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Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of

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Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.

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Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.

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Speaker 2: Live from New York.

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Speaker 3: I'm Caroline Hyde and I'm Jackie Devalas in Washington. This

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Speaker 3: is Bloomberg Technology.

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Speaker 4: We get straight to the markets because we currently see

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Speaker 4: a market that braces for possible changes.

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Speaker 2: Jackie to the tariffs on Canada and Mexico.

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Speaker 4: All of this is being suggested by Commas Secretary Howard

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Speaker 4: Lutnik in a Bloomberg interview with Bloomberg Television. We are

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Speaker 4: basically being bounced around by the latest headlines. We have

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Speaker 4: got so much to debate when it comes to the market.

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Speaker 4: D Anidy, the earnings with CrowdStrike looking worse than the

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Speaker 4: market had braced for and CrowdStrike currently trading off significantly

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Speaker 4: by some eight percent, off as much as twelve percent

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Speaker 4: at one point, as once again that hit to the

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Speaker 4: entire global breakdown in software that we saw back in

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Speaker 4: last summer. Shares still having an effect as we saw

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Speaker 4: worse than expected earnings outlook for this company.

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Speaker 2: Let's stick into all of this with Bluebergs Isabelle Lee.

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Speaker 4: Because we have whiplash on our hands, whether or not

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Speaker 4: it's about the latest amount announcement for semiconductor support here

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Speaker 4: in the United States, whether it's whiplash ultimately, and whether

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Speaker 4: we will have tariffs remain in force or not.

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Speaker 2: How does the market digest this moment.

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Speaker 5: I think that's why they're confused. Markets have been se

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Speaker 5: signed between gains and losses. Before I came here, I

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Speaker 5: had a script on in my head that stucks rallying

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Speaker 5: because of the ISSM beat. But there now as I'm

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Speaker 5: sitting here, they're actually edging lower. It's been a wild ride,

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Speaker 5: and options traders really predict more volatility to come. And

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Speaker 5: on Friday we have the big payrolls data that's also

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Speaker 5: going to add to volatility. We have options traders predicting

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Speaker 5: a move of one point two percent in either direction,

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Speaker 5: and that's pretty significant. So it's really just if you

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Speaker 5: take a step back, investors are on edge. Even for

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Speaker 5: us on the terminal, you have headlines after headlines. You

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Speaker 5: just really don't know what to expect. Some people argue

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Speaker 5: that it's too much of a data driven market, but

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Speaker 5: remains to be seen Isabelle.

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Speaker 3: We're expecting some kind of guidance from Howard Lutnik later

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Speaker 3: this afternoon. What subsectors within tech should we be on.

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Speaker 6: The lookout for.

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Speaker 5: There's automakers, there's also chip makers. But the thing is

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Speaker 5: tyres itself isn't really bad. We have many analysts telling

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Speaker 5: us that it's Tarris Priss lingering, growth spheres, press, the

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Speaker 5: prospects of the FED keeping interest rates higher, plus the

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Speaker 5: higher stock valuations. Then if you have all of that,

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Speaker 5: you question whether the markets should be this high. But

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Speaker 5: other than that, even in Asia we have Asian equities rallying.

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Speaker 5: We have German stocks really in question after that really

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Speaker 5: big stimulus that they're injecting.

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Speaker 2: So all in all, we have recession probabilities rising.

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Speaker 5: We have a JP Morgan implied probability of economic downturn

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Speaker 5: rising through thirty one percent on Thursday. That's up from

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Speaker 5: set eighteen percent at the end of November. So now

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Speaker 5: again we have a lot of investors predicting their own

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Speaker 5: models of recession. But it's really just a tough market

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Speaker 5: to digest.

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Speaker 4: It's a tough market global market for companies trying to sell.

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Speaker 4: At the moment, I think of Tesla once again dropping lower.

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Speaker 2: We saw China weakness.

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Speaker 4: Yesterday in terms of the data, you saw it in France,

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Speaker 4: and then the latest chew to drop is Germany. I mean,

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Speaker 4: Elon Musk, is this his brand or is it ultimately

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Speaker 4: about what's happening in terms of curtailing some of their

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Speaker 4: output some of their production.

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Speaker 5: I think it could be both, because Tesla registration plummeted

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Speaker 5: in Germany last month, and a part of that is

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Speaker 5: Elon Musk and his politicking. But then a part of

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Speaker 5: that is also just really the car makers suspending out plants.

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Speaker 5: If it's model why yeah, and then they have a

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Speaker 5: factor outside of Berlin and that will lose out to

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Speaker 5: several projections. I feel like it's just really the perfect

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Speaker 5: storm or the perfect cocktail, everything moving together. But yes,

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Speaker 5: every headline in every part of the world is really

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Speaker 5: something to watch out for.

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Speaker 4: Public investors are trying to dicer in it. So a

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Speaker 4: private investors is across the tape when it comes to

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Speaker 4: what's happening in the public markets. But let's get back

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Speaker 4: to what leaders are talking about.

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Speaker 2: In the private markets too.

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Speaker 4: We've had Bloomberg business leaders across the board at the

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Speaker 4: invest conference that we're hosting today in New York City.

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Speaker 4: I did today. I spoke with Iconic Capital founder Michael Anders,

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Speaker 4: and we began with the changes in consumer sentiment at

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Speaker 4: this moment in reaction to tariff threats and also the

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Speaker 4: impact on AI.

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Speaker 2: Take to listen, But.

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Speaker 7: I think it's spending a lot of time with consumer

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Speaker 7: CEOs lately. There is definitely an awareness that there's a

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Speaker 7: sentiment shift. I think the consumer is beginning to start

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Speaker 7: paying attention to the uncertainty in terms of, you know

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Speaker 7: where tariffs are going to take us, And so I

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Speaker 7: think that's a pause that people are feeling. From our standpoint,

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Speaker 7: though we actually like this environment. It makes you do

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Speaker 7: the work. And I think if you're you know, got

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Speaker 7: the team, you've got the rigor, you've got the discipline,

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Speaker 7: you've got the focus. And going back to what I

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Speaker 7: said earlier, this is a moment where picking the winners

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Speaker 7: is so critically important. And so I think right now,

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Speaker 7: in this AI journey we're in, it's been a long road.

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Speaker 7: I mean, AI has been around for decades.

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Speaker 4: Does generative AI become more relevant at this moment where

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Speaker 4: companies are worrying about predicting the future, making sure that

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Speaker 4: they're profitable. Are they even more galvanized than to lean

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Speaker 4: into this generative shift.

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Speaker 7: I think in the last year or two, the awareness

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Speaker 7: around jen AI has gotten everybody sort of to the

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Speaker 7: point where they know it's critically important. But it is

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Speaker 7: such a complicated and nuanced situation we're in right now

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Speaker 7: that I think people are starting to really know the

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Speaker 7: need they need to pay more attention, and I think

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Speaker 7: it's less about the predictive nature of it. I think

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Speaker 7: that's kind of where we've just come from, and now

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Speaker 7: we've gone to where these machines are able to think,

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Speaker 7: they're able to reason, and pretty soon they're going to

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Speaker 7: be able to act. And I think the acting piece

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Speaker 7: is what gets us very close to this agi moment

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Speaker 7: where machines are all knowing.

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Speaker 4: That was my candas of Iconic Capital, and Jackie such an.

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Speaker 2: Important voice of this moment.

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Speaker 4: They have bet on the past winners, They bet on

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Speaker 4: the snowflakes, on the data dogs, on the ADI ends.

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Speaker 4: They're now making big bets on the likes of data breaks.

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Speaker 4: But they continue to invest in this moment even though

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Speaker 4: we've got this tipping point that's worried about geopolitics. They

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Speaker 4: like this environment where you're having to do more work,

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Speaker 4: and I think my putting money where the mouth is

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Speaker 4: assured insurance technologies. They just committed more money to that

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Speaker 4: particular Jennai business just yesterday.

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Speaker 6: That's right, Caroline.

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Speaker 3: Not always the covered names are a little bit underappreciated

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Speaker 3: and tech but crucial sectors to keep an eye on. Now,

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Speaker 3: let's go to the Bloomberg invest Conference for a conversation

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Speaker 3: with KKR co CEO Joebe along with Bloomberg's Shanali Basic.

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Speaker 8: Across Mall Street, and we're going to get to some

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Speaker 8: of the things underpinning those goals. But first we're going

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Speaker 8: to start with a big view on where the world

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Speaker 8: stands today. And as we've been talking about Joe, in

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Speaker 8: the US, investors are trying to shake off that tariff

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Speaker 8: hangover that exists right now. The markets have been very jittery,

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Speaker 8: investors are digesting how these trade policies could be in

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Speaker 8: the future. How do you view the impact from your seat?

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Speaker 9: Sure, I think it's obvious to everybody that we're in

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Speaker 9: an environment right now where there's a lot of uncertainty

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Speaker 9: around trade tariffs, but it's not necessarily new. Even with

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Speaker 9: the first Trump administration, he was focused on tariffs and trade.

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Speaker 9: Biden kept most of those tariffs in place. So I

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Speaker 9: think in our business, you know, we're very long term investors,

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Speaker 9: we need to be thinking about these issues over time,

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Speaker 9: not just in one administration. And what I'd say is,

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Speaker 9: you know, we have teams at KKR who focus on

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Speaker 9: all these areas of macro risk, whether that's currency, tariff

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Speaker 9: and trade, geopolitical risk, regulatory risk in each of the

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Speaker 9: different markets that we're investing in.

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Speaker 6: I think this.

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Speaker 9: Issue around supply chain security and resiliency, which relates to tariffs,

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Speaker 9: is obviously front and center for all long term investors,

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Speaker 9: but people are trying to parse through what this all means.

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Speaker 9: The final policies are not in place, the actions of

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Speaker 9: other countries and governments in reaction to what Trump may

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Speaker 9: or may not do is still unknown, so it's very

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Speaker 9: fluid at the moment, and I think that's obviously creating

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Speaker 9: some uncertainty and volatility.

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Speaker 8: You know, it's interesting in conversation with you, you had

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Speaker 8: mentioned that this was a risk that you should have

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Speaker 8: seen coming in a lot of ways. So from where

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Speaker 8: I'm sitting, it looks like KKR has been preparing for

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Speaker 8: this in a way that many investors have kind of

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Speaker 8: very obviously have not been So what have you been

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Speaker 8: doing to prepare for all of this uncertainty knowing that

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Speaker 8: there's even more of it ahead.

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Speaker 9: Yeah, So, I think we have over one hundred and

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Speaker 9: fifty companies in our private equity portfolio around the world.

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Speaker 9: Supply chain resiliency, multiple sourcing avenues for our companies has

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Speaker 9: always been a part of the risk mitigation approach, and

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Speaker 9: we've spent a lot of time really over the last

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Speaker 9: five six seven years understanding that risk and mitigating that risk.

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Speaker 9: And when it comes to new investments, I think a

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Speaker 9: big part of our job thematically is understanding the risk

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Speaker 9: environment we're in and choosing those themes and sectors and

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Speaker 9: opportunities that really have less exposure to terrorf risk or

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Speaker 9: trade risk. So maybe a couple of examples of that is,

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Speaker 9: you know, healthcare services are very domestic, whether it's in

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Speaker 9: the US, Europe, or Asia. You know, that's an area

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Speaker 9: where we feel like the TERRFF risk at least is

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Speaker 9: not a pronounced risk. You could look at certain services businesses.

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Speaker 9: We've made a number of investments in companies like home Services, Foundation,

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Speaker 9: Inspection maintenance companies in the US for an aging housing stock.

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Speaker 9: You look at it services and software investments in different countries. Again,

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Speaker 9: very little terrorf risk, so you're able to really zero

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Speaker 9: in and target those industries and sectors where you don't

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Speaker 9: think this is going to be a big problem.

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Speaker 8: When you think about the ripple effects that you might

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Speaker 8: see from the terror strategy. There are a lot of

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Speaker 8: concerns about inflation, sure growth. How are you thinking about

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Speaker 8: the economic headwinds that the US is facing Listen, I

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Speaker 8: think that's.

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Speaker 9: One of the big uncertainties out there that people are

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Speaker 9: trying to figure out. Tariffs are inflationary by design, so

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Speaker 9: I think if that leads to an escalated level of

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Speaker 9: inflation in US economy, obviously that's going to slow GDP growth.

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Speaker 9: It may put some pressure on the FED obviously in

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Speaker 9: a more tough economic environment, to lower rates faster over time.

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Speaker 9: But we've always felt that the bigger trends happening in

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Speaker 9: the world, whether that's energy transition, the massive investments into data,

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Speaker 9: a lot of these things are in inflationary by its nature.

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Speaker 9: Putting aside tariffs, so we have a higher resting heart

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Speaker 9: rate for inflation globally today. Than we've had in the

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Speaker 9: last decade, and you expect that to continue and potentially

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Speaker 9: even get higher inflation. Right, if these tariff and these

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Speaker 9: trade wars continue, it's not an unreasonable expectation that in

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Speaker 9: the near term you can see higher inflation.

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Speaker 8: Well, it doesn't that mean higher rates or do you

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Speaker 8: think that the FED is going to have to lower

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Speaker 8: rates into the face of that. People are starting to

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Speaker 8: use the words stagflation an awful lot these days.

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Speaker 9: I think it's going to be different in different markets,

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Speaker 9: and I think the FED is going to have to

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Speaker 9: be very nimble in how they navigate this risk. Obviously,

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Speaker 9: if the US is headed towards an economic downturn, cutting

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Speaker 9: rates is probably going to be the policy response. If

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Speaker 9: rates are high and we're not headed down that recession

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Speaker 9: path or deceleration of growth path, then rates could actually

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Speaker 9: go a little bit higher in the near term.

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Speaker 8: So let's look at this from a global perspective as well.

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Speaker 8: I think one unique view you can bring from KKR

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Speaker 8: is that you are very global in nature. So you

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Speaker 8: see the way that the changes are happening in the

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Speaker 8: tariff strategy, the way that nations are kind of separating

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Speaker 8: in their relationship to each other. You see that on

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Speaker 8: the ground through your portfolio companies. What are than other

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Speaker 8: areas of the worlds that are maybe even more attractive

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Speaker 8: to you than the United States right now?

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Speaker 9: Well, you know, I think it's not a secret. You

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Speaker 9: had it up on the slide. We're big fans right

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Speaker 9: now of Japan. We think that is a really really

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Speaker 9: underpenetrated opportunity, especially among US investors. They really haven't figured

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Speaker 9: out how to get the exposure they want in a

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Speaker 9: market like Japan where they're coming out of two and

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Speaker 9: a half decades of deflation. So finally positive wage growth,

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Speaker 9: pricing power, inflation is very modest, but positive inflation right now,

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Speaker 9: and rates are actually increasing modestly in Japan. That's a

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Speaker 9: completely different macro picture than what we've seen in Japan

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Speaker 9: for the last three decades, and a really exciting time

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Speaker 9: when you marry that with shareholder reform, activism, activism, corporate

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Speaker 9: governance reform in that market. Outside of the United States today,

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Speaker 9: Japan is the largest destination of our capital.

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Speaker 8: So it's interesting. In addition to Japan, KKR has maintained

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Speaker 8: a commitment to China as well. In fact, there are

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Speaker 8: big deals that are in the market that KKR may

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Speaker 8: be involved with at this very moment. So a lot

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Speaker 8: of other investors are very worried about China, the internal

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Speaker 8: economics and the relationship that China has to the United States. Yeah,

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Speaker 8: how do you view that dynamic?

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Speaker 9: Yeah, listen, I think the geopolitical tensions right now obviously

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Speaker 9: are front and center for US as we think about

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Speaker 9: where to invest in how to invest and in China

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Speaker 9: in particular, you have to avoid those sectors that have

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Speaker 9: sensitivity on both sides of the ocean, both the US

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Speaker 9: government and the Chinese government. So we have not invested

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Speaker 9: in some of these sensitive sectors like electric vehicles or

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Speaker 9: semiconductors or AI. That's not the focus of our China

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Speaker 9: investment strategy. We're really focusing on super high quality domestic

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Speaker 9: businesses that are around domestic consumption and services. So we

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Speaker 9: in our portfolio today we have one of the largest

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Speaker 9: or the largest Chinese pet food company, again geopolitically not sensitive.

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Speaker 9: We own one of the largest pharmacy chains in China.

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Speaker 9: We own the largest white mushroom grower in China, all

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Speaker 9: geared towards the domestic market, a growing middle class who

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Speaker 9: wants higher quality goods and services and food, and I

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Speaker 9: think that's the sweet spot of where we're focused to

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Speaker 9: the market today.

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Speaker 8: That's interesting because even if you're focused on the Chinese consumer,

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Speaker 8: that might be a little more insulated to let's say,

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Speaker 8: the global macro challenges. There are a lot of concerns

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Speaker 8: about the Chinese economy. Why are you seeing through them?

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Speaker 9: Yeah, listen, I think the overall long term trend in

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Speaker 9: China is the middle class is growing, and the expectations

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Speaker 9: of the middle class are really for higher quality goods

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Speaker 9: and services, safer food, safer services, and that's what these

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Speaker 9: companies that we're investing behind are really catering towards. No doubt,

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Speaker 9: the macro growth in China has slowed from a decade ago, right,

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Speaker 9: you were talking about a country growing at double digits GDP.

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Speaker 9: They're targeting four to five percent growth today, right, So

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Speaker 9: there has been a slowdown. There's clearly challenges in terms

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Speaker 9: of the real estate market in China, and you have

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Speaker 9: to factor all that in in terms of the growth

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Speaker 9: rate you're underwriting, and largely the entry multiple. You know,

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Speaker 9: the Chinese stock market today is one of the most

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Speaker 9: interesting value markets in the world in terms of multiples.

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Speaker 9: So if you know what you're looking for the type

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Speaker 9: of risk you're trying to mitigate against, you could still

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Speaker 9: find some interesting opportunities.

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Speaker 8: You know, yes day I asked the question, is American

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Speaker 8: exceptionalism dead? In addition to that, I ask you, is

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Speaker 8: globalization of diversification play? Is it a safety trade? How

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Speaker 8: do you think about it?

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Speaker 9: But we are a very very global firm, and we

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Speaker 9: have a lot of different ways to participate in those opportunities.

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Speaker 9: Private equity, real estate, private credit, and infrastructure. So in

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Speaker 9: really volatile periods like we're in right now, having that

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Speaker 9: flexibility of capital, we could partner with companies management teams

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Speaker 9: as a provider of anything from senior and from grade

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Speaker 9: debt right to non investment grade debt, to structured credit solutions,

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Speaker 9: structured equity solutions, growth equity capital, to buy out capital.

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Speaker 9: So you know, today it's an interesting market. When volatility spikes,

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Speaker 9: that usually leads to really really interesting deployment opportunities for

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Speaker 9: our firm. You need to be nimble, you need to

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Speaker 9: have the local reach in all these different markets. But

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Speaker 9: we're excited, quite frankly about twenty twenty five. They're going

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Speaker 9: to be hiccups. There's going to be some headwinds in

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Speaker 9: terms of some of these macro policies, but our ability

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Speaker 9: to deploy scale capital around the world, we think is

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Speaker 9: quite high.

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Speaker 8: I will still ask you, if not dead, then is

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Speaker 8: American exceptionalism then overblown?

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Speaker 9: Now listen, I think this notion that the US is

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Speaker 9: going to win alone has never been the case. I

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Speaker 9: think the strength of the United States is really the

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Speaker 9: resiliency of the economy, the strength of our capital markets

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Speaker 9: to mobilize capitals to support companies in the private sector,

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Speaker 9: and labor productivity. Right when you think about why the

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Speaker 9: US has grown faster than Europe or faster than Japan,

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Speaker 9: it's really about labor productivity in the United States. A

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Speaker 9: lot of that is technology driven and innovation driven, but

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Speaker 9: a lot of that is our unique mobility of labor

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Speaker 9: in this country. You think about Japan, which is going

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Speaker 9: through this resurgence. You know, structurally they've done the best

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Speaker 9: job of any country in terms of women participation in

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Speaker 9: the workforce, people working longer in Japan. Right, They've got

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Speaker 9: real demographic challenges. They've done an excellent job around automation

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Speaker 9: and robotics in their industrial base, but they're not getting

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Speaker 9: the labor productivity because the mobility of labor in Japan

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Speaker 9: is quite constrained, and their investment in software and tech

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Speaker 9: is a fraction of what you see in the United States. Right,

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Speaker 9: So the real superpower of the United States is labor productivity.

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Speaker 8: At the end of the day, I do want to

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Speaker 8: spend the remaining time here switching gears talking about the

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Speaker 8: future of KKR, because it's been fascinating to watch the

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Speaker 8: change from an iconic private equity company to.

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Speaker 6: What you are today.

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Speaker 8: There was the full acquisition of your insurance company last year,

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Speaker 8: Global Atlantic, and it's made KKR look more and more

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Speaker 8: like Berkshire Hathaway. And there's one part of your business

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Speaker 8: that's far less understood that I think makes you look

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Speaker 8: like the most like Berkshire Hathaway, and that's your strategic

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Speaker 8: holding's business. Many people don't know that KKR owns eighteen

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Speaker 8: companies on your own balance sheet at KKR, what is

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Speaker 8: this business going to be in maybe ten years and

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Speaker 8: why is it valuable to you? Sure?

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Speaker 9: So when you think about KKR as a business, we

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Speaker 9: really have three core strategic parts of our business. Strategy

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Speaker 9: asset management, I think is well understood. That's what we're

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Speaker 9: known for for the last fifty years. So that's our

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Speaker 9: third party private equity again real estate and infrastructure of

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Speaker 9: private credit business, and that's the six hundred and fifty

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Speaker 9: billion dollar business that you mentioned at the start. The

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Speaker 9: second big pill of our business today is Global Atlantic.

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Speaker 9: It's one hundred percent owned insurance company in the life

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Speaker 9: and annuity space, roughly one hundred and ninety billion dollars

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Speaker 9: of AUM there and again playing into all of these

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Speaker 9: trends around retirement savings, retirement security, and being able to

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Speaker 9: offer individuals compelling products for their own long term savings.

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Speaker 9: The third piece of it is a segment that we

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Speaker 9: introduced last year at our investor Day, but it's been

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Speaker 9: a segment we've been incubating for well over a decade

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Speaker 9: now at KKR, and that's Strategic Holdings. So what we're

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Speaker 9: trying to build in Strategic Holdings is in some ways

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Speaker 9: a mini Berkshire Hathaway. These are companies where we own

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Speaker 9: large stakes, sometimes controlling stakes, sometimes not, but businesses that

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Speaker 9: we think we could own literally forever. Businesses that have

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Speaker 9: the potential to compound in mid teens over a very

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Speaker 9: very long period of time. Very defensive in nature, so

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Speaker 9: we have eighteen companies in that portfolio today. We're going

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Speaker 9: to continue to redeploy our free cash flow at KKR

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Speaker 9: to invest in more of these types of businesses. And

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Speaker 9: it's not just private equity. Over time, it's going to

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Speaker 9: include certain platforms, probably in infrastructure and real assets, maybe

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Speaker 9: certain build ups you know that we're going to do

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Speaker 9: in different sectors. You know, when Scott Nuttell and I

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Speaker 9: my co CEO, joined KKRE back in nineteen ninety six,

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Speaker 9: Berkshire Hathaway had a market cap of forty billion dollars

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Speaker 9: and roughly nav balance sheet of forty billion dollars. You

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Speaker 9: fast forward twenty eight years, they have a trillion dollar

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Speaker 9: market cap on the back of long term compounding of

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Speaker 9: their balance sheet and their investments. Right, some version of

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Speaker 9: that is what we're going to be doing with strategic holdings,

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Speaker 9: but leveraging all of the skills and expertise we have

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Speaker 9: in our private equity teams, our infrastructure teams around the world.

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Speaker 8: So what's an interesting parallel here If you think about

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Speaker 8: Berkshire Hathaway, is it almost like Global Atlantic is your

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Speaker 8: own Geico, and these future infrastructure holdings will be your

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Speaker 8: BNSF and your private equity holdings would be kind of

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Speaker 8: like your stock portfolio.

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Speaker 9: Yes, this imperfect anology, but directionally you are absolutely right.

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Speaker 9: I think listen strategic holdings for us, you got to

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Speaker 9: think about it as a way, how do we think

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Speaker 9: about redeploying our free cash flow as a business back

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Speaker 9: into the most attractive areas. Some of that might be

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Speaker 9: in our traditional third party asset management business, right we

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Speaker 9: find great ways to deploy capital across those investments, we'll

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Speaker 9: deploy that capital. A lot of the capitals reinvested back

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Speaker 9: into Global Atlantic. We acquired our first controlling stake in

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Speaker 9: Global Atlantic in twenty twenty and GA at that time

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Speaker 9: had around seventy billion dollars at AUM. Four years later

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Speaker 9: it has one hundred and ninety billion dollars at AUM.

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Speaker 9: So we've supported that growth with more investment. And then

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Speaker 9: this third segment of strategic holdings, obviously, which is what

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Speaker 9: we're super excited about, is one where we're going to

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Speaker 9: be continuing to invest a lot more of our free

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Speaker 9: cash flow as a business. So our guidance to the

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Speaker 9: street today is by twenty twenty six that portfolio will

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Speaker 9: be generating around three hundred and fifty plus million dollars

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Speaker 9: after time dividends. For us, that's growing to seven hundred

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Speaker 9: million dollars by twenty twenty eight and one point one

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Speaker 9: billion dollars by twenty thirty. So it is a very

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Speaker 9: very visible, recurring, growing cash flow stream at KKR.

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Speaker 8: So you essentially have a kind of a future Unicorn

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Speaker 8: of sorts being built inside of KKRE. If you're going

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Speaker 8: to be bringing in a billion dollars over time in

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Speaker 8: this business, do you think it's built into KKR stock

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Speaker 8: that assumption yet?

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Speaker 9: I think people are starting to appreciate what we're trying

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Speaker 9: to build. But I think the bigger picture is when

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Speaker 9: you look at our universe in the alt space five

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Speaker 9: years from now, ten years from now, I think many

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Speaker 9: of the public peers in the sector are going to

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Speaker 9: actually take very different approaches to how do they grow

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Speaker 9: their firms. I think the approach we have was with

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Speaker 9: third party asset management, insurance and strategic holdings is quite

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Speaker 9: differentiated and different than the way most of our peers

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Speaker 9: are trying to grow their firms today.

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00:22:52,040 --> 00:22:54,320
Speaker 8: Now, I want to spend a little time talking about

437
00:22:54,640 --> 00:22:58,560
Speaker 8: not just institutional capital and how you are deploying capital

438
00:22:58,560 --> 00:23:01,200
Speaker 8: in your own balance sheet, we've been talking so much

439
00:23:01,320 --> 00:23:04,640
Speaker 8: about how there has been a massive push for retail.

440
00:23:04,680 --> 00:23:07,080
Speaker 8: When it comes to the world of private assets, everyone

441
00:23:07,160 --> 00:23:09,760
Speaker 8: is doing it differently. You have a relationship with capital

442
00:23:09,800 --> 00:23:13,439
Speaker 8: Group in order to make this available in a mutual

443
00:23:13,520 --> 00:23:18,520
Speaker 8: fund form. So how available is it to invest in

444
00:23:18,560 --> 00:23:21,680
Speaker 8: private assets from where you're sitting. What's the minimum amount

445
00:23:21,840 --> 00:23:23,680
Speaker 8: you would need to put into a fund to start

446
00:23:23,720 --> 00:23:25,600
Speaker 8: to get access to what you're offering.

447
00:23:26,359 --> 00:23:28,720
Speaker 9: Sure, So the way to think about the bigger picture

448
00:23:28,720 --> 00:23:32,600
Speaker 9: opportunity is for most of our history at KKR, we

449
00:23:32,600 --> 00:23:36,879
Speaker 9: were found in nineteen seventy six. Our core client base

450
00:23:37,200 --> 00:23:41,920
Speaker 9: was really large institutional investors, pension funds, insurance companies, sovereign

451
00:23:41,960 --> 00:23:46,280
Speaker 9: wealth funds around the world. The individual investors who participated

452
00:23:46,359 --> 00:23:49,240
Speaker 9: with us were really ultra high networth families and family

453
00:23:49,280 --> 00:23:53,480
Speaker 9: offices who could allocate capital as part of their diversification

454
00:23:54,119 --> 00:23:57,239
Speaker 9: as really LPs in our funds. They were willing, they

455
00:23:57,240 --> 00:24:00,000
Speaker 9: were sophisticated investors, willing to take at ten or twelve

456
00:24:00,080 --> 00:24:03,960
Speaker 9: year you know, illiquidity risk, just like a pension fund would.

457
00:24:04,880 --> 00:24:07,280
Speaker 9: So that's a very small percent of the households obviously

458
00:24:07,280 --> 00:24:09,520
Speaker 9: in the United States, but that's how they've accessed and

459
00:24:09,520 --> 00:24:13,119
Speaker 9: partnered with us historically. What's relatively new for us in

460
00:24:13,160 --> 00:24:16,240
Speaker 9: the last two to three years is we've introduced a

461
00:24:16,320 --> 00:24:20,160
Speaker 9: series of private wealth products for individual investors who are

462
00:24:20,320 --> 00:24:24,080
Speaker 9: credited investors. Okay, so those are investors with a net

463
00:24:24,080 --> 00:24:28,720
Speaker 9: worth of call one to five million dollars. These open ended,

464
00:24:28,800 --> 00:24:33,160
Speaker 9: evergreen products have semilarquidity of features, so you're not locking

465
00:24:33,200 --> 00:24:35,840
Speaker 9: up your capital for ten to twelve years. You have

466
00:24:35,960 --> 00:24:38,439
Speaker 9: the ability if you needed to redeem a portion of

467
00:24:38,480 --> 00:24:42,120
Speaker 9: your capital every quarter. So it's a slightly different format,

468
00:24:43,119 --> 00:24:47,240
Speaker 9: but it's it's investing in exactly the same deals that

469
00:24:47,280 --> 00:24:50,400
Speaker 9: our flagship funds are investing in, right So that's we're

470
00:24:50,400 --> 00:24:54,760
Speaker 9: trying to deliver that same institutional quality experience, the same portfolio,

471
00:24:54,800 --> 00:24:57,840
Speaker 9: the same access to deal flow, whether that's in private equity,

472
00:24:57,920 --> 00:25:02,200
Speaker 9: real estate, infrastructure, of private credit, to individual accredited investors.

473
00:25:02,640 --> 00:25:04,840
Speaker 9: Right in that one to five million dollars in networth,

474
00:25:05,560 --> 00:25:07,680
Speaker 9: that's around ten percent of the households in the United

475
00:25:07,720 --> 00:25:10,399
Speaker 9: States in those first two buckets ultra high net worth

476
00:25:10,640 --> 00:25:14,959
Speaker 9: and accredited investors, and roughly half the AOO in the

477
00:25:14,960 --> 00:25:18,840
Speaker 9: individual channel. With Capital Group, we have an exciting new

478
00:25:18,880 --> 00:25:24,480
Speaker 9: partnership which really addresses the next ninety percent of US households.

479
00:25:24,840 --> 00:25:29,040
Speaker 9: These are mass affluent individual investors who probably wouldn't be

480
00:25:29,080 --> 00:25:32,040
Speaker 9: buying our private wealth product and wouldn't be LP's in

481
00:25:32,080 --> 00:25:35,879
Speaker 9: our traditional fund. So we're creating hybrid products with Capital

482
00:25:35,920 --> 00:25:38,520
Speaker 9: Group in a mutual fund format. We're starting with credit

483
00:25:39,000 --> 00:25:41,960
Speaker 9: in the second quarter, where we're going to be putting

484
00:25:42,000 --> 00:25:45,119
Speaker 9: a portfolio together. Where Capitol Group manages the public credit,

485
00:25:45,640 --> 00:25:48,639
Speaker 9: we will manage the private credit allocation in that mutual

486
00:25:48,680 --> 00:25:52,040
Speaker 9: fund and deliver a product to the mass affluent that

487
00:25:52,080 --> 00:25:54,359
Speaker 9: looks very different from anything they've been able to buy before.

488
00:25:54,480 --> 00:25:56,840
Speaker 8: You know, it feels like the holy grail for this

489
00:25:56,960 --> 00:26:01,240
Speaker 8: industry is making private assets available and four own plans. Yes,

490
00:26:01,480 --> 00:26:03,720
Speaker 8: how soon do you think that happens? And if not

491
00:26:03,840 --> 00:26:05,680
Speaker 8: that soon, what's the biggest barrier?

492
00:26:06,400 --> 00:26:08,840
Speaker 9: Well, listen, I think again, at a high level, when

493
00:26:08,880 --> 00:26:11,439
Speaker 9: you think about some of the societal challenges, we have

494
00:26:12,160 --> 00:26:15,600
Speaker 9: a big part of that is securing your retirement right

495
00:26:16,160 --> 00:26:17,359
Speaker 9: as you retire from work.

496
00:26:17,640 --> 00:26:21,520
Speaker 4: Kr co CEO Jove along with Bloomberg Shnalie Basset from

497
00:26:21,520 --> 00:26:31,359
Speaker 4: Bloomberg invest This is Bloomberg Technology.

498
00:26:36,359 --> 00:26:38,440
Speaker 2: Welcome back to Blue Meg Technology. I'm Caroline Hyde in

499
00:26:38,520 --> 00:26:40,040
Speaker 2: New York and.

500
00:26:40,000 --> 00:26:41,480
Speaker 6: I'm Jackie Devalace in Washington.

501
00:26:41,720 --> 00:26:44,080
Speaker 4: Let's just talk about more of the politic king that's

502
00:26:44,119 --> 00:26:46,320
Speaker 4: affecting the market right now, and we want to think

503
00:26:46,359 --> 00:26:48,920
Speaker 4: about what's happening in terms of President Trump and how

504
00:26:48,960 --> 00:26:52,199
Speaker 4: he touched on in his address to Congress yesterday, in

505
00:26:52,200 --> 00:26:55,760
Speaker 4: particular the focus on chips, which included a call, of course,

506
00:26:55,800 --> 00:26:59,240
Speaker 4: to end the bipartisan fifty two billion dollar Chipsack Take listen.

507
00:27:00,080 --> 00:27:03,760
Speaker 10: Your Chips Act is a horrible, horrible thing. We give

508
00:27:03,880 --> 00:27:07,360
Speaker 10: hundreds of billions of dollars and it doesn't mean a thing.

509
00:27:07,440 --> 00:27:10,480
Speaker 10: They take our money and they don't spend it. All

510
00:27:10,520 --> 00:27:14,200
Speaker 10: that meant to them, we're giving them no money. All

511
00:27:14,240 --> 00:27:16,119
Speaker 10: that was important to them was they didn't want to

512
00:27:16,119 --> 00:27:18,080
Speaker 10: pay the tariffs, so they came in their building, and

513
00:27:18,119 --> 00:27:19,560
Speaker 10: many other companies are coming.

514
00:27:20,280 --> 00:27:21,439
Speaker 11: We'd have to give them money.

515
00:27:21,960 --> 00:27:24,359
Speaker 10: We just want to protect our businesses and our people,

516
00:27:24,680 --> 00:27:26,520
Speaker 10: and they will come because they won't have to pay

517
00:27:26,560 --> 00:27:29,960
Speaker 10: tariffs if they build in America. So it's very amazing.

518
00:27:30,200 --> 00:27:34,240
Speaker 10: You should get rid of the Chip Act once again.

519
00:27:34,359 --> 00:27:37,840
Speaker 4: Investors try to digest what this means for market capitalizations,

520
00:27:37,840 --> 00:27:40,080
Speaker 4: for the potential of buying publicly traded stocks. Have a

521
00:27:40,080 --> 00:27:42,199
Speaker 4: look at what the reaction has been ultimately on the

522
00:27:42,240 --> 00:27:44,840
Speaker 4: chip sector. We have been moving between gains and losses.

523
00:27:44,920 --> 00:27:48,080
Speaker 4: On the Socks Semiconductor Index. We're off by four tens percent.

524
00:27:48,440 --> 00:27:52,399
Speaker 4: Intel drags us lower, a big recipient of course, and

525
00:27:52,480 --> 00:27:54,919
Speaker 4: potential loans and grants coming from the chipsack we're off

526
00:27:54,920 --> 00:27:57,440
Speaker 4: by four point three percent. But TSMC saying that they're

527
00:27:57,440 --> 00:27:59,480
Speaker 4: going to be laying the groundwork here in the United States,

528
00:27:59,680 --> 00:28:02,680
Speaker 4: is that the tariff that brings us here the potential

529
00:28:02,720 --> 00:28:05,120
Speaker 4: concerns there. TSMC up by one point two four percent.

530
00:28:05,160 --> 00:28:07,360
Speaker 4: Brall come up by three tens of a percent. Mike

531
00:28:07,400 --> 00:28:10,240
Speaker 4: Shepard joins us to really discern the devil that is

532
00:28:10,240 --> 00:28:12,600
Speaker 4: in the detail here in that's just trying to understand

533
00:28:12,600 --> 00:28:15,520
Speaker 4: really what this means. Would ever any grants or loans

534
00:28:15,720 --> 00:28:17,040
Speaker 4: be taken away from.

535
00:28:16,880 --> 00:28:18,359
Speaker 2: A company that's already been given it.

536
00:28:19,000 --> 00:28:21,439
Speaker 12: Well, our reporting right now indicates that there will not

537
00:28:21,520 --> 00:28:24,760
Speaker 12: be any clawbacks that actually take place. So if a

538
00:28:24,840 --> 00:28:27,760
Speaker 12: check has been written to a company in cash, nobody

539
00:28:27,840 --> 00:28:30,760
Speaker 12: is coming knocking on their door saying, hey, we want

540
00:28:30,880 --> 00:28:34,680
Speaker 12: Uncle Sam's money back to put some other priority Under

541
00:28:34,720 --> 00:28:37,720
Speaker 12: the new administration. But at the same time, it does

542
00:28:37,840 --> 00:28:40,800
Speaker 12: raise a question about money that has been committed but

543
00:28:40,960 --> 00:28:44,200
Speaker 12: not yet dispersed. Would there be any delays in that

544
00:28:44,720 --> 00:28:48,040
Speaker 12: or a possible effort by the President through Congress or

545
00:28:48,040 --> 00:28:51,440
Speaker 12: through the Commerce Department, which oversees this program to either

546
00:28:51,560 --> 00:28:55,440
Speaker 12: stall or maybe try to redirect the money. Now, even

547
00:28:55,520 --> 00:28:59,000
Speaker 12: that is kind of a remote prospect. And when the

548
00:28:59,040 --> 00:29:03,360
Speaker 12: President said that he should just have Congress get rid

549
00:29:03,560 --> 00:29:06,080
Speaker 12: of the Chips Act, he turned right around and looked

550
00:29:06,080 --> 00:29:09,040
Speaker 12: at Mike Johnson. Was one of those moments during his address,

551
00:29:09,280 --> 00:29:12,360
Speaker 12: and that really put the ball in essence in Congress's

552
00:29:12,440 --> 00:29:15,200
Speaker 12: court more than anything else. We have seen a few

553
00:29:15,280 --> 00:29:18,160
Speaker 12: changes though in this Chip's Act office, Carol, and one

554
00:29:18,160 --> 00:29:21,160
Speaker 12: of them is that the dose driven cuts led by

555
00:29:21,160 --> 00:29:23,520
Speaker 12: Elon Musk, they have gone through that office with the

556
00:29:23,560 --> 00:29:26,480
Speaker 12: loss of as many as forty employees who would oversee

557
00:29:26,760 --> 00:29:29,560
Speaker 12: deployment and disbursement of that money. So we are seeing

558
00:29:29,600 --> 00:29:33,880
Speaker 12: some disruption to the program no matter what. One difference

559
00:29:33,920 --> 00:29:38,040
Speaker 12: you highlighted between TSMC and Intel was in the share price,

560
00:29:38,240 --> 00:29:40,600
Speaker 12: and part of that reflects that Intel is struggling to

561
00:29:40,600 --> 00:29:43,640
Speaker 12: find customers that would sustain those big new plants that

562
00:29:43,680 --> 00:29:46,720
Speaker 12: the government is helping him park to build. TSMC, on

563
00:29:46,760 --> 00:29:49,040
Speaker 12: the other hand, heard from both A and D and

564
00:29:49,200 --> 00:29:52,040
Speaker 12: Nvidia on Monday that, Hey, we're ready to buy those

565
00:29:52,080 --> 00:29:54,040
Speaker 12: chips you guys are going to be making for us.

566
00:29:53,920 --> 00:29:58,480
Speaker 3: There, Mike, where does this leave President Trump's vision for

567
00:29:58,600 --> 00:30:02,800
Speaker 3: boosting domestic production, auction of these critical chips, and just

568
00:30:02,880 --> 00:30:06,440
Speaker 3: broadly our competitiveness with China. This program was kind of

569
00:30:06,480 --> 00:30:09,360
Speaker 3: supposed to put us in the lead, keep us there.

570
00:30:09,800 --> 00:30:11,600
Speaker 3: What other levers does he have to pull?

571
00:30:11,640 --> 00:30:16,240
Speaker 12: Now, Well, we know the favorite lever of Donald Trump,

572
00:30:16,280 --> 00:30:19,400
Speaker 12: and that is a word that he refers to constantly

573
00:30:19,440 --> 00:30:22,480
Speaker 12: as the most beautiful word perhaps in the dictionary, and

574
00:30:22,600 --> 00:30:25,360
Speaker 12: that is tariffs. And he sees that as the driver

575
00:30:25,520 --> 00:30:29,120
Speaker 12: in getting TSMC to make its decision to move to

576
00:30:29,240 --> 00:30:32,680
Speaker 12: the US. And he also invoked that a week ago

577
00:30:32,720 --> 00:30:36,760
Speaker 12: when Apple announced a five hundred billion dollar plan to

578
00:30:36,840 --> 00:30:39,840
Speaker 12: invest in the US over four years and hire as

579
00:30:39,920 --> 00:30:43,600
Speaker 12: many as twenty thousand new employees here on American soil.

580
00:30:43,880 --> 00:30:47,560
Speaker 12: Trump said that the threat of tariffs had prompted Apple

581
00:30:47,640 --> 00:30:49,960
Speaker 12: to make that decision, and he sees it as a

582
00:30:50,000 --> 00:30:55,200
Speaker 12: way much more than subsidy programs to effectively bring companies

583
00:30:55,240 --> 00:30:58,520
Speaker 12: to make their investments here, and he's also promised regulatory

584
00:30:58,600 --> 00:31:02,120
Speaker 12: relief on perm for any companies that want to invest

585
00:31:02,160 --> 00:31:05,200
Speaker 12: more than a billion dollars here in the US. So

586
00:31:05,360 --> 00:31:09,320
Speaker 12: it is a combination of tariff threats and regulatory relief,

587
00:31:09,320 --> 00:31:12,080
Speaker 12: and he talked about regulatory relief as well during his

588
00:31:12,120 --> 00:31:13,000
Speaker 12: speech last night.

589
00:31:14,400 --> 00:31:17,120
Speaker 3: That's Bloomberg's Mike Shepherd, thanks so much for joining us.

590
00:31:17,560 --> 00:31:20,520
Speaker 3: Let's stick in more to the impact of Trump's comments

591
00:31:20,520 --> 00:31:23,880
Speaker 3: on the Chips Act and tariffs. Were joined by Liza Tobin,

592
00:31:24,000 --> 00:31:28,080
Speaker 3: managing director of Garneault Global. Liza, there is a lot

593
00:31:28,120 --> 00:31:30,320
Speaker 3: to digest last night, but I want to start with

594
00:31:30,560 --> 00:31:33,200
Speaker 3: the potential repeal of the Chips Act.

595
00:31:33,280 --> 00:31:34,160
Speaker 6: This was really.

596
00:31:33,960 --> 00:31:38,720
Speaker 3: Supposed to cement our position in the AI competitive landscape.

597
00:31:38,920 --> 00:31:41,160
Speaker 3: Does this put us at risk a falling behind?

598
00:31:42,040 --> 00:31:45,080
Speaker 13: Yes, the comments that Trump made in his speech last

599
00:31:45,160 --> 00:31:48,000
Speaker 13: night were not new. He's on the record of complaining

600
00:31:48,120 --> 00:31:50,560
Speaker 13: about subsidies and what's really at the heart of his

601
00:31:50,680 --> 00:31:55,760
Speaker 13: concerns is not wanting to be subsidizing other countries. And

602
00:31:55,800 --> 00:31:58,440
Speaker 13: so he's he, you know, in his first term, and

603
00:31:58,920 --> 00:32:03,280
Speaker 13: now he's putting pressure to get our allies to reimburse us.

604
00:32:03,320 --> 00:32:08,800
Speaker 13: He really feels like it's unfair that TSMC, a Taiwanese company,

605
00:32:08,800 --> 00:32:12,440
Speaker 13: has gotten subsidies, and so you've seen this ratcheting up

606
00:32:12,480 --> 00:32:16,200
Speaker 13: of pressure on TSMC that resulted in one hundred billion

607
00:32:16,360 --> 00:32:21,080
Speaker 13: dollar announcement that TSMC will put even more investment into

608
00:32:21,120 --> 00:32:24,760
Speaker 13: the United States. The sixty five billion already announced before

609
00:32:24,800 --> 00:32:29,200
Speaker 13: and the Biden administration was already the largest foreign direct

610
00:32:29,240 --> 00:32:32,640
Speaker 13: investment in US history, and so by adding another one

611
00:32:32,720 --> 00:32:33,480
Speaker 13: hundred billion to.

612
00:32:33,520 --> 00:32:35,600
Speaker 6: That, it really tops it chart.

613
00:32:35,960 --> 00:32:37,920
Speaker 13: So it kind of remains to be seen if that

614
00:32:38,000 --> 00:32:40,680
Speaker 13: will be enough to kind of satisfy him that he's

615
00:32:40,720 --> 00:32:45,600
Speaker 13: been reimbursed by Taiwan and TSMC for these subsidies. But

616
00:32:45,600 --> 00:32:47,240
Speaker 13: that's really at the heart of his concerns.

617
00:32:47,800 --> 00:32:48,560
Speaker 6: How then can a.

618
00:32:48,520 --> 00:32:53,000
Speaker 4: Local player like an Intel be reimbursed? Liza, talk us

619
00:32:53,000 --> 00:32:55,640
Speaker 4: through what you think the chart and the stic situation

620
00:32:55,840 --> 00:33:01,040
Speaker 4: is for local players who have been promised local US money.

621
00:33:02,040 --> 00:33:04,000
Speaker 6: Yeah, that's a good way to put it, Caroline.

622
00:33:04,080 --> 00:33:09,560
Speaker 13: I mean, the stick, of course is teriffs, and I

623
00:33:09,600 --> 00:33:13,200
Speaker 13: agree with your previous commentator that his favorite tool, he's

624
00:33:13,280 --> 00:33:16,680
Speaker 13: kind of Swiss army knife policy tool is the tariff.

625
00:33:16,720 --> 00:33:19,360
Speaker 6: And so that was the stick that we heard about.

626
00:33:19,360 --> 00:33:22,880
Speaker 13: But there were also some kind of promising carrots sprinkled

627
00:33:22,880 --> 00:33:23,920
Speaker 13: through his speech.

628
00:33:24,240 --> 00:33:26,160
Speaker 6: He talked about tax cuts.

629
00:33:25,880 --> 00:33:29,360
Speaker 13: From manufacturers to buy more equipment. That would be a

630
00:33:29,360 --> 00:33:32,920
Speaker 13: positive thing. He also talked about high skilled talent. So

631
00:33:33,240 --> 00:33:36,960
Speaker 13: the attention has gone to his proposed gold card idea

632
00:33:37,360 --> 00:33:40,480
Speaker 13: where high net worth individuals could pay five million dollars

633
00:33:40,520 --> 00:33:43,280
Speaker 13: to get a green card. But also buried in the

634
00:33:43,360 --> 00:33:47,360
Speaker 13: speech was an allusion to the issue of high skilled

635
00:33:48,320 --> 00:33:52,120
Speaker 13: graduates from US universities having to leave the United States

636
00:33:52,120 --> 00:33:54,760
Speaker 13: and not being able to stay and get a green card.

637
00:33:55,360 --> 00:33:58,040
Speaker 13: And so it sounds like President Trump wants to change that.

638
00:33:58,160 --> 00:34:01,640
Speaker 13: And that's something that many companies complain about as being

639
00:34:01,680 --> 00:34:06,320
Speaker 13: the number one constraint to setting up companies and manufacturing

640
00:34:06,320 --> 00:34:09,239
Speaker 13: plants in the United States is a lack of skilled workforce.

641
00:34:09,400 --> 00:34:12,720
Speaker 3: Let's talk more about that talent pipeline, because the Chips

642
00:34:12,760 --> 00:34:16,080
Speaker 3: Act was not only providing money for the manufacturing of plants,

643
00:34:16,320 --> 00:34:19,799
Speaker 3: but also to agencies like the National Science Foundation, which

644
00:34:19,840 --> 00:34:22,880
Speaker 3: really develops a lot of these master's degree doctorate level

645
00:34:22,920 --> 00:34:25,799
Speaker 3: students that eventually end up in the private sector. By

646
00:34:25,920 --> 00:34:28,680
Speaker 3: yanking that funding away, what does that do to that

647
00:34:28,800 --> 00:34:30,920
Speaker 3: pipeline of talent longer term.

648
00:34:31,440 --> 00:34:35,319
Speaker 13: Yeah, I think here there are a couple parts of

649
00:34:35,400 --> 00:34:38,200
Speaker 13: President Trump's agenda that are working cross purposes.

650
00:34:38,239 --> 00:34:40,080
Speaker 6: On the one hand, his instincts.

651
00:34:39,640 --> 00:34:42,000
Speaker 13: Are that we need to attract the best and the

652
00:34:42,000 --> 00:34:44,520
Speaker 13: brightest to the United States. But on the other hand,

653
00:34:45,080 --> 00:34:49,400
Speaker 13: you have those kind of firing workers across the federal

654
00:34:49,440 --> 00:34:52,920
Speaker 13: workforce and trying to cut funding. So if that starts

655
00:34:52,960 --> 00:34:57,000
Speaker 13: cutting things like federally funded R and D and other

656
00:34:57,360 --> 00:35:00,919
Speaker 13: support for science, you know, there's a very strong track

657
00:35:01,000 --> 00:35:04,239
Speaker 13: record of that kind of federal investment in R and

658
00:35:04,320 --> 00:35:07,000
Speaker 13: D paying off over the long term economically and in

659
00:35:07,080 --> 00:35:12,000
Speaker 13: terms of moonshot programs and so here, I think Trump's

660
00:35:12,000 --> 00:35:16,319
Speaker 13: agenda is kind of fighting fighting within itself, and it

661
00:35:16,360 --> 00:35:18,360
Speaker 13: remains to be seen how that fight will be resolved.

662
00:35:18,560 --> 00:35:20,600
Speaker 4: Liza, we bring you on time and time again to

663
00:35:20,680 --> 00:35:24,320
Speaker 4: the show because you're Chinese expertise here, whether it's previously

664
00:35:24,400 --> 00:35:26,560
Speaker 4: the special Competitive Studies Project, you're now of course, we've

665
00:35:26,560 --> 00:35:29,600
Speaker 4: got no global think about geopolitical risk. In thirty seconds,

666
00:35:30,000 --> 00:35:32,799
Speaker 4: is the new policy the new administration setting the US

667
00:35:32,880 --> 00:35:36,000
Speaker 4: up better or worse versus China.

668
00:35:36,080 --> 00:35:38,920
Speaker 13: So what's interesting is China has been a bit on

669
00:35:39,000 --> 00:35:43,600
Speaker 13: the back burner in President Trump's first six weeks, he's.

670
00:35:43,400 --> 00:35:45,160
Speaker 6: Not talking about China as much.

671
00:35:45,200 --> 00:35:47,880
Speaker 13: It only came up very briefly a couple of times

672
00:35:48,200 --> 00:35:50,680
Speaker 13: in his speech last night, kind of in passing.

673
00:35:51,520 --> 00:35:54,239
Speaker 6: But we know that over on the other side of the.

674
00:35:54,239 --> 00:35:58,200
Speaker 13: Pacific, Beijing is opening up its National People's Congress today.

675
00:35:58,960 --> 00:36:02,520
Speaker 13: Their premiere made comments kind of reinforcing their desire to

676
00:36:02,600 --> 00:36:06,640
Speaker 13: annex Taiwan, and you know they're ratcheting up the pressure

677
00:36:06,680 --> 00:36:09,160
Speaker 13: in the Taiwan Strait. So it's only a matter of

678
00:36:09,239 --> 00:36:13,000
Speaker 13: time before China kind of forces itself back onto the

679
00:36:13,040 --> 00:36:15,000
Speaker 13: front burner of Trump's agenda.

680
00:36:15,719 --> 00:36:18,880
Speaker 4: Zotobin, always great to catch up, Managing director Agano Global,

681
00:36:19,280 --> 00:36:23,040
Speaker 4: thanks for joining us, coming up bringing AI to consumer

682
00:36:23,120 --> 00:36:24,359
Speaker 4: applications AC sales men.

683
00:36:24,440 --> 00:36:26,480
Speaker 2: Quaso's with us talking about the.

684
00:36:26,440 --> 00:36:28,840
Speaker 4: Opportunities in that consumer space.

685
00:36:28,960 --> 00:36:45,320
Speaker 2: This has been about technology time now for VC Spotlight.

686
00:36:45,440 --> 00:36:48,480
Speaker 4: There are a growing number of opportunities for applied AI

687
00:36:48,960 --> 00:36:52,400
Speaker 4: to transform your my products the consumer that's creating new

688
00:36:52,440 --> 00:36:55,960
Speaker 4: openings for investors. Benquaso as a partner at ACEL joining

689
00:36:56,040 --> 00:36:58,200
Speaker 4: us for more. And then when I think of your career,

690
00:36:58,239 --> 00:37:01,520
Speaker 4: I think of AI and enter. But you're really leaning

691
00:37:01,560 --> 00:37:03,320
Speaker 4: in here to thinking about how it's going to affect

692
00:37:03,480 --> 00:37:05,080
Speaker 4: my life. What are some of the best that you've

693
00:37:05,080 --> 00:37:05,560
Speaker 4: been making.

694
00:37:06,560 --> 00:37:07,040
Speaker 6: That's right.

695
00:37:07,120 --> 00:37:09,840
Speaker 11: So we recently led a seventy eight million dollar series

696
00:37:09,880 --> 00:37:13,000
Speaker 11: C into an AI powered language learning app called Speak

697
00:37:13,360 --> 00:37:16,879
Speaker 11: and so specifically, Speak teaches its learners how to communicate,

698
00:37:17,080 --> 00:37:20,520
Speaker 11: how to have conversations through voice and audio. And this

699
00:37:20,560 --> 00:37:23,240
Speaker 11: is kind of in contrast to the historical industry driven

700
00:37:23,280 --> 00:37:27,360
Speaker 11: by memorization in grammar centric techniques. So we're really excited

701
00:37:27,400 --> 00:37:29,719
Speaker 11: to back the leader in AI and kind of the

702
00:37:29,800 --> 00:37:31,480
Speaker 11: language learning ecosystem.

703
00:37:32,560 --> 00:37:36,359
Speaker 3: Ben, where are we now when it comes to consumer technology?

704
00:37:36,400 --> 00:37:39,640
Speaker 3: Because there was quite the heyday in the mid two thousands,

705
00:37:39,719 --> 00:37:42,279
Speaker 3: but today, in the era of AI, the biggest checks

706
00:37:42,320 --> 00:37:45,120
Speaker 3: are being written for a lot of enterprise focused companies.

707
00:37:45,360 --> 00:37:46,000
Speaker 6: What's left?

708
00:37:46,040 --> 00:37:49,560
Speaker 3: What opportunities are you seeing to really bring back that

709
00:37:49,640 --> 00:37:50,560
Speaker 3: consumer space?

710
00:37:51,680 --> 00:37:52,480
Speaker 2: Yeah, Look, I think.

711
00:37:52,320 --> 00:37:55,040
Speaker 11: It's been a tough decade for consumer on the whole,

712
00:37:55,120 --> 00:37:58,080
Speaker 11: but AI unlocks a whole new opportunity and we're actually

713
00:37:58,080 --> 00:38:00,239
Speaker 11: seeing a little bit of a blend of both B

714
00:38:00,280 --> 00:38:02,560
Speaker 11: to B application side at the house with the consumer

715
00:38:02,600 --> 00:38:04,799
Speaker 11: side of the house. You know, at Excel, we're trying

716
00:38:04,800 --> 00:38:07,719
Speaker 11: to back teams and products that are bringing five to

717
00:38:07,760 --> 00:38:11,719
Speaker 11: ten x better user experiences to its users. And within

718
00:38:11,760 --> 00:38:13,560
Speaker 11: the consumer world, that can come in the form of

719
00:38:13,680 --> 00:38:15,680
Speaker 11: language learning, it can come in the form of music

720
00:38:15,880 --> 00:38:19,440
Speaker 11: and health and wellness. So yeah, I think there's a

721
00:38:19,480 --> 00:38:22,800
Speaker 11: lot of opportunity and frankly, the foundation that AI provides

722
00:38:22,840 --> 00:38:25,319
Speaker 11: for a lot of these application layer businesses are what's

723
00:38:25,320 --> 00:38:25,760
Speaker 11: the real.

724
00:38:25,640 --> 00:38:26,479
Speaker 6: Game changer here?

725
00:38:27,600 --> 00:38:29,920
Speaker 3: What do you make of valuations right now in the market.

726
00:38:30,000 --> 00:38:33,880
Speaker 3: AI seems to be an outlier still getting those huge

727
00:38:33,960 --> 00:38:37,640
Speaker 3: valuations even before a company has started generating revenue. Do

728
00:38:37,680 --> 00:38:39,360
Speaker 3: you think some of that will start to soften?

729
00:38:41,000 --> 00:38:43,480
Speaker 11: It's hard to predict the future. We're going to go

730
00:38:43,520 --> 00:38:46,440
Speaker 11: through a lot of local maximums, local minimums. I think

731
00:38:46,480 --> 00:38:49,360
Speaker 11: at Excel we're focused on what the next decade is

732
00:38:49,400 --> 00:38:52,560
Speaker 11: going to drive from an enterprise value perspective, and so

733
00:38:52,760 --> 00:38:55,040
Speaker 11: if we're backing the right products and the right teams

734
00:38:55,040 --> 00:38:59,160
Speaker 11: who are laser focused on those missions, the valuations hopefully

735
00:38:59,239 --> 00:39:04,600
Speaker 11: we'll look back on and won't feel too scared about

736
00:39:04,600 --> 00:39:06,680
Speaker 11: our entry points. But there's no doubt there's a lot

737
00:39:06,680 --> 00:39:08,040
Speaker 11: of excitement here and I think you have to be

738
00:39:08,080 --> 00:39:10,600
Speaker 11: disciplined on where you're placing your bets.

739
00:39:11,080 --> 00:39:13,280
Speaker 4: Ben is some of that froth coming out a speaking

740
00:39:13,280 --> 00:39:16,160
Speaker 4: with Mike Anders over Iconic earlier today at Blomberg invest

741
00:39:16,239 --> 00:39:20,760
Speaker 4: and he's saying, naturally, this disruption, this consumer sentiment shift,

742
00:39:21,080 --> 00:39:23,520
Speaker 4: maybe that's a better environment for his company. At least

743
00:39:23,560 --> 00:39:25,719
Speaker 4: it's out writing checks in because we do get rid

744
00:39:25,760 --> 00:39:27,680
Speaker 4: of the froth, the fomo a little bit. I mean

745
00:39:27,960 --> 00:39:30,359
Speaker 4: our valuations coming down in the private sector when we're

746
00:39:30,360 --> 00:39:33,200
Speaker 4: off by twenty three percent compared to videos high a

747
00:39:33,280 --> 00:39:34,359
Speaker 4: little bit earlier in the year.

748
00:39:35,600 --> 00:39:37,600
Speaker 11: Yeah, I think the tough part about looking at at

749
00:39:37,640 --> 00:39:40,560
Speaker 11: public valuations is they're changing on a daily basis, and

750
00:39:40,600 --> 00:39:43,160
Speaker 11: we're thinking about where these companies settle five to ten

751
00:39:43,200 --> 00:39:46,480
Speaker 11: years from now. And so while yes, we'll see you know,

752
00:39:46,640 --> 00:39:49,600
Speaker 11: medium shifts week to week, month to month, the truth

753
00:39:49,680 --> 00:39:51,719
Speaker 11: is our underwright really has to be what can this

754
00:39:51,760 --> 00:39:54,200
Speaker 11: company be at five years from now, ten years from now.

755
00:39:54,239 --> 00:39:58,080
Speaker 11: And that's a challenge, but it's not necessarily correlated to

756
00:39:58,120 --> 00:40:03,160
Speaker 11: the day to day price movements in the public with markets, what.

757
00:40:03,120 --> 00:40:07,520
Speaker 3: Do you make of the humane kind of disaster there?

758
00:40:07,640 --> 00:40:10,360
Speaker 3: It didn't really take off the AI pen. It was

759
00:40:10,400 --> 00:40:15,640
Speaker 3: really the first intersection of generative AI and hardware. Do

760
00:40:15,719 --> 00:40:18,719
Speaker 3: you guys look at those types of opportunities when you're

761
00:40:18,800 --> 00:40:21,520
Speaker 3: going out and looking at how can we really bring

762
00:40:21,560 --> 00:40:23,600
Speaker 3: this from a more consumer standpoint.

763
00:40:24,880 --> 00:40:27,440
Speaker 11: Yeah, Look, I think it's always easy to poke holes

764
00:40:27,680 --> 00:40:31,920
Speaker 11: in somewhat failed missions Hindsight's twenty twenty. But the truth

765
00:40:32,000 --> 00:40:34,680
Speaker 11: is consumer is such a big opportunity that you have

766
00:40:34,760 --> 00:40:36,759
Speaker 11: to take these big swings, and so I have a

767
00:40:36,800 --> 00:40:38,319
Speaker 11: lot of respect for that team. I have a lot

768
00:40:38,360 --> 00:40:41,240
Speaker 11: of respect for teams that are chasing massive end markets

769
00:40:41,400 --> 00:40:45,319
Speaker 11: like audio, or like fitness, or like health and wellness.

770
00:40:46,000 --> 00:40:49,280
Speaker 11: So I don't imagine they're going to be the only one. However,

771
00:40:49,560 --> 00:40:51,200
Speaker 11: I also think we're going to wake up in twenty

772
00:40:51,239 --> 00:40:53,279
Speaker 11: thirty five with a whole slew of new products that

773
00:40:53,320 --> 00:40:55,440
Speaker 11: we use every single day, and not all of those

774
00:40:55,480 --> 00:40:57,320
Speaker 11: are going to be created by the Apples and Amazons

775
00:40:57,360 --> 00:40:57,800
Speaker 11: of the world.

776
00:40:59,320 --> 00:41:02,160
Speaker 3: That's been a partner at Excel, thanks so much for

777
00:41:02,280 --> 00:41:02,759
Speaker 3: joining us.

778
00:41:10,040 --> 00:41:13,239
Speaker 4: It is the startup aiming to bring back extinct species

779
00:41:13,400 --> 00:41:15,759
Speaker 4: like the dodo bird, like the wooly mammoth, and it

780
00:41:15,800 --> 00:41:18,920
Speaker 4: says it's achieved a first step towards those goals. Colossal

781
00:41:18,920 --> 00:41:24,200
Speaker 4: Biosciences has created a wily mouse. Scientists modified the mice

782
00:41:24,360 --> 00:41:28,080
Speaker 4: using DNA and genomics technologies, giving the animals longer, thicker hair,

783
00:41:28,160 --> 00:41:32,320
Speaker 4: and and altered metabolism. Ben Lamb, Colossal's co founder and CEO,

784
00:41:32,760 --> 00:41:33,720
Speaker 4: is back on the show.

785
00:41:34,280 --> 00:41:36,560
Speaker 2: Ben, how big a step.

786
00:41:36,400 --> 00:41:38,319
Speaker 4: Is this because they look really cute but they don't

787
00:41:38,360 --> 00:41:39,680
Speaker 4: know that different from other mice.

788
00:41:40,600 --> 00:41:43,080
Speaker 14: Well, I think they look significantly cuterer than I say.

789
00:41:43,120 --> 00:41:45,200
Speaker 14: You know, one article actually yesterday said they are the

790
00:41:45,239 --> 00:41:48,000
Speaker 14: most adorable mice that have ever been created. They did

791
00:41:48,000 --> 00:41:50,160
Speaker 14: say it was an accident, which isn't true. It's been very,

792
00:41:50,239 --> 00:41:53,000
Speaker 14: very targeted. And you know some people have already asked,

793
00:41:53,120 --> 00:41:56,160
Speaker 14: you know, will the wooly mice increase the speedable which

794
00:41:56,160 --> 00:41:57,560
Speaker 14: we get to a mammoth And the answer is no.

795
00:41:57,920 --> 00:41:58,640
Speaker 2: You know, we've been editing.

796
00:41:58,640 --> 00:42:00,319
Speaker 14: I've been on the show before and we've been editing

797
00:42:00,360 --> 00:42:03,560
Speaker 14: our Asian elephant cells with mammoth aleeles now for about

798
00:42:03,600 --> 00:42:05,800
Speaker 14: two and a half years. But what the wooly mouse

799
00:42:05,840 --> 00:42:08,120
Speaker 14: does is it proves that our end the end process

800
00:42:08,520 --> 00:42:12,640
Speaker 14: of understanding computational biology from these ancient DnaA, making the

801
00:42:12,760 --> 00:42:15,360
Speaker 14: edits and then screening the embryo so that they're healthy

802
00:42:16,080 --> 00:42:19,040
Speaker 14: and we produce living healthy animals works and it it

803
00:42:19,120 --> 00:42:21,880
Speaker 14: also worked in one month. So we started the project

804
00:42:21,880 --> 00:42:24,880
Speaker 14: in September. In October we had our first mice and

805
00:42:24,920 --> 00:42:27,560
Speaker 14: they had exactly the number of edits we targeted with

806
00:42:27,560 --> 00:42:31,000
Speaker 14: one hundred percent efficiency, and the exact phenotypes are physical

807
00:42:31,000 --> 00:42:33,560
Speaker 14: attributes that we're looking for, which is a validation of

808
00:42:33,560 --> 00:42:35,120
Speaker 14: all the edits we're making in the mammoth.

809
00:42:35,120 --> 00:42:36,520
Speaker 2: Already this is pace.

810
00:42:36,600 --> 00:42:39,919
Speaker 4: Then what is the next step where do we get

811
00:42:39,960 --> 00:42:42,560
Speaker 4: to see the next innovations for this particular mouse.

812
00:42:43,360 --> 00:42:46,239
Speaker 14: Yeah, so right now, you know, it's obviously clear that

813
00:42:46,320 --> 00:42:50,120
Speaker 14: we can see the hair fluffiness or wooliness as we

814
00:42:50,200 --> 00:42:52,920
Speaker 14: like to call it, in terms of the texture, the thickness,

815
00:42:52,920 --> 00:42:55,680
Speaker 14: and the different ways it grows. We can also see

816
00:42:55,760 --> 00:42:59,440
Speaker 14: they're slightly slightly fattern a little bit larger, so it

817
00:42:59,560 --> 00:43:04,160
Speaker 14: goes into the lipid metabolism genes that we've edited from

818
00:43:04,280 --> 00:43:07,279
Speaker 14: the mammis. And then we can also see obviously the color,

819
00:43:07,320 --> 00:43:09,600
Speaker 14: which is the color that mammos are when you pull

820
00:43:09,640 --> 00:43:13,200
Speaker 14: them from the permafrost and clean all the promofrosts knock

821
00:43:13,320 --> 00:43:13,839
Speaker 14: off of them.

822
00:43:13,960 --> 00:43:14,760
Speaker 6: But what's really.

823
00:43:14,520 --> 00:43:16,960
Speaker 14: Interesting is over the next six to twelve months, once

824
00:43:17,000 --> 00:43:18,920
Speaker 14: we get approval from our ethics board and our I

825
00:43:19,120 --> 00:43:23,000
Speaker 14: Code Board, we'll actually start to do behavioral tests versus

826
00:43:23,000 --> 00:43:26,000
Speaker 14: wild type mice with feeding them different diets, increasing the

827
00:43:26,040 --> 00:43:29,080
Speaker 14: temperature just a little bit to see how they behave

828
00:43:29,239 --> 00:43:31,840
Speaker 14: in these different environments, to see if they do prefer

829
00:43:31,960 --> 00:43:34,480
Speaker 14: cold tolerance, And that'll be another signal that we're on

830
00:43:34,560 --> 00:43:36,799
Speaker 14: the right track with some of our mammoth edits that

831
00:43:36,800 --> 00:43:38,480
Speaker 14: we're making in the Asian alpha genome.

832
00:43:38,760 --> 00:43:40,239
Speaker 4: But I asked for it last time, and I sort

833
00:43:40,239 --> 00:43:43,600
Speaker 4: of returned to it at this moment of geopolitical anxiety.

834
00:43:44,200 --> 00:43:46,560
Speaker 2: A man who has built generative well, you.

835
00:43:46,600 --> 00:43:50,040
Speaker 4: Built AI companies, You've thought about defense, you've thought about space,

836
00:43:50,280 --> 00:43:53,400
Speaker 4: but now is the time you're thinking about willy mammos

837
00:43:53,440 --> 00:43:56,200
Speaker 4: and potentially extinct animals.

838
00:43:56,239 --> 00:43:59,200
Speaker 2: Coming back push us forward as the why again, why

839
00:43:59,360 --> 00:43:59,920
Speaker 2: we're doing this?

840
00:44:00,960 --> 00:44:02,600
Speaker 14: So we're going to lose up to fifty percent of

841
00:44:02,640 --> 00:44:05,200
Speaker 14: biodiversity between now and twenty fifty if we don't do

842
00:44:05,239 --> 00:44:08,000
Speaker 14: anything about it. Right, we know conservation works, it just

843
00:44:08,040 --> 00:44:10,400
Speaker 14: doesn't work at the speed of which we're eradicating species

844
00:44:10,440 --> 00:44:12,720
Speaker 14: and changing the planet. Right, So we need new tools

845
00:44:12,760 --> 00:44:16,400
Speaker 14: and technologies in that. And what's amazing about this project

846
00:44:16,560 --> 00:44:18,600
Speaker 14: is it gives us an opportunity to build new tools

847
00:44:18,600 --> 00:44:21,680
Speaker 14: and technologies which can help humans, which we're monetizing. It

848
00:44:21,760 --> 00:44:24,560
Speaker 14: also builds opportunity to build technologies that can help conservation,

849
00:44:24,880 --> 00:44:26,759
Speaker 14: which we're giving to the world for free. We've launched

850
00:44:26,800 --> 00:44:29,759
Speaker 14: our foundation last year with a fifty million dollars seat

851
00:44:29,800 --> 00:44:32,000
Speaker 14: investment in it. And it also gives us an opportunity

852
00:44:32,000 --> 00:44:34,600
Speaker 14: to inspire the next generation. So I'm really glad that

853
00:44:34,640 --> 00:44:36,719
Speaker 14: I'm not dealing with events or some of the other

854
00:44:36,800 --> 00:44:40,239
Speaker 14: geopolitical issues. I think everyone generally agrees on both sides

855
00:44:40,280 --> 00:44:42,600
Speaker 14: the aisle and all of the world that losing species

856
00:44:42,920 --> 00:44:45,360
Speaker 14: is bad and we should do everything we can to

857
00:44:45,400 --> 00:44:48,320
Speaker 14: protect what's here and build new technologies for conservation.

858
00:44:48,440 --> 00:44:49,320
Speaker 2: And that takes money.

859
00:44:49,320 --> 00:44:51,040
Speaker 4: And boy, if you raised it more than former and

860
00:44:51,080 --> 00:44:53,320
Speaker 4: thirty five million dollars of it, then the next stage

861
00:44:53,360 --> 00:44:54,359
Speaker 4: is how expensive is it?

862
00:44:54,400 --> 00:44:55,880
Speaker 2: How much more might you need to raise?

863
00:44:56,960 --> 00:44:59,719
Speaker 14: You know, where a technology startup, it's also innovating new

864
00:44:59,719 --> 00:45:03,120
Speaker 14: tech achnologies for human health care and other industrial use cases.

865
00:45:03,120 --> 00:45:05,359
Speaker 14: Like we spent out breaking last year, which is our

866
00:45:05,400 --> 00:45:08,560
Speaker 14: plastic degradation company. We spent out form Bio, our competition

867
00:45:08,640 --> 00:45:11,320
Speaker 14: biology company for human healthcare. We have another one that

868
00:45:11,440 --> 00:45:12,680
Speaker 14: may or may not be coming out at the end

869
00:45:12,719 --> 00:45:15,239
Speaker 14: of this year, and so we will continue to raise

870
00:45:15,280 --> 00:45:18,520
Speaker 14: money as long as there's investors' interest and sentiment and

871
00:45:18,560 --> 00:45:19,880
Speaker 14: they're excited about the mission.

872
00:45:19,880 --> 00:45:21,320
Speaker 6: But I think genetic.

873
00:45:20,960 --> 00:45:24,400
Speaker 14: Proofcases where we can identify genes and make one hundred

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Speaker 14: percent in precision at it's using multiplex editing, making all

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00:45:27,719 --> 00:45:30,720
Speaker 14: these these editswards stack, you're made all at one time

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Speaker 14: with one hundred percent efficiency. That's just not something that

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Speaker 14: we see in genome engineering, right. I mean, I'd say

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Speaker 14: that leading the charge in genetic multiplex engineering is probably

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00:45:41,640 --> 00:45:44,280
Speaker 14: a pretty large market long term. So we will continue

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Speaker 14: to raise more capital in the years to come.

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Speaker 4: The Willie Mouse the stepping stone to the Wily Mammoth.

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Speaker 4: Thanks so much for bringing us acute pictures and your expertise.

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Speaker 4: Ben Lamb, co founder CEO of Colossal Biosciences. Now that

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Speaker 4: does it for this edition of Bloomberg Technology.

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Speaker 7: What would be