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This is Bloomberg Tech coming up.
A possible de escalation in the Middle East ripples through markets as President Trump outlines talks to potentially end the war in Iran.
Plus, we'll take a look at Mosque's grand plan to manufacture his own chips for robotics, AI and space data centers.
And Nscale becomes one of Europe's most valuable startups with a fourteen point six billion dollar valuation and add Sheryl Sandberg to its boards.
We'll discuss let's check on these markets first and foremost, though, because you called it rippling through the market said, there is talk of a de escalation, there is sites being set on the straight or four moves, and there isn't it another record move for Brent contract of like ten percent and one point it fell below ninety six dollars.
This of course fuel some risk on sentiment.
We see the NaSTA one hundred having its best day since the start of February. At one point it's best day since November. And this really as we see President Trump send shockwaves through the market with what seems to be an apparent discussion at a high level and maybe some movement towards the strait.
Of hol moves. Just take a listen to what he said to reporters.
Earlier that would be up in to their version if this worked, be a jointly control nine Maybe me, maybe me, thanks, me and the idola, whoever the idolla.
Is President Trump speaking to reporters earlier today. Let's get to Bloombers Kyle Lyons, co host of Balance of Power for the latest, and what is the latest?
You know?
All morning long, so many headlines on the terminal about the state of talks between the United States in Iran.
Yeah, and we have seen a major about face from President Trump here, from threatening within forty eight hours to attack Iranian power and energy infrastructure, they did not agree to open the strait of horror moves to now saying he's asked for a delay of such action for five days due to progress in talks that he said took place someday between his envoy Steve Whitcoff and Jared Kushner and their Iranian counterparts, in which he said, according to
those discussions, Iran agreed not to restart its nuclear program and to relinquish nuclear material that is still in the country. He says, Iran is the one who was looking to make a deal here, though he would like to make a deal as well. But there are a few outstanding questions, one being who is it exactly that the US is
negotiating with. As President Trump said, it is not the Iyatola Mushtaba Hamane, of course, the son of the late Supreme Leader, and the US has repeatedly heralded as well as Israel taking out much of Iran's top brass, from the national security chief to the defense chief to the head of the Iranian Revolutionary Guard card. It's not exactly clear who this person may be, though Axios is reporting that Whitcoff is speaking with the leader of the Iranian Parliament,
so that may be the case. That we have not confirmed that here at Bloomberg. And beyond that, it is not clear that Iran is actually as eager to make a deal as the President suggests. Iranian state media have said that the president's statements is just psychological warfare and effort to get energy prices down, and that no talks are happening between Tehran and Washington. There's also the third
party in this conflict to consider, Israel. Israeli officials have told Bloomberg that they do not see an imminent end to the war and they will continue strikes, though not looking at energy infrastructure. And so that does remain an open question. Even if the US and Israel are not
going after the energy infrastructure, is the president threatened? That is not to say that military strikes and operations against other assets will not continue in the region all the same, Clearly, with the President's a more optimistic tone on a potential diplomatic offramp to this conflict is rippling its way through financial markets today, which may impart have been his.
Intent, Katie, a very thorough state of affairs.
Where do we look to next?
Well, it's going to be a question of, as President Trump says that talks will continue by phone between the US and Iran today, if we get any further readout from those or if Iranian state media starts to signal that perhaps there is more effort toward a deal, not just on the US side, but on the Iranians as well, and if we hear any further developments for Israelis to whether or not they are willing to accept the terms that President Trump is outlining here, Certainly a degree of
skepticism may be warranted until anything is more ironed out. Keeping in mind as well that we are coming off the deployment of more assets and personnel, including thousands of marines, to the Middle East, and a request by the Pentagon to the tune of some two hundred billion dollars to Congress for additional funding for this conflict, and of course to backfill stockpiles that we have deployed thus far in
the Middle East. So it doesn't appear necessarily that the US at this time is fully willing to walk away from military operations, even as a diplomatic off ramp may be pursued here. I would also know that President Trump is scheduled to speak in Memphis at one pm. It's something more domestically focused on crime, but he could, as he speaks with officials they are and with reporters gathered, give even more signalists to what exactly he sees happening next when it comes to run.
Bl most Kaylee lines from Washington, thank you very much. Indeed, look that's bringing the market reaction to all of this, Bluemost Billy Lipshitz joins us, Now, we always have a tech focus on this show, but to whiplash.
In terms of the turnaround of the markets, Yeah, no, And in Bloomberg reporting just a few minutes ago that the president's decision was aimed in part at calming markets.
So we did see that reaction.
As you mentioned, we saw the SP five hundred absolutely rip when Trump talked down d escalator or talked about de escalation. There's so much uncertainty around what the path forward looks like. The main thing to keep in mind, the SP five hundred is really back to where it was on Wednesday. It's where essentially it was at the end of Friday a week.
And a half ago.
So as much volatility as there has been on the headline levels, you're not really seeing an actual move in either direction. Yes, the SP five hundred broke below it's two hundred and one hundred day moving averages back above that, but for all intents and purposes, you're still in essentially a banded region for the last few weeks.
Remember that we ended Friday with the Nasdaq one hundred having its full straight week of declines, and the thing about the warring Iran is that the headlines change direction all the time. There's been big outperformance in chips as well, and it's a double take, but the Philadelphia Semiconductor Index is up twelve percent so far this year. Well, then as that one hundred and an S and P five hundred both down three percent. How much is this is energy, Bailey?
How much is this is still people trying to assess supply chains and how that might impact different sectors.
It's a lot about the supply chain.
It's a lot of uncertainty around what the ultimate knock on effects are, how long does this war conflict last, what the ultimate damage is to the infrastructure, anyrn on some of these oil fields and some of the oil refining projects. The big thing to keep in mind, though, at is that markets are tied. So we have been seeing pretty much the market move in lockstep to the downside of whatever oil's doing. So if oil's down twelve percent, logically you can expect the market to rally and vice versa.
So again, it is still only Monday morning. We still have a lot of time. Even though Trump talked about a five day kind of pause, for attacking some of these energy projects. But the big thing to keep in mind is that we are seeing these moves play out in real time across.
Assets, Bluebooks, Bay Lipschultz with the market some thank you very very much.
Like coming up.
Elon Musk Inc.
Is proposing to put the entire chip industry under one roof up next the Tesla SpaceX terror Fab master plan.
This is Bloomberg Tech.
Tesla and SpaceX will jointly run an advanced chip manufacturing facility in Austin, Texas as according to Elon Musk, the CEO of both companies, now mask says, the semiconductor industry is moving too slowly to meet his robotics, his AI and his space ambitions. Let's get more on the plans of bloombergs Lauren Grush. So this is extraordinarily large. Was there any actual significant data we know that this will help spin things up for his companies?
Well, I think a lot of you know, just like with Elon Musk and how he usually does things.
There were a lot of promises, right.
One thing that I took particular note of was you know how much this was going to benefit is data center in space project that they've been touting for some time now, and what we know is ultimately driving the planned IPO for SpaceX that may or may not occur later this year.
We did get a rendering of what one of those data center.
Satellites would look like, and so from what I understand, you know these chips will be a big factor in making those data center satellites a reality.
And to you, because of course you're also our SpaceX Tesla reporter as well as being on TV with me luckily and talk to me about how you put it in the very top headline, this is trying to do everything all under one roof.
We've never already seen this before in the chip industry.
Yeah, so having logic, which is GPU, CPU, the GPUs going to the orbital data center, the Lauren outlined, memory and packaging. The industry doesn't work like that, and for good reason. They're done by specialists essentially as separate industries because the raw materials are completely different and the processes are are different. So it's not just the scale that's unprecedented, it's the approach. To give you an idea of that, Elon Musk is saying the facility will start at about
one hundred thousand wafers a month. A lead edge fab right now probably does thirty to one hundred thousand, and then they want to scale up to one million a month. So that's about seventy percent of TSMC's global output. The footprint is kind of insane, so there's a lot of questions on how they'll fund it, and they basically said, we don't know yet, but it's going to cost a lot of money.
Lauren.
The other thing as well, is like eighty percent I think was the figure. I mean, you had the honor of staying up over the weekend watching the full presentation, but like we're showing on the screen now the bigger picture, which is the design for the orbital Data Center satellite form factor carried by Starship.
But what Musk was saying was that the vast majority.
Of activity will be to serve GPUs in space.
Yeah.
Absolutely.
It's actually a full circle moment for me here in Arson because he made this announcement here and there had actually been a bunch of lights coming from Sea Home Power Plant, which a lot of Austinites were curious about, and then we learned Saturday.
Night that yes, this was about this announcement. But yeah, as you can see on the screen.
There, one of the big aspects of the orbital data centers are these massive solar panels that they're going to need in order to gather enough power to run these satellites. And that satellite is supposedly a mini satellite and it's only capable of having a capacity of think of a one hundred kilowats is what he said. But you know that they plan on launching a bunch of these satellites. You know, recently SpaceX filed with the FCC to launch up to one million data center satellites.
So this is by no means a small project for them.
It's an expensive project, and in many ways it's why we anticipate SpaceX is going to have to go to the public markets.
Lauren, just how much more.
Cost effective is it? Do we get any comparison versus doing it here on Earth?
You know, the ELON has laid out the pros and cons of going to space. One of the big ones is that, you know, space is big, and there's a lot more room to move to lay all of these satellites out right. Also, the Sun is a big aspect of it. So here we have a lot of limits when it comes to getting enough power in order to run.
These data centers.
But the idea is to put these satellites into a specific orbit that would harness the Sun's energy practically twenty.
Four to seven. So those are the reasons that are being laid out for going into space. Whether or not it's crass effective, I think, is the big question mark that we're all waiting to see.
It's always sunny in space. Bluemboslare and grush, Thank you very much. Let's stick with it and get the investor perspective. We're joined by Karen Fronsky, Global head of Private Acuity Investments at Fidelity. Her teams invested in private companies for over fifteen years, currently has over fifty billion dollars deployed across one hundred and fifty private companies, County SpaceX as
one of them. The idea that SpaceX is undertaking terror fab with Tesla at unprecedented scale to secure compute here on Earth and in orbit.
Your reaction to that, Karen.
Well, my reaction is they've actually been thinking about this for a long time. So Lauren just.
Talked about the FCC application for a million SATs in space. But if you rewind back to twenty twenty two, they had filed a patent around getting computing resources to SATs in space as well. So I think this is something that Elon and his team have been thinking about for a long time, frankly at least since the post chat GPT moment.
I also think conceptually it makes a lot of sense.
So you just talked about Lauren just talked about harnessing power in Sun synchronous orbit. But the other constraints on AI data centers here on Earth are not just power. It's land, it's permitting, it's getting contractors like electricians to put these blocks together, and those constraints don't exist in space. And so I think conceptually it makes a ton of sense to be thinking about in the longer term data centers in space. The question, of course becomes what you
were just talking about, is it economical? And frankly, what we've been watching for as investors is Starship and Starship Flight twelve should happen in April. They're going to be launching their Gen three of the ship, which will carry up to one hundred tons of payload. And as a reminder, the plan is for Starship to be fully reusable in the future, and if it's fully reusable, ultimately the cost of launching it could come down very, very meaningfully, which
would mean launching the AI data centers into space. Those payloads could make that whole concept very economical.
Taran, you and your team at Fidelity, what research modeling have you done for the fact and the point at which orbital data center becomes profitable. A lot of people when I said you were coming on the program wanted to know if you've been shown at any evidence by SpaceX about the viability of an or data center this decade. But many people measure it in the dollar per kilogram equation.
When it comes to Starship, absolutely we do measure it in dollar per kilogram. And again, as I mentioned, it really comes down to how quickly Starship can be up and fully reusable. So as a reminder Falcon nine, they just reuse the booster the first stage and Starship will be both the booster and the ship. They've now successfully caught the booster of Starship three times at the tower catch. People have probably seen that, and they've had successful atmospheric reentry.
Of the ship as well, but have not yet caught that.
The other thing that they haven't done as of yet is they actually haven't dispensed of any actual payloads into.
Space as of yet.
They've tested out the pez door which opens up to let the payloads out, but actual payloads have not been put out into space.
So those are the milestones that were really following.
But you can bet there is an Excel spreadsheet at Fidelity that measures that the cost for kill a watt and when we believe this will become economical.
Oh, there's gonna be people who really want to see that Excel spreadsheet, Karen, in particular those who look a more cynical on the how outlook of the economy and the economic pros and cons of this. For example, the Jim chainos well known for betting against certain key themes, but he asks in a post in particular, how much one giga what data central space would save in terms of power costs versus one giga? What terrestrial data center can you push out where you think it could go at least?
Yeah?
I mean listen, I think again, we're talking not this year, not next year, we are talking about several years out.
But it could it could move down the cost pretty meaningfully.
I won't give you an exact dollar amount, but we do believe it could be pretty material.
In the here and now.
What we're looking for materiality is up to a one point two five trillion dollar evaluation. If SpaceX does indeed go public, how realistic do you think that is at the moment? What momentum do we need to see? Because at the moment we're all sort of at the behest of the markets.
We are at the behest of the market.
Obviously the markets are feeling quite good this morning as well.
But I think it's important to remember that SpaceX has a lot going for it right now.
You know, when we first invested at Fidelity back in twenty fifteen in SpaceX, they had done thirteen Falcon nine launches to date. Today they launch every other day. They're putting up somewhere between eighty to ninety percent of the world's payload one company. They when we first invested, they didn't have a single Starlink satellite or Starlink sub to that, they have ten million.
Subscribers across the globe.
Obviously, there are ambitions to do more on the wireless carrier front. So SpaceX has a lot going for it, and of course, you know the cherry on top would be the future of orbital data.
Centers, right, incredible capital efficiency, right, twelve billion dollars raised in its lifetime, and you think about what it's done with that. The next thing is, what's a scenario where SpaceX merges with Tesla and why? Because that's the reaction that people have had since TERRAFAB was announced over the weekend.
Yeah, I mean, obviously people have been talking about that possibility for a little while, and SpaceX acquiring XAI certainly catalyze those conversations even further. And I think Elon is, you know, kind of putting his cards on the table, if you will, as it relates to his ambitions to vertically integrate the ability to be a chip manufacturer, as difficult as it may be, but also in putting in aggregate data centers. Remember he's done it here on Earth
CLASSUS one and CLASSUS two. He done it, he did in record time CLASSUS one specifically, and very large GPU clusters, and so from an engineering perspective, I think he knows how to do it. I'm not trying to be flippant about how difficult some of these things are, but he is an expert at vertically integrating companies and.
A thinking beyond all of this in many ways.
Karin Frosky, I wish we could it done the whole show with you and gone so much more into some of the investments. Global head of Private Equity Investments of Fidelity Thanking now coming up. Tim Cook's succession plans remain a mystery, but details emerge in the air apparent that's next.
This is pretty bad Tech.
CEO Tim Kirk is now sixty five and has been tight lit about his retirement and succession plans, but a leading candidate is beginning to emerge. John Turnus, Apple's senior VP of hardware Engineering, has taken on a growing role overseeing the company's products and marketing. For more, let's get to Bloomberg's Mark German, who leads our coverage when all
things Apple and consumer technology. And this is an important piece of writing, right, this is what people have been asking about for quite some time.
What do we need to know?
Yeah, you know.
Tim Cook is not ready to talk about retirement. He says that he can't live without Apple. He can't imagine a time where he's not at Apple. And the good news for him and for shareholders is we probably don't have to imagine a time with Tim Cook not at Apple for at least another ten ten years or so, right because when he steps down as CEO, he will stay involved at the company in some sort of capacity,
probably executive chairman. But the wheels are in motion for Tim Cook to step down in the next half decade at the very latest and be replaced by John turnis the senior vice president of hardware Engineering. He's responsible for the development of all of Apple's products. Obviously those generate eighty percent or so of Apple's revenue. He's worked at Apple for about half his life, just under twenty five years.
He understands the culture. This is someone who would be more product focused than Tim Cook, but in many ways operates like Cook and would surprisingly be a continuity.
Choice mark What stayed you to really feel that he is the heir apparent. What's been happening underneath the hood of Apple that makes you think this is the guy.
There's a lot going on internally.
There's been a very steady expansion of his responsibilities. He's received oversight a couple of years ago of Apple's Vision Products Group, which is responsible for the in development smart glasses, which are a big upcoming product launch for Apple. He's taken over the robotics teams. At the end of last year, he took oversight of Apple's design team, so software design and hardware design. That's a very critical role in the company.
That's something that only you know, people like Tim Cook, Johnny Ives Steve jobs people of that ILK have overseen in the past. He's fifteen years younger than Cook. He's about ten years younger than any other option for Apple's next CEO on the company's executive team. Apple has been
putting him front and center in product announcements. He introduced the MacBook Neo earlier this month, which is obviously a big business lever for Apple for the Mac Specifically, the day after the introduction of that computer, he was the one who went on Good Morning America to talk about it. These are traditionally things that the CEO Tim Cook has done for years for major new products, but now it's turnus doing.
It Mark very very quickly.
Where does Apple's strategy with AI generate to AI and voice based AI fit in with this story?
You know, the big question is if Apple is going to try to evolve into an AI company or after and Services company. If that's the case, Turnis is probably not the right pick, but I do believe they are going to be a hardware company at heart for the forest yeable future, which makes Turnus front center of the action.
Bloomberg's Mark Gummon, as always with one of the most highly read pieces.
We so appreciate you joining on it. Thank you.
Coming up, Elliot Well, it's said to take a big stake in synopsis pressing for changes in mid AI pressure.
That's up next. This is Bloomberg Tech.
Welcome back to Bloomberg Tech.
The status of the war in Iran is a big driver of markets, particularly for technology. Look at a Nazdak one hundred pushing higher outperformance in the Philadelphia Semiconductor Index. The President easing off on threats with Iran and talking
up the talks that are taking place. There's been out performance for chips all year long, and one reason being that the region is a principal producer of both helium and sulfur critical elements in Chippridut coming out of Patar, Saudi Arabia and the UAE, and supply is tight was impacted by the straight off of the moves, but it's oil Brent the global benchmark now below one hundred dollars a barrow. Again, a really sharp turn of events overnight, Caroline.
But continuing to try and link this to the tech sector, because while it seems like talks might yield an end of the war in Iran, there is not yet an end to the war in Iran.
Good context, Let's talk a little bit more with Blimugs tech equity reporter common Ryanikey. And look at the moment I'm looking on the Nasdaq one hundred, only twelve slocks.
Are in the red.
Video leads the charge Tesla up in terms of points perspective. But where do people who go in this period of volatility.
Yeah, so I think when we see things kind of go more risk on, there's so many flows back to big tech because those are the names. You know, they have a lot of excitement, They have these solid balance sheets, you know, over urchingly, they're what works. So there's what
have worked at least in the past four investors. And something that we've actually seen recently is that a correlation between the Equoid index and the Magni magnificent seven has become less tethered and well that maybe sounds like it's not a good thing, it actually could mean that there's
some outperformance coming for tech. So the last time this happened was in twenty twenty three, right before we saw these huge gains from the release of chatch Ept and all of the AI frenzy that's come into the market. So with things especially looking better, potentially with the war in Iran, we're seeing maybe some more risk on coming back.
Valuations have been really washed out from the MAG seven and this really could be a good moment for investors to buy and start feeling better about that sector.
Come and you make a technical analysis and look at the correlation, as you said, but you also speak to the street and one of the conclusions you reach in the piece is that analysts do see big tech, megacap tech MAG seven reclaiming leadership in the market.
What are the reasons why.
Well, one of the reasons that we're really seeing is that there had been some large flows from big tech into international equities sort of around some of the AI fears, sort of that the gains, the momentum in this trade, it's started to peter out. That something we've seen over
the last few months. But now with the macro sort of shifting back, we could really start to see some influence coming back into big tech, back into those US equities, and into some of the areas of the market that have previously worked that have sort of been on hiatus. Maybe in terms of you know, gains over the last few months, one of.
The biggest players in the market, you'd say, was black Rock, just across all benchmarks, all indices. Look, Larry Fink has done one of his really important notes to his investor base, and he's worried about AI and the inequality that's bringing, particularly about access to some of the equity markets.
How do you think that could be playing through?
You know, I think this is such a good point, and it's something that I always try to remember as we're you know, speaking about markets, that there are just real people on the other end, right, Like this is so important for anyone investing in a FOURH on K or four or three B. What he is saying is basically, because gains have been so strong in some of these big companies, that could you make the disparity of inequality
larger in the market if you're not participating. So it's just speak to the fact that you know, if you can be engaged in the market, if you can be invested, you want to be taking advantage of these games and technology and in AI. And so he was looking at some ways to potentially, you know, level the playing field the.
Most calm and ronicky. Thank you very much.
Elliott Investment Management is said to have taken a multi billion dollar investment in Synopsis. That's according to sources, The activist investor is pushing for changes at the chip design software maker as broad concerns loom from AI's impact.
Let's bring in Bloomberg's.
Leanna Baker, who leads our coverage in the US of deals. And I have to say, Leanna, you know, Karen and I just had a conversation with the CEO. I think it was last week. Harry can correct me if I'm wrong. That's what we talked about. How it threat is your business from AI that basically, you know, either renders it redundant or less valuable. What's Elliot's play here with Synopsis?
So Synopsis plays in a really interesting space, the eeda space electronic design automation software. It's a doopoly with a company called Cadence. They're kind of the coke and pepsi of the industry, and you can't make a chip without them. So Elliott is trying to see, you know, what are these stocks that could benefit long term from AI and the growth of AI with Nvidia, you know, being an investor in Synopsis, they kind of view this one as
a long term winner. But the stock has underperformed and there's a lot of things the company could do to raise margins. Maybe they raise prices because they're in this really lucrative duopoly. They have a lot of levers to pull to maybe, you know, boost the top line.
Carol hit me on the IB it was March eleventh that the CEO is on the show. Could you explain the activist investor part of the story? I guess the mechanics of how it works. So Elliott takes a stake and then what happens.
So Elliott is one of the world's biggest activists investors, and they've been in a lot of tech names over the years, Western Digital, they're in Pinterest right now. And what they do is they work behind the scenes. They sort of indicated in the statement.
If you read that.
Jesse Cohen, the head of activism at Elliott, said that you know, things are sort of constructive with the company, so they're trying to help Synopsis, you know, get these things in order and make a few changes at the company that long term will benefit both Elliott and Synopsis and all the shareholders.
Synopsis response so farly on it because it cools it. Shay has happened under pressure leading into this.
Nanna oh the response, Sorry, you're showing it on the screen. So that's Jesse Cohen's response. Who's the Elliott partner? But the company Synopsis has sort of said they take all shareholders you know, into account and h they're clearly engaging here with Elliott, and they haven't put out any statement that makes it sound like things could get ugly or in a fight, because that's the flip side when you bring an activist into your stock, things could go the
other way. In this case, it seems like things are friendly and it won't go to a proxy fight or anything like that. But that is a risk when you have an activist in your shares.
Yes, not just saying in an email center statement that it doesn't comment on specific conversations with individual in shareholders by the bord of Directors and management team and regularly engage with shareholders on arrange of issues. Lenna Baker with all the news on the latest activist engagement. Meanwhile, let's talk about the bond market. JP Morgan has kicked off that sale of eight billion dollars in junk debt to fund the record leverage buyout of electronic arts.
That's according to source now.
JP Morgan earlier and mender the EA by out debt package, increasing the size of a US dollar loan offering by billion dollars while trimming back the bond sale by the same amounted.
What have we got?
Okay?
Coming out, We're going to speak with KTO Network CEO Shlomo Kramer about their latest innovations in cybersecurity amid growing geopolitical threats. There's a lot to do with Iran and then the cyber space.
This is Bloomberg Tech.
The RSA conference kicks off this week right here in San Francisco, bringing together thousands of cyber security leaders and policymakers amid rising global tensions and digital threats. CATO Networks is among the companies attending, and CEO Shlomocramer joins us now frankly, and I think, obviously what is happening with the war in Iran will be discussed by you and your colleagues. You know, Iran poses at a nation state level a cyber threat to this country, the United States.
What are you seeing, what are you hearing, and what are you talking about with colleagues this week?
So obviously the cyber threat from Iran and other other facilities is serious. But imagine a room full of Iranian cyber warriors and then transformed there to an army, to an ergentic army of AI agents.
You're saying that Iran has competence in that.
That's amaying that the future.
Delivers a much more radically dangerous threat landscape than what the presence is through the AI transformation.
I think about what CATO does and I'm trying to summarize it for everyday people that might not know. Instead of having a box on your premises in terms of networks and your own firewall and your own VPN, you just offer a cloud based solution.
For all of it.
It's a cloud based solution, and think of Blockbusters moving to nettrics.
If an enterprise or company of any size in this country does face a threat from Iran or any other threat actor. What's the benefit of going through that technology.
You don't need to be technologist.
You just connect to the net, to the cloud network, very simple for an agent or a small box, and you are protected wherever you are, wherever your applications are, wherever your critical assets are in minutes.
Of course, you're Israeli based company, and we hope that colleagues are safe at CATO Networks. But I'm interested as to watch Lomo is happening at the moment when you mentioned agent now before the Iran war erupted and we focused on that conflict, of course from a humanitarian perspective, we also were thinking about the market impact before this of software and being disrupted by generator AI of the latest plugin suddenly sending cybersecurity stocks lower.
How have you seen and digested that move in the market.
This is very good question, Thank you for asking it.
AI, like any other technology revolution, and this is perhaps the biggest in my life, has beneath it a set of technologies and capabilities that are required that are enablers to this technology, like in the case of AI. Compute, energy and cyber cyber is essential for the enterprise to consume AI because without security enterprises will not consumer Above that layer of technology, there are the winners, there are the neutrals, and there are the road kills of this.
New AI technology.
And obviously this is exactly where investors do not know how the card will reshuffle itself and are very hesitant in terms of investing. I will call the world, I will call it almost a freeze. But in that sense, Cyber is absolutely a winner. And that goes back to my previous comment about the warriors of cyber versus an army of Argentic attackers. The threat landscape based on AI
is going to change dramatically and for the worse. So cyber is key in addressing that threat and it's going to be unfortunately a huge beneficiary from that transformation.
Unfortunately or fortunately, If you happen to have a CEO of Acto Networks and it's currently privately fund and you might be looking at the public markets, at what point, showma, do you think you will to beef up the business continue to grow, will need turn to broader investment areas.
So we are as a growth company, continue to invest heaving in our growth, and we will you know, consider all options both private and public funding in order to continue to drive this.
We are in the very early in the.
Cycle of this category of network securities. It's called SASE. I didn't invent the name, and you know, a decade from now, this is going to make Keto the largest leader in modern network security.
SAC secure Access service EDGE which basically again I'm trying to make it digestible, but you combine firewall, threat protection, secure gateways, everything into one single cloud based platform. Can ask you this this week in RSAY, let's put geopolitics to one side and threat level. What's the threat within industry on who's innovating and using competence in artificial intelligence to add value to their products? Like who is it that you look at and go wow, they're doing really good things.
So the key to answer this question is who is using AI in order to fight AI? Who is implementing AI capabilities because that is the only way to fend off this.
Army gentic swarm. Defense against the gentic swarm.
Off exactly right.
And companies such as Kato, but many other companies all already have been using AI for many years and are doubling down on debt and there companies that not and that is going to determine the winners from the losers.
Schlimokramer, Cada Network CEO here with us in San Francisco in town for RSA this week.
Caro plenty more headlines about there is.
And It's time now for Talking Tech and First Up, A come back concept by K pop group BTS drew a smaller crowd than expected now that led the shares to the agency that represents them High to their largest decline since twenty twenty two. The group's return after four year hiatus has high stakes for High, which, despite acquisitions of labels from Hollywood to Latin America, has added sluggish
profit growth due to BTS's time on the sidelines. Plus Sony, while it's nearing a one billion dollar deal to sell a majority stake in its home entertainment business to a Chinese rival TCL that's called to sources, the company's announced an agreement in January for a home entertainment joint venture then include Sony's Bravian television brand and startup pandu Ai has raised two hundred and twenty five million dollars from
investors including Maverick, Silicon SoftBank, and Synopsis. Now the company CEO that's shrewd Linger is former Golm and Sax managing director. He has pivoted the startup towards aim structure since taking over last year.
Ed sticking with Chips, Tune into the Close tomorrow afternoon for a conversation with Rene Haas arm CEO. That's a three thirty pm in New York, twelve thirty pm Pacific time. All right, coming up, we're going to speak with Mitchell Green of lead Edge Capital after the closing of its Fund seven with three point five billion dollars in commits.
What's next the Cisplinberg Tech.
Lead Edge Capital has announced the closing of its Fund seven with three point five billion dollars in commitments, bringing its total capital raise since inception to nine billion dollars. Here to discussed is lead Edge Capital founder and managing partner Mitchell Green.
And it's great to have you back on the show.
Let's just start with the basic three point five billion dollars for fund seven. What the intention is, the strategy the thesis in how you deploy out of this fund?
Sure welled, Karen, thanks so much for having me on. Thesis continues to be as the same it's been, you know in funds three, four or five, six seven.
This this will just be a continuation of you know, what we're already doing.
And we have a very specific framework, which we call the lead edge eight, you know, which is certain financial criteria are ten million plus in revenue or you're growing twenty five.
Percent plus a year.
Will continue to do that across the across the life cycle of different types of you know. Literally, we can lead a primary around, put money in the balance sheet of a company. We can buy out early investors or early employees. We can fund the continuation vehicle from an investor that needs to get out. We can buy an entire company and a buyout. It's really like the full life cycle. And then actually we also invest in some companies in their public as.
Well, the rules based which is very interesting whether you call it bench capital or private growth equity, because I'm curious how it works in practice. So if you're saying, okay, we only invest in companies that reach these criteria, do you find them or do they find you?
It's a great question.
So the way we've always sourced, and it's the way the three of us who run the firms, our backgrounds are best preventure partners and insight. So we have a team of about eighteen twenty two to twenty four year olds that pick up the phone and call companies all day long. You know, some you know gone are kind of the days of cold calling company or actually leading voicemails.
But you know, our team of you know, eighteen twenty two to twenty four year olds.
Think of these people as a lot of like former college athletes, people that were debaters, people who are entrepreneurs. We want people that are really persistent because the great company doesn't call you back right away.
Sometimes call that CEO a half dozen times before.
They call you back right But again, we'll speak to about nine thousand companies a year, and if I said you had to meet all eight criteria, it only be about ninety or one percent. But we say that if you meet at least five, it's about a ten percent yield. Sort of nine thousand companies nine hundred meters five or more criteria due diligence on one hundred and fifty to do five to seven deals a year.
Mitchell true help, but feel that those ex college athletes and those twenty to twenty four year olds are going to be very well helped or maybe disrupted by agenta KI and I want to hear your play on the whole software investment thesis because this is what called my attention.
Yeah, so what I would what I would say is is again somebody asks you, as long as the person that works at lee edge of twenty two to twenty four old is on the other end of a phone.
Talking to another human being like a CEO or CFO of a company, in the human interaction is still really really important. However, where AI.
Can be really helpful now is and where I did this.
You know, the three of us who run the firm all started our career is doing this fifteen twenty plus years ago. And you know today an analyst or an associate cold calon companies can be a lot can use AI to be a lot more educated. When talking to an entrepreneur, you know they can have done a bunch of research that would have taken a couple hours before, they can do.
It in five minutes. You can chat our clawed you.
Know, they can look up all the competitors, they can get the value prop they can ask like what do you think the right questions to ask are?
So actually AI it can help you find more I say, hey, I just.
Spoke to ABC company like toast in the restaurant point of sales system, give me all the competitors so I can then call them as well. So it actually like makes the analyst associates even more powerful.
And Mitchell, how many therefore of the calls do you think will still be going to software companies that have been beaten up that you think still look attractive, because that has been the narrative that a GENDERKI is coming to eat their lunch and therefore they're going to see significant pressure on their ars and their future growth.
For us, it's always been about Look, software is a very broad word, right, there's lots of different types of software companies. Just like if you say I'm going to Europe, like there's lots of places in Europe, you coun could be like, oh in Europe, it rains no place, lot of places in Europe it doesn't rain. So for US like software, So we're looking for companies, and we always look for companies that have like very high grows dollar attention.
Now again you might say, well AI is going to change all that, Well, then you're looking for software companies that have a mode, that have that own the data that are systems of record that tend to sell the large enterprises.
You know, you could have most you know, if you have people on here from most banks. Most banks still don't even.
Allow their employees to access US, you know, access AI from their systems. These big enterprises when they buy software, want security.
You know.
Look, you've been able to buy open source software for decades. Yeah, Companies like Elastic and Grafana and Data Bricks and red hat exist because they provide an enterprise level on top of what was already free software. And see, I think you're going to continue again, We've met outside of software as well. We invest in consumer internet, We invest in marketplaces, we invest in financial exchanges, we invest in payments companies like transfer Wise.
But yeah, we will continue to definitely invest in software.
Mitchell Green need edge capital come back as you deploy that seventh fund. Congratulations on the fundraise and like talking about the use of AI for that you need infrastructure.
We can talk about that now.
Nscale, UK developer for AI Data Centers, is now one of your most valuable startups after raising two billion dollars in a recent round, which now values the company at a call fourteen point six billion dollars.
Now the AI hyperscalers are.
Also looking to this particular company because they want to be looking for more compute. But also they've got some significant leaders coming in directors including former British politician Nick Clegg, Showel Samburg as well longtime chief operating officer of Facebook and its parent Meta. And I'm very really to say we can welcome the leadership now n Scale CEO Josh Payin along with Cheryl Sanmdburg. It is a joy to
have you both on the show. And Josh, some huge ambitions from nd scale and just the computing power that you can bring online, the revenues you're going to be generated in the next few years, just talk to us about how you achieve that that necessary infrastructure.
Josh, Well, thank you, Caroline, it's great to be here. First of what I'll say is this is the fourth Industrial Revolution. This market is moving so fast and we're still at the beginning. We're talking about a technology that is going to lead to atomized automated drug discovery, the extension of human life, truly autonomous agents, and that the only thing that prevents that future is access to the scarce resource, which is the compute, and so n scale
solves this problem. We buy and build and deploy all of that infrastructure to allow for these products to be built and operated.
And so not only is there just huge demand for the sector, but we're capturing it.
That's huge demand for your expertise, Cheryl, and to join boards. Why did you choose Josh? Why did you back end scale? Why on the board?
Well, the funny part of the story starts with his part.
Which is, well, so thinking about how I build the next great AI platform, what was most important to me is speaking to executives that have built great platforms before of global scale, and so certainly none better than Cheryl Sandberg. And so I tried for some time to get an introduction to Cheryl, and upon finally doing so, we scheduled a thirty minute call. And the first thing that she said to me was I don't do boards, and I don't do these calls.
Right, So it was an inauspicious beginning.
But I didn't do boards and I didn't do these calls.
But what I saw in Josh ninety minutes into our thirty minute phone call was what I considered real visionary leadership. Over the next few weeks, as he was trying to get me to consider joining the board. He went away and he wrote a letter to his management team. And the only person I'd ever seen right like that was Mark Zuckerberg. This combination of a relentless, relentless desire for great,
relentless desire for execution, you know. And from my point of view, I joined Google when it was at two hundred and fifty people left at twenty thousand. I joined Facebook when it was five hundred and fifty people left, you know, almost one hundred thousand.
So the opportunity to work with.
The founder I believe in.
I joined right as the company was about three hundred and four hundred people, so that same spot, and try to take some of the lessons we've learned and help a company. I believe in this much scale really matters. I also really believe in the power of AI. I think we're at the very beginning I started my career in global health. AI is going to mean that anyone in a remote village anywhere in the world could get skin cancer diagnosed at the same efficacy rate as someone
in the Mayo clinic. But that is going to take a build out and a buildout of infrastructure and compute, and I really believe in Josh and Nscale's ability to do that, so I'm happy to be here, Josh.
The term neo cloud has actually also become quite broad. When I talk to people about nscale, they say, well, nscale is modular. How do you set yourselves apart from the other neoclouds out there, many of whom come on this program and make quite similar pitches.
Yeah, So I think the key distinction with n scale is we are fully vertically integrated. Again, if you think about the challenge for the sector, it's actually landing the infrastructure on the ground and getting it plugged in. And the true scarcity given that the demand in the sector is the land, the power, and then the chips, and so by and large, the neocloud sector is not really vertically integrated in that they don't own their own land and power.
N scale does.
We own the and power, we own the chips, and we own the software delivering an end to end service to the counterparty. In addition, we recently acquired a company called American Intelligence Corporation in West Virginia, which adds an even further segment to that, which is the ownership of
the power. This is a behind the meter site, which means that we're effectively taking natural gas and producing our own energy, which means it's not connected to the local grid and therefore subject to any kind of price increases for consumers.
So it's great to have you back on on Bloomberg Television and on Bloomberg Tech. You said, I don't do boards historically with this role with end Scale, I think a lot of people are really interested if you go back to being an operator. You know, with time, if you adjoin the executive ranks at end Scale, and whether you do or don't kind of operationally, how you think you can help the company grow.
So I've joined as both a board member as an advisor. I'm spending real time with Jajh and his team. I have no plans to go on board full time. They have an incredible exec team and my goal is to help them Scale, help figure out how we structure, how we do corporate governance. I've helped recruit some other great board members Nick Clegg you mentioned joined the board with me, Sue Decker, who has decades of experience chearing audit committees and in the financial world, and work with them to
really scale their company. What I see in Josh is two things is really ambition, like real ambition to make a difference in how the AI build out happens, make it sustainable, make it clean, commitment to local jobs as we scale and build. But also a commitment to excellence, to hiring the best people, to getting people into the right jobs, to structuring so that we can really execute.
And it's been it already has been a great pleasure to work this closely with someone I believe in, and also Caroline, I know you always care about this really strong team of senior women. Hew do AI Infrastructure CFO head of Security.
Josh before me hired what.
He considers who he considers the best people on a lot of great women in those jobs.
I love that because it is something I'm passionate about.
It's something that you spent your career advocating for, Cheryl is diversity within the ranks of talent. But also you're advocating as well for clean energy. And I notice what one other boards seeing with terror dot and that is about carbon neutrality. So Josh, I asked you, what about carbon neutrality for West Virginia, because that's about the actual gas.
How do you think about that in the longer term.
Yeah, sure.
So broadly, the company thesis is to take sustainable energy and convert it into intelligence. So we first do this in the North of Norway. So we operate in the North of Norway using only hydropower. The North of Norway has such a large oversupply of energy due to basically the seasons. Effectively, during the winter all of the glaciers melt over, and then in the summer they all melt and create enormous waterfall, and the Norwegian government has built
large hydropower dams to capture that energy. But the challenge is it can't be exported and so it's got to be consumed in region. So n Scale is building some of the largest AI infrastructure projects on the European continent in the North of Norway, taking otherwise stranded energy and converting it to intelligence. The same goes for our projects in Texas as an example. In Texas, you've got a similar oversupply of renewables and other energy, but it's in
remote location. So we're building some of the largest infrastructure projects in North America in this location in order to convert that to intelligence. Now in West Virginia, we're doing the same thing but slightly different. In West Virginia, we're
producing our own energy. One of the challenges with the North American grid is constrained, and so we felt that producing our own energy with natural gas generators I behind the meta was the best way to scale sustainably but also not impact local prices.
And the grid.
Cheryl, you're very used to being inside companies that are just truly global, right, listening to what Josh is saying, and Scale gets a lot of credit because it's a kind of a leader in Europe. It is a footprint in the United Kingdom. But we've just been talking about America. How much do you want Josh, I know he's sitting next to you, to shift gears a little bit and
move this company in himself to the US. Do you want him to focus on the Middle East, where there is the capital, there is the will, there is energy supply for example.
Well, I'll let him answer that.
But certainly this is global, right, This is a global company started in London and continuing to expand all.
Over the world. Yeah, I mean today.
Today we're operating in five countries. We have plans for fifteen. Naturally, North America is the center of the universe for artificial intelligence, both with startups, with life your customers, with access to capital, and so naturally I spent a lot of my time here, but as Cheryl said, this is a global market, and I'm spending most of my time on a plane as a result.
That's a very familiar tale that you appears have told us on this program. To n Scale CEO Josh Payin, n Scale board member and advisor Cheryl Sandberg, it's great to have you both on the program that does it for this edition of Bloomberg Tech, Tune in tomorrow for a special edition of the show, live from the Hill and Valley Forum in Washington, DC, will sit down with some of the biggest names in government, industry and technology.
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