Monologue: Australia's Dodgiest AI IPO Is A Pale Horse

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0:30I'm Melissa Jeltson, host of the What Happened to Her podcast. We're kicking off the season with the Sandra Birchmore story, a case the police wrote off as a suicide in a snowstorm. Her family never bought it, and the man they suspected wore a badge. You never know who that devil is because he's wearing a disguise. Sometimes it's a police uniform. And you can get access to all episodes 100% ad-free

1:00with an iHeart True Crime Plus subscription exclusively on Apple Podcasts, available only to iHeart True Crime Plus subscribers. So don't wait. Head to Apple Podcasts, search for iHeart True Crime Plus, and subscribe today. I'm Fox Sports reporter Jenny Taft. And I'm former U.S. Women's National Soccer Team player Carly Lloyd. And on our new podcast, Whatever It Takes, nothing is off limits. I played with players that didn't truly love the game. I found the love with the ball at my foot.

1:30I don't care what I'm being asked to do at Fox. I'm going to go get some reps and love it and embrace it. Listen to Whatever It Takes with Carly Lloyd and Jenny Taft on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts. What happens when romance gets a little monstrous? On Radio 831, a romance podcast, join us, Sanjana Basker, and Tyler McCall as we host our own monster romance extravaganza. We're joined by the villain edit author, Rosie Dannen, and sentient object romance expert, Gracie Delgado,

2:01to explore what these unexpected love stories can reveal about desire, fantasy, and what we actually want. Listen to Radio 831, a romance podcast, on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts. I've been hearing for decades that the markets can solve climate change. Today, we have more incentives for market solutions than ever, and emissions are rising. On this season of Drilled, Carbon Cowboys, the story of three market solutions colliding in one multinational boondoggle.

2:32You gotta give Bruce and the guys credit. They're Republican. They don't give a s*** of money. Listen on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts.

Firmus IPO valuation

2:44Call Zone Media Hello and welcome to this week's Better Offline monologue. I'm your host, Ed Zitron.

2:57Better Offline Thousands of miles away in the strange world of Australia, a pale horse has emerged in the form of Firmus, an NVIDIA-backed AI data center company with a whole $50 million in revenue, that is, or perhaps was, trying to raise about $5.5 billion in its IPO, which would have been, I think, the second largest in the history of the country. At first, Firmus seemed like it would be another Australian core weave, another vehicle to raise debt to buy NVIDIA GPUs, backed by a $10 billion loan from Blackstone and Coatoo,

3:31and a plan with the data center magnet called CDC to build $73 billion worth of capacity in what was once called Project Southgate, with plans to build the country's largest data center by April of this year. Just any guesses, you know, put down some money, how likely do you think that was? Do you think it happened? Do you think it did? Anyway, Firmus has every backer that you'd expect from a dodgy data center company, funding from NVIDIA, Jane Street, and Blackstone, all of whom also backed CoreWeave and multiple other AI data center projects, and an initial commitment from Meta to artificially boost its potential earnings

4:04by saying, yes, once you build one of these data centers, which you have never done before, by the way, will absolutely pay you for it, under the direct assumption that very little will get done for many, many years, and I will say the correct one, too. It's unclear what happened to the data centers, other than the fact they haven't been built, but you've probably worked out by now why I keep referring to Project Southgate in the past tense, as CDC pulled out of the project a few days ago with around 2.5% of the capacity built, and that's less than a month from when this company was meant to go public.

4:35Not a great sign. It's unclear who else Firmus will build with, but it's got bigger problems to deal with. You see, its initial IPO valuation was meant to be around $50 billion. Australian, I'm just saying dollars, just get over it. Except when banks started offering shares, it priced around $11 apiece, or a valuation of $43.7 billion, followed by Australian pension fund Unisuper, saying that, and I quote, it all comes down to valuation, and that it will not have any meaningful exposure,

5:06citing that Firmus may have a compelling story, but not a compelling valuation. And for those of you at home who've been playing, is that good? That is not good. Per the Australian Financial Review, Firmus has initially claimed in its original term sheet, that it had indicative orders that priced above $11 a share, only for the pricing of the IPO to be cut to $8.25 a share, with the AFR now reporting that the company may end up taking anywhere between $6 and $7 apiece to get the thing out the door.

5:40As noted by hedge fund CEO, CEO of Plato, David Allen, speaking to the AFR, if the IPO was so well covered at $11 a share, why was it cut? Well, I think the answer is obvious. Firmus is a fucking stinker. 90% of its revenue backlog comes from two customers, Meta, as mentioned, and an unnamed major global technology company. As well as, though this wasn't in the prospectus, a multi-year deal to provide compute to OpenAI out of data centers in Malaysia, that do not exist, and, let's be honest, will never exist.

6:10Indeed, I don't know why nobody pointed at that within these stories. I've read a lot of Firmus stories, and I haven't really found much discussion of that. It's almost like everyone just kind of assumes that that was a bit. I think it's a joke. A little funny one, except a multi-billion dollar joke. You know, much like Firmus. As mentioned at the jump, Firmus has a whole $50 million in revenue, annually speaking, but plans to build 10 gigawatts of capacity in the next five years, costing it hundreds of billions of dollars that it just doesn't have,

6:41and nobody's going to give it. Every promise underlying Firmus' valuation comes down to, to paraphrase Plato's David Allen, flaws execution of some of the most ambitious infrastructure projects in history, and as Allen noted, valuing Firmus based on its EBITDA multiple, as in working out how valuable it is based on the cash that it might bring in, is kind of like valuing an airline based on planes being free and lasting forever. In any case, as I read this, it's unclear whether Firmus lists at all, or, if it does, how much it'll actually list for.

Media coverage of AI

7:12The Australian financial media has been beating the absolute shit out of it for months in a way that should embarrass the vast majority of journalists that have covered data centers in America and England, pushing back against basically every ridiculous claim and talking to skeptic after skeptic, mocking the company for its dodgy metrics, and scrutinizing the banks backing it. A great example is Mark DiStefano of the AFR, who made the point yesterday morning that banks had, as mentioned, said the IPO was effectively filed at $44 billion, despite the fact that it was anything but,

7:43and that there'd be potential regulatory problems as a result. Can you imagine any of this kind of pushback against Corweave, Nebius, Iron, or any of the other dogshit merchants raising billions to maybe build a data center someday? No, no, no, no, we absolutely couldn't here in America. It'd be considered uncouth to point out their financial fragility. In fact, if anything, we should help pump these stocks so they can raise more money to send to our glorious god, Mr. Jensen Huang.

8:10Firmus is set to go public in the next few weeks on October 23rd, but the rumblings are that it might not even make it out the door, and if it does, it'll be at a vast discount. It's a sign that investors have finally started to see the AI bubble for what it is, a bunch of grifters trying to dump questionably valued assets onto an unsuspecting public under the auspices of innovation, kind of gussied up by the press. I'll also add that basically every single problem and criticism that people have with Firmus, revenue concentration,

8:41questionable delivery timelines, unbelievable debt load today and in the future, can be levied against every single American AI data center company without exception, and that the only real difference is that some of those data center companies already had some, but not much, capacity built as a result of their cryptocurrency mining operations. Corwee was smart to go public in 2025, and I think Lambda, another NVIDIA-backed NeoCloud planning to do so in 2027, is going to have a few more problems. The Australian coverage of Firmus

9:12should be an embarrassment to the American finance and tech press because it shows what actual journalism looks like. As I read this sentence, I see a headline from Bloomberg about Corwee signing a deal with Adani Connects, you know, that guy who was under massive fraud allegations, but they've all gone away. Thank you, our president. In India, for 240 megawatts of capacity that won't come online until the middle of 2028, which is functionally identical to the promises made by Firmus. Except, instead of saying that, the article chooses instead to talk about how Corwee has, and I quote,

9:43been expanding geographically in order to boost available capacity and better serve global customers. When all of this shit finally collapses, something has to fundamentally change about how the business and tech press does its fucking job. The amount of times a neocloud or AI company has managed to get a glossy piece about some theoretical project as a means of raising more debt or venture investment off the back of press, unquestionably repeating their marketing collateral, is actively dangerous for investors and the general public. It is very, very, very easy to see the problems in this industry,

10:13but I guess it's much harder to do so if you're intentionally choosing to ignore them. Firmus is as bad as Corwee was, and is as bad as Lambda. Perhaps they have a little bit more infrastructure, but their problems are identical. And I know that there are journalists who are listening to this who might be a little bit butthurt, but it's not my fucking problem or my fucking fault that nobody seems to be able to criticize these companies. I challenge you, if you feel like your feelings are hurt, to go and read the coverage of Firmus if you cover AI data centers and see what the difference is

10:44between the American coverage and the Australian coverage. Because it's distinct. And had anyone bothered to take Corwee, or Iron, or Nebius, or Lambda, or any of the American ones seriously, like the Australians have with Firmus. Maybe we wouldn't be in this situation we're in today, and maybe the future stock crash that happens, which fucks every investor, retail and otherwise, that is connected to a neocloud, maybe we could have avoided that. We can't now. So thankfully, it looks like Australian investors

11:15won't get harmed as much as American ones. But when it comes down to the point, when this stuff falls apart, when it comes to the point when people get hurt, people are going to ask who to blame, and the answer is partially the media. And if you're a member of the media hearing this, maybe it's not about you. Maybe you did your job. Maybe you were critical. Or were you? Go and check your work. Go and check whether you actually criticized and actually scrutinized and were an actual skeptic of these companies.

11:46Or whether you spent far more effort scrutinizing the scrutinizers. Because that's how we get bubbles. That's how hype cycles grow. And that's how regular people get fucked. Fucked as retail investors or those who are having their insurance funds put into these companies. And guess what? Guess fucking what? You know who actually backed Firmus? Blackstone's credit and insurance fund. So when this dog dies, and it will, it will be directly

12:17as a result of nobody really pointing that out and allowing and actually greenlighting and approving and celebrating companies like Blackstone sinking pension funds and insurance funds into these dodgy goddamn companies. All of this could have been avoided and my anger that you hear in my voice is because I've been saying it for years. And I hope something changes as a result of this. I will be calling for change. Been taking detailed notes. Oh, how I have. And I will, of course,

12:48be back next week with a great episode on Borns and, of course, another monologue. It's always a pleasure to serve you. Thanks as ever for listening. I love you all. Lisa, tell them about our new show. We have a new podcast. It's called Don't Lie to Me. I'm Lexi Iwanu. We're two best friends 22 years apart but so close at heart. And I'm Lisa DiGiulio, the old one, which means we have wildly different references,

13:19occasionally different opinions, and at this point in my 50s, I've lived it all. Now in my 30s, being the founder of New Shoes, Good Taste is my business. Listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

13:34I'm Melissa Jeltson, host of the What Happened to Her podcast. We're kicking off the season with the Sandra Birchmore story, a case the police wrote off as a suicide in a snowstorm. Her family never bought it and the man they suspected wore a badge. You never know who that devil is because he's wearing a disguise. Sometimes it's a police uniform. And you can get access to all episodes 100% ad-free with an iHeart True Crime Plus subscription exclusively on Apple Podcasts, available only to

14:05iHeart True Crime Plus subscribers. So don't wait. Head to Apple Podcasts, search for iHeart True Crime Plus and subscribe today. I'm Fox Sports reporter, Jenny Taft. And I'm former U.S. Women's National soccer team player, Carly Lloyd. And on our new podcast, Whatever It Takes, nothing is off limits. I played with players that didn't truly love the game. I found the love with the ball at my foot. I don't care what I'm being asked to do at Fox. I'm going to go get some reps and love it and embrace it.

14:36Listen to Whatever It Takes with Carly Lloyd and Jenny Taft on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts. What happens when romance gets a little monstrous? On Radio 831, a romance podcast, join us, Sanjana Basker, and Tyler McCall as we host our own monster romance extravaganza. We're joined by the villain edit author, Rosie Dannen, and sentient object romance expert, Gracie Delgado, to explore what these unexpected love stories can reveal about desire, fantasy, and what we actually want.

15:06Listen to Radio 831, a romance podcast, on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts. I've been hearing for decades that the markets can solve climate change. Today, we have more incentives for market solutions than ever, and emissions are rising. On this season of Drilled, Carbon Cowboys, the story of three market solutions colliding in one multinational boondoggle. You gotta give Bruce and the guys credit. They're Republican. They don't give a s*** of money. Listen on the iHeart Radio app,

15:38Apple Podcasts, or wherever you get your podcasts.

15:43This is an iHeart Podcast. Guaranteed human.