From Mahart.
We're Innovation, Money and Power Collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde.
And Ed Ludlove.
I'm Parlinehider Bloomberg's World headquarters in New York.
And I'm Ed Ludlow in San Francisco. This is Bloomberg Technology coming up.
Full earnings coverage ahead, we break down results from sales Force, Snowflake Paramount to name.
But a few, plus Bitcoin pushes toward a record high amid massive inflows into exchange traded funds. We'll get to read on the state of digital currencies amid that rally, and.
Apple facing weak demand for the iPhone in China as resellers slashed the price of the latest model. We'll discuss that and so much more throughout the salbot. First, let's check in on these markets, and it's a macro feel to the day. We get that pceedflator, what is the inflationary pressure that the Federal Reserve is looking at? Came in bang in line with expectations, two point eight percent
year on year in terms of inflatory pressure. Right for the Federal Reserve therefore to be pausing on any rate cuts but we hold up about five ten percent on the nasdacs and relief to the market. We're seeing tenure yields come down some three four basis points in fact, down across the curve, and I'm looking at a volatility index of fear gauge that shrinks by less than a point.
We're at thirteen handle. Moving on and have a look at what you were just outlining their ed Really where the action has been is on the risk Asseler choice of the technology show, which is Bitcoin.
We're up almost four.
Percent, sixty two sixty three thousand, let's call it. Remember sixty nine thousand dollars is the previous record back in November twenty twenty one.
Where are you looking on the micro so a.
Lot in the earnings context, but when it comes to tech Snowflake is the big mover. It's down eighteen percent or so in the session, but on track for its biggest drop on record. Two pieces of news, really, Kevin Supman, the CEO, is stepping down. He will be replaced by
ex Googler Shrida Ramaswami. But also the sales outlook that they gave for the current period, even at the high end of the range, it's like twenty million dollars below what the street was expecting in terms of consensus, And the story for Snowflake was sharp deceleration and growth in twenty twenty three. They didn't do enough to say we're on the upward trajectory moving forward into twenty twenty four.
There's a lot more happening as well. In the Arnie's context's a kind of mixed bag of different companies that will get to throughout the show. The first is Paramount is actually up four point eight percent. Sales declined mid single digits in the quarter gone ad weakness, but they called it the AD slump is over, we bottomed out, we're rebounding. We'll talk about it later in the program. Hb's now down one percent. It's kind of traded a bit choppy this morning. Look specifically at sales of PCs
to consumers. The street expected them to return to growth, but sales fell one percent in that category. It's a concern even though they're saying twenty twenty four will be better on the customer or corporate side. Then salesforce is actually up one point five percent. It's outlook for the year suggests annual growth of full year fiscal twenty five ten point eight percent. I want to go very specific
with the numbers, ten point eight percent. The reason that's important is that they grew just above eleven percent last year. So in other words, we expect decelerating growth. That's not what the street wanted to hear. But we got a first ever dividend and a buyback. How many times are we going to keep saying that divvy buy back stocks up one and a half.
Percent, And let's dig in therefore, with an expert who is across all of those numbers ed and you bring us the takeaways. Brody Ford was there with a closer look at some of these results, and Brody, there does seem to be this worry about the forecast front and center.
Yeah, everybody wants some more growth, there's no question. With Snowflake in particular, they're always an interesting one because, unlike a lot of these software companies that charge you five ten year contracts so you can predict it pretty well, they charge you based on how much you use the product, kind of like AWS or an Azure, which means every earnings, it's a little volatile. We're not sure what we're gonna get and so this forecast, it made people feel anxious
because it showed that growth continue to decelerate. You mix that with losing one of the most famous CEOs in the industry, that's going to be a shakeup.
Okay, let's talk about salesforce. This is I just go so nerdy on the details. I use MDL on the Bloomberg terminal, and we're talking about a few basis points. But my understanding, Brody, and you and I were talking about this on the phone, is where do we find the AI read through? We didn't you know they outperformed in the quarter gone to end twenty twenty four fiscal twenty four with like eleven point two percent growth, and they're guiding us to ten point eight percent growth this year.
What is or what is not happening for salesforce right now?
Yeah, And it's funny because they are guiding to that above ten percent number when it comes to the non consulting revenue. When it comes to top line, their forecast has slipped below that psychologue called ten percent mark, which you know, all of a sudden, then you become a value stock rather than a growth stock.
Salesforce.
The story they're telling is that AI is going to buffet the need for a lot of their solutions. The early stage one will be in their data products, data cloud, warehousing, Tableau for analytics, and that did outperform, right, I mean, they are seeing uptick there.
They say it's the.
Highest organic growth of any product they've had. But still I think the AI impact on these numbers is relatively low, and I think that's the case for a lot of these application software makers. They want to tell an AI story, but in reality, it's still very early days. It is hard to quantify the exact impact at this point, even if in the earnings call you're going to hear those two letters over and over again.
We certainly are.
Brady Ford.
We thank you so much for bringing us the inside track on both Snowfake Salesforce. Let's dig in with both those companies and the broader ecosystem right now, of Lisa, welcome Rebecca webtman CEO and principle of Valua, Technology analyst firm providing research advisory services to leaders with a focus on the value of technology. So talk to us about
the value proposition at Salesforce right now. From your perspective, Rebecca, are the offering the right kind of offerings at the right price point with the right focus on margin.
Sure, Caroline, thanks thanks for having me today.
So Salesforce I got the timing right with data Cloud right, just as everyone recognizes that data and metadata is actually what makes AI work. They've got data Cloud out production and they're doing a lot today from a penetration perspective, offering credits to customers to get out there and start to adopt data cloud so they can start to experience the benefits of AI. Salesforce has some runway in other areas as well, and I think what we've seen too in the past years they've.
Pushed to improve efficiency and improve.
Margins is offerings like the AWS marketplace and other more self service things that should help them keep their cost of sales under control as well.
It's interesting whenever I hear, for example, marketing coming my way from a Salesforces or is about the safety the using of your own proprietary data here, and that seems to be the sale from Snowflake too. But sticking with Salesforce, ultimately, what's your view on whether the incumbents win in this space.
The fact that they've already got the deals with so many of these corporates that they're going to be the ones that win out these AI offerings, or whether these challenges that are coming up and being VC backed can make some begin roads.
You know, it's interesting that you asked that, Caroline, because we just stood a study asking people about whom they would trust with their AI and what we found is that it wasn't necessarily those established vendors. Buyers were more likely to trust AI solutions that came back from organizations that had traceable data and clear ethics and privacy policies, not necessarily an established vendor.
So there's still a lot of room for innovators out there.
This is how I think about AI and salesforce. Right, AI means they can charge more, they're more expensive premium products, adds value to what they already do that did not show up in their numbers. Do you agree with that?
I would agree with that, But I think too what we're seeing is a penetration strategy for data cloud today as customers need to make that leap into it. So you see with the new marketing cloud offering where they get data cloud credits, they're going to work on building that up in true salesforce fashion, get them to try and get excited about it and then really be able to turn on the switch.
Oh, we know all about true Salesforce fashion, but here's the reality. There's a company that grew mid twenty percent range every year for a decade and it's going the wrong way. Snowflake had a sharp deceleration in its growth last year. It's not giving us evidence that it's turning around. What's your conclusion on the corporate enterprise spending environment based on the results that those companies gave.
Well, I think Snowflake made it pretty clear when they said this is recovery, not rebound. We're looking at a new era in correcting. On the software space. I do think Salesforce has some runway with its other products like Slack. There's still a big revenue opportunity there that they haven't quite at.
Okay, so we have a change of leadership at Snowflake. Does that excite you?
The market never likes the surprise change in CEOs.
Right, But I think too. Frank was brought in to grow at a certain point, just like you did with Service. Now, a streeter is a different person, and as we look at Snowflake moving from just cloud storage to more of an AI company. Certainly Shreeter has the chops and the experience that make him a good.
Person in that spot.
All right, CEO and principle of Valoir, Rebecca Edam and greats have you on the program. Really good wide range of analysis on many different companies coming up on the program. We're going to switch from the equity markets to bitcoin risk asset of choice and crypto markets more broadly, we're going to discuss all of that and more with Framework Bench's Vance Spencer. That's neck, but there are other stocks on the move, Carra.
There are and there are more earnings to come.
If you thought it was all over after the bell, we're going to be looking at for what Dell has to report.
We're up seven tenths of a percent ahead of those numbers you.
Look back, and of course we've got the focus on HPE. We've already had HPS you were running us through at the start of the show. Currently at one point eight percent, and I understand the CEO will be joining the network tomorrow now. Soundhown Ai another darling in the AI spies, up two hundred and twenty percent so far this year for up another seven percent. Can this company deliver the exuberance that we see factored into the share price from New York, from San Francisco.
This is Bloomberg Technology.
Look, let's check on other risk assets today because they are higher decidedly, so we are on a tear when it comes to crypto.
Could we be eyeing the.
Sixty nine thousand dollars handle that we had previously at record numbers for bitcoin currently training up at sixty three thousand, as you'll see. But it's not just Bitcoin getting the love. It's being spread through some of the other areas. I think theoryum up significantly, up two point three on the day, but we're hitting A three thousand, four hundred and sixty five and other Layer one protocols. I think a Solana also doing particularly well. Look at that more than eleven
percent on the day. There is much love more broadly in the cryptosphere. Look at what's happening in the equity side of the equation though as well, because as some of these underlying assets do well well, if you're holding or if you're mining, they're.
Doing particularly well for you as well.
I mean, we know key Hoddler in chief in the equity market is of course MicroStrategy and they're up three point three percent. Now, interestingly, on the downside have been Marathon. Now this is on the back of their numbers. Many worrying about the accounting practices and ultimately whether or not they're just showing an uplift to their overall earnings because they're able to show the current increase in value of
the underlying holdings a bitcoin. It's that some fifteen percent, some an has felt that the numbers didn't hit their mark.
And remember these stocks have run up in recent weeks and months.
We're looking also at r platforms on the downside by more than nine percent, probably in sympathy with the other miner that is Marathon. But it's notable that at the moment ed there is this supply demand dynamic that just seems to be working in bitcoin in particular's favor.
All right, let's keep digging into everything crypto and bringing Van Spencer, co founder of the Web three focus venture firm Framework Ventures one point four billion in assets under management. You carry summed it up really nicely. First of all, we've moved slightly beyond just bitcoin to a kind of broader positivity in digital assets. And then the supply demand equation. Just give me a health check right now of how
you feel. General sentiment is towards cryptocurrencies extremely positive, to say the least.
I mean, if you think about the nine bitcoin ETFs that are active right now, they're on pace to buy about.
A million bitcoin per year.
I have it up on my other screen, but there's about one point nine million bitcoin total on all of the exchanges worldwide, and so something's got to give. And this is what's different in this cycle versus the previous cycles, where you know, we didn't have Larry Fink buying eighty five thousand bitcoin in the last twenty trading days, and so these ETFs are a watershed moment. There are eleven years in the making. That was when the first application was filed, and we've got ether up next. It's a
May twenty ninth approval or deny update. We think it will be approved. It's basically the same case, and it's a much smaller and much more reflexive asset. And the last thing I'll say is that there's a ton of work that's happened since you know, the big crash that happened in twenty twenty two. We've got DeFi really firing starting to produce earnings. We've got gaming starting to bring in a lot of people. The ecosystem is extremely coherent.
It's kind of hard to fade just all of the work that's happened.
So I feel good you take on the face of it, just the movement in bitcoin. But one of the things we've been talking about this week is the offshoots right to other let's call them asset classes, but take NFTs. You look at the date of NFT volume in December, really close correlation with Bitcoin. The reason I'm glad to have you on the show, Vans is to me, it seems like a lot of that is related to what's happening in gaming, an area that your firm is really focused on.
I mean, gaming is probably the most positive story in crypto right now, and it's a story that's again been years in the making. But all the games that were funded in that twenty twenty one twenty twenty two run have just started to launch, and one in particular, Pixels, has about four hundred thousand daily active wallets. That's the biggest blotching application by far right now in terms of
user count. And so we're moving kind of beyond this prosumer you know, whale driven crypto economy into something that's more mass market. And you know, people have been waiting for that adoption moment, and I think it's coming. I think it might already be here. And so you've got all these different narratives really firing. The ETFs gaming DeFi eth what's the bare case. I mean, maybe the ETF inflows stop, but the vast majority of O RaaS have not been able to allocate to these yet. And the
numbers that we hear are one to three percent. That's what Fidelity says, you know, of the portfolio that you should have in crypto, well, that equates to about one hundred and fifty billion dollars coming into this space over the next couple of years. And you know, we're one of the larger asset managers in crypto framework is and we've had the pleasure of buying you know, mid nine figures of crypto over the past two years. And liquid markets and this might sound strange, but it's actually hard
to get the coins. These markets are not as liquid as people think. And so I think the open question is kind of what happens when that money comes in it could get, you know, wilder than people think.
It is.
My guess. I remember reading about you guys twenty twenty two. Hannah Millo was writing about how you were raising money at a time where everyone was raising money. You know, that was happening. It did not happen in twenty twenty three. Where are you focus now in the deploying of capital and your your kind of appetite to raise more funds.
I don't know how much I can or cannot say about you know, our raising plans.
It's just you and I on the show. Just give us to meet those events.
Yeah, we raised four hundred million two weeks before Luna collapsed, and so you can imagine what that was like. And we spent that year buying you know, we called a lot of the capital in that fund, and you know, really nobody wanted to talk to us when we were buying eight at one thousand, But at thirty five hundred. People have now turned around and you know, all the LPs are excited and there's a lot more interest in this space. But let me put it in perspective for you.
I was at a pension fund conference this week. It was a two day multi strategy multi asset class Pension fund conference. The crypto people got one panel at eight thirty in the morning, and you know, there's a ton of interest, but the pension funds and the largest endowments
in the world are still behind on this stuff. And I do think in the fullness of time, when you look back and you think about what it might mean to miss the birth of an acid class, especially into an ETF style paradigm, a lot of those people are going to be pretty upset and wondering what happened. So I think we're early.
All right.
Framework VENs has co found event Spen, so really appreciate having you on the show. I'm glad there were some things you could time for talking tech. First off, Electronic Art said yesterday that it would be cutting five percent of its workforce that's about six hundred and seventy people, due to shifting customer needs and a refocusing of the company. Will also be halting development on a number of undisclosed
titles and pulling back on its real estate holding. CEO Andrew Wilson told staff in a memo that the company would be quote moving away from development of future licensed ip that we do not believe will be successful in our changing industry. EA joined Sony, Microsoft, ten Cents, Riot Games, and other top studios and laying off employees as game
development costs increase and finance. The world's largest crypto exchange said it recovered four point four billion dollars worth of digital assets for its users who mishandled their deposits within the past two years. Users can mishandle their funds in a variety of ways, including entering incorrect wallet addresses, depositing incompatible tokens, and problems from blockchain upgrades. That's according to
Thursday's report. The cryptocurrency exchange said it resolved more than three hundred eighty one thousand cases of cryptocurrency that was deposited by users but not credited in twenty twenty two and twenty twenty three. Plus. Ali Barber is rolling out its second major price cut for cloud services in years, hoping to win back users from rivals like ten Cent
competing to provide tools critical to training AI. The Chinese Internet Pioneer will slash prices starting Thursday on scores of internet based services by as much as fifty five percent or twenty percent on average. The cuts represent one of the more aggressive moves by the company to stay ahead of ten Cent and by do in the cloud business and risk triggering a price war in what's already a hotly contested set throughout in China. Caro, what are you Yeah, we.
Talking in contestant sectors and ones that well might be feeling the heat.
Let's talk about streaming.
And focusing on Paramount says to see, actually a bit of a reprieve today, up three point three percent off the revenue for its direct to consumer streaming business Parwaermount plus beat expectations room meg Intelligence analyst Keitha. Ranganathan joins us now for more on the results, and well, there was some optimism really showing there, but ultimately the revenues the AD side still a cloud here.
Yeah, absolutely, Caroline. So you know you're right in terms of the DTC business, which is the streaming business, there were some green shoots there. I think overall what we came off with was there are some tones of you know, stabilization in Paramount's results. I'm just not sure that it's
going to be enough. You know, you do have the linear TV business, which brings in about fifty five percent of the revenue for the whole company almost ninety percent of its profits though, so there's obviously a lot of focus there, and that sector has just been so challenged just with cord cutting and kind of this whole movement to to streaming and you know, the movement of eyeballs from linear TV networks to all of the digital platforms,
and so obviously the advertising dollars also moving away, so that market has been under a lot of stress. TV ads were down fifteen percent. You know, Paramount will get the benefit in the first quarter with the Super Bowl. There will be you know, some lingering benefits throughout the year with the political ad cycle, but that's not going to be enough because you know, the core advertising trends remain very, very challenged, and so yeah, that was definitely
kind of that remains a pain point. But I think the bright spot is that, you know, the streaming metrics definitely look good.
There's a lot going on in the background with Paramount Gita, and for me, it always comes back to the loss in the streaming business was more narrow than expected, but we don't have any better sense on how Paramount does anything organically or inorganically to make that business profitable.
So they did articulate a strategy, and this was you know, this was I think one of the things that investors are kind of cheering a little bit this morning, because they said that they are hoping to get to paramount plus profitability domestic profitability by twenty twenty five. Now that's the first time that they've actually given us a time frame. Yes,
losses have narrowed. They do seem to have some plans in place for cutting down costs, for kind of optimizing content costs across the board, both their linear TV networks as well as streaming. Again, I'm not sure that's enough
to move the needle. We did see last week Warner Brothers Discovery actually posting a modest profit in its streaming business, but investors are still very, very skeptical that the profits on the streaming side can actually completely offset the losses on the linear TV side.
Cutting your way to profit. Bloomeg Intelligence analystsiter rang an eighth and great to have you on the program. Welcome back to bloomboag Technology. Ed love low here in San Francisco, Caroline.
Heid and Neo Les quick check on these markets said, because today the PCE number that favored view of inflationary pressures from the Federal Reserve was posted at eight thirty am, and it was a relief it came in where expectations were two point eight percent urinear growth in terms of inflationary pressure, the Fed seeming right to be pausing on any cuts. But that sort of relief that it came in as expected means that tech stocks push higher, up
four tens a percent. Tenure yield comes down some three basis points, but actually sort of moving aside from any of the macro data points of late, Bitcoin has been on its own role over the last few trading days and weeks. As you know, we're currently at sixty two and fifteen, so clearly really trying to eye that new record high at supply demand dynamics continue. We'll dig into that in a moment. Was one of our VC guests.
We're up two point eight percent. Move on and have a look at some of the individual movers because earnings have come thinking fast a lot for some of these software AI players that I want to shine a light on.
OCTA massive move up some twenty percent.
Now, this company's been under duress, remember a breach that happened recently. Now the numbers that came in from Octa seemed to give analysts some reprieve. They seem to be liking the fact that they're managing to upsale where they think the price point for this particular company is going. And subscriptions were sort of a relief over there, ju A Lingo up twenty two percent. Absolutely rampant growth that we're seeing at the moment in terms of revenues driving higher.
People wanting to be learning the languages on this particular AI enabled platform. Maybe the Super Bowl advert did a little bit as well. We're looking at C three AI twenty four percent higher. This also a relief because many had thought that maybe this had just been an AI hype cycle. C THREEAI needed to prove that it's a subscription growth was really there, and it is and many an analyst therefore upgrading on the back of these numbers
as well. So some big moves in some of these software and AI plays today ed.
All right, we have some breaking news crossing the Bloomberg terminal and a red headline in the video games industry. Swedish video games outfit Embracer is going to sell its Saber subsidiary in a deal valued around five hundred million US dollars that according to a Bloomberg source. Let's bring in the reporter that just broke that story for Bloomberg,
Jason strud This is an interesting one. I'm familiar with the names because I'm a longtime fan and player of Knights of the Old Republic, the Star Wars Going We used to play on PC, the OG and the second version. Tell us about the deal you're reporting on. Yeah, So it's happening as we speak.
So this is going to be announced in a in the next week or two that Embracer Group is selling. Essentially, Saber, which is a big subsidiary of Embracer Group, is going to go private.
So a little bit of context here.
Embracer Group is the Swedish gaming conglomerate that made a lot of headlines a couple of years ago because it was buying up companies all across the video game industry, a huge spending spree back in the halcyon days of twenty twenty one, when the.
Interest rates were low and buying was easy.
But of course things have changed and Embraser Group has since embarked on a cost cutting initiative that has led to carnage across the video game industry and has shut down studios, laid people off, and now it's just looking to shed costs whenever possible.
This is the latest move on that front.
And overall, well, when you see these cancelation of projects, when you see ultimately companies doing deals like this, does it speak to some of the pressure points that we sing across the entire industry?
It definitely does.
And yes, just this year, this week alone, I mean we've just seen it's been a bloodbath. Sony has laid off nine hundred people. EA just said last night it was laying off more than six hundred people. Yeah, we're seeing our climate a lot of it. There are a few factors behind all of these layoffs, but I think the biggest one is that during the pandemic, when there was a lot of growth in the video game industry, a lot of these companies just swelled, they bloated, they
hired too many people. And now they are kind of they're facing the math. They are looking at the numbers. The numbers have gone down a little bit. The growth hasn't been quite what it was when everybody was stuck at home playing video games. But the overhiring is still there and as always happens to people who actually made those decisions that are sticking around. It's the people who got hired who are suffering as a result of this.
Adjacent the other top story that our alreadience is following is rock Star Games, the studio behind graand Theft Auto, telling its employees, according to your reporting, to come back to the office five days a week starting in April. What do you know about the decisions behind that move. Yeah, it's interesting. I think that in a lot of industries.
A lot of industries obviously are grappling with this question of returning to the office after employees have gotten used to either working hybrid or working remotely. With the gaming industry, it's kind of it plays off on the topic we were just talking about, because the volatility of the video game industry is such that people have to uproot their lives constantly for new jobs, and so remote work is
very much a shield against that volatility. And so for a company like Rockstar, which is one of the leading video game developers, to come out and say, hey, we need you all to come in five days a week really strikes kind of It's a big contrast between what we're seeing elsewhere. Yeah, Rockstar, they're Rationale here. It's largely because of security, and so they've suffered from some huge
leaks of the next Grand Theft Auto game. There was one in twenty twenty two where a bunch of footage, early footage from the game got leaked and dropped on the internet. And then last year, last December, just a couple of months ago, and they were planning on releasing their latest their new trailer, their first trailer for GTA six. It was actually leaked on Twitter a few hours before it was due to go up. It was pretty ridiculous. Actually, it was leaked with like a giant chiron in the
middle saying by Bitcoin. It was very very bizarre sequence of events. The game was the game is set in Florida. I joked at the time that it's the most Florida thing ever for the game to leak in that fashion. But this is one of the main reasons that they're doing this return to office because they believe that their security was compromised as a result of people working remotely.
What's interesting, though, is we've seen it at other tech companies.
I think of Grinder, who said look, come back to the office, and it actually helps them reduce their workforce with a more of a natural attrition version, because they're like, look, if you're not going to buy by some of a you need not come back. Is that kind of what's playing into this as well, Jason, even though they are playing up the security side.
That is extremely an extremely common theory, I will say, and I've heard that not just attached to Rockstar, but also to a bunch of other companies. Lizard last year was big on return to office and one of the theories was, hey, is this just kind.
Of a soft layoff?
Is this a way that we can lay people off without actually laying people off because we know that X percent of people will leave when they're forced with the prospect of having to go back to the office five days a week.
So very common theory.
I don't have anything that can prove that, but it's certainly logical, Jason Shyer.
Brilliant to have you across what is a very talkt of industry group today, across all of the different companies moving and shaking me.
Thank you so much.
Meanwhile, let's turn to Apple for a moment, because well, there's not some great price point action happening over in China. Resellers slashing the price of the iPhone fifteen models get this by as much as one hundred and eighty dollars, and it all seems to signal that we've got an unusually prolonged slump in demand and ed, this is more than we're used to.
What took my.
Attention was it actually some of this as dressed up as well deals to be made before International Women's Day. I haven't seen many deals being made my way for International Women's Day next week for objects to be cheaper than usual, but the fact that one hundred and eighty dollars does seem to be more than we usually see at this time of year in the lunar holidays.
Yeah, there are different data sets that you can point to and try and draw a conclusion. The main one that the Bloomberg focuses on in the story Carro is that iPhone fifteen sales are just not doing as well as prior generations the iPhone fourteen in China, so an Ali barber's team or you can get one hundred and eighty dollars discount, but the difference this time around this year more domestic pressure right a handset from Huawei, you know, in the marketplace, and.
Those headwinds just continue.
We talk about some of the geopolitical tensions that have effect of course a supply side chain of Apple and more broadly demand too. We've got to think that there's been this government not perhaps the pr around it is been difficult to find the nuance, but ultimately governments or government affiliated companies not wanting you to bring in your Apple phone, wanting you to buy local, and Huilewey of course bringing out this incredibly powerful rival.
The conclusion that Bloomberg Intelligence anlysts reach, it implies weakness in China. Okay, coming up on Bloomberg technology, how New York City might be poised to be the next major AI hub. That's according to Lux Capital. We're going to discuss with partner Grace Isford. That's next, Carol, what's happening in the markets.
We're just going back to Apple for a moment, because this is a European related company, a Swiss chip maker in fact, absolutely plunging as you can see in European trading after.
A major customer.
Now analysts believe this customer to be Apple ed canceled the chip maker's key project around micro LEDs. So as this is a result impactment charges of up to nine hundred million euros. You can see the impact on that two day chart from New York, from San Francisco, this is Bloomberg Technology. Well you just saw that magnovograts is going to be on Bloomberg in a little while. And well that's because we're talking about crypto a lot at
the moment. Bitcoin of course having quite the tear forty two percent on the nose over the last trading days of thirty days. And this is of course as we see demand supply ultimate imbalance, as we start to see the ETFs come to bear, and notably some of the talk of halving hamp maoning in April, someone who basically is at the intersection everything we're talking about at the moment, whether it's the nexus of web three, also of data infrastructure of AIML is Lux Capital partner Grace Isford, who
joins us now for VC Spotlight. And what's so interesting is you were sort of very highly focused on what now seems to be all of our talking points at the moment when you first came to Lux in twenty twenty two, having been at canvas before that what are you making of the ecosystem in crypto when you're looking
at putting VC dollars to work? Because yes, we can all think of it as some sort of asset that we can track and better and speculate, But what is the underlying building of infrastructure looking like right now?
Ironically, it's the same building blocks for both. You know, who are the innovative technologists who are taking you know, cutting edge fundational principles, whether it's in cryptography or whether it's in applied machine learning, and taking that to solve a real problem for the end users. So, both the B to B infrastructure on the crypto side and the B to B infrastructure on the AI side, we continue to see a lot of exciting innovation.
Okay, well, let's talk about the practical innovations that are being built. Maybe here you've just been to San Francisco. There's a lot of talk actually of how cryptography can be an answer to compute and access to compute when we are thinking of large language models and machine learning.
Is that something you're seeing being solved for at the moment in both places?
Well, certainly, actually, take our lex Portfolio company together AI. We actually led the seed in that company. They're based in San Francisco, but they're chief scientists Tredoo. He's actually moving to New York to be an assistant professor at Princeton and love to talk a little bit more about the New York theme there. But they are actually having decentralized compute in many ways versus using a centralized cloud provider in order to power that AI infrastructure stack.
Great, let's have a little bit of healthy competition between cities, shall we. This week we published a documentary called Welcome to Cerebral Valley. And as you know, like right now, the line share of dollar or intellectual capital is here, but New York is growing both on the personnel side and attracting more dollars. What is lux Capital's attitude.
Towards that the AI demand is unprecedented, both in San Francisco and New York, and I think you're going to see continued growth in both cities. Right sfal Continua Hub. New York is a really exciting and growing hub, both because of the demand we have here. Forty four of Fortune five hundred companies are headquartered right here in New York. There was a recent Unicorn Report where the number of unicorns in New York grows from three to one hundred
over the last ten years. And you're seeing huge industries here, whether it's financial services or media. As it retains to New York specifically, there's a great talent be here. I just mentioned tread out from Together actually as moving here to New York. We've also seen several other great AI labs world class right here in New York. Nyu Jan Lacun, He's the chief medice scientist at Meta. He's also here in New York, and the Princeton and Columbia and Cornell labs are are bustling.
One of the surprising headlines that caught my eye in the last couple of days was Jamie Diamond of all people saying that mayor's in Texas will phone them up and say what can we do to get more business? But you know, officials in New York City, according to Jamie Diamond, and not as business friendly. What is your kind of boots on the ground experience of that. From kind of a host city perspective.
I've been seeing bustling innovation and I've been seeing a lot of people choosing to live in New York because they want to live here and going through whatever hoops they need to do to build an awesome company here. So, whether that's getting great talent out of major tech companies, whether that's getting a lot of new grads. We saw a six x increase in applicants according to a recent Handshag report over the last five years, wanting to move here.
And we see a lot of international talent, right folks iming from Europe, both coming from Israel, all moving right here to New York City.
What often will be said to some of the vcs that I speak to us chatting with able partners, for example yesterday, is that what New York has going through it, even if it's not comparable in terms of the share scale of money being raised quite yet or deployed here is diversity. And we have different industry groups here. It's interesting that a lot of the companies that you're backing seem to be in image generation, seem to be in sort of the advertising creative space.
I think a Runway, for example, well.
Runway right based here in New York, looks partnered and led the theory feed in that company. They are working hand in hand with filmmakers and with producers right in their offices in New York City, and so they're working not just to add AI as a side thing to their workflows, but integrate it directly into their workflow. And you've seen a lot of success with that, working with both for five hundred companies and those filmmakers in production.
And I'm pretty sure a little bit of healthy nervousness coming from those industry groups that are seeing themselves being well and many would say disrupt by the pace of AI. Gratis Fords, So great to have her on just on the nexus of everything that's happening in a world at the moment, Lu's capital partner, and we're talking at to you about well another portfolio company of their right now.
Yeah, Hugging Face. And actually, as a reminder, the big story we've been tracking this week is the fallout from Gemini alphabet or Google's generatorve AI text and image generating tool that has come in for criticism and elicited a response from Sunder Pitchi, the CEO of Google, who called some of the deficiencies unacceptable. Let's bring in Hugging Face Research and chief ethics scientists Margaret Mitchell Murrett. You have your own history with the academic body of Google that
we can get into. But yeah, that's right. We're showing Sunder pitch Eye's statement right now about what happened with Gemini. The reason we really want to get you on the show is can this be fixed technologically speaking in the short term?
Yeah, it actually can.
So there's a few different approaches to handling the different ways that people are going to be using these systems, and one is to have a bunch of different models under the hood that end up figuring out what different users intent is and providing different kinds of responses based on what the user intent is.
So it should be fixable.
I'm a little surprised it's taking so long, but I guess we'll see.
What I'm trying to reconcile in my mind is that Google is at the origin story of artificial intelligence, the body of R and D or academic work that happened more than a decade ago. How do we get to this point where they publish a tool where there is clear evidence that the model has some deficiencies and evidence of biases.
Yeah, I mean, we've seen Google laying off a lot of people, laying off people who are experts in AI ethics, which really helps with the kind of issues that they're seeing now. I think that Google might be playing a bit of catch up, sort of trying to release things perhaps before they're fully ready, and also not necessarily having the right people at the table to make the decisions. So Google's in a very different position than it was, you know, twenty years ago.
It's worth saying what side of the table you're coming from and your history with Google, because of course you co led Google's ethical AI team.
You step down from that group.
You're priate previously of course over at Microsoft, I mean you've been everywhere. You've moved over to hugging face to really drive the ethical perspective at that particular part of the business. But I'm interested is to the lackings, the failings that you saw a couple of years ago that drew your criticism and ultimately.
As you left Google.
Is that what's the edge hit When I think about the some of the issues that you say as to why this isn't getting fixed as quickly it seems to be from you your perspective, A question of personnel here and who's got the power to make decisions right right, Yeah.
It's completely an issue of who's at the table. I mean, one of the things that so many UH women and people of color speak to in the AI ethics world is the need to think about how technology is going to be used, how it impacts different people. And we're really not seeing that kind of consideration in the way that these technologies are being unrolled. So it really seems to be that there isn't enough clear thinking about foresight,
about context of use, about the social impact. And these are things that a lot of people who specialize in in things like AI ethics responsible AI m many of whom are underrepresented in technology. You know, we're we're not seeing this kind of insight, which means that there might not be the right people, and the people there might be more disempowered than they should be.
And the model that this is then l unleashed upon is in an environment of a cultur wars, some might call it. Margaret, I'm interested though, what for me as a consumer could be made clearer? How can transformation, How can me understanding what's going on under the hood be better served to me?
So I understand where.
I perhaps can show my preferences, my needs my choices when it comes to the images being generated, right right.
So one thing that actually people are familiar with with Google image search is when you type in some sort of query, some prompt to get a set of images, there's a bunch of different boxes you can select from that get at different things you might use. In the past, Google has actually been very good at this, trying to give users an option to specify the kinds of intents that they have in what they're trying to search for, and then further refining based on that. So that technology
is there. It's something that Google actually has a history of developing and developing well. This same kind of approach could be put into any sort of chatbot system, be it more generative or not, where users are shown as a selection that they can choose among to get at the kinds of things that they would like. There's also the possibility to have a back and forth in order for the system to ask the user for a little
bit more specificity. Users could potentially set preferences and the system could also show a variety of different things regardless of different boxes users might check. They could say, here's a historical image, here's the world, as it could be you know, let me know more about what you'd like to see practical takeaways.
We really appreciate you for it. Margaret Mitchell of Hugging Face. Of course, she was previously founder and co led Google's ethical AI group. The SEC while it's investigating where the open Ai investors were misled as the startup went through a ferocious debate of a leadership last year. This is all being reported by the Wall Street Journal, citing people
familiar with the probe. Now the Securities in Exchange Commission is studying internal communications by CEO Simulman in relation to his ouster reports said, now the SEC has sent a subpoena to the company in December, and our senior OpenAI officials to preserve internal documents now to regain his job, remember ed Altman agreed to an internal investigation among other conditions, and we get to see the outcome.
Yeah, we wait the outcome. There are the private investors in a complex cap table, and then there are the Microsoft investors, because remember in the public markets, Microsoft shares reacted to the chaos which you and I both live through.
Feels an age away, but of course there's still debate rages on. Meanwhile, That does it for this edition of Bloombog Technology.
Big thanks to everyone who listens to the podcast. We know there are a lot of you out there. We're on Spotify, iHeart Apple, and the Bloomberg platforms. Gosh, what a week it's been. From San Francisco and New York City. This is Bloomberg Technology.