Fermi America and the Texas Tech University System announced in June that it is building a first-of-its-kind behind-the-wall HyperGrid in Amarillo. The project, shown in this rendering, is expected to be the world’s largest energy-driven AI complex. Texas billionaire Toby Neugebauer, who co-founded the company with former Gov. Rick Perry, has been trying to capitalize on two hype cycles that have spurred ridiculous valuations: artificial intelligence and small nuclear reactors. But critics question whether Fermi may be all hat and no cattle.
Fermi America/Dallas Morning News
Rick Perry addresses a crowd on Thursday, Feb. 15, 2024. Texas billionaire Toby Neugebauer, who co-founded Fermi America with former Gov. Rick Perry, has been trying to capitalize on two hype cycles that have spurred ridiculous valuations: artificial intelligence and small nuclear reactors. But critics question whether Fermi may be all hat and no cattle.
Kim Brent/Beaumont Enterprise
Then-Secretary of Energy Rick Perry speaks during the luncheon at CERAWeek by S&P Global. Texas billionaire Toby Neugebauer, who co-founded Fermi America with Perry, has been trying to capitalize on two hype cycles that have spurred ridiculous valuations: artificial intelligence and small nuclear reactors. But critics question whether Fermi may be all hat and no cattle.
Michael Wyke/Contributor
Texas billionaire Toby Neugebauer, who co-founded Fermi America with former Gov. Rick Perry, has been trying to capitalize on two hype cycles that have spurred ridiculous valuations: artificial intelligence and small nuclear reactors. But critics question whether Fermi may be all hat and no cattle.
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Texas billionaire Toby Neugebauer is having a stretch of bad luck, and so is anyone who has invested in his companies.
When he was CEO of Fermi America, a startup promising to build a nuclear-powered mega-datacenter near Amarillo, Neugebauer said he “would auction off my two boys” before selling the company’s natural gas generators, a scarce commodity these days.
A few weeks later, after the board of directors fired him, Neugebauer called on “the Fermi board to conduct an immediate process, led by an independent investment bank, for the sale of the company.”
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Fermi is Neugebauer’s second startup where investors rebelled as the company crashed. As Fermi’s largest shareholder, Neugebauer is trying to cash out after its stock price fell 81% since it was listed in October on the NASDAQ and valued at $12.5 billion. Critics say Neugebauer is at best a bad manager and accuse him of misleading investors.
Neugebauer and Fermi executives did not respond through multiple avenues to multiple requests for comment. But in a press release, Neugebauer expressed his belief that “Fermi is creating the most efficient and effective solution for the AI energy crisis” and “continues to be aligned with what is in the best interest of all shareholders.”
The company, co-founded with former Gov. Rick Perry, has been trying to capitalize on two hype cycles that have spurred ridiculous valuations: artificial intelligence and small nuclear reactors. But critics question whether Fermi is all hat and no cattle with no customers, no revenue and a rapidly depleting bank account.
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Poor past performance
Neugebauer’s previous business catastrophe, a company called GloriFi, also tried to ride two investment waves in financial technology, known as fintech, and “anti-woke” investing. He attracted some of the nation’s most conservative investors, but they would soon accuse him of squandering millions of dollars, triggering lawsuits full of shocking allegations.
Before starting GloriFi, Neugebauer made $1.1 billion as an investor, starting with investment banker Kidder, Peabody & Co., before co-founding private equity firms Windrock Energy and Quantum Energy Partners. He used those profits to buy a share of Major League Soccer team Austin FC and invest in well-connected politicians.
GOP politics runs in the family. His father, Randy Neugebauer, represented Lubbock in the U.S. House of Representatives. Toby Neugebauer gave Perry $110,000 while he was governor and donated $136,000 toward his 2011 presidential bid. Until 2024, he lived in a $40 million near-replica of the White House in Dallas’s Preston Hollow neighborhood. (The 17,679 square foot, six-bedroom mansion does not include an Oval Office.)
Neugebauer, in 2021, started work on GloriFi, an “anti-woke” bank backed by fellow right-wing billionaires Peter Thiel, Joe Lonsdale, Vivek Ramaswamy and Ken Griffin. As CEO, Neugebauer pitched the firm to conservatives who viewed Wall Street as too liberal.
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However, the company imploded within days of its launch. In a 2023 lawsuit, Neugebauer accused the investors named above of sabotaging the bank by denying it funding as part of a scheme to take it over.
The investors were upset with Neugebauer and pulled their funds when they couldn’t oust him. GloriFi board member Nick Ayers, who served as former Vice President Mike Pence’s chief of staff, alleged Neugebauer was volatile, drinking on the job and mismanaging the company, the Wall Street Journal reported. The company remains in bankruptcy court, where a trustee accused the former CEO of fraudulent transfers of assets, court documents show.
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A year later, Neugebauer got his GloriFi band back together to start Fermi. He included GloriFi board member Charlie Hamilton as Fermi’s chief site officer, GloriFi chief financial officer Miles Everson became Fermi’s CFO, GloriFi’s chief marketing officer Cathy Landtroop filled the same role at Fermi, and GloriFi’s vice president of finance and capital markets Rodrigo Acuna is a Fermi board member.
Alienating allies
When troubles mounted earlier this year, Neugebauer began to misbehave in public. Politico reported the CEO became “loud and belligerent” at a NVIDIA conference with Commerce Secretary Howard Lutnick over whether South Korea would invest in Fermi’s data center.
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At the CERAWeek conference in Houston, the billionaire argued on stage with Amanda Peterson Corio, Google’s global head of data center energy. The two disagreed on whether data centers should connect to the grid, with Neugebauer alienating a potential customer.
Fermi fired Neugebauer a few weeks later, but his allies remain in control, according to Fuzzy Panda, a research firm that makes money betting against companies.
Fermi has yet to sign a tenant for its data center project and is searching for power plant equipment. Fermi must also renegotiate a lease with an old Perry ally, former GOP state Sen. Brandon Creighton, who is the new Texas Tech University chancellor and Fermi’s landlord.
Stock analysts differ over Fermi’s chances for survival, but on one thing they agree: The sooner Neugebauer fades into the background, the better Fermi’s chances of building at least one data center, let alone a nuclear power plant.
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Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.