As an AI startup CEO, I pay each employee $18,000 a year to live close to work, and the investment is worth it

Rilla AI

• Rilla's CEO offers an $18K housing stipend to help employees live close to the AI startup's office.
• Rilla is working on offering a gym, sauna, and cold plunge within its Williamburg office building.
• Employees at the startup typically work 12 hours a day for six days a week.

This as-told-to essay is based on a conversation with Sebastian Jimenez, the CEO and cofounder of Rilla, an AI startup based in New York City that builds speech analytics software for in-person sales teams. Rilla relocated to Williamsburg, Brooklyn, in 2026. The essay has been edited for length and clarity.

I started Rilla in 2019 because I became fascinated with the creative process.

I used to do stand-up comedy in college, and I loved the idea of trying something, failing, getting feedback, and improving. That's what building a startup feels like.

That same mindset is part of why we now offer employees an $18,000 annual housing stipend if they live within about a 10-minute bike ride of our Williamsburg office. We want to remove friction from people's lives so they can spend more time in the flow.

We're one of the fastest-growing AI startups, but we're not trying to replace people. We're building what I like to call an Iron Man suit for salespeople.

That same philosophy shapes how we think about our own employees.

The flow state

Rilla has what many people would call an insanely hardcore culture.

I was deeply influenced by the book "Flow: The Psychology of Optimal Experience." The central idea is that one of life's purposes is to spend as much time as possible in a state of complete focus and immersion. That's what we optimize for.

We believe at Rilla that we need to create an environment where our employees are in the flow almost 100% of the time.

Our employees typically work 12-hour days and come into the office six days a week. We don't clock people in or out, and we don't force anyone to work here. We select people who want this kind of environment. Many of them are former Division I athletes, entrepreneurs, or people who have always pushed themselves to perform at a very high level.

I think those hours help cut out a lot of the extra fat in life. When you spend that much time working, you become much more intentional about how you use the rest of your day.

The new office space

Rilla signed a 10-year lease for a penthouse office space at 25 Kent in Williamsburg.

Rilla

As we grew to around 120 employees, we realized something was working against us: our office.

Most commercial buildings have sealed windows, which means CO₂ builds up throughout the day. Once CO₂ levels climb high enough, studies have shown cognitive performance can fall significantly. People think they're tired at 3 p.m., but often it's because they're breathing stale air.

That realization led us to hire Dr. Joe Allen from Harvard, one of the world's leading experts on healthy buildings. We toured around 20 offices looking for one with exceptional ventilation.

We eventually signed a 10-year lease for the entire penthouse floor at 25 Kent in Williamsburg because it has what Dr. Allen told us is the best ventilation system he'd seen in New York City. Clean air may sound boring, but if your business depends on creativity and focus, it matters.

Our benefits pay off

Every benefit we offer has one purpose: helping people stay healthy and spend more time doing meaningful work.

We're not trying to coddle people. A lot of companies offer perks that end up distracting employees. We ask ourselves, "Can this help someone get into the flow?"

That's why we pay for three meals a day. It's why we're building a gym with a sauna and cold plunge. And it's why we offer employees an $18,000 annual housing stipend if they choose to live within about a 10-minute bike ride of the office.

Commuting is one of the most annoying parts of people's day. If someone works 12 hours, sleeps eight hours, and works out for an hour, they don't have much free time left. I'd rather they spend that time with family, reading, or doing something meaningful than sitting on a subway.

Altogether, we spend roughly $37,000 per employee each year on housing, meals, and fitness benefits before you even include healthcare, retirement benefits, or equity.

We're fortunate that we can afford to invest that much because we're an extremely capital-efficient business. Each engineer generates roughly $4 million to $5 million in annual recurring revenue.

The housing stipend is optional, but about 80% of our employees take it.

Our goal isn't simply to get people into the office. It's to build an environment where they can do the best work of their lives. And if they stay at Rilla long enough, they usually end up pretty ripped, because they're eating well, working out, and spending their days in a culture that takes performance seriously.

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Americans spend a lot of time sleeping, working, and relaxing. Take our quiz to see how you compare.

Sleep, work, and leisure are three of the biggest ways Americans use their time.

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• From work to making meals and taking care of children, Americans can accomplish a lot in a day.
• The latest American Time Use Survey results showed how people spent their time in 2025.
• Take this quiz to see how your day compares.

What do you spend your day doing?

The Bureau of Labor Statistics published new results from the 2025 American Time Use Survey, showing how many hours a day, on average, were spent doing different primary activities.

Americans from young adults to Gen Xers devoted large chunks to sleeping, work-related activities, and leisure. Teens spent more time a day on educational activities than other groups, while people who were at least in their mid-60s spent more time than others on household activities. Men spent more time than women working, while women spent more time on household activities.

You can take the quiz below to see how your day compares to the survey results.

On average, personal care took up the most time; this category includes activities such as sleeping, showering, and hair care. Slightly more time was spent on this on the weekend and holidays than on weekdays — at 10.44 and 9.53 hours respectively. Household activities averaged about 2 hours a day, with food preparation and cleanup taking 0.7 hours. These averages include those who didn't participate in activities.

The new data also shows how workers spend their day. They're spending just as much time on personal care as on work. Full-time employed people spent 8.45 hours on a weekday and 5.49 hours on a weekend day working. People with at least a bachelor's degree spent fewer hours working than those with other educational attainments.

On days worked, employed full-time people spent about 3 hours a day on average on leisure and sports, about an hour on household activities, and about an hour on eating and drinking.

Women spent more time a day on average than men on housework, food prep, and caring for children. Meanwhile, men spent more time on lawn and garden care, working, and sports, exercise, and recreation.

As age rose, so did hours spent alone. Unemployed people spent more time alone than those working, 7.11 waking hours and 6.63, respectively.

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The AI infrastructure boom is sending these 5 stocks soaring

Japan has emerged as one of the biggest beneficiaries of the AI infrastructure boom.

Bloomberg/Getty Images

• AI's biggest winners extend far beyond Silicon Valley's household names.
• Hardware suppliers are soaring as spending on AI infrastructure accelerates.
• Asian manufacturers dominate the world's best-performing non-US stocks.

The AI trade has spread well beyond Silicon Valley.

While Nvidia and the Magnificent Seven dominate headlines, many of this year's biggest stock winners are the companies supplying the hardware that powers artificial intelligence — and many of them are based in Asia.

"The current phase of AI development is overwhelmingly infrastructural," Allianz Research said in a recent report, as hyperscalers, governments, and corporations race to build AI infrastructure and expand computing capacity.

Many of those companies occupy critical positions in the AI supply chain. They make the components that allow advanced chips to store data, process information, and communicate at high speed.

The AI infrastructure boom has spilled over into equity markets. Despite volatility driven by tariffs, geopolitical tensions, and recession fears, investors have piled into manufacturers of memory chips, electronic components, and circuit board materials. Those moves have propelled stock markets in South Korea, Japan, and Taiwan to fresh record highs, outpacing gains in the US market.

These stock markets have been volatile in recent weeks, shaving gains off the three booming markets, but analysts remain upbeat.

"We think the semiconductor memory supercycle is still not fully priced in the North Asian markets of Korea and Taiwan," Goldman Sachs analysts wrote in a note on emerging markets, which doesn't include Japan, this week.

The bank expects South Korea and Taiwan to post the strongest earnings growth through 2027, though retail trading and shifting sentiment around AI could drive further market volatility.

These were the five best-performing non-US stocks tracked by MSCI's All Country World Investable Market Index during the first half of 2026:

1. Samsung Electro-mechanics

Unlike Samsung Electronics, which is best known for smartphones and memory chips, sister company Samsung Electro-Mechanics specializes in the behind-the-scenes components used in AI hardware.

The company produces semiconductor substrates that connect advanced chips to circuit boards and multilayer ceramic capacitors that help deliver stable power to high-performance servers.

As demand for AI accelerators has surged, so has demand for these components, helping lift the company's shares 660% in the first half of 2026.

2. Kioxia Holdings, Japan

Shares of Japanese memory-chip maker Kioxia climbed about 631% in the first half of 2026 as booming demand for AI data centers drove record earnings.

Spun off from Toshiba in 2017, the memory business was sold the following year to a Bain Capital-led consortium for about $13 billion before being rebranded as Kioxia in 2019.

The company makes NAND flash memory and storage products used in AI servers and cloud data centers.

As AI training and inference required ever more high-speed storage, investors bet demand would continue to outpace supply, helping Kioxia become Japan's most valuable company by market capitalization, around $300 billion.

3. Kingboard Laminates

Hong Kong-listed Kingboard Laminates' shares jumped about 535% in the first half of 2026 as investors bet on rising demand for AI hardware.

The company supplies materials used to make printed circuit boards, which allow chips and other electronic components to communicate with one another.

As AI data centers require more powerful servers that process and move larger amounts of data, demand has grown for higher-performance circuit boards and the materials used to make them.

4. Yageo Corporation

Shares of Taiwan-listed Yageo climbed about 357% in the first half of 2026 as investors bet on rising demand for AI hardware.

Earlier this year, the company completed its acquisition of Japan's Shibaura Electronics, adding temperature sensors that can help monitor heat in AI servers and data centers.

Yageo is also one of the world's largest manufacturers of capacitors and resistors, components found throughout AI hardware.

5. Unimicron Technology

Taiwan-listed Unimicron Technology's shares climbed about 345% in the first half of 2026 as demand for advanced AI chips surged.

The company makes printed circuit boards and IC substrates, which connect powerful processors to the rest of an AI server.

As chipmakers develop more powerful AI processors, demand has risen for these increasingly sophisticated components.

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I tried 4 patriotic fast food promotions, and the best one captured the spirit of America's 250th birthday

McDonald's brought its fried apple pie — which was discontinued in 1992 — back in time for America's 250th birthday celebration.

Katherine Tangalakis-Lippert

• Fast food chains have rolled out limited-time promotions to celebrate America's 250th birthday.
• I taste-tested patriotic desserts from McDonald's, Burger King, Krispy Kreme, and Wienerschnitzel.
• The best dessert made sense for the occasion and felt timelessly American.

As America gears up to celebrate its 250th birthday, many fast-food chains are marking the occasion the way they know best: with limited-time desserts loaded with red, white, blue, and plenty of sugar.

I taste-tested patriotic dessert promotions from McDonald's, Burger King, Krispy Kreme, and Wienerschnitzel to see which chains delivered a worthy tribute to the nation's semiquincentennial.

Some leaned heavily on festive colors or flavors, others on nostalgic Americana. One stood out by doing both.

Krispy Kreme's USA-themed doughnuts

Katherine Tangalakis-Lippert

I have a soft spot for Krispy Kreme and fond memories of road trip doughnut stops with my family as a kid, my sisters and I savoring fresh-out-of-the-fryer rings in the back seat.

As an adult, I rarely visit the chain — in part because the nearest location is more than 20 minutes away, but I've also since found it's not as craveable as it once was.

With three semiquincentennial offerings this summer, each priced at around $3.39 in my market, though they're as low as $2.50 in others, I hoped the chain would make a comeback in my mind. I left disappointed, as it was the least favorite of my four stops.

Katherine Tangalakis-Lippert

Two of the three doughnuts tasted exactly the same — plain rings with vanilla icing. One merely had sprinkles while the other had no additional toppings.

The third had a cookies-and-cream filling that I found cloyingly sweet, with no discernible cookie flavor to set it apart from the others.

All three, as part of their USA-themed decorations, featured highly concentrated food dye that stained my fingers and the corners of my mouth.

Don't get me wrong, they were doughnuts, and by no means unpleasant, but unfortunately, Krispy Kreme's patriotic treats looked more festive than they tasted.

Burger King's cinnamon apple pie and firecracker cookie pie

Katherine Tangalakis-Lippert

Burger King's July 4th dessert menu includes its firecracker cookie pie as well as the "cinnamon apple pie," a direct competitor to its longtime fast-food rival, McDonald's apple pie.

The cookie pie was explicitly rolled out for America's 250th celebration and featured more festive packaging and decorations, while the cinnamon apple pie debuted earlier this year and will remain available while supplies last.

Katherine Tangalakis-Lippert

I thought the firecracker cookie pie, with a sugar-cookie crust, vanilla mousse filling, and a whipped cream topping, was a bit one-note and overly sweet, though the mousse had a pleasant texture.

Although it wasn't to my taste, served cold, it felt like a refreshing, creamy dessert to be enjoyed on a hot summer day.

With a price tag between $2.99 and $3.59, depending on your location, it was slightly pricier than the apple pie, but I found the cookie crumbs and sprinkles on top were an added patriotic bonus that helped it stand out from the other desserts on the list without being too try-hard.

Katherine Tangalakis-Lippert

Burger King has offered handheld apple pie before — notably, it discontinued its Dutch Apple Pie in the summer of 2020 after its manufacturer stopped producing it.

However, McDonald's vastly outperforms Burger King in both total revenue and average store sales, and the pie seemed a perfect example of the competition: Burger King's version, while tasty, felt like it was trying to replicate the McDonald's classic rather than carve out its own lane.

Although the taste was very similar to McDonald's pie, the dough in Burger King's apple pie was denser, less flaky, and a little less flavorful; it also had larger bites of apple but a similar cinnamon taste in the filling. Priced at $2.13, with a range between $1.99 and $2.69 depending on location, Burger King's version was less expensive, but it didn't feel like a better value.

Wienerschnitzel's funnel cake

Katherine Tangalakis-Lippert

My most surprising stop was at Wienerschnitzel — a brand that has been around since the 1960s, boasting a menu of "Mmm-Merican" food, but one I must admit I am not particularly familiar with.

Their new menu item for the nation's 250th birthday includes a limited-time summer menu of hot dogs, corn dogs, and, for the first time, funnel cakes topped with apple pie filling, strawberry, or Oreo cookies.

I opted for the apple — since what's more American than apple pie? — and found myself going back for bite after bite of the treat.

Katherine Tangalakis-Lippert

The funnel cake itself was well-fried, with crispy edges and a fluffy center, and the topping was the classic mix of sweet and cinnamon that you'd expect. It came with a layer of whipped cream topping that melted into the cake since it had clearly come straight out of the fryer.

At $6.45 after tax, this dessert was the most expensive that I tried — and they can run as much as $8.00 depending on flavor and location — but it was also the biggest, and could easily be split between two people and still be satisfying. It was also one of my favorites, and made me want to try more of Wienerschnitzel's offerings.

McDonald's fried apple pie

Katherine Tangalakis-Lippert

Last seen nationwide in 1992, McDonald's fried apple pies' return this season made headlines for good reason.

When the golden-arched giant switched to baking their apple pies, fans lost the blistered, crispy crust you can only get from deep frying. Reviving the fried version in time for the nation's birthday was a deliberate (and, in my opinion, wildly successful) nod to McDonald's — and America's — roots.

I say this as someone too young to have tasted the original and therefore not biased by OG nostalgia: this thing slaps.

Katherine Tangalakis-Lippert

With the return of its fried apple pie, McDonald's once again proved why it remains at the top of the fast-food leaderboard. At $3.01, the pie was almost the least expensive treat I tried, but I would have happily paid a dollar more for how much I enjoyed it. If you're lucky, you can snag one in a lower-price market for as little as $1.99.

The crust is delightfully light and flaky, a step up from the baked version, while the filling delivers the iconic apple flavor you've come to know and love from the burger chain.

Served piping hot, it is a bit of a burn risk, but what's the 4th of July without a little fire?

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2 reasons there's a 'mom-cession' brewing in the US job market

Labor force participation has declined among women with the youngest child under 5.

Jessie Casson/Getty Images

• It's tough to be a job-seeking mom with young children, and some may choose to leave the workforce.
• Labor force participation has dropped for women with children under age 5.
• Return-to-office pushes and childcare issues are two major factors.

When Fatema Ali was laid off from her IBM project manager job in 2024, one of her biggest concerns was how she and her husband would support their three children, the youngest of whom was 8 months old.

She hoped to find another job quickly. But she's still looking for full-time work.

A few months earlier, her husband had left his job to pursue a startup idea that wasn't yet generating income.

"I didn't want that pressure to show on my face," said Ali, who's in her 30s and lives in Texas. "I don't want my children to feel like there is anything wrong."

The past few years have been especially challenging for job-seeking moms with young children. As hiring has remained low, return-to-office pushes and ongoing childcare challenges have made it harder for some mothers to find jobs and stay in the workforce.

Are you a mom that's been job searching or dropped out of the workforce? Reach out to these reporters to share at mhoff@businessinsider.com and jzinkula@businessinsider.com.

Heather Long, chief economist at Navy Federal Credit Union, described the situation as a "mom-cession," based on an analysis of job-market data by Matthew Nestler, a senior economist at KPMG. Nestler found that unemployment of college-educated women with at least one child under age 5 has increased, while their employment-to-population ratio dropped.

Nestler doesn't see the situation improving soon, as employers have been calling people back to the office, and childcare remains expensive or hard to get.

"It's really heartbreaking because we're in a moment of time, coming out of the pandemic, where women are experiencing record gains in the American labor force," Long said. "So it's particularly tough to watch moms of young kids unable to find opportunities at this moment, that this should be a boon for all American women."

The pressures on working moms

Nestler found labor force participation among college-educated women whose youngest child is under 5 has declined from December 2023 to May 2026. He said this group of women disproportionately benefited from increased pandemic-era flexible work arrangements, which were common in white-collar jobs. Meanwhile, participation has increased for women without children and for most groups of men.

Two big factors are making it harder for parents to stay in the workforce: Return-to-office mandates and the difficulty of finding affordable childcare. Casey Peeks, the senior director of Early Childhood Policy at the Center for American Progress, previously told Business Insider that almost half of young children in the US live somewhere without sufficient licensed childcare. "Childcare is too expensive, but it's also really hard to find," Peeks said.

A pandemic-era program in the 2021 American Rescue Plan Act helped childcare providers with wages, rent, and other costs. Nestler said the end of those funds in late 2023 led to a flattening of childcare employment.

"The dramatic expansion, especially of college-educated moms of young children's participation and employment coming out of the pandemic, overlapped directly with that recovery in the childcare sector," Nestler said.

For mothers balancing childcare responsibilities, return-to-office mandates have narrowed the pool of jobs that fit their needs. An analysis by staffing firm Robert Half found that just 4% of new job postings in the first quarter of 2026 were fully remote, compared with 19% that were hybrid and 77% that were fully on-site.

Moms with elementary-school-aged children are also having a difficult time. Prime-age women with at least a bachelor's degree whose youngest child is between 5 and 12 have seen labor force participation cool a little. "When the workday and calendar do not align with the school day and calendar, there's going to be more stress there," Nestler said. Meanwhile, the rate for college-educated women with a teenager as their youngest child has increased.

What can be done

Long said a loss of workplace flexibility has been brutal for moms and that there needs to be a middle-ground compromise between staff who want to work from home and CEOs who want workers back at office desks.

A Pew Research Center survey of US working parents in March found that 71% of those not self-employed said flexibility to work from home when needed would be very or extremely helpful to them, but only 23% said this flexibility is available to them.

Even with the benefit of remote work, parents still face challenges. About half of parents working from home most or all of the time told Pew it's difficult to balance work and family life, and said being employed makes it harder to be a good parent.

The survey also showed parents want access to childcare at work. "A majority (59%) of working parents with children 5 or younger — including 68% of working moms with a kid in this age group — say it would be extremely or very helpful to have onsite childcare at their workplace," Pew said. "But just 7% say this is available to them."

The US can also look to other countries' offerings. "The United States used to be a leader in women in the workforce, and we really fell behind for many years in the past decade, and countries like Japan and Canada surged ahead of us," Long said, adding that the solution was investing in subsidized childcare. For now, though, many US parents are left to navigate those challenges on their own.

Over time, Ali's husband returned to the workforce, easing the financial pressure on the family. As her children have gotten older, Ali said she's been able to devote more time to her career, splitting her efforts between her job search and a different startup opportunity she launched with her husband.

"Being unemployed hasn't felt like much of a break," she said. "When you're dealing with financial uncertainty, caring for children, looking for work, and trying to build something new, your mind is always racing."

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US pullback from NATO echoes the set-up of an unsettling German wargame

Boris Pistorius, the German minister of defense, said Germany will assume some responsibility for assets the US is withdrawing from Europe.

Bernd von Jutrczenka/picture alliance via Getty Images

• NATO leaders are expected to focus on how quickly European forces can shoulder more responsibility.
• The US has notified European allies that it will withdraw some forces, leaving capability gaps.
• A new podcast examines the challenges Germany would face in a war crisis without US support.

When NATO leaders meet in Ankara next week, they are expected to focus on a pressing question within the alliance: how, and how fast, Europe can shoulder the responsibility for its own defense as the United States reduces its military role on the continent.

"It is happening," Germany's defense minister Boris Pistorius said in June, "and Germany will assume responsibility." He added that an "orderly transition" was needed, "because nobody — including the Americans — should have any interest in seeing dangerous capability gaps arise as a result of a disorderly withdrawal that cannot be compensated for in a timely manner."

Those capability gaps are at the center of the debate. While European governments are increasing defense spending and expanding military capabilities, many acknowledge that the continent will need time before it can replace key US assets. The main concern is what happens if a major security crisis emerges before the transition is complete.

A public wargame simulating a Russian attack on Lithuania explored that question earlier this year, focusing on Berlin's response. As Europe's largest economy, NATO's logistical hub for reinforcing the alliance's eastern flank, and a country that has pledged to build the continent's strongest conventional army, Germany would be expected to play a central role in such a crisis.

Developed by the German media outlet WELT together with the German Wargaming Center at Helmut Schmidt University of the German Armed Forces, the wargame examined how Berlin would respond under pressure, whether it could assume a leadership role if American support proved uncertain, and which legal and political constraints would shape its choices.

By the end of the exercise, Russia had achieved its immediate military objective. Germany, meanwhile, remained focused on managing the crisis rather than altering its course, suggesting that its greatest challenge lay in the speed and nature of political decision-making.

WELT and the Helmut Schmidt University of the German Armed Forces examined a European security crisis where US support is uncertain in a scenario-based role-playing game earlier this year.

Tobias Grabow/Business Insider

One of the central variables in the wargame was the role of the United States. Set after a ceasefire in Ukraine, the scenario assumed a US administration determined to avoid being drawn into another war in Europe. Represented by former US diplomat and NATO official Jeff Rathke, Washington initially declined to discuss invoking NATO's collective defense clause after Russian troops entered Lithuania.

Since then, the question of how quickly — and to what extent — the United States would become involved in a future European crisis has become more pressing. Washington is reviewing its military posture in Europe, plans to withdraw capabilities from NATO's force model, and recently ended the rotational deployment of more than 1,000 US troops in Lithuania without an immediate replacement. US President Donald Trump said in April he was weighing whether to pull out of NATO, disgruntled with alliance members resisting his calls to join offensive operations in the war on Iran.

"All of that has added to fractures within the alliance," said Alexander Gabuev, director of the Carnegie Russia Eurasia Center, who played the Russian president in the wargame. Since the outcome of the simulation was first published, he said, uncertainty surrounding the future US role in European security has become "much more pronounced."

The wargame drew international attention when its results were first published in German earlier this year. Among those responding publicly was NATO Secretary General Mark Rutte, who said the alliance was "well prepared" to respond to any attack against its members. This week, WELT is releasing an English-language version of the five-part podcast titled "Ernstfall" based on the wargame.

Carolina Drüten, the International Security Correspondent at WELT, is the host of the award-winning podcast "Ernstfall: What if Russia attacks NATO? Inside a German Wargame." An English version is available on Spotify and Apple Podcasts.

The Axel Springer Global Reporters Network harnesses the resources of the company's newsrooms to publish ambitious scoops, investigations, interviews, opinion pieces and analysis. It allows journalists — including those from POLITICO, Business Insider, WELT, BILD, Onet and Fakt — to collaborate on major stories for an international audience of hundreds of millions across platforms: online, print, TV and audio.

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An AI data center suing for Colorado River water highlights a bigger question: Who should get the West's water?

Drought has long been a challenge in California's Imperial Valley.

Allen J. Schaben / Los Angeles Times via Getty Images

• A data center developer in California is suing for access to Colorado River water.
• The developer wants to use water allocated to farmland and use it for cooling instead.
• Water experts and local advocates say it raises bigger questions about how water should be used.

The developer behind what would be California's largest AI data center is suing for access to Colorado River water, the threatened source of freshwater for 40 million people and the subject of countless disputes over water use in the West.

The lawsuit, filed this month by Imperial Valley Computer Manufacturing, says the company needs access to 287 million gallons of water for the 330-megawatt data center. If the proposed project in Southern California's Imperial Valley is built, it would be the largest AI data center in the state.

The lawsuit was filed after the Imperial Irrigation District, a local agency that delivers Colorado River water in the Imperial Valley, denied the company's request for water for the project. It also comes as communities across the US push back against data centers. The Colorado River is the only source of freshwater in the Imperial Valley, which has long faced drought and water supply issues.

The developer, Sebastian Rucci, said the project would not add to demand on the river overall because the company would fallow, or stop irrigating, nearby farmland and use that water to cool the data center instead.

Rucci told Business Insider the proposal would have "zero impact" because the data center would not require any additional allocation from the Colorado River, adding that its water demand would be similar to that of a 160-acre farm.

Water experts and local advocates say the case raises a bigger question than how much water a single data center should use: As water becomes scarcer and new industries increase demand, should water historically used for farming be redirected to power the AI boom?

Moving water from farming to data centers

Imperial Valley's identity has been tied to farming, with cattle, alfalfa, lettuce, and spinach among its top commodities. John Fleck, a writer and water policy expert at the University of New Mexico, told Business Insider that "taking land out of agricultural production to use for other things is a values question, even if it's a small amount."

The Colorado River is the source of freshwater for 40 million people.

Thomas O'Neill/NurPhoto via Getty Images

Michael Cohen, a senior fellow at the Pacific Institute focusing on Colorado River Basin water use, said the issue is not necessarily the amount of water, but rather the developer's plan to access farmland, dry it up, and reallocate it for industrial use.

"There's a lot of resistance in any agricultural community to 'buy and dry' because that's jobs," he said.

Rucci said his company has a contract to purchase the land and water assignments from farmers. He also said he pursued this strategy after his proposals to use reclaimed water were rejected.

While individual landowners may profit from the practice, taking farmland out of production can have cascading effects in agricultural communities, including fewer farm-related jobs.

Imperial Valley's economy has long relied on Colorado River agriculture. If it weren't for that part of the country around Imperial and Yuma, Arizona, "no one in America could afford a salad in February," Rhett Larson, a water-law expert at Arizona State University, said.

Larson said that while farmers may make money selling land or water rights, the people who are often hurt are the fertilizer salesmen, tractor repairmen, teachers, dry cleaners, or anyone in these rural communities who doesn't have land or water rights to sell.

Rucci said the data center would bring major economic benefits to Imperial County, including 1,688 construction jobs, over a hundred permanent jobs, and an estimated $2.95 billion in economic improvement over 30 years, citing an independent economic study prepared for the county.

"Economic diversification is exactly what the area needs," Rucci said in an emailed statement, pointing to Imperial County's high unemployment. The county's unemployment rate was about 17% as of May, according to state data.

California's Imperial Valley is a major agricultural hub.

Allen J. Schaben / Los Angeles Times via Getty Images

Who makes decisions about water?

Eric Reyes, an Imperial Valley resident and the executive director at the advocacy organization Los Amigos de la Comunidad, said he's concerned the lawsuit is an attempt to circumvent the Imperial Irrigation District (IDD), a publicly owned utility governed by an elected board. Water rights in the area have long been held in trust by the IID, rather than individual landowners.

Reyes said the developer's plan "raised a huge red flag" because it could involve a "private deal with a landowner and then use it for his own purpose." He sees it as an attempt to circumvent the IID and give landowners more power over water, some of whom, he says, want to "farm water instead of farmland" — or sell water intended for farming — because it can be more lucrative.

Rucci rejected the idea that the company is trying to circumvent IID's control and said farmers have the right under state law to assign water, and that the proposals would not require "a single additional drop" from the Colorado River.

Larson said the case shows why water fights in the West are rarely only about conservation.

"Everybody will say, 'Well, we need to conserve water,' but they'll often stop at that point," he said. "We need to ask another question, which is, 'conserve it for what?'"

Moving water from farms to data centers could be a choice some communities make, Larson said, but there will be tradeoffs.

"The Colorado River basin has to decide what we want to be when we grow up and what it will take to get there," he said. "We have enough water to do a lot of great things. But we don't have enough water to do every good thing."

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