From Marhard where Innovation of Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hide and Ed Ludlow.
And Caroline Heide of Bloomberg's Weld headquarters in New.
York and Amed Ludlow in San Francisco. This is Bloomberg Technology coming up.
ARM kicks off its IPO roadshow seeking nearly five million dollars, but will break down why the offering could be significantly smaller than previously targeted.
Plus will take a look inside Huawei's new phone, which holds the most advanced chip made in China yet. This is the country seats sarras of forty billion dollar fund to bankroll investments in domestic chip making and research, and.
How digital regulation in the EU is impacting America's techture. Mid the forthcoming Digital Markets Act or bring you the details of what is going to be unveiled in terms of those gatekeepers as soon as tomorrow. But first that's check in on these markets and some of the big US players not managing to lift the Nasdaq all that much today. We're actually down, my bad a tenth of
a percent. Look, it's the back to school feeling but we're also getting our reality check on what is a macro picture that is pretty ugly over in China is pretty ugly over in Europe.
When you look at the PMI.
Data, the tenure yield just rising after of course a day of rest and play that we had on Monday. In the US trading action, we're maybe perhaps you picking up a little bit as we see more investment grade bonds coming to the market. Of course that back to school feeling means we're.
Going to get a ton of issuance.
I'm looking at the Bloomberg Dollar Index, so this is really the asset class to be watching at the moment. Dollar pressured higher at the moment. Is this just trying to find some sort of well, more safety in the current macro picture. Is this also that the Federal Reserve is going to be keeping higher rates for longer visa vi the rest of the world when the US economy just manages to navigate a downturn for the rest of
the world. We look at what's happening in terms of bitcoin. Therefore, on the lower side, when you see the dollar outperform, we just found that about a third of a overall twenty five hundred is where we traded.
But get into minittigritty the individual movers.
Yeah, you and I were talking this morning about how there's not that much action in the technology sector.
There are a few individual names.
Airbnb up six point seven percent best performer on the Nazda one hundred, hy news that it's going to be included in the s and P five hundred. That driving that single name. How we tease Huawei, We're going to bring you something fascinating, an official tear down of the Mate sixty pro. One mover to the downside is the ADRs of Jaomi. The theory being that if Huawei gains market share in the domestic smartphone market, itlbeit at Shaomi's
expense in Nvidia a little bit lower. Moving to the downside, we're gonna have a really interesting conversation you and I Caroline about in Nvidia's valuation and one voice who says it's getting a little bit extreme and overdone. The main story I would say in Tuesday's morning, remember we're coming off long weekend, is arms IPO. We got that F one filing, and here are the numbers on the low end,
forty seven dollars a share. At the high end fifth fey one dollars a share, raising four point eight seven billion dollars in terms of proceeds from an IPO. This is the early stages, but these are much lower numbers than have been reported out there. Let's bring in Bloomberg's Leanna Baker, who leads our deals coverage out of New York, and Leanna walk us through the numbers and what we've learned in this kind of opening foray of the road show week.
The numbers, as you mentioned, came in a little below what had earlier been reported. ARM had been looking to raise. At one point we had reported eight to ten billion. That has been scaled back a bit. You mentioned that we could still see it go up. The road show is just starting. There could be great demand, for all we know, for these shares, and we could see them raise the range. That's definitely possible. That said, SoftBank has kind of scaled back the amount that they want to sell.
Nasayoshi Sowne, the CEO and founder of SoftBank, is very bullish on ARM. He doesn't want to get rid of the whole thing. They're only selling ten percent in the IPO, so that's one of the reasons why the company is not looking to raise as much as they had thought, and because they're not looking to raise as much, the valuation is a little lower. It's still a behemoth though.
This is a company according to the filing that'll be valued at close to fifty five billion, So it's definitely sort of the first big elephant out of the gate to get the IPO markets moving again.
Yeah. Boy, we are excited on it, so to perhaps some.
Of the m zoned customers that are coming in as integraled investors in the IPO. But if there are going to be any flies in the ointment, what are they?
What are all the questions on the road show going to be about.
There's definitely questions about arms path forward. They've changed their business model a bit. They're trying to get into the more lucrative data center and computing, not a fully away from mobile mobiles. Their roots, and they're ubiquitous with all their customers, many of whom you mentioned are participating in the IPO, like Apple and AMD and others. But will the company be able to fully change its business model
to spark growth. That's the question investors will want to see, especially the ones who had invested when I got taken private in twenty sixteen, will they be back and what's the path forward?
We got someone to talk about those key questions with Leanna Baker. Great setup, She's got some busy weeks coming up. Meanwhile, let's extend this conversation. Piever goes with us unless they wrote new Street research, and it feels to me, Pierre, A key question on everyone's lips is exposure to China, particularly when we have the macro data coming in thick and fast.
That's on the weaker side.
Yes, you know, as a rule of sum, the semiconical industries exposed twenty to twenty five percent to domestic China. And guess what ARM that is really almost everywhere it's only going to judge is exposed about the same to China.
So twenty twenty five percenter provenues.
People talk a lot about it because the setup is very specific for Armed. They have like a subsidiary in China as they've gun control and that's their only Chinese client. So all companies in China who want to use ARM technology license that technology is their It have a copyright license on their on their instructions set have to go
through this local ARM company. It has created some difficulties in the past because there is lack of control, lack of you know, auditing of the company, but it's it's relatively minor and in my view, at the end of the day, as long as China wants to use them and needs ARM, ARMS business in China is going to
do good. But of course, you know, you know what the situation is, China wants to grow more independent from the West and that's going to be a headwind for ARM in my view, very slow, very non very limitted impact from how you think about the valuation of the business today.
Okay, so tell us how you're thinking about the valuation.
What sort of number are you looking at? What vindicates it?
Yeah, so it is an interesting business, but they span out of money on reception and development. They come up with great architectures. That's also a standard. The whole industry
is using it. So that's really the takes everybody wants to use and then clients pay a license fee to ARM to get the right to start working on their IP and then they pay royalties once they produce chips that contain ARMS technology, and so this royalty is really to me today they are not all profits because ARM has been very investing in their operations to build this base of IP, but going forward, royalties are pure profits.
So I like to look up ARM and that's what I've been doing.
You know, when the stock was listed for twenty and sixteen as multiple royalties, you see that over time. It's a very relevant metric that is stable. It reflects very well as the gross outlook of the company, and it has historically, like just before the acquisition by Stops Bank, it was trading on six terms higher than the SUCKS And so that's the kind of valuation I'm looking at today.
So I'm looking at twenty twenty twenty seven.
Revenues for ARM as we modeled them, and I look at twenty seven times that, So that gives me like an eighty two billion dollar valuation in as you enter into twenty twenty six.
So I find the valuation.
Range today fifty to fifty four billion, very very attractive. It gives you like an opportunity to see you know, twenty percent pounds of return on up to twenty percent pound in return.
On the name between now and the beginning of twenty twenty.
Six, twenty twenty six. It's interesting because I'm fascinated by the mechanics of this. You write in your notes that the range forty seven to fifty one dollars is attractive to investors new investors taking advantage of the IPO. But all told, soft bank is going to hold on to ninety percent of this company.
Why well, because you know so two reasons. The first one, so bank c is in the name, probably even more websites. And I see the MASSA is very very goodish on Armed future.
So for soft.
Burd it's not a matter of getting rid of ARM of like making a profit on ARM.
It's more a matter of, you know, after five years.
As a private company, the company has tried a lot of things, have made a lot of investments, some of them have worked well, some of them have worked less well. And now Armies at a point in time where becoming a listed company again makes a lot of sense of the company in terms of, you know, being successful, attracting talent, creating the right you know, like government setup and management set up. Being a listed company brings a lot of advantages to ARM and I think it's a very good
timing to do that. And then for soft Bang there it is not in my understanding to exist, but more to have ARM as an additional very liquid asset and an asset on which seven can leverage to actually raise money for further investments.
So that's really the way I think about it.
So I don't expect, yes, you know something, to to lower their share, to lower their their stake in ARM an soon.
Yeah.
The great fun of a traditional I PO is that it gives the company an opportunity to tell a story about themselves right to the world. And the story that ARM wants to tell is that they are relevant for AI. They are going to do great with all of the R and D and CAPEX going into AI. Do you buy that story?
Yes, yes I do, but you have to be very different understand its way. I like to quantify that as a very like an AI diversification.
Yes, almost everything that is going to grow.
ARMS revenues right into revenues as like fire, is going to be related to AI. So from that perspective, I do agree with your statements. But interestingly, all the AI ARM is going to get exposed to is not like the AI clusters that receiving world out today, like the NDDR or TPU.
Based AI clusters.
In that part of AI ARM as actually very very little is any exposure. But in your mobile phone you need larger ships, you need ships with better IP so that the chip can better deal with AI models and with all these services that are built on AI, and ARM is actually bringing to the market a lot of innovation that is very relevant to that, and in particular, the number one driver of pricing power for ARM other the next five years is the road out of their V nine you take to us, so that's a nice
iteration of their instruction set. And the number one innovation that is v NI brings to the market is actually AI specific instructions. So the next generation of ARM ship are going to do much better job dealing with AI workloads from that aspect.
To you, it's really it's really an AI.
List, but totally uncorrelated to what's happening today, like it's a crazy and crazy spending on AI glister because in the GPU in an AI accelerator is between a minimal contributor and another contributor.
Yes, Pierre feragu Ana list over at New Street Research, joining us Caro straight after publishing his reaction note to that F one firing.
Just great timing having you on the show. Thank you so much.
You're looking at Huawei's Mate sixty pro going through a tear down by Tech Insights, Bloomberg News ask the research firm to lift the lid on China's latest domestic smartphone. What we learned that is an advanced seven animeter chip was made by China's top chip maker, Smick or Semi Manufacturing International Corp. It makes a sign that there's some early progress in Beijing's push to beat out US technology export curves. Joining me here on set is Bloomberg's Ian King.
The speculation and the rumor was that it was five nanometer.
It's not.
It's seven nanometer SMIC or Smick made. Tell us what we know from that teardown.
Yeah, you've got to remember, like three is better than five, which is better than seven. Three would be sort of the state of the art in terms of manufacturing capabilities that somebody like Apple would try to be accessing it at this point. So seven sounds like a long way behind, maybe two three years behind, but you can still do a lot with that level of manufacturing technology. Underpinning this though,
is should they actually be doing this? Is this representating a circumvention of what the US is trying to do, which is to get one way away from access to technology.
And to that point, Caroline, we should we should say that Bloomberg went to the US Commerce Department and asked if this seven nanometer tech is caught within the bounds of curves and I don't believe the US Commerce Department replied.
Yeah, thus far it does, shine O. THEO were really a question mark. And what has been the US spearheading this in of a global clampdown on basically China's access to this sort of technology. Do you think it does ring question marks?
Now?
There are absolutely questions. To be fair to Commerce, though they're not going to comment about individual actions that they take against a specific company. That's kind of their policy. So we tend to sort of find that out when it gets announced. And they have actually sort of when these stories crop up, they have taken action. So we'll see what happens there. There's definitely known as on them to take some action, but we wouldn't expect them to talk about it right now.
We did learn about where China's at in its technology competence, right you know, there's this idea that it's seven nanometer, but they sold out of the handset very quickly, and that indicates to us, even though it's two generations removed from the cutting edge, that they're not making seven nanimeter at volume yet or at scale.
Yeah, I mean, this is a conversation that we had last week. Remember, you can make a few of these things on the bench, right, that's great, well done, you're good at the technology. But the real art is to make millions, tens of millions, hundreds of millions of these things. We really need to see whether they can do that or not, and do that on an economic basis. If they can, then this is definitely you know, a red flag warning, symbols, whatever you want to describe it with.
If they can't, then maybe this is a symbolic thing, just to poke. The Secretary of Commerce from the US, who was in China last.
Week in some great reports, for example the Jeffreyes tream puning out you know the myths and the facts about this particular Mate sixty. I'm interested more broadly on the impact on competition though. What has been reality is the share price reaction from Shaomi in does this pook war We back on the map, even if only in China.
Well, you have to remember that they basically got out of the handset business. They essentially spun it off because they were in such a difficult position because of these sanctions. This as a symbolic thing, as something to market around. It's absolutely sensational. Look at the attention it's getting. We're talking about it on the other side of the world, right, So yes, of course it really helps. But again we'll need to see that volume, as Ed and I just discussed, we'll need to see that.
Volume absolutely brilliant throughout inking. Thank you so much getting us up to speed on the tear down. Meanwhile, let's get a tear down on what we're likely to be hearing from the EU set to unveil it's Gateclimper's list tomorrow under the Ease Forthcoming Digital Markets Act. Of course, we've been long anticipating which platforms are currently going to be at risk too much stricter regulations. Guest likely these big players from New York, from San Francisco. This is
Bluebot technology time now for talking tech. First up advertising sales at X of course, formerly known as Twitter, they're down from sixty percent. Neil Musk is pointing the blame at the Anti Defamation League now Musk is actually accusing that they're not for profits is having a personal vendetta against him since he purchased the platform. The ADL has previously reported that harassment and extremist content on the platform
has spiked since Musk's takeover. Meanwhile, let's turn our attention to Sam Altman, who is now the first person to.
Get an Indonesian Golden Visa.
It's the new visa that allows foreigners to make substantial investments in the country to remain for between five and ten years. It's part of a new initiative to boost economic development in the region. And Plus, TikTok is hiring UK security firm NCC Group to help audit well it's data.
It's controls, the protections in Europe in particular. It's all part of what is called Project Clover.
It's similar to a program right here in the US to reassure Europeans that the Chinese government can't access their data. TikTok currently runs a data center in Dublin and is building another one in Ireland and indeed in Norway too.
Yeah, let's stick in that region.
Big Tech is bracing for the European Union's biggest ever clamped down on anti competitive practices, which may provoke a new wave of legal battles between regulators and here in Silicon Valley. The announcement on which tech platforms are to be targeted under the EUS Digital Markets Act is due tomorrow. For more, let's bring in Bloombergs Gillian Deutsch who joins us out in Brussels. Caroline and I are so used to covering the kind of antitrust case, you know, the
battle that played out in court. Now the story in the EU is moving to legislation and rule making. Explain what's about to happen.
Yeah, So tomorrow is a big day for the European Commission. This is when they come out and say which companies, major tech companies are considered gatekeepers and those are companies that are considered dominant in their space. And then they're going to lay out which of those products from those companies are considered core platform services and those are the products that these companies are going to have to redesign to comply with a whole bunch of new rules set
by the europe Commission. And to your point ed, I mean, I want to back up a little bit. We've seen lots of these anti trust cases from the European Commission for years now, for almost over a decade. And really what the EUOPEA Conussion's trying to do is say, okay, these cases have often dragged out on the ports for years. They have often been unsuccessful as well. So instead of dragging companies to port after they've done something they deem anti competitive, the Commission saying.
Let's set out those rules.
From the get go, and so I'm really going to see some of those big rules come to fruition tomorrow.
Of course, this sort of follows off from the Digital Services Act now it's the Digital Markets Acts, and it always ends up to be signs that are either instilled or indeed warned about.
Is that really what the stick is here?
Are there any carrots that persuade the big companies to fall in line?
Well, I do think one carrot as well, do you want to operate on one of the biggest markets? And so we actually have seen some companies say actually maybe not because there's not and how there's too much regulation. And one prominent example is that Meta actually has not
rolled out threads in your Opean Union. We've seen it across the channel in the UK and obviously in the United States, but we don't have it here because what what Meta says is that we don't know how these kinds of rules under the Digital Markets Act are actually going to be enforced. And one of those rules is that companies can't combine personal data across platforms. So Meta saying, you know, I'd rather be safe than sorry, So maybe
we shouldn't even roll out the EU. But we also are seeing lots of those threats of fines that companies won't be able to operate in the EU if they break break these rules repeated b So this kind of two tier track of the d m A. And like you mentioned, Caroline DSA, there really are are are this this new wave of regulation, and so the EU pecushions trying to work with companies and say, look, we're trying to trying to make this work for you guys too,
But there are definitely lots of lots of court cases and fines on the horizons.
They don't you know, it is often a two a street our reflects on my own time in Brussels, Jada, I mean, what did the companies have to say about it? Are they trying to meet them halfway?
Does that makes sense?
So I covered the DSA, which I mean the DNA is more focused on anti trust and competitive behaviors. The DSA is focused on you know, harmful illegal content we see in digital marketplaces or on social media platforms. And with the DSA, we've seen companies like TikTok and Meta they've really redesigned some of their products to be more transparent to flag all content. So they're definitely laying up those things saying, look, we're paying attention, we're caring about
this regulation. But we also see lots of potential court cases on the horizon the DSA. We already saw two companies, Amazon and Solando sue over those rules, and we're almost certain we're going to see more now that the DMA is going to.
Affect the people who always win.
So lawyers seeing Bloomberg's Chilian joyed, Great to have you on the show.
Welcome back to Bloomberg Technology. I'm Ed Lovelow in San Francisco.
And I'm Carroine hid in New York.
Let's get a quick check on these markets because a bit of a lackluster start to this month as we currently see then as that one hundred up what about ten percent after our Monday rest day. We're just seeing a switch into perhaps a buying mode as we carry on the day's trade, but ultimately people slow cautious to get back to the buying as we see this new start of September that usually on US a lot of bond selling, particularly an investment grade in the corporate world, two year yield.
Is up some six basis points. This is where some of the big.
Moves are happening, and largely many are thinking because of the supply is going to be rich when it comes to investment grade bonds coming to the market and putting some pressure on the overall US treasuries. We're also they've got a myriad of macro data which looks pretty ugly over in China, it looks ugly in Europe.
We're seeing the dollar.
Therefore outperformers, maybe a place of safety and ultimately where rates are likely to have to be higher for longer as the US economy outperforms Bitcoin on the downside visa v.
The US dollar. Let's move it on into individual players.
Though, because as I mentioned, perhaps some of the China macro data not looking so pretty. Some news that came out on Monday, while we're all having on Labor Day off. Was Tesla up some four percent on perhaps some good numbers coming out of China. We understand perhaps sales picking up in a month of August as they price cut their way. Oracle on the outside up two point seven percent.
Barclay's out with the notes going overweight, seeing this growth trajectory looking good for the next few years for Oracle, and I'm looking at a Luminut down some five percent if the worst performer on the Nasdaq one hundred in fact, and.
This is we understand their naming. Of course, a new CEO.
We knew that Francis d'osusas sort of abruptly left a couple of months ago Aggulant Technologies. Jacob Jason's going to be taking the reins of the DNA sequencing giant. But boy, of they got some issues on their hands. Of course, issues about maybe having to cut back on their overall growth trajectory that they originally thought. Of course, having those proxy battles with billionaire activist Carlikan to.
Name but a few.
But a company that is currently looking for a change of leadership ed.
Okay, And let's stick with markets check this one out. A note from Goldman Sachs saying AI valuations are not excessive. They right, given the valuations of the dominant incumbent companies are high, but not excessive. We believe we are still generally in the first phase of a typical technology technology weight. Now that is not a uniformly held position, Carro, but it kind of goes to what Jensen's one was talking
about on the Nvidia earnings call. They see two trends, the move to generative AI and accelerated computing, but he thinks they're in the early innings, and Goldman out saying, yeah, yeah, we see that too.
And actually goldm have been together a nice basket of some of the smaller stocks that could really benefit in terms of profitability stakes from the uplift of AI, from the productivity that's likely to be granted. Therefore seeing maybe even a seventy percent run rate for some of these
stocks on the back of that. I'm interested though, on who the naysayers have been and ed it has been the likes of Bank of America saying this is a baby bubble as originally what they seem to be terming it, but worries about the valuations and where they've already run
to and and also August Stanley. I mean we know that they're generally a bearish take, often coming from Mike Wilson and the team, but they too have been a little bit worried about ultimately how far we've already run and whether tech ed can withstand higher rates, higher borign costs.
Yeah.
I think that there's one or two soft pieces data that I'm going to look at, and we've got the perfect person to ask next, but how much are people spending now on R and D proportionately to their operating expenses all their revenue and then the capex commitments from those that want to benefit from AI because that investment drives later growth. And I think that's a really interesting place to focus.
Yeah, exactly whether or not you have the patience man leep seeing always does is here with us some Bloomberg intelligence, and these sorts of whether we're too enthusiastic, whether we've got a bubble or not, are going to come thick and fast to your mind sight the valuations that we're already training at.
Well, So you have to be selective in this environment. Given the run up we have seen and the upward revisions we have seen for the likes of Nvidia. You have to ask for yourself, are there any other companies that could see upward revisions like that? And it's too early to say that companies are able to, you know, unpack new revenue opportunities, especially on the software side or on the services side, because right now they're all buying these chips, they're investing trying to figure out a new
product that they can monetize. Co pilots is one way that Microsoft has said, Okay, we could monetize this based on you know, the enterprise base we have. We can sell them an additional product in the form of a copilot. For others, it's not so clear whether there are customers
that are willing to pay for generative AI. And frankly speaking, we may not be at a point where the technology is there in terms of you know, being product ready, yes, and so that's when you generating revenue generating and that and that's where it adds to the R and D expense because you have to buy these chips, you have to invest in hiring engineers to develop a product. But
when it will be product ready is the question. And you could see in fact a margin hit for some of the companies that are investing in Generator VII right now.
And what's so interesting is it's not just cell side notes that we're getting. We're getting big takes from buyers, admittedly players more in the value space. But I thought the rob Are not no in particular, was an interesting thing.
Yes, yeah, rob Are not the so called bubble hunter of research affiliates.
Man.
He makes two points and I'll run them past you. The first is that he calls it big market delusion, the idea that the valuation of video right now reflects that they won't be displaced by another player, that they basically remain the incumbent. And that, second of all, the current market cap of the video, its size makes it a really safe bet. What do you make of those two points? It's position in the market, but also its current size.
I agree, I think with that comment simply because the companies that are investing right nine Generator VII are your hyperscale cloud venders, and they are the ones who are actually buying these chips involved. That's what drove that one hundred percent upside revisions for Nvidia. I mean, had it been your fragmented enterprise IT base, they wouldn't be making
those sort of commitments. Even though everyone agrees with the disruptive impact of generative AI, the fact that you're seeing that kind of a big lift in hardware and semiconductor spending is because of the concentrated nature of the wires, which in this case is the Hyperscape cloud players. And you have to ask to yourself, if everyone is able to develop that technology over time, then it does get commoditized.
And I go back to the revenue generation aspects of you know how you're going to monetize it in software or services that you can layer, and it's not very clear. We're still at a very early stage in terms of unpacking the monetization opportunities on the software side.
During the earning season, particularly Jensen Huang in Vidia's Earning Cool, he talks about the two big trends, accelerated computing and then the demands for specific generative AI tools, but also capital expenses. He said, look at the commitments on the R and D side and the CAPEX side of those they care about are those data points that you track as well at Bloomberg Intelligence to kind of see how far we have left to go on this technology wave.
I think, look, everyone right now is spending their R and D dollars on generative AI. The key question to me is, you know the proprietary data that is available to be fed into a large languid model at the end of the day, the foundational model, the billions of parameters in the model it's based on. You know, large amounts of data. You can't build a large anguid model on a small data set. And where do you get
that data from? Given every company has become so conscious about their data, whether it's Reddit, Twitter, all the open Internet data. And that is where I think the heart of how this technology will evolve lives is where do you have access to data?
You are singing from a hymnsheet that I've heard Kathy would sing from a little bit as well, all about the proprietary data. And ultimately Kathy was early in her call that in video was just too far, too fast.
Get into other names that are being overlooked here?
What are other names that are being overlooked From Bi's perspective.
Well so from our perspective. Internet companies have an advantage here, whether it's so social media companies, search companies, they own the proprietary data within their walled gardens. Software companies, on the other hand, they don't have their proprietary data, they have customer data. They can't build large anguid models on
top of that. So clearly Internet platforms are the ones that are coming up with the large anguid models right now, and they have an advantage in terms of, you know, redoing their next version because they have access to that data.
Where software companies like Microsoft partner with open ai and open ai actually build the air large angroid model on open Internet data from Reddit and Twitter, and they'll have a hard time finding the next iteration of it because everyone is limiting the user of the open Internet data as well. I do think Internet platforms have an advantage in the cycle.
And for a longer term discussion and just how much this changes the world of the Internet and how much more closed it becomes. Man's saying absolutely, bringing from Boombag Intelligence. We always love him on the.
Show time for VC Roundup and first Up. Phata Ray, a startup that uses artificial intelligence to dixect money laundering and other financial crimes in international transactions, has raised fifty seven million dollars in a recent investment round the investment comes is financial institutions record a sharp rising fraud, much of it actually boosted by new AI tools, and next Gen Healthcare rose thirteen percent after Bloomberg reported that Tomer
Bravo is in advanced talks to buy the health records software company. That's according to sources, who also say that the private equity.
Firm could announce a deal as soon as this week.
Plus four time NBA champion and perennial All Star Stephen Curry is among the new investors in Upwind, in a fifty million dollar round which values the Israeli cybersecurity startup at three hundred million dollars.
Caro, He's pretty active in the VC world. That's what I was quite the sportsperson. Let's talk about venture more broadly right now ed, because I'm pleased to say right here in your is Drew Glover visiting. For the time being, it's today's VC spotlight. Therefore, partner at FIAT Venture's course also fat growth and emerging VC focus in the findex space.
And what makes you different is not only.
Well the focus on underrepresented founders, but notably also the way in which you advise alongside invest Now at the moment is all the advising or the discussion about watching these big companies about to come to market and whether or not we'll get more exits in the IPO area.
Well, it's really interesting at theach growth we're able to and VR growth is the consultancy of the FIAT ventures of the business. So we get to advise a number of these companies, but very much stage agnostic, early stage all the way to public companies, and then on fiad ventures we get to invest in these companies because we actually can tractually get.
The right to invest.
So in short, yes to your question, we have all this incredible data and education that we get by actually doing the work on the ground with these companies. And one thing that we are seeing is a lot of very optimistic things happening in the public market right now. But also at the same time, we have to be really thoughtful in terms of how we're building products and how we're building strategies to bring some of these public companies to the public markets. So in terms of the
trends we're seeing seeing a number of trends. I mean, I'm hearing a lot of talk about AI and generative AI right now, and one of the biggest things is is everyone wants to shift their business to an AI first business. Where one thing that we are constantly pushing is AI is an incredible tool, is incredible feature, but it's not always the right.
Product to shift to.
Because whatever all these companies have is an incredible amount of data. AI can help empower to create really, really valuable features to their core products.
I mean, we're just talking to Mandy seeing about the power of proprietary data. We're also talking about earlier in the show the fact that our might not be selling as much as its company as well, the amount might raise might not be as much, and maybe the valuations.
Are being questions that it goes on its road show.
Ultimately, how important is it for Stripe, for example, an area that you're going to be very focused on a company that is in the world of fintech, but also looking at the public markets at some point.
Well, I think Stripes are in a great position.
One thing that we've seen over the last call it year and a half here is us moving away from this application layer to the infrastructure layer of fintech. And just to break that down, the application layer is very much consumer fintech. You've seen like the crazy growth over the last five years of or even ten years of neobanks like Chime and other ones like Varril Money. I could keep going down the list there, but now we've moved into this infrastructure layer, and that's something Stripe was
ahead of its time on. These are the f tech the fintech technologies that run are the entire fintech ecosystem, but we can't necessarily see and feel it. Like we know that Stripe is powering the back end of Stripe, but we don't know its Stripe. I'm sorry, the back
end of Shopify, but we don't know its Stripe. So one thing that we're seeing in the fintech market today is this infrastructure opportunity where we're going to see over time is every single action we make on every single app is going to be run by this fintech infrastructure. Every time we purchase, every time we get a loan, every time we refinance debt. And so I believe Stripe is going to see a big headwind here over the next couple of years as they decide what their next step is.
Hey Dre, good morning for San Francisco. It's ed here with everything that's happened in general to AI. Has that pushed you at FIAT back to more sort of sole focus on fintech. And the reason I asked that is look at Salesforce or Nvidia, these big incumbents in AI who deploy big sums of capital, they've really muscled in buying up. I think the page foot data show Salesforce was the most active investor in the first half of
this year. So do you look at that and say, you know what, you guys have generative AI, we'll state with fintech.
Well, no, I actually think the generative AI is going to be a massive ad to what's happening in fintech. All these fintech companies, one thing that they have that most other industries don't have in spades is data, and that is consumer data. That is call it data across the entire customer journey. And when I say the customer journey, I mean the moment they download the app to the
moment that they fund a bank account. And being able to take that data and organize it through genera of AI will be able to not only enhance the customer's experience and the customer journey, but will also make it so we can add additional products in the most efficient way possible. I mean some things that we always think about and you know we have a number of companies
that do this. Is for example, like the home loan process is one that is very much human, human capital intensive, and one thing that we've seen AI be able to do is actually make it so we can take a lot of humans out of that and be able to make it so instead of it being a twenty thousand dollars process to complete, you can do that now in two th that with two thousand dollars or three thousand dollars.
So not only are we seeing companies becoming more capital efficient because of AI, but we're also seeing them be able to just become better businesses and more healthy businesses over time.
One area of concern has for example, we mentioned Stripe and the fact that it's going to be having a lot of tailwinds well at in over in Europe has just perhaps made everyone sit up and worry about the fact that there aren't enough moats.
This can be consolidated. How much you're seeing.
Really motible, blockable areas of fintech that others just can't replicate.
And that's a really great question.
I think you know, what we've seen.
Over the last call It decade is really the fintech brand wars, where we've seen a lot of companies really try to build their moat around brand. And one thing that we have notices that is very capital intensive. You need the market to really be humming, and you need to be you need to see venture dollars leaving pockets quickly, and that is shifted. So what we're seeing now is, especially in the private markets, is folks are no longer just trying to build brands, but they're trying to build
sustainable businesses. And that brings me back to this, this this transition of moving away from the application layer to the infrastructure layer. One thing about the infrastructure layer is these are B to B businesses.
These are B to B two ceeds.
See them on Instagram exactly.
You will not see them on Instagram, but you will feel them in your life and you might not even
know that you're engaging with them. And so really these API driven types of business models where instead of a company or a large company having to go build a team of one hundred different engineers, they can just partner with a company and help that help that enhance their technology firstus having to buy a technology, and that is a big shift we're seeing with some of these public companies is they're no longer buying businesses and taking that
money off the balance sheet. They're partnering with businesses and embedding them into their current infrastruy ructure.
Fear Ventures founding partner Drew've love a great to see with us out of New York.
Thank you so much. More to come on the show.
This is Bloomberg Technology, all right. Apple TV's got a big boost from its Major League Soccer streaming service after Argentine's superstar Leona Messi joined the league. That according to The Wall Street Journal, citing antenna data, let's bring in Antennis CEO Jonathan Carson for more. The data that you provided is staggering. July twenty first was the first game one hundred and ten thousand sign ups for MLS season Pass.
How does that relate to any other era or period of sign up for Apple TV?
Well, great to be here and fun to talk about this story because it is such a unique situation in the streaming world. We're two decades into sports leagues rubbing their own director consumer video subscription services, and they've become quite mainstream, quite successful. But this is the first time we've ever seen a mid season pop like this.
A very unique story.
Obviously, but a unique business story as well for Apple tv Plus and for the MLS seeing a huge surge in subscriptions five months into the season.
To that point, How replicatabile is this? I mean, Jonathan, how wrong is the sticking power? How much can they depend at Apple on this sort of star path? How many other stars could ever be as an equivalent?
To be clear, there is only one Leo MESSI, so I think this is a pretty unique case, but the sticking power is quite strong. All of July was very good for the service. In fact, it was about half the signups according to our data for MLS season pass have come of July. It also happened to be Apple tv plus biggest month. July was their biggest month for sign ups for the year as well.
Jonathan, what are the data do you have available to antenna? Do you have evidence or data that all of those sign ups retained their membership and have not canceled, for example, by September?
We absolutely track that and so we'll see what happens over the course of the coming months. What I will say is that historically sports sign ups actually retained very well. You may think people are just signing up for one particular game, but people that sign up for sports seasons tend to stay through the season, and because they're staying on for several months, those services then have the opportunity to present other programming that they might be interested in.
So historically, the churn rates for people that sign up around big sports events are lower than churn rates for typical members.
Only one leo MESSI but it is great to geek out on some of the data all around it, Jonathan Cass. I'm brilliant to have your take on the show. CEO of Antenna come back with such rich amount of data to the show at some other point. Meanwhile, look that does have this edition of Bloomberg Technology ED.
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