From the heart.
We're Innovation, Money and Power co lie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
Live from New York and San Francisco. This is Bloomberg Technology. I mean up tech winners and losers. The latest earnings that investor moves as saw Us and Drug and Miller. Will they sell out before the sell off?
And the Tesla analysts who almost crashed using FSD is back with another review of the tech. We speak to truists William Stein.
Defense Tech is in focus a massive fundraise for Andreil.
We speak with its executive.
Chair and VC back at about the whopping fourteen billion dollar valuation of US. We've got George Soros, You've got standing Druck and Miller both are investment firms actually wanted to trim their holdings in the Magnificent seven stocks before
the major downturn in such tech names. Back in mid July by Prescient for more on the story and other investor moses bring in Bloemberg's Hemma Palmer's joining us on the daily at the moment, Hemma, Look, it does feel like they managed to cool this a little bit.
Tell us about the names that they trimmed.
Yes, so we care about these titans of the industry, billionaire investors.
They sold some of their steak.
George Sore sold some of his steak in Alphabet and Amazon, so some prescient moves there. Stanley drugg and Miller sold some of his exposure to Nvidia.
Also quite interesting.
David Tepper and other Family office investor, former Hedgepooter manager cut some of his steak in Amazon and Microsoft and Meta. So we do see some trimming of those tech positions ahead of what was a pretty significant cell off.
We kind of discussed this twenty four hours ago, Hemmer. But you know, they come thick and fast than thirteen F filings. You see individual fund names that the stock pickers in particular, they go one way or the other. But in aggregate, was it a good second quarter for technology or a bad second quarter for technology in terms of going in and out?
Yeah, so I would say in aggregate, we did see some selling of some tech bets, which for the investors was a pretty good move ahead of the volatility that we saw. So we did see some selling of Microsoft. One hundred and forty hedge funds sold at that steak, some trimming of Meta, some trimming of Nvidia. Apple though a popular stock buy, the most buying we've seen in about three months.
And like well the Oracle of Omaha, I'm interested in the Tiger cubs that we talk about so much. What moves have they been making? Have they been making back any of the losses basically we've been so accustomed to of late.
Yes, So the performance we did see a little bit of a downturn in during the volatility. Not terrible, but not great. Every month does matter when it comes to these funds that are trying to dig themselves out.
Of a hole.
But in terms of their thirty and positioning, some interesting moves. United Health seems to be a popular buy for these funds. Tiger Global started a brand new position in that company, it's seventh largest holding. CO two started a small steak a loan Pine Bot some as well too, So you netted Health does seem to be a little bit popular. D one started a brand new position in XPO, that's a logistics company, and that's now D one's fifth largest holding.
So we do see some kind of interesting moves on the margins and companies that are not necessarily traditional.
Tech, Bloomberg, Semma Palmer, thank you very much. Ali Barber reported earning's posting a disappointed four percent rise in revenue, even after aggressive promotions to try and drive spending. Joining us for more on the China tech earning stories bloombergs Isabel Lee. The ADRs are higher though now it's kind of interesting when you go from the Asian session into the US session. But overall it's sales growth weakness that we're worried about.
It's likely hire.
I think investors have digested the news overnight, but they're still not that thrilled. The four percent rise in revenue. You're correct, it was a rise, but it was a kneemic and we have profit plunging around twenty seven percent. Ali Baba really has just struggled to drive its growth. We have Edie Wood, the CEO, who was installed last year, making this priority to focus on the twin business of cloud computing and commerce. He has also been making bets
on AI in the long run. But investors have been worried that Ali Baba's intense drive to beat its competitors pdd in, JD dot Com will compress margins and the three way arrivalry among those have been really intensifying for a while. And a little quick note, Ali Baba's biggest rival, Tencent, reported better than expected earnings, but we did have the company warning of weakening consumption and JD dot Com also
reported better than expected earnings. So it's really Ali Baba it's kind of in the backseat for now, but it's just one quarter in zooming out. The economy in China is still not looking that fantastic it, I mean.
It's interesting just going back to the thirteen next. So we were discussing we understand that Michael Barry, for example, has actually been beefing up He's Ali Baba st people do believe in a turnaround for this business. Is it all to do with ultimately a weak revenue stream a weak consumer because they did seem to really put it away when it was GMV focused on indeed margin focus.
Yes, Michael Berry did increase this Ali Baba steak by around seven percent, and we also have they have a tepper slashing his Ali Baba steak for a little bit, but it's still the biggest holding in his company. And I think that's really the main question. Would you invest in China? Because now it's cheap. We have the other end though, saying that they will not invest because it's cheap for a reason. If you zoom out, we have the latest data from China still showing an economy weakening.
We have domestic demand faltering, we have property crisis that is still prolonged in slumping. So it's really not proving to be better. But then if you ask others, they're still seeing a bright spot. I mean, no economy goes up in a straight line. They see this as a blip in China's economy, but still believes that this second largest economy in the world will be a bright horizon someday.
I mean, as we say, David Temper trimming my seven percent, Michael Berry, are paying some different views on individual names, but I'm interested as so. You know, we were talking of Ali Baba more of the rejuvenation, the rerientation, the dissecting of this business.
What does the future look like, how are.
They managing to stabilize, how are they thinking about ips and like any hints thet with.
The IPOs, it's still unclear, but you can see Ali Baba really making a big push into the AI space.
So that's a good news.
But the bad news is it's rivals are also doing the same and you see the same thing playout here in the US, the AI halo, so to speak. But now it's kind of fres a little bit. We have investors already questioning when they will see the payout of their millions of investments into AI.
But in China the same is playing out.
Ali Baba has made huge stakes into the AI industry, and so has pddnj DO dot Com. And that's why I think it will just always be a three way rival for those Bloomberg.
Says a La on the China Tech Beat. Thank you very much. Let's discuss whether Ali Baba's should he adjustments could position it to recapture market share from the likes of PDD and other competitors now with Jacob Cook, CEO of WPIC Marketing and Technologies, is a firm which drives market expansion for global brands in China but also Japan,
South Korea and more. And it was interesting I wanted to kind of start talking about the e commerce landscape, but as Isabelle outlined quite clearly, those same e commerce names are increasingly thinking about cloud basically in AI. Good morning, the e commerce market in China.
H good morning.
It's really signed gone from a two horse race over the years between j D and Alibama into a four horse race now with China's TikTok, Douian and PDD. What we really like to think about the reports that came out as we've kind of digested through them, is they're actually maybe a little bit disappointing on the overall revenue, but should good growth in terms of GMB and up until now, a lot of the growth from the competitors has actually eaten into a lot of that, so it's
stabilized there and stabilized with JD. That was a great result too as well. So in terms of that landscape, JD had a much shorter cycle in terms of changing what they wanted to do from the subsidies that they were giving away to consumers many years ago to really operational efficiencies and getting closer and tighter supply chains.
So that changed. I think we saw ninety two percent increase and profit with them, so that was great. Ali Baba's not through that transition yet.
Eddie, who has been very clear about that that he's not really focused on bottom line profits yet until he gets a lot of this divergence and restructuring and stuff done, and we've seen their GMP hold as well, and I think was even up a couple of points, so that's been really good. I think that tells us that they're probably pretty happy with where they are in their transition.
Jacob, how destabilizing for the global brands that you represent is it when a company such as Eli Webber is doing a re orientation or restructuring. How willing are they to stay with to try and grow in China at the moment.
I think extremely well. I think Ali Baba has always been a very good partner. The people and that you know that you end up engaging with as a brand under their Hunjo campus are actually very professional and usually a lot of the invest in the business in the individual categories too. But what was also announced is we're going to get a whole bunch more merchant programs too as well, and we ways to advertise, So we're excited
about that level of innovation overall. You know, customer acquisition costs that they're fairly stable on team all, and they've been relatively attractive for brands to do that. It's been actually more destabilizing to have to really rush into these other trends at PDD and DOHI in which have completely different approaches to e commerce.
In the moment, JD is the outlier shares rep significantly, right, is it the outlier? Is there a point of difference in its place in that market and its strategy.
Yeah, it's a simpler business.
It doesn't have all of the massive business units that Ali Baba does in terms.
Of especially cloud competing being much larger.
And they announced really what they were going to do with restructuring and off with these subsidies and race for customers is really focused on operational efficiencies.
They did go through a round of management layoffs a couple of years.
Ago, and to us, what we look at is that sort of being very successful. And again I think the difference is here between the two of them is what's going on with Ali Baba and how they're going to compete against in the new e commerce landscape is a longer transition process, and I see them being about halfway.
Through that right now.
What's your main piece of advice for a company that's wanting to access e commerce growth in China?
Right now?
I think my advice is to actually go for it if you've I know, there's a lot of headwinds in the economy, especially due to real estate. But if you take away you know, luxury goods, which really isn't aligning with that new younger consumer that's more into Lulu eleven, and you take away durables, which are related to new home sales.
E commerce growth in China is still lower double digits.
And we saw you know, a Grade six eighteen a couple of months ago, and we're all really optimistic about eleven eleven in a lot of categories, you know, excluding the ones.
That I just mentioned.
Jacob Cook, CEO of WPIC Marketing and Technologies, we really appreciate the expertise.
Thank you.
Coming up, look a closer look at how Google Search might be providing the giant with the AI advantage.
That's next, bomog Technology.
Taking a look at Google. Following the federal court ruling last week that Google is an illegal monopoly, We're taking a closer look at the search giant's influence with AI. Publishers face a choice between offering up their content for use by AI models that can make their sites obsolete and disappear from Google Search, which is a top source of traffic. Let's break it all down with Bloomberg's Julia Love,
who joins me here on set. What we're really talking about here is web crawler, in other words, a mechanism to go through a website's data and persis in search, and that gives Google an advantage because some of that data ends up in the training of large language models. Essentially good Morning in Morning.
Yes, so Google has been at this for decades now. It crawls the web millions of different sites to be able to show a detailed index to users, but that now gives it an edge over search startups that are trying to get into the game because they want to crawl too. But many websites block pretty much everyone from crawling except for Goodle and Microsoft's bing, and so startups.
Are at a real disadvantage to choose whether or not to crawl.
Ultimately, Julia, there's also the macro perspective that regulators are really worried about this advantage that Google seems to have in the world of AI. They already think it's a monopoly in search. This might just double down on it.
Yes, absolutely, I think there's underscores that this is just one of many advantages that Goodle continues to have in the AI race. Publishers face a difficult choice, and they're very worried about the AI overviews that doodle displays at the top of search and what that could mean for their traffic. But they worry that if they blocked the doodle back from crawling, then that will affect their visibility of Goodle search, which would just be a death blow.
And that's said consideration that they don't face with search startups like Perplexity, where it's easier to just block the crawler.
Meanwhile, I think overviews is going live in new countries today.
Julia Love brilliant to have you. Thank you.
Now, let's take a look at all of this in the context of the reports that Bloomberg has been bringing you about the Department of Justice considering breaking up Google. It would be a rare antitrust move. It's bringing Sarah Lamb, senior fellow at the Technology Policy Institute, and Sarah, we're just hearing about, ultimately the fears that AI, the dominance that Google has in AI just once again doubles down on its monopolistic traits that have already been seen. Do
you agree with that. Do you think that antitrust breaking it up could help?
Well?
Right now, we're ten days out after Judge of Meta released a ruling on August fifth, after a ten week bench trail on US versus Google, and so the talk about remedies of possibly breaking up Google, that's all going to start September fourth with the remedies hearing. We can talk about what those remedies are being floated as, but we won't know what the Justice Department recommends until then.
We won't know. But one of the ideas that we reported is on the table, citing sources, right, is the divestment of data. If you read the story the original port from bluebos near Nyland, that's what is being discussed. Maybe you divest it is its own entity. Do you see a way that would work in practice?
Sarah, Well, what's interesting is Android was discussed at the Google Pixel event being part of implementing Gemini in with search. The Android question is is very interesting because it's a global market for Android and the US market is only a fraction of who uses Android. It's not clear at all that Android is you know, core to the general
search question in the monopoly trial. So you know, we can discuss whether that could help with remedies, but really what I think is more likely is that limits on exclusive contracts and defaults would would survive or would be more reasonable within scope. But definitely people are talking about the operating system market, the browser market, how AI fits
into everything. But one thing to note though is that, you know, like Microsoft, the Microsoft case, like AT and T case, it's going to take several years for us to go through appeal and remedy and settlements. So what is AI powered search going to look like in three years, four years? I think that's an important question.
Sarah Olan, Senior Fellow at the Technology Policy Institute, Thank you.
Is X a failing social network? Well, that's the hypothesis come from Bloomberg Opinions Dave Lye saying in his latest piece that with a platform losing advertisers even getting under increasing e scrutiny from the regulators, social platform quote weeks of failing social network syndrome, Bloomberg Opinions Daily is here with more and you coin you use reoriented a phrase, borrow a pretty famous restaurant critic and repurpose it.
Look, why does it reek of a failing social platform?
For many with the Trump discussion, it's one of the most active it's been for a while.
Well, this is a phrase that Antsy Bordain, as you said, use to describe restaurants that were going under. And the way he described it is it wasn't they'd go under overnight or even for a few months or a while. But there's something in the air when there's a place that isn't quite right. And I said that applies two X formerly known as Twitter, of course.
And it's for many reasons.
I think what's happened on that network since Elon Musk took it over, quite clearly, is it has become almost a single issue network for Elon Musk's politics, this issue of the culture wars, as we describe it, and what is happening less on X is some of the communities that made many normal people want to use it in
the first place. So talking about football, talking about music, talking about books, whatever, those communities are finding it harder to interact with each other, and certainly no new people seem to be joining to joining those discussions in a way they might have done previously.
And look, if you go to your own X page have been posting since twenty twenty three. But you're almost forced to re engage with the platform for the story, and Emil Musk re engage with you.
Yes, quite so.
I haven't posted yet for almost a year, and that was based on my feelings towards what my feed was showing me in terms of the types of content I was getting without following certain users, and I didn't feel like.
It was a yes.
So, well, this is something that Emil must sink to me today or mentioned me about today. I checked my screen time. It's actually average of nineteen minutes a day this week, and that was only because I downloaded the app to listen to his conversation his interview with Donald Trump earlier in the week. So without that, which went on for almost a couple of hours, I think my time on x would be very very minute. I check in on it to see what's happening. I'm a journalist,
of course I need to do that. But in terms of engaging with the network, I think it's usefulness has gone now, but I think it will. I think it will continue in some form for a while. But in terms of this useful utility for people, I think that that eras behind us.
Davis, you know, I use x a lot, I spend a lot of time on the platform. I share a lot of my reporting. I don't see a lot of data supportive that video does very well when I show video to the content, and it's interesting. One of the communities that does well there is Tesla, of course, But your issue in the opinion piece is about advertising, advertiser flight and money. Does Musk even care about the advertisers? Is it even a priority for him to have revenue growth as a basic question?
I mean, look, we've seen what Elon Musk has said directly to advertisers in words that we can't repeat on air, only to then a couple months later now sort of be suing some advertising groups in order to punish them for boycotting the platform. I mean, look, I think Elon Musk is quite sincere when he says he doesn't care if advertisers don't want some advertise on his platform, given he thinks it's now this sort of this arena for free speech. But the problem is he will need to care, right.
I mean, this is a website that needs money to survive. As as rich as your Musk is, it still needs to be a functioning business. And I think that's going to be Twitter's problem as we go past the election, because right now I think a lot of the attention on it is to do with the presidential election. Once the votes accounted, people may move.
Yes, I have a lot of questions about monetizing groc or monetizing X through Grock and XAI. Bluebag's Opinion Daily.
Thank you very much, Welcome back to Bluemore Technology. I'm Caroline Hid in New.
York and I ed Lovelow in San Francisco. A quick check in on the markets and as that one hundred is up for a sixth straight session, there was a seven day run of games that ended July tenth, and we talked a lot about how over many weeks actually Then, as that one hundred is under pressure, we're kind of bracing still from video earnings on the twenty eighth of this month. But now the thirteen f look back, some of the economic data is a factor. Those single names
are quite interesting. Again, it's kind of backward looking, but if you think about the megacaps, there were notable funds so Struck and Miller who cut exposure to certain megacat names in the second quarter. Many increase their positions in video, which is notably higher today having gone past the high which was I think July eighteenth. Tesla is also interesting,
up six percent, some funds increased, some funds decreased. No real news catalyst out there, but we're going to get to a really interesting conversation on Tesla and full self driving in a few minutes time.
KARRC.
Yeah.
First, let's just quickly check in on a big mover today, Cisco rising, after giving a pretty bullish revenue forecast for the current period. It's all about a rebound and orders, even though it of course announced plans to cut thousands of jobs as part of a strategy shift. As kept to Boom Mega Intelligence analyst u Jinho and rejin Look, it's that inventory digestion that is now in the rear view mirror, that job cuts looking forward.
Yeah, thanks Caroline, So I think part partial in terms of the job cuts. I thought the first round of job cuts that they announced a couple of quarters back wasn't enough, and essentially they're trimming the fat on their legacy business to really drive up the cash cloud of the networking business.
Now.
One of the things that they said on the call was that they're rediverting some of those cost savings to the growthier parts of the business, which is essentially this Splunk observability plus the security side of the business, which I think is the right move.
It was in Good Morning, It's dead in SF. What's the Cisco story? You know, when Ian King was on the show yesterday reporting it was about a company and transition. I thought that many quarters ago it was already a company and transition more focused on software and ed.
You know, that's ian as one hundred percent right the way I view from a revenue standpoint, Physical twenty twenty five was going to be a transition year, just primarily because of the backlog head when there's some residual backockhead when Francisco is going through. But one of the things that they are trying to monetize is the data that goes within inside the network, and that's one of the reasons why, or the main reason why they made this
Plunk acquisition. Now, it's going to take, like any large acquisition does, it takes several quarters to really integrate into the system, and then with the hopes of possibly monetizing the data for faster growth and better margins.
Is there an AI story for Cisco. You know, if you think about some of the trading action, particularly June July through August, maybe it was the idea that there isn't as much of one as we thought.
Yeah, so a couple of things that from a core networking standpoint, there was a small AI story. What they said on the call was that there was an additional billion dollars of orders. So that brings it to about two billion dollars of total quiul of orders that they see to date. But from a revenue standpoint, it's not that small on a fifty five to fifty six billion
dollar base. But the longer term is if we think that data is going to be a goal to fill to fuel these large language models, you know, Cisco is potentially in the nexus of that, right because data has to run through the network.
U jinho all, thank Cisco, We thank you. Now let's just get back to Tesla. Ed you were appointing us there a moment ago, because last month we spoke with truest analyst William Stein, who said he nearly crashed while using an older version of full selfe driving in a Tesla democar.
He published a research.
Note on the experience, claiming FSD just wasn't ready for the prime time. There was a lot of questions for Will from around the world and why he didn't try the latest update of FSD, So why didn't he film that experience too?
He went back to the Tesla store.
He took the test again, this time using version twelve point five and an updated iteration of FSD. His conclusion, look, Tesla's FSD version twelve point five was a fast fail. Well, Stein, he's here with us, so why was it a fast fail?
Very early into my test drive, FSD took this car through a red light making a left turn from the second to left and not turn lane.
Illegal move.
Didn't feel terribly unsafe, but clearly illegal. If I were driving the car and there were an officer there, I'm pretty confident I would have been stopped. So from my perspective, even though didn't get in a crash and it wasn't even safe for me to really intervene, it was safer for me to let the car make this turn. This was a clearly illegal move. So from my perspective, this was a fast fail.
Let's do this again. Will the basics of the test. Where were you whose test the vehicle were you using, what was the duration of the test, and why did you not film it in full?
Yeah, let me address the last question first. I'm not a video a vlogger or whatever. I'm not a social media personality, right. I'm an equity research analyst at Truce Securities, writing research for our institutional investor clients. Film or video is not a typical media that I operate in. Regarding the test, it was similar to the two prior ones that I did, and that included using a test vehicle from Tesla with the latest software that they had available
at the time. It's in suburban New York and it was about a ten mile drive that I asked the car to take me on to a local spot close to where I.
Live and back and that was the test.
And in each case there were different characterizations of how the car felt and the level of safety, but in each case there were failures, making it really not, let's say appropriate to think about full self driving in the way that a robotaxi would.
Well, a lot of people ask me, why are you getting this guy on the show, and you kind of answered that you are a research analyst who provis research the institutional investors looking at Tesla. But what interested me is you are a semiconductor an AI analyst, and Elon Musk says on the earning schools with some regularity, to understand our future as an AI or autonomous driving company, go and use it for yourself. So you did my question your thesis on the jump from your test to
a robotaxi future a Tesla. Why do you not see it?
Well, it's just not obvious today. Right now the company is already generating revenue from FSD. It's one of the three major AI projects that we know about going on at Tesla. We believe there's significant value already embedded in these AA projects in the stock, so we think it's important to understand whether this works or not. My assertion
is that it doesn't work today. That doesn't mean that Tesla can't generate revenue from it, and it also doesn't mean that they can't get there eventually, just not ready today.
And there is the crux of the issue. How important is it that we see robotaxi in October?
Well, I think the idea that FSD needs to work is critical to the stock. In my opinion, only about a third of the stock's value is wrapped up in the automotive production and energy capture and storage businesses. About two thirds of the value of the stock are wrapped up in these AI projects. So he's got to show something at this Robotaxi day. He's already pushed out that date from August to October. But if we have the supposition that Robotaxi will depend on FSD, that is not ready. So let's see.
Well, I'm an FSD user. I got version twelve point five the day it was released. I'm on twelve point five point one point three. At the moment, it's not perfect. Today I can be completed the dog leg at Lombard and van Ness for the first time. Will you keep testing with this regularity.
I'll test when there's you know, let's say, a reason a major upgrade, or if there's a request by the company. Elon Musk told me to is the way I like to say it. Right after Q one he challenged investors to go try it.
I did. We wrote about it after Q two, same thing.
The criticisms I got were around, hey, twelve dot five is such a massive upgrade.
You're missing the mark.
You have to go try this newer one and see the improvements. And I did that, and I would say, you know, improved in some ways, but still a critical failure in my opinion.
William Stein Truest, Managing Director of Tech Equity Research, thank you very much. Next, Singapore and state owned investor Temisex spent billions of dollars in the second quarter buying shares in US tech giants just before the sector dropped. In July, Temasek increased the value of its holdings in eleven big tech firms by three point three billion dollars in the
three months through the end of June. The majority of the increases went into six of those names, Microsoft, Apple, Nvidia, Alphabet, Meta, and Amazon b At the end of July, however, most of those companies saw their stock slide amid concern about the extent of AI related gains and also fears of a recession. Okay, coming up on the show, we're going to be joined by Trey Stevens, executive chairman, co founder of Anderil and a big investor partner of Founders Fund.
That's next, the Sploombog technology Time for Talking tech, and first up, Apple pushes ahead with a tabletop robot the company's moving forward with the development of a tabletop home device that's said to combine an iPad like device with a robotic limb. The check Giant has several hundred people working on the new hardware as it searches for new
sources of revenue. Plus a video is said to have scrapped millions or scrapes, sorry, millions of YouTube videos without consent from creators to train and develop its AI models. That's according to a new federal lawsuit FILD in California. The AI Dialing allegedly instructed employees to use tools to download videos and evade detection in an effort to train its Cosmos AI video projects. And fintech firm Klan is said to be close in choosing Goldman Sachs to lead
its USIPO next year. That's according to sources who also say the company is seeking evaluation of about twenty billion dollars. Deliberations are ongoing. Details of the IPO could change Carrot.
Well, talking of companies that are currently private and making some bigger rounds. Defense technology start up Andreil has raised one and a half billion dollars in a new funding round and plans to spend one hundreds of millions on a new facility to manufacture its rockers, it's underwater vehicles and other autonomous weapon systems here in the US.
Tell us more about the deal. Tray Stevens, his executive.
Chair, is co founder of andrel Of course, you're own Founder's Fund as well, which puts a big chunk of change into ANDREIL from fourteen billion dollar market capitalization, the raising of funds that's from manufacturing.
Where will that be? Why make it in the US?
Yeah, the investment by Founder's Fund officially makes it the largest position that Founder's Fund has had in our twenty year history. So, as the founder of the co founder of the company, that's kind of exciting to be on both sides of the table there. The Arsenal one project is a significant undertaking for the company. It's kind of predicated by this recognition that our weapons inventory in the United States literally is missing as zero on the end
of it. And we may be okay on day zero, stretched on day thirty, but there's no way that we have the amount of equipment that we need if we were to go into an active conflict on day three hundred. What Arsenal is all about is putting our own skin in the game, rather than asking the taxpayer to polling up all of the risk and giving a head start a leap into production of these systems at quantity. So we're not asking the taxpayer to do that by themselves.
The taxpayer does do it for legacy rivals. Why shouldn't they do it for you? Why do it on your own right?
That is the historical model.
The problem is is that is exactly what slows innovation because the business model of the legacy defense industry is cost plus. It's let's wait until the government pays us to do something and then we'll get some small amount of margin on top of that. This isn't the way
technology innovation works. As you know, the requirement is to step up, put your own capital into internal research and development, and then you have to kind of take the position of betting on yourself that the thing that you're building and developing is the thing that the customer is going to buy at the end of the day.
And that's exactly what we're doing at rol Trey. Good morning. I saw post me on social media about the location of the facility. I think you might have being facetious, but where will it be not San Francisco, but will it be in Socoo Right, I was.
Frankly amazed at the amount of people that thought I was being serious when I said that we were deliberating putting it in San Francisco. Were obviously not putting Arsenal one in San Francisco. You know, I think there are a lot of states that are very much in play. Interesting will come down to availability side availability Greenfield versus Brownfield, and the incentives that we're able to get from the states to accelerate as quickly as possible into the program.
So not sure yet, can't really come in any further than that, but hopefully we'll have more information in the coming months.
There are just so many people that credit and AIL as being so the lead leading defense tech startup. Right you talk to Kara really interesting about don't put the burden on the taxpayer to fund the growth of operations. But I'm trying to sort of build a timeline of when all of the big money from government does go to ANDERIL and that there's an openness to just engage with Silicon Valley.
The culture is certainly shifting. We've seen tremendous moves since Honestly, SpaceX and Palenteer were founded earlier on in the twenty first century. Andreil is stepping into that wave. We have the benefit of being able to stay and on the shoulders of giants that have done an incredible job creating that market space. You know, I think the defense tech industry as a whole has seen a major boom that you guys have talked about quite a bit here on
air at Bloomberg. The question is really about, like how much the government is going to be able to lean into picking winners, not in an unfair sense, but really in the sense of identifying the companies that are going to be able to scale to the size of the problem. And that's the focus that we've had since the beginning, is not on research and development projects, but on scaling
into production requirements that the warfighter has. And that's a culture that's shifting over time as we move away from very high cost, low volume, legacy exquisite systems into some of these higher volume charitable assets in the autonomy space that we're focused on as a company.
How does the cultural change depend on who's in the White House. It's a sensitive question, but when you look at who's first put money into andre Ill. Well JD. Vounce was one of them. He could be in the White House. Would that make a big change?
Do you think?
You know, it's obviously like a weird conversation in Silicon Valley because there's this kind of belief that defenses this weirdly republican thing. And the reality is for anyone that works in DC, is you know that this is just completely false. Defense is a bipartisan area, you know, as all the other bills are kind of drudging their way through Congress, the National Defense Authorization Act passes within your
super majority every single year. I don't think we're affected at all by politics, whether it's you know, a Harris administration or a potential second Trump administration. We're in a good place in either case. It's more about leaning into the things that the Pentagon needs and not really worrying about how politics affects that.
There is some state level politics. Elon pulling SpaceX from Hawthorne in California, But Andreil is so cool to socow story. I'm sorry to go back to it, Trey, but what do you make of that?
You know, for us, the location of our research and development facilities is largely predicated on access to talent. It's really important that we have the ability to recruit and retain the best software engineers, the best hardware engineers that are going to be able to there will be critical to us building the products that we're working on. So do I think that it would be just as easy to do that in places that don't have a critical
mass of engineering talent. Not necessarily. We have no plan to leave Southern California as our headquarters at any point in the future right now.
Tray Stevens, executive chairman and co founder of Anderrell and partner at Founders Fund. Of course, thank you. Almost half of companies need more than six days to recover data and restore usual business. That's one of the takeaways from Khesity's latest report on cyber resilience. San Jaypoon and CEO and president of kah City joins me. Now and the reason d DOSSL denial service is definitely on the rise.
Bad actors are more active. Other conclusions from your research, Yeah, thank you having me.
Yes, we did a survey of three thousand IT and security people in US and the G seven countries. There were three things that stirre at one which I expected, which is two thirds of the people's surveyed said they've been ransomware attacked and they expected to increase.
But two things start.
One was two percent of them believed they could be resilient in a day, and approximately fifty percent said they would take them a week to result.
That's not acceptable.
And the second aspect of it was almost ninety percent of them said they believed the organization would pay the ransom, and seventy five percent of them believe the ransom will be over a million. That's also not acceptable. So you know, there's a treasure trove of data and what we surveying, and I'm a data junkie who I found those three results to be somewhat alarming.
And therefore they do what Sanjay I imagine they used cohesivey. But at what point, how do you get someone to be able to tackle this within a matter of days rather than a matter of weeks.
Well, listen, I think the most important thing we learned from the CrowdStrike Microsoft fallout, whether you know the formerly Artists formally known as Twitter x was DDoS and the Microsoft dad US attack is we have as an industry have to focus on resilience. It's a little bit like the healthcare industry, Caroline, when we all faced COVID, it didn't matter whether you're.
Going to get COVID or not.
The question was how quickly could you recover from it? And you almost have to plan for the fact that it's not just if, but when you get attacked, and you're going to probably hit get ransomware attack, how quickly can you recover? Resilience is the most operative world. It should not take us days to recover from that CrowdStrike, Microsoft fallout.
It should be ours nine environment. It must be good for your business, though, how's cahesity doing? You know, if the activity and the defense is on the up.
Well, we just finished our fiscal year.
Since you asked me, I'll break it out here on your program.
We had a record year.
We closed our year at five to forty nine million in revenue, growing twenty six percent, which is the fastest among all all our peers for the fiscal twenty four and we turn free casual positve, which is the first time any of our companies.
So profitable growth.
As you know, we announced our intent to acquire Bear to us, which puts us when we close that transaction pending regulatory approvals as the biggest in our space. So business is good and we're really really focused on serving our customers.
Twenty seconds. You're going to go public anytime soon.
We have to close this transaction.
That's step number one.
But the anticipation is once we close the transaction digested with the next stage is hopefully a public offering at the right time.
Sanjay, great to have you on, Sanjay Poon and CEO and president of cahesitys and fascinating data is business and about the world of cybersecurity.
But that does it for this edition of bluemin Technology. Yet I don't forget check out the podcast. You know where to find it on the terminal, Apple Spotify, and iHeart the team in New York, the team here in San Francisco that does it. This is Bloomberg Technology