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This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
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This is Bloomberg Technology coming up.
Look Spotify it slashes its workforce by seventeen percent. Is amit the company's steepest job cuts this year. Will break down the streaming services, push to costs and drive profitability.
Plus, the crypto rally gains steam as Bitcoin tops forty two thousand US dollars for the first time since April of twenty twenty two. We'll discuss what it means for the digital currency ecosystem in today's VC Spotlight, and.
We sit down with the oculist creator Palmer Lucky as his defence technology startup, Andreill veils a tiny, reusable fighter jet to blow up drones. All that and so much more ahead, let's get into these markets. Look, we are in sell off mode. We're just hearing from Guy and Alex that basically we're just getting back to the levels we're out on Thursday. Such has been the drive higher in risk assets of late, we're off by one point
one percent. Now we know mainly just reassessing how much we've a run up already, but also really with the direction of travel for the Federal Reserve and a lot of the jobs data that.
We're learning this week.
Two year yield currently up by some ten basis points, so clearly seeing a sell off in bonds and stocks Blue mug Donar Index on the higher side by some five ten percent. After we've seen such weakness in the US dollars so far this year, let's move on because the strength of the US dollar not out matching the strength in bitcoin and ED. We're going to dwell on this a little bit later in the show much more.
But the fact that we are now piercing above forty two thousand at one point in earlier training, now at forty one and a half thousand, let's call it. We know the driving force behind all of this. Will we get in spot bitcoin ETF come January? Will, of course the harving process next year draw demand yet further, But ultimately this is about risk asset demand as well, isn't it.
Yeah, we call it our risk asset of choice, and it's interesting that on days like today, where equities are broadly lower, bitcoin is higher, but so are crypto related stocks. And I guess that there are two rationales, right. It's a proxy for Wall Street to get some exposure to cryptocurrencies like bitcoin without investing in them directly by investing
in stocks that are relevant to it. Or the other way of looking at it that if the thing that is important to these equities does well, in this case bitcoin, then they do well as well. And you are seing some pretty outsized moves. I mean, these are big moves right on these single names on a day where equities are lower.
And I think perhaps we've got a little bit used to a lack of volatility, dare we say it? In broader bitcoin prices, we were used to things flinging about by ten double digit percentage points. But on the day, well, we have been only up about five six percent, But
that feels a big move. And I think these numbers, we're still way off the sixty nine thousand dollars level that we had in previous highs, but we were back at that level that we saw in Eightril twenty twenty two, prior to the Taro Luna Debarkle and all of this just slowly rebuilding confidence really in the ecosystem.
Yeah, and we've had guests on this show saying sixty thousand dollars next year, one hundred thousand dollars maybe next year. Seeing is believing, I think when it comes to bitcoin. But we're excited about twenty twenty four. The other top story that we've got to get back to, Carrie is Spotify reducing its workforce by seventeen percent. That's fifteen hundred jobs. This is the company's biggest cuts yet this year. They've done three trims. I want to bring in Bloomberg's actually
calm and give us the details. Actually, what did Spotify say about the timing and rationale for cutting fifteen hundred employees.
Yeah, so today Spotify's CEO Daniel Eck put out a blog post sort of explaining the cuts. He said, basically, these decisions were going to have to be made, possibly over the next couple years, and he decided to just rip the band aid off and cut a bunch of people all at once. He essentially said that yes, they've cut operating costs quite a bit, but not enough, and that they needed more people to go and more people to focus on their core mission, which is building for creators and consumers.
Yeah, I think just realigning the fact that too many people were ultimately building things that weren't core to the ultimate mission of building profitability or building margin, and that seems to be what analysts like so much at the moment, Ashley. And it's interesting that a lot of them saying eventually margin is going to be buoyed by what have been some really outsized commitments to the world of well podcasting in particular.
Yes. Yeah, so the story of Spotify really is that they since twenty nineteen, have committed over a billion dollar to the podcast world. They bought studios, they bought creation technology, they bought a hosting service, and really what we've seen over the past year is just a total backtrack on that business. And I imagine as we learn more about today's clubs, we'll hear about how that impacts their podcast business as it is.
Yeah, it's interesting. Loads of technology companies have gone through this the mic grow focus on profit. The other metric you can look at is say, well, actually, Spotify is on track for an astonishingly good year one hundred million new subscribers or users. It's going to add based on how it's done so far. What is the overall health score for Spotify actually based on your reporting.
Yeah, I mean, I think that's what's very puzzling here, right is they've had amazing growth from a monthly average user perspective. They do have more free users than subscription so that's an issue. You know, they want to be able to monetize those subscriptions more. But broadly speaking, they
continue to grow, which is pretty incredible. I think they just have to figure out what is going to be the way that they make more money because they keep having to pay these music rights holders, which makes a ton of sense, but they also need to find other revenue opportunities. So we've seen price increases, we've seen them cut costs, we've seen them move into podcasting, and then very recently they moved into audiobooks. So maybe that'll be magic bullet. I don't know.
And all of this at a time where Daniel let does speak about the macro realities as well. He talked about the fact that look, money's more expensive than it used to be. Boring coss have been on the rise. This is perhaps just really trying to instead of what we started to talk these micro cuts that are happening at tech companies at the moment, he's just, as you say, ripping the band aid and just showing his intent to still have this year of efficiency to coin a metaphrase.
Yeah, And I don't know if we knowed it at the top, but this is the third round of cuts this year. So they did a significant chunk in January, they did another chunk in June, which was primarily the podcast team. And yeah, now here we are with the biggest cut that they've made all year. So overall, over two thousand employees will have lost their jobs.
Yeah, I like your point on users. I mean, I'm on the premium Family monthly subscription which I pay, and I have some other family members on there which do not pay. But I guess the free user points Big Bloomberg's actually come and busy night early morning for you, Thank you so much. Are more tech layoffs and other stories happening elsewhere. Twilio cutting five percent of its workforce, it's third major headcount reduction in order to reach profitable growth.
The cuts mostly affected salespeople for Twilio's consumer data platform and contact center software. That's according to a memo from the CEO, Jeff Laws and the company has shed more than three thousand workers since September twenty twenty two, which is about one third of its total workforce in that time.
Core Weave it's a cloud computing provider that's among the hottest startups in the AI race. It says it's close to minority stake sale to investors led by Fidelity, others including as you can see JP Morgan Asset Management. We're also gotting Zoom Ventures among them, all participating. They can transaction the values of the company that get this seven million dollars acording to sources, well, we can get a source very close to the deal now, none other than
the CEO core Weave, Mike and Trader. Is great to have you on the show. Mic and extraordinary story really of cour We've going from its origins. Well, you are a commodities tradee or the space for crypto, you're doing mining aneath and then of course you become a specialized cloud AI provider. At what makes your offering different from the more general purpose cloud providers out there.
Sure, First of all, thank you very much. It's great to have an opportunity to speak with you. Topically a very exciting day over here. Weave and my whole team is very excited about these transactions as we go into the end of the year, looking forward to really getting
off to next year in the same putting. So, to answer your question, Creweed is a specialized cloud computing company, and what we mean by that is we've made every decision from the hardware stack all the way through the software stack to really build a cloud that is specialized to address the needs of companies that need massive scale, paralyized computing. When we talk about that, we're really talking
about the three industries that we address. The first one is media and entertainment, and so if you go to see a Marvel, you know there's a good chance that several of those studios will have rendered their images on our infrastructure. The second one is basic science synthetic biology, so think of that is like drug discovery and protein folding.
And then finally and most importantly right now obviously, is the build out of infrastructure that is very very appropriate for artificial intelligence and machine learning.
Mike, I keep hearing about core We've I have done all year long about just the sort of booming growth that you've experienced I think you started the year disclosing you had three data centers online. Now I believe it's somewhere between fourteen and eighteen. How have you been able to move so quickly on the infrastructure side, Yeah.
You know, great teams all across our infrastructure internal to the company, just an incredible coordination automation to allow us to kind.
Of build and scale that.
We also have great relationships up through the supply chains that have been so difficult for everyone to navigate. The support from our partners all through the supply chain has been incredible and unimers are correct, We've made a massive push in terms of the number of data centers that we are in. It puts us in a position to be able to serve the largest, most important artificial intelligence models that are being trained, that are being served in
the public right now, and it's very exciting. We've got a lot more work to do, but definitely improving and increasing our footprint every day.
One of those partners is in video. We're just showing some of your key customers on the screen, but in VideA is a tech partner as well, right, and my understanding is that you're actually helping them. You yourselves to build their own next gen supercompute. What can you tell us about that project?
So, in Videos is one of the partner of ours. They invested alongside Magnetar and K two in our B round, which was where we raised four hundred and twenty million dollars in April of this year.
It was.
A kind of massive step for us as we began to accelerate our growth through the year, and so by having a partner like in Vidia invest in the company, it made it very clear to all of our partners across the debt space, across the equity space that they had looked at our infrastructure and were comfortable with the way that we built it in order to deliver the most performing configuration of the accelerated compute that is defined by their GPU.
You've been raising money, whether it be equity or debt, at quite a pace because of course what you're doing needs a lot of money. Would you tap the public markets? Would you think about going public as soon as twenty twenty four?
So, as you said, we really made three different transactions in the capital markets this year. We did the BE round early on that was, as I said, a quandred and twenty one million dollar raise. We came back and we did a very very large debt facility that was two point three billion dollars that was really dedicated to purchasing the capital intensive infrastructure that's required. And then this secondary transaction is the final transaction for us for the year.
We are not committed or having no real comment around the concept of going into the public markets other than to say that we are capital intensive business and that we are going to need to continue to access capital markets in the most efficient way possible, and as far as that goes, all options are absolutely on table for us as we look into the future.
Mike quickly, you've built on H one hundred and DGX, but AMD's coming with mi I three hundred. Have you looked at that?
Yeah, so we do. We spend a lot of time researching all of the different silicon alternatives in the market. Right now, our focus is on the H one hundred. I would argue that, you know, as you look across the AI space at large, their focus is on the
H one hundred. It's an amazing piece of silicon. It does incredible things in terms of moving the AI space forward, and so it's really been the majority of our effort, but we do monitor all of the different silicon alternatives that are out there that could potentially be integrated into a provider like US COOL.
We've see Mike can transit greats. Catch up with you setting minorities taking that company at a big valuation. Thank you. Coming up here on Bloomberg Technology, former US Treasury Secretary Larry Summers weighs in and what it means to be a member of open AI's newly formed bulb. We're gonna bring you those details next. This is Bloomberg Technology. Okay,
time for talking tech and first up. COMMA Secretary Gina Romondo says if the US truly wants to stop China from making cutting edge semiconductors, then her department is going
to need more funding. During its defense forum on Saturday, Romondo also urged American chip companies to prioritize national security over their revenue, and one of the chip making industry's most valuable suppliers is sinking deeper into debt despite holding more than ninety percent share of the silica used to polish silicon wafers, Fuso Chemical, based in Japan, hasn't lifted prices because it fears it would sky out its relationships
with customers like Samsung, Intel, and Taiwan Semiconductor. FUSO also struggling to make its CAPEX targets. Plus, California's Privacy Agency has drafted a set of rules They aim to give residents more agency over how their personal data is used by automated tools. If adopted, the proposal would affect how tech companies develop AI, which relates heavily on data to train itself. Board members will discuss the draft on Friday, though enforcement isn't likely to start anytime.
Seeing Caroline Let's stick on AI ed because the former US Treasury Secretary Larry Summers, well, he's hoping to get settled into his new role as a board member of the so called interim Board of Open AI, of course, the key AI startup. He shared his thoughts on the matter in bluemog Television's On Wall Street week A, David weston, take a listen.
This was something that was extraordinarily important. You know, no one could be certain whether this is a once a decade technology, at once a peth century technology, at once a century technology, at once a millennium technology. No one can know that for sure, but it sure looks like it's awfully important to develop rapidly and safely and to
disseminate effectively and well. So when I was offered an opportunity to be part of contributing to that, overseeing to make sure that that was effectively done, and to do it working with some very great people, I thought it was a real opportunity and I was glad to do it.
I don't want to take anythway from your technological expertise, but what you just said safely strikes me as probably part of what you're going to be focused on, and that gets to questions of governance about how you handle this technology wherever it's going and how a powerful may be. Do you have an overall sense of what you need to do to govern it to get this safely part right?
You know, David, I've been on the job two days and they're going to send me the onboarding packet for the board on Sunday. So I shouldn't be saying too much at all because I don't know enough. Here's some things I think I know. I think I know that a company like this has to be prepared to cooperate. Doesn't mean always agree with but cooperate with key government officials on regulatory issues, on national security issues, on development
of technology issues. I think I know also, and this is integral to the structure of open AI, where the for profit entity is itself a creature of a not for profit entity, that this needs to be a corporation with a conscience, and that we need to be always thinking about the multiple stakeholders in the develop into this technology. And as a board member, that will be part of my responsibility working with other board members to.
Make that certain.
You know, my colleague at Harvard Lake, colleague Ken Galbraith, said that conscious is the knowledge that someone is watching, and I think it's the responsibility for everybody involved in this to be thinking very carefully always about both opportunities and uncertainties and to make sure that those are balanced in the best way that's possible.
That was former US Treasury Secretary Larry sum Is sitting down with Bloomberg's David Weston. We should also know that Larry Summers is a Harvard University professor and a paid contributor to Bloomberg TV and Will Street. We now as we keep an eye on the situation with the Israel Hamas Wall. The situation is also one that's been hard
to manage online. TikTok is having a hard time moderating deep fake videos of her mass victims and other private citizens, even though these videos violate their content moderation policies, which ban AI generated videos of private citizens and miners. And yet these videos are racking up thousands to millions of views. I want to bring in Bloomberg Alex Brinko, who's been writing about this this morning on Bloomberg. That is the struggle.
They're in contravention of the policy, but they're being seen by millions, Alex. Absolutely.
And in the days after the October seventh attack by Hamas in Israel on that music festival, I was looking on the app for some of the names of some of the believed victims, and some of the top videos were AI generated videos that purported to and showed folks like Shannie Luke, the twenty two year old now known to be dead Germans. Really woman who you saw her face.
You saw an image like her standing in front of folks in military garb holding guns, talking about her thoughts on the attack, talking about her mother.
But this was not in.
Fact showne Luke. This was a digital resurrection, as experts call it, where somebody went online used one of these increasingly inexpensive tools to take some photos of her from the Internet and turn it into an AI generated video. Now these videos are against the content guidelines of TikTok. Private citizens and miners are not allowed to be portrayed in what TikTok calls synthetic media, which includes AI videos.
But that video wrapped up seven million views alone before I sent it to TikTok and they took it down. There are dozens of additional videos like this portraying both victims of hamas portraying three year old murder victims in a child's voice talking about how they died and the injuries they sustained. And these videos are live and again racking up thousands to millions of views and sometimes going viral.
So this is just an indicator to me of this kind of early wave of w where AI is hitting real people, and in particular people who, since they are deceased, cannot actually come in and defend themselves when they see their likeness out there on social media.
So deeply emotive, Alex and just to say what TikTok has indeed come back. Of course parent company Byte Dancing, Like how the platforms, TikTok continues to invest in detection and transparency and in industry and partnerships to address this rapidly evolving technology. But therein lies the issue. It is a rapidly evolving technology. What do you think more could be done internally by TikTok and indeed the other key social media players out here.
They've already rolled out tools to ask users to opt into label AI on videos that use AI, but most of these videos Caroline that I came across didn't have that label. So it's clear they need to be doing more behind the scenes with their incredibly powerful algorithms, with their human moderators to be picking up on this stuff. But when I talk to experts, they're already raising a flag not just in these digital resurrections, but also looking
forward to things like the election. Right now, a lot of these videos have this kind of uncanny valley weird feel. They're going to get more realistic and the apps are going to need to do more to be able to detect them.
Alex BLERINCA thank you so much for bringing us the story from New York and San Francisco. This's a Bloomberg Technology.
Welcome back to Bloomberg Technology. Ed love Low here in San Francisco.
Caroline hid and New York. Let's quit check on these markets because actually we're having the biggest cell offon indeed the NASAK one hundred in more than a month now October twenty sixth we're seeing and we're off by more than a percentage point. Now is this profit taking after
the run up that we've had. Of course throughout the month of November, is in a little bit of caution as perhaps we're baking a little bit too much dubbishness into a federal reserve and the direction of travel for bonds. But nevertheless, the sell off in stocks and a sell off in bonds as well, the two year yields spiking as well. I'm looking though at in spite of this sell off in risk assets, one stands out bitcoin actually
powering up. We're up at one point in excess of forty two thousand dollars and we're still on the higher side despite the stronger US dollar today. You know, the driving forces we're still talking about spot bitcoin ETF will that we signed off in January will we get of course, and what we know the harving's going to come next year, but what will macro policy mean for bitcoin into twenty twenty four. So still on the higher side, let's look
at some of the individual movers today. I'm having quick look at Uber because well, maybe I've be including the S and P five hundred. That's of course what's driving it higher, up some five percent on the day. But actually one of the only fields are green other than
cryptostocks and Uber. Let's go to some of the losers. Interestingly, some inside selling happening and in video in November, in fact, three hundred and seventy thousand shares were either sold or filed to be sold by internal candidates of course executives at the company. So we're currently see that off by about two point four percent offter of course, a massive
run for twenty twenty three. Anady meta same that one of course from Mark Zuckerberg himself first time in a couple of years, ed that he's actually selling his own company shares currently off by one point eight percent, as you can see. But we've got a key company to be talking about next.
Yep, and we're going private this time, Anderil is out with a new autonomous air vehicle. Road Runner is akin to a mini reusable fighter jet that blows up drones, and the startup says the US will deploy it in the field next year. Delighted to say joining US now is Andrew founder Palmer Lucky down in Costa Mesa, California. We've just showed images of it. But from a technology perspective, Palmer, you've been working on this in secret and stealth for
a couple of years. What is new here? What is the technology at play?
Well?
Roadrunner is an AI piloted autonomous air vehicle. It's got a lot of cool features. It's powered by two twin turbojet thrust vector and engines. It's very very fast, carries a significant payload, It's very maneuverable. But the really cool thing about it is that it can be reused. It's actually a vertical takeoff and landing vehicle, and that means that with certain payloads, you can go out there, perform the mission, come back, reland, and then refuel, rearm and
use it again. With other payloads, Let's say a one way warhead to go up against a large aircraft, I can send a whole swarm of road Run is out there, and only the ones that actually engage the target are consumed. Everyone else can come home. And that allows you to have much greater effective magazine depth and to use these things in way that you can't use traditional one way missiles, where once you launch it, it's gone, whether you launch a bunch of them or one of them.
Palmer, we share with our audience at the top of this segment. Actually Vance wrote about it in his story that the US plans to put this to deployment next year, right, But so much of the newsflow around drones has been in the context of the war in Ukraine. You know, drones are a key strategy for both sides, it seems. Do you see road Runner being deployed in Ukraine in the natime? What kind of talks have you had around that.
Well, I'll tell you this, I see it in my mind's eye. But whether it goes there isn't up to me. It's up to a bunch of people in the US government. You know, the foreign military sales process, the transfer process is government driven rather than company driven the vast majority of the time. And we've been in Ukraine since the second to the war, not just with our products, but also sending people over there. I actually was in Kiev
to meet with Zelenski for the second time. I met with him ahead of the war, because he was interested in purchasing our technology to help secure their eastern border. Unfortunately, that wasn't something we were able to make happen because of those restrictions that I mentioned earlier. And so it's certainly something that I would love to see personally.
What about demand from Europe in and of itself, Palma.
So, I mean, we have a lot of we have a lot of European customers, and we do a lot of work in particularly with the United Kingdom and the UK Royal Marines especially, But you know, there's a little bit of a tricky dynamic with some European countries. Some European countries really see their defense apparatus as a way to run a jobs program, and they are forcing US companies like ANDROL to compete with their own domestic capabilities.
It might not be as advanced, might be years behind, might be more expensive, but it's pretty hard for them to get over the fact that they would be dropping that internal program to buy some from an American company. It's a difficult pill to swallow for some of these countries, especially ones that do have what anyone would consider a pretty strong defense industry of their own.
One country that has a strong defense industry of their own is China, and you've been outspoken on this. We've heard, of course, not only about china strength in defense, but also their strength in ai And of course you're twinning the two here. I'm interested as to how much those conversations surrounding Taiwan, the concerns there are building, and whether or not it's actually something that you are having conversations with the dood about.
I mean, it's all about that. Everyone is talking about making sure that the capabilities that we're building today are ready to go for a fight in the Pacific in twenty twenty seven or earlier, because that is the latest that we see China trying to launch an offensive for a variety of reasons. That's the timing for some kind of action against Taiwan, which is critical to our economy. You know, there's a lot of places around the world
that we call partners. There's a lot of places around the world that we say are important to our interests and their semiconductor industry is really about as important as it gets, especially for such a small country so close to China. The good news is, I think people are recognizing this threat. Big tech companies years ago thought that China was something one that was going to be a
huge growth market for them. They thought they were going to get in and sell them social media, sell them services. And I think people are starting to realize that that's not what's happening. They're coming here and they're eating our lunch, and that is I think positive for tech companies decision to start working with the dood again.
There's an interest, in an intense interest, excuse me, in Anderil. People don't, let's know that much about the company. So if we take the kind of Taiwan case study road Runner aside, what are the products and technologies that you can offer that you would deploy it and get a hypothetical scenario like that.
Well, our core product is something called Lattice AI. It's kind of the AI engine that powers all of our products. We actually have more people at ANDROL working on software than hardware, even though we have over a dozen hardware products, and that's because Lattice is something our software investment is something that can reach across all these systems and a lot of external systems. Lattice AI is integrated with more
third party products than anderill made products. Even so, we make loitering munitions like the Altis Line, we make autonomous underwater vehicles like the Dive Submarine. We make counter UAS systems, electronic warfare systems, surveillance systems, tactical UAS systems like the Ghost helicopter drone. We've got a lot of things that could make a really big difference. And again, everything that we're doing, and most of what the DoD is doing, is preparing for our conflict with a great power like
China in the Pacific on a near term timeframe. Anything that we make that is not going to be ready to go into that type of fight, whether it's a blockade or a real invasion, is not something that I think is particularly relevant or worth heavy investment at Palma.
When I posted on social media, you are coming on the show, I guess the most common question from the r audience was about manufacturing. You know, if you take Roadrunner as an example, they know it's a cutting edge technology, but they actually want to know more about how you scale the output of that product.
Well, there's a few things that go into that, you know, first of all, Androl is a defense product company more than a defense contractor. We use our own money to decide what to build, how to build it, and then we build it and sell it when it's done. And it's very different than companies that get paid more when they have let's say, an inefficient manufacturing process or a longer manufacturing process because they're on a cost plus contract.
And our head of manufacturing comes from Tesla, where he scaled several lines to very very large numbers of vehicles. We have a lot of other people who have experienced making consumer electronics on a very tight schedule. We've done five new revisions of Century Tower, four new revisions of Cent of our Ghost drone in just five or six years, and so we're on more of a consumer electronics manufacturing and iteration cycle than any traditional defense.
Company would be.
And look, my previous company was OCULUSVR. I started that when I was nineteen years old living in a camper trailer, sold it to Facebook for a few billion dollars. Was there for a few years before getting fired. But while I was there, we've made millions of virtual reality headsets in China. I know how China does things. I know how these things can be done, and I'm trying to bring a little bit of that Chinese energy here to US manufacturing, absent all the stuff that I hate about China.
Interesting perspective on what you can learn, perhaps even though you dislike parts of what's evident. I'm palm up to that point. I mean, everyone's currently handringing about artificial intelligence
US versus China, China versus everyone. I mean, you've just been in the UK, I mean at least saying that you've been building relationships there, and we just think about the UKAI summit, where what was it, thirty one country signed up to some sort of guardrails When it comes to well, the acceleration of deployment of AI in the military. What do you make of these moves too put in guardrails in artificial intelligence's use within military.
A lot of these are decades behind. The US government has been thinking about these things literally for decades. It really bothers me when people say, oh, man, we need to come up with rules that tell the DD what to do about AI. I mean they haven't been thinking about these things. They don't understand how important autonomous weapons. I mean, what are you talking about. The US Government's been deploying autonomous weapons like radar seeking missiles and missiles
that can differentiate between targets for decades. Now, look at something like a sea ram or a sea whiz. The automated guns that are protecting our bases and our ships from incoming mortar fire, incoming artillery fire, incoming missile and rocket fire.
Those are autonomous weapons.
They're making decisions about what to shoot down and what to not without a person manually deciding what to do, beyond deciding to turn on the system and allow it to engage targets.
Period.
So the US government has very strong doctrine around this that really boils down to making sure a human is always responsible for any decision, and that doesn't mean that the person's responsible for pulling the trigger. I hate this idea too.
People say, well, can't.
You agree that a day I should never be able to decide when to pull the trigger. And I don't agree with that because I don't think there's any moral high ground in making let's say, a landmine that can't tell the difference between a school bus full of children and a Russian tank column. I think that it is good for it to be able to decide when to pull the trigger as long as a person is taking responsibility for that employment and whatever goes wrong in the end.
And so I'd see a lot of this is performative. There are people who have never thought about AI, never thought about weapons until very recently, and they're now declaring themselves to be AI safety experts, and they are decades behind the people who have actually been working on autonomous weapons policy and ethics and guidelines. I think the United States is clearly far and away the leader in this space.
Palmer, I just wanted to point out, you know, when I put on social media coming on the show. Of course, there are a body of people out there that don't agree with the use of any technology in the context of war because they don't want to have any consideration of war right they are believe in peace. Frankly, it would be remissing me not to ask you as well about Oculus. You mentioned it in your prior answer. I think we're almost at the ten year anniversary of then
Faith for acquiring then your company Oculus. Over the last ten years, where have we landed in VR and AR. This year, we had Metaquest three, we had Vision Pro from Apple. Just give me your assessment of the technology field for headsets.
Well, the people who think that we shouldn't be using tech in any of this stuff, I'd say, let's arm Nato with sticks and stones and water guns and see how that goes for you guys. As far as VR, I'm really excited with how it's going. I am happy to see a lot of my deeply held technical beliefs
playing out in the market. One example is the Apple Vision Pro being kind of an augmented reality, virtual reality, mixed reality combo headset that is doing full reprojection of the world where it's capturing the world using sensors and then using all new photons to project in your eyes, rather than an optically transparent AR system that a lot of people were trying to build over the last decade. I've always been on the hard AR full reprojection side.
Happy to see that kind of pan out with Apple. I've used the new Apple headset. It's amazing.
You know.
Probably the best accomplishment that I've done on the VR side was making sure that VR came back from the dead. It is now something that other people are working on, so that for the rest of my life, I'm going to be able to go out and buy really nice virtual reality headsets without having to do it myself, which is what I was doing when I was fifteen and sixteen starting Oculos.
Andreill founder Palmer Lucky. Good to catch up. Good to have you with us here on Bloomberg Technology. Thank you for your time. So coming up on the show, the crypto rally Gaviz steam as Bitcoin tops forty two thousand US dollars, we're going to keep conversation going and discuss investing in the digital currency ecosystem more broadly. That's the VC Spotlight. Next, this is Bloomberg Technology.
Let's talk crypto for a moment, because Bitcoin, if you hadn't noticed, has just surged past forty two thousand dollars again, extending the largest digital tokens at rally to more than one hundred and fifty percent so far this year, far outpacing stocks and other risk assets. For today's VC Spotlight, that we're going to be investing and looking at the turn of digital currency ecosystem and the startups within it.
Morgan Bellers with us NFX general partner. You invest in a whole broad remit of companies, but what we love is your background and the fact that you were there building one of the first ever stable coins with Libro, and as part of Facebook, you of course investing companies
such as Ramp, which is about FIAT into crypto. This exuberance around bitcoin seems to be about institutional access, whether or not we get a bitcoin, a spot, bitcoin ETF where do you think that really works for the ecosystem at large?
Thank you again for having me so seeing this turn is exciting, although cautiously optimistic. I think that there have been several like Schrodinger's cats in crypto is dead?
Is it Alive?
And one of those has been the BITCOINYTF like is it dead?
Is it alive?
And I think we're turning a corner as I not gotten all of the wood, that it might finally actually be happening, which would be huge, if not the largest impact that could be had on institutional adoption. And the second Joininger's cat was Binance, Like people were worried about Binance. What was there, what wasn't there? What was going to happen, what wasn't going to happen, and I think what we saw happen a few weeks ago was like minimal impact
on the space, so I think it. So those are two huge unknowns that I think are now becoming known in a positive way. So that's exciting for the space.
Morgan. Earlier in the show, Caroline and I were talking about how you know when bitcoin goes up, publicly traded crypto related stocks also go up, either because it's like a proxy for exposure if you're not invested in a digital currency, or it's a logic where well, if coins doing well, that's the thing that underpins all of those companies, so they do as well. Spin that forward to the VC context, is bitcoin being up good for you when you decide okay, I'm going to invest here here or that.
I like to think that I stay sober enough that it doesn't matter, but in reality it probably does affect mine and others psyches.
I think I've said this on the show.
Before, but for me, there's always three questions, which is one is this company solving a problem for anyone? Two is anyone using this thing? And three is this product or a company making money or has any potential to make money? And when you look at the history of crypto and crypto startups at blockchain companies, there's very few that actually check all three of those boxes, let alone
one or two. And bitcoin is one of the few use cases that is, you know, checks all of those boxes and is real and is definitely a case study for potentially other But at the seed stage, I try to not look at the price of bitcoin when.
What you look at is probably the general energy of building in the seed stage right now. And to that end, amid what has been termed yet another crypto winter, has the building still been going? Have there been problems that are being solved in this time where we could stop just talking about prices and actually look at what fundamentally is being built.
Building is still going. When the market was nuts, you had what my partner James caused, the fruit flies coming in. So the founders who thought it was just like, you know, the sexiest successory to have a crypto company and thought overnight they would be worth a lot on paper. And what the market cooling down dat is it filtered those founders out. So now you really only have founders coming in who really really care, who actually have a problem
to solve, So in a weird way. The bear market's very nice because it automatically applies a filter at least to the top of the funnel of startups that isn't necessarily there in a ballmarket.
Morgan, bigger picture. We've had a lot of guests on the show that criticized the US as a regulatory environment or a market environment to foster the underlying technology, let's say blockchain in this instance. Your view on that.
I am proud to be an American. However, I do wish that crypto regulation was a bit more founder friendly than it currently is. To bring back my Schrodinger's cat analogy, which I think still applies here.
There are a lot of.
Unknowns or fears or concerns about which way various regulatory bodies can go on various regulatory topics in crypto that are scaring founders away from starting companies in the US. And if there was more clarity in one direction or another that would limit the amount of guessing or fear that was required to start a company, I think that would be a lot more conducive to founders, specific specifically starting companies in this space in the United States.
Morgan Bella an f X general partner. We always enjoy having you on the show, The Schrodinger's Cat Analogy. Let's see if it gets traction, we'll see.
I'm a dog person, by the way.
But oh, I know I've met as you know, I've met your dog, which is always at your side. But we're out of time for today. Thank you, okay. Apple's long anticipated breakup with its main financial services partner, Goldman Sacks is underway, with the iPhone maker offering the bank a path out of their deal. But who might replace Goldman? It's the focus of this week's Power On column, and Bloomberg's Mark German joins me here in San Francisco. You
have a thesis Chase outline it. Yeah, first of all, thank you for having me.
We've heard about City Bank, We've heard about American Express, but I think Chase is absolutely the most likely company to take over four Goldman Sacks.
In terms of the Apple card partnership, Chase is a lot.
Going for it. It makes a ton of money, so it has the cash balance, It has the management, It has the reserves to take on a partnership that may not be entirely lucrative at the get go. It does have time to sort of bake into its financials that this is going to be a long term strategy and partnership. Goldman, as you know, lost a couple billion dollars maybe a little bit more than that on this.
They couldn't really sustain it. Chase probably could.
The other thing is is Apple and Chase, most people don't know, have a long term relationship. Chase is one of the biggest partners for credit card transactions in the app store, Apple online services, Apples, retail stores, online stores, and Apple probably gets a better rate right because of that deal with Chase and how much Chase credit card
usage there is. And there's all sorts of stuff behind the scenes storing Apple's cash balance, so that long term relationship means their prime for a bigger expansion.
It was a great write up. I urged people to go wells also learned that well Steve scuer is off playing golf with Eddiq sometimes Mark Coman always with the facts you thank you meanwhile. That does it for this edition of Bloomberg Technology.
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