Bloomberg Audio Studios, podcasts, radio news from the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Live from New York and Caroline Hyde and this is Bimberg Technology. Coming up. The Nasdaq whip soaring ahead of President Trump's tarifs. This week will discuss the global tech impact. Plus Elil Musk admits his role with those is taxing him and impacting his job as CEO of Tesla and SpaceX, and a crew of four passengers are set to embark on a journey around Earth's poles, so first time humans have flown such a mission. But first a check in on these markets, which are under pressure once again in
sell off mode. As you see, we're off by one point six percent off of our lowers for the day on the Nasdaq one hundred from a points perspective, though it is the Magnificent seven that drag us the most. Apple is one name in the green, but otherwise it's in video, Microsoft, Amazon, Tesla, as well as Meta and Alphabet. Drill into the individual moves that push us a little bit lower, and we've got to shine a light on
what's happening with Tesla. Once again, analysts really shining a light on the fact that this is politically entwined in many ways. The consumer reaction to one Elon Musk, we're off by five and a half percent. Again, they had outperformed when we first got those hints of auto tariffs. No how evs in particular, Tesla might be hurt less than competitors. But once again today in risk of sentiment,
it's off by five and a half percent. And actually his Elon Musk over the weekend speaking at a town hall in Wisconsin about the dose impact on Tesla's share price.
It's costing me a lot to be in this job. What they're trying to do is put massive pressure on me, and I guess to to you know, I don't stop stop doing this. But you know, my Teslis stock and the stock of everyone who Holst Tess has gone went roughly in half. I mean, it's a big deal.
Let's get you analysis in Meg's Max Chafkin joins us now host of elon Ing podcast and just intertwined with his movements. And it was interesting that at a political rally he's admitting some of the knock on effects here.
Yeah, I mean, well, it's been pretty dramatic. We've seen these huge drops in sales in Europe, where of course Elon Musk has also been uh been stirring the pop politically,
to say the least. And we've seen sales declines going on for some time now, and that and those declines are colliding with a business that also has all these other struggles, so you throw, you know, Elon Musk's kind of controversial branding, these these kind of provocations that he's been doing almost on the daily with actual struggles with the business as well as you know, all the uncertainty around tariffs and the economy in general. And it's it's
really like a perfect storm. It's a bunch of things that are all kind of working together to hurt what had been just a company that had been soaring, you know, even a couple of months ago.
Soaring on vibes. Many would say often this stock is not related to fundamentals of the business. Even when earnings disappoints, sales disappoint we've actually seen sale shares push higher. Can he restore vibes or do we start to look at the fundamental issues of the business. Well, that's the thing.
I mean, the vibes were based on this idea that Elon Musk is this kind of amazing business superhero. He can do things that nobody else can do. And so much of that brand was built on Elon Musk as an innovator, as somebody who invents new products, particularly new products that are you know, involved with alternative energy, and that kind of flatter the sensibilities of a certain kind
of consumer. Now, what we've seen over the last couple of years, and in a much more intense way over the past couple of months, is just Elon Musk subverting that brand, taking that brand and essentially throwing it out the window and presenting a new brand, which is Elon Musk as a you know, cost cutter, as this vehicle of trolling austerity. It is very, very different from the story that he had been telling before, and I think that is going to make it harder to write the ship.
But does that give a new source of demand for those that loathe the new version? Many love it. Many like the fact that there's a rebalancing in austerity, that perhaps there's a new source of buyer who wants to get out there in Tesla who hadn't automatically looks in it from an evy environmental perspective.
Well, this is something we've heard from some people who have sort of defended some of these moves as well as you know, if you kind of squint, you could see while he's trying to sell pickup trucks. So maybe it makes sense to signal more to the right. What we've seen from Elon Musk, I'd say goes way beyond signaling to the right. I mean, he's you know, you know, saying things that are racially tinged. He's making gestures that to many people look like, you know, he's saluting Hitler
at a Trump rally. These are not things that even Republicans, even a whi of Trump supporters, are not necessarily going to be comfortable with these moves. So I think that's one issue. The other issue is the cyber truck has just not performed as a pickup. It is not competing well with you know, the likes of the Ford f one fifty. I think sales have really disappointed. It's become a great way to signal your support of Donald Trump, not necessarily winning fans in the kind of truck driving class.
Always great to catch up with Max Chafkin, go listen to all things elon K as well. Meanwhile, let's stick with enel Musk, his artificial intelligence startup Xai, when it's just purchased the social media platform X and an all stock deal, the values of combined businesses at one hundred million dollars. For more, let's bringing Kurt Wagner enol Musk, very busy man and one of his startups buying another one. And there's a big well boying for the X shareholders ecty or debt in many ways, I.
Think so I think they're the biggest winners in this whole thing, right, I mean, because you think about what happened over the last two and a half years since Elon walked in in the Twitter offices with that sync, right, there's been a ton of uncertainty. We've seen advertisers flee, we've seen users flee, We've seen the value of that company, by some measures, basically cut in half, if not more. And so if you are an ex investor today, a week ago, you were owning shares in this very struggling
social networking business with a small advertising arm. Now you own shares in an AI startup that's worth double the price and growing, and so I think this is a big win for them, more so than pretty much anybody else.
There were initial analyst reactions saying this makes sense. Will Research, for example, immediately putting out feeling that the combination makes strategic sense, but many also questioning why they needed to do it at all. Already Grock was deeply infused with in X, Why do they need to make the tie up? And other more questions and answers In many.
Ways, Yeah, I mean, this is my biggest question here is that on paper, yes, this makes sense, right, an AI company buying a social network like X, getting you know, exclusive access to that proprietary data, getting the distribution of a GROC to millions of people via X, right, Like all those things make sense on paper.
But the difference here is that.
Elon already owns both companies, right, So there was no fear that X was going to go out and strike some exclusive deal with a competitor. You know, they were already using X's data to train GROC and work on their AI models, so like they had the relationship sort of already. And so that's why I don't really understand why they needed to spend you know, thirty three billion or forty five billion including debt to buy this company that they pretty much had all of what they needed from it already.
A key question mark for me as well, Kat not only who leads x going forward and what Linda aki Yakarino's future looks like, but is how he got an eighty billion dollar valuation on Xai. There was no new funding here. It seems to be a number that was kind of plucked out of the air exactly.
And so the last time Xai had a funding round was in November. I believe it was valued right around fifty billion at that time. There's been no new rays for Xai since then until this deal, and suddenly Xai is worth eighty billion, right, And so this is what happens, Caroline,
when you have two privately held companies. They're owned by the same person, they're represented by the same bank, right, Like he is able to essentially, you know, make up these valuations and say, you know, I think x is worth this, and that means that Xai is now worth that and boil that's done, right as long as shareholders are not you know, essentially revolting at these these decisions.
I think Elon has a lot of sort of latitudes here to you know, value these things where he wants them to be valued.
Number go up, Kat Wagner, thanks so much joining us. Coming up preparing for Trump's reciprocal tariffs. More on the global tariff impact on a tech sector. That's next as a blombg technology markets. They are in cell off mode ahead of President Trump's reciprocal tariff set to begin at this Wednesday. Now this is course is he says he's prepared to enact secondary tariffs on buyers of Russian oil if Putin refuses to cease far US with the Ukraine.
For more, Bloomberg's Kaylee lines joins us with a macro focus, and we want to whickle it a bit more down to technology. But Kayley, there's a lot of angst quite evidently so today.
Yeah, a lot of anks because there's a lot of uncertainty, Caroline Frankly, at this point, two days ahead of this so called Liberation Day announcement the President is planning to make, there is a real lack of clarity as to what exactly these reciprocal tariffs are going to look like. What the rates will be, who will be placed on, and whether or not there will be any exemptions, and what
it will take to get those exemptions. The President over the weekend told reporters that this will initially start out with our country. That does throw a little bit of cold water on the idea that he may have made some exceptions right from the jump, that he also is suggesting that it's not so much about ten or fifteen countries.
He said he hadn't heard that rum or, even though that it's actually something that was floated by his very own Treasury Secretary Scott Bessen, who suggested there is a dirty fifteen and according to Bloomberg Economics analyst analysis of what those fifteen countries actually are, nine of them that have the largest trade deficits with the US are in Asia.
A lot of components like semiconductors, for example, could be impacted, and that is just keeping in mind that whatever reciprocal levies are put on, there is always the chance that even more tariffs are layered on top of that. The President has floated semiconductor specific tariffs at some point in the future, as well as on things like pharmaceuticals. Is just unclear what exactly that timeline will be and how all of these work in conjunction.
Is he's also.
Talking about, as you mentioned, Caroline, secondary tariffs on purchasers of Russian oil if he doesn't like the way Vladimir Putin is conducting seasfire negotiations between the US and of course Ukraine, and the big buyers of Russian oil at least right now are China and India, both of which, of course, in China's case, already have tariffs in place. In India could be very threatened given the high levees it has on US imports with higher reciprocal terror frates as well.
Kenney, you point us towards the semiconductor effect. We've also got to take an account the deadline that comes to the end of this week around TikTok as well. Vac too embroiled in this geopolitics right now. Yeah, it absolutely is.
When the President was asked about this last week, Caroline, the deadline coming up, he actually suggested that if China and the Chinese Communist Party would agree to acquiesce to a sale of TikTok's US operations, that that actually could result potentially in a lower teriff rate, suggesting once again he sees trade policy as a mechanism for negotiating really
unrelated things. And he also said that if that can't be done by Saturday, which of course is the deadline April fifth, that he could always just extend it, as we saw him do at the very beginning of his term, extending at seventy five days, which is why the liners this weekend rather than being back in January. But as for the actual details of what a deal could look like, who that ultimate purchaser could be, and how much control they have though, we're not just the operations, but the
algorithm specifically, very much amadeom question. And we only have a few days to go here, Caroline.
Katie Lions bringing us up to speed, Thank you so much. Meanwhile, we've just had some breaking news, as you can see across your screens. More ECB European Central Bank officials appear ready to accept an April rate pause, basically ending the cutting cycle that we have currently seen. It's importantly to do with the fears around the fallout from tariffs, the inflationary effects. Let's just go more deeply into the global
tariff impact right now. Ben Harburg's with US, no A Capital managing partner and core values Alpha portfolio Manager, No A capital. Look, it's a private firm managing over more than two billion assets and under management your core values. That brings particular exposure to Chinese companies. You're the perfect voice, Ben. Are you struggling with a lack of clarity or do you feel that you can invest in this moment?
Well, I think from a Chinese person active, actually the country is pretty well positioned. China has been bearing the brunt of US tariffs and threats of tariffs for years now across both administrations, and so China started much earlier than any of other American trade partners and starting to think about offshoring, friend shoring, near shoring.
You know, investors were threatened with sixty percent.
Tariffs prior to Trump selection, and so actually a lot of those kind of very high noise numbers are already baked into two people's estimations. And so I think you've seen actually the Chinese market outperforming this year relative to its US counterparts.
It's also been outperforming in large part because of the Generator AI wave of news. The fact that innovation seems to be backfront and center is that something you've been betting on to then, innovation was always there.
I think the issue was that global investors, particularly Western investors, didn't price it correctly. That Chinese market was fundamentally undervalued for the last few years. You know, Chinese equivalents of
their American companies valued at many multiples lower. And I think some of these more visceral, understandable, concrete actions like the Deep Seak kind of Sputnik moment, I think awakened global investors to really re evaluating these businesses on their fundamentals, and they recognize that actually there was huge amounts of innovation going on in China, particularly in the AI.
Space, where China was always neck and neck with the US.
And it's not just Deep Seak, it's Alibaba, It's ten Cents. So I think people kind of woke up out of their sleep and recognize that the market was fundamental innervalue.
Well, then what about innovation in the United States? As we see taris take an impact, is it her?
I don't think so.
I mean the American innovative spirit remains intact. Global top minds still flocked to the United States and are integrated through our universities, into the American workforce, most of them becoming Green color holders or US citizens. This same kind of query was asked the Chinese when they were kind of taking their steps to kind of rein in entrepreneurs
a couple of years ago. You know, when we saw the anti trust measures taken against Ali Baba and Mayitwan, it was a similar narrative, was innovation and.
Entrepreneurship being hurt. So I don't think that's the case.
And if anything, America is going to put foot on the gas on innovation over.
The Trump era.
We will see, you know, a lowering of a lot of the red tape, the regulatory hindrances, bureaucracy that was getting in the way, more tax support, more kind of integrated thinking across departments to support innovation. So I expect actually a boom in the US innovation, not a decline.
Then you are close to the administration, we understand that when you're trying to give advice to those currently over in Washington or any other investor trying to search for clarity right now, do help people ultimately eat their vegetables with what might longer term be an innovation boost. There must be pressure on certain particular parts of innovation when it comes to robotics, when it comes to semiconductive access, for example.
Well, so first I think you know, we're things aren't as valuats or unpredictable as people think. We're essentially doing what the President said he would do. So if you want to know where we're going, read what he said. Watch what he said. Uh, this is not a huge surprise to anyone who was following him over the last not not just over the campaign trail, but over the last decades.
And then you know, certainly there is going to be short term pain.
A lot of the key inputs to our supply chain, be it automotive, robotics, you know, the rare earth materials that come across all kinds of different core inputs. All of those are are going to be hit in the short term, which will mean some pain. But ultimately we have to find a way to wean ourselves off dependence on particularly obviously Chinese inputs. We need to either on shore those supply chains or near shore friendshore those with countries that we know we can rely on for decades to come.
And I think this will ultimately.
Sell to protect America. America's supply chain and ensure that it is not going to be vulnerable to a geopolitical adversary over the coming years.
And what about some of the winners twenty twenty three, twenty twenty four in video comes to mind, of course some of the key chip makers, which now many are worried through regulation won't be able to access some of their end demand points. Geopolitics getting in the way of that too. Is that the sacrifice it's worth it?
Well, that's not new again.
I mean, you know, we were we were already seeing chip bands and coming particularly out of the Biden administration over the last four years, exporting those chips into China.
And of course many of the American chip manufacturers and.
Video side saw thirty to forty percent of all their exports going into China. And China's obviously done incredibly well building you know, five and ultimately six G hardware mobile handsets, and so it is a huge demand market for those
for those consumers. So what we have to find do a way to do is continue to do business with China without giving there our most cutting edge chips, so ensure that you know, Chinese consumption is still helping to understand underlie and fund American art research and development and innovation, but make sure we're still ahead on the kind of most cutting edge chips. And so that's where these chip
bands come into effect. And we've got to ensure obviously that those aren't being circumvented by third party countries.
As well, big investor in China, investor in innovation, investor in soccer as well, which I think is behind the background that we currently see with you at the moment, Ben ben Harberg, another capital and anymore, we thank you time now for talking tech and first our France has fined Apple one hundred and sixty two million dollars over iOS data consent rules. Now antitrust regulators say Apple's app tracking transparency system does not allow developers to comply with
Europe's GDPR priphacy rules. Instead, it forces apps to display multiple pop ups. Apple said it was disappointed in the decision, while similar investigations are actually underway in Germany, Poland, Italy and Romania. Plus Nokia and Amazon have settled a global patent dispute over its streaming technologies. Nokia had alleged that Amazon used its tech in streaming services and devices without authorization.
The settlement results all patent litigations globally. The terms are not disclosed, and Japan is preparing as much as five point four billion dollars an additional aid for chip startup Rapidness is the latest move by the country to bolster its semiconductor industry during heightened US China tensions. Now that brings Japan's total public funding of advanced chips to nearly
eleven and a half billion dollars. And let's just now take a look at those US China tentions with a focus on Huawei reporting a nine and a half percent rise in revenue in the December quarter according to Bloomberg's calculations based on annual results. There's also posted a net loss and more than forty million dollars due to aggressive spending on research into development. Let's talk about it with Peter Elstrom. And the point here is China is all in on R and D in large part because the
limitations to access to chips from the US. Yeah, that's exactly right.
This this is a pretty remarkable financial report from Huawei. As you mentioned, Huawei's revenue grew almost ten percent to about thirty eight billion dollars. The company has been growing quite quickly recently. That's largely because of big gains in their smartphone business, in particular in their cloud computing business. As you may recall, Huawei was largely out of the smartphone business because of this US ban on them getting the access to the most advanced chips. They weren't able
to compete with Apple and even their domestic competitors. They've now been able to get access to those and the smartphone business is growing again.
Cloud computing is growing again.
But as you say, really the headline number here is the loss that they've got. They haven't lost money in a quarter for many years. They're pouring money into R and D in particular, Huawei has really become one of the leaders, the national champions for China and trying to make breakthroughs in these key technologies that are important to them strategically. So they've developed their own operating system to replace Android, for example, on smartphones, which was very common.
We also are pouring money into semiconductors. In particular, they've come out with their own AI chip to compete within Vidia in the market. Because in Vidia can't sell its highest end chips into the market. Wawei is taking some of that business right now, and they're getting the kind of practice in business to be able to make some gains. In terms of the sophistication. They're still quite always behind Nvidia, but they are making progress.
And briefly, Peter, this feeds into a moment where we're thinking generative AI is actually being upended by China because they can do more with less and less powerful chips. Does that counterrap that a little?
Right? We've seen the constraints that the US has put on China and Chinese companies have actually led to some pretty creative innovations. We saw it with deep Seek in particular, where they had access to some in Vidia chips but not the most advanced, they still made progress. Now Huawei is trying to feed into that also by providing some chips that are maybe not quite as sophisticated, but at least give some of these China startups an opportunity to be able to develop AI services.
It's astrom great to have you on the show as always with your Asia focus. We thank you. Welcome back to New meg Technology and Caroline Hide in New York. A quick check on these markets. We are bouncing off our lows when it comes to the Nasdaq one hundred. But look, we've been underwater throughout the trading day, and indeed, following on from Friday's anxiety too, we're off by one
point four percent. Your leaders on the downside are the who's who are the magnificent seven in video, Microsoft, Amazon, Tesla, Meta Alphabet. In fact, it's really only Apple that's in the green at the moment. We're seeing the magnificent seven off by two point four percent. As I shine a light on in video off by another four percent for what have been the star performer of twenty twenty three and twenty twenty four. I also should just show what's
happening to corweav after it went public last week. First day of trading was Friday. It didn't perform that well on Friday, and now I'm below that initial price of forty dollars were ath thirty six dollars and a half. No wonder in a risk off attitude, but also as we continue to question the ultimate need for compute here, let's discuss with the startup whose business relapsed with corweave.
Lambda CEO Stephen Balabana, I'm very pleased to say joins us now your business has breadth, and it's not just about access to GPUs and data centers. But how do you feel the market is currently responding to the need for compute in the longer term.
Well, I think that a lot of the demand for compute in the future is already priced in, and what we're seeing in the short term is probably just general market fluctuations. But what I've been seeing with open Eye's new image generation tools is that there's a lot more compute demand coming down the pipe.
I think that was where the tension lied for us, particularly on Friday, when everyone's worried about too much exposure of a core weave to a few key hyperscalers. But then Sam Altman of open ai is saying that his GPUs are melting because everyone is so keen to play with his updated model. So can you square that for us? How much will demand of generalor AI ultimately push forward your business? Yeah?
So Sam's tweeting that they're seeing biblical demand for the image generation tools that they've launched recently, and a lot of the businesses that are probably traded right now are being valued on a forward basis, which is to say that the projections that they're management teams and everyone's been providing is how they're being valued. And so I think that there's a lot of as they say, would to chop to get to to those run rates which are
the basis for the valuations. But these tools, it's a lot more than just anime image generations.
And means it doesn't feel like that when you're actually on ex at the moment, but there is more.
To it, right, And so the biggest leap here is that these are the first generation of models that are basically perfect text rendering fidelity. And so what you're going to start to see a lot more of is instead of an AI generated image being in an embed inside of a presentation, you're going to start to see the
entire presentation slide is generated by a neural network. What that means is, I think we're getting closer and closer and closer to the future where nearly every pixel you see on a computer screen is going to be rendered by a neural network.
Therefore, that just means compute goes up and to the right as it weaves into our enterprise life, into our personal life.
Every presentation, every piece of sales collateral, every advertisement, every video game, you're going to start to see more and more AI compute embedded in those things, which means that demand is going to continue to grow more than exponentially.
Have we got the infrastructure ready for that.
Everybody is working really hard in our industry to keep up with the ongoing demand. Even with all the high expectations and ambition that open ai has, their servers are still on fire, and they still probably have underestimated the amount of demand that they are seen.
Now.
I mean you're serving developers, of course, the entire AI development cycle right now. What is it like at your business? So how are you managing to scale to meet that level of demand?
Yeah?
I think that one way of looking at land versus say Core Weave. COREA has a lot of customer base and for example open Ai, and what we're doing is servicing kind of everybody. Everybody else, A lot of hyperscalers and over one hundred and fifty thousand individual developers use Lambda cloud to train their models and inference their models.
And what we're going to see, especially with these new advances in image generation, is that Opening Eye is going to have their time in the spotlight run away continue to grow their market share and then Open source models are going to come in and we're going to start to see a lot of that compute demand in clouds like the hyper scalers and lambda.
Will that open source winning come from China? How much are we going to see it being US made startup and AI models or how much will this be really global offer it? I think it's hard to predict.
I think that my bet would be that we'll probably see a high quality Chinese model first, and then the rest of the world will continue to publish theirs. I am generally bullish of open source internationally, whether it's in the United States, China, or elsewhere.
So for those who are currently aware of the hype cycle, seeing the valuations skyrocket and then come back down, and still waiting for Generator AI to affect their everyday working world, how soon will that come? Do you think? How soon? If what every PowerPoint display we make is ultimately a neural network.
I think that what you're starting to see is that more and more of the productivity that you do is going to be coming from tools like chad GPT, and so you might not actually end up seeing it embedded inside of PowerPoint. It may actually just be hey, please generate this presentation for me, here are the key talking points, and it perfectly renders a PDF for you at the
end of it. I think that that's the big shift that's happening, is that neural networks are replacing more and more and more of software that we use every day.
Perhaps not particularly beautiful Moune music for some of these publicly traded companies and their products that we so use often. Stephen Balavan flown in for uswith so thank him, co founder and CEO of Lander. Meanwhile, from AI Data Centers to compute for crypto, the Trump family is launching a bitcoin mining focus venture with HUT eight called American Bitcoin, which will focus on bitcoin mining and quote strategic bitcoin
reserve development. Eric Trump will serve as American Bitcoin's chief strategy officer. Bloomberg's Michael Reagan has been helping edit the stories across this world at the moment and ever more, the administration and family of the administration becoming intertwined with crypto.
Yeah, that's right, Carolina. Obviously, this is the latest of several Trump family projects in the cryptospace world, Liberty Financial being sort of the most high profile. A so called DeFi platform launched by Trump and members of his circle.
This was new news this.
Morning that we did not know who's coming. But Eric Trump and Donald Trump Junior are investors in a company that is basically forming a joint venture with HUT eight. HUT eight will be the majority owner of an eighty percent They are transferring all of their bitcoin mining rigs
to this new subsidiary and it will be called American Bitcoin. Now, remember, on the campaign trail, President Trump made this promise that he wanted all bitcoin to be mined in the USA, which a lot of people in the industry were skeptical that he'd actually be able to fulfill that promise just because of the decentralized global nature of bitcoin. And we haven't heard much from the President himself about how he
plans to follow through on that plan. But we do know now that the Trump sons are a part of this operation, this joint venture with HUT eight to mine bitcoin in America.
And once again, it's all about bitcoin. And you've been writing some great stories across your team, but what's up with ethereum at the moment? Which is the number two players still? But DeFi just not translating in the way many had thought.
Yeah, it's a really interesting story, Carolyne. I mean, Ethereum had so much promise, so much potential years ago. I think if you look at it from its basic sense, there's sort of competition on both sides for Ethereum that is pretty fierce above it. If you're just an investor who just wants exposure to cryptocurrency, Bitcoin has really proven to be the token of choice for that, and I think a big part of that reason why is because of that famously limited supply of Bitcoin, there will only
ever be twenty one million bitcoin in existence. Ethereum, on the other end, doesn't have a cap on how many Ethereum tokens will be issued, and there are already about six times as many Ethereum tokens out there. So from an investor standpoint, it's clear that you know, people looking for long term exposure to the growth and prices a bit of crypto are sticking with Bitcoin, and the ETF flows have been really you know, off the charts for
Bitcoin and not so much for Ethereum. But then below Ethereum, the other competition on that sort of DeFi space is Salana. You know, Ethereum's great innovation was that you could trade a lot more than just the ether tokens. You know, bitcoin exists, that blockchain exists basically just to trade bitcoin. Ethereum opened up the world to the possibilities of NFTs and these other smart contracts that could be traded on
crypto blockchains. Now you can roll your eyes on NFTs, but for Wall Street that's hungary to tokenize real world assets. That was sort of the proof case.
Of how that could be done.
But the problem now is Salanta is just doing it at a cheaper, faster transaction speed and is really providing stiff competition for Ethereum.
Moment of truth for Italic in a moment, Michael Reagan, we thank you very much. Indeed, coming up, we're going to be joined by Catherine Bracy, CEO the tech advocacy group tech Equity on herniebook dissecting the impact of venture capital and society at large. It's a bally meg technology Alphabets AI based drug discovery unit Isomorphic Labs. It's just that it raised six hundred million dollars in its first external funding round, was led by Thrive Capital with participation
from GV and Alphabet. The goal develop its AI drug design engine and support drug candidates into clinical testing. Now we're going to take a slightly different approach to the VC industry, though. A new book says bad practices from venture capital are bleeding into all industries and damaging the economy. It's called World Eaters, How venture capital is cannibalizing the economy. It's author Katherin Bracy, CEO of the advocacy group tech Equity,
joins us now, and it's the word cannibalizing. I'm really interested in within. Can you articulate briefly what the argument is here the bad behavior.
Well, essentially, it's the power of the venture capital has been chasing. It's become about chasing financial returns instead of chasing new technologies. And since there's so much money chasing a very few companies that can actually deliver venture scale returns, the money has gone and sought out areas of the economy where it really shouldn't be. And that's why the book is called World leaders, a play on Read Hoffman's essay from twenty eleven, software is eating the world. I
don't think it's software that's eating the world. I think it's venture capital's business models that are eating the world.
Well, if you look at the latest funding round, the record one that's going to be up to forty billion dollars in new equity for now a three hundred billion dollar valuation. Open ai surely a generative AI, large language model that just would not have the money to continue unless it looked to VC or private funding. Surely that is the right kind of business to get venture capital funding.
Well maybe, Actually I interviewed Sam Altman for the book, and he told me that the technology behind open ai is the kind of thing that government should be investing in, same with his other big startup in nuclear that government isn't doing it, so venture capital has to step in. And the reason he's set up open ai as a nonprofit was to protect the technology from the mandates of
venture capital as much as possible. We see how that has ended up and what it means for companies who are maybe pursuing these breakthroughs that have a lot of danger in the world to be really driven by the incentives of investors and not really the incentives of what's best for our society.
Is there a way to realign incentives here at the moment, because ultimately the US government, for example, is trying to pull back on spending turning evermore to the private markets, to private capital to fund AI infrastructure. For example, we've got money going into at least genitive AI helping with health breakthroughs we just reported from Alphabet. How do you realign at this moment, Catherine.
Well, I definitely think there's a role that government can play for market crafting, that is, you know, creating the incentives for venture capital to seek out the startups that aren't getting invested in. I think, you know, what I found in my research was that the bigger problem than VC investing in some companies is that they weren't investing in many others that could create a lot of great value.
You know, companies that are hitting doubles or triples instead of grand slams, and right now there just are not capital markets for them. So, you know, I think there's a lot that government could do to catalyze money going into those areas. But honestly, there's nothing that policy really has to change right now for the markets to change.
Limited partners could decide that, you know, chasing returns through venture capital is not always the best outcome, that not every VC fund can be Sequoia or Andres and Horowitz and not every limited partner is going to get into them, So why not take a bet on you know, fund managers that are putting their portfolios together around doubles and triples instead of chasing the elusive dec acord.
And what do these doubles and triples need to fix? One are the is that you think of being over looked?
Well, the one I focus on in my book is housing. I think the housing market is a very clear opportunity. We need innovation there for sure, but we don't. There aren't that many software based or venture scale solutions to that software or housing is obviously very infrastructure heavy. There are long time cycles here, the regulatory burdens are high, and so the way that a fund needs to be structured to pursue innovation in the housing market is just
going to be different. And I don't think there are that many fund managers thinking outside the box. How might you construct an innovation fund in early stage risk capital fund to address solutions in the housing market that doesn't look like chasing power law returns at at every angle.
Has embracing so fascinatingly. Thanks for coming on and talking about at CEO tech Equity and the autha of the book well details. SpaceX and Apple are fighting for space literally. According to the Wall Street Journal, the two companies are competing for satellite spectrum rights, which are in limited supply now. The iPhone maker has been working to expand its satellite
connectivity services in a direct combetition with SpaceX's Starling. The move would allow Apple to provide service in areas where regular cell services can't.
Now.
In response, SpaceX has pushed for federal regulators to stall Apple funded satellite expansion efforts. And let's just stick with SpaceX because the company is preparing to launch four passengers around Earth's poles in a first of its kind mission. For more, let's bring in Bloomberg's Sana Prashanka and joining us for more. The crew of four passengers are doing what has never been done before and going around the Earth's poles. Right, yes, yes, exactly.
So it's the first human space flight to fly over the Earth's polar regions, which is pretty interesting. So they'll take off from Florida and fly in a ninety degree circular orbit around the Earth.
Finance by a crypto billionaire. Why is he and the three that he has selected? So keen on the polls. Yeah.
So they had a press conference last Friday. The FRAM two mission. FRAM two is based off a Norwegian polar expeditionship, and what Chun Wang, who is a cryptocurrency investor, said was that he had always as a kid, always looked at the Earth's map and saw this white spot at the bottom of the pole and always wondered what was out there. So he's excited to view that from space, and he's very into visiting different countries, being an explorer and going on different adventures, is what he said.
It's taking an extraordinary group with him of other Pole focused explorers, but they're offering their own bodies up to research here. They're taking on a lot of risk Altimnisana.
Yes, yes, definitely, And actually one of the things that they're doing on their mission is conducting research on the impacts of spaceplight on human health. So they're also teaching other people about what it's like to be up there while they're putting their own bodies at risks. And one of their projects will be capturing the first X ray image of a human in space, which will be definitely very interesting for the research community in the science community.
And they lift off Florida. Is this evening, Yes, it's this evening.
They're targeting around nine pm, but there's a couple different launch windows if the nine pm one doesn't work out, But for now, I think it's around nine thirty pm.
Sana Pashanka, thanks for following up for us. We appreciate it. Also happening today right here on Earth in Vegas at least, Intel is holding its two day Intel Vision event. It's a conference which kind of showcases Intel's technologies and how they're being used to enable new solutions and drive business success, so they say, in the AI era. But of course that success is all hinges on this guy, Intel's new CEO Lit butam he's gonna be speaking for the first
time this Afternoons's taking on the top job. Let's ask man deep seeing from real meg Intelligence what we think might be articulated Because he's been out there talking to investors, writing letters of course also to his own workforce cuts, it seems yeah.
I mean, look, they've already peered back from the nand business so you can see, you know, the focus is shifting towards AI hopefully, and that was one of the things that I think Pat Gelsinger didn't do very well. Was really hone in on AI, which is the growth market. I mean, when we look at all the hyperscalers increasing their tapics by fifty percent, you would expect is something would trickle down to Intel in terms of, you know,
driving some revenue upside. And I'm hoping, you know, that's the vision he articulates when he talks to investors, is how Intel is really focused on AI. And look the foundry side. I mean, the government seems to be supportive to Intel, you know, to bring manufacturing on shore, but that is a lengthier turnaround because one of the concerns for investors in Intel stock is the cash burn. Yes,
you don't want to see cash burn. And the message here is we're really focused on AI opportunity and they somehow have to find a way to compete with Nvidia.
Well, they got Goudie. That is the offering, right. Do they need to change up the talent they have? They've certainly been changing up the board talent at least it seems well.
I think there's a lot of that they need to change at the product level. Clearly, the product didn't resonate very well with the market when it comes to the training and influencing opportunity on the AI side. But look, this guy is coming from Cadence, so he has that software angle in terms of, you know, thinking about what is it that Intel can do in terms of both the chip side as well as the software side. And I hope he articulates that vision.
It's got to be smoptimism in there too. Right, this is a stock that has been wiped out over the past year or so.
Yeah, I mean, if you look at the valuation, this is like every pessimistic scenario is baked in the stock right now. So any hint of good news around a from a vision perspective, and then he lays out clear markers. I think it's going to resonate with investors.
Mandate it's saying, going to be attuned to that talk coming from Vegas senior Bloomberg Intelligence analyst. Also, he's busy helping organize well as Bloomberg Intelligence's fourth Generator AI conference. It's happening on Wednesday, featuring some leading figures in the industry. I'm lucky enough to be talking to a few of them. Meanwhile, that does it for this edition of Bloomberg Technology. Don't
forget to check out our podcast. You can find it on the terminal as well as online on Apple, Spotify, and iHeart from New York. This is Bloomberg Technology.