From Marhard where Innovation, Money and Power Collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed lud Love.
I'm Caroline heind A Bloomberg's Weld headquarters in New York, and I'm d Ludlow side by side this week.
This is Bloomberg Technology.
Coming up full ev coverage ahead. Tesla drops after deliveries fell way short of expectations. Meanwhile, Rivian beats production estimates. We'll discuss.
Plus we'll get the outlook for technology stocks after Apple posted one of its worst quarters relative to the S and P in over a decade.
And we'll take the pulse of the IPO market. That's is Microsoft bat Rubrics IPO filing shows growing revenue, still losses. Details to come, but first that's checking on these public markets. And we're having the worst day in about a month the moment on the key benchmarks. We're seeing tech in particular under pressure, off by one and a half percent on the NASDAC. This as we see once again a fear of the fact that US economy is just too strong.
The Federal Reserve is not going to be cutting rates at the market anticipated rate, and Therefore, we're likely to see just a pullback and some of these more frothier names Tenure Yield though also pushing higher on the back of the fact that we're going to see rates staying higher for longer potentially. And Bitcoin of course riscassett under pressure as we see the rest sell off we're of by more than five percent. Also we see the inflows
perhaps style back from those crucial spot bitcoin ets. But ed, there is one stock that you.
Are watching, yeah, and that is Tesla and Tesla deliveries missed expectations. In fact, that's an understatement. Tesla's deliveries three hundred and eighty eight thousand or so in the core to gone was the biggest miss against Bloomberg consensus on record. Where did we get this analysis wrong? The stock is down around five percent in the session in pre marketed fallen as much as seven percent. What are the factors
that are happening here? I want to bring in Stephanie Bauder's Streaty, director of industry Insights at Coxa Automotive and Stephanie Tesla said this is supply side related. Three factors. They diverted shipments because of the situation in the red Sea. They pause production in Berlin because of what they call an arson attack, and they relaunched a refresh Model three in Fremont, which impacted the production rum ramp. Why has that impacted deliveries to this extent?
Yeah, good afftering you, thank you so much. Yeah, Tesla's definitely the news today. We had forecasted that we're going to see decline in Q one for Tesla, And if you look at just as you mentioned, you know, they have the two models, the why you know and the US that are really like carrying them forward, but they don't have any new product recently, and hopefully with the Roadster two coming in twenty twenty six, that's going to
help them. But if you look like any automotive, new product really drives sales, and so I think for Tesla they're in that in between waves. If they've mentioned on their last call of where they had, you know, high volume products and now they're waiting to launch this new one that's going to be more affordable, which the industry
really needs. So I think Tesla has a lot of word ahead of it, and I think when they have their earnings car, I think it's going to be important for them to really lay out what that plan is to execute on that.
Stephanie Love, how you're going there on the demand side of the equation, I know you focus predominantly on the United States, and interesting we talk a lot about well some of the competition coming from Chinese makers BID in particular, and you see also show me, for example, launching a new EV where on the first day of sales online
it looks as though bookings a northern ninety thousand. When you're looking at the US demand side, how much is the competition an issue for it or is it really the supply side a lack of a new product that's the driver here.
I think it's the competition. You know, if you look at last year, it was a record year one point two pure battery electric vehicles. This year this quarter, we're expecting fifteen percent year of year. But with that, you know, Tesla as you saw is you know, we are expecting like a three point two percent year over year growth. Meanwhile, there's some other brands are going to see significant increase Q one. The results are going to come in the
next week or so, will happen or even report. But some of the other products that are going to become popular. I think are really creating more competition for Tesla, and I think that's going to continue. You know, Tesla's finally having to compete with these other brands are offering different styling product range that are competing with the Tesla models. So I think definitely that's going to be a driving factor for Tesla going forward.
Caroline, I'm just going to recap the numbers because I slightly misspoke at the top. So Tesla's first quarter deliveries were three hundred eighty six thousand, eight hundred and ten. The estimate was for four hundred and forty nine thousand. As Caroline knows, Stephanie, I was one of the people that leased a model. Why in the penultimate day of
the quarter. I did so because the incentives on offer, both those from the federal tax credit and those that Tesla did of its own accord, were just too good to pass up. Then on April the first Tesla raised prices again and they said they were going to do that. And what it's got me thinking about now that we have the first quarter number print, is there a market anymore, particularly in this country, for a forty thousand dollars to
fifty thousand dollars EV. It seems like that's gone and everyone is waiting for the twenty five thousand dollars EV to finally materialize.
Yeah, you hit on it. If you think about EV adoption, like our research consistently shows that price is one of the major barriers, along with infrastructure. And at the end of February, the average EV was fifty two thousand. If you look back two years ago, the price premium and EV was about seventeen thousand, So in February that gap
narrative about fifty five hundred. But still it's expensive, right, And so I think portability is key to adoption, and I think we're going to need some more of those vehicles that are that different price point. And I think as we start to see more used evs enter the market, that might be able to compate some of that price point barriers.
Rivian is another interesting one. They beat expectations on both production and deliveries, though they'd kind of set the bar low, which is being kind for the quarter. What you make of a name like Rivian where they offer the big, BOXYEV that Americans love. They like light truck category, they like big cars, but they seem still like a niche player.
Well, you know, any of these new entry entrants into the EV market, you know, they'struggling with you know, cash, trying to build up their brand. They don't have any ice vehicle revenue to support that. But with Rivian, I think the unveiling of the R two created a lot of energy for that brand, and I think it's going to be key if they're able to execute on that.
But that R two is going to be critical in terms of giving them entry into this high volume segment and more affordable volumes and hopefully being able to turn a profit over long term. So I think Rivian's on a good path and I think definitely that R two and veiling helped ignite some of that excitement about the brand.
Stephanie, we talk about the incentives offered from a federal perspective at the moment, is the biggest competition to an EV A hybrid, just because we're still so worried about infrastruct great question.
Yeah, I think we're going to continue to see gas hybrids increase in sale because if you think about a gas hybrid, there's nothing different. Like you said, it's the same experience as driving an ice vehicle, you don't have to worry about charging infrastructure any of that. So I think we're going to see that because it's a good
gateway as we try to navigate to full electrification. Hybrid's definitely a good option, and we'll probably start to see more plug in hybrids as well since that's a good gateway as well.
Stephanie, is policy support working in this country.
I definitely think it is. If you think about the incentives, I think that seventy five hundred dollars, as we know, with the changes in the regulation, some of them become uneligible. But I think that definitely has helped with adoption. And I think one of the things that change with the point of purchase. Now that you get that seventy five hundred a point of purchase, I think that is also attractive.
But I will say that I think the incentives are very confusing and consumers some consumers aren't aware of them and confusing what is eligible what isn't. So I think there needs to be more education around just EV's in general, around the incentives, the value of an EV, what's it like to drive an EV? That total cost of operation is going to be important as well, So I think
we have a lot of work ahead. In January, one of our key messages was for EV it's going to be the year and more so, We're going to see more sales, but we're going to see more bumps. We're going to see more incentives or price cuts. But also I think we're going to see the industry build more sales muscle and really selling these evs to that next wave of adoption.
More transparency, please, Stephanie valdezstri we thank you so much of Cox Automotive. Mean, while coming up, Erka KLA's going to be joining us PA Jim Jennison Technology FUM portfolio manager. We've got a deep dive on what's happening in the broader markets today with a big chip sell off, and she's got a keen eye on some of those names.
Ed, what are you watching, Well, let's go back to Shaomi for a second. You mentioned it. By close of play Friday, having unveiled this new EV a surprise entrance to the EV market, they had eighty nine thousand orders
ninety thousan I'm sure bigger. Now see the reaction when Asia markets opened after the holiday weekend, Really curiously there's a lot of evidence that in the Chinese market, consumers were putting down the refundable deposit and then canceling just for the prestige of saying I ordered a Gaomi and then didn't follow through with it. Interesting if it actually haven't materializes. This is bluebog technology. We took another bite
out of the Apple in the first quarter. Shares are coming off the worst quarterly performance relative to the S and P five hundred index in over a decade, with the company raising more than three hundred billion dollars of market value in twenty twenty four. The twelve percent dropped since the start of the year's paying off for short sellers, giving them an incentive to unwind their bets. Now it
could be the time to buy. That's according to technical analysts who argue Apple's flirting with levels where bottom feeding could come soon. Apple looking cheap to some of the ever megacap tech names on a relative term. The key support level to watch for one hundred and sixty five dollars a share. Will that be enough to entice you dip buyers? If you're one of them, hit me up on X, LinkedIn, Instagram, wherever social media you know where to find me, Caroline.
Meanwhile, let's just go a little bit broader than Apple and see what's been helping me the charge on the border benchmarks, and what's pulling away a little bit. P Jim Jennison, Technology Fun Portfolio Manager Erica Klaas with us. We're so pleased to welcome you back to the show. And while Apple's been having a few tough times, as has Tesla, let's just focus on where it still dines out and super microcomputer up more than two and forty
eight percent, Video is still up seventy nine percent. You're a holder of chip names. People are questioned how far they've run? Do they still have further to go?
You know, at Jennison, we always take a longer term view, and our view remains very constructive. When we look out over three five years, we still see extraordinary opportunities for penetration of AI and that is really broadening out in its applicability in industries. So we still are very constructive.
When you say broadening out, does that mean you take money off the table from the winners that we've seen the in videos that I mentioned and put it into industry groups that now benefit from AI. Or do you have to do both, our viewers, you have to do both.
There are the core experts in compute, led of course by Nvidia, which I believe is a core holding to own for a long, long period of time, and also advanced micro devices. But the very existence of parallel computer or accelerated compute is creating opportunities throughout various industries, whether it be energy, whether it be for other semiconductor companies, whether it be for healthcare. So we're really looking at a broad base of opportunities for these companies to address.
It's been really interesting in the show for probably almost two years speaking with investors who are basically ripping off the paneling of a server design and learning what's going into it. Now a name like Micron is starting to get credit at GtC, we can get into GCC and all the fantastical things that Jensen said, But he was slapping Michael Dell on the back and saying, Oh, if
you need a server, this is the guy. Is that you'll kind of approach how the compute gets built in its entirety and then work out the component providers and invest in those.
So this is such a great question because on one hand, the very essence of compute, how compute is done has changed the demand for memory. As you talk about the demand to be the demand created for distributing power, generating power, dealing with power thermal envelopes for example, are all changing and that's creating extraordinary opportunities on the infrastructure side of
the business that we're very interested in. On the other side, the actual advent of accelerated compute has applicability to everyone from smart cities to healthcare apptions. We're looking at things like drug discovery, medical imaging sequencing as being enabled by the event of accelerated compute.
Here we are and we led you to it. But we're talking about markets and the tailwind that is AI that' stop of mind. We're not talking about rates, we're not talking about concerns of global economic strength, We're not talking about geopolitical headwinds.
Why I think the interesting thing to think about is that this technology is disruptive to literally every single industry.
So while there are always going to be cyclical concerns, whether it be one specific geographic region is slowing down, or perhaps pressure of inflation or interest rates, at the end of the day, what we're seeing right now is literally every single industry being disrupted by the advent of AI, and so I think that that discussion happens not in a vacuum, but it probably drowns out to a certain extent some of the more macro concerns I want to talk.
We just mentioned that we're not talking about geopolitical tensions. I want to weave in the ongoing geopolitics that is China and US because it does affect a lot of the chip names that you hold. We're actually just getting breaking news that Hi Jinping, leader of China, and indeed Biden and President Biden have whole held phone talks. Shinoa, which is a local news organization over in China, has
been reporting this. No real details on the phone talks, and one indeed was discussed, but China's official news agency reporting that President she has spoken with President Biden of late. Now we know within that context is the fact that US has been limiting sales of US chips to China worried about the application of such technology in China. Has that worried or in any way changed your opinion on how much to go into these some names that are exposed to China and video being one of them.
So from a semiconductor equipment perspective, those US companies that sell equipment to make chips, they've also been banned from selling their most advanced equipment into China. I think that the end of the day, what that does is it forces semiconductor companies to look for locations outside of Taiwan, outside of China to build. And what we've seen is an unprecedented amount of government support around the world to build more semiconductor plants. That's a great tailwind for semiconductor
equipment for years and years to come. Later, on top of that that these semiconductor chips themselves are becoming more semiconductor equipment intensive. This is a long time tailwind for the industry going forward. On the semiconductor side, as you say, what we're finding is that where there's a will, there's
a way people want to have the compute. So it may take place in different geographic regions, but the ultimate necessity is there and driving the demand for Nvidia beyond even what we had thought three months ago.
Caroline and I have no problem talking about semi conductors all day long, but there are other things out there. I mean, we're going to talk about the rubric IPO later in the program, how do you feel about software cybersecurity. You know, there must be more opportunity out there in the world than beyond a GPU or a combination of CPU and GPE.
You know, right now, I think that there's extraordinary opportunity for apps to be developed to take advantage of this compute. And so basically what we're seeing is a scramble an incredible innovation on the software side to be able to analyze big data, being able to sort through huge amounts of data and then make sense of it so that companies can understand consumer patterns, the progression of certain of certain diseases, even modeling out how drugs may behave as
they're developing them. So the software is very, very critical in this process. Not to mention the cybersecurity is an absolutely essential part of this too, because this is at the core the companies. Whatever company is best assets, that intellectual property must be protected, and that's why cybersecurity is also seeing such a strong backdrop of demand.
Tech the data at all costs. PGM Jennison Technology Fund Portfolio Manager, Erica Cloud. It's great to have you back on the program. Thank you.
Time now for talking tech first up email musks starlink well it claims that it's rolled out of high speed internet in Italy, is being obstructed by Telecometalia, is the country's largest phone carry over There, it's possible repercussions for its services across Southern Europe and North Africa. Meanwhile, while the US is asking South Korea to adopt restrictions on semiconductor technology exports to China similar to those that Washington
has already implemented. It's another sign, of course, that the Biden administration is stepping up its efforts to thwart Beijing's chip ambitions. Meanwhile, Japan it's approved as much as three point nine billion dollars in subsidies to chip venture Rapidness. It's committing more money to it's ambition to catch up
in semiconductive manufacturing and the economy. Mister quin Salto said that the additional funding will help rapidus by chip making equipment and also develop advanced back end chip making processes.
Ed.
What if you got what a name? Catching up in chips and it's called Rapidness. Let's turn to the IPO market with Rubric, the cloud and data security startup backed by Microsoft, filing for an IPO, with size and price of the company's plan share sale to be disclosed in a later filing. But the person that broke the story first time around, Bloomber's Katie Roof, joins us. Now, I think this is an IPO in the technology space based
in Palo Alto, well known back by Microsoft. We care about it to us, the banks tell us the size and scope of this one.
Sure, yeah, no, we've been We've been looking into this one for a while. They were supposed to go public last fall and then they delayed it. And I broke last week that the filing was coming any day now and it came. So yeah, this is one that's backed by light Speed in Greylock. They have both were the top shareholders and the filing, as you mentioned, they're also backed by Microsoft.
There's a lot of interest in this one.
It's only the second enterprise software company to go public since twenty twenty one. We had Klavo last fall and now we have Rubric. This one is of course very different. This is data security, but they have you know, large enterprise clients. They have clients like Goldman Sachs, and then they also have you know, public sector clients like the State of Utah, they have a pretty wide list of clients, and you know, they're going to be testing the market to see how things are.
And the market has to digest the fact that it's still lost.
Making right, it is losing money.
But as Jason Lempkin, a top software enterprise software venture capitalists pointed out on Twitter, it's ARR is growing significantly the annual recurring revenue. This is a metric that enterprise software investors care a lot about because it suggests that that the customers are, you know, renewing their contracts and that they're going to continue to get more customers, that they have a high retention rate.
So you know, depending on what you look at.
You know, if you care about profitability, no, Rubric is not profitable and their revenue overall revenue is actually growing pretty slowly, but you know ARR is up significantly.
Well okay too, We thank you for some of the devil in the detail that got released last night. Welcome back to me in my Technology.
I'm Caroline High and I'm ed Lovelow. This week in New York City, the story of the markets, at least in this session is strong economic data around the world, pushing us to believe that central banks all around the world will keep rates elevated for longer. That's kind of the story. You see Bitcoin participating in this risk off mode alongside the Nasdaq one hundred. The kind of individual story we've been talking about all day is Tesla. It's
down five point five percent. That will have a big points drag on the major indices, including the S and P five hundred and Frankly, this was the worst deliveries missed for Tesla on record relative to the consensus. You've got to go all the way back to the end of twenty twenty two for the last time they delivered vehicles at that kind of three hundred and fifty thousand mark. It was three eight six this time. Rivian also lower,
even though it beat expectations. All in all, higher rates seems to be the story around the world of technology right now.
Meanwhile, we would just want to return to some of that breaking news we had earlier. Bloomberg has indeed confirmed with the White House that President she of China and President Biden of the United States had a phone call. It has indeed concluded, and indeed it's the first time that they've been talking directly since November when they met in California. Remember, now there's a whole laundry list of
things they could be talking about. We understand from our perspective here on the Technology show, there's going to be a lot about cyber a lot about AI. There's also going to be, of course, from what we understand's being made on discussions around fentanyl and particular, yes, President was expected to urge more efforts to combat fentanyl and of course its approach here into the United States. China's corporation is also being sought on a multitude of geopolitical concerns
Ukrainian war, of course, Middle East thermol in particular. So we understand after these particular communications, these are what are
being discussed and being in particular focused on. But we'll have a lot more for you in a moment as to what exactly was being discussed on the AI and cyberfront as well, not to mention chips, But for now, let's return to an interesting story for an investor perspective, because Do Not Pay as an artificial intelligence company that offers online legal services, to become one of the first private venture backed companies to pay dividend to those shareholders.
It's all because basically it's profitable. What else is going to be doing with its money. It's actually got more money than it raised from these VC names. Let's talk about it. Which Joshua Browder do not pay CEO and Joshua why give money back to investors? I feel that's a very unknown thing to do in the world of VC backed companies.
I think investors and employee is are tired of money losing companies. And we're in a really interesting time right now where AI means you can build big businesses with very few staff. So in our case, we only have seven employees and seven contractors, but hundreds of thousands of paying customers, and so we want to build a big business. But we also realize that the purpose of a company is to do well by at stakeholders, and it's nice to give some money back to our earliest believers.
What does that look like? Give me size and scope on the divv and if you have more money in the bank and profit then you raise from vcs, give me those numbers as well.
Yes, so the dividend, our Q one dividend was in the middle seven figure range. Do not pay as a whole has raised twenty four million in total, so it's quite a sizable portion of what we raised that we have in profits every year, and we're not resting on our laurels. We're thinking big. Sam Altman said that there can be a billion dollar company with just one employee, and we don't think we're close to being there yet.
We as I mentioned, we have seven employees. But with AI, you see companies like Klana where they've replaced sixty percent of their customer service workload with AI, companies like mid Journey where they have hundreds of millions of revenue and only under twenty employees. So that's really what we're inspiring to be too.
Let's just talk about the models you mentioned sam Altman. There, how is do not pay built ultimately? When you're using AI to negotiate some of these contracts and money off for users? Are you underpinned by open AI or you agnostic?
We use open AI. I started the company seven years ago when I got a bunch of parking tickets and I realized, if you know the right things to say, you can use templates to get out of them. But in the AI era, it feels like we can build much more exciting products. One thing I'm really excited about is AI build and gootiation, which we just launched right. We have robots log into people's utility accounts and start chatting with the big companies. And what's interesting is the
big companies that use AI. We use AI and the two ais are chatting to negotiate.
Hey, Josh, you've been coming on the show for a little while now. As we always point out to our audience, you are not a lawyer. But basically the original premise of Do Not Pay was to use an automated service to challenge everything from sort of parking fines to build disputes. How is the business growing? Give me kind of volumes numbers around bills that have been successfully negotiated on do not Pay? How many of your proceedings have gone onwards to court? For example?
So do not Pay us all about helping people jump through hoops that they don't have time to jump through. So no one has time to wait on hold for four hours to save twelve dollars. So a lot of these cases, the squeaky will gets the grease and they don't go to court. We just send these letters to these companies and you get the refund one over a million tasks and cases for our customers over the past seven years, do not pay CEO Joshua Browder, great to
catch up on the program. Let's get right back to that breaking news. President g of China, President Biden of the United States, we've had a phone call. The calls concluded, according to the White House, they spoke Tuesday, the first one on one communication since meeting in California last November. Bloomberg's end of Current in Washington, DC with the details. This is Bloomberg Technology, so there was an element of
this conversation about the technology sector. What is the must know about the conversation between President Biden and President G.
Well, as you say, first of all, the first time they've had a one on one since November. The White House briefing suggesting it's kind of a progress check in in terms of where things have gone since then. The main points coming from our colleagues at the White House is that they spoke about the counter and narcotics trade. Of course, that's the topic of fentanyl, which is central
to what both presidents have been discussing. And then there was a broader discussion around China's role in playing for stability in the Middle East using its leverage there, and of course Chinna's role when it comes to the war in Ukraine. Now, the whole broader point of this call speaks to the idea that both sides are continuing to
try and stabilize relations. There are areas of cooperation, for example in AI as you mentioned there, but the focus of the call in terms of the details so far seems to have been both on security and on the counter narcotics trade.
And there's a whole list of things that they could have talked about that perhaps would have more ramifications on the economies as well. I mean, you say that they're working to try and find at least well security and guard rails around AI. But at the moment we were just talking how at the moment that the US is leaning on South Korea to stop them exporting so much of their chip equipment and technology to China. How much is technology at the heart of a conversation here or not.
Oh, it's very much the elephant in the room. As you say, the coal is about stabilizing relations, but that does not mean the competitive strategic ages has gone away. And of course the point being there, export controls, investment controls, the race for the US to get back in the game in terms of chip production and EV production and everything else. None of that has been changed or will be changed by this phone call or any other. This
is about basic communications. Remember it was only a year ago. Actually, there were no communications between the two governments after the balloon incident. So it's just all about getting the basic guard rails in place. Don't forget Treasure sector Yellen of course among the officials going to Beijing. So no major progress from this. The technology race story hasn't changed. It's just about keeping things on an even keel.
Diplomacy at the heart of it. And to Karen, thank you so much for bringing us the latest on that She Biden conversation coming up. That we're going to go back to the private sector world for a moment. Atomico partner Laura Cannell's going to be joining us. What Atomico's investment outlook is whether they've been pacing their bets. She's got real expertise in artificial intelligence. This is bloomg technology.
Tiger Global gathered about two point two billion for its latest VC fund. But here's the thing. It was well short of its six billion dollar target, and it's the smallest fundraising hall in roughly a decade. That's according to Bloomberg sources. Let's bring in Bloomberg Tamapalma, who broke that story. When I think about the raises they've done, the affectionately known pips, they've had no problem in the past, they had a problem this time.
They had a problem this time. And admittedly it's a very difficult fundraising environment. But this is certainly a pivot from the way we think of Tiger Global and their epic fundraisers in the past. Their last fundrais was thirteen billion, nearly thirteen billion dollars big. Every fund has been essentially bigger than the one before, So this is the first time that a Tiger fund has not raised more than its predecessor.
This comes in the context of some bets that went bad.
Yes, a number of things. Some of the bets haven't been working well. They've been marking stuff down the environment. A lot of funds, venture funds have been feeling marked downs. A lot you're seeing when it comes to allocators to these funds, in some ways their hands are tied because private equity has been slow to give back distributions, so they have fewer dollars to put to work. And then venture has been challenging, as you're well aware, so it's been a tougher space.
You mean, the fundraising environment generally for all firms. I mean, this story was incredibly well read, and one reason it's cool is you kind of get some insight into what's happening at Tiger Global. There's insider money, there's the LPs that are external, there's pressure from all sides. Just give us the juicy gos.
Yes, so the juicy gos. So essentially, when we look at the history the past few funds that Tiger has raised, insiders have given about ten percent of the assets. We're seeing with this fund is that insiders are actually forking up about twenty percent of internal assets for this fund, so twenty.
Percent of fund raised assets.
So what that means is the money they've raised from outside investors is less than two billion dollars and they're putting up more of their own cash.
Typically.
I will say though, that Tiger insiders do make up the biggest investors and traditionally most of their funds.
Well, it's about aligning in terms of your end goals. I'm sure Hamma Palmer is a brilliant scoop came out late yesterday, Miss Police, she joins us today on it. Meanwhile, let's just stick with well the venture funding environment, how hard it is when the money's being allocated. If you've already raised VC spotlight time with Laura Connells, she's partner at Atomico, currently holds four point five billion dollars in assets under management, and in fact you've been allocating some
of that money. You recently led a fifty eight million dollars Series C funding for a telehealth company called Plago, and this is about cognitive behavioral therapy to help treat addiction. It's really interesting you come on this moment, Laura, where we've just heard that there's a conversation at the highest levels between President she and A and Biden about Fentanel so emotive, so high on a political agenda, health agenda for many, Why is telehealth the right thing to back? Absolutely?
Look, as you've said, it's a hugely emotive and hot topic going into these US elections. Also, and quite rightly, unfortunately, substance use management is an area that continues to be poorly served and so one of the things that we spent a lot of time figuring out was what the right type of solution was, and we found it with
a Palago team. We were lucky enough to back an exceptional team there of initially a clinician led team founded in the UK that relocated to the US, which really set out to address broad based substance use disorder management, so anything from tobacco and alcohol to opioids. And what we found is that the optimal solution, and what they found was the optimal solution was this combination of CBT
and digital content together with medication assisted treatment. Now, the most important thing about it is for it to be clinically validated with clear ROI from an employer perspective, and I think, just to throw a couple of stats out, you know, it's estimated that at least one individual there's one individual in every American family currently suffering from some kind of addiction, which is a shocking number. Around seventy
percent of those individuals are still in the workforce. Around ten percent of the total workforce self reports a substance use disorder or addiction, and only one percent of the total workforce currently has access to clinically validated treatment. So you know, the numbers are shocking. The total estimated direct cost of substance use disorders is around thirty five billion dollars in the US, and that's only the direct cost
in terms of healthcare incremental healthcare costs. So you know, to say that we're in urgent need of better solutions is an understatement.
Now, it's interesting that you are finding this particular case to want to back. I mean, you're someone who has a lot of expertise in the field of allocating towards artificial intelligence, the hot topic, and at the moment, I'm sure in many ways this is AI driven, But I'm interested as to what the competitive landscape was to allocate to a company like Peleego or any company right now. Are you finding that there's a tougher time to be writing checks? Is it is a too much competition?
Yes, it's a It's been really interesting to watch this market, to be in the market, particularly over the last couple of years. You know, what I think we can we can say about it safely say is that there's been a lot of later stage capital, be it corporate, corporate, venture investors, or perhaps a non specialist venture investors, including family officers, that were very active in the market in twenty twenty one and early twenty twenty two and that
have cleared out of the market. Now that's not to say that competition has decreased. In fact, you know that reduction in capital supply has also been met by you know, a smaller pool of very high quality companies coming to market. You know a lot of companies that perhaps have struggled more not coming out to market to avoid getting priced.
And so for the very high quality opportunities, it's still it's still pretty competitive, you know, as it should be, and I think it's no bad thing for for investors also to be to be forced to kind of show their wares and the kind of value aad they can provide. I think the last thing to say about that is that, you know, given the cost of capital has increased to the to which it has in the last couple of years, you know firms that can actually help founders avoid mistakes
and who understand the shortcuts. Eye you have a growth acceleration teams or big operating platforms and expertise that has very meaningful incremental cost saving or indeed revenue uplift that we can provide with less of the burn. So I think an all round more discriminating market in principle. Of course, there are a few areas where hype is notable, as you've already discussed several times in your show today.
So how do you discern hype from real You know, I've been going to a lot of these hackathons where venture partners are getting hands on with, even at the code level, a piece of software before they're investing. Did you do that with play Goo as an example?
Yeah?
So, Look, I mean I think Pelago in particular is an example of you know, having deep expertise and a right to win in a given sector. So here in particular, you know this team of ex clinicians who have the medical knowledge and expertise and then can combine that with
commercial new and technical sophistication. But the more general point, the more general question you're asking around how we get comfortable in AI in a market that's moving this quickly, is that we really have a deep pool of technical talent and experts that we also lean on to help us stay up to date and so that we're moving in our understanding at least as quickly, as are the
best founders. But you know, that's one of the one of the tough challenges in this market, that there is so much noise, and so I think the best defense against this is really just to be you know, to have the humility to know that often, you know, people and investors can grossly overestimate near term performance and underestimate
a long term potential value creation. So in summary, I would say, take, we're trying to take our time investing, we lean on the experts, and we have a big dose of humility here as we invest.
Laura, what's the direction of travel right now? Are you chasing after potential portfolio companies or is your desk just piled high with pitch decks.
Yeah. Look, I think the best part of the job is speaking to fantastic, exceptional founders who are trying to build incredible companies. So look, we still get a huge amount of inbound and that really is as I said, you know, the best part of my day. So look, there are two parts to two parts of the job
that we stay focused on. One, of course, is staying as close as we possibly can to the founders that we've backed and to be true partners to them and that does require a lot of time and commitment and effort, of course, particularly in this trickier macro environment. But of course, you know, we're constantly sourcing, constantly speaking, two people we think are going to be the next leaders in whatever market they're operating in.
And Tomoko of course borne out of the wealth from Skype and a real pin up in the European area. I'm interested as to the companies you're backing. Are the European based you just mentioned how well the one we're just the telehealth company moved to the US.
Yeah.
Absolutely.
You know, one of the things we do as a firm is we release every year the State of European Tech Report, which is the kind of the industry standard report for all the activity in European tech. And what's been really interesting is if you take something like AI for example, you know that really is a paradigm shift in technology. Around thirty three percent of total funding last year in AIML went to European based companies, and so we really believe in the European opportunity. I mean that
was really the genesis of our founding. When Nicholas Enstrob founded Atomico, it was on the premise the best founders can come from anywhere and if the leading indicase that is in terms of funding or anything to go by at the early stage. You know, we fully expect that we're going to have an absolutely extraordinary generation of European based founders. So we are focused on you know, Europe as the home called advantage, but we also recognize that
we want to stay. We want to keep the optionality to invest on a global basis as well.
Tom a co partner Laura Connor, is great to have some time with you out of London. Appreciate it. Another story we're going to bring you real quick. Social commerce startup Flip, an online marketplace featuring product review videos made by shoppers, has raised one hundred and forty four million dollars in fresh funding. Is It seeks to take on
the likes of Amazon and TikTok. Led by Streamline Ventures, the funding round brings flips valuation to one point zero five billion dollars, and it includes a fifty million dollar investment from advertising software firm at Loving. That's according to the companies.
It has been going viral. Google says it will delete millions of records of users browsing activities and as part of a settlement of a class action lawsuit. Now. The lawsuit alleged it tracked people without their knowledge was filed back in twenty twenty, and it says the company tracked people using incognito browsing mode. That function basically let's users turn off data collection when using the Chrome browser, but other Google tools used, like websites, like advertising technologies scoop
still the data up. Anyhow, It's all according to the suit now. A Google spokesperson said that we are pleased to settle this lawsuit, which we always believed was meritless and some more.
Yes. So the other story we're tracking is what's happening with Disney. Disney looks set to conclude a showdown over the composition of its board. The Wall Street Journal reporting overnight that the company is leading in its proxy battle against billionaire activist investor Nelson Pelts. That's with around half of the votes counted. An investor can change their vote at any time. But the latest name, having got the backing of the force from George Lucas and Jamie Diamond,
is black Rock. We have a four point two percent stake almost ten billion dollars of Disney stock.
Important, t WRO Price another key name. But look, there's not without some key names that are currently betting on the other side of things and wanting to see Pelts come to the board or indeed the previous CFO. All of this really could go to the wire. It feels like yes, and ultimately what does that mean for the key concern is long term succession planning for Bob byger Well, if he does lose this quote unquote battle and we do see Pelts join the board, is he going to
stick around? That's a key question as to how quickly they have to consider some succession.
Again, as I wrote about earlier this week, if Pelts is successful, which looks unlikely at this stage, how does he change anything. I don't see many proposals.
We'll see overall, how the votes still add up. And if I get any more ads asking me to do so, I'm going to go completely stir crazy. But that does it for this edition of Bloomog Technology.
Recap the show on the podcast, it was a pretty big show, heavy ev theme chips, global politics, on Apple, Spotify, iHeart, and all of the Bloomberg platforms. From New York City, this week, this is Bloomberg Technology