Speaker 1: I'm Caroline Higher, Bloomberg's world headquarters in New York, and
Speaker 1: I made Lovelow in San Francisco. This is Bloomberg Technology
Speaker 1: coming up. Espionage in the chip industry ASML accusing a
Speaker 1: former China based employee are stealing confidential information, the second
Speaker 1: such breach in less than a year. We discussed plus
Speaker 1: are we there yet? Elon Musk says he needs until
Speaker 1: late this year to fix Twitter before handing over to
Speaker 1: a new CEO. Will bring you the details and valuing
Speaker 1: the AI opportunity. We sit down with Sonja Juang, partner
Speaker 1: on Sequoia's capital growth team, for a look at the
Speaker 1: future of generative AI technology and the startups driving it.
Speaker 1: But first were checking on the markets because well, initially
Speaker 1: there was panic that retail sales were growing at almost
Speaker 1: the fastest clip in two years up three. Does that
Speaker 1: mean inflation is going to be high too? But then
Speaker 1: the market decides to drive higher and in fact we
Speaker 1: closed session highers in the natstack up nine. The modern
Speaker 1: markets more worried about the good data and there are
Speaker 1: some six spaces points as they think the Fed's going
Speaker 1: to have to tackle that inflammation inflation. Interestingly, we've got
Speaker 1: a bit of a sell off in Chinese related names
Speaker 1: at the moment. Maybe this is a bit more of
Speaker 1: a focus on what's happening in terms of geopolitics rather
Speaker 1: than what's happening in the macro economy in the US.
Speaker 1: Flipping on a gear, I'm going to delve into some
Speaker 1: of the micro stories. On the day, we had some
Speaker 1: significant rallies. I mean notably Roadblocks up twenty six percent,
Speaker 1: best day since December twenty Everyone was gaming over the
Speaker 1: holiday season, and also they were really adding those active users.
Speaker 1: Airbnb up best dayance November twenty one really on a
Speaker 1: tear as well, as it seems as though the strength
Speaker 1: of twenty two it's going to continue into next year. Yeah,
Speaker 1: earning is a real driver, and that's still the case
Speaker 1: after ours this Wednesday. These are names I'm watching. Cisco
Speaker 1: forecasting sales in the April quarter will rise eleven to
Speaker 1: thirteen sent, double what analysts were forecasting, that stock having
Speaker 1: a positive reaction. Twilio of course just gone through a
Speaker 1: second round of layoffs, but a surprise forecast for an
Speaker 1: adjusted profit cents per share for the current fiscal quarter.
Speaker 1: The street looking for a two cent lost That a
Speaker 1: big surprise and boosting that stock boos Roku one that
Speaker 1: we haven't spoken about as much carry up even after
Speaker 1: saying first quarter sales will be seven hundred million dollars
Speaker 1: slightly above street expectations. That there's been concerned about how
Speaker 1: they're losing market share to everyone else out there and
Speaker 1: seemed to be weathering the storm. The big story of
Speaker 1: the day in markets but also geo politically was a
Speaker 1: SML the Dutch chip equipment makers saw It's u s
Speaker 1: A d r S actually under pressure for most of
Speaker 1: Wednesday session but basically closing flat. What we know, the
Speaker 1: company disclosed that a former employee in China stole information.
Speaker 1: That's what was driving the narrative. Now in the last
Speaker 1: thirty minutes of breaking bloomberg scoop which gives us some
Speaker 1: more insight into exactly what that information, what that data was.
Speaker 1: That's bringing an executive editor, Tom Giles, who has the details. Tom,
Speaker 1: what have we learned in the last thirty minutes We
Speaker 1: have gotten information about We've got more information on exactly
Speaker 1: what was stolen. So this ex employee, this China based employee,
Speaker 1: took information from a data management system that's used internally
Speaker 1: to let employees collaborate on products, and the products in
Speaker 1: this instance are very expensive lithography machines that a s
Speaker 1: m L uses that that customers use to actually make chips.
Speaker 1: It's very expensive equipment. It's these these are these could
Speaker 1: be the size of busses and costs upwards of a
Speaker 1: hundred and seventy million dollars a piece. So it's very
Speaker 1: very valuable information. And what this person took, we don't
Speaker 1: have the specifics, but they we know where it came from,
Speaker 1: and it came from this like information sharing system called
Speaker 1: life Cycle life Center, Team Center. Is that what I mean?
Speaker 1: If he seems to be coming from the likes of
Speaker 1: Siemens Tom. What's so interesting is that this is what
Speaker 1: the second time that we've seen such a breach from
Speaker 1: China being linked for a s mL, and all of
Speaker 1: this just speaks to the tension around US and China,
Speaker 1: particularly in technology. Yeah, you know, the US is doing
Speaker 1: everything it can to deprive China of the information and
Speaker 1: the and the and the technology it needs in order
Speaker 1: to become a force in hip making. It legs far
Speaker 1: behind the US in this critical technology, and the US
Speaker 1: is doing everything it can, and it has asked players
Speaker 1: in Japan and the Netherlands, which are some of the companies,
Speaker 1: including a s mL that make the most sophisticated equipment.
Speaker 1: If you don't have a s m L on your side,
Speaker 1: it's really hard for you to come anywhere near the
Speaker 1: capabilities of the US and the West. And that's why
Speaker 1: a s m L is so critical. It is one
Speaker 1: of the very few companies in the world that makes
Speaker 1: these photography systems that the information was stolen about UM
Speaker 1: using everything from e vs to military gear. Tom As always,
Speaker 1: thank you so much for helping break down what is
Speaker 1: another great scoop coming from your team. Now turning to
Speaker 1: another company that we're watching, just talking about Evis and well,
Speaker 1: the man that's behind one of the key ones, but
Speaker 1: he's also behind Twitter at the moment. Elon Musk spoke
Speaker 1: to the World Government's summit in Dubai earlier today, so
Speaker 1: that he may need to rest, in fact, have the
Speaker 1: rest of this year to make things right at Twitter
Speaker 1: before handling off to a new chief executive officer. Just
Speaker 1: take a listen. I think I need to um stabilize
Speaker 1: the organization and just make sure it's in a financially
Speaker 1: healthy place. UM and that the product road map is
Speaker 1: clearly laid out. UM, So I don't know. I'm guessing
Speaker 1: probably towards the end of this year, UM, we should
Speaker 1: would be good timing to um find someone else to
Speaker 1: run the company, because I think it should be in
Speaker 1: a stable position around you know, at the end of
Speaker 1: this year, well Man has followed his entire journey over
Speaker 1: Twitter is one cut Wagner and I feel like a
Speaker 1: lot of Tesla shareholders were a bit disappointed by that timeline.
Speaker 1: But what it was the Twitter reaction? Yeah, Well for me,
Speaker 1: having you know, seen the pole that Elon Musk came
Speaker 1: out with at the end of last year saying should
Speaker 1: I find someone? I think the expectation from folks is
Speaker 1: that this was going to happen a lot quicker than
Speaker 1: a full calendar year, right, But as he pointed out,
Speaker 1: he has really been dramatically trying to cut down on
Speaker 1: the costs at Twitter. He's still spending a lot more
Speaker 1: time physically in the building than I would have predicted
Speaker 1: when he first took over. So you know, he he
Speaker 1: clearly doesn't feel like Twitter is in eight place where
Speaker 1: he can hand it off to someone else. Now. I
Speaker 1: also think, let's be real when he does find a
Speaker 1: new CEO. It's not as if he's suddenly going to disappear, right.
Speaker 1: This is someone who likes to be very, very hands
Speaker 1: on with the companies that he has. But I do
Speaker 1: think that it's taking a lot longer it will. It
Speaker 1: sounds like take a lot longer than I had expected.
Speaker 1: As we do each and every day, we went to
Speaker 1: our audience and asked, what do you think must should
Speaker 1: be doing right now? Should he be doubling down on Twitter?
Speaker 1: Should he go back to Tesla? These are the results.
Speaker 1: They kind of speak for themselves. Respondents say, get a
Speaker 1: new CEO in a SAP. What I'm finally hard to
Speaker 1: pass is what has he actually done there? What is
Speaker 1: he actually changed? And what is a brief amount of
Speaker 1: time since taking over? Well, we know that he has
Speaker 1: gotten rid of a lot of people, right in terms
Speaker 1: of costs, They've cut more well over half of the staff.
Speaker 1: They're not paying some of their bills, they're trying to
Speaker 1: renegotiate contracts with vendors. So you know, there are business
Speaker 1: things that he's doing to try and drastically limit how
Speaker 1: much money Twitter is spending. So that's one thing from
Speaker 1: a product standpoint, you know, it doesn't feel like there's
Speaker 1: been a ton. Of course, for those of us who
Speaker 1: use Twitter all the time, we've seen things like, uh,
Speaker 1: you know, the algorithm changes or the tweaks too, maybe
Speaker 1: the types of things we see in our feed that
Speaker 1: we didn't before. But it's not as if there's been
Speaker 1: some major new product then none of us were expecting
Speaker 1: that's come out yet. Yeah. Well, I guess Twitter blue
Speaker 1: to a setting stand you have the edit if you
Speaker 1: you know edit button issues. I canna ask you a
Speaker 1: difficult question, knowing full well none of us had an answer.
Speaker 1: But who could be yea and the next CEO at Twitter? Well,
Speaker 1: what's funny is that, you know, I think we we've
Speaker 1: heard and reported that there's kind of a search going on,
Speaker 1: or there was a search at the end of last year.
Speaker 1: But what's you know, My read on this is that
Speaker 1: it's going to be someone who Ellen is very close
Speaker 1: with already, right, I mean, he's not going to just
Speaker 1: hand this company over to someone that a search firm
Speaker 1: finds for him. It's going to be a trusted adviser.
Speaker 1: It's going to be a friend. And you know, I
Speaker 1: think that list is probably relatively short. You see you
Speaker 1: look at the people who have been helping out most
Speaker 1: at Twitter, which maybe it gives you the best idea.
Speaker 1: There's people like David Sachs, right, who he knows from
Speaker 1: his PayPal days of venture capitalist Steve Davis, the president
Speaker 1: of the boring Company, has been spending a lot of
Speaker 1: time on Twitter. Those are the types of names that
Speaker 1: I would be leaning toward. But again it sounds like
Speaker 1: we have a lot of time before he's going to
Speaker 1: make that decision. Cogner, love having you on about it,
Speaker 1: Thank you so much. Meanwhile, let's stick on the theme
Speaker 1: of elon Musque because thanks to Tesla's se many scent
Speaker 1: rise this year, that's the stock price. The millionaire is
Speaker 1: closing in on recapturing his title as the world's which
Speaker 1: is person since, of course he fell behind Bernard oh
Speaker 1: No in December, but may take a bit longer for
Speaker 1: mus to actually overtake No, who's of course behind LVMH.
Speaker 1: He disclosed in fact this week he gave eleven point
Speaker 1: six million Tesla shares to unnamed charitable causes between August
Speaker 1: and December two. Now, the stock was worth about one
Speaker 1: point nine billion dollars based on closing prices on the
Speaker 1: days must donated the securities. Earlier today, the SEC proposed
Speaker 1: expanding certain requirements to cover a range of assets, including
Speaker 1: virtual currencies. Bloomberg Shnali Bassek caught up with coin Bases
Speaker 1: General counsel and chief legal officer Paul Grell about how
Speaker 1: these changes were impacked his company, coin Base cuse c
Speaker 1: Truck's company is a qualified custodian today, It was a
Speaker 1: qualified custodian yesterday, and it will remain a qualified custodian tomorrow.
Speaker 1: UM And the reason for that is that in many ways,
Speaker 1: coin bases operated exactly in accordance with these rules, and
Speaker 1: we think that's good for the industry, and we think
Speaker 1: that's good for consumers and investors. Against that, back draw, Paul,
Speaker 1: what do you make of these SEC share comments that
Speaker 1: investment advisors can't necessarily rely on platforms such as coin
Speaker 1: Base as qualified custodians. Well, I think that when it
Speaker 1: comes to coin But when it comes to coin Base,
Speaker 1: we've seen actually SEC officials explicitly recognized that UM coin
Speaker 1: based can and does operate operate as a qualified custodian
Speaker 1: in a safe, reliable manner that investors and consumers can
Speaker 1: have confidence in as for others, we think standards are
Speaker 1: a good thing. We think that UM investors and consumers
Speaker 1: have a right to understand that their assets are safe,
Speaker 1: that the standards are being followed by those charge with
Speaker 1: that responsibility. Are are those our standards that have been
Speaker 1: vetted by appropriate UH over overseers and regulators. So in
Speaker 1: a lot of ways, this is about bringing the rest
Speaker 1: of the industry up to the standard coin basis set
Speaker 1: for itself, and on balance, we think that's positive, Pa Paul.
Speaker 1: What does that then mean for something like international expansion?
Speaker 1: At the end of the day, UH, cryptocurrencies broadly are
Speaker 1: an international prospect. How does that translate? They are? I mean,
Speaker 1: there's no question about it that UM. One of the
Speaker 1: things that I think is has has has accounted for
Speaker 1: LAD to so much of the interests in crypto is
Speaker 1: it's borderless nature. But the factor remains that each jurisdiction
Speaker 1: has its own rules, and coin base of course follows
Speaker 1: those rules UM in to the strict letter of the law. UM.
Speaker 1: The thing is though, that for UM, for many in
Speaker 1: crypto UM, the options to operate are are truly international.
Speaker 1: What that means is that the United States needs to
Speaker 1: understand that um its standards are in some ways, uh
Speaker 1: competing against those of the rest of the world, and
Speaker 1: so yes, we always want to make sure that investors
Speaker 1: and consumers are protected. Yes, we want to make sure
Speaker 1: that those standards are clear. But it's also important to
Speaker 1: strike the right balance between innovation on the one hand
Speaker 1: and protection on the other. That was Coin Basis Teeth
Speaker 1: legal officer Pool Grail. Let's get into it with Bloomberg
Speaker 1: Shnali Bassek, who is a part of that conversation that
Speaker 1: brought us that intoview. I guess the starting point is
Speaker 1: what does that mean for coin bases business? How does
Speaker 1: this complicate things for them going forward? Well, I think
Speaker 1: a couple of things are interesting here. Ed you have
Speaker 1: them clearing the record here and seeing them as a
Speaker 1: qualified custodian even under these new proposed rules that it's
Speaker 1: still unclear on how long they would take to become
Speaker 1: real rules given the feedback that they're getting. Overall, remember,
Speaker 1: even though you have coin Base here kind of applauding
Speaker 1: certain parts of this process here, coin base has such
Speaker 1: a nuanced relationship with the SEC they applaud certain parts
Speaker 1: of this rule making process us. But remember there are
Speaker 1: other things that they heavily dispute, such as some things
Speaker 1: that the SEC feels about staking. Even when it comes
Speaker 1: to this qualified custodian issue, remember coin based is one,
Speaker 1: you have other members of the crypto community a little
Speaker 1: more concerned. Jake Travinsky, for example, of the Blockchain Association
Speaker 1: voicing his frustrations online about how these proposed changes could
Speaker 1: violate the SEC's mission by making investors less safe and
Speaker 1: discouraging capital formation. And I have to say, when you
Speaker 1: look at the other SEC commissioners that have weighed in,
Speaker 1: there are a number that have also voiced concerns about
Speaker 1: the amount of qualified custodians. What happens outside of coin
Speaker 1: based in this industry, remember both because Bitcoin was up
Speaker 1: over the twenty four hour period as well as some positive,
Speaker 1: frankly regulatory news for coin based you saw the shares
Speaker 1: just completely ripping today. But again there are some things
Speaker 1: on the sidelines, like the staking issue, which remains to
Speaker 1: be unresolved. Let's go outside the world of coin based
Speaker 1: las because my husband's a manager over there, so I
Speaker 1: don't want to talk about it too much, but I'm
Speaker 1: interested in you'll world outside what other ripple effects, What
Speaker 1: is you know, e crypto at large being reading into
Speaker 1: the SEC crackdown? Is it where did the ripple effects
Speaker 1: go well outside of coin based Like I was saying,
Speaker 1: the reason this matters so much is because we've reported
Speaker 1: a couple of times this week that the SEC and
Speaker 1: other regulators have largely been whispering to the rest of
Speaker 1: the financial industry, is saying that listen, your relationship to
Speaker 1: crypto matters to you, and by the way, could open
Speaker 1: you up to more liabilities. So if you're a hedge fund,
Speaker 1: do you have to worry about how your assets are custody?
Speaker 1: It's interesting because let's see how the next twelve months
Speaker 1: play out, because as that forced these hedge funds like
Speaker 1: a Brevan Howard or others to start working with the
Speaker 1: likes of a coin base more, what happens to something
Speaker 1: like b n y Melon you have, for example, just
Speaker 1: a couple of days ago. Brian, I'm so from talking
Speaker 1: about how institutional interests has grown in this space, even
Speaker 1: despite some of the crypto winter issues. But what happens
Speaker 1: as the SEC brings down a stronger arm on the industry,
Speaker 1: do the traditional players start to get a little spook
Speaker 1: to the main question and to take it full circle
Speaker 1: back to why the SEC is so rankled about crypto
Speaker 1: and why in many ways people are staying acting with
Speaker 1: hindsight is because of what happened in the fd X.
Speaker 1: It's up to speeding. What's happening with the founder of
Speaker 1: f t X. Some I'm not freed has been all
Speaker 1: over the press today. What a day. So this has
Speaker 1: been weeks where we knew that Sam Bank been freed
Speaker 1: as well as his lawyers have been trying to keep
Speaker 1: the name of the guaranteurs behind this really record setting
Speaker 1: bail package, this bond that you wander fifty million dollar
Speaker 1: bond secret. But now we have the judge really saying
Speaker 1: that this doesn't apply to these particular instances because these
Speaker 1: guaranteurs decided to be involved in such a public case.
Speaker 1: These are two people that are very closely closely related
Speaker 1: to the parents of Sam Bank been freed. Remember this
Speaker 1: is Barbara Freed and Joseph Bankman, who were been Stamford
Speaker 1: law professors. Remember this is one of the people involved
Speaker 1: in the guarante guarante our program. Here's Larry Kramer, who
Speaker 1: was a Stanford lawd d mean a legal historian alongside
Speaker 1: Barbara Feed for a very long time. And if you
Speaker 1: take a look at the statement here, really he makes
Speaker 1: it very very personally. Has nothing to say about the
Speaker 1: legal matter itself. But his family has faced a harrowing
Speaker 1: battle with cancer, he says, and the Bankman Freed family
Speaker 1: has been the truest of friends, and so this is
Speaker 1: a very personal matter for him to show up for
Speaker 1: the Bankman Freed family and the time of need. According
Speaker 1: to his statement provided to us on Wednesday, Tomorrow, Thursday,
Speaker 1: Sam Bankman Freed does face court in New York again
Speaker 1: to discuss his bail conditions. Remember, there's been a lot
Speaker 1: of questions about how he's been communicating with people via
Speaker 1: signal and other means in the course of his house
Speaker 1: arrest here where he is living with his family on
Speaker 1: essentially what is uh land and property owned ultimately by
Speaker 1: Stanford as well. I'm sure you'll be giving us up
Speaker 1: to speed with all that happens in that court tomorrow,
Speaker 1: shnais we kind come Meanwhile, sticking with oversight, the CEOs
Speaker 1: of Apple, Metta, Amazon, Microsoft, well, they've all been subpoenaed
Speaker 1: by the House does are Committee chair Jim Jordan is
Speaker 1: seeking more information from the tech giants on content moderation
Speaker 1: that the subpoenas requires and a bit Shiye and new Jasseye,
Speaker 1: Tim Cookmark Zuckerberg, and Satyanadella to respond to the committee
Speaker 1: with documents and communications by Marche. We do not know
Speaker 1: if there will be an in person hearing. Ed Thank you, Karen.
Speaker 1: Are coming up. Apple pushing back it's long awaited debut
Speaker 1: of its mixed reality headset. We bring you the Bloomberg scoop.
Speaker 1: That's next before we head to break, I'm checking in
Speaker 1: on Roku cool Underway shares continues to push higher, up
Speaker 1: almost eleven percent, forecasting revenue of seven hundred million in
Speaker 1: the fiscal first quarter, above expectations. I'm looking at commentary
Speaker 1: on the call from Anthony Wood, CEO, Steve Loud and
Speaker 1: CFO saying two very tough year, but the outlook going
Speaker 1: forward a bit brighter and on that adjusted the bit
Speaker 1: dar basis they're moving towards positivity. Will continue to try
Speaker 1: that stop as the calls ongoing. This is Bloomberg, let's
Speaker 1: talk about Apple, and they're setback for the company's next
Speaker 1: big initiative. According to people familiar in the matter, that
Speaker 1: touch Jon is postponing that planned introduction of its first
Speaker 1: mixed reality headset. Let's go go to June instead of April,
Speaker 1: Bloomberg's Mark German. Of course he did. Of course he
Speaker 1: had the scoop for us. Just talk to us a
Speaker 1: little bit about well, what's having to put the brakes
Speaker 1: on here? Yeah, thank you so much for having me
Speaker 1: as always. So this is the latest incarnation of the
Speaker 1: status of Apple's long awaited mixed reality headset. They wanted
Speaker 1: to get it out the door in about this time
Speaker 1: last year. They pushed it back to the end of
Speaker 1: last year, than to January of this year, than to
Speaker 1: April of this year. Now it's being postponed yet again
Speaker 1: early June at the annual Worldwide Developers Conference, Right, that's
Speaker 1: ww d C. This makes a lot of sense. This
Speaker 1: is Apple's big showcase every early summer, late spring, where
Speaker 1: they introduced their next platforms, their next software updates for
Speaker 1: all the devices. So it makes sense to showcase this
Speaker 1: device there too. I get that. I get the marketing decision,
Speaker 1: but was that what drove it? According to our sources,
Speaker 1: did they basically say, you know what, let's wait for
Speaker 1: the big splash, or in looking at the products, was
Speaker 1: it just that there were issues, it wasn't ready. What
Speaker 1: have you found out? I'm sure it was a blend
Speaker 1: of both. Obviously, Apple's a very marketing and PR driven company,
Speaker 1: so I'm sure that had a big role to play
Speaker 1: in it. But this was mostly an engineering based decision. Uh.
Speaker 1: There were quite a few issues related to both hardware
Speaker 1: and software on the device, and maybe a little bit
Speaker 1: attributed to production as well, So it made sense to
Speaker 1: push it back, keeping the oven for a couple more
Speaker 1: months and really have that introduction down correctly and have
Speaker 1: that gap in between when the products introduced and released
Speaker 1: really stay in that initial time frame, right, because if
Speaker 1: they introduced it in April, you know, they probably would
Speaker 1: have to push back the release by a couple of
Speaker 1: months as well because there were still quite a few
Speaker 1: snags to to work through its pivoting from hardware to services.
Speaker 1: You had another story twenty four hours ago about Apple
Speaker 1: strategy when it comes to buy now, pay later, and
Speaker 1: it's changing how it makes decisions on basically lending to
Speaker 1: the consumer. What have you found out? So this is
Speaker 1: actually quite interesting. So Apple will be doing lending for
Speaker 1: the first time. They'll be actually giving out these loans
Speaker 1: up to about a thousand dollars for by now pay later. Uh.
Speaker 1: This would be very similar to what a firm and
Speaker 1: clarn on some of the other providers do. And so
Speaker 1: what Apple will be doing is they'll be using all
Speaker 1: that data and that history they have on individual customers
Speaker 1: to make those decisions to decide how much they want alone. Baby.
Speaker 1: You know they look at your Apple Pay right, how
Speaker 1: many cards you have on Apple Pay, where you move
Speaker 1: you're denied for an Apple card? How many apps do
Speaker 1: you buy on the App Store? How much have you
Speaker 1: spent and then paid are devices in the past Bloomberg
Speaker 1: Smart German, just ongoing terrific reporting on Apple. Thank you
Speaker 1: so much. If you think that that artificial intelligence is
Speaker 1: going to is going to influence the enterprise in a
Speaker 1: big way, then I think this represents a just a
Speaker 1: staggering addressible market opportunity. Welcome back to Bloomberg Technology. I'm
Speaker 1: card Hard in New York and I made Lovelow in
Speaker 1: San Francisco. You heard their carry the thoughts of C
Speaker 1: three AI CEO Tom Sebo on the show twenty four
Speaker 1: hours ago. Let's carry on this conversation because it just
Speaker 1: won't stop euphoria, the buzz around AI. It won't go away.
Speaker 1: It won't go away. And I think what's notable is
Speaker 1: we're all thinking about the consumer use right now, what
Speaker 1: is the enterprise use? And I know that there's some
Speaker 1: big bets and the fact that they're gonna be some
Speaker 1: killer apps out there, but not just for you and
Speaker 1: E by the way in which we work and which
Speaker 1: we put this to a real productive endpoint. Yeah, and
Speaker 1: those are some of the names. They're continuing to raise
Speaker 1: funds as well. So let's get all of this under
Speaker 1: wraps with Sonya Huang, a partner as the Oil Capital's
Speaker 1: Growth Teams's co led investment in AI focused companies such
Speaker 1: as Gong where Sonya is on the board, as well
Speaker 1: as Glean and Hugging Face. You can see some of
Speaker 1: the portfolio names there. Sonya, welcome. You set out a
Speaker 1: thesis in September, and in that thesis you said, here's
Speaker 1: where generative AI takes us. A lot has changed since September.
Speaker 1: Has any of what's happened accelerated, what's possible and how
Speaker 1: soon it could happen? To your mind? Thank you so
Speaker 1: much for having me here. We think this is a
Speaker 1: watershed moment for a technology if we think about previous
Speaker 1: platform shifts going from desktop to mobile, going from on
Speaker 1: premise assass we think that this one is even larger
Speaker 1: in magnitude as a PLATFORMSFT. I want to just take
Speaker 1: a moment to underscore the significance of what is happening
Speaker 1: right now in technology. We now have models that are
Speaker 1: capable of writing, of creating, of conversing at human or
Speaker 1: even superhuman levels of intelligence. That's something that computer scientists
Speaker 1: have been dreaming of since the nineteen fifties and it's
Speaker 1: finally arrived, and I think the impacts are going to
Speaker 1: be profound. Every industry is getting reinvented by AI. Nieva
Speaker 1: and Glean are doing that, the search Gong is doing
Speaker 1: that with sales, iron Cloud is doing it with legal.
Speaker 1: There's this Cambrian explosion of applications right now because whenever
Speaker 1: there is a platform shift, it opens the door for
Speaker 1: founders to build new and daring, legendary companies. And that's
Speaker 1: exactly the gold rush that we're seeing right now in
Speaker 1: the startup ecosystem. You've called it a gold rush. Bloomberg
Speaker 1: and some of his headlines is called it a frenzy.
Speaker 1: There are publicly traded stock C three AI Big Bai
Speaker 1: that are of triple digits year today. Is this overhyped
Speaker 1: or is the hype justified? Look, I think there's hype
Speaker 1: and there's substance, and we try to separate the two.
Speaker 1: Hype comes and goes. It kind of creates this crazy
Speaker 1: animal spirits. You can't control it, and so for the
Speaker 1: better of our part, we try to ignore what happens
Speaker 1: with hype and focus on the substance. And when it
Speaker 1: comes to substance, it is just stunning to see some
Speaker 1: of the results in generative AI already. If you think
Speaker 1: about previous times when everyone got excited about AI, a
Speaker 1: lot of it was a head fake. This time is different.
Speaker 1: This time is it's not vapor where everyone has chat
Speaker 1: chypt in the palm of their hands. Everyone is using
Speaker 1: this technology. If you look at some of the results
Speaker 1: that are being delivered, get hub has some results that
Speaker 1: they've published that fort lines of codes are now being
Speaker 1: auto completed by their model co pilot. If you look
Speaker 1: at AI that can now generate entire screenplays and movies
Speaker 1: from scratch, the results are there. So we try to
Speaker 1: ignore the hype and focus on the substance. And when
Speaker 1: we see the substance of the results are being created
Speaker 1: right now. Boy, do we get excited. And when you
Speaker 1: wrote in September that thought leadership pace Sonya, what was
Speaker 1: interesting is you hold it a large model War's law
Speaker 1: dream for us. Therefore, already we got chat chypt on
Speaker 1: a han. Where in the next decade does it take us?
Speaker 1: What will we be able to do? Yeah, as as
Speaker 1: we think about it, the pace of progress and R
Speaker 1: and D on the large models has just been breathtaking,
Speaker 1: and I think it's only going to accelerate. If you
Speaker 1: see all the announcements that Google and Microsoft have been made.
Speaker 1: There is an arms race happening right now as it
Speaker 1: comes to training and investing in these large models, both
Speaker 1: the algorithms and the compute and the data. And I
Speaker 1: think that benefits the entire ecosystem because all these applications
Speaker 1: rely on great foundational models. And as the foundational models
Speaker 1: get larger and larger, their emerging capabilities just are blowing
Speaker 1: everybody away. And I think that means it positive for
Speaker 1: the entire ecosystem. These applications are now capable of doing
Speaker 1: things that weren't possible before. Let me give you example,
Speaker 1: iron Clad in our Portfolio is a company that does
Speaker 1: legal contracting software. Now that GPT three three point five,
Speaker 1: now we're going onto GPT four is getting so good
Speaker 1: it is finally becoming possible for us to automate away
Speaker 1: the creation in the analysis of legal contracts. These are
Speaker 1: the sorts of capabilities that get unlocked at the application
Speaker 1: layer when the foundational layer starts to get really good.
Speaker 1: Talked to the previous answer you gave was about separating
Speaker 1: hype from reality, and the way in which you talk
Speaker 1: it does, unfortunately take me back a year or so
Speaker 1: when the hype was all around crypto and I know
Speaker 1: you have nothing to do with f t X yourself personally,
Speaker 1: but Sequoia has has itself abroad in that in some way.
Speaker 1: And I'm interested as to how you think about the
Speaker 1: due diligence you do an AI and really understanding the
Speaker 1: value of these companies, because it must be really hard
Speaker 1: to understand when you think it's such explosive growth. How
Speaker 1: do you line up the valuations, how do you decide
Speaker 1: what checks you're going to write and where this company's
Speaker 1: future can go. Well, I was an investor or a
Speaker 1: specialist in crypto, so I can't speak to that. What
Speaker 1: I can tell you is when it comes to AI,
Speaker 1: we are leaning into the approach that we always take,
Speaker 1: which is to find each of us finds one or
Speaker 1: two companies that we really really want to partner with
Speaker 1: um every year. It's a very small number of companies.
Speaker 1: We're trying to find future category leaders, and then we
Speaker 1: are running down due diligence in order to understand whether
Speaker 1: the evidence lines up with the story. Right now, the
Speaker 1: story of these companies is incredibly promising when you think
Speaker 1: about the things that they're able to do with They're
Speaker 1: able to automate away the entire film creation process, the
Speaker 1: entire game development process. The burden is then on us
Speaker 1: as investors to go and make sure that the evidence
Speaker 1: lines up to the story, and that means talking to customers.
Speaker 1: That means looking at dollar retention rates to make sure
Speaker 1: that customers as are as finding value out of these
Speaker 1: products and that we're not just dreaming and hoping that
Speaker 1: they will see and see that value. What's been so
Speaker 1: interesting about open AI in particular is its closed profit model,
Speaker 1: and a lot of emphasis has been on the investment
Speaker 1: from Microsoft into that business, but a question that has
Speaker 1: kept coming out of that is how do these companies monetize,
Speaker 1: Will they ever monetize to a level where they they
Speaker 1: change the game? Can? Normically speaking? Yeah, Well, first of all,
Speaker 1: Opening Eye deserves a ton of credit for taking what
Speaker 1: happened with transformers and large language models and taking it
Speaker 1: out of the research labs of these big tech companies
Speaker 1: and turning it into a real arms race. And they
Speaker 1: have the results to show GPT three, GPT three point
Speaker 1: five chat GPT Dolly, these results are stunning. To your
Speaker 1: question on business model, I actually think the business models
Speaker 1: fairly straightforward. It is intelligence as an API, just as
Speaker 1: we were in an API economy, just as you buy
Speaker 1: Stripe over API, you buy Twilio over a PI. A
Speaker 1: lot of the companies were working with need to rely
Speaker 1: on these foundational models in orders to run their goods
Speaker 1: and services, and a lot of them are looking to
Speaker 1: pay open Aye for that. So the same way you
Speaker 1: pay for an AP I call the Stripe, you pay
Speaker 1: for an API called the open Eye. What's interesting around
Speaker 1: open Ai, of course, has been the rapid pace at
Speaker 1: which we've suddenly seen everyone wanted to use a hundred
Speaker 1: million within a week or so. It's also now we
Speaker 1: as they team up with Microsoft. They are trying to
Speaker 1: very slowly but surely get it into consumers hands, people
Speaker 1: learning it, t wating and proving with it. But unsurprisingly
Speaker 1: humanity falls his chat bolts to the brink sometimes, and
Speaker 1: there has been some reporting around some of the inaccuracies
Speaker 1: or sometimes some of the extraordinary comments around sentient or not.
Speaker 1: To that point, how do you feel about some of
Speaker 1: the regulation or indeed focus on ethics that we're getting
Speaker 1: to in the point in artificial intelligence. I think all
Speaker 1: of these questions are very real, They're very thoroughny, they're
Speaker 1: very hairy. Some of them are getting solved as we speak. So,
Speaker 1: for example, the concept that you were just talking about hallucinations,
Speaker 1: which is that these models have the tendency to make
Speaker 1: up things on the fly, that's getting solved by these
Speaker 1: foundational model companies. I wouldn't be surprised if in the
Speaker 1: next six to twelve months we have models that are
Speaker 1: actually capable of truthfulness. There's other questions over ethics, over copyright.
Speaker 1: These are sort of harrier problems that require all the
Speaker 1: stakeholders together on the table and agree on what's fair.
Speaker 1: Is it's fair for stability and to profit off the
Speaker 1: back of other artists work and stability for their part
Speaker 1: has been a really good ecosystem player, and you collaborating
Speaker 1: and bringing artists to the table. I think these are
Speaker 1: all problems that are solvable in the nearest medium term.
Speaker 1: I actually think long term about the economic impact what
Speaker 1: happens when all these jobs start to get automated way.
Speaker 1: I think it has the potential to create a lot
Speaker 1: of disruption in terms of our labor force, in terms
Speaker 1: of the fabric of our society and the economy. And
Speaker 1: in that sense, I think it's incredibly important that we're
Speaker 1: all investing in reskilling to make sure that we are
Speaker 1: all able to make use of these new technologies and
Speaker 1: nobody is left behind. This is a rising tide here.
Speaker 1: We want the rising tide to lift all boats. So
Speaker 1: it's interesting to see also names from China by Do
Speaker 1: ten Cent kind of follow suit very quickly. How interesting
Speaker 1: is the opportunity there? There's an initiative in Conquress to
Speaker 1: kind of block access to investing into Chinese companies right now.
Speaker 1: Is that an area that you'll look to the talent
Speaker 1: and innovation that's coming out of China in Ai? Yeah, absolutely,
Speaker 1: I focus on investments in the US and Europe. We
Speaker 1: are Sequoia are set up as three separate teams US, Europe,
Speaker 1: China and India Southeast Asia. So I primarily focus on
Speaker 1: investments in the US and Europe, where we're seeing a
Speaker 1: lot of investment and efforts from the legs of Microsoft, Google,
Speaker 1: n ai UM. I think that this will likely play
Speaker 1: out similar to the cloud computing revolution, where you ended
Speaker 1: up with Microsoft Asser, you ended up with Google Cloud
Speaker 1: platform platform, you ended up with a WS in the US,
Speaker 1: and then the western world in China has its equivalent clouds.
Speaker 1: I think a similar thing will play out in the
Speaker 1: foundational model world. Absolutely fascinating, a calm believe they're called hallucinations.
Speaker 1: That's absolutely brilliant. Sekoia Capital partner Sonja Kaim, thank you
Speaker 1: so much for spending some time with us. Wonderful to
Speaker 1: deep dive on AI there. Meanwhile, coming up, let's deep
Speaker 1: dive on ACoM I the shares falling after the infrastructure
Speaker 1: software company reported results that well show pressure from the
Speaker 1: cloud computing costs. The investment there, we're going to discuss
Speaker 1: it all with the CEO and co founder is Tom Laton,
Speaker 1: Johnnys next and Ed you've got some breaking news. Yeah,
Speaker 1: President Biden has done a surprise tweet. Actually in lading
Speaker 1: our EV charging network. We have to ensure there's many
Speaker 1: charges work for as many drivers as possible. He name
Speaker 1: checks to that end at Elon Musk will open a
Speaker 1: big part of that Tesla's network up to our drivers.
Speaker 1: Remember President Biden naming Tesla and naming Elon Musk. That
Speaker 1: does not happen often. It's a story. Will continue to track.
Speaker 1: This is Bloomberg most check in on the shares of
Speaker 1: ACAM Technologies like they fell the most. It's May of
Speaker 1: last year after reporting results. That's as Alice started to
Speaker 1: note perhaps that the coward computing costs are pressuring some
Speaker 1: free cash flow margins. Let's talk about why that investment
Speaker 1: is being made and what the future of the company is.
Speaker 1: Tom Layton is a doctor. Is Acham i CEO as well.
Speaker 1: They're just great to have some time with you. Tom,
Speaker 1: Just talk to us about it. Seems as though Alice
Speaker 1: were a bit worried about the conservative nature of your
Speaker 1: forward looking guidance in the first quarter full cost Talk
Speaker 1: to us about the shift to compute. Why will it
Speaker 1: pay off eventually? Because perhaps you're pulling back home as
Speaker 1: and when it will pay off. Yeah, the compute market
Speaker 1: is enormous, you know, well north of a hundred billion
Speaker 1: dollars a year, and Acomy is in a great position
Speaker 1: to tap into that market with our launch of Acoma
Speaker 1: Connected Cloud. You know, we already have a platform with
Speaker 1: over four thousand locations doing edge computing where function as
Speaker 1: a service, and now we're integrating in Lenode and growing
Speaker 1: it so that we'll have a core cloud compute functionality
Speaker 1: and a distributed compute functionality so containers and vms can
Speaker 1: get a lot closer to end users around the world.
Speaker 1: And by putting it all together, we're going to be
Speaker 1: able to offer major enterprises better performance for a lot
Speaker 1: of compute function at a lower price point. And cost
Speaker 1: is a big issue today with the cloud, and that's
Speaker 1: the place I think am I can really help. So
Speaker 1: when all bcs on this says you're going all in
Speaker 1: on compute, we would wait for evidence it can pay
Speaker 1: off before getting back involved in your stock. When can
Speaker 1: they get back involved? When will it pay off? Fienji thing, Tom, Well,
Speaker 1: I think now is a great time to get involved.
Speaker 1: You know, obviously weren't happy with a sell off today
Speaker 1: but I think Akama has it a great value now
Speaker 1: uh and as we do the build out this year
Speaker 1: and add the functionality, will be signing up more customers.
Speaker 1: You know, I've had the chance to meet with senior
Speaker 1: executives at many of the world's leading media companies, commerce companies,
Speaker 1: and they are very excited about being able to use
Speaker 1: ACAM Connected Cloud. Uh. You know, they care a lot
Speaker 1: about performance, they care about getting their apps close to
Speaker 1: end users, and they care about cost. Uh. And so
Speaker 1: I think you'll see increasing numbers of large enterprises start
Speaker 1: to adopt Akama Connected Cloud, and then that will translate
Speaker 1: into substantial revenue growth for ack AM. I down the
Speaker 1: road saw me mentioned costs. I think one specific uh
Speaker 1: complaint from the street I point out is they worried
Speaker 1: about you taking on the likes of AWS and Asual
Speaker 1: on price. They you know, all BC for example, says,
Speaker 1: that's a pretty tough value proposition. Is that your strategy
Speaker 1: to take on the big boys when it comes to price. Well, yeah,
Speaker 1: you know, we've been competing with the cloud giants for
Speaker 1: over ten years, uh, and we still have the market
Speaker 1: leading delivery solutions and the market leading security solutions. Despite
Speaker 1: competing with the hyper scalers. In fact, you know, the
Speaker 1: hyper scale ers are some of our largest customers. They
Speaker 1: use those services from ocom I, even though we're competing
Speaker 1: with them, And now we're going to compete on core
Speaker 1: cloud compute too, and you know, I think it'll be
Speaker 1: a compelling, compelling value proposition for major enterprises. Also, it's
Speaker 1: it's good to realize we're not a threat to the
Speaker 1: hyper scale ers. You know, we're going after a one
Speaker 1: or two percent market share over the next few years,
Speaker 1: which for us is huge. That's billions of dollars, which
Speaker 1: makes a big difference to doc am I. But you know,
Speaker 1: they've got businesses that are growing fifteen percent a year
Speaker 1: and if Alcamy, you know, manager to take one or
Speaker 1: two percent, that's not gonna slow them down. So I
Speaker 1: don't think they're worried about, oh, they've got a lower
Speaker 1: price to compete with Acama. You taught us on the
Speaker 1: cool about new segmentation customers. I just wondered if you
Speaker 1: could took us through some of the areas where you
Speaker 1: feel you're winning. What kind of customers are they? What
Speaker 1: sectors are all spending money with you right now? Yeah,
Speaker 1: for segmentation that's the companies that have you know, mission
Speaker 1: critical functions, key infrastructure, banks, utilities, UH, companies that can't
Speaker 1: afford to get be hit with ransomware. And increasingly you're
Speaker 1: seeing the government authorities require a solution there. And Guardicle
Speaker 1: now is recognized as the market leader. So I think
Speaker 1: you know, over time, pretty much every major enterprise is
Speaker 1: going to need that solution. But today it's starting with
Speaker 1: you know, mission critical infrastructure. Tom Laighton A, come, I see,
Speaker 1: thank you for your time on a busy earnings stay
Speaker 1: and let's stick with earnings. Bloomberg caught up earlier with
Speaker 1: Airbnb CEO Brian Chesky post earnings, talking about robust travel demand.
Speaker 1: Here's what he had to say about where exactly the
Speaker 1: company is seeing any signs of that strength. We are
Speaker 1: expecting pretty steady growth. Now. We are expecting a little
Speaker 1: bit more accelerated growth in the short term stays, but
Speaker 1: that's that's more of a recovery. We're seeing more recovery
Speaker 1: short term stays. We're seeing more people go to cities,
Speaker 1: and we're seeing more people cross borders between urban and
Speaker 1: cross border. That was around eight percent of our night's
Speaker 1: book before the pandemic. So it's really more a matter
Speaker 1: of a recovery of the old ways of traveling and
Speaker 1: a real sustainability of the new ways, like including people
Speaker 1: staying longer and traveling to more to places. C O.
Speaker 1: Brian Chesky that let's talk about UFOs and how they
Speaker 1: can help the US fend off Russia and China. In
Speaker 1: the past few years, the US has been a lot
Speaker 1: more willing to talk about UFOs, and for a very
Speaker 1: good reason. It's not that authorities wants to talk about aliens,
Speaker 1: but there is no again, no indication of aliens or
Speaker 1: extraterrestrial activity. They mean unidentified flying objects in the truest sense,
Speaker 1: something airborne that they can't identify. They prefer to call
Speaker 1: them unidentified aerial phenomena. The u S breaks these so
Speaker 1: called u a p s into five categories, according to
Speaker 1: a declassified report from one airborne clutter such as birds,
Speaker 1: plastic bags, and civilian drones, natural atmospheric phenomena such as
Speaker 1: ice crystals or thermal fluctuations, the US government or industrial
Speaker 1: development programs which speak for themselves, foreign adversary systems, including
Speaker 1: technologies allegedly deployed by Russia or China, and the fairly nebulous.
Speaker 1: On the other that's the one that tends to excite
Speaker 1: people because it includes flying sources and little green men.
Speaker 1: But it's the penultimate category foreign adversaryist that the government
Speaker 1: really has, which is why it's been trying to encourage
Speaker 1: the military to report UFO sightings. Navy or Air Force
Speaker 1: personnel might have felt embarrassed about reporting a potential UFO
Speaker 1: sighting for fear of ridicule, but some of those might
Speaker 1: actually have been spy balloons or drones from a geopolitical
Speaker 1: competitor such as China. If the UFO isn't reported, then
Speaker 1: the government may never know that a spy balloon has
Speaker 1: entered its airspace. The issue soared into the headlines when
Speaker 1: the U S shot down what it said was a
Speaker 1: Chinese spy balloon in February and said it was part
Speaker 1: of a broader trend. If pilot's report what they think
Speaker 1: are alien sightings more often, that it might help the
Speaker 1: US better identify actual threats from terrestrial rivals. Wimberg quick
Speaker 1: takes Alex web there and let's dig into this more.
Speaker 1: Ryan Hartman is president and CEO of Worldview. It's a
Speaker 1: company that focuses on remote sensing and stratospheric surveillance, and
Speaker 1: which has we to go public through a merger with
Speaker 1: a black check firm, Ryan, stratosphere, it is a new economy.
Speaker 1: Explain that for us? Well, I think what we've seen
Speaker 1: over the last few weeks is that the stratosphere is
Speaker 1: in fact a contested domain and what that means is
Speaker 1: there's going to be nations all around the world that
Speaker 1: are using this kind of technology to deliver remote sensing
Speaker 1: or surveillance types of capabilities. And that's why we call
Speaker 1: it the stratospheric economy. Ryan, can you give us any
Speaker 1: size and scope on how your business has been buffered
Speaker 1: by what's happening in the headlines of recent weeks. Are
Speaker 1: you winning new business because of this, Well, we're certainly
Speaker 1: getting a lot more interest, and I think, you know,
Speaker 1: the timing of us taking the company public helps UH
Speaker 1: investors understand that, you know, this is an area where
Speaker 1: it's a great place to invest. There's there's certainly a
Speaker 1: lot more work to be done in the in the stratosphere,
Speaker 1: and it's not just government work, it's commercial work. You
Speaker 1: can do things like methane detection or monitoring our lines
Speaker 1: are other critical infrastructure, and so you know, it's it's
Speaker 1: it's it's really exciting. Um. You know, it's concerning as
Speaker 1: well to see those kind of technologies flying over our
Speaker 1: own country, but but it's quite exciting. Put your technology
Speaker 1: versus what we've seen out of China. How much more
Speaker 1: ahead of the game are they or not? Well, you know,
Speaker 1: one of the key difference differences of our technology is
Speaker 1: the ability to navigate. You know, we're not going to
Speaker 1: fly over a country where we shouldn't be flying. Our
Speaker 1: technology enables us to maneuver quite freely and enables us
Speaker 1: to stay over an area for a very long period
Speaker 1: of time. And so those are the things that are important.
Speaker 1: Ryan Hartman, president and CEO of world View, will continue
Speaker 1: to track your company. I am sure now that does
Speaker 1: it for this edition of Bloomberg Technology. Car Yesh sadly,
Speaker 1: I'm gonna be off in the next couple of days.
Speaker 1: Time at schools shut down for a couple of days.
Speaker 1: But I know that you're gonna do an amazing job.
Speaker 1: We're gonna be tuning in it, and you don't want
Speaker 1: to forget to choose to listen to our podcast to
Speaker 1: you can finding on the terminal Hill online on Apple
Speaker 1: and Spotify, on iHeart and our Twitter spaces. I'm already
Speaker 1: gonna start promoting that for Friday midday New York Time
Speaker 1: from New York. From San Francisco, discipline Berg