From the heart where Innovation of Money and Power Collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed loved Love.
I'm Caroline Hide of Bloomberg's World headquarters in New York and Imed Lovelo in San Francisco.
This is Bloomberg Technology coming up.
Micron fools as the forecast fails to meet the loftiest AI driven expectations for coverage.
Ahead, Plus SpaceX notches a two hundred and ten billion dollar valuation in its latest tender offer.
Details ahead, and we go.
Live to Santa Ana, California.
That's as police raid a warehouse of suspected stolen merchandise bound for marketplaces like Amazon. All that and so much more ahead, But first we check in on these markets and look a little reprieve to some of the selling that we've seen earlier in the traders.
Well, the bad news is good news on the macro front.
Some of that jobless claim data, some of the housing sales data, some of the industrial production data weaker. That means does a FED have room to cut later this year? All eyes on macro policy. We're currently just up only thirteen points. Though on the Nasdaq are some big laggards that ED is going.
To walk us through.
I'm looking at a ten year yield thought a bid. We're seeing money move into the bond market on the back of that data, even as we see yet more supply coming from the seven year side of things coming a little bit later. I'm looking at the dollar actually down versus a Japanese yen. Keep an eye on the en, and we've seen such weakness where we see intervention coming from the boj We're currently training at one hundred and sixty.
Move on and have a look at what's happening in the world of bitcoin, because look, we're still at about a sixty one thousand dollar handle. We've seen some significant selling going on at the moment, but for now we're at more than a percentage point, so a little bit of risk appetite coming into crypto as well.
But ED, what are you watching?
I'm going to do something a bit unusual.
I'm going to go right to private markets and start with this big story around spacexuation of two hundred and ten billion US dollars based on the latest tender. A tender is at where the company basically lets employees and insiders sell their shares to investors for liquidity, but because you assign a price to the shares, you're able to
establish evaluation. This is a custom chart on the Bloomberg terminal that we make using those Bloomberg News reports going back many quarters of many years, but also the latest data from pitchbook, and it's a big jump.
Right.
One hundred and eighty billion dollars was the valuation we reported in December of last year. We're up to two hundred and ten billion. Later in the show, we're going to go to Katie Ruth, who helped break that story last night. Just there's so much to discuss around this company, but also the idea that if you're a massive growth stage name, why go public? The private markets are there to support you. Microm is the big earning story. It's
really interesting. They gave this sales forecast that at the midpoint was kind of bang on what the street was looking for, really high expectations. It's a story carrow about high bandwidth memory. High bandwidth memory gets coupled with AI accelerators like in Video's H two hundred and if that's doing so well, well, why is Micron not doing so well?
Because of its legacy businesses d RAM and nand or flash memory and those cyclical markets and end markets that they go into two day chart with the sock down six percent in the session right now.
I mean, what's the CEO to do when they're posting revenue growth of more than eighty percent. Let's dwell on it for a moment. A closer look at a Micron after the release of their earnings report and of course the follow up for what in video is currently digesting to their AGM meeting that happened on Wednesday. In King is the person we turn to for it, and Ian, I mean go to Micron first. This feels as though they just couldn't beat the highest mark out there for the estimates.
No, you're absolutely right. I mean they are predicting that revenue will be ninety percent from where it was a year ago. Albeit that's a that's a pretty easy comparison given.
How bad last year was.
But yes, it's all about how much real demand are you getting from AI how much of that real high margin kind of product AD's favorite type of memory chip are you shifting and making money from.
So it is really interesting and thanks you to that, by the way, I even managed to convince you to embed the video we made about high bandwidth memory and your story.
It's now I owe you.
He did some math for us, so he basically said, we know what sales are for high bandwidth memory and the quarter gone, the current period, and what they'll be in the next fiscal year.
And you can see a really clear path.
That as the investment in AI infrastructure ramps so to do sales of high bandwidth memory.
Yeah.
No, absolutely, one hundred million dollars, which is relatively small for the quarter reported, going to multiple hundreds of millions, going to multiple billions next year. So when you're a company that has about six billion dollars of sales a quarter, that's a good sign, very good sign.
I mean all of this, of course, is in comparison to and video has been churning out in the high bandwidth memory is what works in lockstep with their own chips. I'm currently looking in video down one point seven percent.
It's been very volatile. What happened at the agmsay.
And yeah, well, first of all, we're not allowed to call it an AGM. According to my American colleagues, that's an English thing. Yeah, Shareholders meeting apparently, but yeah, they really just came out then reiterated this pitch that they've given us this new industrial or evolution, this our products are becoming more and more vital to this giant change in the economy. So we really didn't get anything new. So if there was an expectation that perhaps Jensen would
pop out some new numbers, maybe those were disappointed. But really it was just him kind of beating his fist against his chest and saying, look here we are, and look how well we've done.
I feel like it was almost rebatum what they said in May twenty second at earnings in the deck basically that they published. But even so, there's just so much attention on a video right now, Blue Masie and King, who leads our chip coverage, thank you so much.
Let's get some more on big tech.
This month's NETS selling in the tech sector has been the largest on records since twenty seventeen, with hedge funds aggressively selling tech stocks after the rise of Nvidia. Bloomberg's j just menton joins us now for more. The markets are a funny thing. I don't want to go as far as to say fickle, because I remember you coming on the show mere months ago and talking about this fomo.
Trade at the beginning of the year.
Now we had this net selling, explain what the markets are doing right now?
Right, So how can you have this net selling and hedge funds. But then just last week we had the Bank of America EPF our data showing that we had record flows going in tech technology stocks. So the reason is if you look at a pie chart when it comes to flows data, actually if you're looking at mutual funds, it's only roughly around twenty percent there, So you can
have those record inflows into there. But that other portion, if you're looking at seventy percent, that composits of say like hedge funds, insurers obviously pinsions, so you can still have both happening, but obviously hedge funds contribute a bigger portion to that. So you can still have mutual funds having that record exposure. But hedge fund's doing something else, and it's not just technology, it's specifically also more geared toward those chip stocks.
Ed It does feel that maybe hedge funds are getting more risk averse. More broadly, they're coming out of momentum. That's right, is the hedge fund trying to be the canary in the coal mine here. They like, look, retail's pouring in, mutuals pouring in, we're starting to get out now.
Well, it's a great point because normally if you look at what retail is doing, it can be a bit of a contrarian indicator. To your point there, because if they're piling in and then hedge funds, if you think of that as more of, may say, the smart type of money, and how they're positioning, that does show you they are definitely moving more toward defensive areas of the market.
But also a part of that is utilities, and that's also been an AI type of play because usually it's typically thought of as less volatile, more diversified if you're in kind of a slower economic regime.
But obviously the economy.
Has been holding up well in the latest Atlanta Fed GDP numbers for the second quarter around three percent. So you are seeing hedge funds obviously pulling out when it comes to those chip in technology type shares, but even though it's more defensive, they are going to other corners that are AI plays as well, care line including utility stocks.
I get the.
I guess concern of how long a rally in a particular sector or name is going to last, Right, But I have to remind myself of the incredible gains either on a year to date basis twelve month basis, and at some point you have to say, like, the going has been good, but it might not last that long.
Jest I feel like we were talking about this a year ago as well, after that was also a record first half that we were looking at for the S and P five hundred and NAVSDAQ one hundred two, when everyone was questioning, then how much longer can that continue? And Gina Martin Adams over at Bloomberg Intelligence had some really great data looking at breadth in how basically what they were looking at a year ago would show that this
could continue for a while, and it has. And Gina's team actually just put out data this week showing that, you know, people, I think anytime something like this happens, people like to talk about bubble type behavior.
They're definitely not seeing that.
With that said, though, if you're looking at the side the Philadelphia Semiconductor Index relative to the S and P five hundred right now, it's actually trading at its all time hides and even higher than above that peak in March of two thousand. So sometimes when I'm talking to sources, obviously maybe things have gotten a bit of ahead of themselves.
But even though people were.
Talking about in video, you know, recently entering a correction or less than or obviously off of ten percent off of that most recent high there, I mean, it was trading around five hundred and fifty dollars in the middle of January, and to look at obviously it had that stock split, so it's been quite a tear here. So sometimes if you bring up sort of the correction sort of mentality with nvideo, sometimes you will obviously get some irols from traders there.
Steve Weisman calling it just a blip, just menton always great to get you on.
Not the hedge funds are up to l's top private market.
Self Bak's Vision fund too is investing in artificial intelligence startup Perplexity AI. Self bank will invests between ten million and twenty million dollars into the US startup, but that's as part of a larger two hundred and fifteen million funding round that triples perplexities valuation to three billion dollars,
making one of the industry's most highly valued companies. Meanwhile, SpaceX, it's notching a two hundred and ten billion dollar valuations insiders cell shares and one hundred and twelve dollars a piece and a tender offer that's at according to Bloomberg sources.
Now the high unexpected price boosts the value of Elmusk's space and satellite company from one hundred and eighty billion back in December's ten to offer, making the company the second most valuable startup in the world, joining smore Bloomberg's Ktie roof and it's the most valuable in the US.
That's right, by answer, is the most valuable in the world. But for US, SpaceX set its own record. It surpassed its own record. It's a two hundred and ten billion out up from one hundred and eighty billion in December.
Katie, there's just such intense interest in SpaceX and getting a piece of it, and I think it's worthwhile for our Bloomberg Technology audience around the world. Explain the mechanics of how tender offer works, right, why us learning from sources the share price is important in the.
Math, sure, and so the tender offers. That's insiders such as employees selling their shares to other private investors. And so the tender offer is different than a secondary where the people are doing one off trades. The tender offer is more meaningful because it means the company signed off on this valuation and that they're doing a large transaction. You know, we're hundreds of millions of dollars of shares,
I mean hundreds of millions of dollars trade hands. And so this is you know, meaningful, you know for Silicon Valley, you know, when they're looking at prices and seeing that, you know, companies can still raise at high prices right now even if they're not AI and IT, but you know, it sets surpasses SpaceX is on record.
I think that's Katie Ruth late night but important reporting from you as the headline, and thought, yep, saw this coming a little bit big one.
Okay, another story.
We're watching shares of Amazon right now as it plans to launch an online storefront for low price apparel and home goods, marking the company's biggest push to counter the rise of discount competitors like Timu and she In. The company's plans were outlined in slides posted to websites for third party Chinese sellers showing Amazon shipping goods directly to
customers from China. Okay, some breaking news. Just moments ago, California police have raided a southern California warehouse filled with allegedly stolen merchandise they say likely would have ended up on online marketplaces run by Amazon and other retailers. Bloomberg Spencer, soaper on the ground with law enforcement, you have been witnessed to that raid, Spencer, Just give us the basics of where you are and what's happened.
Yes, So, we're about thirty miles south of Los Angeles and Santa Ana, California. We're just off Interstate five at a warehouse behind me that's actually a retail liquidation center, which you know, can be legitimate businesses that get you know, scratched and dented merchandise and returns and then they go about selling it. But this rate that just happened a
little more than an hour ago. California Highway Patrol's Cargo Theft Division had information that there could be stolen merchandise inside. They got a search mort and they executed that search mort this morning. So we had about a dozen officers storm on the scene, they secured the facility and what they're doing right now is going through It looks like an order house. There's like boxes from Florida ceiling of
all kinds of stuff. Vacuum cleaners, had food, you know, air fryers, all kinds of things that you can imagine they're trying to sift through all that stuff to determine if anything's been stolen and if they could trace that back to a to a previous theft.
I mean, this is a big operation. They've got you on board to witness it. This clear is important to them.
Spencer.
How economically important is it to companies that are losing the goods like this?
Yeah, that's a great question. And everyone's familiar shoplifting because you see like cell phone videos of people loading up a shopping part full of stuff and running out of the store. But this is far more serious and also more sophisticated, where they're stealing entire cargo containers and one hall could be anywhere from a couple hundred thousand to up to twenty million of cargo. So the losses get very high, very quickly, and it's really been on the rise.
The number of cargo thefts reported in the US in the first quarter of this year were nearly one thousand, and that was up almost fifty percent from a year earlier, and it's just been going up with no end in sight. The fees are getting more sophisticated. They're impersonating legitimate trucking companies, you know, going to warehouses picking up entire truckloads of inventory and like they're supposed to be the ones picking
it up and taking off with it. And then you know, a delivery's never made where it'supp and that's when they discovered the theft was made, like days later. So it's a really big problem that folks a lot of damage.
Bloomberg Spencer Sober, who is it on the ground in southern California, has just accompanied law enforcement in a raid where they seed allegedly stolen merchandise bound for Amazon. That's the first for this program, I think, in probably this network. Right coming up on the show, we're going to be joined by Jeff Thomas, executive vice president of Nasdak's Corporate Platforms business, for his read on the IPO landscape. I'm going to take a short break. Stay with us because
we will be right back. This is Bloomberg Technology, Time for Talking Tech and first st up Open Ai makes a deal with Time. The maker of track GPT has partnered with the magazine in a multi year agreement that would allow access to current and historic comment. In return, Chat GPT user queries will link answers back to the original source on Time dot Com and Time will also have access to openaised tech. Plus, the US, Japan and
South Korea make a pledge for stronger tech relations. The three countries say they'll work closely on building out a more resilient supply chain in order to address weaknesses in key tech sectors like semiconductors in AI. The move comes amid rapid expansion and competition from China in the chip sector, and Webtoon Comics has raised three hundred and fifteen million dollars in its USIPO, topping the marketed range. The online comics company sold fifteen million shares after marketing them for
eighteen to twenty one dollars each. According to Bloomberg calculations, Webtoon has a market value of about two point seven billion dollars at.
That IPO price.
Bloomberg spoke with COO and CFO of webtoon David Lee. Here's what he had to say on how they'll use that cash.
We'll use this to speed up and deepen the tools we give any creator globally to be a global hit. Many of the stories that you've come to see on Amazon, Primer, Netflix, the top show on Netflix today, the eighth show, is powered by our platform, and so you'll see us continue to delight more and more consumers here in the United States and the rest of the world and invest behind our creators.
We want to talk more about listings right now and the international flavor of them. Jeff Thomas is with US Executive Vice president Nasdak's Corporate Platforms business. We're going to be assessing the IPO landscape, and Jeff, I mean today a big day for webtun and interestingly, South Korea base never is the company to sort of backs it, so we're see more international companies coming to.
The US to list.
That's right on NASZAC. This year, we've had sixty four IPOs and nearly half of those have come from international, and so we've had web Tune from Korea, we had super High out of Asia, we had Merrickside of the UK for ovial out of Spain all looking to come to the US capital markets because frankly, they can get a better valuation and the capital markets are wider and deeper here in the USA.
That's not uniformly true though, right The chat around Sheian is so interesting to me. They seem to be looking at London based on the political tension between the US and China. That was a headline that I think crosswile I was on vacation. I was very surprised to see it. What would the factor in that case be to your mind?
You know, I think there's always unique aspects to every deal. What we really focus on here at Nasdaq is trying to provide a great platform to support all of our companies from across the world. That includes having a great trading platform, supporting companies with our investor relations insights, and really helping them on their sustainability journeys.
Are there fewer Chinese companies though, eyeing the US, I'm sorry, Are there fewer Chinese related names eyeing the US to go public?
You know, I think we still see a lot of strong demand from around the globe. It's not just China over in Asia, but we have a lot of interest out of Southeast Asia, you know, not just Korea like where Webtoon is from, but Vietnam, Indonesia, Lots of other companies countries over in Asia are also looking to come to the US.
Yeah, vin Fast is an interesting example of a name from that region in this market. I trying to get a bigger picture sense of what's going on, Like we had this pocket of listings in September of last year, and we started the year with some energy and we're showing a graphic on the screen now of all the VC back names that we've waiting for ages to give us a signal ongoing public Where are we in this market broadly at this moment in time, Jeff.
We do have a very strong pipeline of VC backed tech companies that are looking to go public over i'd say the next twelve to eighteen months. This year, the story really has been more about private equity back companies, companies in the healthcare sector. We've had some great names out of biotech. We just had Lineage Logistics file publicly yesterday that's going to be the largest cold storage rout
in the US. So a lot of the more kind of steadier growth, highly profitable companies and I think some of the venture tech companies we expect to see more activity as out of those. In twenty twenty five.
We were just hearing though, how we've now got a new record setter for valuation in the US private markets, that being SpaceX. Many might think that Elon Musk would I a Texas based exchange as and when that becomes a reality, Jef, what do you think the competition?
Well, I think, frankly, we endorse competition. I think the US capital markets are unique in that we not only compete for listings in the US, but we also compete for all the trading volume. That's the way the SEC has set up the market structure here in the US, so it's highly competitive. There's actually sixteen different exchanges in
the US. There's dozens of different internalizers and dark pools across the US, and I think that competition is one of the things that drives such great outcomes for our listed companies. It's why we invest so much in our technology to provide a great trading platform. It's why we have to differentiate our value proposition to provide great marketing
and visibility to our listed companies. And then of course all of the the data and insights to help them understand who's buying and selling their stock every day.
And if you're a SpaceX y go public a tool when the private markets vacuul the way. Jeff Thomas is Acuctive, Vice President of NASDAT School for Platforms Business.
Thank you so much.
The deal flow is still not quite there.
Creditate equity has slowed a little bit.
In the activity in our pipelines, we're seeing a meaningful acceleration and deal flow.
The key concern we have is well to be activity where the buyers and sellers meet them well middle and that hasn't quite happened yet, but I'm hopeful it will.
For the credit markets, you still have a lot of options, whether it's a recap, a minority sale, and that's what we're seeing. So it may not be asset sale outright, but a transaction is going to occur.
Now the rates of stabilize and that cuts are on the horizon. We are seeing the pipeline pick up meaningfully, which means you should start to see more deals, more of veloci and even if the base rate comes down, it's still going to offer a pretty attractive ring.
Some of the top names over the last couple of days of Bloomberg invest and talking about rates stabilizing. Today we actually see a bid on rates. We see perhaps yields come down even ahead of that sen yet seven year auction. We get a little bit later today we're
off by four basis points. Now some of that movement into the bomb market has just stemmed some of the anxiety around the technology play Here on the equity market as well, we're down only a tenth of fer percent, even though we have some big drawed douns in single names. But for now we're stable, off about thirty points on the Nasdaq one hundred.
That is the bigger benchmark.
I'm looking at the bitcoin currently off by about a percentage point, Crypto managing to push on higher as we see a little bit of well risk on sentiment. We've got it in bomb market, we've got it in the crypto market. But let's look at some of the individual names in the equity market that maybe is dragging down the overall and now's that one hundred because Micron, the
key one underperformed down by more than six percent. As you'll see, look the CEO comes out spells the fact that I gues see record sales in twenty twenty five, says that revenue is climbing more than eighty percent, points to forecast of revenue up more than ninety percent.
Not good enough. The market wanted to see more.
This is all about, of course, the high bandwidth memory coming from Micron and his AI play.
I'm looking at PDD as well, off by more than three percent.
Is depository receipts traded here in the US Pindo, a duo owns Temu and Tamu. Maybe has some more competition coming from Amazon that's dragging it lower. I'm looking at Palo Alto Networks, so interesting one ed we're up more than five percent. Does the scale are doing well as well? Security companies cybersecurity? A real focus today is that because some analysts are liking it Burnstein for example, liking Palo Alto Networks, or is it more an issue of what's
just happening in the UK and hacking. We're going to be discussing that a little bit later, but for now, back to investment.
Yeah.
Another thing that's come out of Bloomberg invests the unveiling.
Of Bloomberg's Ones to Watch.
List in finance and markets fintech company block known for financial services like Square and cash App, made the list, shining a light on Amrita A Hooja blocks, CFO and COO, and I'm delighted to say I'm research joins me now and set in San Francisco. In my career, I've met many actually joint CFO coos, but it's a really interesting dual role where maybe at times you conflict with yourself because you have to manage the numbers and you have to run the operations of the business.
What's that like, Well, first of all, thank you so much for having me here, Ed, I really appreciate it.
That's right.
I have to hold both things aspiration and discipline. Aspiration because the market opportunity that we're going after is vast, over a two hundred billion dollars TAM across financial services and commerce, and discipline because we want to do that with ruthless focus on unit economics and holding ourselves accountable
to returns on those outcomes. And so as a COO and as a CFO, I'm very focused on both and continue to show to demonstrate our progress towards our investment framework and financial targets of being a rule of forty company in twenty twenty six.
The stock is down eighteen percent so far this year. There are multiple stories coming with block some of it very closely tied to bitcoin, and we can talk in a little bit about strategy, but where would you say the company is at right now in where you're trying to get it to.
I think that we have a tremendous opportunity ahead for growth. If you look at q one at an eight billion dollars annualized gross profit, you know scale, we were growing over twenty two percent year over year. To be at that scale and to continue to demonstrate growth, we clearly are serving very important needs on behalf of our customers, whether small businesses with Square or the over fifty four
million monthly actives for cash app, which are individuals. We see a significant opportunity to do more of that.
We're early.
We use technology and AI to underpin all of our products, and we're focused on improving our product velocity to ship more products to our customers.
You are early, and in many ways, i'mri to regulation and has to play cat shop. I mean, it's not missed on many that they're trying to bring financial and technology regulation into the twenty first century.
That's what the last sort of Congress vote was actually on.
And I'm interested as to whether you think regulation is there in the right pace view at the moment with Block because there is lots of investigations and there's lots of people trying to get the head around the future of crypto and payments.
That's right, and we welcome regulation as it appropriately serves consumers.
We work with regulators.
We look to build a healthy ecosystem for our customers.
It's our top.
Priority to maintain a safe, secure platform that builds trust over time. So ultimately that's good for Block.
Trust over time.
There has been some concerns around, for example, money laundering warries, trading within sanctioned countries, which of course I know is being investigated at the moment. When it comes to cash app, how are you working with regulators and that to ensure that you are bringing the level of transparency. I'm sure you have internally to those Externally, we take.
Any of those allegations extremely seriously. We're working by investing in the appropriate areas that again build a healthy and safe and responsible platform for our customers, including our compliance teams, our product teams, or risk management teams. We are always open to feedback and want to create that appropriate dialogue with regulators, policymakers, and our company, along with our customers ANDRITA.
When I moved to San Francisco in twenty eighteen, Jack Dorsey was probably a little bit more closely associated with what was then called Twitter, and a lot has changed since I've been here in the last six years. He's now at block And what is that like working with him, your relationship with him and the role he plays day to day in the company, And when I look at the Bitcoin news that came out recently, how much is that where he's focused.
Of course, Jack is a visionary.
He's now not only running our company, but also running Square, and so I would say that the vast majority of his focus and our focus is on our two mature
eCos systems with Square and with Kasha. With Bitcoin, you know, we have a stake in the future where money can move at the speed of the Internet, and we think Bitcoin is the likeliest contender to enable that vision because it is resilient, it's been battle tested, it's secure, it's transparent, it's fairly liquid, and so you know what we see as we look around the world is that often the most underserved customers are the ones who have to pay the highest rates to access their money or to move
money around. We think bitcoin has the opportunity to change that. You know, we of course are going to be disciplined and prudent in how we invest towards that future. Less than three percent of our op X goes towards Bitcoin experiments and initiatives, but it could be a potentially transformative one.
I'm really interested in the investment side of it, Amrita, because yes, you're building products and can entirely understand why and want to experiment for the good of the consumer, But why the balance sheet? Why continue to have ten percent a gross profit going into bitcoin products as well each month and indeed keeping it as an investment on the balance sheet?
Yes, only it's ten percent of bitcoin gross profit, which is less than five percent of our overall gross profit, so it's a fairly modest sum.
And what it helps us do is actually learn.
It helps us understand what it means to custody bitcoin, what it means for our treasury teams to be out in the market buying bitcoin, what it means with respect to insurance.
There's a lot of different things.
That we get to learn from this relatively modest and small investment in the scope of our much broader balance sheet.
I'm sure it's great to have some time with you combat some being on the list. We appreciate your time, Amuja of block Meanwhile, coming up, we're going to be joined by Shudi Gandhi, founder of Array Ventures, to talk about the really early stage investments in AI and how a pang offer is a blue meg technology.
Time now for our VC round up.
First up, Andrew is in talks with Peter Teel's Founders Fund and other investors to raise one or half billion dollars. That's according to sources, this would be one of the year's largest funding rounds.
One exclusively focused.
On AI just AI enabled plus Sequoia Capital is leading a sixteen million dollar investment in Dust. It's a French startup building customized AI bots for companies now. The startup makes software that plugs into offerings from Open Ai, Google, Anthropic and mistrale AI and then mixed up to apps like Slack. And it's not scires only AI investment. On the day, Clay and AI startup focused on sales and
marketing for businesses. Let's just raise forty six million dollars from investors like Sequoia, but also Meritech and First Rand.
Capital and others.
This brings the company's valuation to five hundred million dollars.
In Okay, let's keep talking about investing in AI and bring in Shrudy Gandhi for more on today's VC Spotlight. She's the founder of Array Ventures, which manages one hundred and fifty million dollars in AUM and the focus is getting into AI names at the very earliest stages. And I think this is a very well timed and important conversation. Two days ago, we had the Etched founder and CEO on the show and they had this debut round one hundred and twenty million dollars.
And after he'd gone off the show.
Loads of people reached out to me on social media and said, great interview, but like they don't have anything to show yet. They're talking about taking on the n videos of the world, and it's a hardware play. And so that's what I want to ask you about in the first instance, getting in at the very early stages. How do you know that that's a viable business, a viable technology a viable plan.
Thank you first of all for having me on this show.
Very good question. Actually it's not that hard today. There is ways to invest, which is one is focused on pain points, and then there's areas to just invest because they're glamorous founders. There's also EA is kind of distributed in currently in two ways. One is model companies and then there's applications.
Yes, I'm sure you've heard a lot about that.
There is also just as Caroline just outlined in some of the today's news stories.
Exactly so there's a whole bunch of investors going after the model companies and they're all kind of it's kind of raised to the bottom in some ways because they're all just getting better. But people and funds are feeling like they're missing out on getting into the best AI revolution just because it's being compared to the early.
Days of Internet today.
But then there is the application layers, and then there's real pain points that companies need to solve, be it in different form of verticals and hr it could be in CIOC. So everybody needs efficiency and today you can solve.
That by not raising that much money.
You can solve for that early days by testing the waters, calling your friends and figuring out what do you need to solve and how can I get started? But just a few million dollars and once you do that, then you can go raise a big amount of capital after or that. But I don't think everybody needs to raise that much money if you're not a model company.
Okay, so if you're going to allocate some of your money to a company that just wants the first round to get things rolling to answer the consumer's need, how are you deciding where's the best place to put it?
That's that's right, Thank you so much for asking.
But I think it's what I just said. We focus on pain points.
We thought, we thought we talk about this thing called agitated workforce, which is if a founder is at a big company agitated. They're really upset about trying to solve some big problems in AI, in data, in infrastructure, in cloud, insecurity. But what they cannot do is get permissions and budgets with the tight budgets today from their CIOs to go solve for that within the company because it's not mission critical.
At the current company.
Then they go on and go say, you know, talk to their few friends and they say, if I build this, will you buy? And their friends out there saying yes. So the three three of the five friends they talk to, they say that that's when our founders go and build, you know, get the conviction to build those companies. Frankly, you don't need that much money early days to put a team together, especially if you have a core deum of amazing engineers, to go put that team together, go
solve for those problems because you've built them before. So what we yeah, what we invest in is pre seed companies. So that's first check ever into a company, and you do not need that much money to go start and validate your ideas.
Your initial check size about one and a half million dollars. Shooty, how long do you then stay with the company, because, as you say, there's a sudden rush, a tussle to get in at later rounds with head evaluations. Do you have a liquidity event then or do you try and ride it out for the exit for the M and A for the IPO.
That's a great question. We don't think of ourselves as a one stage investor. Usually we write it out, but we've been very fortunate in the last few years to get liquidity events at series BC plus stages of the companies. So sometimes as a prudent investor, we will sell like a tenth of our shares or less than a tenth of our shares in a company. We just did that and we returned our first fund, which was a twenty
sixteen vintage. So we will consider that as a case by case basis, just as a fiducial responsibility to our lpis. But our goal is to never get out at the second or the third round of the investment.
Trutier, one of our audience members, is written in on the Bloomberg Terminal VIP and say they agree with you that you know, AI can mean different things, but they add that for some investors mock ups and wireframes and not products, and for some other investors they are you know, that's an interesting point where I want to go to end is you know, you have to find these people if they're precede, where are they coming from and where are they coming up with their ideas?
Yeah, so it's a great question.
Oftentimes people think that you just call your other VC friends and get deal flow, but not in preceed precede. You're building networks at operators, at amazing companies that are coming. You know, people that have worked at for two to four years at a hard company.
Paid maybe or maybe not.
It doesn't matter. I think what matters is they've built this before. What matters is they know how to build this and when they go take it on.
As a startup after.
This, they're gonna go do it with very little amount of money, which is a preceed round. So that's where we invest in people coming out of different operators, coming out of different companies.
Truety, so great to have you on.
Come back, Truety Gandhi, founder of Array Benches.
Let's talk sport.
FIFA seeking to raise as much as two billion dollars for the expansion of FIFA Plus it's the free streaming service launched by the football's global governing body to offer live coverage of matches. According to people with knowledge of the matter, well let's bring in Phoenix. Do you let you like how called it football?
Yes?
So, Felix. It's a good time to be selling some sort of sports right.
Now, it really is. I mean it's an expensive time if you're a buyer.
But you know, all these stream and services have launched, these ads supported tiers. I think the biggest movement right now in the whole home entertainment world is the fact that you know, as they try and build out these advertising uh you know, ad supported part of their platforms, they're going to need more live sports, right and so every time any bit of sports rights comes up for sale,
you just see the prices going up and up. You see the NBA, you know, sign these about signed these huge deals.
They're getting a big bump. You know.
FIFA, if they have some secondary packages, you can go out in the market, sell the rights or distribute them yourselves.
Yeah, it's a great time to be selling sports rights.
Phoenix, tell me a bit about FIFA Plus.
I mean I have Sling, I have Paramount Plus.
I watch football at the weekends on Peacock. Do I need get myself FIFA Plus as well?
Depends on your level of addiction.
I mean you have to go pretty yeah, you have to go pretty far down. I mean the Premiere, the best soccer, you know, the World Cup, those rights, the broadcast rights you know for twenty twenty six have been sold.
You'll watch in the US, you'll watch them on Fox.
But I think all of these leagues, you know, you get down to the smallest slices possible, whether it's soccer, tennis, basketball, football, you know, in some ways, I think actually the NFL has been the model for you know, you try and chop them up as you know, small pieces as possible, because every slice you can find a buyer for, or you can put them on your own streaming service and you know, get advertising advertisers or you know, sell subscribers.
Indep bloom Begs Felix Jellette out of New York, thank you.
A big story.
Out of the United Kingdom, London hospitals are facing major consequences following a cyber attack against lab service provide a cinabus on June third, which resulted in the release of sensitive medical records and NHS patient data. Bloomberg's Ryan Gallaha joins us with more significant you know, seeing some of the UK papers covered this as well.
Ryan, just explain what happened.
Yeah, So what happened was on June the third, a Russian lengthd hacking criminal hacking gang that call themselves Quellen broken too Syovis's computer systems and deployed the kind of malicious software that essentially locked down So I know this as computers and so Novice is a really important company because it provides blood testing biopsy testing for a whole range of hospitals in Southeast London particular, and what it meant was that these hospitals couldn't test blood for their patients.
And now into the fourth week of their sentident, the hospitals have been unable to test blood at normal capacity, which is obviously caused massive problems for them.
And then there's the horror to realize that maybe your own personal information while pregnant, your own newborn, your own diagnosis of schizophrenia, might now become a more public form of information. Ryan once hearts go out to those that might well be affected, and many are. And I'm wondering what therefore the ramifications are because it seems as though the NHS knew that they were vulnerabilities.
Yeah, I mean, the unfortunate thing is that the gang behind this attack actually on Friday last week published a huge amount of data that they stole from the computers before they locked them down at Cynovus, and they've now you know, dumped that all online and I had to look through some of it, and it's a huge volume of information like I've seen in myself, like forty thousand quite detailed medical records on patients from across the UK, which was the striking thing because obviously the end in
itself has primarily affected London hospitals, but what I found was that said Nervous has actually been doing these tests for hospitals across the UK and Ireland, so it really is impacting. The data breach is impacting the whole UK and Ireland though, which wasn't really understood at the outset of this. So there's people across the country who are you know, their personal confidential medical information. It's potentially been put out there as a result of what's happened.
Meanwhile, the NHS thing and trying to talk of their cyber resilience in the amount that they've invested, but thus far they need to keep an eye on their third parties. Ryan Allagher, great reporting, thank you for bringing it to us. Meanwhile, that does it for this edition a Bloomberg Technology A lot we got in.
Yeah, incredible reporting from our colleagues and news from around the country, around the world. Actually in fact Recapple that on the podcast. You know where to find it on the Bloomberg platforms, but also an Apple Spotify and iHeart one more day to go, and it's a big one this Friday.
This is Bloomberg Technology.
But he didn't gi