From the Heart where Innovation, Money and power Collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Love Love.
I'm Paradine Heider Bloomberg's world headquarters in New York, ALANM.
Ed Lovelow in San Francisco. This is Bloomberg Technology coming up.
Apple, it scrats its EV ambitions after a decade long effort as the company focuses instead on AI.
We'll have full coverage ahead.
Plus Google CEO Sunderpitch Eye blasting the failures of the Gemini image generation feature as the company looks to remedy the situation. We have all of the details and.
We sit down with the CEO of data automation firm Clavio. As a company reports earnings for the second times it's going public, and as they announced, guess what new AI products?
All that and so much more coming up.
So let's check in on these markets because there was a torrent of economic data, not much to catch the attention today. Mixed data means that we're currently off about four tens percent on the Nasdaq. As we really care about the PCEE number, the favored inflation data by the federal reserve that comes out tomorrow.
All eyes on that.
We see a little bit of a sell off ahead of that number Golden Dragon index over in China. Of course, this is the US traded version of some of these Chinese big names, down one and a half percent, so really some weakness coming over from what was a pretty ugly day in China trading. I'm looking at what's happening in the ten year yield, nothing burger, nothing really moving.
We're off just about one basis point where there is action.
And on the macro perspective of we're looking at one particular asset, claus A choice Bitcoin.
Look at this one point.
Seven point seven percent higher. We are encroaching on that all important sixty nine thousand dollars record level ed. We know the sixty one thousand has already been eclipsed. Why, good old supply demand dynamics. There's more demand from the ets. The supply side we know is going to be halved in terms of amount of bitcoins going to be mined come end of April. And of course, well not many holders are selling at the moment, but ed, what are you watching?
One story Apple Apple is shutting down its car project after a decade of work. Full kudos to Bloomberg's Mark German. He's going to join us in just a few moments. He broke that story. But this is a two day chart. That is the moment that Mark broke the story. The stock would have been a little bit lower Tuesday, and look at the gain on it. Okay with flat now,
But the reaction globally to this has been pretty profound. Actually, we know that some of the two thousand people working on the Apple car project will lose their job, some of them will be shifted into Apple's work on generative AI, according to Mark's reporting. But for me, this story was about ten years where Apple did not know what that end car product ev product, robotaxi product would eventually look like.
And you've seen it all over social media overnight. In this morning, Caroline, it's the one thing everyone's talking about, a big backtrack.
Well, they talked about it over that decod long process. Here's actually Tim Cook and what he had to say about the plans all the way back in twenty seventeen.
Take a listen.
We sort of see it as the mother of all AI projects. It's probably one of the most difficult AI projects. Actually, to work on. And so autonomy is something that's incredibly exciting for us, but we'll see where it takes.
Is and Mark German joins us.
Now, isn't that interesting the fact that Tim Cook talked to it as the mother of all AI projects and that's where the talent now goes.
But to generative AI, it's certainly an AI project right at the very core of an autonomous self driving system as artificial intelligence using cloud, using onboard software, using onboard hardware to understand what the vehicle is, do live processing and make those decisions using an AI engine on behalf the user.
Whether to stop, whether to make that turn, whether to change lanes, to understand the environment, to drive in the snow or drive into the rain. Right, those are all decisions that are made by an AI processor, And so clearly Apple does have some AI talent there that they're able to relocate to their other AI initiatives that have nothing to do with the car.
Mark, let's go deep into the details that you reported. So there was a meeting held by two high level Apple executives where they informed the two thousand or so staff working on the Apple car project that it was being shut down. What else do we know.
Yeah, there was a meeting Tuesday morning at ten am where Jeff Williams, Apple COO and Kevin Lynn Chappels, VP of Technology, who's been in charge of the car project known as Titan inside the company since twenty twenty one. They informed the team, like you said, the it would be winding down immediately. Really three main groups there. You have the hardware engineers. You know this is simplification, but you have the hardware side, you have the software side,
and you have the AI side. So the AI side of the project will be shifting towards Apple's AI and mL division under John g and Andrea. The software side, most of those folks will be moved to Craig federigi's operating systems organization, and then the hardware team a lot of those people, unfortunately, are being laid off. It's one of the biggest layoffs, i'd say, in Apple's modern day history since certainly since Tim Cook became CEO in twenty eleven.
And then some of the hardware engineers will have the opportunity to apply to other jobs within the company. Obviously Apple's a hardware company, and perhaps some of those people will find roles on other teams, whether that's for the iPhone, the Vision Pro, the Apple Watch, you name it. But this is a bombshell development for Apple. This is something that Apple just doesn't do, throwing in the towel on
a major project in such a public fashion. You know, the Apple car started in twenty fourteen, ten years ago, and Apple is such a secret company, but everyone knows they've been working on this, so this has been a really public failure for them.
Being Bo's Mark German, terrific reporting, impactful reporting. Thank you for joining us on the show. What does it mean for Apple? But what does it mean for the ev industry at large? Let's bring in Cities Global Head of Auto's Itai mcayley to get into what Apple winding down its electric car effort means for names like Tesla. You look at Tesla shares up two percent in the session it Your thesis seems to be that if this is good for anyone, Apple canceling its car project, it's good for Tesla.
Why absolutely, Yeah, yeah, So you know we always thought that Apple would have been most likely to compete directly against Tesla, and too a lesser extent companies like GM and Ford. You know, a lot is changing with electric and software and autonomous of course, But one thing that we're learning, not just from this news but even other developments recently, is that the barriers to enter and succeed in scale in the EV and particularly also in the
AV the autonomous side, are still pretty high. And so I think this is another data point kind of supporting that those barriers still do exist, and we think it does bold well competitively, maybe mostly in our coverage for Tesla and to a lesser extent, GM and Ford.
It's how you lead auto's coverage at City as opposed to Apple. But what I always think about when I've covered this story of Mark over the last six years or so is like Apple is used to margins for consumer electronics, and even if you get to like Tesla level margins, it's not even close. Did you have any sense of what you think Apple was trying to get out of a car project?
Sure?
Yeah.
Broadly for the industry, we see the biggest opportunity for higher margins is in software services and particularly around the economy. And if you look at the average automaker today in the US, we've estimated it from a lifetime revenue, a lifetime revenue of a car. Today, those automakers only generate maybe forty percent of the lifetime revenue of the car.
There's no a whole other sixty percent out there that there tends to be much higher margin that you could begin to tackle with software services think about autonomous vehicle subscription models in the future, and so we do thee as part of our industry thesis that the future of this business model isn't just about selling a car, making a kind of money on the one time sale, but really thinking about the entire lifetime revenue that a vehicle
can generate, plus incremental revenue from services you peer to peer sharing deliveries that really autonomous technology can unlock over time. But it is a difficult challenge. You seen a lot of companies, you know, kind of take longer to develop level three and level four technology. You could argue that, you know, Apple kind of shutting down that the program suggests that, you know, maybe more negative view on the
long term potential. But then you could also argue that the companies who are kind of leading the way from level four will ultimately build much bigger competitive mode just because of how difficult it is to ultimately achieve that degree of technology and capability.
What was so interesting was obviously the price point in which Apple was originally going to be targeting. I mean, there was talk of a one hundred thousand dollars car that immedia made me think of the BYD news earlier this week, that they're going to be having some supercar coming onto the market more than one hundred thousand dollars in terms of a price point. Is that where the competition now lies for a Tesla, for a FOURD, for
a GM. It's not actually homegrown Apple, it's looking over what China is doing in a BYD.
Broadly.
Yeah, there's a lot a lot of competition, of course, broadly coming out of China. I think every automaker is keenly focused on it. There's different degrees of EP penetration around the world, the US of course being smaller, but we actually do need to think in the US more EV product particularly and more affordable price segments they have not yet been penetrated. It is going to be a
competitive market going forward. Yeah, I do think that even with the slowdown today in ev adoption, of course, the competitive threats global, we are still quite there. I think automakers are certainly thinking about that, not only again when thinking about the EV platforms, but also incremental services revenue from autonomous and software of course being a big part of ultimately making the economics work, particularly at those lower price points.
And this is where I suppose the starkness of the data is so raw. The fact that we're expecting an eleven percent increase in sales of evs in the US this year compared to a more than forty percent increase in the year of twenty twenty three. I mean, ultimately, is this the only way that these companies can distinguish themselves.
Can survive.
Perhaps to tap some of the talent that's about to be let go at Apple is by driving the services, because Apple's got car play. But obviously there's much more margin generation to be done some of the other auto sectors.
Yeah, truly, all the above. Every auto company is trying to work the numbers to that creates some delays, frankly in new product introductions to make the P and L and unit economics work for EV's, but there's no question over time that software and services is key to towards making those economics even stronger and again unlocking longer term a lot of revenue opportunities I spoke about a bit before. But you know, in the US, we're not as negative
on EV adoption as consensus is today. We actually think the US does need more product to drive better coverage, and we've seen a very uneven market in terms of the number of products today, and of course auto companies with evs, we've seen a very uneven market even when you look at the geographical distribution of electric vehicle sales in the US, and so you know, we think it will be slow and steady growth. There's not been a disruptive of course transition, which again is good for the
so called legacy automakers. It sort of supports this notion we've been writing about about the sort of comeback of the legacy automakers in some degree. But ultimately, you know, EV's we still think are the future and we're done well and right. They're very compelling products and we think that you know, automakers are still going to be invecting pretty aggressively into them and.
When the infrastructure is there to support it.
To City Global Head of Auto Sector Ittai McCurley, it's so great to have you on the show.
We appreciate it.
Meanwhile, that there's more news coming out of Apple, in particular with the latest on allegations of the company has imposed software and hardware limitations on its iPhones and iPads that actually impede rivals from effectively competing. Now, representatives in the company met with the Justice Department last week in one is a final effort to persuade the agency not to file an antitrust suit against Apple.
It's all according to sources, the suit is expected to be coming in the next few weeks, lu likely by the end of March.
So the sources say, we've got to check in on bitcoin today because we are training ever so close to the record high that we saw all the way back in November twenty twenty one. We're back at a sixty one thousand hand or remember sixty nine thousand is the record high that we saw for bitcoin.
R up another seven point seven percent on the day.
This is notable given risk assets are actually selling off more broadly today and tech hasn't got much love, and we're more focused on a federal reserve. But Bitcoin manages to push higher despite that. Let's stick in to risk assets across the board. IPEC Oscar desh Gaya is with
US senior market analysts over at Swiss Code. We're going to be getting your tech markets feel out here and more broadly, I mean, when you're looking at a risk asset of bitcoin, is the story more about mass adoption, about that being a meaningful part of a general portfolio. As to why we're seeing a run up at the moment.
Well exactly.
I mean bitcoin has become like an important thing for the financial industry and we think that's got a great future in terms of finance and the centralized finance, and while the next couple of years and the fact that we also saw the ETF seeing the daylight is very
important in terms of adoption. And what's interesting is if bitcoin could actually break that poor relation that it has with the traditional risk assets, then it would be just a very interesting asset that someone should hold in peers or her portfolio because it's just a different thing that is moving on different fundamentals and it's really a great alternative for portfolio diversification.
Let's go to earning season. It's a game of artificial intelligence or artificial sweetener, because everyone's doing buybacks and if you look at like names like eBay. I think back to like Disney, Mercedes Benz. In Europe, everyone's doing buybacks and it kind of makes earning season seem like reallyuthoric. Well, how do you feel about that?
Well, the earning season for big technology companies has been good beyond the buybacks, because if we're looking at Magnificent seven Socks, well they eat out some fifty five percent earnings.
Growth and that's a big deal.
And it's even a bigger deal when you think that expectations have gone just through the roof. So we think that there is something fundamentally positive there in terms of
well development. And AI was obviously the major takeaway of this earning season because what we see is well AI investments are really pouring in, and when we talk with industry heads, well, we also realize that the investment decisions in AI seems to be well quicker than other investment decisions because in industries and companies seem to understand.
Very well how AI is going to.
Increase their productivity, decrease their costs, and improve their profit and their profit margins. And they also have quite a short payoff period. So investments are actually pouring in and that's absolutely helping the big technology sucks, especially those who are related to AI or just eat out some mind blowing results.
The main beneficiary of this story continues to be in Vidia, right, the hardware provider of the underlying technology. The thesis you just outlined is more about the end use, so the end case. Do you still think it's important to stay closely aligned with names like Nvidia, AMD and some of the hyperscalers.
Well, I think that yes, because those are the early commerce and they are the pillars of this AI revolution. What we see in AI today is a little bit like the digital version, the digital equivalent of the industrial revolution. So the potential is absolutely huge. Now, looking at the valiations, yes, Nvidia's valuation has gone through the roof, but not the valiations as of today are not that shocking because Nvidia's valuation in terms of PE ratio is lower today than
it was at last year's twenty twenty three peak. So yes, the Nvidia stock price is going higher exponentially, but the earnings follow as well, So we think that Nvidia is a very interesting stock to hold in an AI portfolio. And zooming out of Nvidia, the global technology stocks are also trading at valiations which are lower than their twenty twenty one peak levels. So by historical terms, the valuations that we have today.
Are not that shocking.
Yeah, if you're looking at forward p well, the ratio there is like a thirty or thereabouts for an nvideo, It's only sixteen for a Qualcom. And I bring up Qualcom because actually the CEO of that company was joining Bloomberg a little bit earlier, and well guess what he was excited about.
Just take a listen.
Why we cannot predict when there's the next cycle. What I can tell you right now with precision is AI is changing how we interact, in how we use our phones, and if eventually, if consumers field that they need to have an aiphone, that will create this new growth momentum for the industry.
We've of course heard Christiano i'm on talk a lot about AI applications and of course the AI use within our smart devices. But should we broaden our remit of investment opportunities at this point? Should we look less at perhaps the pixel shovels. Where are the applications you're looking at other industry groups?
Now?
Well, absolutely, I mean you can growth in this to chip makers and especially you can also growthen your vision to geographically other diversification opportunities, and for example, Japanese chip makers or Japanese companies in the chip sector are also looking very interesting to us in terms of in terms
of good diversification opportunities while having an exposure to AI. Now, obviously other technology areas are very interesting as well because technology as by nature, is very adaptable to well AI revolutions. So every company it has to do that has potential to improve their products and services with AI are interesting to you know, having a AI proatfolio.
Any guest that comes on the show and says something like technology by its very nature can come on the show again anytime. E Pepvsco. Desh Gaya, senior market analysts at Swisco, just quiit a terrific conversation. Thank you. Back to bitcoin really quickly, hitting sixty thousand dollars for the first time in more than two years. This comes as demand for the TOE and is widening, being not beyond
committed digital assets enthusiasts. That's been the story. Meanwhile, US Senator Elizabeth Warren sat down with Bloomberg yesterday a wide ranging interview on the looming government shut down the path ahead for rates, but also cryptoregulation.
Have listen, in our financial system, pretty much everybody follows the same set of rules. I'm talking banks and credit unions and credit card companies, gold traders and stockbrokers.
Private equity now.
Has to follow the rules precious metal dealers, Venmo, Western Union, but not crypto. My view of the world is same kind of activity, same common risk, should have the same regulation.
Google, we have a response from the Sea Sono Pitchy sending an email to staff what has been, of course, the problematic responses from Google's Gemini AI engine, describing them as quote completely unacceptable, according to a note that teams are now working around the clock to rectify the issues.
More, let's bring in Blue Meg, Seth Figermann and Seth.
I mean to put it lightly problematic, but is this enough of this sort of like mere cull per moment, This is not good enough enough to for ultimately the damage to the.
Brand that this is done.
Yeah, I mean, at some level of the question is is this even a fixable problem? And it's very unclear right now that is. They're saying they're going to work around the clock, test out different prompts and try to weak out bad cases like what we saw over the last week. But the technology itself is fundamentally flawed. The data it's trained on, it's fundamentally biased, and they are attempting band aid measures here just to get the product
out there. So even if they wait two weeks, three weeks a month, we may still see users effectively troubleshoot it in the wild and find other issues.
When we've actually gone to spokespeople at Google, they say Gemini is built on creativity and productivity tool It may not always be accurate or reliable, but as you say, this is an over correction of previous lackings in other AI generators, and I'm interested as to what really has gone round wrong.
From a technical perspective.
Yes, what we understand is that behind the scenes, Google has effectively traed a technical fix here. They have done what we call prompt engineering. They are when you enter
a prompt and say give me a picture of a nurse. Ordinarily, on certain image generators will show you a woman by default, or often a woman, but maybe now without even knowing it, it'll add show me a male nurse and a woman nurse, and a nurse of this adversity and that the problem is users don't know that's happening behind the scenes and over correcting forgating that they almost prevented you from be able to see an image of a white person in that role or any other And so it just speaks
to the urgency right now. These companies feel to deploy these products even if they can't properly safeguard for all bad use cases.
MENTA has a white paper just on trying to explain this phenomenon. Cethiman, great to have you on, Welcome back to blow Meg Technology and Caroline had in.
New York and Mamed love Loow in San Francisco. A quick check in on the markets. I guess we're kind of like treading water right now. We get core PC Thursday. There is still a micro focus on what economic data will lead the market to believe the FED is going to do. And you see US tenure yield around four point two nine percent where it's been equity market it's a little softer three tens percent on the Nasdaq one hundred.
It's a very tech heavy index with sw I always check that we showed you once, we showed you twice. I should show you a third time Bitcoin above sixty one thousand US dollars par token. Go back two years when it was at that level. What happened in the same month as it reached sixty nine thousand dollars per token? Where will we go next? It's exciting. We'll keep on track of it. I do want to go back to Alphabet,
parent of Google. I know we just had seth orII editor explaining sunderpitch eyes reaction to what are accuracies and bias problems in Gemini, And you can go on bloomberg dot com see that full memo that Bloomberg's published he sent staff. But we're down another two percent in the session and trading at one point in the session at the lowest level for Alphabet since mid December. So there's a clear reaction here. We're going to keep on top of the story because there is a debate carry you
and I have been talking about it all morning. How do they actually fix this technically or is it not as straightforward as that. It's one to watch certainly, and we're down five percent in the last or four and percent in the last five sessions or so.
I mean, all of this brought on by prompt transformation, something that we'll get far more used to. Meanwhile, yesterday and Sony of course announced that it will be laying off some nine hundred employees in its gaming division and we'll completely shutter PlayStation London. That brings the amount of video game industry workers who have lost their jobs this year to more than six thousand.
Let's bring in an expert in the feed field.
Jason Chapman joins US co founder and managing partner over at Convoy Ventures.
It's a firm that actually invests in platforms and technologies in gaming.
And from the perspective of the industry here, Jason, is this something we're going to see across the board? Because for Microsoft, when they made layoffs, we sort of thought, oh, it's the M and A deal. But more broadly, is this another industry group that got too big during COVID and now has to slim back down.
Thank you for having me. While these layoffs were significant, they're not surprising. We're going to continue to see more layoffs throughout twenty twenty four. For context, we saw about three percent of the global gaming workforce laid off in twenty twenty three. We're in February and we've already seen
two percent of that workforce laid off. We expect that number to continue to rise, both with groups that have already done rounds of layoffs like Microsoft, Gaming, Unity, Riot and others, and also some newer companies that haven't yet announced.
Why, Jason, why are the companies doing this belt tightening, It's a great question.
It's because money is not cheap anymore. We were all bloated and we got way too comfortable, hired way too many people. In the post COVID boom, company including in games as well as in tech, is having to right size their industry. We need to do more with less. We need to get more capital efficient, and I think you're seeing that hit gaming in full force in twenty twenty three and twenty twenty four.
Okay, so the narrative back in early twenty twenty three when the big tech companies were belt tightening, was well, we'll leave some of this talent and go.
And build their own ventures. But is this also happening at the startup level?
Are you seeing belt tightening cut layoffs happening there.
Too, and ultimately what does it mean for your part of the industry.
Absolutely, it's happening both with the big players and also the small players. So you know, the startups are not isolated from these concerns either. You know, we've seen across many of our companies in average of about thirty percent pullbacks and staff and we expect that to continue. And all those companies are either doing the same on a top line basis or actually better. And so I think that just shows you that we got inefficient. And I think that's a lesson learned in games, it's a lesson
learned in tech. And as I said before, money is not cheap anymore, and people it's very hard for them to raise both in public and also in private settings for capital.
Yeah, I think long term we're talking about generative AI being a tool to accelerate game development. But right now, I mean, I'm playing PlayStation. Right now, I'm playing Switch. I'm enjoying the games, but there isn't sort of one title or trend or thing that I'm really excited about in twenty twenty four. Maybe Star Wars Outlaws shout out that game, it's going to be incredible, But do you see what I mean? There isn't a sort of short
term catalyst to drive a spending cycle. I wondered if you agree with that, Jason.
I think you're gonna have to look to the UGC platforms. You know, you're gonna have to look to Roadblocks. You're gonna have to look to UFN with Epic and Fortnite obviously huge announcements there with the Disney investment, I think you're gonna see a lot of new titles come from those those regions versus you know, kind of you standalone huge titles that you see more historically announced by the major groups. So I would tell you go on Rodblocks,
let's go plan on Fortnite together. There's some exciting things coming down the pipeline there, but definitely noted. Also, the big, big disappointment in the games industry obviously is that Grand Theft Auto got delayed to twenty twenty five. That was a huge disappointment for many and probably sounds like for
you at as well. So yes, while in the games industry we're gonna have to make do with UGC for a little bit, there are some other exciting titles coming out here, and I think we're gonna have to make do with some of the older content for the rest of the year.
Okay. One, let's play Fortnite. Two roadblocks okay, three, Yes, very sad about DJs niver A managing partner, Jason Chapman, you bring it all. Thank you so much, Okay. I've been waiting to show you this for a long time. In twenty twenty three, San Francisco positioned itself as the place to be when it came to AI and investors back that title. But what happens next? I looked at what's really going on in our city. For Bloomberg regionals,
welcome to the real Cerebral Valley. This is the Hayes Valley neighborhood of San Francisco, is characterized by the painted ladies, hip shops and restaurants, and it's fairly diminutive size.
Blink. I mean you miss it, really, But tech industry local sea Hayes Valley, or Cerebral Valley as they like to call it. As a metaphor for what's happening in San Francisco, it became the epicenter for new and growing AI companies, part of a vanguard that could help SF bring back business that slipped out to Silicon Valley or even out of state. I talked to a couple of local tech luminaries to see how much of this is real and how much of this is hype.
That every revolution in Silicon Valley sort of happens in waves like that. There's personal computer as the Internet, your mobile phones, and I think that this is as big or bigger, because what you see is now software being able to reason, and that's transforming not just one or two industries, but absolutely all of them at the same time.
So what happens in the next twelve months with artifisial intelligence in this city.
One of the big things that we talk about in San Francisco is the doom loop. The commercial buildings are completely empty, prices for real estate have completely crashed. But the silver lining here is we're going to fill every one of those skyscrapers with thousands of very high paying jobs that then create software and products that basically serve billions of people out there.
And some folks on there that don't agree with that view as well. Check out the full documentary on Bloomberger Regionals, Bloomberg dot Com and all the social platforms.
Caroline meanwhile ed look vc Bakklana shrank It's net losses I seventy six percent in twenty twenty three. We're talking about a fintech buy now, pay later firm over there in Europe, not instant people vary that makes preparations for one of.
Its biggest IPOs of the year.
Now the fintech company is even briefly moving into profit that happened in the previous three months, accelerating its faith it grows as we've seen the targeted this further expansion here right here in the United States, which is now as big as market now.
Interestingly, part of.
Its growth has actually been thanks to open AI powered AI Assistant, which Klara says is doing the equivalent get this of seven hundred full time agents and now's two point three million conversations with the first month of being deployed. Now, that announcement was enough to send the shares as you'll see of Teleperformance down twenty nine percent, hitting their lowest level since late twenty sixteen.
We say, of course, the anountsourcing company that is all about.
We're on the phone and people, let's see what wells, what's coming up when it comes to AI disruption. A new AI image generator is in town, and we've just got the backing of Andrewson Horowitz. More on that one next. Meanwhile, let's just keep an eye on some of the public P trader companies that we've got to be looking at. Applied materials. This one down, as you'll see, just some two point three percent. This is more of a legal ramification for this company. The US is renewing an inquiry
into applying materials as Chinese business. They're underscoring Washing his efforts thrilly to curb chips being sent.
To that particular company or off by two point four percent. This is blue their technology.
New funding for AI companies keeps pouring in, and this time it's Ideogram announcing eighty million dollars in a series A funding round led by Andres and Horowitz and launching a new version of their image generation model, joining us with the Deets Bloom both Rachel Metz The timing of this is astonishing. But let's focus first on Ideogram. What is it that they do? Who are they? What can you tell us about them?
Sure so, Idea Graham was formed by some people who worked on Google's image generation technology in this and they launched their first version of their software last year, and basically they are concentrating on making it easy for people to come up with really good AI generated images without having to put in like a really leathy written prompt. And also typography. They're really focused on making it so you can have legible words in your images.
Ironically, it was led by several former Google employees. That timing therefore juxtaposed with the issues going on with Google, but also the exuberance around video generation and more image based focus or ZA for example.
This is why we're governering this sort of valuation.
Rachel, Yeah, I mean, well, I think that the funding that they're getting this time around is it's a lot of money for a company that's not very old. But I think it's really reflective in part of how much computing power you need, which is very expensive. In order to train these models and to run these models. You know, they need to hire some more employees. I think they're still a pretty lean stirrup over there. But as you said,
the timing, yes, very interesting. In fact, one of the things, one of the things that's very interesting in addition to this funding that they're getting, they have this new model. One of the new features they have allows them to people to turn on or off automatically lengthening their prompts, which is something that some companies do but they don't always talk about to users. So this way users will it'll be very obvious to users whether that's happening or not.
Prompt transformation something we're talking about several times today that hasn't really been discussed before. And also I mean talking at timing stability AI's latest image generator as well, got a lot of people talking Rachel.
Met's absolutely brilliant to have you on as always. Thank you.
Now let's stick on the world of venture capital and our VC spotlight today. We want to take a look at Black Tech Nation Ventures, so Pittsburg based venture firm which just announced the close of a fifteen million dollar inaugural fund to back software startups led by founders from diverse backgrounds. Let's bring in general partner David Motley for more. Who's staying up late for us while traveling in Hong Kong? But where will your money be deployed?
David? Is it more US focus? Is it Pittsburgh focused?
Is it?
Are you agnostic?
Caroline?
Thank you?
Let me start bus saying we really appreciate the opportunity on your program. Excited about the attention that our fund is getting Fund one launched honest way, and we're looking forward to earning the right to launch a much larger fund too.
To follow with.
With respect to where we are investing, we are investing nationally and technology funds that are led by black and diverse founders with an eye towards delivering outsize returns to our founders.
Thinking of your founders, you've already invested in a whole gamut of like the future of finance with MTech. You're looking at good find which is helping sort of well food trucks and the like. But I'm interested, David, you say about the attention your fund is garnered. I'm going to be brutally honest. Fifty million dollars isn't that much in the grand scheme of things at VC. But what's sad is it's large when it comes to backing black
founders and raised by black vcs. Why is it still only a fifty million if you can, dare say only and what are some of the headwinds that you've found trying to raise this fund?
Caroline, your point is well made. Fifty million dollars in the scheme of venture is a very small fund, we do have the opportunity to leverage what we're doing with our fund with other like minded funds and deliver much larger scale relevance for the companies in which we invest. One of the reasons why venture is retreated for black lead funds is that the overall venture market declined in twenty two twenty three, after watershed years, if you will,
in twenty and twenty one. But in particular, now that the attention that was garnered on the backside of the tragedy with George Floyd is retreating in the rearview, mirror funds are also moving away from this sector.
David, I'm looking at this data point. Around seven hundred million dollars of venture money went to blackfounded startups in the US last year, below a billion for the first time in a long time. What's the trajectory looking forward? You know, thank you for your time on the show. We you know, we're very interesting talk about the fund. But I'm assuming that you feel like you can't do this on your own. Are you getting support from other firms who are raising funds with the same intent.
So the answer to your question is yes, we are getting a lot of support and interest from other like minded funds. We have in that convened a forum for
black led funds across the country. When we take a look at what's it going to take to try and move the needle, it's going to be funds like ours proving out that there is alpha and the sector there is the opportunity to deliver success from funds like ours, from founders like the ones we're investing in, and prove out that this not just an initiative, but an investment category that can provide venture like returns.
Well, for now, like sorry, Ed, oh, no, Cara, go for it.
Well, I mean it's notable that for now you got back in from alphabet First, National Bank, Mark, Cuban to name a few.
Ed all right, Black Technicians, General Partner David Mottley.
We got to go.
But by the way, super grateful for you joining us in Hong Kong. Very late there.
We'll have you back in the future.
You appreciate it. Date automation and marketing firm clavi o out with four quarter earnings after the bell last night. It's only the second report they've done as a public company. Revenue beat estimates in the final few months of the year, Johnny us Now Clavier CEO, Andrew Bioleki Andrew, they talk about that period of the year being seasonally strong. But if I'm trying to pick out a story, it's that you added a lot of new customers, and I wonder
if that was a direct result of the IPO. You know, one rationale for going public is let's get our name out there.
Yeah, well, first, thanks for having me. You know, we're really excited about our results in the fourth quarter. You know, as you mentioned, we work with a lot of retail and e commerce businesses and brands over one hundred and forty thousand of them in Q four. Is there time to shine and we're really excited that at last year we help those businesses generate over fifty billion dollars in sales.
You know, Chlaviya, We're all about helping businesses and brands build first party relationships with their customers, with then consumers, and then building great experiences for them that helps them drive real growth.
Let's just talk a little bit about the where the headwinds are or indeed why the share price is down. I know, risk assets are down across the board at the moment. Andrew and I'm sure we don't look at the day to day vagaries of your share price, but it is lower, perhaps more on our earnings for share perspective, and maybe Morgan Stanley coming out with a price target downgrade.
I'm interested as to what, if anything, you're having to spend a lot of money on even as you're driving up revenue and growth in terms of users.
Sure.
Yeah, I mean we don't spend too much time thinking about the stock price day over day. I mean, I'll tell you what I'm excited about. Yeah, yesterday we launched Klavyo AI, which is our artificial intelligence toolkit for all of our businesses and brands. You know, as we look forward, we build claveo is a great platform for any consumer business to build direct relationships with their end customers. We think the future of marketing, and really CRM is all
about autonomous. Autonomous doesn't mean that marketers are out of jobs. It means that they're back to doing strategy and creative work work on the brands and out of the minutia. So, you know, we launched a series of features that I think are going to becomes table stakes, things like the ability to create email content from a prompts or automatically optimize that email or SMS or your website without a marketer having to do all the editing and testing. The
AI can do it for you. And we're really excited about the results that that's driving for customers. You know, just as an example, willow Tree start using some of our predictive analytics, some of our machine learning based artificial intelligence based tooling, and that increased their revenue from email by over fifty percent. You know what's great is I think artificial intelligence is going to allow a lot of marketers to not only free up time be more productive,
but it's going to drive better results. And you know that's we're spending a lot of time and you know, frankly human capital investing in building out that functionality.
Okay, so you hiring on that front. Therefore, Andrew are you? Are you going to do more with less when it comes to your own people power?
Yeah, well we've already been you know, we founded Klavyo, we bootstrapped our business, so we've always been a very efficient company. But yeah, we're hiring a lot of folks on the artificial intelligence and product and engineering side. We're also seeing great demand from larger brands, brands like Mattel
Good American Marine Layer that are choosing Clay. So we're also investing in increasing our sales capacity as we see a lot of demand from mid market and enterprise brands that want to move on to art.
Andrew, we just have fifteen seconds. How much do you think you spent R and D wise and launching clavy o AI.
Yeah, we've beneficient at it. Actually, our costs to build that have not been as large as some of the foundational large language models you see out there. And the other really great part for us is because we're so close to driving value, we can show our customers the
actual revenue that artificial intelligence is creating for them. I think there's going to be opportunities for us that as our customers, you know, see more of that value that we can also partake in, you know, that value creation, that monetization.
Well, enjoy that sunny day behind you. We appreciate you coming on talking us through the numbers and the AI focus. Glavy O CEO Andrew Vaileki of course on the second set of earnings as a public company.
And meanwhile, that does it for this edition of Bloomberg Technology A.
Huge show, a huge week. Check out the podcast. You know where to find it Bloomberg, Apple, Spotify, and also on iHeart. It feels like earning seasons, kinda in the rear view mirror, but AI just doesn't go away from New York City and San Francisco. This is bloomboat technology.