Speaker 1: From Mahart where Innovation, Money and Power colle in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: I'm Caroline Heinde at Bluemog's world head quarters in New
Speaker 2: York and Imed Lovelow in San Francisco.
Speaker 3: This is Blueberg Technology coming up.
Speaker 2: The EU gives Microsoft the green light for at sixty
Speaker 2: nine billion dollar takeover of Activision Blizzard. We'll discuss what
Speaker 2: this actually means for the gaming industry's biggest ever deal.
Speaker 4: And we'll talk Twitter, as Linda Yacarino prepares to take
Speaker 4: the helm at the social media company, how will her
Speaker 4: experience help nuwer advertisers back to the platform.
Speaker 2: Plus we'll talk all things artificial intelligence. We sit down
Speaker 2: with the CEO C three AI as a result Beat
Speaker 2: and we get the startup AI perspective from the venture
Speaker 2: firm in Site Park. All that so much more coming up.
Speaker 2: Before we go into the startups, Let's go into the
Speaker 2: big caps. Let's go into what's happening in the public markets. Ed, interestingly,
Speaker 2: I'm stealing your funder. Let's take it back to what's
Speaker 2: actually more broadly my focus, which is the Nasdaq, which
Speaker 2: is actually up about half a percentage point. It's outperforming
Speaker 2: the rest of the industries. On the day, we're outperforming
Speaker 2: the rest of the benchmarks, even though we're basically a
Speaker 2: little bit cautious. Volumes are lower, we're worried about a
Speaker 2: course the debt ceiling, we're worried about some of that
Speaker 2: New York data that came in in terms of manufacturing
Speaker 2: look lackluster, and basically we're a little bit more cautious
Speaker 2: on our outlook. But we are seeing big tech being
Speaker 2: brought just tentatively on those thinner volumes up five ten percent.
Speaker 2: The tenure yield push is higher. As we hear from
Speaker 2: some Fed speakers where afar our boss think being one
Speaker 2: of them who sits down with might make here a
Speaker 2: little bit later. But he's talking about look no, and
Speaker 2: pushing him back against your viewpoint that we're going to
Speaker 2: be cutting rates here in the US anytime soon. Interesting
Speaker 2: moves over in Turkey, could we see political upheaval. In fact,
Speaker 2: we have a down day overall for assets over there,
Speaker 2: and the dollar strengthens versus the Turkish lira. Moving on,
Speaker 2: let's look at what's happening in terms of crypto in
Speaker 2: terms of Bitcoin, and actually as though it actually weekends
Speaker 2: on the day, just a little bit ed. We are
Speaker 2: seeing Bitcoin just getting a bit of a bid, but
Speaker 2: we're still only at twenty seven thousand, so still not
Speaker 2: managing to push through that thirty thousand dollars level, but
Speaker 2: get into where I almost took of here a little
Speaker 2: moment ago.
Speaker 4: Yeah, we woke up to a quiet Monday right carry
Speaker 4: this morning, worried about news, but we have had some
Speaker 4: that's moving markets. Metha now up two point four percent,
Speaker 4: lou Kappaso upgrading that stock from a hold to a buy.
Speaker 4: We'll bring you those details later in the program, along
Speaker 4: with C three AIP eighteen percent early release of results,
Speaker 4: upgrading modestly it's full year forecast for sales. We're going
Speaker 4: to speak to the CEO about what's really happening all
Speaker 4: the investor interests around AI related names. Tesla actually now
Speaker 4: flat melon. Musk has been in France where he met
Speaker 4: with President mac quhan. But there was some feel good
Speaker 4: in that sock. Of course, when we got details of
Speaker 4: a new Twitter CEO on Friday, the idea being that
Speaker 4: Elon Musk now will be more focused on Tesla less
Speaker 4: distracted at Twitter, but we're giving back some of those games,
Speaker 4: off by around a tenth percent, basically flat. The big
Speaker 4: story this Monday is that the European Union, through the
Speaker 4: European Commission, has proved Microsoft's deal to buy Activision Blizzard
Speaker 4: for sixty nine billion dollars. We're going to get into
Speaker 4: the details over the analysis and reasoning what it means
Speaker 4: for the cloud gaming market.
Speaker 3: In particular, we see the share reaction.
Speaker 4: It was modest at first, rop a percentage point, highest
Speaker 4: level in three weeks on Activision, more modest, up just
Speaker 4: two tens percent on Microsoft separately, completely separately, Bloomberg reporting
Speaker 4: that Microsoft's cloud unit, as You're is the subject of
Speaker 4: scrutiny from a U antitrust regulators, according to sources. We'll
Speaker 4: get those details later in the program. A lot now
Speaker 4: going on.
Speaker 2: They've been busy, haven't they, All this focus on competition
Speaker 2: and pushing back against it.
Speaker 5: Let's talk about it all.
Speaker 2: We've got our senior litigation analyst of Bloomberg Intelligence, Jennifer Rye.
Speaker 2: We've also got Anna London, our legal reporter Kavin Gummel.
Speaker 2: Catherine starting with you wasn't a surprise to see the
Speaker 2: EU sort of take a different stance from the UK.
Speaker 5: Hi, there m nor so, this wasn't a surprise decision.
Speaker 6: We were intcipating that the European Commission would accept this
Speaker 6: deal with behavioral remedy. These behavioral remedies include those too
Speaker 6: late rivals have access to the games for our owns
Speaker 6: ten years, and the Commission said that with these conditions
Speaker 6: that will allow the deal to be pro competitive.
Speaker 4: Jen, I'm going to come to you at Bloomberg Intelligence.
Speaker 4: In the analysis published by the European Commission, Jen, they
Speaker 4: say that actually this is going to be pro growth,
Speaker 4: pro market. How is their analysis so different to that
Speaker 4: of the UK CMA.
Speaker 3: Are they just reading two different sets of data?
Speaker 7: You know, it's really just about a different prediction as
Speaker 7: to what's going to happen with cloud gaming in the future.
Speaker 7: And you know, I think it just shows how difficult
Speaker 7: these merger decisions can be when they're involving tech and
Speaker 7: when they're involving future markets, because it's really they're looking
Speaker 7: at a crystal ball and they're speculating about what can happen,
Speaker 7: and reasonable minds can differ. The European Commission views Microsoft's
Speaker 7: move to guarantee that these these games Call of Duty
Speaker 7: and World of Warcraft that it would be acquiring from
Speaker 7: Activision would be on these other cloud services also in
Speaker 7: other cloud subscriptions, and that's not the way things are today.
Speaker 8: Those games aren't available.
Speaker 7: So the European Commission is looking at this as output
Speaker 7: expanding or pro competitive, whereas the UK is saying, no,
Speaker 7: you know, we think Microsoft today has too much power
Speaker 7: in the cloud and by having these great games, this
Speaker 7: must have content for some gamers. In the future, they'll
Speaker 7: be able to push out these other cloud gaming services
Speaker 7: and these other competitors, and we're trying to prevent that.
Speaker 7: We're trying to prevent Microsoft from being dominant in this
Speaker 7: market in the future.
Speaker 8: So they just sort of saw what was going to
Speaker 8: happen in the future.
Speaker 4: Differently, Catherine, we knew this was coming at least the
Speaker 4: timing of the decision. Now through the twenty second we
Speaker 4: got it. Bloomberg sources had said that the EU would
Speaker 4: rule in favor of the deal. So what happens now?
Speaker 4: What is the process that we're tracking at Bloomberg News.
Speaker 6: Yes, so that's to say has given a glimmer of
Speaker 6: hope to Microsoft, but it's not going to change things massively.
Speaker 6: Microsoft already faced massive challenges in the US with the
Speaker 6: FTC having blocked to sue, and in the UK the
Speaker 6: Microsoft will have to lodge its appeal at the Competitional
Speaker 6: Peel Tribunal by the end of the month, and that
Speaker 6: will be really difficult because the CAT is a judicial
Speaker 6: review process, so you know, they'll just look at the
Speaker 6: legality of the CMA's decision rather than really assessing the
Speaker 6: merits of that choice.
Speaker 2: And what is interesting, Jen is that, well, we just
Speaker 2: heard it from Catherine, a glimmer of hope coming, but
Speaker 2: realistically this is an uphill battle, even though we do
Speaker 2: see a share price reaction for activision Brizard, Ultimately, from
Speaker 2: your analysis, it feels like you don't think the tune
Speaker 2: is being changed here and what sort of timeline do
Speaker 2: you think this deal ultimately unwinding.
Speaker 5: You know, in your perspectivities.
Speaker 7: See this changing things very much, because at the end
Speaker 7: of the day, there is a very high standard to
Speaker 7: overturn a CMA decision. I actually did a little research
Speaker 7: and I looked at merger decisions by the CMA that
Speaker 7: had actually been reversed or sent back to the CMA
Speaker 7: on appeal, and it was about thirty percent, so that's
Speaker 7: a low percentage, so it's a high standard.
Speaker 8: It's going to be difficult, and.
Speaker 7: The European Commission's decision is separate and based on the
Speaker 7: separate analysis and maybe even different market conditions. So I
Speaker 7: don't really think it factors in much, and it doesn't
Speaker 7: change the fact that Microsoft has this very high, difficult
Speaker 7: standard to meet to overturn that decision.
Speaker 8: And then timing. You mentioned timing.
Speaker 7: I think that's so important here because even if Microsoft
Speaker 7: is successful, let's say.
Speaker 8: On appeal to in the UK, and even with their.
Speaker 7: Lawsuit that's coming up in August in the US against
Speaker 7: the Federal Trade Commission, you're looking at a very very
Speaker 7: long time period before there could be an actual ultimate
Speaker 7: final outcome. Because the CMA, let's say, the appeal tribunal
Speaker 7: doesn't like the decision or thinks the facts need to
Speaker 7: be reevaluated, I'll send it back to the CMA to'll
Speaker 7: look at it again. And in the US, even if
Speaker 7: the administrative large judge that will be hearing this trial
Speaker 7: rules for Microsoft, the FEC can appeal and the appeal
Speaker 7: will go back to the Commissioners the very three commissioners
Speaker 7: that voted to sue to begin with, So there's a
Speaker 7: good chance that would be reversed. At which point Microsoft
Speaker 7: an Activision could appeal to a federal report. But we're
Speaker 7: talking way into the end of twenty twenty four here,
Speaker 7: so a long time frame if they really want to
Speaker 7: have success.
Speaker 4: Jen Catherine Bobby Kotik, the CEO of Activision, is sent
Speaker 4: through an emailed statement to us and he says that
Speaker 4: the EC conducted an extremely thorough, deliberate process. But the
Speaker 4: bit that jumps out at me is although they required
Speaker 4: stringent remedies, and I think that's a reference to the
Speaker 4: ten year of access, ten years of access to cloud
Speaker 4: platforms on call of duty. Catherine, remind us, when they
Speaker 4: go back to the CMA and make this appeal in
Speaker 4: the UK, they're not necessarily appealing the decision in and
Speaker 4: of itself. They're appealing how that decision was made. They're
Speaker 4: appealing the process. Remind us, what has to happen.
Speaker 6: Yes, exactly that, so what the cat They don't look
Speaker 6: at the medus of this decision, They just look at
Speaker 6: it in a judicial review process, and which would will
Speaker 6: be the legality of the decisions, so you know, they
Speaker 6: can look at things whether the CME was irrational or
Speaker 6: you know, if there was any procedural procedural errors there
Speaker 6: that they might have got wrong. I mean, I think
Speaker 6: it's also important to understand with this process that if
Speaker 6: the CAT does find that there are any errors made,
Speaker 6: that the CAT will then actually refer that back to
Speaker 6: the CME itself. So that is another hurdle for Microsoft
Speaker 6: that it will need to pass.
Speaker 4: Yes, we should point out that the UKCMA did come
Speaker 4: out with a response this morning saying they stand by
Speaker 4: their original decision, so we'll wait and see what happens.
Speaker 4: Bloombergs Cafferinemol and Jennifer Ree of Bloomberg Intelligence, thank you
Speaker 4: very much. Sticking with Microsoft and antitrust, we've mentioned it
Speaker 4: that earlier Microsoft's Azure cloud business has been targeted by
Speaker 4: the European Union's Anti Trust Arm and MID concerns the
Speaker 4: US software firm is leveraging its market power to squeeze
Speaker 4: out rivals as part of an informal probe. Regulators are
Speaker 4: quizzing competitors and customers about how Microsoft may be using
Speaker 4: its access to business sensitive information belonging to cloud firms.
Speaker 4: It has commercial dealings with that all. According to sources.
Speaker 2: Carrot competition analysts, they're busy, So too is one Linda Yakarino.
Speaker 2: We know that she's saying she's excited to transform Twitter ed.
Speaker 2: We're going to be talking about what she brings to
Speaker 2: the social media platform and more with three past studios
Speaker 2: Stephen wolf Herrera joining the show. So Twitter's incoming CEO,
Speaker 2: Linda Yakarina says she's excited to transform the company and
Speaker 2: achieving La Musk's vision for the platform. In her first
Speaker 2: few tweets since galning the job, Yacarina said, look, she's
Speaker 2: committed to the development of the social media company and
Speaker 2: said feedback from users is vital to that future. I
Speaker 2: speak to someone who knows her impact, none of for
Speaker 2: fifteen years. At least three past studios. Chief business Officer
Speaker 2: Stephen wolf Perrera is in the studio with us. And
Speaker 2: when you heard that this force that you've worked and
Speaker 2: seen and interacted with for fifteen years is going to
Speaker 2: be taking the helm, what did your immediately think?
Speaker 9: I thought it was a brilliant move.
Speaker 10: The platform needs a radical transformation. They need to have
Speaker 10: credibility with the marketplace, with brands with consumers, and Linda
Speaker 10: has a track record around innovation really putting consumers first.
Speaker 10: So I think it was a brilliant move for a
Speaker 10: platform that desperately needed to change.
Speaker 2: And is it safety first? Is it innovation first? How
Speaker 2: does she manage to square that circle of a CTO
Speaker 2: who's going to want to be pushing ahead with innovation
Speaker 2: and perhaps running fast and breaking things.
Speaker 10: Look on the technology side, I mean, obviously elans a
Speaker 10: visionary and he'll be able to certainly figure out the
Speaker 10: path from Twitter to transform it to the super ad x.
Speaker 10: But you need to stay biard as the business. I mean,
Speaker 10: right now, it's been bleeding advertisers. No one wants to
Speaker 10: be on the platform. There's been all this drama around it.
Speaker 10: And Linda's a stabilizing force. I mean, she's spent over
Speaker 10: ten years at NBC Universal really stabilizing that company, growing
Speaker 10: it over thirteen billion dollars in sales, leading their upfront,
Speaker 10: leading you know, kind of innovation with data with other
Speaker 10: TV networks, really trying to bring the community together.
Speaker 9: And she is a force to be reckoned with.
Speaker 10: I mean, there's a reason why they have her nickname
Speaker 10: being developed Hammer because she's able to negotiate with brands.
Speaker 10: She's tough, she's fair, but or you know, number one
Speaker 10: is really to bring brands back onto the.
Speaker 2: Platform, and to do that alongside an executive chair, of course,
Speaker 2: said and I mean you know a lot about the
Speaker 2: people that worked alongside Elan over the years.
Speaker 3: Yeah.
Speaker 4: Yeah, it's interesting how it works. So at SpaceX you
Speaker 4: have Gwynn Shotwell as the COO and president running things
Speaker 4: day to day. At Tesla, particularly in recent courses, Zach
Speaker 4: Kirk on the CFO is like more visible and other
Speaker 4: executives like literally appearing on stage. So I guess, even
Speaker 4: to your mind, how do you see that working. You know,
Speaker 4: Linda who you know with Elon Musk day to day,
Speaker 4: do you think that she can get him to see
Speaker 4: reason or compromise.
Speaker 9: I think so.
Speaker 10: I mean we saw a trial run of what their
Speaker 10: relationship is going to look like about a month ago
Speaker 10: in Miami there was the Possible Conference, a big marketing event,
Speaker 10: and she was on stage doing a fireside chat interview
Speaker 10: with Elon and she didn't pull any punches. I mean,
Speaker 10: Linda's not a wallflower, right, I mean, she's very tough,
Speaker 10: she knows her business. You know, she is a good
Speaker 10: New Yorker, grew up in Long Island, you know, Italian heritage.
Speaker 9: I mean, she's as tough as they come.
Speaker 10: And she asked him the tough questions on stage, and
Speaker 10: so you could see that she didn't shy away from
Speaker 10: asking him about, Hey, why did Twitter cancel the client
Speaker 10: council that they had? Are you going to bring that back?
Speaker 10: Are you going to stop doing tweets at three in
Speaker 10: the morning. You know that's not good for the platform.
Speaker 10: So I feel that she knows this space, she knows
Speaker 10: this industry, and she's beloved by brands and marketers and
Speaker 10: media agencies. And so if he's smart, he'll really give
Speaker 10: her the range. Let her be the CEO, let her
Speaker 10: build this platform, and then bring all the innovation to
Speaker 10: really help connect content, commerce and community.
Speaker 4: We go back to it, how does she build this platform?
Speaker 4: You know Elon sets out his ideas as CTO, many
Speaker 4: of them.
Speaker 3: We know about subscription based.
Speaker 4: Service, algorithm, algorithmically addressing where things appear in the tie timeline.
Speaker 4: Then what impacts Linda going to have when she comes in?
Speaker 4: What ideas can she actually install?
Speaker 10: Well, first, it's about leadership. I mean the company has
Speaker 10: what lost so many employees. They've obviously let a ton
Speaker 10: of people go. You know, they are a fraction of
Speaker 10: what they were before. I feel like there has been
Speaker 10: this crisis and confidence in Twitter, and here is a
Speaker 10: real leader who's going to come in and stabilize the
Speaker 10: business and bring back that confidence, bring back the trust
Speaker 10: of not just the employees but also the advertising community.
Speaker 9: And you have to start there.
Speaker 10: I mean, at the end of the day, this has
Speaker 10: to be about getting the basics right. And she knows
Speaker 10: how to build a business. She is a leader, she
Speaker 10: is inspiring. She will bring talent to the commpany. I mean,
Speaker 10: she built a data business from scratch for NBCU. She
Speaker 10: understands e commerce, she understands analytics, and so she had
Speaker 10: that full span of control on the business side. Again,
Speaker 10: you have incredible engineers and technologies over at Twitter, certainly
Speaker 10: at the Helm with you on, but you know, having
Speaker 10: her really lead the business side, that's what this company needs.
Speaker 2: It's interesting, of course talking about the Data League, talking
Speaker 2: about ultimately how you show brands that you're making impacts,
Speaker 2: the right impact for them converting into sales.
Speaker 5: But I'm also interested in the grander vision.
Speaker 2: Many people had to quickly Google or search or chat
Speaker 2: shipt who.
Speaker 5: Linda Yacarino is.
Speaker 2: But behind the scenes, she's really has had a very
Speaker 2: powerful influence, had a very influential job. What vision do
Speaker 2: you think she thinks Twitter ultimately is going to be
Speaker 2: to make this a worth her wild kind of move.
Speaker 10: Yeah, I mean, look, she was the chairwoman of NBC
Speaker 10: Universal's ad sales business, right, she had a great job.
Speaker 10: She was one of the most powerful people in media.
Speaker 10: So for her to leave, it had to be something
Speaker 10: really compelling. It had to be a bigger vision. And
Speaker 10: I think Elance shared the vision for the super app
Speaker 10: for x and I feel that she got really excited
Speaker 10: about that.
Speaker 9: And so again her ability.
Speaker 10: To innovate, to bring consumers and brands along on this journey.
Speaker 10: That's a very unique position to be. And she understands content.
Speaker 10: She actually was a partner for Twitter for years. Think
Speaker 10: about the Olympics and the Super Bowl and World Cup,
Speaker 10: all those mega events that truly have global ramifications.
Speaker 9: She was at the center of that.
Speaker 10: So now to bring that lens around again, content, commerce
Speaker 10: and community. Everyone is trying to connect that and as
Speaker 10: one of the largest media brands on the planet, she
Speaker 10: understood that an audience, whether it's eighteen to thirty four,
Speaker 10: eighteen to forty nine, whatever advertisers are looking for, they
Speaker 10: could find that audience anywhere. The reality means you have
Speaker 10: to make a compelling to put those dollars on Twitter.
Speaker 4: Yeah, we reported that there were others involved in that
Speaker 4: relationship NBC in Twitter, and she was at a macro level.
Speaker 3: But that's great insight.
Speaker 4: Three Pass Studios Chief business Officer, Stephen Wolf Pereira, thank
Speaker 4: you very.
Speaker 9: Much, Thanks so much.
Speaker 4: Now coming up, Miguel McKelvey joins to talk about his
Speaker 4: recent which include his acquisition of clothing brand American Giant
Speaker 4: and a social network for senior aged users.
Speaker 3: More on that. Next, this is Bloomberg.
Speaker 4: In an effort to revitalize manufacturing in the US. Miguel McKelvey,
Speaker 4: co founder of we Work, says he's buying clothing brand
Speaker 4: American Giant. There's also plans to build a new social
Speaker 4: network for users fifty five in older. Miguel McKelvey joins
Speaker 4: us now for more on what's quite a few announcements.
Speaker 4: I find manufacturing fascinating. Think about the world of technology
Speaker 4: on this show we operate in and actually that's a
Speaker 4: big part of the story, why do you want to
Speaker 4: revitalize US manufacturing?
Speaker 1: Well, it started for me with really, you know, the
Speaker 1: same kind of response that I had to office workers
Speaker 1: with we work, is that the environment that people are
Speaker 1: working in just isn't great and isn't a nice.
Speaker 3: Place to be.
Speaker 1: Like sitting in a cubicle for ten hours a day
Speaker 1: to me was seemed terrible. And similarly, I think that
Speaker 1: the working environments where people make things have really been
Speaker 1: brought down to the lowest possible, you know, from a design,
Speaker 1: from an ergonomic, from just a human perspective, And it
Speaker 1: makes sense because you know, you have to compete with
Speaker 1: really low labor in other places in the world. But
Speaker 1: I think in the US, for our future, you know,
Speaker 1: we can create jobs and places to work that are
Speaker 1: that are much better, and I think that's what can unlock,
Speaker 1: you know, a new future for American manufacturer.
Speaker 4: Miguel across all of your projects, was it difficult to
Speaker 4: engage with investors? Did you have to do some reputational
Speaker 4: rebuilding or explain what happened that we work your associations
Speaker 4: with Adam Are those questions.
Speaker 9: Yeah, I think they're fair.
Speaker 1: I mean a lot of the stuff that I worked
Speaker 1: on was the we Work product and obviously building helping
Speaker 1: to build an organization that scaled to you know, hundreds
Speaker 1: of locations around the world, and that is a credibility
Speaker 1: which I think is lasting. I mean, we were able
Speaker 1: to do amazing things. And then there's obviously another layer
Speaker 1: of things at the company that didn't go as well,
Speaker 1: and you know, people always have questions about that, and
Speaker 1: oftentimes I would say, you know, people want to know
Speaker 1: the we Work storty. You know, there's a sort of insatiable,
Speaker 1: insatiable desire to learn more about what happened that we work.
Speaker 1: So I don't mind those conversations. You know, for me,
Speaker 1: it's still a learning process. I still like reflecting on
Speaker 1: those times because I learned from all those conversations. So yeah,
Speaker 1: I mean I wouldn't say reputational as much as just
Speaker 1: people are really curious.
Speaker 2: People are curious also, of course that you're getting back
Speaker 2: into the world of commercial real estate. In many ways
Speaker 2: we're thinking of is it nia how you say it,
Speaker 2: a focus on a social network but in a real
Speaker 2: life one for people fifty five years and older. I
Speaker 2: can see the relevance of the relevancy of this with
Speaker 2: older parents who complain about noise levels and the way
Speaker 2: in which one interacts. But ultimately does the real estate
Speaker 2: arc that we're currently on at the moment mean that
Speaker 2: you're getting good prices. People are worried about the banks,
Speaker 2: for example, and their exposure to real estate, particular commercial
Speaker 2: real estate.
Speaker 1: Yeah, so there's a parallel to you know, we work.
Speaker 1: When we first started, we were coming out of that
Speaker 1: financial crisis back you know, two thousand and seven, two
Speaker 1: thousand and eight, and then there was a big dip
Speaker 1: in commercial real estate back then, and that actually helped
Speaker 1: us acquire, you know, especially in the early days, good
Speaker 1: deals on our initial buildings. And so I think that
Speaker 1: opportunity is similar. A lot of people were coming to
Speaker 1: me with future of work questions, you know, what do
Speaker 1: you think is going to happen? What role do you
Speaker 1: want to play in it? And honestly, I have to
Speaker 1: say I'm a bit not bored. But it's just I've
Speaker 1: sort of been there, done that, and for me to
Speaker 1: re enter that market didn't make sense to me. But
Speaker 1: I do think there are a lot of parallels. I mean,
Speaker 1: I want to create communities for people where they you know,
Speaker 1: enter and spend time in spaces that make them feel good.
Speaker 1: And I think that's where this opportunity became clear, you know,
Speaker 1: an intersection of what I love to do and the
Speaker 1: opportunity in real estate.
Speaker 2: Briefly, Adam Newman, of course, your co foundal We Work,
Speaker 2: is also back in the way to take game.
Speaker 5: Would you ever work with him again?
Speaker 1: You know, for me, my main thing is growth and learning.
Speaker 1: I like to keep expanding on, you know, the experiences
Speaker 1: that life can offer me. And you know, Adam is
Speaker 1: a CEO, he's a he's a top dog and a leader,
Speaker 1: and and for me, I want to I want to
Speaker 1: learn how to be in that position. I want to
Speaker 1: lead a company. And so it doesn't make sense right
Speaker 1: now for us to work together, but I you know,
Speaker 1: for no reason other than I just want to keep
Speaker 1: growing on my own journey.
Speaker 2: Michael, thanks for telling us your journey. American giant proto
Speaker 2: Naya come on and talk to us about it again.
Speaker 5: Migael mc kelvey, co founder of we.
Speaker 2: Work, welcome back to blue their technology. I'm Caroline Hyde
Speaker 2: in New York.
Speaker 4: And im Ed Lovelow in San Francisco. Caroline, just get
Speaker 4: a check on markets. We're in quite a tight range.
Speaker 4: When it comes to equity markets, look at the NAZET
Speaker 4: one hundred up three ten percent. A lot of focus
Speaker 4: on what's happening with the debt ceiling debate out in DC,
Speaker 4: a little bit of caution outperformance in semiconductors. I look
Speaker 4: at the Philadelphia Semiconductor Index. Every name in the green
Speaker 4: apart from one which is a SML currently flat, a
Speaker 4: lot of upside there, yields climbing a little higher four
Speaker 4: basis points on the ten year three point five percent,
Speaker 4: and as you noted earlier, Bitcoin on its way back
Speaker 4: up again towards or an above twenty seven five hundred
Speaker 4: US dollars per token. In terms of the specific names
Speaker 4: and movers that we're watching, the big newsflow mover is
Speaker 4: obviously Activision and Microsoft, those two names moving to the upside.
Speaker 4: Microsoft basically flat now, but Activision up one point three
Speaker 4: percent after the European Commission approved the deal for Microsoft
Speaker 4: to acquire the video game maker for sixty nine billion
Speaker 4: US dollars. Look at C three AI up nineteen percent,
Speaker 4: carrow biggest Johnpson's the end of March out early with
Speaker 4: results slightly raising full year guidance, but also some response
Speaker 4: from the company to short sellar reports that we'll get
Speaker 4: into with the C three AI CEO Tom Sebel joins us. Now, Tom,
Speaker 4: you modestly raise guidance for the full year. Caroline's been
Speaker 4: doing a great job covering how a lot of the
Speaker 4: equity market activity at the start of this year is
Speaker 4: all AI driven. Was your guidance raised? Just the authoria
Speaker 4: that we've seen in AI.
Speaker 11: High ed Hi, carolinan We with all the planning activity
Speaker 11: that's going on after the end of the year for
Speaker 11: a fiscal year twenty four and twenty five for new products,
Speaker 11: new customers, new growth, and now this is going on
Speaker 11: the world. We had a lot of good news to
Speaker 11: report and we wanted to make sure that there wasn't
Speaker 11: an inadvertent selective.
Speaker 12: Disclosure of this information.
Speaker 11: So we issued this release just to make sure that
Speaker 11: the information was provided to the market in a manner
Speaker 11: that's compliant with all SEC regulations.
Speaker 2: Thomas, it's fascinating C three generative AI for enterprise search.
Speaker 2: I think it was March that you unveiled this. You've
Speaker 2: said at the moment that the addressable market for enterprise
Speaker 2: AI is extraordinarily large, but everyone's fighting for it. We
Speaker 2: just had, of course cause Palenteers saying they want to
Speaker 2: take the whole market for generative AI, and they're particularly
Speaker 2: active in some of the defense areas that you are.
Speaker 5: Can there be multiple players? How are you feeling about competition?
Speaker 11: I think what we look at is so Caroline, As
Speaker 11: you know, for some years now, for over a decade,
Speaker 11: we've been talking about this emerging market for applying artificial
Speaker 11: intelligence the enterprises to improve their business operations. Now, I
Speaker 11: think as we power into twenty twenty three, the whole
Speaker 11: world has come around to seeing that this is a
Speaker 11: huge addressable market and there's no corporation that want doesn't
Speaker 11: want to take advantage of it. This looks like a
Speaker 11: larger than a half a billion half a trillion dollar
Speaker 11: addressable software market growing very rapidly, and I think there's
Speaker 11: going to be an opportunity for many companies to be.
Speaker 12: Quite successful in this space after it's over. This is
Speaker 12: this is a big.
Speaker 2: One, and how are they using your particular offering? How
Speaker 2: you are building for these companies? We just saw a
Speaker 2: load of the names proving different well.
Speaker 11: We use AI to basically make all these enterprise applications
Speaker 11: that have been installed in the last three decades erp
Speaker 11: CRM manufacturing supply chain to make them predictive, so that
Speaker 11: we can predict how many parts we need in each
Speaker 11: component of our supply chain, so we deliver products on
Speaker 11: time in it in full, say air Force, we use
Speaker 11: it to predict device failure or system failure in weapons
Speaker 11: systems like aircraft so that they have increased availability, fraud detection,
Speaker 11: customer churn. So these are the most common applications of
Speaker 11: enterprise AI to business processes, and I think that there
Speaker 11: is no CEO in the world that is not now
Speaker 11: trying to figure out how this is not kind of
Speaker 11: number one on his or her list. You're trying to
Speaker 11: figure out how to use these technologies to advance their
Speaker 11: market position.
Speaker 3: Tom.
Speaker 4: On April fourth, Carrisdale Capital, a known short seller, alleged
Speaker 4: serious accounting and disclosure issues with C three AI. What
Speaker 4: is your latest response to that short seller report.
Speaker 11: Well, you can see on our website that our audit
Speaker 11: committee conducted an impetitive investigation with independent outside council and
Speaker 11: independent accounting firm and determined that all of those allegations
Speaker 11: were a complete bunk, and so we published that this morning.
Speaker 11: It's been well reported that Carrisdale is under investigation by
Speaker 11: the Department of Justice for doing this sort of thing
Speaker 11: to manipulate stock prices to their economic advantage. If this
Speaker 11: is true, it's highly unlawful. We expect to have the
Speaker 11: opportunity to cooperate with the Department of Justice and this activity,
Speaker 11: and hopefully the Department of Justice will do their job
Speaker 11: and if they find that there is wrongdoing, hopefully these
Speaker 11: people will be prosecuted to the full extent of the law.
Speaker 3: Okay, Tom, thank you for the update on that.
Speaker 4: I went to our audience and I said, Tom Siebel's
Speaker 4: coming on the show.
Speaker 3: What do you want to know? One question that caught
Speaker 3: my eye.
Speaker 4: Are there any government or public sector contracts that you
Speaker 4: have turned down for ethics reasons when it relates to AI.
Speaker 11: Yes, there is a government and I won't say which one, Okay.
Speaker 3: Is asked come on, you've got to say which one, now, Tom,
Speaker 3: Which government.
Speaker 12: That has asked us to use AI?
Speaker 11: To a Western government, because that's all we do business with,
Speaker 11: that has asked us to use AI to identify extremists
Speaker 11: in the population, We think that we don't want to
Speaker 11: touch that. On a more less controversial note, Okay, we've
Speaker 11: been asked. We were asked some years ago to build
Speaker 11: an hr AI enabled hr system for the Department of
Speaker 11: the Army. Okay, this would use a AI to determine
Speaker 11: who to promote, who to assign.
Speaker 12: Now we neglect.
Speaker 11: We elected not to do that because what we're doing
Speaker 11: is propagating cultural bias. No matter what the question is,
Speaker 11: the answer will be white male went to West Point
Speaker 11: and in twenty first century, that answer is simply not
Speaker 11: going to fly. And so there are other companies in
Speaker 11: our business who would get a snap of that opportunity
Speaker 11: to a second but but we won't do those things.
Speaker 2: Basically, you're saying yourself regulating Tom, and I'm interested in
Speaker 2: what you make of the guardrails, whether they're being put
Speaker 2: in place enough amid private markets. We just had the
Speaker 2: Credo AI CEO on recently. Navina, who's working along with
Speaker 2: Booz Allen. I know you do a lot of work
Speaker 2: with Booz Allen thinking about how we can have these
Speaker 2: guardrails put in place by the companies themselves. Ultimately, do
Speaker 2: you think government needs to be ahead of the curve here?
Speaker 2: You have a lot of ex government officials on your board.
Speaker 11: For example, Caroline, I think you're raising a very important issue.
Speaker 11: I mean, this matter of the ethical application of AI
Speaker 11: is hugely important. I mean, these technologies are extraordinarily powerful,
Speaker 11: and pretty soon it will be almost virtually impossible for
Speaker 11: a mortal to determine the difference in news in fake news.
Speaker 11: These questions call into the question our ability to conduct
Speaker 11: free and open democratic societies.
Speaker 12: So this is very troubling stuff.
Speaker 11: I don't believe that in the long run that self
Speaker 11: regulation is going to work. We've seen too many private
Speaker 11: enterprises and by the way, too many public sector organizations
Speaker 11: that do not act beneficially. But you know, it is
Speaker 11: an important issue and it does need to be discussed
Speaker 11: or this will go to some.
Speaker 12: Horrible places.
Speaker 4: Tom, I want to come to you and ask about
Speaker 4: your costs. There's a lot of emphasis on particularly chip design,
Speaker 4: you know, finding the most efficient path forward to power cloud,
Speaker 4: the energy costs behind building large language models, training foundational models.
Speaker 4: How are you kind of making sure that in all
Speaker 4: the work you're doing you said you're bringing new products
Speaker 4: in that you're still not letting kind of costs some
Speaker 4: ravel and get out of control.
Speaker 11: Well, our costs, so our cost in operating these these
Speaker 11: large language models and these enterprise AI applications and our
Speaker 11: customer's costs are primarily from these vendors that provide the
Speaker 11: cloud infrastructure, from Google Cloud, from AWS, from microsofts who
Speaker 11: are what have you now? I think that you know
Speaker 11: these guys who operate these companies and those companies that
Speaker 11: are behind them, like in Nvidia.
Speaker 12: These are very smart people and.
Speaker 11: They are I think making amazing kind of breakthroughs in
Speaker 11: chip technology and energy efficiency technology, and I'm confident they
Speaker 11: will be able to provide these massive scale computation on
Speaker 11: storage infrastructures available to governments and private enterprises at more
Speaker 11: than acceptable cost.
Speaker 2: Tom, great to catch up with you. Thanks coming on
Speaker 2: on a busy day. Tom Cwell is C three AI
Speaker 2: CEO in mob blomog News is in touch with Caristale about,
Speaker 2: of course, what Tom has said. If they want to
Speaker 2: make further comment, We appreciate your comments today. Meanwhile, sticking
Speaker 2: with AI, Google is adding two new features in its
Speaker 2: image search to reduce the spread of misinformation, especially now
Speaker 2: that the artificial intelligence tools have made the creation of
Speaker 2: folk so realistic fakes all the more common. That the
Speaker 2: new feature is called about this image, You're going to
Speaker 2: get context with it. You're going to understand when the
Speaker 2: image or similar ones we first index by Google, where
Speaker 2: they first appeared and where else they shown up online?
Speaker 2: Coming up? Guess what we're talking AI? Yes, but this
Speaker 2: time from a venture perspective. How are you starting out
Speaker 2: your investment journey? Where are the startups that you want
Speaker 2: me backing? George Matthew Manage, director of Insight Partners, with
Speaker 2: plenty of expertise in the field of AI and mL
Speaker 2: joining us next.
Speaker 5: This is bringing back.
Speaker 11: I think the hype around AI is under hyped given
Speaker 11: the impact I think is going to have on the
Speaker 11: way we work and live.
Speaker 3: The top of my questions from many of our customers.
Speaker 2: Is you know, how can they continue in a waking
Speaker 2: responsibly or get crushed by this generative AI wa.
Speaker 10: I think it's going to take a while for regulatory
Speaker 10: frameworks come into place, given the lack of knowledge it
Speaker 10: appears and people in Washington.
Speaker 2: I really think it's going to be incumbent on companies
Speaker 2: themselves to be responsible and.
Speaker 13: How they're taking advantage of this technology and putting in
Speaker 13: place those guardrails.
Speaker 1: We train our models to actually understand what is the
Speaker 1: information on the web that corroborates it that backs up
Speaker 1: the information and if we can't corroborate it, then we will.
Speaker 3: Not output it.
Speaker 10: And what we're seeing today is a lot of AI
Speaker 10: tourists pretending to be AI natives.
Speaker 2: You know, there's a lot of companies who are not
Speaker 2: selling solutions, they're ultimately just selling vaporware.
Speaker 10: AI is something that's you know, we actually know a
Speaker 10: lot about our industry.
Speaker 3: Is no stranger to it.
Speaker 1: So for almost all of us experience the beauty of
Speaker 1: a generativ I.
Speaker 2: There's some of our recent guests and what they had
Speaker 2: to say about the AI landscape, both from a fauner
Speaker 2: perspective to an investing one. So let's keep talking about it.
Speaker 2: We've got our VC Spotlight moment with George matthew Managing
Speaker 2: director of Insight Partners, who too has had.
Speaker 5: A journey as a builder as.
Speaker 2: A ceokspre You were over at Outrix as well, really
Speaker 2: helping that business go public and now you're on the
Speaker 2: finding the new vet side of the equation.
Speaker 5: And George, what do you make of the hype around AI?
Speaker 9: Is it hype?
Speaker 5: Is it reality? How you seeing the week from the
Speaker 5: chaff at the moment?
Speaker 13: Yeah, Carolyn, question you asked that question. When you think
Speaker 13: about what's going on in AI right now, it's very
Speaker 13: clear that there is a fair amount of hype today.
Speaker 13: But when we look at this down the line ten
Speaker 13: years from now, we'll realize that absolutely incredible things are
Speaker 13: happening right now as we speak in terms of building
Speaker 13: this next generation of software. And this is where Insight
Speaker 13: has been focused for almost twenty six years, in terms
Speaker 13: of really helping guide many of the great founders and
Speaker 13: executives in building great software companies.
Speaker 2: Do the guidance for a moment, because yes, you're there
Speaker 2: with your AI, your mL had set on, and I'm
Speaker 2: sure you're thinking about companies that have that as their
Speaker 2: bones to invest in. But when I think of Insight,
Speaker 2: I'm also thinking the ed tech companies you have, the
Speaker 2: e commerce companies that you have, the companies that are
Speaker 2: being disrupted enormously by artificial intelligence, particularly generative How much
Speaker 2: are you having to guide those companies to become AI native?
Speaker 13: In many ways, in my view, every company has an
Speaker 13: opportunity to become an AI company, And if you think
Speaker 13: about the opportunity that exists, particularly within the inside portfolio,
Speaker 13: many of those companies have incredible amounts of private data. Well,
Speaker 13: what is that opportunity when you look at the market
Speaker 13: for really building AI companies at scale in the future,
Speaker 13: It turns out it's our private data. And so when
Speaker 13: we work with many of our portfolio companies, we really
Speaker 13: help them understand the use of that data to be
Speaker 13: able to build analytical models, to be able to build
Speaker 13: generative models at scale, and be able to support the
Speaker 13: scale of their existing business being an AI driven one.
Speaker 2: It really is going back to that Kafe Wood conversation
Speaker 2: we had several months ago and again about proprietary data
Speaker 2: and how important it is.
Speaker 4: Yeah, I think the thing for me, George is we
Speaker 4: have been our coaster on the show a couple of
Speaker 4: weeks ago, and he made this claim that ninety percent
Speaker 4: of the companies that you guys are putting money into
Speaker 4: is an industry. They're not going to make it. So
Speaker 4: I wonder what the strategy then is whether you have
Speaker 4: to have a much a portfolio of companies now just
Speaker 4: to make sure that in a crowded field you find
Speaker 4: the kind of shining star.
Speaker 13: I think when you look at this market today, there
Speaker 13: are many companies that are going to struggle in their
Speaker 13: transition to really deliver AI solutions at scale. We ad
Speaker 13: Insight really focus on the businesses that really understand a
Speaker 13: few things really well.
Speaker 9: One is the ability.
Speaker 13: To have that private data available to them to be
Speaker 13: able to build their AI products. Two is to be
Speaker 13: able to look at user experiences. Three is to be
Speaker 13: able to have a great workflow that fits into the
Speaker 13: rest of the way that that software works inside their
Speaker 13: specific industry. When you find the combination of those three
Speaker 13: or four things, you have a very interesting, compelling business.
Speaker 13: For example, if you look at where Jasper is today
Speaker 13: as a business, they were able to really build a
Speaker 13: mechsuit for content marketers to be able to drive the
Speaker 13: scale of which they are able to produce contact at
Speaker 13: a speed that's ten x greater than any you've seen before.
Speaker 13: And so that's a great example of a business that
Speaker 13: can take the combination of the things that I just
Speaker 13: mentioned and really build an AI driven business at scale.
Speaker 4: George, why does Insight sit on the debate around regulation
Speaker 4: and guardrails?
Speaker 13: At Insight, we're really looking at how the changing regulation
Speaker 13: is continuing to evolve. We definitely believe that there's a
Speaker 13: need to positively regulate the industry, particularly as there's tremendous
Speaker 13: changes that are occurring.
Speaker 9: At a boat, societal and a corporate level.
Speaker 13: We at Insight really focus on really helping our founders
Speaker 13: just achieve the scale and their businesses and as they
Speaker 13: think through the opportunities, particularly from an AI standpoint, how
Speaker 13: can they build very competitive modes over time to be
Speaker 13: able to scale their businesses accordingly.
Speaker 2: And motes that are international in many ways. I'm interested
Speaker 2: in when you look at your previous successes, check interestingly,
Speaker 2: an education tech company that's now having to grapple with
Speaker 2: AI disrupting this business model, Ali Baba, a Chinese based company.
Speaker 2: And actually even O Coster was saying he's more worried
Speaker 2: at the moment about China growing AI than he is
Speaker 2: really about whether or not a lot of the ones
Speaker 2: growing here.
Speaker 5: And we talk chaff how.
Speaker 2: Do you think about these two ecosystems evolving, whether US
Speaker 2: can quote unquote win the race.
Speaker 13: I think we're at a moment here where there is
Speaker 13: a tremendous advantage for US based companies. And why is
Speaker 13: that Because if you think about what comes out of
Speaker 13: a AI or generative model, it's the ability to fuel
Speaker 13: what we think of as reinforcement learning and that feedback
Speaker 13: loop from a reinforcement learning standpoint, whether it be machines
Speaker 13: humans or humans and machines driving it together, really improve
Speaker 13: models over time. When you look at certain totalitarian regimes,
Speaker 13: it turns out that feedback loop isn't as significant as
Speaker 13: when you see the impact of really building a business
Speaker 13: inside of Western democracy. So in our view, we see
Speaker 13: a slight advantage right now for companies that are building
Speaker 13: their corporations in the context of Western democracy, where you
Speaker 13: can see a lot of that reinforcement learning really be
Speaker 13: impacting the positive reinforcement of building models at scale.
Speaker 4: George Matthew, Managing director of Insight Partners out there in
Speaker 4: New York, thank you very much for your time