From the heart where Innovation of Money and power Collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed.
Ludlove live from New York.
This is Bloomberg Technology coming up.
Political anxiety hits tech, China dials up trade tensions with the US, and we bring you the latest on South Korea's move to martial law. Plus SpaceX weighs a tender offer which could boost its valuation to a whopping three hundred and fifty billion dollars, and we sit down with the CEO of AT and T as the company predicts double digit profit games in twenty twenty seven.
But first we check in on these markets.
We're off just slightly on the NASAQ one hundred on a day where Apple is that it had a new record high in video and the Green We've got a lot tugging us into the red in terms of key points moves. On the downside, Intel we'll get to, but I also want to shine a light on what's happening
over in South Korea. Keystocks there from the technology perspective, sk Heiniz, Chip Focus, Samsung chip Phones, Everything technology key exporter for this particular country, We're off significantly when you're looking at those shares that are traded abroad, those in London, those in Germany for sk Heinex all as we understand that the leadership in South Korea moves to martial law, but of course members of the own party of the president are not agreeing with the move that's has been made.
You've got to get up to the moment news with us. You can also do that if you're lucky enough to have a Blomberg terminal.
Check out top Live.
There's a blog there with the latest on what is occurring in South Korea.
Just type in tliv go.
But we want to bring you what is the up to the moment reporting from Mike Shepherd, who joins us from Washington. So much to be debating when it comes to geopolitics today. Mike, can you start with us for us in South Korea and just how extraordinary the movements are being made?
Well, you know, as you said, Carolina, it even caught members of President Yun's own party and aids off guard. They weren't expecting this. It was born of perhaps frustration out of a deadlock over the budget between his minority party and the majority Democratic party in the nation's parliament, and that standoff really has bubbled over into the country's first declaration of martial law in forty four years. But
it's uncertain where things are going from here. Troops are reported to be in the National Assembly building and some members of parliament may be moving.
To try to block this.
They have the authority to do so, but they need a majority present, which would be at least one hundred and fifty lawmakers. And as I said, this is a fast moving story, so we will have to keep close watch where this standoff between President Yun and his own lawmakers ends up.
Heading we have actually got reggy news saying that the South Korean Parliament has a request of the marshal law to be lifted, and they say that South Korean lawmakers are going to vote on the marshal law lift noting as you say, and according to the latest blog that dozens of lawmakers might have managed to enter the main hall of the National Assembly according to footage of KBS locally there, and they need, as you say, one hundred
and fifty law makers to be present. From a constitutional perspective, this does have an effect on liquidity. We know that they've made a move to ensure that liquidity is there for the markets. But we think from a technology perspective of Samsung, of sk Heinex, and of these companies that are currently worrying about the new US administration and what that means for tariffs and their own exports falling.
There is so much happening for these companies right now between the US chip export curbs announced yesterday and then the cross currents with the incoming administration where the relationship between South Korea and the US and all the rest of the world with the President elect threatening tariffs on imports to the US. So adding this to the mix is just another bit of volatility for key companies like sk Heinex and Samsung Electronics. As you highlighted at the.
Intro, YTNTV is currently reporting that some certain whether South Korean stock markets will indeed open on Wednesday. Just shifting gears, Mike, because we really want to talk to you about what's happening with the China US tip for tab as well concerns they're limitations on key metals for technology use.
Well, I'm glad you brought this up because this is something that is not to be overlooked in all the global conversation about turmoil here and even in Paris. The Chinese took a significant move in the overnight hours to counter the Chips curbs that the Biden administration announced yesterday, and this would limit imports exports to the US from China of key minerals. These would include gallium and germanium
and antimony. And these are look not something that's traded very heavily the way you might think of oil with a trillion dollar market. These are tiny amounts that are exported each year, but they are significant. They end up in semiconductors with military use, They end up in satellites, and these materials also show up in night vision goggles. So it is hitting the US in a way that is aimed at the defense industrial base and the tech industrial base as well. Now for the moment, the US
is taking this and stride. The White House hasn't really responded in full to this, and the industry has been able to adapt so far to earlier restrictions that China had already imposed about a year ago. They've been able to find alternate sources of supply from their own inventories, and there are other places outside China where these minerals
can be produced and found. It's just that the world has grown so dependent on China as the top supplier because it could be made so cheaply there and in such great abundance.
Mike Shepherd, we bring this the need to know, Thank you, and let's just talk about some of the ramifications of the US limitations on exports of significant technology to China. We shine a light on an ASML of course chip equipment makeover in Europe. The company is stating that US authorities are imposing additional restrictions on suppliers for the export of chip manufacturing technology, and the regulations will become effective immediately, but they stay it doesn't expect long term demand to
be impacted by these new regulations. Up two and a half percent over the last couple of training days. Let's stick with all things chips. Let's just take a look at Intel shares, actually one of the key drags on
the benchmarks today. We're off by four percent again after yesterday's surprise departure a CEO Pat Gelsinger, opening the door potentially for the troubled company to consider maybe more deal options in the future, scenarios that, of course, he rejected during his time running the chip maker, Willimberg's Peter Elstrom joins us for more we think of m and A of course, plenty of reporting around what could be spun
off and who would be buyers. What are you thinking about that being reignited, Peter.
Yeah, Well, Intel has been at the heart of deal talks for a number of months. At this point, they've lost a lot of ground in the chip industry to a few of their competitors, notably in Vidia and TSMC in particular, and so there have been these discussions of deals. But Pat Keelsinger had been an advocate for keeping the company together, trying to get this money from the chipsack in the US, making investments in big companies in big
fabs that they wanted to build out. And in particular, he wanted to move into the foundry business, that is, making bespoke chips for other players in the market like in Vidia. That's where TSMC is really excelled. So it invested billions of dollars into that initiative. He wanted to keep the manufacturing and the product designed together. Now that he's gone, you could see some changes in that attitude towards deals in particular, you could see them look at
breaking up the manufacturing and the design. You could look at some alternates too. We know that Qualcom looked at trying to buy the company in the past. Intel has a couple of subsidiaries too that may be ripe for spin offs, including Alterra and Mobilize. Those are possible deals that you could look at now. But first and foremost, the board has to find a new CEO for this company.
Certainly does, and they're paying a lot to the exiting CEO as well, at least a golden goodbye, it would seem that's right.
Yeah, Gelsinger is collecting his pay package on the way out. He departed last weekend after this decision was made. He was not going to stick around to help find that new CEO or train that new CEO. So now the board took a dramatic step here. They pushed out somebody who had been well respected when he came in to the company, was expected to be the savior of the company.
Now they need to find somebody else that's going to take the helm, and then they can set a strategy going forward, whether it's going to be deals or whether it's going to be doubling down in this idea that Intel can go back to its roots and really establish the industry leading manufacturing that it used to have.
Peter Alstrom, thanks so much for the latest on Intel. Meanwhile, coming up more corporate news for you, AT and T seeing sustained profit growth for the next three years. We're going to be talking with the CEO, John Stankey join us. This is Bloue meg Technology. AT and T trading higher today as it says they see sustained profit growth over the next three years, including double digit games in twenty twenty seven. This is the company is really doubling down on its fiber rollout as well.
I'm pleased to say.
For more the AT and T CEO John Stankey joins us. Now from your own named stadium, John, let's talk a little bit about twenty twenty nine. You're expecting to have fifty million plus total locations with fiber. Why this big fiber focus?
How do you get there?
We look, we've had great success with what we've built thus far, and we see customer first of all, love the product, they stay with us longer, they drive better value into the business. We're having great success at selling multiple products into fiber households. Four out of every ten of our fiber subscribers also subscribe to our wireless service today and that's getting higher. And when you think about where technology is going in the future, workloads are only
going to go up. We expect data consumption is going to increase about eighty percent over the next five years, and fiber is the one that can do that. It's the one that has the symmetrical bandwidth characteristics that will facilitate AI and sending more data up into a network than what comes down, which is traditionally how broadband networks are built today. And we think that's a great investment for the long haul.
John, Just as you speak, we've got some breaking international news. We've just got to bring our viewers of South Korean lawmakers voting to request lifting martial law.
We will bring you up to the moment news.
But at South Korean National Assembly, Speaker Wo is saying they will protect democracy. Turn to you and a US focus and a business that you are currently wanting to see. Really the bandwidth and the broadband and the.
Infrastructure play that you're offering.
What's interesting is the way that you're fueling investment in fiber in particular is by doing innovative partnerships like the one with Blackrock. Do you need outside investment to commit to this sort of infrastructure rollout.
Look, we have a great portfolio of options. We primary portfolio play is owned and operated where we take one hundred percent of the economics, We fund it, build it, and operate it ourselves. But we also realize we're in kind of a constrained window right now. Fiber is needed now. There isn't going to be a window that's open for
a long period of time to do this work. Capital markets, of course, private capital markets sometimes provide a little bit of insulation that public markets won't, and in order to make sure we keep our lead, will balance that portfolio out and our relationship with Blackrock and our gigapower work has been really effective. What we've proven in the market is that we can operate outside of our traditional operating territory just as effectively as we have in our home territory.
I think Blackrock, as a partner, has viewed it as being a really successful investment. They've been willing to put more into it, and we expect we're going to continue to use that as one of the tools to grow our footprint over time to get past that fifty million we're talking about.
And it's really interesting you brought up, of course, AI and the demands there. In many ways, everyone's been ringing the hands of the energy infrastructure needs and black crocs sort of funding that infrastructure build out. But how significant is the AI demand and the strains on what you provide.
It's an interesting issue. I think actually power consumption is going to be really important moving forward. That's one of the things we're talking about today with our analysts and investors, which is how do we shut down our century old copper infrastructure and all the electronics and equipment that support
it that are really power hungry. And that's one of the ways that getting more this traffic over to fiber, which is passive and uses a lot less power, that we can actually help to offset some of the increase of what data demand and AI will drive moving forward. And we think that's a really important policy dynamic on this look. I think there's going to be a lot of issues that the country has to work through on
getting the power grid to support leadership and AI. It's going to happen, maybe it gets slowed down a little bit. Maybe there's a few bumps in the road, but what we do know is that demand's going to be continuing to go up.
Well, you're also talking to analysts and investors about today, is how you're giving money back big returns invests, whether you're doing it through driven in but also through buybacks as well. Why have you chosen that angle Now you've paid down debt.
It's a good day when you're giving more back to shareholders. Look, we feel very comfortable with our debt position that we're going to arrive at in the middle of next year, and that's why we're making this announcement today. First of all, we did a really nice job of structuring our balance sheet properly, so we've got really attractive interest rates on our portfolio of debt. We've got it termed out. That's
a really, frankly, a strategic asset. And the way it's set up right now, and given that we're largely investing organically in the business, reinvesting in our business like this and getting our leverage structure the way it is, feels very comfortable to us. Because every year we're reinvesting in capital, reinvesting in assets that we hold, and Frankly, when you kind of look at some of the m and A work we've done as we've restructured the business, we spun
out certain non strategic assets. We haven't really gone back after the equity structure and reducing the share count outstanding, and when the dividend yield is still over five percent, we've got fantastic dividends coverage. This is an opportunity for us to maybe balance that out a little bit and bring a little bit of equity back in house.
Okay, let's talk about that changing of your own portfolio of the assets you hold.
DirecTV moving away mean.
Will we see that being integral to these financial forecasts.
No, we've actually today as we sit down and talk with the investment community, we'll be providing restated constructs under x direct TV. Assuming that we're going to close up by the middle of next year. We still see great improvements in our cash flow. We'll expect that we'll probably grow cash flow by about a billion dollars a year even without direct TV. As we move through this planning process, we see acceleration in our EPs, our ebit is going
to continue to grow. So you know, Direct TV has been really good it's provided us a lot of cash coverage. We did a really nice job of managing the asset down to this point. It's time to focus on what we're going to do moving forward, which is build a world class connectivity business. And it's the right decision to make at this point.
Now.
A lot of analysts are echoing that, and we are, of course with John Sanky the AT and TCO to our worldwide radio and TV audiences. Many relieve that you're getting back to what you do best, which is telecoms. Within that though, is you know, some really clear clarity being given on the numbers. You're getting forty billion dollar plus of an anticipated shareholder returns, fifty billion dollars plus of financial capacity over.
The next three years. What are the risks we're.
At this time of a new administration coming in. There are macro headwinds, global headwinds.
Are there risks to these numbers?
Well, I think every time there's an administration change, there's usually a discussion about boy could change his negatively impacted business. I mean a call four years ago there was a little bit of that narrative going on, and I think we've done just fine for the last four years. And frankly, some of the things that I hear right now, tax policy, possibly reinstituting accelerated depreciation, those things could be very very
good for our business. And in fact, when they were in place and they weren't lapsing, we were investing at a higher level. And so I think if this administration, incoming administration, follows through on what they'd like to do, which is to put pro investment policies in place for the nations one of the nation's largest capital investors, that's going to be a really good thing for us. So
we watch that carefully, certainly like everybody else. There's other policies up in the air around tariffs and a few other things that we're all kind of wondering what might occur with that. I think sane minds will prevail. I think some of what we're hearing right now is directed to make sure that we negotiate from a position of strength, and we make sure that we respect the US market as strong and as meaningful as it is, that people should play on a fair and level playing field when
they gain access to it. And I'm hopeful that we'll see good policy comes out that drives good investment and good economic returns As.
A result, well, returns are up on your shares. You're currently training at the highest since twenty twenty one. More broadly, do you think that you can sustain this sort of growth?
We do, Otherwise we wouldn't be out giving the three year guidance that we're giving. We feel, first of all strong and the fundamentals. Consumers need to use more Internet, they need to get higher performance networks to support that.
That's the business we're in, and we're going to talk a little bit this afternoon with our investors about our ability to manage the cost structure in dealing with that accelerating and increased growth so that as customers use more that we can ultimately drop more cash to the bottom line. And that growth dynamic of us getting more efficient people using more of the product, We think that's going to sustain itself over the next three years, and that's why we gave the guidance that we gave.
We so appreciate you coming live at and T Stadium over in Texas, John Stanky at and.
T C Stay WI.
Thanks for having me in.
Meanwhile, let's talk about a whopping valuation going on three hundred and fifty billion dollars as how much SpaceX is now aiming at the company now in talks to sell insider shares that can make you know, Musks Rocket and satellite company the most valuable startup if it got that valuation to sources, Katie Ruth joins us now and this is once again secondary market activity, a tender offer.
Who will be selling to who? Katie? That's right.
Well, so insiders such as employees and in theory existing venture capitalists can sell their shares to new investors. The three hundred and fifty billion dollar valuation is a huge jump. Even just last month they were discussing two hundred and fifty five billion valuation. But the recent success of the Saddle Starship launch and then also Elon's ties to Trump and Trump's when I guess, created more investor enthusiasm. So it's now a record for most valuable startup in the world.
Extraordinary And many then say, well when they exit, when might some of these secondary shares be sold on an open market in an IPO. Do you think this sort of activity in the secondary market puts off such a liquidity event, Katie.
Sure, And so you know they wouldn't do this. Most likely if they were on the verge of IPO, because you wouldn't want to dilute. Uh, you wouldn't want to reduce the demand from the institutional investors, and so you wouldn't do this kind of thing on the eve of an IPO. But uh, you know it has been reported and it is known that at some point in time they want to spin out Starlink, their satellite internet provider, and create the whole separate business with that, and that
Starlink could go public. But nothing immin it.
Katie, We thank you, Katie Ruth there in La. Meanwhile, staying in Musk's world, deliveries from Tesla's Shanghai factory fell for a second month in November, down four point three percent year on year, according to data from the China Passenger Car Association. This comes even as the Chinese government increased subsidies to entice more consumers to.
Buy an electric vehicle.
But let's stick with all things Elon Musk, because it's been denied again. Elon mus record setting Tesla pay package was struck down again by a Delaware judge ruling that Tesla's board was improperly influenced by Elon Musk when adopting his pay package back in twenty eighteen, avoiding the deal.
Elon Musk reacted.
To the news on X with a post saying, quote absolute corruption.
Limberg's Bailey Lipschaltz joins us some more so.
Once again the judge is like, no, I don't care what your shareholders think.
This is too much and they plan on appealing again.
According to Tesla on the platform owned by Elon Musk X, so it does seem like this is going to be a dance that we can continue to keep an eye on. As you mentioned, was worth about fifty six billion dollars at the time the last time the judge canceled this plan right now based on the closing on Monday, worth
one hundred and one point five billion dollars. So if this does end up being kind of stood by, if Tesla is not effectively successful in pushing back on the ruling, then the board would kind of be back to the drawing board and have to come up with a new proposal.
That's interesting, Tesla is the biggest points contribute to the downside on the NASDAC today. Maybe that's more about the sales in China, but also there was this worry that if he doesn't get this pay package, Elon Musk is out, He's going to focus more on his AI project, maybe even more on the government side of things.
Is that still a risk to investors?
It still is just an unknown, and I think that's the big thing when you talk to investors or Tesla bulls. The big question is the stock going back to twenty eighteen is up almost fourteen hundred percent. This is a huge rally. This is a big company and there is such a big key man risk in Elon Musk. If there even is a thought that he steps away from
the company, what does that mean for Tesla? What does that mean for the self driving ambitions, especially, as you mentioned, if he leans into his doze role with the government. There's so many unknowns, and I think that's been kind of the big bullbear debate. Even if you go back to again twenty eighteen, when Elon was potentially looking at what this company could do and has launched XAI to your point, has done what he's doing with SpaceX and now is wearing a government hat.
All of this, of course sparked by one key shareholder lawsuit, and those lawyer's got a huge payout the privilege of having represented this person. But I'm interested as to the future of Delaware as well. Elon on the back of this up and left saying and the companies should follow him. Is that something that's going to carry on if we see these sorts of legal tip for taps.
If you go on X again, it does seem to be very much a platform that is pro Elon. But you look at a number of investors, prominent investors, prominent vcs, prominent executives talking about what this could mean for being domiciled in Delaware. What the uncertainty is if a judge can push back on something that from a company's perspective, your shareholders voted by a super majority to back your board members stood by. So it does create a bit of a cloud if you will over domiciling in Delaware
and what that can mean. Again, Elon did move out of there quite quickly, so it will be interesting to see if others think about following suit in the wake of this second pushback.
I mean not so many have one hundred billion dollars on the line in terms of a pay package. Bailey Lipsill's great to get him on all things Elon welcome back to Bluemog Technology and Karen Hide in New York quick check on these markets for you, and the Nasdaq had been being pulled a little bit lower, now currently up by a tenth four percent Whipsword as we see in video, and apples At indeed an a new record
high today. On the downside, Tesla proving us lower. But also we want to dive into some of the individual names after they've had some earnings and indeed news coming from certain companies. Panenteer once again managing to soar ever higher, this as they get a particular new deal lifted for how they can sell their products. So Palenteer currently up five point five percent. Z Scaler, It's currently down by five percent as its earnings seem to be underwhelming, shares
falling at the one point more than seven percent. Morgan instantly saying first called results were fine, but the billing beat was lighter than expected. In some worries about the second quarter forecast meta up to and a half percent. Some reports coming from the Financial Times that Mark Zuckerberg himself wouldn't mind being part of contributing to tech knowology lawmaking under the next administration, of course, having been reports that he met with Donald Trump oramar Lago last week.
We're currently trading up by two and a half percent. But following Donald Trump's election, of course, the social media platforms like Threads and blue Sky or an influx of new users as people search for alternatives, enol Musk's pretty right leaning platform X joining us. How to discuss all of this, Rose Wang Blue Sky COO alongside our very own Kurt Wagner.
We welcome you to the show.
Rose and Kirk, thank you, And just first and foremost, let's just dig in Rose a little bit as to what it's been like since the election. How have you found blue Sky, the numbers racking up of people using it, how your infrastructure has been slightly taxed?
Thanks for having me, Caroline. Since the election, we've seen more than ten million US users join blue Sky, and it's been very exciting for us because up until now we've seen global growth from Japan in February, from Brazil in April and August, and now we're seeing the growth happening in the US, UK, Canada. Because I think people are tired of a platform that controls what they see, and they don't like a platform that's partisan.
Don't like partisanship. But let's talk about infrastructure.
And with that sudden growth of users internationally Anahem in the US, some of has happen strained a little bit.
How much have you had to boost your own support systems?
The engineers have been working around the clock to make sure that the app stays online. And what we're very proud of is that the infrastructure has not had significant downtime in the time that we've had all this influx of new users because our protocol was built for scale. When we first built our protocol, we were actually building it for Twitter as our customer, because back then Jack wanted to open up Twitter so that others could build on it, users could have choice. That was the promise.
Of course, things changed when X changed hands, and so we went and built our own app to showcase what we believe that social should look like.
Ros I'm wondering what all of this influx of new users has done for you financially. You just close the series A, I believe in October. There was a report last month that there's spent a lot of interest in maybe more investors coming in to Blue Sky. Have you started looking at possibly raising even more money to keep up with this growth.
Right now, we're focused on our end user.
We have so many new people coming to the platform and what they care about is are we having fun, are we making friends again? And do we feel safe? And so that is what the team is focused on. We're also launching subscriptions at the end of this year because we see so many people who want to support us and we want to give users tools to help them self express more. So that's like more custom icons
and longer video uploads. But we would never put speech behind a paywall, so nothing that is a core functionality you would have to pay for.
And speaking of those core users, you have benefited, as Caroline pointed out from the election from I think a lot of people leaving X. They're no longer feeling like they are getting what they want from X. It's kind of created this label of blue Skies, as you know, the anti Elon network or maybe a more left leaning network. How do you feel about that label? Do you feel like that's sort of what you're going for or is that just people sort of projecting onto you guys.
I think that there's always a reaction when something happens an event, but we'll see the narrative change over time, because, like I said beforehand, we've had Japanese users, Brazilian users, Korean users, people from all over the world come to Blue Skype, So to say that it's a US centric, left leaning app is not correct. We're also not building
an app for one voice or one type of political viewpoint. Well, we've built is an open infrastructure for any person who has interesting viewpoints, who wants to have engaging conversation to to Blue Sky and then go build their own space, whether that's their own feed or their own political labeler that users can subscribe to to either turn off political content or to turn it back on, depending on their mood.
Rose.
I know this is really real time, but you mentioned Korean newss. Are you seeing an awful lot of activity today given the news on martial law, how much she's seeing journalists float to the platform and and people wanting to know.
I believe we had our first breaking news happen on Blue Sky where one of the reporter, Sarah Jong, is reporting live from Korea and she's only posting on Blue Sky, and so I think we're starting to see that Blue Sky is the place for things that are happening currently, where do you talk about it on blue Sky because
people feel safe. There's all sorts of guards against not only misinformation but also speculative information because users can go and label that piece of post without waiting on the central authority or a parent company like US.
I'm wondering, as you see, you know, state affiliated media for example in Russia, North Korea, China start to come on to blue Sky. Historically platforms have labeled those media right has sort of in some cases cut down on their ability to advertise or things like that. Have you thought about how you're going to deal with state affiliated media organizations in some of these more controversial countries.
The way that we've built social is that we've given the toolbox to users to go and decide how they want to experience content and how they want to interact with other people. And so currently, the way that we care about the end user is that they're primary citizens. So we're not so worried about heads of states or
brands in terms of trying to serve them first. We're really trying to serve the end user first, which means that we're giving end users the tools to go and decide how they want to take in the news or how they want to interact with different accounts when it
comes to different heads of states. What we care about is that they want to follow the rules of our terms of service and community guidelines, and then we also have different jurisdictions geo fencing for different countries, much like other social media platforms.
Let's talk about those rules and the way in which you interact on Blue Sky because you're having to think about moderation, you're having to think about trust and safety. In fact, some of the money the fifteen million dollar raises amarked for that rose. How are you managing to crack down on content that you don't want to see on the platform?
First of all, I think it's important that you just put trust in safety as a priority. Most social media platforms put growth ahead of trust and safety, and trust and safety is just something that they have to do.
It's a checkbox.
That's totally different on Blue Sky. When you have a network that's run by two women who've been on the Internet for decades and experience the Internet as women.
We've prioritized safety. What does that look like.
It looks like we didn't have invite codes, or we had invite codes last year because we weren't ready to open up a network, so before we had a modelation team. The other way that we've thought about moderation is we thought about it in terms of stackable moderation, which only the parent or the central company only has a certain amount of controls that they can go do to help diverse communities, and central authorities tend to act very slowly.
And like I said, there's so much information between toxic misinformation or hate speech and things that make people unhappy on Social and so what we've done is give those controls back to users so they can either go label root post speculative information, and other users can subscribe to those labels and not wait for us to make those decisions. And that's what we mean by opening up social and making it more democratic, where you don't have to wait for us, you can build.
Rose.
We spent a lot of the conversation talking about how global this network is. Right now, I believe you know you are in San Francisco, headquarter in San Francisco. Is that the long term plan for you? Is there any world in which which Blue Sky would actually you know, relocate, maybe move to Europe or somewhere else. For headquarters for either regulatory reasons or even you know, to avoid a confrontation with the Elon Musk or Donald Trump or someone like that.
Well, Blue Sky is actually remote, and so the team is quite global. We have people in Europe, in Asia, in the US, and so I think it's really important that the team looks like the users, and so we want to continue to be a remote team and to be able to be reactive to the different needs of our global audience.
No technical HSQ, then, is that the answer?
No hqsewin a Bruskay Brimbo's Kat Wagner, thank you for helping bring us to that interview.
A great conversation now coming up.
Sequoia Capital partner Kasatin Bula is going to be joining us to discuss where AI investment is heading at the moment.
What he actually deems to be AI.
This is bring my technology, technological advances in AI expecting to boom in the next year, drawing significant interest and of course investment. And the forefront is to que A Capital partner, Constantine Vula, who's been involved in AI investment for more than a decade, joining us now to just talk about well, where we are in the AI hype cycle. Where we are in terms of identifying what artificial intelligence really is?
Are we still hyped Constantine.
Good morning, Caroline, and great to see you. We are definitely in an AI hype cycle, and yet we're not really focused on the twenty twenty four hype cycle or even twenty twenty five. We're focused on the very long term, and artificial intelligence is a very big and very important macro trend akin really to the Industrial Revolution. And so that's the trend we have been investing in for decades and are going to continue investing in for decades to come, regardless of where hype lands.
We wrote a piece a year or so ago really identifying how Gartner, for example, these hype cycles and this wild enthusiasm, and then suddenly you get into this disappointment, sort of a trough of disillusionment. Where are we in terms of consumer adoption, in terms of people actually putting return on investment AI investment?
First, you're exactly right.
Let me give a couple examples AI changes over time. When I was an AI researcher a long time ago, we were barely scratching the surface of natural language processing and natural language understanding, and the beginnings of computer vision twenty twenty two twenty twenty three were really about large language models and answering questions, and really the advent of modern AI twenty twenty four has been the year of agents. And what an agent is an AI that actually completes
a task. You ask it to do something, and it doesn't just tell you how to do it, It does it for you. An example of an AI agent company is our own portfolio company Expo.
Xpo was founded by the.
Creator of GitHub copilot, and they set out to create an agent for cybersecurity, extremely challenging an important space, and in a few months they were able to develop an AI that can actually outperform some of the best penetration testers in the world. So this AI goes in and it attacks a website with the permission of the website provider, finds vulnerabilities and actually reports it back and says, we have found these vulnerabilities. We've completed this entire task. That
was twenty twenty four for AI. It was all about agents twenty twenty five and beyond likely will be about swarms of AI agents, networks of AI agents, them working together and maybe even against each other. To some result.
Kazantin the swarm of AI agents, I feel there's a swarm of companies talking about AI agents that we're about to have salesforce numbers after the bell today, and they're all about agent force. At the same time, we recently had one of your port fodio companies on Rocks for example, which is also all about agents. How are we going to see them cross contaminate, work against each other, or and see some win and some lose.
Absolutely the reason why people are so excited about agents is because the promise of AI completing tasks, not every task, but many tasks is so impactful. We really want AI to be able to do the work you just mentioned. Rocks and Rocks is a great example of a company that is an AI agent, but an AI agent that actually includes the human in the loop. Rocks is not trying to cut the person out. They're actually trying to say, Okay, you are a really good seller, you have really good
human relationships with your buyers. Instead of trying to disintermediate that, we're going to empower you with an agent. This agent's going to do all the work and research for you. It's going to get you prepared for that next meeting.
And an example of them actually putting that theory into practice is they originally developed a technology that would auto draft emails, and they actually had the ability to auto send those emails, but they took that out and they found that when they actually kept the human seller in the loop, performance was triple three times as high. So there are companies where the agent's going to do the entire task, likely in the cybersecurity space, like with Expo.
There are companies where their AI agent's going to do work for the person in order to augment them, like in the case of Rocks.
Constantine, you're a big thinker, and you put out of trends and forecasts, trend for us, how many agent offerings we really need? How many public and private companies, how many horses such as Rocks can you back?
Well, it's just the beginning in early days for artificial intelligence. And look, the constraint is really our creativity. The amount of opportunity for artificial intelligence is huge. And I'll give an example. Two areas that are critical to all of us are healthcare and education. They have been areas where cost has gone up and up and up for decades and a lot of reason for that cost increase is because of the cost of services right now that AI
can actually complete some tasks. I really think that AI can come in and in the coming decades, not just the coming year, but in the coming decades be a hero for those industries, drive down costs and actually help us have a better educated, healthier population. So really, the sky is the limit for artificial intelligence and for AI agents and for networks of AI.
That's the team. Sky's the limit.
Partner at Sequa Capital, thanks so much for joining us. Amazon's cloud unit AWS, well, it's rolling out components. It says, we'll make data centers run more efficiently, more efficient cooling to renewable diesel, for example, to back up generators. These new designs could help address the growing strain on the electrical grid from power hungry server farms. Tend to another
key company salesforce. With the company scheduling to report third quarter earnings later today, investors, of course, they're watching the company's new AI agent strategy. I'm waiting to see if actually this pivot that they're talking about is paying off in real time. Body Ford joins us, and look, the share price is very exuberant.
Will the numbers bear it out.
We will see last earnings, many investors of Salesforce hadn't heard the word AI agent, then the company said it one hundred times on the earnings call. Essentially, application software companies haven't made a bunch of money from AI yet. It's been the hardware companies or the software infrastructure companies. And so the Agent's pivot is all about kind of testing out a new generative AI type product that for now a lot of folks are much more optimistic about.
We don't expect it to boost numbers tonight, but all attention is on what the company tells us about what agents can make money wise when it look at the six twelve month time horizon.
Okay, going to get updated figures on adoption of this agent force. Are we going to see actual real time sales optick on the back of this push?
If you ask me, it's gonna be a bit squishy. I expect to hear about a lot of proof of concepts. I expect to hear some big name customers that are using the agents. But remember agents are a kind of consumption based product. You're not gonna sign a massive billion dollar deal. You're gonna kind of pay as you go, meaning it's gonna take time for this revenue to ramp up. But right now, as we see in the share price, investors believe that it will.
Ramp What about cost base as well.
That's a really interesting question, right because every time you serve the product, you serve the LM. Yeah, that's an expense at Salesforce pays their initial cost here is about two dollars per use. You have to assume that their cost on that is, you know, quite a bit less than the two dollars they're charging.
All eyes on four PM and what comes out after the bell boting forward? Thank you, We appreciate it. On all things CRM. Now let's get to the key geopolitical story. South Korea's president declaring martial law in an emergency national address earlier today. President Yun said the decision was made to protect freedom and constitutional order. He accused the opposition
of trying to paralyze the administration with impeachment moves. Now, opposition lawmakers raced into parliament voted to request that the president withdraw martial law. Now the market waits to see if the president complies. Joining us now for more on the market reaction. Writ large Bloomberg's Maria Elena Vesquino and Maria what we're wandering, I mean, as technology show, we look at what's happening Samsung and sk Heinez, the share prices drop from FX perspective, South Korean one down a lot.
What do we wait and wish for?
At least?
Well, I think the market right now is just waiting for the next announcements from authorities, whether it's a finance ministry, the Central Bank.
A few minutes ago they put out a.
Statement saying that they would provide unlimitedlyquidity if they need to write, and that was a big comfort for investors. There's a ton of assets, as you've said, that do trade during the US hours. Samsung shares listening London lost as much as seven point five percent after the headlines on the Marshall.
Law came out. Then you know there's.
An ETF listed in the US with South Korean stocks that also felt as much as seven percent. The one the ETFs the shares of Korean companies listed in London to have lost so much, but they've paired some of those losses in the last couple of hours since the statement came out, So I think they're just looking for details. I think they're just hoping for a lot of support because that's what you can expect in those in those situations, right.
I mean, meanwhile, the mix of s k Heiinix, Samsung Electronics have been there's been this added concern about these are key exphoters for a nation very dependent on these technology companies and exports are going to be on the risk potentially of new tariffs coming from the United States. This is awful a lot for us for the Korean government to be trying to navigate.
Is this what sparked it all?
And ultimately is tarifs what you're hearing is a key concern for investors.
Yeah, it has been.
I mean, the one has been part of the so called Trump trade, right, Like you're bullish the US dollar and bearish Asian currencies, and of course the one is part of that. So even if it's not a direct thread off tariffs for Korea, because you know, we hear Trump mentioning China or Mexico more often than he does Korea.
It would just cause the region to slow down economically and eventually hit the currency.
So absolutely, I mean, obviously, the current political environment in the US foreign policy coming up with the next administration is going to be a big part of what happens in Korean markets.
Blimberg's Maria Elena Viscano up to the moment on what's happening in South Korea across the markets that does it for this additional blue bag technology, do not forget to check out the podcast you can find on the terminal Apple Spotify, iHeart this is Bluemant and he