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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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Speaker 1: from coast to coast with Caroline Hide in New York

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Speaker 1: and ever Low in sentrances, go.

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Speaker 2: This is Bloomberg Tech coming up. Netflix gives a lackluster

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Speaker 2: forecast for the second quarter, while chairman and co founder

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Speaker 2: Red Hastings steps down after twenty nine years at the company.

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Speaker 3: Plus, the US government plans to make a version of

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Speaker 3: anthropics Mythos model available to major federal agencies to tackle

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Speaker 3: cyber risks, despite the ongoing legal feud with.

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Speaker 4: The Pentagon and Sequoia.

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Speaker 2: Capital raises seven billion for its latest expansion fund, targeting

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Speaker 2: AI giants like Open Ai and Anthropic. We have details

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Speaker 2: later in the hour.

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Speaker 3: Such a great scoop ed that you've got. Meanwhile, let's

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Speaker 3: forget what the markets are doing. Extraordinary moves and once

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Speaker 3: again it's because we get an extraordinary barrage of news

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Speaker 3: when it comes to the Middle Eastern conflict, the straight

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Speaker 3: of war moves promised to be open for commercial vessels

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Speaker 3: at least. Oil absolutely tumbles down some twelve percent as

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Speaker 3: hopes that suddenly we'll get supply chain eases coming. We're

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Speaker 3: off by twelve percent. Now at one point it was

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Speaker 3: a record move for Brent. I'm looking at therefore still

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Speaker 3: a record high for the NASDAK one hundred up one.

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Speaker 5: Point three percent.

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Speaker 3: This is another almost thirty we're seeing just trillions added

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Speaker 3: over the course of the last few trading days. I

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Speaker 3: want to look at what's happening in terms of the

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Speaker 3: last thirteen days. This is the longest streak that we've

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Speaker 3: seen in years. We're currently up some sixteen percent at

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Speaker 3: the moment ed. It is notable the amount of games

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Speaker 3: that we see in the Nasdaq, how long they have

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Speaker 3: been for and even today despite one key drag on

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Speaker 3: the market, that you're looking.

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Speaker 2: At thirteen days for the first time since twenty thirteen.

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Speaker 2: The technology story is in the markets. Microsoft is up

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Speaker 2: two and a half percent this Friday, but on the week,

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Speaker 2: it's heading for its best week since two thousand and seven.

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Speaker 2: There's no one single story or catalyst out there, but

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Speaker 2: there's just momentum generally. Intel Similarly, we've been talking about

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Speaker 2: Intel being an outperformer even in spite of the war

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Speaker 2: in Iran and how that's impacted chip supply chains. It's

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Speaker 2: a stock trading at its highest level since two thousand.

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Speaker 2: Where there is a story is in Netflix and Netflix's

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Speaker 2: earnings essentially, the outlook for the current period. The second

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Speaker 2: quarter not that good, and the stock is currently down

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Speaker 2: eight and a half percent, its worst day as it

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Speaker 2: stands since October. At one point in the session, we're

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Speaker 2: even deeper declines. And then there's the overhang of the

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Speaker 2: Warner Brothers Discovery deal that didn't happen. And then Read Hastings,

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Speaker 2: the co founder and now chairman who's been with this

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Speaker 2: company for twenty nine years, is stepping down. Let's summarize

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Speaker 2: Bloomberg's Lucas Shaw, who leads the screen Time team, is

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Speaker 2: with us.

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Speaker 4: Let's start with that overhang.

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Speaker 2: I guess one of the reasons that the first quarter

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Speaker 2: results look good is that they got to pay a

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Speaker 2: breakup fee from Paramount, so factor that in, but I

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Speaker 2: think that that is the story. There's just this hang

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Speaker 2: of what life looked like after walking away from the

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Speaker 2: Warner Brothers Discovery deal.

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Speaker 6: Well, walking away from the deal has been the short

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Speaker 6: term up until earning has been really good for the stock.

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Speaker 6: Right the stock was up quite a bit over the

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Speaker 6: last few weeks. Investors did not like the Warner Brothers deal.

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Speaker 6: They were worried about how much Netflix was paying. They

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Speaker 6: were worried about what it would mean for the company.

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Speaker 6: But it also fed sort of, I think, expectations that

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Speaker 6: the forecast this year would be revised in a positive way,

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Speaker 6: and instead, even though Netflix had a better first quarter

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Speaker 6: than they expected in terms of subscriber growth and revenue,

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Speaker 6: they maintain the estimates, and they warned that actually profit

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Speaker 6: and margin would be down a little bit in the

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Speaker 6: second quarter because of increased spending on programming.

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Speaker 3: So maybe the market got ahead of itself. Where did

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Speaker 3: they get impacted by Read Hastings? How much is that

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Speaker 3: a concern that this looming large figure co founder is

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Speaker 3: going to be stepping and looking more at philanthropy.

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Speaker 6: Yeah. Hard to quantify, of course, because it's not like

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Speaker 6: the investors will saying, well, I sold for this reason

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Speaker 6: and I sold for that reason. But look, it has

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Speaker 6: to be a factor. On the one hand, Read Hastings

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Speaker 6: has been telegraphing his departure for a long time. In

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Speaker 6: twenty twenty he names ten surround Us as co CEO.

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Speaker 6: In twenty twenty three, he steps down as CEO and

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Speaker 6: becomes executive chairman. Then he becomes just chairman. He's been

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Speaker 6: signaling that he's going to thraw from this business because

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Speaker 6: he feels like he's done his job. At the same time,

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Speaker 6: this is the guy who led the company for most

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Speaker 6: of its existence, did a tremendous job, and so his

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Speaker 6: departure is going to worry people.

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Speaker 2: Just to point out that Read Hastings is also a

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Speaker 2: board member of Bloomberg Inc. And Bloomberg LP, the parent

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Speaker 2: company of Bloomberg Media, the parent company of this network, Lucas.

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Speaker 2: There's a lot of choice right now. I watch Netflix.

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Speaker 2: I'm watching The Night Agent. I think it's very good.

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Speaker 2: You might watch HBO Max, you might be Disney Place

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Speaker 2: or Hulu. Did we learn anything about Netflix's content slate strategy?

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Speaker 2: You know, they've been pushing into live, pushing into games.

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Speaker 2: It's not really clear to me, like what what happens

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Speaker 2: next on that front.

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Speaker 6: They're staying the course for the time being. At least

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Speaker 6: they're sort of reiterating we're confident in what we're doing.

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Speaker 6: We're yes, they are. They're moving into some new areas

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Speaker 6: video podcasting, live programming, and gaming. Where the three that

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Speaker 6: they signaled both in their letter to shareholders and in

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Speaker 6: the call I don't think those have immediate or dramatic

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Speaker 6: impacts on the business. Podcasting is not registering in a

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Speaker 6: big way yet. Live is probably the most significant, but

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Speaker 6: they are being very selective about what live programming that

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Speaker 6: they do. And video gaming they would acknowledge has has

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Speaker 6: been amiss so far, but they feel like they're starting

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Speaker 6: to develop a more comprehensive strategy for the most part.

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Speaker 6: You look at the twenty billion dollars nineteen billion dollars

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Speaker 6: they're going to spend this year, and it's on the

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Speaker 6: same kind of scripted programming they've done for for a

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Speaker 6: long time now.

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Speaker 3: Lucas sure as always brilliant to have you leaders screen time.

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Speaker 5: We appreciate it.

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Speaker 3: Let's get more on Netflix with Alicia Reese when we're

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Speaker 3: Security Senior vice president of equity Research. You've actually got

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Speaker 3: an outperform rating on the stock one hundred and eighteen

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Speaker 3: dollars twelve month price target actually raised a little bit

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Speaker 3: from one hundred and fifteen, So the confidence. Alicia talked

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Speaker 3: to us about where the confidence comes from.

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Speaker 7: Yeah, I think the ads strategy is what is being

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Speaker 7: underappreciated here domestically. I think they had to put a

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Speaker 7: lot into content in the second quarter to offset or

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Speaker 7: you know, just give the user reason to for resilience

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Speaker 7: on the on the subscriber, subscriber the premium tiers, but

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Speaker 7: those who are not convinced could easily go to the

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Speaker 7: AD tier. And we've seen with our survey work over

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Speaker 7: the years a lot of resilience around that since they

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Speaker 7: introduced the AD tier. I think there's a lot of

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Speaker 7: reason for people to stay when they give, when they

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Speaker 7: post all of that content. And you know, to lucas

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Speaker 7: this point, you know, podcasting hasn't been a huge mark

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Speaker 7: so far, but you know, Netflix did point out that

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Speaker 7: a lot of their users are coming on during the

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Speaker 7: day when they wouldn't normally come on, and so that

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Speaker 7: is incremental engagement. I think it's useful to have as

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Speaker 7: much incremental engagement as they possibly can as they raise price.

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Speaker 7: I do think it will be incremental here in with

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Speaker 7: the price increases domestically, perhaps not in Europe. There is

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Speaker 7: some legal pushback right now on the price increases in

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Speaker 7: a few countries and could potentially be in the continent.

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Speaker 7: I think, you know, the AD tier is really you

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Speaker 7: know that the piece that is underappreciated here. There's so

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Speaker 7: much opportunity for them to expand, and as they increase price,

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Speaker 7: some people and quite a few people tend to get

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Speaker 7: pushed over to the ad tier, and with Netflix's low

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Speaker 7: ad load and higher CPMs and potentially growing CPMs, they

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Speaker 7: can benefit pretty handsomely in the back half of the year, Ansia.

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Speaker 3: Can you go through geographically for US a little bit,

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Speaker 3: because perhaps we're underwhelmed in terms of first or pushing

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Speaker 3: forward first go to US. Canada was actually a slightly

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Speaker 3: slower growth and anticipated, but Asia doing well, Europe doing well,

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Speaker 3: that in America doing well.

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Speaker 5: Is there's still the growth there.

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Speaker 7: Yeah, I think it's really important to note that, you know,

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Speaker 7: because of the geographic diversity, their results are you know,

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Speaker 7: pretty steady overall. The World Baseball Classic was a huge

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Speaker 7: hit in Japan, but it didn't seem like there is

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Speaker 7: a lot of churn. Soon after, there was a lot

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Speaker 7: of content that people in the region found really favorable

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Speaker 7: and so they kept on the service. And Netflix noted

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Speaker 7: their AD tier being, you know, having a little bit

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Speaker 7: more heft in the region because of that increased subscriber growth.

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Speaker 7: So that's something that we had not factored in. The

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Speaker 7: average revenue per member is quite low in APAC, and

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Speaker 7: I think advertising in Japan and elsewhere in the region

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Speaker 7: could really boost results. You can wasn't as strong as

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Speaker 7: we had expected it to be in the first quarter,

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Speaker 7: but you know, there was a range, and it was

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Speaker 7: really within the range. Our survey work, you know, just

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Speaker 7: suggested that it was pretty standard part for the course.

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Speaker 7: Nothing you know, huge, a miss or a beat, but

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Speaker 7: you know, you do have some decent trends in Europe,

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Speaker 7: you know, absent the price increases as well. So I think,

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Speaker 7: you know, overall regionally they're quite healthy and they'll continue

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Speaker 7: to be. But there is you know, nothing domestically that

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Speaker 7: helped them hit it out of the park this quarter.

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Speaker 2: There's a line in the Bloomberg story Alicia wall Street

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Speaker 2: is looking for signs Netflix can keep subscribers engaged, and

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Speaker 2: Netflix has not disclosed subscribers since the first quarter of

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Speaker 2: twenty twenty five. It focuses on engagement time spent. And

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Speaker 2: so you've gone over a number of interesting telltale signs

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Speaker 2: of how you assess the health of the company going forward.

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Speaker 2: What is the metric that proves definitively that Netflix is

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Speaker 2: taking time and eyeballs in a world where you have

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Speaker 2: a lot of choice, and it's not just about streaming

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Speaker 2: platforms in that battle.

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Speaker 7: Well, it doesn't matter whether they're on the premium tier

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Speaker 7: or the ad tier, so long as you know, Netflix

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Speaker 7: is extracting increasing revenue off of these users, and engagement

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Speaker 7: is clearly an important sign. But so you're looking at

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Speaker 7: a combination of revenue whether they're getting, you know, the

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Speaker 7: highest subscription price, or whether they're on the ad tier

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Speaker 7: and engaging significantly with the content and providing a lot

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Speaker 7: more value to advertisers and therefore revenue to Netflix. And

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Speaker 7: if they're able to do that at a reasonable cost

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Speaker 7: of content, the profitability will continue to climb and free

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Speaker 7: cash fow will continue to climb, and that's what we've

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Speaker 7: been seeing, and so for us, that's a huge positive.

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Speaker 7: In the second quarter, surely there's going to be a

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Speaker 7: lot of content memorization, a lot more content on the service,

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Speaker 7: but in the back half that's going to even out

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Speaker 7: and they'll be able to hit those full year targets

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Speaker 7: and probably exceed them.

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Speaker 2: Netflix ask Wall Street judge us on traditional financial metrics.

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Speaker 2: The stocks down nine percent, on track for its bigges

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Speaker 2: stroops since October, but at one point down twelve percent,

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Speaker 2: biggest drop since twenty twenty two Wall Streets judging on

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Speaker 2: the financial metrics. Alisha Reesa Webersh, thank you very much.

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Speaker 2: Now coming up in the program, and thropics Mythos model

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Speaker 2: was among the top concerns for global leaders at the

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Speaker 2: IMF Spring meeting. We're going to get the latest on

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Speaker 2: the cyber concerns buzzing around DC at s NEPs. This

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Speaker 2: is bloombog Tech Andthropic CEO Dario m. O'Day is set

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Speaker 2: to meet with White House Chief of Staff Susie Wilds today.

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Speaker 4: That's according to reports.

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Speaker 2: The meeting comes as the company's powerful AI model Mythos

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Speaker 2: continues to raise concerns with public and private leaders over

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Speaker 2: its cybersecurity capabilities. And let's not forget and Thropic is

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Speaker 2: still feuding with the Pentagon over how the military uses

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Speaker 2: its AI tools. Let's get the latest with Bloomberg's Mike Shephard,

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Speaker 2: who's in Washington. I think we start with the reported meeting,

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Speaker 2: but right now there is constant headlines about anthrop relationship

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Speaker 2: with the federal government.

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Speaker 7: Ed.

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Speaker 8: This is a little bit of a twist in the

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Speaker 8: whole saga. You know, since the beginning of the year,

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Speaker 8: we've seen this increasing few between Anthropic, the developer of Claude,

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Speaker 8: and now Mythos over what degree of safeguard should be

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Speaker 8: included in its product, and it culminated in that Pentagon

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Speaker 8: declaration of the company and its systems as a supply

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Speaker 8: chain risk and prompting a company lawsuit to get that

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Speaker 8: designation overturned. Really an extraordinary turn of events, and yet

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Speaker 8: now the technology has forced another and this is the

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Speaker 8: prospect that its newest product, Mythos, could be so powerful

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Speaker 8: and so good at identifying cyber vulnerabilities that it can't

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Speaker 8: be released widely beyond a handful of technology firms and

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Speaker 8: Wall Street banks that really have that kind of trust

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Speaker 8: and also would need to be able to vet their

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Speaker 8: own systems. In a way, this really kind of brings

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Speaker 8: us closer to the remote possibility that has been talked

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Speaker 8: about by policy makers and others for years that there

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Speaker 8: could be a devastating cyber attack that takes out critical

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Speaker 8: infrastructure or disrupts the financial system.

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Speaker 5: Mike, what have those in Washington?

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Speaker 3: What are those close to the administration made of this

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Speaker 3: sort of contradictory relationship going on at the moment. The

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Speaker 3: fact that they're trying to freeze them out from a

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Speaker 3: supply chain headache risk in one sense, I mean an

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Speaker 3: extraordinary step taken. And on the flip side, outside of

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Speaker 3: the Pentagon, they seem to be working with a Treasury department,

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Speaker 3: and we understand would eventually be working with other federal agencies.

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Speaker 8: Well, this really is the question of the moment, and

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Speaker 8: it seems to be that they are looking past the

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Speaker 8: conflict that they're having between the company and the Pentagon

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Speaker 8: for the moment, simply because they need to.

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Speaker 4: The urgency of it.

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Speaker 8: Requires that the Treasury Department not only engage and test

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Speaker 8: the system on its own networks to make sure that

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Speaker 8: there are no vulnerabilities. Ever, remember the Treasury handles all

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Speaker 8: manner of payments to US citizens, social Security, you name it,

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Speaker 8: and then also performs critical market functions that could be

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Speaker 8: disrupted if hackers were able to penetrate those networks. So

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Speaker 8: they really have an agenda, and so do many other agencies.

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Speaker 8: So for the White House to line up access which

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Speaker 8: it currently does not have to METHOS for all these

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Speaker 8: agencies is something seen as important and it is putting

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Speaker 8: in the backseat. This whole question of whether the Pentagon

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Speaker 8: should be insisting their anthropic drop its demands for safeguards

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Speaker 8: on its products and military use.

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Speaker 4: Bloomberg's Mike Shepherd and DC with the reporting. Thank you.

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Speaker 2: Carra just point out that over the last seven days

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Speaker 2: a number of Anthropic executives have gone on stage or

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Speaker 2: done interviews and they've basically explained that they want to

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Speaker 2: have it both ways. They're saying, yeah, we are standing

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Speaker 2: with these principles against the Pentagon because we believe in it,

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Speaker 2: but we know that the government needs to have access

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Speaker 2: to and understand the most powerful model. That's basically the

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Speaker 2: lineally pragmatic. They're trying to be pragmatic, and at the

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Speaker 2: end of the day they are now based on our reporting,

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Speaker 2: taking action on that and saying to government, have had it.

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Speaker 5: And isn't it interesting.

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Speaker 3: At the same time, we've got the UK and Europe

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Speaker 3: desperate to get their hands on this technology as well

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Speaker 3: and calling for steps to be taking. We learned, of

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Speaker 3: course in that interview with Tom McKenzie and the Anthropic

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Speaker 3: UK lead or North of Europe lead, the UK will

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Speaker 3: be getting it soon.

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Speaker 5: Look, you've got to learn more. There's plenty to discuss.

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Speaker 5: Let's talk about how.

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Speaker 3: We've got a Bloomberg Live Q and a coming up

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Speaker 3: a little bit later today on Anthropics Mythos coming up,

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Speaker 3: We're now going to be speaking to the AVEX CEO,

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Speaker 3: Roger Wells. So the company makes its public market debut.

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Speaker 3: This is a Bloomberg Tech.

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Speaker 2: Madison Air made a strong debut on the public market's

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Speaker 2: pulling off the largest US industrial ip since nineteen ninety nine.

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Speaker 2: I spoke with CEO Jill Wyant about the company's strategy

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Speaker 2: and how is data center business took shape.

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Speaker 4: Listen to this.

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Speaker 5: So we've been at this for a while.

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Speaker 9: You know, the data center business was born out of

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Speaker 9: our customer handling business, which has done this for a

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Speaker 9: combined three hundred and fifty years. So we did not

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Speaker 9: start doing this last week or last quarter. We've had

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Speaker 9: a triple source supply chain. We've had ninety nine to

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Speaker 9: one hundred percent delivery rates for the hyperscalers and the

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Speaker 9: co locators we've been serving for years, and we are

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Speaker 9: there to care for and optimize and ensure those assets

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Speaker 9: perform at their best. We are differentiated, we are winning,

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Speaker 9: and I think the best part of that story and

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Speaker 9: it's all within a very balanced set of end markets.

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Speaker 9: We are not a data center peer play. We give

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Speaker 9: investors great exposure to the obvious opportunity there while at

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Speaker 9: the same time growing nicely in other advanced high performance

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Speaker 9: environments in the macroeconomy where air impacts customer outcomes.

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Speaker 4: Away from the stock market.

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Speaker 2: You know, a focus of the Bloomberg Tech audience is

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Speaker 2: the role of debt in all of these projects. Let's

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Speaker 2: call it the reindustrialization of America. I think, correct me

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Speaker 2: if I'm wrong. You know, coming out of this IPO,

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Speaker 2: the debtloads, I think it looks like about three billion

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Speaker 2: dollars for you. What's the strategy do you see with

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Speaker 2: time paying that down? That coming down quickly? Or your

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Speaker 2: sanguine on the load and how you work it?

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Speaker 9: Well, about a one hundred one hundred percent of the

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Speaker 9: IPO proceeds we were used to retire debt. So now

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Speaker 9: I don't know the exact calculation. I've been talking to

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Speaker 9: a lot of folks today about green shoe execution. But

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Speaker 9: really we should come out of that IPO about three

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Speaker 9: and a half times trailing on a leverage basis, and

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Speaker 9: then we continue to do what we do, which is

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Speaker 9: grow our business and generate cash flow and expand our EBITA,

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Speaker 9: which should allow us to exit twenty twenty six below

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Speaker 9: three times levered on a trailing basis. Again, we run

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Speaker 9: that play into next year, and we should be south

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Speaker 9: of two point five times levered, as I say, before

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Speaker 9: New Year's eve, well before New Year's Eve in twenty

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Speaker 9: twenty seven. And really then it just comes back to

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Speaker 9: the same play we've always been running. Grade sales, higher

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Speaker 9: margins are EBITDA margins enterprise wide at twenty six and

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Speaker 9: a half percent or eight hundred to one thousand basis

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Speaker 9: points better than the most of the competition we see

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Speaker 9: out there. Our team is very focused and robust around

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Speaker 9: converting that to free cash flow. We have an asset

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Speaker 9: light model where we whereby we can make our growth

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Speaker 9: investments while remaining at a low single digit capex, and

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Speaker 9: we have an owner's mindset across the company, so good

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Speaker 9: discipline use of cash. So we feel good about that,

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Speaker 9: you know, getting that balance sheet to the point where

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Speaker 9: investors consistently told us they wanted to be, and then

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Speaker 9: that just opens up more optionality and flexibility.

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Speaker 10: For us going forward.

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Speaker 3: Madisoneo to Yan sticking with IPOs Shares, a military drone

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Speaker 3: maker AVEX. I'll have to begin trading today. The companies

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Speaker 3: raised three hundred and twenty million dollars. The shares pricing

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Speaker 3: twenty dollars each, near the top of its projected range,

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Speaker 3: has beat now with Roger Wells, he's AVEX CEO, and

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Speaker 3: a big day for the business. What's interesting is what

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Speaker 3: you use the money for. Therefore, what will three hundred

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Speaker 3: and twenty million dollars by.

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Speaker 11: Yeah, so our primary use of proceeds is going to

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Speaker 11: be to buy down debt and create networking capital that

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Speaker 11: we can really use to scale the business and accelerate growth.

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Speaker 2: Just so you know, Roger Bloomberg's reporting that these shares

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Speaker 2: are indicated to open somewhere twenty three to twenty five

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Speaker 2: dollars apiece. You priced at twenty it was twelve times

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Speaker 2: over subscribed. So I don't know how that makes you

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Speaker 2: makes you feel. But the basics of it are, you're

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Speaker 2: a drone company, and you're a company that, in line

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Speaker 2: with the rest of industry, is looking at the battlefield

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Speaker 2: you might move deeper into warfare.

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Speaker 4: Explain the strategy.

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Speaker 11: Yeah, So, first off, we couldn't be more excited with

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Speaker 11: where we landed. A lot of investor excitement and interest

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Speaker 11: in the products, technologies, and solutions that AVX is moving

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Speaker 11: into the market. We are a company that builds autonomous,

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Speaker 11: multi mission, multi domain systems that are battlefield proven. By

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Speaker 11: the time we get to the end of fiscal year

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Speaker 11: twenty six, we will have delivered over nine thousand system

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Speaker 11: to Ukraine and really proven the capabilities that we bring.

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Speaker 11: We will continue to focus in on bringing kinetic solutions

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Speaker 11: that are designed to meet the needs of our customers

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Speaker 11: long range precision strike voider ammunitions and launched effects.

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Speaker 3: More broadly, when you say that these are being used,

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Speaker 3: how do we see the scale rampop and how dependent

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Speaker 3: do you remain on government contracts from the United States.

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Speaker 4: Yeah. Look, I think the.

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Speaker 11: Activities we've seen in Ukraine and more recently in Oran

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Speaker 11: just validate the fact that autonomous unmanned systems are going

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Speaker 11: to be a part of modern warfare now and long

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Speaker 11: into the future. We feel like we're well positioned with

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Speaker 11: significant backlog over eight billion dollars as it stands today,

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Speaker 11: and really also validated by the fact that the fiscal

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Speaker 11: year twenty seven budget request came in over fifty billion

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Speaker 11: dollars for exactly the same types of systems that we

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Speaker 11: bring to the market into our customers. So we see

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Speaker 11: a lot of growth in this area of the market

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Speaker 11: and a broad adoption of this type of technology.

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Speaker 4: Have you done the math on that, Roja?

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Speaker 2: So when the full year twenty seven defense budget gets done,

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Speaker 2: how much of that you could capture?

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Speaker 11: Yeah, I think we're well positioned and well aligned with

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Speaker 11: evolving requirements. Obviously, we're working very closely with our customers

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Speaker 11: to ensure that we are able to bring scaled systems

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Speaker 11: that are affordable and on the timeline that's operationally relevant.

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Speaker 11: So we're constantly working with them to make sure that

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Speaker 11: we're meeting their demand.

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Speaker 3: Roger, There's been a lot of exuberance, shall I say,

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Speaker 3: hype around defense tech names, and a lot of them

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Speaker 3: make drones, and I'm interested as to how you continue

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Speaker 3: to build a USP narrative here. What makes you different

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Speaker 3: than the other drone companies?

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Speaker 11: Yeah, Look, I think we really focus in on a

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Speaker 11: differentiated technology stack that allows our systems to be highly

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Speaker 11: competitive on the modern battlefield. We're able to execute in

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Speaker 11: highly contested environments where GPS is denied, communications jammed, electronic

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Speaker 11: warfare is being pervasively devoid quite technical sophisticated adversaries, and

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Speaker 11: that technology differentiation is really how we distinguish ourselves and

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Speaker 11: how we continue to bring top talent.

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Speaker 4: To the AVX team.

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Speaker 2: Avex indicated it's open twenty three to twenty five dollars,

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Speaker 2: priced at twenty dollars in an IPO that Bloomberg reports

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Speaker 2: was more than twelve times oversubscribed. Roger Wells is Avex's CEO,

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Speaker 2: Thank you very much. Coming up on the program. Shares

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Speaker 2: of Netflix dropped pretty sharply as well, after posting disappointing

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Speaker 2: second quarter earnings forecast. There's also a big departure. Someone

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Speaker 2: with a long history of that company will have it next.

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Speaker 4: It's halftime. This is Bloomberg Tech.

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Speaker 5: Welcome back to Bloomberg Tech.

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Speaker 3: We are checking in on these markets because it's an

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Speaker 3: extraordinary day. From geopolitics, it looks as though the straight

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Speaker 3: ofform moves is open according to Iran courses as we

438
00:23:00,640 --> 00:23:04,480
Speaker 3: move towards closer end to conflict of the world hopes.

439
00:23:04,520 --> 00:23:06,520
Speaker 3: But we're down by nine point six percent if you're

440
00:23:06,520 --> 00:23:08,159
Speaker 3: looking at oil, we've jumped a head a little bit.

441
00:23:08,200 --> 00:23:11,080
Speaker 5: So let's go back to the Nasdaq one hundred record high. Yeah,

442
00:23:11,240 --> 00:23:12,320
Speaker 5: down ten percent on Brent.

443
00:23:12,400 --> 00:23:14,760
Speaker 2: Tech is unstoppable in spite of the war in Iran,

444
00:23:14,840 --> 00:23:17,640
Speaker 2: so many headlines, so Iran's foreign minister confirms the straightform

445
00:23:17,640 --> 00:23:19,760
Speaker 2: Moves is open. By the way, the straightfor Moves is

446
00:23:19,760 --> 00:23:21,439
Speaker 2: a body of water in the Gulf and lots of

447
00:23:21,440 --> 00:23:23,800
Speaker 2: ships carrying oil pass through it.

448
00:23:24,359 --> 00:23:26,000
Speaker 4: More than oil, more than oil.

449
00:23:26,080 --> 00:23:27,080
Speaker 5: Everything's need for check.

450
00:23:27,119 --> 00:23:29,840
Speaker 2: But that's why you see that that big drop in Brent.

451
00:23:29,960 --> 00:23:33,119
Speaker 2: You know that the oil, I guess will start flowing

452
00:23:33,160 --> 00:23:35,879
Speaker 2: a little bit more. And then you know, broadly speaking,

453
00:23:36,040 --> 00:23:38,320
Speaker 2: you know tech is the focus for a lot of

454
00:23:38,359 --> 00:23:42,199
Speaker 2: investors right now. And within that, you know that bucket

455
00:23:42,240 --> 00:23:44,760
Speaker 2: of the Nasdaq one hundred for the first time, a

456
00:23:44,840 --> 00:23:47,040
Speaker 2: thirteen day streak since twenty thirteen.

457
00:23:47,240 --> 00:23:49,040
Speaker 4: I think, yeah, twenty thirteen.

458
00:23:49,119 --> 00:23:50,080
Speaker 5: To go back that long.

459
00:23:50,440 --> 00:23:54,040
Speaker 3: The sentiment risk on sentiment to remain just by all

460
00:23:54,080 --> 00:23:57,040
Speaker 3: the jupilitical headlines. But let's go to the AI headlines

461
00:23:57,040 --> 00:23:59,439
Speaker 3: that continue to drive this market and look for some.

462
00:23:59,320 --> 00:24:01,000
Speaker 5: It's positive, for others it's negative.

463
00:24:01,040 --> 00:24:03,840
Speaker 3: Figment down off by six point four percent as we

464
00:24:03,920 --> 00:24:08,680
Speaker 3: get well reality check, that's still AI might be disrupting

465
00:24:08,720 --> 00:24:11,600
Speaker 3: the world of software this time. Claude Design is what's

466
00:24:11,600 --> 00:24:14,760
Speaker 3: coming out and topic just relentless with the amount of announcements.

467
00:24:14,880 --> 00:24:15,040
Speaker 6: Yeah.

468
00:24:15,080 --> 00:24:16,879
Speaker 2: So look at that chart, the squiggly line. But the

469
00:24:17,000 --> 00:24:20,560
Speaker 2: drop just after eleven Eastern is because the headline hit Anthropic,

470
00:24:20,640 --> 00:24:24,520
Speaker 2: confirming that Claude Design is being launched and released. It

471
00:24:24,520 --> 00:24:26,840
Speaker 2: had been reported in the press earlier in the week,

472
00:24:26,920 --> 00:24:29,480
Speaker 2: which also had hit Figma. But that's a pretty sharp

473
00:24:29,520 --> 00:24:34,560
Speaker 2: reaction of AI displacing a platform that does design.

474
00:24:34,520 --> 00:24:38,520
Speaker 3: Create polish visual work like designs, prototype slides, one pages

475
00:24:39,119 --> 00:24:39,560
Speaker 3: and more.

476
00:24:40,080 --> 00:24:41,680
Speaker 5: Lanodobe as well for example.

477
00:24:41,440 --> 00:24:44,200
Speaker 2: Yeah, storry is not going to go away. Let's get

478
00:24:44,200 --> 00:24:48,080
Speaker 2: back to Netflix. And Netflix is under pressure and the

479
00:24:48,119 --> 00:24:50,879
Speaker 2: stockdown almost ten percent, on track for its biggest drop

480
00:24:51,119 --> 00:24:53,919
Speaker 2: since October. I believe at one point on track for

481
00:24:53,920 --> 00:24:57,040
Speaker 2: its biggest drop since twenty twenty two. The reactions to

482
00:24:57,119 --> 00:25:00,199
Speaker 2: the numbers and a big departure. Keitha rang A, then

483
00:25:00,200 --> 00:25:04,680
Speaker 2: a Bloomberg intelligent intelligence, says in her React research. Netflix

484
00:25:04,760 --> 00:25:07,800
Speaker 2: maintaining its full year outlook despite avoiding M and A

485
00:25:07,920 --> 00:25:13,440
Speaker 2: costs may concern investors, but reflects a cautious approach. Peter

486
00:25:13,600 --> 00:25:16,960
Speaker 2: joins us, Now you know a lot of your colleagues

487
00:25:16,960 --> 00:25:20,160
Speaker 2: and peers in the markets on the street pointed out

488
00:25:20,240 --> 00:25:23,280
Speaker 2: that they kind of wanted to see Netflix raise the

489
00:25:23,320 --> 00:25:27,879
Speaker 2: full year guidance. You know, was there an expectation of that, Like,

490
00:25:27,920 --> 00:25:31,160
Speaker 2: why were we going into to the print thinking maybe

491
00:25:31,160 --> 00:25:32,560
Speaker 2: they'll tell us things are better than they are.

492
00:25:33,720 --> 00:25:35,920
Speaker 12: Yeah, there was definitely a lot of you know, elevated

493
00:25:35,960 --> 00:25:39,320
Speaker 12: expectations going into the print ed. So you know that

494
00:25:39,400 --> 00:25:42,800
Speaker 12: they just hiked prices in the US, and I think

495
00:25:42,880 --> 00:25:45,960
Speaker 12: that definitely fed into that optimism.

496
00:25:46,119 --> 00:25:46,920
Speaker 5: There was also the.

497
00:25:46,880 --> 00:25:49,000
Speaker 12: Thing of you know, the M and A integration cost

498
00:25:49,080 --> 00:25:53,000
Speaker 12: basically going away after they dropped the Warner bid, and

499
00:25:53,080 --> 00:25:56,359
Speaker 12: so you know, I think investors just naturally assumed that

500
00:25:56,440 --> 00:26:00,239
Speaker 12: they would take up their operating margin, which they did

501
00:26:00,280 --> 00:26:02,600
Speaker 12: not do. So, you know, this was just your classic

502
00:26:02,600 --> 00:26:05,399
Speaker 12: case of when results were definitely good, but that's just

503
00:26:05,440 --> 00:26:07,560
Speaker 12: not good enough, given that the street was expecting a

504
00:26:07,600 --> 00:26:09,320
Speaker 12: whole lot more case it.

505
00:26:09,359 --> 00:26:13,280
Speaker 3: Therefore, what holds back margin growth revenue still looking regive good,

506
00:26:13,280 --> 00:26:16,040
Speaker 3: perhaps a little more tepid than the street had anticipated,

507
00:26:16,280 --> 00:26:17,199
Speaker 3: is consumer sentiment.

508
00:26:17,280 --> 00:26:18,480
Speaker 5: The one being hit is it, Well, they.

509
00:26:18,480 --> 00:26:21,400
Speaker 3: Still have to deploy cash within their content because look,

510
00:26:21,400 --> 00:26:24,560
Speaker 3: they're not getting Warner Brothers discovery content anymore.

511
00:26:25,359 --> 00:26:28,600
Speaker 12: Yeah, No, that's a great point, Caroline, and it's exactly that.

512
00:26:29,000 --> 00:26:33,040
Speaker 12: So it is elevated content spending this year. So historically

513
00:26:33,080 --> 00:26:36,600
Speaker 12: what we've seen for Netflix is content amortization in about

514
00:26:36,600 --> 00:26:40,480
Speaker 12: the six to seven percent growth range. This year, it

515
00:26:40,560 --> 00:26:43,560
Speaker 12: is actually jumping pretty significantly, so it's going to be

516
00:26:43,680 --> 00:26:47,000
Speaker 12: up ten percent. They've guided to cash content costs of

517
00:26:47,119 --> 00:26:50,679
Speaker 12: roughly twenty billion dollars, so that's you know, a pretty

518
00:26:50,720 --> 00:26:53,679
Speaker 12: significant step up from prior years, and that's what is

519
00:26:53,720 --> 00:26:57,359
Speaker 12: really kind of working its way into that kind the

520
00:26:57,640 --> 00:27:00,800
Speaker 12: tepid operating margin guidance. We're going to see the biggest

521
00:27:00,800 --> 00:27:04,080
Speaker 12: step up happen in the second quarter. And this is

522
00:27:04,119 --> 00:27:07,360
Speaker 12: really just Netflix kind of as you just pointed out, Caroline,

523
00:27:07,359 --> 00:27:10,800
Speaker 12: this is just them diversifying their content portfolio, kind of

524
00:27:10,840 --> 00:27:14,639
Speaker 12: making all of these new investments into live content, into

525
00:27:14,680 --> 00:27:17,720
Speaker 12: you know, some of these sports games, if you will,

526
00:27:18,280 --> 00:27:21,840
Speaker 12: video podcasts, all of that, and that is really casting them.

527
00:27:22,119 --> 00:27:24,400
Speaker 12: But it's you know, it's them just playing both offense

528
00:27:24,440 --> 00:27:25,040
Speaker 12: and defense.

529
00:27:26,040 --> 00:27:27,679
Speaker 3: Rangon Avan, it's so good to have you on. Thank

530
00:27:27,720 --> 00:27:29,080
Speaker 3: you from Boomberg Intelligence Ed.

531
00:27:29,200 --> 00:27:29,720
Speaker 5: What have we got?

532
00:27:29,840 --> 00:27:32,200
Speaker 2: Yeah, many more news stories in the world of tech,

533
00:27:32,240 --> 00:27:35,080
Speaker 2: and it's time for talking Tech first Up. Chinese regulators

534
00:27:35,560 --> 00:27:38,920
Speaker 2: have find leading delivery platforms in the country, including those

535
00:27:38,920 --> 00:27:42,720
Speaker 2: from Ali, Barba, Pinduo Duo, and May Twan. For failing

536
00:27:42,800 --> 00:27:46,800
Speaker 2: to screen unqualified merchants, authorities imposed five hundred and twenty

537
00:27:46,800 --> 00:27:51,080
Speaker 2: eight million dollars in fines and seizures, the largest since

538
00:27:51,160 --> 00:27:55,240
Speaker 2: China's twenty fifteen food safety law update. Plus TV shopping

539
00:27:55,280 --> 00:27:58,800
Speaker 2: network QVC has filed for bankruptcy. It's part of a

540
00:27:58,840 --> 00:28:02,320
Speaker 2: plan of the Struggle multimedia retailer to cut more than

541
00:28:02,400 --> 00:28:05,000
Speaker 2: five billion dollars of debt. In a statement, the company

542
00:28:05,040 --> 00:28:07,480
Speaker 2: said it had more than a billion dollars in cash

543
00:28:07,520 --> 00:28:10,560
Speaker 2: at the end of twenty twenty five to fund ongoing operations.

544
00:28:10,760 --> 00:28:13,320
Speaker 2: And Open AI is rolling out an early version of

545
00:28:13,359 --> 00:28:16,560
Speaker 2: a new AI model designed to accelerate drug discovery to

546
00:28:16,680 --> 00:28:20,400
Speaker 2: chat tob tea maker says it's gpt Rosalin model targets

547
00:28:20,440 --> 00:28:23,119
Speaker 2: life sciences research that will initially be offered as a

548
00:28:23,160 --> 00:28:25,879
Speaker 2: limited preview to select business customers.

549
00:28:25,920 --> 00:28:28,040
Speaker 3: CORCT the promise of healthcare is big when it comes

550
00:28:28,080 --> 00:28:30,600
Speaker 3: to AI. Meanwhile, you're coming up with a big set

551
00:28:30,640 --> 00:28:34,280
Speaker 3: of investment towards AI, potentially SEQUOIA capital raising seven billion

552
00:28:34,280 --> 00:28:38,120
Speaker 3: dollars for its latest expansion fund under this new leadership.

553
00:28:38,360 --> 00:28:39,800
Speaker 5: Were on that next, this is Bloomberg Tech.

554
00:28:49,520 --> 00:28:52,600
Speaker 2: Bloomberg reporting that Sequoia Capital, one of the largest and

555
00:28:52,640 --> 00:28:56,280
Speaker 2: most prominent venture capital firms, has raised seven billion dollars

556
00:28:56,280 --> 00:28:59,200
Speaker 2: for its latest expansion fund. It will target AI giants

557
00:28:59,320 --> 00:29:02,760
Speaker 2: like AI an Anthropic and the Dasher Mascarain has break

558
00:29:02,800 --> 00:29:06,960
Speaker 2: the story joins us now. So like Sequoia raises funds

559
00:29:07,200 --> 00:29:11,040
Speaker 2: relatively often, I would say, but what we're hearing is

560
00:29:11,080 --> 00:29:13,560
Speaker 2: like that, this is a big raise seven billion. It's

561
00:29:13,760 --> 00:29:16,840
Speaker 2: very clear focus later stage mature companies.

562
00:29:16,960 --> 00:29:19,160
Speaker 4: What else do we need to know? Yeah?

563
00:29:19,160 --> 00:29:22,240
Speaker 13: Absolutely, I mean, listen, this is the first fund raise

564
00:29:22,280 --> 00:29:25,720
Speaker 13: we've seen since there's been a leadership change and at Sequoia,

565
00:29:25,840 --> 00:29:28,160
Speaker 13: So this is something that we've been tracking very closely.

566
00:29:28,240 --> 00:29:30,400
Speaker 13: What is it going to look like under a new

567
00:29:30,480 --> 00:29:33,560
Speaker 13: leadership with Pat Grady and Alfred Lynn at the top

568
00:29:33,600 --> 00:29:35,400
Speaker 13: of the firm they came in at the end of

569
00:29:35,480 --> 00:29:38,480
Speaker 13: last year. Right now, it looks like a lot more investing.

570
00:29:38,560 --> 00:29:41,440
Speaker 13: This is about double the size of the last expansion

571
00:29:41,480 --> 00:29:44,840
Speaker 13: fund that Sequoya raised in twenty twenty two and comes

572
00:29:44,840 --> 00:29:47,440
Speaker 13: in addition to two point five billion raised for its

573
00:29:47,480 --> 00:29:50,600
Speaker 13: seed through growth investing last year.

574
00:29:50,520 --> 00:29:52,000
Speaker 5: So just a lot more capital.

575
00:29:52,360 --> 00:29:54,720
Speaker 3: And we're sort of seeing that written Nage, aren't we,

576
00:29:54,920 --> 00:29:57,960
Speaker 3: Clenn Perkins Thrive. We know that others are in the

577
00:29:58,000 --> 00:30:03,040
Speaker 3: market potentially raising you highlight capital, potentially general catalysts as well,

578
00:30:03,320 --> 00:30:04,920
Speaker 3: and all of them having to raise bigger and bigger

579
00:30:04,920 --> 00:30:06,760
Speaker 3: funds because they need to write bigger and bigger checks

580
00:30:06,800 --> 00:30:08,120
Speaker 3: to the bigger and bigger startups.

581
00:30:09,360 --> 00:30:11,880
Speaker 13: Absolutely, I think right now there's a dynamic in venture

582
00:30:11,920 --> 00:30:15,720
Speaker 13: capital where if you're a platform fund, you can't just

583
00:30:15,800 --> 00:30:18,440
Speaker 13: be able to play in one stage. And so with

584
00:30:18,520 --> 00:30:20,880
Speaker 13: this new capital with Sequoia, it's fur their latest stage

585
00:30:20,920 --> 00:30:23,920
Speaker 13: investments and it remarks back to some of their most

586
00:30:23,960 --> 00:30:27,520
Speaker 13: successful investments with which closed last month and a thirty

587
00:30:27,520 --> 00:30:30,800
Speaker 13: two billion sale to Alphabet was something that Sequoia backed

588
00:30:30,800 --> 00:30:32,880
Speaker 13: at the earlier stages but continue to double down on.

589
00:30:32,960 --> 00:30:36,040
Speaker 13: We've said that about Thrive, we're seeing that now about Iconic,

590
00:30:36,760 --> 00:30:40,920
Speaker 13: a firm that I profiled today, backing Anthropic again and again.

591
00:30:41,320 --> 00:30:43,280
Speaker 13: And so it's the new normal for funds to be

592
00:30:43,280 --> 00:30:45,040
Speaker 13: having to add billions to their balance sheet.

593
00:30:45,280 --> 00:30:48,360
Speaker 2: Okay, so Natasha, let's let's show our audience who's leading

594
00:30:48,400 --> 00:30:52,240
Speaker 2: this firm right the co stewards they're called not co CEOs,

595
00:30:52,280 --> 00:30:55,160
Speaker 2: not co managing partners, co stewards. There they are on

596
00:30:55,200 --> 00:30:58,000
Speaker 2: the left of your screen that read yeah, and they

597
00:30:58,000 --> 00:31:03,920
Speaker 2: clearly have sartorial direction and synergy as well. But Alfred

598
00:31:03,960 --> 00:31:06,040
Speaker 2: Lynn on the left Pat Grady on the right, just

599
00:31:06,080 --> 00:31:08,840
Speaker 2: give the backstory of when they came in, the changes

600
00:31:08,920 --> 00:31:11,440
Speaker 2: Sequoia made and set the scene for this new era

601
00:31:12,040 --> 00:31:14,120
Speaker 2: at what is a very important and big bench affirm.

602
00:31:15,480 --> 00:31:15,800
Speaker 4: Yeah.

603
00:31:15,840 --> 00:31:19,080
Speaker 13: Absolutely so last year roll Off both handed the reins

604
00:31:19,120 --> 00:31:21,320
Speaker 13: over to Alfred Lynn and Pat Grady. Now, Alfred Lynn

605
00:31:21,360 --> 00:31:24,240
Speaker 13: was known as someone that was helping lead Sequoia's early

606
00:31:24,280 --> 00:31:27,080
Speaker 13: stage practice. Pat Grady is someone that was known as

607
00:31:27,160 --> 00:31:30,400
Speaker 13: leading Sequoya's later stage practice. Now we're seeing them both

608
00:31:30,440 --> 00:31:33,760
Speaker 13: really be hand in hand and co lead the firm together.

609
00:31:34,360 --> 00:31:35,360
Speaker 4: And there's a few more changes.

610
00:31:35,400 --> 00:31:37,600
Speaker 13: So we've reported on some shake ups on the early

611
00:31:37,640 --> 00:31:40,960
Speaker 13: stage side of the house. We've also seen some people

612
00:31:40,960 --> 00:31:44,959
Speaker 13: come back to Sequoias fold. So most prominently we saw Douglioni,

613
00:31:45,040 --> 00:31:48,120
Speaker 13: the former senior stewart, so former top leader of the firm,

614
00:31:48,480 --> 00:31:51,560
Speaker 13: come back into an active investing world. And we've also

615
00:31:51,560 --> 00:31:54,360
Speaker 13: seen them beep out their growth stage investing ranks, so

616
00:31:54,440 --> 00:31:57,880
Speaker 13: a lot of changes and that's why really the New

617
00:31:58,200 --> 00:32:00,880
Speaker 13: Capital Hall is something we were so desperate to get

618
00:32:00,880 --> 00:32:03,160
Speaker 13: to the bottom up because we have just been wondering

619
00:32:03,160 --> 00:32:06,280
Speaker 13: if we're going to see Sequoia refocus or we're using

620
00:32:06,280 --> 00:32:08,760
Speaker 13: them expand. And for now you definitely can tell that

621
00:32:08,800 --> 00:32:12,720
Speaker 13: what Alfred and pats top priority will be will be expansion.

622
00:32:13,320 --> 00:32:15,480
Speaker 5: And to the bottom of it you got within.

623
00:32:15,800 --> 00:32:18,680
Speaker 3: Natasha Mascarona is always great reporting on the benure space.

624
00:32:18,720 --> 00:32:19,320
Speaker 5: We appreciate it.

625
00:32:19,400 --> 00:32:22,040
Speaker 3: Let's stick with that benure space because well, we just

626
00:32:22,080 --> 00:32:25,160
Speaker 3: posted actually for VC record chattering two hundred and sixty

627
00:32:25,160 --> 00:32:27,080
Speaker 3: seven billion dollars in the quarter.

628
00:32:27,200 --> 00:32:28,320
Speaker 5: But the data shows that.

629
00:32:28,280 --> 00:32:32,120
Speaker 3: The landscape is almost entirely consumed by the aiarms race.

630
00:32:32,480 --> 00:32:34,040
Speaker 3: We don't want to call it that in this scenario,

631
00:32:34,160 --> 00:32:36,200
Speaker 3: it's a race. Well, the rest of the ecosystem is

632
00:32:36,200 --> 00:32:39,920
Speaker 3: effectively frozen because of geopolitical uncertainties. Joining us now is

633
00:32:39,960 --> 00:32:42,000
Speaker 3: one of the architects of the support. Carl Stamford, director

634
00:32:42,040 --> 00:32:46,160
Speaker 3: of Venture Capital Research, over at pitchbook KYL, It's extraordinary

635
00:32:46,320 --> 00:32:48,840
Speaker 3: how much money is being raised, but how much money

636
00:32:48,840 --> 00:32:50,320
Speaker 3: is being spent on just a few companies.

637
00:32:52,080 --> 00:32:54,000
Speaker 14: Yeah, it really is right, and to your point of

638
00:32:54,080 --> 00:32:57,479
Speaker 14: the data looking really great, and it does, but it

639
00:32:57,520 --> 00:33:00,200
Speaker 14: really depends on where you're at. Nine percent out of

640
00:33:00,200 --> 00:33:02,240
Speaker 14: the capital went to deals of one hundred million ar larger,

641
00:33:02,280 --> 00:33:05,200
Speaker 14: so about one hundred and eighty five you had seventy

642
00:33:05,400 --> 00:33:08,880
Speaker 14: three percent of that go to five companies, all AI.

643
00:33:09,000 --> 00:33:11,200
Speaker 14: And if you include data bricks in there, you have

644
00:33:11,320 --> 00:33:14,640
Speaker 14: investors that want exposure and LPs that want exposure to AI.

645
00:33:14,720 --> 00:33:17,080
Speaker 14: And so what's getting left behind is the non AI companies,

646
00:33:17,120 --> 00:33:19,760
Speaker 14: whether it be your traditional enterprise SaaS it was hot

647
00:33:19,800 --> 00:33:24,400
Speaker 14: in twenty twenty one, or you know, different business models

648
00:33:24,440 --> 00:33:27,840
Speaker 14: that are just not harnessing or not AIAI native like everyone.

649
00:33:27,560 --> 00:33:31,160
Speaker 5: Wants, everyone wants. So what happens is a tale of

650
00:33:31,200 --> 00:33:32,120
Speaker 5: totally two cities.

651
00:33:32,160 --> 00:33:34,000
Speaker 3: Are there an awful lot of people out there who

652
00:33:34,000 --> 00:33:35,960
Speaker 3: are receiving no funds, who are still languishing in down

653
00:33:36,040 --> 00:33:37,920
Speaker 3: rounds or not even to raise funds at all?

654
00:33:38,040 --> 00:33:38,160
Speaker 13: Is that?

655
00:33:38,440 --> 00:33:40,360
Speaker 5: Are there these zombie companies out that car.

656
00:33:41,840 --> 00:33:42,240
Speaker 4: Definitely?

657
00:33:42,240 --> 00:33:44,400
Speaker 14: I mean there's twenty five percent of the unicorns, you

658
00:33:44,400 --> 00:33:47,000
Speaker 14: know about nine hundred unicorns now in the US. Twenty

659
00:33:47,040 --> 00:33:49,320
Speaker 14: five percent of those haven't raised since twenty twenty two

660
00:33:49,680 --> 00:33:51,720
Speaker 14: in a market that's really fast and really hot like

661
00:33:51,760 --> 00:33:54,200
Speaker 14: we're seeing right now. If you were a strong company

662
00:33:54,200 --> 00:33:57,680
Speaker 14: and were leveraged for raising another around, you would do that.

663
00:33:58,120 --> 00:34:00,280
Speaker 14: And so those companies are still trying to find a

664
00:34:00,320 --> 00:34:02,760
Speaker 14: way to you know, maybe they are going to take

665
00:34:03,480 --> 00:34:05,840
Speaker 14: a lower exit or you know, find some way to

666
00:34:05,960 --> 00:34:08,960
Speaker 14: go through us back and reorganize themselves. But there's a

667
00:34:09,000 --> 00:34:11,960
Speaker 14: lot of those companies that were strong and hot in

668
00:34:12,000 --> 00:34:14,439
Speaker 14: the next big company in twenty twenty one and twenty

669
00:34:14,480 --> 00:34:16,560
Speaker 14: two and have not raised sense and those are the

670
00:34:16,560 --> 00:34:19,080
Speaker 14: companies that are really struggling in this market.

671
00:34:19,280 --> 00:34:22,400
Speaker 2: We are we're just reflecting Kyle that the data we're showing,

672
00:34:22,440 --> 00:34:24,839
Speaker 2: the data you guys published is from the first quarter, right,

673
00:34:24,880 --> 00:34:30,600
Speaker 2: and activity has been heavy more recently. You heard the

674
00:34:30,640 --> 00:34:33,040
Speaker 2: reporting from from Natasha and I last night.

675
00:34:33,120 --> 00:34:33,319
Speaker 10: Right.

676
00:34:33,800 --> 00:34:37,240
Speaker 2: Our understanding from sources is Sequoias doing seven billion dollars

677
00:34:37,480 --> 00:34:39,640
Speaker 2: in an expansion to fund but to go after that

678
00:34:39,760 --> 00:34:42,799
Speaker 2: late stage, you know, the AI companies, What do you

679
00:34:42,880 --> 00:34:46,120
Speaker 2: infer from that? You know, the necessity to have capital

680
00:34:46,160 --> 00:34:49,840
Speaker 2: at those levels, I guess, because otherwise you're not buying

681
00:34:49,880 --> 00:34:51,640
Speaker 2: in to the names that we're talking about.

682
00:34:52,800 --> 00:34:55,200
Speaker 14: Yeah, there's a few things that tells me. Right, One,

683
00:34:55,280 --> 00:34:58,239
Speaker 14: companies will continue are going to continue to stay private longer, right,

684
00:34:58,239 --> 00:35:00,680
Speaker 14: And so those vcs that have I have access and

685
00:35:00,760 --> 00:35:04,040
Speaker 14: exposure to companies that are then fifteen years old and

686
00:35:04,120 --> 00:35:06,439
Speaker 14: raising another private round, are going to want to get

687
00:35:06,480 --> 00:35:09,000
Speaker 14: into those companies again and continue to keep their stakes high.

688
00:35:09,280 --> 00:35:12,239
Speaker 14: It also tells me that LPs want that exposure. They

689
00:35:12,320 --> 00:35:14,600
Speaker 14: know these companies are not going to go public in

690
00:35:15,040 --> 00:35:17,759
Speaker 14: the timely fashion that we might have seen five years

691
00:35:17,800 --> 00:35:19,960
Speaker 14: ago or a decade ago, Right, So they want to

692
00:35:19,960 --> 00:35:22,680
Speaker 14: make sure that they have exposure to the anthropics and

693
00:35:22,760 --> 00:35:25,640
Speaker 14: the SpaceX is and the data breaks of the world.

694
00:35:26,239 --> 00:35:27,920
Speaker 14: Maybe not, but in the.

695
00:35:27,920 --> 00:35:33,160
Speaker 2: Future, those companies they're going to probably go public this year, right, Yeah, Yes, that's.

696
00:35:33,000 --> 00:35:33,920
Speaker 4: What I'm saying everything.

697
00:35:35,480 --> 00:35:37,000
Speaker 14: I think that impacts a lot, right. I think One,

698
00:35:37,040 --> 00:35:39,800
Speaker 14: we're looking at those companies as the kind of market

699
00:35:39,800 --> 00:35:42,520
Speaker 14: indicators if the IPO market window is going to be

700
00:35:42,560 --> 00:35:46,160
Speaker 14: fully open this year. We have seen obviously SpaceX confidentially FI.

701
00:35:46,280 --> 00:35:49,319
Speaker 14: We have seen discord filed in January, but hasn't gone

702
00:35:49,360 --> 00:35:51,880
Speaker 14: any movement. There's not really a backlog or a pipeline

703
00:35:51,920 --> 00:35:54,520
Speaker 14: of VC backed IPOs because everyone's waiting for these big

704
00:35:54,560 --> 00:35:57,240
Speaker 14: companies to go public to see what the public investors

705
00:35:57,239 --> 00:36:00,879
Speaker 14: want to support. You see how Figure has traded today

706
00:36:00,920 --> 00:36:06,319
Speaker 14: after Anthropic announced their design studio. That's the world. A

707
00:36:06,320 --> 00:36:09,000
Speaker 14: lot of these VCPAG companies, they're going to go public

708
00:36:09,120 --> 00:36:11,160
Speaker 14: and they're going to not find the support from their

709
00:36:11,239 --> 00:36:13,920
Speaker 14: high valuations and then have to contend with the Anthropic

710
00:36:14,040 --> 00:36:17,120
Speaker 14: and Open AI launching something that's very competitive to their space.

711
00:36:17,239 --> 00:36:20,520
Speaker 2: Carl Stanford, director of Venged Capital Research at pitchbook back

712
00:36:20,520 --> 00:36:22,880
Speaker 2: on Bloomberg Tech, Thank you very much.

713
00:36:23,280 --> 00:36:24,279
Speaker 4: We've just talked about it.

714
00:36:24,320 --> 00:36:28,200
Speaker 2: Private markets are bracing for IPO soon to be public

715
00:36:28,239 --> 00:36:31,200
Speaker 2: markets ahead of what's expected to be the biggest IPO ever,

716
00:36:31,400 --> 00:36:35,160
Speaker 2: SpaceX has moved up a scheduled vesting date for shares

717
00:36:35,200 --> 00:36:39,279
Speaker 2: awarded to employees. According to sources, it may be accelerated

718
00:36:39,320 --> 00:36:41,800
Speaker 2: to assume as next week. Let's get the details with

719
00:36:41,840 --> 00:36:44,600
Speaker 2: Bloomberg Deals. Brian gord I think the point here is

720
00:36:44,600 --> 00:36:48,759
Speaker 2: that an accelerated vesting kind of makes those employees feel

721
00:36:48,760 --> 00:36:51,800
Speaker 2: a little bit better about the mechanics of an IPO

722
00:36:51,920 --> 00:36:55,359
Speaker 2: for them, what they might be able to sell, and

723
00:36:55,400 --> 00:36:57,000
Speaker 2: of course lock up periods, et cetera.

724
00:36:57,320 --> 00:36:59,480
Speaker 10: I think it gives them the comfort I suppose that

725
00:36:59,520 --> 00:37:01,319
Speaker 10: they're part of the journey. And I think, you know,

726
00:37:01,400 --> 00:37:04,120
Speaker 10: given what's going on with Elon generally, I think his

727
00:37:04,360 --> 00:37:08,000
Speaker 10: view is that the employees, the shareholders are all in unison.

728
00:37:08,120 --> 00:37:09,840
Speaker 4: You know, this is very much part of their success.

729
00:37:10,320 --> 00:37:12,520
Speaker 10: So I think, you know, having giving this sort of

730
00:37:12,560 --> 00:37:15,640
Speaker 10: reassurance and confidence to SpaceX employees that they're going to

731
00:37:15,680 --> 00:37:18,640
Speaker 10: be you know, made whole if you will, in terms

732
00:37:18,680 --> 00:37:21,200
Speaker 10: of what they're able to buy or sell, I think

733
00:37:21,320 --> 00:37:24,520
Speaker 10: is you know, massively important just for unity morale around

734
00:37:24,560 --> 00:37:27,920
Speaker 10: what is clearly a massive mega milestone, not just for

735
00:37:27,960 --> 00:37:29,880
Speaker 10: Space Expert for the world or CAVAMOD.

736
00:37:30,000 --> 00:37:31,480
Speaker 3: But I mean, not to put it lightly, this is

737
00:37:31,480 --> 00:37:34,799
Speaker 3: going to be the most extraordinary IPO, the most in

738
00:37:34,880 --> 00:37:38,240
Speaker 3: terms of scale, in terms of what the company itself

739
00:37:38,239 --> 00:37:42,200
Speaker 3: has achieved. But will there be this moment where we're

740
00:37:42,200 --> 00:37:45,279
Speaker 3: starting to worry about how much the current employees can

741
00:37:45,560 --> 00:37:48,360
Speaker 3: can lock in the money. What doesn't mean about the

742
00:37:48,360 --> 00:37:50,120
Speaker 3: time frame how quickly are we going to there for

743
00:37:50,239 --> 00:37:50,680
Speaker 3: b IPO.

744
00:37:51,080 --> 00:37:52,839
Speaker 10: I mean it's crazy to think that, you know, you're

745
00:37:52,840 --> 00:37:55,200
Speaker 10: looking at a day now where the nastack is up

746
00:37:55,239 --> 00:37:57,520
Speaker 10: one point six, one point seven. Everything is falling into place.

747
00:37:57,520 --> 00:38:00,040
Speaker 10: But if you also put you know, this employee, you

748
00:38:00,080 --> 00:38:02,640
Speaker 10: know vesting schedule in the same light that you put

749
00:38:02,640 --> 00:38:05,919
Speaker 10: the thirty percent retail allocation in, I mean, it's all

750
00:38:06,080 --> 00:38:08,280
Speaker 10: kind of I mean, I don't think people fully understand

751
00:38:08,280 --> 00:38:10,960
Speaker 10: the gravity of like this deal in particular, right, I mean,

752
00:38:11,120 --> 00:38:13,719
Speaker 10: thirty percent you know, retail allocation and an IPO as

753
00:38:13,760 --> 00:38:15,799
Speaker 10: large as large as this, they're looking to seventy five

754
00:38:15,800 --> 00:38:18,960
Speaker 10: billion dollars. I mean, that's a significant chunk walking.

755
00:38:19,040 --> 00:38:21,239
Speaker 2: So there's there's a there's a timeline here. So what

756
00:38:21,239 --> 00:38:24,440
Speaker 2: we're reporting is that SpaceX told employees that the vesting

757
00:38:24,520 --> 00:38:27,040
Speaker 2: date would take place in April rather than May.

758
00:38:27,360 --> 00:38:28,719
Speaker 4: But what we're working.

759
00:38:28,400 --> 00:38:31,080
Speaker 2: Toward is June to set out the timeline and the

760
00:38:31,080 --> 00:38:33,319
Speaker 2: mechanics of how we think this IPO is going to work.

761
00:38:33,400 --> 00:38:36,040
Speaker 10: Right, so this next week, as soon as next week,

762
00:38:36,080 --> 00:38:38,520
Speaker 10: we could see this resting eight moved up of public filing,

763
00:38:38,520 --> 00:38:41,120
Speaker 10: because they've already confidentially filed. The public filing could come

764
00:38:41,400 --> 00:38:43,799
Speaker 10: we hear as soon as maybe the third week of May,

765
00:38:44,040 --> 00:38:45,960
Speaker 10: which would then put them on track for that fifteen

766
00:38:46,040 --> 00:38:48,879
Speaker 10: day minimum cooling off perio at the SEC mandates, which

767
00:38:48,960 --> 00:38:50,759
Speaker 10: are then then for put them in line for the

768
00:38:50,840 --> 00:38:54,200
Speaker 10: June listing that could come in sort of the second

769
00:38:54,200 --> 00:38:57,080
Speaker 10: week of June, so that's like a matter of weeks.

770
00:38:57,400 --> 00:38:59,520
Speaker 10: So you know, by this time, in a couple of weeks,

771
00:38:59,520 --> 00:39:01,720
Speaker 10: we could be at this thinking like the whole global

772
00:39:01,719 --> 00:39:04,480
Speaker 10: capital market looks entirely different, like not to mention the

773
00:39:04,520 --> 00:39:06,200
Speaker 10: trimming in some of the stocks that's already gone on

774
00:39:06,239 --> 00:39:06,840
Speaker 10: to make way.

775
00:39:06,719 --> 00:39:09,080
Speaker 3: For this, And what the extraordinary is how much money

776
00:39:09,120 --> 00:39:11,480
Speaker 3: has been made in the private markets and how much

777
00:39:11,600 --> 00:39:13,799
Speaker 3: might therefore be made or not in the public markets.

778
00:39:13,800 --> 00:39:16,600
Speaker 5: Bloomberg's Ryan called across this IPO, we thank you.

779
00:39:16,680 --> 00:39:20,680
Speaker 3: Coming up, Apple's longtime marketing executive retires, marking.

780
00:39:20,360 --> 00:39:22,120
Speaker 5: A change of the guard for a series of key

781
00:39:22,160 --> 00:39:22,760
Speaker 5: product lines.

782
00:39:22,840 --> 00:39:28,919
Speaker 3: As a Bloomberg Tech, Iran has agreed to suspend its

783
00:39:29,040 --> 00:39:33,360
Speaker 3: nuclear program indefinitely, according to President Trump. In a phone

784
00:39:33,360 --> 00:39:36,800
Speaker 3: conversation with our own Bloomberg reporter, he said that Iran

785
00:39:36,840 --> 00:39:40,760
Speaker 3: will not receive any frozen funds from the United States.

786
00:39:41,239 --> 00:39:43,440
Speaker 3: This is breaking news from our own Kate Sullivan over

787
00:39:43,440 --> 00:39:45,600
Speaker 3: a Bloomberg. We'll keep you abreast of the latest, but

788
00:39:45,880 --> 00:39:49,200
Speaker 3: He says that the deal between to end the conflict Iran,

789
00:39:49,400 --> 00:39:52,160
Speaker 3: US and Israel, most of their main points are finalized.

790
00:39:52,360 --> 00:39:53,760
Speaker 5: It'll go pretty quickly.

791
00:39:53,800 --> 00:39:55,759
Speaker 3: According to the President of the United States, A S

792
00:39:55,800 --> 00:39:57,719
Speaker 3: and PID a record and Nazak one hundred at a record.

793
00:39:57,719 --> 00:39:58,800
Speaker 5: Brank crude off by ten percent.

794
00:39:58,920 --> 00:40:01,680
Speaker 2: Yeah, the stocks route record and session highs anyway, but

795
00:40:01,800 --> 00:40:04,439
Speaker 2: pushed even a little bit higher on those headlines. Another

796
00:40:04,480 --> 00:40:08,440
Speaker 2: big story we're tracking, Apple's longtime marketing executive Stan Ung

797
00:40:08,640 --> 00:40:11,520
Speaker 2: is retiring after thirty one years with the company. He'd

798
00:40:11,520 --> 00:40:13,759
Speaker 2: been in charge of a series of key product lines

799
00:40:13,800 --> 00:40:17,080
Speaker 2: for the iPhone maker, like the Apple Watch, airpod's health

800
00:40:17,280 --> 00:40:20,640
Speaker 2: and smart home initiatives. Bloomberg Senior Tech editor Dana Warman's

801
00:40:20,640 --> 00:40:24,760
Speaker 2: here with us on set another name leaving the world

802
00:40:24,760 --> 00:40:28,680
Speaker 2: of Apple one maybe people weren't familiar with, but important.

803
00:40:28,719 --> 00:40:30,440
Speaker 4: Nonetheless, Yes, and it.

804
00:40:30,360 --> 00:40:32,279
Speaker 15: Appears to be a friendly departure. But as you said,

805
00:40:32,360 --> 00:40:34,680
Speaker 15: it's of a piece. There have been there's been a

806
00:40:34,680 --> 00:40:37,480
Speaker 15: big changing of the guard across both the Steve Jobs

807
00:40:37,480 --> 00:40:40,200
Speaker 15: era and even to some extent, the Tim Cook era.

808
00:40:40,440 --> 00:40:42,279
Speaker 15: And this is not to say that Tim Cook is

809
00:40:42,320 --> 00:40:45,840
Speaker 15: retiring anytime soon. But Bloomberg has reported really extensively that

810
00:40:45,960 --> 00:40:50,920
Speaker 15: the company is really deeply into its succession planning and

811
00:40:51,000 --> 00:40:54,880
Speaker 15: is preparing a successor. And this feels like just another

812
00:40:54,960 --> 00:40:58,440
Speaker 15: drum beat in a path that is going to culminate

813
00:40:58,719 --> 00:41:01,839
Speaker 15: in Tim Cook himself leaving at some point, again not

814
00:41:01,880 --> 00:41:04,879
Speaker 15: necessarily soon, but at some point not soon.

815
00:41:05,080 --> 00:41:08,600
Speaker 3: Stan is soon. What did he achieve? I mean, he's

816
00:41:08,600 --> 00:41:12,960
Speaker 3: so closely known with the watch but also the iPod.

817
00:41:13,040 --> 00:41:14,240
Speaker 5: The og of at all.

818
00:41:14,920 --> 00:41:19,200
Speaker 15: Yes, absolutely goes back way that way back. And even

819
00:41:19,239 --> 00:41:21,960
Speaker 15: in his LinkedIn post announcing his departure, he said that

820
00:41:21,960 --> 00:41:23,719
Speaker 15: one of the last things he did at Apple on

821
00:41:23,760 --> 00:41:26,160
Speaker 15: the Apple campus was do a workout in the gym

822
00:41:26,280 --> 00:41:30,120
Speaker 15: using his original iPod Classic that he said was still

823
00:41:30,160 --> 00:41:32,719
Speaker 15: working on a pretty good battery. But one thing that

824
00:41:32,800 --> 00:41:35,760
Speaker 15: Mark German did note in his report is that at Apple,

825
00:41:35,800 --> 00:41:38,759
Speaker 15: at least, marketing executives aren't just in charge of the

826
00:41:38,800 --> 00:41:41,160
Speaker 15: advertising of these products, but they have a hand in

827
00:41:41,200 --> 00:41:45,040
Speaker 15: steering the product development itself. So that was interesting to me,

828
00:41:46,000 --> 00:41:48,319
Speaker 15: And that is that's not to say that there won't

829
00:41:48,320 --> 00:41:50,920
Speaker 15: be future airpod's, future Apple watches, and I'm sure that

830
00:41:50,960 --> 00:41:54,920
Speaker 15: there are products in the pipeline for years ahead, but

831
00:41:54,960 --> 00:41:59,359
Speaker 15: that just speaks to the influence that marketing executives at

832
00:41:59,360 --> 00:42:00,720
Speaker 15: that level have at the company.

833
00:42:00,960 --> 00:42:03,319
Speaker 5: Well said in a woman, it's great to have you

834
00:42:03,320 --> 00:42:05,040
Speaker 5: on all things Apple. We thank you.

835
00:42:05,560 --> 00:42:07,879
Speaker 3: There's another story we've got to get to over an

836
00:42:07,880 --> 00:42:11,839
Speaker 3: Intel they're actually hiring Samsung executive Sean hun is about

837
00:42:11,880 --> 00:42:14,000
Speaker 3: to join Intel next month to become general manager of

838
00:42:14,080 --> 00:42:16,359
Speaker 3: the company's foundry services in a bid to help win

839
00:42:16,520 --> 00:42:19,640
Speaker 3: over customers for the foundry business. And it course comes

840
00:42:19,640 --> 00:42:21,840
Speaker 3: as a company is trying to break into the outsourced

841
00:42:21,920 --> 00:42:26,800
Speaker 3: chip manufacturing business currently dominated by TSMC, and with Samsung

842
00:42:26,880 --> 00:42:30,280
Speaker 3: coming in as a second it's important with the reporting

843
00:42:30,280 --> 00:42:31,280
Speaker 3: you've done on the TERRAFAB.

844
00:42:31,480 --> 00:42:34,759
Speaker 2: Yeah, so Intel announced that it's joining must terrafab right,

845
00:42:34,920 --> 00:42:38,480
Speaker 2: and generally the stock story is amazing. Intel is back

846
00:42:38,480 --> 00:42:41,440
Speaker 2: at its highest level since two thousand, extraordinary, and it's

847
00:42:41,480 --> 00:42:43,799
Speaker 2: up for a third straight week, and it's just like

848
00:42:44,160 --> 00:42:48,920
Speaker 2: has momentum. But that is the unproven part customers using

849
00:42:48,960 --> 00:42:52,000
Speaker 2: its chip manufacturing technology. And of course next week we'll

850
00:42:52,000 --> 00:42:54,319
Speaker 2: find out because they have earnings. You know how much

851
00:42:54,360 --> 00:42:55,240
Speaker 2: progress they've made.

852
00:42:55,080 --> 00:42:58,440
Speaker 5: Towards that two thousand to twenty and twenty six.

853
00:42:59,200 --> 00:43:01,759
Speaker 3: What a it has been to be with Intel and

854
00:43:01,760 --> 00:43:03,520
Speaker 3: the fact that basically you're back at where we were

855
00:43:03,520 --> 00:43:06,319
Speaker 3: in twenty twenty, that January high before, of course the

856
00:43:06,360 --> 00:43:08,879
Speaker 3: world came to a standstill, is where Intel was out.

857
00:43:08,920 --> 00:43:12,399
Speaker 3: But what a pummeling the stock got in previous years,

858
00:43:12,480 --> 00:43:14,560
Speaker 3: and then just last year extraordinary up eighty percent, this

859
00:43:14,640 --> 00:43:15,520
Speaker 3: year already up ninety.

860
00:43:15,680 --> 00:43:15,879
Speaker 4: Yeah.

861
00:43:15,880 --> 00:43:18,560
Speaker 2: Look, it's not just about capacity either, you know the

862
00:43:18,640 --> 00:43:21,560
Speaker 2: volume of chips available. It's about what they've always said

863
00:43:21,680 --> 00:43:25,640
Speaker 2: is technology leadership and having the latest processes that can

864
00:43:25,680 --> 00:43:28,239
Speaker 2: produce the best chips at the highest year. The economics

865
00:43:28,239 --> 00:43:31,080
Speaker 2: are brutal, but they just got to come out and say, oh,

866
00:43:31,120 --> 00:43:32,680
Speaker 2: by the way, this is our customer. I'm not going

867
00:43:32,719 --> 00:43:34,799
Speaker 2: to name one for them, but that's the story that

868
00:43:34,800 --> 00:43:35,480
Speaker 2: we're looking for.

869
00:43:35,840 --> 00:43:38,400
Speaker 3: I need the proof points. Meanwhile, that does it for

870
00:43:38,480 --> 00:43:39,680
Speaker 3: this edition of BlueBag Tech.

871
00:43:39,800 --> 00:43:39,840
Speaker 7: ED.

872
00:43:39,920 --> 00:43:40,960
Speaker 5: You're sticking here in New York.

873
00:43:41,200 --> 00:43:42,680
Speaker 2: I do a little New York weekend and we'll be

874
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Speaker 2: back next week here on set. Check out the pod.

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Speaker 2: You know exactly where to find it. Iheartspotify and Apple

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Speaker 2: and on Bloomberg. This is Bloomberg Tech