WEBVTT - Bloomberg Businessweek Weekend - June 23rd, 2023 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.680 editors who bring you America's most trusted business magazine. 0:00:09.119 --> 0:00:12.000 Plus global business finance and tech news. 0:00:12.200 --> 0:00:16.279 The Bloomberg Business Week Podcast with Carol Messer and Tim 0:00:16.320 --> 0:00:19.000 Stenebeck from Bloomberg Radio. 0:00:20.239 --> 0:00:22.560 We begin with our cover story at the latest issue 0:00:22.600 --> 0:00:26.200 at Bloomberg Business Week. It's a finance section takeover centered 0:00:26.200 --> 0:00:29.480 around the outlook for the global commercial property market, and 0:00:29.600 --> 0:00:32.440 as we're about to learn, it's not pretty. Let's welcome 0:00:32.479 --> 0:00:34.760 in our Bloomberg News real estate reporting team of Patrick 0:00:34.800 --> 0:00:37.239 Clark and Natalie Wong, along with the editor of the magazine, 0:00:37.320 --> 0:00:39.800 Joel Weber and you know, Joe, as you point out 0:00:39.840 --> 0:00:42.600 and you guys point out in this section that the 0:00:42.640 --> 0:00:45.080 sector really has not come back from the pandemic. It's 0:00:45.080 --> 0:00:45.920 still dealing with that. 0:00:46.240 --> 0:00:46.480 Yeah. 0:00:46.600 --> 0:00:50.360 Look, we've been talking about commercial real estate for most 0:00:50.400 --> 0:00:52.720 of the pandemic because that was a return, you know, 0:00:52.760 --> 0:00:55.360 the return to office started to become a thing, except 0:00:55.480 --> 0:00:59.240 that never really took off. And what we realized here 0:00:59.280 --> 0:01:01.280 and what we tried to bring together in this cover 0:01:01.320 --> 0:01:05.319 package is that the commercial real estate outlook is looking 0:01:05.640 --> 0:01:08.839 really scary and there's a lot of debt that looks 0:01:08.920 --> 0:01:13.319 like a wall, and the strategy that the industry is 0:01:13.440 --> 0:01:17.480 used to basically finance buildings may not work anymore in 0:01:17.520 --> 0:01:20.160 the current environment, and so that sets up a really 0:01:20.200 --> 0:01:23.360 precarious situation, and we wanted to put all of our 0:01:23.480 --> 0:01:26.279 wits to that and turn it into a global effort 0:01:26.319 --> 0:01:26.720 as much. 0:01:26.640 --> 0:01:27.119 As we could. 0:01:27.200 --> 0:01:28.880 So pat common in on this in terms of how 0:01:28.920 --> 0:01:30.119 you guys were thinking about it. 0:01:30.840 --> 0:01:34.480 Yeah, I think most people would say that high interest 0:01:34.560 --> 0:01:36.680 rates are okay for real estate. We've had high interest 0:01:36.720 --> 0:01:40.959 rates in the past. But the transition from exceedingly low 0:01:41.040 --> 0:01:44.240 interest rates as low as can be to higher interest 0:01:44.319 --> 0:01:46.640 rates where we were where we are now happened so 0:01:46.800 --> 0:01:51.400 fast that something has to break. And right now we've 0:01:51.440 --> 0:01:53.520 been sort of that. We're in this period where we're 0:01:53.520 --> 0:01:57.760 trying to put that off as long as possible. 0:01:58.320 --> 0:02:02.000 And it's like, darn you, Fed, but it just happened 0:02:02.040 --> 0:02:02.520 so fast. 0:02:02.720 --> 0:02:04.560 Listen, it's not even you know, I mean, the FED 0:02:04.760 --> 0:02:07.440 had to intervene in March twenty twenty when it looked 0:02:07.480 --> 0:02:11.040 like the COVID was going to really kind of completely 0:02:11.040 --> 0:02:14.440 blow up the economy, the global financial system, everything. But 0:02:15.120 --> 0:02:17.519 you know, we're still dealing with the reverberations from that. 0:02:17.680 --> 0:02:19.639 Natalie come on in as well, because I do think, 0:02:19.720 --> 0:02:22.160 you know, the financial crisis, right, a different type of 0:02:22.200 --> 0:02:24.800 real estate crisis. We know that was largely residential. But 0:02:24.840 --> 0:02:27.520 I do feel like everyone thought, maybe we've learned some lessons, 0:02:27.560 --> 0:02:30.240 but maybe those same lessons aren't going to apply in 0:02:30.280 --> 0:02:31.400 this environment, right. 0:02:31.440 --> 0:02:33.040 I mean, I think when we're looking at the property 0:02:33.080 --> 0:02:35.520 market and the US alone, at least, most of the 0:02:35.520 --> 0:02:38.560 distress that we're seeing is concentrated in offices where you're 0:02:38.600 --> 0:02:41.919 seeing sort of a double whammy of existential questions about 0:02:41.960 --> 0:02:45.280 how much space people actually need and the fallout from 0:02:45.280 --> 0:02:48.639 the pandemic, and also how those assets are being impacted 0:02:48.680 --> 0:02:51.160 by the rapid rise and rates. This Pat was saying 0:02:51.480 --> 0:02:53.400 a lot of these owners, even the biggest ones from 0:02:53.400 --> 0:02:56.519 Brookfield to Blackstone to Pimco, they were just walking away 0:02:56.560 --> 0:02:58.040 from these properties and cutting their. 0:02:57.960 --> 0:03:03.200 Losses worth mentioning in my ongoing campaign for RTO propaganda 0:03:03.720 --> 0:03:06.880 that I walked by Pat clarka a number of weeks. 0:03:06.639 --> 0:03:07.960 Ago and I was like, what are you thinking about? 0:03:07.960 --> 0:03:11.280 And you know, there was a phrase that he shared 0:03:11.320 --> 0:03:14.040 with me that, honestly, it was one that washed over me, 0:03:14.080 --> 0:03:15.760 and I had to remind him. I was like, what 0:03:15.800 --> 0:03:17.560 was that again? What was that again? And then finally 0:03:17.600 --> 0:03:19.400 I was like, we should actually write that, Pat, what 0:03:19.560 --> 0:03:19.840 was it? 0:03:20.080 --> 0:03:22.519 Well, extend and pretend, which is you know, this is 0:03:22.560 --> 0:03:25.720 an old cliche in the real estate world at least, 0:03:25.800 --> 0:03:28.840 and it has worked before. I mean, I think, I 0:03:28.840 --> 0:03:30.960 think if you really go back, you would learn that 0:03:31.440 --> 0:03:33.680 when you can extend and pretend, when banks have to 0:03:33.680 --> 0:03:36.600 take properties back when losses are realized, it is bad 0:03:36.680 --> 0:03:38.760 and it's messy. And you know, that's what happened in 0:03:38.800 --> 0:03:42.200 the early nineties. It was a mess the global financial crisis. 0:03:42.200 --> 0:03:44.040 The industry said, you know, let's see if we can 0:03:44.080 --> 0:03:46.120 just kind of push this off as long as possible. 0:03:46.240 --> 0:03:49.240 And not to say there was no mess, but the 0:03:49.280 --> 0:03:54.840 strategy of extending pretending was largely successful. The question is 0:03:55.120 --> 0:03:58.360 does it work again in this period where you have 0:03:58.520 --> 0:04:00.880 this interest rate shift has been so abrupt. 0:04:00.960 --> 0:04:02.440 Yeah, there's a point, right right. If you're an owner 0:04:02.440 --> 0:04:04.280 of property, you're like, wait, this is just too expensive. 0:04:04.280 --> 0:04:05.640 It's better for me to just walk away. 0:04:06.000 --> 0:04:06.280 Okay. 0:04:06.440 --> 0:04:08.200 Just in case you're not familiar with the phrase extend 0:04:08.240 --> 0:04:09.840 and pretend, what's the extend part? 0:04:09.880 --> 0:04:10.920 And what's the pretend part. 0:04:11.320 --> 0:04:14.080 Yeah, well, you know, you extend loan term. So a 0:04:14.080 --> 0:04:16.960 commercial real estate loan doesn't work like your thirty year mortgage. 0:04:17.040 --> 0:04:18.880 Right you at the end of your five or ten 0:04:18.920 --> 0:04:21.320 year term, there's a balloon payment. So when you're when 0:04:21.360 --> 0:04:23.360 you run out of term and you run out of extensions, 0:04:23.480 --> 0:04:25.720 you own a one hundred million dollar building, you've got to, 0:04:26.279 --> 0:04:28.520 you know, potentially give one hundred million dollars or some 0:04:28.680 --> 0:04:31.960 large sum back to the lender. And if you don't 0:04:31.960 --> 0:04:33.960 have it right now, the lender could say, you know, 0:04:34.160 --> 0:04:36.039 it would be better for all of us if we 0:04:36.279 --> 0:04:38.520 wrote you an extra year of term on this and 0:04:38.560 --> 0:04:42.320 we deal with this down the line. And again, that 0:04:42.480 --> 0:04:45.560 was in March twenty twenty. In that early period of COVID, 0:04:45.560 --> 0:04:47.919 there was a lot of that and it was effective, 0:04:48.520 --> 0:04:52.720 effective in part because you know, Congress pumped enormous amount 0:04:52.720 --> 0:04:55.839 of money into the US economy, fed lowered interest rates, 0:04:55.880 --> 0:04:59.760 transactions picked up again and kicking the can down the road, 0:05:00.120 --> 0:05:03.080 or you know, the other cliches are delay and. 0:05:03.000 --> 0:05:04.479 Prey, delay, delay, and pray. 0:05:04.680 --> 0:05:05.880 I have to say, I get it. Kind of a 0:05:05.920 --> 0:05:07.880 lesson when it comes to real estate loans about this 0:05:07.880 --> 0:05:10.320 whole idea. Right, you have a loan, do the balloon payment, 0:05:10.360 --> 0:05:12.279 and then you just get more time. Like right, That's 0:05:12.279 --> 0:05:15.240 how it normally works in the industry, or has for 0:05:15.279 --> 0:05:16.760 a long time. But this is different. 0:05:17.000 --> 0:05:18.640 This is different. I mean that's Pat was saying, Like, 0:05:18.640 --> 0:05:20.640 a lot of the extend and pretend during the pandemic 0:05:20.680 --> 0:05:22.960 happened because people didn't know where values stood and people 0:05:23.000 --> 0:05:25.599 didn't know how the return to work would shake out. 0:05:25.760 --> 0:05:28.600 It's been more than three years, it's clear that vacancy 0:05:28.640 --> 0:05:30.600 rates are still at record heights and getting worse in 0:05:30.680 --> 0:05:33.200 many of the major cities. And not only that, but 0:05:33.279 --> 0:05:35.640 you have the issue with the banking crisis, the regional 0:05:35.680 --> 0:05:38.960 banks that are offloading, you know, billions of commercial real 0:05:39.040 --> 0:05:41.440 estate loans, and some of that is starting to shake out, 0:05:41.520 --> 0:05:45.279 and investors and lenders and regulators are seeing that it's 0:05:45.320 --> 0:05:48.200 not going to balance out anytime soon. So you know 0:05:48.360 --> 0:05:50.120 it's time to start writing off the loans. 0:05:50.200 --> 0:05:52.440 Okay, So, Pat, if this is the end of extend 0:05:52.480 --> 0:05:56.120 and pretend, what does that actually begin to look like? 0:05:57.360 --> 0:06:01.400 Well, if it doesn't work, if lenders can and lenders 0:06:01.440 --> 0:06:04.520 and borrowers can't push things out, it can get bad. 0:06:04.720 --> 0:06:07.240 You know the again, we've got these balloon payments that 0:06:07.279 --> 0:06:12.159 come due, and you've got this situation where lenders are 0:06:12.880 --> 0:06:15.560 you know, at minimum under scrutiny over there commercial real 0:06:15.640 --> 0:06:19.320 estate exposure, you know, arguably under pressure to reduce commercial 0:06:19.360 --> 0:06:23.120 real estate exposure from both you know, regulators, ratings companies, 0:06:23.480 --> 0:06:26.560 and you know, even shareholders. I'm talking about banks primarily 0:06:26.600 --> 0:06:30.520 who provide the bulk of commercial real estate finance, but 0:06:30.560 --> 0:06:35.240 again life insurers or securitization market. There's both a huge 0:06:35.360 --> 0:06:39.159 need for a new debt in commercial real estate to 0:06:39.200 --> 0:06:42.200 refinance these old loans that are coming due, and there 0:06:42.360 --> 0:06:45.480 is a you know, a sort of retreat of liquidity. 0:06:45.520 --> 0:06:47.800 There are debt providers out there. They generally are going to. 0:06:47.839 --> 0:06:49.560 Want a premium to give you a loan right now 0:06:49.800 --> 0:06:52.600 because they can get it. But it's also a little 0:06:52.640 --> 0:06:56.800 more niche. This sort of the bulk of credit provided 0:06:56.800 --> 0:06:59.920 by regional banking system is not necessarily going to be 0:07:00.040 --> 0:07:03.120 there right now, and you can start spinning out scenarios 0:07:03.200 --> 0:07:07.719 where banks are being pushed to cut exposure. They're selling loans, 0:07:07.720 --> 0:07:10.400 they're having to take discounts to sell loans because interest 0:07:10.480 --> 0:07:12.400 rates are higher right now. So why would you buy 0:07:12.440 --> 0:07:15.120 an old book of loans that's generating three percent interests 0:07:15.120 --> 0:07:18.040 when you can originate a new loan at double that. 0:07:19.000 --> 0:07:24.240 Natalie, you wrote remarks for the magazine a couple months ago. 0:07:24.280 --> 0:07:26.600 It was the first time that we actually saw a default, 0:07:27.040 --> 0:07:29.520 and we sort of were like, wait a second, something 0:07:29.520 --> 0:07:32.360 else is coming, And so here we are talking about 0:07:32.360 --> 0:07:33.240 it a couple months later. 0:07:33.280 --> 0:07:34.400 But when you. 0:07:34.280 --> 0:07:36.600 Look ahead, how big of a wall of debt are 0:07:36.640 --> 0:07:40.280 we talking about here, and what does that actually mean 0:07:40.360 --> 0:07:40.880 for everyone? 0:07:41.120 --> 0:07:43.480 It's massive. I mean in the US alone, there's one 0:07:43.480 --> 0:07:47.000 point four trillion dollars worth of debt that's maturing this 0:07:47.080 --> 0:07:50.400 year and the next, and a lot of investors around 0:07:50.440 --> 0:07:52.880 the world, a lot of the banks and a lot 0:07:52.880 --> 0:07:54.720 of the private equity firms that we wrote about for 0:07:54.760 --> 0:07:58.080 the previous story are going to be facing these big maturities, 0:07:58.120 --> 0:07:59.920 and some of them are just walking away from it. 0:08:00.080 --> 0:08:01.320 I think this is also a big part of it 0:08:01.360 --> 0:08:03.080 of how we're going to be using real estate going forward, 0:08:03.080 --> 0:08:05.600 whether it's offices, right, there's some offices you can kind 0:08:05.600 --> 0:08:09.280 of remake and repurpose, but that's not always the case. 0:08:09.280 --> 0:08:12.400 I mean, there's we're rethinking, right, how we use our space. 0:08:12.320 --> 0:08:14.640 You're rethinking it. But the problem is it takes time, 0:08:14.720 --> 0:08:16.720 and it also takes a lot of money, which these 0:08:16.760 --> 0:08:19.800 companies don't have right now. And for some like we 0:08:19.800 --> 0:08:22.320 were writing about the Seagram building, which is still doing well. 0:08:22.360 --> 0:08:25.160 It's an iconic building, but they've already put in twenty 0:08:25.160 --> 0:08:27.520 five million dollars and they're still losing a major private 0:08:27.520 --> 0:08:29.840 equity tenant to a much newer development. Like some of 0:08:29.840 --> 0:08:32.000 these buildings, no matter how much money you pour into it, 0:08:32.200 --> 0:08:35.439 the bones, you just can't make it like a developer 0:08:35.480 --> 0:08:37.559 can't ground up, and it's cheaper to do a ground up. 0:08:37.800 --> 0:08:39.920 And that's I think the big thing is this idea 0:08:39.960 --> 0:08:42.400 that some of this stuff can get converted from commercial 0:08:42.400 --> 0:08:43.079 to residential. 0:08:43.160 --> 0:08:45.200 Right that's just not going to happen. 0:08:45.440 --> 0:08:48.400 And so it leaves you a question of like, okay, 0:08:48.400 --> 0:08:50.360 if we've got all these empty office buildings, like what 0:08:50.360 --> 0:08:51.920 are we going to do with them? And then you think, okay, 0:08:52.000 --> 0:08:54.520 well maybe it's New York and this is I think, 0:08:54.880 --> 0:08:56.880 you know, Pat wrote the kind of the opening essay 0:08:56.920 --> 0:08:59.360 for the package, and Natalie and John Gidtlson took a 0:08:59.400 --> 0:09:02.680 much more map global view of what this actually looked 0:09:02.720 --> 0:09:06.480 like around the world. Whenever from New York to San Francisco, 0:09:07.120 --> 0:09:09.960 even looked abroad places like Hong Kong. If we have 0:09:10.080 --> 0:09:13.200 a lot of empty office space, there is no good 0:09:13.240 --> 0:09:16.360 solution with what to do with and it becomes kind 0:09:16.360 --> 0:09:18.920 of a frightening proposition when you think about the global 0:09:18.960 --> 0:09:20.719 implications of this, right, Natalie, Right, you. 0:09:20.679 --> 0:09:24.000 Basically have the zombie buildings that are the owners handing 0:09:24.000 --> 0:09:25.880 the keys over to the lender, and the lender typically 0:09:26.080 --> 0:09:27.920 puts it in the hands of receivers in these buildings 0:09:28.040 --> 0:09:30.800 essentially limp along for years with the lender trying to 0:09:30.800 --> 0:09:32.720 figure out what to do with it. And we're seeing 0:09:32.720 --> 0:09:35.240 that it's already going to potentially have impacts on tax 0:09:35.280 --> 0:09:38.280 revenues at different cities in San Francisco in New York. 0:09:38.360 --> 0:09:40.720 These professors at NYU and Columbia did a study which 0:09:40.760 --> 0:09:43.720 said that remote work. Due to remote work, office values 0:09:43.760 --> 0:09:46.600 will be wiped out forty four percent from pre pandemic values, 0:09:46.679 --> 0:09:48.480 and that's going to take a big hit of the 0:09:48.520 --> 0:09:52.480 city revenue because offices take up twenty percent of the 0:09:52.559 --> 0:09:54.160 property tax revenues of New York. 0:09:54.280 --> 0:09:56.079 I have to say that's one of the out of 0:09:56.120 --> 0:09:57.640 the section I love where you guys broke it down 0:09:57.679 --> 0:09:59.160 into cities. I was kind of blown away by some 0:09:59.240 --> 0:10:02.480 of the statistics and the impact in terms of data, 0:10:02.920 --> 0:10:05.599 you know, values going down or just vacancies. It was 0:10:05.640 --> 0:10:09.440 pretty remarkable. I highly recommend everybody check out the complete section. 0:10:09.840 --> 0:10:12.160 It is the finance section, the cover story all about 0:10:12.160 --> 0:10:15.080 the struggling commercial real estate sector. Thanks to Bloomberg News 0:10:15.240 --> 0:10:18.240 real estate reporters Patrick Clark and Natalie Wong, along with 0:10:18.240 --> 0:10:20.040 the editor of the magazine, Joel Weber. 0:10:20.000 --> 0:10:23.560 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:23.600 --> 0:10:27.280 live weekdays from two to five pm Easter on Bloomberg Radio, 0:10:27.480 --> 0:10:30.360 the Bloomberg Business app and you too. You can also 0:10:30.440 --> 0:10:33.760 listen live to our flagship New York station, Just Say 0:10:33.880 --> 0:10:53.760 Alexa Play Bloomberg E love them thirty. 0:10:41.760 --> 0:10:48.559 Day same. 0:10:51.000 --> 0:10:52.200 Right now, it's not tomorrow. 0:10:53.160 --> 0:10:54.680 What are incredible organizations? 0:10:55.080 --> 0:10:57.640 But do you love the Daryl Hall with Daryl I 0:10:57.679 --> 0:11:00.280 mean with the long hair. Yeah, yeah, me too. But 0:11:00.280 --> 0:11:01.000 then he got a cut. 0:11:01.080 --> 0:11:02.280 It was a little bit of a mullet. 0:11:02.480 --> 0:11:05.480 I like that, Yeah, I can. Yeah, I don't like mullets. 0:11:05.480 --> 0:11:07.480 All right, So, Matt, we talked yesterday about a story 0:11:07.480 --> 0:11:11.199 that concerns have been highlighted when it comes to the 0:11:11.240 --> 0:11:14.360 private credit world, pressures of higher interest rates, what it 0:11:14.400 --> 0:11:16.760 means for those borers floating rates. 0:11:16.760 --> 0:11:19.240 As you said, Oh my goshte to say that you 0:11:19.280 --> 0:11:22.480 and I are both pretty well obsessed with private credit. 0:11:22.120 --> 0:11:24.240 And I am I am anywhere where I feel like 0:11:24.240 --> 0:11:26.600 I don't have a total handle on it, and everybody's like, 0:11:26.760 --> 0:11:29.959 don't worry, it's gonna be okay. So let's get into 0:11:30.520 --> 0:11:33.319 the private world, which includes, of course private equity with 0:11:33.400 --> 0:11:36.679 us as Kate Ambrose, CEO of the Global Private Capital Association, 0:11:36.720 --> 0:11:41.600 it's a nonprofit, nonprofit, independent membership organization representing private capital 0:11:41.600 --> 0:11:45.400 investors who manage some two trillion in assets globally. We're 0:11:45.400 --> 0:11:49.000 talking about a KKR, We're talking about Bill and Melinda Gates, Colsters, 0:11:49.000 --> 0:11:52.439 We're talking about the former Silicon Valley Bank, academic institutions, 0:11:52.440 --> 0:11:55.400 and more so looking forward to our conversation she's here 0:11:55.440 --> 0:11:56.320 in our Bloomberg interaction. 0:11:56.600 --> 0:11:58.240 Is this essentially a lobbying group? 0:11:58.320 --> 0:12:01.760 Or when I see non profit together with private equity, 0:12:01.840 --> 0:12:04.120 like alarm bells go off? Why does private equity need 0:12:04.200 --> 0:12:04.880 the nonprofit? 0:12:05.000 --> 0:12:05.200 Right? 0:12:05.440 --> 0:12:08.640 Love that question, love it. We are a very unique organization. 0:12:09.160 --> 0:12:12.720 The organization was founded as the Emerging Markets Private Equity 0:12:12.760 --> 0:12:15.720 Association by the IFC of the World Bank over twenty 0:12:15.840 --> 0:12:16.280 years ago. 0:12:16.400 --> 0:12:16.920 Oh my god. 0:12:16.920 --> 0:12:20.920 It was founded by the first LPs in funds in 0:12:21.240 --> 0:12:25.080 emerging markets and grew to some prominence at the period 0:12:25.160 --> 0:12:27.760 of time that there was this idea that emerging markets 0:12:27.840 --> 0:12:29.960 was going to be an asset class in and of itself, 0:12:30.000 --> 0:12:34.240 that was going to be faster demograph younger demographics, faster growth, 0:12:34.240 --> 0:12:36.559 that would be a rising time that would lift all boats, 0:12:37.280 --> 0:12:40.920 and grew to some significant size. I joined in twenty 0:12:41.040 --> 0:12:45.000 nineteen as CEO and really to reposition the organization for 0:12:45.040 --> 0:12:47.800 the future, to reflect what's going on in the world today. 0:12:48.040 --> 0:12:51.320 The terminology emerging markets is forty years out of date. 0:12:51.760 --> 0:12:53.920 You know, it's forty years old. It's just completely outdated. 0:12:54.000 --> 0:12:56.680 China's the world's second largest economy, so many of the 0:12:56.720 --> 0:12:59.199 opportunities is so much capital flows from these places in 0:12:59.240 --> 0:13:01.920 the world. So we are now the Global Private Capital Association. 0:13:02.400 --> 0:13:05.760 The regions that we cover our Asia, Latin America, Africa, 0:13:05.880 --> 0:13:08.199 Central and Eastern Europe, and the Middle East. But our 0:13:08.200 --> 0:13:10.960 board includes for example Bill Ford of General Atlantic, one 0:13:10.960 --> 0:13:13.520 of the world's largest private equity farms. As you mentioned KKR. 0:13:13.559 --> 0:13:17.280 Others are members. We have for example, Tamasek, the Singapore 0:13:17.360 --> 0:13:20.160 Sovereign from their Chief Investment Office, are fascinative. 0:13:20.440 --> 0:13:24.280 So essentially it was the organization was started to kind 0:13:24.320 --> 0:13:28.680 of shepherd growth through private equity in these markets exactly. 0:13:28.880 --> 0:13:31.720 And the reposition nonprofit is that wrong? 0:13:31.840 --> 0:13:32.319 We are. 0:13:32.440 --> 0:13:35.800 So we are the same structure as a national Venture 0:13:35.800 --> 0:13:38.839 capital Association in the US or a private equity council, 0:13:38.840 --> 0:13:41.400 which indeeder lobby groups. The beauty and this is why 0:13:41.400 --> 0:13:43.920 we use the word independent, is that because we cover 0:13:44.080 --> 0:13:46.560 all of these markets, we're not there to lobby on 0:13:46.600 --> 0:13:52.040 behalf of lower tax rates for or preferential regulatory treatment 0:13:52.080 --> 0:13:55.120 for our members. We're really there to evangelize capital and 0:13:55.280 --> 0:13:57.960 educate on the opportunities across global markets. And the last 0:13:58.000 --> 0:14:00.800 thing I'll say is we are not a US slobby group. 0:14:00.840 --> 0:14:03.760 We are truly a global organization. Again, our board includes 0:14:03.800 --> 0:14:07.880 the leading fund managers from India, Africa, Latin America, both 0:14:07.920 --> 0:14:09.000 global firms and local. 0:14:09.080 --> 0:14:10.320 So where does your funding come from? 0:14:10.960 --> 0:14:15.360 Membership dues? So over three hundred member firms pay dues 0:14:15.400 --> 0:14:18.120 to be members of the organization. We have a very 0:14:18.200 --> 0:14:20.560 dynamic research platform. I can throw some data off the 0:14:20.600 --> 0:14:22.760 top of my head in terms of fundraising and trends 0:14:22.760 --> 0:14:23.680 and things like private exit. 0:14:24.160 --> 0:14:26.600 So but what what I'm getting is that the World 0:14:26.640 --> 0:14:30.200 Bank said we need to shepherd growth through this mechanism 0:14:30.240 --> 0:14:32.200 private equity, and a good way to do that just 0:14:32.200 --> 0:14:34.200 put together an organization to support it. 0:14:34.320 --> 0:14:34.840 I guess what. 0:14:35.000 --> 0:14:38.880 So the IFC is the International Finance Corporation, and they 0:14:39.000 --> 0:14:42.720 were limited partners in funds, so they actually put money 0:14:42.720 --> 0:14:43.240 into funds. 0:14:43.400 --> 0:14:43.720 See. 0:14:43.800 --> 0:14:47.760 And there's a whole universe of development finance institutions, including 0:14:47.800 --> 0:14:51.520 the US DFC, which is what the US uses to 0:14:51.760 --> 0:14:54.800 compete with China. Frankly, around the world putting money into funds. 0:14:54.880 --> 0:14:57.680 So it really it's more commercial than sort of what 0:14:57.720 --> 0:15:00.400 we're describing. But we are a nonprofit organization. 0:15:00.200 --> 0:15:05.520 ESDFC, the Development Finance Corporation. Okay, So if you had 0:15:05.520 --> 0:15:08.520 to say your top priority in your organization, number one, 0:15:08.720 --> 0:15:09.040 just one? 0:15:09.120 --> 0:15:09.600 What is it? 0:15:10.120 --> 0:15:10.360 Wow? 0:15:10.440 --> 0:15:11.040 That's tough. 0:15:12.160 --> 0:15:15.320 There's kind of twins, so I may cheat. One is 0:15:15.360 --> 0:15:19.200 to just re educate the world on the opportunities and 0:15:19.240 --> 0:15:22.680 the realities and the risks of investing in these markets. 0:15:23.520 --> 0:15:26.760 And the second would be to influence capital towards greater 0:15:27.400 --> 0:15:30.840 long term, inclusive growth and environmental private capital. 0:15:31.000 --> 0:15:34.720 Yes, private capital. I am obsessed, Matt. We're both obsessed. 0:15:35.160 --> 0:15:37.040 And I feel like I keep saying this last couple 0:15:37.080 --> 0:15:38.960 of times I've been at Milk and we've done broadcasts. 0:15:39.360 --> 0:15:41.400 Doesn't seem like anybody cares about the public markets. It's 0:15:41.400 --> 0:15:43.920 all about the private market's private credit, private equas well. 0:15:44.040 --> 0:15:48.760 Those people are you're hanging around the wrong people public Well, yes, yes. 0:15:48.640 --> 0:15:53.360 But there's also right but so but I mean, tell 0:15:53.440 --> 0:15:57.160 us about from your perspective, because I think there's some 0:15:57.240 --> 0:16:00.680 nervousness in terms of the private capital world, especially as 0:16:00.680 --> 0:16:02.520 we see rates going out that you know, there doesn't 0:16:02.520 --> 0:16:04.840 feel like there was as much transparency and that that 0:16:04.880 --> 0:16:08.280 could be problematic interesting transparancy. 0:16:08.400 --> 0:16:12.960 But well, okay, great, I mean absolutely, the scale of 0:16:13.040 --> 0:16:16.240 capital is remarkable, and this is sort of private capital, 0:16:16.280 --> 0:16:19.680 private capital exactly. For example, last year alone one point 0:16:19.680 --> 0:16:21.880 three trillion. You know, it's one point two one point 0:16:21.880 --> 0:16:25.640 three but critically that's just what's raised by fund managers. 0:16:25.760 --> 0:16:28.440 You've got to throw in there all the Canadian pension plans. 0:16:28.480 --> 0:16:30.480 By the way, CPB is also on our board of 0:16:30.520 --> 0:16:34.200 Directors as his future front from Australia. It's trillions and 0:16:34.280 --> 0:16:38.120 trillions of dollars of liquidity. It's just so that the 0:16:38.240 --> 0:16:39.880 scale of money that is a bila. You've got all 0:16:39.880 --> 0:16:43.720 the Chinese billionaires, you've got family offices. You know, there's so. 0:16:43.760 --> 0:16:46.000 Much everybody wants in right now. Because the thing is. 0:16:45.960 --> 0:16:49.280 There's also nervous, so much talk of the opportunity in 0:16:49.360 --> 0:16:53.680 private credit, it's become uh, kind of the darling of 0:16:53.920 --> 0:16:57.320 investors really from retail up now. 0:16:57.440 --> 0:17:00.680 Right Well, I was speaking across all private credit, private 0:17:00.720 --> 0:17:05.240 capital strategy, using private equity, venture capital, infrastructure, real assets. 0:17:05.280 --> 0:17:06.200 So there's a lot in there. 0:17:06.280 --> 0:17:07.480 What's really hot right now. 0:17:08.080 --> 0:17:11.240 So the two Well, you're mentioning private credit, which absolutely 0:17:11.320 --> 0:17:12.760 is a huge driver. So if I had to say 0:17:12.800 --> 0:17:15.600 a strategy that's going really quickly, I'd say private credit. 0:17:15.600 --> 0:17:20.760 And there was fourteen billion dollars in private credit fundraising 0:17:20.840 --> 0:17:24.040 last year. KKR had a big Asia private credit fund, 0:17:24.160 --> 0:17:27.080 Apollo had a big private credit fund, big manager in 0:17:27.080 --> 0:17:30.280 India is raising one point six billion for their private 0:17:30.320 --> 0:17:33.399 credit fund just focused on India. Then the other I 0:17:33.440 --> 0:17:36.360 would highlight two other big drivers particularly in our markets, 0:17:36.760 --> 0:17:42.560 climate and everything anything sustainability focused huge driver. Seriously absolutely 0:17:42.600 --> 0:17:46.720 different from the ESG. Absolutely absolutely huge driver. And I 0:17:46.760 --> 0:17:50.600 would make this critical distinction ESG. It's kind of like 0:17:50.600 --> 0:17:54.440 the working with terminology, like emerging markets. It can mean anything, right, 0:17:54.440 --> 0:17:56.280 what is the ESG? What is impact? I mean, the 0:17:56.560 --> 0:17:59.280 definitions really are there. There's a lot of situation. 0:17:59.160 --> 0:18:01.199 Kind of going through a record, make up yourself based on. 0:18:03.240 --> 0:18:08.640 Particularly It's funny when you say you know transparency. I 0:18:08.640 --> 0:18:12.000 believe that there's actually a greater opportunity for transparency and 0:18:12.080 --> 0:18:16.080 private capital strategies because you can see what's in portfolios. 0:18:16.119 --> 0:18:18.920 You can see you can look at the portfolio. 0:18:18.359 --> 0:18:20.760 Company level, not every portfolio. 0:18:21.000 --> 0:18:22.719 Well, in the I guess I would say in the 0:18:22.760 --> 0:18:24.680 markets that we represent. 0:18:25.000 --> 0:18:26.719 Going in, but if you're a pension fund, you can 0:18:26.760 --> 0:18:28.800 look at it, right, Yeah. 0:18:28.600 --> 0:18:31.920 I mean I'm speaking specifically to the markets that we're in, 0:18:32.280 --> 0:18:36.000 and in the markets that we're in, you know governance, 0:18:36.160 --> 0:18:40.520 governance and transparency and you know going in and cleaning 0:18:40.560 --> 0:18:43.280 up that type of stuff from the outset. And there's 0:18:43.320 --> 0:18:45.400 so much leverage, so I don't know, when you're thinking 0:18:45.400 --> 0:18:48.000 from a risk perspective, you're thinking about the amount of 0:18:48.080 --> 0:18:49.960 leverage that's been put on If. 0:18:49.720 --> 0:18:52.320 KK or Apollo has a fund, I don't necessarily know 0:18:52.400 --> 0:18:53.280 everything that's in it. 0:18:53.600 --> 0:18:57.600 You know, here's another driver, ide would point right though, Yeah, 0:18:58.000 --> 0:18:59.320 I honestly can't answer that. 0:18:59.400 --> 0:19:00.879 No, No, I think care but they quit it out 0:19:00.920 --> 0:19:03.720 in there. And Carol and I both have been grappling 0:19:03.800 --> 0:19:08.560 with trying to value the entire size of the private 0:19:08.560 --> 0:19:11.560 credit market, for example, and that data is difficult for US. 0:19:11.640 --> 0:19:13.720 Privent credit is going to be a much less transparent 0:19:13.760 --> 0:19:17.560 than private equity. Correct, yes, because in private equity you're 0:19:17.560 --> 0:19:21.280 talking about typically investments and so. But private credit is 0:19:21.680 --> 0:19:23.560 absolutely less private equity. 0:19:23.560 --> 0:19:26.439 If you're not if you're getting into private firms, I 0:19:26.440 --> 0:19:28.240 guess there's announcements. There has to be, like to. 0:19:28.200 --> 0:19:31.200 Say, the deal portfolio is on the website. And I 0:19:31.240 --> 0:19:33.680 would make another point, which is one of the things 0:19:33.720 --> 0:19:35.480 that I find really exciting about what I do in 0:19:35.520 --> 0:19:38.760 the opportunity. The way the industry is changing, just in 0:19:38.840 --> 0:19:41.879 the space of the last five years, the level of 0:19:41.960 --> 0:19:46.720 accountability and the shift in thinking in private capital globally 0:19:46.960 --> 0:19:51.399 is remarkable. You look at you know, the examples of 0:19:52.040 --> 0:19:56.440 founders being pushed out because of even a hint of impropriety. 0:19:57.160 --> 0:19:59.880 There is so much more focus on long term reputation 0:20:00.000 --> 0:20:03.520 because let's face it, you know one bad step reputationally 0:20:03.720 --> 0:20:05.320 is you know, it has a major impact. 0:20:06.000 --> 0:20:08.720 And look at Crispin O'Day exactly. 0:20:08.840 --> 0:20:11.399 And then but I do wonder about private equity concentration 0:20:11.480 --> 0:20:13.800 and fields and we've talked about it with healthcare or 0:20:14.000 --> 0:20:16.440 you know, in vet service. I mean there's a lot 0:20:16.440 --> 0:20:17.240 of concentration. 0:20:17.880 --> 0:20:19.920 Well, I got to say, just go about tows not 0:20:20.040 --> 0:20:21.600 in the markets that I focus on. So this is 0:20:21.600 --> 0:20:24.960 our platform, which is basically that there is such a 0:20:25.000 --> 0:20:29.840 scale of capital availability invested. The leverage ratios there's virtually 0:20:29.840 --> 0:20:31.800 no leverage in the markets we represent. Each is a 0:20:31.840 --> 0:20:34.720 huge Again, you know, there's very little leverage, and you're 0:20:34.960 --> 0:20:38.800 investing in rather than sort of trading portfolio company important 0:20:38.840 --> 0:20:41.000 to a manager or manager, you're investing in things from 0:20:41.040 --> 0:20:41.800 the bottom. 0:20:41.480 --> 0:20:44.000 Come back soon. Kate Ambrose, CEO at the Global Private 0:20:44.000 --> 0:20:47.160 Capital Association, Here in studio, Right here on Bloomberg. 0:20:51.160 --> 0:20:54.679 You're listening to the Bloomberg Business Week Podcast. Catch us 0:20:54.760 --> 0:20:57.359 live weekdays from two to five pm Easter. 0:20:57.320 --> 0:21:00.600 On Bloomberg Radio, the Bloomberg Business App, and you too. 0:21:00.920 --> 0:21:03.960 You can also listen live to our flagship New York station. 0:21:04.560 --> 0:21:06.639 Just say Alexa, play Bloomberg. 0:21:06.680 --> 0:21:07.440 You love them dirty. 0:21:09.520 --> 0:21:11.679 Two companies easily too, the biggest when it comes to 0:21:11.720 --> 0:21:14.840 selling us stuff. We're talking about Amazon and Walmart. Both 0:21:14.840 --> 0:21:17.800 have been Bloomberg business. We cover stories for different reasons 0:21:18.160 --> 0:21:21.000 and the subject of many, many more stories inside the 0:21:21.040 --> 0:21:23.240 magazine and also on the Bloomberg and at Bloomberg dot 0:21:23.240 --> 0:21:26.400 com every single day. Matt, there's so many stories about 0:21:26.440 --> 0:21:28.080 Amazon and Walmart on a regular basis. 0:21:28.119 --> 0:21:28.280 Yeah. 0:21:28.280 --> 0:21:30.959 Absolutely, I mean, why wouldn't there be Walmart has what 0:21:31.080 --> 0:21:35.600 five hundred thousand employees or something, and you know that 0:21:36.119 --> 0:21:38.320 Paul Sweeney wants to be a Walmart reader when he's 0:21:38.320 --> 0:21:39.119 done with this career. 0:21:39.160 --> 0:21:41.359 I had no idea. Oh my god, I look. 0:21:41.240 --> 0:21:42.119 For the Amazon. 0:21:42.160 --> 0:21:44.639 You know, we were just talking about FedEx and UPS 0:21:44.720 --> 0:21:49.040 and I almost wonder if Amazon has a real competitor 0:21:49.080 --> 0:21:52.600 in their own delivery network, right like other possible companies 0:21:52.640 --> 0:21:56.520 could use Amazon shipping instead of FedEx or UPS because 0:21:56.560 --> 0:21:58.560 they're that ubiquitous. 0:21:58.800 --> 0:22:01.399 Absolutely had to pair back a little bit because we 0:22:01.440 --> 0:22:03.720 got a little obsessed with Amazon. Anyway, let's get to it, 0:22:03.760 --> 0:22:05.600 because the two are also the subject of a new book, 0:22:05.600 --> 0:22:09.400 Winner sells All Amazon Walmart and the Battle for our Wallets. 0:22:09.400 --> 0:22:11.480 The author, Jason Delray, is with us. He's a business 0:22:11.560 --> 0:22:14.920 journalist for fifteen years, covering e commerce for the last decade. 0:22:15.040 --> 0:22:17.399 He's here in our interactive broker's studio. Nice to have 0:22:17.440 --> 0:22:19.600 you here. Welcome, welcome, Thanks so much. Tell us a 0:22:19.600 --> 0:22:21.320 little bit about why you wrote this book and why 0:22:21.359 --> 0:22:22.879 you wrote it now, or how long you've been working 0:22:22.920 --> 0:22:23.199 on it. 0:22:23.880 --> 0:22:26.520 So I've been working on about three years and long 0:22:26.640 --> 0:22:30.200 thought that while there have been some great books about Amazon, 0:22:30.280 --> 0:22:31.760 Bradstone's chief among. 0:22:31.560 --> 0:22:34.959 Them, rights on your book. 0:22:34.240 --> 0:22:36.159 That he did blurb a bit for me. 0:22:36.640 --> 0:22:39.400 Can I just say what he wrote? A revelatory account 0:22:39.400 --> 0:22:42.760 of the bloody rivalry between two ruthless retail juggernauts that 0:22:42.800 --> 0:22:44.560 are not accustomed to losing anyway. 0:22:44.560 --> 0:22:44.880 Go ahead. 0:22:45.119 --> 0:22:47.720 Brad's been coming to me over the years and so 0:22:48.320 --> 0:22:52.240 written great books about Amazon. There's been some interesting books 0:22:52.240 --> 0:22:55.280 about Walmart, although not many in the last fifteen years. 0:22:55.720 --> 0:22:58.040 I thought to look at each and in a vacuum 0:22:58.160 --> 0:23:02.400 sometimes misses how much each there is influenced strategies, and 0:23:02.520 --> 0:23:05.919 there really hasn't been a deep dive into the innovator's 0:23:05.920 --> 0:23:08.400 the dilemma that Walmart specifically has faced over the last 0:23:08.400 --> 0:23:11.600 twenty years. And for those reasons and a few others 0:23:11.920 --> 0:23:14.480 which we may get into, I thought, you know, looking 0:23:14.480 --> 0:23:18.520 at inflection points and their rivalry over time and where 0:23:18.520 --> 0:23:21.960 and how they've influenced each other would be interesting for 0:23:22.040 --> 0:23:24.360 retail and e commerce folks who work in the industry, 0:23:24.640 --> 0:23:27.080 but also just smart people who care about what. 0:23:27.000 --> 0:23:29.080 Motivates these two companies. 0:23:28.560 --> 0:23:29.879 Well, just the competition. 0:23:30.000 --> 0:23:34.200 I mean, you know, households see that themselves in real time. 0:23:34.240 --> 0:23:37.520 Everybody I think has an Amazon app, right, and more 0:23:37.520 --> 0:23:40.520 and more people are getting a Walmart app. Is we've 0:23:40.560 --> 0:23:44.880 come to know it more online than just a gigantic 0:23:45.320 --> 0:23:51.960 big box store. Is Walmart starting to take away serious, 0:23:52.320 --> 0:23:56.840 significant market share from Amazon online? Not yet, but I 0:23:56.880 --> 0:24:01.600 think they finally, for a couple of different reasons, connected 0:24:01.640 --> 0:24:04.399 the dots between their stores and their you know, and 0:24:04.440 --> 0:24:08.520 their fulfillment centers and their website in a meaningful way. 0:24:08.240 --> 0:24:09.320 That Amazon is. 0:24:10.000 --> 0:24:12.920 You know, they worried about Walmart a long time ago, 0:24:13.000 --> 0:24:16.199 then stopped worrying when Walmart seemed just not to be 0:24:17.000 --> 0:24:18.440 active at all in the space. 0:24:18.359 --> 0:24:20.320 And elevant right when it came to online. 0:24:20.320 --> 0:24:23.280 I mean, for a very long time Amazon executives have 0:24:23.320 --> 0:24:26.040 told me for a long time, we were waiting ten 0:24:26.160 --> 0:24:29.160 fifteen years for Walmart to take advantage of well their 0:24:29.240 --> 0:24:32.480 key advantage, which was a store within ten miles of 0:24:32.560 --> 0:24:35.080 ninety percent of the population, and to use that either 0:24:35.119 --> 0:24:40.400 as pickup hubs or delivery many warehouses. And they are 0:24:40.440 --> 0:24:43.600 finally doing that, but it has taken a very long time. 0:24:43.680 --> 0:24:47.440 And so are they stealing market share? Not quite yet, 0:24:47.480 --> 0:24:51.679 but I think they are finally sort of competitive in 0:24:51.760 --> 0:24:54.919 the space, which sounds shocking to just have that be 0:24:55.040 --> 0:24:57.120 the minimum, but that's where we're at. 0:24:57.200 --> 0:24:59.800 I want to get into the acquisition of Walmart of 0:25:00.040 --> 0:25:02.200 Vipers dot Com because that was really pivotal, and I 0:25:02.240 --> 0:25:03.919 think even Business Week did a cover story. But I 0:25:03.920 --> 0:25:08.320 want to ask you from your reporting, these guys are massive, 0:25:08.680 --> 0:25:10.879 and I think about when I go shopping, I shop 0:25:10.880 --> 0:25:12.800 and then I look at Amazon, and I like, kind 0:25:12.800 --> 0:25:15.600 of it's kind of always my check. Are they getting 0:25:15.640 --> 0:25:17.720 too big? Both of them? 0:25:18.640 --> 0:25:18.800 You know? 0:25:18.840 --> 0:25:21.760 I say at the end of the book that I 0:25:21.800 --> 0:25:25.360 hope that the continued competition and the fact that Walmart 0:25:25.400 --> 0:25:29.119 is finally really competitive online leads to things, you know, 0:25:29.680 --> 0:25:33.040 better convenience for consumers, but also maybe better wages for 0:25:33.240 --> 0:25:37.840 employees as they compete for talent. They're both getting into healthcare. 0:25:37.520 --> 0:25:39.440 Which is something Walmart has gotten a lot of criticism 0:25:39.480 --> 0:25:40.240 for over the years. 0:25:40.240 --> 0:25:45.240 Correct, both getting into healthcare, and perhaps you know that 0:25:45.320 --> 0:25:48.359 is the industry that's ripe for better consumer you know, 0:25:48.400 --> 0:25:55.000 attention and and so maybe, but that's sort of an idealistic, 0:25:55.320 --> 0:25:57.479 you know, way to think about these two companies that 0:25:57.520 --> 0:26:01.320 have not always inspired you know, the you know, the 0:26:01.359 --> 0:26:05.439 greatest feelings among you know, I mean labor groups, consumer groups, 0:26:05.480 --> 0:26:09.280 small businesses and so are they too big? I mean 0:26:09.600 --> 0:26:13.560 I'll leave that to you know, regulators to figure out. 0:26:13.600 --> 0:26:14.960 I think Walmart's days. 0:26:14.800 --> 0:26:20.200 In the in the line in sorry, scrutinized spotlight fire, Yeah, 0:26:20.240 --> 0:26:22.320 has sort of passed, which has been you know, I 0:26:22.600 --> 0:26:25.400 report in the book Andy Jasse has been angered by 0:26:25.440 --> 0:26:27.919 that over the years, like white like they're the biggest 0:26:28.200 --> 0:26:31.119 retailer revenue, Like what's up and they've had to explain 0:26:31.200 --> 0:26:33.520 like it's it's our turn now, right, it's our turn. 0:26:33.600 --> 0:26:36.600 And so we'll be interested to see what happens with 0:26:36.640 --> 0:26:40.639 the FTC. Will that lawsuit eventually happened? And sorry, I 0:26:40.640 --> 0:26:41.880 think I well, I. 0:26:41.840 --> 0:26:43.560 Was just going to ask about the employees, because of 0:26:43.560 --> 0:26:47.280 course the two of them competing is good for consumers 0:26:47.400 --> 0:26:49.120 in the sense that it lowers prices. 0:26:50.280 --> 0:26:52.160 But I can't. 0:26:52.160 --> 0:26:56.840 Imagine how they would how that would benefit their employees. 0:26:56.840 --> 0:26:59.960 And I know the each try and put a positive spin. 0:26:59.800 --> 0:27:03.080 On things like paying a fifteen dollars minimum wage, or 0:27:03.920 --> 0:27:04.240 you know. 0:27:04.200 --> 0:27:06.520 They have college education programs. 0:27:06.560 --> 0:27:08.840 Yes, they both sort of match each other with over 0:27:08.880 --> 0:27:11.480 the years, but they. 0:27:11.320 --> 0:27:15.520 Do, I mean, make a bigger margin on the backs 0:27:15.560 --> 0:27:18.159 of these employees, right, I mean, the whole point of 0:27:18.200 --> 0:27:20.840 a business like this is to kind of squeeze costs 0:27:20.880 --> 0:27:24.840 in places like labor to make more money for the shareholders. 0:27:25.080 --> 0:27:30.199 Yeah, and they both drive drive people really hard. I 0:27:30.200 --> 0:27:32.040 have a chapter in the book that's all about how 0:27:32.040 --> 0:27:34.480 in the last five years Walmart has recruited a lot 0:27:34.520 --> 0:27:39.239 of warehouse leaders and other logistics leaders from Amazon and 0:27:39.280 --> 0:27:42.280 how they sort of imported the Amazon way and culture, 0:27:42.359 --> 0:27:47.760 which not surprisingly did not always go well. And I 0:27:47.760 --> 0:27:51.680 think as they add automation, the companies will say we've 0:27:51.720 --> 0:27:54.280 taken away some of the most menial work, some of 0:27:54.320 --> 0:27:57.520 the toughest work. But what often happens at the same 0:27:57.600 --> 0:28:00.439 time is the work speeds up. I see all these 0:28:00.480 --> 0:28:05.760 states investigating Amazon. It's not because it's not because the 0:28:06.000 --> 0:28:09.640 you know, one one act in the work is really difficult. 0:28:09.680 --> 0:28:12.399 It's because of the repetition and the speed, and so 0:28:13.400 --> 0:28:15.720 I think it's a big issue. And they say they're 0:28:15.800 --> 0:28:19.000 you know, they're constantly improving safety and the like. But 0:28:19.320 --> 0:28:22.560 there's a lot of investigations and evidence that proves otherwise. 0:28:22.600 --> 0:28:23.879 There's a lot of stuff things and I kind of 0:28:23.880 --> 0:28:28.280 mixed them together. But yeah, Jet dot com and Walmart 0:28:28.680 --> 0:28:30.840 talk to us about some of the kind of interesting developments. 0:28:30.880 --> 0:28:32.240 We've got about two minutes and then we'll come back 0:28:32.240 --> 0:28:35.280 and talk some more. But were these pivotal experiences. 0:28:35.560 --> 0:28:40.240 Yeah, so, so Amazon bought diapers dot com the parent 0:28:40.280 --> 0:28:43.200 company was Quizy way back around twenty ten, stole it 0:28:43.200 --> 0:28:43.880 from Walmart. 0:28:45.200 --> 0:28:45.960 Mark Lurriy, that. 0:28:46.040 --> 0:28:49.120 Entrepreneur spent a few years at Amazon, starts Jet dot Com. 0:28:49.480 --> 0:28:51.640 Maybe started working on it while he was at Amazon. 0:28:51.760 --> 0:28:52.600 Not totally clear. 0:28:53.680 --> 0:28:56.400 Wasn't really working out, but a lot of attention, and 0:28:57.360 --> 0:29:00.680 Walmart was needed a big you know, in books of talent, 0:29:01.840 --> 0:29:04.000 make the biggest acquisition in e commerce at the time, 0:29:04.040 --> 0:29:09.360 three point three billion. Mark Lori comes in, you know, 0:29:09.920 --> 0:29:13.840 some successes, some failures, but the metabolism of the online 0:29:14.360 --> 0:29:17.959 sales at Walmart picks up and then they both compete. 0:29:17.960 --> 0:29:21.520 Recently in healthcare on an acquisition called pill Pack, Walmart 0:29:21.680 --> 0:29:23.680 thought it had it. I have a great anecdote in 0:29:23.680 --> 0:29:27.840 the book. Ceo of Walmart, actually here's the Amazon deal, 0:29:27.840 --> 0:29:31.000 announced that they bought PillPack instead, tries to convince the 0:29:31.120 --> 0:29:34.760 entrepreneur that he should back out of the Amazon deal, 0:29:34.800 --> 0:29:36.600 even though I mean, it's kind of crazy. The deal 0:29:36.680 --> 0:29:39.600 is public to the world, and it just shows like 0:29:39.720 --> 0:29:42.880 in some key areas where they're trying to get first 0:29:42.880 --> 0:29:46.200 mover advantage, they've gone head to head and more often 0:29:46.240 --> 0:29:47.960 than not, it seems Amazon has one. 0:29:48.400 --> 0:29:51.200 Tell us about meeting because you did for this book. 0:29:51.240 --> 0:29:54.880 The CEO of Walmart, mister McMillan, yees. 0:29:54.920 --> 0:29:59.680 So I went down to Bentonville, Walmart's hometown, met Doug 0:29:59.720 --> 0:30:03.200 mcma in the what they call the home office. I 0:30:03.200 --> 0:30:04.840 guess they have a new one being built, so this 0:30:04.920 --> 0:30:08.040 is the original, and spent about ninety minutes with him. 0:30:08.080 --> 0:30:10.440 We had a sixty minute interview. Plan went a little 0:30:10.440 --> 0:30:13.560 over which I was I was happy about, although they 0:30:13.560 --> 0:30:17.120 did not. My original pitch was to trail him for 0:30:17.160 --> 0:30:20.160 a week. That did not really work out, and that's 0:30:20.200 --> 0:30:24.080 not something that Walmart really does much of. And so Doug, 0:30:24.360 --> 0:30:26.320 you know, I was really interested in getting to know 0:30:26.400 --> 0:30:28.240 him a little bit. He's been at that he's a 0:30:28.240 --> 0:30:30.920 Walmart lifer, but they saw him as a CEO kind 0:30:30.920 --> 0:30:34.000 of bridge generations, like you know, they talk. He talks 0:30:34.040 --> 0:30:36.440 about how he you know, he had an early Palm 0:30:36.480 --> 0:30:42.160 pilot and like was into tech and tech forward and 0:30:42.400 --> 0:30:45.120 they made him CEO about nine years ago, and so 0:30:45.680 --> 0:30:47.880 his challenge has been just massive, and so it was 0:30:47.920 --> 0:30:51.760 interesting getting his thoughts on it to both you know, 0:30:51.960 --> 0:30:54.960 help reinvigorate the store business, which when he first came 0:30:55.000 --> 0:30:58.959 on board was struggling, while also trying to just you know, 0:30:59.360 --> 0:31:02.200 get into Cornel buy in that Amazon could be an 0:31:02.200 --> 0:31:05.360 existential threat, which is how he called what he called 0:31:05.360 --> 0:31:08.840 it to his executives and also board members in those 0:31:08.880 --> 0:31:12.000 first couple of years as CEO. And you know, he 0:31:12.040 --> 0:31:14.640 sees a lot of progress there, but he told me 0:31:14.720 --> 0:31:18.800 he's still dissatisfied with the speed of transformation, the speed 0:31:18.840 --> 0:31:20.959 of change in some parts of the organization. 0:31:21.800 --> 0:31:22.680 I thought he might have. 0:31:22.680 --> 0:31:24.560 One more year in him, maybe at ten years he 0:31:24.600 --> 0:31:27.720 would step aside, but there was some good reporting recently 0:31:27.760 --> 0:31:30.040 that he's going to stay on board a couple more 0:31:30.120 --> 0:31:34.400 years as they try to really make sure that this 0:31:34.520 --> 0:31:39.680 new digital DNAs is infused throughout the organization, which you know, 0:31:40.000 --> 0:31:41.720 let's be real, it's one of the biggest companies in 0:31:41.720 --> 0:31:43.920 the world. Not an easy thing to turn that ship. 0:31:44.760 --> 0:31:46.440 I wonder what I wonder. 0:31:46.200 --> 0:31:49.760 What happens if the US further d keuples from China, 0:31:50.200 --> 0:31:52.800 because both of these stores, I had to be fair, 0:31:52.840 --> 0:31:54.720 I haven't spent a lot of time in a Walmart, 0:31:54.760 --> 0:31:56.520 but I do spend a lot of time on the 0:31:56.520 --> 0:31:59.920 Walmart app and on the Amazon app, and I often 0:32:00.160 --> 0:32:04.000 try and look for products that are made in America 0:32:04.160 --> 0:32:07.520 or I just noticed that all of my choices are 0:32:07.520 --> 0:32:10.520 made in China, like everything and the brand name is 0:32:11.000 --> 0:32:16.240 it's something you can't exactly so, but do they do. 0:32:16.280 --> 0:32:18.080 They make an effort to try. 0:32:18.120 --> 0:32:20.800 And I wish Amazon would have a made in America section, 0:32:20.920 --> 0:32:22.880 but they don't. 0:32:23.160 --> 0:32:24.920 For a while, Yeah, and I thought, and. 0:32:27.320 --> 0:32:30.120 I know Amazon now has like a small a small 0:32:30.160 --> 0:32:33.680 business badge, which I think there's been some reporting that's 0:32:33.720 --> 0:32:37.440 proven to not always be completely accurate. Small business from 0:32:37.520 --> 0:32:41.640 China and listen, Amazon made this bet back in about 0:32:41.640 --> 0:32:44.400 twenty thirteen, the twenty fifteen that they were going to 0:32:44.480 --> 0:32:50.320 go all out courting Amazon Sorry Chinese suppliers and sellers, 0:32:50.920 --> 0:32:54.800 and you know, they went growth, growth, growth, and they 0:32:54.880 --> 0:32:58.480 knew there would be some trade offs and they've just 0:32:58.560 --> 0:33:02.080 kind of lived with it. Walmart had an opportunity on 0:33:02.120 --> 0:33:05.600 their website at least when they were welcoming in new 0:33:05.720 --> 0:33:09.560 sellers trying to build that marketplace business, to take a 0:33:09.560 --> 0:33:13.000 different path. Now maybe that wasn't no Chinese sellers, but 0:33:13.040 --> 0:33:16.440 maybe that was US sellers only or something, you know, 0:33:16.560 --> 0:33:21.040 something that would be more curated and something they could 0:33:21.120 --> 0:33:26.280 market honestly. And they just I think mostly under Marc Luri, 0:33:26.400 --> 0:33:29.640 a previous e commerce leader and entrepreneur, they really went 0:33:29.680 --> 0:33:33.680 after just growth and expanding the seller base and they 0:33:33.720 --> 0:33:36.800 opened up to China in a big way. And you know, 0:33:38.040 --> 0:33:40.239 I hope it doesn't blow up in some way for 0:33:40.480 --> 0:33:43.400 you know, for either company, because that'll mean that something 0:33:43.440 --> 0:33:46.200 bad happened for consumers on the marketplace business. 0:33:46.720 --> 0:33:49.880 But it just, you know, there's a reason. 0:33:51.360 --> 0:33:54.000 It just doesn't seem natural to have every product available 0:33:54.000 --> 0:33:57.840 across the world at your fingertips without knowing a ton 0:33:57.920 --> 0:33:59.960 about the person behind it, And that's sort of where 0:34:00.040 --> 0:34:00.640 we're at today. 0:34:00.720 --> 0:34:03.480 But Jason, can we have a world where both Amazon 0:34:03.960 --> 0:34:09.080 and Walmart exist? I mean, your book is Winter sells all? 0:34:09.160 --> 0:34:09.680 Yes? Right? 0:34:09.760 --> 0:34:10.160 Right? 0:34:10.320 --> 0:34:10.440 No? 0:34:10.560 --> 0:34:13.399 So I think there was a long period of time 0:34:13.440 --> 0:34:18.120 where some people at the top of Walmart were concerned 0:34:18.160 --> 0:34:20.239 if they didn't start making a dent and getting their 0:34:20.239 --> 0:34:24.359 act together, that yes, in some key online categories, there 0:34:24.400 --> 0:34:27.120 would be one winner, and that would be Amazon with 0:34:27.680 --> 0:34:31.600 ninety percent market share, ninety five percent market share. I 0:34:31.640 --> 0:34:35.319 think they've done enough over the last few years that 0:34:35.320 --> 0:34:40.040 that reality does not seem, you know, in the near term. 0:34:40.160 --> 0:34:43.920 And putting aside Amazon's also its own struggles in the 0:34:43.960 --> 0:34:46.120 last couple of years with cost cutting and the like. 0:34:46.160 --> 0:34:48.680 But does Walmart have an advantage because it does have stores? 0:34:48.719 --> 0:34:50.640 And I think about some stores that I shop at 0:34:50.680 --> 0:34:52.680 that I love that I can order online pick up 0:34:52.719 --> 0:34:54.799 in a store. Do like I have a lot of flexibility. 0:34:54.840 --> 0:34:56.560 I don't like to hang out in a store. It's 0:34:56.560 --> 0:34:58.240 not as much fun to hang out online. 0:34:58.360 --> 0:35:01.280 But I do wonder is there that an advantage potentially, 0:35:01.440 --> 0:35:03.799 especially as it builds, it should. 0:35:03.560 --> 0:35:06.360 Be it should be and as you know, as we 0:35:06.440 --> 0:35:09.560 see labor costs up over the last couple of years, 0:35:10.040 --> 0:35:14.120 supply chain costs, logistics cost up, you know, returning items 0:35:14.160 --> 0:35:17.400 like returning e commerce items. It should not like the 0:35:17.480 --> 0:35:20.759 myth doesn't work to do it free by shipment. And 0:35:20.800 --> 0:35:23.959 so Amazon has failed up to date with a real 0:35:24.000 --> 0:35:26.759 physical presence. And I think they'll keep at it because 0:35:26.840 --> 0:35:29.040 it is an advantage for Walmart, even if it's just 0:35:29.080 --> 0:35:31.640 to give customers, yes, place to pick up, but a 0:35:31.719 --> 0:35:32.560 place to return. 0:35:32.680 --> 0:35:32.839 Right. 0:35:32.960 --> 0:35:35.200 I ordered trying to get ready for this week in 0:35:35.280 --> 0:35:38.600 my book launch, ordered like forty seven different white shirts 0:35:38.640 --> 0:35:41.439 online and like, you know, knowing I could just ship 0:35:41.520 --> 0:35:44.400 him back or in some cases return to a store, 0:35:44.400 --> 0:35:45.680 but not an Amazon store. 0:35:46.120 --> 0:35:48.840 It's interesting in terms of. 0:35:50.200 --> 0:35:53.320 The fact that no one's written a book about Amazon Walmart, 0:35:53.360 --> 0:35:54.960 and no one's really done that. 0:35:55.200 --> 0:35:59.560 Bradstone, He's written to books, Well, no Amazon. 0:35:59.280 --> 0:36:01.120 That's about Amazon. I'm talking about Walmart. 0:36:01.280 --> 0:36:01.440 Yeah. 0:36:01.480 --> 0:36:03.880 Are they secretive or they are? You know, is it 0:36:03.960 --> 0:36:06.280 hard to get in there? They wouldn't. 0:36:06.640 --> 0:36:08.279 Yeah, hang out with the CEO for a week. I 0:36:08.320 --> 0:36:11.280 get that because that's annoying. But yeah, and they've they've 0:36:12.239 --> 0:36:16.440 they are, they're very secretive. They are secretive, I think listen. 0:36:16.480 --> 0:36:18.640 I think they participated in some way for a couple 0:36:18.680 --> 0:36:20.560 of reasons. I think I showed them over the years 0:36:20.560 --> 0:36:23.440 I was going to publish stuff that they didn't think 0:36:23.480 --> 0:36:25.560 would get out of the company that did, and so 0:36:25.640 --> 0:36:28.200 I would continue to And I think they wanted to 0:36:28.280 --> 0:36:31.400 tell try to tell the story that they are finally 0:36:31.480 --> 0:36:34.520 turning a corner and that they you know, they get 0:36:34.560 --> 0:36:37.799 how far they were behind, and but that they can 0:36:37.960 --> 0:36:42.040 lead in some ways. I think also, you know, for 0:36:42.120 --> 0:36:45.080 a lot of years when they were they've seen you know, 0:36:45.160 --> 0:36:47.200 Amazon has been in the spotlight for a lot of 0:36:47.239 --> 0:36:49.800 bad reasons in the press and in DC for the 0:36:49.880 --> 0:36:52.839 last couple of years. So they have some opportunity here 0:36:52.920 --> 0:36:55.640 to tell a different story as well and sort of 0:36:55.680 --> 0:36:57.040 stand apart from Amazon. 0:36:57.520 --> 0:36:59.759 I'm thinking of our audience just got about unfortunately, Jason, 0:36:59.760 --> 0:37:03.280 about thirty seconds left here, we talked about healthcare healthcare earlier. 0:37:03.600 --> 0:37:07.959 Should our investment world and audience be watching these two 0:37:08.080 --> 0:37:09.840 in terms of what they might do to healthcare? 0:37:10.080 --> 0:37:12.719 Absolutely, I think ten years from now we may. I 0:37:12.760 --> 0:37:15.000 don't know if we're being these jobs, but if we were, 0:37:15.120 --> 0:37:17.040 and we were back here, I think we may look 0:37:17.080 --> 0:37:19.560 back and say, the biggest impact these companies have had 0:37:19.560 --> 0:37:22.880 in the last ten years on everyday people have is 0:37:22.960 --> 0:37:26.239 in healthcare, whether that's physical clinics like Walmart clinics one 0:37:26.320 --> 0:37:30.279 Medical Clinics which now Amazon owns, or virtual care, or 0:37:30.320 --> 0:37:33.600 maybe upending the insurance industry in some way. You know, 0:37:33.640 --> 0:37:36.520 the biggest challenge to Walmart in the healthcare is they've 0:37:37.320 --> 0:37:41.759 just churned through leaders yea, and they say there's a commitment, 0:37:41.800 --> 0:37:44.399 but we need to see that, you know, that sort 0:37:44.440 --> 0:37:46.400 of come through in steady leadership. 0:37:46.560 --> 0:37:47.120 This was fun. 0:37:47.200 --> 0:37:48.480 Good luck with the book, thanks so much. 0:37:48.480 --> 0:37:49.440 Good luck with the white shirt. 0:37:49.960 --> 0:37:53.160 I mean I have many at home waiting to go back. 0:37:53.520 --> 0:37:56.440 Jason Delray. The book is Winter Sales All Amazon, Walmart, 0:37:56.480 --> 0:37:57.800 and the Battle for our Wallets. 0:37:58.120 --> 0:38:01.479 You're listening to the Bloomberg Business This Week podcast that's 0:38:01.520 --> 0:38:04.240 just live weekdays from two to five pm Easter. 0:38:04.280 --> 0:38:07.680 On Bloomberg Radio, the Bloomberg Business App and YouTube. 0:38:07.880 --> 0:38:10.919 You can also listen live to our flagship New York station, 0:38:11.480 --> 0:38:14.400 Just Say Alexa, play Bloomberg You Love Them thirty. 0:38:16.239 --> 0:38:16.399 Hey. 0:38:16.440 --> 0:38:19.280 June is Equality Month here at Bloomberg, So every Monday 0:38:19.320 --> 0:38:21.560 and Thursday in the month of June. We're looking at 0:38:21.600 --> 0:38:24.520 all aspects of equality today. Our focus is on the 0:38:24.600 --> 0:38:27.239 lack of equal access when it comes to connectivity, something 0:38:27.320 --> 0:38:28.920 we often talk about at Bloomberg and I feel like, 0:38:29.040 --> 0:38:31.359 you know, Matt coming off the pandemic, when we saw 0:38:31.440 --> 0:38:33.200 kids working from home or trying to work from home 0:38:33.280 --> 0:38:36.480 and then you know, parking in a lot outside of 0:38:36.520 --> 0:38:39.080 McDonald's or something because they just didn't have internet access. 0:38:39.080 --> 0:38:40.439 I thought things were going to get a lot better, 0:38:40.440 --> 0:38:42.040 but as you remind me, it takes time. 0:38:42.239 --> 0:38:47.200 Well, look, that's the biggest problem with the lack of 0:38:47.840 --> 0:38:52.320 broadband nationwide is that when schools sent all the kids 0:38:52.320 --> 0:38:54.960 home and said, you know, work from your laptops or 0:38:55.320 --> 0:38:58.880 you know, telecommute with your iPads, not everyone could do 0:38:58.920 --> 0:39:02.239 that for a various reasons. It's expensive right to own 0:39:02.280 --> 0:39:06.040 that kind of equipment, and even if you are a 0:39:06.120 --> 0:39:08.880 rich person, if you're living in some remote area of 0:39:08.920 --> 0:39:13.880 the country, you just can't get online. So do we 0:39:13.960 --> 0:39:17.440 have to roll out fiber? Is there are there other options? 0:39:17.560 --> 0:39:21.000 We just saw for Elon Musk getting approval from the 0:39:21.040 --> 0:39:24.800 Pentagon to provide starlinks to Ukraine. 0:39:25.120 --> 0:39:27.120 But we also talk about. 0:39:28.200 --> 0:39:34.960 Wireless broadband spreading the joys of high speed connectivity across 0:39:34.960 --> 0:39:35.520 the country. 0:39:35.680 --> 0:39:37.120 Still, it's a big country. 0:39:37.200 --> 0:39:40.839 It's a very, very very big country, and I don't 0:39:40.840 --> 0:39:43.279 think a lot of Americans realize just how big it is. 0:39:43.360 --> 0:39:45.120 You're right, You're right, things we take for granted in 0:39:45.120 --> 0:39:47.520 big metro cities is not the same across the country. 0:39:47.680 --> 0:39:47.839 Well. 0:39:47.920 --> 0:39:50.440 Heidi Binko is co founder and executive director of the 0:39:50.560 --> 0:39:54.840 Just Transition Fund, established in twenty fifteen by Rockefeller Family 0:39:54.840 --> 0:39:59.000 Fund in the Appalachia Funders Network. They are about helping 0:39:59.000 --> 0:40:03.080 communities tap in to federal funding opportunities, including those in 0:40:03.160 --> 0:40:08.120 connectivity and broadband. She joins us on Zoom from Charlottesville, Virginia. Heidi, 0:40:08.239 --> 0:40:10.040 good to have you here, and you've been listening to 0:40:10.120 --> 0:40:12.759 us rant on a little bit. Tell us a little 0:40:12.760 --> 0:40:14.880 bit about your organization and the work that you're doing 0:40:14.920 --> 0:40:16.719 to connect more Americans. 0:40:18.000 --> 0:40:20.920 Yeah, thanks Carolyn, Thanks Matthew for having me today. I'm 0:40:20.920 --> 0:40:23.080 really glad you're talking about broadband. I think there's a 0:40:23.320 --> 0:40:26.880 sort of a quiet crisis in America that you're right, Carol, 0:40:26.880 --> 0:40:29.160 that those of us in metro areas really don't think about. 0:40:29.280 --> 0:40:33.880 So the Just Transition Fund is a nonprofit philanthropic organization 0:40:34.040 --> 0:40:37.040 that I founded a number of years back, and essentially 0:40:37.080 --> 0:40:39.839 we help communities affected by the downturn of the coal 0:40:39.880 --> 0:40:43.719 industry diversify and grow their economies. So we're helping them 0:40:43.760 --> 0:40:47.280 realize they realize their own vision and vision for a thriving, 0:40:48.080 --> 0:40:52.400 vibrant economic future. And we realized along the way that 0:40:53.640 --> 0:40:56.840 we cannot work on economic development. You know, as you 0:40:56.880 --> 0:41:00.239 said in your opening statement, you can't work on workforce development. 0:41:00.400 --> 0:41:05.000 Kids can't access the internet for educational purposes if there 0:41:05.040 --> 0:41:07.799 is not a good broadband connection in these places. And 0:41:08.480 --> 0:41:11.520 people in urban areas don't realize this. I think most 0:41:11.520 --> 0:41:14.400 people don't realize it. But this problem is particularly crude 0:41:14.840 --> 0:41:18.719 acute in rural America. It's even more acute in the 0:41:18.800 --> 0:41:21.360 rural communities in which we work. So third of the 0:41:21.440 --> 0:41:23.640 coal communities that we work and don't have access. And 0:41:23.680 --> 0:41:26.360 it's even worse than some places like West Virginia the nation. 0:41:26.520 --> 0:41:29.360 It's interesting, I'm thinking right now. You know, we're on radio, obviously, 0:41:29.440 --> 0:41:31.880 but we're also on YouTube, and we're on Bloomberg Originals 0:41:31.920 --> 0:41:34.480 are streaming service. And for something like here, you know, 0:41:34.600 --> 0:41:36.960 people take it for granted again, like being able to 0:41:37.040 --> 0:41:40.200 kind of tap into us on multiple platforms. But you're right, 0:41:41.440 --> 0:41:44.720 it's not the case across certainly rural parts of the country. 0:41:44.880 --> 0:41:47.840 What are the government programs that are out there in 0:41:47.880 --> 0:41:50.320 a week where we're talking a lot about governments. 0:41:49.960 --> 0:41:52.839 Well, we have the Big Broadband true, what's it called 0:41:52.840 --> 0:41:57.240 Broadband Equity Access and Deployment deployment, right, the Bad Program, 0:41:57.320 --> 0:41:59.959 which is bad program forty two billion. 0:41:59.640 --> 0:42:02.359 Dollars, so a lot at least, it's like a lot. 0:42:02.480 --> 0:42:05.000 At least the government realizes that there's a problem, right 0:42:05.000 --> 0:42:06.480 and are trying to do something about it. 0:42:07.239 --> 0:42:10.239 Yeah, that's exactly right, Matthew. The Big Program, which is 0:42:10.640 --> 0:42:16.080 administered by the NTIA, the National Telecommunications Information Agency, is 0:42:16.160 --> 0:42:19.480 one of several agencies that is receiving a lot of 0:42:19.520 --> 0:42:25.120 money for broadband to speed broadband adoption across the federal government. Actually, 0:42:25.160 --> 0:42:27.120 I don't think people realize it, but there's over one 0:42:27.239 --> 0:42:31.759 hundred billion dollars available through this administration to support broadband 0:42:31.840 --> 0:42:36.200 access access. The problem is it's not that easy for communities, 0:42:36.400 --> 0:42:41.560 particularly rural communities or low capacity communities to access those funds. 0:42:41.800 --> 0:42:44.839 So that's where that's where the Just Transition Fund comes in. 0:42:45.360 --> 0:42:49.360 So what do you do I can imagine, because this 0:42:49.480 --> 0:42:53.200 country really is so big that it's not just West 0:42:53.280 --> 0:42:58.960 Virginia or I don't know, Kansas, but there are multiple 0:42:59.000 --> 0:43:03.160 states where you know, the population per square mile is 0:43:03.239 --> 0:43:06.879 less than one. Right, So how do you you can't 0:43:06.960 --> 0:43:09.400 roll out fiber to all of those places? 0:43:09.480 --> 0:43:09.600 Right? 0:43:09.680 --> 0:43:11.280 Is it about fixed wireless access? 0:43:12.440 --> 0:43:15.359 It's about a lot of different technologies and in your right, right. 0:43:15.440 --> 0:43:20.560 The problem is particularly particularly acute in places like southern Illinois, 0:43:20.640 --> 0:43:24.560 Western Colorado, different places in Ohio, all across the. 0:43:24.480 --> 0:43:29.480 Country, Wyoming, Mexico exactly. 0:43:29.000 --> 0:43:31.840 Right, Like the tribal communities are hit particularly hard the 0:43:31.920 --> 0:43:34.920 Navajo Nation. In some areas, ninety percent of the communities 0:43:34.960 --> 0:43:38.880 can access can't access the internet, right, So it's it's 0:43:38.920 --> 0:43:41.799 it's it's particularly bad. And essentially what we do is 0:43:42.239 --> 0:43:45.680 we act as an early stage investor to help communities 0:43:45.800 --> 0:43:49.239 access the federal capital capital they need to build out 0:43:49.520 --> 0:43:53.640 and access broadband infrastructure. So whether it's you know, fixed 0:43:53.680 --> 0:43:58.759 wireless or or broadband or fixed wireless or starlink or 0:43:58.760 --> 0:44:00.960 what have you, there are different ways to access the 0:44:01.080 --> 0:44:03.480 you guys start these federal problems, do you guys tap 0:44:03.520 --> 0:44:06.120 into st some of our Yeah, some of our communities 0:44:06.160 --> 0:44:09.720 out in out in travel areas are working on that 0:44:09.840 --> 0:44:12.239 are using that. The problem with starlink is that it's 0:44:12.280 --> 0:44:15.520 really expensive now, right, and that's another problem, right, I mean, 0:44:15.719 --> 0:44:18.719 that's what makes this broadband problem so so hard to 0:44:18.760 --> 0:44:22.040 deal with, right, Like, it's not only a problem of 0:44:22.400 --> 0:44:26.080 physical infrastructure of access, but it's also a problem affordability. 0:44:26.200 --> 0:44:28.920 What's what's a successful project that you guys have done 0:44:28.960 --> 0:44:30.640 and we've just got about thirty seconds. 0:44:31.080 --> 0:44:34.080 Yeah, great project that we worked on was in West Virginia. 0:44:34.160 --> 0:44:37.320 We helped a series of communities access more than forty 0:44:37.360 --> 0:44:40.239 five million dollars in federal funds and it ended up 0:44:40.280 --> 0:44:43.960 connecting over thirty thousand of the most disconnected households in 0:44:43.960 --> 0:44:46.640 West Virginia. So those kids that you heard about during 0:44:46.640 --> 0:44:48.960 the pandemic that we're going to the McDonald's Wi Fi 0:44:49.239 --> 0:44:51.920 right parking lot to get Wi Fi to do their homework, 0:44:52.160 --> 0:44:53.480 that's what this project helped. 0:44:53.640 --> 0:44:55.000 Wow, that's amazing. 0:44:55.080 --> 0:44:55.919 That's very good. 0:44:56.080 --> 0:45:00.640 Yeah, absolutely, yeah, because what a disadvantage and it's tough 0:45:00.680 --> 0:45:05.359 that some families, so many families had to endure that. 0:45:06.280 --> 0:45:08.560 Hopefully they don't have to go through that again anytime soon. 0:45:08.719 --> 0:45:10.520 Yeah, and especially in a world, especially when it comes 0:45:10.520 --> 0:45:12.440 to things like school. I mean, that's how kids, that's 0:45:12.440 --> 0:45:15.239 how they work. It's just very different, certainly from when 0:45:15.239 --> 0:45:16.759 I went to school, and maybe when you went to. 0:45:16.760 --> 0:45:19.600 School, a little different from back in the seventies. 0:45:19.640 --> 0:45:21.440 Here, Heidi, thank you so much. I'm glad we were 0:45:21.440 --> 0:45:23.360 able to check in with you. Heidibinko, she's co founder 0:45:23.400 --> 0:45:26.440 and executive director of the Just Transition Fund, joining us 0:45:26.480 --> 0:45:29.799 on Zoom from Charlottesville, Virginia. No, I just remember with 0:45:29.800 --> 0:45:31.680 my own daughter, like it's like all these assignments came 0:45:31.719 --> 0:45:35.600 in on, like laptops and everything, and how they communicate 0:45:35.600 --> 0:45:37.560 with teachers and great, like, it's just different. 0:45:37.640 --> 0:45:38.839 We should revolt, all right? 0:45:39.520 --> 0:45:40.440 You ready ready to do? 0:45:40.600 --> 0:45:41.040 Okay? 0:45:41.400 --> 0:45:41.719 All right? 0:45:41.760 --> 0:45:43.560 You are listening and watching Bloomberg Radio. 0:45:46.200 --> 0:45:49.759 You're listening to the Bloomberg Business Week podcast. That's us 0:45:49.800 --> 0:45:52.480 live weekdays from two to five pm Eastern. 0:45:52.360 --> 0:45:55.680 On Bloomberg Radio, the Bloomberg Business App, and you too. 0:45:55.960 --> 0:45:59.000 You can also listen live to our flagship New York station, 0:45:59.560 --> 0:46:01.680 Just say Alexa, play Bloomberg. 0:46:01.719 --> 0:46:02.759 You love them thirty. 0:46:04.160 --> 0:46:06.400 All right, Well, no doubt about it. N VideA betting 0:46:06.440 --> 0:46:09.360 big time on AI so to our investors that Nvideo 0:46:09.440 --> 0:46:11.719 is going to get at this right because and Video 0:46:11.760 --> 0:46:13.799 is now a one trillion dollar market cap company, just 0:46:13.800 --> 0:46:15.600 one of nine companies to get there, a move that 0:46:15.680 --> 0:46:19.880 put it into today's Alpha pack of Silicon Valley h 0:46:20.239 --> 0:46:23.440 and I got to say, it's really interesting considering the 0:46:23.560 --> 0:46:26.160 Nvidia history, which is what a story in the current 0:46:26.160 --> 0:46:29.640 issue of Bloomberg Business Week gets into that story, as 0:46:29.640 --> 0:46:32.360 we said in Bloomberg Business Week, on newstands, online at 0:46:32.360 --> 0:46:34.640 Bloomberg dot com, Slash BusinessWeek, and of course on the 0:46:34.680 --> 0:46:37.280 Bloomberg Let's get into it at Bloomberg News Technology reporter 0:46:37.320 --> 0:46:40.040 Austin Carr on the phone in Boston, and of course 0:46:40.040 --> 0:46:42.040 with us the editor of Bloomberg Business Week, Jill Webber 0:46:42.080 --> 0:46:45.400 here in our Bloomberg Interactive Brokers studio. Every time we 0:46:45.480 --> 0:46:47.760 do anything though that has an AI connection, I always 0:46:47.800 --> 0:46:50.160 forget the open AI and Elon Musk like it all 0:46:50.239 --> 0:46:52.600 goes Elon is everywhere. I know that that's not what this. 0:46:52.560 --> 0:46:55.960 Story and that one, you know, goes from a couple 0:46:55.960 --> 0:46:59.319 of years ago, even when you know there was going 0:46:59.360 --> 0:47:00.360 to be a lot of interest this. 0:47:00.440 --> 0:47:03.279 But the thing that I think that reveals. 0:47:02.880 --> 0:47:05.160 Is that in video is really at the heart of 0:47:05.320 --> 0:47:08.880 the AI conversation, which you know that newslash not the 0:47:08.880 --> 0:47:11.200 first person to say that. But what has been impressive 0:47:11.280 --> 0:47:14.920 is that they've only become more entrenched and more powerful 0:47:14.960 --> 0:47:17.040 and more valuable as a company. 0:47:17.000 --> 0:47:18.479 That in this time. 0:47:18.760 --> 0:47:23.360 Yeah, and the person who's leading the company is really 0:47:23.480 --> 0:47:26.640 kind of a fascinating person. And he's been at the 0:47:26.640 --> 0:47:29.640 head of the company for a really long time, right Austin, 0:47:30.000 --> 0:47:31.920 And so you guys to spend some time with him. 0:47:31.960 --> 0:47:32.480 What's he like? 0:47:33.520 --> 0:47:38.040 Jenson's long He's a fascinating, extremely intense, very sharp elbowed 0:47:38.719 --> 0:47:41.440 chief executive officer. He was a co founder of Nvidia, 0:47:41.480 --> 0:47:43.640 has been there since. It was known as a gaming 0:47:43.680 --> 0:47:47.360 pioneer back in nineteen the late nineteen nineties for developing 0:47:47.360 --> 0:47:50.799 graphics cards, and only recently if they started to get 0:47:50.840 --> 0:47:54.880 credit for their expansion into developing graphics processors for AI. 0:47:55.880 --> 0:47:57.880 But even though you know, we're just getting hit to 0:47:57.920 --> 0:48:00.879 them with them passing a trillion dollars market cap or 0:48:01.160 --> 0:48:04.480 being at the core of open AI's sort of foundational 0:48:04.520 --> 0:48:08.880 technology with their microchips, they've been, you know, working on 0:48:08.920 --> 0:48:11.279 this AI challenge since the mid two thousands. It's a 0:48:11.360 --> 0:48:14.080 huge bet. The company took back in a round two 0:48:14.080 --> 0:48:16.719 thousand and six to start pivoting towards these sort of 0:48:16.960 --> 0:48:21.840 high performance computing problems, developing graphics cards that could handle 0:48:21.920 --> 0:48:24.520 a lot more than just loading up a game on 0:48:24.560 --> 0:48:28.080 your laptop. And so this company, helm by Jensen Wang, 0:48:28.120 --> 0:48:30.960 really deserves credit for making this big bet and actually 0:48:30.960 --> 0:48:33.680 pulling it off over a lot of years of doubt 0:48:34.239 --> 0:48:36.360 about what this technology can do beyond gaming. 0:48:37.000 --> 0:48:40.360 So because he you know, I always think of Nvidia 0:48:41.120 --> 0:48:44.080 with gaming. I'm a big call duty guy. You can 0:48:44.080 --> 0:48:46.799 play against me my gamer tag, a shower fan. But 0:48:47.160 --> 0:48:50.640 I never think of them as doing anything else. They 0:48:50.680 --> 0:48:52.880 have made other bets that have failed, right. 0:48:53.440 --> 0:48:55.560 They've paid a lot of bets that failed. Jensen Kuang 0:48:55.640 --> 0:48:57.600 actually prides himself on that. He used to say back 0:48:57.640 --> 0:48:59.239 in the day that they were always ninety days of 0:49:00.440 --> 0:49:03.120 from going out of business. He bet on you know, 0:49:03.239 --> 0:49:08.279 tablets going into the smartphone space with more chips, bet 0:49:08.320 --> 0:49:11.719 on various graphics cards that failed, and so this, you know, 0:49:11.760 --> 0:49:14.359 although it looks prescient in retrospect, this was actually one 0:49:14.360 --> 0:49:16.799 of many bets he laid over the past decade or two. 0:49:16.920 --> 0:49:20.239 But he's always operated on that sort of knife edge, 0:49:20.680 --> 0:49:23.640 which is actually pretty rare in the semiconductor industry when 0:49:23.920 --> 0:49:25.640 if you do mess up a chip cycle, it can 0:49:25.680 --> 0:49:29.160 have huge, huge impact. And you know, these companies really 0:49:29.160 --> 0:49:31.800 suffer if they miss a cycle or missed a chip generation. 0:49:32.080 --> 0:49:34.399 And yet that's something that Jensen Hong is really pushed toward. 0:49:34.440 --> 0:49:37.240 He's not just going toward the incremental update. He's actually 0:49:37.239 --> 0:49:40.320 making this massive other bet beyond loading Call of Duty 0:49:40.360 --> 0:49:43.160 to sort of power chat, GPT and all these other 0:49:43.200 --> 0:49:45.520 apps through the graphics cards that they developed that are 0:49:45.560 --> 0:49:49.120 sort of bizarrely and sort of serendipitously very good at 0:49:49.719 --> 0:49:52.640 number crunching and data crunching for the type of brain 0:49:52.800 --> 0:49:56.000 that AI needs to survive and endure. And that's something 0:49:56.000 --> 0:49:58.759 that you wouldn't have expected maybe ten or fifteen years 0:49:58.760 --> 0:50:01.480 ago when Intel was sort of the head of that 0:50:01.560 --> 0:50:04.400 conversation and really known as the you know, the develop 0:50:04.440 --> 0:50:06.560 of the big CPUs and owning all the data centers 0:50:06.560 --> 0:50:09.120 out in the world. But that that has completely changed 0:50:09.120 --> 0:50:11.279 with the advent of AI and what the technology they 0:50:11.320 --> 0:50:14.319 need to to sort of uh sort of be developed on. 0:50:14.440 --> 0:50:15.839 I want to I want to talk more about that, 0:50:16.120 --> 0:50:18.600 but but first I want to talk about a public 0:50:18.640 --> 0:50:21.560 service that you provided in the story, which was before 0:50:22.960 --> 0:50:25.040 he wore the leather jacket, he had kind of a 0:50:25.040 --> 0:50:28.480 different outfit and then he just owned the leather jacket 0:50:28.600 --> 0:50:30.759 and it just became a thing. 0:50:30.880 --> 0:50:32.160 And I just love that about it. 0:50:32.239 --> 0:50:34.840 Totally changes his persona. I think of him as a 0:50:34.880 --> 0:50:38.520 cool dude, a total Yeah. You know, Jobs had the turtlenick. 0:50:38.840 --> 0:50:40.920 You know, you know what's one up on the turtlenick, 0:50:41.160 --> 0:50:41.960 A leather jacket. 0:50:42.000 --> 0:50:42.680 It's way better. 0:50:42.800 --> 0:50:47.040 Yeah, Austin, what was that? What's been the transformation of 0:50:47.600 --> 0:50:48.520 Jensen along the way? 0:50:48.719 --> 0:50:51.000 Like, I think that's a really good question. And you know, 0:50:51.040 --> 0:50:53.440 people make a lot of the leather jacket or sort 0:50:53.440 --> 0:50:55.919 of any uniform that that Steve Jobs or even Mark 0:50:55.960 --> 0:50:59.879 Zuckerberg wears today, and I think, what what what? That 0:51:00.080 --> 0:51:02.200 leather jacket actually came up unprompted in many of my 0:51:02.280 --> 0:51:06.200 conversations with a lot of sources and executives, insofar as 0:51:06.239 --> 0:51:11.000 that it was sort of a very computational decision. Jensen 0:51:11.160 --> 0:51:14.359 is an engineer by trade. He's brilliant, but the way 0:51:14.360 --> 0:51:17.320 he thinks about problem solving is very much like an engineer, 0:51:17.400 --> 0:51:19.239 and so I think part of it based on My 0:51:19.480 --> 0:51:22.480 reporting at least was that he adopted that that uniform 0:51:22.640 --> 0:51:25.160 not be you know, Steve Jobs had sort of an 0:51:25.200 --> 0:51:27.320 aesthetic that he was trying to go after, whereas I 0:51:27.360 --> 0:51:29.640 think Jensen sort of made the decision one day to 0:51:29.680 --> 0:51:32.360 stop dressing like sort of you know, a geek squad 0:51:32.400 --> 0:51:34.440 member at Best Buy and start dressing a little bit 0:51:34.520 --> 0:51:36.600 hipper and have more stage presence. I don't think it 0:51:36.680 --> 0:51:38.640 was sort of core to his fashion, but I do 0:51:38.680 --> 0:51:40.920 think he realized that it was something he needed to adopt, 0:51:41.360 --> 0:51:43.600 sort of like an avatar in the metaverse. That's how 0:51:43.640 --> 0:51:45.920 I sort of compare it to. So it is an 0:51:45.920 --> 0:51:47.840 interesting thing. But you saw him grow as the CEO 0:51:48.400 --> 0:51:51.200 and become much more of a luminarian statesman, having been 0:51:51.239 --> 0:51:53.480 around for decades. I think he's the longest running CEO 0:51:53.480 --> 0:51:55.759 in the semiconductor's base. He's got to be that there 0:51:55.800 --> 0:51:58.160 and the sort of tech CEOs who've been around and 0:51:58.200 --> 0:52:00.960 at the helm of the company for this many decades. 0:52:01.000 --> 0:52:03.960 But that's sort of a testament to how strong, wild 0:52:04.000 --> 0:52:06.320 he is and sharp elbow he can be with employees. 0:52:06.360 --> 0:52:08.560 I gotta I gotta work on it. There's I haven't 0:52:08.560 --> 0:52:10.680 found my leather jacket. Yet, but you know it's out 0:52:10.680 --> 0:52:11.240 there somewhere. 0:52:11.719 --> 0:52:14.520 You have your uniform. Shoot, I got the sneaker. 0:52:14.239 --> 0:52:16.000 I've got some, I've got some a couple of things 0:52:16.000 --> 0:52:17.960 that you know are part of my look. But okay, Austin, 0:52:18.000 --> 0:52:21.000 there's another part of the story that I felt like you, 0:52:21.000 --> 0:52:23.920 you and Ian King your coolin and the story did 0:52:23.960 --> 0:52:26.080 a great job of breaking something down that I did 0:52:26.160 --> 0:52:30.200 not understand, which is, talk to us about the shopping 0:52:30.360 --> 0:52:31.480 cart metaphor. 0:52:31.160 --> 0:52:32.680 That you use that is the CPU. 0:52:32.960 --> 0:52:36.200 That is like, it's foundational to what has made in 0:52:36.320 --> 0:52:39.120 Vidia and VIDIA and until your shopping cart analogy, I 0:52:39.239 --> 0:52:40.640 didn't fully appreciate it. 0:52:41.520 --> 0:52:43.480 I appreciate that, Joelt. Just know that we've worked on 0:52:43.600 --> 0:52:46.080 many different metaphors and analogies before we landed on this. 0:52:46.360 --> 0:52:48.160 I like where you landed. I like your leather jacket. 0:52:48.200 --> 0:52:49.120 Go ahead and walk us through it. 0:52:49.680 --> 0:52:52.200 But basically, if you want to take away one thing 0:52:52.239 --> 0:52:54.480 from the story, it should be the difference between a 0:52:54.640 --> 0:52:57.560 graphics processing unit also known as the GPU, or what 0:52:57.719 --> 0:53:00.520 Intel makes which is called the central processing unit or CPU, 0:53:01.520 --> 0:53:03.799 and the way we describe it in the story as 0:53:03.880 --> 0:53:06.600 the difference between sort of a shopping cart, which is 0:53:06.840 --> 0:53:09.719 the equivalent of a CPU at a grocery store, you 0:53:09.760 --> 0:53:12.080 can run around and pick up all your groceries. You 0:53:12.160 --> 0:53:14.560 can hold a ton in that individual shopping cart, but 0:53:14.640 --> 0:53:16.120 it sort of takes a while to work through the 0:53:16.160 --> 0:53:19.359 grocery store each of the aisles. What in Vidia makes 0:53:19.440 --> 0:53:21.880 is called a GPU, and that it does a lot 0:53:21.960 --> 0:53:25.359 of small and repetitive tasks very well. So it's sort 0:53:25.360 --> 0:53:28.400 of the equivalent of having a bunch of smaller shopping baskets, 0:53:28.680 --> 0:53:30.400 which on their own could not hold as much as 0:53:30.440 --> 0:53:32.640 a shopping cart. But I imagine if you had twenty 0:53:32.719 --> 0:53:34.920 of them running around the store picking up your toilet paper, 0:53:35.360 --> 0:53:38.040 or your orange juice, or your milk or other groceries, 0:53:38.200 --> 0:53:41.239 you could get done a lot faster than what a 0:53:41.320 --> 0:53:44.280 shopping cart or Intel CPUs would do. And so that's 0:53:44.320 --> 0:53:47.359 really the core of what Nvidia has been doing well, 0:53:47.520 --> 0:53:50.080 which is, you know, all these AI training models, they 0:53:50.120 --> 0:53:53.000 need a bunch of hand baskets essentially of data to 0:53:53.120 --> 0:53:55.520 sort of train chat GPT and make sure it can 0:53:55.600 --> 0:53:58.279 speak fluently and then respond to your queries. And that's 0:53:58.320 --> 0:54:01.960 what a GPU is really good at doing repetitive small 0:54:02.320 --> 0:54:04.799 data tasks simultaneously, which a CPU. 0:54:04.600 --> 0:54:08.200 Is not very adept ad So how does a company 0:54:09.080 --> 0:54:12.200 go from being almost as you said, They've gone through 0:54:12.280 --> 0:54:14.480 like a couple of iterations. They almost ran out of 0:54:14.560 --> 0:54:17.600 cash at one point. What was the key turning point 0:54:17.840 --> 0:54:20.320 in Nvidia that has set it up for us to 0:54:20.440 --> 0:54:23.040 be kind of talking about it as much as we 0:54:23.160 --> 0:54:23.680 do today. 0:54:25.040 --> 0:54:26.640 To be honest with Carol, I actually think a lot 0:54:26.680 --> 0:54:29.120 of people think about this as a hardware story developing, 0:54:29.560 --> 0:54:33.200 you know, the microchips that are go inside these data 0:54:33.239 --> 0:54:36.720 centers or servers. But it's actually more of a software story. 0:54:37.239 --> 0:54:39.040 One of the big bets he made back in the 0:54:39.160 --> 0:54:42.640 mid two thousands which develop a programming language that could 0:54:42.719 --> 0:54:45.680 sort of build software for these GPUs much in the 0:54:45.719 --> 0:54:48.600 same way that game developers make Call of Duty or 0:54:48.800 --> 0:54:52.120 other you know, high graphics intensive games for these graphics cards. 0:54:52.440 --> 0:54:54.920 And so he built a programming language along with his 0:54:55.040 --> 0:54:57.560 team that really took a while. I mean back is 0:54:57.680 --> 0:55:00.399 you know, let's say twenty fourteen, twenty fifteen, Wall Street 0:55:00.480 --> 0:55:02.600 just had no idea why they were investing this. Even 0:55:02.680 --> 0:55:04.520 employees told us they had no idea what any of 0:55:04.600 --> 0:55:06.600 this had to do with gaming, and the reality was 0:55:06.640 --> 0:55:08.799 it really didn't. It was a bet on something else, 0:55:08.880 --> 0:55:12.560 which was going after sort of large scale supercomputers and 0:55:12.680 --> 0:55:15.920 making sure this technology could be programmed to do stuff 0:55:16.160 --> 0:55:18.279 like what has become chat GPT. So I think that 0:55:18.440 --> 0:55:19.719 was a key turning point. You see a lot of 0:55:19.760 --> 0:55:25.520 other companies like Google, Microsoft, Facebook developed their own competitor hardware, 0:55:25.640 --> 0:55:27.640 but what they don't have is a programming language that 0:55:27.920 --> 0:55:30.359 in Vidia has spent a decade plus developing and bringing 0:55:30.400 --> 0:55:31.400 in developers to build on. 0:55:32.040 --> 0:55:36.399 Okay, so marquee product now and where's it headed the market? 0:55:36.520 --> 0:55:38.960 Product now is you're lucky if you can get your 0:55:39.080 --> 0:55:40.600 hands on a Joel all those. 0:55:40.640 --> 0:55:43.400 I can't you buy vibing one maybe a leather jacket. 0:55:44.200 --> 0:55:45.960 Well, yeah, it would cost more than a leather jacket. 0:55:46.000 --> 0:55:48.640 It goes for maybe ten or twenty thousand dollars, depending 0:55:48.640 --> 0:55:51.640 on if you're getting it on retail or secondary markets. 0:55:51.800 --> 0:55:55.920 It's called the Hopper one hundred. And it's just someone 0:55:56.040 --> 0:55:59.600 compared the initial past couple of generations of GPUs is 0:55:59.640 --> 0:56:02.400 going for let's say a BMW to a Lamborghine. But 0:56:02.480 --> 0:56:04.440 then they couldn't really come up with a comparison for 0:56:04.560 --> 0:56:06.879 this next stage of graphics carent I mean, maybe it's 0:56:06.880 --> 0:56:09.480 a space Sprocket or something. But it's really fast. It 0:56:09.560 --> 0:56:11.920 can These are leaps and bounds over what past generations 0:56:11.960 --> 0:56:14.319 have performed. And I think what you're going to see 0:56:14.360 --> 0:56:17.680 is this sort of just insanely exponential growth and AI 0:56:18.040 --> 0:56:20.760 performance out there based on this training that these GPUs 0:56:20.800 --> 0:56:23.719 can process at once. And so that's why Elon Musk, 0:56:23.760 --> 0:56:26.840 that's why Sam Oltman, everyone's after these GPUs because they 0:56:26.920 --> 0:56:29.279 want them in their data centers, training their models, these 0:56:29.360 --> 0:56:31.640 large language models that power things like CHATGPT. 0:56:32.480 --> 0:56:37.320 So also twenty four billion, fifty four billion components on 0:56:37.440 --> 0:56:39.000 this GPU, and it's time. 0:56:39.080 --> 0:56:43.239 You wouldn't see. You'd have to have basically a very 0:56:43.320 --> 0:56:45.759 refined microscope to see down there. If you actually touch 0:56:45.760 --> 0:56:48.560 it feels pretty smooth. But beneath the surface, yeah, it's 0:56:48.800 --> 0:56:50.759 We described it as sort of like looking like the 0:56:51.400 --> 0:56:55.200 Tokyo subway map, except with about fifty four billion more stations. 0:56:55.280 --> 0:56:57.640 All right, So Austin, you've really kind of spelled out 0:56:57.680 --> 0:56:59.920 why you know they have I guess first mover advantage. 0:57:00.000 --> 0:57:02.359 It feels like for this AI ephor you I mean, 0:57:02.400 --> 0:57:03.960 this is a stock We talked about it earlier with 0:57:04.040 --> 0:57:06.640 a guest. You've got a current pe of over two hundred, 0:57:07.239 --> 0:57:10.799 a ford looking pe of almost sixty. Many people think 0:57:10.800 --> 0:57:14.160 it's getting heady. Can somebody else do what Nvidia is 0:57:14.239 --> 0:57:17.120 doing when it comes to AI, Not yet. 0:57:17.800 --> 0:57:19.720 I think it's it will take some years. You know, 0:57:19.800 --> 0:57:22.960 Google chips right now, some have said, are just as 0:57:23.080 --> 0:57:26.000 fast as the ones that are out from Nvidia on 0:57:26.040 --> 0:57:29.000 the market. But again, this next generation h one hundred 0:57:29.120 --> 0:57:31.520 product is going to be catch up and match the 0:57:31.560 --> 0:57:33.880 performance of Google chips. And again they have that software 0:57:33.920 --> 0:57:36.760 component which Google does not have. You know, I think 0:57:36.800 --> 0:57:38.960 there's two ways this could go. You know, in Vida 0:57:39.080 --> 0:57:42.400 just continues to steal the market like Intel did with servers, 0:57:43.080 --> 0:57:45.160 you know, decades ago, and maybe they you know, right 0:57:45.200 --> 0:57:47.680 now they have this eighty percent market share and these accelerators. 0:57:48.720 --> 0:57:51.480 Other analysts feel that maybe they stumble, maybe a competitor 0:57:51.560 --> 0:57:53.480 does come out with some product that that steals the 0:57:53.560 --> 0:57:55.640 market or developed some software. But I think that's that's 0:57:55.640 --> 0:57:58.240 still years ahead, and right now in videos in a 0:57:58.360 --> 0:58:00.520 pretty good place. I mean, everyone we talk this is 0:58:01.240 --> 0:58:04.120 said that this is sort of invidious market to lose. 0:58:04.360 --> 0:58:07.120 Austin, I'm curious because you've mentioned a couple of times 0:58:07.680 --> 0:58:11.680 you've said he has sharp elbows, and it's also been 0:58:11.720 --> 0:58:15.160 pointed out in your story that if he loses, he 0:58:15.400 --> 0:58:19.280 can just you know, fire everybody or humiliate senior staff, 0:58:19.360 --> 0:58:20.160 like is. 0:58:20.200 --> 0:58:20.800 He a jerk? 0:58:21.920 --> 0:58:25.040 I should clarify that he actually is known famously. He 0:58:25.120 --> 0:58:27.840 even said this that he's never fired anyone. But if 0:58:27.880 --> 0:58:30.400 you talk to sources about him, that's because he will 0:58:30.440 --> 0:58:32.720 make it a place that you don't necessarily want to 0:58:32.760 --> 0:58:36.600 work if he's unhappy with your performance. So I wouldn't say. 0:58:36.480 --> 0:58:37.680 It sounds like a boss to me. 0:58:38.080 --> 0:58:40.600 Sounds like a boss. Yeah, Joel's very much the same way, 0:58:43.040 --> 0:58:46.560 but bosses, But yeah, no, he is I would say 0:58:47.080 --> 0:58:49.280 very intense. But I will say he has this core 0:58:49.360 --> 0:58:51.880 following of loyal executives that have been there decades, and 0:58:52.080 --> 0:58:53.600 there's got to be a reason they're working for him. 0:58:53.600 --> 0:58:55.720 If if he was sort of just a jerk or 0:58:55.920 --> 0:58:58.000 could be very mean and sharp elbow, they wouldn't continue 0:58:58.040 --> 0:58:59.160 to work with him. But they get to work on 0:58:59.200 --> 0:59:01.520 fascinating project. They really feel like they're on the tip 0:59:01.520 --> 0:59:03.120 of the sphere of technology, and I think there's a 0:59:03.160 --> 0:59:05.520 reason why he inspires that loyalty in his troops and 0:59:05.640 --> 0:59:07.400 especially as employees. They really look up to him, and 0:59:07.680 --> 0:59:10.200 he has this sort of loyal, sort of militant life 0:59:10.240 --> 0:59:11.280 following inside the video. 0:59:11.400 --> 0:59:13.200 My other favorite thing in the story, and there are many, 0:59:13.240 --> 0:59:15.640 it's like the fact that he like has the you know, 0:59:15.720 --> 0:59:18.240 he tries GPT and then what's the first thing he does, 0:59:18.360 --> 0:59:19.560 writes a poem about his company. 0:59:19.600 --> 0:59:22.439 It's like opening. It's some great Then he never uses 0:59:22.440 --> 0:59:25.000 it again, but he pays. But he pays the monthly 0:59:25.240 --> 0:59:27.040 because they need the money. They need the money all right. 0:59:26.960 --> 0:59:28.600 Thanks to Austin Carr and Jill Weber. 0:59:28.680 --> 0:59:29.040 Check it out. 0:59:29.040 --> 0:59:31.360 It's in the current issue of Bloomberg business Week magazine. 0:59:32.120 --> 0:59:35.640 You're listening to the Bloomberg Business Week Podcast. That's us 0:59:35.720 --> 0:59:39.360 live weekdays from two to five pm Eastern on Bloomberg Radio, 0:59:39.600 --> 0:59:41.080 the Bloomberg Business app. 0:59:41.000 --> 0:59:41.600 And you too. 0:59:41.880 --> 0:59:44.919 You can also listen live to our flagship New York station. 0:59:45.480 --> 0:59:48.720 Just say Alexa, play Bloomberg You love him thirty. 0:59:50.440 --> 0:59:52.200 You say you on a rebel? 0:59:55.320 --> 0:59:55.640 You know. 0:59:58.160 --> 0:59:59.960 We all want to change the world. 1:00:00.320 --> 1:00:01.040 Yeah, a little bit of a. 1:00:01.200 --> 1:00:01.800 Can we play this? 1:00:02.440 --> 1:00:02.880 What do you mean? 1:00:03.000 --> 1:00:05.120 I feel like you don't. We have to pay somebody 1:00:05.160 --> 1:00:06.480 if we play this. I don't know why. 1:00:06.520 --> 1:00:09.800 It's specifically the Beatles, but I feel like it's expensive 1:00:09.840 --> 1:00:10.480 to play the Beatles. 1:00:10.480 --> 1:00:12.240 I think you're allowed to play a certain amount. 1:00:12.160 --> 1:00:13.240 Like less than thirty seconds. 1:00:13.240 --> 1:00:14.720 So you know what's really important. We're going to talk 1:00:14.720 --> 1:00:15.920 about a revolution that's going on. 1:00:16.280 --> 1:00:18.760 Yeah, I've been on Reddit lately. 1:00:18.840 --> 1:00:19.560 I know what's going on. 1:00:20.280 --> 1:00:22.880 So let's get to it, because this story it has 1:00:22.960 --> 1:00:25.680 to do with really kind of a changing world. Whether 1:00:25.760 --> 1:00:29.840 it's the ad market online, whether it's AI. There's a 1:00:29.920 --> 1:00:32.160 lot of stuff that we're trying to figure out in 1:00:32.240 --> 1:00:35.440 a very new environment for the social media world. And 1:00:35.920 --> 1:00:38.800 our Joshua Brustin gets into it in the new upcoming 1:00:38.880 --> 1:00:41.240 issue of Bloomberg BusinessWeek magazine. So let's get to it. 1:00:41.840 --> 1:00:44.520 Joshua of course here with us along with the editor 1:00:44.560 --> 1:00:47.160 of Bloomberg business Week Magazine, Joil Weeber. Joshua, by the way, 1:00:47.160 --> 1:00:50.800 it is Bloomberg business Week Technology editor. So the story 1:00:50.840 --> 1:00:52.680 is very telling, right as we talk so much about 1:00:52.680 --> 1:00:56.000 AI Joel and trying to understand the importance of data 1:00:56.120 --> 1:00:59.400 going forward. It's important to AI generative AI. 1:01:00.120 --> 1:01:02.920 Yeah, and then there's Reddit, which is just I think, 1:01:03.160 --> 1:01:05.000 you know, for the past couple of years become the 1:01:05.080 --> 1:01:08.560 great hope of the Internet it is, you know, as 1:01:08.640 --> 1:01:09.240 we've seen. 1:01:09.200 --> 1:01:11.720 Weird, so weird, Remember it was no one's hope. 1:01:12.280 --> 1:01:14.960 You know what The genius of Reddit though, was that 1:01:15.160 --> 1:01:18.280 it reminded us of how great the Internet was, like 1:01:18.520 --> 1:01:21.240 in two thousand and two, before there were social networks 1:01:21.240 --> 1:01:23.680 and stuff, and it just was it's so basic, you know, 1:01:23.760 --> 1:01:25.240 it just puts it all out there. 1:01:25.440 --> 1:01:25.640 Yeah. 1:01:26.120 --> 1:01:30.400 I learned everything I know about crypto originally on Reddit, 1:01:30.480 --> 1:01:33.640 like before anyone before it was one thousand dollars bitcoin. 1:01:34.360 --> 1:01:36.880 I went on Reddit, I joined the subreddit, I got 1:01:36.960 --> 1:01:39.880 to know people. I bought my first bitcoin through the subreddit, 1:01:39.960 --> 1:01:41.200 you know, for six hundred bucks. 1:01:41.320 --> 1:01:44.000 Yeah, what's your handle? Like leather jacket? I can't tell you. 1:01:44.160 --> 1:01:48.919 No inside joke there from yesterday. What struck me about 1:01:48.920 --> 1:01:49.160 this though? 1:01:49.400 --> 1:01:53.240 Podcast Also, if you were going to swallow the internet, 1:01:53.520 --> 1:01:55.600 Reddit would be a pretty great place to start. And 1:01:55.680 --> 1:01:59.560 that's sort of what's kicked off this current controversy and 1:01:59.680 --> 1:02:03.120 remind Reddit still not a publicly traded company, which has 1:02:03.280 --> 1:02:04.280 also been part of this. 1:02:04.400 --> 1:02:06.080 So Josh, what happened? 1:02:07.360 --> 1:02:09.920 Well, what happened started in April when Reddit said it 1:02:10.000 --> 1:02:13.200 was going to start charging for API usage. This is 1:02:13.280 --> 1:02:17.880 basically how you would systemically ingest Reddit data for your 1:02:17.960 --> 1:02:22.320 own for your own programs. And as you mentioned, one 1:02:22.480 --> 1:02:26.000 big use of the Reddit API is to take data 1:02:26.080 --> 1:02:28.920 and use it to train AI models. It's part of 1:02:29.040 --> 1:02:31.760 the model that is used to train chat GPT. I 1:02:31.840 --> 1:02:35.000 think Google's model uses it as well. And it's just 1:02:35.160 --> 1:02:38.600 this big data set of people talking. And if you 1:02:38.600 --> 1:02:40.480 want to teach a computer to talk like a person, 1:02:40.960 --> 1:02:42.280 Reddit it's one place to start. 1:02:43.240 --> 1:02:46.640 So Reddit wants to make sure you're smart. I start 1:02:46.720 --> 1:02:47.680 training with Reddit. 1:02:48.240 --> 1:02:50.480 I mean, actually, my wife works for a company I 1:02:50.560 --> 1:02:55.600 won't name it that scrapes places like Twitter and Reddit 1:02:55.720 --> 1:02:59.560 for data. They do that for corporations, so that, for example, 1:02:59.800 --> 1:03:00.800 this is not a client. 1:03:00.840 --> 1:03:01.720 I'm just using it. 1:03:01.840 --> 1:03:05.280 If PEPSI wants to know, you know, how people on 1:03:05.360 --> 1:03:08.760 Twitter feel about them, this company goes and uses the 1:03:08.800 --> 1:03:11.440 Twitter API and scrapes all the mentions and figures out 1:03:11.480 --> 1:03:13.360 you know, which are positive, which are negative, and which 1:03:13.360 --> 1:03:14.000 are neutral. 1:03:14.080 --> 1:03:17.360 So yeah, yeah, that's actually learning a lot about Matt. 1:03:17.520 --> 1:03:21.040 You know, I'm glad that the revolution was hinted at 1:03:21.040 --> 1:03:22.240 the beginning because yeah. 1:03:22.120 --> 1:03:24.480 You know, and what Reddit wants to do is make 1:03:24.560 --> 1:03:27.240 your wife's company pay for that. Yes, because they're exactly 1:03:27.280 --> 1:03:32.320 some commercial use from this. And at first the announcement 1:03:32.360 --> 1:03:34.640 was made in April, you know, people said, huh, that's 1:03:34.640 --> 1:03:37.040 an interesting look at like what might happen with AI 1:03:37.120 --> 1:03:40.000 in the future. And then it became clear that this 1:03:40.200 --> 1:03:42.760 was also going to impact a lot of developers that 1:03:42.920 --> 1:03:46.240 make apps on Reddit that Reddit users really like today 1:03:46.920 --> 1:03:52.560 and Reddit users really didn't like that, And after some negotiations, 1:03:52.560 --> 1:03:54.880 if you can call it that, with the company, the 1:03:54.960 --> 1:03:58.560 company refused to change its policies and the entire site 1:03:58.720 --> 1:04:02.160 or big parts of the site went dark last week. 1:04:02.560 --> 1:04:05.720 So I mean, for example, Carol uses Twitter, not through 1:04:06.240 --> 1:04:09.640 Twitter dot com, but she has some third party tweet 1:04:09.720 --> 1:04:12.280 deck that she uses, and tweet Deck I guess would 1:04:12.280 --> 1:04:14.240 hook up to Twitter with an API as well. And 1:04:14.320 --> 1:04:19.400 you're talking about people using Reddit with such third party apps, right, yeah, exactly. 1:04:19.560 --> 1:04:23.080 There are some very popular Reddit readers that ingest Threddit 1:04:23.120 --> 1:04:25.120 and give you a better or give you a different 1:04:25.840 --> 1:04:29.840 user interface. Those apps run ads that they don't share 1:04:30.400 --> 1:04:32.760 the revenue with Reddit, so Reddit wants some of that revenue. 1:04:33.320 --> 1:04:37.280 But also the API is used to build tools that 1:04:37.760 --> 1:04:42.200 things like the volunteer moderators that make Reddit run use 1:04:42.400 --> 1:04:44.160 just in their day to day use. And that was 1:04:44.240 --> 1:04:47.000 really kind of what moderators said, if you take this 1:04:47.080 --> 1:04:49.760 away from us, we can't do our jobs and we're 1:04:49.760 --> 1:04:50.680 giving you free labor. 1:04:50.800 --> 1:04:54.120 So which is key part there, Jush rights, but Reddit 1:04:54.200 --> 1:04:56.080 power users or something else using the site in a 1:04:56.120 --> 1:04:59.400 way that seems more like employment than leisure, except for 1:04:59.440 --> 1:05:00.280 the getting paid part. 1:05:00.440 --> 1:05:03.200 Like this is one of the amazing things about the Internet. 1:05:03.480 --> 1:05:05.880 You find a community of people who care and they 1:05:05.920 --> 1:05:07.479 will do all that work for free. 1:05:07.760 --> 1:05:10.920 Yeah, right, which also is I'm sure part of but 1:05:11.440 --> 1:05:14.040 you know, the AI swallowing it all likes. 1:05:14.480 --> 1:05:16.400 Yeah, at the heart of it, this is a conflict 1:05:16.440 --> 1:05:19.040 between two groups of people who said, I don't want 1:05:19.080 --> 1:05:21.120 to do something without getting paid for it or getting 1:05:21.280 --> 1:05:22.840 you know, I don't want to do something for free 1:05:22.880 --> 1:05:24.120 if you're going to exploit me. 1:05:24.480 --> 1:05:25.920 The moderator is being exploited. 1:05:25.640 --> 1:05:28.080 By everybody else is going to get paid, and I'm being. 1:05:28.000 --> 1:05:31.200 Exploited by the AI companies, the or the third party 1:05:31.200 --> 1:05:32.200 app companies or whoever. 1:05:32.400 --> 1:05:34.680 I love. There's a quote in a professor at the 1:05:34.720 --> 1:05:37.400 Institute for Advanced Study, and I guess was in the 1:05:37.440 --> 1:05:39.600 Biden Administration's Office for Technology and Science. 1:05:39.640 --> 1:05:39.960 Policy. 1:05:40.040 --> 1:05:42.240 People are anticipating that there's a change in the economy 1:05:42.240 --> 1:05:45.000 of the internet company. Right, we're finding the ad model 1:05:45.800 --> 1:05:48.040 can just go so far, right, and now we're increasingly 1:05:48.160 --> 1:05:50.640 we knew data was worth something, Right, We've all been 1:05:50.680 --> 1:05:54.040 trying to figure out who ultimately benefits from all that 1:05:54.160 --> 1:05:56.400 data collection, right, and now we're kind of getting to 1:05:56.480 --> 1:05:59.280 a whole new level of it because it's needed to 1:05:59.360 --> 1:06:03.040 make generate of AI so much smarter, right, And that's 1:06:03.080 --> 1:06:05.080 kind of what it gets into on a bigger, broader level. 1:06:05.520 --> 1:06:05.720 Yeah. 1:06:05.800 --> 1:06:08.000 Absolutely, I think a lot of people are very nervous 1:06:08.000 --> 1:06:11.320 about the changes coming in the Internet, and there's a 1:06:11.440 --> 1:06:15.720 question about who creates value online and who is going 1:06:15.840 --> 1:06:17.960 to be compensated for that value and how. 1:06:18.760 --> 1:06:21.920 Okay, so what does this mean for that IPO that 1:06:22.040 --> 1:06:22.920 never quite happened. 1:06:24.040 --> 1:06:26.480 Well, I think it's fair to say, although Reddit will 1:06:26.560 --> 1:06:30.000 not say that part of the initial reason to do 1:06:30.440 --> 1:06:33.600 the changes were to shore up its business as it 1:06:33.840 --> 1:06:38.520 looks ahead to this IPO, and I think how it 1:06:38.640 --> 1:06:41.080 impacts it really depends on the outcome of this. There's 1:06:41.560 --> 1:06:44.840 real concern out there that if the moderators continue to 1:06:44.960 --> 1:06:47.440 be in revolt, that Reddit won't work as well, and 1:06:47.680 --> 1:06:50.080 might not be as good of a business going forward. 1:06:50.120 --> 1:06:52.520 It might kind of fail to function as a service. 1:06:52.920 --> 1:06:55.120 What it reminds me of a little bit is the 1:06:55.240 --> 1:06:57.720 Dungeons and Dragon cover story that we did not so 1:06:57.880 --> 1:07:03.800 long ago, because Bro also tweaked the licensing agreement before 1:07:04.560 --> 1:07:08.080 the big blockbuster came out right, and the nerds did 1:07:08.160 --> 1:07:11.800 not like that. They there was a revolt online. Then 1:07:11.880 --> 1:07:14.520 Hasbru ultimately had to back down, but there was so 1:07:14.720 --> 1:07:18.440 much money at stake, And here we are again. I 1:07:18.440 --> 1:07:20.919 won't call Reddit users nerds, but they are nerds. Okay, 1:07:20.960 --> 1:07:24.520 well you said it, but it basically creates this moment 1:07:24.720 --> 1:07:28.840 where you've got, you know, a platform that everyone has 1:07:28.880 --> 1:07:30.880 turned to. I mean, this is the hope of what 1:07:31.320 --> 1:07:33.800 it was, back to the future, bet that the future 1:07:33.800 --> 1:07:35.960 of the Internet actually maybe look more like Reddit, and 1:07:36.040 --> 1:07:38.520 all of a sudden, the underlying value proposition is the 1:07:38.600 --> 1:07:39.760 thing that is at risk. 1:07:40.840 --> 1:07:45.920 It is pretty crazy, Mike Drop, It's really kind of right. 1:07:46.040 --> 1:07:49.440 It's kind of heavy thinking of like how this moves forward. 1:07:49.640 --> 1:07:50.600 Well, here's the thing. 1:07:51.040 --> 1:07:54.840 AI is the the you know, the dawn of generative 1:07:55.280 --> 1:07:58.960 AI has made us all realize, oh, Reddit is worth something. 1:07:59.240 --> 1:08:02.960 I mean, there's real value there, highly entertaining, right. I mean, 1:08:03.040 --> 1:08:05.320 I've loved Reddit for over a decade. 1:08:05.960 --> 1:08:06.600 You still use it. 1:08:06.760 --> 1:08:09.440 I use it all the time, like literally every day 1:08:09.600 --> 1:08:13.480 on multiple devices. But I always thought it was our user. 1:08:13.800 --> 1:08:17.360 I always thought it was fairly worthless. Although I guess 1:08:17.439 --> 1:08:19.560 now that I think about it, it's need answers for me, 1:08:19.720 --> 1:08:22.160 so many questions, your time, your your eyeballs. 1:08:22.240 --> 1:08:23.800 Think about how much that's worth, right? 1:08:24.120 --> 1:08:28.800 Yea? What is Reddit thinking? Joshua inside? Internally as they 1:08:28.840 --> 1:08:30.360 work this way this through. 1:08:30.720 --> 1:08:33.120 Well, Reddit has said there have been some memos that 1:08:33.200 --> 1:08:36.519 have come out from inside the company where the executives say, 1:08:36.560 --> 1:08:39.080 you know, this is these flaps happen every once in 1:08:39.080 --> 1:08:41.960 a while. Reddit is a very restive community, and the 1:08:42.040 --> 1:08:44.639 idea is like, let's keep let's keep our heads down, 1:08:45.360 --> 1:08:47.960 you know, we'll take our lumps and a month from 1:08:48.040 --> 1:08:50.320 now everything will be back to normal and we can, 1:08:50.880 --> 1:08:53.080 you know, move forward with this plan. The economics will 1:08:53.080 --> 1:08:56.320 be better and problem solved or at least, you know, 1:08:56.960 --> 1:08:57.879 problem lessened. 1:08:58.560 --> 1:09:01.719 Wait, who are the overlords that run Reddit? 1:09:02.280 --> 1:09:04.640 Like Alexis Ohanian is gone right now, He's like a 1:09:04.680 --> 1:09:05.760 women's soccer guy, So. 1:09:06.200 --> 1:09:10.719 Who who are the bosses? Who's the corporate face of Reddit? 1:09:11.120 --> 1:09:14.439 So the CEO of Reddit is is Steve Huffman, the 1:09:14.520 --> 1:09:17.840 other co founder. And Reddit, as you might remember, was 1:09:17.920 --> 1:09:21.200 bought by Conde Nass soon after it was founded, and 1:09:21.360 --> 1:09:24.160 it is now an independent subsidiary or it is it 1:09:24.320 --> 1:09:27.959 is its majority owner remains Advanced Publications, which is Conde's 1:09:28.000 --> 1:09:28.599 parent company. 1:09:29.280 --> 1:09:33.240 Cool, So, how do we think they might attempt to 1:09:33.720 --> 1:09:36.000 navigate this, Josh, Like, what are their options really? 1:09:36.560 --> 1:09:39.200 And they You're right, they have gone through this before. 1:09:39.280 --> 1:09:42.840 I'm thinking of remember the anti work kerfuffle where like 1:09:42.920 --> 1:09:48.320 the community sort of ousted the moderator that it had, right, Like, 1:09:48.640 --> 1:09:51.479 there's been tensions like this that have simmered before. But 1:09:52.200 --> 1:09:53.800 how do you think they go about navigating this? 1:09:54.040 --> 1:09:56.559 Yeah, this thing, this kind of thing happens from time 1:09:56.600 --> 1:09:58.680 to time. And I think that's what Reddit is betting on. 1:09:59.000 --> 1:10:01.960 And it says it's going to build a lot of 1:10:02.600 --> 1:10:05.400 moderator tools or has already released some that will replace 1:10:05.520 --> 1:10:08.280 some of these, uh, some of these third party tools 1:10:08.320 --> 1:10:10.120 that might not be able to function if they have 1:10:10.200 --> 1:10:12.800 to pay for the APIs. And I think that they'll 1:10:12.880 --> 1:10:15.880 hope that moderators will find out that, oh, these things work. Okay, 1:10:16.760 --> 1:10:19.880 maybe this isn't such a big deal after all. You know, 1:10:20.040 --> 1:10:22.559 I love Reddit, and it turns out I can continue 1:10:22.600 --> 1:10:25.320 to do my job, and you know, and they got 1:10:25.439 --> 1:10:27.640 mad and then they get better and things calm down 1:10:27.640 --> 1:10:29.559 for a little while until the next time they get mad. 1:10:29.720 --> 1:10:33.200 And what about for for the AI companies that are 1:10:33.400 --> 1:10:35.240 out their attempting to swallow the Internet? 1:10:35.400 --> 1:10:37.400 Like, will they pay up? 1:10:37.600 --> 1:10:40.799 What do you think that dialogue looks like it certainly 1:10:40.960 --> 1:10:44.800 seems like the AI companies are preparing to pay in 1:10:44.960 --> 1:10:49.559 some way. You know, Reddit is not the number one 1:10:49.760 --> 1:10:53.400 source of material, but there may be some licensing deals 1:10:53.439 --> 1:10:55.759 worked out. And I don't think I think the economics cere. 1:10:56.760 --> 1:10:57.439 That provides it. 1:10:57.520 --> 1:11:00.360 That's not You've just provided me with another ques actually me, 1:11:00.439 --> 1:11:02.200 what is the number one source of material? 1:11:02.360 --> 1:11:04.800 If not read it? So basically wonder like where do 1:11:04.840 --> 1:11:05.639 these lives come from? 1:11:07.160 --> 1:11:08.280 Where should I be going? 1:11:08.760 --> 1:11:12.200 Is Wikipedia a better source? I mean, what are these 1:11:12.479 --> 1:11:14.280 AI models doubling up? 1:11:14.439 --> 1:11:15.960 All of it? All of it? 1:11:16.120 --> 1:11:16.759 No hierarchy. 1:11:17.479 --> 1:11:19.880 Yeah, it's it's an immense it's a large range. I 1:11:19.920 --> 1:11:21.200 actually don't know off the top of my head what 1:11:21.280 --> 1:11:24.760 the number one is number one sources, but there's you know, 1:11:24.880 --> 1:11:27.840 there's like thousands of websites that it's scraping and you know, 1:11:27.960 --> 1:11:29.439 putting together sure millions. 1:11:29.439 --> 1:11:31.559 Even what does this mean for Elon and Twitter? Potentially 1:11:32.960 --> 1:11:34.479 he's trying to figure it out too well. 1:11:34.840 --> 1:11:38.200 One thing that this shows is that, you know, Reddit 1:11:38.280 --> 1:11:41.320 users have some power over the site, whereas Twitter users don't. 1:11:41.360 --> 1:11:41.599 Really. 1:11:41.800 --> 1:11:43.760 I mean, people are mad at Elon, and Elon's like, well, 1:11:43.880 --> 1:11:46.479 go go ahead, you can leave if you want, but 1:11:46.680 --> 1:11:48.040 they can't shut Twitter down. 1:11:48.240 --> 1:11:50.960 And they don't leave. By the way, if you look 1:11:50.960 --> 1:11:53.320 at the data actually use to increase. 1:11:53.360 --> 1:11:54.960 Everybody lost their checks and we're like, okay. 1:11:55.120 --> 1:11:58.479 Everybody said, like when when Trump got elected, people are like, 1:11:58.520 --> 1:12:00.559 I'm gonna move out of this country if Trump gets elected. 1:12:01.040 --> 1:12:03.960 Fast forward, nobody moved out. Same thing about with Twitter. 1:12:04.000 --> 1:12:05.960 You know, they said I'm gonna quit Twitter if Elon 1:12:06.080 --> 1:12:07.599 must take They're all still there. 1:12:08.520 --> 1:12:12.120 I'm genuinely curious here when you go to Reddit, like 1:12:12.160 --> 1:12:14.240 what are the sub threads that you traffic in? 1:12:15.000 --> 1:12:17.600 I feel like that's such a private question, which is 1:12:17.640 --> 1:12:20.360 why I won't even tell you my handle. Like the 1:12:20.479 --> 1:12:22.759 last thing in the world I want is for anybody 1:12:22.800 --> 1:12:24.160 to see my Reddit money. 1:12:24.240 --> 1:12:24.400 Back. 1:12:24.680 --> 1:12:27.040 I've worked with Matt for so long and he said 1:12:27.080 --> 1:12:29.599 something earlier, and I'm like, you still surprised me twenty 1:12:29.680 --> 1:12:30.679 plus years in coming. 1:12:30.840 --> 1:12:31.759 He's full of surprises. 1:12:31.920 --> 1:12:34.519 You don't maintain multiple Twitter or Reddit hand I do have. 1:12:35.040 --> 1:12:35.479 I do have. 1:12:37.000 --> 1:12:41.560 Tell us your family friendly, you know, I mean, so 1:12:42.800 --> 1:12:45.880 I look and I look at like a leather jackets thing. 1:12:45.920 --> 1:12:50.040 Although for that I use even more embarrassing forums than Reddit, like, uh. 1:12:50.120 --> 1:12:52.680 We learned yesterday Matt is I mean, I'm kind of 1:12:52.720 --> 1:12:54.160 obsessed with leather jackets. 1:12:54.439 --> 1:12:56.880 I'm also kind of obsessed with leather boots and shoes, 1:12:56.920 --> 1:12:59.200 and Reddit has a very good forum for for boots. 1:13:00.439 --> 1:13:02.920 We actually didn't ask you about this yesterday in video 1:13:03.040 --> 1:13:08.120 CEO Jensen very very much. It owns the leather jacket. 1:13:08.400 --> 1:13:11.080 Where do you rank his leather jacket like critique, I 1:13:11.160 --> 1:13:14.040 don't get more than one though, exactly so, I don't. 1:13:14.360 --> 1:13:15.719 They didn't look so amazing. 1:13:15.880 --> 1:13:18.040 I don't think he's getting them from like the best 1:13:18.400 --> 1:13:20.559 shinky horse hide tanneries in Japan. 1:13:20.760 --> 1:13:22.680 You should reach out. I think that was he on 1:13:22.800 --> 1:13:26.040 the Reddit formula. The thing is for jackets, you've got 1:13:26.120 --> 1:13:28.400 to go to the door. Lounge is even worse. 1:13:28.840 --> 1:13:32.400 Please, I think I think there needs to be uh, 1:13:33.000 --> 1:13:35.400 you know, fashion consulting with Matt. 1:13:35.800 --> 1:13:37.320 I'll reach out to and video. 1:13:37.400 --> 1:13:39.599 How come somebody put chaps in our ib chat? Did 1:13:39.640 --> 1:13:40.320 you say chaps? 1:13:40.680 --> 1:13:41.040 Chaps? 1:13:41.760 --> 1:13:42.120 Chaps? 1:13:42.439 --> 1:13:42.760 I don't know. 1:13:43.520 --> 1:13:45.559 Leather pants is what he's asking about. 1:13:45.920 --> 1:13:47.600 I have a few pairs of, you know. 1:13:48.320 --> 1:13:49.960 But that's for riding your motorcycle. 1:13:50.160 --> 1:13:50.800 And we're good. 1:13:50.880 --> 1:13:51.360 Are you staring? 1:13:52.000 --> 1:13:52.320 All right? 1:13:52.439 --> 1:13:52.840 Maybe not? 1:13:53.000 --> 1:13:54.559 Okay? Talk about a revolution? 1:13:54.800 --> 1:13:55.519 We just had one. 1:13:55.960 --> 1:13:56.240 All right. 1:13:56.320 --> 1:13:58.679 That's a wrap, guys, Thank you so much. Josha brustin 1:13:58.880 --> 1:14:02.880 Tech Editor BusinessWeek. Here in studio Laitil Weber, the editor 1:14:02.920 --> 1:14:05.559 of Bloomberg BusinessWeek, is story and the new issue at 1:14:05.600 --> 1:14:08.800 BusinessWeek Magazine on newstands tomorrow, online at Bloomberg dot com, 1:14:08.840 --> 1:14:11.599 slash business Weekend, on the Bloomberg and on leather Chaps. 1:14:12.200 --> 1:14:13.799 We're taking a break. This is Bloomberg. 1:14:16.280 --> 1:14:19.800 You're listening to the Bloomberg Business Week Podcast. Catch us 1:14:19.880 --> 1:14:23.519 live weekdays from two to five pm Eastern on Bloomberg Radio, 1:14:23.760 --> 1:14:24.880 the Bloomberg. 1:14:24.439 --> 1:14:25.680 Business App, and you too. 1:14:26.040 --> 1:14:29.080 You can also listen live to our flagship New York station, 1:14:29.640 --> 1:14:32.519 Just Say Alexa, Play Bloomberg e Love and thirty. 1:14:34.320 --> 1:14:36.360 Well, there was a story on the Bloomberg Today was 1:14:36.400 --> 1:14:39.960 an analyst at with a note saying nothing is AI proof, 1:14:40.000 --> 1:14:42.719 but live sports may come close. And basically they're saying 1:14:43.400 --> 1:14:47.800 maybe sports as an asset and sports rights are something 1:14:47.880 --> 1:14:49.280 that maybe's protecting from Aha. 1:14:49.520 --> 1:14:51.360 Well, absolutely, I mean continuing to appreciate. 1:14:51.560 --> 1:14:53.679 One of the most read stories was about a Sydney, 1:14:54.360 --> 1:14:57.120 Australia based fund manager who said, I'm not going to 1:14:57.160 --> 1:15:00.680 buy you know, Nvidia and the ship makers of the 1:15:00.760 --> 1:15:02.960 data center operators, but I'm going to buy stuff that 1:15:03.280 --> 1:15:06.800 can't be broken by AI right. And he said it's 1:15:06.840 --> 1:15:09.200 a very small field. There's there's few things, you know, 1:15:09.240 --> 1:15:10.559 but there are things out there. 1:15:10.479 --> 1:15:10.840 All right. 1:15:11.000 --> 1:15:13.240 So we are so obsessed with AI right and how 1:15:13.280 --> 1:15:15.680 it's going to impact our world. So joining us to 1:15:15.720 --> 1:15:18.160 talk a little bit about it. From Menlo Park on 1:15:18.360 --> 1:15:23.040 Zoom is Bob Muglia. He's former CEO of Snowflake, the 1:15:23.040 --> 1:15:26.280 global infrastructure software company. He was there from twenty fourteen 1:15:26.320 --> 1:15:29.120 to twenty nineteen. Before that at Juniper Networks and then 1:15:29.120 --> 1:15:32.560 a Microsoft divisional president back in nine. He is a 1:15:32.640 --> 1:15:35.960 board director for a lot of companies. Board memberships on Microsoft, 1:15:36.320 --> 1:15:39.400 Snowflake relation AI and a few more. He's got a 1:15:39.479 --> 1:15:43.639 new book out. It's called The Data Datapreneurs, The Promise 1:15:43.680 --> 1:15:47.000 of AI and the Creators building our Future. And I apologize, Bob, 1:15:47.040 --> 1:15:48.920 I've had a hard time getting out. It's basically a 1:15:48.960 --> 1:15:53.200 play on data entrepreneurs. And I love the title. Welcome, Welcome, 1:15:53.280 --> 1:15:54.760 How are you good? 1:15:54.800 --> 1:15:55.120 I'm good. 1:15:55.200 --> 1:15:57.479 It's glad to be here down the Bayer this week, 1:15:57.560 --> 1:15:59.640 so it's fun. I'm warmly up in Seattle, but I'm 1:15:59.640 --> 1:16:00.519 down the this week. 1:16:00.560 --> 1:16:02.200 So I think, are they talking a lot about AI 1:16:02.280 --> 1:16:02.880 in the Bay Area? 1:16:03.439 --> 1:16:04.880 That's all they talk about down here? 1:16:06.439 --> 1:16:06.559 Well? 1:16:06.720 --> 1:16:09.400 Rightfully, So from your vantage point, should we all be 1:16:09.560 --> 1:16:12.040 talking about AI? And how should we be talking about it? 1:16:12.120 --> 1:16:14.479 And of course I'm talking about machine learning, generative AI, 1:16:14.680 --> 1:16:16.080 kind of the next level, if you will. 1:16:16.880 --> 1:16:19.280 Well, I think it really has hit the vernacular of 1:16:19.800 --> 1:16:22.960 common people and it's become part of everyday lives with 1:16:23.280 --> 1:16:26.160 tools like jack GPT, and it's really just the beginning. 1:16:26.280 --> 1:16:28.560 I mean, this is going to affect us in a 1:16:28.720 --> 1:16:30.880 very deep way. I think we're going to see all 1:16:30.960 --> 1:16:33.599 sorts of wondrous things coming in the next couple of years. 1:16:34.120 --> 1:16:36.760 These assistants or copilots that are going to help us 1:16:36.760 --> 1:16:39.439 in a whole bunch of ways. Just about every application 1:16:39.600 --> 1:16:42.160 is going to be updated, big, big time, lots of 1:16:42.200 --> 1:16:44.800 change in technology. It's the biggest thing I've ever seen 1:16:44.840 --> 1:16:46.080 in my career, actually. 1:16:46.560 --> 1:16:50.040 So, I mean, it's absolutely huge, and the co pilots 1:16:50.080 --> 1:16:53.160 are one of the things I'm most excited about for Microsoft. 1:16:54.400 --> 1:16:56.880 Do you think there's a killer app that we haven't 1:16:56.920 --> 1:17:00.200 seen yet or are there just so many uses is 1:17:00.240 --> 1:17:01.800 that it will be hard to pin one down. 1:17:02.280 --> 1:17:04.600 Well, honestly, one of the killer apps is going to 1:17:04.680 --> 1:17:07.200 be searched, for sure, and you know we have an 1:17:07.240 --> 1:17:10.799 opportunity to see search truly reinvented with these answer bots 1:17:10.840 --> 1:17:13.080 that are being created. Bing was one of the first ones. 1:17:13.120 --> 1:17:15.400 There's a number of others out. I have an investment 1:17:15.400 --> 1:17:18.080 in a small company called Perplexity that's that's in that space. 1:17:18.479 --> 1:17:19.920 But it's really the first time you've been able to 1:17:19.960 --> 1:17:22.000 take on Google. I'll say, I'll say that for sure. 1:17:22.600 --> 1:17:25.280 I think the office is going to be tremendously updated. Really, 1:17:25.400 --> 1:17:27.679 just about every application is going to up be updated. 1:17:27.720 --> 1:17:30.200 I saw Salesforce made some major announcements a week or 1:17:30.240 --> 1:17:34.240 two ago. You're going to see just about every application updated. 1:17:34.280 --> 1:17:37.719 And you know a company I ran for five years, Snowflake, 1:17:37.840 --> 1:17:40.760 is going to be making major announcements next week. Lots 1:17:40.760 --> 1:17:43.240 of stuff happening. So yes, lots of apps. I don't 1:17:43.240 --> 1:17:45.400 know if it's any one app. I think it's many 1:17:45.439 --> 1:17:47.639 apps that'll be that'll be, it'll be killer apps. 1:17:48.280 --> 1:17:53.800 Bob Bloomberg Business recovering in a story about Reddit and 1:17:53.920 --> 1:17:57.519 basically it gets to a bigger question about who owns 1:17:57.640 --> 1:18:01.800 the data that is going to help make generative AI smarter? Right, 1:18:01.920 --> 1:18:05.080 that's crucial. What's your view on that. 1:18:06.120 --> 1:18:07.840 Well, there's an awful lot of data out there, and 1:18:07.960 --> 1:18:10.880 one of the things that people are learning about with 1:18:11.080 --> 1:18:14.000 these generative AIS and these machine learning programs is the 1:18:14.120 --> 1:18:17.280 quality of the data really matters. So I think you're 1:18:17.280 --> 1:18:20.360 going to see corporate data becoming very important, proprietary data 1:18:20.439 --> 1:18:23.360 becoming important assets that people are using. You know, public 1:18:23.439 --> 1:18:26.320 forms like Reddit and lots of public forms that are 1:18:26.360 --> 1:18:28.880 out there. Those are all that's data that people are using. 1:18:29.560 --> 1:18:31.840 They may try and monetize it in some ways. I 1:18:31.920 --> 1:18:34.160 think see you'll see people starting to do that if 1:18:34.200 --> 1:18:38.080 people have sources of public data. But in general, people 1:18:38.080 --> 1:18:40.040 are going to be using their data as a way 1:18:40.080 --> 1:18:43.559 of generating proprietary information. And what we haven't seen yet 1:18:43.680 --> 1:18:45.680 is this really break into the enterprise and that's a 1:18:45.720 --> 1:18:47.880 tremendous opportunity over the next couple of years. 1:18:48.040 --> 1:18:52.200 Does this generative AI make different social media platforms more 1:18:52.240 --> 1:18:54.360 important than before? In other words, we were talking about 1:18:54.400 --> 1:18:56.360 kind of who's the top right place, right Matt in 1:18:56.439 --> 1:18:59.080 terms of social media is does it kind of upend 1:19:00.280 --> 1:19:01.080 the hierarchy? 1:19:01.200 --> 1:19:04.479 If you will, it probably will over time. I mean, 1:19:04.560 --> 1:19:06.599 it's hard to say. It's hard to say. As I said, 1:19:06.800 --> 1:19:08.519 you know, I can see for the first time, you know, 1:19:08.680 --> 1:19:12.160 applications like search, which have the opportunity to be disrupted. 1:19:12.600 --> 1:19:14.840 I think social media will be different because you're gonna 1:19:14.880 --> 1:19:17.680 want to have AI summarize things for you. One of 1:19:17.720 --> 1:19:20.120 the challenges with social media there's so much garbage on it. 1:19:20.160 --> 1:19:22.280 It'd be nice to have a bot be able to 1:19:22.360 --> 1:19:24.760 say what's interesting in that that happened today. And so 1:19:25.120 --> 1:19:27.320 perhaps with the media company that does the best job 1:19:27.400 --> 1:19:29.160 of that may wind up in the best position. But 1:19:29.240 --> 1:19:30.519 we'll have to see to find out. 1:19:30.640 --> 1:19:33.280 I mean, Carol, how many emails do you get every day? 1:19:33.360 --> 1:19:36.639 Too many? I don't even read them all literally, and if. 1:19:36.560 --> 1:19:39.599 I could have I'm constantly typing eight nine go, eight 1:19:39.760 --> 1:19:41.839 nine go, which is spam and delete on the Bloomberg. 1:19:41.880 --> 1:19:43.640 I don't even I don't even delete anymore because it 1:19:43.680 --> 1:19:44.559 would take so much time. 1:19:44.840 --> 1:19:47.519 It would be great if AI. That's one area in 1:19:47.520 --> 1:19:51.439 which I can't wait for AI. One thing I'd bristlet 1:19:51.479 --> 1:19:54.160 a little bit, Bob is when when Carol says make 1:19:54.240 --> 1:19:57.400 it smarter, I mean, it's not really getting smarter, right, 1:19:57.760 --> 1:19:59.479 That's a term that you use for a human and 1:19:59.560 --> 1:19:59.920 I think. 1:19:59.840 --> 1:20:02.639 We but it is becoming right, it's the use of data. 1:20:02.800 --> 1:20:03.400 It's different. 1:20:03.479 --> 1:20:06.040 It's the right word. It's the right word. Well, what 1:20:06.240 --> 1:20:07.600 do you do? 1:20:07.680 --> 1:20:13.599 You share the concerns voiced by people like Musk and uh, 1:20:13.840 --> 1:20:18.759 you know open AI, Sam Altman about you know, somehow 1:20:18.960 --> 1:20:26.720 this program becoming smart enough to subjugate humanity like that 1:20:26.880 --> 1:20:30.519 seems to me to be a ridiculous and be kind 1:20:30.560 --> 1:20:33.439 of takes responsibility away from the companies that are running 1:20:33.439 --> 1:20:34.120 these programs. 1:20:35.000 --> 1:20:37.679 Well, you know, we've as we've all grown up, we've 1:20:37.880 --> 1:20:42.719 been seen many dystopian science fiction things, Terminator being perhaps 1:20:42.800 --> 1:20:45.200 one of the most the most accomplished of all of those. 1:20:45.240 --> 1:20:45.519 I don't. 1:20:45.640 --> 1:20:47.200 I don't know how you can. You can be much 1:20:47.240 --> 1:20:50.400 worse than Terminator was to humanity. So there's a lot 1:20:50.439 --> 1:20:52.880 of there's a lot of of of of literature and 1:20:53.160 --> 1:20:55.360 science fiction that goes into this. You know, in the 1:20:55.439 --> 1:20:58.080 short run, the real concerns are what people will do 1:20:58.240 --> 1:21:01.920 with AI, and people to do everything with AI, good, bad, 1:21:02.000 --> 1:21:05.519 and evil, and as they do with social media, right, 1:21:06.240 --> 1:21:08.840 like they do with social media exactly, And and AI 1:21:08.960 --> 1:21:11.599 can do some things faster than humans can, so there 1:21:11.680 --> 1:21:13.920 may be some new challenges, but it also can help 1:21:14.000 --> 1:21:17.040 to fight against those challenges too, And so you know, 1:21:17.080 --> 1:21:20.559 we'll see AI defending us against bad AI, good AI 1:21:20.640 --> 1:21:21.840 defending us against bad EI. 1:21:22.040 --> 1:21:25.360 In the short term, you know, the long term concerns. 1:21:24.960 --> 1:21:29.680 About about existential issues about humanity are really about will 1:21:29.880 --> 1:21:32.519 will this intelligence get smarter than all of us and 1:21:32.640 --> 1:21:36.400 then you know, go become rogue and go against us. Now, honestly, 1:21:36.439 --> 1:21:38.160 I do think it's going to get smarter than all 1:21:38.240 --> 1:21:41.439 of us. It's on a path to basically be able 1:21:41.520 --> 1:21:45.479 to take the ideas and the intelligence of everybody in 1:21:45.600 --> 1:21:48.360 humanity and to put a lot of that together into 1:21:48.439 --> 1:21:52.560 a system that can be immediately trained and replicated and 1:21:52.680 --> 1:21:55.160 grow and things. So there is a lot of opportunity 1:21:55.200 --> 1:21:58.200 for this stuff to get smarter. But ultimately we will 1:21:58.240 --> 1:22:02.040 be creating whatever it is. And I've always been a 1:22:02.120 --> 1:22:04.960 believer that values will reign supreme in the end, and 1:22:05.240 --> 1:22:08.479 that while humanity does many things wrong, ultimately we come up. 1:22:08.800 --> 1:22:11.040 We never really screw it up that badly, and ultimately 1:22:11.160 --> 1:22:13.680 we'll make the right things happen. I think AI is 1:22:13.720 --> 1:22:15.600 going to do great things for all of us in 1:22:15.680 --> 1:22:17.439 the short and medium term and in the long term. 1:22:17.520 --> 1:22:19.680 Who knows what will happen, But I still have a 1:22:19.800 --> 1:22:22.400 very positive outlook. I'm definitely a techno optimist. 1:22:22.920 --> 1:22:25.600 I love your optimism, Bob. We need more of that. 1:22:26.000 --> 1:22:26.519 Let's get more. 1:22:26.560 --> 1:22:28.760 Bobs also think it's it's important. 1:22:29.160 --> 1:22:30.599 Yeah, it's all about people. 1:22:30.640 --> 1:22:34.679 I mean, ultimately, the thing to realize is these tools 1:22:34.720 --> 1:22:38.400 are being created by people, and we will do to 1:22:38.520 --> 1:22:40.400 it what we do with everything. And like I say, 1:22:40.479 --> 1:22:42.720 lots of great things and maybe some bad things too, 1:22:43.240 --> 1:22:45.320 but we'll figure out how to control it and make 1:22:45.360 --> 1:22:45.720 it work. 1:22:45.800 --> 1:22:49.000 I think about healthcare like the ability, because healthcare is 1:22:49.360 --> 1:22:52.280 far from even as we know. It's an old story, unfortunately, 1:22:52.560 --> 1:22:54.559 But I think about the possibility if you've got something 1:22:54.640 --> 1:22:57.000 and there's no way the medical community can keep up 1:22:57.040 --> 1:22:58.840 with all the research that's out there, and so the 1:22:58.880 --> 1:23:02.800 ability to somehow use AI to figure out, Wait, what's 1:23:02.840 --> 1:23:06.200 your you know, ailment and your the nuances to it. 1:23:06.320 --> 1:23:07.560 And then here's the reason, I don't know. 1:23:07.640 --> 1:23:09.519 I just think it's so dangerous at first. Do you 1:23:09.560 --> 1:23:12.000 ever get a little bit sicknical on WebMD? Then like 1:23:12.040 --> 1:23:13.160 all of a sudden, you're dying. 1:23:13.280 --> 1:23:15.720 But that's not as smart as it could be, right 1:23:15.760 --> 1:23:17.680 bub Yeah, and web md is. 1:23:17.720 --> 1:23:19.280 Unfortunately you go, you go on the web and you 1:23:19.320 --> 1:23:20.920 don't know, you know, you really know what you're looking for, 1:23:21.040 --> 1:23:22.599 and you see all sorts of nasty things. 1:23:23.360 --> 1:23:25.559 Dying I'm always dying, to be quite honest. 1:23:26.160 --> 1:23:27.519 Talk about these co pilots. 1:23:27.560 --> 1:23:31.800 Think about it. Think about a physician's assistant copilot right 1:23:31.960 --> 1:23:34.760 that has access to all the latest medical research and 1:23:34.840 --> 1:23:37.680 can look at a scan, for example, and compare it 1:23:37.760 --> 1:23:40.200 to millions of other scans that have been done, and really, 1:23:40.320 --> 1:23:42.760 do you know, find things that people wouldn't be able 1:23:42.840 --> 1:23:45.400 to find. These co pilots are going to be incredibly 1:23:45.439 --> 1:23:47.559 helpful in medicine. It's one of the areashe we'll see 1:23:47.600 --> 1:23:49.639 some of the biggest advancements in the next five years. 1:23:49.720 --> 1:23:51.320 And I'm going to have a co pilot here in 1:23:51.360 --> 1:23:51.879 the studio. 1:23:52.000 --> 1:23:52.120 Man. 1:23:53.040 --> 1:23:54.080 As much as I love you. 1:23:54.439 --> 1:23:56.640 I'm going to have a co pilot, and I'm just 1:23:56.760 --> 1:23:58.640 going to tell you you deserve one. He will be, 1:23:58.720 --> 1:24:02.040 as you know, entertaining probably or whatever. Still with us 1:24:02.200 --> 1:24:06.479 is Bob Mugley. He's former CEO of Snowflake, also at 1:24:06.960 --> 1:24:10.040 Juniper Networks Microsoft. He's got a new book out. It's 1:24:10.080 --> 1:24:13.200 called The Datapreneurs, The Promise of AI and the Creators 1:24:13.240 --> 1:24:16.480 Building Our Future. Still with us on Zoom from Menlo Park, California, 1:24:16.520 --> 1:24:18.320 and I promise, I bet if we have AI to 1:24:18.479 --> 1:24:21.680 revenge they can say this titles, so forgive me. I 1:24:21.760 --> 1:24:26.720 do think it's interesting though, about the data entrepreneurs that 1:24:26.840 --> 1:24:29.760 are out there kind of figuring this out, Bob right now. 1:24:29.800 --> 1:24:33.679 And I feel like your vantage point and having worked 1:24:33.720 --> 1:24:37.840 with some visionaries very early on, likea Bill Gates or 1:24:37.920 --> 1:24:40.800 even a Sam Altman who is now increasingly because of 1:24:40.880 --> 1:24:44.559 Open AI become a household name, tell us take us 1:24:44.640 --> 1:24:47.200 back there, though, to maybe give us some insight of 1:24:47.280 --> 1:24:50.000 what that era was like. As we feel like we 1:24:50.080 --> 1:24:53.040 are embarking on a whole new kind of data era. 1:24:54.160 --> 1:24:54.360 Yeah. 1:24:54.720 --> 1:24:58.160 Well, the book The Datapreneurs is really about the entrepreneurs 1:24:58.200 --> 1:25:01.559 I've known that have made a data industry and today 1:25:01.680 --> 1:25:04.880 AI what it is. And the basic theory is that 1:25:04.960 --> 1:25:08.519 there's an arc of innovation that has occurred really since 1:25:08.560 --> 1:25:13.400 the advent of digital computing, with continued new improvements, new 1:25:13.479 --> 1:25:16.120 technologies that have happened over time that have been advanced 1:25:16.160 --> 1:25:19.680 by these incredible people, and that has brought us to 1:25:19.720 --> 1:25:22.000 where we are today. And it has been this series 1:25:22.040 --> 1:25:25.960 of progressions. Back in the late eighties early nineteen nineties 1:25:26.000 --> 1:25:28.840 I worked very closely with Steve, Steve Baumer and Bill 1:25:28.920 --> 1:25:33.360 Gates in the work on Windows, and back then there 1:25:33.479 --> 1:25:36.760 was a focus on something called information at your Fingertips. 1:25:36.840 --> 1:25:39.040 This was a vision Bill had come up with about 1:25:39.080 --> 1:25:41.640 how we would be able to find any information we 1:25:41.760 --> 1:25:44.280 wanted by just going to our PC and asking and 1:25:44.360 --> 1:25:47.080 running a query and asking a question if it really is. 1:25:47.160 --> 1:25:50.519 Back then, most people didn't even have email. Email was 1:25:50.720 --> 1:25:54.000 relatively new back then, the Internet had yet to be invented, 1:25:55.280 --> 1:25:57.960 and so this was a pretty novel concept. And while 1:25:58.040 --> 1:26:01.599 it didn't pan out the way Bill had anticipated, it being, 1:26:01.680 --> 1:26:05.200 which was really a desktop centric, Windows centric view of 1:26:05.240 --> 1:26:09.679 the world. The Internet really changed that and really brought 1:26:09.800 --> 1:26:12.559 us information at your fingertips in every way we could 1:26:12.560 --> 1:26:15.679 have ever imagined. And now we have this incredible amount 1:26:15.720 --> 1:26:18.560 of information available to us, and in some senses, the 1:26:18.760 --> 1:26:21.280 largest problem we have is it's too much for us 1:26:21.360 --> 1:26:24.160 to digest and to really make sense of. And and 1:26:24.240 --> 1:26:26.080 that's where AI can really help us, because you can 1:26:26.120 --> 1:26:29.040 go through a lot of that data and turn it 1:26:29.120 --> 1:26:31.840 into information that is useful for us and and and 1:26:32.520 --> 1:26:35.360 much much easier for us to consume. So it's been 1:26:35.640 --> 1:26:39.160 it's been an ongoing trajectory. The world was very different back. 1:26:39.040 --> 1:26:40.280 Then, you know. 1:26:40.360 --> 1:26:42.720 I've often made the comment that I saw you know, 1:26:42.800 --> 1:26:46.320 I saw Microsoft from from a bird's eye vantage point 1:26:46.360 --> 1:26:49.200 and got a chance to see it all. I've often 1:26:49.240 --> 1:26:52.080 said I saw the good, the bad, and the ugly 1:26:52.360 --> 1:26:56.080 at Microsoft. I was one of the twelve witnesses who 1:26:57.520 --> 1:27:00.280 was in front of Judge Jackson and the DJ case 1:27:00.320 --> 1:27:03.040 than David Boyce, and that certainly would qualify as the 1:27:03.160 --> 1:27:06.879 ugly in my opinion. But and then I did penance 1:27:06.960 --> 1:27:09.120 on that for a couple of years afterwards, when I 1:27:09.280 --> 1:27:12.599 kept going back to Washington, d C to clean up 1:27:12.640 --> 1:27:15.360 some of the last issues we had with protocol documentation 1:27:16.040 --> 1:27:16.679 on the DOJ. 1:27:16.920 --> 1:27:18.840 So I lived through all of that back then. 1:27:19.439 --> 1:27:21.639 What is there going to be a penance, if you will, 1:27:22.400 --> 1:27:24.479 or a similar tough time when it comes to AI. 1:27:24.760 --> 1:27:27.080 Is there going to have to be a very significant 1:27:27.160 --> 1:27:28.920 role by regulators in your view? 1:27:29.960 --> 1:27:31.519 Well, first of all, let me start by saying that, 1:27:32.000 --> 1:27:34.880 you know, the Microsoft case really created a lot of law, 1:27:35.120 --> 1:27:37.960 and I think all the industry as a whole has 1:27:38.040 --> 1:27:40.840 learned a tremendous amount from the mistakes we made way 1:27:40.880 --> 1:27:43.600 back when, so they can avoid a lot of the 1:27:43.760 --> 1:27:46.040 challenges that we went through. You know, in terms of 1:27:46.120 --> 1:27:49.200 regulations for AI, there certainly will be some I think 1:27:49.360 --> 1:27:52.679 understanding what needs to be regulated is something that's still 1:27:52.720 --> 1:27:56.960 being considered. I think that there are areas where people 1:27:57.240 --> 1:28:00.439 taking AI and doing things with it that you know, 1:28:00.560 --> 1:28:02.880 that are that are that that like deep fakes as 1:28:02.880 --> 1:28:06.120 an example, there may need to be some new laws 1:28:06.200 --> 1:28:09.360 associated with that, because, if I understand correctly, the laws 1:28:09.400 --> 1:28:12.840 that we have today don't necessarily fully cover the idea 1:28:12.880 --> 1:28:16.679 of somebody creating a complete image, a complete like image 1:28:16.720 --> 1:28:19.800 of a person and then having that image saying things 1:28:19.880 --> 1:28:22.439 that are just not true and clearly that that can't 1:28:22.479 --> 1:28:24.200 be allowed, and we need to make sure that things 1:28:24.280 --> 1:28:26.599 like that are not permitted. So the laws will get 1:28:26.640 --> 1:28:31.080 updated somewhat, but actually most of the existing laws can 1:28:31.160 --> 1:28:33.840 be applied because people are behind these things. 1:28:33.920 --> 1:28:35.840 And if you can, if you if you can. 1:28:35.840 --> 1:28:37.840 Take a look what happened with crypto right like it 1:28:37.920 --> 1:28:39.200 got me. It's gotten messy. 1:28:41.080 --> 1:28:43.479 Crypto is messy to begin with, though, isn't it. 1:28:43.600 --> 1:28:45.840 That's true, that's true, that's but do you feel like 1:28:45.880 --> 1:28:47.519 you know what I'm saying that it feels like there 1:28:47.720 --> 1:28:50.759 was quite a lag in terms of regulatory oversight. 1:28:52.120 --> 1:28:54.880 Well, there always is going to be a laged. There's 1:28:54.920 --> 1:28:57.280 always going to be alaged because technology will move faster 1:28:57.400 --> 1:28:59.920 than the government can ever move. And so we you know, 1:29:00.240 --> 1:29:03.360 we discover you know, the Sam Bankman freeds that happen. 1:29:03.520 --> 1:29:05.960 You know that that is something that perhaps could have 1:29:06.000 --> 1:29:09.760 been caught. But now I think people have a clean, 1:29:10.280 --> 1:29:12.320 a keen eye to look for things like that. 1:29:13.040 --> 1:29:15.920 So I am curious. You're the kind of person that 1:29:15.960 --> 1:29:18.160 if I was going from New York to the West Coast, 1:29:18.200 --> 1:29:20.360 I'd love to be sitting on a plane with because 1:29:20.360 --> 1:29:22.479 I would pick your brain and probably drive you crazy. 1:29:23.280 --> 1:29:26.280 But having said that, what is when people know your background? 1:29:26.479 --> 1:29:29.240 What is the question that they ask you most? When 1:29:29.280 --> 1:29:32.040 it comes to our new world and our obsession, it 1:29:32.080 --> 1:29:34.280 feels like it almost euphoria when it comes to AI. 1:29:34.439 --> 1:29:37.000 What's the smart conversation too that we should be having? 1:29:37.640 --> 1:29:40.559 Well, I think the interesting question is that I keep 1:29:40.640 --> 1:29:43.120 hearing is what are the new innovations that are going 1:29:43.200 --> 1:29:46.120 to come about? What are the areas where applications are 1:29:46.160 --> 1:29:48.840 going to be transformed, and how is the technology going 1:29:48.880 --> 1:29:51.280 to transform it. One of the things we've learned in 1:29:51.360 --> 1:29:54.240 the last few months, which frankly wasn't clear in December 1:29:54.280 --> 1:29:57.439 or January, is that this AI is going to be 1:29:57.520 --> 1:30:01.720 available to just about everyone at effect zero cost you. 1:30:01.800 --> 1:30:05.080 It'll be advertising based in some ways, and services will 1:30:05.080 --> 1:30:08.519 come out that are available to consumers as a whole. 1:30:09.040 --> 1:30:12.400 And I think that that you're going to have these 1:30:12.479 --> 1:30:17.280 services available to people really in all socioeconomic brackets. That's 1:30:17.360 --> 1:30:19.960 one area where it was not obvious a few months ago, 1:30:20.040 --> 1:30:22.400 and now it does seem to be clear. We've seen 1:30:22.400 --> 1:30:28.240 an incredible explosion of development of new open source technology, 1:30:28.720 --> 1:30:32.280 so it's not just coming from the big boys. Uh, 1:30:32.720 --> 1:30:34.840 there was an initial thought that you had to have 1:30:34.920 --> 1:30:38.080 spent tens or hundreds of millions of dollars to build 1:30:38.120 --> 1:30:41.680 these these these models. That is certainly still true. But 1:30:41.800 --> 1:30:45.200 what's happening is is that open source models are appearing 1:30:45.280 --> 1:30:48.880 that have a lot of that work already done that 1:30:49.000 --> 1:30:51.960 can then be customized. So the interesting question is where 1:30:51.960 --> 1:30:53.200 are these things are going to make a difference in 1:30:53.240 --> 1:30:55.320 the next few years. And I think you know you're 1:30:55.360 --> 1:30:58.519 going to see it in just about every application. And 1:30:58.640 --> 1:31:01.760 it's not just technologlogy coming from Google and open AI 1:31:01.880 --> 1:31:03.320 and Microsoft that'll make it happen. 1:31:03.479 --> 1:31:06.920 Love this, come back anytime and open invitation, no doubt 1:31:06.960 --> 1:31:09.040 about it. Really appreciate it and good luck with the book. 1:31:09.360 --> 1:31:12.599 Bob Muglia. He is the former CEO of Snowflake. As 1:31:12.720 --> 1:31:15.640 we said, the datapreneurs, the promise of AI and the 1:31:15.720 --> 1:31:18.320 creators building our future. It's a new book, it's out. 1:31:18.400 --> 1:31:20.680 Check it out, so relevant to what's going on right 1:31:20.720 --> 1:31:23.320 now on zoom from Menlo Park, California. Bob again, thank 1:31:23.360 --> 1:31:26.120 you so much. You're listening to Bloomberg Business Week watching 1:31:26.200 --> 1:31:28.800 us as well. I'm Carol Masser along with Matt Miller, 1:31:28.920 --> 1:31:30.320 and this is Bloomberg Radio. 1:31:34.960 --> 1:31:38.479 You're listening to the Bloomberg Business Week podcast. Catch us 1:31:38.560 --> 1:31:42.200 live weekdays from two to five pm Eastern on Bloomberg Radio, 1:31:42.439 --> 1:31:45.280 the Bloomberg Business app and you too. You can also 1:31:45.439 --> 1:31:49.320 listen live to our flagship New York station. Just say Alexa, 1:31:49.560 --> 1:31:51.240 play Bloomberg. You love them, Jerdy. 1:31:52.960 --> 1:31:53.639 Let's get to our. 1:31:53.520 --> 1:31:54.720 Guest, because we want to talk about some of the 1:31:54.800 --> 1:31:58.200 challenges fame seeing the music industry due to artificial intelligence. 1:31:58.240 --> 1:32:00.760 With us again right here on Blomberg Busines, speak Michael Happy. 1:32:00.800 --> 1:32:03.599 He's president CEO of Sound Exchange, and organization that essentially 1:32:03.640 --> 1:32:07.160 collects royalties for music creators. Right, I'm saying it right, Yeah, 1:32:07.240 --> 1:32:09.240 back in studio. I'm good to have you back with us. 1:32:09.439 --> 1:32:11.200 I'm pleasure to be here, always happy to come and 1:32:11.240 --> 1:32:13.040 chat with you about whatever issues are on your mind. 1:32:13.160 --> 1:32:16.280 Well, there's there's a lot of issues that my therapist 1:32:16.320 --> 1:32:20.200 has marked don't want to go exactly. Having said that, 1:32:20.400 --> 1:32:22.600 AI talked us about your members or the folks that 1:32:22.640 --> 1:32:25.160 you work with. Are they a little nervous about the 1:32:25.240 --> 1:32:25.840 rise of AI? 1:32:26.400 --> 1:32:30.040 So look, AI is a very interesting uh topic in 1:32:30.040 --> 1:32:32.080 the music industr, right now there's there's you know, there's 1:32:32.080 --> 1:32:34.440 certainly concerns about it, but there's a lot of opportunities 1:32:34.479 --> 1:32:34.840 as well. 1:32:35.479 --> 1:32:35.600 You know. 1:32:35.720 --> 1:32:38.360 On the one hand, you know, when you think about 1:32:38.400 --> 1:32:41.080 the issues that AI brings, I typically put them into 1:32:41.160 --> 1:32:45.240 three buckets, legal, cultural, and financial. On the legal front, 1:32:45.320 --> 1:32:46.680 there's obviously there you know, there are a lot of 1:32:46.720 --> 1:32:49.800 copyright issues about what is AI allowed to scrape? Can 1:32:49.880 --> 1:32:52.840 you go and scrape copyrighted contents? You know, for instance, 1:32:52.880 --> 1:32:55.720 all of those very excellent you know databases out there 1:32:55.800 --> 1:32:58.800 that you guys supply is AI allowed to scrape copyrighted things? 1:32:59.520 --> 1:33:02.360 When AI creates a product, is it copyrighted? These are 1:33:02.360 --> 1:33:05.200 all some questions that are that are being engaged. Although 1:33:05.240 --> 1:33:07.800 we think copyright law pretty much protects creators the way 1:33:07.840 --> 1:33:09.240 they need to. But you know what people don't talk 1:33:09.240 --> 1:33:11.599 about as much. And thank you for bringing up Drake 1:33:11.640 --> 1:33:14.360 in the weekend. It isn't just about copyright law. It 1:33:14.479 --> 1:33:18.799 is just it's equally about artists rights, creators rights. 1:33:19.040 --> 1:33:21.080 You know what we call name, image and likeness. That 1:33:21.600 --> 1:33:22.400 the thing that bothers. 1:33:22.520 --> 1:33:25.559 They took their sound, right, they took their sound. 1:33:25.640 --> 1:33:27.759 But you know what you're also doing when you imitate 1:33:28.160 --> 1:33:31.559 an artist with fully you know, creative age chalk. 1:33:31.479 --> 1:33:32.599 And a bar singing karaoke. 1:33:33.080 --> 1:33:35.080 Excuse me, you. 1:33:35.120 --> 1:33:38.479 Know you're basically marketing on the you know, the the 1:33:38.640 --> 1:33:41.360 brand and the image that Drake and the weekend and 1:33:41.439 --> 1:33:43.400 that's just not right in any in any scenario. 1:33:43.600 --> 1:33:46.400 Agreed, Agreed. Right, it's a brand, it's a branding. 1:33:46.400 --> 1:33:48.240 But it's it's not just about the legal party. 1:33:48.360 --> 1:33:50.439 You know what, what what would I think the music 1:33:50.640 --> 1:33:52.640 industry wants everybody to be aware of, is there's this 1:33:52.680 --> 1:33:56.000 cultural component as well. You know, there's something about human 1:33:56.120 --> 1:33:58.240 artistry that we're actually part of a coalition called the 1:33:58.320 --> 1:34:03.240 Human Artistry Campaign DOT and you know it talks about 1:34:03.439 --> 1:34:06.120 as an industry, not just music, but all the creative industry. 1:34:06.160 --> 1:34:06.719 It talks about. 1:34:07.000 --> 1:34:08.760 Look, AI is a really cool tool, and we should 1:34:08.800 --> 1:34:11.000 talk about the benefits that it brings to the music 1:34:11.040 --> 1:34:13.759 industry and elsewhere. But let's not forget the human element. 1:34:13.840 --> 1:34:16.080 Let's not forget the value that human artistry brings. 1:34:16.120 --> 1:34:18.800 I think that's irreplaceable also, Michael, I mean to be fair, 1:34:20.160 --> 1:34:23.960 AI could be really helpful in the studio. If you're 1:34:23.960 --> 1:34:26.960 a guitarist, like a singer songwriter and you want a 1:34:27.160 --> 1:34:29.960 certain drum beat. You can probably much more easily now 1:34:30.080 --> 1:34:33.200 get AI to create that for you with whatever time 1:34:33.320 --> 1:34:36.640 signature you want, and you know, whatever drum kit you 1:34:36.840 --> 1:34:39.000 wanted to sound like. But you're not going to be 1:34:39.040 --> 1:34:42.200 able to write the kind of hit that resonates with people, 1:34:43.040 --> 1:34:47.200 you know, for generations with a software program right now. 1:34:47.479 --> 1:34:51.639 So you are absolutely right on, and it reminds I disagree. 1:34:51.680 --> 1:34:53.160 I think you could. You're going to be able to 1:34:53.280 --> 1:34:54.880 use AI to write songs. 1:34:54.640 --> 1:34:56.800 Yes, you can use AI to write songs, but you're 1:34:56.800 --> 1:34:58.519 not going to be able to churn out a Stairway 1:34:58.560 --> 1:35:00.400 to Heaven. You know, you're not gonna be able to 1:35:00.479 --> 1:35:03.680 do a great Eagle's Greatest Hits Volume two. You're not 1:35:03.720 --> 1:35:05.400 going to be able to get in a lot of 1:35:05.600 --> 1:35:08.479 more as set. You know, something that sells millions of 1:35:08.520 --> 1:35:12.360 copies and speaks to people in their hearts for twenty 1:35:12.479 --> 1:35:17.400 thirty forty years at jingle Yes, a commercial okay, but 1:35:17.720 --> 1:35:18.000 you're not. 1:35:18.040 --> 1:35:21.759 Going to be able to really move people time soccer program. 1:35:22.280 --> 1:35:25.000 I've got two responds to that. First of all, AI 1:35:25.160 --> 1:35:27.560 is actually not that new. What's new is you know, 1:35:27.840 --> 1:35:30.439 completely generative AI. But AI has been around in the 1:35:30.520 --> 1:35:33.840 music industran elsewhere for decades. Brian Eno back in nineteen 1:35:33.920 --> 1:35:37.360 ninety six, not to date myself, you know, talked about 1:35:37.439 --> 1:35:41.000 he actually put out an album and talked about AI music. 1:35:41.280 --> 1:35:44.560 And it's been, as you said, drum kits, synthesizers, you know, 1:35:44.720 --> 1:35:48.360 voice modulation. So it's been around for a long time. 1:35:48.400 --> 1:35:50.960 What's the game changers? Predictive? But to your point about 1:35:51.040 --> 1:35:53.519 not being able to replace it, I'm reminded. I was 1:35:53.560 --> 1:35:56.640 in an industry event just two days ago here in 1:35:57.880 --> 1:36:01.520 New York and Joe Walsh speaking of the Eagles genius 1:36:01.760 --> 1:36:02.920 Joe Walsh, I saw. 1:36:03.640 --> 1:36:05.920 An award and big time love of Stevie Nicks by 1:36:05.920 --> 1:36:07.120 the way, yes, well. 1:36:06.960 --> 1:36:10.800 Who doesn't I know? And he had a great quote 1:36:10.840 --> 1:36:12.400 that stuck with me. He's talked about. 1:36:12.160 --> 1:36:14.360 AI briefly when he was giving this award, and he said, look, 1:36:14.400 --> 1:36:16.800 you know, we're all being told that the future is AI, 1:36:17.040 --> 1:36:19.639 and pretty soon hits are going to be shot from 1:36:19.720 --> 1:36:22.040 these you know, digital canons at the speed of sound, 1:36:22.040 --> 1:36:24.920 and we're all going to become obsolete. Needless to say, 1:36:25.120 --> 1:36:27.360 Joe Walsh. Walsh thought that was a lot of bs, 1:36:27.439 --> 1:36:29.000 and he had a quote that I will never forget. 1:36:29.120 --> 1:36:31.160 He said, he said all of that, and he said, 1:36:31.200 --> 1:36:35.000 you know what, you can't program the gift. 1:36:34.840 --> 1:36:38.040 Of a songwriter or the soul of an artist. I 1:36:38.120 --> 1:36:40.280 agree one percent. And that is exactly the thing about 1:36:40.320 --> 1:36:42.920 Midnight in Harlem, Carol. 1:36:43.040 --> 1:36:46.400 You know Susan Tadashi and Derek Trumps, they have such 1:36:46.439 --> 1:36:49.479 a unique sound and the way they work as artists 1:36:49.720 --> 1:36:53.040 and the way they work together, that just I don't 1:36:53.080 --> 1:36:56.920 believe that a computer program, whether it's generative or not, 1:36:57.320 --> 1:36:58.040 can replace that. 1:36:58.760 --> 1:36:58.920 Now. 1:36:59.320 --> 1:37:01.519 I guess what I'm saying is that they could maybe 1:37:01.680 --> 1:37:04.880 create a song. I'm not necessarily saying like that what 1:37:04.960 --> 1:37:07.600 you get in a live element or you know, performers 1:37:08.080 --> 1:37:11.080 singing together, like there's something that's magical. But I do 1:37:11.280 --> 1:37:15.200 think you could use AI easily, machine learning generative AI 1:37:15.640 --> 1:37:17.960 to help fill out a song full about lyrics. 1:37:18.000 --> 1:37:20.360 Absolutely, And actually, Caroll, that's a great point AI. A 1:37:20.439 --> 1:37:22.640 lot of the industry also sees the all of the 1:37:22.720 --> 1:37:24.439 industry sees the upside of AI. Let me tell you 1:37:24.520 --> 1:37:25.160 some of the pots I. 1:37:25.160 --> 1:37:27.680 Want AI, right, Matt, We want to do ourselves. 1:37:27.400 --> 1:37:30.639 Want jobs, so many use cases. I think it would help, 1:37:30.720 --> 1:37:32.040 but I don't think it's going to place. 1:37:32.320 --> 1:37:34.120 You know, you know what I want. I want, AI 1:37:34.320 --> 1:37:34.479 like it. 1:37:34.560 --> 1:37:36.639 You know, the new Indiana Jones movie that is coming out. 1:37:36.760 --> 1:37:39.320 The first segment of that of that film, they have 1:37:39.479 --> 1:37:45.799 taken the practically unlimited tapes and videos from earlier Indiana 1:37:45.880 --> 1:37:50.280 Jones and they de aged him Indiana Jones, not Sean Harrison. 1:37:50.360 --> 1:37:54.080 For that's what I want, in fact, the past. In fact, 1:37:54.120 --> 1:37:56.360 if you're putting this on on on webcasts, can you 1:37:56.439 --> 1:37:58.600 do that to me before post production? That be, But 1:37:58.680 --> 1:37:59.840 there's other things AI can do. 1:38:00.280 --> 1:38:03.320 John Lennon, you know, AI Paul McCartney talking about it 1:38:03.400 --> 1:38:05.960 and being able to extricate, you know, some of his 1:38:06.200 --> 1:38:09.639 voice from a demo about two years before he died 1:38:09.640 --> 1:38:10.400 in nineteen. 1:38:10.160 --> 1:38:11.760 Eighty Music Resurrection. 1:38:11.920 --> 1:38:14.439 They think, for those of you who don't know, I mean, 1:38:14.680 --> 1:38:18.000 they're pulling out from a demo tape and they're going 1:38:18.080 --> 1:38:21.479 to release the Beatles last record. They haven't said, no 1:38:21.560 --> 1:38:23.640 one is, They haven't officially said what the title of 1:38:23.720 --> 1:38:25.280 the of the record is, but a lot. 1:38:25.200 --> 1:38:27.040 Of them are predicting John Lennon. 1:38:27.240 --> 1:38:29.760 Well, it's done with John Lennon's permission. It's done with 1:38:30.080 --> 1:38:32.320 it's done, you know, with his estates permission, and you. 1:38:32.320 --> 1:38:32.720 Get it run. 1:38:32.760 --> 1:38:33.280 We got it run. 1:38:33.439 --> 1:38:35.519 Thank you so much of a great weekend cover much. 1:38:36.160 --> 1:38:36.760 This is the. 1:38:36.800 --> 1:38:40.960 Bloomberg Business Week Podcast, a little of Apple, Spotify, and 1:38:41.160 --> 1:38:44.879 anywhere else you get your podcasts. Listen live each weekday 1:38:44.920 --> 1:38:47.600 is starting at two pm Eastern on Bloomberg. 1:38:47.200 --> 1:38:50.479 Dot com, the iHeartRadio app, tune In, and the Bloomberg 1:38:50.560 --> 1:38:51.120 Business app. 1:38:51.320 --> 1:38:54.040 You can also watch us live on Bloomberg Quick Take 1:38:54.280 --> 1:38:57.599 every weekday on YouTube and always on the Bloomberg terminal