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We begin with our cover story at the latest issue at Bloomberg Business Week. It's a finance section takeover centered around the outlook for the global commercial property market, and as we're about to learn, it's not pretty. Let's welcome in our Bloomberg News real estate reporting team of Patrick Clark and Natalie Wong, along with the editor of the magazine, Joel Weber and you know, Joe, as you point out and you guys point out in this section that the
sector really has not come back from the pandemic. It's still dealing with that.
Yeah.
Look, we've been talking about commercial real estate for most of the pandemic because that was a return, you know, the return to office started to become a thing, except
that never really took off. And what we realized here and what we tried to bring together in this cover package is that the commercial real estate outlook is looking really scary and there's a lot of debt that looks like a wall, and the strategy that the industry is used to basically finance buildings may not work anymore in the current environment, and so that sets up a really precarious situation, and we wanted to put all of our wits to that and turn it into a global effort as much.
As we could.
So pat common in on this in terms of how you guys were thinking about it.
Yeah, I think most people would say that high interest rates are okay for real estate. We've had high interest rates in the past. But the transition from exceedingly low interest rates as low as can be to higher interest rates where we were where we are now happened so fast that something has to break. And right now we've been sort of that. We're in this period where we're trying to put that off as long as possible.
And it's like, darn you, Fed, but it just happened so fast.
Listen, it's not even you know, I mean, the FED had to intervene in March twenty twenty when it looked like the COVID was going to really kind of completely blow up the economy, the global financial system, everything. But you know, we're still dealing with the reverberations from that.
Natalie come on in as well, because I do think, you know, the financial crisis, right, a different type of real estate crisis. We know that was largely residential. But I do feel like everyone thought, maybe we've learned some lessons, but maybe those same lessons aren't going to apply in this environment, right.
I mean, I think when we're looking at the property market and the US alone, at least, most of the distress that we're seeing is concentrated in offices where you're seeing sort of a double whammy of existential questions about how much space people actually need and the fallout from the pandemic, and also how those assets are being impacted
by the rapid rise and rates. This Pat was saying a lot of these owners, even the biggest ones from Brookfield to Blackstone to Pimco, they were just walking away from these properties and cutting their.
Losses worth mentioning in my ongoing campaign for RTO propaganda that I walked by Pat clarka a number of weeks.
Ago and I was like, what are you thinking about?
And you know, there was a phrase that he shared with me that, honestly, it was one that washed over me, and I had to remind him. I was like, what was that again? What was that again? And then finally I was like, we should actually write that, Pat, what was it?
Well, extend and pretend, which is you know, this is an old cliche in the real estate world at least, and it has worked before. I mean, I think, I think if you really go back, you would learn that when you can extend and pretend, when banks have to take properties back when losses are realized, it is bad and it's messy. And you know, that's what happened in the early nineties. It was a mess the global financial crisis.
The industry said, you know, let's see if we can just kind of push this off as long as possible. And not to say there was no mess, but the strategy of extending pretending was largely successful. The question is does it work again in this period where you have this interest rate shift has been so abrupt.
Yeah, there's a point, right right. If you're an owner of property, you're like, wait, this is just too expensive. It's better for me to just walk away.
Okay.
Just in case you're not familiar with the phrase extend and pretend, what's the extend part?
And what's the pretend part.
Yeah, well, you know, you extend loan term. So a commercial real estate loan doesn't work like your thirty year mortgage. Right you at the end of your five or ten year term, there's a balloon payment. So when you're when you run out of term and you run out of extensions, you own a one hundred million dollar building, you've got to, you know, potentially give one hundred million dollars or some
large sum back to the lender. And if you don't have it right now, the lender could say, you know, it would be better for all of us if we wrote you an extra year of term on this and we deal with this down the line. And again, that
was in March twenty twenty. In that early period of COVID, there was a lot of that and it was effective, effective in part because you know, Congress pumped enormous amount of money into the US economy, fed lowered interest rates, transactions picked up again and kicking the can down the road, or you know, the other cliches are delay and.
Prey, delay, delay, and pray.
I have to say, I get it. Kind of a lesson when it comes to real estate loans about this whole idea. Right, you have a loan, do the balloon payment, and then you just get more time. Like right, That's how it normally works in the industry, or has for a long time. But this is different.
This is different. I mean that's Pat was saying, Like, a lot of the extend and pretend during the pandemic happened because people didn't know where values stood and people didn't know how the return to work would shake out. It's been more than three years, it's clear that vacancy rates are still at record heights and getting worse in
many of the major cities. And not only that, but you have the issue with the banking crisis, the regional banks that are offloading, you know, billions of commercial real estate loans, and some of that is starting to shake out, and investors and lenders and regulators are seeing that it's not going to balance out anytime soon. So you know it's time to start writing off the loans.
Okay, So, Pat, if this is the end of extend and pretend, what does that actually begin to look like?
Well, if it doesn't work, if lenders can and lenders and borrowers can't push things out, it can get bad. You know the again, we've got these balloon payments that come due, and you've got this situation where lenders are you know, at minimum under scrutiny over there commercial real estate exposure, you know, arguably under pressure to reduce commercial real estate exposure from both you know, regulators, ratings companies,
and you know, even shareholders. I'm talking about banks primarily who provide the bulk of commercial real estate finance, but again life insurers or securitization market. There's both a huge need for a new debt in commercial real estate to refinance these old loans that are coming due, and there is a you know, a sort of retreat of liquidity.
There are debt providers out there. They generally are going to.
Want a premium to give you a loan right now because they can get it. But it's also a little more niche. This sort of the bulk of credit provided by regional banking system is not necessarily going to be there right now, and you can start spinning out scenarios where banks are being pushed to cut exposure. They're selling loans, they're having to take discounts to sell loans because interest
rates are higher right now. So why would you buy an old book of loans that's generating three percent interests when you can originate a new loan at double that.
Natalie, you wrote remarks for the magazine a couple months ago. It was the first time that we actually saw a default, and we sort of were like, wait a second, something else is coming, And so here we are talking about it a couple months later.
But when you.
Look ahead, how big of a wall of debt are we talking about here, and what does that actually mean for everyone?
It's massive. I mean in the US alone, there's one point four trillion dollars worth of debt that's maturing this year and the next, and a lot of investors around the world, a lot of the banks and a lot of the private equity firms that we wrote about for the previous story are going to be facing these big maturities, and some of them are just walking away from it.
I think this is also a big part of it of how we're going to be using real estate going forward, whether it's offices, right, there's some offices you can kind of remake and repurpose, but that's not always the case. I mean, there's we're rethinking, right, how we use our space.
You're rethinking it. But the problem is it takes time, and it also takes a lot of money, which these companies don't have right now. And for some like we were writing about the Seagram building, which is still doing well. It's an iconic building, but they've already put in twenty five million dollars and they're still losing a major private
equity tenant to a much newer development. Like some of these buildings, no matter how much money you pour into it, the bones, you just can't make it like a developer can't ground up, and it's cheaper to do a ground up.
And that's I think the big thing is this idea that some of this stuff can get converted from commercial to residential.
Right that's just not going to happen.
And so it leaves you a question of like, okay, if we've got all these empty office buildings, like what are we going to do with them? And then you think, okay, well maybe it's New York and this is I think, you know, Pat wrote the kind of the opening essay for the package, and Natalie and John Gidtlson took a much more map global view of what this actually looked like around the world. Whenever from New York to San Francisco,
even looked abroad places like Hong Kong. If we have a lot of empty office space, there is no good solution with what to do with and it becomes kind of a frightening proposition when you think about the global implications of this, right, Natalie, Right, you.
Basically have the zombie buildings that are the owners handing the keys over to the lender, and the lender typically puts it in the hands of receivers in these buildings essentially limp along for years with the lender trying to figure out what to do with it. And we're seeing that it's already going to potentially have impacts on tax revenues at different cities in San Francisco in New York. These professors at NYU and Columbia did a study which
said that remote work. Due to remote work, office values will be wiped out forty four percent from pre pandemic values, and that's going to take a big hit of the city revenue because offices take up twenty percent of the property tax revenues of New York.
I have to say that's one of the out of the section I love where you guys broke it down into cities. I was kind of blown away by some of the statistics and the impact in terms of data, you know, values going down or just vacancies. It was pretty remarkable. I highly recommend everybody check out the complete section. It is the finance section, the cover story all about
the struggling commercial real estate sector. Thanks to Bloomberg News real estate reporters Patrick Clark and Natalie Wong, along with the editor of the magazine, Joel Weber.
You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio, the Bloomberg Business app and you too. You can also listen live to our flagship New York station, Just Say Alexa Play Bloomberg E love them thirty.
Day same.
Right now, it's not tomorrow.
What are incredible organizations?
But do you love the Daryl Hall with Daryl I mean with the long hair. Yeah, yeah, me too. But then he got a cut.
It was a little bit of a mullet.
I like that, Yeah, I can. Yeah, I don't like mullets. All right, So, Matt, we talked yesterday about a story that concerns have been highlighted when it comes to the private credit world, pressures of higher interest rates, what it means for those borers floating rates.
As you said, Oh my goshte to say that you and I are both pretty well obsessed with private credit.
And I am I am anywhere where I feel like I don't have a total handle on it, and everybody's like, don't worry, it's gonna be okay. So let's get into the private world, which includes, of course private equity with us as Kate Ambrose, CEO of the Global Private Capital Association, it's a nonprofit, nonprofit, independent membership organization representing private capital
investors who manage some two trillion in assets globally. We're talking about a KKR, We're talking about Bill and Melinda Gates, Colsters, We're talking about the former Silicon Valley Bank, academic institutions, and more so looking forward to our conversation she's here in our Bloomberg interaction.
Is this essentially a lobbying group?
Or when I see non profit together with private equity, like alarm bells go off? Why does private equity need the nonprofit?
Right?
Love that question, love it. We are a very unique organization. The organization was founded as the Emerging Markets Private Equity Association by the IFC of the World Bank over twenty years ago.
Oh my god.
It was founded by the first LPs in funds in emerging markets and grew to some prominence at the period of time that there was this idea that emerging markets was going to be an asset class in and of itself, that was going to be faster demograph younger demographics, faster growth, that would be a rising time that would lift all boats,
and grew to some significant size. I joined in twenty nineteen as CEO and really to reposition the organization for the future, to reflect what's going on in the world today. The terminology emerging markets is forty years out of date. You know, it's forty years old. It's just completely outdated. China's the world's second largest economy, so many of the opportunities is so much capital flows from these places in the world. So we are now the Global Private Capital Association.
The regions that we cover our Asia, Latin America, Africa, Central and Eastern Europe, and the Middle East. But our board includes for example Bill Ford of General Atlantic, one of the world's largest private equity farms. As you mentioned KKR. Others are members. We have for example, Tamasek, the Singapore Sovereign from their Chief Investment Office, are fascinative.
So essentially it was the organization was started to kind of shepherd growth through private equity in these markets exactly.
And the reposition nonprofit is that wrong?
We are.
So we are the same structure as a national Venture capital Association in the US or a private equity council, which indeeder lobby groups. The beauty and this is why we use the word independent, is that because we cover all of these markets, we're not there to lobby on behalf of lower tax rates for or preferential regulatory treatment for our members. We're really there to evangelize capital and
educate on the opportunities across global markets. And the last thing I'll say is we are not a US slobby group. We are truly a global organization. Again, our board includes the leading fund managers from India, Africa, Latin America, both global firms and local.
So where does your funding come from?
Membership dues? So over three hundred member firms pay dues to be members of the organization. We have a very dynamic research platform. I can throw some data off the top of my head in terms of fundraising and trends and things like private exit.
So but what what I'm getting is that the World Bank said we need to shepherd growth through this mechanism private equity, and a good way to do that just put together an organization to support it.
I guess what.
So the IFC is the International Finance Corporation, and they were limited partners in funds, so they actually put money into funds.
See.
And there's a whole universe of development finance institutions, including the US DFC, which is what the US uses to compete with China. Frankly, around the world putting money into funds. So it really it's more commercial than sort of what we're describing. But we are a nonprofit organization.
ESDFC, the Development Finance Corporation. Okay, So if you had to say your top priority in your organization, number one, just one?
What is it?
Wow?
That's tough.
There's kind of twins, so I may cheat. One is to just re educate the world on the opportunities and the realities and the risks of investing in these markets. And the second would be to influence capital towards greater long term, inclusive growth and environmental private capital.
Yes, private capital. I am obsessed, Matt. We're both obsessed. And I feel like I keep saying this last couple of times I've been at Milk and we've done broadcasts. Doesn't seem like anybody cares about the public markets. It's all about the private market's private credit, private equas well.
Those people are you're hanging around the wrong people public Well, yes, yes.
But there's also right but so but I mean, tell us about from your perspective, because I think there's some nervousness in terms of the private capital world, especially as we see rates going out that you know, there doesn't feel like there was as much transparency and that that could be problematic interesting transparancy.
But well, okay, great, I mean absolutely, the scale of capital is remarkable, and this is sort of private capital, private capital exactly. For example, last year alone one point three trillion. You know, it's one point two one point three but critically that's just what's raised by fund managers. You've got to throw in there all the Canadian pension plans. By the way, CPB is also on our board of Directors as his future front from Australia. It's trillions and
trillions of dollars of liquidity. It's just so that the scale of money that is a bila. You've got all the Chinese billionaires, you've got family offices. You know, there's so.
Much everybody wants in right now. Because the thing is.
There's also nervous, so much talk of the opportunity in private credit, it's become uh, kind of the darling of investors really from retail up now.
Right Well, I was speaking across all private credit, private capital strategy, using private equity, venture capital, infrastructure, real assets. So there's a lot in there.
What's really hot right now.
So the two Well, you're mentioning private credit, which absolutely is a huge driver. So if I had to say a strategy that's going really quickly, I'd say private credit. And there was fourteen billion dollars in private credit fundraising last year. KKR had a big Asia private credit fund, Apollo had a big private credit fund, big manager in India is raising one point six billion for their private
credit fund just focused on India. Then the other I would highlight two other big drivers particularly in our markets, climate and everything anything sustainability focused huge driver. Seriously absolutely different from the ESG. Absolutely absolutely huge driver. And I would make this critical distinction ESG. It's kind of like the working with terminology, like emerging markets. It can mean anything, right, what is the ESG? What is impact? I mean, the
definitions really are there. There's a lot of situation.
Kind of going through a record, make up yourself based on.
Particularly It's funny when you say you know transparency. I believe that there's actually a greater opportunity for transparency and private capital strategies because you can see what's in portfolios. You can see you can look at the portfolio.
Company level, not every portfolio.
Well, in the I guess I would say in the markets that we represent.
Going in, but if you're a pension fund, you can look at it, right, Yeah.
I mean I'm speaking specifically to the markets that we're in, and in the markets that we're in, you know governance, governance and transparency and you know going in and cleaning up that type of stuff from the outset. And there's so much leverage, so I don't know, when you're thinking from a risk perspective, you're thinking about the amount of leverage that's been put on If.
KK or Apollo has a fund, I don't necessarily know everything that's in it.
You know, here's another driver, ide would point right though, Yeah, I honestly can't answer that.
No, No, I think care but they quit it out in there. And Carol and I both have been grappling with trying to value the entire size of the private credit market, for example, and that data is difficult for US.
Privent credit is going to be a much less transparent than private equity. Correct, yes, because in private equity you're talking about typically investments and so. But private credit is absolutely less private equity.
If you're not if you're getting into private firms, I guess there's announcements. There has to be, like to.
Say, the deal portfolio is on the website. And I would make another point, which is one of the things that I find really exciting about what I do in the opportunity. The way the industry is changing, just in the space of the last five years, the level of accountability and the shift in thinking in private capital globally is remarkable. You look at you know, the examples of founders being pushed out because of even a hint of impropriety.
There is so much more focus on long term reputation because let's face it, you know one bad step reputationally is you know, it has a major impact.
And look at Crispin O'Day exactly.
And then but I do wonder about private equity concentration and fields and we've talked about it with healthcare or you know, in vet service. I mean there's a lot of concentration.
Well, I got to say, just go about tows not in the markets that I focus on. So this is our platform, which is basically that there is such a scale of capital availability invested. The leverage ratios there's virtually no leverage in the markets we represent. Each is a huge Again, you know, there's very little leverage, and you're investing in rather than sort of trading portfolio company important to a manager or manager, you're investing in things from the bottom.
Come back soon. Kate Ambrose, CEO at the Global Private Capital Association, Here in studio, Right here on Bloomberg.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekdays from two to five pm Easter.
On Bloomberg Radio, the Bloomberg Business App, and you too.
You can also listen live to our flagship New York station. Just say Alexa, play Bloomberg.
You love them dirty.
Two companies easily too, the biggest when it comes to selling us stuff. We're talking about Amazon and Walmart. Both have been Bloomberg business. We cover stories for different reasons and the subject of many, many more stories inside the magazine and also on the Bloomberg and at Bloomberg dot com every single day. Matt, there's so many stories about Amazon and Walmart on a regular basis.
Yeah.
Absolutely, I mean, why wouldn't there be Walmart has what five hundred thousand employees or something, and you know that Paul Sweeney wants to be a Walmart reader when he's done with this career.
I had no idea. Oh my god, I look.
For the Amazon.
You know, we were just talking about FedEx and UPS and I almost wonder if Amazon has a real competitor in their own delivery network, right like other possible companies could use Amazon shipping instead of FedEx or UPS because they're that ubiquitous.
Absolutely had to pair back a little bit because we got a little obsessed with Amazon. Anyway, let's get to it, because the two are also the subject of a new book, Winner sells All Amazon Walmart and the Battle for our Wallets. The author, Jason Delray, is with us. He's a business journalist for fifteen years, covering e commerce for the last decade. He's here in our interactive broker's studio. Nice to have
you here. Welcome, welcome, Thanks so much. Tell us a little bit about why you wrote this book and why you wrote it now, or how long you've been working on it.
So I've been working on about three years and long thought that while there have been some great books about Amazon, Bradstone's chief among.
Them, rights on your book.
That he did blurb a bit for me.
Can I just say what he wrote? A revelatory account of the bloody rivalry between two ruthless retail juggernauts that are not accustomed to losing anyway.
Go ahead.
Brad's been coming to me over the years and so written great books about Amazon. There's been some interesting books about Walmart, although not many in the last fifteen years. I thought to look at each and in a vacuum sometimes misses how much each there is influenced strategies, and there really hasn't been a deep dive into the innovator's the dilemma that Walmart specifically has faced over the last
twenty years. And for those reasons and a few others which we may get into, I thought, you know, looking at inflection points and their rivalry over time and where and how they've influenced each other would be interesting for retail and e commerce folks who work in the industry, but also just smart people who care about what.
Motivates these two companies.
Well, just the competition.
I mean, you know, households see that themselves in real time. Everybody I think has an Amazon app, right, and more and more people are getting a Walmart app. Is we've come to know it more online than just a gigantic big box store. Is Walmart starting to take away serious,
significant market share from Amazon online? Not yet, but I think they finally, for a couple of different reasons, connected the dots between their stores and their you know, and their fulfillment centers and their website in a meaningful way.
That Amazon is.
You know, they worried about Walmart a long time ago, then stopped worrying when Walmart seemed just not to be active at all in the space.
And elevant right when it came to online.
I mean, for a very long time Amazon executives have told me for a long time, we were waiting ten fifteen years for Walmart to take advantage of well their key advantage, which was a store within ten miles of ninety percent of the population, and to use that either as pickup hubs or delivery many warehouses. And they are finally doing that, but it has taken a very long time.
And so are they stealing market share? Not quite yet, but I think they are finally sort of competitive in the space, which sounds shocking to just have that be the minimum, but that's where we're at.
I want to get into the acquisition of Walmart of Vipers dot Com because that was really pivotal, and I think even Business Week did a cover story. But I want to ask you from your reporting, these guys are massive, and I think about when I go shopping, I shop and then I look at Amazon, and I like, kind of it's kind of always my check. Are they getting too big? Both of them?
You know?
I say at the end of the book that I hope that the continued competition and the fact that Walmart is finally really competitive online leads to things, you know, better convenience for consumers, but also maybe better wages for employees as they compete for talent. They're both getting into healthcare.
Which is something Walmart has gotten a lot of criticism for over the years.
Correct, both getting into healthcare, and perhaps you know that is the industry that's ripe for better consumer you know, attention and and so maybe, but that's sort of an idealistic, you know, way to think about these two companies that have not always inspired you know, the you know, the greatest feelings among you know, I mean labor groups, consumer groups, small businesses and so are they too big? I mean I'll leave that to you know, regulators to figure out.
I think Walmart's days.
In the in the line in sorry, scrutinized spotlight fire, Yeah, has sort of passed, which has been you know, I report in the book Andy Jasse has been angered by that over the years, like white like they're the biggest retailer revenue, Like what's up and they've had to explain like it's it's our turn now, right, it's our turn. And so we'll be interested to see what happens with the FTC. Will that lawsuit eventually happened? And sorry, I think I well, I.
Was just going to ask about the employees, because of course the two of them competing is good for consumers in the sense that it lowers prices.
But I can't.
Imagine how they would how that would benefit their employees.
And I know the each try and put a positive spin.
On things like paying a fifteen dollars minimum wage, or you know.
They have college education programs.
Yes, they both sort of match each other with over the years, but they.
Do, I mean, make a bigger margin on the backs of these employees, right, I mean, the whole point of a business like this is to kind of squeeze costs in places like labor to make more money for the shareholders.
Yeah, and they both drive drive people really hard. I have a chapter in the book that's all about how in the last five years Walmart has recruited a lot of warehouse leaders and other logistics leaders from Amazon and how they sort of imported the Amazon way and culture, which not surprisingly did not always go well. And I think as they add automation, the companies will say we've taken away some of the most menial work, some of the toughest work. But what often happens at the same
time is the work speeds up. I see all these states investigating Amazon. It's not because it's not because the you know, one one act in the work is really difficult. It's because of the repetition and the speed, and so I think it's a big issue. And they say they're you know, they're constantly improving safety and the like. But there's a lot of investigations and evidence that proves otherwise.
There's a lot of stuff things and I kind of mixed them together. But yeah, Jet dot com and Walmart talk to us about some of the kind of interesting developments. We've got about two minutes and then we'll come back and talk some more. But were these pivotal experiences.
Yeah, so, so Amazon bought diapers dot com the parent company was Quizy way back around twenty ten, stole it from Walmart.
Mark Lurriy, that.
Entrepreneur spent a few years at Amazon, starts Jet dot Com.
Maybe started working on it while he was at Amazon. Not totally clear.
Wasn't really working out, but a lot of attention, and Walmart was needed a big you know, in books of talent, make the biggest acquisition in e commerce at the time, three point three billion. Mark Lori comes in, you know, some successes, some failures, but the metabolism of the online sales at Walmart picks up and then they both compete. Recently in healthcare on an acquisition called pill Pack, Walmart thought it had it. I have a great anecdote in
the book. Ceo of Walmart, actually here's the Amazon deal, announced that they bought PillPack instead, tries to convince the entrepreneur that he should back out of the Amazon deal, even though I mean, it's kind of crazy. The deal is public to the world, and it just shows like in some key areas where they're trying to get first mover advantage, they've gone head to head and more often than not, it seems Amazon has one.
Tell us about meeting because you did for this book. The CEO of Walmart, mister McMillan, yees.
So I went down to Bentonville, Walmart's hometown, met Doug mcma in the what they call the home office. I guess they have a new one being built, so this is the original, and spent about ninety minutes with him. We had a sixty minute interview. Plan went a little over which I was I was happy about, although they did not. My original pitch was to trail him for a week. That did not really work out, and that's
not something that Walmart really does much of. And so Doug, you know, I was really interested in getting to know him a little bit. He's been at that he's a Walmart lifer, but they saw him as a CEO kind
of bridge generations, like you know, they talk. He talks about how he you know, he had an early Palm pilot and like was into tech and tech forward and they made him CEO about nine years ago, and so his challenge has been just massive, and so it was interesting getting his thoughts on it to both you know, help reinvigorate the store business, which when he first came on board was struggling, while also trying to just you know, get into Cornel buy in that Amazon could be an
existential threat, which is how he called what he called it to his executives and also board members in those first couple of years as CEO. And you know, he sees a lot of progress there, but he told me he's still dissatisfied with the speed of transformation, the speed of change in some parts of the organization.
I thought he might have.
One more year in him, maybe at ten years he would step aside, but there was some good reporting recently that he's going to stay on board a couple more years as they try to really make sure that this new digital DNAs is infused throughout the organization, which you know, let's be real, it's one of the biggest companies in the world. Not an easy thing to turn that ship.
I wonder what I wonder.
What happens if the US further d keuples from China, because both of these stores, I had to be fair, I haven't spent a lot of time in a Walmart, but I do spend a lot of time on the Walmart app and on the Amazon app, and I often try and look for products that are made in America or I just noticed that all of my choices are made in China, like everything and the brand name is it's something you can't exactly so, but do they do.
They make an effort to try.
And I wish Amazon would have a made in America section, but they don't.
For a while, Yeah, and I thought, and.
I know Amazon now has like a small a small business badge, which I think there's been some reporting that's proven to not always be completely accurate. Small business from China and listen, Amazon made this bet back in about twenty thirteen, the twenty fifteen that they were going to go all out courting Amazon Sorry Chinese suppliers and sellers, and you know, they went growth, growth, growth, and they knew there would be some trade offs and they've just
kind of lived with it. Walmart had an opportunity on their website at least when they were welcoming in new sellers trying to build that marketplace business, to take a different path. Now maybe that wasn't no Chinese sellers, but maybe that was US sellers only or something, you know, something that would be more curated and something they could
market honestly. And they just I think mostly under Marc Luri, a previous e commerce leader and entrepreneur, they really went after just growth and expanding the seller base and they opened up to China in a big way. And you know, I hope it doesn't blow up in some way for you know, for either company, because that'll mean that something bad happened for consumers on the marketplace business.
But it just, you know, there's a reason.
It just doesn't seem natural to have every product available across the world at your fingertips without knowing a ton about the person behind it, And that's sort of where we're at today.
But Jason, can we have a world where both Amazon and Walmart exist? I mean, your book is Winter sells all?
Yes? Right?
Right?
No?
So I think there was a long period of time where some people at the top of Walmart were concerned if they didn't start making a dent and getting their act together, that yes, in some key online categories, there would be one winner, and that would be Amazon with ninety percent market share, ninety five percent market share. I think they've done enough over the last few years that that reality does not seem, you know, in the near term.
And putting aside Amazon's also its own struggles in the last couple of years with cost cutting and the like.
But does Walmart have an advantage because it does have stores? And I think about some stores that I shop at that I love that I can order online pick up in a store. Do like I have a lot of flexibility.
I don't like to hang out in a store. It's not as much fun to hang out online.
But I do wonder is there that an advantage potentially, especially as it builds, it should.
Be it should be and as you know, as we see labor costs up over the last couple of years, supply chain costs, logistics cost up, you know, returning items like returning e commerce items. It should not like the myth doesn't work to do it free by shipment. And so Amazon has failed up to date with a real physical presence. And I think they'll keep at it because it is an advantage for Walmart, even if it's just to give customers, yes, place to pick up, but a place to return.
Right.
I ordered trying to get ready for this week in my book launch, ordered like forty seven different white shirts online and like, you know, knowing I could just ship him back or in some cases return to a store, but not an Amazon store.
It's interesting in terms of.
The fact that no one's written a book about Amazon Walmart, and no one's really done that.
Bradstone, He's written to books, Well, no Amazon.
That's about Amazon. I'm talking about Walmart.
Yeah.
Are they secretive or they are? You know, is it hard to get in there? They wouldn't.
Yeah, hang out with the CEO for a week. I get that because that's annoying. But yeah, and they've they've they are, they're very secretive. They are secretive, I think listen. I think they participated in some way for a couple
of reasons. I think I showed them over the years I was going to publish stuff that they didn't think would get out of the company that did, and so I would continue to And I think they wanted to tell try to tell the story that they are finally turning a corner and that they you know, they get how far they were behind, and but that they can
lead in some ways. I think also, you know, for a lot of years when they were they've seen you know, Amazon has been in the spotlight for a lot of bad reasons in the press and in DC for the last couple of years. So they have some opportunity here to tell a different story as well and sort of stand apart from Amazon.
I'm thinking of our audience just got about unfortunately, Jason, about thirty seconds left here, we talked about healthcare healthcare earlier. Should our investment world and audience be watching these two in terms of what they might do to healthcare?
Absolutely, I think ten years from now we may. I don't know if we're being these jobs, but if we were, and we were back here, I think we may look back and say, the biggest impact these companies have had in the last ten years on everyday people have is in healthcare, whether that's physical clinics like Walmart clinics one Medical Clinics which now Amazon owns, or virtual care, or
maybe upending the insurance industry in some way. You know, the biggest challenge to Walmart in the healthcare is they've just churned through leaders yea, and they say there's a commitment, but we need to see that, you know, that sort of come through in steady leadership.
This was fun.
Good luck with the book, thanks so much.
Good luck with the white shirt.
I mean I have many at home waiting to go back.
Jason Delray. The book is Winter Sales All Amazon, Walmart, and the Battle for our Wallets.
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Hey.
June is Equality Month here at Bloomberg, So every Monday and Thursday in the month of June. We're looking at all aspects of equality today. Our focus is on the lack of equal access when it comes to connectivity, something we often talk about at Bloomberg and I feel like, you know, Matt coming off the pandemic, when we saw kids working from home or trying to work from home and then you know, parking in a lot outside of McDonald's or something because they just didn't have internet access.
I thought things were going to get a lot better, but as you remind me, it takes time.
Well, look, that's the biggest problem with the lack of broadband nationwide is that when schools sent all the kids home and said, you know, work from your laptops or you know, telecommute with your iPads, not everyone could do that for a various reasons. It's expensive right to own that kind of equipment, and even if you are a rich person, if you're living in some remote area of the country, you just can't get online. So do we have to roll out fiber? Is there are there other options?
We just saw for Elon Musk getting approval from the Pentagon to provide starlinks to Ukraine.
But we also talk about.
Wireless broadband spreading the joys of high speed connectivity across the country.
Still, it's a big country.
It's a very, very very big country, and I don't think a lot of Americans realize just how big it is.
You're right, You're right, things we take for granted in big metro cities is not the same across the country.
Well.
Heidi Binko is co founder and executive director of the Just Transition Fund, established in twenty fifteen by Rockefeller Family Fund in the Appalachia Funders Network. They are about helping communities tap in to federal funding opportunities, including those in connectivity and broadband. She joins us on Zoom from Charlottesville, Virginia. Heidi, good to have you here, and you've been listening to
us rant on a little bit. Tell us a little bit about your organization and the work that you're doing to connect more Americans.
Yeah, thanks Carolyn, Thanks Matthew for having me today. I'm really glad you're talking about broadband. I think there's a sort of a quiet crisis in America that you're right, Carol, that those of us in metro areas really don't think about. So the Just Transition Fund is a nonprofit philanthropic organization that I founded a number of years back, and essentially we help communities affected by the downturn of the coal
industry diversify and grow their economies. So we're helping them realize they realize their own vision and vision for a thriving, vibrant economic future. And we realized along the way that we cannot work on economic development. You know, as you said in your opening statement, you can't work on workforce development. Kids can't access the internet for educational purposes if there is not a good broadband connection in these places. And people in urban areas don't realize this. I think most
people don't realize it. But this problem is particularly crude acute in rural America. It's even more acute in the rural communities in which we work. So third of the coal communities that we work and don't have access. And it's even worse than some places like West Virginia the nation.
It's interesting, I'm thinking right now. You know, we're on radio, obviously, but we're also on YouTube, and we're on Bloomberg Originals are streaming service. And for something like here, you know, people take it for granted again, like being able to kind of tap into us on multiple platforms. But you're right, it's not the case across certainly rural parts of the country. What are the government programs that are out there in a week where we're talking a lot about governments.
Well, we have the Big Broadband true, what's it called Broadband Equity Access and Deployment deployment, right, the Bad Program, which is bad program forty two billion.
Dollars, so a lot at least, it's like a lot.
At least the government realizes that there's a problem, right and are trying to do something about it.
Yeah, that's exactly right, Matthew. The Big Program, which is administered by the NTIA, the National Telecommunications Information Agency, is one of several agencies that is receiving a lot of money for broadband to speed broadband adoption across the federal government. Actually, I don't think people realize it, but there's over one hundred billion dollars available through this administration to support broadband
access access. The problem is it's not that easy for communities, particularly rural communities or low capacity communities to access those funds. So that's where that's where the Just Transition Fund comes in.
So what do you do I can imagine, because this country really is so big that it's not just West Virginia or I don't know, Kansas, but there are multiple states where you know, the population per square mile is less than one. Right, So how do you you can't roll out fiber to all of those places?
Right?
Is it about fixed wireless access?
It's about a lot of different technologies and in your right, right. The problem is particularly particularly acute in places like southern Illinois, Western Colorado, different places in Ohio, all across the.
Country, Wyoming, Mexico exactly.
Right, Like the tribal communities are hit particularly hard the Navajo Nation. In some areas, ninety percent of the communities can access can't access the internet, right, So it's it's it's it's particularly bad. And essentially what we do is we act as an early stage investor to help communities access the federal capital capital they need to build out
and access broadband infrastructure. So whether it's you know, fixed wireless or or broadband or fixed wireless or starlink or what have you, there are different ways to access the you guys start these federal problems, do you guys tap into st some of our Yeah, some of our communities out in out in travel areas are working on that
are using that. The problem with starlink is that it's really expensive now, right, and that's another problem, right, I mean, that's what makes this broadband problem so so hard to deal with, right, Like, it's not only a problem of physical infrastructure of access, but it's also a problem affordability.
What's what's a successful project that you guys have done and we've just got about thirty seconds.
Yeah, great project that we worked on was in West Virginia. We helped a series of communities access more than forty five million dollars in federal funds and it ended up connecting over thirty thousand of the most disconnected households in West Virginia. So those kids that you heard about during the pandemic that we're going to the McDonald's Wi Fi right parking lot to get Wi Fi to do their homework, that's what this project helped.
Wow, that's amazing.
That's very good.
Yeah, absolutely, yeah, because what a disadvantage and it's tough that some families, so many families had to endure that. Hopefully they don't have to go through that again anytime soon.
Yeah, and especially in a world, especially when it comes to things like school. I mean, that's how kids, that's how they work. It's just very different, certainly from when I went to school, and maybe when you went to.
School, a little different from back in the seventies.
Here, Heidi, thank you so much. I'm glad we were able to check in with you. Heidibinko, she's co founder and executive director of the Just Transition Fund, joining us on Zoom from Charlottesville, Virginia. No, I just remember with my own daughter, like it's like all these assignments came in on, like laptops and everything, and how they communicate with teachers and great, like, it's just different.
We should revolt, all right?
You ready ready to do?
Okay?
All right?
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All right, Well, no doubt about it. N VideA betting big time on AI so to our investors that Nvideo is going to get at this right because and Video is now a one trillion dollar market cap company, just one of nine companies to get there, a move that put it into today's Alpha pack of Silicon Valley h and I got to say, it's really interesting considering the Nvidia history, which is what a story in the current issue of Bloomberg Business Week gets into that story, as
we said in Bloomberg Business Week, on newstands, online at Bloomberg dot com, Slash BusinessWeek, and of course on the Bloomberg Let's get into it at Bloomberg News Technology reporter Austin Carr on the phone in Boston, and of course with us the editor of Bloomberg Business Week, Jill Webber here in our Bloomberg Interactive Brokers studio. Every time we do anything though that has an AI connection, I always forget the open AI and Elon Musk like it all
goes Elon is everywhere. I know that that's not what this.
Story and that one, you know, goes from a couple of years ago, even when you know there was going to be a lot of interest this.
But the thing that I think that reveals.
Is that in video is really at the heart of the AI conversation, which you know that newslash not the first person to say that. But what has been impressive is that they've only become more entrenched and more powerful and more valuable as a company.
That in this time.
Yeah, and the person who's leading the company is really kind of a fascinating person. And he's been at the head of the company for a really long time, right Austin, And so you guys to spend some time with him.
What's he like?
Jenson's long He's a fascinating, extremely intense, very sharp elbowed chief executive officer. He was a co founder of Nvidia, has been there since. It was known as a gaming pioneer back in nineteen the late nineteen nineties for developing graphics cards, and only recently if they started to get credit for their expansion into developing graphics processors for AI.
But even though you know, we're just getting hit to them with them passing a trillion dollars market cap or being at the core of open AI's sort of foundational technology with their microchips, they've been, you know, working on this AI challenge since the mid two thousands. It's a
huge bet. The company took back in a round two thousand and six to start pivoting towards these sort of high performance computing problems, developing graphics cards that could handle a lot more than just loading up a game on your laptop. And so this company, helm by Jensen Wang, really deserves credit for making this big bet and actually pulling it off over a lot of years of doubt about what this technology can do beyond gaming.
So because he you know, I always think of Nvidia with gaming. I'm a big call duty guy. You can play against me my gamer tag, a shower fan. But I never think of them as doing anything else. They have made other bets that have failed, right.
They've paid a lot of bets that failed. Jensen Kuang actually prides himself on that. He used to say back in the day that they were always ninety days of from going out of business. He bet on you know, tablets going into the smartphone space with more chips, bet on various graphics cards that failed, and so this, you know, although it looks prescient in retrospect, this was actually one of many bets he laid over the past decade or two.
But he's always operated on that sort of knife edge, which is actually pretty rare in the semiconductor industry when if you do mess up a chip cycle, it can have huge, huge impact. And you know, these companies really suffer if they miss a cycle or missed a chip generation. And yet that's something that Jensen Hong is really pushed toward.
He's not just going toward the incremental update. He's actually making this massive other bet beyond loading Call of Duty to sort of power chat, GPT and all these other apps through the graphics cards that they developed that are sort of bizarrely and sort of serendipitously very good at number crunching and data crunching for the type of brain
that AI needs to survive and endure. And that's something that you wouldn't have expected maybe ten or fifteen years ago when Intel was sort of the head of that conversation and really known as the you know, the develop of the big CPUs and owning all the data centers out in the world. But that that has completely changed with the advent of AI and what the technology they need to to sort of uh sort of be developed on.
I want to I want to talk more about that, but but first I want to talk about a public service that you provided in the story, which was before he wore the leather jacket, he had kind of a different outfit and then he just owned the leather jacket and it just became a thing.
And I just love that about it.
Totally changes his persona. I think of him as a cool dude, a total Yeah. You know, Jobs had the turtlenick. You know, you know what's one up on the turtlenick, A leather jacket.
It's way better.
Yeah, Austin, what was that? What's been the transformation of Jensen along the way?
Like, I think that's a really good question. And you know, people make a lot of the leather jacket or sort of any uniform that that Steve Jobs or even Mark Zuckerberg wears today, and I think, what what what? That leather jacket actually came up unprompted in many of my conversations with a lot of sources and executives, insofar as that it was sort of a very computational decision. Jensen
is an engineer by trade. He's brilliant, but the way he thinks about problem solving is very much like an engineer, and so I think part of it based on My reporting at least was that he adopted that that uniform not be you know, Steve Jobs had sort of an aesthetic that he was trying to go after, whereas I think Jensen sort of made the decision one day to stop dressing like sort of you know, a geek squad member at Best Buy and start dressing a little bit
hipper and have more stage presence. I don't think it was sort of core to his fashion, but I do think he realized that it was something he needed to adopt, sort of like an avatar in the metaverse. That's how I sort of compare it to. So it is an interesting thing. But you saw him grow as the CEO and become much more of a luminarian statesman, having been around for decades. I think he's the longest running CEO
in the semiconductor's base. He's got to be that there and the sort of tech CEOs who've been around and at the helm of the company for this many decades. But that's sort of a testament to how strong, wild he is and sharp elbow he can be with employees.
I gotta I gotta work on it. There's I haven't found my leather jacket. Yet, but you know it's out there somewhere.
You have your uniform. Shoot, I got the sneaker.
I've got some, I've got some a couple of things that you know are part of my look. But okay, Austin, there's another part of the story that I felt like you, you and Ian King your coolin and the story did a great job of breaking something down that I did not understand, which is, talk to us about the shopping cart metaphor.
That you use that is the CPU.
That is like, it's foundational to what has made in Vidia and VIDIA and until your shopping cart analogy, I didn't fully appreciate it.
I appreciate that, Joelt. Just know that we've worked on many different metaphors and analogies before we landed on this.
I like where you landed. I like your leather jacket. Go ahead and walk us through it.
But basically, if you want to take away one thing from the story, it should be the difference between a graphics processing unit also known as the GPU, or what Intel makes which is called the central processing unit or CPU, and the way we describe it in the story as the difference between sort of a shopping cart, which is the equivalent of a CPU at a grocery store, you
can run around and pick up all your groceries. You can hold a ton in that individual shopping cart, but it sort of takes a while to work through the grocery store each of the aisles. What in Vidia makes is called a GPU, and that it does a lot of small and repetitive tasks very well. So it's sort of the equivalent of having a bunch of smaller shopping baskets, which on their own could not hold as much as
a shopping cart. But I imagine if you had twenty of them running around the store picking up your toilet paper, or your orange juice, or your milk or other groceries, you could get done a lot faster than what a shopping cart or Intel CPUs would do. And so that's really the core of what Nvidia has been doing well, which is, you know, all these AI training models, they need a bunch of hand baskets essentially of data to sort of train chat GPT and make sure it can
speak fluently and then respond to your queries. And that's what a GPU is really good at doing repetitive small data tasks simultaneously, which a CPU.
Is not very adept ad So how does a company go from being almost as you said, They've gone through like a couple of iterations. They almost ran out of cash at one point. What was the key turning point in Nvidia that has set it up for us to be kind of talking about it as much as we do today.
To be honest with Carol, I actually think a lot of people think about this as a hardware story developing, you know, the microchips that are go inside these data centers or servers. But it's actually more of a software story.
One of the big bets he made back in the mid two thousands which develop a programming language that could sort of build software for these GPUs much in the same way that game developers make Call of Duty or other you know, high graphics intensive games for these graphics cards. And so he built a programming language along with his team that really took a while. I mean back is you know, let's say twenty fourteen, twenty fifteen, Wall Street
just had no idea why they were investing this. Even employees told us they had no idea what any of this had to do with gaming, and the reality was it really didn't. It was a bet on something else, which was going after sort of large scale supercomputers and making sure this technology could be programmed to do stuff like what has become chat GPT. So I think that
was a key turning point. You see a lot of other companies like Google, Microsoft, Facebook developed their own competitor hardware, but what they don't have is a programming language that in Vidia has spent a decade plus developing and bringing in developers to build on.
Okay, so marquee product now and where's it headed the market?
Product now is you're lucky if you can get your hands on a Joel all those.
I can't you buy vibing one maybe a leather jacket.
Well, yeah, it would cost more than a leather jacket. It goes for maybe ten or twenty thousand dollars, depending on if you're getting it on retail or secondary markets. It's called the Hopper one hundred. And it's just someone compared the initial past couple of generations of GPUs is going for let's say a BMW to a Lamborghine. But then they couldn't really come up with a comparison for this next stage of graphics carent I mean, maybe it's
a space Sprocket or something. But it's really fast. It can These are leaps and bounds over what past generations have performed. And I think what you're going to see is this sort of just insanely exponential growth and AI performance out there based on this training that these GPUs
can process at once. And so that's why Elon Musk, that's why Sam Oltman, everyone's after these GPUs because they want them in their data centers, training their models, these large language models that power things like CHATGPT.
So also twenty four billion, fifty four billion components on this GPU, and it's time.
You wouldn't see. You'd have to have basically a very refined microscope to see down there. If you actually touch it feels pretty smooth. But beneath the surface, yeah, it's We described it as sort of like looking like the Tokyo subway map, except with about fifty four billion more stations.
All right, So Austin, you've really kind of spelled out why you know they have I guess first mover advantage. It feels like for this AI ephor you I mean, this is a stock We talked about it earlier with a guest. You've got a current pe of over two hundred, a ford looking pe of almost sixty. Many people think it's getting heady. Can somebody else do what Nvidia is doing when it comes to AI, Not yet.
I think it's it will take some years. You know, Google chips right now, some have said, are just as fast as the ones that are out from Nvidia on the market. But again, this next generation h one hundred product is going to be catch up and match the performance of Google chips. And again they have that software component which Google does not have. You know, I think
there's two ways this could go. You know, in Vida just continues to steal the market like Intel did with servers, you know, decades ago, and maybe they you know, right now they have this eighty percent market share and these accelerators. Other analysts feel that maybe they stumble, maybe a competitor does come out with some product that that steals the market or developed some software. But I think that's that's still years ahead, and right now in videos in a
pretty good place. I mean, everyone we talk this is said that this is sort of invidious market to lose.
Austin, I'm curious because you've mentioned a couple of times you've said he has sharp elbows, and it's also been pointed out in your story that if he loses, he can just you know, fire everybody or humiliate senior staff, like is.
He a jerk?
I should clarify that he actually is known famously. He even said this that he's never fired anyone. But if you talk to sources about him, that's because he will make it a place that you don't necessarily want to work if he's unhappy with your performance. So I wouldn't say.
It sounds like a boss to me.
Sounds like a boss. Yeah, Joel's very much the same way, but bosses, But yeah, no, he is I would say very intense. But I will say he has this core following of loyal executives that have been there decades, and there's got to be a reason they're working for him. If if he was sort of just a jerk or could be very mean and sharp elbow, they wouldn't continue to work with him. But they get to work on
fascinating project. They really feel like they're on the tip of the sphere of technology, and I think there's a reason why he inspires that loyalty in his troops and especially as employees. They really look up to him, and he has this sort of loyal, sort of militant life following inside the video.
My other favorite thing in the story, and there are many, it's like the fact that he like has the you know, he tries GPT and then what's the first thing he does, writes a poem about his company.
It's like opening. It's some great Then he never uses it again, but he pays. But he pays the monthly because they need the money. They need the money all right.
Thanks to Austin Carr and Jill Weber.
Check it out.
It's in the current issue of Bloomberg business Week magazine.
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You say you on a rebel?
You know.
We all want to change the world.
Yeah, a little bit of a.
Can we play this?
What do you mean?
I feel like you don't. We have to pay somebody if we play this. I don't know why.
It's specifically the Beatles, but I feel like it's expensive to play the Beatles.
I think you're allowed to play a certain amount.
Like less than thirty seconds.
So you know what's really important. We're going to talk about a revolution that's going on.
Yeah, I've been on Reddit lately.
I know what's going on.
So let's get to it, because this story it has to do with really kind of a changing world. Whether it's the ad market online, whether it's AI. There's a lot of stuff that we're trying to figure out in a very new environment for the social media world. And our Joshua Brustin gets into it in the new upcoming issue of Bloomberg BusinessWeek magazine. So let's get to it. Joshua of course here with us along with the editor of Bloomberg business Week Magazine, Joil Weeber. Joshua, by the way,
it is Bloomberg business Week Technology editor. So the story is very telling, right as we talk so much about AI Joel and trying to understand the importance of data going forward. It's important to AI generative AI.
Yeah, and then there's Reddit, which is just I think, you know, for the past couple of years become the great hope of the Internet it is, you know, as we've seen.
Weird, so weird, Remember it was no one's hope.
You know what The genius of Reddit though, was that it reminded us of how great the Internet was, like in two thousand and two, before there were social networks and stuff, and it just was it's so basic, you know, it just puts it all out there.
Yeah.
I learned everything I know about crypto originally on Reddit, like before anyone before it was one thousand dollars bitcoin. I went on Reddit, I joined the subreddit, I got to know people. I bought my first bitcoin through the subreddit, you know, for six hundred bucks.
Yeah, what's your handle? Like leather jacket? I can't tell you. No inside joke there from yesterday. What struck me about this though?
Podcast Also, if you were going to swallow the internet, Reddit would be a pretty great place to start. And that's sort of what's kicked off this current controversy and remind Reddit still not a publicly traded company, which has also been part of this.
So Josh, what happened?
Well, what happened started in April when Reddit said it was going to start charging for API usage. This is basically how you would systemically ingest Reddit data for your own for your own programs. And as you mentioned, one big use of the Reddit API is to take data and use it to train AI models. It's part of the model that is used to train chat GPT. I think Google's model uses it as well. And it's just
this big data set of people talking. And if you want to teach a computer to talk like a person, Reddit it's one place to start.
So Reddit wants to make sure you're smart. I start training with Reddit.
I mean, actually, my wife works for a company I won't name it that scrapes places like Twitter and Reddit for data. They do that for corporations, so that, for example, this is not a client.
I'm just using it.
If PEPSI wants to know, you know, how people on Twitter feel about them, this company goes and uses the Twitter API and scrapes all the mentions and figures out you know, which are positive, which are negative, and which are neutral.
So yeah, yeah, that's actually learning a lot about Matt. You know, I'm glad that the revolution was hinted at the beginning because yeah.
You know, and what Reddit wants to do is make your wife's company pay for that. Yes, because they're exactly some commercial use from this. And at first the announcement was made in April, you know, people said, huh, that's an interesting look at like what might happen with AI
in the future. And then it became clear that this was also going to impact a lot of developers that make apps on Reddit that Reddit users really like today and Reddit users really didn't like that, And after some negotiations, if you can call it that, with the company, the company refused to change its policies and the entire site or big parts of the site went dark last week.
So I mean, for example, Carol uses Twitter, not through Twitter dot com, but she has some third party tweet deck that she uses, and tweet Deck I guess would hook up to Twitter with an API as well. And you're talking about people using Reddit with such third party apps, right, yeah, exactly.
There are some very popular Reddit readers that ingest Threddit and give you a better or give you a different user interface. Those apps run ads that they don't share the revenue with Reddit, so Reddit wants some of that revenue. But also the API is used to build tools that things like the volunteer moderators that make Reddit run use
just in their day to day use. And that was really kind of what moderators said, if you take this away from us, we can't do our jobs and we're giving you free labor.
So which is key part there, Jush rights, but Reddit power users or something else using the site in a way that seems more like employment than leisure, except for the getting paid part.
Like this is one of the amazing things about the Internet. You find a community of people who care and they will do all that work for free.
Yeah, right, which also is I'm sure part of but you know, the AI swallowing it all likes.
Yeah, at the heart of it, this is a conflict between two groups of people who said, I don't want to do something without getting paid for it or getting you know, I don't want to do something for free if you're going to exploit me.
The moderator is being exploited.
By everybody else is going to get paid, and I'm being.
Exploited by the AI companies, the or the third party app companies or whoever.
I love. There's a quote in a professor at the Institute for Advanced Study, and I guess was in the Biden Administration's Office for Technology and Science.
Policy.
People are anticipating that there's a change in the economy
of the internet company. Right, we're finding the ad model can just go so far, right, and now we're increasingly we knew data was worth something, Right, We've all been trying to figure out who ultimately benefits from all that data collection, right, and now we're kind of getting to a whole new level of it because it's needed to make generate of AI so much smarter, right, And that's kind of what it gets into on a bigger, broader level.
Yeah.
Absolutely, I think a lot of people are very nervous about the changes coming in the Internet, and there's a question about who creates value online and who is going to be compensated for that value and how.
Okay, so what does this mean for that IPO that never quite happened.
Well, I think it's fair to say, although Reddit will not say that part of the initial reason to do the changes were to shore up its business as it looks ahead to this IPO, and I think how it impacts it really depends on the outcome of this. There's real concern out there that if the moderators continue to be in revolt, that Reddit won't work as well, and might not be as good of a business going forward. It might kind of fail to function as a service.
What it reminds me of a little bit is the Dungeons and Dragon cover story that we did not so long ago, because Bro also tweaked the licensing agreement before the big blockbuster came out right, and the nerds did not like that. They there was a revolt online. Then Hasbru ultimately had to back down, but there was so much money at stake, And here we are again. I
won't call Reddit users nerds, but they are nerds. Okay, well you said it, but it basically creates this moment where you've got, you know, a platform that everyone has turned to. I mean, this is the hope of what it was, back to the future, bet that the future of the Internet actually maybe look more like Reddit, and all of a sudden, the underlying value proposition is the thing that is at risk.
It is pretty crazy, Mike Drop, It's really kind of right.
It's kind of heavy thinking of like how this moves forward.
Well, here's the thing.
AI is the the you know, the dawn of generative AI has made us all realize, oh, Reddit is worth something.
I mean, there's real value there, highly entertaining, right. I mean, I've loved Reddit for over a decade.
You still use it.
I use it all the time, like literally every day on multiple devices. But I always thought it was our user. I always thought it was fairly worthless. Although I guess now that I think about it, it's need answers for me, so many questions, your time, your your eyeballs.
Think about how much that's worth, right?
Yea? What is Reddit thinking? Joshua inside? Internally as they work this way this through.
Well, Reddit has said there have been some memos that have come out from inside the company where the executives say, you know, this is these flaps happen every once in a while. Reddit is a very restive community, and the idea is like, let's keep let's keep our heads down, you know, we'll take our lumps and a month from now everything will be back to normal and we can, you know, move forward with this plan. The economics will be better and problem solved or at least, you know, problem lessened.
Wait, who are the overlords that run Reddit?
Like Alexis Ohanian is gone right now, He's like a women's soccer guy, So.
Who who are the bosses? Who's the corporate face of Reddit?
So the CEO of Reddit is is Steve Huffman, the other co founder. And Reddit, as you might remember, was bought by Conde Nass soon after it was founded, and it is now an independent subsidiary or it is it is its majority owner remains Advanced Publications, which is Conde's parent company.
Cool, So, how do we think they might attempt to navigate this, Josh, Like, what are their options really?
And they You're right, they have gone through this before.
I'm thinking of remember the anti work kerfuffle where like the community sort of ousted the moderator that it had, right, Like, there's been tensions like this that have simmered before. But how do you think they go about navigating this?
Yeah, this thing, this kind of thing happens from time to time. And I think that's what Reddit is betting on. And it says it's going to build a lot of moderator tools or has already released some that will replace some of these, uh, some of these third party tools that might not be able to function if they have to pay for the APIs. And I think that they'll hope that moderators will find out that, oh, these things work. Okay,
maybe this isn't such a big deal after all. You know, I love Reddit, and it turns out I can continue to do my job, and you know, and they got mad and then they get better and things calm down for a little while until the next time they get mad.
And what about for for the AI companies that are out their attempting to swallow the Internet?
Like, will they pay up?
What do you think that dialogue looks like it certainly seems like the AI companies are preparing to pay in some way. You know, Reddit is not the number one source of material, but there may be some licensing deals worked out. And I don't think I think the economics cere.
That provides it.
That's not You've just provided me with another ques actually me, what is the number one source of material?
If not read it? So basically wonder like where do these lives come from?
Where should I be going?
Is Wikipedia a better source? I mean, what are these AI models doubling up?
All of it? All of it?
No hierarchy.
Yeah, it's it's an immense it's a large range. I actually don't know off the top of my head what the number one is number one sources, but there's you know, there's like thousands of websites that it's scraping and you know, putting together sure millions.
Even what does this mean for Elon and Twitter? Potentially he's trying to figure it out too well.
One thing that this shows is that, you know, Reddit users have some power over the site, whereas Twitter users don't.
Really.
I mean, people are mad at Elon, and Elon's like, well, go go ahead, you can leave if you want, but they can't shut Twitter down.
And they don't leave. By the way, if you look at the data actually use to increase.
Everybody lost their checks and we're like, okay.
Everybody said, like when when Trump got elected, people are like, I'm gonna move out of this country if Trump gets elected.
Fast forward, nobody moved out. Same thing about with Twitter.
You know, they said I'm gonna quit Twitter if Elon must take They're all still there.
I'm genuinely curious here when you go to Reddit, like what are the sub threads that you traffic in?
I feel like that's such a private question, which is why I won't even tell you my handle. Like the last thing in the world I want is for anybody to see my Reddit money.
Back.
I've worked with Matt for so long and he said something earlier, and I'm like, you still surprised me twenty plus years in coming.
He's full of surprises.
You don't maintain multiple Twitter or Reddit hand I do have.
I do have.
Tell us your family friendly, you know, I mean, so I look and I look at like a leather jackets thing. Although for that I use even more embarrassing forums than Reddit, like, uh.
We learned yesterday Matt is I mean, I'm kind of obsessed with leather jackets.
I'm also kind of obsessed with leather boots and shoes, and Reddit has a very good forum for for boots.
We actually didn't ask you about this yesterday in video CEO Jensen very very much. It owns the leather jacket. Where do you rank his leather jacket like critique, I don't get more than one though, exactly so, I don't. They didn't look so amazing.
I don't think he's getting them from like the best shinky horse hide tanneries in Japan.
You should reach out. I think that was he on the Reddit formula. The thing is for jackets, you've got to go to the door. Lounge is even worse.
Please, I think I think there needs to be uh, you know, fashion consulting with Matt.
I'll reach out to and video.
How come somebody put chaps in our ib chat? Did you say chaps?
Chaps?
Chaps?
I don't know.
Leather pants is what he's asking about.
I have a few pairs of, you know.
But that's for riding your motorcycle.
And we're good.
Are you staring?
All right?
Maybe not?
Okay? Talk about a revolution?
We just had one.
All right.
That's a wrap, guys, Thank you so much. Josha brustin Tech Editor BusinessWeek. Here in studio Laitil Weber, the editor of Bloomberg BusinessWeek, is story and the new issue at BusinessWeek Magazine on newstands tomorrow, online at Bloomberg dot com, slash business Weekend, on the Bloomberg and on leather Chaps. We're taking a break. This is Bloomberg.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg.
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You can also listen live to our flagship New York station, Just Say Alexa, Play Bloomberg e Love and thirty.
Well, there was a story on the Bloomberg Today was an analyst at with a note saying nothing is AI proof, but live sports may come close. And basically they're saying maybe sports as an asset and sports rights are something that maybe's protecting from Aha.
Well, absolutely, I mean continuing to appreciate.
One of the most read stories was about a Sydney, Australia based fund manager who said, I'm not going to buy you know, Nvidia and the ship makers of the data center operators, but I'm going to buy stuff that can't be broken by AI right. And he said it's a very small field. There's there's few things, you know, but there are things out there.
All right.
So we are so obsessed with AI right and how it's going to impact our world. So joining us to talk a little bit about it. From Menlo Park on Zoom is Bob Muglia. He's former CEO of Snowflake, the global infrastructure software company. He was there from twenty fourteen to twenty nineteen. Before that at Juniper Networks and then a Microsoft divisional president back in nine. He is a board director for a lot of companies. Board memberships on Microsoft,
Snowflake relation AI and a few more. He's got a new book out. It's called The Data Datapreneurs, The Promise of AI and the Creators building our Future. And I apologize, Bob, I've had a hard time getting out. It's basically a play on data entrepreneurs. And I love the title. Welcome, Welcome, How are you good?
I'm good.
It's glad to be here down the Bayer this week, so it's fun. I'm warmly up in Seattle, but I'm down the this week.
So I think, are they talking a lot about AI in the Bay Area?
That's all they talk about down here?
Well?
Rightfully, So from your vantage point, should we all be talking about AI? And how should we be talking about it? And of course I'm talking about machine learning, generative AI, kind of the next level, if you will.
Well, I think it really has hit the vernacular of common people and it's become part of everyday lives with tools like jack GPT, and it's really just the beginning. I mean, this is going to affect us in a very deep way. I think we're going to see all sorts of wondrous things coming in the next couple of years. These assistants or copilots that are going to help us in a whole bunch of ways. Just about every application is going to be updated, big, big time, lots of
change in technology. It's the biggest thing I've ever seen in my career, actually.
So, I mean, it's absolutely huge, and the co pilots are one of the things I'm most excited about for Microsoft. Do you think there's a killer app that we haven't seen yet or are there just so many uses is that it will be hard to pin one down.
Well, honestly, one of the killer apps is going to be searched, for sure, and you know we have an opportunity to see search truly reinvented with these answer bots that are being created. Bing was one of the first ones. There's a number of others out. I have an investment in a small company called Perplexity that's that's in that space. But it's really the first time you've been able to take on Google. I'll say, I'll say that for sure.
I think the office is going to be tremendously updated. Really, just about every application is going to up be updated. I saw Salesforce made some major announcements a week or two ago. You're going to see just about every application updated. And you know a company I ran for five years, Snowflake, is going to be making major announcements next week. Lots of stuff happening. So yes, lots of apps. I don't
know if it's any one app. I think it's many apps that'll be that'll be, it'll be killer apps.
Bob Bloomberg Business recovering in a story about Reddit and basically it gets to a bigger question about who owns the data that is going to help make generative AI smarter? Right, that's crucial. What's your view on that.
Well, there's an awful lot of data out there, and one of the things that people are learning about with these generative AIS and these machine learning programs is the quality of the data really matters. So I think you're going to see corporate data becoming very important, proprietary data becoming important assets that people are using. You know, public forms like Reddit and lots of public forms that are out there. Those are all that's data that people are using.
They may try and monetize it in some ways. I think see you'll see people starting to do that if people have sources of public data. But in general, people are going to be using their data as a way of generating proprietary information. And what we haven't seen yet is this really break into the enterprise and that's a tremendous opportunity over the next couple of years.
Does this generative AI make different social media platforms more important than before? In other words, we were talking about kind of who's the top right place, right Matt in terms of social media is does it kind of upend the hierarchy?
If you will, it probably will over time. I mean, it's hard to say. It's hard to say. As I said, you know, I can see for the first time, you know, applications like search, which have the opportunity to be disrupted. I think social media will be different because you're gonna want to have AI summarize things for you. One of the challenges with social media there's so much garbage on it. It'd be nice to have a bot be able to
say what's interesting in that that happened today. And so perhaps with the media company that does the best job of that may wind up in the best position. But we'll have to see to find out.
I mean, Carol, how many emails do you get every day?
Too many? I don't even read them all literally, and if.
I could have I'm constantly typing eight nine go, eight nine go, which is spam and delete on the Bloomberg.
I don't even I don't even delete anymore because it would take so much time.
It would be great if AI. That's one area in which I can't wait for AI. One thing I'd bristlet a little bit, Bob is when when Carol says make it smarter, I mean, it's not really getting smarter, right, That's a term that you use for a human and I think.
We but it is becoming right, it's the use of data. It's different.
It's the right word. It's the right word. Well, what do you do?
You share the concerns voiced by people like Musk and uh, you know open AI, Sam Altman about you know, somehow this program becoming smart enough to subjugate humanity like that seems to me to be a ridiculous and be kind of takes responsibility away from the companies that are running these programs.
Well, you know, we've as we've all grown up, we've been seen many dystopian science fiction things, Terminator being perhaps one of the most the most accomplished of all of those.
I don't.
I don't know how you can. You can be much worse than Terminator was to humanity. So there's a lot of there's a lot of of of of literature and
science fiction that goes into this. You know, in the short run, the real concerns are what people will do with AI, and people to do everything with AI, good, bad, and evil, and as they do with social media, right, like they do with social media exactly, And and AI can do some things faster than humans can, so there may be some new challenges, but it also can help to fight against those challenges too, And so you know, we'll see AI defending us against bad AI, good AI
defending us against bad EI.
In the short term, you know, the long term concerns.
About about existential issues about humanity are really about will will this intelligence get smarter than all of us and then you know, go become rogue and go against us. Now, honestly, I do think it's going to get smarter than all of us. It's on a path to basically be able to take the ideas and the intelligence of everybody in humanity and to put a lot of that together into a system that can be immediately trained and replicated and grow and things. So there is a lot of opportunity
for this stuff to get smarter. But ultimately we will be creating whatever it is. And I've always been a believer that values will reign supreme in the end, and that while humanity does many things wrong, ultimately we come up. We never really screw it up that badly, and ultimately we'll make the right things happen. I think AI is going to do great things for all of us in the short and medium term and in the long term. Who knows what will happen, But I still have a
very positive outlook. I'm definitely a techno optimist.
I love your optimism, Bob. We need more of that. Let's get more.
Bobs also think it's it's important.
Yeah, it's all about people.
I mean, ultimately, the thing to realize is these tools are being created by people, and we will do to it what we do with everything. And like I say, lots of great things and maybe some bad things too, but we'll figure out how to control it and make it work.
I think about healthcare like the ability, because healthcare is far from even as we know. It's an old story, unfortunately, But I think about the possibility if you've got something and there's no way the medical community can keep up with all the research that's out there, and so the ability to somehow use AI to figure out, Wait, what's your you know, ailment and your the nuances to it. And then here's the reason, I don't know.
I just think it's so dangerous at first. Do you ever get a little bit sicknical on WebMD? Then like all of a sudden, you're dying.
But that's not as smart as it could be, right bub Yeah, and web md is.
Unfortunately you go, you go on the web and you don't know, you know, you really know what you're looking for, and you see all sorts of nasty things.
Dying I'm always dying, to be quite honest.
Talk about these co pilots.
Think about it. Think about a physician's assistant copilot right that has access to all the latest medical research and can look at a scan, for example, and compare it to millions of other scans that have been done, and really, do you know, find things that people wouldn't be able to find. These co pilots are going to be incredibly helpful in medicine. It's one of the areashe we'll see some of the biggest advancements in the next five years.
And I'm going to have a co pilot here in the studio.
Man.
As much as I love you.
I'm going to have a co pilot, and I'm just going to tell you you deserve one. He will be, as you know, entertaining probably or whatever. Still with us is Bob Mugley. He's former CEO of Snowflake, also at Juniper Networks Microsoft. He's got a new book out. It's called The Datapreneurs, The Promise of AI and the Creators Building Our Future. Still with us on Zoom from Menlo Park, California, and I promise, I bet if we have AI to
revenge they can say this titles, so forgive me. I do think it's interesting though, about the data entrepreneurs that are out there kind of figuring this out, Bob right now. And I feel like your vantage point and having worked with some visionaries very early on, likea Bill Gates or even a Sam Altman who is now increasingly because of Open AI become a household name, tell us take us back there, though, to maybe give us some insight of
what that era was like. As we feel like we are embarking on a whole new kind of data era.
Yeah.
Well, the book The Datapreneurs is really about the entrepreneurs I've known that have made a data industry and today AI what it is. And the basic theory is that there's an arc of innovation that has occurred really since the advent of digital computing, with continued new improvements, new technologies that have happened over time that have been advanced by these incredible people, and that has brought us to where we are today. And it has been this series
of progressions. Back in the late eighties early nineteen nineties I worked very closely with Steve, Steve Baumer and Bill Gates in the work on Windows, and back then there was a focus on something called information at your Fingertips. This was a vision Bill had come up with about how we would be able to find any information we wanted by just going to our PC and asking and running a query and asking a question if it really is.
Back then, most people didn't even have email. Email was relatively new back then, the Internet had yet to be invented, and so this was a pretty novel concept. And while it didn't pan out the way Bill had anticipated, it being, which was really a desktop centric, Windows centric view of the world. The Internet really changed that and really brought us information at your fingertips in every way we could
have ever imagined. And now we have this incredible amount of information available to us, and in some senses, the largest problem we have is it's too much for us to digest and to really make sense of. And and that's where AI can really help us, because you can go through a lot of that data and turn it into information that is useful for us and and and much much easier for us to consume. So it's been it's been an ongoing trajectory. The world was very different back.
Then, you know.
I've often made the comment that I saw you know, I saw Microsoft from from a bird's eye vantage point and got a chance to see it all. I've often said I saw the good, the bad, and the ugly at Microsoft. I was one of the twelve witnesses who was in front of Judge Jackson and the DJ case than David Boyce, and that certainly would qualify as the
ugly in my opinion. But and then I did penance on that for a couple of years afterwards, when I kept going back to Washington, d C to clean up some of the last issues we had with protocol documentation on the DOJ.
So I lived through all of that back then.
What is there going to be a penance, if you will, or a similar tough time when it comes to AI. Is there going to have to be a very significant role by regulators in your view?
Well, first of all, let me start by saying that, you know, the Microsoft case really created a lot of law, and I think all the industry as a whole has learned a tremendous amount from the mistakes we made way back when, so they can avoid a lot of the challenges that we went through. You know, in terms of regulations for AI, there certainly will be some I think understanding what needs to be regulated is something that's still
being considered. I think that there are areas where people taking AI and doing things with it that you know, that are that are that that like deep fakes as an example, there may need to be some new laws associated with that, because, if I understand correctly, the laws that we have today don't necessarily fully cover the idea of somebody creating a complete image, a complete like image of a person and then having that image saying things that are just not true and clearly that that can't
be allowed, and we need to make sure that things like that are not permitted. So the laws will get updated somewhat, but actually most of the existing laws can be applied because people are behind these things.
And if you can, if you if you can.
Take a look what happened with crypto right like it got me. It's gotten messy.
Crypto is messy to begin with, though, isn't it.
That's true, that's true, that's but do you feel like you know what I'm saying that it feels like there was quite a lag in terms of regulatory oversight.
Well, there always is going to be a laged. There's always going to be alaged because technology will move faster than the government can ever move. And so we you know, we discover you know, the Sam Bankman freeds that happen. You know that that is something that perhaps could have been caught. But now I think people have a clean, a keen eye to look for things like that.
So I am curious. You're the kind of person that if I was going from New York to the West Coast, I'd love to be sitting on a plane with because I would pick your brain and probably drive you crazy. But having said that, what is when people know your background? What is the question that they ask you most? When it comes to our new world and our obsession, it feels like it almost euphoria when it comes to AI. What's the smart conversation too that we should be having?
Well, I think the interesting question is that I keep hearing is what are the new innovations that are going to come about? What are the areas where applications are going to be transformed, and how is the technology going to transform it. One of the things we've learned in the last few months, which frankly wasn't clear in December or January, is that this AI is going to be available to just about everyone at effect zero cost you.
It'll be advertising based in some ways, and services will come out that are available to consumers as a whole. And I think that that you're going to have these services available to people really in all socioeconomic brackets. That's one area where it was not obvious a few months ago, and now it does seem to be clear. We've seen an incredible explosion of development of new open source technology,
so it's not just coming from the big boys. Uh, there was an initial thought that you had to have spent tens or hundreds of millions of dollars to build these these these models. That is certainly still true. But what's happening is is that open source models are appearing that have a lot of that work already done that can then be customized. So the interesting question is where are these things are going to make a difference in the next few years. And I think you know you're
going to see it in just about every application. And it's not just technologlogy coming from Google and open AI and Microsoft that'll make it happen.
Love this, come back anytime and open invitation, no doubt about it. Really appreciate it and good luck with the book. Bob Muglia. He is the former CEO of Snowflake. As we said, the datapreneurs, the promise of AI and the creators building our future. It's a new book, it's out. Check it out, so relevant to what's going on right now on zoom from Menlo Park, California. Bob again, thank you so much. You're listening to Bloomberg Business Week watching
us as well. I'm Carol Masser along with Matt Miller, and this is Bloomberg Radio.
You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business app and you too. You can also listen live to our flagship New York station. Just say Alexa, play Bloomberg. You love them, Jerdy.
Let's get to our.
Guest, because we want to talk about some of the challenges fame seeing the music industry due to artificial intelligence. With us again right here on Blomberg Busines, speak Michael Happy. He's president CEO of Sound Exchange, and organization that essentially collects royalties for music creators. Right, I'm saying it right, Yeah, back in studio. I'm good to have you back with us.
I'm pleasure to be here, always happy to come and chat with you about whatever issues are on your mind.
Well, there's there's a lot of issues that my therapist has marked don't want to go exactly. Having said that, AI talked us about your members or the folks that you work with. Are they a little nervous about the rise of AI?
So look, AI is a very interesting uh topic in the music industr, right now there's there's you know, there's certainly concerns about it, but there's a lot of opportunities as well.
You know.
On the one hand, you know, when you think about the issues that AI brings, I typically put them into three buckets, legal, cultural, and financial. On the legal front, there's obviously there you know, there are a lot of copyright issues about what is AI allowed to scrape? Can you go and scrape copyrighted contents? You know, for instance, all of those very excellent you know databases out there that you guys supply is AI allowed to scrape copyrighted things?
When AI creates a product, is it copyrighted? These are all some questions that are that are being engaged. Although we think copyright law pretty much protects creators the way they need to. But you know what people don't talk about as much. And thank you for bringing up Drake in the weekend. It isn't just about copyright law. It is just it's equally about artists rights, creators rights.
You know what we call name, image and likeness. That the thing that bothers.
They took their sound, right, they took their sound.
But you know what you're also doing when you imitate an artist with fully you know, creative age chalk.
And a bar singing karaoke.
Excuse me, you.
Know you're basically marketing on the you know, the the brand and the image that Drake and the weekend and that's just not right in any in any scenario.
Agreed, Agreed. Right, it's a brand, it's a branding.
But it's it's not just about the legal party.
You know what, what what would I think the music industry wants everybody to be aware of, is there's this cultural component as well. You know, there's something about human artistry that we're actually part of a coalition called the Human Artistry Campaign DOT and you know it talks about as an industry, not just music, but all the creative industry.
It talks about.
Look, AI is a really cool tool, and we should talk about the benefits that it brings to the music industry and elsewhere. But let's not forget the human element. Let's not forget the value that human artistry brings.
I think that's irreplaceable also, Michael, I mean to be fair, AI could be really helpful in the studio. If you're a guitarist, like a singer songwriter and you want a certain drum beat. You can probably much more easily now get AI to create that for you with whatever time signature you want, and you know, whatever drum kit you wanted to sound like. But you're not going to be able to write the kind of hit that resonates with people, you know, for generations with a software program right now.
So you are absolutely right on, and it reminds I disagree.
I think you could. You're going to be able to use AI to write songs.
Yes, you can use AI to write songs, but you're not going to be able to churn out a Stairway to Heaven. You know, you're not gonna be able to do a great Eagle's Greatest Hits Volume two. You're not going to be able to get in a lot of more as set. You know, something that sells millions of copies and speaks to people in their hearts for twenty thirty forty years at jingle Yes, a commercial okay, but you're not.
Going to be able to really move people time soccer program. I've got two responds to that. First of all, AI is actually not that new. What's new is you know, completely generative AI. But AI has been around in the music industran elsewhere for decades. Brian Eno back in nineteen ninety six, not to date myself, you know, talked about he actually put out an album and talked about AI music. And it's been, as you said, drum kits, synthesizers, you know,
voice modulation. So it's been around for a long time. What's the game changers? Predictive? But to your point about not being able to replace it, I'm reminded. I was in an industry event just two days ago here in New York and Joe Walsh speaking of the Eagles genius Joe Walsh, I saw.
An award and big time love of Stevie Nicks by the way, yes, well.
Who doesn't I know? And he had a great quote that stuck with me. He's talked about.
AI briefly when he was giving this award, and he said, look, you know, we're all being told that the future is AI, and pretty soon hits are going to be shot from these you know, digital canons at the speed of sound, and we're all going to become obsolete. Needless to say, Joe Walsh. Walsh thought that was a lot of bs, and he had a quote that I will never forget. He said, he said all of that, and he said, you know what, you can't program the gift.
Of a songwriter or the soul of an artist. I agree one percent. And that is exactly the thing about Midnight in Harlem, Carol.
You know Susan Tadashi and Derek Trumps, they have such a unique sound and the way they work as artists and the way they work together, that just I don't believe that a computer program, whether it's generative or not, can replace that.
Now.
I guess what I'm saying is that they could maybe create a song. I'm not necessarily saying like that what you get in a live element or you know, performers singing together, like there's something that's magical. But I do think you could use AI easily, machine learning generative AI to help fill out a song full about lyrics.
Absolutely, And actually, Caroll, that's a great point AI. A lot of the industry also sees the all of the industry sees the upside of AI. Let me tell you some of the pots I.
Want AI, right, Matt, We want to do ourselves.
Want jobs, so many use cases. I think it would help, but I don't think it's going to place.
You know, you know what I want. I want, AI like it.
You know, the new Indiana Jones movie that is coming out. The first segment of that of that film, they have taken the practically unlimited tapes and videos from earlier Indiana Jones and they de aged him Indiana Jones, not Sean Harrison. For that's what I want, in fact, the past. In fact, if you're putting this on on on webcasts, can you do that to me before post production? That be, But there's other things AI can do.
John Lennon, you know, AI Paul McCartney talking about it and being able to extricate, you know, some of his voice from a demo about two years before he died in nineteen.
Eighty Music Resurrection.
They think, for those of you who don't know, I mean, they're pulling out from a demo tape and they're going to release the Beatles last record. They haven't said, no one is, They haven't officially said what the title of the of the record is, but a lot.
Of them are predicting John Lennon.
Well, it's done with John Lennon's permission. It's done with it's done, you know, with his estates permission, and you.
Get it run.
We got it run.
Thank you so much of a great weekend cover much. This is the.
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