Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and ever Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. Electronic Arts agrees to
Speaker 2: sell to a group of private investors in a deal
Speaker 2: that values the company at about fifty five billion dollars
Speaker 2: in the largest leveraged buyout in history.
Speaker 3: Plus Jawe plans to ramp up production of its most
Speaker 3: advanced AI chips in a bid to take market share
Speaker 3: from Nvidio, and.
Speaker 2: Big Tech pushes hire as investors look at and beyond
Speaker 2: the magnificent seven.
Speaker 4: In a key week for economic.
Speaker 3: Data, and talking of keywek for economic data, let's check
Speaker 3: out these markets ahead of non farm payrolls on Friday.
Speaker 3: We are really seeing Ashley market sentiment trade higher on
Speaker 3: the NASAK one hundred, up eight ten percent. After a
Speaker 3: little bit of digestion last week, we're back on top
Speaker 3: f big tech, and I'm looking at crypto also getting
Speaker 3: a bit of buying. We're up almost three percent on bitcoin.
Speaker 3: We're still of our record high zed but it's notable
Speaker 3: after some of those leverage bets came out of the
Speaker 3: market last week, there's some tentement buying as we see
Speaker 3: gold og gold and a record high. We see digital
Speaker 3: gold pushing high.
Speaker 5: To what have you got?
Speaker 2: Let's go to our top story and that is Electronic
Speaker 2: Arts the biggest leveraged buyout in history. It equates to
Speaker 2: an offer of two hundred and ten dollars per share.
Speaker 2: It's the chop behind Illustrates. That is a significant premium
Speaker 2: over where the stock was trading when the rumors started
Speaker 2: coming out. We now have confirmation and we're not that
Speaker 2: far off two hundred and ten dollars a share. The
Speaker 2: structure really important silver Lake, Saudi in Public Investment Fund
Speaker 2: and a group of other investors, and there's a debt
Speaker 2: portion here as well. JP Morgan's involved, and I remind
Speaker 2: everyone look at the historic relationship between Saudi's PIF and
Speaker 2: Electronic Arts.
Speaker 4: We need more details, we do, and we.
Speaker 3: Can do that exact thing. Someone helped break the news,
Speaker 3: Deanna Bakers with us. Of course, whenneberg Us deals Managing editor,
Speaker 3: the deal is an one just from the shas scale
Speaker 3: of it, Leanna, but also the players involved, and why
Speaker 3: are this group of investors interesting considering what they already own.
Speaker 6: So Ed mentioned a bunch of investors, but he didn't
Speaker 6: mention Jared Kushner's Affinity Partners. It's a firm that he
Speaker 6: founded during Trump's first administration, and as you know, the
Speaker 6: son in law of the president. There's a view that
Speaker 6: maybe his involvement could help ease the approval of the deal.
Speaker 6: Any foreign takeover does need sephia's approval.
Speaker 2: This is really interesting, but it's in line with what
Speaker 2: Saudi Arabia has been doing in video games. Like three
Speaker 2: years ago, billions and billions of dollars pledged to this
Speaker 2: and they already held ten percent of Electronic Arts. Anyway,
Speaker 2: could you just explain a little bit the structure of
Speaker 2: the leverage buyout and how we think it's going to work.
Speaker 6: So you mentioned JP Morgan, So they're providing about twenty
Speaker 6: billion dollars of financing. So that's just you know, bank debt.
Speaker 6: Goldman Sachs advised Electronic Arts. But in terms of the structure,
Speaker 6: it's just a leverage buyout. These investors are putting debt
Speaker 6: on the company. They're valuing it at over fifty billion.
Speaker 6: We'll try to report out, you know, how much money
Speaker 6: specifically are these equity checks that silver Lake, PIF and
Speaker 6: Affinity are putting in. But we're hearing you know. As
Speaker 6: you mentioned, PIF already is a big shareholder with about
Speaker 6: ten percent of EA. They're certainly going to be involved.
Speaker 6: They have a huge portfolio video games.
Speaker 3: Right now, we've got a penny more to discuss. We're
Speaker 3: going to get a little bit more detail, of course
Speaker 3: from our gaming report as.
Speaker 5: Well at it.
Speaker 2: Yeah, and I just point out one thing real quick.
Speaker 2: This is a company that's free cash flow positive, just
Speaker 2: doesn't have a massive growth story. Blue mostly on a
Speaker 2: Bak who leads the deals team, Thank you very much.
Speaker 2: What does this mean for gaming? In fact, the question
Speaker 2: is why is Electronic Arts going private? Let's get out
Speaker 2: to Bloombos. Jason Schreier, who leads our video games coverage industry.
Speaker 4: When I was a kid, you know this story.
Speaker 2: I would save up for weeks and I would spend
Speaker 2: my allowance at a store to buy a disc from
Speaker 2: my PlayStation or my PC. The video games industry does
Speaker 2: not work like that anymore, and I think it speaks
Speaker 2: to the core of how EA is running right now.
Speaker 7: And I think nowadays you would be saving up to
Speaker 7: buy a new costume for your character in EA's Apex Legends.
Speaker 4: Yeah.
Speaker 7: The big number that I would look at that I
Speaker 7: think helps illustrate why this happened is EA's revenue split
Speaker 7: between what they call live services and products. Live services
Speaker 7: meaning in game transactions where people spend with inside their
Speaker 7: games rather than buying new ones. And that's what is
Speaker 7: seventy five to twenty five. Seventy five of EA's revenue
Speaker 7: in the last fiscal year came from live service micro transactions,
Speaker 7: people buying costumes, people buying FIFA players Ultimate Team players,
Speaker 7: and that to me is a is a shocking number
Speaker 7: in many ways, but I think largely what it says
Speaker 7: is that gaming has started to become. If it's not
Speaker 7: already a mature market where it is not seeing a
Speaker 7: ton of growth, it is certainly not seeing double digit
Speaker 7: growth anymore. It is seeing maturity and predictability among its
Speaker 7: games and EA's yearly sports franchises, which is kind of
Speaker 7: generating predictable revenue is free to play titles like Apex Legends.
Speaker 4: That tells that story.
Speaker 3: Just to go in on why private equity therefore thinks
Speaker 3: this is the moment to take this out of the
Speaker 3: public markets. You're not having to report on a quarterly basis, Jason.
Speaker 3: But it's also interesting timing because they've got a Juggernaut
Speaker 3: about to come out in October, Battlefield six.
Speaker 5: Could this change the.
Speaker 3: Dynamics of what this is priced out, whether other people
Speaker 3: come into the field and try and scoop it up.
Speaker 7: Yeah, it's a little baffling to me. I was actually
Speaker 7: pretty surprised at the time, in because I would think
Speaker 7: that EA would want to hold off for a better price,
Speaker 7: given the Battlefield is expected to be a pretty big hit.
Speaker 7: That said, from what we've heard, from what other people
Speaker 7: have reported, this deal has been in the works for
Speaker 7: months now. EA has actually been looking to sell themselves
Speaker 7: or to participate in an m and A of some
Speaker 7: sort for years now.
Speaker 8: Andrew Wilson has been, if.
Speaker 7: Not quite public, at least semi public about that fact
Speaker 7: about wanting to become a bigger BDA company, whether through
Speaker 7: a merger or an acquisition. And it could be just
Speaker 7: that the timing worked out kind of independently of their
Speaker 7: release schedule and they were looking to do this regardless.
Speaker 7: But yes, I would think they would be able to
Speaker 7: get a better premium if Battlefield six comes out and
Speaker 7: does Gangbusters or even beats Call of Duty, their biggest rival.
Speaker 3: Andrew Wilson did put out a statement to his own
Speaker 3: employees saying that entering a new era of opportunity will
Speaker 3: dig into what that looks like a little bit later
Speaker 3: in the show as well, but most Jason Schua, it's
Speaker 3: great to have you meanwhile, broad a market outlook for
Speaker 3: you right now with Michael Green, Simplify Asset Management, chief
Speaker 3: investment Strategists and portfolio joining us now, Michael, just this
Speaker 3: scale of desire to hold and buy into debt. We
Speaker 3: think of Oracle's sale and bonds we've got leveraged by
Speaker 3: out now being clearly taken down by banks because they
Speaker 3: think they can syndicate this. What does it signal about
Speaker 3: the wash of cash that we have in the market
Speaker 3: and the valuations we're getting on companies.
Speaker 9: Well, I think there's two separate components that are coming through. First,
Speaker 9: we're seeing more and more evidence that the cash flow,
Speaker 9: that is the prodigious cash flow that has come through
Speaker 9: many of the technology companies now has claims against it,
Speaker 9: and taking on debt is simply a way of pulling
Speaker 9: that forward. You've effectively said the two billion dollars a
Speaker 9: free cash flow that Electronic Arts currently has is going
Speaker 9: to go to servicing debt as compared to significant investment.
Speaker 8: And I'll be honest with you, this is part.
Speaker 9: Of a signal that we are very, very interested in
Speaker 9: actually buying debt. We have incredible tightness in both a
Speaker 9: high yield market and in the investment grade market. The
Speaker 9: demand for debt is very very high given the retirement
Speaker 9: needs of the baby boomers, and interestingly enough people are
Speaker 9: trying to deliver into that. This is very very similar
Speaker 9: in a lot of ways to what we would have
Speaker 9: done in historical time periods of manufacturing IPOs if that's
Speaker 9: what's demanded.
Speaker 8: We're seeing that on the platforms like.
Speaker 9: Robin Hood and coinbase, where there's a ton of demand
Speaker 9: for new IPOs. The older generation really wants to own
Speaker 9: investment grade debt and high yield debt.
Speaker 2: Michael, I just scrambled a bit, if I'm being honest,
Speaker 2: but I think you guys do have like less than
Speaker 2: a thousand EA shares. I don't know why, whether that's
Speaker 2: sort of a historical or tangential fact, but just talk
Speaker 2: a little bit more about that. You know, biggest leveraged
Speaker 2: buyout in history has a big shiny headline. We've reported
Speaker 2: that JP Morgan is going to do like twenty billion
Speaker 2: of the debt. You sort of interest in a mechanism
Speaker 2: like that, Well.
Speaker 8: If we have exposure to.
Speaker 9: Electronic arts, it's going to be through one of our
Speaker 9: index oriented products. We are not going to select shares
Speaker 9: in electronic arts. So I would be misspeaking if I
Speaker 9: spoke about a particular inserted desire that drove that.
Speaker 8: I would just highlight that.
Speaker 9: Ultimately, when we think about the quantity of debt that
Speaker 9: is being offered, there is tremendous demand for debt, both
Speaker 9: in actual form as we're discussing, and then also in
Speaker 9: synthetic form. You know, Eric Bokunas of Bloomberg speaks often
Speaker 9: of of boomer candy, the idea of products that offer
Speaker 9: extremely high yields. That the type of call overwriting is
Speaker 9: just a way of creating synthetic debt exposure. So that
Speaker 9: is demographic demand that's driving through on all of this stuff,
Speaker 9: and I think this is just telling you there is
Speaker 9: more of that out there.
Speaker 2: There is an alternative to market based debt, and that's
Speaker 2: a mechanism that we're seeing from Nvidia. It's called circular
Speaker 2: financing to some you give an equity investment or capital
Speaker 2: to a company and they use some of that to
Speaker 2: then buy the product that you're known for. Can you
Speaker 2: talk a little bit about that, Michael.
Speaker 9: Yeah, A lot of people are starting to become increasingly
Speaker 9: aware of this component of vendor financing. And it's not
Speaker 9: just vendor financing. We see it not just with InVideo,
Speaker 9: with their deals with core Weave that are circular, and
Speaker 9: an equity investment is made into core Weave that then
Speaker 9: flows back into repurchases of in video products. One that
Speaker 9: reduces the price competition associated with it. If in Video
Speaker 9: is giving me the equity investment or lending me the
Speaker 9: money to make purchase and going to be less willing
Speaker 9: to negotiate speaks to in videos extraordinarily at high margin
Speaker 9: j genes.
Speaker 8: And the protection of those.
Speaker 9: The more transactions that are going through in that form,
Speaker 9: the more I would argue we have to be thinking
Speaker 9: perhaps the margin is not as sustainable.
Speaker 8: As it actually appears.
Speaker 9: The thing that I would emphasize is if we look
Speaker 9: at other types of debt that are being taken on,
Speaker 9: they're being taken on. Meta in particular has taken on
Speaker 9: an extraordinary amount of debt where they are simultaneously financing
Speaker 9: or underwriting the debt for the financing of building of
Speaker 9: data centers, and they are also entering into operating lease
Speaker 9: agreements where they are effectively committing on both sides of
Speaker 9: the equation. We're seeing more and more evidence of this,
Speaker 9: and one of the great ironies I would highlight is
Speaker 9: is that all of this is equity finance at its core.
Speaker 8: It's really not.
Speaker 9: Subject to the whims of federal reserve rate policy. It
Speaker 9: tells us nothing about whether policy is restrictive or not.
Speaker 3: Michael, It's interesting that below the surface, when you think
Speaker 3: about the check the money that's being promised to open
Speaker 3: AI from Nvidia, many it said, actually it then helps
Speaker 3: open AI go out and take on debt because they've
Speaker 3: got this backing from Nvidia. More broadly, is this an
Speaker 3: asset class you want to be piling into at this moment?
Speaker 3: What are the risks clear for everyone to see, and
Speaker 3: what are some of the hidden risks when you're piling
Speaker 3: into a very few names who are going all in
Speaker 3: on each other and indeed data sent the More broadly.
Speaker 9: Well, I think that there are two really really interesting
Speaker 9: components to it right. One is, remember that the vast
Speaker 9: majority of people are piling in here without any explicit
Speaker 9: thought behind it. You guys obviously know the work that
Speaker 9: I spend talking about the impact of passive investing.
Speaker 8: The average American investing.
Speaker 9: Into their four oh one K putting money into a
Speaker 9: target date fund, has no interest in Video or Microsoft,
Speaker 9: or has any critical evaluation of it. It's simply the
Speaker 9: way we plan our retirement today. And so a huge
Speaker 9: chunk of the money that is flowing in is not
Speaker 9: being sent through thoughtfully. It's being sent through mechanically. So
Speaker 9: people are very allocated to this, regardless of whether it's
Speaker 9: discretionary or not. The second component that I would emphasize
Speaker 9: is that this type of circularity is again a byproduct
Speaker 9: where in many situations you would look at this and
Speaker 9: you would say, wait a second, this really seems like
Speaker 9: anti trust activity.
Speaker 8: Google just lost a verdict in terms of anti trust.
Speaker 9: The judge failed to forest remedies, and immediately they turn
Speaker 9: around and engage in the activity that they were actually
Speaker 9: dinged for, working with Apple to basically lock in a
Speaker 9: monopoly position in Apple's user interface. So we're seeing this
Speaker 9: circularity across multiple components of it, whether it stops, whether
Speaker 9: it continues to be enabled by the way that we
Speaker 9: invest We simply can't know yet.
Speaker 2: Michael Green of Simplify Asset Management across Asset News of
Speaker 2: the Day, really appreciate it. Now coming up, Israeli Prime
Speaker 2: Minister Benjamin et Yaho discusses AI with investors and tech
Speaker 2: leaders last night here in New York ahead of his
Speaker 2: visit with President Trump. He's due to arrive at the
Speaker 2: White House any moment. We'll have the details. This is
Speaker 2: Bloomberg Tech.
Speaker 3: Is re any Prime Minister Benjamin Netanyah, who met with
Speaker 3: tech executives and investors in New York during his United
Speaker 3: Nations General Assembly visit, And now, according to sources, Nestanya,
Speaker 3: who discussed using AI to boost his country's economy and
Speaker 3: his military capabilities.
Speaker 5: For all Blueboks of aidances.
Speaker 3: Co host amriy Horden joins us now from the White House,
Speaker 3: where President Trump now is set to meet the Prime
Speaker 3: Minister netanya who and that's much more about military, much
Speaker 3: more about geopolitics right now.
Speaker 10: Yeah, absolutely, we're just moments away though for Prime Minister
Speaker 10: Benjamin netna who firm arriving at the White House to
Speaker 10: have this really crucial meeting with President Donald Trump after
Speaker 10: the President last week at the UN General Assembly, met
Speaker 10: on the sidelines with a number of Arab leaders and
Speaker 10: discussed this twenty one point plan alongside the UN General
Speaker 10: Assembly Benjamin Nenyaw, who also had a little bit more
Speaker 10: of an informal conversation with these tech executives. According to
Speaker 10: reporting from my sources as well as ED sources, individuals
Speaker 10: like Lyman, venture capitalists like Josh woolfel part of this meeting,
Speaker 10: and most notably Jacob Helbert was also there.
Speaker 5: This was an individual that was.
Speaker 10: An advisor to Pallenteer that he was tapped to join
Speaker 10: the Trump administration. He had his hearing, he'll be an
Speaker 10: under secretary of the State Department, just waiting for final
Speaker 10: Senate confirmation. And the discussions really involved around how to
Speaker 10: use artificial intelligence to not just boost the Israeli military,
Speaker 10: but also Israel's economy as we see an absolute arms
Speaker 10: race when it comes to AI infrastructure and development. It's
Speaker 10: also on the keels of almost two years ago Pallenteer
Speaker 10: deciding to have this strategic relationship with the Israeli military.
Speaker 10: So Bendri Ninya, who's sitting down when none of these
Speaker 10: tech leaders on how exactly Israel was going to advance
Speaker 10: some of this capability in a military format as well
Speaker 10: as an economic one before he sets foot inside the
Speaker 10: Oval Office with President Trump.
Speaker 4: Exactly.
Speaker 2: So, Amory, I think the point that the sources made
Speaker 2: to you and I is that this was a group
Speaker 2: of tech industry people that had exist relationships with President,
Speaker 2: Prime Minister net and Yaho. What do we need to
Speaker 2: know about this upcoming meeting with the President?
Speaker 4: What's on the agenda?
Speaker 10: Well, this one is going to be incredibly important for
Speaker 10: both President Trump and Prime Minister net and Yahoo. As
Speaker 10: I mentioned, it comes on the heels of President Trump
Speaker 10: outlining how he can see an end of the war
Speaker 10: in Gaza, which is feeling very optimistic about with this
Speaker 10: twenty one point plan he discussed with Arab leaders, and
Speaker 10: I sat down with the Egyptian Foreign Minister on Friday,
Speaker 10: who was optimistic after being in that meeting with President
Speaker 10: Trump that they do have a path forward on ending
Speaker 10: the war in reconstruction. Of course, the devil on all
Speaker 10: this is going to come in the details when it
Speaker 10: comes to the Israeli red lines as well of Arab
Speaker 10: leaders red lines as well.
Speaker 2: Bloomberg Za, Marie Harden, thank you very much and be
Speaker 2: sure to stay with Bloomberg for complete coverage of that
Speaker 2: meeting between President Trump and Prime Minister net and Yahoo.
Speaker 2: That's coming up at one fifteen pm New York time.
Speaker 2: Coming up on Bloomberg Tech, Huawei plans to ramp up
Speaker 2: production of its most used to advance AI chips in
Speaker 2: a bid to take market share. From the video, we
Speaker 2: have the details. Next, this is Bloomberg Tech. We're seeing
Speaker 2: live pictures of President Trump walking in with Israel Prime
Speaker 2: Minister Benjaminette Naho, who's just arrived at the White House.
Speaker 2: The two set to participate in a bilateral meeting in
Speaker 2: just a few moments time. Back to our other top story,
Speaker 2: Huawei is preparing to sharply ramp up production of its
Speaker 2: most advanced AI chips over the next year, aiming to
Speaker 2: win customers in the world's biggest chip market. Is in
Speaker 2: Nvidia struggles with geopolitical headwinds. Bloomberg's Global Technology Executive editor
Speaker 2: Peter Elstrom joins us, we're talking about the nine ten
Speaker 2: c ascend chip, right. This is kind of the marquee
Speaker 2: Huawei talk us through the numbers that we learned in
Speaker 2: the course of reporting about the next two years.
Speaker 5: Right one.
Speaker 11: Wai course is probably best known for its communications equipment,
Speaker 11: had smartphones for a long time too, but it is
Speaker 11: also really the leading developer of semiconductors within China. It's
Speaker 11: put a ton of research and development into this process
Speaker 11: and it's made quite a bit of progress. So what
Speaker 11: sources are telling us is that the company is preparing
Speaker 11: to ramp up production of some of these high end
Speaker 11: chips that would be used to run AI models within
Speaker 11: the country and also train some models in the country.
Speaker 11: As you mentioned, the nine ten C is the most
Speaker 11: advanced chip that they have on the market right now.
Speaker 11: We understand from sources they'll produce about three hundred thousand
Speaker 11: this year and they're planning on ramping that up to
Speaker 11: about six hundred thousand next year. That's not enough to
Speaker 11: meet all of the domestics supply, but they're hitting the
Speaker 11: market at a very vulnerable moment for Nvidia. In Nvidia
Speaker 11: had hoped to be able to sell a bunch of
Speaker 11: chips into China. There's a very vibrant AI see there.
Speaker 11: Companies want to buy their chips, but there have been
Speaker 11: these geopolitical tensions where the H twenty chip was banned
Speaker 11: for a while, then Washington allowed it to be sold,
Speaker 11: but then Beijing pushed back and said they don't want
Speaker 11: their companies to buy that chip right now. So as
Speaker 11: in Vidia stalls, Huawei is racing ahead and trying to
Speaker 11: fill that market need.
Speaker 3: Temeracon Technology is also trying to raise a This is
Speaker 3: a moment for domestic chip making talent, but ultimately we're
Speaker 3: still worried about how Smick can actually produce or manufacture
Speaker 3: and how powerful any of these next iterations that Eric Shue,
Speaker 3: the rotating leader of the business, can actually be compared to.
Speaker 3: In video, it seems as though analysts think they're not
Speaker 3: going to nearly rival the GPUs and the next iteration
Speaker 3: from Nvidio.
Speaker 11: Right they're still very far behind in video. I mean,
Speaker 11: in Video is the most valuable company in the world.
Speaker 11: They have tons of resources to be able to throw
Speaker 11: at this, and obviously they've helped companies in the US
Speaker 11: like OpenAI and Microsoft a ton on this front. Now,
Speaker 11: Beijing is very concerned about that reliance on American technology
Speaker 11: at this critical juncture, so as Hi Jimping and President
Speaker 11: Donald Trump entre into these trade negotiations. They have many
Speaker 11: issues on their plate, including TikTok. The Communist Party wants
Speaker 11: to do whatever they can to be able to wean
Speaker 11: themselves off of that American technology, so they poured a
Speaker 11: ton of resources into building these domestic capabilities. As you mentioned,
Speaker 11: Cabrico is coming on one of the upstarts that's probably
Speaker 11: the most promising in the market. And then Huawei is
Speaker 11: also spending a lot of money on this front. Ali Baba,
Speaker 11: the e commerce company, is investing in semiconductors too, So
Speaker 11: you're seeing really this nationwide effort to try to make
Speaker 11: some progress in chip production. Again, they're very far behind
Speaker 11: what the Americans can do and the Taiwanese can do
Speaker 11: right now, but they are making progress, and I think
Speaker 11: what sources are telling us now is they're making progress
Speaker 11: over the next year to an extent that we had
Speaker 11: not anticipated.
Speaker 3: Feate Astrom always breaking it down. We so appreciate that. Meanwhile,
Speaker 3: fitness company Peniton, it's that to.
Speaker 5: Unveil new products this week, refreshing.
Speaker 3: Its exercise equipment, hardware, and its software lineup. Of course
Speaker 3: it's including AI Let's get more from Lumo. Consumer Tech
Speaker 3: Managing Editor Mark Gum and how wholesale is the change
Speaker 3: going to be for Peloton this week.
Speaker 12: This is going to be their biggest hardware revamp in
Speaker 12: at least half a decade. This is under new CEO,
Speaker 12: Peter Stern. I know a lot of us love and
Speaker 12: use Peloton, but they've been struggling lately from a revenue perspective,
Speaker 12: from a sales perspective, from a profit perspective, management perspective,
Speaker 12: but also from a products perspective, and it's time for
Speaker 12: them to step it up under new leadership, and that's
Speaker 12: what they aim to do this week. Peter Stern will
Speaker 12: be holding a keynote address in the middle of the
Speaker 12: week and introducing an end to end hardware refresh that
Speaker 12: includes new bikes, new treadmills, new rows, a fully upgraded
Speaker 12: operating system across all a Peloton hardware that deeply integrates
Speaker 12: what they call internally Peloton Intelligence. This is AI for
Speaker 12: personalized coaching and creating plans for users.
Speaker 8: So this is a big refresh.
Speaker 12: This is Peter Stern's moment to put his stamp on
Speaker 12: the company. The last CEO, Barry McCarthy, basically ran the
Speaker 12: company into the ground, something that they said was necessary
Speaker 12: after the CEO before him, co founder John Foley, pulled
Speaker 12: some levers that put the company in a very bad
Speaker 12: financial position. So we'll see if Stern is the ones
Speaker 12: to be able to turn things in the correct direction.
Speaker 2: Mark, Karen and I are both uses of the hardware
Speaker 2: and subscribers to the platform. There'll be an audience watching
Speaker 2: the show that have like deja vu and say, well,
Speaker 2: hold on, isn't this the latest of several turnarounds that
Speaker 2: have happened in the last many years.
Speaker 12: The last turnaround was mostly focused on re architecting the
Speaker 12: fundamentals of the company. They moved production to third party manufacturers,
Speaker 12: they shut down facilities, they tried to right size the company.
Speaker 12: They did I think four or five different rounds of layoffs.
Speaker 12: What Peter Stern is doing after that was done by
Speaker 12: the last CEO is actually trying to go into the
Speaker 12: growth mode here, which means rolling out new products and
Speaker 12: new initiatives. No new products or major initiatives are rolled
Speaker 12: out under the prior regime, So this is about bringing
Speaker 12: new hardware into the market and we'll see if that's
Speaker 12: successful for them. You know, so far, they're up quite
Speaker 12: a bit on an annual basis, let's see if investors
Speaker 12: like the hardware.
Speaker 2: The end of twenty twenty, the pandemic year, this was
Speaker 2: the stock there was at one hundred and sixty two dollars.
Speaker 2: It's now just above eight dollars. Bloomberg's Mark German a
Speaker 2: big week, Thank you very much. Now coming up is
Speaker 2: EA goes private in a fifty five billion dollar deal.
Speaker 2: We're going to speak with Jason Chapman of investment firm
Speaker 2: Convoy on the impact of the gaming industry. This is
Speaker 2: a firm that only looks at the gaming industry and
Speaker 2: we've gone over the.
Speaker 4: Details of this deal, Caro.
Speaker 2: We've looked at how historic it is from a financial perspective,
Speaker 2: but there will be gamers out there going, look, I
Speaker 2: love some of these EA games.
Speaker 4: Yeah, why are you doing this?
Speaker 3: My son recently new to the whole EA experience. But
Speaker 3: I'm looking though at the market effect. We're up four percent,
Speaker 3: but remember the market moved on Friday. That was an
Speaker 3: initial reporting came out. It's a nice tacy premium. We'll
Speaker 3: see what private equity could do for the business.
Speaker 5: This is a Bloomberg Tech.
Speaker 4: Welcome back to Bloomberg Tech.
Speaker 2: Electronic Arts or EADEO, Game company is going private in
Speaker 2: the largest leverage buyout in history. We talked about the
Speaker 2: structure of the deal throughout the program, but like we
Speaker 2: started the question, why this is a five year chart
Speaker 2: of the stock and apart from that spike on the
Speaker 2: far right hand side, which was the trading, remember two
Speaker 2: hundred and ten dollars for shares the offer at like
Speaker 2: two one hundred and three right now, So stock this
Speaker 2: traded sideways five years and there are a lot of
Speaker 2: questions about whether executives at EA saw the writing on
Speaker 2: the wall or on their console screen or whatever that
Speaker 2: there's some uncertainty for the future, Carrot, and I'm still
Speaker 2: trying to understand it.
Speaker 5: Well, we've got a good voice to dig into it.
Speaker 3: For more on in the EA deal, Jason Chapman, Convoy
Speaker 3: Managing partner, joins us. Convoy is an investment firm. It's
Speaker 3: dedicated to video game and interactive entertainment industry. You understand
Speaker 3: better than anyone the disruption that's happened within this industry.
Speaker 3: Is going private the right tactic for EA.
Speaker 13: Thank you for having me on again, Caroline and Ed
Speaker 13: and I absolutely do think it is the right thing
Speaker 13: for you to go private and here's here's why today
Speaker 13: EA has represented kind of the digital home for many
Speaker 13: core tenant properties and games. Think of the sports division,
Speaker 13: which composed about sixty percent of revenue. You've got the sins,
Speaker 13: You've also got Battlefield which is about to launch. And
Speaker 13: a lot of speculation for EA has been that they
Speaker 13: continuously go back to the well of producing the same
Speaker 13: types of IPS and they haven't come up with anything
Speaker 13: quote unquote new in a while. Going private will allow
Speaker 13: them to take a risk to develop some new IP
Speaker 13: and also be a powerhouse once again for generating new
Speaker 13: experiences for gamers. And so for therefore, as a gamer myself,
Speaker 13: I like the transaction.
Speaker 3: You're investing in the frontier of gaming and the next experiment.
Speaker 3: So what is it that they can innovate on at
Speaker 3: the moment. What are the trends that you're seeing in
Speaker 3: your portfolio companies that can be adopted by the biggest studios.
Speaker 8: Yeah.
Speaker 13: So one of the challenges for large studio driven public
Speaker 13: entities is that the public market cycle is difficult for
Speaker 13: developing new IP. And so you know, you saw the
Speaker 13: act vision Blizzard acquisition by Microsoft. You're seeing this again
Speaker 13: finding homes where these companies can actually innovate in private.
Speaker 13: Think of what Rockstar is doing with Grand Theft Auto.
Speaker 13: That is difficult to do as a public entity. It
Speaker 13: just is unless you have a multitude of properties that
Speaker 13: can kind of play defense for you in the short term.
Speaker 4: And so what am I excited about.
Speaker 13: I'm excited to see what that infrastructure optimized, let's call
Speaker 13: it further refined, which I have full confidence the PIF
Speaker 13: and their other partners will do here in this transaction
Speaker 13: to see what they can produce on the other end,
Speaker 13: and they produce Battlefield. I don't know if you all
Speaker 13: saw that test, but it was the nineteenth most successful
Speaker 13: CCU event on Steam and ed.
Speaker 2: I've seen the test, and like all over Instagram reels
Speaker 2: and TikTok, is the early access experience. What you just
Speaker 2: said about PIF though, this is the letter that that
Speaker 2: Andrew Wilson sent employees right and in the limited amount
Speaker 2: of time I've spent with EA's leadership this year, they've
Speaker 2: talked about IP in the context of going outside of
Speaker 2: games and this letter. He talks about sports, and he
Speaker 2: talks about gaming, and he talks about entertainment broadly. This
Speaker 2: is something that Saudi Arabia has been working on for
Speaker 2: a number of years. Do they just give EA a
Speaker 2: new domain to move into.
Speaker 13: Absolutely so. You know, roughly, right now about two percent
Speaker 13: of the PIF's assets are in entertainment in sports. That's
Speaker 13: going to move to about three and a half percent
Speaker 13: at the conclusion of this transaction. They've seen massive success
Speaker 13: with Scope Ly they acquired that for just a hundred
Speaker 13: five billion. They've rapidly expanded and acquired Nyantic for an
Speaker 13: additional three and a half billion. They are now looking
Speaker 13: at EA as the mothership of their gaming strategy outside
Speaker 13: of mobile. I believe that you will continue to see
Speaker 13: scopely dominate their mobile strategy, and EA will now probably
Speaker 13: dominate their popular console and PC and alternative strategies outside
Speaker 13: of mobile. And so this is this is form a
Speaker 13: four pmative move by the PIF, and I'm excited to
Speaker 13: see what they do with it.
Speaker 2: I'm keeping a team in New York on their toes.
Speaker 2: But like Battlefield six we're showing on the screen right now, SIMS, Madden,
Speaker 2: EAFC formerly known as FIFA, what are the future of
Speaker 2: those properties? Do they change somehow?
Speaker 13: People are spending less time on new titles and more
Speaker 13: time in existing titles that's going to continue to propagate here.
Speaker 13: And that's why I look at this transaction by the
Speaker 13: PIFs as a very intelligent move. EA has dominated the
Speaker 13: digital homes that we're familiar with for years, and that's
Speaker 13: what people want. They want innovation on things they're slightly
Speaker 13: familiar with. Also, they will have the ability when going
Speaker 13: private to risk it and go for some new properties
Speaker 13: that will come to love, like a new battlefield. I'm
Speaker 13: excited to see them challenge Call of Duty with their
Speaker 13: battle reale. And so for all these reasons, I like
Speaker 13: the transaction.
Speaker 3: What about consolidation do they start picking away at companies
Speaker 3: that you invest in?
Speaker 13: I think when you have a new buyer in the market,
Speaker 13: which the sovereign wealth funds appear to be, you know one,
Speaker 13: we're seeing this with PIF mainly, but secondarily we're seeing
Speaker 13: this with Tamasik with their move into Keyword Studios. So
Speaker 13: absolutely having a new buyer on the scene is a
Speaker 13: good thing for the industry. It is not a bad thing,
Speaker 13: and especially one that's willing to pay a premium. You know,
Speaker 13: typically when you look at privately, you're not that excited
Speaker 13: given that the multiples you may receive or not quite
Speaker 13: what you would hope for if you're going to go public.
Speaker 13: But sovereign wealth funds are here to play, They're here
Speaker 13: to play well, and I think having another place of
Speaker 13: capital liquidity is only a good thing for startups and
Speaker 13: for those who motivating building.
Speaker 4: I saw a twitch and r about that very quick.
Speaker 4: I think Cara's question.
Speaker 2: Is it's a good opportunity for your portfolio companies to
Speaker 2: get acquired by a bigger beast, because like EA goes
Speaker 2: for very technical acquisitions.
Speaker 13: Yes, yes, absolutely, and I'm very excited about this. I
Speaker 13: think it's a good sign for what is to come.
Speaker 13: And there's many good companies in our portfolio that I
Speaker 13: think would love to work with EA and many of
Speaker 13: the parties involved in this transaction.
Speaker 2: Jason Chapman of Convoy really appreciate you coming on Bloombo Tech.
Speaker 2: Thank you very much. At Caroline, we're looking at shares
Speaker 2: for Comcast. So much news coming out today. Basically it's
Speaker 2: a very simple story. They're down three tens of percent,
Speaker 2: basically flat the story. Michael Kavan has been promoted to
Speaker 2: co CEO, joining Brian Roberts. I don't know much more
Speaker 2: to save you on that well landscape's interesting.
Speaker 3: It's interesting because he used to be heading up M
Speaker 3: and A and another big bank and institution before he
Speaker 3: came on board to Comcast. So clearly whe are dealing
Speaker 3: there as they particularly sell off some of their assets.
Speaker 3: But coming up, we're getting through the world of crypto
Speaker 3: ed I'm Immersinger, CEO of the Rock Chain Association, can
Speaker 3: be joining us discuss the group's new campaign to defend
Speaker 3: the stable coin legislation.
Speaker 5: It was only passed in July or on that.
Speaker 3: This is bloombog Tech, Soft Bank and Arc Investment are
Speaker 3: among potension investors in a major funding round for tether holdings.
Speaker 5: According to sources, the funding could.
Speaker 3: Give the company behind the world's largest stable coin I
Speaker 3: value is high as five hundred million dollars. It's got
Speaker 3: the details of bling bag Finance reporter Catherine Doherty and
Speaker 3: why are we seeing such a gargantuan overall valuation for
Speaker 3: this company? What are they thinking? What is Ark and
Speaker 3: soft Bank backing here?
Speaker 14: So there's a few against the backdrop of a changing
Speaker 14: regulatory environment. I would say that is probably the number
Speaker 14: one force behind the decision that firms like soft Bank
Speaker 14: and Arc Investment are looking into When you have a
Speaker 14: firm like Tether that has been at the forefront of
Speaker 14: stable coin and emerging technology in the crypto space, these
Speaker 14: firms in putting their money behind a private firm and
Speaker 14: the development that Tether is working on behind the scenes
Speaker 14: is really a signal to the rest of the industry
Speaker 14: of where things are potentially headed. It also sets up
Speaker 14: the stage for a really increasing environment of setting up
Speaker 14: major firms in what they're trying to do in expanding
Speaker 14: into other forms of payment and lending. So it's really
Speaker 14: all eyes on how big the valuation really does become.
Speaker 14: The numbers that we're reporting out at Bloomberg are on
Speaker 14: the higher end, so it really remains to be seen
Speaker 14: whether or not they come in or are lower than expectations.
Speaker 2: You know, there's this moment in time about whether this
Speaker 2: round is sort of unique to Tether and what it
Speaker 2: tells us about valuation a moment more broadly, then there's
Speaker 2: the strategy, how does this backing help Tether grow as
Speaker 2: an issue of stable coins?
Speaker 4: Give us the one two and answer those Catherine, Yes.
Speaker 14: Well, on the second point that you're making, it really
Speaker 14: is about where they're going to put their money, where
Speaker 14: they go next I mentioned lending payments. These are all
Speaker 14: emerging technologies and Tether has always been a firm that
Speaker 14: is at the forefront. And now that the regulatory environment
Speaker 14: is changing, where there is engagement with the industry and regulators,
Speaker 14: that is really where the industry is going to look
Speaker 14: to see what happens next. And in terms of the
Speaker 14: actual size, that is really the big question here on
Speaker 14: if they do get the higher end of the range,
Speaker 14: how will they put that money to work and what
Speaker 14: does that mean for the rest of the sector. Will
Speaker 14: there be other firms that are looking to raise money
Speaker 14: either privately or going out and potentially we've been seeing
Speaker 14: some big IPOs and that really sets the scene. When
Speaker 14: you have a firm like Circle that is out there
Speaker 14: publicly having to report to their investors and disclose what
Speaker 14: kind of money and the investments that they're making. That
Speaker 14: really sets up a stage between Circle and Tether. You
Speaker 14: have a public company and a private company both working
Speaker 14: in the same industry and looking to compete in the
Speaker 14: stable coin issuance space.
Speaker 2: Luis Kevin, doc's great to have you back on Bloomberg Tech.
Speaker 4: Appreciate it.
Speaker 2: Elsewhere in the world of stable coins are Battle's brewing
Speaker 2: between crypto supporters and traditional finance over the Genius Act.
Speaker 2: Let's get the perspective of some immersing a CEO of
Speaker 2: the Blockchain Association context. The Genius Act creates a regulatory
Speaker 2: structure for the issuance of stable coins, a form of
Speaker 2: crypto pegged to the dollar, and it was just signed
Speaker 2: into lauren' ly and I think you and I talked
Speaker 2: about it.
Speaker 4: Yeah, surely there are yeah, absolutely, you know.
Speaker 2: Like we've discussed the idea that David tax is out
Speaker 2: there like talking this is dollarization, this is fantastic. But
Speaker 2: we're talking about now tension between a more modern industry
Speaker 2: and traditional finance. How for your association is that tension
Speaker 2: being debated?
Speaker 15: Well, we're coming out pretty strongly against some of the
Speaker 15: proposals that the traditional banks have in front of Congress.
Speaker 1: Now.
Speaker 15: They'd like to row back a lot of what the
Speaker 15: Genius Act does. They have claimed that they want to
Speaker 15: close some loopholes that truly are not loopholes. They were
Speaker 15: out the table when we negotiated this bill, so any
Speaker 15: concerns that they have now are kind of you know,
Speaker 15: late to the game concern At the end of the day,
Speaker 15: stable coins have the opportunity to change how we move
Speaker 15: money in this work, in this globe, in the globe,
Speaker 15: and we want to make sure that the regulations are
Speaker 15: such that we can continue to see that innovation thrive
Speaker 15: and grow.
Speaker 5: If you can't beat them, join them, as the saying.
Speaker 3: So it's the idea that I've heard of just bank
Speaker 3: crafter bank considering launching their own stable coins. Why then
Speaker 3: fight the Genius Act which would allow them to do that.
Speaker 15: Yeah, I mean, I believe they will start to issue
Speaker 15: their own stable coins. This is a competition question right now.
Speaker 15: A lot of the exchanges are able to offer a
Speaker 15: reward around four percent for stable coins. Your traditional savings
Speaker 15: account is offering less than one percent, and they don't
Speaker 15: want to compete. So the idea is, let's try to
Speaker 15: stop the competition and really kind of create a regulatory
Speaker 15: mode around traditional finance and let them get out ahead
Speaker 15: where the stable coin issuers are our ahead of the banks.
Speaker 15: And I think that's probably the biggest concern they have.
Speaker 15: Right now.
Speaker 3: You're sending a letter to Congress, You're you're arguing against
Speaker 3: some of these actions taken by the big banks, but ultimately,
Speaker 3: when you're looking at the broader context of TeV out
Speaker 3: there raising funds fifteen to twenty billion dollars maybe giving
Speaker 3: it evaluation five hundred billion doing those those the numbers
Speaker 3: are reasonable as to the market opportunity right now.
Speaker 15: Yeah.
Speaker 5: Absolutely.
Speaker 15: When you think about how money moves in the in
Speaker 15: the world, it's tradition, it's slow, it's inefficient, there's a
Speaker 15: lot of friction. Stable coins take that out of the system.
Speaker 15: It's an opportunity to again move money quickly and efficiently,
Speaker 15: and it's something that I think the financial services sector
Speaker 15: has been waiting for. So I'm not surprised by the
Speaker 15: evaluations we're seen for these companies. I think there's just
Speaker 15: a lot of opportunity in the stable coins sector going
Speaker 15: forward real quick.
Speaker 2: As the point of clarification, Tether Holdings is a member
Speaker 2: of your association, somebody that you are support.
Speaker 15: Tether No, they're not a member. They just you know,
Speaker 15: we were just at their launch for tether us. Certainly
Speaker 15: somebody that we would love to see in our membership
Speaker 15: circles in our membership. So if you have stable coin
Speaker 15: issuers in our membership.
Speaker 2: The reason I also I want to go back to
Speaker 2: the Genius Act point, which is that the banks want
Speaker 2: one thing and you your association as members want something different.
Speaker 2: You basically don't agree. That being said, what is it
Speaker 2: that the banks are wrong about? Just distill that please.
Speaker 15: Yeah, So they're calling this loophole where the exchanges are
Speaker 15: able to offer a reward for stable people putting money
Speaker 15: in stable coins. This is no different than a reward
Speaker 15: you would get if you're using a bank credit card.
Speaker 15: They are claiming that that is a loophole around the
Speaker 15: yield prohibition in the bill. This is not a yield offer.
Speaker 15: This is a separate reward offered by the exchanges. This
Speaker 15: is not the stable coin issuers offering yield. Again, it's
Speaker 15: the exchanges offering a reward. It's very different. It is
Speaker 15: not a loophole. And again, if the banks want to compete,
Speaker 15: their welcome to do so by offering similar rewards or
Speaker 15: similar interest rates on savans accounts.
Speaker 3: What's interesting is Tether, of course, makes its money by
Speaker 3: allocating the money it holds and the US treasuries it
Speaker 3: holds and farming yield from those. All of this is
Speaker 3: about regulation. Yes, you come from the CFTC. At the moment,
Speaker 3: the CFTC has one person in it with yet to
Speaker 3: see a new leader installed. Is there an anxiety? Is
Speaker 3: the anxiety that some have about a void of regulatory
Speaker 3: over seeing of this very nascent industry group.
Speaker 5: Is that right or wrong in your perspective.
Speaker 15: Right now, I think there's some concern that there's not
Speaker 15: permanent leadership at the CFTC that probably you see that
Speaker 15: play out more with potential market structural legislation that the
Speaker 15: Capitol Hill's working on. But at the end of the day,
Speaker 15: you see very strong leadership coming out of book the
Speaker 15: SEC and the CFTC. They're holding a round table together today,
Speaker 15: So it's certainly, you know, even though there's only one
Speaker 15: person at the CFTC, that's not stopping the agency from
Speaker 15: moving ahead doing what is necessary to ensure that they
Speaker 15: are allowing innovation to thrive. So I think the concern
Speaker 15: while it, you know, probably is something to think about
Speaker 15: with market structure, because they do need long term leadership
Speaker 15: at the CFTC. Right now, the CFTC and the SEC
Speaker 15: is doing everything they need to be doing to make
Speaker 15: sure the innovation is going to thrive in the US.
Speaker 3: Caroline fram Republican Acting Chair, the sole member at the
Speaker 3: moment of the CFTC. It is great to have you
Speaker 3: here though, of course we really appreciate some there coming up.
Speaker 3: Motor Lab CEO Eric Burden, how does Beern Hodgson is
Speaker 3: joining us to talk about the aim structure company Series
Speaker 3: B funding around and at one point one billion dollar
Speaker 3: post money valuation.
Speaker 5: There's a really big tech.
Speaker 4: Startup.
Speaker 2: Modal Lab says it provides AI infrastructure for AI native startups,
Speaker 2: enabling the building and testing of AI applications.
Speaker 4: It's just close of you.
Speaker 2: Eighty million dollar Series B funding round led by Lux Capital.
Speaker 2: Model Labs CEO Eric Bernhardson joins us.
Speaker 13: Now.
Speaker 2: Caroline and I have been discussing all morning, kind of
Speaker 2: a bit like the salesforce question what does model do?
Speaker 2: But I think like the understanding is it's more analogous
Speaker 2: to like a together AI and maybe nearer to a neocloud.
Speaker 2: But just explain that basic question to us to start.
Speaker 16: Yeah, totally, and it's great to be here about it.
Speaker 16: So we built the infrastructure layer of a lot of
Speaker 16: AI applications. So if you think about a lot of
Speaker 16: all these AI applications, you know, people building things like
Speaker 16: generator media or large language models or things like Vibe
Speaker 16: coding platforms, they only need a software layer to run that,
Speaker 16: and so we basically provide a software layer by aggregating
Speaker 16: a lot of underlying physical infrastructure, a lot of GPS
Speaker 16: all over the world, and then make it easy for
Speaker 16: engineers to build things on top of that. Build things,
Speaker 16: whether that's related to training or inference or batch processing
Speaker 16: or code the execution, or many other things. We have
Speaker 16: a lot of customers like Meta, Lovable, Pseuno, Ramp and Scale,
Speaker 16: a lot of happy developers who basically build things using
Speaker 16: our SDK on top of this infrastructure platform.
Speaker 2: So that sounds very much like AWS and AWS Lambda.
Speaker 1: Is that fair?
Speaker 2: Like what's the landscape here?
Speaker 16: There are some similarities like AWS LAMB that is built
Speaker 16: for more of a traditional infrastructure, and I think what
Speaker 16: we realized when we started this company was basically a
Speaker 16: lot of traditional infrastructure, you know, things like you know
Speaker 16: a WSLAM or Kubernators or Docker just isn't built for AI.
Speaker 16: So we realize in order to build this new layer
Speaker 16: of infrastructures to support all these applications, basically to throw
Speaker 16: out a lot of the existing infrastructure and build a.
Speaker 8: Whole news stack.
Speaker 16: But we're very happy customers of AWS. We run an
Speaker 16: AWS we run many other hyperscalers. We have great partnerships
Speaker 16: with them. I think what they're good at is running
Speaker 16: all the physical infrastructure, all the data centers, and then
Speaker 16: what we're very good at is innovating in the layer
Speaker 16: above with the developer experience and building this platform that
Speaker 16: enables engineers to build all these AI applications on top
Speaker 16: of it.
Speaker 3: So you've got eighty million dollars more in funding. We've
Speaker 3: raised more than eighty million, and now that takes you
Speaker 3: to one hundred and eleven. What do you need all
Speaker 3: the money for? What are your absolute costs?
Speaker 5: Eric? What's keeping you up?
Speaker 8: Yeah?
Speaker 16: For sure, So so far we've actually been pretty capital efficient.
Speaker 16: But we see a lot of demand out there. There's
Speaker 16: so many customers building these applications, you know, starting to
Speaker 16: see a lot of adoptionals in later stage company. A
Speaker 16: lot of enterprise companies are now taking what's maybe previously
Speaker 16: research prototypes and putting it into production and they need
Speaker 16: a platform to run these applications, and that's when they
Speaker 16: come to you. We think there's just a massive opportunity
Speaker 16: that the market is exploding, so much demand out there.
Speaker 16: Since we're going to take this money and you know,
Speaker 16: first first and foremots hire a lot of engineers to build,
Speaker 16: you know, because we need to.
Speaker 4: Invest in this platform.
Speaker 16: We're building a very deep platform, but also invest of
Speaker 16: course in sales and marketing.
Speaker 3: How hard is it to find the right talent? How
Speaker 3: expensive is it?
Speaker 4: It's hard, It's hard.
Speaker 16: I mean we're in New York, so I think we're
Speaker 16: actually a little bit sheltered from the very worst part
Speaker 16: of it. But yeah, it's very hard to find all
Speaker 16: these you know hard you know, these people solving these
Speaker 16: hard infrastructure problems.
Speaker 2: Eric, we're going to bring back some video. We're just
Speaker 2: showing the platform. It still comes back to access to infrastructure,
Speaker 2: the GPUs, the underlying technology, right, are you taking on
Speaker 2: the capital burden of that? Like who's actually paying for
Speaker 2: access to lease or buy out the capacity?
Speaker 16: Now, we're trying to be a very capital efficient in
Speaker 16: the sense that we don't actually own any underlying physical
Speaker 16: and infrastructure. Like I mentioned, we run on top of
Speaker 16: a lot of different clouds. We run on all the majorhyperscalers.
Speaker 16: We're adding a bunch of neoclouds and so our view
Speaker 16: is that, you know, in order to move fast, in
Speaker 16: order to expand very quickly, it's much better to build
Speaker 16: in the existing physical infrastructure, and we focus more on
Speaker 16: the layer above the software layer, and that enables us
Speaker 16: to move very quickly and expand very quickly in a
Speaker 16: more capital efficient way.
Speaker 5: Eric, you're going global.
Speaker 3: You've got a lot of love from the likes of
Speaker 3: Scale AI, but Lovable as well. That's more an overseas play.
Speaker 3: How much you able to broaden this.
Speaker 4: A lot more?
Speaker 16: And it's great to see customers like Lovable. I actually
Speaker 16: grew up in Sweden and so you know Lovable is Swedish.
Speaker 16: But yeah, most of the customers are in the US.
Speaker 16: But we're seeing a lot of very wide different types
Speaker 16: of use cases, right, Like I mentioned, you know things
Speaker 16: like generated media or large language model applications. But some
Speaker 16: of the stuff we've also seen more recently is you
Speaker 16: know a lot of computational bi tech. Well literally I
Speaker 16: talked to a customer the other day. It's literally using
Speaker 16: model to cure cancer. And then you know weather forecasting.
Speaker 16: There's many other applications. So it's super exciting.
Speaker 3: All right, Ben Hadson, it's great to have you on
Speaker 3: the show. Thank you, CEO Modile Labs. And then he's
Speaker 3: just funding around Meanwhile, that does it for this edition
Speaker 3: of Bloomberg Tech, right here in New York.
Speaker 15: Both.
Speaker 2: Yeah, it's taken US fifty six minutes, but I am
Speaker 2: here in New York this week. I'm really happy to
Speaker 2: be here. Incredible amount of news recap this show. EA,
Speaker 2: that's a big moment podcast. You know where to find
Speaker 2: it online on the Bloomberg platforms. Let's do it from
Speaker 2: New York today. This is Bloomberg Tech.