We're from Mahard. We're Innovations, Money and Power Collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
I'm Caroline Heid at Bloomberg's world headquarters in New York.
And I'm Ed Ludlow in San Francisco. This is Bloomberg Technology.
Back together again, coming up at full earnings coverage. Of course, Netflix its sours after posting its biggest subscriber growth since the pandemic.
Details ahead plus sticking with earnings will break down the results from Europe's most valuable tech company. And here from the ASML CEO himself.
And we push your head to the results out after the bell and partake a bit of a game of bingo, but this time you'll have to listen into the Tesla earnings call to win all that and.
So much more ahead.
Meanwhile, let's check in on these earnings in these markets, because look, we are seeing reprieve money pouring into the US stock market on the back of technology managing to outperform in terms of earnings.
Yes, we'll dig into Netflix in a moment.
NASA up more than one point one percent on the back of it now interesting, we're all thinking about China about whether or not stimulus is indeed to come. They signal that they will reduce those rates that are.
Held by the banks.
Reserve requirements are going to come down in the next couple of weeks. We see the stock market reaction. I'm highlighting what's happening on the Nasdak Golden Dragon. At the moment, we're up two point six percent for the Chinese stocks. Now we're seeing bond market pretty lackluster on the day as we see some pretty strong data here in the United States. We want to see what's happening in the world a bitcoin there, because what a tory ride we've had of late. Yes, we seem to have traveled and
arrived and now sell off. But today we're actually up up again two percent.
We're at fully thousand, holding out that sort of level at the moment.
Ed.
But let's dig into the micro what's happening on your.
End, Yeah, a lot going on in single names, specifically in the earnings context. Texas Instruments is the biggest maker of analog chips. He gave the sales outlook that Frank makes us worried that the slump in industrial Semis is continuing. These are the most basic chips that do vital functions and that stock down two point four percent ASML Europe's most valuable tech company. These are the European listed shares. Its orders tripled in the cord have just gone the
shehare reaction obviously positive up nine percent. We will hear from the CEO in due course. Tesla after the bell up one point four percent, but it's been the biggest points drag on the S and P five hundred so far in twenty twenty four. The focus how many evs are going to build this year and rounding it off Microsoft by the way up one percent. I just put it there because as it stands, it's just a crossed once again the three trillion market cap mark. That's more
of a public service announcement on that one. Meta has hit a key milestone though, and it's a stock that's really interesting ahead of earnings. Its gain has taken its market cap to one trillion dollars for the first time in around two years. We've passed the year of efficiency. That's in the rear view mirror. Earning coming up. We have a mixed narrative right now about the ad space. But finally, this is a stock starting to get some
credit I think for its AI story. We'll come back to that later in the program and later in the week as well.
Meanwhile, we've got to get straight to it and on what is dictating trades, certainly in terms of the direction of travel from the Netflix move and into the NASDAG more broadly, shares popping after those companies' numbers, we really did see the biggest jump in new subscribers since the pandemic.
We've got to dig into the details.
Geta Raganathan's with us from Lummeg Intelligence, and we were blown away by subscriber growth and indeed by seemingly the advertising jugnaut really starting to pay off.
Now is that what's working?
I mean, everything seems to be working, Caroline. So obviously, yes, we did see those huge subscriber numbers, and I think what really is kind of giving the street and the market so much of confidence in this whole story is that you have all of these growth drivers in place. Yes, you know they're advertising to your has kind of kicked off.
It got off to a little bit of a slow start, but remember they only have it in about twelve markets, so it really has to kind of gain much greater traction, and they're going to do exactly that they've invested now in this whole raw programming deal. So we should start the start to see the advertising tier kind of become much more material in revenue starting at least in twenty twenty five. But as of right now, it's the Paige sharing, it's the password sharing crackdown that is kind of really
really working and working very well. And it wasn't just the four y U results, it's the guidance for twenty twenty four that kind of I think blew everybody away.
All right, Geeterrang and Nathan Bloomberg Intelligence technology analysts, thank you so much. Just keep the conversation going with Rich Greenfield Partner and media and technology analysts at light Shed Partners and Rich. When I went through the numbers more deeply, there's the thirteen point one million new subs, but five million of those came from the emir region. So it's interesting, what do you think are those drivers, those growth drivers that Geeta was talking about.
I mean, you have a few sort of what I would call the perfect storm if you think about what's happening right now. Ed one Obviously, all of the companies, the legacy media companies, whether we're talking Disney or Warner Brothers, Discovery or Paramount or comcass like, they're all pulling back on their streaming efforts.
You know, they've all.
Sort of shifted into let's cut costs, let's raise the price, let's cut back on marketing. And so the competitive landscape for Netflix is far less intense.
Than it was.
You know, I think we had this brief period of time during the pandemic where everyone in legacy media, cable network media world thought like getting into streaming was easy. Now they're realizing it is really hard. The markets are no longer paying for subs. They want to see profitability, so they're all pulling back. So number one, competition is
lessening for Netflix. Number two, you know, I think the reality is that Netflix investing in lower costs here, you know, getting and advertising having a lower cost service is making a very big difference. And then I think three, one of the amazing things that you're in right now is as the legacy media companies pull back on their own streaming efforts, they're seeing their legacy businesses cable television really under pressure.
They're licensing more content.
You know, just last night you saw Warner Brothers Discoveries ABO licensing Sex and the City to Netflix, like everything is for sale, and so the amount of content flowing onto Netflix is exploding. We've really come full circle. It's like back to the future day Flix. Remember a five years ago everything was on Netflix from third party companies and then there was nothing, And now we're really right back to it.
We're back to that.
You know, the heroin needle is back in the arm, like they can't get off of the drug of licensing content to Netflix they needed for survival right now. And so Netflix is in this position where they've got more content than ever before, and the competitive dynamic is less than in years, and they've got a cheaper service with advertising to offer to consumers. That perfect state is why Netflix had their second best net ad quarter in the company's history.
Okay, so rich, what therefore is priced in? Before we get into basically what seems to be a bit of a blood bath and the rest of the competitive landscape, What about the leaderhip position that Deutsche Bank at the moment is saying is fully priced into the stock at these levels?
Is it?
How much further can we run.
The Internet is generally winner take most.
I was just listening to one of your colleagues talk about, you know, Meta getting back to a trillion dollar market cap.
You know, we there is I think tremendous room to run.
You know, Netflix is still you know, you're still looking at a company that there's no reason why they can't add hundreds of millions of subscribers. I mean the fact that they added thirteen million subscribers in a quarter. I mean there now it's sept million subscribers in the US. You know, I think people not too long ago thought the US was tapped out. Now they're growing the US nicely again, and I think all signs point to them getting to eighty to ninety million subs over time.
Europe. You mentioned there's huge growth opportunities in Europe.
So I think the reality is now that they have a lower cost product, and you know, they have an advertising tier in markets that represent eighty percent of AD dollars worldwide, So there's tremendous potential to accelerate growth. I don't think the growth story is over at all, and I think the most important thing to think about is
that competitive dynamic eases. That's going to fuel Netflix, and the real question should be what happens to all these other companies, whether it's Disney or Warner Brothers or Paramount well Rich.
We discussed that twenty four hours ago in the context of the WWE deal, right. It answers all of the points you've just made in that it's raw in the US, but exclusivity and all the other properties outside the US.
Where's Disney and ESPN?
I don't see them doing deals like the one which surprised us between Netflix and TKO.
The reality is these companies can't compete, you know, they just don't.
They're trying to balance their.
Legacy media assets, whether that's cable networks or linear broadcast TV networks and TV stations.
They're all trying to balance and so the result.
Is is those businesses which are very profitable decline. They don't have the same dollars to invest in streaming, and so they're all scaling back. And so the real question that I think we should be asking, you know, we've got all of the major media companies reporting over the next couple of weeks, and I'm sure you're going to be discussing it, you know, Ed and Caroline the question is, why are you still doing streaming?
Like should you just give up?
Like is there a path to building a scaled global streaming platform that really makes meaningful dollars? Or are you kidding yourself? And you're sort of just in that denial phase. And I think that's the real sort of you know, if you think about what's going on in boardrooms right now. You woke up this morning and you're like, holy cow, they added thirteen million subs. They're already at this massive scale, and they're growing at multiples of how fast we're growing.
They're investing more, we're cutting back, Like, why are we doing this? Should we be in the peacock business? Should paramount plus exist?
We believe?
Know?
How soon do these executives figure out what we believe they.
Should do if we don't hear at this earnings and we do still see the fight on when it comes to more broadly, the world of streaming is now Netflix basically a global TV hasn't already got that rich.
It feels Carolyn, like you've hit escape velocity. I mean, it really feels that way now.
I will say there's probably a time by pre pandemic, I think there was a point in time where people felt the same, including myself, about Netflix, and then everyone called into question because they saw what was happening during the pandemic where everyone you know, Disney Plus exploded and Max HBO Maxit when it was called that at the time was exploding. I think everyone got very excited that this was easy to replicate. I think now you're they're
all realizing that they are not capable. They don't have the resources, technical knowledge, commitment to the business, and so I do feel like Netflix is at that escape velocity, and I think the only question is how much money are these big media companies going to torch on streaming before they realize this is just not what they do well. They actually just make great content and they should focus on harvesting as much cash out of that business and
not try to be a platform. That's probably where we end up by the end of twenty four with several of these companies, they're just going to.
Have to give up.
Rich Greenfield always great to have some time with you, Lightshed partners, me thank you.
This is not your typical victory speech, but let's not have somebody take a victory when she had a very bad night.
This race is far from over. There are dozens of states.
Left to go.
Former President Trump and fellow contender Nikki Haley there after the result came out, of course from mex Kayley lines was all across them in the real time. You now coming to us from Manchester, New Hampshire the morning after the primary to give us basically the details on the vote and also how the internet technology is intertwined into all of this.
Well, Caroline, the details of this vote were Trump won by a double digit margin, maybe not the margin we expected going into primary day, but by eleven points, so not necessarily the strong second place, showing that Nikki Haley and her supporters were looking for. Nonetheless, she says she is going to stay in this race, go to the next real contest that she wants to compete in her home state of South Carolina, where she served as governor.
That primary is on February twenty fourth. The issue is she's pulling more than thirty points below Trump in her home state, and over the course of the next four weeks attacks against her in South Carolina and elsewhere could only intensify, as will likely calls from the Republican establishment to fall in line behind Trump. As he is at this point the presumptive Republican nominee. Of course, this tease
us up. Given Haley's very difficult rode ahead, very hard to see how she is a passed to the nomination for a rematch of the twenty twenty election, Donald Trump versus incumbent President Joe Biden. Now, the Biden campaign seems like it's welcoming this development. They have always wanted to have a general election against former President Trump because Biden has beaten him once before, obviously in twenty twenty. But of course Biden was in some ways not officially on
the ballot here in New Hampshire as well. The Democratic Party, together with the President, have decided that the first primary should be in South Carolina, not here in New Hampshire, so he was not on the ballot. Instead, there was a write in campaign for him here, while other candidates like the Democratic Congressman from Minnesota, Dean Phillips, were actually
on the ballot. Biden won, though in a decisive victory really historic for a write in campaign, more than seventy percent of the vote, while Dean Phillips got around twenty percent.
What was interesting, though, guys, and this relates to your program here on Bloomberg Technology is right before the primary, a wobo call AI generated with the voice of Joe Biden was making phone calls to voters here saying to hold their vote until November, essentially in coouraging them not to go out and write in the name of the president. We asked the Congressman Dean Phillips about that a few
days ago when that news broke. He didn't know anything about who was behind the robot call, but he did say we need to be thinking really critically about deep fakes in this election cycle, and he does not think President Biden has done enough at this point to address it, guys.
And therein lies a key technology story for this election cycle. Bloomber's k lines on the ground terrific reporting. Thank you, Let's stick with politics and that AI story this election cycle. CrowdStrike president Michael Santonus joins us Now to discuss how generative AI could affect the upcoming election and how his company views election security off the heels of yesterday's New
Hampshire primary. The deep fake is one example of malicious let's call it malicious content that circulates on social media in the early forays of this election cycle. What is the volume of activity you are seeing in that use case than others.
Yeah, thanks for having me. Look, I think it's going to be an interesting year. There's over forty countries that are voting this year. The problems that you're talking about this morning a growing issue, and I think in a
lot of ways it's what we're going to see. There's been so much talk over the years about voting systems and probably too much being put into that area because we do have to think about deep fakes, we have to think about disinformation campaigns, and ultimately what it's going to come down to is the average voter it's going to really struggle to understand what's real what's not, and they're going to have to do a lot of work to make sure that they're not making decisions on who
to vote for that maybe is based on incorrect information.
Audio deep feats actually something we saw in Slovakia's parliamentary election already. So something that's coming and unfolding. How much are well government's most front and center social media companies managing to breecee this because it can't all just be left in the hands of consumer to try and work out real.
From not well, it can't be left to the consumer. But the problem is that it's very easy for a consumer to create this content. What was once a very technical thing to do is now a few thousand dollars and you can go and get a very good capable graphics card and the system. You can get some instructions and you can build your own deep fate, you can
build the voiceover, you can build a video. So the challenge is we're going to see a lot of this content in volumes that we've never seen before created by the average person. So it's going to be something that everyone's going to have to step up to address. Whether it's governments, whether it's a social media sites. It's something that should be a concern to everybody because it's going to really sway decisions that people are making because it's just so easy to create this content today.
Absolutely fascinating.
And of course this isn't just the only election that's on the books here worldwide, plenty to be cracking down on CrowdStrike. President Michael Santonas, we want to thank you so much for joining us today. I'm sure we may well be returning for your expertise.
In the future.
Meanwhile, look, a group of senators from both sides of the aisle is ramping up calls for creation of a federal agency to regulate the technology industry, as is concern surrounding the risks of AI. As we discuss they continue to grow now. The group wrote a letter urging Majority Leader Chuck Schumer to establish an agency dedicated to regulating the nation's largest tech Company's.
Head right, it's coming up on the program, ASML says, it's seeing some pretty positive signs in sales growth. Is the chip making equipment industry bottoms out. Bloomberg TV caught up with its CEO and we will bring you that conversation next. This is Bloomberg Technology. It's time for talking tech and first start. Washington State legislators are at the center of a growing debate regarding artificial intelligence regulation. House filled nineteen fifty one hopes to place restrictions on how
businesses and government agencies can replace human decision making with AI. However, big tech lobbyists argue that the bill is flawed, and Apple is hitting the brakes on its plans to bring a self driving car to market. Bloomberg's reporting that the company is now shifting its focus toward building an electric car with more limited features. With the latest changes, the company is looking to introduce the car in twenty twenty eight at the earliest, down from twenty twenty six plus.
ASML CEO Peter Wennick tells Bloomberg TV that the generative AI boom needs his company's technology to compute and store data. The Dutch chip maker benefited from strong demand from China last year, shares today at an all time high.
Carol extraordinary, Sherry Action, extraordinary center numbers. And then you're just talking about the SML performance. Where he actually spoke with the CEO, Peter Wannick a little bit earlier, he sat down with Bloomerg's Tom McKenzie really laid into the clarity of China and artificial intelligence.
Take a listen.
Ninety of our business in China has to do with mature technology, and that's the technology that we need for all the major transitions. You know, if you think about energy transition, the electrical vehicle transition, digitization, rollout of the smart grid, you know, life sciences, it's all mature technology. That's where the masses are.
So what is your message to those in Washington, lawmakers in Washington, lawmakers in the Hague even who are pushing to expand those restrictions beyond the most cutting edge lithography machines, to expand those restrictions on the sale of lithography to China.
Well, you know, a full respect for national security concerns, that's not the point. But I think we need to take into consideration that this chip industry has created an almost seamless ecosystem across the globe that has given us massive advantages in terms of innovation and cost reduction. So that's from an economic point of view, we need to make sure that economic system that we have created, which has given us so much benefit, that we keep that intact.
It's not about national security, it's about making sure that innovation can keep going.
You're stepping down in April. Does your success or at least have to wargame the possibility the scenario where ASML has to operate in a global market X China.
Well, you know, I.
Don't know whether he's war gaming. I don't think he's a gamer, to be very honest, you know, we'll just have to deal with the reality. But also, you know, I'm an optimist.
That worries a lot, and I do believe that we have.
Created, you know, macroeconomic systems that are so dependent on each other that I think that is a scenario you can always put into a game, but I don't think that's a very realistic one.
You do not have generative AI without ASML. It's as simple as that, without your extreme ultra violet lithography machines. How much demand are your clients saying they are seeing for chip making equipment to generate those kind of AI chips.
Althot me first of all say that I think the full extent of what AI could bring is not totally clear because it's all about the applications and that still needs to develop.
It.
One thing is absolutely sure, it's going to need massive amounts of compute power and storage data storage. So I think without ASML, without our technology, that's not going to happen. So it's very clear it's going to be a big driver going forward for our business in the business of our customers.
That was ASML CEO Peter winning the chip equipment maker euro It's most valuable tech company.
Let's get a quick check on these markets. Said, Now let's just dwell on some of the record highs that we're hitting today because in amongst some of the strong economic data, we're still deciding that tech names are going to outperform, particularly from the Magnificent seven that have.
Already rode so high already.
Look at Matter I see above one trillion dollar market capitalization.
We're riding high on Meta Alphabet also in a new record high.
As well, Microsoft above three trillion dollars. We also, though, want to shine a light what's happening with Tesla? Will those earnings manage to well INCENTIVI some of the investors come back to that name, because remember it is one of the most expensive out there on the Magnificent seven and the worst performer of late.
Lad Yeah, I think in the earnings context, eps's forecast has dropped thirty eight per cent year on year, a very different story with the other six. So Tesla is reporting earnings after the closing bell today, We're going to spice things up a bit in terms of how you react to those results with a game of bingo from the elon Inc Podcast team joining us to explain the methodology the science behind this masterpiece. Co host of the
Elon Inc Podcast Bloombost Max Chafkin. I'm going to go straight to something that you've shortchanged the global audience on, which is you put prototypes are easy, production is hard. In two separate squares, You and I both know that that comes in one sentence.
Listen, as Wilmer's chief Bingo signed, I can tell you that, you know, a Bingo card needs to have some gimmes and some that are much less likely to hit. You're right, it will be very surprising if Elon Musk did not say prototypes are easy, Production is hard, of course, in reference to the difficulty manufacturing the cyber truck.
Tesla's a new pickup truck.
A lot of these are fun, a lot of these are you know, at one point you're segment he's going to audibly take a toke.
But what is crucial for an investor base here?
What are the words that you think will come out of his mouth that might inject some enthusiasm or create further out.
So you know, as Ed said, we're trying to have a little fun with this and also participating in what is really like a time honor tradition for both Tesla bulls as well as critics. You know, lots of investors lots of commentators have made their own Bigo cards. You can find them on Reddit, so we wanted to kind of join in the fun. I think in terms for investors it sounds strange to say, but Elon Musk's.
Mood is very important.
You know, he is one of the most accessible CEO, is probably the most accessible CEO in the world. He talks all the time continuously. He doesn't hold back, as we often discuss, and so how he describes these numbers is probably just important as the numbers that he describes. Do we get a sad Elon, a dower Elon, a pessimistic Elon, or do we get an optimistic Elon? And I think that will ultimately decide how investors react to what happens.
Later Today, investments want to hear what demand is like, but also the dojo, the supercomputer, the AI, the robotics question. Now, this is something we're starting to hear from me in On Musk, that he's might well just take that kind of technology elsewhere if he is not recompensed in the way he wants to be by Tesla, are he gonna here?
And he pushed back on his own board.
Again, well that should be very interesting and the idea that you know, Elon Musk course is very unconventional. But the idea that he's asking for what amounts to a massive pay raise at the same time, you know, essentially making a threat or at least a veiled threat, as he said, to take his AI expertise elsewhere. It's kind of staggering, especially given that for for a couple of years now he's been emphasizing that AI is sort of core.
To Tesla and the Rose multipas exactly.
The whole bet here, especially for Tesla bulls, is that this company is going to operate a robotaxi fleet, will eventually build a supercomputer dojo as you say, which I believe is and one on your Bingo card if you're playing at home, and and so that so it does it is a bit of a head scratcher.
You know.
On the other hand, he does have some leverage here because of course he has these other companies that are also doing AI stuff x most notably, and so there is in some sense a credible threat to Tesla investors.
And you know, as we've seen, the Tesla.
Board has generally gone along with whatever Elon Muskas for. So so you know, he'll he'll probably feel emboldened.
The beauty of this bingo board and card is that it means different things to different people. So the basics for Wall Street are, will test the reiterate it's fifty percent compound annual average growth for twenty two twenty four, In other words, will they say they're on track to build two point five million evs? But for that, like Tesla owner, fan, retail audience, look at the top right square, full self driving And what's so interesting in the last twenty four hours or.
So is they brought up version.
Twelve of FSD beta and there's so much chat about it. You know, how do you think that will be distinguished? Max between the Tesla fan, that Elon Musk supporter, the retail investor, and legacy Wall Street There sometimes just focuses on the fundamentals should we call it?
So, you know, I.
Would argue that the full self driving promise is very important to everybody. Of course, there are, as you say, some analysts who are much more focused on these kind of the question of margins, And I think, you know, basically, how many people want to buy Tesla's and what are the margins? Those are the two most pressing questions, but how Elon Musk himself is CES self driving? Is is it something that's going to happen next year? As you always you know, it basically seems like every year he
says coming next year hasn't come yet. It's been a source of continual disappointment and criticism.
But watching to see if he ever pulls back from that promise.
I think that would have huge effects on not just.
On demand, not just on like car buyers, but also on how investors think about this stock, because again, so much of the value is about the future and the promise that Elon Musk has been reiterating a year after year after year that this is going to be more than a car company.
Wow. Max Chafkin is a beautiful Bingo card, and we thank you for being our chief scientist of Bingo cards in residents.
Ed, what have you got coming up on the world of Elon?
Well, look, while I was at CES in Las Vegas earlier this month, I had to take the opportunity to take a ride in one of the Tesla vehicles that's operating in Elon Musk and Boring's Vegas Loop.
Here's how it went.
This is the Vegas Loop, a one point seven mile series of tunnels under the Las Vegas Convention Center made by Elon Musk's Boring Code. During CEES twenty twenty four, we took a ride in one of the loops, Tesla Model Wise. I jumped in at the Central station, riding to West Station and then onto Revera A Station and Resorts World before circling back without getting out. It took
me about fifteen minutes to do that loop. Top speed in the straight parts of the tunnel was forty miles per hour, with an average of thirty when things got congested, fifteen miles an hour. There were no crazy wait times with the full fleet of Tesla's deployed. It got busier
around lunchtime, but lines were minimal. The ride can be bumpy at times in certain sections, but if you're going to walk from West Hall to North or Central Hall that could take you twenty five minutes, it takes just two minutes in the loop, and within the LVCC it's free. The systems designed to carry more than forty four hundred convention goers an hour in the Tesla's. In the future, there's a plan for special vehicles that carry twelve people.
Borings also planning an expansion of sixty eight miles of tunnels with ninety three stations across the Vegas Convention Center and of course the Las Vegas Strip. By the way, if you're claustrophobic, this is not the future travel technology for you, Caroline, It's.
A limitations still ed.
Meanwhile, coming up, look how creative more creative startups?
How can they avoid a lower valuation. We'll discuss all that next.
Meanwhile, look, there are more earnings coming thick and fast, not just tes.
The service now IBM after the bell.
IBM currently trading down to tens percent, but the market is looking pretty buoyant, looking in anticipation of cash flow coming back on and also any mention of AI service now up two point two percent, current remaining performance obligations and projected to rise twenty almost twenty one percent. We'll see how they managed to perform after bell. This is Bloom their technology. Let's just talk about the environment for startups.
It's been a tough one typically though of course they depend on serial infusions of funding from backers to get through their early years. So we're so called down round.
They see raising money at a lower applied valuation there before it's a big black eye.
So lately companies are good and kind of creative to try and avoid being considered less valuable. I want to bring in Bloomberg's Aema Palmer, who's just written a key story on all of this and how inventive and ultimately how ignoring of their own investors becoming.
Yes, so it's become, as you mentioned, a very challenging environment. So companies have been a lot more medicine to let their own shareholders know what's happening inside their company. And so what's that means is those shareholders struggle to value and mark these companies in their books, and that has a whole trickle up effect to their investors and the ones even above them.
There's an interesting element of your story, which is the secondaries market. And it's interesting partly because Caroline and I have been really focused on it in recent weeks. But think about mechanics of how it works in terms of employee liquidity and what you do or don't have to share in terms of financials, while also not having to offer new equity precisely.
So the secondary market has gotten very interesting as a lot of invest don't have a way to typically get out those few IPOs, there's fewer M and A, so you're seeing the second day market be the place people turn to to get liquidity, and especially employees who are common shareholders and maybe looking for some cash on hand.
But that's becoming more and more challenging because if people don't know what's happening at the company, if they don't have access to financials, they don't know how to price these things. So if a buyer is interested, they don't know how they should value this company, how what bid they should offer, if it should it be a twenty percent discount on eighty percent discount, and they may not
be able to get through their due diligence. And so sellers as well too may not have that insights, especially if they're lower in the cap table.
All right, Bloomberg's Hemma Palmer, thank you now, Speaking of startup valuations, his one that just doubled built rewards is the app that rewards consumers on their rent. Just raise the two hundred million dollars round led by general catalysts and push the company's valuation to three point one billion dollars.
That's a big valuation.
The new York based startup plans to use some of that money to expand its rewards network to include small restaurants, grocery stores, dry cleaners, and other local merchants. And by the way, is someone that rents and is trying to find a house to buy in the Bay area?
Good luck?
This is an interesting concept. Let's bring in CEO anchor Jane for more. Anchor, welcome to the program. Let's start with the round and get that done. You know, big chunk of change, big valuation. But why did you do it? Why did you need that cash?
Oh?
The nice thing about the way we've been raising capital and built is we've never actually raised cash in a moment where we needed money, right, and so the company today is profitable and that's allowed us to be more strategic and instead of just going out in a fundraise, this was really more about partnerships. So well, we've been so lucky to have happened today. Is we brought in Ken who was the CEO of American Express for years. He built membership rewards and this merchant ecosystem join us.
And as I think you probably know, after he left American Express, he joined General Catalyst, where you know he is also their lead investor, and so part.
Of this round is really about aligning.
Interest, bringing in Ken as a partner in the business, and then a lot of this can be used for you know, things like share buybacks. You're talking about secondaries. One of the benefits of being a profitable company is you can focus on long term while still giving investors early liquidity opportunities.
Is it going to change you having a co branded master card If you've now got an Amexa.
So Built, well, this is the thing, right, so Built business.
We are the payments and rewards platform for rental apartments across the country, so people get rewarded with rent payments no matter how they pay check, cash, acch payments, MX, Visa MasterCard. I think what's so exciting now though, is you're not just getting points on rent, you're also earning in your neighborhood. And I think this is one of the most excessing there has never been.
So you're not going to change your own co brander most so we have.
A co brand card.
I think that's we're really excited about that. But I think the platform going from home and rewarding you on your biggest expense rent to now building that neighborhood loyalty and allowing these local restaurants, grocery stores, coffee shops to say, here's how you reach people in your local apartment buildings, Here's how you reward them for coming in regularly.
That can be a game.
Changer and talking at games. You've also got Roger Goodell joining I mean NFL. It's all about building loyalty. Remind us how you're getting paid because people are coming onto.
Your board and giving you money.
Because you've got a really strong revenue stream here, you are taking a cut of each of these purchases.
So this is yes. The short answer is yes.
And I think what's so exciting is we didn't have to reinvent the business model.
We had to build the ecosystem.
Right.
Loyalty programs exist in airlines and hotels. They make money from their merchant partners, when they drive spend, they make money from their co brand cards.
What we've also done in.
Addition to that is build the biggest payment processor for rent payments on top of that, and so you allow yourself to be profitable and generate revenue from how people spend on rent. When you help drive spend to local merchants. When people use your co brand card and that ecosystem together is really what makes this unique and differentiated anchor.
I've got to go back to the rent issue. I mean, for so many people, paying rent is painful. Right, you kind of get viewed as a futile exercise where there's no equity reward. You don't get any of the tax benefit of owning a home and paying or deducting the mortgage interest.
It's crazy. But what it's crazy? But what is the market for it? Right?
Is there a clear demographic in the customers that came to you and said, yeah, I like this. Is there a geographic concentration? You know, the market here in SF and New York is well known.
It's a great question. Renters are all over the country.
I think what's important to understand is most built members are in that twenty one to thirty five old demographic. You're at this point in your life where buying a home it's not just about affording a home. You're at a point in your career where you're moving around. You want the flexibility.
You're living in.
San Francisco, then you moved to Chicago or Atlanta or Dallas or Denver.
Right.
The problem, like you said, is that historically you haven't gotten anything back for baying rent every month, and so with Built you earn those points which you can convert into airline miles and hotel points. But as you might remember when we came on here a few years ago, one of the things we spent eighteen months working with Fanny Freddy and fh On is to allow people to use points towards a down payment on a home and use your rental payment history to build your credit and
help you qualify for a mortgage. So what's exciting about that is you pay your rent at any apartment with Build using any credit card, debit card, or bank right. And then as you build your points balance, you're also building your credit history. So if you decide to then buy a home when you're ready, you have a head start.
I'm interested very briefly on ultimately how you continue to expand and is it about talent right now? The money you said you raised didn't need to fortunately, but where do you put it to work right here right now?
So I think there's two different parts of this expansion that's really exciting. Today we have over fifty percent of the top fifty residential owners and operators already in the Built Alliance.
I think now we.
Have an opportunity to really scale across the long tail of the multi family. But we've also now expanded into providing rewards on single family homes condos. We just rolled out our first set of condos here in New York with Douglas Ellman and Mortgage Servicing, so even homeowners can start to participate in this rewards platform for paying their mortgage and being in their neighborhood.
So that's one part, and then the.
Second part, which I think is again it takes time and it's you know. This is what American Express and Visa and MasterCard have done is bring in all these local merchants and say, look can be a plug and play neighborhood loyalty platform for you. Here's a way to reach people when they move in. I mean, people don't realize fifty percent of renters move out every single year. So all those new people moving into the neighborhood, we make it really easy for you to reach those customers.
Introduce your local restaurant and give them rewards and benefits.
As a local.
The person who's most likely to come in on a Monday evening, the person who's likely to come in two three times a week. I think that is a powerful ecosystem and community we can build.
Boil Rewards CEO. Than good Jane. Great to have you on the show.
Thank you, thanks for calling.
Jersey Mike. How can I help you? What time do you close today?
We close today at ten pm?
Can I help you with anything else?
Sandwich change Jersey Mike's jumpinions the world of artificial intelligence today to company announcing a partnership with SoundHound AI to add state of the art voice AI ordering Ceoka Bamajaja SoundHound CEO joining us Now this is a big deal.
How many stores? When?
How thanks for having me.
Yeah, we are very excited about the announcements they have about Jersey mankels about at over twenty five hundred locations. Usually brands like this start with one or two before they expand, where we're starting with fifty, which is great, and we are starting the year with over ten thousand live locations across small puble brands and over one hundred thousand locations in our pipeline.
Kaevon, what is competition like for you now? Given the world has suddenly embraced general to AI, so.
Somehow has three pillars of business. In the first pillar, we provide a branded AI assistant to products like cars and TVs IoT devices. In the second pillar, we have AI customer service for businesses like restaurants and beyond. And in the third pillar that's coming in the future, we bring them together so while you're driving, you can order food by talking to.
Your car instead of talking to the restaurant.
Which brings are pill are two customers to our pillar one, the users up pillar one customers. So something changed last year. General AI and large language models really changed the landscape. Sand Hunt is eighteen years old. We've been developing the
core technology in conversational AI for almost two decades. But when large language models change the landscape, it's really accelerated our path to adoption and competitors, the big tech players have to build their own large language model, so it's right, takes them a couple of years, and then the smaller cabon.
Yeah, we just had ten seconds left.
This an exclusive deal or your phone in Jack in the Box and Wendy's next.
It's not exclusive. We are in twenty five over twenty five brands already and like Wendy's I'm sorry not Wendy's White Castle, and that's the one we've announced. And we can also power smaller brands like it can be a single location sandwich shop and we can.
Use our ai kavan great having some time with you, come back soundhoudaiice o.
K van Mahoja.
That does it for this citizen of Bloomleg Technology