Speaker 1: From the heart of where Innovation of Money and Power
Speaker 1: COLI in Silicon Valley, NBR. This is Bloomberg Technology with
Speaker 1: Caroline Hide and Ed Ludlow Ed Lovelow here in San Francisco.
Speaker 1: Carola Hide off this week, this is Bloomberg Technology. Coming
Speaker 1: up on the program. The banking fallout continues. We'll bring
Speaker 1: you the details on spob's bankruptcy as hearings continue in Washington.
Speaker 1: What does it mean for Silicon Valley founders and vcs
Speaker 1: and more than a thousand tech heavyweight call for a
Speaker 1: pause on the artificial intelligence boom to implement safety protocols.
Speaker 1: We'll break down what's inside the petition, plus chip stocks
Speaker 1: getting a boost as analyst upgrade and video and Micron issues.
Speaker 1: An upbeat forecast will discuss what's driving momentum. But first
Speaker 1: let's going to take on the ARC. It's technology a
Speaker 1: big driver. We're fully in risk on mosing out performance
Speaker 1: in the NASA one hundred, but the Philadelphia Semiconductor Index
Speaker 1: in particular. Why a pretty bullish outlook for the fiscal
Speaker 1: third quarter from Micron, which we'll get into later in
Speaker 1: the show. Yields also coming back a little bit of
Speaker 1: the US ten yere at three point six percent. Bitcoin
Speaker 1: kind of caught up in this risk on rally above
Speaker 1: twenty eight thousand. It's highest level in dollar terms since
Speaker 1: June of last year. Look, it's been a good run
Speaker 1: for tech stocks in particular. Look at the NASA one hundred,
Speaker 1: very tech heavy index. We're heading for a pretty blockbusters
Speaker 1: quarter that's just gone. Of course, we're getting towards the
Speaker 1: end of the march, a few sessions left to go.
Speaker 1: As we bring up this Bloomberg terminal, please miss the
Speaker 1: director to visualize the point that I'm trying to make.
Speaker 1: Whether we continue that momentum is all about the FED.
Speaker 1: Remember that Thursday core PCE the Fed's main measure that
Speaker 1: they're looking to that will answer a lot of questions
Speaker 1: in terms of the direction of travel for rates. That's
Speaker 1: the macro picture. Here's the micro Kitty Greyfer, New York.
Speaker 1: What you got, hi? Add why I have a lot
Speaker 1: green behind me. Let's start with Micron, like you said,
Speaker 1: issuing an upbeat outlook for the fiscal third quarter. Sales
Speaker 1: expected about three point nine billion dollars, that is above
Speaker 1: the average analysts estimate. You could see Micron shares up
Speaker 1: about six percent almost six percent. Other chip stocks rising
Speaker 1: as well, including a video shares are hired by about
Speaker 1: two percent. You had Piper Sandler come out and raise
Speaker 1: their price target on this stock to three hundred dollars,
Speaker 1: so giving shares of boost. Moving on outside the chip space.
Speaker 1: Carnival also cruising today. They got an upgrade from Susquehanna
Speaker 1: ahead of get this wave season. Apparently that's when the
Speaker 1: cruise industries offers discounted rates. I didn't know that. Pretty interesting.
Speaker 1: Paychecks also rising as well, up about five point seven
Speaker 1: percent or so. But let's talk about the banks, because
Speaker 1: that was the big story today. What happened in Europe overnight.
Speaker 1: You have Sergio or Mandi coming back as UBS CEO
Speaker 1: starting in early April to oversee that acquisition of credit.
Speaker 1: See in this chart behind me shows that in the
Speaker 1: eight days since that acquisition was announced, we've seen shares
Speaker 1: rally getting another bounce today. Ed Katie gray Fell with
Speaker 1: the Movers will track those throughout the hour. Turning from
Speaker 1: UBS to the banking crisis here in the United States,
Speaker 1: you're going to be looking at live pictures of the
Speaker 1: House Financial Services Committee hearing day two of the Regulatory
Speaker 1: consideration of the biggest banking failure since the financial crisis.
Speaker 1: Here with the details. Bloomberg's Katanga Johnson out in dc
Speaker 1: FED supervision Chair Michael Barr basically acknowledging for a second
Speaker 1: day that there were lapses in oversight, Right, Katanga, of
Speaker 1: what happened with Silicon Valley Bank, we'll be heard today. Yes,
Speaker 1: was Bar acknowledging that there was a lack of oversight,
Speaker 1: not just from his particular office at the fair, but
Speaker 1: even from the supervisors who were on the ground, who
Speaker 1: knew months before he was made aware of the issues.
Speaker 1: And lawmakers on both sides of the hour. Will he
Speaker 1: drill down on the timing around when Barr was first
Speaker 1: alerted and how quickly he acted even once he learned
Speaker 1: of these lapses. You consider the questions from lawmakers right,
Speaker 1: senators yesterday, congressional representatives today. A lot of them focus
Speaker 1: on individual people, the pain that was suffered by depositors.
Speaker 1: You have to remember the customer based Katana, right, Many
Speaker 1: of these were vench capitalists and startup founders. So we
Speaker 1: actually have any answers of kind of what the next
Speaker 1: step is, either to prevent this in the future or
Speaker 1: some sort of restitutions what happened a few weeks ago.
Speaker 1: Regulators are really mulling whether there might be a need
Speaker 1: for them to drill down on existing rules and perhaps
Speaker 1: potentially pushing lawmakers to consider new rules around whether they
Speaker 1: should be able to mitigate some of the risks of
Speaker 1: this issue in the future. Bar in particular, really emphasize
Speaker 1: the fact that he's open to in reviewing his toolkit.
Speaker 1: Have regulators sort of were collaboratively in that way, but
Speaker 1: then also he's open to really having Congress or perhaps
Speaker 1: the government kind of bil the office really dig in
Speaker 1: to the ways in which the rule book can be enhanced.
Speaker 1: All right, bloom bes Katanga Johnson out in DC. Thank you. Look,
Speaker 1: let's talk about what the SVB bankruptcy means for those depositors,
Speaker 1: start up founders, vench capitalists, tech businesses of all sizes
Speaker 1: and bringing Gregory Jermaine, Professor of law at Syracuse University
Speaker 1: and also the director of the Bankruptcy Clinic. First of all, professor,
Speaker 1: welcome to the program. Your assessment of what you've heard
Speaker 1: over the last twenty four hours from both panels, Well,
Speaker 1: not very interesting, right, I mean, a lot of repetition
Speaker 1: of stuff we already knew a lot of political pasturing,
Speaker 1: but really no new information coming out of this of
Speaker 1: these hearings. The only thing i'd i'd say is that
Speaker 1: you know, every time someone asks an interesting question, the answers, well,
Speaker 1: our report is going to be out on May first.
Speaker 1: So until we get the report on May first, I
Speaker 1: don't think we're going to learn a lot more about
Speaker 1: what was going on in the regulatory environment. Yes, so
Speaker 1: that was kind of my general overview of listening to you.
Speaker 1: A few hours of the testimony, we broke the news
Speaker 1: of what was happening on Silicon Valley Bank on this
Speaker 1: program the friday it collapsed and into the Monday, the
Speaker 1: discussion among venture capitalists was that they wanted a reincarnated
Speaker 1: form of SVB to survive what ended up happening. Of course,
Speaker 1: his first Systems came in and took some of the
Speaker 1: deposit book, but not all of it. There were lots
Speaker 1: of questions in these hearings about why an outright savior
Speaker 1: didn't come in that first weekend. What's your assessment of
Speaker 1: that this law happens very fast these days, you know,
Speaker 1: I mean the run on the bank, you know that
Speaker 1: took place over a couple of days and and and
Speaker 1: everybody's panicked and you know, and trying to get a
Speaker 1: new institution to come in, uh and take this over
Speaker 1: is not an easy and an easy task, especially because
Speaker 1: I think the full scope of you know, what their
Speaker 1: what their loan book looks like, and what it's worth
Speaker 1: isn't known, and so the government kind of sold it
Speaker 1: with some backstops in place, uh to protect First citizens
Speaker 1: is the buyer um. So it's it's not easy to
Speaker 1: you know, to to to figure out what's going on
Speaker 1: in a huge institution like all of these large banks
Speaker 1: are today in such a short period of time and
Speaker 1: get someone to take it over. Well, here's the main point.
Speaker 1: They wanted it to survive and reincarnated form in some
Speaker 1: sense it is you know, many vcs point to SVB
Speaker 1: being a spiritual Paul Silicon Valley literally that you know,
Speaker 1: the first institution to write a check or bank a
Speaker 1: founder when others would in what is the risk here
Speaker 1: with First Citizens taking on some of the books, Well,
Speaker 1: I think for citizens wants the business. I mean they're
Speaker 1: they're taking over the branches, They're they're going to keep
Speaker 1: the employees that have all the relationships and so you know,
Speaker 1: I think they want to they want to keep it. Um,
Speaker 1: So my guess is that they're going to be working
Speaker 1: very hard over the next year or so to to
Speaker 1: try to shore up trust within the community. But you know,
Speaker 1: the handover is going to take a period of time
Speaker 1: and uh, and I expect they're going to be some
Speaker 1: bumps in the road for a short while as they
Speaker 1: as they ramp up to taking over all these assets
Speaker 1: and providing better supervision than Silicon Valley Bank did of
Speaker 1: the situation. But yeah, well I just want to jump in, Hey,
Speaker 1: you are an expert in the field of bankruptcy. You've
Speaker 1: looked closely at the situation as it unfolded its Silicon
Speaker 1: Valley Bank. How do we fix it? What happened? How
Speaker 1: do we prevent it from happening again? Well, I don't
Speaker 1: think there's other than providing a government backstop against all deposits,
Speaker 1: which could be extremely expensive to the public. You know,
Speaker 1: there's there's always going to be the possibility of bank runs,
Speaker 1: even just rumors. Banks are subject to, you know, rumors
Speaker 1: spreading so quickly that people get scared. Even we've had
Speaker 1: bank runs of ensured deposits, which you know makes no
Speaker 1: sense they're not at risk, but people get nervous because
Speaker 1: you know, they don't trust that they're going to be
Speaker 1: able to get their money out. And so the banking
Speaker 1: system is based on confidence, and when confidence breaks down,
Speaker 1: the system, the system is starts to starts to shake apart.
Speaker 1: And so the government's real job here is to provide
Speaker 1: as much confidence as they can that the banking systems slovent.
Speaker 1: Gregory Jermaine of Syracuse University, thank you for your insight.
Speaker 1: We'll keep on tracking the story. Now, all of the
Speaker 1: TERMO in Silicon Valley maybe having a chilling effect on deals.
Speaker 1: Goldman Sachs just lost three partners in the investment bank
Speaker 1: who exiting the Wall Street firm amid a slump in
Speaker 1: deal making specifically focused on tech. Wall Streets saw a
Speaker 1: hit to their compensation last year as that drop in
Speaker 1: deal making took its toll. Some Goldment banking partners face
Speaker 1: pay cuts of more than fifty percent. But these are
Speaker 1: three high profile bankers that Bloomboa's reporting have left really
Speaker 1: focused on the tech sector, and we'll continue to track
Speaker 1: where they've gone. Onto time for talking tech first, CrowdStrike
Speaker 1: investing ten million dollars in abnormal Security, a startup that
Speaker 1: helps businesses cope with compromised emails after highlighting the attack
Speaker 1: method as a fast growing threats the largest amount of
Speaker 1: cash the cybersecurity firms ever funded through its venture arm,
Speaker 1: the CrowdStrike Falcon fun. The two companies also will work
Speaker 1: together as part of a close partnership. Let's turn to
Speaker 1: Chips and Videos, seeing its price target raised that Piper
Speaker 1: Sandler from two seven five to three hundred dollars. The
Speaker 1: analyst they're saying the company has the ability to create
Speaker 1: new and lucrative market opportunities with its software footprint, which
Speaker 1: is still in the early stages of growth and adoption,
Speaker 1: and rounding it out. Also with Micron receiving a price
Speaker 1: target upgrade at Susquehanna Financial, boosting its target from sixty
Speaker 1: five dollars to ninety dollars, the analysts saying they think
Speaker 1: the May orter represents the worst case operating losses, but
Speaker 1: believes the near to medium term risk raw profile's attractive
Speaker 1: given the updated price target. Now, let's stick with Micron
Speaker 1: giving an upbeat forecast for the fiscal third quarter, sending
Speaker 1: shares higher. Bloomboz and King on set with me in
Speaker 1: San Francisco. This was interesting because what they're saying is
Speaker 1: our customers have been working through inventories, but there are
Speaker 1: signs that that kind of glots or downturned that people
Speaker 1: are calling it. There might be a different trajectory on
Speaker 1: the other side. Yeah, I think the way to sort
Speaker 1: of look at this, to frame this is things aren't
Speaker 1: going to get that much worse. You've got to bear
Speaker 1: in mind this is a company that is on course
Speaker 1: to have its worst ever net loss in terms of revenue.
Speaker 1: It's half the size of where it was last year.
Speaker 1: So this isn't a victory parade by any stretch. But
Speaker 1: if you believe that the chip industry is on this
Speaker 1: long term growth path, then you're looking for points like
Speaker 1: this where things aren't going to get that much worse.
Speaker 1: The editors of Bloomberg Opinion wrote an editorial in the
Speaker 1: last twenty four hours about the Chips Act and the
Speaker 1: money that is being lined up from the public sector
Speaker 1: to onshore manufacturing capacity in this country. The conclusion that
Speaker 1: they reach is that actually it's a plan that's racing
Speaker 1: towards failure. They talk about red tape, they talk about
Speaker 1: the time it actually takes to set up a manufacturing
Speaker 1: facility from scratch when it comes to chip fabrication. Ironically,
Speaker 1: when you spoke to the Micron CEO last night, he
Speaker 1: is kind of asking for the opposite to increase capacity.
Speaker 1: He's saying, we and our peers need to cut down
Speaker 1: our production right now. Explain that one to us. Yeah,
Speaker 1: I mean there's a couple of really really important things
Speaker 1: at play here. The chip industry is as old as
Speaker 1: I am, which is pretty old. Right throughout its history,
Speaker 1: your words, economic forces have determined whether you build a plant,
Speaker 1: whether it makes sense to build a plant, whether you
Speaker 1: put capacity online. Now we've got government saying, hey, here's
Speaker 1: a check, build a plant here, that's what we want.
Speaker 1: So the concern there is that we'll have this systemic overbuild.
Speaker 1: Micron was saying was a bit more short term, which
Speaker 1: is saying, look, we can all get back to profitability.
Speaker 1: We can all make money if we all up putting
Speaker 1: less to looking into the front of these production lines.
Speaker 1: That's a great idea, and it's certainly there some evidence
Speaker 1: that that has happened. But really the sort of the
Speaker 1: thing that wasn't said directly was that Samsung the biggest
Speaker 1: part of the memory ship industry hasn't been doing that,
Speaker 1: so the outlook for profitability there is still a little
Speaker 1: bit dim outlook for prosability. I'm looking at the shares.
Speaker 1: We're higher by around five and a half percent, so
Speaker 1: positive reaction. This kind of terminal chart tells the story though,
Speaker 1: if you look at this sort of deficit that Micron
Speaker 1: faces this year, this is a big hit to profit,
Speaker 1: a big loss going back to the eighties. Why has
Speaker 1: that happened? It's a memory thip industry. This is the
Speaker 1: most brutal PRAM and nand exactly the storage basically in
Speaker 1: your mobile devices, in your computers. The problem that Micron
Speaker 1: has and all of the other membership makers have is
Speaker 1: it's a commodity, right. You can buy these things in
Speaker 1: these exchanges. You know what the price is. What happens
Speaker 1: when you have a glut is you end up making
Speaker 1: chick and then you have to go out and sell
Speaker 1: them for less than it costs you to make them.
Speaker 1: And that's where Micron is. Yeah, I mean that chart
Speaker 1: says it all really that, you know, the leg's kind
Speaker 1: of taken out from under them just very quick finally,
Speaker 1: and we've just got a few seconds. End markets basically
Speaker 1: this is about smartphones. The data center business bottomed out
Speaker 1: in fiscal second quarter. What did the broad hopes for
Speaker 1: the smartphone market in the second half of this year. Yeah,
Speaker 1: that basically that it's not as bad as it was.
Speaker 1: And Micron gave us a picture that said, maybe smartphones
Speaker 1: aren't going to collapse as badly as we'd feared, and
Speaker 1: also maybe PCs won't be as badly as we'd feel
Speaker 1: we've had Micron. Everyone is over the moon with Nvidia.
Speaker 1: Nvidia can do no wrong as far as sell side
Speaker 1: and this at least are concerned. Why do people think
Speaker 1: that Nvidia is going to be the main beneficiary from
Speaker 1: investment in artificial intelligence because so far they have been
Speaker 1: so far they've they've mechanically how does that work? What
Speaker 1: is it that's exciting? Well, the workloads that you need
Speaker 1: to run and system to have these recommendation engines basically
Speaker 1: reward the ability to do multitasking, to do parallel processing
Speaker 1: in Video's processors do that arguably better than anybody else.
Speaker 1: And it's sold that story very well. All right, Bloomberg
Speaker 1: zan King not quite as old as the chip industry,
Speaker 1: but he's covered it a long time and we're grateful
Speaker 1: to have him. Now, coming up, we're watching shares Valley
Speaker 1: Barber surge for the second day after news that the
Speaker 1: company is splitting up up one point eight percent on
Speaker 1: the USADRS. Right now, we're bringing the details of that
Speaker 1: plan next. This is Bloomberg. Ali Barber's massive overhaul plan
Speaker 1: boosted Chinese tech stocks overnight, with investors betting the sectors
Speaker 1: in for an overdue reevaluation. Is the regulatory environment improved?
Speaker 1: Shares Valley Barber surge earlier by the most since November
Speaker 1: out in Hong Kong after the news that the company
Speaker 1: will be splitting it's too hundred and fifty billion dollar
Speaker 1: empire into six business units. Bring bags Isabel lead back
Speaker 1: twenty four hours ago is about we were talking about
Speaker 1: the kind of fresh news this is happening al in Asia.
Speaker 1: They've had time to digest what's going on. And also
Speaker 1: we're hearing about development of how they'll present that plan
Speaker 1: right exactly. And it's interesting actually because this is the
Speaker 1: second rally in two days, and it really just means
Speaker 1: investors are liking what they see because to your point,
Speaker 1: Ali Baba, it's a two hundred twenty billion dollars empires
Speaker 1: will be split into six and analysts really like this
Speaker 1: for two reasons. In fact, overnight some analysts have upgraded
Speaker 1: Ali Baba from AD to buy. So the first reason
Speaker 1: is it'll just allow Ali Baba to be more nimble
Speaker 1: because China has cracked down on these two big detect
Speaker 1: two big to failed tech companies, and Ali Baba was
Speaker 1: one of them. So now with the six units, there'll
Speaker 1: be a little bit more flexible in adjusting that a
Speaker 1: regulatory landscape, and a lot of analysts are really liking that.
Speaker 1: And the second reason is it will unlock up valuations
Speaker 1: because these six units were given the discretion into raise
Speaker 1: funds however they see so ipo is one of them,
Speaker 1: and we know that the ipo industry has been kind
Speaker 1: of lackluster these days, so that will also help revive
Speaker 1: the IPO market. If you go on tli V, go
Speaker 1: on the Bloomberg terminal, I know that we're going to
Speaker 1: be covering Ali Baba briefing on their plan to kind
Speaker 1: of walk investors through how this would look. Remind us
Speaker 1: of what the business of Ali Baba looks like these days,
Speaker 1: you know, we think of it on the Bloomberg Technology Show.
Speaker 1: It's kind of an e commerce giant. It's much more
Speaker 1: complicated than that. It definitely is. It's so sprawling, which
Speaker 1: makes it a bit more complex. So a lot of
Speaker 1: traders have been trading Ali Baba like a utility, when
Speaker 1: in fact it's more than that, and in fact, compared
Speaker 1: to its rivals like ten Cent, Ali Baba is way cheaper,
Speaker 1: which is why some of the analysts are saying this
Speaker 1: will help Ali Baba kind of reshape its image, break
Speaker 1: it up into six and if among those is ten cents,
Speaker 1: so this can also this breakup can be a blueprint
Speaker 1: not only for China actually, but for the broader industry
Speaker 1: here broader world. Rather here in the US, we also
Speaker 1: have two big to fail companies that US regulators have
Speaker 1: been scrutinizing. But back to China, ten Cent is one
Speaker 1: of them. And it's hard to imagine that this happened
Speaker 1: without the permission or the blessing of the Chinese government.
Speaker 1: So a lot of people are also saying that this
Speaker 1: might be a signal that, you know, the crackdown in
Speaker 1: the past two years, it's done and dusted. And I
Speaker 1: also will bring up that jackmar returned at least to
Speaker 1: the public knowledge on Monday, so one can just back lit.
Speaker 1: Whether that's coincidence or that's planned, who knows. We're showing
Speaker 1: a chart of Vali Barber's share performance relative to its valuation,
Speaker 1: essentially earnings per share EPs. Unsurprisingly, looking at the Bloomberg
Speaker 1: a number of analysts upbrading price targets, but also looking
Speaker 1: at the bonds trading volumes very high. A lot of
Speaker 1: interest in Ali Baba right now. What happens next? Right?
Speaker 1: Does this happen overnight? Is the investor community bracing for
Speaker 1: an instant split in instant IPO or is this something
Speaker 1: that is going to be protracted. I think now investors
Speaker 1: are just really on a weight and ce mode. But again,
Speaker 1: this likely happened with a blessing of the Chinese government.
Speaker 1: I think more than Ali Baba, they're looking to see
Speaker 1: whether this will affect other companies. So Ali Baba isn't
Speaker 1: the only big company out there. There's also ant There's
Speaker 1: also ten Cent JDS, so it'll be kind of Ali Baba.
Speaker 1: I don't want to call it guinea pig. It's the
Speaker 1: only thing I could think of right now, the only word,
Speaker 1: But it's the pioneer. There's the first company in China
Speaker 1: to do this at least in recent memory, so it'll
Speaker 1: really be a blueprint, and that's what investors are seeing.
Speaker 1: How this will affect the broader industry in China. All right,
Speaker 1: Bloomberg's Isabel Lee on the China Tech Beat, Thank you
Speaker 1: so much. Welcome back to Bloomberg Technology. I'med Lovelow in
Speaker 1: San Francisco. It's going viral art fish intelligence experts, industry
Speaker 1: leaders and research is including Elon Musk and Apple co
Speaker 1: founder Steve Wozniak, calling on developers to hit the pause
Speaker 1: button on training powerful AI models. More than eleven hundred
Speaker 1: people in the industry signed a petition calling for a
Speaker 1: six month break from training AI systems that are more
Speaker 1: powerful than the latest iteration behind open aiyes Chat GPT.
Speaker 1: The idea is to allow for the development of shared
Speaker 1: safety protocols. Joining me on set to discuss technologist Sarah Gaw,
Speaker 1: a former general partner at Greylock now founder of early
Speaker 1: stage AI focus VC firm Conviction. I'm really happy that
Speaker 1: you're here. Thanks. You know this space many signatories to this.
Speaker 1: They're basically saying we've come quite far. Stop we need
Speaker 1: to rethink the parameters around this your immediate reaction to that. Yeah,
Speaker 1: so I would start with, like, AI is just an
Speaker 1: advanced form of computing. So it's like saying we're going
Speaker 1: to stop development on computing until we can guarantee sort
Speaker 1: of a writing code perspective from a layman's perspective, Yeah,
Speaker 1: just from it's a general technology that's a tool that
Speaker 1: can be used for like huge value creation and also
Speaker 1: buy bad actors. Right, But you draw comparison to computing
Speaker 1: or the Internet. The move is not to call a
Speaker 1: moratorium on the Internet. It's to develop like safety protocols
Speaker 1: and be transparent about access. So you're somebody that's investing
Speaker 1: actively in AI related startups will get to that in
Speaker 1: a second. How realistic is it to ask founders like
Speaker 1: the ones that you back to just stop. How does
Speaker 1: that even work? Yeah, So there's certainly a question on
Speaker 1: enforcement here, right, because most of the research that would
Speaker 1: be related to developing a model more capable than something
Speaker 1: like GPT four is very expensive to do. So the
Speaker 1: number of labs that are capable of it, of funding
Speaker 1: an effort like that is very few, and you know
Speaker 1: they're staffed with teams that are very focused on alignment
Speaker 1: and responsible development. But if a set of like largely
Speaker 1: these signatories do not belong to those labs, and so
Speaker 1: it's not as if you have people generally at the
Speaker 1: City of the Art calling moratorium. You have people who
Speaker 1: are not part of those state of the art adverts. Right,
Speaker 1: They've already done something in the field, And that's why
Speaker 1: I wanted to have you on the program. Correctly if
Speaker 1: I'm wrong, But your investment thesis is basically we should
Speaker 1: be funding and backing those that are working on technological
Speaker 1: breakthroughs that are not yet solved, right, and putting pause
Speaker 1: on development kind of goes against that thesis. Yeah, and well,
Speaker 1: fund basic research efforts, but I know the thesis of
Speaker 1: the fund is much more on the applied side. And
Speaker 1: I'll give you a few examples, But to me, it's
Speaker 1: hard to argue that we don't want to give more
Speaker 1: people the superpowers that we're developing now. So if that
Speaker 1: is the ability to have any person ask questions of
Speaker 1: business data and natural language like seek, that feels like
Speaker 1: a useful thing. If it is to decrease the cost
Speaker 1: of high quality legal work like Harvey, that feels like
Speaker 1: a useful thing. I'm super excited about giving people more
Speaker 1: creative skills. Right, So you have people who don't know
Speaker 1: how to draw using mid Journey, or people who don't
Speaker 1: know how to code using Copilot to write code. All
Speaker 1: of these are democratizing capabilities, Sarah, I just want to
Speaker 1: update the audience that we've reached out to open ai
Speaker 1: multiple times an open Ai have not responded to our
Speaker 1: requests for comment. In the letter which was written in
Speaker 1: the petition which I've got here, I mean they directly
Speaker 1: call out open Ai, so you can see why we're
Speaker 1: trying to get them to respond. The question is this
Speaker 1: doesn't really work unless open ai engages with them, does it?
Speaker 1: It does not because they're ahead, right, And I think
Speaker 1: like this is a nuanced point. But alignment or the
Speaker 1: idea of like let's make the AI do things that
Speaker 1: humanity or users want, it's it's a very it's very
Speaker 1: intertwined with like advancing capabilities. There's not really a way
Speaker 1: to make them models more governable if we don't understand
Speaker 1: their capabilities. Right in the petition or the letter, they
Speaker 1: basically talk about the idea that powerful AI system should
Speaker 1: not be developed until we're confident that their effects will
Speaker 1: be positive and the risks are manageable. My question to you,
Speaker 1: say you had a founder proposal deck in your desk,
Speaker 1: and how on earth would one quantify or codify those
Speaker 1: two targets. Yeah, I think again, like computing and the
Speaker 1: Internet are really good analogies, right, I think there are
Speaker 1: absolutely real risks and once we already see today right,
Speaker 1: disinformation used by bad actors like I'm a longtime cybersecurity
Speaker 1: investor as well, like people use the Internet to do
Speaker 1: bad things. That doesn't mean like no internet, right or
Speaker 1: I don't think that's the conclusion most people would draw
Speaker 1: the other risks. You know, I really care about access
Speaker 1: and also a reinforcement of bias. But but the thing
Speaker 1: to do is to address these concerns in like a
Speaker 1: open and transparent way, not to call for a halt development.
Speaker 1: You know many of the or know of quite well,
Speaker 1: many of the signatories to this letter, to this petition.
Speaker 1: Were you surprised by any of the participants, I would say,
Speaker 1: I genuinely believe that you know there are signatories who
Speaker 1: care about democratis that you should of access because I
Speaker 1: think you know, a monopoly structure for advanced AI capabilities
Speaker 1: is good for no one. But I think the most
Speaker 1: cynical read of a letter like this could be that
Speaker 1: it's a strategic competitive move so that people can catch up. Right,
Speaker 1: And some of the signatories have been on the wrong
Speaker 1: side of a technical architectural revolution in favor of transformers,
Speaker 1: which are sort of sort of a fundamental architecture that's
Speaker 1: making these AI's work so well. You and I have
Speaker 1: discussed and on this program, we've discussed where we're at.
Speaker 1: We're generative AI, and from a consumer perspective, I can
Speaker 1: go on chat GBT or Bard and I can ask
Speaker 1: questions and get relatively detailed and informed responses. There's much
Speaker 1: more to generate to AI than that. And I wondered
Speaker 1: which areas you think we should a well in the
Speaker 1: first instance, really be focused on, for example, in the
Speaker 1: legal field, and think areas that you're interested in. Yeah, again,
Speaker 1: like i'd probably put like some of the areas we
Speaker 1: care about into sort of new skills capabilities and then
Speaker 1: new knowledge. Right, So example, as you describe would be
Speaker 1: new skills as giving people the ability to code, to draw,
Speaker 1: to create video, to do legal work. New knowledge, I
Speaker 1: think is even more interesting. So you've seen fundamental advances
Speaker 1: in for example, the life sciences around a protein generation,
Speaker 1: protein folding. I think the idea of reducing the cost
Speaker 1: to deliver a new drug to less than two billion
Speaker 1: dollars a shot feels quite important to humanity. That's a
Speaker 1: very specific example. How does AI help us do that? Yeah,
Speaker 1: without getting into too much of the technical detail, there
Speaker 1: are tasks within the drug discovery process that are basically
Speaker 1: approached by the industry in very expensive experimental ways today,
Speaker 1: and being able to get better understanding of biology and
Speaker 1: chemistry with these models makes the process of drug development
Speaker 1: potentially much cheaper. You are a venture capitalist, but I
Speaker 1: know that you work deeply with and have done for
Speaker 1: a long time with the founders that you've backed in
Speaker 1: terms of the operation of their business, your research driven.
Speaker 1: I know that you read a lot from the world
Speaker 1: of academia. Who should be driving this? You know, Elon
Speaker 1: Musk is a signatory. He reportedly started his own startup
Speaker 1: right in the field of generative AI. It's very messy
Speaker 1: right now in terms of the leadership in this field. Yeah,
Speaker 1: you know, I think like in the end we should
Speaker 1: have people from academia, from the state of the art
Speaker 1: research labs, like a more inclusive discussion including like nation states, Like,
Speaker 1: it's very hard for me to see a governance framework
Speaker 1: that matters in the end that does not include a
Speaker 1: international nation state participation. This has been a quite tense
Speaker 1: and serious conversation because there are risks that we're concerned about.
Speaker 1: When you woke up this morning before you knew about
Speaker 1: this initiative, how do you feel about where we stand
Speaker 1: withmentum in this field? You know, actually most of the
Speaker 1: conversations we've had been very positive in recent weeks and months. Yeah,
Speaker 1: you know, I'm just genuinely very excited, right, And it's
Speaker 1: not that I don't see the risks again long time
Speaker 1: cybersecurity investor people doing a lot of bad things in
Speaker 1: the Internet as well. But you know, my waking up
Speaker 1: experience today was my five year old daughter saying, make
Speaker 1: me a three hunded cerberus unicorn dragon, right. And the
Speaker 1: reason she believes that's possible is, like we play with
Speaker 1: using a generative AI, using a generative AI tool. She
Speaker 1: doesn't know those words yet, she's five, But the idea
Speaker 1: that she can create these images and tell a story
Speaker 1: using her creativity with all these new skills, I think
Speaker 1: it is quite inspiring. You had a decade at Graylock.
Speaker 1: Just tell me really quickly about Conviction. Yes, this is
Speaker 1: a new initiative for you. Yeah, so as of last year,
Speaker 1: I started a new venture, fun focused on early stage AI.
Speaker 1: I think it's the largest value creation opportunity we're going
Speaker 1: to see this generation, and it's a very immature field.
Speaker 1: So the early stage focus and being able to understand,
Speaker 1: as you said, like the translation from research is our focus.
Speaker 1: You're busy. You're also, of course the co host of
Speaker 1: the No Priors AI focused podcasts, which you should all
Speaker 1: check out. Conviction founder former Graylock general partner Sarah Bell,
Speaker 1: Thank you so much. Now coming up, the Golden State
Speaker 1: Goes Green, how Silicon Valley is trying to tackle the
Speaker 1: climate crisis. Plus, let's take a look at shares of
Speaker 1: Lulu Lemon, which are frankly surging. As Boombow's Katie Greifeld
Speaker 1: put it, the explanation is there is intense interest right
Speaker 1: now in athleisure, a lot of that story, the e
Speaker 1: commerce story. But those gains around thirteen and a half percent,
Speaker 1: the biggest jump on the stock since March of twenty twenty.
Speaker 1: Company giving an annual outlook really above street expectations, high
Speaker 1: demand as I said, for those leggings and active where
Speaker 1: more of that? Next? This is Bloomberg. So last night
Speaker 1: we hit the road and towards climate tech in the
Speaker 1: heart of Silicon Valley. I hosted a panel with top
Speaker 1: names from the industry about what's really driving growth in
Speaker 1: venture backing for climate solutions at the Teconomy Climate Summit
Speaker 1: twenty twenty three. Alongside me, Sophie Purdham of Climate Tech VC,
Speaker 1: Nekakaboulet of Aligned Climate Ventures, and PMP Power of Ahead
Speaker 1: of c Lab America's Male have a listen. The dollar
Speaker 1: value going into climate related venture plateauing between twenty twenty
Speaker 1: one and twenty twenty two, driven entirely by the decrease
Speaker 1: in the growth rounds. Right, so many of us invest
Speaker 1: quite early, but those large five hundred million dollars plus
Speaker 1: private rounds, those fell off a cliff kind of right,
Speaker 1: as this fack market also froze. Well, that goes back
Speaker 1: to the original quick fire around. Were they overvalued? The
Speaker 1: original twenty twenty one was nuts. Right, Yes, yes, and
Speaker 1: yes second quick fire around. Does the private sector or
Speaker 1: the public sector drive investment into climate tech? I'll give
Speaker 1: you an opportunity to expand in a second private, private private.
Speaker 1: I was hoping you disagree with Mr, and it didn't
Speaker 1: really work. So that brings me to my actual question,
Speaker 1: which is the impact of the IRA, because I want
Speaker 1: to keep this focused in the news agenda as well.
Speaker 1: I think you all agree that the IRA, through a
Speaker 1: trickle down effect, will see dollars flowed earlier stage startups. NKA.
Speaker 1: How does that kind of manifest itself to your mind? Yeah,
Speaker 1: for us, we're looking at how can we support our
Speaker 1: startups that they don't have to continuously get into that
Speaker 1: kind of hedonistic Silicon valley treadmill of raising more and
Speaker 1: more corporate equity. So for us, that means tax credits.
Speaker 1: Those are kind of non deluted funding dollars that are
Speaker 1: going directly into my startups so that they can pause,
Speaker 1: whether between fundraising rounds, or maybe not even have to
Speaker 1: raise another round. So that's really exciting there. I think
Speaker 1: the other piece is the IRA funding is hitting a
Speaker 1: number of parts of the infrastructure ecosystem, and the White
Speaker 1: House report just got White House budget just got released
Speaker 1: and they put aside, I think about two hundred and
Speaker 1: fifty million for interconnection and permitting environmental permitting support, so
Speaker 1: For me, it's not just direct cash that might come
Speaker 1: into my companies. It's cash that might make it easier
Speaker 1: for them to do their jobs, and also additional cash
Speaker 1: for their customers to get basically a discounted product as well.
Speaker 1: Met A big part of what you do is data driven,
Speaker 1: research driven. How do you interpret the broader impact of
Speaker 1: the IRA. I think it's a beyond the actual dollar money,
Speaker 1: which is huge as well. Talking about android of billions
Speaker 1: is also a very strong signal for the private sectorals
Speaker 1: Europe was very concerned that you know, maybe they actually
Speaker 1: I was they were coming out because as you must remember,
Speaker 1: it was just one of good shots I will say
Speaker 1: on the good side, but it's a very strong signal
Speaker 1: for the private sectors saying it is a good time
Speaker 1: twin verse. That was quite a lively discussion at the
Speaker 1: Teconomy Climate Summit twenty twenty three. Diverse range of views
Speaker 1: on why we should be back in climate startups and
Speaker 1: where the money is coming from, very candid takes from
Speaker 1: those panelists. We should get him on the show very soon.
Speaker 1: Federal regulators in front of the House Financial Services Committee
Speaker 1: today to testify for a second day about recent bank
Speaker 1: failures at SVB and Signature Bank selling by with us
Speaker 1: for the latest on the hearing is RAMP CEO Eric
Speaker 1: Glenman and Eric I find RAM fascinating corporate card automated finance.
Speaker 1: We've had discussions with the CEO of Mercury, for example,
Speaker 1: talked about brex your company did it benefit from the
Speaker 1: days and weeks that followed the SVB collapse? First, thanks
Speaker 1: for having me on ed and look, our whole mandate
Speaker 1: and commitment to customers is to help them spend less
Speaker 1: money and spend less time. You know, we're happy to
Speaker 1: announced today that last year RAMP grew by four times
Speaker 1: year over year, and it all comes down to our
Speaker 1: unique approach. By helping customers spend less, we help them
Speaker 1: spend over four hundred million dollars less than the otherwise
Speaker 1: would have, automate five point eight million hours of work
Speaker 1: and ultimately drive a better bottom line. And so you know,
Speaker 1: we think events like last week, earlier this months with
Speaker 1: spob's failure, obviously folks go out and look for solutions
Speaker 1: and dependable partners like RAMP, But ultimately we think it's
Speaker 1: about what we do day and day of helping customers
Speaker 1: and businesses have a better bottom line is why we
Speaker 1: are growing. I think the root of my question is
Speaker 1: that not just diversifying banking, but many startup founders and
Speaker 1: bench captists came to quickly realize they wanted to modernize
Speaker 1: how they conduct their finances. And what I'm asking you
Speaker 1: is what lens did you have into that in the
Speaker 1: last three weeks. Certainly so a couple of sets of things.
Speaker 1: I mean, first, so our primary product is really around credit,
Speaker 1: and so when we are effectively allowing companies to continue
Speaker 1: spending no matter where they're banking. Part of how we
Speaker 1: sprang into action is as thousands of our customers were
Speaker 1: moving banks, we were a continuous lifeline of support to
Speaker 1: make sure that as they were moving from smaller institutions
Speaker 1: to whether it's lawyer's institutions, sify as you name it,
Speaker 1: their service on RAMP was continuous and they also were
Speaker 1: evaluating tools like Ramp that can help me get more value.
Speaker 1: In addition to that, because we work with a diverse
Speaker 1: array of financial partners, we were able to support customers
Speaker 1: in moving over a billion dollars in deposits in the
Speaker 1: first forty eight hours of the bank failure, and so
Speaker 1: we were there as a partner. We were there as
Speaker 1: a support to make sure there was more valued of
Speaker 1: every dollar of spend. And last, our product was a
Speaker 1: bridge and a lifeline where other products were less certain
Speaker 1: or unable to provide services. There's a lot of discussion
Speaker 1: right now around US sort of de facto tightening of
Speaker 1: financial conditions, literally being able to access capital, whether it's venia, debt, venture,
Speaker 1: traditional loans. Is that an area where you come in
Speaker 1: and try and fill If indeed there is a tightening
Speaker 1: of financial conditions when interest rates go up and the
Speaker 1: cost of capital is higher, I think what's top of
Speaker 1: mind for every whether it's started founder, small business owner,
Speaker 1: or ultimately CFO, is what am I getting out of
Speaker 1: every dollar and that hurdle for a return knee to
Speaker 1: be that much higher. I think for US, I mean
Speaker 1: obviously part of our products, whether it's in the corporate
Speaker 1: card or in flexible finance solutions. Of course we do
Speaker 1: offer credit, but ultimately ramps advantage to customers is helping
Speaker 1: them reduce their spend by four percent. When you compare
Speaker 1: this to what most others in the industry are doing
Speaker 1: of coming up with increasingly collaborate rewards programs and trying
Speaker 1: to incentivize companies to spend more. We think something like RAMP,
Speaker 1: which does the inverse. It actually helps companies spend less
Speaker 1: and get more of every dollar. Are not just useful
Speaker 1: in every kind of time, but frankly that much more
Speaker 1: valuable when capital does not come cheap anymore. Let's talk
Speaker 1: a little bit about RAMP. And actually, you as a
Speaker 1: found a CEO, right you're backed by some pretty big
Speaker 1: names Goldman Sachs, City found as fund Stripe to name
Speaker 1: but a few eight point one billion dollar valuation. Sales
Speaker 1: grew four x last year. Are you struggling right now?
Speaker 1: It doesn't sound like it in this environment. Look, I
Speaker 1: think part of I think, going back to what's on
Speaker 1: top of mind for founders is can I find software
Speaker 1: that's focused on my business that helps me spend less
Speaker 1: and helps my dollars go further and so will Certainly
Speaker 1: customers are spending less and we love that, and we're
Speaker 1: here to help them. It is accelerated the interests and
Speaker 1: demand from customers for solutions like this last I mean,
Speaker 1: you talk about even the events of this month, failures
Speaker 1: of other banks. Over a third of our customers actually
Speaker 1: come from word of mouth. And recommendations from others, and
Speaker 1: so in terms of new business growth, this has been
Speaker 1: among the fastest years of growth and certainly even over
Speaker 1: the past month month of growth that we've ever had. Eric,
Speaker 1: as a final question, and indeed a point of clarification,
Speaker 1: did the company bank with SVB or you yourself personally
Speaker 1: and by extension, what do you make about the sort
Speaker 1: of the first citizens coming in and saving what was
Speaker 1: a really influential institution among the tech community. First, so
Speaker 1: RAMPED not bank with ask to be your have direct exposure,
Speaker 1: but ultimately we're here to support. We work with over
Speaker 1: fifteen thousand businesses and several thousand of them did and
Speaker 1: so we were there to support them through that tough period.
Speaker 1: You know. As far as for Citizens in the acquisition,
Speaker 1: we certainly wish them lucky. They are I think a
Speaker 1: fantastic institution there to serve a lot of companies. But
Speaker 1: no matter what, our rule as a partner to these
Speaker 1: companies is to serve them no matter where they choose
Speaker 1: to bank and help them get more of every dollar
Speaker 1: an hour. All right, Thanks to RAMP CEO Eric Glyman
Speaker 1: joining us from New York. That does it for this
Speaker 1: edition of Bloomberg Technology. Make sure to tune in tomorrow
Speaker 1: Twilio CEO Jeff Lawson joining me live. You don't want
Speaker 1: to miss it, and there's also a lot to recap
Speaker 1: from the last few days. To check out the podcast
Speaker 1: wherever you take your podcast, you can find it on
Speaker 1: the Bloomberg terminal as well as on Apple, Spotify, iHeart,
Speaker 1: and our other Bloomberg platforms. Really risk on mode in
Speaker 1: these markets with technology outperforming. We get that PC core
Speaker 1: PC data coming Thursday. That will tell us a lot
Speaker 1: about the FED, the impact of higher rates or otherwise
Speaker 1: on valuations. But for now, out here in a very
Speaker 1: soggy San Francisco, thank you for listening. This is Bloomberg