The Exchanges

Q So, for people who don't know what Optical connectivity means. Can you explain that? We're moving from copper wires to optics and transferring data with light, but what does that mean?

A Obviously there are fibers and fibers are essentially glass. They're just conductors. Instead of having wires, copper wires, you have fibers and fibers basically contains the light, just like a wire or a copper strand contains electricity. And so what you get with Uh, fiber optics is the ability to move data faster over longer distances with less heat and less power than you get with, uh, electricity. So if you think about the way data centers are architected today, it's mostly copper wires, right? Ethernet cables are essentially copper wires. And copper wires, the physics of copper is there's a resistive property. So As data tries to move across the wires, it gets hotter, and the resistance prevents it from going all that far. And so now inside the data center, you have speeds are increasing, bandwidths are increasing, and copper can no longer carry these signals, uh, the distances they need to go. And so you have more and more optics now coming into the data center. And optics essentially is just light, right? We're just shining light along a fiber, and that, that light is modulated, meaning it turns on and off at really, really high speeds, and that's what creates the, the transmission.

AI assessment note: “fibers basically contains the light, just like a wire or a copper strand contains electricity.”

Q So you joined a CEO in 20, 25. What is it like to take the reins in the craziest market ever? And also give a little bit of your background of where you were before.

A Yeah, I mean, this is, uh, you know, an interesting thing. I think if you look at most CEOs, They either retire or somebody retires them for them, right? You don't see too many CEOs change jobs. And I've actually been lucky enough now to be CEO of three different public companies. The first public company I was a CEO of is a company called Finisar that was optical. That's now the heartbeat of one of our biggest competitors, but also one of our biggest partners in Coherent. Coherent's built around The engine that was Finisar that we ended up selling to them. Then I was a CEO of a semiconductor company. I'm mostly a semiconductor guy, and I was CEO of a company called Synaptics for five or six years. And then I joined Lumentum, as you're pointing out, at a time where The board of directors showed me a forecast and they said, hey, here's what we think the company is going to do. And I, of course, as one does, discounted it by about 50%, and it's been up probably four X over what they even showed me. So we've just hit the company with the right products at absolutely the right time. Really, our team, before I got there, the previous CEO set it up well, right products, right roadmap, And we have all of the goods that people are looking for now as they convert their data centers to more and more of the fiber optics.

AI assessment note: “I've actually been lucky enough now to be CEO of three different public companies.”

Q Okay, so we did this interview with Tom Mueller who was the first employee at SpaceX and we were talking about data centers in space and we put out the videos and in the YouTube comments, you know, there's a lot of fear-mongering about birds and killing birds with the lasers and all that kind of stuff. So can you dispel some of the misconceptions about lasers and their strength?

A And look, it's all about power. I'll give you a really good example, right? The iPhone with the face ID, That's a laser product that beams lasers onto your face. And, you know, one of the concerns of course Apple had was, hey, I want to have people's eyes burning out, right? So the power of those lasers are relatively modest and you're never going to burn somebody's eye out. Similarly, you're not going to have birds burning up as these lasers shoot data down to the, to the earth, right? It all has to do with the power. You can have these, Super high power lasers that can shoot down missiles that can cut through metal. You can have modestly powered lasers that power the internet backbone, and you can have these super low power lasers that do things like the face ID.

AI assessment note: “Similarly, you're not going to have birds burning up as these lasers shoot data”

Q all about spending smarter, moving faster, but I take this in a personal lens. So I'm really curious from your standpoint, you've built up a tremendous career. You've been CEO of three public companies. I like to think performance component of that is like who you surround yourself with, who you're mentored by, who you're inspired by those types of figures along the way. Who are those figures for you?

A Look, I've, I've been super lucky. I mean, um, you know, you, you talk about Brex and performance, and I think you, you've got the right theme and the right partner for what you're doing. Um, I've been, been very lucky. My father, interestingly enough, was an electrical engineer, right? He was one of the first, uh, Electrical engineers that came over from Europe. He's actually, uh, was based in the United Kingdom and came over just shortly before I was born. And he had tremendous influence. He told me as I was growing up, you can have any major you want in college, just as long as the last word is engineering. Electrical, mechanical, civil, I don't care. Gotta be an engineer. And he had tremendous impact, I think, on me. And then as I got in my career, I spent a lot of years at a company called Broadcom, which I know you've covered pretty extensively. Broadcom was a very interesting company in that it was bought by Avago, and then the name stayed, the Broadcom name was the surviving name, but there was a gentleman at Broadcom, a guy called Bob Rango that I worked for for years and years, and Bob served on several boards and had a long and prestigious career, but he had a lot of Impact on me sort of from as a business guy and how I think about, uh, business problems.

AI assessment note: “there was a gentleman at Broadcom, a guy called Bob Rango that I worked for”

Q I think it was Tony. We were on a call before our interview, and he was pointing out the great irony of spending 10 trillion dollars over the next couple years on data center build out to move data from meters down to centimeters and millimeters. So, how is this process and this build out, how are you managing it?

A Yeah, look, I mean, you know, fiber optics has been the Backbone of the internet for years, right? So when the internet first came in was the sort of the first great wave of the optical companies. And what happened was you're digging up the earth in the United States, in Paris, in London, wherever it might be, and installing these fiber optic cables because the internet now is traveling over huge distances. And so the first real optical, uh, you know, sort of the The big wave was now building the backbone of our internet infrastructure across the world. And you actually have fiber optic cables today that run under the ocean. So if we want to have communication that goes between Paris and New York, there are fiber optic cables that are actually buried in the ocean, and those fiber optic cables conduct these signals. But as I said a minute ago, what's happened is Now you're going to faster and faster speeds, and when you go to faster and faster speeds, the physics say that copper can't work or it doesn't work as well, and so what you have now is this internet, this big backbone, this big infrastructure that we've played in for numerous decades, and those volumes are actually relatively modest. You're talking about volumes of, let's say, a thousand units a quarter. And now we're being asked by these hyperscalers to deploy in 1,000,010 of millions of units. So it's really changed t…

AI assessment note: “now we're being asked by these hyperscalers to deploy in 1,000,010 of millions”

Q time to get Brex AF. Learn more at brex.com slash sorcery. That's B-R-E-X dot com slash S-O-U-R-C-E-R-Y. Bye. That supply constraint is creating a lot of demand, but it's also creating tremendous demand for the stock, which is crazy to see. The stock was up, I think, almost a thousand percent at one point. How do you handle that mentally as a CEO when you know that you are constrained?

A It's tough. I mean, they, you know, the, the interesting thing that the question we get all the time, and I think you've asked many of the people on your show is, is this a bubble? Right. And what's interesting about the optical industry is if there are no more data center build outs, if you don't see this crazy rate of construction that we've seen over the past three or four years, still you're going to have a shift within the existing properties from electrical signaling to optics. Right. And so we, our growth rate, which has been astronomical, we've grown Three times. I've been with the company only a short period of time. I've been there about five quarters now. And in those five quarters, we've tripled our top line revenue. So the stock price has gone up, you know, 10 or 12 times. As you correctly point out, at one point, it was up over a thousand dollars. It's come back, I think, on a lot of the concern around AI over the last couple of weeks. But we have a high-performing stock largely because People are seeing the future and seeing the future start to play out where you have more and more optical components going into these data centers and driving super high demand for our products.

AI assessment note: “the question we get all the time... is, is this a bubble?”