Intel Tumbles and FCC Commissioner Carr Talks TikTok

stocks lower. Then our exclusive interview with SEC Commissioner Brendan Carr about how a nationwide TikTok ban would actually work, and we asked chat TPT to come with a market beating e t F. We're bringing the results, so let's get straight into it with Angelo Zeno, analyst at c f R A. I mean, and I brought you that top line forecast for the current period, but what were your takeaways from the Intel print you email that in terms of maybe what's driving the downside and in the

shaws after hours the guide down and people were looking to fill down party percent. I think the outlook was U the consensus is looking down about center, so so um that was really the big miss on that side of things. But I think, um, you know, you kind of think about what's really driving the lower guide on the sales side of things. It's really kind of two factors, right. It's it's the kind of the weakness we're seeing on the PC side of things. But things are, you know,

significantly weaker than I think most people anticipated. And when you kind of look at the Q four numbers, I think PC down sales down about percent in the fourth quarter. So I think, um, you kind of need further settle in declines versus to sell through before we kind of fully get to the bottom. And I think maybe the good sign is that's sharp decline in sales guide maybe is hopefully a good indication that maybe we kind of

get past this maybe by the second quarter. And then I said, the other factor in terms of sales bag is on a day data center side of things. I mean, it'll be interesting to kind of see how weak things are there, but clearly a lot of inventory built up there. But um, I think that's kind of really what stronggy about the weakness of the guidance of things and a lot of self help needed because otherwise depending on ordering a components, that depending on people working through our inventory.

Are they doing enough self help particular on the cost side, You know, yeah, when you look at the margins here, right, especially the margin guidance, the gross margin guidance here at thirty nine percent, I mean, I think the answer there is, UM, there's probably more that they need to do or UM, it'll be interesting to kind of really figure out what's going on in the margins there, because thirty by far at this point in time, UM the lowest among our

coverage universe within the semiconductor industry. So UM, that in itself is saying a lot there. Now, the big problem here is UM, they're looking to do a massive kind of undertaking in terms of technology transitions. For technology transitions in five years, never been done within the semi conductor industry. They need to get this right. This management team needs to get it right first and foremost, even it means losing money here in the near term, which is what's

going to happen in the first quarter. So UM, at this point in time, that is kind of the most important factor for them. They didn't provide any guidance here. For my guest is the capets guy probably has to go down relative to what we saw in two sort of going to look to do some things here, right, um they you know, they did announce some cost cuts in a third order a couple of months ago. They're going to execute on that, but at this point in time, it's hard to cut given what they've done in front

of them. Got it? And you mentioned there no full year twenty three guidance in the earnings statement. I can confirm the earnings cause started in the company saying it is not going to give full year guidance for full year twenty three. They're also talking about the macro difficulties they're seeing lasting through the first half of this year. Guide into long term PC market of three hundred million units. Break it down to very simple terms for us, What

is the problem for Intel? Yeah, I mean yeah, well, first and foremost, like, I think the competitive environment. It has been by far their biggest issue in recent years, right, I mean, despite the fact that you know that they

may all do it otherwise. Um A m D has definitely been kind of chipping away in terms of market share um On specifically on their certain data center server side of things, which has kind of been historically kind of a very good, kind of um profitable business for this company, and it no longer is, at least at this point in time. So I think the competitive environment

clearly is a problem for them. The cycle is the the other issue for them here I mean being overly exposed to really two care areas of the market, one being um PCs, which you know was a three hundred fifty million unit market UM in one UM was down about last year. Probably looking at this point in time, given the guidance, you're looking probably down at least teen

percent UM here in three. Again, so the cycles and other ratios, specifically on the PC side of things, and now also on the data center side of things, which started I can as Angelosino, great to have your instant analysis. Thank you, cfr A there. Meanwhile, let's get onto another key story is again about Salesforce sources saying that they may appoint new board members amid pressure from activist investors. Now the list of possible appointments includes Carnivals former CEO,

Maskcards current CFO, and an investor value APTS chief. In fact, Salesforce had in fact been working on refreshing its board for several months. We understand as pressure of course continues to mount to boost profits and shareholder returns. Let's get straight to Ed Hammonds. You broke the news. What would these individuals bring to the board, Like Caroline, I think, first and foremost probably a proper lactic against the other

activists who are circling this company. I mean Starboarder there, Elliott there, we think Jeff Ubburn with his inclusive capital funder there. And you see this fairly often in these bigger companies that might have several dissident shareholders that they will strike a deal with one group um and bring some of those onto the board. And as I say, it's often a way of really defending against some of the other activists and what they might see as some

of the less savory claims against the company. Why is Salesforce under attack from so many different activists right now? I think a couple of reasons. That the first is is less exciting if you like, which is that it's it's just a safe, better minutes down I think from its highs. But unlike some of the smaller companies that they might normally target, it's unlikely to get wiped out, so you have quite a safe place to park your

money one way or another. The other reason, and I think This applies to a lot of big tech companies. Is it just doesn't have great corporate governance historically, and and that that has been okay when the market was rising and everything was looking great, but as soon as things start looking bad, these tend to be the first companies they get raked over by the activists, and you're

seeing that in some other big tech companies as well. Um. I also think there has been a sort of series of acquisitions that have been quite large and not necessarily that successful. And despite Benny Off saying that he was going to slow down on that, he obviously has continued

to do it. And I think stuff like that really is is kind of a red rag to an activist because they know that there will be some long only investors, potentially even some retail investors who have similar discontent about that. So when it comes to Tableau, when it comes to Slack, are we going to see such names as this push for disposals? Is it further cost cutting? What sort of discipline do they want? Yeah, it's a great question and

at this point we don't know is the answer. I mean, look, Elliott have been most public in terms of their recent statements, have said they like many off, they like the company, they want to work constructively. That usually is sort of activist code for let us into the boardroom. We will give you cover to make some job cuts to perhaps would be harder to make on your on your own or of your involution. UM. In terms of spinning off and separating assets, yeah, I think there is a case

to be made for some investitures here. But again, some of these deals that were struck at a fairly high point in the market, it's difficult to see sales force just exiting and getting anything other than a discount doing those. Hammond terrific reporting that scoop moving the stock to his biggest game since November. Thank you. National security concerns are

concerns that we take extremely seriously. UM. As we have this closed in the past, we have had discussions with the U. S. Government, but I'm very confident that to the detailed discussions that we are going to have, we will come up with a solution that will reasonably address the national security concerns that the policy makers have. TikTok CEO there show too. That was at the Bloomberg New

Economy Forum in Singapore back in November. Addressing at the time national security concerns from the United States, and since then those concerns they've been building up. No action still from the administration, and some states have actually started to take it upon themselves to implement some curbs on the popular app, like ll Texas for instance. Of course, some universities there and now banned the app on their campus networks.

Will help. What more should be done? Let's bring in someone has been vocal on all of this, SEC Commissioner, Brendan Carr, Commissioner, it is great to have some time with you, and you have been outspoken about the concerns you see around TikTok. What from your perspective can you, as an FCC commissioner do Is it about speaking out to or out or action can you take? Then? We have some expertise and experience in this area at the FEC.

We've dealt with Huawei's E t E China Mobile, a lot of companies with ties back to communist China that are involved with the various data flows. That's why I'm speaking out. In the main though, the action here is going to come from the Biden administration, the Treasury Department, SIPPIUS, the Committee on Foreign Investment, has been reviewing this for almost two years now. I think the reality is is

the tide really has been moving out on TikTok. I think it's had a very bad two months, and I think it's shifted now from a question of whether there's going to be some sort of band or decoupling of TikTok from Beijing to a question of when that takes place. Now, TikTok is still spending a lot of money, millions of dollars to avoid that. But I definitely think things are moving in the wrong direction for TikTok. What about the direction from the administration? Do you think it will ultimately

be then? And Siphius the focus there or is actually gonna be Congress because we actually see across the aisle some agreement here. It could be both. As you mentioned, there's bipartisan legislation now in Congress by Cameral actually in the House last Congress, Republican Gallagher Democrat Christiana Morphy representatives have a bill that would band TikTok nationwide. Obviously bipartisan agreement to band TikTok nationwide on federal devices, and we

have almost thirty states now that have done it. It could be the Biden administration. Ultimately that takes the final action here. I think it should be there precedent for this. We've used scipious before to unwind the purchase of Grinder based on having connections back to a Beijing based entity. India has band TikTok across their entire country, so I think that's the right direction to go here. Commission Nico, good evening to you with with massive respect to your office.

The FCC does not have a power or a remit to take action on this, So who are you backing to take action? Who do you think at a federal state level actually see some material change when it comes to regulating TikTok. I think SEC officials we do have some expertise here, again when it deals with companies that have ties to the CCP and the various data blows. But right in the main, I believe this is an

issue that the Treasury Department should take a look at. Really, I think the biggest leader on this has been Democrats Chairman of Sending an Intel Committee, Mark Warner. He has said that quote TikTok scares the dickens out of him, and he's been working with Senator Rubio and others on this, So it could be Treasury, could be Federal Trade Commission for as we talked about earlier, there's a lot of interest in the House, bipartisan interest in taking action there.

So I think it's gonna come from action on several fronts, states included. I don't anticipate this will be a poor FCC issue itself, though, Yes, Commissioning you mentioned India. We went to our audience and as then if they felt that what they saw the action taken in India could be replicated here in the United States. Seventy respondents said yes, uh, it sets an important precedent. Does the action taken in India set an important precedent? I think so it's a

strong precedent. You know, India's obviously the world's largest democracy, so I think taking action in that context is very instructive. And again, there's two main issues here. There's national security but also mental health. You know, on the national security side, TikTok came clean just last month and said yes, in fact, they had been surveilling the locations of specific U S reporters who are writing negative stories about TikTok. That's sort

of a nightmare scenario. Remember, we're at a point in time where TikTok has been engaged in negotiations with Sippius, where they have every reason to be on their best behavior, and yet they were engaged in that type of ne various conduct. Trust is the most important thing right now

when you're trying to negotiate with the government. And if I was in the Bide administration at Sippius, I'd be really disappointed if I had this draft agreement with TikTok that was in place over the over the summer and you see this subsequent conduct, I think it's it just shows that Um, I just don't see a path forward where you could cut a deal that will put air tight protections in place. So ultimately you feel aban is the only way. It's interesting to EU before was sort

of not talking as tough enough. Now in their lexicon, the word band has become on the tip of that tongue. We've also been here seeing it from India. As we mentioned, is there no way that a deal could be done with Oracle, no way that TikTok could convince there is a safe way of still continuing to operate in the US. Yeah, I just don't see that you mentioned Europe is starting to sort of ramp up their activity just this week. I think government officials in the Netherlands band TikTok from

federal devices. There Again, it fundamentally comes down to trust. And there was leaked internal communications um that Forbes got over the summer UH and they showed that a TikTok officials said that even if all these protections are in put in place, this project Texas that they talk about a lot that involves oracle that according to them, it remains to be seen whether product and engineering, meaning Beijing

could still get access to this data. So if officials inside TikTok aren't certain that these protections are gonna be air tight, I don't think that we should think that they would be either. And again, if you look an analysts, one analyst in particular had odds of a TikTok band at around ten percent this summer and towards the end of last fall. They had up to now was before the bipartisan bill was introduced, else before you saw some of these recent revelations. So I think things are moving

in the wrong way. But again we'll see they're spending an awful lot of money to try to stop a band or a decoupling commission. It is one part of this equation we've not discussed, which is the TikTok user here in the United States. Lots of people love using that app. Uh. Many have told us they don't understand the risks. They're not well explained. Why should TikTok be banned? How would you justify it to them? Those million plus users that are saying we want this again, it's too fold.

It's national security and mental health. On the NAS security side again, it's it's pulling all sorts of sensitive data, everything from search and browsing history, keystroke patterns, potentially according to terms of service biometrics, which includes base prints and voiceprints. And for years they misrepresented where this was going. Uh. Internal communications again show that everything is viewed inside China. That's why FBI Director Chris Ray and others are raising

the alarm. But the mental health side is interesting as well. There was a recent report side by New York Times that had account set up for a thirteen year old girls that within a matter of thirty minutes, was showing eating disorder self harm content. And flash forward to the version of tiktok' is available in China doy On, and it's not showing that it's showing education materials. Museum exhibits science experiments. So it's very troubling both from a national

security data security side, but also the mental health side. Okay, but the mental health issues have been leveled not just at TikTok, but at homegrown social media platforms Instagram. I'm often having to respond to such concerns. How if we banned TikTok and uses move perhaps to YouTube, shorts and Instagram, how do we prevent that sort of element happening here. Yeah, there's a baseline level of of privacy protection, so we need to put in place. I'm actually open to taking

a look at increased age restrictions for social media. Generally, a lot of this, to your point, goes to social media apps beyond TikTok. Again, I think there's something very unique about TikTok that's exposed by the fact that you can compare what it shows to kids in the US versus kids in China. But I do think there's a broader issue we have to deal with here. It's sort of like how do you eat an elephant? Though? It's

it's one bite at a time. I think there's broader data flow concerns to go back to China with all sorts of applications and data brokers. But we've been looking at TikTok for two years. We have a big case developed on that we should take that action, and then I think it makes it easier to then deal with knock on case and say, well, this is like TikTok, We've dealt with it. That's what we've done in other context again, we went with whah wait first at the FCC,

then z t E, then Shina Mobile. I think that's how we sort of approach this broader issue, Commissioner. I think what we keep hearing is we've we've been looking at this for two years. These things do not work well. I don't think Caroline and I hearing from people in your position from the company's is an actual solution. Are you going to suggest that Apple or Alphabet through Google just don't make the app available through their stores? How

are you going to actually make this happen? And that's one one appetite that that I've thrown out there is this idea that you can look at Apple and Google have them remove it from the app store, obviously India as an example, grinder as a precedent here in the US, where we've banned an app through with the Sipius review, at least in that case required the sale. I think all of those our potential actions that can be taken here,

and I think TikTok actually is uniquely replaceable. Again, a lot of parents look at TikTok and I think it's like Facebook or Instagram or another social media where you're following a network of people you know. But in the main with TikTok, you go on there immediately you're being fed content from Beijing. So I do think it could be replaced in with with either another owner or another

short form video application relatively quickly. At c C Commissioner Brendon car with thank you for your time and the robust conversation. Frankly, and I know TikTok is a story will continue to discuss now coming up, why Morgan Stanley fired some of its own bankers find I should say some of its own bankers, and how WhatsApp is at the heart of it. This is Bloomberg. Morgan Stanley has fine some of its own anchors for some more than one million dollars each for conducting business on WhatsApp and

other messaging platforms. And clearly a painful reminder, particularly if you're senior, and this is perhaps when you're facing a million of a fine rather than perhaps a couple of thousand, is how seen you are, how often you are already

reprimanded and sort of a points system here. But it's interesting that these banks are paying the fines themselves and then asking for their own employer and literally clawing back bonus is already paid out because they're under that much pressure from the regulators to make sure communications for business are done properly. It's astonishing pressure from the SEC, the s CTC. Can you imagine being asked to give back a bonus that I made? I can't. I have to say.

The other story that caught my eyes the Bloomberg reporting around the NYC and what was actually responsible so for according to a source in Layman's terms, it was that they didn't basically turn on off and back on again the basically deeply technological area that you're trying to ensure that there's never any disasters and through one person and one personnel issue a disaster ensued in the markets. That's right, Welcome back to me technology. I'm car High and I'm

in Ludlow this week, both of us in San Francisco. Now, after a growing chorus of layoffs across the technology industry at large, one company is going against the grain. The cloud software platform Service Now will not layoff employees in three that's according to the company's CEO, Bill McDermott. So how is he going to keep that promise? Well? Fortunately, Bill joins us now on the program that that's a pledge. Bill, So how are you going to keep it? Well? We

are the platform for end to end digital transformation. Customers today have two things on their mind. On one hand, they have to automate and improve their productivity and do a lot more with less, so they're really trying to take cost out of the business. On the other hand, they recognize that digital business is something they have to have to do well at, so they are investing thing

and they're investing for the long term. So if you're investing for growth or you're taking costs out of the equation, with service Now, you can do it on one platform. You can do everything on Service Now is platform and that's what makes it so compelling. Bill told just Stock Grace three percent. We're investors chairing the pledge to not do layoffs or were they chairing the financial results? Oh?

I think they're cheering the financial results. You know, we are growing at the rule of fifty eight and a half, meaning if you combine our revenue growth and our free cash flow margin and we are growing in fifty eight and a half, they say you're a world class status at So we are doing something that no other enterprise software company in the world is doing. We're growing faster than all the others, but we're doing it in a

profitable way. In Wall Street likes that. But more importantly, it's a reflection of what we're doing for great customers like the Schwartz Group in Germany they're going for next generation retail, or the United States Army. They're serving their one million constituents and they're doing this end to end on one platform to run all of their business operations. You, of course actually hired, I didn't net people to your

business in quite a lot of them. Would you make the most of some of the talent that's becoming available and hide more in this environment? Caroline We hired five thousand last year, as you know, and it's fantastic because on the service now platform, you can literally run all your business opera rations as a company or an individual on one platform. So this argument that young people or new hires are unproductive is not the case here at service Now because they do all their work on the

service now platform, which is a total sensation. So our productivity is fantastic with early in career folks or senior executives that just want to work for the best, best company in the business will continue to hire. We're especially hiring and engineering and go to market professionals to take care of our customers. And I start there saying, well, now you're saying you're hiring this thing executing well in a tough environment. You're a man who understands activist investors.

You dealt with them in previous times. You understand how to some navigate that. Talk to us as other businesses face this environment right now, how are you looking to talk to your investor base, particularly when you have a stop that it's still pretty high multiples. Yeah, Caroline, you're right, I mean it is high multiples, but that's because the growth rate is so high. What I'm super proud of

is that understanding. And this was also reinforced today by other media professionals that the activist investors that are working with these other technology companies start the meeting off with we need you to look at the benchmark, and the benchmark is service now. And then they say their growth rate is twenty eight percent UM. And then they look at their margin profile and it's the highest in the

cloud business. And then they show them our free cash flow margin and they're like, we need you to be that, and that's how the meeting starts. So I take that with a hungry and humble attitude. Well humble because we know it's all about taking care of the customers and doing it super well with great employees, and well hungry because we want to grow even more and even faster. So I don't have an issue with activist investors, and

I have worked with them in the past. I actually have a great relationship with Elliott Management and with Jesse Cohne. I think they're terrific and at the time when I was with another company, they offered very good suggestions and we trust and we did a lot of cool stuff together. But here I don't think this is the first place they'll stop because it's so successful. Does your company thrive

in difficult times? Because I think you were talking about customers moving away from different individual vendors and basically coming to you for a one stop shop solution. But when customers do that, it's often because they're having to look and make changes reaction. Read you see what I mean? Yes, I do it. I mean, here's the situation. If you believe the independent research companies like I d C, they will tell you that I T spend for software will

grow in double digits this year. So that's a fact, an independent research fact. But let's assume that didn't happen, and let's just assume there was no increase in I T spend. What's happening now with customers When they have three or four technologies to do something similar, they're saying, let's cancel three and go with the one that's the best alter and the two. We don't want all four.

And during the hype cycle of the whole pandemic where people were trying to figure things out, they just board every point solution they can get their hands on, and now they want to really go for platforms that matter. So what service now is enabling companies to do. It's really consolidate to spend, move away from platforms that don't matter, and increase your productivity quite dramatically on one that does.

So take cost out, go for service now, put growth in Gopher service now, all on one platform for anten digital transformation. It's interesting. You are such a positive person. It sounds like and in many ways rightly. So I'm looking at analyst recommendations basically thirty six of that and I say, by your stock there's only one holdout one under performing things. Your stock is going to drop, and

that is Stephan over at BMP Power. What one thing would you say to stuff and what's he getting wrong? And what is that one thing that does keep you up at night that you're trying to tackle that We convinces that so well, I got to go speak with him. I think he has to have a meeting with me or come talk to our people as Serre technology. We haven't spend enough time with him, um, but I guess one out of thirty six isn't too bed. I would just tell him, like, if you look at where the

new economy is going, this is a platform economy. And in this economy, you have the hyper scale of clouds, which are all very relevant outstanding companies and they're gonna do very well. And then you have a couple of sas companies um and among those couple of sas companies that matter, we are one of them. What's unique about us is whether you're doing workloads in a public cloud, a private cloud, or in a multi cloud. Formation Service now serves as the control tower to end to end

digital transformation. If anyone understands the implications of that and the network effect that that creates, and the fact that we have the stickiest, most loyal customers in the business, with retention rates near and we grow same account revenue growth nearly thirty per customer. Plus we're getting lots of new business. We have a new business surge in Q four. I find it hard to understand why anyone wouldn't have

a by rating on that stock. The other thing, from an individual investor perspective, hey, look the whole thing, Caroline. As you know, the tightening monetary policy is what compressed

the multiples, especially in high tech. But as that now gets more normalized, you want to be in the companies that have the ability to give you tremendous leverage, because once that tightening of the monetary policy lessens, loosens gets more normalized, everybody in twenty four hours of forty eight hours is going to jump on to be in where to get in high leverage growth stocks like Service Now, and you want to be there before that rush. Are you going to miss out your time in the market,

Bell your time in the market. Service Now CEO from a great house in time with it. As always, we thank you. Let's talk see meanwhilet's talk about Amazon selling a vacant Bay Area office complex, in fact purchased during the pandemic. Now the company paid a hundred twenty three million dollars for the twenty nine acre property is the latest effort to unwind a pandemic era expansion that left

it with a supplus of warehouses and of employees. The Bay Area's office market has been hit harder course in the past two years. This company is pivoted to remote work and gave up real estate to cut costs. Now coming up the VC industries booming with interest in artificial intelligence. Will speak with insight partners who've been at it for a little while now when it comes to AI, this is bloom bog. Should you be using chat GPT for

investment advice? Look, this is a natural language processing technology numerously is not at strong points. So if you ask it to pick certain stocks to out performing in ETFs, probably going to sit on the fence. But it might entice you to decide to look for actual investments that

use the power of AI. For example, there are a couple of ets sort out before in the market using artificial intelligence, like the AI powered Equity e t F. It's got about a hundred million dollars in assets under management. It's greats information from the Internet and regulatory filings to help its over six thousand stocks that analysis pick re orientate in our perform. We've also got the like Silver State Street Fund one week seven billion dollars in assets

under management, and itself is powered by IBM Watson. It too is finding the right sort of stock to be picking and is up about ten percent on the year so far. The one thing that chat GPT might incentivize you to do, though, is stay diversified. When you ask it about trying to find a balanced portfolio, will recommend that you spread your investments across various asset types to find uncorrelated returns and that folks be diversified. It's not that strong a math said, but it is of course

a focus of a company that is trying. When you ask chat Gypt what to be doing with your investments, it sits very much on the set on the fence. It's saying like, you know, you can lose money or can gain it, but it's really interesting to try and tell where you should be investing in, what the power

of AI is in your investments. And what's so funny is now and know the companies that are starting to try and make out that they're using AI right in the same way that we used to see perhaps like write blockchain when it blockchain, when everyone started to put blockchain onto the end of their names, and that the stocker pop. We've just seen some other companies starts to

say that they're harnessing the power of AI. I don't know how to get my head around this, because I thought the whole point of ETS in particular was to be about passive investing, and you're asking artificial intelligence to help you with it doesn't even bear going there. Bloom Bers Katie Growfeld wrote a brilliant story about it in the terminal and on blue dot com go and read it. Is it active? Is it passive? If a bot does

it for I don't know. I don't know. But talking about companies trying to get on the bandwagon of harnessing AI, open Ai, of course, which is the company behind chat GPT, Well it's being all the buzz over at BuzzFeed because BuzzFeed is planning to use open ai to bolster some of its own content creation. We understand the news cent shares surging at one point more than on this Thursday, buzzfeeds market value at one point, therefore hitting four million dollars.

Let's get to it, Liciadeas and Elia, I mean, what ultimately will this help BuzzFeed do? Yees? So, I think that the main point here is for BuzzFeed sent MML out to its start today is saying that this is going to help them bring a lower cost to the content that it produces. And I think we've seen AI a lad in the tax face in terms of with algorithms. I think that's where a lot of us are the most mimiliar with it um. But it is really interesting to see that they are actually wanting to implement it

with the content that it's creating. UM. So yeah, it'll be UM show to see how this plays out. I think. So the pitch here is replaced journalists with art fish intelligence, which for the three of us, I imagine is an uncomfortable thing to discuss. So let's talk about what Wall Street Alicia's saying about this partnership. I mean, the stock reaction says it all, really, doesn't it mm hmm Yeah. And as you said, UM, definitely different groups of people

who have different opinions on this. UM. Clearly Wall Street is um excited at the idea of ai UM. We saw share volume go absolutely bonkers today UM with over two dred a million. UM. You know, share exchange is happening. UM. So I think that analysts are um excited and have a generally positive out look about ai UM. I think that there is probably more to come, you know. I

think that this is just the beginning of the discussion. UM. And as we learn more about the outline of one BuzzFeed plans to implement this, I think that that will camera down how in lass are viewing it. Mags Alicia das really looking into the applications of open AI for BuzzFeed, but of course AI, artificial intelligence and indeed generative AY

are could really disrupt most parts of industry. It feels like right now, and every VC we talked to seems to be discussing that maybe this is a new tipping point. Lonie Jeffrey is one of them, managing director of Inside Partners, which has been tracking AI. You've been tracking machine learning startups and scale up since you've been taking stakes in some of them, and only you said in particular that this is perhaps feeling like the early launch of the

Internet itself. Why so, what's so important and impactful about generative AI? I think you know, before the release of chat GPT, many people have been underestimating the progress that AI has been made over the last few years and will make going forward. It was kind of like the spark that lit the fire of startup innovation around general v I, and it also created a renewed fundraising dynamic.

One way to think about it is that we've gone from these systems of prediction like classification or recommendation systems, to these systems of creation, and so you now have these really interesting, powerful generative systems like our portfolio company Jasper which can help you write a blog post, or stable Diffusion which can generate images, or get hub copilot which can help write code and likely see co pilots emerge with the ability to create first drafts for all

sorts of other functions besides programming, you know, eventually medical documentation, legal contracts, school lesson plans and things like that. The thing for me Loan is it all comes down to money. It always comes back to money, right and and the team over its coil capital writing this research report recently, the AI has the potential, particularly generative a AI, to

generate trillions of dollars of economic value. How do we get there to actually, you know, implement AI in a way that that leads to value creation or products and services we can actually charge for. It will be very interesting to watch where the pools of value will accrue and where the economic boats will be the deepest with

these new generative AIA and technologies, if anywhere. Some people believe that the economic power will go to the companies that are building the large foundation models because they require so much time and skill and money to create, like

open AI and Google and others. And some think that the modes will be deepest with the companies that are fine tuning the models for specific use cases, because they can enjoy things like demand side economies of scale from having proprietary training data or flow of feedback data from users. But I think it's a little early. It's still the fog of war around at all. Lonnie, your CB is fascinating. We just showed some of your portfolio companies on the screen.

You interned at Microsoft in your earlier years, you worked at IBM. Who is going to get there first, big tech company like Microsoft or the more nimble startops that you're investing in now. I think the rise of generative AI in particular could help to democratize access to AI technology because it can be delivered as a service. It that's such a versatile capability of these foundation models. UM it may be easier for regular companies to consume and

without being quite as deep tech. But I would say it's also important to remember that, um it's not just the generative AI companies that are making transformative impact in the kind of more traditional AI like in computer vision

AI and healthcare. For example, we have a portfolio company over Jet where the CEO A Warda and her team have built powerful technology that can tell you whether you're two needs a filling or a crown based on its reading of a dental X ray or itor of health which can apply computer vision to colonoscity videos in real time. It can catch cancer's poll ups missed by a gas enterrologist, which can be hugely impactful for healthcare. Um so there's gonna be a lot of progress over the next couple

of years. I think it will be pretty pretty fun to watch Lonely Jeffe. We're looking forward to watching it along with the managing director of Insight Partners. Thank you so much for joining Caroline and on the show going viral today? What have you seen it already? The new teaser for the season four of HBO's Succession Now the March twenty four season premiere was trying across all of

social media Basically. HBO says an average of six point one million viewers watched season three, up fifty six PEP from season two, and the season three finalie held one points of a million viewers who tuned in live. But Edward's interesting is we keep saying our succession white lotus. Some of these key talked about ones, but actually if you look at the numbers, they're not. Some of the

most popular, they're not. There's a target audience. I get why, you know, the Bloomberg family would be into Succession, the money behind it, the stories that aren't reflecting reality. There are fans out there. I mean, this is going viral right. I went to Twitter hashtag Succession. The video on Twitter has you know, one point five million views when I last looked. People get excited for this and they get

talking about it because they love the stories. But look at it compared to like Young Sheldon average audience seven million, so way more than Succession. Yellow Stone season five is getting twelve million in terms of their overall viewerships. So perhaps as much as the fewer it gets, perhaps that maybe just Succession is really good at marketing itself on social media. It's a case of no, your audience, yes, yeah, and maybe we're it. And that does it for this

edition of Broomberg Technology to our own audience. From here at least San Francisco, I've got to get on a plane. Thank you for being here. Don't forget check out our podcast and everything we've got coming up this week. This is Bloomberg,