that's listening to think about the way that they use technology today and to think about the way that they used it a year ago and try to imagine how they're gonna use it in a year from now.

And because of that need is why we have to continue to build data centers, but we don't stop, but they're right to force us to do it cleaner, safer, more sustainable, more reliable, and they have to have a greater impact on the communities we serve.

- Kirk, we're outta time.

Where can people find out more about what you do with data centers?

- You could Google "We Are Overwatch."

WeAreOverwatch.com and they can find me on LinkedIn.

- All right, Kirk Offel.

He is the CEO of Overwatch Mission Critical.

We appreciate your perspective today and we will hopefully talk to you again soon.

Thank you very much, Kirk.

- Thanks, Mark.

- And we wanna encourage everybody, if you missed part one of our data center story last week, go to wtvp.org, check that out.

Share it with your family and friends.

Share this episode and the more informed we are, the better.

Thanks for joining us tonight.

We'll see you next week.

(upbeat music) (upbeat music continues) (upbeat music continues) (upbeat music continues)