We're from Marhart where innovation, money and power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde.
And Ed Ludlove.
I met Ludlow in San Francisco. Caroline Hyde is off. This is Bloomberg Technology. Coming up, we have full coverage of the first presidential debate and discuss the state of crypto with former Republican presidential hopeful Vivek Ramaswami. Plus we'll break down Apple's business in China as iPhone shipments jump forty percent following discounts, and a new survey shows Tesla's design changes are confusing customers and undercutting its quality. Will
discuss that and so much more through the hour. Happy Friday, June twenty eighth, twenty twenty four, Let's get right to financial monde markets. The S and P five hundred and new all time high, the NASDAK one hundred, a new all time high, briefly breaching the twenty thousand mark for the first time, yields a little higher, and Bitcoin, even though we kind of have this risk on, sentiment softer by a percentage point below sixty one thousand US dollars
per token. The main factor in the markets this morning is not the first presidential debate, but the PCE reading decelerating, the PCE being the Fed's preferred gauge or measure of inflation. That's kind of the discussion on the week. I also want to take a look at one specific name in the context of what we are about to talk about, which is the presidential debates, and that is Trump Media and Technology Group. This morning, we actually traded significantly higher,
maybe more than three and a half percent. You see that we're now down six tenths of a percent. This is, of course the parent company, a true social that a company went public via a spack with ownership ties to Donald Trump. We will get to this in due course, but for now, let's get a recap of the first presidential debate hosted by CNN that took place in Atlanta last night.
There's more to be done. There's more to be done. Working class people are still in trouble.
He has not done a good job, He's done a poor job. And inflation's killing our country. It is absolutely killing us.
Price of eggs, the price of gas, the price of housing, the price of a whole range of things. That's why I'm working so hard to make sure I deal with those problems. I was recently in France for D Day and I spoke to all about those heroes that died. I went to the World War II cemetery, World War One cemetery. He refused to go to. He was standing with his four star general and he told me, said, I don't want to go in there because they're a bunch of losers and suckers. My son was not a loser,
was not a sucker. You're the sucker. You're the loser.
There's nobody that's taken better care of our soldiers than I have. The money that we're spending on this war, we shouldn't be spending. It should have never happened. I will have that war settled between Putin and Zelensky as president elect before I take office on January twentieth. I'll have that war settled. If we had a real president, the president that knew that was respected by Putin, he
would have never he would have never invaded Ukraine. Israel would have never been invaded in a million years by Hamas. You know why, because Iran was broke with me. I wouldn't let anybody do business with him.
Everyone from the United Nations Security Security Council straight through to the G seven to the Israelis and Netnaw himself have endorsed a plan. The only one who wants the war to continue is Hamas under Roe v.
Wade, you have late term abortion, you can do whatever you want. Depending on the state, you can do whatever you want. We don't think that's a good thing. We think it's a radical thing. We think the Democrats of the radicals, not the Republicans.
It's been a terrible thing, what you've done. The fact is that the vast majority of consuls and scholars support ROW when it was decided support it ROW, and that was that's this idea that they are all against. It is just ridiculous. This guy's three years younger and a lot less competent.
Well, I took two tests, cognitive tests. I ast them.
I just won two club championships.
Bloomberg's Kaye Lines joins us with more from DC and Kaylee, I just want to read you the headline of the most read story on Bloomberg this morning, Biden's disastrous debate accelerates doubts over candidacy. Let's start with how poorly Biden is perceived to have performed relative to Trump in that.
Debate incredibly poorly.
Edin you have bipartisan lawmaker's political strategists saying that this morning Joe Biden, at eighty one years old, very much showed that he is an octogenarian president. The White House has now said that he was battling a cold, but his voice was raspy at times, his speech was halting, He took many long pauses, misstated facts, at one point actually saying that he beat medicare dis not adequately articulating his own policy in many instances, which gave Donald Trump
many openings to attack him. Donald Trump, for his part, seemed much more energetic focused, uncharacteristically so perhaps for the Donald Trump that we typically see at campaign rallies, working within the format of this debate, which of course was Mike's cut off when it was not your turn to speak, lack of a live studio audience. Things that the prevailing notion was might help Biden more going into the debate actually turned out to potentially be advantageous to Donald Trump.
That said, Donald Trump did lie repeatedly throughout this debate on things like economic statistics under his administration, like the lowest black unemployment rate of all time that actually happened during the Biden administration. He said that tariffs would not cause higher inflation, something that almost every single economist.
We speak to would dispute.
He also said that he didn't say things that he has said on tape right again about the outcome of the twenty twenty election, and yet was not fact checked by the moderators and was struggling Joe Biden struggling to fact check him himself. He repeatedly called him out for lying many times, but then could not articulate what the
actual truth of the matter was. So all in all, it was a very difficult night for Joe Biden, and there is a lot of talk here in Washington this morning, including from those within the Democratic Party, as to whether or not he can actually go forward as the nominee.
The placement of the debate, as well as the words Joe Biden on Google trends, for example, is interesting. Unsurprisingly, all of the names involved are trending on x, the platform formerly known as Twitter.
We've woken up to.
A world this morning, perhaps different to what we expected, where we are debating President Trump's candidacy and what might happen next. It's a long way to go to the next debate in September ahead of the election in November.
What are you hearing in Washington, d C.
Well, there is this idea that considering this was a very early debate, this happened in June before either Trump or Biden are officially their party's nominees. At this point, they're still just presumptive nominees. There is a question of when we get to that Democratic Convention in Chicago as to whether or not it might be an open convention. Of course, that is his decision only President Biden is able to make. He already has had the adequate number
of delegates to secure the nomination pledged to him. They have to remain so unless he decides to drop out of the race and direct them to cast their votes for someone else. Of course, that is a decision that the President those close to him, including the First Lady
Joe Biden, will have to make. But that is a very real conversation that is happening here in Washington, and was happening in Atlanta last night, where a number of the surrogates that were there in the spin room for the Biden campaign included those who potentially the prevailing thought is could be someone who is the nominee instead of him, like California Governor Gavin Newsom, who was swarmed when he
hit the spin room floor after the debate. Now, he did say Joe Biden is going to be the nominee that he has as full backing. Other potentials like Michigan Governor Gretchen Whitmanner have said the same within the last twenty four hours. But it certainly is a great difficulty that the Democratic Party at largest space as they struggle with this idea that Donald Trump does seem now to be even farther ahead in this race, if betting markets are to be believed, than he was heading in.
To this debate.
Finally, Kayley, and quickly, you know what I see on social media, beyond the memes and endless clips that have been shared, is a frustration from American voters that they didn't learn anything. There was actually no answer to many of the questions posed from a policy or platform perspective. Going into a presidential election campaign.
No frequently, and they did not answer the questions that were directed at them at all, instead pivoting to entirely different subjects. Certainly you saw social media in a tizzy not even fifteen minutes into this debate, many Democrats expressing exasperation with the performance of Joe Biden, but many others still calling into question how the US ended up with these two as candidates. We know that voters are very
unhappy with these choices. They are hoping for any other choice, which is why you are seeing other third party camp and it's like RFK Junior gaining more support. But certainly there is a lot of frustration among the voting populace as to what they saw last night. And I would just point out when voters wanted to hear about the issues, even issues that Joe Biden, what we understood from his campaign, were planning to drive home on hit Donald Trump hard
on like abortion or democracy. Many of those moments were missed. At one point, when he was talking about abortion, it spiraled into a story about immigration and a woman who had been murdering. It got very confusing at times. It was really difficult for policy to break through for either
of these candidates at all. And of course, even under direct questioning, Donald Trump was asked repeatedly if he would accept the results of this election, no matter what the outcome was, and he would not give a straight yes or no answer.
Bloombo's Katie lyones out of Washington, d C. A late night for you. Grateful to have you with us on Bloomberg Technology. Surprise for many to the world we woke up to this morning. But we'll keep the conversation going because coming up we will be joined by former Republican presidential candidate Vivek Ramaswami for his take on last night's presidential debate. Bloomberg has reporting that mister Ramaswami is close to Trump and the Trump team and advising on some
areas of tech policy. That's the conversation we're going to have. This is Bloomberg Technology. Let's break down the presidential debate from last night with Vivek Ramaswami, a former Republican candidate himself. He joins me now from Atlanta. Mister Ramaswami, Good morning
to you this Morningberg Technology. We're a technology show and I've wanted to ask you to come on following the debate because of your background, because of the reporting of your relationship with former President Trump and the Trump campaign team. But we should talk about last night so the floor is yours.
Your reaction to that debate, Well, look, I was.
In Atlanta last night, got back to my home in Columbus today, and after sleeping on it, my conclusion is the same as what we saw last night, which is this was sad for the United States of America to see the current President, Joe Biden in the mental state that is actually in. There was a lot of joking about drug testing or were they going to drug him up?
It looked more like he had a lobotomy, and I just think that that's a sad thing, speaking as an American, regardless of partisanship, when you think about the country that has produced the greatness of innovation and the leaders leading companies in the private sector. To see the person who's leading the federal government himself be as absent as he was yesterday, I think is really a damning indictment of the modern Democratic Party now the president.
Yep, mister Ramswami, may I just jump in, and it's interesting that that you ran as a president's candidate for the Republican Party. You're representing former President Trump, but you started by speaking about President Biden's performance.
Any of frustrated this morning.
That we actually didn't hear any answers to the questions posed to former President Trump about what he would do if re elected, what some of his policy platforms were. What did you learn about what former President Trump might do were he to be re elected to the White House.
Well, he asked me about my impressions. And I think the number one most salient thing about the debate for anybody who watched it was in needed the surprise of Biden's performance, which is why I commented on it in response to your question. But I agree with you it's much more productive to talk about the policy vision of the man who's likely to be the next president, which is Donald Trump. And I think one of the things we took away from yesterday was talking about the revival
of American success and a focus on the economy. The fact of the matter is President Trump, I think demonstrated that despite being a member of a different economic class than most Americans as a billionaire, he is still somebody who understands prices have gone up but wages have remained flat. And I think that part really landed. I wish the debate had gone into greater depth on policy. Frankly, if Biden had shown up with great mental acuity. We might
have had that opportunity. In many cases, the things he said were incoherent. That stopped that debate for me as useful as it could. But what do we learn last night and then the combination of recent speeches that President Trump has given. Economic growth is a core objective for Donald Trump. That's not a left leaning message or a right leaning message. Economic growth is an inherent and worthy objective.
From bringing down the tax burden, to the regulatory burden, to drilling for oil and natural gas and increasing the supply of energy to bring down costs. Those are core issues that I think matter not only to business owners and economically minded voters. It's a factor that matters to all voters. And that was one of the more powerful things that came out of last night was the discussion about the economy and the economic vision for the next four years.
Mister Remeswome, may I just point out what you said on prices and also wage inflation. You said prices have gone up, what wages have remained flat? That is no longer true. If you look today. We saw inflation in May down fractionally almost company to be ages we're up seven tenths of a percent. I just want to get the latest dates me out. Let me just comment on that in direct response to you. So your numbers, guy, I like that, as you well know.
I believe you well know. Inflation is accumulative, right, So that is the inflation rate.
But inflation over.
The course of the last several years. You want to look at actual mini consumer goods and products are up by over fifty percent since the time Biden took office. How much does a carton of egg cost? How much does a car cost? How much is your electric bill? Those are undoubtedly higher than when Joe Biden took office, and it is a hard fact that wages have not gone up at the same rate. So I don't want to play this verbal jiu jitsu of the last month's numbers.
If you want to get into facts, I'm all in favor of it. Those are the hard, indisputable facts, and we don't have to argue the facts because most Americans who pay those bills already have a deep understanding of that. And I do think that is going to be a guiding force in what we see this November.
Mister Ramasami, you and I both agreed on one thing, which is that we will talk about technology and policy from it from a technology standpoint. You mentioned energy and oil in particular. One of the things that I reported was that you act as almost in intermediary between former President Trump and Elon Musk, and it seems as if the former president in Elon Musk are now speaking.
Or at least have spoken.
Where do you see them finding middle ground and an influence if former President Trump were to return to the White House.
I respect the two of them individually, both as people who have succeeded in this country through the private sector. I think we all share a belief, all three of us, that we need more of those voices in American politics driving change, not as professional politicians, but people who look at political problems through the lens of an entrepreneur and a business leader objectively. And so I think that that's a common cause that I would say is formIn basis
for the friendship with both of them. The reality is one of the things that we're all rooting for as well, is not only an economic revitalization of the US, but a revitalization of innovation in the United States of America. I think we have seen a decline in the rate
of innovation in the US. But that is ultimately our competitive advantage in the end is the ultimate innovation and the innovative spark of starting the greatest companies known to mankind, generally here in the United States, which then has collateral benefits of creating jobs and creating wealth. But it's also
the founding spark of American exceptionalism. Right Our founding fathers were the likes of Thomas Jefferson, who not only wrote the Declaration of Independence, he also invented the swivel chair and the polygraph test. Benjamin Franklin. I think of Elon Musk as a modern Benjamin Franklin type of figure. Invented the lightning rod and the Franklin stove. Yet these were also the people who led the country politically and set it into motion. So I think we have a chance
to revive that seventeen seventy six kind of spirit. And I think there's a role for a modern Washington, a modern Jefferson, a modern Benjamin Franklin. I think in many ways Donald Trump is stepping up to be the modern George Washington of our time. Elon Musk reminds me of the Benjamin Franklins of their day, and so I think we found different common cars in our love of this
country to revitalize that founding spirit. Even though each of us have had our own successes separately in the private sector. And I'm biased, but I'm of the view that we need actually more of those people stepping up to play different roles in defining the future of our politics in America.
Mister Ramaswami, can I ask just very quickly, is as a matter of checking, have you spoken to the former president since last night?
I haven't spoken to him since last night. No.
The reason I ask is about your role with him directly and also his team. You know, one of the areas of reporting of focuses been discussions you may have had with him around crypto and the role that crypto may play if former President Trump returned to the White House. Could you tell me a bit about that and the conversations that you've had someone that.
Started actually after I left the race. I left the race after the Iowa caucus, but before the New Hampshire primary, and I could tell you one part that was sort of totally public on that stage was in New Hampshire began my conversations with Donald trum about why in my campaign I had been opposed to a central bank digital currency a CBDC. And one of the things that impressed me about President Trump was his intellectual curiosity about that issue.
I've met a lot of politicians, including Republicans, who have heard the vague acronym CBDC, but don't know the first thing about what it actually means, but they pretend like they do. Donald Trump was the opposite of that. He actually said, what the heck is that? Tell me what it is? And then he asked me what are the best arguments for why they're actually supporting it? And I thought that was a mark of a good leader who wanted to understand the best arguments for the other side.
And later on he said it from the campaign stage and an event, so I feel comfortable sharing this part of it where he came out then after a thoughtful consideration, after careful study of the issue of his opposition to a central bank digital currency, and he explained why it's
the threat to liberty. The flip side of that is why you might favor decentralization and alternative options from people just staying tethered to the dollar of holding the FED accountable by having other options in the marketplace of alternative currency. So I think there's been a number of productive conversations he and I have had. And one of the things that I look at this for is it's not a sector.
I don't look at cryptocurrency as a sector. To the contrary, I look at the first principles of the United States of America, founded on competition and choice and financial freedom, and I think those principles are certainly what motivated my interest in these issues in the campaign, and I think that's what's also helped a lot of my conversation with the President Trump is let's start with first principles of what's right for America, not what's good for one sector
or another. But then let's adopt the kinds of policies that actually allow America to remain the beachhead of innovation rather than playing from behind.
Mister Rameswami, just one item on the idea, the president has to block anything or anyone from doing CBDC. I think the FED is said clearly many times that it's not going to introduce one unless mandated by Congress. Now that that's the Fed's position on that, I want a little about.
And just since we're closing the loop on that, Jennet Yellen has certainly stood for her advocacy and Executive Raffan sponsors legislation that goes through Congress. That's other things work in Washington, DC. But I do think it's good to have a president, one way or another that's clear about his position, and I think that Donald Trump adopted the right position in his clarity.
I would like to talk about artificial intelligence, and I appreciate that this was not a question posed last night, but any of the policy questions posed weren't really answered by either participant. But when former President Trump was in office, we weren't talking about the idea of an existential threat from a large language model in the many hundreds of billions of parameters. We weren't talking about the need to regulate AI. So former President Trump doesn't have the experience
of that. But do you think that he has the sort of academic study enough or he's thought about it, because going into office, if he were to regain the White House would be an issue to consider.
I do wish this had been a topic both at that debate and even in the Republican primary debates. Where this issue did not come up once as well, even though I suggested it many times. It's an important issue for the future, and it falls outside of traditional partisan boundaries, So I'm glad you're bringing it up. Is President Trump going to claim to be a domain expert in AI
or something that he's not a domain expert in? Knowing that's what I love about him, But I think he's going to be able to attrack the best minds around him to set rational policy that at once allows the US to be a leader in innovation while at the same time acknowledging a different kind of risk than we've
faced in the past from different types of generative AI. Personally, one of the things that I think makes a lot of sense as a first step rather than creating some sort of central government bureaucracy to handle this, is just treat it the same way you treat other sectors. Just in the same way that you're a chemicals manufacturer and
you can't dump in somebody else's river. If you're the developer of a protocol or an algorithm that has unpredictable but nonetheless realized negative effects, that you're liable for those effects. Basic principles of the law that we already use elsewhere, but to use them in this new domain. Well, and what I have seen from President Trump, it's the same question that came up even in the last topic we discussed.
Is a level of intellectual curiosity somebody who has been an executive, somebody who, unlike Joe Biden frankly, from seeing what we saw last night, is still intellectually with it enough to be able to go deep on the details, attract the best people, and make the rational policy decision. Not in an ideological or ideologue driven manner when it comes to AI, but in a manner that is driven by our actual understanding of the facts. And so I do have confidence in his ability to lead here.
Mister Ramaswami, I'm sorry instructs you a shorter time, and I want to make the most of it. Have you been asked to submit documentation for vetting for a potential cabinet position in the event of a Trump White House.
We've got a lot of conversations about the future. I've not been asked to be the vice president, but whatever it is, I'm going to look at what maximizes the impact on the country and how we make sure that second Trump term is as good as it possibly can be, and I am hopeful that we're going to see the strongest ticket not just of the century, but of my lifetime. I think after last night, we have a unique opportunity in this country for this not to just be a
fifty point one election. We've had a lot of thin margin, thin ice elections. This could be a Reagan nineteen eighty nineteen eighty four style landslide, remixing minorities, Hispanics, Blacks, young people, creating a new coalition in this country that's pro American and goes beyond the boundaries of the traditional Republican Party, whilst from those America First principles that Trump ran on.
So that's what I'm rooting for. I appreciate that answer. I am out of time, but I need to ask you about BuzzFeed, but also the idea I'm being told over and over your interests in a media company something like a vice. You know you've been buying up BuzzFeed shares. It's reported your statement, what happens? What are you aiming to do here?
Well, look, I'm now the second largest class A shareholder at BuzzFeed. I've been very public in my letter that this is a company that has struggled and failed for reasons that I still think are fixable. A lot of people know what BuzzFeed is. They don't know what the
what the brand is actually stands for. And I think they have a historic opportunity to do what many in the mainstream media have an opportunity to do, build a brand centered on trust and the pursuit of truth by saying that you know what, we platform all voices left right, doesn't matter across the cultural spectrum, and use that to define a coherent and powerful brand that I think audiences are hungry for, especially of younger audiences today that are
sick and tired of yesterday's legacy media, but want authenticity, want to trust content creators. So I've given in the context of the letter that I sent to their board, I've also proposed three directors mister Ramsa joined the board, a direction strategy that I hope will create the value of a company.
That sadly has performed a Ramaswam me. I'm sorry to cut you off. We are out of time that Ramaswami, thank you. This is Bloomberg.
Welcome back to Bloomberg's Technology at Ludlow in San Francisco. I want to check in on Apple, Chaz. It's an resting position. Apple finds itself in up for a fifth straight day, kind of recovering under the radar. It's a name that we've had a lot of concern about with regards to valuation. We've been debating about whether the AI strategy with Apple is understood by investors, if they've given the stock too much credit about AI or too little.
But really what's driving trading is data round in China that shows shipment's up forty in the month of May, a continuing short term recovery after a really tough first three months of this year where sales weren't great and domestic handset makers were taking market share. Then we entered this period of the year in China, which is such a key market for all electronics providers and makers, where they did a lot of discounting, you know, special holiday sales,
things like that. But the stock interesting over a five day basis, I would say that it's the longest streak since June eighth, which was the end of an eight day winning streak, and it's kind of on the verge of re taking the crown of the world's most valuable company, which it had lost to Microsoft and briefly to Nvidia. Let's bringing blue Miss Mark German the perfect correspondent for this.
Talk to me about the China data because it's official data that we kind of crunch the numbers on and I'm trying to extrapolate a story out of it.
Is this a recovery?
The story definitely is a recovery. Right in the first couple months of twenty twenty four, you saw iPhone shipments declined quite significantly in China. But you know, around the springtime, some interesting things happen. Apple started offering some promotions on some of the higher end iPhone models. Some of the resellers and online sales channels for the iPhone started offering discounts.
There.
They have several different holidays shopping holidays in China that offer discounts not only in the iPhone but several different products. And so what you've seen here is in uptick in sales, and based on our calculations, based on the data that comes officially from China, you sell forty percent growth in the last month or so, and so that's quite significant for Apple and the smartphone market is growing quite strongly in China right now. It's not just Apple, it's Huawei
some of the other Chinese phonemakers. But China was a real concern for investors in Apple earlier this year and last year. In with the sales uptick, a lot of those concerns are being mitigated. And this is happening at a really great time for Apple because the summers are usually slow season for iPhone sales, given the anticipation of
the new models to come in September. So what you're seeing right now is a strong uptick in the current iPhones in the months leading up to the next iPhones, and then you're going to get another big push come September October when the new iPhones roll out. So right now things in China for Apple in terms of the iPhone, they're as good as they've been in several months.
Mark, Can we talk a little bit about the big picture strategy in China. You reported, for example, June twenty first, that Apple was halting its AI rollout in Europe because it was concerned about the regulatory environment. There By comparison, do we have a good sense of what the AI roll out will be in China and whether it will just mirror what they plan to do in the United States.
So, as you know, there's three facets to Apple Intelligence. There's an on device large language model right for some of the more minor tasks like notification prioritization. There's a cloud component which is also run through Apple for more advanced things like writing tools and summarizing information. And then the third part is the chatbot. That's the whizbang feature that is going to be most exciting to a lot
of people. And in the US you get open Ai as a partner, but in China you're going to need another partner. So they've talked to Alibaba, they've talked to Baidu, they've talked to some others, but they don't have an agreement in place there. And until they're able to get an agreement for that third party chatpot integration, they're not really going to be able to roll out Apple Intelligence in a meaningful way. I would expect that to come together sometime by the middle of next Europe.
Just point out that in the duration of Mark's report here with us on bluebo Technology, Apples actually raised its Friday game in this flat But as we showed is up on the week, Bloom Moost Mark German Goods, catch up Happy Friday. In benched capital news, the firm Kleiner Perkins announced today that they have raised more than two billion.
Dollars for two new funds.
The first eight hundred and twenty five million dollar funds will target young startups and another one point two billion dollar will be allocated towards a later stage fund. Klinda Perkins will look for startups that are leveraging AI for growth. Now for a look at the state of the tech M and A market, Ali Love, partner of M and A and technology at Deba, Vois and Plimpton, joins us
for more. It's been an interesting few weeks actually in the world of M and A, particularly when I speak to bench capitalists, they might actually be more upbeat that some of their latest stage venture back companies are more likely to be acquired than go public. That there's kind of some energy there is that something that you see from your desk as well.
Yeah, I think that's exactly right. I think that there's a lot of optimism in the market right now. If you look at the last you know, three to four years, you obviously had a massive uptick in twenty one and twenty two, and that dropped off precipitously, with valuations dropping in twenty two, end of twenty two, all of twenty twenty three, and to some extent to the beginning of
this year. And we have you know, probably three major groups of acquirers that will acquire venture back technology companies. You have private equity, traditional tech acquirers, and what I like to refer to as non traditional tech acquirers. Those are older industries, you know, looking at private equity. Obviously, the rise and interest rates made them nervous, but if you go back in history, private equity is very used
to operating at double digit interest rates. So have they dusted off their old place books reminded themselves how do we do this again? Absolutely, and they've become increasingly active in the first two quarters of this year. Going to traditional tech acquirers. A lot of them sat out the first couple of years of the boom. They didn't want to spend cash at that level. They didn't want to you know, uh, you know use that I mean, sorry, go ahead.
No, no, I'm sorry.
I just wanted to jump in and ask about you know, there's the mechanics of it using cash. I particularly understand the private equity side of that equation. There's also like a little bit of a psychological side of any transaction. What's interesting about your firm is you're you're on both sides of the table, right, buyer and seller. What are attitudes right now to sitting down and hashing out a deal?
Yeah, I mean, I think one of the things that we work with our clients right now a lot on is both for traditional non tra traditional tech acquirers, understanding the mindset of founders and of boards. You know, in a lot of instances, these are companies that were two individuals in a garage. They've grown their companies to multi billion dollar companies, but along the way, they've underpaid themselves. They haven't bought houses, they haven't gotten married, they haven't
had children, you know, they haven't gone on vacation. And any buyer that loses sight of that isn't understanding the company that they're buying.
So something really interesting is happening in what I would call non tech companies as well. Right This idea that in a world of AI. For examples, we just discussed that new kind of Perkins fund you've got to have some sort of AI tool or your investor base or your employees won't believe you and they'll leave. And I see that happening in all kinds of sectors, you know, oil and gas, utilities, even construction saying uh oh, we better buy a solution here.
That must be a boon for business to you.
That's exactly right. And you really have two separate things going on here. So first, speaking specifically to AI, I think it's a mischaracterization to say that there's a lot of AI M and A activity. There aren't enough AI platform companies for there to be consolidation. Now, there are a lot of companies that do something else. They do cybersecurity. Maybe they are an HR platform, maybe it's a fintech company, you know, are they adding AI to what they do
to improve their products? Absolutely, those products are getting smarter, they're going faster, they're more attractive to their customer base. But those aren't fundamental AI platforms, you know. On the flip side, the other thing that we're seeing is a lot of as you said, some non traditional tech acquirers come deeper into the tech space. Another area where they're
doing that is cybersecurity. If you go back to the beginning of the pandemic, everybody may remember they were say, massive pipeline hack on the Eastern seaboard that woke up a lot of the oil and gas companies to say, we've not invested enough in technology, We've not invested enough in cybersecurity, in protecting these infrastructure projects. And so a lot of companies in theory could build those solutions, those cybersecurity solutions, but some older industries are not equipped to do that.
So what do they do.
They go out and buy them wholesale. They buy a company to create a product just for them. And so that's what a lot of some of these older industries. It could be oil and gas, it could be agriculture. You know, to some extent, even banking is still behind the ball for some of these technologies.
Ali, what you just said on consolidation was really interesting. It almost contradicts kind of what we'd been hearing. What I wrote about a few weeks ago, which was based on comments from hugging face that you know, hugging face is a platform that hosts loads of large language model providers, and the smaller players needed help.
They've run out of cash. It's an expensive enterprise.
You seem to be saying that actually at the platform level, that isn't happening because there aren't enough platform level providers right now.
Just give me a bit more on that.
Yeah, So to be clear, there is a ton of investment going into AI and AI platform companies one hundred percent, and I think you see that with the Kleiner Perkins fund that was just announce But what you're not seeing is the exits. There aren't enough of those companies for there to be consolidation. Yes, absolutely there are some, but not to the volume that you see in other subsectors of.
Alie love from Deba Boys and Plimpton. It's great to have you on the program. From the M and A side appreciate it.
Thank you.
Let's zero in on the field of climate tech and how AI can help and bring in Juan Maldoon, a partner in co Head Adventures. It energized capital. The firm focuses on climate solutions one point four billion dollars of capital to play with. Let's actually just thought with what Ali was talking about. From the M and A perspective, I have had sort of thematically specialized.
Vcs come on the show.
In recent weeks and months and say, pretty good outlet for us because they either provide a very clear technology platform to a bigger beast in the energy field, for example.
What did you make of her comments?
I sort of agree.
So I actually think that we're seeing a lot of growing interest from traditional industrial companies that are looking for digital.
Technologies and pockets of growth.
And frankly, in our space, the software meets climate intersection brings both. It brings digital technologies and it brings the growth pockets that a lot of these traditional buyers are bringing.
I think this interest isn't exclusive to AI companies or maybe even catalyzed, because I do agree that a lot of the AI specific companies are still early in their journey, but there's no doubt tech driven growth that is attractive, and I think the companies are looking for products so they can build outo their platforms and talent next generation that's going to help them pull forward to where the transition is actually going.
And I think it's a surprise or audience that we have a bench caps they specializing in energy or climate tech talking about AI, but weed to understand how much of it is hype and how much is it if it's sort of having an actual impact, right, I was a battery and EV reporter for a really long time. Loads of examples where software makes a really fundamental difference. So to take that, give me case studies of where you're seeing AI impact your foot portfolio, companies, or the industry at large.
Yeah.
No, absolutely, and actually think that AI is already having a big impact in our space in two primary ways. On the one hand, it's actually very computationally intensive, and it demands huge amounts of power, which is electricity to actually give rise to that compute.
And this is a huge.
Surge in the powerload in our world, and it's pointing to stress in our grid. So energy consumption is expected to grow seven to ten percent year on year compared to usually two to three percent year on year over the next several years. So that's a huge draw for power and it's a huge draw for potential AI applications.
The second is that AI is actually enabling a wide set of opportunities to accelerate the energy transition, Like you were talking about workflow automation that can help reduce soft costs or generative tools that can help improve the development
or the deployment of renewable projects. So, for example, batteries you mentioned, we have a company in our portfolio called Twice that can actually use AI engines to calibrate how batteries will age and degrade over time, so we could better predict battery behavior, better predict performance, better predict detailed insights into the state of charge and capacity, so to make sure that we can actually use those resources more effectively and more appropriately at scale.
And I'm sure you will have watched the presidential debate last night. Infrastructure has been at the heart of President Biden's policy platform for the last three and a half years. How has that manifested in the real world for you in the areas that you invest in?
The infrastructure The Inflation Reduction Act, which is really an infrastructure bill, has pulled the future forward in a lot of different ways. But at Energize, we don't really see a shift in political power as a particular threat to the energy transition. We see that that train is underway and the companies that we're investing are accelerating that. So it might change a little bit the pace, but the direction is not really changing.
For me.
I think it comes down to economics. The renewable transition technology that is viable today, wind solar, and batteries that come down and costs dramatically over the last ten and fifteen years, and that's going to continue. We've invested under
Republican presidents and under democratic presidents either way. That train has really left the station, and we actually think that the directional arrow of progress is going to continue to follow better products and better economics and really better social outcomes around the world.
You join us from Chicago, Illinois.
I still think of the Bay Area in Silicon Valley as the hotbed of energy or climate related teg.
Is that the case, there's a lot of innovation outsideide of Silicon Valley. For climate, climate is a global opportunity. The talent that is tackling the climate challenge is also global. We see a lot of innovation in Europe specifically where those power dynamics and that energy infrastructure is very very different.
So actually, no, we see a lot of opportunity to invest outside of Silicon Valley, and we actually really like to be close to customers and so being in that Midwest the heart of industry is important to us.
Quan Maldoon, partner and co head adventures that energize. Really great to have you on the program, and it's an area that I've been thinking.
About a lot of late, so thank you now.
Coming up, also on topic, a new survey shows Tesla no longer stands about the other electric vehicles in quality because of some specific head scratching design changes. It's got a really interesting discussion coming up. This is bloombog Technology, Time for Talking tech.
Two quick stories in the news.
Microsoft and open AI's thirteen million dollar partnership is set to face scrutiny EU and to trust What watchdogs are set to ask rivals and customers about the company's exclusivity clause, in which Microsoft's Azure is the sole cloud provider for open Ai, but worth noting no formal investigation has been opened yet. Plus, rain Ai recruits an Apple exec The startup backed by Sam Altman, made its second high profile higher this month, employing an Apple chip executive that once
led hardware engineering. Rain Ai is hoping to design a new type of semiconductor, specifically for artificial intelligence.
Okay.
According to JD Power's initial quality study, Tesla no longer stands above other electric vehicles in quality because of head scratching design changes on its cars, such as removing the turn signal stalks. I want to bring in my friend and colleague bloombergs Keif Norton, who's the.
Byline on this one.
I found it so interesting to read because so much of the Tesla origin story was that its technology was great. It was a great product. But they've made some tweaks that on specific models. I think it's Model X and S after a certain year and then REFRESHMDEL three that actually have not gone them down well with the tesseronas.
Yeah, that's right.
I did start in twenty twenty one with S and X. It's now migrated to three, which means it's hitting the mainstream buyer, and the mainstream buyer does not like giving up their turn signal stocks. What Elon is trying to do is trying to go stock free, so you lose the turn signal stock and you also lose the windshield wiper stock. On the other side, all of those have migrated to being buttons on the steering wheel.
So, as regular viewers of been Bo technology know, I have a Model Y which I pay for myself, but it has the stalks. The one thing i'd observe is like the screen in the middle. There are no dials or buttons on the dash. I spend a lot of time looking at the screen and reading the JD report. I think that was a big point that many of the respondents made as well.
Absolutely, JD Power said. The author of the study told me that the consumers report that they have much more eyes off the road time because they're hunting around for these, you know, ordinary functions. This isn't high level tech that people are looking for. They just want to beat the horn because something happened in front of them and they can't find it.
We won't get into the whole idea about the future of Tesla and full self driving where to Elon Musk's mind, you won't need to pay attention anyway. But you've covered this industry for such a long time. You've written brilliant pieces at the product level. How impactful are these JD reports?
Like does the average consumer pick it up and go? Well? This will inform whether or not I get a Tesla?
Absolutely, JD Power and consumer reports, those two measures are the ones that carry the most weight with consumers. You can see it and the automakers advertising they'll you know, run the JD Power Seal if they're one of the preferred brands. And tess Law has always been the highest
ranked EV. Now all the other evs, Ribban, the legacy automakers, they've all caught up with Tesla, primarily because of these rudimentary functions that have been put on the steering wheel and taken away from their usual locations.
In the story, there's a chart of problems per one hundred vehicles. But it's also a quality survey. Can we just quickly talk about the quality part of this discussion?
Yeah, so, I mean quality is defined in a couple of ways. One is things that break, that don't go well. But also quality in this survey now reflects what consumers are having trouble operating. It might be functioning as designed, but if the driver can't figure out how to use it, then that's a quality problem. And so that's what's showing up on Tesla here. These are things The buttons work if you can find them, but can you find them
in an emergency situation? And others have pointed out if you're in a round about, the way the turn signals work out. There's a couple of directional arrows and steering wheel during a roundabout and you're in the middle of it, your steering wheel's upside down and you don't know which.
Errow to push.
Yeah, that's a problem. Bloombergs Keith Norton.
It's great to catch up and see you here on Bloomberg Technology.
Thank you. That does it for this edition of Bloomberg Technology. Check out the podcast. What an episode.
It was.
Happy Friday to everyone all around the world. This is Bloomberg Technology.