From Mahard.
We're Innovation, Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Caroline heid On Bloomberg's weldad quarters in New York, and I'm also in New York Ed Louvelow here in This is Bloomberg Technology.
Coming up.
Look, we'll take a look at what we can expect from Tesla's deliveries report does as an analysis slashing estimates as the quarter comes to a close.
Details ahead plus.
More momentum in the IPO market is Microsoft Banks, Rubric says it's ready to file for its initial public offering, walking you the latest, and.
We will sit down with the production company Shy Kids as they produce an entire short film using open ayes Sora have that so much more coming up throughout the hour.
First, let's check in on these markets.
And while after a stellar first quarter ahead, we're just pairing back a little bit across the benchmarks and that'sacks still clinging onto the gains. But look only by one point at the moment. What is driving some of them perhaps sell off in the equities on the day at least has been the movement in the bond market tenure yields spikinging at eleven basis points in the tenure. But we're up across the curve four point three one is
where we're currently trading. Why factory orders coming in a surprise gain and really showing that this is a strong US economy and therefore the Fed really doesn't have to be cunning rates anytime soon. Bitcoin current under pressure off by two point eight percent, still relatively higher at sixty eighty eight hundred and twenty seven, but put.
It into concext stead.
Look at where we have come for this year alone on the S and P five hundred, despite those moves in bonn yields throughout the year.
Yeah, it's been a fast start to twenty twenty four. The first quarter, the first back to back quarterly gained since mid of last year Dune quarter of last year. But I'm trying to find what are the commonalities between all of these gains at the inducey's level, and I think the answers in Vidia basically along with some other AI names that we're caught up in a kind of infrastructure play, and now the attention's focusing well, if rates
are going to come down. Which rate sensitive sectors do you want to be in and does that mean moving away from tech? Which is sad for us, it might be savvy for others.
And to be honest, savvy on the date and on the year to date, we're still seeing chips sector absolutely flying one and a quarter percent higher on the day. We've got analysts out there upgrading the stocks of the likes of Micron. Isn't just, of course a star performer that has always been in video, but this has started to spread and where else has been really the beneficiaries.
And later in the program we also have to talk about our risk assert of choice, which is bitcoin, because there is something that is due to happen on the calendar, the harving. I think it's important to understand that. But broadly speaking, every week I have a sense of deja vu because we always say, oh, will the Fed cut rates or when will they cut rates? And in which increment and then we go from there and see how it impacts the technology sector. We used to say higher
rates discount the present value of future cash flows. By I'm reading this note from City Strategies saying, actually we're thinking about where we need to move outside of technology, what role bitcoin play and that as well have no idea.
Yes, spread the love.
Meanwhile, Jupiter of fund Over in Asia is still saying, look, get in on the AI play, go in on those sorts of names that you still have seen so outperformed. So it feels as though the artificial intelligence run up still has some space to run. But there is one stock ed that has really fallen of fout this year so far. It was a magnificent seven player and it's anything but magnificent at the moment.
And just before we came on air, the declines in the moment really accelerated. Tesla's down two point five percent. We are bracing for first quarter deliveries where the expectation is that they will deliver around four hundred and fifty seven thousand sequentially quarter and quarter. That would been a six percent decline. The big one to watch is like, look at how wide the estimates are at the lower end. This could be the first time in years that Tesla's
seen a drop year on year in deliveries growth. And we know all about the factors higher rates, the consumer's not interested any more. Domestic competition in China, there is a lot for us to discuss and discuss it. Corey Cantal and list A Bloomberg NIF covering vehicle electrification joins us here in New York. I mean, this is an important quarter, but the first quarter of twenty twenty four kind of summed up the EV story. Are you in the concerned about Tesla camp?
I think I'm in the way and see how Tesla does. And if you look at the market globally, it's getting more competitive. The number of the really watches that four hundred and twenty three thousand units. I could see Tesla being pretty flat. We've seen in the US, for example, month.
That's what they did in the first quarter of twenty twenty three. Three.
Right, you're on year being flat even you've seen some estimates of a decline of about three percentage points as a possibility down to about four hundred and ten thousand. Deutsche Bank had Tesla four hundred and fourteen thousand deliveries, I would bet more on probably the I'd say Barish delivery side, just because of the number of issues they've had. You look at not only China and competition there, but
in Europe. Tesla's a giga factory in Berlin, so I'll slowed down due to some outside issues that I must flew over there to help deal with afterwards. So you look at China, a lot of competition here in the US MILEL three refrac Europe issues, so nowhere is going particularly well. Not being said, Tesla is still likely to outpace BID in terms of its fully electric vehicle sales this quarter. Given you know, even if Tesla had about fur hundred thousand minutes.
Let's go into the context here. If we do see an actual year on year decline, how unheard of is that for Tesla.
The last time that happened to Tesla was in twenty twenty during the pandemic, and then I went back in the data and before that you have to go back to twenty fourteen to see a slight decline year on year. In general, it's been flat or Tesla has seen a
lot of growth on the year on year basis. Elon Musk has said, we're in between two waves, and so the question is, you know what happens this quarter, and then what does Tesla do They're corrected moving forward, because again they haven't given a kind of guidance of delivery for the full year, which you typically see auto makers do, and you want to see that reassurance if you're looking
for the EV sector to grow. Tesla was about forty six percent of US EV sales, which was actually the lowest in twenty twenty three on basis, so they're becoming less important to the health of the overall US EV market, but still important to the global leaving market.
Okay, last Thursday, in the Bay Area, in an undisclosed location, I went and picked up a Model Y. I did it at least one. At least one because I needed a new car, but also it was astonishing the federal tax credit in the least context, but also Tesla's own incentives. They always do this at the end of a quarter, and they warned us that April first prices would go back up. They did. I woke up this morning and checked the website. But you talked about between two waves.
I debated, as you know, because we discussed it for a really long time. Do I need what model? Why does the Model Y work for me? I think on balance it did for many consumers out there. This is really complicated. They look at the vehicle's test or offers and say, I don't know that I want a Model three or Model Y. I can't afford an SNX and cybertruck. Don't even get me started.
Well, there's only so many cyber trugs being in buildgip. Yeah, you're got to go down the pre order list. I think the other issue is you look at the Model Y and the Model three. They're really close in price now, they are, so if you are looking at a three, why just spend a little bit more for the Why
for more like room and more space. With the next generation Tesla vehicle announced for production sometime next year, you want to make sure you're not cannibalizing the three, because right now, Why is the best value out there, not just in the US, one of the best selling vehicles in the world.
But then let's get that broader context of competition you mentioned BYD and how they're managing to ramp up in end of market share. But over in Europe, you know you've got BMW coming out with some really extraordinary electric vehicles. Overall, is competition now something really Tesla has to be sitting up in a world.
Yes, I think China it's the most intense China. You've got a bunch of different other makers competing in a real way and consumers there. I think the ideas even said that EV sales should be about fifty percent of all car sales in China in the next coming few months. Everywhere else, Tesla has a bit more of an advantage in terms of time, but everywhere it's wrapping up. I'm looking forward to those bmwevs next year. That should be the new class making waves. And they're big here in
the US too. I mean, they were about twenty percent of all BMW sales last year in the US were electric, So it's not just the Europe not just the China thing. Tesla has competition everywhere, and that's a big difference from a couple years ago.
Current cantor giving individual advice to Edel shouldn't been driving. But also you can check him out on Bloomberg ne ef. He has some great analysis across evs. Meanwhile, coming up, chief experience officer at ledger Ian Rodgers joining us tell us what we can expect a little bitcoin harming.
I'm also sticking with the EV sets for a minute. Nikola, the maker of battery electric, electric and hydrogen fuel cell trucks, is down a percentage point, but it had been up as much as sixteen percent in pre market ten percent at the open. The current management team is suing disgraced founder and CEO former CEO Trevor Milton, who himself was trying to get new board members who are his friends on the board and has been sentenced to four years
in prison. I don't know if he's litigating this from prison, but this is a wild stock that you want to be following, and we're trying to get more details. We'll keep an eye on it. This is Bloomberg technology.
Let's talk crypto bitcoin to be specific, because every is so often the formula that governs the rate at which new bitcoin tokens are created, but it changes. These events they're called halvings, are a planned reduction in the rewards that miners receive and happen once every four years or so. Now, after the last three halvings, the coin hit records. So both skeptics and supporters they're watching this particular move closely to see what will come of the event and the price point.
More specifically, let's get to chief.
Experience officer at Ledger as Ian Rodgers joining us really on your take, I mean, your business is all about ultimately the consumer side and the buying and securing of crypto. When you're thinking of the harving, are you expecting everyone is going to be a flurry of anticipation to have more, to own more as a supply becomes more limited and it does drive up the price.
Well, I think that the having is a great opportunity for people to learn learn more about what bitcoin is and how it works. You know, Bitcoin it's designed to mimic precious metals in that the more you mine it, the more difficult it becomes to mind. And going into this having is, we have an unprecedented setup because we have hit an all time high on a weekly, monthly and quarterly basis. You know, prior to the having, which is something that hasn't happened before in the times that's
happened previously. After you have you know this this weekly, monthly, quarterly all time high, you've had an appreciation of three
hundred percent. So you know, the setup, the setup of the having is is interesting because you know, it's it's a financial endeavor for the miners and you can learn a lot from watching what the miners are doing going into the having, and they've been investing so they've obviously been betting on betting their businesses on the price of bitcoin going up, and it looks like they're about to win their bed.
I like the comparison with literal mining of metals or commodities. Called it what you will, and I find those data points interesting. When you say machines, I think you mean the compute right to run this. And you're also focused on the hash rate, which has been accelerating. Why are those data points that you're following.
Well, because you're what you're doing, and if you're looking to the minors to see what they think is going to happen after the having, than what you're doing is you're saying, okay, well, what's the break even point for them? So at the current you know, at the at the current rate of bitcoins being created, which is about nine hundred per day, the break even point for them is
a thirty two thousand dollars bitcoin. So they've been investing all year long, even knowing that after the having, the break even point for them will be sixty four thousand dollars bitcoins. So even you know, back in January when the price of bitcoin was between forty and fifty thousand dollars. They were still investing betting that the price of bitcoin would surpass that sixty four thousand dollars mark. So now
bitcoin's you know, hovering around seventy seventy thousand dollars. And then what you have is again as I said, you had you about nine hundred bitcoins being created on a daily basis. After the having that will go down to four hundred and fifty bitcoins being created on a daily basis. But you have this this new event which is the Bitcoin ETFs, which are driving a demand of around twenty
five hundred bitcoins every day. So you know, there will only ever be twenty one million bitcoin nineteen and a half million of those are already in existence. All of those have come into existence via this mining process. And if you just look at the at the supply side, we've had we've had you know, kind of a you know, we've had this this demand that's been created by the ETFs, and then now you're about to have the supply shock of the having. So I think, you know, it's it's
it's very you know, very simple supply and demand. And you know, and also now you know, bitcoin's been around for fifteen years, so A. It's been hardened, and we've had a long time to look at it, and we've looked at these cycles many times. So you know, there's no no guarantee that the past will predict the future. As I said, we've never had this all time high in advance of the e t A. I mean, I'm sorry, in advance of the having the the ETF is a new way to buy bitcoin. So there's a lot here
that I'm precedented, you know. But but we're definitely looking at past cycles to try to predict the.
Future, and we are asking a lot of your own expertise in this domain. And I wonder just how decentralized is the mining community at this moment, how much are they able to be redeploying yet further and further capital into compute into well ultimately, and the economics.
That you just walked us through, well, it's it's I mean, it's it's global. It chases cheap energy, you know, because the you know, the cheaper that you can they can run the mining operation, you know, the more profitable you can become. Also, you know, the compute that that drives mining, you know, has has improved tremendously between the last cycle and this cycle. So you know, it is a it
is a it's a it's a global business. But again, these are these are these are businesses, right, so you know, the question is what will they do after they're having you know, how much of the bitcoin that they mind will they need to sell and then put into the market. Will they be able to keep their machines online because it's profitable to do so, or will they need to
unplug some of their machines because the profitability has gone down. So, you know, that's why it's super interesting to continue to keep an eye on the mining business and to see what investments they're making and what bests they're making.
We're talking about harving because it's due in April. Look, we've had a pretty robust debate in the last week in with Jack Mallers, who was on the program. The Strike CEO Mike Novagratz came on the show last week and made the same argument. They basically in the camp of there's only twenty one million bitcoin ever and therefore price only go up. Bitcoin go up for that very simple reason. But one of the interesting data points that
I track at least is liquidity in the market. You know, I get it on the supply side, but there's a lot of trading that goes on. Basically, are you in the camp of only twenty one million bitcoin? Ever, so it only go up.
Well, I'm in the camp of we lead digital lives, and we will have digital ownership in our digital lives. And there is a new invention here. I mean, that's thinking. That's what people often kind of overlook. They look at only the speculative side. But you know, I've been working on the Internet since the early nineties, and I did digital music for twenty years and I was a big part of the fact that you no longer own your music collection, you rent it. So bitcoin has been the
tip of this sphere of digital ownership. And I think that you know that you know we will have digital ownership in our digital lives. And yes, because you have this this truly scarce digital ownership asset, which is like a behaves like a precious metal. I think, look, if you own pesos, you want to own dollars, and if you own dollars, you want.
To own bitcoin.
Legend chief experience officer in Roger's Grades, catch up with you. It is time for talking tech and first off, in the news. Huawei can he hinued its rung of strong, coarsely profit growth, building on the resurgence of its consumer business against Apple's iPhone and the rise of its cloud division against Sally Barba. The Chinese networking and electronics company reported net profit of about two billion US dollars in the December quarter. According to Bloombog's calculations, that's up more
than sixty five percent from a year earlier. Plus open Ai plans to open an office in Tokyo in April, as the AI pioneer begins to build out its international operations. The office will be its first in Asia and the third international location after the company opened offices in London
and Dublin last year. All of that, according to Bloomberg sources, and AT and T said personal data from about seventy three million current and former customers was leaked onto the dark web, which prompted the company to reset seven point six million account pass codes. The data, which also included sixty five point four million former customers, hit the dark web about two weeks ago. But the Elite data also includes personal information like social security numbers. It appears to
be from twenty nineteen that time period or earlier. The source of the data is still being investigated, and it's not known whether the data came from the company or it came from a third party vendor Carra.
Yeah, we want to dig into this story a lot more now. Bloomberg Intelligence analyst John Butler joins us and at and T itself rushing to practically be talking to customers affected.
But more broadly, how heard or unheard of?
Is this sort of amount of a leak of things such as your Social Security numbers?
So that's actually a great question, and the answer is security breaches for the carriers are actually more.
Common than you would think.
T Mobile sort of leads the pack with several dating back to August of twenty twenty one and even earlier, but they had one of similar size back in August of twenty twenty one. And what's interesting is it really didn't impact confidence in the brand at the time.
So we looked at subscriber churn.
How many subscribers left the brand after T mobiles breach. Did it affect net additions new people coming to the brand in the wake of the breach, And the answer is it really didn't. It wasn't that impactful. To them, and so our call on AT and T is something similar. We don't think this is really going to dent the brand in a major way in the wake of this incident.
That's the thesis that you outlined in your Bloomberg Inteligens React. There's going to be a lot of AT and T customers John the watching this show thinking what is John Butler talking about? They got access to my information? How quickly was the response from AT and T to get this resolved and under wraps.
So I think once it was out it was they made all the right moves right. They were offering subscribers reimbursement for any security like LifeLock that they might want to add onto their accounts, and there were also they reached out to everyone and changed their passcode. So again from the basic blocking and tackling standpoint, I think they're doing all the right things. Inklings of this leak, so to speak, go all the way back to twenty nineteen.
There was sort of a rumor.
Out that a bad guy had gotten the AT and T data, but it had not been dumped onto the dark web at that point, so AT and T really didn't have any data to work with to verify whether it had or had not been leaked, and I think i'd add that there's still question as to whether it was leaked or stolen from AT and T or stolen from one of its vendors.
Yeah, ATNT denied that it was a victim of a day to reach back in twenty nineteen, it was sky Shiny Hunters that claim to a stolen the personal data and they indeed said that the stole information didn't come from its own systems. But John, this isn't a great look after what happened just last month right, well, actually back in I think it was yeah, now March when they had a huge outage as well. I mean there's going to be a few slightly frustrated customers right now.
Yeah, the timing is tough.
I think in the immediate wake of this, there could be a little bit of blowback for AT and T in terms of you knows, its brand reputation. It's never lasting, That's the interesting thing. I'd point out. The best test case is Rogers, which is Canada's largest internet provider i'm sorry, wireless provider, and they had a huge internet outage a
couple of years ago and it was really substantial. It took down I think over a third of the country for several days, and they actually had no impact in terms of net editions or were impact to the brand. So people forget this pretty quickly, and I expect no different for AT and T.
Bloomberg intelligence analyst John Butler. Great to have you back on the program. John, it's been a one Welcome back to Bloomberg Technology. Ed Ludlow here alongside Carrow in New York City.
Yeah, so nice to have you here.
I meanwhile, we are getting you up to spee that's happening in the markets right here, right now, and more broadly, we're coming off of those highs, ed after what has been a phenomenal start to the year and in fact, phenomenal six months. I mean, let's call it. The December quarter was up fourteen percent for the NAZET one hundred, and we see the NASA one hundred and pulling out another eight and a half percent rally in the first quarter.
Of the year. Today we take a breathe.
We're up just five points, but the rest of the benchmarks are on the downside.
Why well, we blame the tenure yield.
Largely and some strong economic data.
Once again, the.
US is just managing to outperform factory orders, this time pushing up rates because why we think that the Federal Reserve isn't going to have to cut rates if we've got such a strong economic picture here eleven pases twelve basis points, that's called it higher on.
The ten year yeale.
Bitcoin as along with other risk assets, is just giving off a little bit today we're down almost three percent, so accelerating some of those losses. Sixty eight thousand seven und sixty though can't be sniffed out after a phenomenal
quarter for that particular asset move over. Look over all, what's happening in some of the individual names, and actually when you've got a day like this where potentially volumes are relatively thin because that the rest of the world is taking a day off due to Eastern mondays, it's known over in Europe volumes are down about eleven percent. If you're looking at the S and P five hundred, and we're seeing the Micron though the outperformer up six
and a half percent. Why because an analyst likes it and they're saying, look, this is integral play for your AI future. So they're liking Micron and shares moving on the back of analyst reports Alphabet get this hitting a.
New record high for Google. We're up almost three percent.
Tesla on the downside, though, and continu continue to anticipate the deliveries for Tesla and whether or not they could actually be a year on y de Kina, Let's go.
To the IPO market.
Rubric, a cloud and data security startup backed by Microsoft, is planning to file as soon as next week. That according to sources. Here's what Rubric CEO told us back in December when he was last on the show.
We asked him about it.
The foecust again on building a long term business.
I leave the IPE to the experts. I can't comment on it.
Karen and I have been asking people signor about an IPO for a very long time. Now, let's get more with Bloomberg's Deals Reporter Ryan Gord, what do we know about Rubric the moves they're making to get listed.
Yes, that's right.
I realized that was just before Christmas when he said that December twenty second. It's interesting we reported last year in September that the company was planning to raise around up to seven hundred million with all at the time. Again, I think market conditions have really sort of blown out since then. If you look at what a stare and read it did a couple of weeks ago, as you say,
expected to file this week. As soon as this week for a IPO, they could flip that s one public and I think this would be yet another test for IPOs.
It's security.
It's a very different profile to the sort of thing that we saw with Redded. It's not chips, so it'll be interesting to see how this one plays out.
Cloud data security.
It is though, that my Microsoft, which of course has been very much the darling of choice in the public markets.
Ryan, do we get a sense of valuation here already.
Or sort of the size and scope of appetite for companies like this.
Carol, I think valuation is a little bit up in the air right now. But I mean if you think to the round that Microsoft invested in, I think, just to double check my notes twenty twenty one, that was four billion dollars. I mean, this is a sector that has proven the very resilient. I think if you look across at the financial sponsor activity in this space, you know you're seeing multiples that are significantly twenty times sort of forwardy bit off for some of these kinds of assets.
So I think when this sort of comes around, should they flip and you know have the fifteen day cooling off period. It'll be interesting to see the investor reception to the results. You know, they're going to disclose their loss making. I think that's still the sense, but exactly by how much. These are the kinds of questions that investors will be pouring over in the coming weeks.
And of course this is a liquidity event for employees. It's also for those that are backed it not only Microsoft, but being Capital Ventures, Coast or Adventures. Some of the names that are put in early checks run who else? Therefore one other is in the VC community will be waiting with bated breath for the next set of names that will likely to see after this.
There are a bunch. I mean, if you think just after Reddit, now we're thinking about the likes of Ibota. It does coupons, they're the types of it's the type of firm where you'll get deals at Walmart, all of these big big box retailers. You've got Turo that is still on the books. There's waste Stars, it's owned by AQUT and I think still has some some other investors of note there. All that said, I think there is
a significant backlog. I was talking to a couple of st on the phone this morning who say that, you know, really the blow up performance of a ster and read it. If you look at a stero at some ninety four percent, read it, even despite the declines last week, is still up thirty seven percent in since issue. These are giving every owner of a private company confidence to actually really test i apos as an exit route. And therefore, you know what does that mean versus a strategic sell And.
They've got a political calendar to negotiate with and get out in front of rang Gold.
Great to have you on, Thank you so much. And what else are we watching today?
We should talk about Disney. This Wednesday might bring the end at least in this chapter of Disney's proxy fight, with the company hosting is annual shareholder meeting and investors voting on efforts by activists to reshuffle the board. So I wrote today in the Tech Daily that this is about the streaming business and Nelson Peltz wants a place on the board. The thing that I don't understand is what him getting on the board is going to do
to fix streaming at Disney. Fortunately, Bloomberg's Felix Julette is here to the question for him. No, I'm kidding, but that's what we're talking about here, and this is what we're bracing for Wednesday. It's basically a vote on strategy.
Yeah.
I mean, I think you look back since twenty nineteen when Disney Plus launched, they've lost more than ten billion dollars on streaming, right, and those losses have been narrowing and you've seen some progress, but they still lost what two hundred million dollars last quarter?
You know.
I think a lot of this vote is, yeah, do you trust Eiger to do this on his own or do you like having pelts there holding his feet to the fire. And I think with Disney, yeah, you have to look at where's the growth going to come to? Where are these profits going to come from in the streaming side. Can they bundle these services together in a compelling way. I mean they're now integrating Hulu into the
Disney Plus app. You have the question of you know, right now you get ESPN Plus as part of that bundle down the road, at some point you'll get the full ESPN flagship presumably, but that's a huge transition for ESPN to pull off. And at this point, yeah, that's one of the giant questions facing Aigri and Disney.
How close to the wire is this getting?
Because I have been just bombarded by ads in every podcast. I listened to the ad in the every break and sorry, it's because I still get ads delivered to me on my podcast. Is that you know I should be out there trying to vote for Bob Iger and against Pelts. Yeah, they're coming to me as a consumer, and I'm interested as to how many consumers have gone out there and actually made their voices heard.
I think it's the suspense has been building. I mean, it really looked like I was going to run away with us early on. He got these big endorsements George Lucas.
Strong, I guess exactly.
Yeah, and then all of a sudden, you know, suddenly Pelts is making this comeback at the last minute. There's all these retail investors. Yeah, Disney has been blanketing these advertisements everywhere to try and get people on board with their slate.
It could go either way.
I really think at this point the soccer is up, you know, thirty five percent this year. It's been having a great year, which you know, Eiger's made all these shareholder friendly changes, but at the same time he's been doing that with Peltz looking over his shoulder. Do you want to keep that arrangement going or do you think it's he's done enough.
I go back to the thesis I outline in the column today, which is, like, what does Pelts do next if he gets put.
On the board?
Because has done quite a lot in recent times that the tension in Florida seems to be going away. They're teaming up with Warner Brothers and Fox on the sports side of things. How has that gone down with Disney's investor base.
I think it's gone down well.
I mean, all these changes, there's not a lot of difference between what Eiger's strategy is and what Pelts has said his strategy is. They've really diverged over the past year. So at this point, I mean, the one thing I think you know is still open is the issue of succession, right, Like, what's going to happen post Iiger? Do you trust the
current board to get it right this time? I think everybody agrees the last time around the board didn't really do much due diligence to try and keep you know, iigre's succession players aren't track and do you trust Pelts to be there and put more pressure on them this summer around.
Kara Roscover was on the show last week and he said, if President Biden can run again for reelection, why can't I go do another ten years at Disney? That was one investor's thesis about what should happen next. Bloomberg's Felix Jullette. Great to have you here in the studio, and now coming up on the show, we're going to be joined by David Jones, founder and CEO of digital marketing group Brand Tech, about their new rais real quick look at
shares of Trump Media and Technology Group. We got some financials four million dollars of revenue last year, but a loss of around fifty seven million US dollars. This tock down accordingly fifteen percent. Remember this is the despack listing relevant to truth Social.
We'll keep tracking it.
This is Bloombog Technology.
Today's VC Spotlight.
Guess what we're talking general to AI, but we're talking in the marketing context here. Firm Brand Tech is with us just recently announced a Series C fundraise one hundred and fifteen million dollars here to discuss well where the funds are going and where generative AI is going. Grand Tech CEO and founder David Jones, it is great to have you here in the studio with us. David, another brit which is slowly but surely take What are you
using these funds for? How are you going to be scaling and making the most of this generative AI moment.
So we launched a company in twenty fifteen with a fundamental belief you could do all marketing better, faster and cheaper using technology and AI machine generating content. And we've sort of been on a seven eight year journey doing
that and it's just to continue that. So, you know, back in twenty sixteen, we invest in AI chatbots, in twenty seventeen, AI media planning, in twenty eighteen, AI mind twins, and then the last major acquisition was Pencil, which is the according to Fast Company, the one of the most innovative companies in the world and one of the leading JENI platforms in the world.
What we're talking about in present day is content right, which is generative AI created in other words, text to video in most cases, or text image where you're at your computer and you say, dream me up at an advertisement or another piece of marketing material based on these parameters, and if well, up, it's there, how quickly do you bring that to the marketplace.
So Pennsylvari simply aggregates all of the latest and greatest GENAI tools and you can do everything from creating insights to packshots, to TikTok posts, to YouTube videos to Instagram posts.
End to end.
It's predictive, so it will give you based on I think the one thing that's really unique about it is we have a billion dollars of media spend across five thousand brands since twenty eighteen, and we've made a million generative aiads. So that allows us to predict whether we think the content that's been created using the GENI platform is going to perform better, worse, or whether we don't
have data around that. And it's interesting people like to play with things that they don't have data on because it's I think a marketer is by definition are optimistic. So literally it's an end to end platform to allow you to create ads, and it typically does that with twice the performance, ten times faster, and somewhere between thirty and fifty percent cheaper.
As you say, you've been doing this since twenty fifteen. Now some of the bigger juggernauts, and you come from having been the I think the youngest CEO ever in the advert in the advertising space for havas well. Now it's wpp in on the act and now we're seeing some of the others coming in and spending millions to try and catch up.
In generally, what makes you beat them?
Look, I think if you look in history, it's never the big legacy business that succeeds post the revolution, you know, I think it's it's incredibly complicated to take a business of one hundred and twenty thousand people and totally change what it does. I mean, I created the company in twenty fifteen with technology at the core, machine generated and AI content at the core, and I think it's really hard.
So it's not totally impossible.
But you know, Kodak didn't win in digital photography, IBM didn't win in mobile to Nephie AOL isn't talked about too much in the Internet space, right.
How engaged are the advertisers forget the agencies and the platforms. Caroline and I've talked a lot about the proximity of a brand to It can be malicious content, it can be mislabeled content. But that's what we're talking about here. Great opportunity but also heightened risky.
So look, I think at a big picture level, like one hundred percent of the headlines today are on jen Ai in less than one percent of the content is created using it, So I think we shouldn't lose sight of that. That said, I've never seen anything in my career like this in terms of the level of brand interest.
I mean, it's literally and you know, many of the big surveys have said that, you know, over sixty percent of the global CEOs are saying it's going to impact our top and bottom line this year, not in the future.
But obviously it comes with issues.
So I think you've got this incredible interest and then it's okay, you know, what do we do about our copyright? How about data and privacy? How about bias? You know, there's a number of big issues, and in fact, when we built the pro product of Pencil, it was designed to circumnavigate all of those. But you know, it's there's a real learning curve going on for everyone, and I think you often see brands go from sort of initially
being concerned and as they understand more. I mean almost our general counsel is our kind of secret weapon in Jenai. But so, yeah, enormous interest, but also some complexities.
Talk about a GC.
You've got a new CFO, you're reportedly valued at about four billion, you're looking going public.
Look, I'm very happy being a private company at the moment.
You know.
My kind of quote on this is I look at going to many places on holiday. But it's not because I look that I always, you know, go there. Obviously it's an option in the future, but so is staying private. You know, we're profitable, high growth, we're well funded, so we'll see. You know, I think it's not something that is off the cards, but neither is it a plan.
When you file the S one we have that clip to play. Yeah, exactly, sire. We appreciate your time. That brand text. See having founder David Jones.
They see everyone has something unique about something that sets them apart.
It's just in my case, you know, it's quite obvious what that thing is. I am literally filled with pard Are. Yeah, living like this has its challenges. Windy days, for one, are particularly troublesome.
That was a clip from Airhead, a short film from Toronto based multimedia production company Shy Kids. It's one of the first short films made using open AIS Sora as sort of The director of that short film, Walter Woodman us now with more. We've covered Sora. We've talked about this in the context of the reaction to it, but water, let's start with the process. What it was like creating this short film using open AIS technology.
Yeah, it's very interesting. It's very similar to many of the processes we already use. We're animators by trade, so we still had to go through the regular steps of you know, making a script and then we would edit and animate and add sound and sound effects and things like that. The thing that really changed was most of what you see the images were generated using SORA.
So Walter talk to us about ultimately the heavy lift or lack thereof of people. The hand ringing that goes on around generative AI, particularly around creative is that it means few of you are needed.
But is that true? What was the working process like?
Yeah, I've read those Twitter comments as well, and what I would say is that without fifteen years of making films and tons of experience, I don't think that this would have happened. I think that our team is very adept at making films, and while generating the images was slightly different than normally having to go out and shoot and grab things like that, it's still a time intensive and human intensive process that requires several hands and several creatives.
For this particular project, it was more on the side of editing and animating, and I would more liken it to an animated process. However, we're currently working on a sequel and that's going to be more of a combination of live action with the actual animation, so that's more of a traditional workflow.
Well, so why did you want to do this? Why did you want to get in using SAU so quickly?
I think as filmmakers, every time you see something new, it's an opportunity to expand your creativity and expand the things that you'd like to tell the world. And for us, we see this as an opportunity to with a very cute, fun short film showing people that it's not all doom and gloom, that there's actually hope for some positivity and that this technology is not something to be scared of, but something to work with.
It is a short film about a young person with a balloon for a head, a metaphor for the fragility of human life, is my interpretation, critic ed Ludlow. But it's only one minute and twenty one seconds long, and I think is that the limitation here that you are confined to very short clips at this stage?
Walter, Well, we could put clips up to one minute. I think the thing is, though, is that you have to sort of curate what's the best, you know, ten seconds or five seconds, and the same way where you shoot everything. It took tons and tons of generations and clips to get to one minute. So in terms of making something longer, I'm not the person who's going to say this is it. It can only be one minute long.
And in fact the sequel already we're clocking in at about three or four minutes, and I think that it's a fool's errand to try to say how long these things can go for. But what I will say is that in order to get something that was cohesive for a minute, it required really, you know, sifting through the same way when you're making a documentary, you know ninety percent of what you shoot gets thrown on the floor. I would say it was a similar sort of burn rate for this.
Well to women as director over at Shy Kids, it's a great watch. Go and have a look at it. We thank you so much, looking forward to the sequel. Meanwhile, what a fascinating conversation ultimately about we had it from the advertising space. Not much doom and gloom on that jobs aren't going to be suddenly eradicated when you generatorve AI within advertising, but you're suddenly going to see your
job description change and used in different ways. And it feels as though this was pretty labor intensive even.
If you are does it allows you to be created? That b tech producer Margerie Gallery and makes the point when we played it out you have to remember those are generative AI generated images. But it's very convincing. It's real and that's the takeaway for me. But a lot of work for less than ninety seconds.
Exactly and thus far, Yes, I'm sure it gives you in a whole load of creative opportunity, whether or not there's that much efficiency as yet in making of it.
A scoop that the sequels coming and it will be four minutes long, so we're all getting back for that.
I want to know what the name is now. Meanwhile, that does it for this edition of Bloombo Technology.
Is so great to have you in the hab yeah for one week only, recap the show on the podcast. So many of you are tuning in, maybe you're commuting into Manhattan, or you're in the Bay Area listening, or you're in London or Tokyo. Thank you for listening to the podcast on Apple, Spotify, iHeart and all the Bloomberg platforms. As we said from New York's You this week, this is Bloomberg Technology
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