Bloomberg Audio Studios, podcasts, radio news from Mahard where Innovation, money and power Collie in Silicon Valley, Nbon. This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
I'm Caroline Heide at Blomberg's World headquarters in New York.
Ed Ludlow is off. This is Bloomberg Technology. Coming up the.
US awards TSMC eleven point six billion dollars in grants and loans in an effort to boost that domestic semiconductor manufacturing or break down what the move means for the US chip production. Plus, in his annual letter to shareholders, JP Morgan CEO Jamie Diamond likens artificial intelligence to the invention of a steam engine.
Will discuss his views on how the technology is changing the world and his work force and blue checks.
They're back and Eno Musk's X the social platform makes a U turn as it offers premium features to popular accounts for free thatsas Musk takes on Brazilian court leaders. Details on that and so much more throughout this hour, But focus on the public markets as we look towards CPI print coming on Wednesday. All eyes focus on what the bond market is doing yields actually curringly up three basis points, and in fact we're seeing the highest levels
for the entirety of this year. But it's not pulling back on any sort of risk taking in the equity market thus far. We still see the NASA pushing up some five tenths of a percent. So keep an eye on some of the key names that are driving US high.
And even as bond markets do still worry about basically basically inflatory pressures and what that means for a federal reserve and the likelihood of a cup coming throughout the rest of the year, Bitcoin still charging to new highs for at three point five percent higher seventy seven hundred and fifty six, or we're back at near those all time highs. Move on, some of the other risk assets to the individual names are on the move in the
individual benchmarks. Tesla best performed on the last that one hundred. We're up five percent. Now remember this a beaten up stock, worst perform on the S and P five hundred so far this year. And Elon Mus trying to switch the narrative here, trying to move from the worries about ultimately deliveries being weak even a concern about the cheaper models, and instead wants us to focus on robotaxis and whether
or not that big unveil will be enough. The booster stock coming on August the eighth, so exactly four months time.
I'm looking at.
Amazon encroaching on all record highs percentage point one hundred and eighty seven, as yet more desire to be getting into.
This stock pushes this name higher.
I'm looking though, at the key story of the day, and this is where we've got a drill in for TSMC. Of course, Taiwanee Semiconductor giants getting eleven point six billion dollars in grants and loans to be putting its third fab in Phoenix, Arizona. This is all about the latest infrastructure play to ensure that we've got domestic chips made here in the United States. Then it could be the underpinning of artificial intelligence. This stock is up two point two five percent on the ADRs.
What does it mean for the broader ecosystem? I'm pleased to say.
Advisor's capital management partner and portfolio manager Joanne Foeni joins us with your expertise and the chip making field, and John, how important is it that we get foreign expertise into the US to continue with a supply chain that has proven to be broken on previous minds of what two or three years ago.
Yeah, Caroline morning, You know, the value to the US of having more domestic manufacturing at the leading edge or close to the leading edge of semiconductors is strategically pretty important.
Right.
We are all looking at geopolitical instabilities and risks, particularly in the Asia Pacific, and so this builds on Taiwan Semi's ability to spread their manufacturing around the world. They already have announced plans in Japan and Germany for lagging edge manufacturing. They already have operations here in the US, but really really limited. This will bring to the US a significant portion of some manufacturing close to the leading edge by the time it's done.
And that'll be that will help stabilize things.
It also de risks Taiwan Semi a little bit for.
Investors, Okay, de risk to a certain degree.
What's been interesting is other companies, when coming into the United States wanting to boost their manufacturing, have worried about the limitation on labor. Have we got the right Ultimately, rest of the joined up approach here. Yes, you can get the money, you can get the grants and the loans, but if you've got the talent pool, yeah.
It's a real challenge.
So when I was working up at Albany Nanotech as part of the team there that was trying to bring manufacturing to upstate New York, and there wasn't much beyond IBM in the Hudson Valley. We had to invest in the local industrial infrastructure, if you like, not just labor, but also machine shops and other support to a fabrication facility. Intel is going to face those challenges in Ohio because
there's very little infrastructure there in this area. Taiwan send Me at least already has plenty of operations in Phoenix, and they're going to have to do more, and so training programs in conjunction with local technical colleges and community colleges helped to create that funnel. Fortunately, chip fabrication plants
tend to be very capital intensive. It's not a lot labor that ends up getting hired here, so these subsidies aren't really about creating jobs, although you hear other politicians say that probably most of the jobs are in the construction of the plant itself. Once the plant is up and running, you know, maybe one thousand or two people.
So it's not a huge number. And I know people are focused on this concern about labor, but we do have great engineering schools in this country, and once the job opportunities are there, you tend to see more kids flow into those programs. Plus you add in the customized training programs from the companies.
Okay, So the companies, when we think of TSMC being one that is really making the most of subsidies, loans grants being offered, so too is Intel as well. And I'm just interested as to how much you think this money this chipset will be filtering into foreign entities or indeed more more local US presence.
Well, you know, the leading edge in manufacturing, unfortunately for the US companies, has been taken over by Taiwan, Semi and Samsung. Intel had made some mistakes in their planning for manufacturing design.
They chose a path.
That ultimately didn't didn't work out very well, and now Pat Gelsinger is trying to shift that path to the more modern alternative and it's going to take them some years and it's going to be costly. So in terms of the US strategic goal of creating more supply of chip manufacturing in this country, we have no choice but
to include foreign companies like Taiwan, Same and Samsung. We will see if Intel ultimately as successful and bringing their manufacturing up to snuff, but right now they're trailing edge.
Move it on and consider for US, Joanne, ultimately whether or not you say it takes some of the risk out for investors, does it really take the risk out of supply chain concerns going into the next ten twenty years that we've seen that hit so hard during COVID.
No, Caroline, and I did you ask that question deliberately to get no answer. I mean, there is just a global integration of manufacturing, not just in chips, but you know, as we saw during COVID, also in protective clothing and devices, and we don't ever really want to undo that. We value incredibly and benefit incredibly from trade and having countries specialize in manufacturing the things that they're comparative advantage favors,
and we get cheaper goods because of it. Consumers benefit around the world because of that, that separation of production by specialty. So we don't ever want to undo trade flows, right, But what we want to do is shore up the infrastructure of politics and economics, hopefully to keep disruptions to
supply chains as low as we can now. Obviously COVID or something like that, another pandemic comes along and we're gonna have problems, and so we have tried to onshore more production of critical items, and that's what the Chips Act.
Is all about.
What's been interesting is there's been for example, Bloombag Intelligence saying, look, ASML chip equipment maker is likely to be another key player that fits from some of the grants.
The loans, the support, the subsidies that the.
US government currently has. Any other key players that come to mind, Well, yeah, I.
Think that's the right to point out the equipment guys. The more chip fabrication facilities that are built, the better it is for LAMB research, for applied materials, for ASML KLA. You know, all the chip guys, and all the gas suppliers and the other smaller equipment suppliers like say of Eco instruments. You know, there's a lot of beneficiaries. This is a very large industry and so it's pretty broad.
And also the companies that use these manufacturers Benvidia, a M, D. Apple, they all benefit by having a source of supply that's more globally diversified and therefore less subject to geopolitical risks.
We always love having your perspective and currently thought and your nose when they're necessary. Taran Feenie of Advisor's Capital Management, thank you so much for joining us. Monday, Jamie Diamonds annual letter to Shareholders out and guess what the focus is out?
Official intelligence?
We want to dig in as to why he's once again calling this out in his letter. Fishinali Bassek of Blomberg News. Twenty seventeen was the first time he mentioned official intelligence in his share letter, but this time it is the key driver of the entire letter.
It feels like, Yeah, it is the scale and the scope at which he mentions it that is different from prior years. But to your point, he has mentioned it a lot before, and certainly we know that JP Morgan has invested a lot of money in this, So what is different this time around the scale at which they're
using it. The use cases have jumped from about three hundred use cases a year ago to about four hundred now and importantly also The number of data scientists and machine learning experts have also been rising over at JP Morgan. Interestingly enough, last year when he mentioned artificial intelligence, it was one of the specific issues, but it was still behind climate, and this time he listed this as the first and foremost issue for JP Morgan.
Ahead, I mean, just to put a find a detail on it.
What was it two thousand machine learning and AI data experts that they've got had, and also an emission that the talent pool is going to have to change.
He's willing to say that will be jobs.
Lost, absolutely, and also that the ones that are not lost will have to be retrained. He's pretty specific about that. In addition to the jobs, I think the investment that's being made is also very interesting, Caroline. Remember they have invested about two billion dollars to build new data centers.
And he sees this movement to the cloud as inextricably linked to the AI revolution, if you will, and he has said that this movement towards AI in this society at large is as revolutionary as the steam engine or the advent of the internet, and so data centers are really interesting here for JP Morgan. About thirty percent last year of their applications had moved to the cloud. By
the end of this year will be seventy percent. So that transformation is pretty drastic when you look at just a year over your tear change for JP Morgan.
Yeah, because I think we like to focus in on the fact that Jamie Diamond's been there saying, look, your kids will only have three and a half day work weeks. They will be cancer free because of this AI technology. But he does then go into cloud. He does just go into technology more broadly.
Yeah, he certainly does in a few different ways. It's flattered throughout the entirety of the annual letter. He talks about it in terms of JP Morgan's own investment, and I think interestingly as well, he talks about this year over year as well. But the competitive set not just from fintech, but from the likes of Apple, and the
language also gets more pronounced as you go on. Whereas last year he kind of brings up Apple Pay and Apple Cards, certain services for Apple, this year he says it holds money and moves money, it lends money and so on. It effectively acts as a bank, And he brings us up in the vein of regulation and all the players that are not facing regulation in technology and financial services. So it just kind of underscores here his intensity to not only keep up but change JP Morgan as we look ahead.
And maybe you'd say the close runner to his talk about technology is his less thing guarded approach to regulators.
Throughout the entirety of the letter to we thank you so much.
Nani Bask always able to jump on this news flow with us.
We thank her for it.
Meanwhile, let's just stick on the markets. Let's stick on artificial intelligence dominating.
These markets a little bit more.
January is with us 'BC Bruin Dolphin, head of market analysis, and look, we have seen markets continue to be near record tized, whether it's the S and P five hundred, whether it's the NASDAC and are you anticipating that remains the case, Janet, even as we worry about a CPI print, for example here in the US.
Hi Carelin, thanks for having me. So we believe that this equitedual market led by artificial intelligence will continue, even though you know then might be bumpy inflation data along the way. We have already seen how the market has performed despite higher bond yields and despite our central bankers being being less dubbish recently, so I think there are more sickular and mega transfactors that.
Is driving the equity market rally there.
I think as long as the inflation is our rages, there's no shock. I think as long as bard yeals remain pretty stabilized, I think the MarCad rally can continue.
Does it broaden?
Though?
There's a really interesting piece out on the Bloomberg today just showing how Wall Street at the moment is trying to find a different way of playing the AI optimism. Yes, you've already put your money into in video and it's up another seventy percent year to date, it was up two hundred percent or more than last year. But what about some of the emerging market players. What about the infrastructure to be had elsewhere? We're just showing a Japanese name tower that's done particularly well.
Well, absolutely so, we actually favor a bass head of exploser to semiconductor equipment makers are related names, so of course Navidia would be the dominant player. But equally, we think there's plenty of opportunities across the entire semiconductor value chained. So I think some of the other players for example,
in memories, in infrastructure, in intellectual property. They may not yet have the recognition or significant valley like Navidia, but there are plenty of opportunities, so we feel that it perhaps is a good way to play it via equal weight basket of stocks exposed to that theme rather than just you know, being a field selected stocks.
For instance, it's interesting you mentioned in video and a lot of some of the risk in amid the exuberance around that name has been its relationship to China, the fact that ultimately it depends on China as the end market, and of course in manufacturing as well. How much do you think geopolitical headwinds are going to be something that we need to consider a bit more in the second half of the year.
Well, we always need to consider geopolitical factors, but I do think that in that case US stocks are likely to outperform the x US regents if you talk about AI stocks for instance, because I think, as we all seen already, there are plenty of subsidies, looks and grants for a company to actually produce in America, so the entire value chain may shift more and more to America. So I do think that the American companies may be less impacted by these political residents. Obviously, the China play,
we're not very very interested in that. I think some of the em plays may also be more at risk if there are more tosks of trade tensions and drop political tensions. So I do think us off should be better in the circumstances.
I'BC Ruined Dolphin, head of market Analysis.
Generally, it's always great to catch up with you on the show in your global perspective.
We thank you for it. Look, we're going to go a little bit more global in a moment.
We have a conversation on cybersecurity with the former try for staff, a cybersecurity and infrastructure security agency that.
CASA, Kristen Todd.
What she's seeing about concerns relating to Microsoft and ultimately exposure to China.
That's up next.
This is bloombag Technology. It's time now for talking tech. First up, Paddy Cosgrove. Well, he's returning to the Web Summit tech conference. The news comes after he resigned, remember back in October of last year, after he made a political statement on the conflict between Israel and Hamas following the October seventh terrorist attacks.
Because where the.
Co founder of the Web Summit tech conference confirmed the news on x that he is returning to his role as CEO.
Plus's AI demand.
Quickens Ali Babara's slashing the cloud prices globally defend off rivals and revived growth.
Now.
The move comes amid a surge in.
Demand for cloud computing to support a global boom in AI development, as well as some pretty complicated internal restructuring, and some key lawmakers have struck a deal on national data privacy here in the United States. The landmark agreement reached by the House Energy and Commerce Chair and the Senate Commerce Chair, would be the first time established federal consumer data privacy rights would be formed and allow Americans
to sue companies such as Google and Meta over violations. Meanwhile, the Department of Homeland Security Cyber Safety Review Board has been out with a report on Microsoft that was pretty damning. It assessed the Microsoft Exchange online intrusion that occurred in May and Junior twenty twenty three. Stig in to what that report showed, the limitations and over all the cybersecurity
spaces it sits right now. Former chief of Staff for Cybersecurity and Infrastructure Security Agency Kissed and Todd is with US and currently serving as the president of Wondrous and it's great to have some time with you. Kissed and we don't want to sort of overlook this. It came at the beginning of last week, but it almost sort of highlighted one oh one cybersecurity etiquette that seemed to have been failed over at Microsoft.
Can you just detael a little bit about what you thought about the report?
Sure, So, the Cyber Safety Review Board, it was launched in twenty one and it was really executed in twenty twenty two. This was the third investigation that it conducted, and last August, the Secretary of Homeland Security said that the review Board was going to look into this intrusion that occurred, as you said in May and June, and what it found, most specifically was that the intrusion was
preventable and should have never occurred. The intrusion itself hacked into the email systems of over five hundred individuals in twenty two organizations, but specifically it hacked into the email of the US Secretary of Commerce Gina Ramundo and the US Ambassador to China, Nick Burns, prior to an official visit to China, and what the review board attributed this breach that should have been preventable to was the fact that it identified Microsoft as having poor security practices, a
lack of transparency into the breach, and a lacks corporate culture when it comes to cybersecurity.
And we've got to remember of the frustrations that gena Romando Commas sectuary showed in particular of a trip to China and what was ultimately unfilled by China at the same time, just the Huawei phone that was suddenly presented, and everyone realizing this moment that perhaps some of the limitations on tech from US to China perhaps isn't doing the job that many had thought. I'm interested in the Threat Act and known as Storm zero five to five eight that seems to.
Have been what's at play here.
But how much should Microsoft have been able to prevent all of this and or how many other risks are the overcoming on a day to day basis. We've shouting out one particular failing, but how often are they achieving what they determined to do well.
This is the big concern because we continue to see these types of breaches happening from Microsoft vulnerabilities and I have a former colleague at SISO who talks about the fact that we say vulnerabilities, but in fact their defects. When you prioritize adding features over security, this vulnerability of infrastructure only increases. And the challenge really this is a national security risk because Microsoft is ubiquitous across the federal government.
It is one of the largest, if not the largest technical technology company in the world. But importantly, the US federal government has its essential services underpinned by micro Microsoft technology, and importantly, these are the services that support national security. So when there are vulnerabilities in the Microsoft system, that translates onto our national security safety.
I think matchwas than adas well.
I think what was interesting about this report is early on when the investigation initiated, Microsoft said let's make this a cloud service provider investigation, and the report did that, and it talked about the other companies, Amazon, Google, Oracle all having better security practices. But I think the key piece here is this isn't necessarily a commercial competitiveness issue
other than government looking at options. But in the very near term this is a national security issue because we've got to be paying attention to the resilience and the safety and security are of our infrastructure, which is underpinned
by technology that's created in the private sector. And I think one of the most telling pieces was the last October, the directors of intelligence from the Five Eyes, which are the countries New Zealand, Australia, Canada, the UK, and the US came together in Silicon Valley in an unpressed, dented meeting to meet with the CEOs of those technology companies to say, we have a real threat from China and you may not have built your company as a national
security company, but your technology is now part of the national security of this country.
Kessentad, it's so great to get your expertise across this. Thank you for well reminding us why it is a little a crucial President of Wandras, we thank you.
Apple has another new next big thing under exploration home robots. The company has teams within its AI in hardware engineering organizations exploring the feasibility of bringing robotics driven devices to market. The company is testing a tabletop device that uses a robotic arm to move around an iPad display. For instance, if a user is on a FaceTime call, the screen can move to mimic the head movements like a nod or the turn of ahead as the person on the
other end of the call. The more interesting product under consideration is a home robot similar to the Amazon astro that can follow a user around their home. Some ideas for that include video conferencing, as well as a pie in the sky ambition for the robot to be able to conduct household chores, such as cleaning dishes before they go in a dishwasher. Any release is probably many years away. If it happens at all. I'm Mark German, this is Bloomberg.
Meanwhile, let's get to check in on these markets, because overall we are seeing equity markets managing to drift higher, and it's that one hundred and tenth of percent. We're coming off of our highs, though, and that might be in the face of borrowing costs that continue to rise. On the bomb market, we're seeing two year yields up another three basis points, let's call it four point seventy seven. We're also seeing the ten year yield up at the
highest in November of last year. Why, we're worried about inflationary pressure, and we'll be getting yet more data later in the week. On Wednesday, the CPI print many bracing for and what that means for the Federal Reserve Bitcoin though, I mean shaping off any concerns with the bond market a risk asset up another three point three percent, again off of recent highs. But we're seventy one thousand, six hundred and sixty eight managing to rally through the weekend.
Move on to some of the individual names that we've been keeping a close eye on, and well, TSMC has got to be a key name if you're trading the American depositary receipts.
That is, we're higher on the day.
Why eleven point six billion dollars coming in grants and loans for this particular chip maker to be building yet further fab units, a third one in Phoenix, Arizona. All of about the supply chain here in the United States. ASML could be a key winner in this particular area as well. Bloomberg Intelligence out with a great note saying like ASML chip equipment maker based over in the Netherlands could well be doing well from the chips act over here in the United States.
We're up a percentage.
Point and Tesla best performer on the NASA one hundred today. We're up more than five percent. Now, all of this as we see perhaps a focus more reorientating on robotaxis tesa CEO Elon Musk saying that the ev maker will unveil its a long promise Robotaxi on August the eighth, exactly four.
Months from now.
That that's years after first hinting at plans for a dedicated robotaxi back in twenty nineteen. Shares at Hazer were, as we see, rallying on this news after the announcement, even as the company has recently been struggling with a week sales competition from cheap Chinese electric vehicles. Plenty of concerns that have pushed this share lower throughout the course of.
Twenty twenty four.
But let's just switch gears and look at what else Elil Musk has been focused on of late, because of course X is one of them, and the blue verification check mark on X. It's been reserved of course to paid subscribers since must overhauld the social platform up until now, because Mask recently decided to grant the status marker for free to those with enough followers, which is roughly what it was like previously, but because of what it has
become some qualifying newsers now sound a little embarrassed to have a blue check mark back, and they want their followers to know that they are not paying for it, or please to how welcome Bluembergs Astin Card to the show, who's just been writing about this in the daily newsletter and Austin just give us some of the anecdotal evidence that people are a bit worried about looking as it they pay for blue check mark.
You know, in recent days, we've seen a lot of these very high profile users who were not paying Twitter, and in fact had their blue check mark revoked by you on eighteen months ago, suddenly seeing that verification status appear in their profiles again. And you see a lot of them tweeting saying number one, I did not pay for this and number two I want to turn it off. You see, there is an option within the settings menu.
So you saw some like the high profile producer of The Wire, David Simon, he was very much complaining saying that he was not paying for this blue check mark, that he would never pay for it. He does not support Elon. And I think what this signals is that the blue check mark has gone from being a status of verification to being something a little bit more meaningless, if not devoid of value, maybe overly politicized. It means something more than just this is your true identity and
you are somewhat of nod. It's really had this sort of controversy installed embedded into that blue check mark since Elon took it over eighteen months ago and promised to get rid of this what he called a lords and peasant system of verification.
Yeah, go back to therefore the change of heart for Elon Musk himself. What hasn't been working under the new system.
So when he took it over about a year and a half ago, he felt the process was corrupt. It was essentially given out to celebrities, politicians, you know, other notable figures, brands, and he just felt the process was, you know, nonsensical as he described it. He felt it was unclear who could get it and who could not. So when he took over, he revoked it in mass for a lot of very famous people, which created a
lot of chaos. And the way the system he replaced it with it required you to pay for a premium subscription at least eight dollars, maybe sixteen dollars a month and then you would go through a review process and get a blue check mark. The issue was all the people whose blue checks were removed did not sort of re engage with the platform. They saw it as a
sign of protests. They'd created so much content, so much engagement on the platform, and suddenly, you know, someone like Lebron James, he would say, wait, I have to pay for my own blue check mark now. And then on the reverse end, you saw a lot of people who supported Elon suddenly rushing to buy this blue check mark, and it almost became a symbol of what whether you were supporting what Elon was doing with Twitter or perhaps his worldview his politics has approached a free speech and
so it became overly politicized. And now again it really I'm not quite sure what a blue check mark means if you have it in your profile, does it mean you are who you say you are, or that you support Elon or you just like paying for Twitter.
Let's just talk about Elon's commitment to free speech for a moment and the global aspect of it, Austin, because over in Brazil it looks as though there has been a push by certain well judges over there to want to clamp down on the use of Twitter and next and certain voices to be heard on the platform. Now in a masque is saying he's lifting certain restrictions in Brazil, basically defying court orders over there. Can you give us sort of ultimately what's brought us to this moment?
Sure, he has defied a court order in the Central reactivated certain accounts that the court had ordered banned. It's still early in the details. We don't quite know what accounts have been reactivated. We don't know why they were ordered blocked. But a judge there is apparently opened an inquiry into the matter and they're looking into and forward. But I think what it boils down to before we know all the details of how this happened and what
the nature of these accounts were. It really symbolizes Elon's so called free speech sort of purism. He sort of presented himself as this free speech advocate that will do anything to promote principles over profit, as he put it. When he sort of said on x that he was going to reactivate these accounts for the good of the free speech. He would even leave Brazil, shut down their office, sacrifice the revenue if need be, and that is definitely
the brand that Elon tries to project. But we've also seen many sort of hypocritical instances of this, especially in the US where he's banned journalists, where he's essentially removed verification status one from the New York Times because he disagreed with some of the reporting, and then in other instances, you know, there was a famous instance where Elon, when people were protesting and trying to get AD supporters to block their supportive of Twitter, you know, he considered banning
those users too, who are sort of trying to boycott the platform. And so we have this sort of tension point between Elon's values and an Ex's business model, which has been really struggling to generate revenue since Elon acquired it. So you're seeing that play out in Brazil, and it's a good question about why he's sort of standing up for these particular accounts and whether or not you will actually commit to that at the expense of Ex's revenue down.
There, probably lose all revenue in Brazil and have to shut down our office there. As he posted himself, Austin Karr, thank you so much for bringing us up to speed and a great news that you had out this morning. Meanwhile, coming up, fight over diversity in corporate America continues as HISS DEI related causes and cases to keep piling up.
We'll discuss all.
Of this with hell Alice cofounder Elizabeth Gore next. Meanwhile, let's just keep a track on some globally traded stocks right now. Atos over in France, French ita company pretty in battle. To be honest, it's going to be presenting a debt restructuring plan today as the company's top shareholder one point seats to build, they say, coalition. They want to offer an alternative rescue plan for this particular name.
It's been under pressure.
Look at how the share price rallied over the course of the European training day.
This is Blue med Technology.
Hello Alice as a fintech startup offering grants, networking opportunities and access to finance for entrepreneurs from underrepresented groups in particular, it's just announced a new Series C funding round in our values the company at one hundred and thirty million dollars. Now, this is despite being on the front lines of a
litigation war over diversity in corporate America. Six months ago, it was hit with a lawsuit by the conservative activist group America First Legal, which has lodged at least six other DEI related suits elsewhere. It claims a grant program by Hello Alice Co runs for black owned small businesses is discriminatory.
Now, the startup has had.
To spend six figures on fees for three law firms so far, and we're going to dive into this ongoing legal battle and indeed, well the ultimate growth of the business too. Hello Alice co founder and president Eizabeth.
Gore is here with us.
And this comes at a time where the DEI discussion pendulum has swung significantly and there is this view that people giving an allocating grants to people of color is in some way discriminating against white founders. Now, how has that been a distraction for the business or actually hasn't been a galvanizing force?
You know it?
I will just open with it's been a galminizing force. We just hit one point five million small businesses on the platform and we serve everyone at Hello Walie in with the five and a half million small businesses that are launching right now in this country is great time to be in fintech.
We think, and we provide credit.
And loans, grants, and we've done forty million in philanthropy and grants, and we're very proud that those have gone to women, people of color, US veterans, and white males. But we're capitalists at the end of the day. We want to make sure everyone are included in the small business ecosystem.
It's critical.
How's any of your use a base.
Any prospective clients ever brought this up and I said, look, the fact that you'll giving grants to minorities, I feel discriminating.
No.
In fact, when we announced that we were being sued, we've had hundreds of thousands of letters of support, emails, people coming out. We're based in Houston, Texas, and we've got our vets coming out in support of African Americans. We have women's coming out and support of men. The small business community, particularly after COVID has really galvanized. They're growing now. Capital is tight right now. I will give everyone that, but they're really a savvy community that they
have to have each other. If you look at Main Street, all those shops are working together to scale everything we need in this country. So that support is there from everyone. We have never heard a complain about it ever.
And so when you're fundraising out there looking for a Series C, how much you're having to talk to potential invest is about the use of the money for a business case, or indeed for a legal case. Is any point not having to be commingled.
Well, sure, I mean there was a lot of tension when the case first came out. There was concern about the quote legitimacy of our business, and I'm here to say that we are now one of the fastest platforms for financial technology, offering credit and.
Loans to small businesses.
We're about to be profitable, which is really exciting for a fintech. But you have to disclose lawsuits a lawsuit, and that's why we think that these are very distracting. We think they're a waste of money. Everything we've done is perfectly legal, and we want to make money for our investors. We want to make money for our small business owners. And I'm really happy to say despite all this, we have significantly grown. It took investors a minute to step back be like, WHOA, what is this?
What is this going to impact me?
And they're capitalists at the end of the day, and our business is growing, We are making money. Our small businesses are so no matter what, they came back in and funded us and we disclosed our Series C.
So we're pretty stoked.
So you remain committed to the philanthropic in depths on the bronze absolutely, What do you remain committed to in terms of your own technology?
What are you doing and building now?
Well, what's really exciting is the evolution of AI. My co founder Cohen Rods has really been on the forefront of that for a decade and now that it is getting i would say cheaper to access great data, it allows us with our we have a proprietary Business Health Score that score small businesses financial health from zero to one hundred and gets them ready for that next step of funding. So that Business Health Score is now being used not just by us, but everyone from Wells Fargo
to Chase. So it's a great time for our business and we're continuing to say that we are here for small business.
We're going nowhere come back as well.
The legal dispute continues. We thank her for her time. Hello Alice, co founder president Elizabeth Gore. Tens of millions of Americans they're gearing up to witness the solar eclipse today, when the Sun will become almost entirely coven by the moon, so first time in almost a century that the western and northern parts of New York State will experience a
total eclipse. And though the entire event will last for several hours, the main spectacle when day turns tonight, is expected to last only about a four minute period, and it will still be going to cost the US thirty gigawatts of solar energy, the output of roughly thirty nuclear reactors.
Meanwhile, Let's Shift.
Gears movie producer David Ellison is in negotiations to take charge of Paramount. He and his backers have agreed to pay a little more than two billion dollars to Sharry Redstone's National Amusements and the family company that controls Paramount.
We want to break all of this down.
Someone's been writing about it significantly like Chet partner Rich Greenfield, and Sharry Redstone likes this offer from Ellison, thinks that he can bring about new growth for the business in its entirety, not sell off assets to immediately.
Rich. Do you like this deal?
Look, this is first of all, we haven't seen exactly what the deal looks like and what all of the different pieces are. But I think if you're the you know, National Amusements, which is effectively Caroline the Redstone family, they want an owner that is going to love the asset take care of the asset in much the way the Redstone family has taken care of the Paramount Studio for decades. And I think that's one of the big attractions here is you know, merging, because again.
What this transaction actually is, it's not a sale.
You know, National Amusements is selling their stake in to Skuidance, but it appears the rest of Skydances being folded in, So essentially it's Paramount buying Skydance and Skydance taking over and having control of overall Paramount.
But this is not a sale.
There was you know, it does not seem that National Amusements wants to sell the entirety of Paramount to private equity and see the company broken up into pieces or sold for parts. That doesn't seem to be something they want to Remember, what I think a lot of investors forget is this is a controlled company.
So just because.
Public shareholders want something does not mean the company has to proceed down that path. That is the danger of a controlled company when you're investing, and if you don't like it, don't invest in controlled companies.
Because ultimately you might end up with a slightly dilutive deal that leaves you slightly poorer. Ultimately, though, could what is the narrative that now needs to be built by Allison or anyone else the current board membership of Paramount say this will in the long term still reap you benefits.
Well, Again, if you're Troll shareholder doesn't want to sell the entire company, then you really have essentially three choices. If you're sitting as the Paramount board, you can do nothing right and you literally just operate status quo. I think the board recognizes current strategy isn't working. Paramount plus bleeding, you know, a billion two billion dollars not a meaningful player in the streaming wars. So I don't believe they want to move forward with the current strategy.
Now that they could.
Fire management, totally, pivot strategy, follow more of the arms dealer of content strategy that Sony has pursued.
Doesn't feel like that's something.
They really feel comfortable doing, nor do they know exactly who they would bring in and then the third piece is do a transaction that, while at least in the near term diluted to public company shareholders, at least gives long term you know, there's a long term pitch to the board that I guess makes sense in terms of how they're going to invest build Paramount Plus into something bigger, use more technology. And I think it's that whole idea
that the board is obviously dealing with. And if you have only you know, if it's really only do nothing or do a transaction that's diluted, you can understand why they might like the diluted transaction because the status quo is not working for Paramount and the company is in more and more trouble. And I think, you know, the only reason the stock is above ten dollars a share was the hope of a transaction, ideally a sale to a third party. I think now the question is, is you know,
how cheap will Skidance end up with this asset? Because I think investors are finally realizing today that the sale to.
A third party isn't happening.
Yeah, I mean that has been passed over Apollo Global Management selling off person specific assets or indeed, I mean Warner Brothers seem to have been dead on a rival.
Rich.
I'm interested in the technology element you just articulated because as Devid Allison has some prower notably his own father of course, with Oracle having founded it, but he is someone who wants to lean into tech.
What could technology bring paramount?
I mean, look, look look at what Skydance has done on the animation side. I mean they've been you know, they went out and hired the creator or the key elements of Pixar Films, John Lassiter. So John Lassiter doesn't work for Disney anymore. He left Disney many years ago. He now has one thousand person animation business, and so that obviously there's a lot of technology that goes into animation.
John Lassiter's now at Skiddance and they've just you know, recently announced that their slate of films is moving from Apple TV Plus over to Netflix, and so their first major release that John's had full control over comes out at the end of this year.
Obviously they think they have the next Frozen.
But so you have some really exciting developments on the Skydance side that our content sort of infused with technology that creates long term opportunity. And again, I think if you're sitting at the Paramount board, you're in a tough situation.
Stock is down dramatically.
I mean, you look at any you know you've got the year to data, but if you look over the last several years.
This has not been a good stock.
The management team has made you what appears to be critical mistakes by entering the streaming wars believing they could, you know, compete with the netflixes and the Disneys. They clearly can't. And so now the question is what do you do. Do you just start shutting things down, do you fire everyone, or do you look for a strategic merger that, even if it's not great in the short term financially, gives long term growth potential or at least a story.
That the board can get comfort with.
And my guess is the board is getting comfortable with that story being the best alternative.
That story still being written as we stan Rich Greenfield come back on it soon. We hope of like shed great to have some time with you today. Meanwhile, that does it for this edition of Bluebog Technology. You do not want to forget to check out our podcast so much to be digesting you find it on the terminal, as well as online on Apple or Spotify and iHeart. If you're based here in North America, have fun viewing NA Eclipse.
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