Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Welcome back to Bloomberg Tech to our TV viewers and
Speaker 2: radio listeners around the world. Were joined by Andrew Feldman
Speaker 2: Cerebres CEO Srebrest Priceless IPO. Andrew one hundred and eighty
Speaker 2: five dollars a share above the top end of the
Speaker 2: marketing range. I'm looking at the Bloomberg terminal shares indicated
Speaker 2: to open three hundred and fifty dollars a share. Your
Speaker 2: reaction to that.
Speaker 1: Pretty good day? Huh?
Speaker 2: How you feel? I mean, did you see this coming?
Speaker 2: There's some mechanics to it, right, But you know, I
Speaker 2: know you, I know you like to let's be honest,
Speaker 2: you like to talk about what's happening in AI. The
Speaker 2: big focus on inference Cerebress is placing it. But this
Speaker 2: is the biggest IPO of the year so far. You know,
Speaker 2: what does it mean to you and your employee in
Speaker 2: your back.
Speaker 1: Is it's the biggest tech one of the biggest tech
Speaker 1: IPOs in history, and it's the biggest semi IPO in history.
Speaker 1: We couldn't be more proud. This is the combination of
Speaker 1: a decade, a work of countless late nights and long weekends.
Speaker 1: We are enormously proud and excited and ready to get
Speaker 1: back to work and start working on the on the
Speaker 1: next great thing.
Speaker 2: Again. The market is indicating shares to open at three
Speaker 2: hundred and fifty dollars a share. Let's see where we're
Speaker 2: at when trading starts. But you're being priced in as
Speaker 2: a major player in this field. Now, what evidence would
Speaker 2: you point to that you are in fact a major payer.
Speaker 2: A lot of focus is on the concentration in the
Speaker 2: relationship with open Ai. Tell me about some of the
Speaker 2: other frontier labs or other names that you have some
Speaker 2: concrete talks with.
Speaker 1: Sure, in the last four months, we announced a deal
Speaker 1: with open ai that's north of twenty billion dollars for
Speaker 1: seven hundred and fifty megawatts of compute. We also announced
Speaker 1: a major engagement with AWS where our equipment would be
Speaker 1: deployed in their data centers. I think those are obviously
Speaker 1: the largest, but there are dozens of others that are
Speaker 1: in what used to be a big deal in the
Speaker 1: ten to fifty million dollar category, and so there's just
Speaker 1: an extraordinary demand right now for fast inference. We're the fastest,
Speaker 1: not by a little bit, but by more than an
Speaker 1: order of magnitude. You know, we're fifteen times faster than
Speaker 1: the next nearest competitor, and as AI has become useful,
Speaker 1: everybody wants it to be fast. Nobody wants to wait.
Speaker 2: On that, you know, twenty one x on you know
Speaker 2: performance and also like a lot of emphasis on the
Speaker 2: dollar PA token, right that that is the metric that
Speaker 2: the field cares about. But that's on paper. You know,
Speaker 2: you just talked about the AWS relationship as an engagement.
Speaker 2: When does the word engagement end and real revenues start
Speaker 2: to show up for you from those relationships.
Speaker 1: Sure, we signed a binding term sheet with AWS as
Speaker 1: described in RS one, and we're working through the master agreement.
Speaker 1: I think in dealing with organizations of that size, it
Speaker 1: takes a little time to dot all the eyes across
Speaker 1: the t's, but we are extremely confident that they will
Speaker 1: be an enormous channel for us and a partner in
Speaker 1: delivering our technology to large enterprises and medium sized enterprises
Speaker 1: around the world. I think they are one of the
Speaker 1: preferred cloud providers for just about every enterprise on Earth,
Speaker 1: and so an opportunity to have your solution embedded in
Speaker 1: their offering as part of their bedrock offering. That's a
Speaker 1: huge win for us.
Speaker 2: We're live on Bloomberg Television and Radio. This is a
Speaker 2: Bloomberg Tech takeover, and we're speaking to Andrew Feldman, the
Speaker 2: CEO of Cerebrus, whose company just priced the IPO at
Speaker 2: one hundred and eighty five dollars a share and is
Speaker 2: indicated right now, I'm looking on the Bloomberg terminal maybe
Speaker 2: to start trade at three hundred and fifty dollars a share. Andrew,
Speaker 2: I think you know this about me. Whenever we have
Speaker 2: a big moment to have a conversation like this, I
Speaker 2: always go to the Bloomberg Tech audience. What do they
Speaker 2: want to know? And actually the first question is what
Speaker 2: was your attitude toward retail investors? Why did you not
Speaker 2: do more for the retail investor in this big moment
Speaker 2: for your company?
Speaker 1: We were more than twenty five xover subscribed. There was
Speaker 1: a lot of hard decisions that needed to be made,
Speaker 1: and nobody got what they wanted. And you know, we
Speaker 1: did our best. It's about all you can do. When
Speaker 1: there's twenty five times more demand for your stock at
Speaker 1: the institutional level and at the retail level, then there
Speaker 1: are shares to be sold. So we're really proud of
Speaker 1: the way we chose to do it. We thought we
Speaker 1: did it with integrity, and I think we are very
Speaker 1: comfortable with the ending allocation.
Speaker 2: Full stack, fully vertically integrated. And what I mean by
Speaker 2: that is you literally build the supercomputer top to tail, right,
Speaker 2: so in Video will do the tray, not just GPU,
Speaker 2: but then Dell super Micro will assemble it. Dell's margins
Speaker 2: low teens, in Video's margins mid seventies, Your margins forty
Speaker 2: forty one percent. And what I'm trying to help the
Speaker 2: audience understand is why that strategy of owning everything top
Speaker 2: to sail is going to pay off in the long run.
Speaker 2: And I would say that The other question I get
Speaker 2: for you is what's the future outlook for margins based
Speaker 2: on your plans?
Speaker 1: Well, I think a couple of things. I think we
Speaker 1: have obviously opportunities to improve our cost structure. You know,
Speaker 1: we did half a billion last year in sales. That
Speaker 1: means we put two hundred and fifty million in the
Speaker 1: supply chain. Obviously that's not an efficient spot. As we grow,
Speaker 1: we will have more leverage in the supply chain and
Speaker 1: our cost of goods will come down. I think we
Speaker 1: have an opportunity to increase prices. I think the demand
Speaker 1: for fast inference is overwhelming this minute, and so I
Speaker 1: think in the in the long run, we'll be really
Speaker 1: proud of our of our gross margins and where they
Speaker 1: will sort of wash out as we hit scale.
Speaker 2: I've got a question for you from a from a
Speaker 2: terminal client via IV. Thank you for the question. Everyone's
Speaker 2: tuned in right now, Andrew. They want they want, they
Speaker 2: want the detail. And so one way that people look
Speaker 2: at it is that you know, this is custom silicon,
Speaker 2: but Cerebrius isn't. Isn't a chip per se. It's like
Speaker 2: wafer level, right. Is there a reason why you can't
Speaker 2: just sell that versus the whole server? Yeah?
Speaker 1: Yeah, that's a good question. For the entire seventy year
Speaker 1: history of the computer industry, every previous effort had failed
Speaker 1: to build a chip of the size. So for your audience,
Speaker 1: this chip is the size of a dinner plate, while
Speaker 1: traditional chips are the size of a postage stamping. And
Speaker 1: not only had everybody failed until we succeeded, but several
Speaker 1: tried to copy us and have since failed as well.
Speaker 1: Part of what we were capable of doing and able
Speaker 1: to do was that we were able to use not
Speaker 1: just the chip, but also our expertise in packaging and
Speaker 1: in system design to solve some of the problems and
Speaker 1: build a truly compelling solution. Right, you don't just get
Speaker 1: fifteen or eighteen or twenty times faster than the competition
Speaker 1: because you built a good chip. That's one of a
Speaker 1: collection of different things that enable that sort of performance.
Speaker 1: You can build a great chip, and the system vendor,
Speaker 1: the ODM, can nibble away at your performance by not
Speaker 1: delivering the right amount of power or the right amount
Speaker 1: of IO. Right. Right, there's there's a reason why in
Speaker 1: Video then sought to control the IO the Envy link
Speaker 1: because they didn't want others to nibble away at their performance.
Speaker 1: And so by building the system, we were able to
Speaker 1: optimize all parts. I mean, you could ask the same
Speaker 1: thing about Porscho. You know, why don't you sell just engines? Right?
Speaker 1: And it turns out that that's a nine to eleven
Speaker 1: is a is a beautiful car because of the engine
Speaker 1: and everything else they put in it.
Speaker 2: Andrew the team's telling me we've got to go, But
Speaker 2: I got to ask you five point five billion dollars,
Speaker 2: what do you use the proceeds for and actually, how
Speaker 2: flexible can you now be an allocating capacity to new customers.
Speaker 2: We just have thirty seconds.
Speaker 1: Oh, I think we will use it to increase capacity.
Speaker 1: We are excited to bring many new customers on board.
Speaker 1: There's a tremendous demand for what we're doing. I think
Speaker 1: we can be aggressive on that front.
Speaker 2: Andrew Feldman Cerebras CEO pricing the IPO one eighty five
Speaker 2: indicated to open three hundred and fifty dollars a share.
Speaker 2: Thank you for your time,