Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From Marhart where Innovation, money and power Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed.
Speaker 3: Loved Love.
Speaker 4: Live from New York and San Francisco. This is Bloomberg
Speaker 4: Technology coming up full coverage of the massive IT failure
Speaker 4: that is grounded flights and upended businesses and markets.
Speaker 3: And Netflix gets its mojo back strong, so subscriber growth
Speaker 3: extends its lead on streaming rivals.
Speaker 4: And in an exclusive interview, Mark Zuckerberg calls Trump a
Speaker 4: badass without endorsing him for president. More on politics and
Speaker 4: take ahead, but first the market ramifications of the eight
Speaker 4: issues that have hit across from Asia to Europe to
Speaker 4: the US. And it was during European and Asian training
Speaker 4: that we hit the hardest. I'm looking the NASDAK futures
Speaker 4: therefore ed because actually we're only trading off by about
Speaker 4: three tens percent on the major benchmarks, but we did
Speaker 4: hit our loads at about four five am. That was
Speaker 4: when we really started to worry about the global ramifications
Speaker 4: of one key company ed that you're watching.
Speaker 3: Yeah, and it's CrowdStrike, and CrowdStrike is down big a
Speaker 3: market leader in endpoint ransomware security, put out a faulty
Speaker 3: patch or update and that impacted Windows hosts around the world,
Speaker 3: didn't impact mac os, didn't impact Linux if you're in
Speaker 3: that camp. But separately, coincidentally, there was also a Microsoft
Speaker 3: asu're outage, both of those contributing to the downside in
Speaker 3: Microsoft stock.
Speaker 5: We have a number of updates.
Speaker 3: There have been fixes issued, but so many of you
Speaker 3: have reached out to Karen I on social media to say, yeah,
Speaker 3: turning the computer on and off fifteen times seems to
Speaker 3: have worked.
Speaker 4: Blue Screen of death as it was no throughout any
Speaker 4: airport that you're unfortunately stuck at.
Speaker 6: But we want to take a closer look.
Speaker 7: At what is seemingly a botch CrowdStrike update that has
Speaker 7: caused this massive IT outage, as Ed says, disrupting Microsoft
Speaker 7: Global airlines, banks, healthcare systems were hit hard by what
Speaker 7: is said to be one of the few outages of
Speaker 7: this scale.
Speaker 6: It's global in nature.
Speaker 4: Who do we bring on our own Tom Giles for
Speaker 4: the team leading perspective here. I mean, we had a
Speaker 4: very busy set of teams across Asia and Europe today.
Speaker 6: It's great to be here.
Speaker 8: Thanks for having me. Yeah, massive outage, unprecedented in its
Speaker 8: scale in many many ways. As ed so succinctly summarized,
Speaker 8: there was this upgrade to CrowdStrike software. This is a
Speaker 8: cybersecurity team that many companies around the world, many businesses,
Speaker 8: many government agencies rely upon to monitor their systems and
Speaker 8: keep the intrusions out. There was an upgrade and it
Speaker 8: affected our Windows systems around the world and chaos has ensued.
Speaker 3: Okay, so Windows is the operating system design and operated
Speaker 3: by Microsoft. Separately, there was a Microsoft Azure or cloud outage,
Speaker 3: which is confused things. This is the latest from Microsoft
Speaker 3: three sixty five, basically saying that they that it appears
Speaker 3: Microsoft three sixty apps normal services have recovered again, there.
Speaker 5: Is ongoing issues.
Speaker 3: I mean, all you have to do tomm is go
Speaker 3: on social media and see the images of the dreaded
Speaker 3: blue screen that Caroline brought up. What also is interesting
Speaker 3: is is how widespread industries were hit. Airlines, banks, what's
Speaker 3: our coverage telling us about that?
Speaker 5: The global nature of the disruption.
Speaker 8: Banks ups so deliveries are disrupted, flights around the world.
Speaker 8: What this shows is the fragility of our global systems
Speaker 8: that are so reliant upon single vendors and one particular
Speaker 8: patch can just go consent things awry. And when you
Speaker 8: combine that with the ubiquity of Windows machines, they run
Speaker 8: something to the tune of seventy percent of the of
Speaker 8: the computers around the world. And then you, on top
Speaker 8: of that add Azure, this cloud computing system that many companies,
Speaker 8: many businesses around the world rely upon for their cloud systems.
Speaker 8: This really put together a toxic cocktail of it. Of
Speaker 8: it outages everywhere, and it just shows how vulnerable our
Speaker 8: systems are to these single vendors.
Speaker 3: Both Tom Giles, senior executive editor leading our global coverage
Speaker 3: of technology. Later in the show, I promise we're actually
Speaker 3: going to get a little deeper on what endpoint security is.
Speaker 3: We have a brilliant technical guest, but the market reaction,
Speaker 3: let's talk about that and bring in Jordan Klein tech
Speaker 3: media and telecom analysts and Mizuo desk analysts, and my goodness,
Speaker 3: your phone must have been ringing off the hook this morning.
Speaker 3: What have investors basically been telling you about their concern
Speaker 3: or lack of concern?
Speaker 9: Oh good, good afternoon, Ed, Thanks for having me. I
Speaker 9: think clearly people are reacting this way because CrowdStrike is
Speaker 9: probably one of the most owned and liked companies in
Speaker 9: the software sector. It's up one of you know, almost
Speaker 9: thirty five forty percent this year. There's very few companies
Speaker 9: in software that are up that much. And when you
Speaker 9: have one of these events, which thankfully wasn't a hack,
Speaker 9: it was an outage, and there's a huge difference, you know,
Speaker 9: reputationally for the company.
Speaker 6: But when you have.
Speaker 9: Two weeks left in your quarter, they're a July ending
Speaker 9: second quarter, it makes people extra nervous that any disruption
Speaker 9: or problems closing business with new customers to make their estimates.
Speaker 5: Or their guidance could be at risk.
Speaker 9: And right now we're in a position where investors are
Speaker 9: looking for reason to sell tech and rotate into other
Speaker 9: lagging areas, and I think they're kind of using this
Speaker 9: to take risk off and you know, not worry whether
Speaker 9: this impacts their quarter.
Speaker 3: Jordan, I don't know how well us you are in
Speaker 3: the market for endpoint security, but the IDC data shows
Speaker 3: that CrowdStrike has about a fifth of the market. Ironically,
Speaker 3: the number two in that market in terms of individual
Speaker 3: players is Microsoft.
Speaker 5: Both of them under pressure. How do you play that well?
Speaker 9: I think there's it's a good question. I don't really
Speaker 9: think that you play that in the view that one
Speaker 9: is going to lose a bunch of share or they
Speaker 9: both will. Because it's a outage and it's not a hack,
Speaker 9: that to me suggests you're not going to see a
Speaker 9: bunch of customers moving off of CrowdStrike or even Microsoft.
Speaker 9: Some people are, you know, bidding up shares of Sentinel One.
Speaker 9: That's a stock that competes at endpoint with CrowdStrike, but
Speaker 9: I don't even know where they rank in the top
Speaker 9: you know market share listings. Palo Alto is another, you know,
Speaker 9: big competitor. They don't necessarily do all endpoint, but they
Speaker 9: do firewalls and security, and that stock is gaining because people,
Speaker 9: I guess, assume they'll benefit. So at the end of
Speaker 9: the day, we'll have to wait and see what the
Speaker 9: implications or ramifications are. But I would advise investors don't
Speaker 9: make any quick, snap, knee jerk reactions in terms of
Speaker 9: buying or selling.
Speaker 6: And I'm more of a net buyer on.
Speaker 9: This weakness, and as it relates to CrowdStrike, I think
Speaker 9: they'll come through fine in a couple of weeks. People
Speaker 9: won't even be talking about this.
Speaker 4: This is a big market cap impact.
Speaker 6: Jordan.
Speaker 4: What's interesting in your note is you bring up, look,
Speaker 4: are they on the hook financially in any way?
Speaker 6: How will we understand that.
Speaker 4: From CrowdStrike as to whether or not their own clients
Speaker 4: either put off renewing or say, look, I've lost a
Speaker 4: lot of business here, where's the money.
Speaker 9: Yeah, that's a great question. I've talked to some people.
Speaker 9: We put out a quick research update from Mizuho Research Analysts.
Speaker 9: What I think is going to happen is you're not
Speaker 9: going to hear anything until they report their quarter, and
Speaker 9: that won't come until the quarter closes after the end
Speaker 9: of July, so it could be as much as a
Speaker 9: month until you don't really get an official update as
Speaker 9: to what they're liable for. If anything, we do not
Speaker 9: think their contracts are written such that they'll have to
Speaker 9: basically pay these companies for lost business or revenue. But
Speaker 9: what's probably going to happen is to appease companies that
Speaker 9: were disrupted, they will give credits, meaning they will say
Speaker 9: you're under contract and you owe us money, but we
Speaker 9: will give you a credit for business that you owe
Speaker 9: us under the contract. So it's basically a discount. How
Speaker 9: much we don't know, But as soon as they can
Speaker 9: quantify that, I think the markets.
Speaker 6: Will like the clarity and they'll be more.
Speaker 9: Positively disposed once they can quantify what the impact will be.
Speaker 9: Wouldn't imagine it's going to be any massive amount.
Speaker 4: And to that point, when you've got a six billion
Speaker 4: dollar move on a market cap, maybe it's not as
Speaker 4: big as six billion. Maybe you can buy into some
Speaker 4: of this weakness Jordan that you're speaking of. How many
Speaker 4: people do you think, though, in this current environment of jitteriness,
Speaker 4: are willing to go long into a weekend such as this.
Speaker 9: We're going to find out as the market, you know,
Speaker 9: we go into the afternoon and we see how this
Speaker 9: stock trades, I would say, initially, you know, it's eleven
Speaker 9: o'clock Eastern, I'm pretty encouraged by the way the stock's acting,
Speaker 9: given it's well off the lows.
Speaker 5: If this was something.
Speaker 9: Where people were in an absolute panic and in the
Speaker 9: market was melting down, I think it would be at
Speaker 9: the lows, and it's not, so I wouldn't be surprised
Speaker 9: if it continues to grind a bit higher. But I
Speaker 9: do think again, the sentiment and tech broadly is people
Speaker 9: are nervous, the sector is not acting well. It's it's
Speaker 9: particularly you know, nerve racking for those as we wait
Speaker 9: for earnings, and I kind of feel like most investors
Speaker 9: are going to take a wait and see. You know,
Speaker 9: our volumes on our trading desk don't suggest panic selling,
Speaker 9: but it doesn't suggest you're seeing waves of buyers coming
Speaker 9: in after a few days of weakness either.
Speaker 4: Jordan Klein, perfect voice for today. We thank you tech
Speaker 4: media and telecom analyst at Mizuho.
Speaker 6: Appreciate the time.
Speaker 4: Now let's just talk about Meta CEO and founder Mark
Speaker 4: Zuckerberg wing in on the current election landscape in an
Speaker 4: interview with Bluembgo Original's host Emily Chang for an episode
Speaker 4: of the Circuit Just take a listen.
Speaker 10: The main thing that I hear from people is that
Speaker 10: they actually want to see less political content on our
Speaker 10: services because they come to our services to connect with people.
Speaker 10: So you know, that's what we're going to do where
Speaker 10: we give people control over this, but we're generally trying
Speaker 10: to recommend less political content. So I think you're going
Speaker 10: to see our services play less of a role in
Speaker 10: this election than they have in the past.
Speaker 4: What's the full use of interview with Meta CEO Mark
Speaker 4: Zuckerberg on the circuit with Emily Chang.
Speaker 6: It's July twenty third, six thirty.
Speaker 4: Pm in New York on Bloomberg Television or stream it
Speaker 4: eight thirty pm ET on Bloomberg Originals.
Speaker 11: In terms of that member growth insurre, I'd say that
Speaker 11: the kind of outside paid outsized paidin and ads in
Speaker 11: the quarter was primarily driven by a stronger acquisition, a
Speaker 11: little stronger than we expected, but also very healthy, continued
Speaker 11: healthy retention in the quarter. And that's across all regions.
Speaker 5: That was the Netflix CFO.
Speaker 3: They're talking about the company's member or subscriber growth for
Speaker 3: retention earning showed strong subscriber editions in the second quarter.
Speaker 3: I want to bring a Needham senior Entertainment Internet analyst,
Speaker 3: Laura Martin. It's a situation where after hours stock go down,
Speaker 3: market open stock go up. Good subscriber numbers. Concerning guidance,
Speaker 3: which is more important for you, Laura.
Speaker 12: I think the subscriber number is in focus in both periods,
Speaker 12: so they over delivered. They added eight million subscribers that
Speaker 12: was about twice the consensus. But then they had a
Speaker 12: very anemic subscriber growth number for the third quarter, and
Speaker 12: they talked about a tougher second half. So the answer
Speaker 12: is subscribers matter a lot, but not that subscribers like overall.
Speaker 12: And also the location of the subscribers is sort of suboptimal.
Speaker 12: They're adding subscribers in the lowest RPOO or what they
Speaker 12: call arm average revenue per user, and so that's actually
Speaker 12: Wall Street doesn't like that either. And the biggest, biggest
Speaker 12: problem is they're going to stop giving us subscriber guidance
Speaker 12: and actually our POO guidance in the first quarter of
Speaker 12: next year, and they just want to talk about revenue.
Speaker 12: And that's a really big problem because it's going to
Speaker 12: add volatility to the stock.
Speaker 3: Where the subscribers are I find so interesting as well.
Speaker 3: So they talked about strength in Asia Pacific and then
Speaker 3: in terms of context of the guidance, like currency impacts,
Speaker 3: particularly in Argentina. If you're covering this stock, where do
Speaker 3: you want to see subscribe a growth sixteen.
Speaker 12: Dollars artpoo's in America? You want to see them all
Speaker 12: there because it's like two p's they pay twice as
Speaker 12: much in America compared to latam or apath.
Speaker 4: Okay, see you one more expensive money being taken in
Speaker 4: from the more expensive clientele. But ultimately they're going to
Speaker 4: get out of the Monaaura. We saturated. We're still trying
Speaker 4: to descend which streaming service I want to be using
Speaker 4: and which one should be merging.
Speaker 5: Yep.
Speaker 12: Well, and I really like their going. I think the
Speaker 12: reason their churn is falling, like in America they're saturated,
Speaker 12: as you say, is live. I think when they do
Speaker 12: these live fights and these live roasts and these like
Speaker 12: exclusive live programming, it keeps people paying for the next
Speaker 12: month because they really market these things, these exclusive live events.
Speaker 12: So I really like, like, I think their video game
Speaker 12: and advertising is very troubled. Video games troubled, but I
Speaker 12: think live is a really interesting genre for Netflix to
Speaker 12: lower turn.
Speaker 4: Okay, so they need to be investing basically because that
Speaker 4: takes a herculean effort from a technology perspective, right.
Speaker 12: Yeah, And they're paying for like NFL games, so they're
Speaker 12: joining the arms race in really expensive live sports programming.
Speaker 12: So that isn't great for your content budget, you know.
Speaker 13: Look ahead, Laura.
Speaker 4: We could go on and on about this entire environment,
Speaker 4: and we didn't even get to some of the discussion
Speaker 4: around the M and A today as well. Ninham Senior
Speaker 4: Entertainment and Internet analyst Laura Martin always so spot on
Speaker 4: when it comes to this market analysis. Meanwhile, and we
Speaker 4: just want to turn our attention to another earnings today
Speaker 4: when we would say at a large fintech American Express
Speaker 4: at the stock trading well, it's been a bumpy ride today,
Speaker 4: in fact, currently off by more than four percent as
Speaker 4: the company sees fiscal year earnings for share between thirteen
Speaker 4: thirty and thirteen eighty dollars, and it actually was looking
Speaker 4: pretty strong, but it's warning that it plans to increase
Speaker 4: spending on marketing in the coming months. CEO sc Scurry
Speaker 4: telling me earlier today that they're really committed to marketing
Speaker 4: to tech investments, particularly in artificial intelligence at the moment
Speaker 4: that this is a company that has had record revenue overall,
Speaker 4: but the market's still questioning that's how they continue to
Speaker 4: be beefing up on the profitability side. Like many other
Speaker 4: American spects, has also been seeing an impact to the
Speaker 4: crowd strike outage, saying quote, we.
Speaker 6: Had to slow down early on.
Speaker 4: All airports were impacted, so our call logs were very
Speaker 4: high as people tried to change their flights, so CEO
Speaker 4: telling us that at the moment, though still pretty confident.
Speaker 6: Ed what we got coming up.
Speaker 3: Another big name in the world of software, Salesforce announced
Speaker 3: launch of the Einstein Service Agent, their first fully autonomous
Speaker 3: AI agent for customer support. Salesforce AI CEO Clarashi joining
Speaker 3: us next.
Speaker 5: This is Bluembo Technology.
Speaker 6: Okay, it's the growing field of AI.
Speaker 4: Salesforce recently announcing the launch of their Einstein Service Agent.
Speaker 4: This is the company's first fully autonomous AI agent working
Speaker 4: to transform customer service jobs. That's bringing Clarashi, CEO of
Speaker 4: Salesforce AI for more. Clara, how can you quantify the
Speaker 4: difference of a normal, typical chatbot here?
Speaker 6: How much better is this agent you're offering?
Speaker 1: Thank you so much for having me. You know, we've
Speaker 1: all interacted with customer support chatbots and what they can
Speaker 1: do is pretty limited. It's it's always obvious that you're
Speaker 1: talking with a bot. Einstein Service Agent is our new
Speaker 1: offering that completely redefines the self service experience. Really feels
Speaker 1: like you're chatting with a human expert who can answer
Speaker 1: complex questions and take complicated actions, you know, for example,
Speaker 1: looking up in order, reviewing a photo that you've chatted
Speaker 1: in of a damaged product, issuing a return shipping label,
Speaker 1: sending a replacement multi steps, all in a secure and
Speaker 1: trusted way. Because Einstein is grounded in your company's trusted
Speaker 1: data policies and procedures in your salesforce CRM.
Speaker 4: There's a multi modal element to this. How much have
Speaker 4: you been building the large language models yourself depending on others?
Speaker 4: Where does ultimately this agent come from?
Speaker 1: Well, we've been developing large language models since twenty eighteen.
Speaker 1: We acquired a company called metamind and our Salesforce research group.
Speaker 1: They are one of the most prolific publishers of Frontier Research.
Speaker 1: That being said, we believe in an open architecture because
Speaker 1: we want to give customers choice when it comes to
Speaker 1: AI models, and we've recently launched our CRM leaderboard. It's
Speaker 1: the first LM leaderboard specifically for sales, service, marketing and commerce.
Speaker 1: And we found something amazing, which is first that small models,
Speaker 1: in some cases open source models actually outperform the biggest,
Speaker 1: most expensive models on the market when it comes to
Speaker 1: a lot of enterprise tasks. The second thing that we
Speaker 1: learned is that the leaderboard is constantly changing week over weekends.
Speaker 1: So we really feel as important to support an open,
Speaker 1: vibrant ecosystem of models.
Speaker 5: It's Clark, good morning, It's Ed in Cisco.
Speaker 3: Look at our lead story is the global outage CrowdStrike Microsoft.
Speaker 3: There's some three sixty five integration with different Salesforce platforms
Speaker 3: and offerings, and you know your role across AI but
Speaker 3: also cloud. What has the impact been on you and
Speaker 3: Salesforce and what's the response been.
Speaker 1: Please, I have a number of friends who are stuck
Speaker 1: in the airport right now. You know, I think nearly
Speaker 1: every industry around the world has been affected. I'm Salesforce
Speaker 1: included by the crowd strike issue. Our engineers are working
Speaker 1: with the CD strike team around the clock to restore
Speaker 1: full access to our services.
Speaker 3: And just finally on that topic, you know you've long
Speaker 3: been in technology. How does this event rank, you know,
Speaker 3: in sort of technological disruptional outages you've seen in your career.
Speaker 1: You know, I think there's you know, that's inevitability when
Speaker 1: it comes to technology, and it really underscores the importance
Speaker 1: of working with trusted partners. I mean, trust is Salesforce's
Speaker 1: number one value, and we very much pride ourselves in
Speaker 1: our uptime partnering with many customers, specifically an AI you know,
Speaker 1: Triple A Air India Open Table. These are companies that
Speaker 1: really help run the world, and so we take that trust, security, reliability,
Speaker 1: and performance very seriously.
Speaker 4: Power there's going to be quite a few friends of
Speaker 4: yours at airports and many others who are desperately trying
Speaker 4: to get hold of a real person right now on
Speaker 4: the phone rather than a chatbot, and I'm wondering how
Speaker 4: long that will be inevitable You in many ways do
Speaker 4: transfer conversations with this new AI agent to a human
Speaker 4: if perhaps just gets out of the capability of the agent.
Speaker 6: How often is that likely to happen? Do you think?
Speaker 1: Well, I think that it really depends on, you know,
Speaker 1: the nature of how much knowledge and trusted policies and
Speaker 1: procedures the companies have been documented inside of their organization,
Speaker 1: and if they don't have very much, we're going to
Speaker 1: help them with that AI generated AI drafted knowledge creation.
Speaker 1: But I think by and large we're going to see
Speaker 1: more and more, just like when you're talking to a
Speaker 1: chatbot or talking to chat GPT, sometimes it's hard to
Speaker 1: tell that it's not a human. Now, the challenge is
Speaker 1: that without that contextual data and without those guardrails, these
Speaker 1: llms can just make things up, they can hallucinate. And
Speaker 1: so that's really where Salesforce is Einstein trust layer. That's
Speaker 1: the layer that every single AI interaction goes through before
Speaker 1: it gets presented to a customer. That's so important to
Speaker 1: make sure that it's trusted, reliable, and accurate.
Speaker 3: Clara, our audience has kind of followed the rollout of
Speaker 3: what Einstein is doing and what Salesforce has done in
Speaker 3: the domain of sort of generative AI tool quite closely.
Speaker 3: You must benchmark against other similar platforms or products. What
Speaker 3: have you learned about a performance essentially against what else
Speaker 3: is out there?
Speaker 1: Well, it's such a great question. It's something that we're
Speaker 1: constantly benchmarking. I mentioned our CRM Large Language Model leaderboard
Speaker 1: earlier and we found that there's really three critical ingredients
Speaker 1: to success when it comes to enterprise AI. First and
Speaker 1: foremost is trust. Making sure that you have data privacy,
Speaker 1: data security, ethical guardrails built in. Again, this is our
Speaker 1: Einstein trust layer. Everything from citations to audit trails, to observability,
Speaker 1: monitoring and data masking. The second ingredient is having the
Speaker 1: right context. If you don't give the LLM enough context,
Speaker 1: it'll just make things up. Now you think about our customers.
Speaker 1: They've been putting their trusted data and their trusted business processes,
Speaker 1: policies and procedures into Salesforce for the last twenty five years.
Speaker 1: And with the introduction of our data cloud product now
Speaker 1: where we have that trusted data across the entire enterprise
Speaker 1: of siloed systems, we're bringing that together and so that
Speaker 1: context is critical to accuracy, reliability, and really the usefulness
Speaker 1: of the AI. And then the third ingredient is empowerment
Speaker 1: and helping bring every employee at an organization along for
Speaker 1: this AI learning journey which is going to be which
Speaker 1: is never ending. And I'm really proud of the work
Speaker 1: that we've done with Trailhead. We've open sourced all of
Speaker 1: the courses that we developed for our internal employees Clark
Speaker 1: Get Smart and AI.
Speaker 3: Clara Shi, CEO Salesforce, say, I great to have you
Speaker 3: back on the show.
Speaker 5: Thank you.
Speaker 3: Coming up, we're going to get back to that massive
Speaker 3: IT outage around the world and disruption in all courts
Speaker 3: of industries with a key name and an expert.
Speaker 4: Welcome back to Bluemore Technology. I'm Caroline Heid in New.
Speaker 3: York and i med Love Low in San Francisco. It's Friday,
Speaker 3: but it's kind of red on the screen and a
Speaker 3: negative vibe actually declines on the NAS that one hundred
Speaker 3: of kind of accelerated in the last twenty minutes or so.
Speaker 3: The top story, you know what it is, the global
Speaker 3: IT outage. Many of you are either at home or
Speaker 3: in your office trying to deal with the dreaded blue screen.
Speaker 3: CrowdStrike is down eight and a half percent off session lows.
Speaker 3: Appoint that Jordan Robinson of Missouri made earlier jorhdan Klin
Speaker 3: sorry of Missouri made earlier. Is that in terms of
Speaker 3: volumes trading, this doesn't suggest panic selling. There aren't buyers
Speaker 3: coming in either. Carow Microsoft Soft as six tens percent.
Speaker 3: Windows is a Microsoft product. But separately, separately from the outage,
Speaker 3: there was some issue in Azure, which they've also resolved,
Speaker 3: but the timing of which is kind of curious and
Speaker 3: kind of rule markets as well.
Speaker 6: Let's dig into it.
Speaker 4: Man keeps seeing perfect person to be with us Bloomberg Intelligence,
Speaker 4: and look, we were just having John kinem as you
Speaker 4: host saying, look, but perhaps buy into this weakness.
Speaker 6: Rather than sell on cloud Strike. Where do you sit
Speaker 6: on it?
Speaker 14: No, I'm in the camp where I think this is
Speaker 14: going to linger on for a while, especially because the
Speaker 14: recovery is not as easy as just rolling back the software.
Speaker 14: I mean, there are a number of clients who are
Speaker 14: at an older version of Windows where you can't just
Speaker 14: roll back the code like this, And that's the biggest
Speaker 14: risk with cloud software is it gets deployed overnight and
Speaker 14: it can have a far reaching impact. But in this case,
Speaker 14: as we can see, the recovery isn't you know, in
Speaker 14: a minute or in an hour. So that's where this
Speaker 14: is going to linger on. And the fact that Microsoft
Speaker 14: is involved, you know, they are the two biggest rivals
Speaker 14: when it comes to endpoint security. So in this case,
Speaker 14: who takes the blame? I mean, I imagine there will
Speaker 14: be lawsuits, there will be customers asking for indemnification because
Speaker 14: of the lost business, and who pays who? I mean,
Speaker 14: I think Croudstrike will have to give a lot of
Speaker 14: discounts to their customers credits and that will have an
Speaker 14: impact on the free cash flow. So I'm just not
Speaker 14: ready to write it off as an incident that happen
Speaker 14: and move on.
Speaker 5: The IDC data.
Speaker 3: I think puts CrowdStrike is holding about one fifth of
Speaker 3: the endpoint security market. I guess the question, the basic
Speaker 3: question is whether this hurts their bookings.
Speaker 5: Right if there are customers or.
Speaker 3: Would be customers that say, nah, I'm not going to
Speaker 3: go into CrowdStrike, what do you think, Mandy?
Speaker 14: I mean, so, think of the endpoints security space. On
Speaker 14: the enterprise side, it's four companies that dominate, Croudstrike and Microsoft,
Speaker 14: and then you have Sentinel one and with Security, which
Speaker 14: Google is rumored to express interest. So clearly, you know
Speaker 14: you don't have a lot of choices to go to.
Speaker 14: But I do expect, you know, customers asking CrowdStrike more questions.
Speaker 14: And that also brings into a question, you know, the
Speaker 14: concept around agentalists versus agent based security. I think there
Speaker 14: will be a growing preference towards agentalist securities where it
Speaker 14: doesn't change the underlying operating system behavior. So clearly a
Speaker 14: lot of architectural level questions surface because of this outage,
Speaker 14: But I still think it's going to hurt CrowdStrike in
Speaker 14: the near.
Speaker 3: Term, Mandy saying of Bloomberg intelligence, busy morning for you.
Speaker 3: Thank you very much. Let's keep the conversation going. Let's
Speaker 3: get technical and let's get some expertise with Steve Grobman,
Speaker 3: executive vice president and chief Technology Officer at McAfee, and
Speaker 3: Steve bear with me, but just for our audience sake.
Speaker 3: CrowdStrike founded twenty twelve by alumni essentially of the current
Speaker 3: form of your business that has a complicated history of
Speaker 3: its own. To start with, as anyone from CrowdStrike phoned
Speaker 3: you or ask you guys for help or advice on
Speaker 3: what's going on.
Speaker 15: Yeah, you know, I know the CrowdStrike team, well, the
Speaker 15: cybersecurity industry is a close knit bunch.
Speaker 13: They're running the response on this.
Speaker 15: You know, we're really focused on making sure that our
Speaker 15: customers are well informed. You know, McAfee is now a
Speaker 15: pure play consumer company where we're protecting consumers and we're
Speaker 15: making sure that they understand that even though their devices
Speaker 15: are protected by McAfee, if they're using services from organizations
Speaker 15: or businesses that depend on CrowdStrike and we're impacted by
Speaker 15: this event, that they might see things like banks or
Speaker 15: transportation having degraded service.
Speaker 13: And that's really where we're trying to play a role.
Speaker 15: Here is to help our customers, our consumers, the industry
Speaker 15: navigate this.
Speaker 3: Steve a few people in the technology industry with me
Speaker 3: an email that CrowdStrike Support sent them, and I'm summarizing
Speaker 3: or paraphrasing, but the email basically says, reboots up to
Speaker 3: fifteen times and that should do the trick.
Speaker 5: What do you make of that?
Speaker 15: You know, when there are issues, putting together procedures to
Speaker 15: get organizations back in business can can have many different forms.
Speaker 13: I think one of the things that.
Speaker 15: I caution is my understanding in this particular case. There
Speaker 15: are a wide range of situations that an organization might
Speaker 15: be in. With the wide range of recovery procedures the
Speaker 15: one that you're outlining it, It's certainly plausible that it's
Speaker 15: one of the scenarios. But what I would say is,
Speaker 15: you know, we as an industry will learn from this.
Speaker 13: We always do.
Speaker 15: If I reflect back to want to cry back in
Speaker 15: twenty seventeen, you know, coming out of that, we change
Speaker 15: the way that we secured our networks, change the way
Speaker 15: that we secured our environments, and we learned, you know,
Speaker 15: back into the nineties when we had some of the
Speaker 15: big worms, we learned, so it's going to happen again.
Speaker 15: I'd really stress that cybersecurity defense is a very different
Speaker 15: industry than most other technology in that bad actors are
Speaker 15: innovating every single day, creating new attacks every single day,
Speaker 15: and making it such that in order to defend environments,
Speaker 15: whether it's McFee defending consumers or croudstrike defending enterprises, requires
Speaker 15: a very rapid deployment of new technology to stay one
Speaker 15: step ahead.
Speaker 13: Of those bad actors.
Speaker 15: So, you know, while we're going to absolutely learn from this,
Speaker 15: I do think it's important that part of it is
Speaker 15: due to the nature of the business.
Speaker 6: So basically get used to it. Is kind of what
Speaker 6: you're telling us, Steve.
Speaker 4: And I'm wondering whether this, as Clara Shi just told us,
Speaker 4: a sales will say this is inevitable.
Speaker 6: How often is this going to happen to us?
Speaker 15: Yeah, I don't know that I would say it's inevitable.
Speaker 15: I do think that there are some unique characteristics.
Speaker 13: I'd put it this way.
Speaker 15: If we're going to drive cars at seventy miles per
Speaker 15: hour on roads like we know that people are going
Speaker 15: to get injured, and that doesn't mean that we shouldn't
Speaker 15: focus on auto safety.
Speaker 13: I think we're in the exact same world here.
Speaker 15: There are technologies like AI that bad actors are using
Speaker 15: to create more and more lethal attacks, and the cyber
Speaker 15: defense industry is going to rapidly be releasing new capabilities
Speaker 15: to mitigate those.
Speaker 13: Part of that means we're moving very quickly.
Speaker 15: And we need to learn how to do that with
Speaker 15: the minimal risk possible of introducing technology defects that caused
Speaker 15: the issue that we saw like that that we saw today.
Speaker 15: But I'd be careful to predict that the is inevitable.
Speaker 6: Okay, then how could we have done this differently?
Speaker 4: What do you think will the learning's ultimately be about
Speaker 4: how with speed you can update and better security without
Speaker 4: taking down global industry.
Speaker 15: So even if you're moving fast, doesn't mean that you
Speaker 15: need to do everything all at once. So you know,
Speaker 15: when organizations roll out protection doing it in a phased fashion.
Speaker 15: I know that that's generally the best known practice, but
Speaker 15: some of the underlying details of exactly how that's done,
Speaker 15: those are things that the industry is going to learn, polish,
Speaker 15: you know, create some new procedures. I do think it's
Speaker 15: important that we don't overreact to this, where if we
Speaker 15: start putting too many controls on the ability to rapidly
Speaker 15: mitigate defenses and attacks, we could be in a month
Speaker 15: worse situation. So on a positive side, we understand this
Speaker 15: issue very well. We understand the guidance that organizations can
Speaker 15: have to get back in business, and we also understand
Speaker 15: even some of the residual impacts. You know, one of
Speaker 15: the things that McFee is seeing is scammers are taking
Speaker 15: advantage of the news cycle to try to scam consumers.
Speaker 15: We're getting calls into our help center where we're getting
Speaker 15: reports that our customers are getting reports from people pretending
Speaker 15: to be their bank trying to trick them into giving
Speaker 15: them a password or other sensitive data. So like it's
Speaker 15: even those angles that we need to educate the world
Speaker 15: that in a complex digital world, we really need to
Speaker 15: be on our guard across the spectrum of enterprise and consumer.
Speaker 4: Steve great perspective, hands on approach. Steve Women, thank you,
Speaker 4: Executive vice president and chief Technology over at McAfee. I mean,
Speaker 4: while coming up, we're going to be joined by Lizzie Francis,
Speaker 4: partner at M thirteen for a discussion on ogygal intelligence
Speaker 4: impact on the future of streaming, on content creation, digging
Speaker 4: into that Netflix Soundhill a little bit more. This is
Speaker 4: Broomberg technology.
Speaker 2: I think that AI is a great is going to
Speaker 2: generate a great set of creator tools, a great way
Speaker 2: for creators to tell better stories. And one thing that's sure,
Speaker 2: if you look back over one hundred years of entertainment,
Speaker 2: you can see how great technology and great entertainment work
Speaker 2: hand in hand to make to build great, big businesses.
Speaker 4: Generator of AI with a Netflix co CEO Ted Surrundus,
Speaker 4: there is look he take gold and how it's changing.
Speaker 6: Up the industry, the streaming industry. Lots to discuss there.
Speaker 4: So let's bring in Lizzie Francis, partner at M thirteen
Speaker 4: for more. And Lizzie, I'm pretty sure you've been focused
Speaker 4: plenty on how content is being disrupted, the innovations and
Speaker 4: how does your portfolio companies reflect that.
Speaker 6: Where do you think AI is going to make the
Speaker 6: biggest difference?
Speaker 16: Oh, good morning, and thank you so much for having
Speaker 16: me on today.
Speaker 5: Yeah, I'm thirteen.
Speaker 16: We really think and see that this paradigm shift with
Speaker 16: AI is happening today, and it's happening quickly and with
Speaker 16: great speed. And so what we're seeing is that it's
Speaker 16: focused mostly on productivity and how we can actually see
Speaker 16: productivity improvements across all sectors. So we've taken an approach
Speaker 16: where we are investing in areas that are really changing
Speaker 16: underlying infrastructure and phenomenal ways. We recently invested in a
Speaker 16: company called maven Agi, which is now servicing over ninety
Speaker 16: percent of inbound customer service for companies like trip Advisor
Speaker 16: and Row. And what's remarkable about this is it's not
Speaker 16: just the productivity, but as M thirteen thinks about the
Speaker 16: few sure of AI, it's really about this paradigm shift
Speaker 16: of customer personalization, really thinking about how we can think
Speaker 16: about creating a better customer experience time and time again.
Speaker 16: So what you see with someone like maven Agi is
Speaker 16: that it really is not just about that passive customer service,
Speaker 16: which is remarkable in itself, it's also about creating these
Speaker 16: surprise and delight moments for customers. It's surprising them in
Speaker 16: places like banking with Hi, how can I help you today?
Speaker 16: Not just on losing your debit card, but do you
Speaker 16: need help finding alone right? Or is it how can
Speaker 16: I schedule a new flight today? Given everything that's happening,
Speaker 16: as we're seeing so I think we're well start to
Speaker 16: see this shift in AI over the next ten years
Speaker 16: where it's not just about productivity, but again it is
Speaker 16: really about this deep focus on personalization and consumer experience.
Speaker 3: So Lizzie M thirteen still has to make sort of
Speaker 3: discerning calculations on where to put money four hundred million
Speaker 3: dollar fund three.
Speaker 5: You know that sizeable.
Speaker 3: Is there a high volume opportunity or is it competitive
Speaker 3: like mechanically everything you've just told us, How do you
Speaker 3: put that into practice each day?
Speaker 16: Yeah, it's a thoughtful point ed and I think because
Speaker 16: we're at this paradigm shift, one of the things we're
Speaker 16: most excited about is we've seen in other cycles is
Speaker 16: that there is quite a bet of venture dollars actually
Speaker 16: flowing into the ecosystem now to propel this kind of innovation.
Speaker 13: So we're seeing that reflected.
Speaker 16: And where venture dollars are actually being allocated. If you
Speaker 16: look holistically across the board, about fifty percent of VC
Speaker 16: dollars are going to AI and AI companies. And so
Speaker 16: when we think about where do we want to actually
Speaker 16: put our dollars when it comes to AI, we still
Speaker 16: think about sound business fundamentals, and so across the four
Speaker 16: areas that we invest in, health, money, finance, and consumer.
Speaker 16: What really matters at the end of the day is
Speaker 16: that when it comes to a company that's either powered
Speaker 16: by AI or is AI native, there has to be
Speaker 16: those sound business fundamentals that really drive the business and
Speaker 16: create a compelling, venture backable business for us to be
Speaker 16: excited about, and we're seeing them. I think you're right
Speaker 16: that it is a competitive market out there, but because
Speaker 16: we're seeing that people are able to innovate so quickly
Speaker 16: with AI and leverage this technology in exciting ways, we're
Speaker 16: actually seeing what we'd hoped AI would actually do at core,
Speaker 16: which is unlocked creativity, unlock innovation, and give entrepreneurs the
Speaker 16: power to actually build businesses that are exciting and transformative.
Speaker 16: We actually have invested in on the healthcare side and
Speaker 16: a company called Carognostics, which is actually helping doctors and
Speaker 16: clinicians diagnose ahead of time previously undiagnosed chronic conditions in patients.
Speaker 16: Now you can see that doctors and clinicians can actually
Speaker 16: provide better patient care and think about the actual patient experience.
Speaker 5: Lizzie Francis, partner at MTHTE. Thank you very much.
Speaker 3: Now more of the conversation with Meta CEO Mark Zuckerberg
Speaker 3: on The Circuit with Emily Chang, where he commented on
Speaker 3: the twenty twenty four presidential election and the state of
Speaker 3: American politics. He even talked about the appeal of former
Speaker 3: President Trump, though does not endorse a candidate.
Speaker 5: Listen to this.
Speaker 17: I want to talk about the twenty twenty four presidential election.
Speaker 9: Okay.
Speaker 17: Facebook has been a flashpoint in many elections around the world,
Speaker 17: and you personally have been called out, most recently by
Speaker 17: former President Trump.
Speaker 6: This is a big election. What do you think is
Speaker 6: at stake?
Speaker 10: Well, I mean, look, it's obviously a very important and
Speaker 10: it'll be a historic election.
Speaker 5: You know.
Speaker 10: I feel like I'm best positioned maybe to talk about
Speaker 10: what our role will be in in and what we're.
Speaker 6: Going to do.
Speaker 5: And look, I mean the main thing that I hear.
Speaker 10: From people is that they actually want to see less
Speaker 10: political content on our services because they come to our
Speaker 10: services to connect with people. So you know, that's what
Speaker 10: we're going to do, where we give people control over this,
Speaker 10: but we're generally trying to recommend less political content. So
Speaker 10: I think you're going to see our services play less
Speaker 10: of a role in this election than they have in
Speaker 10: the past. And personally, I'm also planning on playing a
Speaker 10: not playing a significant role in the election. I've done
Speaker 10: some stuff personally in the past. I'm not planning on
Speaker 10: doing that this time. And that includes, you know, not
Speaker 10: endorsing either of the candidates. Now, there's obviously a lot
Speaker 10: of crazy stuff going on in the world. I mean
Speaker 10: the historic events over the last like over the weekend,
Speaker 10: and I mean a personal note, it's yeah, I mean,
Speaker 10: seeing Donald Trump get get up after getting shot in
Speaker 10: the face and pump his fist in the air with
Speaker 10: the American flag is one of the most badass things
Speaker 10: I've ever seen in my life. But and I think
Speaker 10: look at some level as an American, it's like hard
Speaker 10: to not get kind of emotional about that spirit in
Speaker 10: that fight. And I think that that's why a lot
Speaker 10: of people like the guy. But look, I mean, it's
Speaker 10: we're living in a pretty crazy time, and I view
Speaker 10: our role here is to make it so everyone can
Speaker 10: express their their views on this stuff, but we're going
Speaker 10: to try to manage it so that way the politics
Speaker 10: doesn't drown out the human connection and the community, which
Speaker 10: is I think the main thing that people come to
Speaker 10: our services for and you know, we're not always going
Speaker 10: to get that right, but that's what we're going to
Speaker 10: try to do, and I think that that's probably the
Speaker 10: best role that we can play.
Speaker 4: Met a CEO co founder Mark Zuckerberg along with our
Speaker 4: Bluemego originals Emily Chang. What's the exclusive interview on the
Speaker 4: circuit with Emini Chang on Tuesday, July twenty third at
Speaker 4: six thirty pm ET in New York on bluemeg Television
Speaker 4: or look, you can stream it to eighth thirty pm
Speaker 4: on Blue meg Originals. But someone else was in the
Speaker 4: room listening. It was Kurt Wagner. We go to him
Speaker 4: for some more on the interview, and it felt as
Speaker 4: though there was a very clear signal that don't expect
Speaker 4: from Mark Zuckerberg at least any endorsement, even though we
Speaker 4: might hear it from others in Silicon Valley and beyond.
Speaker 11: Yeah, I don't.
Speaker 18: I don't think there's any upside to him endorsing someone
Speaker 18: at this point, right. I mean, it's it's sort of
Speaker 18: like that old Michael Jordan quote, you know, Republicans by
Speaker 18: sneakers too. It's like he's got a global platform, he's
Speaker 18: got you know, partners on both sides of the aisle.
Speaker 18: He's got advertisers on both sides of the aisle, and
Speaker 18: I think or someone in his position, you know, there's
Speaker 18: just not really I think what we saw on that
Speaker 18: clip is about as close as he's going to come to,
Speaker 18: you know, saying something that sounds like an endorsement for
Speaker 18: either one of these guys.
Speaker 3: Well, it's still fascinating. This is what Trump said on
Speaker 3: True Social in March. I know you're familiar with this, Kurt,
Speaker 3: but it was in the context of whether or not
Speaker 3: he would get rid of TikTok, Facebook and zucker Schmarck
Speaker 3: will double their business.
Speaker 5: So Zuckbert said something nice about Trump.
Speaker 3: I don't know that Trump shares the sentiment, but this
Speaker 3: is an issue in this cycle, TikTok, social media, big tech.
Speaker 18: Yeah, absolutely, And I think there's some political savvy in
Speaker 18: what Mark Zuckerberg said yesterday, right, I mean, if the
Speaker 18: wins are indeed changing, obviously we talked about a lot
Speaker 18: over the last week plus that it feels like Donald
Speaker 18: Trump is really taking sort of this election lead here.
Speaker 18: You know, it's in Mark Zuckerberg's best interest to say
Speaker 18: something flattering or nice to the guy who may be
Speaker 18: president and who has threatened him in his company, right,
Speaker 18: And so I don't think that this was you know,
Speaker 18: off the cuff comment. I'm sure this was somewhat calculated
Speaker 18: in that regard. And this is going to continue to
Speaker 18: be a contentious relationship. I don't think, you know, because
Speaker 18: Mark Zuckerberg said one nice thing about Trump, suddenly these
Speaker 18: two are going to be buddies. But you know, he's
Speaker 18: staring down the idea four more years of a Trump presidency,
Speaker 18: and so I think he's sort of, you know, starting
Speaker 18: to set a new maybe that we hadn't heard over
Speaker 18: the last couple of years.
Speaker 5: Well, things can change.
Speaker 3: As we discussed on the show this week, Kat, President
Speaker 3: Trump is now pretty close with mister Elon Musk. These
Speaker 3: people matter. They have influence in Silicon Valley globally they do.
Speaker 18: I mean not only do they have the money, right,
Speaker 18: we talked about what Elon's doing in terms of his
Speaker 18: political donations and how impactful that can be, but they
Speaker 18: just have such a cultural influence over you know, they
Speaker 18: have fans, right, These are celebrity CEOs, and when they
Speaker 18: come out and say, you know, in Elon's case, I
Speaker 18: endorse Trump, I'm giving money to Trump. That has a
Speaker 18: ripple effect to a lot of people who admire and
Speaker 18: respect what Elon says. And I think Mark Zuckerberg is
Speaker 18: the same way with a different audience.
Speaker 13: Right, So these.
Speaker 18: Guys have such influence. That's why we care about what
Speaker 18: they say when it comes to politics.
Speaker 3: Bloomberg's Kurt Wagner in the room for a seriously important interview.
Speaker 4: Character. Yeah, And meanwhile, that does it for this edition
Speaker 4: of BlueBag Technology.
Speaker 6: What a week it has been ed.
Speaker 3: Yeah, in a moment in tech history. Recap on the pod.
Speaker 3: You know where to find it. This is Bloomberg Technology.