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This is Bloomberg Tech coming up a US reversal as Nvidia and AMD are set to resume some AI chip sales to China. Plus, we're live from the inaugural Pennsylvania Energy and Innovation Event. Our conversations with US Energy Secretary Chris Wright and White House AI and cryptos are David Sachs. An AI startup Commission has agreed to buy what remains of Windsor for an undisclosed sum. Both CEOs join us
later this hour. Let's get back to our top story, and that is that Nvidia and AMD will start selling some AI chips back into China after the adminutetration and US government signaled that they would secure the licenses and approvals to do so. Nvidia continues to for hire a fresh record highs four point two trillion dollar market cap company. We know the story there, Jensen Wang right now is in China, AMD trading at its highest level since October.
There are many questions about why now, Let's get out to Washington, DC, Bloomberg's Mike Sheppard, and that's where I start. The timing of this mic. Very interesting. What do you make of it?
Well, it's fascinating.
This announcement today from in video in the overnight hours comes less than a week after Jensen Wang sat down with President Donald Trump in Washington and the White House for a closed door meeting. Now we don't know what was said in private between the two men, but one thing we do know is that Jensen Wang has been clear in his message that US export controls that have hit his company particularly hard had been a failure and
that put US competitiveness at risk. His vision is that if is unable to sell a modified and slowed down version of its AI chip into China, the US will be seeding that market in essence to Nvidia's chief Chinese rival, Huawei Technologies, and that would set the stage, potentially ed for Huawei to then start exporting some of that AI technology into other countries where in Vidio would also like
to have a toe hold and bigger footprint. For Jensen Wong, he really wants the global rollout of AI to be defined by what he calls the American stack of technology rather than the Chinese one ad.
I think we need to talk about Nvidia's business here as well. Right, this is the H twenty chip, and when they stopped shipping the H Chinese to China, we were able to quantify the impact at least to the top line of Nvidia's business. What do we know will happen in the second half of this year in terms of sales and what business they can claw back.
Well, when they released their results for the first quarter, they did report a four point five billion dollars write down related to those export curbs on the AGE twenty chip. And remember the H twenty chip have been redesigned specifically for the Chinese market to meet earlier rounds of US export curbs that were enacted on national security grounds. Now they should they stay in place, would have hit the
bottom line even further. This coming quarter. They were projecting law sales up to eight billion dollars, but that could all change.
Here ed there's the trade and business case, and then there's the politics. This was Treasury Secretary Scott Besson speaking on Bloomberg Television earlier today.
You might say that that was a negotiating chip that we used in Geneva and in London.
It was all part of a mosaic.
They had things we wanted, we have things they wanted, and.
We're in a very good place.
I expect to meet my Chinese counterpart, the Vice premiere in the next few weeks.
Was this a boggaining chip literally that played into trade talks between the US and China.
Well, it certainly is something that Chinese officials would have raised during the talks, and for the first time, US officials are indicating that the chip export curbs actually emerged as something in the negotiation. So it's unclear where they rank, but certainly it helped the US gain access to those rare earth exports from China that American customers had suddenly found difficulty buying as China began to slow down its sales of those crucial products to automakers and other buyers.
Here bloombergs Mike Shepherd in Washington, d C. Thank you very much. We have some breaking news crossing the Bloomberg terminal and it involves poly Market. According to Bloomberg's reporting, both a DOJ and a CFTC investigation into where the polymarket was accepting trades from US based users that were in violation of its previous settlement agreements with the federal
regulatory bodies have been dismissed. That's according to a Bloomberg source, who says that these two investigations from the BIDE era are now being terminated. We'll bring you more on that story as we get it, but it's just broken across Bloomberg. The sick were Crypto. It's been an eventful week in markets. We had tech earnings, but it's also Crypto week, which is underway. Joining us now to discuss is Catherine Dowling Bitwise Asset Management, General Counsel and Chief Compliance Office. And
I've got to Katain. I want to ask you for your reaction to that story we just broke. I'll go over the reporting. There were two investigations into Polymarket, the US Justice Department and also the CFTC looking at where the polymarket was accepting trades, but that was a bid near investigation that our reporting says is over. What do you make of that?
You know?
Ed?
Thanks for having me, And it's funny. I spent some hours on the plane last night and I looked at the number of hours spent on Biden and Error lawsuits. And investigations, and it was over ten years combined of man and woman hours spent on these various investigations. What I make of that is part of what we've seen as this tectonic shift of let's get back to fundamentals and let's make sure that if we're investigating different businesses that there's really some there there.
And that really.
Plays into the whole theme of Crypto Week, which is getting to the clarity that the industry has been asking for for years.
You're a former assistant U attorney in the Economics Crime Unit, so it's great timing to have you on the program. It is crypto week, and what's so interesting on the Bloomberg terminal, there's a lot of contradicting reports right There was a report last night that bitcoin has a lot of room to run because it is Crypto Week and everyone's sort of enthusiastic and talking about it. Actually there's
a bit of profit taking this morning. What is the main tailwind right now that you're seeing for this industry.
The main tailwind is having this basis for institutional capital to enter. When you're looking at from the sidelines, there's still a ton of institutional capital on the sidelines. Why Because although there's been talk for years, as I just said, about getting to this clarity, we're really finally seeing that momentum actually happen. We're seeing that momentum happen in legislation. We're seeing that momentum happen in bipartisan support and voting behind these key legislative initiatives.
And that's key.
All of the complexity that we saw behind some of these cases that have been dismissed that we've just been talking about. That complexity is what breeds the insecurity is what keeps capital out. They're looking in, they're waiting for that moment. They see the promise of the technology, but they just can't get their arms around the regulatory insecurity they see and they sense. So now we're heading in
that direction. You know, someone asked me yesterday Crypto Week, is this just the crypto industry being loud, And I said, no, this is actually coming from Congress. That is a huge difference, and that's the momentum shift we're seeing. We have bipartisan support with the realization knowing from you know, years of work for many in the industry that we need to get that clarity and we're heading finally in that correct.
Direction, Catherine. This week, the House will vote on bills to regulate stable coins during Crypto Week. Your expectation quickly of what's going to happen.
Expectation is that stable coin is heading towards signature, that momentum has been there. It's you know, it's something, it's it's a piece that you can understand. These are you know, centralized intermediaries that should be regulated. It's hard to have, you know, bipartisan disagreement about that fact. Yes, you can, you know, quibble about the language and you know how
we how we write it up. But I think there's no disagreement that this is an area that should be regulated, you know, and this is all on the heels of the circle IPO. So we can see that moving forward. Clarity that'll that hopefully will we'll get through the House, and then we'll see what the Senate does with that.
Will they take clarity.
Will they create their their own where we've been hearing about the Senate version that's going to come out, So we'll see whether those two get squashed together or whether the Senate will book at clarity. And some of that will just depend on the politics that plays out over the next few days during the Crypto Week.
Catherine Dowling a bit wise asset management. Great to have you back on the show, Thank you very much. Coming up, we go live from Pittsburgh where we speak with the US Energy Secretary Chris Wright. That conversation you do not want to miss, and it's coming up next. This is Bloomberg Tech. Pittsburgh is host to the inaugural Pennsylvania Energy and Innovation Summit. The event kicks off today with President Trump set to attend in just a few hours. For a look at the future of US energy and tech.
Bloomberg's Tyler Kendall is standing by Tyler, Thanks so much, Ed.
And I'm pleased to say that I'm joined by the US Energy Secretary, Christopher Wright.
Secretary right, thank you.
So much for joining Bloomberg. And I want to start with one of the main reasons why we're here in Pittsburgh. There is this surging demand for energy to help power artificial intelligence, and the administration focuses a lot on its deregulation agenda. Do you think that you can accomplish your goals fast enough to keep up with what has been a surge and energy consumption.
I think we will.
You're right, it's a challenge. I mean, our the agenda of President Trump is to unleash American energy. The last four years the Biden administration was more to shackle American energy. But you're right, there's rapidly rising demand and what we as the government need to do is enable private businesses to build the things they want to build and invest in the things they want to build. We're not going to do this building ourselves, but we're going to enable private businesses to do it.
Well, I'm glad that you brought up private businesses and to kind of put a finer point on this idea of urgency. We actually heard from Mark Zuckerberg yesterday pledging billions that Meta is going to invest in data, but it is raising concerns about an energy crisis.
To fuel it.
I'm wondering, have you spoken to Zuckerberg or Meta about their plans.
Oh, we speak Meta extensively about their plans, and yeah, there's a number of the hyperscalers that have huge investment opportunities. We're excited about that.
This is the.
Newest energy intensive industry to arise. That's what artificial intelligence is energy intensive industry, taking the most sophisticated, most expensive form of energy electricity and turning it into intelligence to transform more world and protect our nation. So yeah, Meta has huge investment plans, as does Amazon and Microsoft and Google and the other players in that space, and we need all of them will invest.
It's a few hundred billion dollars this year. In fact, you'll hear at the.
Conference today announcements it was seventy and I think now ninety billion dollars just in the state of Pennsylvania.
When you hear big investments though, and how much energy that is going to take, what's your level of concern though that there is going to perhaps be such a great demand, Can the US really.
Keep up with it?
Absolutely?
United States energy production because of the shale revolution just exploded in the last ten.
Or twelve years.
Pennsylvania is a massive energy producer today. Pennsylvania exports more energy out of its state than any other.
State except for Texas.
And Pennsylvania could massively grow its energy production, just doesn't have enough pipeline capacity to move that natural gas out of the state. So what's going to happen is more of that gas or additional gas will be consumed in Pennsylvania turned into electricity generated intelligence and keep the United States ahead of China in the AI race.
So I want to talk about oil, and I also want to welcome in our audience that has just joined us. We are talking to the US Energy Secretary, Christopher Wright. I'm Tyler Kendall. I want to show you some of these statistics that our analysts have. Bloomberg pulled that the US oil rig account has dropped thirteen percent since late February. It's in the midst of its longest traction since twenty twenty.
I know that there were some incentives in the reconciliation package, but what further incentives is the administration considering to help get forward these oil breaks to continue drilling.
Mostly it's get out of the way.
You know, we had the Biden administration had four years all of government approach to try to, as they said, end fossil fuels. Now, that didn't work very well. We went from eighty two percent of American energy coming from fossil fuels before Biden took office to eighty two percent exactly the same when he left office. Those are just simply the energy sources that power our country and our world today, but it's get out of the way of
the marketplace right now. US production has grown so fast as has other places in the world that prices are maybe at the low end of profitability for producers here, so you see a pullback and activity.
You're going to see with these new.
Investments and economic growth in the United States, We're going to see growth in demand for oil and of course that'll probably bump prices back up a little bit keep drillers active.
Well, you mentioned there perhaps a lower price environment. And part of this also when we're talking about costs that these companies are facing, has to do with tariffs. And I wanted to ask you about copper in particular, which is essential to data centers and getting energy to help power AI. What sort of impact is a fifty percent copper terraff set to go into effect on August first, going to have when we're talking about the cost for energy infrastructure.
Well, I think the biggest impact of that fifty percent terra fund coffer is going to speed up copper mining in the United States. We have enormous copper resources here. We have some huge minds that have been trying to get going for years. We want to get copper production growing rapidly in this country. Copper, like steel, is just essential to everything that happens in the world.
Should we expect the energy industry to get some sort of tariff car vouts moving forward?
I believe the President plans no special carveouts. He wants to reindust the United States of America.
There's a lot of tools to do that.
Make it easy to invest in the United States, make it attractive to invest the United States, and tariffs are an additional element of that toolbox.
I'm sure you're talking to industry, though. Is a carve out on the table? Are there any negotiations underway for say, the oil industry to get a carve out when it comes to the equipment that they use in the field, like copper or steal for example.
No discussions right now. We are hearing from the industry, and of course this is true. If you incrementally raise the cost of projects, that hurts the economics of them. We want to do everything we possibly can to maximize investments in the United States so jobs and opportunity come here to our country.
Lastly, I just want to ask you a geopolitical question, because we did hear from President Trump yesterday threatening one hundred percent so called secondary tariff on countries that import Russian energy supplies. If that were to go into effect, what would that do to prices in the global energy market?
Something like that would likely drive oil prices up. I think President Trump's strong agenda there is to end the war in Ukraine. Our hope is that that large pressure will have an impact on Russia and we can bring just a brutal war in Eastern Europe to an end. That's President Trump's goal is prosperity at home and piece abroad, and the old formulas weren't working very well in that respect. So yeah, President Trump has very different tools, very different
negotiating skills, and very different level of boldness. I think we're going to see tremendous growth in piece abroad and prosperity at home.
All Right, we have to leave it there. US Energy Secretary Christopher Wright, thank you so much for your time. This has been a conversation here in Pittsburgh on the sidelines of the Pennsylvania Energy and Innovation Summit.
I'll toss it back to you.
Blue Bogs Tyler Kendo with US Energy Secretary Chris Wright. Okay, coming up on the program. We're speaking with Niraptalia, co founder and CEO next Tool. That conversation is up next Bloomberg Tech. The neighborhood networking service next Door, has launched a redesigned app with features aimed at making the platform more useful, including safety, local news, and service recommendations. Nextdoor CEO president and co founder Nera Avtalia joins us, Now, now, look,
let's be honest about this. I have a sense of deja vu because I think we've done a Nextdoor two point oh before, so I'd say this is maybe next Door three point zero, But give me the basics of why you've done it and what you've done well.
This is an entirely new Nextdoor.
So whether we call it two point oh three point zero or a ten point zero doesn't matter, because for consumers, this is going to feel and operate like a completely new app, but grounded in what Nextdoor has always cared about, and that is safety, alerts, local and recommendations from trusted neighbors.
The thing that you and I have discussed a lot in the past is the scale of Nextdoor, so forty six million active users going forward with this new focus, what's the metric that you judge success by, is it the user base or something else?
Well, it is engagement, and you're right.
We have over one hundred million verified neighbors who've joined Nextdoor, but the potential for Nextdoor, we believe, is much greater. We can and should be one of those social networks that has over a billion users, and so we have work to do, and over the last year, the work that we've done is to create a better product to enable more engagement, which will translate the more users translate in more revenue translate into profits, et cetera.
The thing I hear a lot in the moment in the domain of social media is time spent actually including generative AI tools. So how do you do the conversion somebody that is a registered user or active user to somebody that spends a lot of time on the platform, but using the new offerings that you've put in place.
Well, ultimately, the real ambition of any consumer application is to turn into a daily habit. And so whether you're coming every day for a few minutes or whether you're spending hours every single day, that's where we start. And today many of our users are only coming weekly or several times per week. So the first thing we do is we ask ourselves, how can we turn this into something that you check the minute that you wake up in the morning, and you check before you go to
bed at night. Because there are so many things happening around us, and if things are happening on the neighborhood, they should be on next door. So that's been our focus and our ambition for the new next Door.
That makes a very interesting, almost academic question, which is if you want next door to be the first thing someone looks at when they wake up and the last thing before they go to bed, who's next Door's closest competitor.
Well, it's a great question, and I think our greatest competitor is really ourselves.
When we talk.
About next store competitive Well, it is, though, because we have an ambition and we have an expectation for what we can deliver to our users that we have not in the past, and so we need to do better. We need to build better product, We need to enable stronger local community. There is no one else today who's built an entire geospatial platform based on where people live. There are lots of local services sites, there are lots of local news sites, but there's no one who's bringing
it all together. So if we can do so successfully, we can be that indispensable, essential neighborhood network that.
Brings in the local news component. I found this fascinating. Why go into local news. We're in an environment where the big social platforms increasingly are pulling back from news on the platform by choice. That was something that you're sort of jumping into head first.
Well, there's a great quote from the famous venture capitalist Michael Moritz that I just read a couple of weeks ago, and the quote is local news is as important to a city as air, water, and gas. And we believe that at Nextdoor, local news is what compels citizens to have civic discourse, it's what helps keep communities stronger. And so as part of this new Nextdoor, we're doing something
that we haven't done in our fourteen year history. We are inviting local publishers to come to our platform and use it as a distribution mechanism to take their great journalism and spread it to our users. And so we have thirty five hundred local publishers publishing fifty thousand articles every week, and now our users can read that news, they can stay in form, they can engage in conversation and it's something that isn't happening to your point on any of the other social platforms today.
And by talking about m and A, because these strategies, which include local news, there are different mechanisms you can use to grow. How do you think about m ANDA and moving into the new domains that you want Nextdoor to win in.
Well, every single advisor that I've talked to, either as a private company CEO or as a public company CEO, has said the same thing. You have to operate your company as if it will be around forever as a single independent entity. And so that's the way that we think about next Door. As a public company, we always have to listen to any conversation that comes our way, but I will tell you we are one hundred percent focused on achieving our potential as a standalone independent entity.
Near Avtealia, CEO, president and co founder of next Door. Back here on the program, coming up deals for AI startups continue as Cognition AI agrees to buy the remainder of windsor we'll hear from both of the CEOs. Next. This is Bloomberg Tech. Welcome back to Bloomberg Tech. There is so much happening in the AI domain that is moving markets as well. Let's start with call we call,
We've pushing a lot higher. There's news out of Pennsylvania this morning that the company's going to invest six billion dollars into an AI data center there. Now, remember Pennsylvania, Pittsburgh in particular, is all the focus this morning as Cene McCormack hosts that inaugural Innovation and Energy Summit. We're going to get to a lot more of that. But the stock really pushing higher, a lot of momentum for coreweed up eight percent. There is our top story, and
it is a clear top story. Nvidia and AMD shares both pushing higher after announcing plans to resume sales of some AI chips into the Chinese market. Why they've secured assurances from Washington and the administration that they will get the approvals and licenses needed to do so. We will
get much more into that throughout the remainder of this program. Now, as Chipstock saw on that news that semiconductors will be able to sell more of their product to China, the Trump administration is still working out its trading relationship with Beijing. Earlier Bloomberg's Amory Horden spoke with Treasury Secretary Scott Besson. Listened to this.
I can tell you one thing that we do not want.
Is a digital Belton road springing up around the world because other countries or China are substituting for our American chip manufacturers.
This is the same chip though, that the Trump administration blocked with export controls in April. So why the change in policy now, Emery.
You might say that that was a negotiating chip that we used in Geneva and in London.
So this was part of the trade talks when it comes to Washington and Beijing. Yes, was it a quid pro quo then, as you said, it wasn't, But was it potentially to make sure that you can get the licenses when it comes to rare earths.
I think it was all part of a mosaic.
They had things we wanted, we have things they wanted, and we're in.
A very good place.
I expect to meet my Chinese counterpart, the Vice Premiere, in the next few weeks.
So when and where will that needing take place.
We're still working on that.
The Chinese leadership has a big conclave at the beginning of August, so we're trying to work out whether that could be in a third country before or after that conclave.
Well, the administration released the framework of the Geneva and London talks.
Well, we have released some of it, and I'll tell you that now having settled on tariffs on the export controls, we can move on to the next stage of talks. And I think it's very important both for the global economy, for the US economy and for the Chinese economy for US to move on and talk about China opening its markets and the increase domestic and consumer production.
There.
Are you hoping to get to that next phase before August twelfth, when that's currently the daytunt between these two economies.
Yeah, Look, I think we're in a very good place, and I tell market participants not to worry about August twelfth.
Shower's Treasury Secretary Scott Besson speaking with Bloomberg's Amory Hoard. And let's get back to Pittsburgh where the inaugural Pennsylvania Energy and Innovation summits underway, and we're going to speak with AI and Crypto taking center stage of the energy and its Digital future joining us now delighted, Say David Sachs, White House, AI and cryptos, our senior policy advisor to the President. David, welcome back. It's great to have you as always on the program. The focus is good in Vidia,
thank you, David. The focus is in video and AMD's ability to now sell in a limited way chips back into the Chinese market. Just your reaction generally to that, Well, we.
Still have a policy of not selling our state of the art advanced the man conductors to China, and the Age twenty is not that it's a heavily deprecated chip, and that's why the Biden administration allowed the sale of the Age twenty to China.
And this is a continuation.
Of that policy in the larger rubric of the trade negotiations that Secretary Besson was talking to you about. So this is a heavily deprecated chip. I think that, like Secretary Besson said, there are some things that China wants from us, or are the things we want from China, and this is all part of the overall trade negotiation.
David, you advised the president on AI policy as well as cryptopolicy. Do you have any sense of when he met with Jensen One last week at the White House. What case mister Wong made to the President that it was the right thing to get the American technology stacked back into China.
Well, Jenson has been making the case publicly for competing in China, and I think there are a lot of merits to the argument. If you look at developments over the past year, Huawei has advanced very rapidly. They have a new technology called cloud Matrix, which which networks together three hundred and eighty four of their Huawei as send chips. Now, the Huawei chip is not as good as the Nvidia chip.
The Nvidia chip is three times more powerful. But if you network together enough of those chips, you can route force your way to a similar kind of result. And that is what Huawei has been developing, is this cloud Matrix three eighty four. And there have been reports, including from Bloomberg, that they've started exporting that technology or they've been seeking to export it. So Huawei is becoming much
more competitive. And if you give the whole Chinese market to Huawei, it's a huge subsidy for their R and D R and it basically forces Chinese companies that might be willing to use AGE twenty to use the Huawei chip and to basically figure out basically to figure out the bugs, work out the kinks of the cloud matrix system,
and help Huawei scale that up. So I think there is a compelling argument here that you just don't want to hand Huawei the entire Chinese market when in Nvidia is capable of competing for a big slice of it worth a deprecated, less capable chip. Again, we're not selling our latest greatest chips to China, but we can deprive Huawei of basically having this giant market share in China that they can then use to scale up and compete
with us globally. So I think this policy is nuanced and I think it makes a lot of sense.
The reporter you're referring to that Bloomberg had was that Huawei was going out to some of the Gulf nations and also some of the Southeast Asian nations and offering prior generations of their chip, but also the cloud matrix that you mentioned. The concern being that in dealing with third countries, you know that be some Chinese access to
other nations technology. How involved have you been, David in these kinds of talks and in framing that the presidents thinking that actually just having direct access to lower performance compute is okay with China right now.
Well, look, I don't want to I'm not going to discuss what I talked to the President about, but I mean I can tell you what I think, which is the Bloomberg story discussed hoh. Huawei was basically trying to make available the Huawei Assen chip, which is their current chip, which is basically put together in a rack system with cloud matrix, to create a viable competitor to in Nvidia, and I think it is a viable competitor. I think in Vidia and AMD and other American companies have a
better product. But if we don't compete across the world, then we will hand the market to China. And one of the reasons that the President went to the Gold States on that trip is to encourage business relations between
the US and the Gold State. He signed massive investment deals and one of the deals that we signed was this new AI Acceleration Partnership where we want to create a pathway for the Gold States like UEE to buy American technology, to buy American and to create data centers on the American tech stack and I can tell you that I don't quite understand why this has proven to be so controversial in Washington. But where these nations, like
the Gold States, they have two choices. They can go with an American technology or they can go with the Chinese technology. And if you don't let them buy the American technology, you're pushing them into the arms of China. And a lot of people said, well, China won't be ready to sell for years, But now we see that there are reports that Huawei is out there trying to
sell and export the Huawei as sent chip. So I think it's very important that we enable our American companies to compete in the global market, that we don't tie their hands, that we don't hobble them, because again, this is zero sum game. That market share will either belong to our companies like Nvidia, or it's going to belong to Chinese companies like Huawei. There's a very simple test
for this. Just look at market share. If five years from now we look across the world and we see that in Nvidia or other American companies have eighty percent more market share, it means that we won the AI race. But if we look across the world in five years and see that Huawei has eighty percent market share, then it means that we lost the AI race. So I think it's very important that we do everything we can to encourage American exports to be sure. We can name
our security standards. But this is a very easy trust but verify situation. The chips that we're talking about are really mainframe computers. They're eight feet tall, they're thirty six hundred pounds. It's very easy to send inspectors into data centers and count the server racks to make sure that they're where they're supposed to be, so the security concerns
can be addressed. I understand that there are some security concerns, but I think they're very easily handled, And what we need to be doing is making sure that we win the AI race globally by making American technology the global standard and not letting not creating a Huawei Bolton Road.
Live on Bloomberg Television and radio worldwide, we're in conversation with David Sack, Senior policy advisor for AI and Crypto the AI and cryptos David I wrote my newslet earlier this week about the analogy that Jensen Wong has been using the American Technology Stack should be akin to the US dollar as the world's reserve currency. That's how he would like the administration to approach it. Do you share that view and see some truth in that analogy.
Well, here's the way I see it, and this is really I think a Silicon Valley view, because I'm ultimately I've been a founder and investor in Silicon Valley for twenty five years. And what we see is that the winning technology companies are always the ones that create the biggest ecosystem. They have the most developers on their platform, they have the most apps in their app store, and so they work very, very hard to create a partner ecosystem. And I think that the United States needs to do
something similar with the American Technology Stack. We want the most other countries using our technology because again it's a zero sum game. And it's not just the chips, it's the operating system that runs on those chips, it's the AI models that then are run in these data sets. We want all of that to be American made and American powered, and look to be sure there are security
concerns and we can address them. I don't think that's that hard, but if we hobble our American companies and don't let them participate in the global market again, we are creating We're playing into China's arms and playing into their digital soult road. So I think, to me, this is.
A pretty easy question.
I think we do want American technology to be the global standard.
It is a little bit like the dollar.
There is a network effect there. The reason why everyone loves the dollars because they know that everybody.
Else will accept it as well.
So we do want to have the strongest dollar, We want to be the reserve currency, and we do want our technology to be the global standard.
David Bluemberg reported this morning that on July twenty third, the President's going to speak in an event titled Winning the AI Race, which you and the rest of the All In Pod team will be posting. Essentially, I guess that's going to be a moment where we'll have a more a fuller sense of what the President and this administration's big picture AI policy is going to be, what the big goals are going to be.
That's right.
That's the President will be giving a keynote address at a one day AI conference in Washington, DC on July twenty third. It's co hosted by all In and Hill and Valley Form, which is also a DC and Silicon Valley policy group, and the President, I think, will be giving his first major address on the topic of artificial
intelligence building on. There are mark studies giving here in Pennsylvania today which are also AI related and related to energy investment, the kinds of investments we have to make to power the next generation of AI.
David, you've been speaking there in Pittsburgh this morning. What's the main focus on the energy side of this AI story? Energy security is a national security priority, but just simply whether or enough whether we will have enough energy resources to power the goals of META and the other hyperscalers.
Well, Pennsylvania is a huge energy producing state. I think it's our second biggest energy producing state. They have abundant natural gas, which I think in the near term is going to be the power source for these data centers.
I think in about.
Five years we could start seeing nuclear scale up, and the administration believes in that too. We want on all of the above approach, But Pennsylvania is very big in natural gas and there are major investments being announced here for more basically fracking for more grid infrastructure, for more power generation. All those things are needed to power data centers. AI runs on GPUs that are incredibly power intensive, and those these data centers in the future are going to
need more power. And the one area I think where America is a little bit behind. I mean, I think we're winning the AI race pretty much at every level of the stack, except that the size of our power grid has not increased very much over the past decade. If you go over to China, they've roughly double the size of their electric grid over the past decade, where ours is only gone up by a couple of percent a year. So this is an area where we need
to make major new investments. And the President is coming to Pennsylvania today to announce many of those investments. And I think you're gonna this has been a major priority the administration, and I think you're going to see.
A lot a lot more of this White House.
AI and cryptos are David Sex, Thank you very much. Coming back on Bloomberg Tech. Okay, coming up deals for AI startups continue. As Cognition AI agrees to buy the remainder of Windsurf, We're going to hear from both of those CEOs. Next, this is Bloomberg Tech. Internally, the companies were saying, it's the perfect fit. What happened? Why did it happen? Windsurf CEO Jeff Wang and Cognition AI CEO
Scott Woo join us now live on Bloomberg Tech. Scott, I'll start with you with that simple question, how did all of this come together? Please?
Yes, absolutely, And so I think we all found the news around this found out about the news around the same time on Friday afternoon, and we were looking at this and saying, Wow, there's there's such a clean fit of all of these things, you know, both in terms of kind of the products, which is Windsurf is one of the leading IDEs, Cognition builds Devin the first AI software engineer Agent, and so there's a clear offering of
ID and agent. At the same time, both of us have a very clear enterprise focus in terms of how we do business and even kind of the customers that we have, the team that we have and so on, and it just seems like such a great fit.
Jeff, what I was hearing over the weekend is that some of the investors on both sides might have played a role in sort of brokering that this was a good idea? Is there some truth to that?
Actually, the way that the other deal panned out was there it should have been a clean cut. So there were kind of like conversations going. But you know, as job as interim CEO, you have to find a lot of options for the future of the company, and I think after talking to Scott it was it was a done deal. In my mind, it was just a perfect fit.
Scott. What's so interesting is like the conviction that Cognition had, Why were you able to move so quickly and just say, you know what, this is a great deal for us.
Yeah, yeah, absolutely. Look, I think we are in the AI code space. I think Winter is a very kind of different complimentary offering in this space. But naturally, you know, we see it. We've tried the product ourselves, We've used it a lot, and it helps us just get to conviction very quickly. And Jeff and I talked and I think especially with everything going on, it was clear that, you know, the sooner that we could get to an outcome, I think the better for the team and for the customers as well.
What role did did Google or even Barren play in this Jeff, we're trying to unpick a series of deals and chronologies that kind of happened very quickly.
I have to say that the whole Google situation was meant to be a clean cut.
So everything at Windsorf was intact.
The product, the IP, the go to market team, the marketing team, even the enterprise engineering team, and it just so happened that these are the components that Cognition was looking for. So I wanted to just be clear, like it was structured in a way where it was a clean.
Cut from Google.
What was the mood Wins Jeff. On Friday when the Google licensing and at Quahia was confirmed.
Yeah, I had to do an all hands to the team and I had to tell them the news, and I had to say that was probably the hardest day for two hundred and fifty people at the company's lives, and I was immediately in action. I don't think I slept maybe three hours over the last the next seventy two hours, and my only goal was to get the best solution for the company. And I think now that
we're with Cognition, everything is intact. We have an amazing core engineering team with Cognition now and we also have Windsurf. The products still everything is the same, and now we also have Devin and then we have the.
Four ground agent and the background agent.
This is like an amazing combo for the company.
Scott, would would you kindly go over the basics of the terms of the deal, like was this a cash.
Or stop deal?
It started Friday and by the beginning of this week it was done.
Yeah, yeah, yeah. What I can say is that wind Surf employees are you know, every single winter employee has an immediate consideration as part of this deal. And then from here on out we are all just one team, and so wind Surf employees are now part of Cognition. We were working on this together and excited to get moving.
When I first learned about Windsurf, it was in the form of Codium and Jeff this questions you and Varren and then the big news was open AI and Windsurf. When did you kind of get the sense that that wasn't going to happen. I know we're going back over history a little bit here, but actually, you know, in a few years time I might look back and go, wow, that was a pretty old series of events. So when did you look at it and say, okay, open AI and Windsurf's not going to happen. What happens next?
I think it was time so open Aye. Kind of the rumors broke like three months ago. And if you think about it, like if three months later there's no progress and there's still drama, a lot of it is reported in the news, I'll say that is a pretty good signal that things are not progressing as fast as
you'd like. And I remember the founders of our company were kind of like locked in a conference room for I think six weeks, and I kind of got the sense that things are probably going to shift in another direction.
Scott, I'd love to talk about technology for a moment, if that's okay. What is it that that Windsurf and cognition can do together?
Absolutely, and so wind Surface, you know, in one line is an ide that makes it so that a developer when they're at the keyboard can go faster and produce code faster. And Devin is an AI software engineering agent that you can.
Delegate tasks to.
And there is a lot of national integration of how we can work together. You can imagine kicking off the agent to go do kind of a first pass at a project and then coming in and doing the finishing touches yourself. With Windsurf, you can imagine using the ide to plan and then once you have the task sorted out, to be able to hand it off. And we're super excited because I think both of us have always been very focused on making software engineering work in.
The real world, you know.
And it's in the last few days actually, at Cognition, for example, we've announced that both Goldman Sachs and City Bank have been rolling out Devin to their teams. Windsurf has been working with JP Morgan and similarly, you know, when we go down the customer list, when we go down the sectors, we found.
A lot of natural partnership.
Jeff I got the sense from reading but also speaking to people over the weekend that kind of post Google, the remainder of the Windsurf team felt a little bit left out in the cold. But on the other hand, that's a great team, you know. Was there a moment where you kind of thought, okay, we can carry on a loan or did the Cognition part of it just say, you know what, we can be better by building with them.
Yeah.
So the funny thing is there's no way I can tell the team at the all hands that, oh, we're just gonna go.
Get acquired, right.
The first thing I had to do is make sure there's achievable plan and it's not as exciting as before of breaking frontier AI models, training and getting to the next big thing. It was kind of picking the safe route and making sure everybody could believe in a route that we can do. And on the side, obviously it was what is the best company that we can work with and how can I get in touch with them? But I had to keep all the options open there and Cognition obviously was the best fit for us.
Scott, I think I'm right in saying you've kind of said on social media that this is a real acquisition, but I would be grateful very quickly from each of you. Your reflection on what's happened with all of these acquahis and what you think the net results of it is.
Yeah, you know, I think it started to come up more in the market and I think it's frankly, it's a bit disappointing, which is to your point exactly what you said. You know, there are a lot of great teams that have gotten left behind, and I think in our case, I think you know, we were huge fans of the Windsurf team from the beginning, and we saw an opportunity to work together.
And Jeff, we just have twenty seconds, but that your thoughts.
I think me and Scott might have just invented a new model for what's going on in the market right now.
If there's acquahera is going on, there's a lot of valuable pieces left.
And I don't want to say pieces, but like even what was left at Windsurf was incredible. And the other important thing to note is all the investors bounder shares were wiped off the cap table. It was an entirely employee owned company, so a lot of people were very happy yesterday, I think is the summary I'll say.
But this might be the new model going forward.
Jeff see wins Skullboys a cognition. We got it all in. I'm really grateful to you buy Thank you. That does it for this edition of balloon Berg Jet Tach. But I've got to check out the Paul. You know where to find it online on all the Bloomberg platforms. Back in San Francisco. Unexpectedly, this is Bloomberg Tech,