Speaker 1: From the Heart where Innovation, Money and power Collie in
Speaker 1: Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Love Love.
Speaker 3: I'm Paradine Heider Bloomberg's world headquarters in New York, ALANM.
Speaker 4: Ed Lovelow in San Francisco. This is Bloomberg Technology coming up.
Speaker 3: Apple, it scrats its EV ambitions after a decade long
Speaker 3: effort as the company focuses instead on AI.
Speaker 5: We'll have full coverage ahead.
Speaker 4: Plus Google CEO Sunderpitch Eye blasting the failures of the
Speaker 4: Gemini image generation feature as the company looks to remedy
Speaker 4: the situation. We have all of the details and.
Speaker 3: We sit down with the CEO of data automation firm Clavio.
Speaker 3: As a company reports earnings for the second times it's
Speaker 3: going public, and as they announced, guess what new AI products?
Speaker 5: All that and so much more coming up.
Speaker 3: So let's check in on these markets because there was
Speaker 3: a torrent of economic data, not much to catch the
Speaker 3: attention today. Mixed data means that we're currently off about
Speaker 3: four tens percent on the Nasdaq. As we really care
Speaker 3: about the PCEE number, the favored inflation data by the
Speaker 3: federal reserve that comes out tomorrow.
Speaker 5: All eyes on that.
Speaker 3: We see a little bit of a sell off ahead
Speaker 3: of that number Golden Dragon index over in China. Of course,
Speaker 3: this is the US traded version of some of these
Speaker 3: Chinese big names, down one and a half percent, so
Speaker 3: really some weakness coming over from what was a pretty
Speaker 3: ugly day in China trading. I'm looking at what's happening
Speaker 3: in the ten year yield, nothing burger, nothing really moving.
Speaker 5: We're off just about one basis point where there is action.
Speaker 3: And on the macro perspective of we're looking at one
Speaker 3: particular asset, claus A choice Bitcoin.
Speaker 5: Look at this one point.
Speaker 3: Seven point seven percent higher. We are encroaching on that
Speaker 3: all important sixty nine thousand dollars record level ed. We
Speaker 3: know the sixty one thousand has already been eclipsed. Why,
Speaker 3: good old supply demand dynamics. There's more demand from the ets.
Speaker 3: The supply side we know is going to be halved
Speaker 3: in terms of amount of bitcoins going to be mined
Speaker 3: come end of April. And of course, well not many
Speaker 3: holders are selling at the moment, but ed, what are
Speaker 3: you watching?
Speaker 4: One story Apple Apple is shutting down its car project
Speaker 4: after a decade of work. Full kudos to Bloomberg's Mark German.
Speaker 4: He's going to join us in just a few moments.
Speaker 4: He broke that story. But this is a two day chart.
Speaker 4: That is the moment that Mark broke the story. The
Speaker 4: stock would have been a little bit lower Tuesday, and
Speaker 4: look at the gain on it. Okay with flat now,
Speaker 4: But the reaction globally to this has been pretty profound. Actually,
Speaker 4: we know that some of the two thousand people working
Speaker 4: on the Apple car project will lose their job, some
Speaker 4: of them will be shifted into Apple's work on generative AI,
Speaker 4: according to Mark's reporting. But for me, this story was
Speaker 4: about ten years where Apple did not know what that
Speaker 4: end car product ev product, robotaxi product would eventually look like.
Speaker 4: And you've seen it all over social media overnight. In
Speaker 4: this morning, Caroline, it's the one thing everyone's talking about,
Speaker 4: a big backtrack.
Speaker 3: Well, they talked about it over that decod long process.
Speaker 3: Here's actually Tim Cook and what he had to say
Speaker 3: about the plans all the way back in twenty seventeen.
Speaker 5: Take a listen.
Speaker 6: We sort of see it as the mother of all
Speaker 6: AI projects. It's probably one of the most difficult AI projects. Actually,
Speaker 6: to work on. And so autonomy is something that's incredibly
Speaker 6: exciting for us, but we'll see where it takes.
Speaker 5: Is and Mark German joins us.
Speaker 3: Now, isn't that interesting the fact that Tim Cook talked
Speaker 3: to it as the mother of all AI projects and
Speaker 3: that's where the talent now goes.
Speaker 7: But to generative AI, it's certainly an AI project right
Speaker 7: at the very core of an autonomous self driving system
Speaker 7: as artificial intelligence using cloud, using onboard software, using onboard
Speaker 7: hardware to understand what the vehicle is, do live processing
Speaker 7: and make those decisions using an AI engine on behalf
Speaker 7: the user.
Speaker 8: Whether to stop, whether to make that turn, whether to
Speaker 8: change lanes, to understand the environment, to drive in the
Speaker 8: snow or drive into the rain. Right, those are all
Speaker 8: decisions that are made by an AI processor, And so
Speaker 8: clearly Apple does have some AI talent there that they're
Speaker 8: able to relocate to their other AI initiatives that have
Speaker 8: nothing to do with the car.
Speaker 4: Mark, let's go deep into the details that you reported.
Speaker 4: So there was a meeting held by two high level
Speaker 4: Apple executives where they informed the two thousand or so
Speaker 4: staff working on the Apple car project that it was
Speaker 4: being shut down. What else do we know.
Speaker 8: Yeah, there was a meeting Tuesday morning at ten am
Speaker 8: where Jeff Williams, Apple COO and Kevin Lynn Chappels, VP
Speaker 8: of Technology, who's been in charge of the car project
Speaker 8: known as Titan inside the company since twenty twenty one.
Speaker 8: They informed the team, like you said, the it would
Speaker 8: be winding down immediately. Really three main groups there. You
Speaker 8: have the hardware engineers. You know this is simplification, but
Speaker 8: you have the hardware side, you have the software side,
Speaker 8: and you have the AI side. So the AI side
Speaker 8: of the project will be shifting towards Apple's AI and
Speaker 8: mL division under John g and Andrea. The software side,
Speaker 8: most of those folks will be moved to Craig federigi's
Speaker 8: operating systems organization, and then the hardware team a lot
Speaker 8: of those people, unfortunately, are being laid off. It's one
Speaker 8: of the biggest layoffs, i'd say, in Apple's modern day
Speaker 8: history since certainly since Tim Cook became CEO in twenty eleven.
Speaker 8: And then some of the hardware engineers will have the
Speaker 8: opportunity to apply to other jobs within the company. Obviously
Speaker 8: Apple's a hardware company, and perhaps some of those people
Speaker 8: will find roles on other teams, whether that's for the iPhone,
Speaker 8: the Vision Pro, the Apple Watch, you name it. But
Speaker 8: this is a bombshell development for Apple. This is something
Speaker 8: that Apple just doesn't do, throwing in the towel on
Speaker 8: a major project in such a public fashion. You know,
Speaker 8: the Apple car started in twenty fourteen, ten years ago,
Speaker 8: and Apple is such a secret company, but everyone knows
Speaker 8: they've been working on this, so this has been a
Speaker 8: really public failure for them.
Speaker 4: Being Bo's Mark German, terrific reporting, impactful reporting. Thank you
Speaker 4: for joining us on the show. What does it mean
Speaker 4: for Apple? But what does it mean for the ev
Speaker 4: industry at large? Let's bring in Cities Global Head of
Speaker 4: Auto's Itai mcayley to get into what Apple winding down
Speaker 4: its electric car effort means for names like Tesla. You
Speaker 4: look at Tesla shares up two percent in the session
Speaker 4: it Your thesis seems to be that if this is
Speaker 4: good for anyone, Apple canceling its car project, it's good
Speaker 4: for Tesla.
Speaker 9: Why absolutely, Yeah, yeah, So you know we always thought
Speaker 9: that Apple would have been most likely to compete directly
Speaker 9: against Tesla, and too a lesser extent companies like GM
Speaker 9: and Ford. You know, a lot is changing with electric
Speaker 9: and software and autonomous of course, But one thing that
Speaker 9: we're learning, not just from this news but even other
Speaker 9: developments recently, is that the barriers to enter and succeed
Speaker 9: in scale in the EV and particularly also in the
Speaker 9: AV the autonomous side, are still pretty high. And so
Speaker 9: I think this is another data point kind of supporting
Speaker 9: that those barriers still do exist, and we think it
Speaker 9: does bold well competitively, maybe mostly in our coverage for
Speaker 9: Tesla and to a lesser extent, GM and Ford.
Speaker 4: It's how you lead auto's coverage at City as opposed
Speaker 4: to Apple. But what I always think about when I've
Speaker 4: covered this story of Mark over the last six years
Speaker 4: or so is like Apple is used to margins for
Speaker 4: consumer electronics, and even if you get to like Tesla
Speaker 4: level margins, it's not even close. Did you have any
Speaker 4: sense of what you think Apple was trying to get
Speaker 4: out of a car project?
Speaker 10: Sure?
Speaker 1: Yeah.
Speaker 9: Broadly for the industry, we see the biggest opportunity for
Speaker 9: higher margins is in software services and particularly around the economy.
Speaker 9: And if you look at the average automaker today in
Speaker 9: the US, we've estimated it from a lifetime revenue, a
Speaker 9: lifetime revenue of a car. Today, those automakers only generate
Speaker 9: maybe forty percent of the lifetime revenue of the car.
Speaker 9: There's no a whole other sixty percent out there that
Speaker 9: there tends to be much higher margin that you could
Speaker 9: begin to tackle with software services think about autonomous vehicle
Speaker 9: subscription models in the future, and so we do thee
Speaker 9: as part of our industry thesis that the future of
Speaker 9: this business model isn't just about selling a car, making
Speaker 9: a kind of money on the one time sale, but
Speaker 9: really thinking about the entire lifetime revenue that a vehicle
Speaker 9: can generate, plus incremental revenue from services you peer to
Speaker 9: peer sharing deliveries that really autonomous technology can unlock over time.
Speaker 9: But it is a difficult challenge. You seen a lot
Speaker 9: of companies, you know, kind of take longer to develop
Speaker 9: level three and level four technology. You could argue that,
Speaker 9: you know, Apple kind of shutting down that the program
Speaker 9: suggests that, you know, maybe more negative view on the
Speaker 9: long term potential. But then you could also argue that
Speaker 9: the companies who are kind of leading the way from
Speaker 9: level four will ultimately build much bigger competitive mode just
Speaker 9: because of how difficult it is to ultimately achieve that
Speaker 9: degree of technology and capability.
Speaker 3: What was so interesting was obviously the price point in
Speaker 3: which Apple was originally going to be targeting. I mean,
Speaker 3: there was talk of a one hundred thousand dollars car
Speaker 3: that immedia made me think of the BYD news earlier
Speaker 3: this week, that they're going to be having some supercar
Speaker 3: coming onto the market more than one hundred thousand dollars
Speaker 3: in terms of a price point. Is that where the
Speaker 3: competition now lies for a Tesla, for a FOURD, for
Speaker 3: a GM. It's not actually homegrown Apple, it's looking over
Speaker 3: what China is doing in a BYD.
Speaker 5: Broadly.
Speaker 9: Yeah, there's a lot a lot of competition, of course,
Speaker 9: broadly coming out of China. I think every automaker is
Speaker 9: keenly focused on it. There's different degrees of EP penetration
Speaker 9: around the world, the US of course being smaller, but
Speaker 9: we actually do need to think in the US more
Speaker 9: EV product particularly and more affordable price segments they have
Speaker 9: not yet been penetrated. It is going to be a
Speaker 9: competitive market going forward. Yeah, I do think that even
Speaker 9: with the slowdown today in ev adoption, of course, the
Speaker 9: competitive threats global, we are still quite there. I think
Speaker 9: automakers are certainly thinking about that, not only again when
Speaker 9: thinking about the EV platforms, but also incremental services revenue
Speaker 9: from autonomous and software of course being a big part
Speaker 9: of ultimately making the economics work, particularly at those lower
Speaker 9: price points.
Speaker 3: And this is where I suppose the starkness of the
Speaker 3: data is so raw. The fact that we're expecting an
Speaker 3: eleven percent increase in sales of evs in the US
Speaker 3: this year compared to a more than forty percent increase
Speaker 3: in the year of twenty twenty three. I mean, ultimately,
Speaker 3: is this the only way that these companies can distinguish themselves.
Speaker 5: Can survive.
Speaker 3: Perhaps to tap some of the talent that's about to
Speaker 3: be let go at Apple is by driving the services,
Speaker 3: because Apple's got car play. But obviously there's much more
Speaker 3: margin generation to be done some of the other auto sectors.
Speaker 9: Yeah, truly, all the above. Every auto company is trying
Speaker 9: to work the numbers to that creates some delays, frankly
Speaker 9: in new product introductions to make the P and L
Speaker 9: and unit economics work for EV's, but there's no question
Speaker 9: over time that software and services is key to towards
Speaker 9: making those economics even stronger and again unlocking longer term
Speaker 9: a lot of revenue opportunities I spoke about a bit before.
Speaker 9: But you know, in the US, we're not as negative
Speaker 9: on EV adoption as consensus is today. We actually think
Speaker 9: the US does need more product to drive better coverage,
Speaker 9: and we've seen a very uneven market in terms of
Speaker 9: the number of products today, and of course auto companies
Speaker 9: with evs, we've seen a very uneven market even when
Speaker 9: you look at the geographical distribution of electric vehicle sales
Speaker 9: in the US, and so you know, we think it
Speaker 9: will be slow and steady growth. There's not been a
Speaker 9: disruptive of course transition, which again is good for the
Speaker 9: so called legacy automakers. It sort of supports this notion
Speaker 9: we've been writing about about the sort of comeback of
Speaker 9: the legacy automakers in some degree. But ultimately, you know,
Speaker 9: EV's we still think are the future and we're done
Speaker 9: well and right. They're very compelling products and we think
Speaker 9: that you know, automakers are still going to be invecting
Speaker 9: pretty aggressively into them and.
Speaker 5: When the infrastructure is there to support it.
Speaker 3: To City Global Head of Auto Sector Ittai McCurley, it's
Speaker 3: so great to have you on the show.
Speaker 5: We appreciate it.
Speaker 3: Meanwhile, that there's more news coming out of Apple, in
Speaker 3: particular with the latest on allegations of the company has
Speaker 3: imposed software and hardware limitations on its iPhones and iPads
Speaker 3: that actually impede rivals from effectively competing. Now, representatives in
Speaker 3: the company met with the Justice Department last week in
Speaker 3: one is a final effort to persuade the agency not
Speaker 3: to file an antitrust suit against Apple.
Speaker 5: It's all according to sources, the suit is expected to
Speaker 5: be coming in the next few weeks, lu likely by
Speaker 5: the end of March.
Speaker 3: So the sources say, we've got to check in on
Speaker 3: bitcoin today because we are training ever so close to
Speaker 3: the record high that we saw all the way back
Speaker 3: in November twenty twenty one. We're back at a sixty
Speaker 3: one thousand hand or remember sixty nine thousand is the
Speaker 3: record high that we saw for bitcoin.
Speaker 5: R up another seven point seven percent on the day.
Speaker 3: This is notable given risk assets are actually selling off
Speaker 3: more broadly today and tech hasn't got much love, and
Speaker 3: we're more focused on a federal reserve. But Bitcoin manages
Speaker 3: to push higher despite that. Let's stick in to risk
Speaker 3: assets across the board. IPEC Oscar desh Gaya is with
Speaker 3: US senior market analysts over at Swiss Code. We're going
Speaker 3: to be getting your tech markets feel out here and
Speaker 3: more broadly, I mean, when you're looking at a risk
Speaker 3: asset of bitcoin, is the story more about mass adoption,
Speaker 3: about that being a meaningful part of a general portfolio.
Speaker 3: As to why we're seeing a run up at the moment.
Speaker 5: Well exactly.
Speaker 11: I mean bitcoin has become like an important thing for
Speaker 11: the financial industry and we think that's got a great
Speaker 11: future in terms of finance and the centralized finance, and
Speaker 11: while the next couple of years and the fact that
Speaker 11: we also saw the ETF seeing the daylight is very
Speaker 11: important in terms of adoption. And what's interesting is if
Speaker 11: bitcoin could actually break that poor relation that it has
Speaker 11: with the traditional risk assets, then it would be just
Speaker 11: a very interesting asset that someone should hold in peers
Speaker 11: or her portfolio because it's just a different thing that
Speaker 11: is moving on different fundamentals and it's really a great
Speaker 11: alternative for portfolio diversification.
Speaker 4: Let's go to earning season. It's a game of artificial
Speaker 4: intelligence or artificial sweetener, because everyone's doing buybacks and if
Speaker 4: you look at like names like eBay. I think back
Speaker 4: to like Disney, Mercedes Benz. In Europe, everyone's doing buybacks
Speaker 4: and it kind of makes earning season seem like reallyuthoric. Well,
Speaker 4: how do you feel about that?
Speaker 11: Well, the earning season for big technology companies has been
Speaker 11: good beyond the buybacks, because if we're looking at Magnificent
Speaker 11: seven Socks, well they eat out some fifty five percent earnings.
Speaker 5: Growth and that's a big deal.
Speaker 11: And it's even a bigger deal when you think that
Speaker 11: expectations have gone just through the roof. So we think
Speaker 11: that there is something fundamentally positive there in terms of
Speaker 11: well development. And AI was obviously the major takeaway of
Speaker 11: this earning season because what we see is well AI
Speaker 11: investments are really pouring in, and when we talk with
Speaker 11: industry heads, well, we also realize that the investment decisions
Speaker 11: in AI seems to be well quicker than other investment
Speaker 11: decisions because in industries and companies seem to understand.
Speaker 5: Very well how AI is going to.
Speaker 11: Increase their productivity, decrease their costs, and improve their profit
Speaker 11: and their profit margins. And they also have quite a
Speaker 11: short payoff period. So investments are actually pouring in and
Speaker 11: that's absolutely helping the big technology sucks, especially those who
Speaker 11: are related to AI or just eat out some mind
Speaker 11: blowing results.
Speaker 4: The main beneficiary of this story continues to be in Vidia, right,
Speaker 4: the hardware provider of the underlying technology. The thesis you
Speaker 4: just outlined is more about the end use, so the
Speaker 4: end case. Do you still think it's important to stay
Speaker 4: closely aligned with names like Nvidia, AMD and some of
Speaker 4: the hyperscalers.
Speaker 11: Well, I think that yes, because those are the early
Speaker 11: commerce and they are the pillars of this AI revolution.
Speaker 11: What we see in AI today is a little bit
Speaker 11: like the digital version, the digital equivalent of the industrial revolution.
Speaker 11: So the potential is absolutely huge. Now, looking at the valiations, yes,
Speaker 11: Nvidia's valuation has gone through the roof, but not the
Speaker 11: valiations as of today are not that shocking because Nvidia's
Speaker 11: valuation in terms of PE ratio is lower today than
Speaker 11: it was at last year's twenty twenty three peak. So yes,
Speaker 11: the Nvidia stock price is going higher exponentially, but the
Speaker 11: earnings follow as well, So we think that Nvidia is
Speaker 11: a very interesting stock to hold in an AI portfolio.
Speaker 11: And zooming out of Nvidia, the global technology stocks are
Speaker 11: also trading at valiations which are lower than their twenty
Speaker 11: twenty one peak levels. So by historical terms, the valuations
Speaker 11: that we have today.
Speaker 5: Are not that shocking.
Speaker 3: Yeah, if you're looking at forward p well, the ratio
Speaker 3: there is like a thirty or thereabouts for an nvideo,
Speaker 3: It's only sixteen for a Qualcom. And I bring up
Speaker 3: Qualcom because actually the CEO of that company was joining
Speaker 3: Bloomberg a little bit earlier, and well guess what he
Speaker 3: was excited about.
Speaker 5: Just take a listen.
Speaker 1: Why we cannot predict when there's the next cycle. What
Speaker 1: I can tell you right now with precision is AI
Speaker 1: is changing how we interact, in how we use our phones,
Speaker 1: and if eventually, if consumers field that they need to
Speaker 1: have an aiphone, that will create this new growth momentum
Speaker 1: for the industry.
Speaker 3: We've of course heard Christiano i'm on talk a lot
Speaker 3: about AI applications and of course the AI use within
Speaker 3: our smart devices. But should we broaden our remit of
Speaker 3: investment opportunities at this point? Should we look less at
Speaker 3: perhaps the pixel shovels. Where are the applications you're looking
Speaker 3: at other industry groups?
Speaker 12: Now?
Speaker 11: Well, absolutely, I mean you can growth in this to
Speaker 11: chip makers and especially you can also growthen your vision
Speaker 11: to geographically other diversification opportunities, and for example, Japanese chip
Speaker 11: makers or Japanese companies in the chip sector are also
Speaker 11: looking very interesting to us in terms of in terms
Speaker 11: of good diversification opportunities while having an exposure to AI. Now,
Speaker 11: obviously other technology areas are very interesting as well because
Speaker 11: technology as by nature, is very adaptable to well AI revolutions.
Speaker 11: So every company it has to do that has potential
Speaker 11: to improve their products and services with AI are interesting
Speaker 11: to you know, having a AI proatfolio.
Speaker 4: Any guest that comes on the show and says something
Speaker 4: like technology by its very nature can come on the
Speaker 4: show again anytime. E Pepvsco. Desh Gaya, senior market analysts
Speaker 4: at Swisco, just quiit a terrific conversation. Thank you. Back
Speaker 4: to bitcoin really quickly, hitting sixty thousand dollars for the
Speaker 4: first time in more than two years. This comes as
Speaker 4: demand for the TOE and is widening, being not beyond
Speaker 4: committed digital assets enthusiasts. That's been the story. Meanwhile, US
Speaker 4: Senator Elizabeth Warren sat down with Bloomberg yesterday a wide
Speaker 4: ranging interview on the looming government shut down the path
Speaker 4: ahead for rates, but also cryptoregulation.
Speaker 10: Have listen, in our financial system, pretty much everybody follows
Speaker 10: the same set of rules. I'm talking banks and credit
Speaker 10: unions and credit card companies, gold traders and stockbrokers.
Speaker 5: Private equity now.
Speaker 10: Has to follow the rules precious metal dealers, Venmo, Western Union,
Speaker 10: but not crypto. My view of the world is same
Speaker 10: kind of activity, same common risk, should have the same regulation.
Speaker 3: Google, we have a response from the Sea Sono Pitchy
Speaker 3: sending an email to staff what has been, of course,
Speaker 3: the problematic responses from Google's Gemini AI engine, describing them
Speaker 3: as quote completely unacceptable, according to a note that teams
Speaker 3: are now working around the clock to rectify the issues.
Speaker 5: More, let's bring in Blue Meg, Seth Figermann and Seth.
Speaker 3: I mean to put it lightly problematic, but is this
Speaker 3: enough of this sort of like mere cull per moment,
Speaker 3: This is not good enough enough to for ultimately the
Speaker 3: damage to the.
Speaker 5: Brand that this is done.
Speaker 13: Yeah, I mean, at some level of the question is
Speaker 13: is this even a fixable problem? And it's very unclear
Speaker 13: right now that is. They're saying they're going to work
Speaker 13: around the clock, test out different prompts and try to
Speaker 13: weak out bad cases like what we saw over the
Speaker 13: last week. But the technology itself is fundamentally flawed. The
Speaker 13: data it's trained on, it's fundamentally biased, and they are
Speaker 13: attempting band aid measures here just to get the product
Speaker 13: out there. So even if they wait two weeks, three
Speaker 13: weeks a month, we may still see users effectively troubleshoot
Speaker 13: it in the wild and find other issues.
Speaker 3: When we've actually gone to spokespeople at Google, they say
Speaker 3: Gemini is built on creativity and productivity tool It may
Speaker 3: not always be accurate or reliable, but as you say,
Speaker 3: this is an over correction of previous lackings in other
Speaker 3: AI generators, and I'm interested as to what really has
Speaker 3: gone round wrong.
Speaker 5: From a technical perspective.
Speaker 13: Yes, what we understand is that behind the scenes, Google
Speaker 13: has effectively traed a technical fix here. They have done
Speaker 13: what we call prompt engineering. They are when you enter
Speaker 13: a prompt and say give me a picture of a nurse. Ordinarily,
Speaker 13: on certain image generators will show you a woman by default,
Speaker 13: or often a woman, but maybe now without even knowing it,
Speaker 13: it'll add show me a male nurse and a woman nurse,
Speaker 13: and a nurse of this adversity and that the problem
Speaker 13: is users don't know that's happening behind the scenes and
Speaker 13: over correcting forgating that they almost prevented you from be
Speaker 13: able to see an image of a white person in
Speaker 13: that role or any other And so it just speaks
Speaker 13: to the urgency right now. These companies feel to deploy
Speaker 13: these products even if they can't properly safeguard for all
Speaker 13: bad use cases.
Speaker 3: MENTA has a white paper just on trying to explain
Speaker 3: this phenomenon. Cethiman, great to have you on, Welcome back
Speaker 3: to blow Meg Technology and Caroline had in.
Speaker 4: New York and Mamed love Loow in San Francisco. A
Speaker 4: quick check in on the markets. I guess we're kind
Speaker 4: of like treading water right now. We get core PC Thursday.
Speaker 4: There is still a micro focus on what economic data
Speaker 4: will lead the market to believe the FED is going
Speaker 4: to do. And you see US tenure yield around four
Speaker 4: point two nine percent where it's been equity market it's
Speaker 4: a little softer three tens percent on the Nasdaq one hundred.
Speaker 4: It's a very tech heavy index with sw I always
Speaker 4: check that we showed you once, we showed you twice.
Speaker 4: I should show you a third time Bitcoin above sixty
Speaker 4: one thousand US dollars par token. Go back two years
Speaker 4: when it was at that level. What happened in the
Speaker 4: same month as it reached sixty nine thousand dollars per token?
Speaker 4: Where will we go next? It's exciting. We'll keep on
Speaker 4: track of it. I do want to go back to Alphabet,
Speaker 4: parent of Google. I know we just had seth orII
Speaker 4: editor explaining sunderpitch eyes reaction to what are accuracies and
Speaker 4: bias problems in Gemini, And you can go on bloomberg
Speaker 4: dot com see that full memo that Bloomberg's published he
Speaker 4: sent staff. But we're down another two percent in the
Speaker 4: session and trading at one point in the session at
Speaker 4: the lowest level for Alphabet since mid December. So there's
Speaker 4: a clear reaction here. We're going to keep on top
Speaker 4: of the story because there is a debate carry you
Speaker 4: and I have been talking about it all morning. How
Speaker 4: do they actually fix this technically or is it not
Speaker 4: as straightforward as that. It's one to watch certainly, and
Speaker 4: we're down five percent in the last or four and
Speaker 4: percent in the last five sessions or so.
Speaker 3: I mean, all of this brought on by prompt transformation,
Speaker 3: something that we'll get far more used to. Meanwhile, yesterday
Speaker 3: and Sony of course announced that it will be laying
Speaker 3: off some nine hundred employees in its gaming division and
Speaker 3: we'll completely shutter PlayStation London. That brings the amount of
Speaker 3: video game industry workers who have lost their jobs this
Speaker 3: year to more than six thousand.
Speaker 5: Let's bring in an expert in the feed field.
Speaker 3: Jason Chapman joins US co founder and managing partner over
Speaker 3: at Convoy Ventures.
Speaker 5: It's a firm that actually invests in platforms and technologies
Speaker 5: in gaming.
Speaker 3: And from the perspective of the industry here, Jason, is
Speaker 3: this something we're going to see across the board? Because
Speaker 3: for Microsoft, when they made layoffs, we sort of thought, oh,
Speaker 3: it's the M and A deal. But more broadly, is
Speaker 3: this another industry group that got too big during COVID
Speaker 3: and now has to slim back down.
Speaker 14: Thank you for having me. While these layoffs were significant,
Speaker 14: they're not surprising. We're going to continue to see more
Speaker 14: layoffs throughout twenty twenty four. For context, we saw about
Speaker 14: three percent of the global gaming workforce laid off in
Speaker 14: twenty twenty three. We're in February and we've already seen
Speaker 14: two percent of that workforce laid off. We expect that
Speaker 14: number to continue to rise, both with groups that have
Speaker 14: already done rounds of layoffs like Microsoft, Gaming, Unity, Riot
Speaker 14: and others, and also some newer companies that haven't yet announced.
Speaker 4: Why, Jason, why are the companies doing this belt tightening,
Speaker 4: It's a great question.
Speaker 14: It's because money is not cheap anymore. We were all
Speaker 14: bloated and we got way too comfortable, hired way too
Speaker 14: many people. In the post COVID boom, company including in
Speaker 14: games as well as in tech, is having to right
Speaker 14: size their industry. We need to do more with less.
Speaker 14: We need to get more capital efficient, and I think
Speaker 14: you're seeing that hit gaming in full force in twenty
Speaker 14: twenty three and twenty twenty four.
Speaker 3: Okay, so the narrative back in early twenty twenty three
Speaker 3: when the big tech companies were belt tightening, was well,
Speaker 3: we'll leave some of this talent and go.
Speaker 5: And build their own ventures. But is this also happening
Speaker 5: at the startup level?
Speaker 3: Are you seeing belt tightening cut layoffs happening there.
Speaker 5: Too, and ultimately what does it mean for your part
Speaker 5: of the industry.
Speaker 14: Absolutely, it's happening both with the big players and also
Speaker 14: the small players. So you know, the startups are not
Speaker 14: isolated from these concerns either. You know, we've seen across
Speaker 14: many of our companies in average of about thirty percent
Speaker 14: pullbacks and staff and we expect that to continue. And
Speaker 14: all those companies are either doing the same on a
Speaker 14: top line basis or actually better. And so I think
Speaker 14: that just shows you that we got inefficient. And I
Speaker 14: think that's a lesson learned in games, it's a lesson
Speaker 14: learned in tech. And as I said before, money is
Speaker 14: not cheap anymore, and people it's very hard for them
Speaker 14: to raise both in public and also in private settings
Speaker 14: for capital.
Speaker 4: Yeah, I think long term we're talking about generative AI
Speaker 4: being a tool to accelerate game development. But right now,
Speaker 4: I mean, I'm playing PlayStation. Right now, I'm playing Switch.
Speaker 4: I'm enjoying the games, but there isn't sort of one
Speaker 4: title or trend or thing that I'm really excited about
Speaker 4: in twenty twenty four. Maybe Star Wars Outlaws shout out
Speaker 4: that game, it's going to be incredible, But do you
Speaker 4: see what I mean? There isn't a sort of short
Speaker 4: term catalyst to drive a spending cycle. I wondered if
Speaker 4: you agree with that, Jason.
Speaker 14: I think you're gonna have to look to the UGC platforms.
Speaker 14: You know, you're gonna have to look to Roadblocks. You're
Speaker 14: gonna have to look to UFN with Epic and Fortnite
Speaker 14: obviously huge announcements there with the Disney investment, I think
Speaker 14: you're gonna see a lot of new titles come from
Speaker 14: those those regions versus you know, kind of you standalone
Speaker 14: huge titles that you see more historically announced by the
Speaker 14: major groups. So I would tell you go on Rodblocks,
Speaker 14: let's go plan on Fortnite together. There's some exciting things
Speaker 14: coming down the pipeline there, but definitely noted. Also, the big,
Speaker 14: big disappointment in the games industry obviously is that Grand
Speaker 14: Theft Auto got delayed to twenty twenty five. That was
Speaker 14: a huge disappointment for many and probably sounds like for
Speaker 14: you at as well. So yes, while in the games
Speaker 14: industry we're gonna have to make do with UGC for
Speaker 14: a little bit, there are some other exciting titles coming
Speaker 14: out here, and I think we're gonna have to make
Speaker 14: do with some of the older content for the rest
Speaker 14: of the year.
Speaker 4: Okay. One, let's play Fortnite. Two roadblocks okay, three, Yes,
Speaker 4: very sad about DJs niver A managing partner, Jason Chapman,
Speaker 4: you bring it all. Thank you so much, Okay. I've
Speaker 4: been waiting to show you this for a long time.
Speaker 4: In twenty twenty three, San Francisco positioned itself as the
Speaker 4: place to be when it came to AI and investors
Speaker 4: back that title. But what happens next? I looked at
Speaker 4: what's really going on in our city. For Bloomberg regionals,
Speaker 4: welcome to the real Cerebral Valley. This is the Hayes
Speaker 4: Valley neighborhood of San Francisco, is characterized by the painted ladies,
Speaker 4: hip shops and restaurants, and it's fairly diminutive size.
Speaker 2: Blink. I mean you miss it, really, But tech industry
Speaker 2: local sea Hayes Valley, or Cerebral Valley as they like
Speaker 2: to call it. As a metaphor for what's happening in
Speaker 2: San Francisco, it became the epicenter for new and growing
Speaker 2: AI companies, part of a vanguard that could help SF
Speaker 2: bring back business that slipped out to Silicon Valley or
Speaker 2: even out of state. I talked to a couple of
Speaker 2: local tech luminaries to see how much of this is
Speaker 2: real and how much of this is hype.
Speaker 15: That every revolution in Silicon Valley sort of happens in
Speaker 15: waves like that. There's personal computer as the Internet, your
Speaker 15: mobile phones, and I think that this is as big
Speaker 15: or bigger, because what you see is now software being
Speaker 15: able to reason, and that's transforming not just one or
Speaker 15: two industries, but absolutely all of them at the same time.
Speaker 4: So what happens in the next twelve months with artifisial
Speaker 4: intelligence in this city.
Speaker 15: One of the big things that we talk about in
Speaker 15: San Francisco is the doom loop. The commercial buildings are
Speaker 15: completely empty, prices for real estate have completely crashed. But
Speaker 15: the silver lining here is we're going to fill every
Speaker 15: one of those skyscrapers with thousands of very high paying
Speaker 15: jobs that then create software and products that basically serve
Speaker 15: billions of people out there.
Speaker 4: And some folks on there that don't agree with that
Speaker 4: view as well. Check out the full documentary on Bloomberger Regionals,
Speaker 4: Bloomberg dot Com and all the social platforms.
Speaker 3: Caroline meanwhile ed look vc Bakklana shrank It's net losses
Speaker 3: I seventy six percent in twenty twenty three. We're talking
Speaker 3: about a fintech buy now, pay later firm over there
Speaker 3: in Europe, not instant people vary that makes preparations for
Speaker 3: one of.
Speaker 5: Its biggest IPOs of the year.
Speaker 3: Now the fintech company is even briefly moving into profit
Speaker 3: that happened in the previous three months, accelerating its faith
Speaker 3: it grows as we've seen the targeted this further expansion
Speaker 3: here right here in the United States, which is now
Speaker 3: as big as market now.
Speaker 5: Interestingly, part of.
Speaker 3: Its growth has actually been thanks to open AI powered
Speaker 3: AI Assistant, which Klara says is doing the equivalent get
Speaker 3: this of seven hundred full time agents and now's two
Speaker 3: point three million conversations with the first month of being deployed. Now,
Speaker 3: that announcement was enough to send the shares as you'll
Speaker 3: see of Teleperformance down twenty nine percent, hitting their lowest
Speaker 3: level since late twenty sixteen.
Speaker 5: We say, of course, the anountsourcing company that is all about.
Speaker 3: We're on the phone and people, let's see what wells,
Speaker 3: what's coming up when it comes to AI disruption. A
Speaker 3: new AI image generator is in town, and we've just
Speaker 3: got the backing of Andrewson Horowitz. More on that one next. Meanwhile,
Speaker 3: let's just keep an eye on some of the public
Speaker 3: P trader companies that we've got to be looking at.
Speaker 3: Applied materials. This one down, as you'll see, just some
Speaker 3: two point three percent. This is more of a legal
Speaker 3: ramification for this company. The US is renewing an inquiry
Speaker 3: into applying materials as Chinese business. They're underscoring Washing his
Speaker 3: efforts thrilly to curb chips being sent.
Speaker 5: To that particular company or off by two point four percent.
Speaker 5: This is blue their technology.
Speaker 4: New funding for AI companies keeps pouring in, and this
Speaker 4: time it's Ideogram announcing eighty million dollars in a series
Speaker 4: A funding round led by Andres and Horowitz and launching
Speaker 4: a new version of their image generation model, joining us
Speaker 4: with the Deets Bloom both Rachel Metz The timing of
Speaker 4: this is astonishing. But let's focus first on Ideogram. What
Speaker 4: is it that they do? Who are they? What can
Speaker 4: you tell us about them?
Speaker 12: Sure so, Idea Graham was formed by some people who
Speaker 12: worked on Google's image generation technology in this and they
Speaker 12: launched their first version of their software last year, and
Speaker 12: basically they are concentrating on making it easy for people
Speaker 12: to come up with really good AI generated images without
Speaker 12: having to put in like a really leathy written prompt.
Speaker 12: And also typography. They're really focused on making it so
Speaker 12: you can have legible words in your images.
Speaker 3: Ironically, it was led by several former Google employees. That
Speaker 3: timing therefore juxtaposed with the issues going on with Google,
Speaker 3: but also the exuberance around video generation and more image
Speaker 3: based focus or ZA for example.
Speaker 5: This is why we're governering this sort of valuation.
Speaker 12: Rachel, Yeah, I mean, well, I think that the funding
Speaker 12: that they're getting this time around is it's a lot
Speaker 12: of money for a company that's not very old. But
Speaker 12: I think it's really reflective in part of how much
Speaker 12: computing power you need, which is very expensive. In order
Speaker 12: to train these models and to run these models. You know,
Speaker 12: they need to hire some more employees. I think they're
Speaker 12: still a pretty lean stirrup over there. But as you said,
Speaker 12: the timing, yes, very interesting. In fact, one of the things,
Speaker 12: one of the things that's very interesting in addition to
Speaker 12: this funding that they're getting, they have this new model.
Speaker 12: One of the new features they have allows them to
Speaker 12: people to turn on or off automatically lengthening their prompts,
Speaker 12: which is something that some companies do but they don't
Speaker 12: always talk about to users. So this way users will
Speaker 12: it'll be very obvious to users whether that's happening or not.
Speaker 3: Prompt transformation something we're talking about several times today that
Speaker 3: hasn't really been discussed before. And also I mean talking
Speaker 3: at timing stability AI's latest image generator as well, got
Speaker 3: a lot of people talking Rachel.
Speaker 5: Met's absolutely brilliant to have you on as always. Thank you.
Speaker 3: Now let's stick on the world of venture capital and
Speaker 3: our VC spotlight today. We want to take a look
Speaker 3: at Black Tech Nation Ventures, so Pittsburg based venture firm
Speaker 3: which just announced the close of a fifteen million dollar
Speaker 3: inaugural fund to back software startups led by founders from
Speaker 3: diverse backgrounds. Let's bring in general partner David Motley for more.
Speaker 3: Who's staying up late for us while traveling in Hong Kong?
Speaker 3: But where will your money be deployed?
Speaker 5: David? Is it more US focus? Is it Pittsburgh focused?
Speaker 14: Is it?
Speaker 5: Are you agnostic?
Speaker 16: Caroline?
Speaker 9: Thank you?
Speaker 16: Let me start bus saying we really appreciate the opportunity
Speaker 16: on your program. Excited about the attention that our fund
Speaker 16: is getting Fund one launched honest way, and we're looking
Speaker 16: forward to earning the right to launch a much larger
Speaker 16: fund too.
Speaker 9: To follow with.
Speaker 16: With respect to where we are investing, we are investing
Speaker 16: nationally and technology funds that are led by black and
Speaker 16: diverse founders with an eye towards delivering outsize returns to
Speaker 16: our founders.
Speaker 3: Thinking of your founders, you've already invested in a whole
Speaker 3: gamut of like the future of finance with MTech. You're
Speaker 3: looking at good find which is helping sort of well
Speaker 3: food trucks and the like. But I'm interested, David, you
Speaker 3: say about the attention your fund is garnered. I'm going
Speaker 3: to be brutally honest. Fifty million dollars isn't that much
Speaker 3: in the grand scheme of things at VC. But what's
Speaker 3: sad is it's large when it comes to backing black
Speaker 3: founders and raised by black vcs. Why is it still
Speaker 3: only a fifty million if you can, dare say only
Speaker 3: and what are some of the headwinds that you've found
Speaker 3: trying to raise this fund?
Speaker 16: Caroline, your point is well made. Fifty million dollars in
Speaker 16: the scheme of venture is a very small fund, we
Speaker 16: do have the opportunity to leverage what we're doing with
Speaker 16: our fund with other like minded funds and deliver much
Speaker 16: larger scale relevance for the companies in which we invest.
Speaker 16: One of the reasons why venture is retreated for black
Speaker 16: lead funds is that the overall venture market declined in
Speaker 16: twenty two twenty three, after watershed years, if you will,
Speaker 16: in twenty and twenty one. But in particular, now that
Speaker 16: the attention that was garnered on the backside of the
Speaker 16: tragedy with George Floyd is retreating in the rearview, mirror
Speaker 16: funds are also moving away from this sector.
Speaker 4: David, I'm looking at this data point. Around seven hundred
Speaker 4: million dollars of venture money went to blackfounded startups in
Speaker 4: the US last year, below a billion for the first
Speaker 4: time in a long time. What's the trajectory looking forward?
Speaker 4: You know, thank you for your time on the show.
Speaker 4: We you know, we're very interesting talk about the fund.
Speaker 4: But I'm assuming that you feel like you can't do
Speaker 4: this on your own. Are you getting support from other
Speaker 4: firms who are raising funds with the same intent.
Speaker 16: So the answer to your question is yes, we are
Speaker 16: getting a lot of support and interest from other like
Speaker 16: minded funds. We have in that convened a forum for
Speaker 16: black led funds across the country. When we take a
Speaker 16: look at what's it going to take to try and
Speaker 16: move the needle, it's going to be funds like ours
Speaker 16: proving out that there is alpha and the sector there
Speaker 16: is the opportunity to deliver success from funds like ours,
Speaker 16: from founders like the ones we're investing in, and prove
Speaker 16: out that this not just an initiative, but an investment
Speaker 16: category that can provide venture like returns.
Speaker 5: Well, for now, like sorry, Ed, oh, no, Cara, go
Speaker 5: for it.
Speaker 3: Well, I mean it's notable that for now you got
Speaker 3: back in from alphabet First, National Bank, Mark, Cuban to
Speaker 3: name a few.
Speaker 4: Ed all right, Black Technicians, General Partner David Mottley.
Speaker 12: We got to go.
Speaker 4: But by the way, super grateful for you joining us
Speaker 4: in Hong Kong. Very late there.
Speaker 5: We'll have you back in the future.
Speaker 4: You appreciate it. Date automation and marketing firm clavi o
Speaker 4: out with four quarter earnings after the bell last night.
Speaker 4: It's only the second report they've done as a public company.
Speaker 4: Revenue beat estimates in the final few months of the year,
Speaker 4: Johnny us Now Clavier CEO, Andrew Bioleki Andrew, they talk
Speaker 4: about that period of the year being seasonally strong. But
Speaker 4: if I'm trying to pick out a story, it's that
Speaker 4: you added a lot of new customers, and I wonder
Speaker 4: if that was a direct result of the IPO. You know,
Speaker 4: one rationale for going public is let's get our name
Speaker 4: out there.
Speaker 17: Yeah, well, first, thanks for having me. You know, we're
Speaker 17: really excited about our results in the fourth quarter. You know,
Speaker 17: as you mentioned, we work with a lot of retail
Speaker 17: and e commerce businesses and brands over one hundred and
Speaker 17: forty thousand of them in Q four. Is there time
Speaker 17: to shine and we're really excited that at last year
Speaker 17: we help those businesses generate over fifty billion dollars in sales.
Speaker 17: You know, Chlaviya, We're all about helping businesses and brands
Speaker 17: build first party relationships with their customers, with then consumers,
Speaker 17: and then building great experiences for them that helps them
Speaker 17: drive real growth.
Speaker 3: Let's just talk a little bit about the where the
Speaker 3: headwinds are or indeed why the share price is down.
Speaker 3: I know, risk assets are down across the board at
Speaker 3: the moment. Andrew and I'm sure we don't look at
Speaker 3: the day to day vagaries of your share price, but
Speaker 3: it is lower, perhaps more on our earnings for share perspective,
Speaker 3: and maybe Morgan Stanley coming out with a price target downgrade.
Speaker 3: I'm interested as to what, if anything, you're having to
Speaker 3: spend a lot of money on even as you're driving
Speaker 3: up revenue and growth in terms of users.
Speaker 9: Sure.
Speaker 17: Yeah, I mean we don't spend too much time thinking
Speaker 17: about the stock price day over day. I mean, I'll
Speaker 17: tell you what I'm excited about. Yeah, yesterday we launched
Speaker 17: Klavyo AI, which is our artificial intelligence toolkit for all
Speaker 17: of our businesses and brands. You know, as we look forward,
Speaker 17: we build claveo is a great platform for any consumer
Speaker 17: business to build direct relationships with their end customers. We
Speaker 17: think the future of marketing, and really CRM is all
Speaker 17: about autonomous. Autonomous doesn't mean that marketers are out of jobs.
Speaker 17: It means that they're back to doing strategy and creative
Speaker 17: work work on the brands and out of the minutia. So,
Speaker 17: you know, we launched a series of features that I
Speaker 17: think are going to becomes table stakes, things like the
Speaker 17: ability to create email content from a prompts or automatically
Speaker 17: optimize that email or SMS or your website without a
Speaker 17: marketer having to do all the editing and testing. The
Speaker 17: AI can do it for you. And we're really excited
Speaker 17: about the results that that's driving for customers. You know,
Speaker 17: just as an example, willow Tree start using some of
Speaker 17: our predictive analytics, some of our machine learning based artificial
Speaker 17: intelligence based tooling, and that increased their revenue from email
Speaker 17: by over fifty percent. You know what's great is I
Speaker 17: think artificial intelligence is going to allow a lot of
Speaker 17: marketers to not only free up time be more productive,
Speaker 17: but it's going to drive better results. And you know
Speaker 17: that's we're spending a lot of time and you know,
Speaker 17: frankly human capital investing in building out that functionality.
Speaker 5: Okay, so you hiring on that front. Therefore, Andrew are you?
Speaker 5: Are you going to do more with less when it
Speaker 5: comes to your own people power?
Speaker 17: Yeah, well we've already been you know, we founded Klavyo,
Speaker 17: we bootstrapped our business, so we've always been a very
Speaker 17: efficient company. But yeah, we're hiring a lot of folks
Speaker 17: on the artificial intelligence and product and engineering side. We're
Speaker 17: also seeing great demand from larger brands, brands like Mattel
Speaker 17: Good American Marine Layer that are choosing Clay. So we're
Speaker 17: also investing in increasing our sales capacity as we see
Speaker 17: a lot of demand from mid market and enterprise brands
Speaker 17: that want to move on to art.
Speaker 4: Andrew, we just have fifteen seconds. How much do you
Speaker 4: think you spent R and D wise and launching clavy
Speaker 4: o AI.
Speaker 17: Yeah, we've beneficient at it. Actually, our costs to build
Speaker 17: that have not been as large as some of the
Speaker 17: foundational large language models you see out there. And the
Speaker 17: other really great part for us is because we're so
Speaker 17: close to driving value, we can show our customers the
Speaker 17: actual revenue that artificial intelligence is creating for them. I
Speaker 17: think there's going to be opportunities for us that as
Speaker 17: our customers, you know, see more of that value that
Speaker 17: we can also partake in, you know, that value creation,
Speaker 17: that monetization.
Speaker 3: Well, enjoy that sunny day behind you. We appreciate you
Speaker 3: coming on talking us through the numbers and the AI focus.
Speaker 3: Glavy O CEO Andrew Vaileki of course on the second
Speaker 3: set of earnings as a public company.
Speaker 5: And meanwhile, that does it for this edition of Bloomberg
Speaker 5: Technology A.
Speaker 4: Huge show, a huge week. Check out the podcast. You
Speaker 4: know where to find it Bloomberg, Apple, Spotify, and also
Speaker 4: on iHeart. It feels like earning seasons, kinda in the
Speaker 4: rear view mirror, but AI just doesn't go away from
Speaker 4: New York City and San Francisco. This is bloomboat technology.