From Mahard where Innovation, Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and.
Ed lud Love.
And Caroline Hyde in San Francisco. Ed Lulow is off. This is Bloomberg Technology coming up the US set to unveil sweeping tarras on China targeting EVS, batteries and more details ahead. Plus we'll sit down with the CEOs of Grinder of Akamai to break down their latest earnings results and Apple apologizing for its latest ad after the online backlash. We'll discuss that and so much more throughout this hour. First, it's going to quick check on these markets and look,
it is three straight weeks of games, folks. That is the best winning street we've seen since back in February. But on the day, we're actually just pulling back a little, only two percent on the NASDAK. Some mixed economic data coming through, in particular some of the confidence consumer confidence actually falling quite significantly in the previous month. That because of lingering inflationary issues, labor side concerns. But nevertheless we're
down some two tens percent. But the sock six hundred over in Europe on a tear are up eight tens ofven percent, and in fact we are have just a real run of good gains in Europe as we see earnings beat time after time, every single industry group up to finish the day over in Europe. Bitcoin echoing some of that slight risker version, but notably we're also seeing well the first time you're seeing crypto exchange volume are
actually falling in about seven months. So post bitcoin etf slight pullback, slight reality bump, we're off by two point six percent. Move on, have a look at some of the individual movers that we're looking on the micro perspective, and Warner brother Discovery actually your best performer when you're looking at the Nasdaq one hundred at more than three percent. Yesterday, Lucashaw breaking the news that David Saslav is looking to control costs here once again. Maybe even more job cuts come.
Remember they've already fired some two thousand people. We could see a real focus on ultimately profitability at the moment. For Warner Brothers Discovery, we're seeing actually Apple off by more than a percentage point. That we'll get into the woes that is the pulling of the ad when it comes to the iPad that's seemingly crushing of ingenuity and human expression, suddenly not being liked. Apple apologizes we were down a percentage point. Tesla also down two point three
percent earlier. I've been training higher. Now Is this something to do with the fact that now we've got a flip reverse on what Elon Musk is currently doing with superchargers. Yes, he is going to be selling focusing on some five hundred million dollars of investment in that area, swift reversal from what we'd heard the previous week, the fact that he was of course firing the entire team of the superchargers.
But also is this more to do with geopolitics? Is this more to do with the fact that the Biden administration is potentially set to unveil a sweeping decision on China tarras next week, targeting key industries, including of for
Tesla's perspective, electric vehicles and batteries and solar cells. Would that mean we get Chinese backlack on US producers such as Tesla joining US and Wall Bloomberg's Mike Shephard, who's in Washington, and my incredible reporting coming from the team at Bloomberg, and it does seem that what this is finally after years of decision, more focus on China and a targeted manner.
Well, it certainly is, and I'm glad you brought it up in that context. The team did such a terrific job really going after this for weeks and weeks to try to figure out when and in what manner this decision would take place and how it would hit. And it is really shaping up in those three areas that you outlined. This is going to be one of the most significant moves that Biden has made since taking office
with respect to China. It is one of the most consequential because it affects that big round of tariffs that Donald Trump announced back in twenty eighteen, and that has been the subject of a lot of back and forth with the world's second largest economy since then.
Therefore, are we expecting more back and forth? Are we bracing ourselves to the fact that if this comes that this does indeed target more of the evs, the solar anity We've already seen some focus on metals, even though then have a broad implication. Are we going to have more tip for tat here is China going.
To respond, Well, China respond to this morning at least with a verbal volley objecting to this. You'll recall that, you know, with the emergence of news about the export controls aimed against Huahwei, that they saw that as economic coercion. They're complaining about this as well. The response to the news last night was swift from the Chinese government.
They're concerned.
However, the retaliation from China may not come in the areas that are directly aligned with the policy that we're seeing, and we'll expect next week. Senator Chuck Grassley, according to our reporting, is indicating that we may see a retaliation in agricultural products, trying to hit America where it hurts a different place, and it's something that in the past has been targeted by Beijing.
Just to stay with us, Mike, we've got some breaking news this being reported by the Wall Street Journal. So building on the Bloomberg reporting that apparently min administration is actually going to quadruple tariffs on Chinese evs. Now, how broader implication is that, considering not many electric vehicles are actually shipped from China to the United States.
Well, you're right, and the whole idea of this, at least with EVS is it's symbolic in a way, it's low cost for the Biden administration to quadruple EVS because there is no consumer impact at home. Remember, when you raise tariffs, it is not the country that is targeted with the tariffs that pays the cost. It is actually the consumers in the purchasing country that actually pay the price,
and in this case there are. China does not have much of an ev market presence here in the US with its makers, So the administration is trying to do two things. It's trying to show that it's tough without imposing too much cost, but it is also trying to create a bullwark so that it is harder for Chinese makers to break into the US market, which is becoming increasingly amenable to the idea of EVS.
We'll see also what Europe does. We know that Europe has been focusing a lot on EVS when it comes to China as well. Mike Shepherd bring in to have you, thank you so much on the latest when it comes to tariffs. Now, all of this, well is the context with which you're trying to invest more broadly across assets At the moment, the geopolitics is a key headwind. Let's dive into that and the impact on equities in tech in particular with Mona Mahazan. She's senior investment strategist to
Edward Jones. And once again we're just Monas seeing more and more navigation necessary by big tech companies of geopolitics. Is that an overhang for you? Yeah?
Thanks, Carolyn, It's a great question. Look, I think as we get closer and closer at election time period, we will be hearing more and more about the policies that both sides of the aisle will be proposing, and a lot of times what we see is the impact is felt in an outside way way in certain sectors, and technology is certainly one of them. I'd point to healthcare
as another, depending on regulation and policy that's administered. Higher taxes, as was noted earlier, higher tariffs taxes in general does tend to be inflationary, so we have to think about that.
Will the administration want to take that step or is this more symbolic in nature in that we don't want to one enter a more meaningful trade war with China, but two we want to signal to them that they cannot be flooding the market, whether it's EVS or any other end market or good that they may be trying to get into into the US. So keep in mind some of it is signaling, some of it has real meaningful implications for areas like technology. But we will get
more and more insight into how these policies manfold. I think as we get closer to the November time period, I'd say more broadly, we are looking at a market that has been driven still by the momentum behind AI and tech anology and megacap technology in particular, But we do expect that to broaden over time.
And can that broadening with stan still issues you mentioned infrastory pressure coming from Taris. Infrastry pressure is still something that the FED is still very focused on. We're hearing from many a FED member at the moment saying we're going to be higher for longer. We see the stocks just take a little bit of a dip on the back of that context, Mona, are you expecting inflatory headwinds to limit some of the increase in the stock markets from here?
You know, Actually we are in the Jerome Powell camp, who he did outline. You know, he had the famous line he doesn't see the stag and he doesn't see the flation. We are also of the mindset that we do think inflation can gradually, perhaps not in a straight line, but gradually move more meaningfully towards at two percent target. For a couple of reasons. One, we do see that shelter and rent component playing some catch up. We are seeing the data in real time if you look at
a ZILLA rent index move meaningfully lower. That has not yet showed up in any of the CPI baskets, And even the PC basket, which is a lower part has a lower exposure to shelter and rent still hasn't moved meaningfully lower, So we think that's coming. Number two, we are starting to see more meaningful potential slowdown in the wage gains component of the labor market. So labor market a couple of early signals of softening, not only the non farm jobs are poured on Friday, but also the
jobless claims figure this week was elevated. We think over time there'll be better balanced in the labor force, more supply coming in, less demand for jobs, which will lead to softer wage gains, which has a direct implication on services inflation. So a combination of shelter and rent and a softening labor market we think will lead to better inflationary trends going forward.
That, combined with.
This earnings growth picture that we are seeing continuing to outperform and improve meaningfully, we think is a good headwind or sorry, tailwind for equities broadly.
Interestingly, here in San Francisco, the one key thing that comes up time and time again is how expensive engineers are. Whether it's particularly in the field of AI, software developers a little bit less but still arguably about a million
in terms of their overall pay at the moment. Mona, I'm interested in what you make there for of AI, the tailwinds of AI more broadly, are we going to see you mentioned the broadening out which industry groups in particular is the healthcare industry groups that we start to pile into.
Yeah, you know, it's a great point because thus far, what we've seen is most of the gains from the AI trade have been felt by the enablers of AI, the infrastructure players, the semiconductors for example. We do think over time you will see the sectors that will benefit from the productivity gains of AI start to place a
meaningful catchup as well. They mentioned healthcare, that's certainly one of the sectors, but if you look at financial services, if you look at manufacturing and industrials, all of those sectors we think will be beneficiaries. And this is over you know, not a twelve month period, but probably more like a three to five year period. We will start to see those productivity gains come through. And keep in mind those sectors are not only prevalent here in the US,
but globally. When you think about where manufacturing, financials, industrials tend to lie, it does tend to be in non US markets as well. So we think there is a case to be made to have exposure to the US. We like having exposure that megacap technology, but also the sectors that may benefit from AI, but also international we think still plays a meaningful part of your portfolio.
Thanks for going global with us. We love it. Menahajen, great to have you on Senior Investments. Stanks Jone had Edward Jones stay well, happy weekend. Meanwhile, well, look, maybe not a happy weekend for some if you're looking at the infrastructure here in the US, it's severe solar storm is expected this weekend and it threatens to trigger blackouts, disrupt navigation systems, knock out high frequency radios around the world.
And this is the first time, it's January two thousand and five that the US Space where the Prediction Center, has actually issued a G four geomagnetic storm watch. It's the second highest on a five step scale, and it says multiple waves of solar energy are going to be bearing down on the planet now five eruptions, some material from the Sun's atmosphere of forecast to arrive starting late on Friday and persist through Sunday. Coming up, we'll hear
from Snapchat CEO Evan Spiegel. Spiegel when talking all things social media as TikTok ban looms here in the United States, what did he have to say at yesterday's San Francisco tech e Ben Meanwhile, t SMC on an absolute tear. Let's focus in on the fact that it's April sales jumped sixty percent. You won't guess that it's a stayed demand for AI chips with me, there's a broadening out here as well. We've seen perhaps a bit of a bottoming out in the global smartphone industry as well, returning
to growth for them. We're seeing it really paying out for the world's largest contract chip maker, this will be their technology time now for Talking Tech first up Elon Musk's U turn on superchargers Now, the Tesla founder says that the company will still spend well over five hundred million dollars to grow its charging network this year. Now. The news comes just over a week when Tesla actually fired nearly roughly five hundred people who were running the
charging business plus for years. Now. Soft Bank has quietly sold off billions of dollars of assets from its flagship Vision Fund now, a sign that basically found in Masseosti's son is shifting away from broader venture capital deals towards investments in just semiconductors and AI.
Now.
Since the end of twenty twenty one, soft Bank's Vision funds sort its US portfolio shrink almost twenty nine billion dollars, and Microsoft enters the mobile gaming arena, announcing it will launch its own version of a mobile game store by July, taking on the likes of Apple and Google Now, the browser based store will debut Microsoft's own games and offer discounts on in game items Misoft says that eventually it will open the store to other publishers at a later date.
Let's turn from gaming to social and snap CEO Evan Spiegel is urging the government to develop a more comprehensive framework for dealing with national security issues. Social media rival TikTok faces a divestment or band ultimatum. Now here's part of what he had to say at Bluebog's technology event in San Francisco.
Always focused on communication between family and friends and making that really fast and fun and visual, and I think that's why we've been able to continue to grow through all the changes that you mentioned. Now reach more than eight hundred million people. So, you know, I think just sticking you know, really staying focused on those close relationships. They're the relationships that mean the most to us, are the people we talk to most frequently.
And enriching that, you know, through Snapchat.
With visual communication, with stories, with the math that allows people to see what their friends are up to, where they are, what they're doing. All these sorts of products I think help bring people close together with the people that mean the most to them. And I think that's really what's you know, led to our just enduring growth.
We actually have a poll, a TikTok specific poll.
What is your opinion on the TikTok ban.
I'll be bummed when TikTok is banned. TikTok should be totally banned care either way, So please vote. Are you a TikTok should be totally banned kind of guy like that? Seems like it would be an opportunity for you.
It's probably a no brainer.
But really, what I think is is really important is that we come up with a durable framework to deal with these sorts of national security issues. I think the United States has recognized that there are these issues, but has sort of been dealing with them in sort of an ad hoc, one off kind of way, And I think that has real implications for the economy looking forward.
If you think about how.
Many businesses in the United States, you know, have a relationship with China, you know, whether or not they manufacture there or they sell their products there. I think it's going to be really important for those businesses here in the United States to get a lot of clarity around what the government thinks is totally okay. Maybe that's like kids toys and diapers and those sorts of things, no problem, you know, but sensitive technology chips, you know, things that
could be used in weapons, probably not okay. And I think the sooner that the United States government can be clear about the areas where they think business cooperation makes a lot of sense, and also clear about the areas where it's you know, maybe not not okay, the more stability we can have in our economy, and I think we can you know, maybe better strengthen that relationship.
I think it's the uncertainty that's tricky.
So you know, I think the more the government can share about how they're thinking about those risks and you know, really create some clarity for business, that'll be helpful.
Now TikTok's not banned yet, there is uncertainty for some of their really important stakeholders, like creators or advertisers. What are you guys doing to take advantage of that uncertainty right now?
The most important thing we can do is just focus on our own business. Folks have lots of alternatives when it comes to short video. You know, they can use Spotlight, which is on our platform, or YouTube.
Shorts or you know, Instagram reels.
So I think there are a lot of different opportunities in the short video space. So what we've continued to do is just focus on what creators love about our platform, which is the relationship they can form with their audience, and that's primarily through our stories products. So creators love using stories to just show what they're doing throughout their day. And because we revenue, creators don't feel pressure to do
all these brand deals. So Snapchat content just feels very authentic, which is why their viewers and their audience, you know, really love it and why that resonates with them.
And then they use tools like Spotlight.
To get more distribution to help people discover them so that they'll add them and watch their story on an ongoing basis. So I think that's a pretty unique value proposition we have for creators, and we're just going to, you know, really stay focused on that.
Snap CEO even Spiegel yesterday, let's talk earnings now, with Grinder posting its first quarter results showing revenue growth thirty five percent year every year, let's discuss all of it, the margin as well, and the expansion of products. Grinder CEO George Arrison is here with me, and George you're saying in your statement, this is a really strong set of numbers. Still loss making, but much smaller loss.
How are you not a real lass from the financial perspective, because it's all weren't related, So we'd have warrants because we did as back and warrants are held as a liability right, and so when you're we have an operating profit and then a loss because of the warrants. So from the business perspective, we didn't lose anyone and.
An adjusted EBITDAR that's showing margin, that's improving.
I mean, we did very well on even are fourty two percent, which I think is really healthy. And we're investing in the busines at the same time.
So and where are you investing because you do talk about your product roadmap. In fact, you're bringing two key products to bear a lot of technical innovation that comes to the chat parts.
Well, yeah, so that was a really big launch for us. We launched a new chat architecture. People would lose chats every time they switched phones before and there was a huge complaint. So that's not going to happen anymore because chats were hosted locally on your device, So we moved away from that. We are when I joined, we didn't really have a long term part problemap. We spent a
lot of time last year working on that. We believe there's huge extension opportunities for the product, extending it into more into dating, building feature sets to support dating and do that not in terms of what other people did day, but what dating world will look like in two years one A What like, well, AI is going to be first, right, Like, I think people will expect that social networks will actually drive connections through AI rather than through filtering, because today
the dating problems haven't really fundamentally changed. It is you come to a page and then you filter what you're interested in. I think that's going to really change.
So you're going to be pushed people because they can the AI can already understand you exactly.
Even from activity that you do on the app, or even activity from the outside the app. Right, Like, there's so much information your text messages about who you are, what you're into. What if there's a world where you uploaded a bunch of your text messages and we use that to understand who you are. I'm not necessarily saying we're going to do that, but those are the kinds of things I think that ay, I will allow companies like us to do and so we don't have a
broad dating specific features are today. We have a lot of dating that happens on the app through conversations and chat, but not in terms of like features for dating specifically. And so as we build that out, I think there's a huge opportunity to kind of skip over the world we're in today and go directly through the world will be coming in a couple of years.
What's interesting is, of course that means you have to have a lot of your community buy into that from a security perspective, and I know that at the moment in the UK, for example, you have been sued because of what you claim is four years a mischaracterization of the way that you were running the businesses practice four years ago. But when there is a concern about privacy, how do you start forward?
So two things. One is for us, privacy is a paramount in sixty concerns in the world, being gay is illegal, and we have users in most of those countries, and so we need to really protect our user privacy because it's not just a matter of life good for business, it's a matter of their life and death. In some respects and so we take that really really serious thing. We do a lot to protect user privacy. That's where you can get on Grinder without giving a photo, for example,
learn her the verification to support user privacy. Secondly, we've never shared any HIV or medical information with any advertiser ever, So it's a complete miscarpectation of what Grinder doesn't do. We've never done that and we never will. So we're going to fight that last suit very vigorously because we don't think it has a merit. But it's also important to remember that whatever they're seeing might have happened which is not true. Happened along there claiming happened a long
time ago, two managements ago. So this is a very different regime at Grinder today than was under Chinese ownership in twenty and eighteen. So you know, I think that's an important thing as well. I think users have to trust us. That's that's really important for us, and that's why we make privacy such a big deal at the company.
I wish we had longer, but we've got thirty seconds. One thing you are hiring.
Again, we are We've grown our chetreeam about fifty percent on the last quarter and we have a lot of roles open across the company.
George, come back, thank you for talking us through it all. Grind the CEO, George Rrison, on that thirty five percent, you're on near growth in revenue. Welcome back to Blue Meg Technology. I'm Caroline Hide in San Francisco, and let's just get you a quick check on these markets, because today we're currently seeing well, the market just a little bit sanguine on the broader benchmark. But then as that
one hundred actually turning into the green. Now that we've had a relative wealth of overall contexts coming from the Federal Reserve, We've had FED speak still saying look, we're going to be keeping these rates higher for longer. You've also had on the flip side, some slightly weaker economic
data when you're looking at consumer sentiment. Add that together and look, we're just still up about two tens per percent, and in fact we're on call for the best well a three straight week winning streak when it comes to benchmarks, actually the longest winning street that we seen since back to February. So we're currently higher. We're see the stock six hundred on a tear as well. Europe once again seeing another day of gains and that's been ramping up
higher as we see earnings doing well. We're seeing tenure yield just up four basis points there. So still factoring in perhaps some of the supply that we've seen this week from the bomdernd auctions, but also perhaps still some sensitivity to FED speech saying we're high for longer. Move on to have a look at some of the individual movers that we're having a look at, because ultimately we've got key TSMC moves that we were just shining a light on at the previous part of the show. That
TSMC up more than will call it five percent. Another great month April, just showing that revenue is higher and growing at a faster pace than the market had anticipated. Of course ongoing AI demand, but also factoring a global scene for smartphones it seems to be bottoming out and seeing some recovery and revenue growth, so key for that chip maker. We're looking at Tesla off by one and a half percent, whether that's the reversal that we've seen
on its superchargers, whether or not. It's also the fact that we're getting more tough talk coming from the US the Bloomberg reporting that maybe we'll see increased tariffs coming on Chinese evs in particular, and what would that mean for the Tit for Tap? Could that hurt Tesla a little bit? So we're seeing it just down and video at one point four percent. Doesn't look like some of the chip makers are going to potentially be hit anymore when it comes to the Tit for tat with US
and China. Remember we've got in VideA earnings still to come. But meanwhile, I want to take a quick like another key stock ack am I currently falling now? This is after forecasts for revenue and adjusted earnings per share came in well less than where the market had wanted to see it. Here to walk us through some of the numbers and the content distribution part in particular, that seems to be the weness. As a CEO, Tom Laton and security revenue was good, up twenty one percent, Compute revenue
good up twenty five percent. But it's a delivery revenue that is under pressure. Is that what's really hitting the revenue forecasts?
Yes, exactly right. You know Internet traffic always increases, but it's not in a straight line. And we have the world's largest content delivery network, and so when there are dips, we feel it. The good news is that we really diversified our business beyond delivery to the point where now two thirds of our revenue is security and compute, and as you noted, both of those businesses are very strong,
great growth and great potential. And I think over time, as we have more and more of our revenue from security and compute, you know, the dips you get from time to time and Internet traffic, we won't see as noticeably on our overall performance.
Interesting diversification key what's took me my interest was a large social media customer optimizing its costs. As what was put forward as to why you've downgraded so many outlooks. Who is the social media player? Are we seeing that more broadly.
Or is it just one Well, we do have a very large social media company and they are cutting back as best they can on costs, you know, facing some geopolitical pressures, I would say more broadly. You know, we've seen sort of a week past couple of months in the gaming vertical and in video, and there's been a lot of reports out there talking about you know, subscriber numbers,
you know, and traffic as a whole. And so we feel that because you know, we carried most of all the video out there and a very big for the gaming companies, and so that creates a little bit of a dip in our outlook for the year. That said, we raised our outlook on security and compute, both of those business is very strong.
Tom, You're the perfect person to therefore ask, because I'm reading between the lines here. A geopolitically affected social media company has got to be TikTok, and I know that you have expertise when it comes to security and more broadly an exposure. At the moment that we're seeing of US companies to China, how much you seeing geopolitics weighing on your business and the business of your clients.
Well, there is some concern there, and you know we made a disclosure that in particular, if the law does take effect banning TikTok, that could impact about a percent and a half of our revenue next year. You know, it shouldn't have a direct impact this year, and it remains to be seen if the law will go into effect.
Are you trying to diversify out of exposure to China more and.
More time well, we want to diversify our company as a whole. Today we have seven customers at one percent of revenue, and you know the goal is to have a broader and broader base, and I think we've done a really good job of that, both within the customer base and also across product lines and geographies, so that you know, you won't see much of an impact, you know, as we go forward, when you know particular things happen on the political stage, or you get a dip in traffic.
And I mean with the wealth of patterns that you have and the focus on security, where are we in the cybersecurity landscape? How much are you seeing in particularly the age of artificial intelligence, it becoming harder and harder to ensure that we are protected in some way from our data.
Yeah, things are in a very challenged state with cybersecurity, particularly with the advances in gen ai, which as of now are very helpful to the attacker. It's much easier for them to generate very malicious malware. We're seeing a lot more breaches and I think the key now really is to develop the internal layer of defense for an enterprise because probably you're going to get breached and the key is to identify it quickly and to proact block
it spread. And there we have the market leading solution with guardacoor to stop the spread of ransomware and data exfiltration malware. And that's a very rapidly growing segment.
For US and a key acquisition made Tom Layton thank you so much spending time with us Yakami a CEO, on all of geopolitics and indeed the revenue from the business. Meanwhile, at our Bloomberg Technology event, I actually talked a little bit more around AI but the infrastructure within coming from chip makers MPARE Computing. The CEO, Renee James, was on stage with me to discuss the state of well the semiconductor industry, some of the competition there. Take to listen.
I had worked in semi conductors obviously a long time, and one of the unexplored areas was continuing to deliver performance but a lower and lower and lower power because one of the things that we had the luxury of doing in the early days of high performance semi conductors was just to use more power, like make them more powerful. We got faster, but we threw more power at it.
So when we started the company, we said you know, we don't need to start a company to prove that we know how to make semi conductors or that to do what we'd already done. So really what we wanted to pioneer is what we call technical term efficiency frontier, which is that knife sedge between super high performance but
at lower power. And up until the time that we started ampere, low power met low performance, okay, and so people would think about it and they'd be like, oh, yeah, we have a super low power device, like is it for a cell phone or is it you know whatever, even though nowadays phones.
Are super bowful.
So we endeavored to build products that could be air cooled. And we of course had been building microprocessors. My core team and I that started the company. We'd been building microprocess for a long time, as you pointed out, and we of course knew that you know, that mL AI
was a major workload. We're thinking a lot about how much power takes and how are we going to even be able to build all these data centers because we had we had been a team that had worked together on the first phase of build out of what you now call hyperscalers, and we knew how big these data centers were getting and how much power these chips the combination.
Right, So that was our thesis.
You can do this at lower power. You can do this in a way that enables all these workloads and stay air cooled, which means you don't have to build a brand new data center with liquid cooling, and that you can stay within the envelope of kind of you know, think about being landlocked. When you build a data center, you have a certain amount of power in that footprint. How are you going to ever upgrade to better compute.
It's a relatively new chip company and it's making inroads into market share and PR computing CEO and A James there. Of course, twenty eight years you'd had an Intel before spotting her own company coming up, we're going to be joined by Index's partners, Nina at Chatian. She's scared her take on AI investing trends of course, where she's seeing the hype in the reality that's next this will be my technology.
I think twenty twenty four is going to be a monumental year for AI.
The current generation of models that we're seeing out there is still in one hundred million dollar range, you know, I think all of this can scale to one hundred billion dollar range.
LAMA three should not be open source. It's a national security has to open source.
We are trying to be the most responsible actors that we can be and think about what are the potential externalities that could be caused kind of accidentally by this tech.
I also worry about over hyping of human extinction risk.
I think that is blown out of control.
I feel like today every single company has to guild their own AI.
They run the risk of being left behind.
Yet the theme there it was AI of cross every single conversation yesterday when we're at the Blueback Technology event, and let's keep that conversation going. He now shady and is with us in Next Ventures partner who joins us to today's VC spotlight. A boy, you've been busy writing some checks backing some AI companies and are the valuations out of whak?
Well, thank you for having me, Caroline, It's great to see you. Yes, there is definitely a tale of two cities. If you are an AI company right now, you can raise in the one hundred x er or multiple But if you're not an AI company, it's still trending around ten x. So there is a huge discrepancy between the valuations for AI and everybody else where.
Are you seeing the value therefore in AI investments, where would you want to be allocating checks when they are at a heady price point?
Yeah, So for us, it really comes back down to the basics. Is this company building something that has true ROI for their customers? And we're really seeing that a lot in the application layer sometimes focus on very specific verticals. For example, we invested in this company called Viscom. They build software for industrial designers. So think anybody that has to design a shoe, a car, a piece of furniture may use AI to help these industrial designers accelerate their process.
And they had some inbound interest very early on from huge companies like Ford and New Balance, And so those are really the areas that we find attractive to invest clear customer, clear ROI, and of course over time we'll see more and more of these.
Hopefully you're leading the team here in San Francisco, and I'm sure there's many an entrepreneur who've used US who's interested in how therefore this called gets your interest? How did they get your inbound? Did they come to you? Do you come to them? How you finding out these jewels in the rough.
Yeah, Well, for us, it's all about investing in people, and so we try to build relationships with folks very early. Sometimes this is while they're still at their current job, or it could be through a network that we have of our own entrepreneurs. And so we really meet people in all different avenues, whether it's a pants referrals from our own entrepreneurs, or even just outbound, and so we're always open to meet great entrepreneurs.
Where are some of the other use cases of AI really peaking your appetite there? It seemed to be more the visual perspective in the way in which ultimately we can spark creativity. Look at the backlash the Apples ad like there's a worry about creativity being stifled rather than rather than augmented. But where else is oxygen intelligence and generative AI reaping rewards for some of the companies that you look at?
Yeah, so, I think the code generation space has been an area that a lot of people have talked about, and there's many companies that have popped up in the space. But that seems one that's an obvious use case and we've already seen a lot of customers, even Fortune five hundreds really putting down, you know, commitment to try out these new codegen softwares companies like Augment for example, and others,
And so we're really excited about that use case. And then if you think about anybody that's using pen and paper and has a lot of unstructured data, that really is ripe for the use of AI, because now suddenly you can make sense of all of that data and really integrate into your workflow something that will accelerate what you're trying to do.
That sparks my imagination back to a conversation with may havebb yesterday of right REI, and she was saying, like, ultimately scanning all the cools from other companies right now who are running out of money and they would need to be bulled. Is this something you're seeing of a generation of AI entrepreneurs that companies off the ground but they can't sustain it from a cost perspective. Absolutely.
I think we're going to see a lot of consolidation in the space because everybody talks about how it's a war for talent specifically within AI, and it's just not sustainable that all of these companies can exist at very
high valuations when they're still very early in revenue. And so you know, we saw that very early on with Mosaic and Data Bricks, of course, the Inflection and Microsoft partnership, and so I think we'll start to see more and more of that over time, and hopefully, you know, two plus two one plus one will equal greater than two.
Are we going to get more of these weird kind of acquihighs though, because the Inflection Microsoft deal it was a relatively extraordinary one.
I wish I could tell you it was extraordinary. We were also scratching our heads a little bit on it. But look, I think it all comes down to acquisition of talent. And I think for a lot of companies that have raised money and they're struggling to find that product market fit, I think it could be an attractive path for them moving forward.
We've only got forty seconds left, But where else, if not AI, where can still be a good investment.
Look, I still think this transition from doing things manually to digitizing them is really important for some of these massive industries. For example, there's a company that I invested in called Siso. They're trying to be the work day for the agriculture industry. So right now, in the agriculture industry you have to do a lot of paperwork on
digital onboarding completely manually. So doing things like that and helping those huge industries really transform to tech first, I think is a huge opportunity.
Wish we could talk more. Nina, Thanks for coming in. Thank great to have you here. Nina shout in which is an Index Benures partner right based here in San Francisco. Now, let's go back to the new meg Tech event that was held right in this city yesterday. Flow co founder and of course well known for being the We Work CEO, Adam Newman, sat with our own Bradstone yesterday to discuss his attempts to win back We Work.
Take a listen, and we're just at the middle of all of it right now. But just to explain a little bit more about it, our bid was six hundred and fifty million. The bid that seems to be the one that they're considering to confirm at the end of the month is four hundred million. It's the difference of two hundred and fifty million. The number is very important. I'll explain a second. Why two when in bankruptcy and I'm learning a lot about I've never heard anything about
it before, so it's all new. I didn't think bankruptcy was a beauty competition.
I thought bankruptcy was where there is a line in your in your in your brief.
Yeah, it's it is a lender brief. I thought it was whoever is going to give the best offer, and when you base it, you based well, what is the other offer? What's the plan that So they show a plan and they give numbers, and just to share a few numbers in the plan that's going to be presented to the judge at the end of the month. The plan says that the average two numbers that are very
easy to track, average revenue, member and occupancy. The two numbers that the current plan is forecasting would be the highest numbers we have seen since twenty nineteen, which is as far as we can go, which I would call peak office and would hockey stick, and they would have to achieve those numbers by the end of this year.
I'll say a little more. The profit margin of the margin of the buildings would have to go from sixteen percent margin, which is the last number that we saw right before it went declared bankruptcy to twenty four percent. That is fifty percent growth in margin by the end of this year.
And this is under your plan or the plan this is you're saying it's could be hyperbolic.
Oh, I'm saying it's definitely unpheasical.
But let me just ask you.
I mean, don't the creditors have a legal requirement to, you know, to take the best deal? So what is there something? And you said it's not a popular early content. So if it was, you know, why if they looked at your deal and perhaps had a legal requirement, had a very very self interested requirement to take the best deal, why why do you think that they have bypassed.
We're maybe getting we're getting very technical, but let's say one, I.
Don't think it's a technical question.
Well it is because your real question you're asking is is the judge obligated to take the best deal or does the judge get to choose what deal he's going
to take? And I think it gets quite technical. But let's say something else, just about back to what I said, from sixteen percent to twenty four percent, fifty percent growth in one year without spending any money on an old on a business that now has aging buildings and what I think is one of the worst office markets maybe in the history, but definitely of the past forty years. Look around just here in San Francisco, but it's a
global phenomenon. If they achieve these very rosy plans that I think are unfeasible, they would then need to in twenty twenty five grow from that to not go cash flow negative.
Weird old five it's going viral. That was part of Apple's recently pulled advertisement, of course, for the new iPad air. The company facing backlash online after the ad depicted so as you can see musical instruments, TVs, paint cans, other creative tools being crushed into an iPad. Apple issued a rare apology for the advert and said that an upset many creators and other customers. The company also said it
will not air the ad on television as planned. Meanwhile, let's just talk about healthcare for a moment and a huge acquisition that Oracle did a twenty eight billion dollar one two years ago to acquire electronic records company Serna, promising a revolution and healthcare technology. However, interviews with more than thirty current and former employees and customers show that
software maker has lost at least a dozen centers. Large clients used to say that Bradie Ford is the guy behind the very well word story and so what they're all in on a healthcare but the clients don't seem to slight the time together.
If you are anybody with a brain, it's hard not to look at the healthcare system of America and say, something's not right here.
We can fix this.
Apple's done it, Google's done it now, Oracle's done it consistently. They found, hey, this is tough to disrupt, right, and so Oracle said that we can buy this company, which makes essentially if you're at the doctor's office and they're taking notes, prescribing stuff, all the kind of software for medical facilities they run that. They said, if we buy this, we can integrate these systems well, put it on the cloud, make it run easier, or a tech company gener today
grows some generative AI. Turns out it's hard. So it's been really tough. They haven't been able to make the progress they've wanted. The company they bought it was kind of on a downward trajectory. So I mean, this is not all Or's fault. But in the two years since they've purchased it, the outcome has been revenues down, Customers have left, They've fired three thousand plus people. It has
been tough going. And when they bought initially the talking point was this is going to boost our earnings, revenue growth engine. Exclusive financials we reviewed show this has not been the case.
We've got thirty seconds. But the move to Nashville, then I'm not gonna happen to Nashville.
Look, it's hard to say.
I saw some other documents that when they moved to Texas more people are still in California. So what does the headquarters mean? Is it a state of mind? Is it where all your employees are?
We do not know.
It's a state of mind, very cooled, natural state of mind. We thank you so much for being with us. He's going back to New York. I'm going back to New York. That's it for this edition of Bloombg Technology. Do not forget to check out our podcast. You can relive so much as the great content that came out of the event yesterday at San Francisco. This is Bloomberg