From Marhard where Innovation, Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I Med Ludlow in San Francisco. Caroline hides off. This is Bloomberg technology coming up. Car dealerships across the US Wholt services after a cyber attack. Full coverage ahead class Open AI co founder Ilia Sutskiva announces a new AI research lab.
We have that exclusive reporting.
An AI video startup, hey Jen, hits a half billion dollar valuation in its latest funding round. We do discuss with the CEO a very quick check in on markets. The S and P five hundred very briefly hit the fifty five hundred historic mark and then pull back with flat on the Nasdaq one hundred. Broadly, we're kind of treading water after a US holiday. The story, though, is individual names in the AI infrastructure play.
We are talking about.
Dell, we are talking about super Micro, and of course we're talking about in video. Later in the show, we're going to bring you details of what played out twenty four hours ago on social media, Michael Dell saying that Dell is building an AI factory for groc and Xai and Elon Musk. Elon Musk coming back on social media and saying super Micro's part of the story as well, and you can clearly see super Micro the kind of biggest beneficiary of.
That move that's coming up.
The top story in terms of newsflow is what we were talking about a moment ago. Car dealers across the United States were affected by a second cyber attack this morning after an initial attack yesterday compromised the CDK software platform and halted business. These are some of the publicly traded dealerships and auto retailers that are impacted in the here and now or moving to the downs. Let's get to Bloomberg's Jef Stone on our cyber team. Okay, let's
start with the latest, because it's moving quite quickly. There was a second report of an attack this morning.
What do we know? That's right.
This is a big, messy cyber attack. You mentioned there's a second incident just reported. That happens as this software provider that works with more than fifteen thousand dealerships around the country is already trying to recover from what looks like is going to be a pretty costly outage. The nature of the incident isn't quite clear yet. We know that dealers are waiting for more information from the company, but we know what looks bad.
Jesse, as I said, you're kind of a key member of our cyber security team. What was the vulnerability here, What was the security breach and where did it happen?
The nature of the breach the point of entry is certainly still under investigation, but this incident fits with a recent string of attacks, certainly in the healthcare sector that our targeting kind of customer service software providers and almost innocuous companies that a lot of your viewers won't think
about on a daily basis. These companies sit at a key point in various supply chains, and when they are hit, there are ripple effects, costly ripple effects that have major impact throughout their supply chain.
Jeff, as you know, I've covered the automotive industry for quite a long time, and I've learned so much about CDK fifteen thousand customers, front office, back office. But also like the names that have been impacted here on the name brand side are big ones like Subaru Toyota. What have the responses from the company's been and what have they actually been telling customers as well.
Please give us time and some patients. We know that dealerships, like I said, are waiting for more instructions from their parent companies from CDK as this continues to unfold. For now, a lot of dealers are slower to make sales. We know that sales representatives are increasingly working with paper transactions rather than the quick automatic stuff that we've all become used to, so.
It's very challenging.
They're waiting for more information.
Jeff.
This is one hack in a series of hacks over years that you and I have discussed on the show. In terms of its scale, where does it sit in those that you've covered in recent years?
Growing the healthcare sector, like I said, has been the main focus over the past year eighteen months or so. The cost of this, based on the number of dealerships certainly affected, seems to be high.
We're waiting to see.
If there will be any government action on this, or any guidance from the Department of Homeland Security, for instance, in terms of understanding the full scope of the incident, But for now it's still.
Calculating blimbergs Jeffstone on a developing story.
Thank you.
Another big story we're tracking is over in China, where e commerce giants have been slashing prices and using celebrity endorsements to boost enthusiasm for the six one eight shopping festival. Bloomberg's Henry Wren joins us for more out of London. This is a new one for me, Henry. I've been reading about six one eight, But if you were to summarize, you'd basically say that the consumer in China is getting an unprecedented level of incentive this week from the big e commerce names.
Yes, indeed, so we're seeing scenes that we have been expecting. For example, the price cuts. You know, PDD, which is known for its budget shopping site pindor Door, has been keen to let its customers know that it has been putting forward the steeper than ever price discounts. But also we've been seeing something that's very unexpected. Let's say, for example, JD dot COM's funder Richard Devil is appearing on live streaming e commerce and it's not humans actually it's a
digital avatar of him. But also in the meantime, a pop star Rihanna, which is who is pretty famous and popular in mainland China, as wells since setting a Chinese style off pancakes in front of camera. So basically we've been seeing everything here with all sorts of promotions.
We're talking about the names that we always discussed on this program, Baba, Pinduoduo, JD. That's the company side of the story, but there's also the Chinese consumer side of the story that we track so closely here on Bloomberg Technology. Is the idea that they're needing to discount so heavily, get so creative, I suppose in their incentive a sign that the Chinese consumer needs a bit of help.
Yes.
Indeed, so the story that we have been reporting what over is the Chinese consumers are still quite cautious in terms of picking deals, and this has been a trend that has been confirmed by this six to one eight event as well. The main messa across the merchants has been price cuts, which has been seen across those live
streaming platforms as well as these three big companies. But also in the meantime we see local media reporting that some categories, for example, women's superos or luxury goods have been seen very high return and cancelation rates rates as high as seventy five percent to eighty percent, which really
shows that consumers aren't quite cautious. Yes, they probably are spending because of those price cuts, those promotions, but they're pretty keen in terms of picking the cheapest deals, not necessarily the best in terms of quality.
Blynd begs Henry Wren, who is all across the China tech beat, thank you so much. It's time now for talking tech and first up Masayoshi's Sun maybe on the cusps, but making a major investment in AI selling shareholders at the annual meeting, the SoftBank says they're looking for their quote next big move in tech. The comments come after the company saw a string of losses through the startup bets plus. Open Ai co founder Ilia Sutskova has announced
a new venture called Safe super Intelligence. The company aims to create a secure, powerful AI system with no intentions to sell AI products or services like rivals Open Ai and Google currently doing. Satskova left open Ai in May, just shortly after the return of Sam Autman and the ouster he was involved in. And finally, Dell announced that it's building out an AI factory with the help of Nvidia to power Elon Musk's XAI with super Microcomputer also
providing servers. The two companies have been adding server capacity in recent months in an effort to win more businesses making AI expansions.
Remember that I sat down with.
Michael Dell last month, who defined an AI factory as the following you.
Get into the ecosystem of all the software and the models that you're hearing about, the small and large models, the retrieval augmented generation. Of course, it's not just GPUs, it's also the networking by storage and the memory that come together.
So let's be honest. That was a lot of buzzwords.
But we're about to have a conversation where I think we can get to the root of what we're talking about, and that's with Nancy Tangler of Laffa Tengler Investments. And it's interesting, Nantie, because you actually got into Dell following earnings May thirtieth, and there was kind of a mixed reception to earnings. You know, there's a growth story there about AI infrastructure, and there were some near Turk concerns.
But let's start with why you looked at Dell and thought, Okay, this is the move I'm going to make.
Well, and thank you for having me a couple of reasons. I mean, we were late to the party, and that will happen from time to time. We've been late to other parties. But the point is that you get there. And we saw it as an opportunity to step in not just on the data center side of the business,
but the PC upgrade cycle part of the business. And so if you look at the hyperscalers they are they are spending or spent about two hundred million dollars two hundred billion, sorry dollars on AI in their budgets, and so we think the use cases are real, the technology is real, the monetization is real, and so this was an area we were underweight hardware in our tech exposure, and this was an area where we could jump in.
So you do not hold in Nvidia, which is really interesting. The big story we're talking about this morning is what played out on social media Wednesday that Michael Dell posted they're building an AI factory for Xai to power groc and Musk responds and says, well, actually super Micro's involved as well, So let's do some math, which actually my colleagues are Bloomberg Intelligence kindly walked me through this morning.
If this deal is for Grock three has.
Said in the past he'll need one hundred thousand, h one hundreds for that. And if you assume the average price of a rack a server racks about a million dollars, there are thirty six in Vida GPUs in each rack. You'll need twenty seven hundred racks. That could mean one point five billion dollars in bookings for both Dell and sm or super Micro. If BI is right about the three billion dollar deal value. So you don't hold in Nvidia, but you kind of do indirectly through Dell.
Is that fair?
Yes, I'm going to take that because you know, it seems silly to not be in Nvidia. We have very strict valuation metrics, and so I'm waiting for the hedgies to go to the Hamptons and then hoping we'll get a pullback an Nvidia. But yeah, I think I think
that is the important thing to be thinking about. That that the investment cycle, as the large language models become larger, the power needed to generate the metrics around that that is going to augur well, not just for in Video, but for Dell and for Broadcom, which is we own the poor man's in video, which is which is broad Coom, and I'm pretty happy with that holding it's up sixty
five percent year to date or seventy. But you know that's that pales in comparison to in Vidia one hundred and seventy percent.
On the valuation question when last I checked. I don't have it in front of me now, but I think in video trades is something like forty five times, yes, twelve month forward earning something like that. And so so it's a rules based issue for you. You just called Broadcom the poor man's in video because you just extrapolate a bit.
Why you'd say that.
Well, it's I mean, it's certainly not as much in the sweet spot. But Hoktan, who by the way, is the highest paid CEO in corporate America. He is a master operator of the business. So they've already made you know, VMware has been on the books for a quarter. It's a creative It smooths out the hardware cycle, and they will be facing some competitions, certainly from in Nvidia in the networking side of their business. But we just think it's a company that it has paid. I mean, we've
owned it for a long time. It's a member of our twelve Best Ideas portfolio, and we continue to like it here it's the cheapest of the group. And I love these old economy or old technology names like Broadcom, Oracle, Dell, who have remade themselves. And that's thanks to strong management teams who pivoted when they should have pivoted, just like Satya Nadella did at Microsoft, which is another twelve Best Ideas named for us.
One of the other top top stories on Bloomberg today is this research note from City and they argue that AI is going to displace more jobs in the banking sector than any other sector. And I was looking across your portfolio, and you have this twelve Best Ideas portfolio.
Which includes Goldman Sachs.
So if we stick with the AI theme, what do you make of that City call that it's going to be in banking where an impact of the world forces most felt from AI.
Yeah, I don't think it's going to be the Goldman side of banking. You know, I've been in this business for forty years at and I've heard all sorts of prognostications about what will happen that never happens.
I think.
Artificial intelligence will augment workers, and particularly the kind of workers, professional workers that Goldman employs. So I don't think it's a bank teller, robo call, you know, side of the business that that will be potentially impacted. But that's not Goldman, at least not anymore. When sin Save exited retail banking, and we think the M and A activity is certainly going to accelerate, So.
We still like it here.
It's still very cheap based on our work, and so you know, I'm not worried about that.
Henry Wren, who covers China tech for US, was just on talking about the Chinese consumer and how many of the big Chinese technology names are doing heavy incentive this weight week. If there's one thing that keeps Nancy Tangler up at night, I think I'm right in saying that it's the consumer broadly. But I guess principally in this country. Why is it such a concern to you the state of the consumer.
Well, so I think there's two consumers. There's the baby boom consumer, which I'm a member of, who has half of the country's net worth, and so they're spending. They're retired generally speaking, and they're not being impacted by this. They have big stock portfolios, but it's the low end consumer that's just getting crushed by you know, sticky inflation,
which is still with us. You know, only on Wall Street do we say, oh, inflation is declining because the rate of rate of change is going up less fast than it was previously. So I think it's wearing on them. The interest expense, the access to credit, all of this is declined. And then we know that, you know, full time jobs declined in March year over year by two hundred and seventy five thousand hours work declined, wages in terms of our average hour, the earnings declined. So this
is a problem spot for the economy. And the low end of the consumer is end mass much greater in numbers than the baby boomers. So I think we have to watch this. And the retail sales numbers that they're not comprehensive, we're disappointing, and the revisions down we're also disappointing.
Earning season is once again around the corner. It's silly to say, take that concern and give me your expectations to technology earnings in particular.
Oh, I think tech's going to continue to shine and Just for the record, we've been advocating overweighting tech since the fall of twenty twenty two, when everyone rode it off once again as not the place you wanted to be, that the tech trade was over, that higher interest rates were going to hurt technology companies, because that was an old, old school view of the world. But in fact, most of the megacap tech names have benefited from higher interest rates.
So we think earnings is going to continue to be a bright spot through this year and into next. And so we want to own, you know, the hyperscalers, We want to own the hardware companies. And you know they wrote off software a few weeks ago, but just wait a few weeks and I think the hedge fund guys will be back in buying software. So there's my cynical view of the way this world works.
Cynical.
Maybe I appreciate the omission that you elate to the party on Dell, but in the end, you made it to the party, and that is what matters. Nancy Tengler of Lappetengler Investments, thank you so much. Stick with us, We'll be right back. This is Blimberg Technology. Eight former employees of SpaceX who were fired in twenty twenty two after writing an open letter criticizing Elon Musk. Have now filed a lawsuit against SpaceX and CEO mask edging sexual
harassment and retaliation. We spoke with one of the plaintiffs in the suit, Paige Holland Feelin.
SpaceX employees are encouraged to follow SpaceX and to follow Elon Musk on Twitter, and in my orientation, we were encouraged to follow him on Twitter. In the employee handbook, it mentions that his Twitter feed is a source of official company news that's allowed to be shared with the public. So if you if you're not following him on Twitter, then you're missing things, and actual delivery dates and deadlines and functions of entire teams and departments are impacted day
to day by what he decides to tweet. In the middle of the night, he decided to, you know, put out a return to office order and talk about it on his Twitter, and that became the law. And you know, a friend of mine had a Starship delivery date changed overnight because it was on Twitter. So now it's now
it's law. So it's not just the nonsense, but the stuff that impacts people's actual day to day work functionality is tweeted about, and then since he's already said it and it's public, it's now written into the official plan.
It was interesting that you said you felt like an outside another because that you're female. But many would say, look, the person actually running the show, the CEO, Gwyn shotwell, female too. How is her voice not allowing your voice.
To be heard?
She is very much part of the problem. I think that she comes from a generation of just a different perspective maybe, but she's so ingrained in the culture there and the lifestyle that she's not willing to.
Rock the boat at all at this point.
She's very much not the adult in the room that the rest of the world kind of makes her out to be. She is a huge part of the problem. I think it's this brand of kind of I want to say, like girl boss feminism that doesn't really uplift those around you. Doesn't feel the need to open your eyes to the very real concerns of people around you.
She likes when people have conversations you pay. She will focus on a one counterpoint to a valid argument as a means of dismissing the entire argument, which is disingenuous and really in bad face.
You have that full suit, and I'm interested to know what you hope to get out of this page.
Accountability most of all. But I think I think accountability because the leadership forms the culture so much, and because it's such a painful place to work, and having being working at SpaceX and open doors for you elsewhere, and so it's really amazing opportunity, and I don't think that that opportunity should be constrained to the people who are,
you know, the typical engineering demographic. There are voices and perspectives to be heard that can contribute in a meaningful way that don't you know, look like the status quo. But aside from that, I think speaking up and telling my story hopefully will help other people who you know, look around them and don't see anyone else that looks like them and don't know that their experiences aren't isolated to their own experiences, can speak up and share the
stories around them. I'm hoping to kind of open up the platform to let people of all marginalized groups have these conversations and feel safe, because I think it's fundamentally it should be a human right to feel safe in the workplace.
Bloomberg Technology reached out to SpaceX and Elon Musk for comment on the suit and the allegations made by Holland Feelen, but they did not respond. SpaceX has previously denied any wrongdoing and said that the fired employees involved in the case violated policy. It also said Musk himself was not involved in those terminations. Gwinshortwell also didn't comment. We continue to track the story and if SpaceX want to talk, they're always welcome on the show. This is Bloomberg. Welcome
back to Boomberg Technology. Ed Ludlow in San Francisco. A quick check in on the market, So I always go to the NAZE one hundred. It's kind of this tech heavy index, a lot of higher multiple names AI as a story plays out, but we are essentially flat as a pancake. Remember it was a market's holiday in the US and Wednesday.
But one real clear mover to the upside is in Vidia. In Vidia continuing to push.
Higher and Nvidia is now the world's most valuable company by market cap. A big part of the story in Thursday session was something that played out in social media.
Talked about it earlier in the program. Michael Dell, the Dell CEO, taking to x saying that they're making an AI factory for Xai to power grock Mask, in response to some other user comments, said super Micro is also going to be providing server rack and server design to Xai, and you can see that actually, in truth, super Micro the bigger beneficiary of the two, but both getting a
push to the upside what they have in common. They just provide the integration of that server rack, but it's the Nvidia GPU at the heart of it that powers it interesting in public markets, we continue to cover what's happening in AI and private companies as well. Open ai co founder Ilia Sutskova, who took part in the twenty twenty three board ouster of Sam Outman, has disclosed plans to continue his work at a new research lab focused
on artificial general intelligence. For more, let's bringing in an our AI editor Bloomberg Seffagen and in New York City, we have a new startup. The startup has a clear mission and remit give us the details.
Yeah, you know, we actually don't know too many details here. For the last six months, everyone has been wondering where is Ilia and what is the next thing going to be And at this point we seem to have an idea he'll have a research lab that is building a future theoretical version of a super intelligent AI that would be smarter than and outperform humans if it ever comes to exist. What they're not doing is trying to commercialize
those products, at least not yet. So it's a very different path than his prior company, open AI, And I think that the biggest question is why when when we start to see any progress on that front, and two, who's going to ultimately end up staffing that company? Will we see him and his new company start to hire disaffected former colleagues from open ai and other startups in the industry.
The venture is called Safe super Intelligence, And the main pledge that I see is is exactly.
That no commercial product.
They won't sell anything until they have the definitive I don't even want to say product, they have definitive artificial general intelligence.
But the inference is that.
Ilia didn't share and we've talked so much about this seth you know, Sharene's coming up on the show in a moment, and she's been on this show talking about it a lot. The inference is that Ilia did not agree with Sam Autman prioritizing the commercialization of AI technology. He's kind of going back to the R and D and academic side of this.
I think that's right.
There's so much unspoken here, and Ilia has been very quiet on how he actually feels about Sam Aulman's leadership and the company broadly, but just in the way this has been structured. It feels like a repuviation of the way that OBAMIAI has been upbreaing of the last year or so.
This was a story that Bloomberg's actually vance broken. Business Week highly recommend you go and read the very long and detailed, sort of unveiled but Bloomberg seth agmen, we really appreciate having you on the program.
Stick with AI.
Artificial intelligence startup Anthropic is releasing a new AI model that it calls its fastest and most capable yet in its rivalry against open ai. A Bloomberg shuring Gafari is here on set. You know, we track Anthropic so closely because it's so well funded. It is believed by industry to be as sort of near incompetence to open AI. The specifics of this models, please, its name, what it's for sure.
So the new model is called Claude three point five Sonnet. It's coming only three months after Anthropic release its last most powerful model, right, Claude three point five, And what they're claiming is that it's actually ahead of open ai on several key evaluations around reasoning, around things like coding and math, and you know, it just shows how quickly these companies are really on the heels of each other trying to come out with the latest and greatest models.
How does Anthropic operate in a way that is different or similar to open Ai? When I was on social media and I saw lots of people say, oh, I was involved in early beta access to three point five, so on it and I have the following opinions. So they appear to do a careful rollout, but it also seems very quick to make a product that they I assume they can sell.
That's right.
So Anthropic has been focusing much more on enterprise customers
as a number one priority as compared to OpenAI. I talked to co founder and president Danielle Amadai have a company who told me that they're not distracted quote unquote by things like coming up with image generation of a cat on a snowboard, and she said that sort of jokingly, but it's true that if you compare the two companies, Anthropic is a lot more focused on they say, use cases that are specific to the business enterprise customer.
Do we have any sort of case studies of how clawed three point fives on it will be used or like how it's any different or capable to prior models.
Yeah, So the company has talked about how it's being used more for things like financial analysis. They've also talked about partnering with drug companies like Pfizer to help with research and discovery, which is also something that open ai is starting to do. So we're starting to see more kind of close integrations of these tools in the enterprise.
Bloomberg Shrien Gafari one of the absolute rock stars of art Official Intelligence Coverage.
It's great to have you on set.
Okay, coming up on the show, we're going to be joined by Devon Kirk, a partner at Portage, for a look at the global fintech industry. This is something we've covered a lot on the show of late the battle for talent and the impact of AI on fintech. Stay with us they're going to take a short break. We'll
be right back with you. This is Bloomberg and Technology. Okay, We're going to take a look at the world of fintech with Devon Kirk, partner at the global fintech focus firm Portage, which has two point five billion dollars in assets under management. It's also the co head of the Portage Capital Solution strategy, where they focus on growth equity, structured equity, and special situations investments in financial technology, financial services companies that operate globally.
And I'm really interested had this conversation.
We've had all kinds of fintech names on the show from around the world, actually just in the last few weeks. And the sense I get is this kind of a bifurcation of how companies are moving in Europe and how they're moving in the United States, particularly those that might have been venture backed grown rapidly, but now they're trying to scale around the world. Would you say that's a fair thesis.
I think that's right.
Certainly, we're seeing in the US the activity is picking up and the fintech space valuations are starting to recover, especially in the B two C segment and there's more optimism around the IPO markets reopening, but in Europe.
Things continue to be slower.
From a growth equity perspective, We're starting to see a bit more and activity in Europe, so that's you know, one path to liquidity for growth equity investors that helps to support that market, but overall it is a more viewted environment in Europe right now.
What are the reasons why?
You know, I've covered all kinds of industries and sectors over the last six years or so that I've been in Silicon Valley in the Bay Area in particular, where growth equity has been very active and you actually get sort of legacy finance names that come in and support what we would regard as being technology companies, particularly, you know, just prior to IPO. Why is that that activity and interest not happening in Europe.
Well, I think there's a few dynamics.
As you know, European markets have always been a little more fickle in their appetite for growth opportunities within the IPO markets.
But I think there's a.
Dynamic specific to fintech where there's a much higher prevalence of FinTechs with bank charters in Europe.
Than you see in the US, and that does tie.
Their hands a little bit in terms of the options available for them to raise capital in this market environment where valuations have been.
A bit Whipsod.
Devin.
One of the most read stories on Bloomberg this morning is about a research note from City who say that artificial intelligence will displace the most jobs or in terms of displacement, be most felt in banking versus other sectors.
Is that something that you see happening.
Yeah, we absolutely see a huge opportunity for AI within financial services.
The volume of activity.
That is happening in that space, the more repeat nature of many interactions and forms of analysis allow for really nice use cases for machine learning as well as generative at AI. What we are seeing though, is that that within the sector we expect, you know, data sets will really drive the winners for how AI gets applied and AI itself. You know, the strength of your AI capabilities is going to be less of a differentiator.
I like having you on because you are sizable, firm at scale and you operate in multiple jurisdictions. So where are are you putting money to work and writing checks right now?
So to your point around AI RegTech is an area that we're really excited about. We see lots of opportunities for technology disruption there. We're also spending you know, increasing time around consumer finance. You know, that's an area that's been hit hard over the last few years, but we think we're at a point now where there's some stronger
business models that we're excited to back. We're also continuing to spend time around vertical SaaS and the opportunities for embedded financial services, particularly payments in many more traditional software businesses.
So, you know, those are some of the themes that we're playing with.
But from a geographic perspective, as you mentioned, we're active across North America and Europe.
I like the idea of reg tech, you know reg tech or regulatory tech, but my understanding is that those are largely software companies that are focused on process right, helping companies make sure they're either compliant or they're adhering to whatever sector specific regulatory requirement is in front of them.
How do you be innovative in a space like that, Well.
I think the innovation comes from, you know, how you drive efficiencies right. Everyone across North America and Europe and the traditional financial services world is looking for.
How they can take out cost.
And really grow their businesses with fewer regulatory inhibitants. But I would also say, you know, regulatory change is one of the toughest strategic challenges for financial services businesses to manage, and so tools that allow them to do that more efficiently are ultimately tools that enable them to be more innovative in various elements of their business. And so we see reg tech and managing reg elatory environments effectively as really an important enabler for innovation for the sector.
Devin, you join us from Toronto. You've cast your eye over Europe. We've talked about the United States. Which jurisdiction do you think is the best environment from a regulatory standpoint right now that allows for innovation, that allows for a market where sort of technology progress is rewarded.
We can continue to see the US as a leader in enabling innovation.
There's pockets, you know, if you think.
About account to account transactions, open banking, EUROPN regulators have really led the way, But overall we see the US environment as being.
A really attractive one.
There's pockets right now if you think about banking as a service, for example, where there's a lot of regulatory dynamics for companies to digest, but overall, we see it as a constructive environment and most importantly a large environment where there's the market opportunity to support investing in innovation.
Devin Kirk, Portage Partner and Portage Capital Solution Strategy COHED.
I like that.
I can't remember the first time we use the frame phrase RegTech. But if you're out there and you're work in compliance and you have strong fings about it, get in touch. We appreciate it, all right, thank you.
In the early days of computer programming, a significant historical anecdote is known as Grace Hopper and.
The fuck that was not a real person?
An avatar of Joshua's You the CEO of hey Jen, an ai startup that let's users quickly create realistic looking avatars, and the companies just announced a sixty million dollars series A led by Benchmark, valuing the company at more than five hundred million dollars, and Heygen's real life CEO, Joshua ju joins me here on set. It was an interesting video. We'll bring it back up again, but just explain what it was that we were looking at.
Sure, Yeah, that was the digital tern boris off me. You know, I was always wanted to try the ALVHATA technology myself, and then I create a toolbrosup for me and then enabling that you know, lip same videos within the same audio.
And that's what we.
See the main point of it is that it requires no camera and no crew or a big studio like we're sitting in now. So how does it work in practice? Just explain the basics of me wanting to create a clip just like that one.
Sure, sure, you know, I think the whole of hagens that we want to produce software to really help to you know, simplify the traditional video production. And you know, nowadays our audience live at the video first row and everyone's like watching lottop videos every day. There's more than a billion hours of video being watched on YouTube every day. Great, but the problem is that videos really you know, expensive to make and businesses are shocking to keep up with demand.
And there's a better way to solve it ar generation. And that's what we do. That we are building an AR video platform leveraging.
The AI technology to do that.
So in short, in order for a customer to real their VATA or a digitwen of themselves. You know, they need to submit a footage and then submit the live video consent and also read out the Dynamo verbal pascal and then our AR model will really verify that and create our version of that.
Some of the use cases that you guys discuss are quite interesting. So if you take for example a not for profit or even a training video inside of a company. You know, think about all the trainings that people have to do every quarter. We do them here you sit through your kind of videos that I get, But what's the market for it? Do you find that businesses are willing to pay for this as a service as a software tool?
Sure?
Sure, you know hay Gen's products help more than four thousand paying customers. Like to do three things essentially, create, localized and personalized. You know, as you see those from some of the product screenshot that customers can create a video without a camera basically leddy avata from the template, or they can create it on their own and the template typing the script and create a video that way.
And this is great for it's beIN the videos how tool videos Toutobio videos chaining content that you just mentioned.
You just said forty thousand paying customers. See, you've just raised sixty million dollars. What do you need the money for?
Great question.
So so the primary motivation of the Fairer reason was to bring in the world class advisors and investor to help us scale. You know, we are accelerating the you know product roodmap and growing the go to market teams. And the business has been profitable since Q two last year.
Profitable since Q two last year. What's your biggest cost compute computer? Yes, and what does that look like? It's manageable, okay, But the underlying model that powers the we're talking basically both image and text video. That's what we're discussing here. But you built it on in Vidia. You built it in partnership with you Sure.
Yeah.
We we work with a loss of a you know, the cloud provider, uh you know Amazon Ezra to you know, power our influenced cluster, and we also have a big cluster to chain our models. You know, especially when we talk about the video model is very heavy lifting. And then you know that's one of the biggest cost area.
So there is also a concern here we'll bring the video back up, which is not you it is AI generated, but there's a trust and safety component where your platform and tool could be used to create content that is not what it purports to be.
How do you overcome that?
Those are two main areas that speaking about the trusting safety and we do at Hagen. You know, I think the first question is around how do we protect a digital twin And you know, like I mentioned every time, for every customer who wants to create a video avatar of themselves, we have an advanced user verification includes you know, live video consent dynamit, verbal parsical as well as human review in the back.
And the second piece is about you know the count modulation. You know it's posted in the public domain.
Sure yeah, and you know the content relation pieces about whether you know whether where you have the albata and what are the content, whether the content complied with our policy. So we combine you know, automatic system with AI model plus human review, the human moderator in the back to really make sure you know there's no you know, misinformation, disinformation, harassment, child safety, political or elections specific content you know being used for this technology.
Just very quickly, it is an election here here in the United States. This exact topic is a big concern. Are you being proactive in specifically the context of the election. Sure, you know, first of all, we do not allow any political or election specific content on the platform today. Our policies and products shot the prohibited you know, creation of
unauthorized content and you know, chess and safety. It is critical to our business and we're working very actively across the braw to the industry, you know, continue to developing, you know, tooling best purpose to combat missed information and misuse. Hey, Jen CEO, Josh Reju, we've had you in person, We've had an AI generated version of you. That's good value for us here on Bloomberg Technology, and we appreciate it. That does it for this edition of the show Bloomberg Technology.
Remember it's been a shorter week here in the United States. We had a holiday Wednesday observing Juneteenth, but recap because the news cycle came back in force. You know where to find the pod on Apple, Spotify, iHeart, and of course if you want to pod with us, we're podding on all the Bloomberg platforms. One day left in the week to go and I'm looking forward to it.
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