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Will GPUs become a new asset class? Our latest podcast guest may have some answers.
Stephen Balaban, co-founder and CTO of Lambda, joins us to explain why a $40,000 monthly AWS bill was the best thing that ever happened to the company in its early days, why he recently handed over the CEO title after fourteen years at the helm, and what is really going on in the GPU market, and whether we should be concerned or excited about the opportunity.
About Lambda
Lambda, branded “The Superintelligence Cloud,” is an AI infrastructure company founded in 2012 that builds and operates gigawatt-scale AI factories and GPU supercomputers for training and inference, serving AI researchers, enterprises, and hyperscalers.
Watch now - Stephen Balaban, co-founder at Lambda
During our latest episode, we also learn how Lambda pivoted from a facial-recognition startup, to a data-collection hardware product called Lambda Hat, to an AI consulting shop nobody would fund, to the largest generator of Deep Dream images on the internet, before finally landing on an opportunity that very few saw coming: GPU cloud businesses.
We also explore an interesting trend and opportunity: could GPUs become a new institutional asset class? We also discuss the lessons Lambda learned from partnering with one of the world’s most talked-about companies: Nvidia.
Watch or listen now across YouTube, Apple Podcasts, Spotify, and X
Download the transcript 👇
Timestamps
(0:00) Meet Stephen Balaban
(2:13) The State of GPUs
(4:40) 2026: Is This the Breakthrough Year?
(6:27) Starting Lambda in 2012
(11:14) Spotting the GPU Opportunity
(16:42) How Stephen Stays Focused
(18:47) Starting a Company with Your Brother
(21:44) Stepping Down as CEO
(27:52) How to Find a New CEO
(29:34) Not Raising from Traditional VCs
(31:30) Where Does the GPU Opportunity Go Next?
(34:35) GPUs Becoming an Asset Class
(36:15) What Keeps Stephen Up at Night
(39:33) How Many AI Models Will There Be?
(41:15) Partnering with Jensen Huang
(46:21) How Technology Has Changed
Our notes from this conversation
1. Pivoting isn’t a failure mode for Lambda, it’s the operating model.
Since 2012 the company has run through roughly half a dozen pivots: facial recognition software, an AR data-collection hardware product called Lambda Hat, a failed “Accenture for AI” consulting play no VC would fund, and Dreamscope, an app that became the largest generator of Deep Dream images on the internet before the fad died. Stephen’s rule: try something, if it works keep doing it, if it doesn’t move on.
2. An expensive AWS bill accidentally invented the company’s real business.
At the peak of the Deep Dream craze, Lambda was paying $40,000 a month to Amazon, nearly enough to sink it. An early investor pushed the team to build their own servers instead. The $60,000 CapEx bet to build workstations wiped out that $40,000 monthly OpEx completely. Workstation sales went from $35,000 in March to $140,000 in May, on the way to $3 million in revenue that first year. The GPU cloud business was the byproduct of a cash crunch, not the plan.
3. GPUs are becoming an asset class, not a depreciating expense.
Short sellers have argued GPUs carry a three-year usable life. Lambda’s counterevidence: V100s launched in 2017 are still nearly fully sold out in its cloud today, generating cash flow almost a decade later. Balaban’s comparison is insurance companies parking their float in power plants and toll roads, stable infrastructure that institutional and eventually retail capital moves toward as a category matures.
4. Starting a company with your brother for moral support.
As a solo founder, your mood on any given day is the company’s mood that day. A co-founder averages two signals instead of riding one. Stephen credits this as much as anything for surviving Lambda’s early years, run out of a small Chinatown apartment with his brother and co-founder, Michael.
5. The requirement to study computer science to build software is gone.
The clearest signal: anyone can now ship real tools built with Claude, people he describes as "meant to be programmers" who majored in something else. The real gate was never a CS credential, it was structured thinking, and that gate is now open to anyone.
Links
Follow Ollie on X: https://x.com/ollieforsyth
Follow Stephen on X: https://x.com/stephenbalaban
Visit Lambda: https://lambda.ai
Previous episodes include
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