Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live from the heart of Silicon Valley with ed La though in San Francisco.
This is Bloomberg Tech coming up.
SpaceX Shares feeling gravitational pool as must company launches its debut bond sale plus tech stock sell off worldwide as Wall Street gets.
An AI wake up call? Is the AI.
Boom sustainable and we go big on private markets? Mellow Ventures raises its biggest ever haul with three billion.
Dollars to BACAI startups.
Partner Vinkie Ganisan joins us on set in San Francisco. The headline on the Bloomberg is that Wall Street gets an AI wake up call, but there has been a global sell off in technology shares. It started Monday in the US, but in career overnight is where it was felt most. The cost be the best performing index in the world so far this year, dropping ten percent from a record high.
It is Samsung.
It is sk Heinix, which led questions about the sustainability of the AI trade. Let's go over to the US session where actually we're off session lows, but there is still severe selling. The socks is down seven percent, then as that one hundred is down two point six percent. All of this about sustainability, durability of what's happening in AI our top story SpaceX shares.
The stock actually briefly.
Dip below one hundred and fifty dollars, which was its trading debut price from June twelve. We're getting new details on the company's first ever bond offering, a five part investment grade deal expected to raise at least twenty billion dollars and rank among the biggest debt sales of the year. The sale would primarily refinance debt while also giving investors a fresh look that how Elon Musk companies are funding
growth across AI, satellites and space. Joining us now the team Bloomberg Senior Markets at Call of Bay, Lipshow and Emily Graffeo on the corporate credit side, and let's start with you. What do we need to know about this that sale, the structure of it, the terms.
Well, look, we need to know that this deal is probably going to be one of the biggest investment grade bond seals of the year, and it already got thirty billion dollars of demand even before the deal was announced. It's pricing later today. Bankers are taking orders from investors right now. We do expect the deal to go pretty well.
So even though the stock is down today, ed this bond sale expected to be successful, and it's getting an investment grade rating, despite the fact that SpaceX is saying it's going to be blowing through cash here. Really what the ratings analysts are focusing on is the fact that they have recurring revenue from their starlink business, they have a dominant launch provider central to the US space program, and of course they have access to enough liquidity to
keep funding that AI expansion. So it's a unique investment grade rating here, but one that at least for right now, investors are putting their confidence.
Behind Bailey and yesterday's program. Credit analyst Robert Schiffman said, equity investors trade on hope looking at the stock now at almost three percent in the session, but briefly in negative territory. We're all talking about it hitting its trading debut price. What's going on in this post IPO trade, and.
We're just still seeing supply and demand trying to be matched. Obviously at the euphoria of listing day. Retail traders continuing to plow through the stock last week as we saw it hit a bit of an airpok, and we see the volatility today, we still have to remember that we're only looking at about five percent of the float available for trading, so we're still well ahead of the lockup whin insiders and long term investors and long term employees
are able to be selling the stock. So the big question now going forward is what is the catalyst to keep buying. As you mentioned, we saw some volatility on an inter day basis, that's kind of par for the course. And if we look back a few months to Sarah bros. A really strong debut, a lot of chop, and then kind of settling out in the few months ahead of
their first earnings report as a public company. So when you're just looking at this again, it's kind of typical playbook that we've seen with a lot of these high profile, highly anticipated IPOs.
I would say that maybe one catalyst is they did this demo, the Starfull mission, where they had this reusable capsule in space. The idea is it was a demo for in space manufacturing. Maybe not, We'll get into that later on. And what I want to understand with this is the significance of the investment grade rating that SpaceX got, because the difference between SpaceX and some of its peers in that domain is this is a company that's going to be burning cash and with negative free cash.
Flow for a really long time. How does that work? Yeah, that's exactly right.
They've really been treated differently here with the investment grade rating. They're not like these other companies that are coming to the investment grade bond market typically expect like a utility company. So this has been, at least according to our reporting what ratings analysts have said, a difficult credit to rate. But again it goes back to that recurring revenue that they have from other parts of their business. And this idea here that this is investors taking a leap of
faith edge just like the equity investors did. The credit sale is also kind of requiring that leap of faith, people putting their trust behind Elon Musk. That narrative spreading from the IPO into this inaugural bond sale as well.
Bailey, We're still talking about the mechanics of capital markets as opposed to what SpaceX actually does. But this is like an immediate post IPO period. You just explain that. I think we should therefore talk a bit about the green shoe. So they actually raised more money all told than we initially reported, right, And the reason I bring that up is because when they launched the bond sale, they said that as of June nineteenth, SpaceX had more than one hundred billion dollars of cash.
Explain that bit.
Yeah, so with the green shoe, that enables bankers to sell more shares about fifteen percent relative to the total float.
So all told, bringing in north.
Of eighty five billion dollars does help bolster the company's balance sheet.
But we really were in ed.
We were breaking some news around this, expecting the company to tap the debt mark, expecting the company to refinance some of its loans that had already had on its balance sheet. So this was also well foretold when you're talking to some of the investors as they were meeting with the company in that road show. The big question going forward, we do have the inclusion in the Nasdaq
one hundred early next month. We also will be expecting analyst initiation reports on the other side of the fourth of July holiday here in the US, so that'll be something where we can start to see the likes of Morgan Stanley and Goldmen Sachs, the two banks that under wrote the IPO, what their analysts are saying. We're going to see some pretty high numbers as it relates to what the total addressable market of space could be. But broadly speaking, we still are in this area where we're
waiting for fundamental news. And the thing that's going to be interesting is SpaceX. As we saw with the partnership with Reflection, AI going to lean on its ability to maybe be a little bit of a hyperscaler or supply some of that compute, or is it going to be a narrative that really does shift to space starshipping the other things that the company wants to do as it relates to getting data centers orbiting the Earth.
I suspect those banks will be bullish. Bloomberg's Bailey lip Schultz and Emily Graffee thank you both very much. Tech stoks are under pressure after Korean chipmakers sell off spark fears of AI sustainability. Despite SpaceX's breakout IPO giving the trade momentum in recent days, investors worry that the I boom may not be as durable as previously thought Martin Norton, chief investment strategist An Mpaw of black on Bloomberg Tech.
I don't want to put words in your mouth, but SpaceX is off to a good start and we got volatility, and I think all of those things we'd expected.
Yes, I think that's absolutely the case. So of course there was some trepedition heading into the SpaceX IPO. We know those things can be volatile, but early days was a good start. We have some volatility today. I think we should anticipate continued volatility. There are those index inclusions, there's the lackups expiring, so there are some things that we need to keep an eye on as it pertains to volatility there. I think volatility for the broader AI
trade too. We know there's been a lot of helium, particularly on the chip side of things, and that creates its own type of price bubble. I don't think it necessarily suggests that AI isn't durable, but it certainly creates volatility in markets.
The headline was Wall Streep getting a wake up call in the AI trade. Is it specifically the AI parts of the market that are vulnerable or is there just sort of some inaggregate concern about equity markets from evaluation perspective or from where we're trading right now.
I think the risk is coming from a few different places. I do think it's predominantly around AI and the things that have led us out of the concern around the war so since April first, that has been the chip area, memory and semi. So I do think concerns around what we're going to see in earnings Micron reporting, whether that gross margin expansion is still possible, I think that is a question mark on investment minds. I also think there is some I guess marginal concern around what rates mean
for equities. I don't look at the broad US equity market though, is all that stretched. And I also think there is some durability to earning. So I'm not sure it's a predominant issue, but it's certainly something that's kind of picking away at the sides of things.
I just if we could go back to what happened in career overnight, I think it's just a very interesting case study. So the cost fee, which I think been the best performing index or benchmark so far this year, basically entered a correction from a record high the night prior, but it was Samsung and Skhinex that kind of led those to clients. Is a strategist looking across asset and looking at US equity markets. What's your interpretation of what happened there?
Well, I guess my perspective is that to your point, this is the best performing market that we've seen year to date. There is an enormous amount of hardware AI exposure in that market. There's been enormous amounts enthusiasm over the supply constraints and just kind of the you know, this is a different type of cycle than we typically see in that part of the market, and I think investors have just been pulled in and caught up in
the enthusiasm. And I think there's room and rationale to expect continued moments of doubt like this when you have prices rising triple digits.
Our top story is probably the SpaceX bond sale of five part offering. We expect a price today. We talked a lot in the last twenty four hours on the show about how there is a difference between the psychology and also methodology of an equity investor and the credit investor, But is there something that links those two. What we learn about SpaceX is business through its ability to tap debt markets that might weigh on the equity as a consequence.
I do think there's a connection in this particular instance. Now, I absolutely agree with that view that credit investors are different than stock investors. There's a little bit more side awareness, a little bit more protection on the fixed income side
than on the equity side. And yet when we're looking at something like SpaceX with so much of its value future loaded, I guess I would say it does seem, given the enthusiasm that we're seeing around that issuance, that bond investors are taking a bit of a queue from equity investors and embedding a bit of hope in their expectations for how SpaceX might perform on the debt side.
And of course, I think a broader point is just how much money this is going to take to realize some of the Elon Musk ambitions when it comes to SpaceX.
Empowers Martin Norton a market's perspective, but you always roll with the biggest technology stories of the day, thank you very much. Indeed, now coming up, we're going to speak with seman CEO Roland Bush on bringing AI from a digital world into the physical conversation, really looking forward to that's next. This is Bloomberg Tech. AI is moving beyond chatbots and onto the factory floor, helping manufacturers boost productivity, with industrial AI becoming a bigger part of the conversation.
Joining us now is Semens CEO Roland Bush, who recently met with European Commissioned President Ursula Vonderleon and other tech leaders to discuss AI's role in Europe's industrial future. But I would note as well, Roland, you were the first conversation I had this year. We started twenty twenty six with Jensen Wang talking about the transition into the physical world. Just very simply to start. Why Semens is bedding so much on industrial AI.
Actually big aus Semens is really geared for this moment to bring AI into the real world.
We call industrial I. Why you need a couple of things.
Number one is you need to technology stack, and the stack includes hardware and software.
Both is super relevant.
Number two is domain no how we know how to build things we are on the shop floor.
The next one is data.
We have a lot of data, our own data, data shared with our customers and partners, and we have the trust of our customers because when the AI hits the real world, hallucination is not an option, so you need hardcore results.
They should work.
So we have all this and we can bring it now to the real world and lustban released. We have great partners like in media, like some others who are with us in making this transformation for our customers.
I asked you at CES in January, give me a case study, an example. There's some evidence of AI in a factory anywhere in the world. Fast forward to June. Is it real now? Is there to please? You can point to please, it's really.
Now, and we can talk about the design face, the manufacturing face, and the operation phase when you're asset sign the field. But you talked about an example on the shop floor. Actually, we now launched our King Engineering Agent.
What is it.
It is an agent which programs an industrial PC for you. So if you have a cutting chop on the shop floor and the cutting is not precise anymore, now an engineer has to go there reprogram your PLC and so on. Iing Engineering agent does it for you. You say, I mean my cutting machine is not not working precisely. I Engineering Agent analyzes the problem, breaks the problem down looks for all the data. The machines the job which has to be done, analyzes it, develops a code, runs it,
compiles it. If it doesn't work, it compiles it over again, fixes it until you can say now go and you push a bottom and then PLC is running with the same precition as before. So we are brought king about fifty percent high productivity while the quality of your programming is increasing by eighty percent.
So this is real fact.
And now we're introduced using another function where electrical design comes also into this into the place. Well, there's a real, a real and this this what's not available in the market. So far we broughder to the market and ready to expand to other use cases.
To either by geography or bi sector. Is there a market where there's just more speed here? You know, we reflected on your meeting with European Commission. Notoriously red tape can get in the way. What are you seeing in different markets around the world.
I mean the hardest market as we can imagine currently is AI factories and data centers.
And here we are really in the design pase together. It's in DDIA.
We create a blueprint, a white paper for how an a high factor in the future looks like and guess what it's based on a digital twin. And this digital twin is optimized with AI obviously, But if you talk about other markets, for example, the fast growing markets which really need productivity and speed, semiconductors, a lot of investment going there, a lot of VAMS built, pharmaceutical there's a lot of investment also going to the United States, and aerospace and defense.
We are ramping up our.
Capabilities to produce stuff. So there are a lot of sectors. And then last part of lease, I mean the car industry is also under pressure. They need to evolve faster, having faster cycles, being more flexible in their production. So I can go on and on, and the topic is
always the same. You will be faster in your design process using ANIE, coming from simulation which verifies to simulation which creates new designs, and all the way in the factory, way down to the point that you were deploying more and more robots, and guess what robots are also AI based automation devices.
Siemens has an almost one hundred and eighty year history as an industrial company, an engineering company. You know the sense I've had from you Roland in the times we've spoken over the last twelve months and more is you are positioning Semens as a technology company. How will your investments,
your attitude towards M and A reflect that. And when you think about the market of today, the volatility we see in the technology sector, do you think that Semens is being treated and valued as a technology company.
Well, the short answer to the last point not yet fun We are working working on it.
But the ons the point.
Over the last some fifteen years or so, we invested thirty billion dollars in building.
Up our software suite.
It's the most comprehensive digital twin can be built with Semen's technology, and it's a physics based digital twin with a four year realistic representation using in media technologies for example.
So and that's unique.
All in all, the nine point four billion in twenty twenty five, nine point five four billion euros in digital revenue including software, we are going to double it.
Until twenty thirty.
So and this is a fast growing, high margin business and it's now even super charged with AI. We rewrite our software so it can be used by engineers and agents, so that means you can see higher growth rates because you can democratize it.
The accelerating simulation.
And again we are supercharging our operation software on the shop floor. We say AI technology, so yes, and we have that advantage again to combine the really needed world you need both hardware is more important than ever. I think about the data centers built, think about how robotics school is through the market to the shop floor. So therefore this combination is unique and we keep on going investing.
It's a transformation. You mentioned it almost surday the years then the fastest transformation or history, and we are on the right track. But it requires again it's super fast adoption, but also of our customers, which we are supporting.
Fresh from one of Europe's biggest keynotes, Fresh from meeting with Europe's most important leaders, Roland birsch Semen CEO, back on Bloomberg Tech, thank you very much. Indeed, now coming up, Qualcom is in advanced talks to acquire Modula. More on this multi billion dollar buying spree and AI software the conversations.
Next, this is Bloomberg Tech.
It's time now for talking tech. I'm youhirah Anand first up, the ongoing debate over AI replacing human workers just got a reality check. Oracle's latest annual filing disclosed that it slashed twenty one thousand jobs over the past year, with AI deployment across operations driving some of those cuts.
This is Oracle is.
Under financial pressure due to an expensive AI data center build out, plus soft Thanks Masayoshi's son is choosing Earth over Space. Son publicly dismissed Elon Musk's grand vision for orbital data centers, calling the math behind them a losing vet. Instead, he says software will focus on building formidable data center capacity here on Earth, and ten Cents is scaling back
its global gaming empire. The Chinese tech Titan is in negotiations to unwind its massive post pandemic buying spree by offloading minority stakes in multiple international gaming studios like Japan's Marvelous, all to free up capital for in another. Then the global AI race ed.
Thank you very much to hiring now.
Qualcom is making a multi billion dollar play to season technology and talent at the cutting edge of AI, sources tell Bloomberg. The companies in advanced talks to acquire software company Modula for about four billion dollars. Bombos wrangle broke the story with the team and joins us. Let's start with the basics. What do we know about the deal?
Yeah, so they're in advanced talks to acquire a Modular for about four billion dollars. It looks like that deal could be announced as soon as the coming weeks. I think this is part very much of this wider AI race four race in AI for inference technology. Basically, that's the process where you go from training models to actually putting them into production. And we've seen i think probably bookended by both the Grock video licensing deal that announts
just before Christmas. We all remember that on Christmas Eve, and maybe also the Sam Bernova deal with Intel and Vista Equity Partners, the private equity firm. This is just really an arms race right now to see how quickly we can start to some of these inference costs for enterprise. What do we know about Modular in terms of like who's already on the cat table where they've been valued in their own private market activity. Yeah, I mean there's quite a few famous VC firms in there, really only
Google Ventures, General Catalysts. General Catalyst is in there for quite a significant chunk of the money. They were valued at just over a billion dollars last September, I believe, so this would kind of be a fairly quick turnaround for those guys involved there. And I think this kind of also gets at something else, which is we've been hearing the callcom has been looking at companies like ten Turrent again another player that sort of sits in and
around this influence AI sphere. Modular itself though, I mean, really is that software layer. It's putting those hardware chips and making them accessible to cross all different models. So that's on you know, Intel and Video and then in this case, soon to be Qualcom.
Should this saw come to plan.
Bloomberg Deals is right and good, Thank you very much. Indeena coming up, Venki Gannism from Menlo Ventures joins us talking about the firm's largest fundraise in its history and how backing AI startups is forcing, frankly, a shift in strategy.
A really big and.
Extended conversation coming up alongside Bloomberg's Natasha Mascarenis. It's halftime here in San Francisco. This is what markets look like. We're off session lows, but technology is selling off. This is Bloomberg Tech.
Welcome back.
To Bloomberg Tech Tuesday, June twenty third, there's a lot going on our top stories, the AI selloff and SpaceX's bumpy ride. Tech Equities reported Carmen Rhinikey standing by in New York with all of it common ed.
Yeah, so we're seeing a lot of red on the screen here today. The nasdac's down almost three percent. The biggest laggards here are memory names, so we know this was kicked off in South Korea when a local media reports so that s k Heinex may be sort of pulling back on its AI chips, maybe shifting to d ram a little bit. That sent the market's tumbling, and it's sort of it sort of gave some pause to
the AI trade that you've seen. So we can see the biggest laggards here sand Discorp, Micron Technology, and Lamb. So these are all memory names that are dragging that market lower. Let's also take a look at SpaceX today, so Sharre is actually seeing a little bit of dip buying. Perhaps yesterday we saw a pretty concentrated sell off the third day of declines that wiped more than four hundred
billion dollars in market value from the stock. That was the second largest one day erasure of market cap in history, following only in Nvidia, and brought the three data client of more than six hundred billion dollars in values. So seeing more green on the screen here Today, shares up about two percent just off session highs.
Few key levels will be watching.
One is that one hundred and fifty dollars line that was where the stock opened at its trading debut. And the other one that we'll be looking at is a two trillion dollar valuation. We're just sort of flirting with that level right now.
Back to you ed the most common rhyanikey on what's going on in tech in public markets.
Let's get to private markets.
Some of the big venture winners from the SPACEXIPO are cashing in by raising new funds that includes Valor Equity Partners founded by longtime MOSC ali Antonio Gressias. According to sources values, Fund seven will have about two point five billion dollars to invest in startups and more SpaceX shares bloom. Most common Arroyo joins us with the details. Let's start with the SpaceX part I find that so interesting. You know, one of the big winners from the biggest Iphei in history,
we went over that. But part of the strategy of new funds is to put them back into Elon Musk company.
So there Valor is now out there racing two point five billion for this fund. But the quirk with it is that the fund has already allocated a portion of the funds in two SpaceX shares, which is kind of interesting because SpaceX is already trading. But the Valor has been fund raising for the past few months. It's not happening like it's been happening since like late last year.
Where does two point five billions sit in the scope of Valor's broader assets that it manages, Like this is a big firm, right and particularly remind us the return or the payoff of the value of their stake in SpaceX post flow.
Right. Yeah, Valor is like said to have a massive one fall of like the four percent steak and SpaceX, But there are mainly an operational firm right late like two like lend resources to the company to the investing, so they have like very targeted investments. So they've they've been in all of a lot of like the Elon Musk's centures, but they also have a lot of consumer
companies as well that they're invested in. But I think it like it kind of shows how much demand there is right now for kind of like being part of the winners.
Bloombo's Carmen Roya, thank you very much. Just take a look at today's big number. Fifty billion dollars. That's how much Apple Dabi's MGX has raised from regional and global investors to accelerate spending on AI infrastructure and technology. That's according to sources, who also say the firm has already deployed capital from the new fund, which closed in recent weeks, and that it ranks among the biggest ever dedicated AI
investment vehicles. More on venure capital and private Market's a little closer to home, Menlo Ventures has raised three billion dollars for new AI investments, the biggest fund raise in the firm's fifty year history. The move reflects just how dramatically venture capital is changing as investors' race to back the next generation of AI winners. Bloomberg's Bench Capital reporter Nasha Natasha Mascarinus broke this story, and she joins us
alongside Melaventure's partner. Thank you Againissan, and here we are in San Francisco. It started with a really basic question, thank you, why why raise the three billion?
First of all, Ed Natasha, thank you so much for having us here. It's a privilege to enjoy the special moment with you all. Fifty year history. I think this moment to me really reminds me of the Renaissance. Like I think when I look at the history of mankind and look at what happened in the Renaissance of the fourteen hundreds, AI is that moment where we actually have a new technology coming in, we have this incredible density of talent.
It was in Florence and the Renaissance, it's in San Francisco with AI, and you have these patrons and the medicis funding these incredible whether that's Da Vinci Donatello and the equal of that would be Dario and Dennis. And so I think like that moment is here.
This is a new thesis to this show and going.
And to me, the our fifty year history meant that we have had this history of finding these moments, and for Menlo, it's a special moment to be able to have that capital to fund these increbl entrepreneurs. There is an amazing eighteen year old woman out there who's thinking about starting a company and want her to know that we are ready with our capital defund.
The speaking of history, I mean, this is not the first time we've seen Menlo Ventures raise record funds.
I know in the past.
In two thousand and five, Menlo raised one point two billion dollar fund, you know, eventually to cut it back down to four hundred million to get back to the roots.
So what's different this time?
You know, what defends the choice to grow the fund size? Really also talk to me a little bit about strategy and sort of how you plan to invest such a big amount of capital.
Great questions today.
I mean to me, it's all about making sure we're the right capital for the right moment. So I believe that we have a Goldilock strategy. We are big enough to be able to fund all the companies that matter, yet small enough to drive venture rates of return.
And that's really been our focus.
We want to be driven by scarcity, so our strategy fits that, and we want to find the companies that really madden and then concentrate on them.
Is this what you call avoiding the middle? The venture capitals will middle.
Exactly to us, We want to be in the barbell. We want to be in the earliest stage where we can find amazing entrepreneurs pre product market fit, but get high ownership, and then we want to back the clear winners like we have done with an anthropic, a lovable and open evidence companies that are scaling and making a difference.
How much does experimentation show up in check writing these days? I know ed and I've spoken a lot about coconut seed.
Yeah, what's the point of a seed round?
Essentially exactly exactly, Like, how do you think about that?
Yeah, actually, it's funny you mentioned it. We actually came up with the new STREETE siege strategy where we wanted to be nimble, so we set aside a small group of dedicated partners, people like Tim Talley, the CEOs Flank joff Redfern, the chief product officer of a Classian Matt Greening ditdas very dedicated group of people and had a different focus. We could actually make an investment with a
smaller group of people without going to investment committee. So I think experimentation has been a very core part of our fifty year history. We've always wanted to make sure that we are changing with the times, right, the most important things we've got to change with the times. We also experimented by funding neo labs, and so that's also been an area of focus for.
US funding neolabs, giving founders access to computes, moving away from certain areas biology for example, or not moving away pairing back to focus unpack all of that.
Yeah, I think when I think about it, you probably moved away more from like fintech and SaaS and more.
AI centric areas.
Right to me, biology could be one of those areas in which AI makes a huge impact. I mean, look, the most important things we can do are to help lengthen human lifetime and improve the quality of life. I think AI is going to make a big impact in drug discovery and it's going to have one of the most positive impacts on healthcare.
You know, you said something to me during our interview, but this didn't make the story, but you said, you know, in order to win and venture to be Contrarriyan, you have to be right and you have to be alone where an AI is menlo right and alone.
Right now, I'll tell you we were right and alone in twenty twenty three when we led that round in anthropic kudos to my partner Matt, who saw this opportunity. Matt Tim They saw that this was going to be a special company. If you remember that time everybody talked about open Ai and Microsoft, they said the game was over. Open Ai as a great winner.
Look, open Air is a great company.
But we had the conviction to put five hundred million in an eighteen billion dollar round, and I think a lot of people didn't want to. And that's what I mean is you've got to be contrary in right. It's not the first time we did that at Siri. We did that with Uber, we did that with Vocal.
The state of play is really different.
Now we're going to talk a bit more about the field. Yeah, you know, after we take a quick break. Something you said about the eighteen year old, maybe it's not an eighteen year old. But what we're seeing is rounds where there are maybe a few founders, alumni of existing frontier labs or academics. They're raising hundreds of millions of dollars from the get go, and the venture firm seems to be making a bet on those people their expertise and their credentials in the field.
Is that where you expect this to go.
Yeah, I mean, to me, it's more about making sure it's not about eighteen or eighty. It's about finding the right person. I think what is different about this time is that a lot of the right people are researchers, which is different from what traditionally has been the focus. And so the thing we spent a lot of time at Menlo is thinking about how do we identify these people, what are the characteristics that make this We've used a lot of and AI internally, so I say we are
not all in on AI. We also all in on AI internally to how we build the firm, and we use that to identify the people and then when you find them, the act with conviction.
I talked to the CEO of Axiom for my story today, who's building.
A twenty one year old math genius?
Yeah?
I mean?
And something she said that was interesting was that, you know, having technical debates with your vcs is actually a hugely valuable ad in this moment. A lot of people invest in AI, but a lot of people can't have those debates, like talk to me about how you are, how you are you personally are staying up to date on AI, and how you're getting competitive intelligence right now? Where are you finding? You know, these founders between eighteen and eighty.
Yeah, I mean to me, first thing is to be able to do that, you've got to have the right technical people in the building. And so we spend the last four years making sure that we built the right technical team. We talked a little bit about Tim our co founder of splunk DD Matt Craning, jaff Redfern, and then we.
Got to use the technology ourselves.
One of the things we did, and I think you mentioned this in your story, we put microphones in a lot of this, or the use of a new product called Whisper, another founder that you're familiar with. And so the idea is we got to use the technology. We got to eat, drink our own champagne, as I like to say, and then make sure that we are there ready to meet the founders where they are.
Okay, Bloombergs and Sash Mascarinus and Meno Ventures is Vinky again, I get to stay with us. We're going to take a quick break and then we're going to get back to the competition in the field of frontier labs valuations and muscling in in a world where the mutual funds, the strategics in everyone wants.
A piece of that pie. Stay with us. This is Bloomberg Tech.
Meno Ventures caused its early investment in Anthropic a bet the firm moment at the time.
All the way back.
In twenty twenty three, twenty four, Anthropic was viewed a distant challenger to open AI. Today that wager stands as one of the most consequential investments of the AI era.
But the field and world is different.
Bloomberg's VC report and attachment Maskrain is still with us and there's been reporting on that along with Menlo Ventures partner.
Thank you Ganison. I say the field is different.
When you did that Anthropic round and in the last block we talked about how consequential that was, everything happened very quickly thereafter, many frontier labs raised money regularly, and those joining the cap table were different. They weren't venture firms, they were mutual funds, legacy Wall Street institutions, hyperscalers, other strategics. How does that change impact affirm like Menlo.
It changes because it brings in a whole set of new players. But I think they bring good perspective from up We look at this as an opportunity to collaborate and find people who again, look, when you have a gold run, everybody rushes in. And I think it takes a lot of capital to build these companies, and these companies are these sorts as special. You spoke to Karina
of Actual Math. She has raised now o one hundred and fifty million, And I think the way to make you know, they say it takes a relay.
To raise a child.
It almost takes a country to raise one of these AI companies. That's the amount of capital. And I think we welcome the chance to collaborate some of these folks and they've been great partners.
Bring me back into that moment of deciding to bet the firm really on anthropic. I mean, my reporting says that Menlo has put around one billion into the company, a stake that is worth nearly fourteen billion. That's according to sources familiar with the matter. I mean, that kind of return is exciting. It's also the kind of thing
that I'm guessing you guys are looking to replicate. So you know, what's the takeaway there and what are you looking you know, how are you changing the way that you write checks?
I think the formula is simple, right, And this has been the same formula that's worked for a last of Tears, which is go deep into an area, build a thesis, find the best company that you can commit to that founder,
and then partner with them to build with conviction. And every one of those things happened with Anthropic in the sense that we look at the entire AI landscape, we zeroed in on this very very special founding team of Daniella and Dario and the six other founders, and then my partner Matt said, we got to lean with conviction. We all rallied around it, and we raised the biggest capital we ever have, and then we have committed to
build the company with them. And to me, that's the same formula we did with Uber, we did with Roku, we did a chime, and I think the same formula will do in the future. Really selective. We will find we have a Goldilocks strategy to be the right size, and then we find the right company, we will lead with conviction and concentrate on them.
What do you make of the king making, you know, in a queen making strategy that's across the Logan Valley, the idea of sort of anointing a winner early on by putting a lot of capital into them. That is quite different than the anthropic bet that you guys made. It was definitely you know, pre revenue and pre household.
Name well he did cool Daria, the Da Vinci of this age. So I don't sorry, no, but yeah, I'm curious.
I guess the idea of you know, trying to find that company not when it's you know, a multi billion valuation, but when it's at a fifty million valuation and helping it hit that that that those usual numbers.
So first of all, I love the fact that you said queen making.
I'm a family.
We have three daughters and my wife is definitely the queen of a house. So I like that. And Andiel to us, you're right. The way I think we think about queen making is to really find those companies early, and we have found plenty of those. So while we
love Anthropic, it's an amazing company. I literally talked to my investors about the ten Ai companies not named the Anthropic be excited about a company like axiomth where we found Karina invested in her very early on open evidence, open evidence, which I know you have a connection with are lovable. These are all companies they have found early. That's really been Melo's focus. Find them early, partner with them, size up with conviction, and then build.
I don't want to put you in a position where you can't speak freely. And I get that you know anthropics, file confidentially, et cetera. But it seems like there are two stories that are both true. At the same time, companies are staying private for longer, and yet we are on the cusp of a very big I PO window.
How do you interpret that moment? And also like the thing is that it's not just that private companies are saying private longer, that the private market seem very willing to support that duration and the level of funding that they need.
It is very much true that the private markets are probably the biggest I've seen in my lifetime. Right, I've been doing mention capital now for my thirtieth year, and they're deeper, and this allows companies to stay private, though I think eventually my feeling is a lot of these companies should go public for a couple of reasons. One,
we do want the public to participate. I think it is very important that in this Ai revolution you see it as democratic, yes, and I think it's good for society to be able to participate as a wider group. I also think that going public creates discipline for all these private companies. You know, ultimately, you know, sunlight is the best disinfectant, and there's no better sunlight than going public.
Melo Ventures partner Frankie Gnison and Bloomberg's Natasha Mascarinis, who has detailed the firm's history and its latest fundraised three billion in funds to back aiur startups on the Bloomberg This Morning, Thank you very much. Like coming up, Meta is joining the wearables game with its own smart glasses, launching three models that are cheaper and fashion forward. My producers tell me, hmmm, we'll discuss This is Bloomberg Tech.
Metha is launching its own smart glasses under its own brand for the first time after popularizing wearables through RayBan and Oakley partnerships. The tech giants glasses are cheaper and even they keep writing this the team fashion forward, with one model made in collaboration with Kylie Jenner. Bloomber's consumer tech editor Mark German has the details. That's the distinction, right, This is Meta All the way through still manufactured by a sul Luck Sodoka.
But for you in.
Your reporting, like what is this is a moment for the wearables category and the smart glasses category, you.
Know, it's interesting.
At the end of twenty twenty seven, Apple's going to introduce N fifty, that's what it's called within Apple, but that is the Apple Smart glasses. And of course, the way Apple is vertically integrated, they are going to be designing, in branding the glasses, you know, under the Apple name,
using their own design team. Meta has been licensing the designs, are working with Esler Lexotica and basically taking ray Bands Oakley's and they're planning other brands like Prada and making those smart And for the first time, what Meta's doing is they're launching their own Meta branded glasses.
Right.
These are not ray Bands, these are not Oakley's. These are Meta design glasses by the Meta Industrial and Harvard design team within the social networking giant, And so that is a.
Big change for them.
And by going internal, going in house, that allows them to come out with a low end and entry level tier for their smart glasses. If you remember, at the end of last year, Meta raised the prices of their Smart classes with the second generation model, and so the entry level of the ray bands, the smart ray bans costs about three hundred and eighty dollars. These ones that I'm wearing, these are the new Meta branded ones.
Those are wearing those I.
Am wearing them. Yes, normally wouldn't be wearing glasses on here, but I had to bring these out. I just got this prayer last night from Meta. So these are three hundred dollars. So that comes in at eight hundred dollars less. So that the big play here bringing something that is a bit more affordable to market by using their in house brand and design.
Okay, so we have definitively answered the question whether or not these are fashion forward. They're fashion forward. I love greatam and modeling them. Now you look great. Let's get into the technology part. We only have thirty seconds, but the capability of these relative to what Meta already had out there. O, they're identical, they're the same.
But the cool anecdote I can give you is that Meta seems to be seriously considering launching versions of its classes without cameras. Now that creates a few interesting wrinkles here. One that'll allow them to create new designs that are maybe slimmer and lighter, with more battery life because fewer components needing to be dedicated to the camera system. Also more privacy conscious and no cameras audio only experience also means cheaper, right.
Bloomberg's Mark Gunman, who leads our consumer technology team on the metaglasses, thank you so much. That does it for this edition of Bloomberg Tech really packed show lot going on in public markets and in private markets in the world of technology. Recap all of that on the podcast. You can find it on the Bloomberg terminal as well as online on Apple, Spotify, and iHeart.
Have a great day, it's a Bloomberg Tech