From Marhart where Innovation, Money and power.
Collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Caroline Hein of Bloomberg's World headquarters in New York, and I'm Ed Ludlow in San Francisco.
This is Bloomberg Technology.
Coming up Disney's fight against activist Nelson pelts Well. It steps up as it has a win of support of Value Act Capital for its board nominees. Will break down the latest.
Plus Bitcoin reversed his course and wipes out gains from this year as uncertainty lingers around the SEC's ETF decision. More details ahead, and is.
Twenty twenty four the year US China tensions finally hit Apple.
Yeah, We're going to dig into that big time later in the show. The kind of main story on the public equity side is Disney. Disney CEO Bob Iger has secured the support of activist Value Act, who will back Disney's proposals for the board. At the same time, a very small activist head from Blackwell's Capital has some other proposals for board nominees, but is in line with bob Iger.
That support important because Bob Iger is trying to ward off Nelson Peltz and Tree and Capital, another activist who have not been happy with Disney's business performance over the last two years. The stock essentially flat. You can see the kind of volatility in trading throughout Wednesday's session. Let's get down into detail, bringing Bloomberg's Lucas Shaw, who leads our screen time coverage. I guess, Lucas, what is the need to know here of this morning's developments and statements.
Well, it's further proof that I guess, let's start with it's a really unusual situation to have a company of this magnitude with all these different activists investors swirling and agitating. But there's been some questions as to what exactly Nelson Pelts wants and what they're seeking from Disney, because it seems like Disney has been doing a lot of the things that they.
Have advocated for.
And then the appearance of Value Act and now this third entity gives some ballast to Bob Iger ahead of the shareholder meeting later this year and would seem to put him in pretty good position. And so I just think it gives Iger a vote confidence.
So remind us Nelson Peltz wants himself on the board and a former executive of Disney. Meanwhile, Value Act and Disney itself want who exactly.
Well, yeah, Nelson Peltz wants Jay Rissulo, who was the CFO under Bob Iger a long time ago and once was thought to be a potential successor. Bob Iger ended up sort of anointing Tom Staggs as a successor. Instead, Tom Staggs didn't end up succeeding Bob Biker because Bob
Biker didn't want to go anywhere. But unlike Jay Rasulo, who clearly has an act to grind with Eiger Stags and his counterpart Kevin Mayer, who has also been you know, at one point in time thought he might succeed, have been happy to advise Bob a little bit.
Kevin mayor more.
So, you know, Bob is basically saying, let me do what I'm doing because we have a plan. We've already added some board members recently who are sort of or are proposing board members who are going to join, and so he thinks that his candidates are just fine. That includes I believe Gorman from Morgan Stanley and then someone who used to run Sky.
We keep an eye on the cummings and goings. When it comes to personal Lucas Shaw does it so brilliantly for us.
We thank him.
Meanwhile, listen to the intricacies of ultimately what this means from a business case, a Disney evaluation case, and I'm more broadly how it fits into the consolidation we anticipate within media for twenty twenty four. Keithan Raganaffon is with us from Lumbag Intelligence and ethern Just already, Lucas made that point that a lot of the work that Bobag has been doing seems to be in line with where
activist investors are wanted. What eight thousand jobs eliminated, seven and a half billion dollars of costs removed, What more could investors want right now?
Yeah, I mean he has done a lot of the things obviously that the activist investors have wanted. And you're absolutely right in terms of cost cuts, in terms of right sizing content expenses. You know, they've brought down content expenses from about thirty billion dollars to twenty seven billion
to now twenty five billion. And I think the biggest takeaway caroline from the latest earnings call was that they're getting their free cash flow back to pre pandemic levels, so free cash flow for twenty twenty four expected to be eight billion dollars. They're also restoring the dividends, so
there's obviously a lot that they're doing. But I think there is still some frustration with Disney's management because we do know that Bob Eyeger last year had spoken about how the linear TV assets are in secular decline, and he had kind of spoken about, you know, how the future for those are very bleak, but we've not really seen any concrete action from.
Him in terms of what he's going to.
Do with those assets, and I think that's leading to a little bit of frustration. Plus, of course, you have the studio. We've had a whole string of misfires, you know, whether it's the latest Marvel's movie, are just not kind of living up to what we expect from Disney, and so they obviously have to do a lot of work on that front as well. But we have to remember, I mean, these things are going to take change takes time.
It's not going to happen overnight. But you're absolutely right, bar Biger is definitely I think the right person to do it. There's a lot of confidence, but again it is going to take a while.
Blackwell's saying exactly that in the statement. As the statement, shareholders deserve the opportunity to continue to really support Disney's turnaround and transformation onto Bobiger.
Meanwhile, though Nelson Pelt.
Says one of the issues he has is compensation, misalignment, governance and succession, which she says have been issues that played the company for decades.
What more could be done on those three? Do you think? Yeah?
I think you know, succession obviously has been this constant pain point for bar Biger, but you know, he's obviously he's brought in. The CFO was a lingering issue. They obviously have Hugh Johnston now in, and they have a whole slew of board members.
That they just actually brought to the board.
I mean, Lucas just pointed out Jeremy Derek from Sky who has a very rich experience in terms of content distribution, content creation. And then of course you have James Gorman, who's a real heavyweight, so they obviously can get a lot of perspective there. So again I think they have all of the things in place. We have to really see what they do in terms of strategic direction for a few of their assets, especially ESPN and then the outstanding ownership issue with Hulu.
A Gita. This is the value act fsis on Disney. They basically state Disney's the world's leading entertainment company. They talk about the IP, they talk about the park's business, and they say in the state in this morning, as legacy technologies transition to digital platforms, we believe Disney can lead the media industry forward. Does Bloomberg Intelligence share value acts thesis around Disney?
Absolutely, Disney has the best in class brands.
There is no doubt about that.
Yes, we have seen a little bit of underperformances I just spoke about in terms of, you know, the studio side, but they absolutely have all of the levers in place. I mean, you look at the media assets they have, you know, fantastic properties, whether it's Marvel, whether it's Pixar, you know, whether it's Star Wars. They have all of the franchises that people love. And then of course you have the parks business, which has been performing extremely well.
I just don't think they're getting enough credit for it.
So the question is what happens next right, Blackwells has some different board proposals. Value Act is backing Disney's proposals for the board. There will be a shareholder meeting. If you sort of gain planned and modeled the scenario where Nelson Peltz is appeased, I think we said that, well, yeah, last year in wee Caroline appeasing. Else does he get a peace based on the reporting you've read this morning, Yeah, it's going.
To be I think he's going to fight really hard. I mean this, this is going to be a really contentious fight I think between Pelts and Disney. He obviously does definitely want to put himself on the board. He definitely wants to see Jay Rizzulu on the board. I don't think Disney kind of needs that distraction right now. It really is going to come down to what I think Bob Eigert. He's obviously been shoring up his defenses with the Value Act news, with the Black Worlds news.
It's going to come down to, you.
Know, if he can announce something, if there are any near term catalysts in terms of strategic initiatives that can kind of really appease Nelson Pelts, whether they can come up with something on the linear TV side, you know, in terms of plans for those linear TV assets, or if there is some kind of announcement with respect to ESPN.
You know, we know that they've been kind of searching for that strategic partner, you know, one of the one of the big digital players, or maybe even the leagues themselves.
US talks have really not got anywhere.
So again, anything comes up on that front, I think it really does kind of reintegrate the star price a little.
Bit, agetha Ang and Nathan with really detailed analysis from Bloomberg Intelligence. So what Lucas Shaw called a highly unusual situation with activist investors sticking with activist investors and number store another story with tracking gambling group en Tain named the CEO of activist investor Eminence Capital to its board.
A shareholder has been pushing to improve the British company's performance. Eminence, which holds enchained shares, has been critical of the company's deal making approach and suggested they could explore divesting some or all of its stake in the US betting joint venture bet MGM, which it co owns with MGM Resorts.
Let's talk about China US because one key American company. It's kind of been able to navigate the rocky relationship between Washington and Beijing and it's been Apple, but mounting tensions between the two superpowers they're making things ever more complicated for the company and Bloomberg Businesswee coconomist Max Traffkin has a story out just about this.
Ultimately, what has changed.
There seems to be two key issues at stake that are going to make Apple's life difficult.
Yeah, absolutely so the two issues. Number one is competition.
So Huawei, which you know, the big Chinese telecom manufacturer for years, was hobbled by these export controls instituted under Donald Trump, maintained by Joe Biden. And early last year, you know, they came out with a new phone, the Mate sixty Pro, which has a chip that is pretty close to the state of the art. It's really the first phone in a couple of years that's come close
to the iPhone, you know, potentially competitive. And then the other hand, you have restrictions, so you have the government preventing people in China from bringing phones into the workplaces of state back companies, and these two things together are a real problem for Apple because you have the government telling people not to use it, and then all of a sudden, some real genuine competition presenting itself.
Max. This is a chart that shows the sort of breakdown of revenues by geography on a course lee basis, and I think back to November on the Earnings School, where China rule was soft and the narrative from executives was this was simply to do with Mac and iPad
because there were no new macs or iPads. But the caveat that Apple tried to put in there, that green bar on the right hand side being propped up by a record for iPhone sales in Greater China in your piece, which you tied to win twenty twenty four, the year US China tensions finally trip up Apple. Is it the iPhone specifically that is the battleground here or is it the whole business over in China? I mean, certainly the whole business.
And we should just take a few steps back and say, you know, Apple is completely intertwined with China. You know, it relies on China for its supply chain, and it's also as that chart you're showing shows a substantial part of the sort of consumer facing business the growth of the Chinese market has been very good to Apple. But we're talking about Apple, you know, the iPhone dominates and it matters a lot here and again these are sort of faint signals that we started to see last year.
But we tried to analysts the first of all, growth in Huawei's sales, and they're expecting at least some pain for Apple and China. But again it's not clear how much, because Chinese consumers still you know, love this company, still love the iPhone and have still been buying it. I mean, as we wrote in the story, there were you know, lines at Apple stores in December even as these restrictions were being reported by Bloomberg and others.
It's an interesting test of Tim Cook in particular, right because he was the supply chain guy before he became the CEO. And in many ways, yeah, they're eyeing India, but they haven't stepped away from China.
Well.
Part of the problem that Apple has here is they are a major employer in China, so this is this
is a political issue in China. China does not want them to necessarily diversify their supply chain, while Apple at the same time, you know, would very much like to not be totally dependent on this on a country, where as we saw during COVID as well as the demonstrations in front of these iPhone factories in twenty twenty two, you know that comes with risks, so you sort of have a push and pull, and some people have seen these restrictions that the government has been putting on iPhones
as sort of a message from China saying, you know, don't you know, you don't want to move out of this country too much because because that could create problems for the local markets.
So it's kind of a delicate balance.
But the one thing that Apple has going for it again are these devices that even though even if they have competition, they are still genuinely loved by consumers, and when you look at the chips and so on, you know, still ahead of what the domestic manufacturers are producing.
All right. Thanks to Bloomberg's Max Chafkin, who's latest in Business Week is a must read, check it out on the year ahead for Apple in China. Sticking with China. In an effort to take a softer tone on the gaming industry, China has reportedly fired the top official of the gaming watchdog agency Bloomberg's Henry Ren is in London with more. This happened overnight US time, and it's kind of a walk back on what were strong regulations that rocked equity markets at the time.
Yes, indeed, so two media reports in the cay that's so fund shooting, who's heads of the China's publishing unit of the Publicity Department would depart from his role. So just to cavet here because there's no official Chinese government statement saying that from Shushing would depart or being fired from his role. However, this does seem that the China's gaming regulator is softening it stands toward the video game sector.
Just remember in late December, the gaming regulator published a sweeping set of curbs limiting Chinese players playing time as well as spending on video games and those who were badly received by the market. We've been seeing a drop in industry build weathers such as Tansen as well as Natti's, as well as other smaller video games stocks in China in late December.
Whiplash, I think is the takeaway for now, Henry Reren, We thank you so much for the latest done what seems to be a changing of sentiment when it comes to gaming, at least for the interest. Meanwhile, coming up, we're good to all things A and cybersecurity or how strike CEOs go for joining us Storgekat stick with us for it as somebody meg technology.
Okay, it's time for talking tech and first st up. Samsung is leaning into AI is the key to unlocking greater sales this year. The smartphone maker plans to launch its next flagship device on January seventeenth, and the teaser to the launch promises that quote Galaxy AI is coming. And SpaceX launched its first six satellites capable of offering mobile phone services, with t Mobile operating like a cell tower in space. The Starlink satellites work with users existing phones,
rather than using specialized equipment to bring connectivity to remote areas. Plus, Atos is in talks to sell it's big data and cybersecurity business to Airbus for as much as one point eight billion euros that's about two billion US dollars. This is the French tech company faces hefty debt repayments at our shares fell following the news Carrott.
Yeah, let's stick.
On the area of cybersecurity and really what it means for twenty twenty four, some of the risks, maybe some of the reads. CrowdStrike CEO George Kurtz joins us now to really spell out what you're seeing on the ground at the moment. George, we were all thinking about artificial intelligence as not only a threat in terms of cyber but also defense too. How are you seeing generative AI come into your playbook at CrowdStrike.
Well, well, we think about AI.
That certainly was the hot topic of twenty twenty three, and as you mentioned, it certainly is and can and will be used for the farest purposes by the adversaries. But when you think about companies like CrowdStrike, it really is a key.
Part of our success Going forwards.
We spend a lot of time on something we called Sharovit ai, which is our generative AI play in terms of help customers really protect themselves and leverage the collective knowledge of CrowdStrike. But more than just a chatbot, actually do work on behalf of our customers using our technology. So we think it's a game changer, something that can take eight hours of work and turn it into ten minutes and work for a security analyst, and we think
we're going to get better outcomes for our customers. So we're really excited about it and it's a big part of our playbook going forward.
And keeping humans in the loop. When it comes to Charlotte AI, I'm interested in whether you can pinpoint any real areas where generative AI has made a real impact in terms of cyber threats.
What have you actually seen.
Well, there is this concept of dark AI, and that is you can think about using something like chat GBT without rails right fraud GBT as an example, is some technologies that are out there where you can essentially leverage AI to create things like phishing emails, to research vulnerabilities, to meet sort of the creation of cyber crime campaigns.
So what it really does, though.
And if you think about generative AI and what it's done for everyone else, is it takes this collective knowledge and sort of makes it available to the masses. So the challenging part that we have now is it makes cyber attacks even more available to maybe folks who don't have all of the knowledge book can actually ask a generative AI technology to do something on its behalf. So cybercram is going to be even more and more prevalent than it is today, George.
Twelve months ago, almost to the day, you and I sat down in Las Vegas at CES and what transpired over the course of twenty twenty three were large scale attacks. I think you guys call them big game hunting in your tracking of these kind of scales of attacks and going into twenty twenty four, that's continued. What are the reasons behind that? Why are you seeing a research and continuation of the wide scale attack.
Well, it's j old adage. You know, you can go where the money is, right, there's a lot of money in these cyber attacks because the adversaries have been so successful in being able to ransom and get paid. And when we think about what we saw over the last year, and you and I talked about a year ago, you're
spot on at CES. It was really the fact that we saw this this sort of double extortion, which was the adversary could encrypt all the data and basically pay it on encrypted or if organizations which they have gotten better and they backed up their data and.
Restored it, they would take a copy of it and then they would then leak at that.
So that was the extortion piece, right, So we saw a lot of that in twenty twenty three, and now I think it's the triple threat we're seeing now the SEC rules coming in, and in fact we've seen adversaries not only encrypt but also go to the SEC as a way to get companies to pay quicker because of the four day rule they have in terms of reporting. So now it really opens up the aperture for the adversaries.
CrowdStrike CEO George Kurtz, It's a great way to kick off twenty twenty four, though I would say the conversation around cyber and the threat hasn't stopped at any point. Karen and I two days into the new year. Thank you so much for your time. Caroline did a great job. At the top of the show. You're also talking about bitcoin volatility in the session. It would be foolish to say there is a clear causal link or catalyst, because
there is a lot of news reports out there. All told, Cara, I think what we're doing is taking stock of where we are or are not with bitcoin ETF applications and the decisions that the regulators will.
Or will not take precisely and headline risk and head of that someone to help break us down whether this volatility is to be expected.
Fuddy Able Alfa's with us head of research for Copper.
Now that's a custodian and digital assets, and you in particular focus on markets on rockchain based finance market infrastructure. So, Fuddy, should we anticipate this sort of volatility into a key date like January tenth, when indeed we all feel the SEC has to make some view on a couple of ETFs and therefore maybe all of the ETFs.
You know what, it's an interesting question about time. If we were talking about this a year or two ago, we'd be wondering whether an ETF would ever be approved. Now we're talking about when will it be approved? So we're a lot closer to a very important moment in cryptocurrency's history. When it's going to happen isn't really that important.
We know that it will happen. We know that black Rock has a very great track record in getting their ETF for applications approved, so there's not really much worry about it getting approved at this point. But when is going to be something that markets are going to look at and it's going to cause a little bit of volatility, and for trader that's great they want volatility. For the long term investors who want to actually buy the ETF, they're going to just hang on a little bit at all.
A fady Caroline and I always say on this program, bitcoin is our risk asset of choice, and sometimes it moves in close correlation with equities, sometimes it doesn't. But you do note that there is some volatility in selling in markets broadly, particularly on higher or stretch valuation tech stocks. How much of this is just going into the new year, new market's fresh perspective.
You know what you mentioned NASDAC, And if we were looking at this again a couple of years ago, we're going to say that bitcoin's now trading again like a tech stock. And actually, if you look at on a weekly basis, the correlation with the S and P five hundred is at its highest since May twenty twenty three. So the correlations are still there, but Bitcoin isn't going drastically down as we've seen with the NASDAC over the
past couple of days into the new year. So Bitcoin's actually doing quite well, even if it's been seen a little bit of volatility today on the back of some not so vetted news.
Yeah, I think I know what you're referencing and fatty I would say this to our audience, this is less than scientific. But I've seen posts on x other blogs that make the argument that actually bitcoin currently is not pricing in a roadmap for approve on Bitcoin ETF are you able to make that argument that the price of bitcoin, even the surge of recent weeks, could not reflect that that potential outcome.
I think we're still at a state of a little bit of gambling in crypto markets. There's still a lot of leverage in the system. If you look at potential cash and carry trades, if someone wants to take a near risk free return, you're looking at fifteen twenty percent. But the reality is is for you to take advantage of that, you need to buy the spot market, put it in under custody, tradeed on global market, and take
advantage of that yield. The reality is what happens when these liquidations occur is that people will have to go back in buy more bitcoin and do the same process all over again. So it's sort of the self fulfilling cycle. Especially when we go into a positive cycle with bitcoin, it feeds off each other, and it does the same when we go in a negative cycle. That's all.
There's been this sort of flurry of activity and awful lot of box ticking needed to be done with the SEC. Think of companies talking about their authorized participants that are involved and be able to create redeem the shares within the ETF. You've got, I've got a bit of a rush for people to have overall the clear language that the SEC is wanting to see as well when it
comes to cash any creation. So if we don't get all the box ticking necessary, and if the SEC doesn't want to make a king maker out of just one or two ETF, so we do hold out, we don't see something by January the tenth, Will we fade this rally?
Do we have to fade this rally?
We could see bitcoin drop as well. Yes, it's not inconceivable to see that bitcoin can drop to thirty seven thousand. A lot of analysts that look out outside the traditional markets and they look at the blockchain activity are arguing that we could see a correction to thirty seven thousand, maybe lower. If you ask me, if I look at sort of a revision to the mean, you could even
argue that it could go to twenty seven thousand. But Ultimately, when we're talking about the ETF approval, we're talking about long term investors who are going to company because they don't want to manage the security of their digital assets, and so at that point it's a completely different arguments. It's inevitably going to go up. So the idea that an ETF is going to either make or break Bitcoin in the next six months is a little bit wrong.
We need to look at who the ETF is really going to be addressing as a market, rather than investors and traders who thrive on the volatility that we're seeing.
Today, yeah, and using strategies and have been doing that for a few years when.
Their liquidity is there. Faddy, I'm interested is to, therefore, have you.
Quantified what sort of scale of money you think will come in as and when a spot bitcoin ETF has approved, what sort of inflows you anticipate in.
I don't really have a number for you, to be honest with you. I think it's a narrative that cryptocurrency markets have really sort of latched onto as something positive as a catalyst after a couple of years of really
difficult things happening within the market. But what is really going to happen is that we're going to see larger investors understand that buying a bitcoin ETF is going to be a lot more expensive than actually taking custody of their own assets, and the opportunities on a twenty four to seven day, round the clock around the year markets are going to be a lot more lucrative than buying something that's traded on a US based exchange only, or
any any sort of exchange traded products that's sort of locked into traditional hours. We're entering a very different financial market infrastructure, and I think bitcoins the start of investors understanding that digital assets offer a lot more interesting opportunities.
Fatty, your analysis is referenced in the main bitcoin story on the Bloomberg town and or blimbag dot com this morning. You're listed as head of research. But copper is a crypto custodian, so I just I went down the rabbit hole. Coinbase is also a crypto custodian. Explain the competition in that market and what it is.
I think we're addressing very different markets. So coinbase is a crypto custodian, but I think it also addresses a much more retail focused audience's and it's done great. I think I don't think the crypto industry would actually be where we're at without the initiative that coin base has
put forward. Digital asset custodians such as Copper are focused more on financial market infrastructure and real world digital assets and removing and mitigating the counterparty risks that we've seen on exchanges, perhaps not coin based on other exchanges that are not so reputable that have been hacked, whereas you use investors would use Copper to mitigate their counterparty risk and still be able to trade on all these exchanges.
I think that's the main difference between companies such as coppers, who's focused primarily on financial market infrastructure and custody and being able to provide the tools, and Coinbase, which has a much more not retail focused, primarily retail focused outfit, but it's just a different kind of offering to the clients.
All right, Faddy Aba, well for Copper, great to have you on the program. Bling their tat thank you for your time. Now coming out here on the show, we're going to talk about the state of the venture capital industry in twenty twenty four with Rebecca Lynn from Canvas Ventures. That's coming up next. This is Bloomberg Technology.
In December it was open view in Boston, and now another VC firm is shutting down. This a solo GP Countdown Capital. It's an early stage investor focused on aerospace and defense startups. Founder j Mallick posted on exit despite delivering strong performance, he believes the future of industrial VC favors larger firms, and his firm is shutting down just sixteen months after closing a new fifteen million dollar investment fund.
Then let's keep it with it. Let's talk about what this means for the future. Some funds were started, some funds closed, drop off in activity. Will we see consolidation in the space? I want to bring in Rebecca Lynn, co founder general partner of Canvas Ventures with me here on SAT in San Francisco. I've been looking at this chart VC backed public listing values. Historically twenty twenty one, a lot was going on across the SPAC space in particular,
but also just traditional listings. The market closed in twenty twenty two. Carolina and I got a little bit excited towards the end of twenty twenty three, and we're trying to work out what happens in twenty twenty four, and I bring the chart up because you've been at this ten to fifteen years. Series B is your sweet spot. There must be loads of portfolio companies that have matured since investment, and you're wondering, how do I get out?
Yes, yes, exactly. I think.
In venture what I learned really really is you don't time the market. What you do is you build really profitable companies built on fundamentals. And it's one of the problems we've seen over the last ten years for this focus on hypergrowth and unicorn status. It's really not what creates these very profitable, long enduring public companies. And so I don't think the answer is, you know, how do
you get out? It's how do you create a profitable company that has options and opportunities when the windows open. And when you look at the big hits we've had, including doc Simity, Lending Club and others, they were actually profitable and growing years before they went public. And so as a company, you really want to control your own destiny, and you do that by a core focus on the fundamentals and the path profitability.
If you look at the Pitchbook data for twenty twenty three, last year looks like we'll hit one hundred and fifty billion A venture funding to drop off. But one of the kind of artificial bright spots, forgive the wording, was artificial intelligence, right, there was a lot of activity large rounds, even at series A debut rounds.
Right.
Is that enough to carry momentum over into twenty twenty fours that now ended.
I think that will continue to some extent, So a couple things. So, yes, it was a huge drop off last year. It was fifty percent down from the year before, and we haven't seen that low of a number since twenty fifteen. Just to sort of, you know, emphasize how much of a drop off we felt last year.
And with AI what you.
Saw as you saw one in every four dollars was invested in the AI space. I think we'll continue to see that. But I also think there's going to be a real day of reckoning too for AI in companies that are wanting to that need to find profitable business models, and we're seeing that, you know, the big companies Google, Facebook, Amazon, all struggling but how to really make AI profitable and how to how to work those business models right, and to that.
Point when you're thinking about the checks to write, and I think of an exit that you have had case Text. I mean, we're seeing more and more legal AI companies come to the foe. We're about to interview another one actually just had a funding round. Are they going to be able to operate independently? Have they got enough of the data that is rich and bespoke to them to fight off ultimately open ai or Microsoft or Google just being able to replicate it themselves.
Yeah, And I think that's a great question in terms of, you know, what it really takes for an AI company to succeed.
So we've had a front row seat in AI.
Since we invested in Siri, you know, back in sort of the first round of this, right, case Text was a really unique situation. Case Tex had been operating for about ten years in the space with ten thousand unique clients and all the data behind that, and so they had access to the large language models for you probably six or seven years, and had been working with it for a decade. And we're really one of the very first people in the sandbox for open ai because of that.
So I would say not all legal startups are the same, and case Text was very unique because they had this large customer base and the data with that. So I guess the answer is maybe, But I would be fairly concerned starting a company right now in a space without having a unique customer base and you know, proprietary data and going up against the Googles and the facebooks and the Amazon's Rebecca.
We came into this conversation with you talking about count and down capital. We had another this was a solo GP, but another venture capital firm in.
And of itself shutting up shop. Is that going to happen as well?
Can you speak to your own industry being forced to consolidate or coming to wind down, not just the portfolio companies that you've.
Backed, right, absolutely.
So it's been really interesting over the past, you know, fifteen years since I've been in venture. This environment looks very much like the environment in which I entered in two thousand and eight. We launched our fund when leaving Crash pretty much that very same week, and it's a great time to invest in companies. When it comes to venture capital firms, there are three times more venture capital firms today in existence than when I started in two
thousand and eight. There are about one thousand firms at that point in time, and there's approaching three thousand firms right now. And what we have seen in every industry cycle is that venture is a s local industry. It ebbs and flows, it sort of peaks every ten or so years, and what we see from that is we do see consolidation in every cycle. But what that creates are amazing firms like Benchmark and Redpoint where sort of the best of you know, partners and other firms joined
together and form new firms. And so we'll see a lot more of that, I believe in the upcoming year or two, and that's an exciting thing for venture overall.
We just have thirty seconds left. What's the big sort of thematic area you're focused on for twenty twenty four?
Big thematic area for twenty twenty four, I really think, you know, healthcare remains an untapped opportunity, and especially in applications for AI. It's uniquely suited for AI because there's a lot of money going into it. People are spending a lot of money to solve these problems in healthcare, and I think it's a really rich area for an application of AI.
Rebecca Lynn, co founder and general partner of Chemas, ventures.
Robin Ai, it's a maker of contract management software, says it's raised twenty six million dollars in a Series B funding round by.
Singapore's Temasek Holdings.
Here to talk more about this the impact of AI on the legal industry more broadly is robin ai CEO Richard Robinson. Richard, great to have you on the show. And look, I mean, what less than twelve months? I think it's only ten months since your Series A. Was this opportunistic? Why did you have to go and raise the funds?
Yeah, like you said, it was opportunistic. We're seeing a once inner generation shift away from traditional SaaS tools to AI, and so in light of lots of demand and a need to really expand out our indefference, we took the opportunity to think about raising more capital.
This Singapore angle his really interesting and so Temasek is leading the round. But you guys also plan to open a presence in Singapore. Why.
Well, we want to be a global business. We think that the last generation of fundamental technology like the Internet gave rise to massive global businesses like Google and Facebook, and we think that AI is going to usher in another generation of companies of that size. And scale, and so we want to be global. We've always been significantly ambitious. We've got customers in Asia and so we wanted to expand that presence and made Perfect Centers a partner.
You talk about this shift of SaaS to AI, and basically you're a co pilot concept that you bring AI sort of too standard office software. And in fact, this particular copilot that you're announcing and been using is free on Microsoft Word add ons, if I'm correct. So with the customers, you already have PepsiCo, PwC, You've got a lot of key names. What where's your revenue generation coming from? Why do these VC names want in on the round?
Yeah?
I think primarily our revenue comes from big companies. We sell to in house legal teams because we want to help companies go faster. So our customers are the Fortune five hundred, the world's biggest primate equity funds that people who do transactions. And I think what's got investors excited is Number one, they see that AI is changing the whole industry. You have that in your last segment. The legal industry is going to change and it's going to
be transformed by AI. But number two they're seeing a startup that has real traction with really discerning customers, and that means that we could build something quite defensible.
Here.
We've been showing video of how robin ai works as a sort of contract drafting assistant or and Karen makes a really important point. It's an add in into Microsoft word. But Microsoft is doing a lot with its own copilot right in terms of productivity tool. Are you worried about the kind of design of the system here that Microsoft is offering something similar?
Not really Microsoft's product is you're right similar, But it's really a general tool. It's designed to do everything a little bit like Microsoft. It's a generic tool. And the legal industry is going to be worth a trillion dollars next year. It is one of the biggest industries on the planet, and I think it needs its own bespoke AI system that understands legal documents, understands lawyer's workflows, understands the law, and so the Microsoft copepole it's not going to do that.
It's catering to.
A much wider audience. We're really this the best in the world at legal AI, and I think that's going to be its own race that requires its.
Own focus Robin AI CEO Richard Robinson, there's a law school graduate the idea of automating drafts in the legal context. I know a few people in my world that would be very interested in that. We're grateful for you for your time. Both.
No, what great conversation ed. Meanwhile, look, I mean we're back to it.
Conversations in twenty twenty four focused on AI, focused on cyber, focused the course on well maybe some of the valuations were saying as well, that does it for this addition of Lilybow Technology.
Yeah, there's an element of deja vu. But recap on the podcast wherever you get yours, Apple, Spotify, iHeart, and Bloomberg from SF in New York. This is Bloomberg