Speaker 1: From Mahard.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: Ahmed Ludlow in San Francisco. Caroline hides off today. This
Speaker 3: is Bloomberg Technology coming up on the program. ARM prepares
Speaker 3: for its IPO with a roadshow slated for next week.
Speaker 3: We'll discuss with our team, and we also speak to
Speaker 3: Ross Gerber of Gerber Kawasaki Plus full earnings coverage ahead.
Speaker 3: Dell saurs to a record high on a PC recovery,
Speaker 3: while broadcons slumps amid a disappointing forecast. We talk AI
Speaker 3: in earnings, and Tesla ravamps the Model three and slashes
Speaker 3: pricing for its premium vehicles in an all out push
Speaker 3: to boost sales. Will bring you those details one future
Speaker 3: company that they end up in public markets ARM. It's
Speaker 3: one of the most anticipated stock listings of the year
Speaker 3: and now ARMS looking to set a date for its
Speaker 3: IPO with a roadshow kicking off after the Labor Day
Speaker 3: holiday in the US. With the latest details, Bloomberg's Leanna Blaker,
Speaker 3: who leads M and A coverage for US. Okay, so
Speaker 3: I think we have a date for pricing and the roadshow.
Speaker 1: What do we know?
Speaker 4: So the date is going to be September thirteenth for
Speaker 4: the pricing of the ipeo, that's the actual IPO, but
Speaker 4: trading isn't expected to start until the next day, which
Speaker 4: is September fourteenth. So this is right around the corner.
Speaker 4: And while ARM is aiming to list on those dates,
Speaker 4: it could always move. The timeline for IPOs is always
Speaker 4: uncertain and it really depends on how meetings with investors go.
Speaker 4: Those meetings will start next week when the road show launches.
Speaker 4: The first signal of the roadshow launching will be early Tuesday.
Speaker 4: We're expecting a filing to come out for ARMED to
Speaker 4: update its perspectives, and it'll publish for the first time
Speaker 4: a price range of where they'll be marketing shares.
Speaker 3: We talk on Blue Bow Technology about ARM is kind
Speaker 3: of the starting gun for a series of technology IPOs
Speaker 3: that we're anticipating. But also the size and scope of
Speaker 3: this is important. What are the numbers that we think
Speaker 3: in terms of money being raised in valuation?
Speaker 4: We reported yesterday for the first time that Soft Bank
Speaker 4: is sort of scaling back how much they're going to
Speaker 4: raise this isn't because of the prospects of the company.
Speaker 4: In fact, they're very bullish on the company. And Matt
Speaker 4: sayoshis the SoftBank CEO, does not want to part with
Speaker 4: more than ten percent of ARM. They one hundred percent
Speaker 4: of ARM. And originally the Vision Fund, which you might
Speaker 4: remember is that vicious fund that lost a lot of
Speaker 4: money through the startupfents. They had owned twenty five percent
Speaker 4: stake in ARM. Recently that steak was sold back to Saftbank.
Speaker 4: So because the Vision Fund is no longer a seller
Speaker 4: in this IPO, they were expected to be a seller,
Speaker 4: but they no longer are, soft Bank to hold on
Speaker 4: score shares. So for that reason, ARM is going to
Speaker 4: raise potentially between five and seven billion, which is lower
Speaker 4: than the amount we originally published, which was eight to
Speaker 4: ten billion. So it's a bit complicated, but the main
Speaker 4: point is that SoftBank is going to cash out here
Speaker 4: with a lot of proceeds, but not as much as
Speaker 4: we originally thought.
Speaker 3: It is complicated, but it is the one that we
Speaker 3: are watching in the world of technology. Bloombos Leanna Baker
Speaker 3: giving us all of the latest details and after this
Speaker 3: long weekend here in the US, we are waiting for
Speaker 3: some movement on arm right. Joining us next Ross GERBA, President,
Speaker 3: CEO and co founder of Gerber Kawasaki. Ross is you
Speaker 3: and I were talking off camera an astonishingly busy week.
Speaker 3: I want to start on that job's data, and we
Speaker 3: always frame it as such, jobs data. What will the
Speaker 3: FED do and how does that impact the technology sector?
Speaker 1: Was your reaction to the numbers this morning?
Speaker 2: Well, you know, I still I've been saying this for
Speaker 2: so long. The FED is done. I mean, all they're
Speaker 2: going to do is create more imbalances in our economy
Speaker 2: by really attacking just a few industries That's all rates do.
Speaker 2: And when you look at what's happening with housing in
Speaker 2: the banking sector and the risks of the FED continuing
Speaker 2: to raise rates and the tremendous losses the FED is
Speaker 2: now taking on its own portfolio that the taxpayers are paying,
Speaker 2: you know, it really doesn't make sense. All the numbers
Speaker 2: are trending in the right direction. We have completely restrictive
Speaker 2: rates right now. Businesses can't borrow, individuals can't buy houses.
Speaker 2: They're having kids that can't move up. You know, it's
Speaker 2: certainly affecting the economy, and many companies are done hiring.
Speaker 2: You know, they're just done hiring for now, and so
Speaker 2: we're seeing a.
Speaker 1: Very good environment.
Speaker 2: If the FED just lays off right here and lets
Speaker 2: things work itself out, I think the next move is
Speaker 2: lower for the FED next year.
Speaker 1: You know, Russ.
Speaker 3: The story of twenty twenty three has been artificial intelligence
Speaker 3: driving this equity market higher. And there are specific names
Speaker 3: you and I will get into, but the Fed's always
Speaker 3: been there in the background. When you're assessing your investment
Speaker 3: priorities and investment thesis, which are you focused on more
Speaker 3: the opportunity and all the impacts of higher rates on valuations.
Speaker 2: Well, you've got two really competing forces here, with rates
Speaker 2: being super attractive. Like clients coming in to our firm,
Speaker 2: you know, it's very easy for me to make them
Speaker 2: five six seven eight percent by buying bonds, and from
Speaker 2: any clients, that's the return they're shooting for.
Speaker 1: So it's kind of.
Speaker 2: Great if you're conservative and older and we haven't seen
Speaker 2: rates like this in over twenty years. But on the
Speaker 2: other hand, the maximum return I see making on these
Speaker 2: bonds is let's say five six seven eight percent right
Speaker 2: where equity is over the long term of average ten
Speaker 2: percent a year in the s and P five hundred,
Speaker 2: where if we own the NASTAC small caps or things
Speaker 2: like my fund GK, which are really growth oriented and
Speaker 2: concentrated funds, we can expect much higher rates to return.
Speaker 2: So if the Feds at the top of the rate
Speaker 2: raising cycle and we've already valued in this effect on
Speaker 2: you know, the market and valuations and the next really
Speaker 2: move for rates or to stay the same or lower.
Speaker 2: We expect, you know, earning will drive the.
Speaker 1: Next move in markets. It's not going to be like
Speaker 1: a Pe expansion.
Speaker 2: And I think that's what investors have to understand for
Speaker 2: the market to move higher, earnings asked to move higher,
Speaker 2: and same with individual securities as well.
Speaker 3: All right, Ross, let's go from the macro to the
Speaker 3: micro and have a bit of fun. I want to
Speaker 3: talk to you about in Nvidia. You've had a lot
Speaker 3: to say about that name and in particular its associational
Speaker 3: relevance to Tesla and a comparison between the two.
Speaker 1: Take it away was your thesis?
Speaker 2: So my thesis is that Tesla and Autonomy was where
Speaker 2: in Nvidia and Tesla originally met. So Tesla used to
Speaker 2: use video chips and building their autonomy systems and the
Speaker 2: model less back in the day, and Tesla started making
Speaker 2: their own chips, are designing their own chips because in
Speaker 2: Video is like, we're not going to design GPUs specifically
Speaker 2: for Tesla, so Tesla's like, all right, we'll do it.
Speaker 2: So over the years, the two companies have, you know,
Speaker 2: really not competed, but continued to develop hardware and software
Speaker 2: for autonomy. And with that, many of the in Vidio
Speaker 2: GPUs were used in crypto and then cloud and now AI.
Speaker 2: So for the first time we see a convergence of
Speaker 2: actual applications, which is gener of AI, check GPT and
Speaker 2: then autonomy full self driving, and we have these applications
Speaker 2: and it's just driven this massive investment from all the
Speaker 2: major tech companies to upgrade their databases and their systems
Speaker 2: to being intelligent.
Speaker 1: And they have to buy in Vidia chips to do this.
Speaker 2: So I think both companies represent the best of American innovation,
Speaker 2: technology and opportunity over the next decade. So boy, I'm
Speaker 2: super bullish on these two companies. There are two of
Speaker 2: my top three holdings in my fun GK, and I
Speaker 2: think investors, even though these valuations are very high, have
Speaker 2: to think out over the next five to ten years.
Speaker 2: Wh's really going to drive growth in our economy And
Speaker 2: it's always been technology, and AI is a tremendous leap
Speaker 2: forward in technology.
Speaker 3: You know, if you think about specific technology or specific products.
Speaker 3: We've talked a lot about the H one N one
Speaker 3: hundred GPU series this year for obvious reasons. They are
Speaker 3: the chip of choice or the tensacle GPU of choice
Speaker 3: for AI. Less about Dojo and Tesla's own proprietary silicon.
Speaker 3: Do you still assign a lot of the potential for
Speaker 3: Tesla on that competence in silicon?
Speaker 2: Absolutely? And I think that's in the valuation of Tesla
Speaker 2: because obviously if it was an EV maker, you look
Speaker 2: at Rivian, which is a great EV maker, its valuation
Speaker 2: is you know, five percent of Teslas. So when you
Speaker 2: when you think about why is Tesla such a valuable company,
Speaker 2: it's because of its technology and that does center a
Speaker 2: lot around AI Dojo chips. They're really machine learning and
Speaker 2: ability to now train the cars through AI clusters. They
Speaker 2: just bought a huge in video, you know, H one
Speaker 2: hundred cluster of Really they're not really chipped or like
Speaker 2: these massive machines actually that you add into your database.
Speaker 2: So when you look at a company like Salesforce, which
Speaker 2: had a great numbers. And I use Salesforce at my company,
Speaker 2: and you start adding AI to this platform, it's going
Speaker 2: to be like a game changer for Salesforce and it's users.
Speaker 2: So I think that there's so many companies in Big
Speaker 2: TAC that can benefit from this, and Nvidia and ultimately
Speaker 2: Tesla are the roads to get reaching these efficiencies through
Speaker 2: AI and autonomy.
Speaker 3: Yeah, we told in the show to speak about how
Speaker 3: Salesforce has pricing power as well. Right, they could charge
Speaker 3: seventy five hundred per years.
Speaker 1: That we spend so much. Yeah, we spend so much.
Speaker 3: We're short in time, and I want to get to
Speaker 3: Disney and Charter because Disney's name that you hold and
Speaker 3: follow closely.
Speaker 1: What do you make of that spat?
Speaker 2: Well, you know, I feel like being a Disney long
Speaker 2: term share older, you feel like you're getting kicked in
Speaker 2: the head over and over again. But this is really
Speaker 2: about why do I watch cable TV. I actually am
Speaker 2: a Spectrum user. I was about to tweet them and
Speaker 2: say pay the damn fee because the only reason I
Speaker 2: watch Spectrum is for sports, and so it's absurd that
Speaker 2: you're cutting off sports from your you know, subs when
Speaker 2: cable's dying, and the only reason people watch cable is
Speaker 2: for sports pretty much. So you know, we're in this
Speaker 2: new period of time between linear TV and cable and
Speaker 2: this you know, convergence of streaming and this battle for
Speaker 2: who's paying for what and where and it's just playing out.
Speaker 2: But any end spectrum will pay because people only want
Speaker 2: to watch sports, you know, I mean, that's bottom line.
Speaker 1: That and Taylor Swift Russ.
Speaker 3: You are a private investor in the entity known as
Speaker 3: X formerly known as Twitter. I reported yesterday that specifically
Speaker 3: the biometric data policy update only applies to premium subscribers.
Speaker 3: It involves a government issued ID with a selfie or
Speaker 3: a double.
Speaker 1: Verification through picture.
Speaker 3: The response I got on the X platform was astonishing.
Speaker 3: What do you, as an investor and user of X
Speaker 3: make of that privacy policy update?
Speaker 2: Well, you know, you can argue two sides of this
Speaker 2: coin with almost every decision X makes. You know, I
Speaker 2: think part of it is great, you know, like profiles
Speaker 2: should actually correspond to an actual human and checking the
Speaker 2: current verification system, in my mind, doesn't really work.
Speaker 1: You know, It's kind of good, but not great.
Speaker 2: This is very similar to what the bitcoin companies were
Speaker 2: doing when you were signing up is you'd have to
Speaker 2: do the same thing and send a picture of yourself
Speaker 2: with your ID and that would verify you for taxes
Speaker 2: and all this kind of stuff. So this isn't an
Speaker 2: uncommon thing for people in the digital world to do.
Speaker 2: I think, for a social media platform and one that's
Speaker 2: building an AI platform, it's a little bit big brotherish
Speaker 2: and scary that now I'm trusting Elon with all my
Speaker 2: biometric data and I can totally get the pushback as well.
Speaker 2: So you know, there's a plus and the minus to
Speaker 2: this thing. I don't know how quick I am to
Speaker 2: upload my driver's license to Twitter yet, you know, so
Speaker 2: I get it, you know. So I think some of
Speaker 2: these things that's really meant to make the purity of
Speaker 2: the platform better. But at the same respect, people aren't
Speaker 2: that excited to give away biometric data to Twitter, either, you.
Speaker 3: Know or ex Ross Gerber, president, CEO and co founder
Speaker 3: of I Think. I threw a dozen different names and
Speaker 3: stories at you. What a fast start to the show.
Speaker 3: Thank you very much. Much more ahead. This is Bloomberg Technology.
Speaker 3: The big news is we go back to the technology
Speaker 3: sector overnight being Tesla. Tesla revamping the Model three sedan
Speaker 3: with sleeker looks and longer range while slashing prices of
Speaker 3: its premium vehicles in an all out push to boost
Speaker 3: its own sales. For more, I'm delighted to be joined
Speaker 3: on set by Bloomberg Stan a whole now that refresh
Speaker 3: Model three we start there, but that's only in China
Speaker 3: and I think Europe, not yet here in the US.
Speaker 1: Yeah.
Speaker 5: What was funny was last night I kept like refreshing
Speaker 5: the Tesla you know, web page to see if it
Speaker 5: was in the US. But no, it's just China and Europe,
Speaker 5: which makes sense. They retooled the China factory first.
Speaker 1: Okay, we've been waiting on that one.
Speaker 3: I think more of a surprise, potentially was the continuing
Speaker 3: downward price of Model ESNX, the most expensive a Tesla's offering.
Speaker 1: What do we know about that?
Speaker 5: So the sn X are really like a tiny share
Speaker 5: of Tesla's overall sales, but by slashing the prices, they
Speaker 5: now qualify for the seventy five hundred dollars text credit
Speaker 5: under the Inflation Reduction Act this country in the United States.
Speaker 5: So this isn't all out pushed by Elon to chase volume,
Speaker 5: which he forecasts. You know, he telecast to everyone.
Speaker 1: That that's what he was going to do. Yeah.
Speaker 3: Well, reminder, audience, I think the line from Elon Musk
Speaker 3: has always been that they're willing to sacrifice profit to
Speaker 3: protect growth.
Speaker 1: Just to explain that to us.
Speaker 5: Yeah, so they are willing to sacrifice profit margins or
Speaker 5: gross margins to maintain their market share.
Speaker 1: And it's really put the.
Speaker 5: Other automakers sort of on the back heel, because how
Speaker 5: do you compete with tessel on price?
Speaker 3: Now, I think you and I quickly reflect on the
Speaker 3: kind of big breaking news of this week that we.
Speaker 1: Worked on together.
Speaker 3: That is, Federal process cuts are looking into this procurement
Speaker 3: order we reported a year ago.
Speaker 1: The subpoenas have been issued.
Speaker 3: You know, this is the latest twist and term, but
Speaker 3: it centers around Omi daf Shah. Just explain who Omi
Speaker 3: daf Shar is and why are we talking about him?
Speaker 6: So.
Speaker 5: Omid is one of Elon's top lieutenants, and he's an
Speaker 5: interesting character in that he seems to work at all
Speaker 5: of Elon's companies. He appears to be working at X,
Speaker 5: he worked at Tesla for a long time. He's really
Speaker 5: kind of the architect of Gigafactory Texas. He also at
Speaker 5: one point had a VP role at SpaceX. And even
Speaker 5: though he's at the center of this probe because he
Speaker 5: apparently ordered people at Tesla to order this special glass
Speaker 5: for a house that Elon was thinking of building.
Speaker 1: He is still employed.
Speaker 5: And you know where this feral probe is headed?
Speaker 1: Headed is a big question?
Speaker 3: Yeah, we replied it reported according to sources that these
Speaker 3: subpoenas are issued and one of the issues centered on
Speaker 3: communications to and from Omi daf Shah and other TESTA executives,
Speaker 3: and we will continue to report on that. Bloomberg, Dana Hole,
Speaker 3: thank you very much. The other top story in the
Speaker 3: tech sector is Dell. Shares of Dell hitting a record
Speaker 3: high today after reporting better than expected sales of personal
Speaker 3: computers and data center hardware, is fueling hopes of a
Speaker 3: recovery in the market for corporate technology. Who's with us?
Speaker 3: Who else? Bloomberg's Brody Ford out in New York. This
Speaker 3: is an astonishing share reaction, Brody, let's start with it.
Speaker 3: What a sell side is at least saying about this.
Speaker 7: We hear that phrase better than feared, and I cannot
Speaker 7: think of a better example than this. I mean, you know,
Speaker 7: sales are down thirteen percent, but we thought.
Speaker 1: It was going to be eighteen.
Speaker 7: This is pretty good, so let's buy the stock, right. So, yeah,
Speaker 7: it's up twenty five percent. And what we're really seeing
Speaker 7: here is that the demand for PCs, particularly business PCs,
Speaker 7: are stabilizing quicker than we thought. As well as getting
Speaker 7: a little up whift on the server. Business companies set
Speaker 7: us do to AI could be doing a better macro environment.
Speaker 7: We all want to tell an AI story, but that's
Speaker 7: part of it as well. So the board.
Speaker 1: Sales were just a little better than we expected.
Speaker 7: You know, we saw HP a couple of days ago
Speaker 7: saying that the recovery is going to take longer than
Speaker 7: we thought, and Dell really took the other side of
Speaker 7: the coin, which I think is surprising a.
Speaker 1: Lot of folks.
Speaker 7: Is often the two results track each other pretty closely.
Speaker 3: Yes, it is not surprising that there is an AI
Speaker 3: discussion in the context of Dell, But you know, what
Speaker 3: they said was, this is a long term tailwind.
Speaker 1: What is the AI story for Dell?
Speaker 3: What is it that Dell does that is relevant to
Speaker 3: ours official intelligence?
Speaker 7: We talk about clouds so much that we forget. Some
Speaker 7: big companies still use servers. They still need servers, and
Speaker 7: Bell sells them, and they sell them with a bunch
Speaker 7: of those nice and video GPUs in there, and they say, hey,
Speaker 7: you want to run some on premise generative AI solutions,
Speaker 7: this is the one for you. And so they said
Speaker 7: that they have two billion dollars in backlocked orders for
Speaker 7: a specific type of server which is marketed to be
Speaker 7: good for AI.
Speaker 1: So essentially they say.
Speaker 7: That long term, more AI workflows, more need for servers,
Speaker 7: more Bell winning.
Speaker 3: All right, Bloomberg's Brady for this week for you here
Speaker 3: on the show, and with plenty of earnings, Thank you
Speaker 3: very much. The other big earning story is in the
Speaker 3: chip sector. Investors were initially kind of underwhelmed with Broadcomms
Speaker 3: results out yesterday. Some analysts weighed in why that might be.
Speaker 3: Have a listen.
Speaker 1: It's not a bad result.
Speaker 3: I do think people were hoping for more, just given
Speaker 3: all of the recent hype around AI. That was Stacy Raskon,
Speaker 3: Bernstein's senior analyst on Bloomberg TV's The Close yesterday evening.
Speaker 3: Let's turn to one of our internal experts on the
Speaker 3: chip sect of Bloomberg's Eaan King. You and I talked
Speaker 3: a lot about Broadcom going into it, what the AI
Speaker 3: story would be.
Speaker 1: What was the AI story in the end.
Speaker 8: I mean, the AI story was as promised. The unfortunate thing, though,
Speaker 8: was the how that reflected on the overall company Basically hoptown.
Speaker 8: The CEO said, look, you know, all of our upside
Speaker 8: is coming from this large language model build out that
Speaker 8: we're seeing else kind of flat at best. He described
Speaker 8: it as a soft landing, But obviously the market took
Speaker 8: that as like the overall demand for semiconductors not fantastic.
Speaker 3: Well, what I enjoyed talking to you about, genuinely is
Speaker 3: the technology story, like understanding what each chip maker does
Speaker 3: in the AI supply chain. So explain Broadcom's offering in
Speaker 3: the data center context.
Speaker 8: Yeah, I mean they have two big main plays here.
Speaker 8: The one is that they really dominate the market for
Speaker 8: what are called switches. These are chips that decide where
Speaker 8: the traffic goes. Basically, one computer's got some information needs
Speaker 8: to get to another. The switch chip is going to
Speaker 8: be what makes those incredibly fast decisions to send that.
Speaker 1: Data around to switch it.
Speaker 8: The other play that they have, and that's quite a
Speaker 8: big play as well is Google.
Speaker 1: We've heard about.
Speaker 8: The TPUs, Yes, they're own in house.
Speaker 1: Who makes them?
Speaker 8: Who designs the broad Com.
Speaker 3: The legacy of Broadcom? Well, an important part of his
Speaker 3: business is Apple. Frankly, it makes short distance communications at
Speaker 3: aaka Wi Fi and Bluetooth. If AI is doing well,
Speaker 3: but sales growth is kind of low single digits, what
Speaker 3: does that tell us about the smartphone business?
Speaker 8: Yeah, I mean Hat made an interesting comment yesterday he said, look,
Speaker 8: our wireless division is basically defying gravity. What he was
Speaker 8: meant by that was overall things are just not great.
Speaker 8: As we know, we've seen you know, the numbers. But
Speaker 8: demand is kind of okay for that division. They're going
Speaker 8: to see some growth into this quarter. Where as you know,
Speaker 8: as Mark Gooman has told us, we're going to see
Speaker 8: a new iPhone, We're going to see new products and
Speaker 8: that features some Broadcom chips. But overall, not fantastic, was
Speaker 8: the bottom line?
Speaker 1: All right?
Speaker 3: Bloomberg Zy and King another very busy person this earning
Speaker 3: season in the chip sector. And let's move from what's
Speaker 3: happening in the public equity markets the tech space and
Speaker 3: move to one of our other favorite risksket risk assets,
Speaker 3: which is Bitcoin joining us now to get the pulse
Speaker 3: on the VC crypto space after all of the Bitcoin
Speaker 3: ETF decisions earlier this week is at least clean still
Speaker 3: Mark found and managing partner. The firm has about eighty
Speaker 3: five million dollars in assets under management that focuses on
Speaker 3: bitcoin companies. So I guess the news, which is not surprising.
Speaker 3: We discussed it twenty four hours ago on this program.
Speaker 3: Is the SEC kind of punting a decision on ETF
Speaker 3: applications for many names. But what have you made of
Speaker 3: everything that's happened in the last seven to ten days.
Speaker 9: Well, BTC bitcoin matures along two distinct but very closely
Speaker 9: related path that's Bitcoin the asset and then Bitcoin protocol
Speaker 9: and technologies, including bitcoin's likening network, it's payment protocol. The
Speaker 9: Grayscale victory over the SEC earlier this week is a
Speaker 9: significant advancement for the maturation and the adoption of BTC
Speaker 9: the asset because it makes a spot ETF much more likely.
Speaker 9: It also limited the arguments that the SEC can advance
Speaker 9: in the future in denying spot ETF, and particularly what
Speaker 9: the court found to be challenging or problematic was the
Speaker 9: approval of future of a bitcoin futures ETF, while the
Speaker 9: SEC continued to reject Bitcoin spot ETFs with the argument
Speaker 9: of course that surveillance sharing agreements were insufficient or that
Speaker 9: there was potential for the practice of manipulation in those markets.
Speaker 9: And so what that means is that for the SEC
Speaker 9: to continue rejecting or denying a Bitcoin spot ETF, they'll
Speaker 9: have to form a new argument, and one that would
Speaker 9: be distinct in its properties from future ETFs.
Speaker 1: And that really shows up.
Speaker 9: The timeline for which we expect to see spy ETF.
Speaker 3: We consider the basics of why this is happening. You know,
Speaker 3: the argument from those that have filed applications is that
Speaker 3: the ETF would give retail and institutional investors just a
Speaker 3: mechanism to exposure. You are a VC that invests in
Speaker 3: bitcoin companies, So how do you play this longer term story?
Speaker 3: Where do you invest to benefit in the longer run
Speaker 3: if you know a Bitcoin spot ETF does become authorized, well, so.
Speaker 9: The expectation that a spot ETF will become authorized exists
Speaker 9: in a sort of ecosystem of activity in which we
Speaker 9: see BTC the asset further financializing and maturing, and so
Speaker 9: we're investing there an example of this is that we
Speaker 9: recently made an investment in a company called Meanwhile, which
Speaker 9: is the first company to offer a BTC denominated whole
Speaker 9: life insurance policy, which has the effect of further financializing
Speaker 9: bitcoin as an asset. At the same time, there's advancement
Speaker 9: happening in bitcoin payments technologies, including to facilitate introduction of
Speaker 9: bitcoin payment technologies lightning networks, specifically to match the needs
Speaker 9: of under other trends that we've seen in the tech
Speaker 9: field and in particular AI.
Speaker 1: I want to go there.
Speaker 3: You know, the Bitcoin Lightning network was something we discussed heavily,
Speaker 3: you know, not in twenty twenty three or the end
Speaker 3: of twenty twenty two, but in prior years. Now, with
Speaker 3: all of the momentum in AI, how do you see
Speaker 3: AI putting momentum back into a focus on the underlying
Speaker 3: technology for bitcoin.
Speaker 9: What's really exciting is that Bitcoin developed slowly and purposely.
Speaker 9: So Bitcoin technologies and Lightening Network in particular was developed
Speaker 9: to solve global scale problems. It wasn't developed to introduce
Speaker 9: a quick trend or to serve as speculative behavior or gambling,
Speaker 9: but really it was meant to serve as a payment
Speaker 9: infrastructure that was pecure and scalable, and this is what
Speaker 9: AI needs. So we know, as AI has become commercialized
Speaker 9: and we're seeing products like Chatchipt and others, flouris should
Speaker 9: become popular, that fraud and payment and chargebacks would become
Speaker 9: a problem for those companies which curtails are addressable market
Speaker 9: and one of the advantages of Bitcoin's Lightning Network as
Speaker 9: a payment solution is that settlement is instant, So if
Speaker 9: you're instantly transmitting value or a product, you can instantly
Speaker 9: settle that transaction and mitigate or completely assuage the risk
Speaker 9: of chargebacks.
Speaker 1: And that sort of fraud.
Speaker 9: And in addition to that, because Lightning Network was purpose built,
Speaker 9: it scales without the constraint of the underlying blockchain, which
Speaker 9: means that activity in the underlying Bitcoin blockchain doesn't curtail
Speaker 9: the amount of transactions per seconds that are possible on
Speaker 9: the Lightning network, and for AI that's absolutely necessary. You
Speaker 9: need to hit scale of millions of transactions per second
Speaker 9: or more in order to service the needs of AI companies,
Speaker 9: and Likening Network can uniquely do that.
Speaker 3: Elise Colleen Stillmark, founder and managing partner. You know, we
Speaker 3: really appreciate the explanation of how you play this as
Speaker 3: a VC, but such a firm grasp on the underlying
Speaker 3: technology as well. Thank you have a good long weekend,
Speaker 3: all right. Coming up here on Bloomberg Technology, we'll look
Speaker 3: at the latest health tech trends with founder's fun Partner
Speaker 3: delian Asparuhoff and Sword Health CEO V.
Speaker 1: Bentu. That's coming up.
Speaker 3: We're also seeing some breaking news crossing the Bloomberg terminal,
Speaker 3: the New York Times reporting that Meta, the parent company
Speaker 3: of Facebook, may allow Facebook and Instagram users in the
Speaker 3: European Union the EU, to pay to avoid advertising. To
Speaker 3: avoid ads that coming from the New York Times, it
Speaker 3: did briefly push the shares highed they've been negative, pushed
Speaker 3: it into positive territory. As those headlines broke, we are
Speaker 3: now flat as a pancake on Meta platforms. This Friday,
Speaker 3: This is Bloomberg Technology, Okay. On today's VC Spotlight, we're
Speaker 3: taking a look at the latest trends in health tech investments.
Speaker 1: And for this let's bring in Virgilio V.
Speaker 3: Benu, founder and CEO of Sword Health, along with founders
Speaker 3: Fun Partner and Varda Space Industry's President delian Asparov V
Speaker 3: I'll start with you. This is really interesting. The technology
Speaker 3: that you are trying to grow and commercialize is sensor
Speaker 3: and software approach to pain management. Just explain sword to
Speaker 3: us broadly speaking.
Speaker 10: Okay, So basically, we believe that if you have physical pain, right,
Speaker 10: if you have low back pain as an example, and
Speaker 10: the best solution to your problem, it's not feels, it's
Speaker 10: not penk killers, it's not surgeries or injections, should be
Speaker 10: high quality, high intensity physical therapy, right, that's the solution.
Speaker 10: The problem with that is that the way we do
Speaker 10: live a physical therapy, it's still one hundred percent labor intensive,
Speaker 10: which really limits and is a bottleneck in terms of
Speaker 10: access to care. And so what we've done was we
Speaker 10: developed this AI solution that we call our digital therapist
Speaker 10: that basically replicates what the human physical therapist will do
Speaker 10: in a pretty clinic. But then you can do your
Speaker 10: sessions independently at home at seven am in your PGMs
Speaker 10: after breakfast without digital therapist, right with our AI solution,
Speaker 10: and then everything that you do is remotely supervised by
Speaker 10: a member of our clinical team. And so we have
Speaker 10: this human plus AI model to how we are changing
Speaker 10: how we treat physical pain, which is a bigger problem
Speaker 10: in healthcare.
Speaker 3: This is an interesting case study because we have one
Speaker 3: of your biggest, biggest investors with us as well, So Delian,
Speaker 3: you know, why did Sword fit within your investment thesis
Speaker 3: when you consider how to play health tech.
Speaker 6: Yeah, we were originally thinking about this as an investment
Speaker 6: thesis at my prior firm, Coastal Aventures. Back in summer
Speaker 6: of twenty eighteen, we were analyzing the general healthcare landscape
Speaker 6: and surprisingly stumbled across the fact that muscle skeletal care
Speaker 6: generally what you think of as physical therapy, but can
Speaker 6: have either a wide range of everything from you know,
Speaker 6: net lower back, knee surgery, et cetera. In the care
Speaker 6: after that was the largest spend in healthcare, and it
Speaker 6: was one of the areas where there was very limited
Speaker 6: you know, sort of applications of technology. For sure, you
Speaker 6: had individual tools that you'd see in brick and mortar
Speaker 6: physical therapy clinics, but there wasn't really much technology being
Speaker 6: applied to the actual delivery of that care.
Speaker 1: There had been a.
Speaker 6: First handful of attempts. They were doing this very thin
Speaker 6: technological layer. Think of it as effectively, you know, interface
Speaker 6: on top of zoom, but no real technology that was
Speaker 6: showing an improved sort of you know, clinical outcome. And
Speaker 6: when we met you know, Virgilio and his team in
Speaker 6: late twenty eighteen, there are two things that really stood
Speaker 6: out to us. One, they had true scientific proof of
Speaker 6: their clinical methodology being more effective than going to a
Speaker 6: brick and mortar clinic. Everybody else was trying to replicate
Speaker 6: brick and mortar, they were actually improving it. And this
Speaker 6: paper was published in Nature, so a very pre eminent
Speaker 6: scientific journal. And then two, the actual solution was not
Speaker 6: just basically put physical therapists behind a zoom screen and
Speaker 6: instead was this AI combined with sensor technology that allowed
Speaker 6: you to while you're watching your evening.
Speaker 1: TV, actually be doing your niche.
Speaker 6: Therapy, your lower back therapy, which just makes it more
Speaker 6: convenient and actually significantly improves the clinical outcomes then having
Speaker 6: to go in person to a clinic.
Speaker 3: The I want to know what it's like you growing
Speaker 3: the business, commercializing in your latest round, I think at
Speaker 3: the end of twenty twenty one November twenty twenty one,
Speaker 3: you've got a two billion dollar valuation, big jump in valuation,
Speaker 3: and then you had a lot of momentum, So what
Speaker 3: does that look like? Explain how you've grown.
Speaker 10: So the reason why we are still going very very
Speaker 10: fast since twenty twenty one in spite of these economic
Speaker 10: challenges that everyone is facing is because one of our
Speaker 10: key value propositions is that we drive cost efficiencies. If
Speaker 10: you are a large employer in the US right now
Speaker 10: and you want to drive financial efficiency, of course you
Speaker 10: can reduce your headcount. That's one way to do it.
Speaker 10: But in terms of healthcare, it's not like you can
Speaker 10: deny a surgery to one of your employees, right you
Speaker 10: are still on the hook for that. And so what
Speaker 10: we allow you to do is that instead of a
Speaker 10: surgery for your low back pain as an example, you
Speaker 10: can use swords and we are able to treat the
Speaker 10: passion much more efficiently with higher levels of passion experience,
Speaker 10: and of course willly reduce in costs. And the way
Speaker 10: we tie all of these up is that we contractually
Speaker 10: guarantee to our clients that we save them many so
Speaker 10: then it becomes a no brainer why they should adopt.
Speaker 3: Surce Delian quick final to you, you know, one consideration
Speaker 3: when you invest in a healthcare startup is its exposure
Speaker 3: or risk with the US healthcare system insurance where it
Speaker 3: fits in with how the system works. Just explain quickly
Speaker 3: how you thought about that.
Speaker 6: Yeah, I think in this particular situation, because it's such
Speaker 6: a large bucket of spend, you can actually go after
Speaker 6: individual self insured employers, right think of like the Fortune
Speaker 6: five hundreds, the Walmarts of the world. Internally they have
Speaker 6: super sophisticated medical teams. When you're talking about hundreds of thousands,
Speaker 6: millions of employees, they may as well be their own
Speaker 6: individual healthcare network. And so relative to swords early commercialization
Speaker 6: in Europe and Australia where they had to send and
Speaker 6: sell to national healthcare systems in the United States, you
Speaker 6: can chip off basically the individual employers one at a
Speaker 6: time that are very both clinically focused, so they will
Speaker 6: appreciate the nature papers that Virgilia is publishing and very
Speaker 6: cost conscientious relatives to somebody that's redding a Medicare plan.
Speaker 6: Walmart ultimately is delivering their bottom line every single quarter
Speaker 6: to public investors rether than being funded by you to
Speaker 6: public dollars. And so the combination of the two led
Speaker 6: sort to go from effectively having no US commercialization at
Speaker 6: the end of twenty nineteen to now being over one
Speaker 6: hundred million dollar revenue run rate, largely based in the
Speaker 6: United States.
Speaker 3: Fascinating global conversation Videlio Vbentu, founder and CEO, Sword Held
Speaker 3: founder's fun partner delian Asparov, Thank you both. This is
Speaker 3: bloombog technology. Okay, So for most artificial intelligence companies, adding
Speaker 3: dot AI is a pretty important part of indicating that
Speaker 3: you are a player in that field. However, dot AI
Speaker 3: just happens to be the Internet country code for the
Speaker 3: Caribbean island of Anguilla, and that is bringing in tens
Speaker 3: of millions of dollars for that island. Beautiful joining me
Speaker 3: now on set Bloomboat's Rachel Metz.
Speaker 1: This is a crazy story.
Speaker 3: So there are AI companies all over the world cutting
Speaker 3: checks to this tiny little island.
Speaker 1: Yes, in a.
Speaker 11: Manner speaking, Yeah, So in Guila's country code top level domain,
Speaker 11: that's the two letters at the very end dot AI.
Speaker 11: A lot of different countries and well all pretty much
Speaker 11: all different countries and territories have these two letters that
Speaker 11: were assigned to them decades ago, back in the nineties
Speaker 11: as the Internet was first getting its leg so to speak.
Speaker 11: And Guila has had this for a long time. At
Speaker 11: a certain point, I think it was around two thousand
Speaker 11: and nine, they opened dot ai domain registration up to
Speaker 11: people outside of the country, so it could be people
Speaker 11: who didn't live there or have a business there. And
Speaker 11: it is the revenue from that has risen steadily. But
Speaker 11: this past year, once chat GBT was released, it took
Speaker 11: off like a hobby stick.
Speaker 3: You have been speaking to some of the officials in
Speaker 3: this tiny island nation who are dealing with this.
Speaker 1: What are the numbers? What's life like for them? That's
Speaker 1: a good question.
Speaker 11: So the person that I spoke to, his name is
Speaker 11: Vince Kate.
Speaker 1: He actually moved from the US.
Speaker 11: To Anguila in the nineties and not to be in
Speaker 11: charge of the domain registration, but sort of happened to
Speaker 11: land in that spot. So basically, when people register dot
Speaker 11: Ai domains with companies like name Cheap or go Daddy,
Speaker 11: money goes from those companies to this man, Vince Cape,
Speaker 11: and he sends it on to the Aquila government. So
Speaker 11: he's been watching this.
Speaker 1: He has a front seat to all this.
Speaker 11: He thinks that the country is going sorry, the territory
Speaker 11: is going to see twenty five to perhaps thirty million
Speaker 11: dollars in revenue this year, which.
Speaker 3: Is gone huge bloombergs rachel Mates. Check out her story
Speaker 3: on Bloomberg dot com.
Speaker 1: That does it.
Speaker 3: Sadly for the edition of Bloomberg Technology Recap on our podcast,
Speaker 3: it has been a massive week for earnings for AI
Speaker 3: and everything in between. From San Francisco. This is Bloomberg
Speaker 3: Technology