Key Takeaways
- • Notable Capital managing partner Hans Tung argues that technological leadership depends on infrastructure: in his view, the British dominated global trade for more than 100 years because of steel ships powered by steam engines, and data centers play the same role for AI that railroads played in the 19th century.
- • Tung contends that compute capacity matters more than model quality, saying "If you don't have enough compute to meet demand, it doesn't matter if you have a better model."
- • According to the article, China controls about 24 gigawatts of working data center compute capacity versus at least 47 gigawatts in the U.S. by conservative estimates, but China leads in high-speed rail and shipbuilding.
- • China accounts for over 80% of new global shipbuilding orders, and one state-owned conglomerate, China State Shipbuilding Corporation, builds more commercial ships each year than the aggregate U.S. shipbuilding industry has built since World War II ended.
- • A Columbia Business School professor estimates AI infrastructure buildout could average 3.6% of U.S. GDP annually through 2032, a figure the article presents as an estimate.
Summary
Fortune columnist Allie Garfinkle profiles Hans Tung, managing partner of Notable Capital and an early backer of Airbnb, Coinbase, and Anthropic, who argues that the AI transition should be read through the lens of earlier industrial revolutions. Tung points to Britain's adoption of steel ships powered by steam engines, noting that in 1890, 80% of the world's ships came from British shipyards. In his telling, the infrastructure of that era, rather than any single invention, gave Britain global naval and trade dominance for more than a century.
Applying the same framework to AI, Tung argues that data centers are the railroads of the 21st century. He cites the American Civil War, where the North's more developed rail network shaped the outcome, and says that most major battles occurred within 24 miles of a railroad. His core point is that talent and models lose their value without the capacity to deliver them at scale. "The models that win are the ones that are available," he said.
The article frames these arguments within geopolitical competition. Tung says China has outbuilt the U.S. in subway and high-speed rail over roughly two decades and now has more high-speed rail than the rest of the world combined. The article also cites estimates that over 80% of new global shipbuilding orders go through China. On data centers, China has about 24 gigawatts of working capacity compared with at least 47 gigawatts in the U.S. by conservative estimates, but the U.S. faces the challenge of executing a large buildout. The article notes concerns including community pushback and the capacity of the electric grid.
Tung's conclusion is that invention alone does not determine winners. "We're not going to just win," he said. "We have to work hard and make sure we win."
Applying the same framework to AI, Tung argues that data centers are the railroads of the 21st century. He cites the American Civil War, where the North's more developed rail network shaped the outcome, and says that most major battles occurred within 24 miles of a railroad. His core point is that talent and models lose their value without the capacity to deliver them at scale. "The models that win are the ones that are available," he said.
The article frames these arguments within geopolitical competition. Tung says China has outbuilt the U.S. in subway and high-speed rail over roughly two decades and now has more high-speed rail than the rest of the world combined. The article also cites estimates that over 80% of new global shipbuilding orders go through China. On data centers, China has about 24 gigawatts of working capacity compared with at least 47 gigawatts in the U.S. by conservative estimates, but the U.S. faces the challenge of executing a large buildout. The article notes concerns including community pushback and the capacity of the electric grid.
Tung's conclusion is that invention alone does not determine winners. "We're not going to just win," he said. "We have to work hard and make sure we win."
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