From Mahard where Innovation, money and power Collie in Silicon Vallet NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Caroline Hide at Bloomberg's Welth headquarters in New York and I met Ludlow in San Francisco.
This is Bloomberg Technology.
Coming up, we'll talk the state of fintech and of course earnings with the CEO of SOFI as a company beats and raises its revenue forecast for the year plus.
President Biden plans to issue a sweeping executive order on artificial intelligence. Today will break down the details and its impact.
And we push ahead to the all important Apple event of the year. It's the last one they have and it's set to veil two new macs and processes later tonight at a scary fest.
But first let's check in.
On these markets, because look, there's a tug of war going on, whether it's geopolitics on the one side, whether or not it's well questions of whether direction of travel we saw off too far too fast when it comes
to tech. We're actually seeing money move into stock markets today, particularly in the nasdac COAB a percentage point are the benchmarks well rallying off of what have been over sold territory, particularly as geopolitics still does swell and we're seeing some concerns about the conflict in the Middle East, but maybe
not escalating the way that many had imagined. So we actually see perhaps a move out of some of the haven's of choice yields Actually pushing up on the ten year yield is notable though also we've got the all important fair and we've also got, of course what we see from the Treasury in terms of bondishments coming up for the last quarter.
In the next year, we're looking at crude just.
Off by three and a half percent, that really playing into perhaps some of the anxiety just pulling back, ever so slightly cautiously when it comes to of course Israel and Hamas. Let's move on and have a little look at oh, the riscacid a choice. When it comes to the blue Blag technology, we're looking at crypto look, actually not much volatility on a day. We're actually we've seen such buying in the previous week. There is still thin liquidity here ed but we're seeing thirty four thousand, a
level that's being so stayed for now. That's as the dollar is on the downside.
Yep. Three single names I'm watching.
The first is Apple, Yeah, the scary fast event this evening, the expectation a new iMac and an updated higher end MacBook Pro, but also an emphasis on chips. We think they'll unveil the M three latest generation processor. The stock being supported up one percent. Then we get earnings on Thursday. Big week for Apple Meta actually some news.
Out of Europe.
Out of Europe, the stock up two and a half percent. We will have an ad free subscription based version of the Facebook app and Instagram that supported the stock in the session. One interesting name that we're watching is kind of the main one of the show is so Fi. This is an earning story. Were down one point seven percent. Following the open we were almost fifteen percent. That is a big swing now to the downside, down one and
a half percent. Upgrading revenue guidance for the year, beating expectations on that front, deposits tripling from a year ago and coming in ahead of expectations. But this is a really interesting stock reaction, strange one.
And funny enough.
I'm pretty sure our next guest doesn't always want to talk about stock reaction. But we'll want to talk a bit more about the numbers. Let's bring in Sofi see Anthony Noto And I'm sure you're going to say, oh, we don't go by the day by day fluctuations. What do you make though of the optimism of release originally seen around the numbers? And what more do you want to say to an investor base that maybe just or maybe we'll take some profit on the day.
Well, first, thank you for having me.
What I'd say is we're really excited about the results that we delivered today. I think they're extraordinary in a number of different ways, and equally as positive on the outlook. There's very few companies that are driving durable growth the way we are. Plus twenty five percent revenue growth, really strong member growth at forty seven percent accelerated. We had a record number of new members added as well as products, which is a testament to the value proposition that we're delivering.
Our profitability continues to improve.
We now have all three of our business segments that are profitable, that being the lending products as well as tech plot form and now financial services. Sixty seven percent growth in are absolute dollars on a year year basis from non lending and that will continue to be the driver and growth of the company. And we meaningfully grew tangible book value over they're trailing twelve months of about
one hundred and seventy million dollars. So I feel like we're executing across the board on both growth and profitability and shareolder value, and it's just a matter of time before that's reflected in the stock.
We just have to keep delivering the way we have been.
Anthony, it was this interesting to listen to you on the call. You kind of really talked up the non lending parts of the business, particularly going into twenty twenty four. Are those going to continue to be more of growth driver for you than the lending business?
That's correct.
They've reached the size in terms of their absolute scale where their absolute growth in dollars is meaningful at two thirds of the overall growth in dollars, and they're profitable, which means we can now start investing even more in them and have them grow faster.
Than their lending businesses.
And so the way we talked about the call is that I would expect tech platform and financial services to be the driver of growth and lending to be additive to growth, which is the opposite of what happened so far this year.
The interest rate environment is really interesting because some of your sort of technology focused payers Lending Club being an example, is struggling. They've gone through a round of job cuts. For example, I look at deposits tripling from a year ago. What is the principal driver of that traction you're getting? Why are you able to perform when similar business models are not.
The thing that we're benefiting from is that we have a great diversification because of our strategy. So our goal is to help our members on all the most important days in their lives and all the days in between. From a financial perspective, that results in us having nine different businesses. Some do really well on a high rate environment, some will do better in a low rate environment.
Right now, the.
Strength that we're seeing is behind our flagship products so far, Money, which is the best of checking and savings in one account. We give you all the great functionality that a digital operator can provide, in addition to additional benefits like two day early paycheck and then most significantly, a very unique interest rate at four point six percent apy no fees, and the ability to get a free certified financial planner end up to two million dollars of FDIC insurance.
So it's a very unique product.
It's helped us grow at the top of our funnel, and then we see great cross buying from that product as well as others. So the diversification we have is definitely helping. Having both lending businesses and depository businesses are also very unique. And then of course our investing business
is a great cross buy product. On top of that, one thing a lot of investors don't know in the retail sector about SOFI is we have a third business, our technology platform business, which is leveraging the technology that we use to build SOFI for other partners.
There's about one hundred and thirty.
Five million accounts that sit on top of that technology platform. We often talk about it as the fintech of the awso fintech because we enable eight billion transactions a year across that platform.
Let's talk about in that offering connector the natural Language AI driven I think it's like an intelligent digital assistant. Basically, how much has AI been a driver of getting clients excited of for your technology offering.
It's a small piece.
As you mentioned, we have a whole portfolio of products in our tech platform, one of which is a chatbot for customer service. It helps reduce the time to resolution and reduce the context per customer. It does leverage AI, natural language AI and answering the questions that our members have they really like the product and improve satisfaction.
It's a product we're offering to financial institutions.
We're also increasingly offering it to people that are not currently using some of our other products, so it's a standalone product that's in the cloud.
What you're also offering in the retail side of your business in particular is IPOs. Of course, this has been an interesting thing that we've heard, particularly AI related store around on which I know that you were helping sell down to some retail investors, but also you're on the Instacart deal and oddity tech. How much will the IPO pipeline benefit you?
Do you think the IPO pipeline has two benefits.
The first is it's a direct revenue stream, which isn't that meaningful, But what is more meaningful is that this is a unique product that mainstream, main mainstream investors retail investors typically do not have access to, so we're giving them access to IPOs at ipo prices and that helps drive more desire to become a SOFI member as well as it increases aum in our invest business, so it
indirectly drives the business in a unique way. We want to give our members an opportunity to invest over the long term, and giving them more selection like an IPO at IPO prices is one way to do that. We're working on alternative asset classes as well. We pioneered fractional shares. We also offer ETFs and robo accounts, so we're trying to be a one stop shop, not just overall as a company, but within verticals like investing.
Anthony last week he sold one hundred million dollars of personal loans.
He talked about it on the call. Who was the buyer.
We don't disclose the individual buyers were very pleased with the demand we're seeing for our assets, especially with the fact that rates are starting to hit a ceiling and would likely come down. We've been able to pass on the higher benchmark rates and higher rates for our loans and that's providing really attractive yields, especially given the fact that we have prime customers with an average FYCO score in our loans in the seven to fifty range and
really high yield. So we've had a number of counter parties that were now making partners, and one of them, as was mentioned in the call, was from one hundred million dollar deal that will evolve into a two billion dollar forward flow. In addition to that, we filed a securitization with Blackrock for three hundred and seventy five million dollars, So a lot more to come on the loan asset side of the equation, but coming out of rates that are pre attractive to our roles into our balance sheet.
All right, So FI CEO, Anthony Noeso, good to catch up. Thanks for joining us on this busy earnings morning. Okay, Later today President Joe Biden will sign an executive Order on Artificial Intelligence regulation, his most significant action yet to rein in the emerging technology. For more on the details, let's bring in Bloomberg's a Kayla Gardener.
So what's in this, CEO?
Yeah, this EO, as you mentioned, is a lot more sweeping than we were expecting. We initially thought it was just going to govern how the government uses AI. This is going to have wide reaching impacts on the private sector,
on civil society. And the biggest takeaway here is the White House is using a law called the Defense Production Act to basically force major developments to submit to safety test so they will have to submit those tests to the government before they can be used for public release.
Now this is not everyone.
This is only powerful systems that are above a certain threshold and that could potentially pose risk to national security, pose economic risk, and that's going to have a big impact on companies like Amazon, Google. And another major takeaway that will be very familiar to people at home is they're also instructing the Commerce Department to start developing technology
for water marking. So when you see those deep fakes video audio even they want there to be some sort of signal to American people that this is authentic, that this is a piece of AI, and they should know that they this is not disinformation or misinformation. So those are the biggest major takeaways, certainly sweeping, but will certainly depend on these agencies to enforce some of these targets.
It's interesting you mentioned the world signaling signaling to well. At the moment, the voter is the people, but there's signaling to companies here, there's signaling indeed that the little of the heavy lifting does fold upon the agencies. Once again, that's about what fifteen companies going to be there at the signing.
What have the reaction really been there?
Yeah, something that's interesting about this EO is it largely builds off of voluntary commitments that fifteen major companies made this summer. That's Amazon, Facebook, Google, all of these major technology companies signed on to basically commit to some of
the things that are already in this EO. And we're going to see all of these companies standing alongside the President today as he signed this EO, really signaling that they want to be a part of this process and ultimately they could be preventing themselves more harm down the line if they show now that they are willing to cooperate, that they're willing to put safeguards on this type of technology. And I think that's exactly what we're going to see today.
We thank you, Okaynat God who's going to be getting back to that EO all important signing and really, well this means for Corporate America global viewpoints on AI and the gudrails that are being put into place. Let's talk about it more with Rama Anu, a senior director of Society and Intellectual Property the Special Competitive Studies. Previously, you served as director of Research Analysis and the National Security
Commission on Artificial Intelligence. Therefore, I'm a perfect voice from the perspective that this is America trying to say that they are taking the biggest steps thus far by the world in terms of putting guardrails on the future development of AI.
Do you think that this really is showing that.
This is a historic moment for our country. America is leading and cutting edge frontier AI models and now we're leading an AI governance. So it's a signal domestically and globally that we are committed to AI governance and not stifling this innovation.
Some of the directives aren't enforceable, as we're hearing. I mean, a lot of the overall legwork, heavy lifting is going to be done by some of these agencies, and indeed.
Perhaps yet further legislation.
Is really needed to come from Congress, particularly when it comes for privacy. From your perspective, does this have real teeth or is this more about signal?
I think it's both.
This is definitely a great start.
The EO will have time lines on when departments and agencies need to work and implement these directives, and so I think that is where the hard work is going to start, is when we are implementing and enforcing this directive.
Rama.
The principal mechanism that the Executive Order outlines is that any company building a next generation large language model as opposed to one that's currently in existence, has to submit it to the government for safety review before it's put into the public domain. Is that an effective tool to your mind to meet the goals of this administration in the field of AI.
Absolutely, But first we need standards and metrics to audit those AI systems.
So that I expect that the Executive Order will put out a directive to the National Unis to come up with those standards metrics for auditing AI systems before they're adopted across.
Departments and agencies.
So I do think it will.
Be effective, but we still have a lot to work to do.
What's the intellectual property story here? If you're getting government oversight and your directing agencies to put water marks on content made by a private entity.
So AI is going to have a.
Lot of implications on our existing systems like our patent regime and our copyright regimes, and as you said, for standards for province and authenticity.
So, for example, I think that the AI.
Implications on the pattern regime means that we have to see what implications this has for our existing pattern regime and our existing laws to see what we may need to change, and the same for the copyright regime. And also there are harms when we don't know whether information in the digital domain is real, or if it's been generated AI, or if it's authentic.
So we do need safety.
Mechanimisms to make sure that when AI, when information is generated by AI, or when AI has been used, that we know that that's what's happening.
Rom your own project, the Special Competitive Studies project is a fascinating one and in many ways led by Eric Schmidt, and the whole idea is sort of ways in which you can strengthen America's own competitiveness within technological developments, particularly in the world of AI.
When it comes to competitiveness, how.
Much do you think it will be fostered or stifled by the fact that it's not just America, but we also need guardrails put in place globally. We've got the UK about to have its AI summit, for example. Is there going to have to be some competitiveness given up for safety?
Well, I think we need we definitely need our partners and allies in this tech competition.
We can't do it alone.
So there needs to be alignment with our existing safeguards on trustworthiness, on safety and security, making sure that these technologies are fair and responsible. So I think that our nations, our partners and allies do need to work together to make sure that our governance mechanisms do align so that we do have mechanisms for data flows, so that we have mechanisms to reach each other's markets.
And in that sense there's healthy.
No, so please finish your thought.
Thank you.
In that sense there is healthy competition, right, so we want everyone to operate according to the rules of the road.
That's only when that's when we.
Can get healthy competition, competition and make sure that we're innovating the way that we want to be innovating.
Well, hey, come those rules of the road we see rama alu, thank you so much for some time. Special Competitive Studies project. We think of adjoining, I mean, while coming up we look at the California Governor Gavin Newsom wraps up hey China trip with a tour of Testas factory.
We'll have more on that next and look you're watching the.
Shes Yeah tested down more than four percent, on track for its biggest drop in a couple of weeks, lowest levels since May. Two pieces of news Panasonic kind of indicating through their first loss in three quarters that there's pretty lackluster demand for Models and Model X, translating through to their cell demand, but also byd big competitor of Tesla's in the China market having strong financial results. This Monday, both those things weighing on Tesla's shares down four percent, their lowest.
Level since May. This is Bloomberg Technology.
It's time for talking tech.
First up, California Governor Gavin Uson wrapped up his China tour with a visit to Tesla's Shanghai factory. Newsom was accompanied by his delegation and China based Tesla executives. The Shanghai plant accounts for more than half of Tesla's global production, plus Panasonic's automotive batteries operations fell to their first law in three quarters on lackluster demand four Tesla's models and
Model X cars. Demand shifted to Tesla models priced below the eighty thousand dollars threshold eligible for tax incentives, hurting the Japanese supplies profitability.
In the September quarter.
Plus, Meta will offer users in Europe add free access to Facebook and Instagram for a subscription fee, after courts in the region began cracking down on the way social media companies treat data. The subscription will cost nine ninety nine euros a month on the web or twelve euros ninety nine cents a month on iOS and on Android Caroline, And.
In many ways that's responding to well European views on control and indeed some strength in the market that certainly Meta has, and that's an ongoing narrative here in the US as well ed because today Google CEO so No Pishai is testifying today in the company's antitrust trial. We just want to get you up to see what's happening, because the star witness is giving testimony.
Bloomberg's Todd Shields is here with.
More and really this is about so No Pishi is push to try and convince basically amid the trial that they were doing this not to just monopolize the market, that we're really worried about a competitive threat here.
Yes, throughout the trial and we're in day thirty now, so this is not a short proceeding. But the Google side of the case, if you will, is just commencing. We're about midway through and throughout. Heavy duty payments to Apple and others for default position have been one of the main issues the government, which says that Google illegally monopolizes search maintains its monopoly through illegal means. The government says those expensive default payments amounting as much as twenty
six billion a year basically foreclosed competition. Everybody uses the defaults, nobody, no other search engines can breathe. If you will, Google says we're in a very intensely competitive world and we need to do what we can or else we're going to be yesterday's roadkill. So the CEO today will be leaning on the latter side of that equation.
We've known for a long long time that Google dominates seuch. But I think at the core of what pitch I is trying to argue, right, is that how consumers consumed technology is changing, the world around them is changing and therefore they are at threats in that market position.
Todd right, So there are threats from Google's point of view, from places like the search within Amazon, search within TikTok, you go to Expedia for travel search. You know, who knows what other search services are going to pop up and potentially undermine Google. And you know, we know from the history of tech there's roadkill. The look really big a long time ago. I heard something about my Space on radio the other day and I thought, wow, there's
a blast from the past. But that was big back in the earlier eons and disappeared rapidly, so you never know, I think is Google's main point. And they say everything we're doing is legal so far, and it's legal, you know, it's justified.
That is a blast from the past. Wilienberg's Todd shows, Thank you very much.
Welcome back to Bloomberg Technology.
I'm Carolin Hide in New York and I'm Ed Ludlow in San Francisco. European markets have just closed, and for one week and one week early we will be bringing European market closed daily here on Bloomberg Technology.
The sock six hundred Europe, which.
Is a benchmark of equities across seventeen European countries, starting the week with a modest four tenths of a percent gain after two straight weekly declines. If there is any one big piece of movement in European trading, it's Brent, the sort of more global benchmark for oil, which is moving to the downside, off almost three percent because of what we've seen in the Israel Hamas war and the escalation of military activity over the weekend. The other thing
is the eco component. We got GDP data and inflation data out of Germany better than expected. We saw bond yields pair declines as a result, and also the euro strengthen against the dollar. It had been a little bit lower before that Echo data came out, Carolina. But that's the European piction, as I said, for one week only. We'll bring it to you daily.
Ah, and what joy it's going to be for this week.
Meanwhile, let's check in on these markets here and across the Atlantic, and currently the United States is well seeing a little bit of desire to be getting back into some of the old soul nature of the Nasdaq and the S and P five hundred currently up about six tens percent, we're coming off the highs when you're looking overall where we had been in some of these benchmarks. A lot of this is surrounding, of course, worries about geopolitics, a play a conflict in the Middle East, whether or
not that will be contained or indeed escalate. But notably, of course, we're also seeing a federal reserve this week from a macro economic perspective, and indeed whether the US Treasury how much they're gonna be selling bonds. So NASA currently up sixtens per percent. If you're looking at the last like one hundred the big tech players, I'm looking at Tessel though, weighing that down on.
One particular side.
In fact, it's the worst performer in terms of points movement on some of these benchmarks, not by four point two percent, you outline y ed. And a lot of this is to do with the signals we're getting from Panasonic, the battery part of this equation there of course saying at the moment that they're seeing a lackluster demand for the Model S, the Model X, and indeed that's been
crimping their own sales. But we've also been seeing the competition from bid Over in China, really interesting that of course, because of some of that narrative around the chip makers, we are seeing over.
All the socks down.
In fact, only four players in the green on the semiconductor chip indext today, and we're going to dig into.
Wine a little bit.
One key player we've got coming up as I'm just shining light that it's up by two percent almost on the day.
Yeah, you're talking about shares a semi conductor manufacturer. On Semi, they're down now more than nineteen percent. That puts it on track for its biggest drop since March of twenty twenty. The stock trading in its lowest level since January of this year. We're going to bring in on Semi CEO Hassan El Kouri, And Hassan, this is really about the outlook you gave for the fourth quarter coming in below expectations.
I guess what is the fourth quarter outlook dictated by what are you seeing in your end markets?
Yeah, all of it is as a demand environment, if you think about it. From we've always known the softness in industrial.
We've outlined that in the fire quarters.
We added to that, you know, the softness that we're seeing or pockets of sauagine that we are seeing from customers as they digest through the inventory, and the inventory is really related to the end demand softening in automotive.
So you couple these two with demand being impacted by interest rates, and you give the guide that we've outlined, which is a softer guide that we've seen with a single outlier of a customer which is also demand that is the biggest impact, which is an automotive OEM in North America.
Hassan, is there a tangible impact from what we've seen in the strikes here in North America.
You're referring to the U A W strikes. We don't see a direct impact. It's not really a big ten. There's no tangible impact that we can pinpoint too. But again it's it's the impact is not going to happen in a quarter. If there's impact in the outer quarter, but given the macro oncertainty that we've had, that's not going to be really an outlier that we have to consider.
Hasani, you've therefore outlined that there's one key player.
In particular that's impacted your numbers. Can you say who?
No, I'd rather not get into customer specifics.
When we do get specifics.
Can I ask specifically about your relationship with some of the Chinese manufacturers, because you do have relationships there and geopolitics has been tough in that arena to say the very least. How do you see your ongoing relationship with China more broadly.
I think our relationship with Chinese or EM specifically on the EV side is very positive. You know, in my prepared in March this morning, I talked about the fact we are engaged with long term agreements with four of the top five China OEMs that are the leading ev or ems. We also renewed our engagement with Neil that extends towards the end of that KID to twenty thirty one, their new generation. So the relationship is very very positive.
It is incremental for US. So I know there's a lot of backdrops by demand in China, but the MAN is going up in China, the MEN is going up in the evs worldwide. I know there's a lot of stories about softening demand, but that doesn't mean demand is going down.
The men's actually increasing.
It's also increasing in the fourth quarter for US and through twenty twenty four, and that also relates to some of the China business that we have, which has been positive because.
We were a share gainer over there.
We came from a very small revenue penetration and that's going to be increasing. So any additional EVS in China is actually incremental revenue for US.
Hassan, I always think about the on semi story or the mainstay of it being silicon carbide going into either battery or power management kit in autos or industrial, and you know, you've painted this kind of broad weakness. But within the university serve, where's this strength? Are there specific industries who are just gobbling up silicon carbide chips as fast as they can right now?
Yeah, So I would start with the biggest industry taking in silicon carby chips is the automotive industry or the immobility ev specifically tangential to that which is driven by it, and also a consequence of it is energy infrastructure, whether it's the charging stations or more importantly the energy storage systems to.
Complement the grid.
That's actually been a very positive and very strong demand environment for US in the industrial. Although industrial in general has been weak, specifically the energy infrastructure has been a very positive, very strong going over fifty percent growth for US and will continue to do so for the remainder of twenty three into twenty twenty four. So those two big macro or mega trends that have been fueling the silicon carbide adoption still here and still driving adoption.
And you've been trying to paint a picture of your supply chain as well being able to feed that sort of demand, and talking about South Korea as well, the ramp there. We're looking at some charts as you speak, Hassan, and they're pretty brutal, to be perfectly honest, for off by twenty percent on the day. It's a complete leg down over the last couple of days. How do you respond to those sorts of selling pressures from an investor base?
How do you manage your own talent pool of this time.
I look at the reaction as I would say, a momentary, short term reaction. It is not a reaction that reflects our long term view of the business.
We'll get through it. I think it's a.
Buying opportunity for a lot of the log shareholders that we have. Employees see in the same way from us Internally, our employees are pumped up.
They've been over executing and really delivering beyond our goals.
Specifically for example, you know we talked about silicon carbide. We've been very bullish about the outlook or multi year outlook of electric vehicles. We maintain that strategic view and that positive view. Our employees see it. The talent that we are recruiting, see the leadership being built, and that's why we're really basing our energy on whatever happens today. Is again it's a temporary whether it's a day, a week, a quarter, it doesn't really matter.
We don't manage the company on our quarter to quarter or a week on week.
We manage it really on a long term and that's where our investments have been going.
Well, thank you for spelling that out for us. Hasan al Kuri is the on Semi CEO. Great to have some time with you. Meanwhile, well let's stick on the theme of chips, Broadcom and the software maker VMware. Well they're saying they're sixty one billion dollar merger is on track to close before November deadline. This is despite still
not receiving approval thus far from the Chinese regulators. Now, the companies did not disclose how close they actually may be for an approval from China, but they've stated that there is quote no legal impediment in closing under US regulations. The greement between the companies ex fires November twenty sixth the.
Right Coming up here.
On Bloomberg Technology, we're going to talk all about AI regulation being in the spotlight. We're going to speak with James Green, general partner at CRV next, and then doctor Faife Lee s a choir professor in the Computer science department at Stanford University in a big name in the world of AI. That's coming up next. This is Bloomberg Technology.
It would be preferable to have a global framework. I mean, what we have done around the whole question on climate we could actually also apply to Heaven International Energy Association also for II. That's given the context in which we are in, it would be very difficult to assume that it is going to happen.
Now.
That was Access CEO Thomas Berbel discussing concerns around artificial intelligence how to regulate it.
It's time now for our VC.
Spotlight where we talk about how you play the investment field given those concerns joining us now James Green, General.
Partner at CRV.
We kind of had this big picture look today right the Biden Executive Order on regulating AI, the UK will consider that tomorrow, and yet at the early stage, so much work is going on to develop the technology.
So where do you start all it's so interesting right now.
I think the reality is that with where we've been investing for fifty three years, you always have to start with the people, and so CLV has taken the approach that we are investing at the earliest stages with people and in broad markets. It's very unclear where the market's going to go. I think even if you just look today with the Biden administration and their Executive Order as well as the EU Act, which remains to be seen, where it comes down. We're kind of finding different areas
to start with security, with dev tools, with applications. There's multiple different areas we're spending time.
The main mechanism outlined in the EO is that a maker of large language models future generations of large language models must run them by the government and let them review them for safety before opening up to the public. Does that impact on how attractive a startup that is building its own foundation model may be as an investment.
Yeah, I think it's interesting with the firms that are making their own foundational models, so they open AI in the US, or DeepMind or Mistrol in the EU.
I still believe there's.
Going to be huge outlier companies in that category. I believe that open ai as well as the open source software companies will still be very interesting. You know, there will be regulation, but much like CCPA and GDPR, there'll be companies that come around.
Out of those somewhere to allocate in this environment, James, if it's not the big makers the foundational layers, where is the applications so nuanced, so necessary that it will be walled off that there will be enough barricades for a company to really survive in.
That Yeah, I think at the application layer there'll be lots of different areas that people can survive coming from. We recently invested in a company called Zero which is using AI for field sales, and that like many others, whether it's developer tools with GitHub and co pilot, there's going be lots of ways that people can be very successful and build large companies. Some of these companies are
growing faster than almost ever before. If you just look at the speed that open Eye is growing in terms of their revenue growth that is being paralleled with many many other companies at the early stage.
Can you, I mean, as a brit now in America from Birmingham, we're looking at the UK trying to sort of show off its prowess in the era of AI. You're now based allocating money. All the companies you're interested in in the West Coast? Are they international? Are they us primarily? Where are you looking for it?
James, that's a great question.
CMB has been investing all over the world for most of its fifty three year period. We've been investing in the West Coast. We started in the East Coast. We invest in Europe, Israel, Latam, so that will continue to be the case. Our AI portfolio, unsurprisingly is very West Coast heavy today. However, with teams coming out of deep Mind in London which Google acquired, as well as teams coming out of Israel, we're seeing global technical talent building
in and around AI applications and infrastructure. So yes, it's currently very heavy on the West Coast, but we'll continue.
To invest globally.
James Green, general partner at CRV.
We thank him for his expertise and that was about sort of some of the private talent. What about the talent coming from public schools, particularly from universities joining us now doctor fair Fairley in the Computer SCIZCE department over at Stanford University, also the author of the World's I See Curiosity, Exploration and discovery at the dawn of AI and this world that you currently see, doctor, are you seeing enough of that talent coming out of the university
with which you sit. Are you worrying, I think in particular about the money that's necessary to foster that sort of talent.
Thank you Caroly and Ed for inviting me here. We are looking at extremely a high level of excitement of students majoring computer science and AI. So as fast as we can train our students, yes, there's a huge amount of excitement and the talent's going to you know, going into the space. But where I said this public sector is academia, is higher education. I do think that we need a much more investment and resourcing to make sure the public sector development and research of AI stays healthy.
Is part of the ecosystem and frankly part of the innovation engine of America.
Doctor Lee.
You met with President Biden and spoke with him in June.
He's due to signing.
To law his Executive Order for AI Standards this afternoon. Based on the fact sheet that's been released in Bloomberg's reporting, which I know you shared on social media, did any of the proposals or recommendations that you made to President Biden end up being in the executive Order?
Yeah, and I'm definitely very excited to see all the details of the executive Order later this afternoon, But from the fact sheet that I briefly read, I am excited to see the level of comprehensiveness and multifaceted broad a coverage of this EO, especially about the National AI Research Resource,
which is called neyor pilot program. We at Stanford Hi Human Center AI Institute spearheaded this effort back in March twenty twenty when we wrote an open letter to many many university leaders across the country and made this into a first bill under the Trumpe administration, and after working with Bidon, White House and an SF National Science Foundation for twenty or so months, we actually submitted a plan for National AI Research Resource there to Congress earlier this year.
So seeing there being part of the on the facts being part of a pilot program coming out of THEEO is really exciting, and frankly, I think it's really we're in dire need when I say we its public sector. Of course, there is a lot more details to be to be seen, and I really look forward to Congress taking action following this EO.
Doctor Lee, you want to see more support for public sector compute resources and to rebalance the amount of AI development being done in the public sector visa v industry and government. Why do you want to see that rebalancing?
And I think this is really important for America's leadership. AI is such a critical technology. It's a horizontal technology that is propelling the entirety of our global our human civization into the next chapter. And we definitely need a responsible development and America's global leadership and it's funding democratic values are critical to help us share in this responsible technology.
So this is why we need the public sector to be part of the innovation as we have always done, whether it's biotech or space technology or you know, computers, Internet. We have done that as a country and we need that for AI as well.
You are, of course the godmother of AI, as many call you, and this isn't just a ai US field. It's a globals field from tomorrow, with the ai discussions happening November first in the UK as well. Are you hopeful that there will be global guardrails agreed here?
Carolyn, So, I'm going to remain cautiously hopeful. I really want to see actions. We have been working with global partners governments, you know, as a neutral public sector institute, and we see a lot of engagement. From that point of view, I'm really I am hopeful. And what makes me most hopeful is the young generation now taking so much interest in this technology, not only from tech point of view, but also from policy and society point of view.
But I really want to see actual meat on the bone. I want to see action, and we also want to be part of this movement in ushering in a multilateral partnership way this technology.
Doctor Faith Ailey of Stanford University, thank you for your time. This is Bloomberg Technology.
It apples the final event of the year tonight. It's capitalizing on a computer market resurgence. When the company unveils two new max and processes, we understand Mark German is here for more from what we expect from the event called scary fast, So I'm thinking speed here.
Speed indeed, mix up a bit of Halloween. This is the first time that I can remember that Apple is hosting an event at five pm Pacific time eight pm Eastern time, and it's all about the Mac. You'll see a new twenty core and Drymac. You'll see new MacBook pros at the high end in three new chips, the M three, the M three Pro and the Mgreen Macs.
These are going to be their fastest NAC chips to date, some of the fastest chips built on this ARM architecture that you've seen from any computer manufacturer.
So for those in the market for a.
New Mac where those who love the speeds and feeds, this event tonight is probably for you.
Calm wait to see what the Halloween vibes are to Mark Gumman, always there to tell us what's coming up before the company actually tells us.
We appreciate it meanwhile, that does it. From this edition of BLUEBG Technology.
ED Yeah big thanks to everyone out there in the audience has been tuning into the podcast. You can find the podcast on all the Bloomberg platforms, but also on Apple, Spotify, and iHeart. We always published the show, and we know that a lot of you have been tuning in, so thank you very much for that. From New York City and here in San Francisco, a really big week ahead. This is Bloomberg Technology