From the heart where Innovation, money and power colle in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed loved Love.
I'm Karen hide A Bloomberg's Voltec quarters in New York. Ed Ludlow is on assignment. This is Broomberg Technology coming up. T SMC shares jump the most. It's February despite a global slump and chip demand and warnings of softness but size of stabilization. We discuss Tesla risking margins in order to boost sales volumes. The company has been cutting car prices on a near monthly basis, and Elon Musk hinted
and more cuts to come. And SpaceX is one step closer to getting humans to Mars after getting its starship off the ground. We'll break down the surprise ending to the historic launch the first. As always, we check in on these markets and as you see, we're actually getting some reprieve to some of the individual movers today. We wanted to go more broad to start, but I'll go
in on the micro for the first and foremost. IBM currently up nine tens percent as it gave a forecast for annual revenue in line with analyst projections delivering of cautiously optimistic sign perhaps amid this uncertain economy, LAM Research up seven point seven percent, really managing to outperform as some of those China curbs aren't impacting the company quite
as much as it had anticipated. Remember this has come as we have breaking news that Biden is to unveil China investment curbs before the G seven summit in May. We moved back to the broader in the season nasdakov by five tenths seven percent. We're still worried about the economy. The headwinds we see actually signs more of those recessionary headwinds upon us, some of the jobless claims coming in higher than expecting, some of those business macro data not
ringing quite so strong. Today. We see the two year yield therefore fall on the back of perhaps potential for the Federal Reserve not have to hike quite so far so fast. We're at four point one six bitcoin as we see some risk aversion down by two and a half percent. Now, all of this is as we try to digest what's happening in LAM Research on the higher
side of things in terms of chips. But what we saw interestingly is moved some TSMC in particular actually rising even though perhaps we saw well signs of concern around this business, seeing am places to say, is here with us, just walk us through the ADRs of TSMC up even though what we're still bottoming when it comes to the chip cycle. According to the CEO.
Yeah, and the results were much better than feared. You could see their pricing actually grew eleven percent, even though way for shipments were down fifteen percent. But the pricing held up quite nicely, which is reflected in the gross margin. So compare TSMC's gross margin versus microns. Microns was the worst quarter in the history of the company negative thirty one percent in the case of TSMC, two to three hundred basis point decline, and the pricing, like I said,
held up very well. So and they didn't cut capex ahead of the ear there will speculation they're going to cut their capex. That didn't happen. The room for the reaffirm the capex for this year.
And the reason they're spending is because they have to diversify their own supply chain for their end user, largely because of what Joe Biden's doing in terms of executive orders to target China US relations.
Absolutely, they have to open overseas fabs. One in Arizona, one in Japan. They're talking about, you know, production being live by twenty twenty four, So clearly they are diversifying. They have no choice, and that is where the gross margin impact may show up, because those fabs aren't going to be as profitable as the ones they have in
Taiwan right now. So that's the longer term risk they have because as they diversify their locations and the factories, it will have an impact on their pricing and you know the cost structure. So clearly that's a risk. But they have the visibility and the commemits from their you know, strategic partners like Apple, like Nvidia, these are the customers of PSMC, and they have visibility for you know, demand on like the three nanometer node, the two nanimeter node,
they will run at full utilization. I'm worried about Intel and you know what will happen to them because of what we solve with Micron. And I think if you are diversified right now, you are in a good spot. TSMC's exposure to high performance computing was forty four percent of their revenue. Remember smartphones was the largest segment. Now it's high performance computing. That's where the AI chips come
into play. And I think if you're not diversified right now as a chip manufacturer, you have a problem.
So you push us perfectly forward. It's trying to sort of read the tea leaves when an IBM is out there saying, actually, we're a bit more upbeat despite and you know, slowing and headwind economy. We've got companies. You just have to be in the right place at the right time to weather this current quarter right.
Absolutely, Autos again, Bryce autos revenue grew thirty eight percent. Is still small, but it could be the next high performance computing segment. Remember high performance computing was much smaller three years back. So that's where if you're a manufacturer you need to diversify. And I think Intel that's what they need to show when they report earnings.
Don't tell me Internet of Things is actually becoming a reality man, deep thing. We love them on there, just pushing us forward to what you need to be worried about with the next set of earnings. Let's go from chips to evs now in terms of earnings and Tesla actually down quite hard today after its first quarter margins were hit by a slew of price cuts.
While we reduced prices considerably in early Q one, it's worth noting that our operating margin remains among the best in the industry. We've taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin.
Let's bring in the Wesley Group managing partner and former Tesla board member Steve Wesley for more on this. So is this the right course of action short term pain for long term market share?
Well, I think it absolutely is.
I mean, look at the solid Q and results record deliveries sold to four hundred twenty three thousand units on a way to doing one point nine to two million units this year. That's studying twenty three point three billion in revenues, slightly above forecast net profit two point five billion for the fifteenth consecutive profitable quarter, share price up
fifty one percent for the year. Aren't argue with those numbers, but I think they're doing the right thing, cutting costs, expanding market share.
That is a smart move.
I mean, as you say, revenue is rising it raise twenty four percent. But you say it's hard to argue, but investors are arguing they're cutting the overall market capitalization of this company on the day pretty hard. What do you think investor has got wrong? Do they just get too ambitious in the short term?
I think there is probably a bit of a billion's in the marketplace. But I think as people step back and look at this, as Elon said, this is essentially one of the most profitable auto companies in the world. They can afford to trigger a global price for it, and that is just what they're doing. They're taking price cuts, prices down six times this year, already twice more in the last thirty days. That's stunning. But they can afford
to do it. Others can't. What's interesting here people need to understand, they say, is there a demand issue?
Absolutely not. The entire world is going all electric.
Customers bought ten million electric vehicles last year. They're projected to be at twenty million vehicles a year within just three years, so there's not going to be a shortage of demand. Elon I think is smart. He's buying market share when they can, and I think that move's.
Going to pay off.
I mean it's worth reatrating yet operating margin is down, but it's still above eleven percent. You look at GM's that's just six point six percent. You look at Forwards,
that's just four percent. What is there any concern around Elon and his navigation of this company at the moment, He's meant to be giving us the Cyberdrup production pretty soon, but he is still kind of distracted, it feels like, with what's going on with Twitter, and he's also got a space company that is running and making big strides on Well.
Look, who knows how distracted he is. Just looking at the numbers, you've got to be pleased. Where the car company that's going from one point three to one million in vehicle sales last year to one point nine or two million this year. Factually, they're just growing faster than anybody else out there. Second, because Tesla has been smarter and executed better on the profitability issue because of three things. First, to bring battery production in house that lowers costs. Second,
the clear Leader and what's called Ota software. They're miles ahead of anybody else on that. Third, the clear Leader and the robotization of the manufacturing process. They get cars produced in a fraction of the time of others. What does that lead to two ex The gross margins of Old So I get three ex. The gross margins of Toyota,
almost five x the gross margins of Ford. Now those numbers will come down a little bit, but as long as he can expand the Tesla name, I think Tesla's going to be looking awfully good.
Ian's a move.
That may hurt him a little bit for the short term, but it's going to pay big dividends for the long term.
Steve, you talk about how demand is not the issue here. I just want to bring in another viewpoint from a key senior equity strategist that federated Hermes. That's one Linda Distil. Just have it Listen to what she had to say.
As we know in these last couple of years with COVID, first she couldn't find a car, and then there were too many cars, you know, there was a glut of used cars, et cetera. And so now and now we have Tesla saying basically saying, we'll sacrifice margins in the name of using this factory space that we have. So as long as the consumer still has money, then yeah, that's a blessing. That's a piece of disinflation, and they'll probably take them up on it too.
Anything Steve would make you second guess that the consumer has money, not at all.
Look, I generally agree with what she said, but what you've got to remember here is when Tesla first bout out the Model three, for example, all out the door, it was about a sixt car. Today it's at forty thousand, and with government stimulus, it's really down to and state stimulus that are also available down to about thirty two to thirty three thousand. This is getting pretty close to
where Honda Accord is. At those prices, there is not going to be any demand issue, and I think that's why long term, Elon's making the right move.
What do you want to see from Elon in terms of his own investment now in terms of continuing to expand production, because when they had their sort of great master plan that they just came out with earlier this year, it felt like some of the production levels were just extraordinary.
Well they are extraordinary.
You've got to look at most of the other competitors, GM four, they have one or two EV plants up and running. Tesla already has four gigafactories, a new one in moderate coming which will be up literally in less than twelve months. New battery plants in Shanghai and later have already online. So Tesla, simply put, is just moving faster than other You got to give them credit for that.
Just look at the numbers of comparison. You know, in the honorable mentioned category of Bard announced ten thousand evy unit sales compared to four hundred and twenty three thousand for Tesla General Motors at twenty thousand. They're not catching up, they're falling further behind. The fascinating news if we step back and look at it is the major competitors to Tesla are two Chinese companies, buyd and Sais.
This is a global changing of the guard, and.
I think investors should look back and see really three things. First, Tesla's extending their lead. Second, the Chinese are coming quickly, and third, a lot of these smaller firms Canoe and Fisker and so on Lordstown, they're just going to have a hard time making the cut. I think Ewe is pressing consolidation in the industry, and I think he's going to be the winner when all is said and.
Done, Steve, I just want to drill it on that really interesting point about China. We know that actually some Chinese demands and frustrated by the price cuts, but the Chinese investment is there. We know commitment to Shanghai, for example, not only with car production but battery production. Are you worried about geopolitics here? We just hear that President Biden will unveil China investment curbs before the G seven summit. He doesn't want US companies like Tesla investing in China.
Yeh, Look, there's a tailor two cities here.
On the upside, China's the world's largest auto market, and Tesla has moved quickly put to manufacturing facility there, and Tesla is killing it in China.
The flip side of that curve is, if there's.
Ever a real estrangement, a geopolitical crisis, and anything like what happened in the Ukraine where Russia nationalized a lot of our companies, Tesla would be in a world of hurt because forty percent of their capacity comes from China today. But in the meantime, if you want to win in the auto industry, you've got to be playing in China.
It is the largest market in the world.
World seven of the top ten bigger selling evs are Chinese names. So right now, Tesla's played the game well. And I think if you're elin Mask, you have to be going to bed every night playing praying that the cord work with China doesn't get worse.
Right now, he's looking awfully smart. We'll see.
I'm not sure he's in a bed. I think he's on a sofa somewhere on a Twitter. Obviously, we'll be in the factory maybe when he gets his few hours asleep. We thank you so much, the Wesley Group managing partner, Steve Wesley, They're great to have you. Meanwhile, let's talk about it. President Joe Biden aiming to sign an executive order in the coming weeks there will limit investment in key parts of China's economy by US businesses. And that's all.
According to sources, the administration has been debating the measure for almost two years now, and it plans to take action before a summit of the Group of Seven that's true to start on May nineteenth. In Japan. SpaceX's Starship Rocket I didn't quite complete its mission on a second launch attempt starship appeared to explode in the sky several minutes after lifting off from the facility over at Bocachico
in Texas. More on these events, we joined Bublomgg's law and Grush, who was just at the launch site earlier, and Elon Musk himself set expectation. He said, look, as long as we don't blow up the launch pad, and they didn't know they didn't.
They actually got pretty far away from the launch pad, and I will say from the ground it was a spec spectacular site well before the explosion happened. I mean, we could feel the rumble in our chest of those thirty three engines. Though I think when I looked at the livestream later not all of those thirty three engines you can see on the screen were actually a light.
So there were some engine problems. I think apparently we'd like some more confirmation from SpaceX. But yes, they did.
Get valuable data, hopefully just from being able to clear the launch pad.
But yeah, something didn't quite go right.
Around two and a half minutes into flight, the stages were host to separate and instead the rockets.
Seemed to vere wildly for.
Sit there. Oh, I think we're taking some hits on this line, Lauren, I'll just ask one more question and hopefully your line stabilizes a little bit. But SpaceX did say the experience a rapid unscheduled disassembly before stage separation, So nuance there push us forward. We knew that there was a delay. They then came on four twenty, which we know is a key day for you, a musk in many ways. What do we expect next? A little bit more description of what went wrong and then the next test light.
I guess yeah.
For me personally, I really want to know what actually caused the mishap, you know, why did the stage separation not occur as planned?
What was going on with those engines that appeared to be out?
And then also I'd like to know from SpaceX whether or not, you know, the rocket broke up on its own, or if they terminated the rocket personally with the flight termination system. It's a system they can use to blow up the rocket to protect you know, the un public. And then yes, you know, how will they incorporate the lessons learned from this flight into the next flight that they do, which I believe Elon said would happen in
the next few months. So very much, looking forward to the timeline, and then I'll show the root cars of this issue.
Extraordinary. We continue to keep across all of it with our own layngrase. We thank you so much for making the time. Meanwhile, let's turn our attention to the financial world for a moment, because the American Express set aside well a little bit more cash to cover any possible loan losses as the economy starts to slow. That did ultimately weigh on some of the earnings. Even though the CEO would say, look, this is just a normalization. Shares
fell despite expending volume still climbing fourteen percent. I got to have a chat with ceosd squay about investments in financial technology in particular, and he said, no, we had AI in our models forever, in our credit models and our four models. How we market to our customer. Where we're thinking about AI even more now is in our customer service. And of course sort of maybe chuckle with the fact that look, the new technology a couple of years ago was all about blockchain. Now it's all about
new tech that is GPT. And he in particularly is saying they're looking at the stuff for a while, and oh, we'll just have to do it in a controlled way and make sure you find the right business case. Have much more on what anx CEO had to say a little bit later in the two pm hour mean while coming up and look at today's big take, which I have to say exposes the dangers of TikTok's algorithm to troubled teams. This is a Bloomberg Today's Bloombog big take.
It's an emotional one. It sheds light on the ways in which TikTok's personal feed can actually be a never ending stream of anxiety of negativity. As part of her series on TikTok and it's trust and safety issues Bloombags, Olivia Carvill writes that the app's algorithm has led teenagers down rabbit holes related to self harm, to depression, human suicide.
Lisa Say Olivia joins me now and it's heart wrenching this story a mother having to after the death of her child, look at what terms he searched for on an app such as TikTok, He's search for Batman, basketball, weightlifting. What did he get instead?
What Chase nescal was seen as a stream of content about anxiety, depression, unrequired love, self harm and in some cases suicide. I actually watched this account and it's still sending their content today. It was really difficult to see what he would have seen in to try and put yourself in the shows of a teenage boy watching never ending streams of really sad videos.
What there for does this say about an algorithm that in many ways people turn to TikTok for joy, for hilarity, for fun. Why is this happening to vulnerable teenage children?
And that's what his parents kept asking is they thought TikTok was about creating joy, that's the company's slogan. They thought it was funny, happy dance videos. And when I went to meet them in Long Island earlier this year, they asked that question of where are the happy videos? You know, we were looking at his account together and what it's still being sent today and there are no
happy videos coming through. TikTok said that it has worked on this specific issue, and it's been working on it for years, trying to break up repetitive videos about sad topics, whether that's depression or eating disorders or suicide related content. But effectively, what this account shows us is that those efforts have fallen short. In some cases they haven't worked.
TikTok have responded. You've had a spokesmen in particular speech to you seeing they're committed to safety the well being of its users, but especially teens. Researchers and child's coologists. They're getting more and more anxious about this, aren't they? What steps? Can anything be done? From a regulatory perspective? Where next goes in your reporting journey?
Well, I think one of the biggest concerns for child psychologists and researchers is that we're seeing this looming youth mental health crisis. We're seeing new data showing that kids are experiencing higher levels of hopelessness, of suicidal thoughts, of anxiety, and alongside that we're seeing explosive use of social media. So while causation is very hard to prove, the correlation is right there in front of us, and that begs
the question of what more can be done. TikTok isn't the only platform that has a recommendation engine that is pushing harmful content to kids, and one of the calls that we've seen time and time again from researchers is given us transparency, let us study your algorithm. Let us understand how it works, what drives it, what powers it. Right now, these companies aren't willing to provide that kind of transparency to researchers, and that is frustrating the academic community.
They feel locked out from studying a phenomenon that is impacting millions of kids around the world.
Olivia, you keep bringing us transparency and we thank you for it. It's an amazing read, heart wrenching one. Olivia Carvill Welcome back to remote technology. I'm Caroline Hider, New York. Let's go quick check on these markets for you, because we are still under pressure from a big tech perspective. Now it's that one hundred coming off of its lows.
We're still off by a quarter of percent. We're worried about economic gloom, the jobless claims to king Hire, some of the business, macro data not looking quite as pretty. So instead of that bad news being good news in terms of the FED, today's bad news is bad news and we're worried about the economy. Money off the table, we take money off out of Microsoft, off by a
quarter of percent, not big move. Remember, just after the World yesterday, We've got some news that Elon Musk was potentially threatening Microsoft with a lawsuit over Twitter's data use when it's training its AI algorithms. But we're off by a quarter of percent. More broadly with the market today, Alphabet Cherzo on the flip side. Remember they've sort of been the underdog when it comes to AI, but Alphabet
seems to be on the rise a little bit. Maybe plan to use generative AI to create ad campaigns according to the ft or up one and a quarter. Let's move it on to look at the other previous area of exuberance when it came to tech, and it was all about crypto. Of course, Bitcoin off by two point three percent, were sub thirty thousand afterwards. Been a spectacular
run up so far this year. Maybe some calm coming out of as we start seeing some resiliency to the financial market, in particularly the banking market here in the United States. There's those earnings come in and we see a little bit of weakness just in the world of eth we're off by one and a half percent, down below that two thousand mark. Let's talk a little bit more about crypto, not so much the price moves on
the day, but the future of regulation. I need to say emmel Na Cole joins us for what is some movement at last when it comes to regulation. But over in Europe, can you talk us through what's being decided at the moment in terms of the first EU sort of package that seems to be coming towards tech and crypto startups over there.
Yeah.
So, the EU has been working on its crypto legislative package for the last three years and it's finally here.
The European Parliament formally approved the final text of the Markets in Crypto Assets Regulation also known as MEKA MICA depending on your pronunciation earlier today, and what that includes is basically a bill of rules that means that now crypto company is seeking to operate from the EU will need to register in one of the member states and that then allows them the right to passport those approvals
across the entire block. It also seeks to put in place some risk management and corporate governance structures so that companies are able to kind of operate within the EU under the purview of supervisory authorities and in a bid to avoid another FTX style collapse.
Yeah, it felt like the talk was pretty tough coming from the shadow representative of micro or micro or how have you set saying, you know, to provide a safe haven no longer to forsters and criminal organizations. But really a unified way of regulating crypto has got to be joy to many founder's ears in some way.
The crypto industry as a whole is generally very happy about MECA because in their eyes it's any rules at all are good rules. And when we say that, we mean, you know, bespoke cause to crypto. In the eyes of the industry it's something that doesn't really fit into existing financial services.
But not every regulator agrees those proposed.
In the UK, for example, the rules that were set up by the government earlier this year, those would seek to fit crypto under existing financial services rules. And we'd heard Gary Genza in the US earlier this week saying that crypto should fit under the existing financial services rules in the US. But the companies when they come into the SEC and talk to them about it, just don't really like what they're hear it.
Yeah, and no wonder Therefore, Europe's been taking bit of market share in terms of crypto venture funding. Emily Nicole, we thank you so much, and really for crypto the real cloud has been regulatarly uncertainty here in the US. But sticking on crypto, we've had a lot about the cryptosphere choosing Miami if you are building in the US to be one of its key hubs. In fact, Bitcoin Miami is around the corner. It's not just crypto has emerged as one of several rising hubs and take at large.
It's born about by the pandemic shifting work trends, of course. So today we want to focus in on Miami a little bit. The Emerge America's conference is kicking off in Miami right now. Bring vcs, tech entrepreneurs together for two days. Let's bring in the Emerge America CEO Flucio Garrado, wonderful tab some time with you. You've also been nominated as the US representative on the board of the World Bank Group by President Joe Biden. So some big tasks at hand.
Fluccio Filicia, talk to us a little bit about what's happening about the signature event. You launched it back in twenty fourteen. How many people are you expecting?
Yeah, well, thank you first Caroline for having me on. Emerge America's was founded in twenty fourteen with a singular focus to transform Miami into me a global tech hub. And we do that by convening all stakeholders that make up any thriving tech ecosystem, from government to higher startups to investors, and we connect the dots between the entrepreneurs, the capital, and the talent, and we tell the stories of how South Florida.
And the rehole is transforming.
We're doing this specifically to capitalize on this very moment, and so today we have more than twenty thousand attendees from all around the world that are convenient here to showcase their new startups, their investments, and to make those connections to help take their businesses to the next level. I would say, you know, talking a little bit about or dovetailing from your previous speaker. If last year was
all about blockchain, this year is all out AI. We've got literally the guy who wrote the Bible on AI, the former CEO and chairman of Google SMID, who will be keynoting tomorrow. And I just got on stage with the seventh time football champion, real entrepreneur and best selling author Tom Brady, who was our opening keynote this morning.
Okay, but interestingly, Felicia of course I would associate Tom Brady more with crypto with blockchain, so is he pivoting to AI as well? I mean, how are you seeing what has been real build up in VC money being allocated to Miami perhaps taking a hit from twenty twenty two like the rest of the tech world because of the pullback in crypto VC money.
Well that's a great question, but it's actually more of a myth. The reality is the data.
Speaks for itself.
Miami has led the nation in terms of venture growth, being number one in the nation for venture activity since the start of the pandemic. While the rest of the world to be contracting, Miami actually only continues to expand. We've grown about two hundred and forty eight percents since
the start of the pandemic. And while investments as continue to focus on fintech, we also have been one of the leading health tech hubs, and I would say and argue also for climate tech, with this being also incredibly important to our community and to the region as a whole.
But surely money must be pulling back and in a way, I mean, has the money that in terms of sponsorship coming for your event pulled back any compared to twenty twenty two.
That's actually a great question, and the reality is no, we are actually pacing ahead of where we were in twenty twenty two. We've have more enterprise tech companies like Microsoft, Google and delf for startups who've taken up more space on our expo floor, who also partner with us year round. We're not just an event, we're a platform, and so we organize start a pitch competitions, innovation challenges, investor summits year round.
And these tech leaders are.
Not just planting a flag here in South Florida, they're looking to also expand their footprint.
Apparently resilient to the macro trends. We thank you so much. Emerging America CEO Felicio Garado there. Meanwhile, coming up, we'll take a further look at the Miami VC scene. Actually, Sapphire Adventures, one of the partners, Casba Wang's over there at the event. We're going to talk about or whether they're putting boots on the ground in Miami. Plus particularly look at one particular Latin company, Marcardo Libra. The shares well of a quarter of a percent, but some interesting
moves in terms of how much they're building up. It's the largest e commerce company over there in Latin America and it's fucking tech layoffs, adding thirteen thousand workers this year. This is a bloomberg time now for our VC roundup. Starting with Tiger Global top point seven billion dollar benure fund that has is recording a twenty percent paper loss as of December twenty twenty two. That's all according to the information. It's taking a hit of course from the FTX fancracy,
so as the NFTs in the company's portfolio. On the positive side, JP Morgan is closing its inaugural Growth Equity Fund with over one billion dollars in aggregate capital commitments eighty percent which is available to deploy in new investment opportunities and to help its portfolio companies scale. And let's stick with the VC scene a little bit more and funding. Let's get back to Emerge America's comfort Over in Miami,
Crypto tech workers moving there, so did VC deals. Therefore, so Miami is not at the level of the biggest hubs like here in New York or over in the Bay Area. I'm bringing only a fraction of the deals compared to these major hubs. According to pitchbook will bring in more. That's our someone on underground, Kasba Wang's their
partner at Safire Adventures. We want you to read about what the opportunities are in Miami because Safi Adventures doesn't have an office there, right, but are you making investments there?
Thanks first, well, thanks for having me on Caroline.
You know, we don't have offers in Miami, but we constantly look for opportunities that are outside of the Bay Area and New York and some of the core tech markets. I would say the invasion here at Emerge as well as the broader Miami city has been amazing, and I've got the opportunity to title a lot of founders INBC, specifically in certain areas like crypto, AI and developer tools and all that.
Of course, you're largely sort of focusing on bigger, later stage company is what are the opportunities for that in AI? We were just hearing from the CEO of Emerged saying this year it's pivoted from all things crypto into all things artificial intelligence. What sort of companies attract you?
Yeah, one hundred andtent So, you know, we think AI is a super trend for the decade, next decade to come. In the short term though, however, you know, the processes that are being disrupted by AI in the short term from a value creation perspective, are actually better captured by incumbents to some extent. Right, So let's say, you know, if you're trying to build the next generation salesforce, salesforce by adding AI on top.
Coul potentially do better than a company.
So I look for companies and founders that are a unique take on AI and how to apply AI to certain business processes.
And the way I think.
About this is, you know, compared to let's say the Internet, right, we don't have new speed as a way of consuming content from the Internet all the way onto your Facebook came up the content news feed, So we're still waiting for that big more for long term value creation. I can already see multiple pockets where AI could really come in and create real value and disrupt existing business prophecies.
Casmer, lend us your expertise as to how you're sorting week from chaff, because there's an awful lot of people who is suddenly an AI company or an AI startup that weren't a few months ago. So how you ensuring that what they're building is really changing the way in which productivity could be.
Yeah, Caroline, this is a great question. This space is emerging, sol fask. Frankly, it's very hard at track, even from an investment perspective, right we at Saftware Adventures, we've started, We've been investing in AI for last decade almost, So this is not a brand new thing. It's just the GENERVD models themselves have been a new way to interact with human beings and add certain chat functions that are familiar,
familiar to the users themselves. So for me, I really look for one again, a founder that has a unique take on a specific problem, So not necessarily just starting from technology, but starting from the business problem itself. That's that's probably number one, and the number two from a pure technological standpoint, I'd like to understand how they differentiate from the incombent solutions. Right, Better it's a distribution advantage. Better,
it's you know, pure technological advantage. Do they have a new take on distribution Because at the end of the day, again going back to my point earlier, AI, you know, just applying to existing business process doesn't solve the distribution problem and in Combent's own distribution, So that's a big thing. I keep seeing companies and then I keep trying to challenge founders on what's their unique take on this Ksber.
What's interesting is what seems to have the crypto world really concern right now is regulatory lack of clarity. And we still have a lot of concerns. Let's say, in the way in which AI is currently being built, the ethical nature in which it can be scaled. Do you worry about regulation? How do you see the CEOs, the founders you're talking to navigate that one.
Yeah, that's a that's a great question.
Again, I think, you know, first of all, I think AI statey should be top of mind for both.
Regulators and builders at the same time.
I think in the value there's the sense of, you know, you try to build first and ask for forgiveness later sort of thing. And I think that philosophy and mentality doesn't necessarily apply to AI. Now we are, you know, despite the fact that in some sense we're kind of closed to AGI, you know, we're not that closed yet, So we are we do have some time to.
Figure this out from a framework perspective.
Well, we do want to see some real clarity around. You know, regulars come in and draw the lane for companies and founders to play within that lane. And you know that just takes time and takes practice, and given how fast is spaced is evolving, I'm assuming the regulations probably will come not this year, but that year.
You specialize partnering the B to be SaaS companies as well. That isn't just all things AI. There's things like cybersecurity. You go to old, good old kind of almost economic resilient building of cyber companies. Where else is attracting you? Because it can't just be checks being written to AI, or can.
It one hundred percent?
Look, I would say, going back to my point on AI, you know I don't think about AI specific companies. I think about how people apply AI into cyber marketing, sales and all the other pockets and B to B SaaS. Right, it's today you don't you don't find a company and say we're mobile, right just like tomorrow, I don't think we'll see companies who say their AI only and cyber to me is an incredible, you know, incredibly exciting space, right.
I think you know number one, cyber has been the top priority for enterprise spending, but everybody is looking to get less get more out of last.
Right.
It's the analogy I uses like our iPhone. You know, when we first got our iPhone, we've got you know, ten apps on this we can keep down on the new apps. Now we've had a thousand apps on iPhone, we're not going to download new apps. And similar thing is happening in cyber too, where the ce cells, the
key buyers, they're looking for consolidation in real time. And secondly, I think what's incredibly interesting exciting is you know, the talent shortage in cybers unfortunately not going away and you know anytime soon.
So there's going to be opportunities.
For companies to come in and provide not only just you know, alerts and and and insights, for the companies to provide a laugh nat solutions for those companies and buyers who want to tackle cybersecurity challenges.
How so, I thought those are incredibly.
Exciting, all very exciting, but how much these founders are having to get to grips with where valuations are now at, even for something as exciting and exuberant as AI or cyber.
Yeah, look, Caroline, I think it's a great question. I don't have a crystal of all. I would say, though, I think valuation is coming down real time. You know, it's bridging the public market and the product market is bridging real time. Now, at what point, you know, do we get to an equiliby room where we started seeing a lot more deals happening. My personal gas is probably we're still a couple of quarters away.
From that point.
But I would say, you know, efficient growth has been a big, big carendy word this year in the value for good reasons. And one of the key reasons and one of the key online statement behind efficient growth is not our growth is created equal.
Right, We're going to have high.
Growing eye probid companies that are flying today that might not be a big public IPO, companies that could go, you know, grow efficiently. And what happened now is investors are looking for proof points for each efficient growth earlier on in company cycle. So instead of just looking at growth early on series A, series B, they're asking for efficient growth stoner than later, which is not a phenomenon that's impacting the funding market.
And how how much are you being impacted by the fact that the exit market is pretty close? There's consolidation as you said, but maybe not so much from a regulatory perspective, from the big American companies being able to buy up smaller ones as we've previously seen, and the IPO market is still pretty short.
Yeah, yeah, totally.
Unfortunately, most of our propolic companies have you know, years of cash on their on their balance sheet. We believe most of our companies are building resilient, long term, sustainable B to B businesses that they will always have a demand right. The way I think about this is, you know, economy is a function of productivity growth and B to B SaaS is a big driver behind that increasing productivity growth, and a.
Lot of our companies are index to that.
So you know, the way I think about is there's n demand market, it's just how we get from point A to point B while surviving this downturn.
Kasper, great to spend some time with you go have you so Fana over at the conference. Caswa Wang, partner at Saffar Adventures. We continue our coverage of the Emergent America conference, where a look at the labor market gender economists. Categor Roy joins us from Miami. She's a CEO and founder of Pipeline Equity uses artificial intelligence to help companies address and take action against gender biases in the workplace.
In Kostka, when we look at these more headlines that BuzzFeed is going to be laying off people, we know metas started to execute on this way. Are they thinking about how they lay off people and how it affects some of their overall gender equity and other areas of equity.
You know, what we've seen so far is that that actually isn't true unfortunately. So for instance, the tech labor for US is about twenty six percent women, and yet so far they've been about sixty five percent of those laid off, which is really unfortunate because we're actually taking a step backward in terms of gender equity in tech at a time when we actually need to be moving forward. Given all the advancements in artificial intelligence.
And everyone's so excited about artificial intelligence, How does your overall data work? What do you use the power of AI to do?
Well?
What we actually do is ensure that every people decision that companies make, so pay performance potential for instance, are actually equitable before they're made. So companies for instance, to pay gap analyzes and what we do is actually ensure the pay gap is closed and keep it closed.
And how does AI take that a step forward? How are you starting to see other companies develop on this?
Yeah, so what we're actually seeing is that, for instance, if you look at performance reviews, what we do is actually look at and we use natural language processing, and we find about a third of all performance reviews can came biased, so we can actually correct that before that performance review becomes part of someone's permanent employment record, and
that actually catalyzes companies toward equity. We've seen, for instance, on average that our customers increase equity by sixty seven percent and the first three months on our platform.
We love how hearing how AI is actually practically being used in here and now Kasika ROI enjoying Miami, which is a pipeline equity. That is it for this edition of blu Meg Technology. Do you not forget to check out our podcast's on Apple Spotify and I heeart this a Blitu Meg didn't they ta