{"id":127835,"date":"2026-08-03T10:46:07","date_gmt":"2026-08-03T10:46:07","guid":{"rendered":"https:\/\/www.europesays.com\/ai\/127835\/"},"modified":"2026-08-03T10:46:07","modified_gmt":"2026-08-03T10:46:07","slug":"data-centers-alone-wont-build-the-ai-economy-wral-com","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ai\/127835\/","title":{"rendered":"Data centers alone won\u2019t build the AI economy :: WRAL.com"},"content":{"rendered":"

In my previous
\ncolumn<\/a>, I argued that artificial intelligence is quietly restoring geography as
\na competitive advantage. For much of the Internet era, distance became
\nincreasingly irrelevant. Computing migrated into distant cloud data centers,
\ninformation traveled around the globe in milliseconds, and economic activity
\nbecame less dependent on physical proximity. The emergence of AI, and
\nespecially the coming generation of physical AI systems, appears to be
\nreversing part of that equation. <\/p>\n

Intelligence is
\nmoving closer to where decisions are made, making data centers, fiber networks,
\nelectrical grids, and low-latency infrastructure strategically important once
\nagain. I have gotten feedback to that article from readers that questioned my
\nthesis. Some have made a reasonable argument that truly low-latency use cases
\nwill build compute power directly into edge devices because even a local data
\ncenter may be too slow a feedback loop for real time sensing and actuation.<\/p>\n

These readers are
\nnot wrong – but I maintain that local infrastructure is likely to provide
\neconomic advantage that we may not fully understand, a trend we have seen
\nrepeat itself with past technology infrastructure, from electrical grids to
\nwireless networks. And I believe there will be many use cases that are not able
\nto handle the added cost and energy requirements of local compute power,
\nnecessitating local hyperscaler capacity. Regardless of whether the thesis is
\nright or wrong, there is a different question that I want to dig into this
\nweek.<\/p>\n

What happens after
\ndata center infrastructure arrives?<\/p>\n

Over the past week,
\nI’ve found myself returning to a sentence from the conclusion of that article: Infrastructure
\ncreates opportunity; people create value.<\/a> I wrote this as a tidy way to end
\nthe piece, and as a reminder that the future economy won\u2019t be shaped by AI.
\nMore accurately, it will be shaped by people who use AI. We must not forget
\nthat people remain at the center of every technological revolution.<\/p>\n

In the current
\ndebates, communities across the country are asking whether they should recruit
\nhyperscale data centers, expand electrical capacity, or invest in digital
\ninfrastructure that positions them for the next generation of economic growth.
\nThose are important questions, and I continue to believe that communities
\nwilling to invest thoughtfully in infrastructure generally outperform
\ncommunities that define themselves by scarcity. But they miss perhaps the most
\nimportant question to ask.<\/p>\n

The more
\nconsequential question is whether your community will know what to do once the
\nnew technology arrives. That distinction has followed every major technological
\ntransition in human history.<\/p>\n

One of the
\nrecurring themes I provide in my conference presentations is that while we
\noften divide history into political eras or national boundaries, economies are
\nmore often organized around technologies. Bronze reshaped civilizations because
\nit created stronger tools and more capable armies than stone. Iron displaced
\nbronze. Steam reorganized manufacturing. Electricity transformed industry and
\ncities. The transistor reorganized information. The Internet reorganized
\ncommunication.<\/p>\n

Every one of those
\ntechnological transitions altered where wealth was created and how societies
\norganized themselves around it. Artificial intelligence will be no different.
\nThe communities that prosper in the Data Economy will not simply be the ones
\nwith the fastest networks or the largest data centers. They will be the ones
\nthat learn how to organize themselves around this new technological foundation.<\/p>\n

That has led me to
\nthink about another kind of infrastructure. If the first wave of AI investment
\nhas been physical infrastructure, I believe the second wave must focus on what
\nI would call institutional infrastructure.<\/p>\n

When we hear the
\nword infrastructure, our minds naturally go to roads, bridges, electrical
\ngrids, substations, water systems, and fiber optic cable. Those investments
\ncreate capacity. They make certain kinds of economic activity possible.<\/p>\n

Institutional
\ninfrastructure does something different. It activates that capacity. It is the
\ncollection of organizations, relationships, and experiences that help people
\nrecognize opportunity, acquire new skills, meet collaborators, commercialize
\nresearch, start companies, find customers, and ultimately create economic value
\nfrom the physical infrastructure surrounding them.<\/p>\n

There are numerous
\nrecognizable examples of institutional infrastructure:<\/p>\n

\u25cf\u00a0\u00a0\u00a0\u00a0
\nAccelerator programs<\/p>\n

\u25cf\u00a0\u00a0\u00a0\u00a0
\nA university commercialization
\noffice<\/p>\n

\u25cf\u00a0\u00a0\u00a0\u00a0
\nCoworking communities<\/p>\n

\u25cf\u00a0\u00a0\u00a0\u00a0
\nEntrepreneur meetups<\/p>\n

\u25cf\u00a0\u00a0\u00a0\u00a0
\nA mentor network<\/p>\n

\u25cf\u00a0\u00a0\u00a0\u00a0
\nAngel investment groups<\/p>\n

\u25cf\u00a0\u00a0\u00a0\u00a0
\nAn AI literacy initiative<\/p>\n

None of these
\norganizations or activities individually transforms a regional economy. Yet
\ntogether they create the connective tissue that allows ideas to move between
\nuniversities, entrepreneurs, investors, manufacturers, and customers. They are
\nevery bit as foundational to a modern innovation economy as roads were to the
\nindustrial economy or broadband was to the Information Age.<\/p>\n

I’ve come to
\nappreciate successful outcomes from strong systems of institutional
\ninfrastructure through my own work over the years. If you want a nearby
\nexample, consider Wilson, North Carolina. Long before gigabit internet became
\ncommonplace, Wilson made the strategic decision to build a municipal fiber
\noptic network<\/a>. But the fiber itself was never the strategy.<\/p>\n

Fiber was the
\nfoundation that created economic capacity for Wilson and the surrounding
\nregion.<\/p>\n

Over the years, the
\ncommunity layered institutions onto that foundation to activate that capacity.
\nThey launched the Exchange, a municipal operated coworking space. They invested
\nin an accelerator program [full disclosure – I lead the team that operates that
\naccelerator]. Wilson began hosting an annual innovation conference, which will
\nhold its 10th anniversary event on October 22<\/a>. <\/p>\n

Wilson even created
\na brand for the community to better understand the economic potential their
\nfiber network could unlock. Gig EAST, representing Entrepreneurship, Arts,
\nScience, and Technology<\/a>, tells the story of Wilson\u2019s future economic prosperity
\nand quality of life resultant from technological and institutional
\ninfrastructure investments. <\/p>\n

In short, Wilson
\nhas activated human capacity around the core technological shifts leading to
\nthe Data Economy. And growth in the city is booming.<\/p>\n

But it has not
\nhappened overnight. Economic development headlines often reward immediacy.
\nLarge corporate recruitment is attractive because it tells a story of
\nnear-instant impact. It produces renderings, ribbon cuttings, construction
\nannouncements, and projections of thousands of future jobs. Those announcements
\nfit neatly within election cycles and budget cycles. They provide visible
\nevidence that something has happened. <\/p>\n

Unfortunately those
\nannouncements rarely actually deliver the promised outcome, so smart
\ncommunities take a more diversified approach. Go whale hunting for corporate
\nrelocations if that\u2019s a political must. But hedge the bets on your economic
\nfuture with an entrepreneurial strategy.<\/p>\n

Remember, building
\nan entrepreneurial economy follows a different timeline. It begins with a
\nresearcher deciding to commercialize an invention. A founder working out of a
\ncoworking space. A first customer. A second employee. A local mentor
\nintroducing an entrepreneur to an investor. A startup surviving long enough to
\nhire ten people instead of two.<\/p>\n

For years,
\ninvestments in institutional infrastructure can appear almost insignificant.
\nThen, almost imperceptibly, they begin to compound. The remarkable irony is
\nthat this slower path is, by a wide margin, the less expensive one. <\/p>\n

Communities
\nroutinely commit incentive packages worth hundreds of millions of dollars to
\nrecruit a single employer. Yet for a fraction of that amount, sustained over
\nmany years, a community can build an ecosystem that repeatedly creates new
\nemployers rather than hoping to attract one. To give you an idea, investing in
\na high quality startup accelerator is about the same cost as installing a
\nsingle traffic light. Or securing a new garbage truck. Or paving a few blocks
\nof sidewalk.<\/p>\n

For perspective,
\nRaleigh\u2019s first coworking space, HQ Raleigh, began with a small investment from
\nfour forward-looking residents. In 2013, a few startup founders came together
\nat that coworking space to launch Pendo<\/a>. Nine years later, Pendo built a downtown
\nhigh rise<\/a> to house its ever growing team.\u00a0<\/p>\n

The challenge of
\ninstitutional infrastructure is not economics. It is that it requires patience
\nwhile not having a defining moment. There wasn\u2019t a singular milestone in the
\nearly Pendo story that would have boosted a political candidate\u2019s campaign. The
\ngolden shovel moment came years later. But it came because of patient
\ninstitutional infrastructure that has built across the Triangle. <\/p>\n

Infrastructure has
\nnever been sexy. It requires steady investment and maintenance. No one expects
\na bridge to be built once and then ignored for the next fifty years. Roads
\nrequire resurfacing. Electrical grids require modernization. Broadband networks
\nrequire upgrades as technology evolves. We understand instinctively that
\ninfrastructure is not a project. It is an ongoing commitment. Institutional
\ninfrastructure deserves to be viewed through the same lens.<\/p>\n

Entrepreneurial
\necosystems require maintenance. AI literacy must evolve as the technology
\nevolves. Accelerator programs should change as markets change. Networks must be
\ncontinuously renewed as experienced founders become mentors and the next
\ngeneration takes their place.<\/p>\n

If we accept that
\nmaintaining physical infrastructure is a legitimate public responsibility, we
\nshould not be surprised that maintaining institutional infrastructure requires
\nthe same long-term commitment. That does not mean taxpayers should carry the burden
\nalone. In my last article, I argued that if hyperscale AI companies require
\nextraordinary new investments in electricity, water, and grid capacity, they
\nshould help finance the expansion of those resources rather than shifting the
\ncosts onto local residents.<\/p>\n

I would extend that
\nprinciple one step further. If artificial intelligence is becoming the
\nfoundational platform upon which future businesses will be built, then the
\ncompanies building that platform also have a vested interest in ensuring
\ncommunities know how to use it.This is not philanthropy. It is market
\ndevelopment.<\/p>\n

Every entrepreneur
\nwho builds an AI-native company becomes a customer. Every manufacturer that
\nadopts AI becomes a customer. Every small business that learns to integrate
\nintelligent systems expands the market for cloud computing, models, software,
\nand digital services. The fortunes of local communities and the fortunes of the
\nlargest technology companies are far more aligned than either side sometimes
\nrecognizes.<\/p>\n

Perhaps communities
\nshould begin asking a different question when negotiating major AI
\ninfrastructure projects. Not simply, “How many jobs will this data center
\ncreate?” But, “How will this investment help our community create the
\nnext generation of companies?” And will that hyperscaler vendor commit a
\ntiny percentage of the data center project budget to fund the next decade of
\ninstitutional infrastructure for the community in which it is built?<\/p>\n

I would argue these
\nmassive tech companies should provide funding for accelerators and coworking
\nspaces and meetup groups. They should conduct AI literacy initiatives. They
\nshould support university partnerships, commercialization programs, startup
\ncompetitions, and entrepreneur support organizations. A seven figure annual
\ncommitment barely dents the budget of a data center project, but can have an
\noutsized positive impact on the community in which it sits.<\/p>\n

Physical
\ninfrastructure determines whether intelligence can exist in a place.
\nInstitutional infrastructure determines whether that intelligence creates local
\nprosperity. The Data Economy has arrived. The question is not whether
\nartificial intelligence will reshape the economy. The question is whether we
\nwill build (and fund) the institutions that allow our communities to shape it
\nin return.<\/p>\n","protected":false},"excerpt":{"rendered":"In my previous column, I argued that artificial intelligence is quietly restoring geography as a competitive advantage. For…\n","protected":false},"author":2,"featured_media":127836,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[24,25,309,205,134,10684],"class_list":["post-127835","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ai","tag-ai","tag-artificial-intelligence","tag-business","tag-infrastructure","tag-technology","tag-wral-techwire"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/127835","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=127835"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/127835\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/127836"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=127835"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=127835"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=127835"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}