WEBVTT - EA Agrees to Largest Leveraged Buyout in History 0:00:02.520 --> 0:00:13.560 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.600 --> 0:00:17.400 from coast to coast with Caroline Hide in New York 0:00:17.680 --> 0:00:19.680 and ever Low in San Francisco. 0:00:22.360 --> 0:00:25.600 This is Bloomberg Tech coming up. Electronic Arts agrees to 0:00:25.680 --> 0:00:28.280 sell to a group of private investors in a deal 0:00:28.480 --> 0:00:31.560 that values the company at about fifty five billion dollars 0:00:31.560 --> 0:00:33.960 in the largest leveraged buyout in history. 0:00:34.080 --> 0:00:36.600 Plus Jawe plans to ramp up production of its most 0:00:36.600 --> 0:00:39.160 advanced AI chips in a bid to take market share 0:00:39.200 --> 0:00:40.279 from Nvidio, and. 0:00:40.240 --> 0:00:43.320 Big Tech pushes hire as investors look at and beyond 0:00:43.320 --> 0:00:44.400 the magnificent seven. 0:00:44.640 --> 0:00:46.600 In a key week for economic. 0:00:46.240 --> 0:00:48.959 Data, and talking of keywek for economic data, let's check 0:00:48.960 --> 0:00:51.280 out these markets ahead of non farm payrolls on Friday. 0:00:51.560 --> 0:00:54.640 We are really seeing Ashley market sentiment trade higher on 0:00:54.640 --> 0:00:57.320 the NASAK one hundred, up eight ten percent. After a 0:00:57.320 --> 0:00:59.800 little bit of digestion last week, we're back on top 0:00:59.800 --> 0:01:01.920 f big tech, and I'm looking at crypto also getting 0:01:01.920 --> 0:01:04.040 a bit of buying. We're up almost three percent on bitcoin. 0:01:04.200 --> 0:01:06.760 We're still of our record high zed but it's notable 0:01:07.080 --> 0:01:09.160 after some of those leverage bets came out of the 0:01:09.200 --> 0:01:11.959 market last week, there's some tentement buying as we see 0:01:11.959 --> 0:01:15.600 gold og gold and a record high. We see digital 0:01:15.600 --> 0:01:16.399 gold pushing high. 0:01:16.440 --> 0:01:17.039 To what have you got? 0:01:17.160 --> 0:01:19.199 Let's go to our top story and that is Electronic 0:01:19.319 --> 0:01:22.880 Arts the biggest leveraged buyout in history. It equates to 0:01:22.920 --> 0:01:25.120 an offer of two hundred and ten dollars per share. 0:01:25.280 --> 0:01:28.280 It's the chop behind Illustrates. That is a significant premium 0:01:28.760 --> 0:01:30.680 over where the stock was trading when the rumors started 0:01:30.680 --> 0:01:33.000 coming out. We now have confirmation and we're not that 0:01:33.120 --> 0:01:35.160 far off two hundred and ten dollars a share. The 0:01:35.160 --> 0:01:39.440 structure really important silver Lake, Saudi in Public Investment Fund 0:01:39.600 --> 0:01:42.440 and a group of other investors, and there's a debt 0:01:42.480 --> 0:01:45.679 portion here as well. JP Morgan's involved, and I remind 0:01:45.720 --> 0:01:50.000 everyone look at the historic relationship between Saudi's PIF and 0:01:50.080 --> 0:01:51.000 Electronic Arts. 0:01:51.120 --> 0:01:52.960 We need more details, we do, and we. 0:01:52.920 --> 0:01:55.160 Can do that exact thing. Someone helped break the news, 0:01:55.200 --> 0:01:59.080 Deanna Bakers with us. Of course, whenneberg Us deals Managing editor, 0:01:59.280 --> 0:02:02.080 the deal is an one just from the shas scale 0:02:02.240 --> 0:02:05.080 of it, Leanna, but also the players involved, and why 0:02:05.120 --> 0:02:08.840 are this group of investors interesting considering what they already own. 0:02:09.000 --> 0:02:11.080 So Ed mentioned a bunch of investors, but he didn't 0:02:11.080 --> 0:02:14.400 mention Jared Kushner's Affinity Partners. It's a firm that he 0:02:14.480 --> 0:02:17.320 founded during Trump's first administration, and as you know, the 0:02:17.320 --> 0:02:19.400 son in law of the president. There's a view that 0:02:19.480 --> 0:02:23.160 maybe his involvement could help ease the approval of the deal. 0:02:23.320 --> 0:02:26.240 Any foreign takeover does need sephia's approval. 0:02:26.840 --> 0:02:29.280 This is really interesting, but it's in line with what 0:02:29.360 --> 0:02:31.560 Saudi Arabia has been doing in video games. Like three 0:02:31.600 --> 0:02:34.000 years ago, billions and billions of dollars pledged to this 0:02:34.560 --> 0:02:37.000 and they already held ten percent of Electronic Arts. Anyway, 0:02:37.040 --> 0:02:39.400 could you just explain a little bit the structure of 0:02:39.440 --> 0:02:41.480 the leverage buyout and how we think it's going to work. 0:02:41.520 --> 0:02:44.160 So you mentioned JP Morgan, So they're providing about twenty 0:02:44.160 --> 0:02:47.480 billion dollars of financing. So that's just you know, bank debt. 0:02:48.000 --> 0:02:52.120 Goldman Sachs advised Electronic Arts. But in terms of the structure, 0:02:52.240 --> 0:02:55.400 it's just a leverage buyout. These investors are putting debt 0:02:55.440 --> 0:02:58.760 on the company. They're valuing it at over fifty billion. 0:02:59.680 --> 0:03:02.440 We'll try to report out, you know, how much money 0:03:02.480 --> 0:03:07.000 specifically are these equity checks that silver Lake, PIF and 0:03:07.160 --> 0:03:11.040 Affinity are putting in. But we're hearing you know. As 0:03:11.040 --> 0:03:13.720 you mentioned, PIF already is a big shareholder with about 0:03:13.760 --> 0:03:16.359 ten percent of EA. They're certainly going to be involved. 0:03:16.440 --> 0:03:18.240 They have a huge portfolio video games. 0:03:18.320 --> 0:03:22.000 Right now, we've got a penny more to discuss. We're 0:03:22.000 --> 0:03:24.120 going to get a little bit more detail, of course 0:03:24.160 --> 0:03:26.080 from our gaming report as. 0:03:25.960 --> 0:03:26.280 Well at it. 0:03:26.320 --> 0:03:28.120 Yeah, and I just point out one thing real quick. 0:03:28.320 --> 0:03:30.920 This is a company that's free cash flow positive, just 0:03:30.919 --> 0:03:33.280 doesn't have a massive growth story. Blue mostly on a 0:03:33.280 --> 0:03:35.080 Bak who leads the deals team, Thank you very much. 0:03:35.280 --> 0:03:37.240 What does this mean for gaming? In fact, the question 0:03:37.320 --> 0:03:40.480 is why is Electronic Arts going private? Let's get out 0:03:40.520 --> 0:03:44.040 to Bloombos. Jason Schreier, who leads our video games coverage industry. 0:03:44.280 --> 0:03:46.320 When I was a kid, you know this story. 0:03:46.560 --> 0:03:48.680 I would save up for weeks and I would spend 0:03:48.720 --> 0:03:51.640 my allowance at a store to buy a disc from 0:03:51.640 --> 0:03:54.920 my PlayStation or my PC. The video games industry does 0:03:54.960 --> 0:03:57.320 not work like that anymore, and I think it speaks 0:03:57.360 --> 0:03:59.440 to the core of how EA is running right now. 0:04:01.600 --> 0:04:03.960 And I think nowadays you would be saving up to 0:04:04.080 --> 0:04:09.280 buy a new costume for your character in EA's Apex Legends. 0:04:09.400 --> 0:04:10.000 Yeah. 0:04:10.080 --> 0:04:12.680 The big number that I would look at that I 0:04:12.680 --> 0:04:18.159 think helps illustrate why this happened is EA's revenue split 0:04:18.880 --> 0:04:23.040 between what they call live services and products. Live services 0:04:23.080 --> 0:04:26.920 meaning in game transactions where people spend with inside their 0:04:27.040 --> 0:04:29.880 games rather than buying new ones. And that's what is 0:04:29.920 --> 0:04:32.800 seventy five to twenty five. Seventy five of EA's revenue 0:04:32.839 --> 0:04:37.000 in the last fiscal year came from live service micro transactions, 0:04:37.040 --> 0:04:41.680 people buying costumes, people buying FIFA players Ultimate Team players, 0:04:42.200 --> 0:04:45.239 and that to me is a is a shocking number 0:04:45.360 --> 0:04:47.520 in many ways, but I think largely what it says 0:04:47.640 --> 0:04:50.479 is that gaming has started to become. If it's not 0:04:50.560 --> 0:04:53.839 already a mature market where it is not seeing a 0:04:53.839 --> 0:04:56.920 ton of growth, it is certainly not seeing double digit 0:04:56.920 --> 0:05:01.160 growth anymore. It is seeing maturity and predictability among its 0:05:01.200 --> 0:05:04.880 games and EA's yearly sports franchises, which is kind of 0:05:04.920 --> 0:05:08.760 generating predictable revenue is free to play titles like Apex Legends. 0:05:08.800 --> 0:05:10.600 That tells that story. 0:05:11.120 --> 0:05:14.240 Just to go in on why private equity therefore thinks 0:05:14.240 --> 0:05:15.719 this is the moment to take this out of the 0:05:15.720 --> 0:05:18.840 public markets. You're not having to report on a quarterly basis, Jason. 0:05:19.080 --> 0:05:21.600 But it's also interesting timing because they've got a Juggernaut 0:05:21.640 --> 0:05:25.000 about to come out in October, Battlefield six. 0:05:25.440 --> 0:05:26.400 Could this change the. 0:05:26.440 --> 0:05:28.520 Dynamics of what this is priced out, whether other people 0:05:28.600 --> 0:05:30.200 come into the field and try and scoop it up. 0:05:31.440 --> 0:05:33.559 Yeah, it's a little baffling to me. I was actually 0:05:33.560 --> 0:05:36.039 pretty surprised at the time, in because I would think 0:05:36.040 --> 0:05:39.240 that EA would want to hold off for a better price, 0:05:39.240 --> 0:05:41.880 given the Battlefield is expected to be a pretty big hit. 0:05:42.279 --> 0:05:45.160 That said, from what we've heard, from what other people 0:05:45.200 --> 0:05:47.880 have reported, this deal has been in the works for 0:05:48.120 --> 0:05:51.560 months now. EA has actually been looking to sell themselves 0:05:51.640 --> 0:05:53.280 or to participate in an m and A of some 0:05:53.440 --> 0:05:54.760 sort for years now. 0:05:54.839 --> 0:05:56.520 Andrew Wilson has been, if. 0:05:56.400 --> 0:05:59.040 Not quite public, at least semi public about that fact 0:05:59.040 --> 0:06:01.640 about wanting to become a bigger BDA company, whether through 0:06:01.680 --> 0:06:05.159 a merger or an acquisition. And it could be just 0:06:05.240 --> 0:06:07.760 that the timing worked out kind of independently of their 0:06:07.760 --> 0:06:10.279 release schedule and they were looking to do this regardless. 0:06:10.320 --> 0:06:12.160 But yes, I would think they would be able to 0:06:12.160 --> 0:06:14.560 get a better premium if Battlefield six comes out and 0:06:14.760 --> 0:06:18.000 does Gangbusters or even beats Call of Duty, their biggest rival. 0:06:19.040 --> 0:06:20.920 Andrew Wilson did put out a statement to his own 0:06:20.920 --> 0:06:23.720 employees saying that entering a new era of opportunity will 0:06:23.760 --> 0:06:25.280 dig into what that looks like a little bit later 0:06:25.279 --> 0:06:26.960 in the show as well, but most Jason Schua, it's 0:06:27.000 --> 0:06:29.560 great to have you meanwhile, broad a market outlook for 0:06:29.600 --> 0:06:32.000 you right now with Michael Green, Simplify Asset Management, chief 0:06:32.000 --> 0:06:36.360 investment Strategists and portfolio joining us now, Michael, just this 0:06:36.560 --> 0:06:39.880 scale of desire to hold and buy into debt. We 0:06:39.920 --> 0:06:42.400 think of Oracle's sale and bonds we've got leveraged by 0:06:42.400 --> 0:06:44.960 out now being clearly taken down by banks because they 0:06:44.960 --> 0:06:47.960 think they can syndicate this. What does it signal about 0:06:48.160 --> 0:06:50.080 the wash of cash that we have in the market 0:06:50.120 --> 0:06:51.840 and the valuations we're getting on companies. 0:06:52.600 --> 0:06:55.400 Well, I think there's two separate components that are coming through. First, 0:06:55.440 --> 0:06:57.840 we're seeing more and more evidence that the cash flow, 0:06:57.880 --> 0:06:59.920 that is the prodigious cash flow that has come through 0:07:00.040 --> 0:07:03.479 many of the technology companies now has claims against it, 0:07:03.560 --> 0:07:06.080 and taking on debt is simply a way of pulling 0:07:06.120 --> 0:07:08.839 that forward. You've effectively said the two billion dollars a 0:07:08.839 --> 0:07:11.720 free cash flow that Electronic Arts currently has is going 0:07:11.760 --> 0:07:14.880 to go to servicing debt as compared to significant investment. 0:07:16.000 --> 0:07:18.600 And I'll be honest with you, this is part. 0:07:18.360 --> 0:07:21.280 Of a signal that we are very, very interested in 0:07:21.320 --> 0:07:24.720 actually buying debt. We have incredible tightness in both a 0:07:24.760 --> 0:07:28.080 high yield market and in the investment grade market. The 0:07:28.160 --> 0:07:31.640 demand for debt is very very high given the retirement 0:07:31.720 --> 0:07:36.600 needs of the baby boomers, and interestingly enough people are 0:07:36.720 --> 0:07:39.600 trying to deliver into that. This is very very similar 0:07:39.640 --> 0:07:40.840 in a lot of ways to what we would have 0:07:40.880 --> 0:07:43.920 done in historical time periods of manufacturing IPOs if that's 0:07:43.960 --> 0:07:44.600 what's demanded. 0:07:44.640 --> 0:07:46.280 We're seeing that on the platforms like. 0:07:46.280 --> 0:07:49.000 Robin Hood and coinbase, where there's a ton of demand 0:07:49.240 --> 0:07:53.280 for new IPOs. The older generation really wants to own 0:07:53.440 --> 0:07:55.200 investment grade debt and high yield debt. 0:07:55.760 --> 0:07:58.000 Michael, I just scrambled a bit, if I'm being honest, 0:07:58.000 --> 0:07:59.560 but I think you guys do have like less than 0:07:59.560 --> 0:08:02.120 a thousand EA shares. I don't know why, whether that's 0:08:02.120 --> 0:08:05.840 sort of a historical or tangential fact, but just talk 0:08:05.880 --> 0:08:08.240 a little bit more about that. You know, biggest leveraged 0:08:08.240 --> 0:08:12.360 buyout in history has a big shiny headline. We've reported 0:08:12.400 --> 0:08:14.520 that JP Morgan is going to do like twenty billion 0:08:14.560 --> 0:08:17.760 of the debt. You sort of interest in a mechanism 0:08:17.880 --> 0:08:20.360 like that, Well. 0:08:20.120 --> 0:08:21.560 If we have exposure to. 0:08:23.080 --> 0:08:25.679 Electronic arts, it's going to be through one of our 0:08:25.760 --> 0:08:30.280 index oriented products. We are not going to select shares 0:08:30.360 --> 0:08:32.680 in electronic arts. So I would be misspeaking if I 0:08:32.679 --> 0:08:36.240 spoke about a particular inserted desire that drove that. 0:08:37.600 --> 0:08:38.720 I would just highlight that. 0:08:38.840 --> 0:08:41.360 Ultimately, when we think about the quantity of debt that 0:08:41.480 --> 0:08:45.000 is being offered, there is tremendous demand for debt, both 0:08:45.120 --> 0:08:47.840 in actual form as we're discussing, and then also in 0:08:47.920 --> 0:08:51.920 synthetic form. You know, Eric Bokunas of Bloomberg speaks often 0:08:51.960 --> 0:08:55.080 of of boomer candy, the idea of products that offer 0:08:55.120 --> 0:08:59.120 extremely high yields. That the type of call overwriting is 0:08:59.160 --> 0:09:01.920 just a way of creating synthetic debt exposure. So that 0:09:02.280 --> 0:09:05.400 is demographic demand that's driving through on all of this stuff, 0:09:05.400 --> 0:09:07.280 and I think this is just telling you there is 0:09:07.440 --> 0:09:08.520 more of that out there. 0:09:08.640 --> 0:09:12.640 There is an alternative to market based debt, and that's 0:09:12.679 --> 0:09:15.920 a mechanism that we're seeing from Nvidia. It's called circular 0:09:16.000 --> 0:09:20.400 financing to some you give an equity investment or capital 0:09:20.840 --> 0:09:23.520 to a company and they use some of that to 0:09:23.559 --> 0:09:26.160 then buy the product that you're known for. Can you 0:09:26.160 --> 0:09:28.000 talk a little bit about that, Michael. 0:09:28.480 --> 0:09:31.160 Yeah, A lot of people are starting to become increasingly 0:09:31.200 --> 0:09:34.800 aware of this component of vendor financing. And it's not 0:09:34.840 --> 0:09:37.600 just vendor financing. We see it not just with InVideo, 0:09:37.679 --> 0:09:40.200 with their deals with core Weave that are circular, and 0:09:40.240 --> 0:09:43.120 an equity investment is made into core Weave that then 0:09:43.160 --> 0:09:47.760 flows back into repurchases of in video products. One that 0:09:47.840 --> 0:09:52.520 reduces the price competition associated with it. If in Video 0:09:52.600 --> 0:09:54.679 is giving me the equity investment or lending me the 0:09:54.720 --> 0:09:56.839 money to make purchase and going to be less willing 0:09:56.880 --> 0:10:00.000 to negotiate speaks to in videos extraordinarily at high margin 0:10:00.040 --> 0:10:00.560 j genes. 0:10:00.760 --> 0:10:01.960 And the protection of those. 0:10:02.080 --> 0:10:04.600 The more transactions that are going through in that form, 0:10:04.720 --> 0:10:06.680 the more I would argue we have to be thinking 0:10:07.160 --> 0:10:10.120 perhaps the margin is not as sustainable. 0:10:09.480 --> 0:10:10.680 As it actually appears. 0:10:11.240 --> 0:10:14.280 The thing that I would emphasize is if we look 0:10:14.400 --> 0:10:16.520 at other types of debt that are being taken on, 0:10:16.600 --> 0:10:19.160 they're being taken on. Meta in particular has taken on 0:10:19.200 --> 0:10:23.040 an extraordinary amount of debt where they are simultaneously financing 0:10:23.120 --> 0:10:25.600 or underwriting the debt for the financing of building of 0:10:25.679 --> 0:10:29.200 data centers, and they are also entering into operating lease 0:10:29.240 --> 0:10:32.440 agreements where they are effectively committing on both sides of 0:10:32.480 --> 0:10:36.080 the equation. We're seeing more and more evidence of this, 0:10:36.520 --> 0:10:39.120 and one of the great ironies I would highlight is 0:10:39.120 --> 0:10:42.480 is that all of this is equity finance at its core. 0:10:42.840 --> 0:10:43.760 It's really not. 0:10:43.880 --> 0:10:47.160 Subject to the whims of federal reserve rate policy. It 0:10:47.200 --> 0:10:50.120 tells us nothing about whether policy is restrictive or not. 0:10:50.920 --> 0:10:54.160 Michael, It's interesting that below the surface, when you think 0:10:54.200 --> 0:10:56.640 about the check the money that's being promised to open 0:10:56.679 --> 0:10:59.120 AI from Nvidia, many it said, actually it then helps 0:10:59.120 --> 0:11:01.840 open AI go out and take on debt because they've 0:11:01.840 --> 0:11:05.120 got this backing from Nvidia. More broadly, is this an 0:11:05.160 --> 0:11:07.440 asset class you want to be piling into at this moment? 0:11:07.559 --> 0:11:11.360 What are the risks clear for everyone to see, and 0:11:11.360 --> 0:11:13.240 what are some of the hidden risks when you're piling 0:11:13.280 --> 0:11:15.679 into a very few names who are going all in 0:11:15.720 --> 0:11:18.320 on each other and indeed data sent the More broadly. 0:11:19.000 --> 0:11:21.120 Well, I think that there are two really really interesting 0:11:21.120 --> 0:11:23.400 components to it right. One is, remember that the vast 0:11:23.400 --> 0:11:26.080 majority of people are piling in here without any explicit 0:11:26.160 --> 0:11:29.200 thought behind it. You guys obviously know the work that 0:11:29.240 --> 0:11:31.760 I spend talking about the impact of passive investing. 0:11:32.280 --> 0:11:34.040 The average American investing. 0:11:33.640 --> 0:11:35.599 Into their four oh one K putting money into a 0:11:35.640 --> 0:11:39.160 target date fund, has no interest in Video or Microsoft, 0:11:39.360 --> 0:11:43.280 or has any critical evaluation of it. It's simply the 0:11:43.320 --> 0:11:46.320 way we plan our retirement today. And so a huge 0:11:46.360 --> 0:11:48.120 chunk of the money that is flowing in is not 0:11:48.160 --> 0:11:52.200 being sent through thoughtfully. It's being sent through mechanically. So 0:11:52.280 --> 0:11:54.959 people are very allocated to this, regardless of whether it's 0:11:55.040 --> 0:11:58.840 discretionary or not. The second component that I would emphasize 0:11:59.000 --> 0:12:02.400 is that this type of circularity is again a byproduct 0:12:02.480 --> 0:12:04.720 where in many situations you would look at this and 0:12:04.720 --> 0:12:06.880 you would say, wait a second, this really seems like 0:12:06.960 --> 0:12:08.280 anti trust activity. 0:12:08.880 --> 0:12:12.440 Google just lost a verdict in terms of anti trust. 0:12:12.440 --> 0:12:15.960 The judge failed to forest remedies, and immediately they turn 0:12:16.000 --> 0:12:18.720 around and engage in the activity that they were actually 0:12:18.840 --> 0:12:22.000 dinged for, working with Apple to basically lock in a 0:12:22.000 --> 0:12:27.520 monopoly position in Apple's user interface. So we're seeing this 0:12:27.640 --> 0:12:31.679 circularity across multiple components of it, whether it stops, whether 0:12:31.679 --> 0:12:33.920 it continues to be enabled by the way that we 0:12:34.000 --> 0:12:36.440 invest We simply can't know yet. 0:12:36.880 --> 0:12:39.959 Michael Green of Simplify Asset Management across Asset News of 0:12:40.000 --> 0:12:42.960 the Day, really appreciate it. Now coming up, Israeli Prime 0:12:43.000 --> 0:12:46.840 Minister Benjamin et Yaho discusses AI with investors and tech 0:12:46.920 --> 0:12:49.680 leaders last night here in New York ahead of his 0:12:49.760 --> 0:12:51.800 visit with President Trump. He's due to arrive at the 0:12:51.800 --> 0:12:54.839 White House any moment. We'll have the details. This is 0:12:54.840 --> 0:12:55.840 Bloomberg Tech. 0:13:04.400 --> 0:13:06.600 Is re any Prime Minister Benjamin Netanyah, who met with 0:13:06.640 --> 0:13:09.640 tech executives and investors in New York during his United 0:13:09.720 --> 0:13:12.440 Nations General Assembly visit, And now, according to sources, Nestanya, 0:13:12.480 --> 0:13:15.760 who discussed using AI to boost his country's economy and 0:13:15.800 --> 0:13:17.800 his military capabilities. 0:13:17.240 --> 0:13:18.400 For all Blueboks of aidances. 0:13:18.440 --> 0:13:21.240 Co host amriy Horden joins us now from the White House, 0:13:21.240 --> 0:13:23.360 where President Trump now is set to meet the Prime 0:13:23.360 --> 0:13:26.800 Minister netanya who and that's much more about military, much 0:13:26.800 --> 0:13:28.480 more about geopolitics right now. 0:13:29.320 --> 0:13:32.320 Yeah, absolutely, we're just moments away though for Prime Minister 0:13:32.400 --> 0:13:35.400 Benjamin netna who firm arriving at the White House to 0:13:35.480 --> 0:13:38.840 have this really crucial meeting with President Donald Trump after 0:13:38.880 --> 0:13:43.240 the President last week at the UN General Assembly, met 0:13:43.280 --> 0:13:45.640 on the sidelines with a number of Arab leaders and 0:13:45.679 --> 0:13:50.080 discussed this twenty one point plan alongside the UN General 0:13:50.120 --> 0:13:52.360 Assembly Benjamin Nenyaw, who also had a little bit more 0:13:52.360 --> 0:13:56.120 of an informal conversation with these tech executives. According to 0:13:56.200 --> 0:13:59.680 reporting from my sources as well as ED sources, individuals 0:13:59.679 --> 0:14:04.080 like Lyman, venture capitalists like Josh woolfel part of this meeting, 0:14:04.280 --> 0:14:06.960 and most notably Jacob Helbert was also there. 0:14:07.000 --> 0:14:09.000 This was an individual that was. 0:14:09.000 --> 0:14:11.760 An advisor to Pallenteer that he was tapped to join 0:14:11.800 --> 0:14:14.040 the Trump administration. He had his hearing, he'll be an 0:14:14.080 --> 0:14:16.800 under secretary of the State Department, just waiting for final 0:14:16.880 --> 0:14:21.240 Senate confirmation. And the discussions really involved around how to 0:14:21.360 --> 0:14:25.800 use artificial intelligence to not just boost the Israeli military, 0:14:25.840 --> 0:14:28.760 but also Israel's economy as we see an absolute arms 0:14:28.840 --> 0:14:32.960 race when it comes to AI infrastructure and development. It's 0:14:33.000 --> 0:14:36.720 also on the keels of almost two years ago Pallenteer 0:14:36.880 --> 0:14:41.600 deciding to have this strategic relationship with the Israeli military. 0:14:41.680 --> 0:14:44.120 So Bendri Ninya, who's sitting down when none of these 0:14:44.160 --> 0:14:47.480 tech leaders on how exactly Israel was going to advance 0:14:47.520 --> 0:14:49.960 some of this capability in a military format as well 0:14:50.000 --> 0:14:52.840 as an economic one before he sets foot inside the 0:14:52.840 --> 0:14:54.240 Oval Office with President Trump. 0:14:54.320 --> 0:14:54.720 Exactly. 0:14:54.760 --> 0:14:56.520 So, Amory, I think the point that the sources made 0:14:56.560 --> 0:14:57.800 to you and I is that this was a group 0:14:57.840 --> 0:15:02.520 of tech industry people that had exist relationships with President, 0:15:02.600 --> 0:15:04.440 Prime Minister net and Yaho. What do we need to 0:15:04.520 --> 0:15:06.480 know about this upcoming meeting with the President? 0:15:06.480 --> 0:15:07.320 What's on the agenda? 0:15:08.160 --> 0:15:10.320 Well, this one is going to be incredibly important for 0:15:10.360 --> 0:15:13.240 both President Trump and Prime Minister net and Yahoo. As 0:15:13.280 --> 0:15:15.840 I mentioned, it comes on the heels of President Trump 0:15:15.880 --> 0:15:18.880 outlining how he can see an end of the war 0:15:18.960 --> 0:15:21.480 in Gaza, which is feeling very optimistic about with this 0:15:21.600 --> 0:15:25.320 twenty one point plan he discussed with Arab leaders, and 0:15:25.320 --> 0:15:27.760 I sat down with the Egyptian Foreign Minister on Friday, 0:15:28.040 --> 0:15:31.440 who was optimistic after being in that meeting with President 0:15:31.480 --> 0:15:34.800 Trump that they do have a path forward on ending 0:15:34.880 --> 0:15:37.200 the war in reconstruction. Of course, the devil on all 0:15:37.240 --> 0:15:39.640 this is going to come in the details when it 0:15:39.680 --> 0:15:42.320 comes to the Israeli red lines as well of Arab 0:15:42.400 --> 0:15:43.680 leaders red lines as well. 0:15:44.280 --> 0:15:46.880 Bloomberg Za, Marie Harden, thank you very much and be 0:15:46.920 --> 0:15:49.600 sure to stay with Bloomberg for complete coverage of that 0:15:49.680 --> 0:15:52.800 meeting between President Trump and Prime Minister net and Yahoo. 0:15:52.840 --> 0:15:56.040 That's coming up at one fifteen pm New York time. 0:15:56.120 --> 0:15:59.120 Coming up on Bloomberg Tech, Huawei plans to ramp up 0:15:59.120 --> 0:16:01.840 production of its most used to advance AI chips in 0:16:01.880 --> 0:16:03.800 a bid to take market share. From the video, we 0:16:03.840 --> 0:16:09.160 have the details. Next, this is Bloomberg Tech. We're seeing 0:16:09.200 --> 0:16:12.200 live pictures of President Trump walking in with Israel Prime 0:16:12.200 --> 0:16:15.160 Minister Benjaminette Naho, who's just arrived at the White House. 0:16:15.160 --> 0:16:18.080 The two set to participate in a bilateral meeting in 0:16:18.200 --> 0:16:20.640 just a few moments time. Back to our other top story, 0:16:20.720 --> 0:16:24.280 Huawei is preparing to sharply ramp up production of its 0:16:24.280 --> 0:16:27.200 most advanced AI chips over the next year, aiming to 0:16:27.240 --> 0:16:30.160 win customers in the world's biggest chip market. Is in 0:16:30.240 --> 0:16:35.000 Nvidia struggles with geopolitical headwinds. Bloomberg's Global Technology Executive editor 0:16:35.240 --> 0:16:37.960 Peter Elstrom joins us, we're talking about the nine ten 0:16:38.080 --> 0:16:40.760 c ascend chip, right. This is kind of the marquee 0:16:40.840 --> 0:16:43.640 Huawei talk us through the numbers that we learned in 0:16:43.640 --> 0:16:46.120 the course of reporting about the next two years. 0:16:47.160 --> 0:16:48.320 Right one. 0:16:48.360 --> 0:16:51.440 Wai course is probably best known for its communications equipment, 0:16:51.560 --> 0:16:53.840 had smartphones for a long time too, but it is 0:16:53.880 --> 0:16:58.360 also really the leading developer of semiconductors within China. It's 0:16:58.360 --> 0:17:01.080 put a ton of research and development into this process 0:17:01.240 --> 0:17:03.000 and it's made quite a bit of progress. So what 0:17:03.040 --> 0:17:06.120 sources are telling us is that the company is preparing 0:17:06.119 --> 0:17:08.080 to ramp up production of some of these high end 0:17:08.160 --> 0:17:12.240 chips that would be used to run AI models within 0:17:12.320 --> 0:17:15.320 the country and also train some models in the country. 0:17:15.359 --> 0:17:17.960 As you mentioned, the nine ten C is the most 0:17:18.040 --> 0:17:20.200 advanced chip that they have on the market right now. 0:17:20.359 --> 0:17:23.600 We understand from sources they'll produce about three hundred thousand 0:17:24.240 --> 0:17:26.320 this year and they're planning on ramping that up to 0:17:26.359 --> 0:17:29.080 about six hundred thousand next year. That's not enough to 0:17:29.119 --> 0:17:32.080 meet all of the domestics supply, but they're hitting the 0:17:32.080 --> 0:17:35.520 market at a very vulnerable moment for Nvidia. In Nvidia 0:17:35.600 --> 0:17:37.159 had hoped to be able to sell a bunch of 0:17:37.200 --> 0:17:40.120 chips into China. There's a very vibrant AI see there. 0:17:40.119 --> 0:17:42.480 Companies want to buy their chips, but there have been 0:17:42.520 --> 0:17:45.720 these geopolitical tensions where the H twenty chip was banned 0:17:45.760 --> 0:17:48.359 for a while, then Washington allowed it to be sold, 0:17:48.400 --> 0:17:50.840 but then Beijing pushed back and said they don't want 0:17:50.880 --> 0:17:53.400 their companies to buy that chip right now. So as 0:17:53.400 --> 0:17:56.600 in Vidia stalls, Huawei is racing ahead and trying to 0:17:56.600 --> 0:17:57.520 fill that market need. 0:17:57.720 --> 0:18:00.600 Temeracon Technology is also trying to raise a This is 0:18:01.080 --> 0:18:05.360 a moment for domestic chip making talent, but ultimately we're 0:18:05.359 --> 0:18:09.000 still worried about how Smick can actually produce or manufacture 0:18:09.320 --> 0:18:12.400 and how powerful any of these next iterations that Eric Shue, 0:18:12.480 --> 0:18:15.760 the rotating leader of the business, can actually be compared to. 0:18:15.760 --> 0:18:17.720 In video, it seems as though analysts think they're not 0:18:17.760 --> 0:18:20.440 going to nearly rival the GPUs and the next iteration 0:18:20.520 --> 0:18:21.119 from Nvidio. 0:18:22.280 --> 0:18:25.040 Right they're still very far behind in video. I mean, 0:18:25.280 --> 0:18:27.440 in Video is the most valuable company in the world. 0:18:27.480 --> 0:18:29.360 They have tons of resources to be able to throw 0:18:29.400 --> 0:18:32.600 at this, and obviously they've helped companies in the US 0:18:32.680 --> 0:18:35.600 like OpenAI and Microsoft a ton on this front. Now, 0:18:35.640 --> 0:18:39.960 Beijing is very concerned about that reliance on American technology 0:18:40.000 --> 0:18:43.760 at this critical juncture, so as Hi Jimping and President 0:18:43.760 --> 0:18:46.800 Donald Trump entre into these trade negotiations. They have many 0:18:46.840 --> 0:18:50.920 issues on their plate, including TikTok. The Communist Party wants 0:18:50.920 --> 0:18:52.840 to do whatever they can to be able to wean 0:18:52.880 --> 0:18:55.800 themselves off of that American technology, so they poured a 0:18:55.840 --> 0:18:59.520 ton of resources into building these domestic capabilities. As you mentioned, 0:18:59.520 --> 0:19:02.399 Cabrico is coming on one of the upstarts that's probably 0:19:02.400 --> 0:19:04.480 the most promising in the market. And then Huawei is 0:19:04.520 --> 0:19:07.639 also spending a lot of money on this front. Ali Baba, 0:19:07.680 --> 0:19:11.320 the e commerce company, is investing in semiconductors too, So 0:19:11.359 --> 0:19:14.040 you're seeing really this nationwide effort to try to make 0:19:14.080 --> 0:19:17.080 some progress in chip production. Again, they're very far behind 0:19:17.080 --> 0:19:19.639 what the Americans can do and the Taiwanese can do 0:19:19.720 --> 0:19:21.960 right now, but they are making progress, and I think 0:19:21.960 --> 0:19:24.560 what sources are telling us now is they're making progress 0:19:24.600 --> 0:19:26.439 over the next year to an extent that we had 0:19:26.480 --> 0:19:27.360 not anticipated. 0:19:27.800 --> 0:19:31.240 Feate Astrom always breaking it down. We so appreciate that. Meanwhile, 0:19:31.280 --> 0:19:32.960 fitness company Peniton, it's that to. 0:19:32.960 --> 0:19:35.440 Unveil new products this week, refreshing. 0:19:34.920 --> 0:19:38.200 Its exercise equipment, hardware, and its software lineup. Of course 0:19:38.240 --> 0:19:41.080 it's including AI Let's get more from Lumo. Consumer Tech 0:19:41.119 --> 0:19:45.320 Managing Editor Mark Gum and how wholesale is the change 0:19:45.359 --> 0:19:46.800 going to be for Peloton this week. 0:19:48.080 --> 0:19:50.440 This is going to be their biggest hardware revamp in 0:19:50.600 --> 0:19:53.520 at least half a decade. This is under new CEO, 0:19:53.680 --> 0:19:56.119 Peter Stern. I know a lot of us love and 0:19:56.240 --> 0:20:01.439 use Peloton, but they've been struggling lately from a revenue perspective, 0:20:01.520 --> 0:20:05.480 from a sales perspective, from a profit perspective, management perspective, 0:20:05.760 --> 0:20:08.280 but also from a products perspective, and it's time for 0:20:08.320 --> 0:20:10.680 them to step it up under new leadership, and that's 0:20:10.720 --> 0:20:13.320 what they aim to do this week. Peter Stern will 0:20:13.320 --> 0:20:15.359 be holding a keynote address in the middle of the 0:20:15.359 --> 0:20:19.159 week and introducing an end to end hardware refresh that 0:20:19.240 --> 0:20:23.760 includes new bikes, new treadmills, new rows, a fully upgraded 0:20:23.800 --> 0:20:27.439 operating system across all a Peloton hardware that deeply integrates 0:20:27.920 --> 0:20:31.840 what they call internally Peloton Intelligence. This is AI for 0:20:32.000 --> 0:20:35.120 personalized coaching and creating plans for users. 0:20:35.200 --> 0:20:36.960 So this is a big refresh. 0:20:37.080 --> 0:20:39.800 This is Peter Stern's moment to put his stamp on 0:20:39.840 --> 0:20:44.320 the company. The last CEO, Barry McCarthy, basically ran the 0:20:44.359 --> 0:20:48.199 company into the ground, something that they said was necessary 0:20:48.280 --> 0:20:52.439 after the CEO before him, co founder John Foley, pulled 0:20:52.440 --> 0:20:54.360 some levers that put the company in a very bad 0:20:54.400 --> 0:20:57.240 financial position. So we'll see if Stern is the ones 0:20:57.280 --> 0:20:59.199 to be able to turn things in the correct direction. 0:21:00.119 --> 0:21:02.080 Mark, Karen and I are both uses of the hardware 0:21:02.080 --> 0:21:05.000 and subscribers to the platform. There'll be an audience watching 0:21:05.040 --> 0:21:06.719 the show that have like deja vu and say, well, 0:21:06.720 --> 0:21:09.879 hold on, isn't this the latest of several turnarounds that 0:21:09.920 --> 0:21:12.119 have happened in the last many years. 0:21:13.680 --> 0:21:17.040 The last turnaround was mostly focused on re architecting the 0:21:17.080 --> 0:21:23.040 fundamentals of the company. They moved production to third party manufacturers, 0:21:23.080 --> 0:21:27.280 they shut down facilities, they tried to right size the company. 0:21:27.320 --> 0:21:30.399 They did I think four or five different rounds of layoffs. 0:21:30.840 --> 0:21:33.600 What Peter Stern is doing after that was done by 0:21:33.600 --> 0:21:36.480 the last CEO is actually trying to go into the 0:21:36.640 --> 0:21:39.960 growth mode here, which means rolling out new products and 0:21:40.000 --> 0:21:43.560 new initiatives. No new products or major initiatives are rolled 0:21:43.560 --> 0:21:47.359 out under the prior regime, So this is about bringing 0:21:47.400 --> 0:21:50.600 new hardware into the market and we'll see if that's 0:21:50.840 --> 0:21:54.280 successful for them. You know, so far, they're up quite 0:21:54.280 --> 0:21:59.000 a bit on an annual basis, let's see if investors 0:21:59.040 --> 0:21:59.640 like the hardware. 0:22:00.000 --> 0:22:01.960 The end of twenty twenty, the pandemic year, this was 0:22:01.960 --> 0:22:03.879 the stock there was at one hundred and sixty two dollars. 0:22:03.960 --> 0:22:06.720 It's now just above eight dollars. Bloomberg's Mark German a 0:22:06.760 --> 0:22:09.080 big week, Thank you very much. Now coming up is 0:22:09.119 --> 0:22:11.840 EA goes private in a fifty five billion dollar deal. 0:22:12.000 --> 0:22:14.560 We're going to speak with Jason Chapman of investment firm 0:22:14.640 --> 0:22:17.399 Convoy on the impact of the gaming industry. This is 0:22:17.440 --> 0:22:20.280 a firm that only looks at the gaming industry and 0:22:20.320 --> 0:22:21.040 we've gone over the. 0:22:21.000 --> 0:22:22.080 Details of this deal, Caro. 0:22:22.440 --> 0:22:25.199 We've looked at how historic it is from a financial perspective, 0:22:25.440 --> 0:22:27.320 but there will be gamers out there going, look, I 0:22:27.359 --> 0:22:28.639 love some of these EA games. 0:22:28.720 --> 0:22:30.000 Yeah, why are you doing this? 0:22:30.560 --> 0:22:34.199 My son recently new to the whole EA experience. But 0:22:34.280 --> 0:22:37.080 I'm looking though at the market effect. We're up four percent, 0:22:37.080 --> 0:22:39.080 but remember the market moved on Friday. That was an 0:22:39.080 --> 0:22:42.360 initial reporting came out. It's a nice tacy premium. We'll 0:22:42.359 --> 0:22:44.639 see what private equity could do for the business. 0:22:44.680 --> 0:22:45.560 This is a Bloomberg Tech. 0:22:56.800 --> 0:22:58.160 Welcome back to Bloomberg Tech. 0:22:58.240 --> 0:23:01.680 Electronic Arts or EADEO, Game company is going private in 0:23:01.760 --> 0:23:05.040 the largest leverage buyout in history. We talked about the 0:23:05.080 --> 0:23:07.359 structure of the deal throughout the program, but like we 0:23:07.400 --> 0:23:10.400 started the question, why this is a five year chart 0:23:10.440 --> 0:23:12.240 of the stock and apart from that spike on the 0:23:12.280 --> 0:23:15.679 far right hand side, which was the trading, remember two 0:23:15.760 --> 0:23:17.320 hundred and ten dollars for shares the offer at like 0:23:17.359 --> 0:23:19.600 two one hundred and three right now, So stock this 0:23:19.680 --> 0:23:22.119 traded sideways five years and there are a lot of 0:23:22.200 --> 0:23:25.520 questions about whether executives at EA saw the writing on 0:23:25.560 --> 0:23:29.200 the wall or on their console screen or whatever that 0:23:29.400 --> 0:23:32.560 there's some uncertainty for the future, Carrot, and I'm still 0:23:32.560 --> 0:23:33.600 trying to understand it. 0:23:33.920 --> 0:23:35.840 Well, we've got a good voice to dig into it. 0:23:36.160 --> 0:23:38.600 For more on in the EA deal, Jason Chapman, Convoy 0:23:38.640 --> 0:23:41.360 Managing partner, joins us. Convoy is an investment firm. It's 0:23:41.359 --> 0:23:44.879 dedicated to video game and interactive entertainment industry. You understand 0:23:45.000 --> 0:23:48.480 better than anyone the disruption that's happened within this industry. 0:23:48.640 --> 0:23:52.560 Is going private the right tactic for EA. 0:23:53.160 --> 0:23:55.560 Thank you for having me on again, Caroline and Ed 0:23:55.680 --> 0:23:57.560 and I absolutely do think it is the right thing 0:23:57.600 --> 0:24:01.520 for you to go private and here's here's why today 0:24:01.640 --> 0:24:04.800 EA has represented kind of the digital home for many 0:24:04.960 --> 0:24:07.919 core tenant properties and games. Think of the sports division, 0:24:07.920 --> 0:24:11.120 which composed about sixty percent of revenue. You've got the sins, 0:24:11.480 --> 0:24:14.520 You've also got Battlefield which is about to launch. And 0:24:15.040 --> 0:24:17.400 a lot of speculation for EA has been that they 0:24:17.440 --> 0:24:19.960 continuously go back to the well of producing the same 0:24:20.080 --> 0:24:22.560 types of IPS and they haven't come up with anything 0:24:22.640 --> 0:24:25.920 quote unquote new in a while. Going private will allow 0:24:25.960 --> 0:24:29.240 them to take a risk to develop some new IP 0:24:29.520 --> 0:24:32.720 and also be a powerhouse once again for generating new 0:24:32.760 --> 0:24:35.640 experiences for gamers. And so for therefore, as a gamer myself, 0:24:35.960 --> 0:24:36.920 I like the transaction. 0:24:37.400 --> 0:24:41.400 You're investing in the frontier of gaming and the next experiment. 0:24:41.840 --> 0:24:43.879 So what is it that they can innovate on at 0:24:43.880 --> 0:24:45.520 the moment. What are the trends that you're seeing in 0:24:45.520 --> 0:24:48.400 your portfolio companies that can be adopted by the biggest studios. 0:24:49.560 --> 0:24:49.760 Yeah. 0:24:49.800 --> 0:24:53.080 So one of the challenges for large studio driven public 0:24:53.200 --> 0:24:57.000 entities is that the public market cycle is difficult for 0:24:57.080 --> 0:24:59.720 developing new IP. And so you know, you saw the 0:24:59.760 --> 0:25:03.960 act vision Blizzard acquisition by Microsoft. You're seeing this again 0:25:04.800 --> 0:25:08.080 finding homes where these companies can actually innovate in private. 0:25:08.119 --> 0:25:11.520 Think of what Rockstar is doing with Grand Theft Auto. 0:25:11.840 --> 0:25:14.399 That is difficult to do as a public entity. It 0:25:14.520 --> 0:25:18.040 just is unless you have a multitude of properties that 0:25:18.080 --> 0:25:20.359 can kind of play defense for you in the short term. 0:25:20.560 --> 0:25:21.840 And so what am I excited about. 0:25:21.920 --> 0:25:26.919 I'm excited to see what that infrastructure optimized, let's call 0:25:26.960 --> 0:25:31.480 it further refined, which I have full confidence the PIF 0:25:31.960 --> 0:25:35.480 and their other partners will do here in this transaction 0:25:35.920 --> 0:25:37.479 to see what they can produce on the other end, 0:25:37.640 --> 0:25:40.520 and they produce Battlefield. I don't know if you all 0:25:40.520 --> 0:25:43.639 saw that test, but it was the nineteenth most successful 0:25:44.359 --> 0:25:47.680 CCU event on Steam and ed. 0:25:48.640 --> 0:25:51.480 I've seen the test, and like all over Instagram reels 0:25:51.480 --> 0:25:55.520 and TikTok, is the early access experience. What you just 0:25:55.520 --> 0:25:58.240 said about PIF though, this is the letter that that 0:25:58.359 --> 0:26:01.560 Andrew Wilson sent employees right and in the limited amount 0:26:01.560 --> 0:26:04.359 of time I've spent with EA's leadership this year, they've 0:26:04.400 --> 0:26:06.800 talked about IP in the context of going outside of 0:26:06.840 --> 0:26:09.639 games and this letter. He talks about sports, and he 0:26:09.720 --> 0:26:13.240 talks about gaming, and he talks about entertainment broadly. This 0:26:13.280 --> 0:26:15.280 is something that Saudi Arabia has been working on for 0:26:15.320 --> 0:26:18.119 a number of years. Do they just give EA a 0:26:18.160 --> 0:26:20.240 new domain to move into. 0:26:21.000 --> 0:26:24.640 Absolutely so. You know, roughly, right now about two percent 0:26:24.680 --> 0:26:27.920 of the PIF's assets are in entertainment in sports. That's 0:26:27.920 --> 0:26:30.040 going to move to about three and a half percent 0:26:30.480 --> 0:26:34.280 at the conclusion of this transaction. They've seen massive success 0:26:34.480 --> 0:26:37.120 with Scope Ly they acquired that for just a hundred 0:26:37.160 --> 0:26:39.760 five billion. They've rapidly expanded and acquired Nyantic for an 0:26:39.760 --> 0:26:42.560 additional three and a half billion. They are now looking 0:26:42.560 --> 0:26:45.960 at EA as the mothership of their gaming strategy outside 0:26:45.960 --> 0:26:48.240 of mobile. I believe that you will continue to see 0:26:48.560 --> 0:26:52.080 scopely dominate their mobile strategy, and EA will now probably 0:26:52.119 --> 0:26:56.800 dominate their popular console and PC and alternative strategies outside 0:26:56.800 --> 0:26:59.760 of mobile. And so this is this is form a 0:26:59.800 --> 0:27:03.159 four pmative move by the PIF, and I'm excited to 0:27:03.200 --> 0:27:04.000 see what they do with it. 0:27:04.240 --> 0:27:06.840 I'm keeping a team in New York on their toes. 0:27:06.880 --> 0:27:10.880 But like Battlefield six we're showing on the screen right now, SIMS, Madden, 0:27:12.040 --> 0:27:15.719 EAFC formerly known as FIFA, what are the future of 0:27:15.760 --> 0:27:18.000 those properties? Do they change somehow? 0:27:19.440 --> 0:27:22.160 People are spending less time on new titles and more 0:27:22.160 --> 0:27:25.800 time in existing titles that's going to continue to propagate here. 0:27:25.840 --> 0:27:28.720 And that's why I look at this transaction by the 0:27:28.720 --> 0:27:34.960 PIFs as a very intelligent move. EA has dominated the 0:27:35.000 --> 0:27:38.120 digital homes that we're familiar with for years, and that's 0:27:38.160 --> 0:27:40.359 what people want. They want innovation on things they're slightly 0:27:40.359 --> 0:27:43.480 familiar with. Also, they will have the ability when going 0:27:43.520 --> 0:27:46.280 private to risk it and go for some new properties 0:27:46.280 --> 0:27:48.600 that will come to love, like a new battlefield. I'm 0:27:48.640 --> 0:27:50.720 excited to see them challenge Call of Duty with their 0:27:50.760 --> 0:27:53.920 battle reale. And so for all these reasons, I like 0:27:53.960 --> 0:27:54.560 the transaction. 0:27:54.880 --> 0:27:58.560 What about consolidation do they start picking away at companies 0:27:58.680 --> 0:27:59.479 that you invest in? 0:28:01.280 --> 0:28:03.920 I think when you have a new buyer in the market, 0:28:03.960 --> 0:28:06.760 which the sovereign wealth funds appear to be, you know one, 0:28:06.760 --> 0:28:09.440 we're seeing this with PIF mainly, but secondarily we're seeing 0:28:09.480 --> 0:28:12.840 this with Tamasik with their move into Keyword Studios. So 0:28:12.960 --> 0:28:16.199 absolutely having a new buyer on the scene is a 0:28:16.240 --> 0:28:18.440 good thing for the industry. It is not a bad thing, 0:28:18.720 --> 0:28:21.320 and especially one that's willing to pay a premium. You know, 0:28:21.359 --> 0:28:23.800 typically when you look at privately, you're not that excited 0:28:24.160 --> 0:28:27.840 given that the multiples you may receive or not quite 0:28:27.840 --> 0:28:29.560 what you would hope for if you're going to go public. 0:28:29.920 --> 0:28:32.680 But sovereign wealth funds are here to play, They're here 0:28:32.720 --> 0:28:35.840 to play well, and I think having another place of 0:28:35.880 --> 0:28:38.520 capital liquidity is only a good thing for startups and 0:28:38.560 --> 0:28:39.800 for those who motivating building. 0:28:40.360 --> 0:28:42.280 I saw a twitch and r about that very quick. 0:28:42.320 --> 0:28:43.440 I think Cara's question. 0:28:43.320 --> 0:28:45.960 Is it's a good opportunity for your portfolio companies to 0:28:46.000 --> 0:28:48.720 get acquired by a bigger beast, because like EA goes 0:28:48.720 --> 0:28:50.400 for very technical acquisitions. 0:28:51.520 --> 0:28:55.160 Yes, yes, absolutely, and I'm very excited about this. I 0:28:55.200 --> 0:28:56.800 think it's a good sign for what is to come. 0:28:56.880 --> 0:28:59.800 And there's many good companies in our portfolio that I 0:28:59.800 --> 0:29:02.160 think would love to work with EA and many of 0:29:02.040 --> 0:29:03.600 the parties involved in this transaction. 0:29:04.280 --> 0:29:07.320 Jason Chapman of Convoy really appreciate you coming on Bloombo Tech. 0:29:07.720 --> 0:29:10.480 Thank you very much. At Caroline, we're looking at shares 0:29:10.520 --> 0:29:13.720 for Comcast. So much news coming out today. Basically it's 0:29:13.720 --> 0:29:15.920 a very simple story. They're down three tens of percent, 0:29:16.200 --> 0:29:19.440 basically flat the story. Michael Kavan has been promoted to 0:29:19.520 --> 0:29:22.360 co CEO, joining Brian Roberts. I don't know much more 0:29:22.400 --> 0:29:24.520 to save you on that well landscape's interesting. 0:29:24.600 --> 0:29:27.360 It's interesting because he used to be heading up M 0:29:27.400 --> 0:29:30.440 and A and another big bank and institution before he 0:29:30.520 --> 0:29:33.120 came on board to Comcast. So clearly whe are dealing 0:29:33.120 --> 0:29:35.240 there as they particularly sell off some of their assets. 0:29:35.240 --> 0:29:37.360 But coming up, we're getting through the world of crypto 0:29:37.480 --> 0:29:40.000 ed I'm Immersinger, CEO of the Rock Chain Association, can 0:29:40.080 --> 0:29:43.200 be joining us discuss the group's new campaign to defend 0:29:43.200 --> 0:29:44.360 the stable coin legislation. 0:29:44.400 --> 0:29:46.320 It was only passed in July or on that. 0:29:46.320 --> 0:30:02.800 This is bloombog Tech, Soft Bank and Arc Investment are 0:30:02.840 --> 0:30:06.680 among potension investors in a major funding round for tether holdings. 0:30:06.960 --> 0:30:08.640 According to sources, the funding could. 0:30:08.520 --> 0:30:10.640 Give the company behind the world's largest stable coin I 0:30:10.720 --> 0:30:13.440 value is high as five hundred million dollars. It's got 0:30:13.440 --> 0:30:16.200 the details of bling bag Finance reporter Catherine Doherty and 0:30:16.760 --> 0:30:21.760 why are we seeing such a gargantuan overall valuation for 0:30:21.800 --> 0:30:23.840 this company? What are they thinking? What is Ark and 0:30:23.880 --> 0:30:24.840 soft Bank backing here? 0:30:25.240 --> 0:30:28.200 So there's a few against the backdrop of a changing 0:30:28.280 --> 0:30:31.760 regulatory environment. I would say that is probably the number 0:30:31.800 --> 0:30:36.160 one force behind the decision that firms like soft Bank 0:30:36.400 --> 0:30:39.640 and Arc Investment are looking into When you have a 0:30:39.720 --> 0:30:42.520 firm like Tether that has been at the forefront of 0:30:42.640 --> 0:30:47.280 stable coin and emerging technology in the crypto space, these 0:30:47.320 --> 0:30:50.920 firms in putting their money behind a private firm and 0:30:50.960 --> 0:30:53.680 the development that Tether is working on behind the scenes 0:30:53.760 --> 0:30:56.160 is really a signal to the rest of the industry 0:30:56.440 --> 0:30:59.440 of where things are potentially headed. It also sets up 0:30:59.480 --> 0:31:05.920 the stage for a really increasing environment of setting up 0:31:06.200 --> 0:31:09.880 major firms in what they're trying to do in expanding 0:31:10.000 --> 0:31:14.800 into other forms of payment and lending. So it's really 0:31:15.120 --> 0:31:18.400 all eyes on how big the valuation really does become. 0:31:18.720 --> 0:31:21.600 The numbers that we're reporting out at Bloomberg are on 0:31:21.680 --> 0:31:24.240 the higher end, so it really remains to be seen 0:31:24.280 --> 0:31:28.320 whether or not they come in or are lower than expectations. 0:31:28.960 --> 0:31:31.880 You know, there's this moment in time about whether this 0:31:32.080 --> 0:31:34.080 round is sort of unique to Tether and what it 0:31:34.120 --> 0:31:37.640 tells us about valuation a moment more broadly, then there's 0:31:37.920 --> 0:31:41.560 the strategy, how does this backing help Tether grow as 0:31:41.600 --> 0:31:42.920 an issue of stable coins? 0:31:43.080 --> 0:31:45.720 Give us the one two and answer those Catherine, Yes. 0:31:45.520 --> 0:31:48.760 Well, on the second point that you're making, it really 0:31:48.880 --> 0:31:51.720 is about where they're going to put their money, where 0:31:51.760 --> 0:31:55.240 they go next I mentioned lending payments. These are all 0:31:55.280 --> 0:31:59.000 emerging technologies and Tether has always been a firm that 0:31:59.080 --> 0:32:02.200 is at the forefront. And now that the regulatory environment 0:32:02.280 --> 0:32:06.280 is changing, where there is engagement with the industry and regulators, 0:32:06.720 --> 0:32:09.600 that is really where the industry is going to look 0:32:09.640 --> 0:32:13.040 to see what happens next. And in terms of the 0:32:13.080 --> 0:32:17.400 actual size, that is really the big question here on 0:32:17.840 --> 0:32:19.800 if they do get the higher end of the range, 0:32:20.160 --> 0:32:22.360 how will they put that money to work and what 0:32:22.400 --> 0:32:24.720 does that mean for the rest of the sector. Will 0:32:24.720 --> 0:32:27.200 there be other firms that are looking to raise money 0:32:27.440 --> 0:32:31.880 either privately or going out and potentially we've been seeing 0:32:31.920 --> 0:32:34.920 some big IPOs and that really sets the scene. When 0:32:34.960 --> 0:32:36.960 you have a firm like Circle that is out there 0:32:36.960 --> 0:32:41.080 publicly having to report to their investors and disclose what 0:32:41.160 --> 0:32:44.080 kind of money and the investments that they're making. That 0:32:44.160 --> 0:32:48.440 really sets up a stage between Circle and Tether. You 0:32:48.480 --> 0:32:51.959 have a public company and a private company both working 0:32:52.040 --> 0:32:54.080 in the same industry and looking to compete in the 0:32:54.120 --> 0:32:55.680 stable coin issuance space. 0:32:56.600 --> 0:32:59.120 Luis Kevin, doc's great to have you back on Bloomberg Tech. 0:32:59.200 --> 0:32:59.680 Appreciate it. 0:32:59.680 --> 0:33:02.160 Elsewhere in the world of stable coins are Battle's brewing 0:33:02.400 --> 0:33:06.640 between crypto supporters and traditional finance over the Genius Act. 0:33:06.840 --> 0:33:09.560 Let's get the perspective of some immersing a CEO of 0:33:09.600 --> 0:33:13.600 the Blockchain Association context. The Genius Act creates a regulatory 0:33:13.640 --> 0:33:16.400 structure for the issuance of stable coins, a form of 0:33:16.440 --> 0:33:18.880 crypto pegged to the dollar, and it was just signed 0:33:18.920 --> 0:33:20.480 into lauren' ly and I think you and I talked 0:33:20.480 --> 0:33:20.800 about it. 0:33:20.880 --> 0:33:23.160 Yeah, surely there are yeah, absolutely, you know. 0:33:23.200 --> 0:33:25.320 Like we've discussed the idea that David tax is out 0:33:25.360 --> 0:33:28.520 there like talking this is dollarization, this is fantastic. But 0:33:28.560 --> 0:33:31.880 we're talking about now tension between a more modern industry 0:33:31.880 --> 0:33:35.400 and traditional finance. How for your association is that tension 0:33:35.480 --> 0:33:36.200 being debated? 0:33:36.840 --> 0:33:40.320 Well, we're coming out pretty strongly against some of the 0:33:40.360 --> 0:33:44.040 proposals that the traditional banks have in front of Congress. 0:33:44.080 --> 0:33:44.240 Now. 0:33:44.240 --> 0:33:46.480 They'd like to row back a lot of what the 0:33:46.560 --> 0:33:49.520 Genius Act does. They have claimed that they want to 0:33:49.520 --> 0:33:52.600 close some loopholes that truly are not loopholes. They were 0:33:52.600 --> 0:33:55.760 out the table when we negotiated this bill, so any 0:33:55.840 --> 0:33:59.000 concerns that they have now are kind of you know, 0:34:00.560 --> 0:34:03.320 late to the game concern At the end of the day, 0:34:03.440 --> 0:34:06.120 stable coins have the opportunity to change how we move 0:34:06.200 --> 0:34:08.760 money in this work, in this globe, in the globe, 0:34:08.800 --> 0:34:12.000 and we want to make sure that the regulations are 0:34:12.239 --> 0:34:15.560 such that we can continue to see that innovation thrive 0:34:15.719 --> 0:34:16.280 and grow. 0:34:17.080 --> 0:34:19.520 If you can't beat them, join them, as the saying. 0:34:19.840 --> 0:34:22.080 So it's the idea that I've heard of just bank 0:34:22.080 --> 0:34:24.839 crafter bank considering launching their own stable coins. Why then 0:34:24.920 --> 0:34:26.960 fight the Genius Act which would allow them to do that. 0:34:27.640 --> 0:34:30.800 Yeah, I mean, I believe they will start to issue 0:34:30.840 --> 0:34:35.400 their own stable coins. This is a competition question right now. 0:34:35.600 --> 0:34:38.319 A lot of the exchanges are able to offer a 0:34:38.360 --> 0:34:42.200 reward around four percent for stable coins. Your traditional savings 0:34:42.239 --> 0:34:46.120 account is offering less than one percent, and they don't 0:34:46.160 --> 0:34:49.600 want to compete. So the idea is, let's try to 0:34:49.600 --> 0:34:53.680 stop the competition and really kind of create a regulatory 0:34:53.800 --> 0:34:57.200 mode around traditional finance and let them get out ahead 0:34:57.760 --> 0:35:01.120 where the stable coin issuers are our ahead of the banks. 0:35:01.239 --> 0:35:03.840 And I think that's probably the biggest concern they have. 0:35:03.960 --> 0:35:04.440 Right now. 0:35:05.280 --> 0:35:08.960 You're sending a letter to Congress, You're you're arguing against 0:35:08.960 --> 0:35:11.840 some of these actions taken by the big banks, but ultimately, 0:35:11.840 --> 0:35:14.319 when you're looking at the broader context of TeV out 0:35:14.320 --> 0:35:16.680 there raising funds fifteen to twenty billion dollars maybe giving 0:35:16.680 --> 0:35:19.360 it evaluation five hundred billion doing those those the numbers 0:35:19.360 --> 0:35:21.839 are reasonable as to the market opportunity right now. 0:35:22.200 --> 0:35:22.399 Yeah. 0:35:22.440 --> 0:35:23.080 Absolutely. 0:35:23.680 --> 0:35:25.960 When you think about how money moves in the in 0:35:26.000 --> 0:35:30.600 the world, it's tradition, it's slow, it's inefficient, there's a 0:35:30.600 --> 0:35:34.160 lot of friction. Stable coins take that out of the system. 0:35:34.440 --> 0:35:39.040 It's an opportunity to again move money quickly and efficiently, 0:35:39.600 --> 0:35:42.640 and it's something that I think the financial services sector 0:35:42.680 --> 0:35:45.680 has been waiting for. So I'm not surprised by the 0:35:45.680 --> 0:35:49.000 evaluations we're seen for these companies. I think there's just 0:35:49.040 --> 0:35:52.840 a lot of opportunity in the stable coins sector going 0:35:52.920 --> 0:35:54.399 forward real quick. 0:35:54.400 --> 0:35:57.040 As the point of clarification, Tether Holdings is a member 0:35:57.080 --> 0:36:00.920 of your association, somebody that you are support. 0:36:01.320 --> 0:36:04.000 Tether No, they're not a member. They just you know, 0:36:04.120 --> 0:36:08.400 we were just at their launch for tether us. Certainly 0:36:08.520 --> 0:36:10.520 somebody that we would love to see in our membership 0:36:10.600 --> 0:36:13.000 circles in our membership. So if you have stable coin 0:36:13.040 --> 0:36:14.400 issuers in our membership. 0:36:14.560 --> 0:36:15.800 The reason I also I want to go back to 0:36:16.040 --> 0:36:18.239 the Genius Act point, which is that the banks want 0:36:18.320 --> 0:36:20.839 one thing and you your association as members want something different. 0:36:20.880 --> 0:36:24.360 You basically don't agree. That being said, what is it 0:36:24.400 --> 0:36:27.080 that the banks are wrong about? Just distill that please. 0:36:27.320 --> 0:36:31.399 Yeah, So they're calling this loophole where the exchanges are 0:36:31.440 --> 0:36:35.399 able to offer a reward for stable people putting money 0:36:35.440 --> 0:36:37.680 in stable coins. This is no different than a reward 0:36:37.719 --> 0:36:39.960 you would get if you're using a bank credit card. 0:36:40.640 --> 0:36:42.960 They are claiming that that is a loophole around the 0:36:43.040 --> 0:36:47.640 yield prohibition in the bill. This is not a yield offer. 0:36:47.840 --> 0:36:50.759 This is a separate reward offered by the exchanges. This 0:36:50.840 --> 0:36:54.080 is not the stable coin issuers offering yield. Again, it's 0:36:54.120 --> 0:36:57.000 the exchanges offering a reward. It's very different. It is 0:36:57.040 --> 0:36:59.760 not a loophole. And again, if the banks want to compete, 0:36:59.800 --> 0:37:03.360 their welcome to do so by offering similar rewards or 0:37:03.400 --> 0:37:06.840 similar interest rates on savans accounts. 0:37:07.320 --> 0:37:10.279 What's interesting is Tether, of course, makes its money by 0:37:10.880 --> 0:37:14.160 allocating the money it holds and the US treasuries it 0:37:14.239 --> 0:37:18.680 holds and farming yield from those. All of this is 0:37:18.719 --> 0:37:22.920 about regulation. Yes, you come from the CFTC. At the moment, 0:37:23.080 --> 0:37:26.520 the CFTC has one person in it with yet to 0:37:26.520 --> 0:37:30.600 see a new leader installed. Is there an anxiety? Is 0:37:30.640 --> 0:37:33.480 the anxiety that some have about a void of regulatory 0:37:33.520 --> 0:37:37.080 over seeing of this very nascent industry group. 0:37:37.200 --> 0:37:39.360 Is that right or wrong in your perspective. 0:37:38.920 --> 0:37:41.360 Right now, I think there's some concern that there's not 0:37:41.480 --> 0:37:44.880 permanent leadership at the CFTC that probably you see that 0:37:44.920 --> 0:37:48.839 play out more with potential market structural legislation that the 0:37:49.040 --> 0:37:51.399 Capitol Hill's working on. But at the end of the day, 0:37:51.520 --> 0:37:54.799 you see very strong leadership coming out of book the 0:37:54.880 --> 0:37:58.280 SEC and the CFTC. They're holding a round table together today, 0:37:58.680 --> 0:38:01.399 So it's certainly, you know, even though there's only one 0:38:01.440 --> 0:38:05.040 person at the CFTC, that's not stopping the agency from 0:38:05.040 --> 0:38:08.600 moving ahead doing what is necessary to ensure that they 0:38:08.600 --> 0:38:13.160 are allowing innovation to thrive. So I think the concern 0:38:13.280 --> 0:38:16.680 while it, you know, probably is something to think about 0:38:16.719 --> 0:38:19.880 with market structure, because they do need long term leadership 0:38:19.920 --> 0:38:23.080 at the CFTC. Right now, the CFTC and the SEC 0:38:23.239 --> 0:38:25.960 is doing everything they need to be doing to make 0:38:26.000 --> 0:38:28.200 sure the innovation is going to thrive in the US. 0:38:28.360 --> 0:38:31.759 Caroline fram Republican Acting Chair, the sole member at the 0:38:31.760 --> 0:38:33.640 moment of the CFTC. It is great to have you 0:38:33.680 --> 0:38:38.000 here though, of course we really appreciate some there coming up. 0:38:38.239 --> 0:38:41.960 Motor Lab CEO Eric Burden, how does Beern Hodgson is 0:38:42.040 --> 0:38:44.280 joining us to talk about the aim structure company Series 0:38:44.320 --> 0:38:46.520 B funding around and at one point one billion dollar 0:38:46.560 --> 0:38:47.480 post money valuation. 0:38:47.880 --> 0:38:49.040 There's a really big tech. 0:39:01.520 --> 0:39:02.000 Startup. 0:39:02.120 --> 0:39:06.080 Modal Lab says it provides AI infrastructure for AI native startups, 0:39:06.160 --> 0:39:09.239 enabling the building and testing of AI applications. 0:39:09.320 --> 0:39:10.120 It's just close of you. 0:39:10.200 --> 0:39:13.720 Eighty million dollar Series B funding round led by Lux Capital. 0:39:14.000 --> 0:39:16.879 Model Labs CEO Eric Bernhardson joins us. 0:39:16.920 --> 0:39:17.200 Now. 0:39:17.560 --> 0:39:20.160 Caroline and I have been discussing all morning, kind of 0:39:20.200 --> 0:39:22.880 a bit like the salesforce question what does model do? 0:39:23.840 --> 0:39:26.560 But I think like the understanding is it's more analogous 0:39:26.560 --> 0:39:30.120 to like a together AI and maybe nearer to a neocloud. 0:39:30.160 --> 0:39:33.000 But just explain that basic question to us to start. 0:39:33.760 --> 0:39:35.640 Yeah, totally, and it's great to be here about it. 0:39:36.280 --> 0:39:38.319 So we built the infrastructure layer of a lot of 0:39:38.320 --> 0:39:40.399 AI applications. So if you think about a lot of 0:39:40.719 --> 0:39:43.319 all these AI applications, you know, people building things like 0:39:43.360 --> 0:39:46.279 generator media or large language models or things like Vibe 0:39:46.320 --> 0:39:49.200 coding platforms, they only need a software layer to run that, 0:39:49.600 --> 0:39:53.000 and so we basically provide a software layer by aggregating 0:39:53.040 --> 0:39:56.080 a lot of underlying physical infrastructure, a lot of GPS 0:39:56.120 --> 0:39:58.560 all over the world, and then make it easy for 0:39:58.600 --> 0:40:01.359 engineers to build things on top of that. Build things, 0:40:01.360 --> 0:40:05.440 whether that's related to training or inference or batch processing 0:40:05.520 --> 0:40:08.160 or code the execution, or many other things. We have 0:40:08.160 --> 0:40:13.600 a lot of customers like Meta, Lovable, Pseuno, Ramp and Scale, 0:40:14.520 --> 0:40:17.120 a lot of happy developers who basically build things using 0:40:17.120 --> 0:40:19.240 our SDK on top of this infrastructure platform. 0:40:19.320 --> 0:40:23.600 So that sounds very much like AWS and AWS Lambda. 0:40:23.800 --> 0:40:24.680 Is that fair? 0:40:25.160 --> 0:40:28.480 Like what's the landscape here? 0:40:28.520 --> 0:40:30.919 There are some similarities like AWS LAMB that is built 0:40:30.920 --> 0:40:33.319 for more of a traditional infrastructure, and I think what 0:40:33.400 --> 0:40:35.480 we realized when we started this company was basically a 0:40:35.520 --> 0:40:38.239 lot of traditional infrastructure, you know, things like you know 0:40:38.239 --> 0:40:41.720 a WSLAM or Kubernators or Docker just isn't built for AI. 0:40:42.160 --> 0:40:44.640 So we realize in order to build this new layer 0:40:44.640 --> 0:40:47.799 of infrastructures to support all these applications, basically to throw 0:40:47.800 --> 0:40:50.440 out a lot of the existing infrastructure and build a. 0:40:50.440 --> 0:40:51.080 Whole news stack. 0:40:51.280 --> 0:40:54.239 But we're very happy customers of AWS. We run an 0:40:54.239 --> 0:40:57.920 AWS we run many other hyperscalers. We have great partnerships 0:40:57.920 --> 0:41:00.320 with them. I think what they're good at is running 0:41:00.320 --> 0:41:03.160 all the physical infrastructure, all the data centers, and then 0:41:03.200 --> 0:41:05.040 what we're very good at is innovating in the layer 0:41:05.120 --> 0:41:08.160 above with the developer experience and building this platform that 0:41:08.280 --> 0:41:10.719 enables engineers to build all these AI applications on top 0:41:10.760 --> 0:41:11.040 of it. 0:41:11.440 --> 0:41:15.560 So you've got eighty million dollars more in funding. We've 0:41:15.640 --> 0:41:18.160 raised more than eighty million, and now that takes you 0:41:18.200 --> 0:41:19.680 to one hundred and eleven. What do you need all 0:41:19.680 --> 0:41:21.920 the money for? What are your absolute costs? 0:41:22.040 --> 0:41:23.200 Eric? What's keeping you up? 0:41:24.120 --> 0:41:24.400 Yeah? 0:41:24.440 --> 0:41:27.000 For sure, So so far we've actually been pretty capital efficient. 0:41:27.040 --> 0:41:29.040 But we see a lot of demand out there. There's 0:41:29.120 --> 0:41:32.759 so many customers building these applications, you know, starting to 0:41:32.760 --> 0:41:34.800 see a lot of adoptionals in later stage company. A 0:41:34.800 --> 0:41:37.680 lot of enterprise companies are now taking what's maybe previously 0:41:37.760 --> 0:41:41.480 research prototypes and putting it into production and they need 0:41:41.760 --> 0:41:44.400 a platform to run these applications, and that's when they 0:41:44.480 --> 0:41:47.200 come to you. We think there's just a massive opportunity 0:41:47.239 --> 0:41:49.840 that the market is exploding, so much demand out there. 0:41:50.320 --> 0:41:52.160 Since we're going to take this money and you know, 0:41:52.280 --> 0:41:55.000 first first and foremots hire a lot of engineers to build, 0:41:55.040 --> 0:41:55.719 you know, because we need to. 0:41:55.719 --> 0:41:56.520 Invest in this platform. 0:41:56.520 --> 0:41:58.480 We're building a very deep platform, but also invest of 0:41:58.520 --> 0:41:59.720 course in sales and marketing. 0:42:00.120 --> 0:42:02.239 How hard is it to find the right talent? How 0:42:02.280 --> 0:42:04.240 expensive is it? 0:42:04.239 --> 0:42:05.319 It's hard, It's hard. 0:42:05.320 --> 0:42:07.239 I mean we're in New York, so I think we're 0:42:07.280 --> 0:42:09.640 actually a little bit sheltered from the very worst part 0:42:09.640 --> 0:42:12.080 of it. But yeah, it's very hard to find all 0:42:12.120 --> 0:42:14.680 these you know hard you know, these people solving these 0:42:14.680 --> 0:42:15.840 hard infrastructure problems. 0:42:16.320 --> 0:42:18.200 Eric, we're going to bring back some video. We're just 0:42:18.239 --> 0:42:22.040 showing the platform. It still comes back to access to infrastructure, 0:42:22.600 --> 0:42:26.520 the GPUs, the underlying technology, right, are you taking on 0:42:27.080 --> 0:42:30.279 the capital burden of that? Like who's actually paying for 0:42:30.400 --> 0:42:34.040 access to lease or buy out the capacity? 0:42:35.080 --> 0:42:37.319 Now, we're trying to be a very capital efficient in 0:42:37.320 --> 0:42:39.560 the sense that we don't actually own any underlying physical 0:42:39.600 --> 0:42:41.400 and infrastructure. Like I mentioned, we run on top of 0:42:41.440 --> 0:42:43.880 a lot of different clouds. We run on all the majorhyperscalers. 0:42:43.880 --> 0:42:46.560 We're adding a bunch of neoclouds and so our view 0:42:46.680 --> 0:42:48.320 is that, you know, in order to move fast, in 0:42:48.440 --> 0:42:51.080 order to expand very quickly, it's much better to build 0:42:51.080 --> 0:42:53.840 in the existing physical infrastructure, and we focus more on 0:42:53.840 --> 0:42:56.960 the layer above the software layer, and that enables us 0:42:57.000 --> 0:42:58.960 to move very quickly and expand very quickly in a 0:42:58.960 --> 0:43:00.000 more capital efficient way. 0:43:00.920 --> 0:43:01.880 Eric, you're going global. 0:43:01.960 --> 0:43:03.680 You've got a lot of love from the likes of 0:43:03.719 --> 0:43:07.520 Scale AI, but Lovable as well. That's more an overseas play. 0:43:07.600 --> 0:43:09.040 How much you able to broaden this. 0:43:10.600 --> 0:43:11.120 A lot more? 0:43:11.160 --> 0:43:13.560 And it's great to see customers like Lovable. I actually 0:43:13.560 --> 0:43:17.000 grew up in Sweden and so you know Lovable is Swedish. 0:43:17.040 --> 0:43:19.360 But yeah, most of the customers are in the US. 0:43:19.400 --> 0:43:22.520 But we're seeing a lot of very wide different types 0:43:22.520 --> 0:43:24.600 of use cases, right, Like I mentioned, you know things 0:43:24.719 --> 0:43:29.040 like generated media or large language model applications. But some 0:43:29.080 --> 0:43:31.680 of the stuff we've also seen more recently is you 0:43:31.719 --> 0:43:33.920 know a lot of computational bi tech. Well literally I 0:43:33.960 --> 0:43:35.919 talked to a customer the other day. It's literally using 0:43:35.960 --> 0:43:39.600 model to cure cancer. And then you know weather forecasting. 0:43:39.719 --> 0:43:41.920 There's many other applications. So it's super exciting. 0:43:42.239 --> 0:43:44.319 All right, Ben Hadson, it's great to have you on 0:43:44.320 --> 0:43:46.680 the show. Thank you, CEO Modile Labs. And then he's 0:43:46.680 --> 0:43:48.560 just funding around Meanwhile, that does it for this edition 0:43:48.560 --> 0:43:50.040 of Bloomberg Tech, right here in New York. 0:43:50.040 --> 0:43:50.160 Both. 0:43:50.239 --> 0:43:52.080 Yeah, it's taken US fifty six minutes, but I am 0:43:52.120 --> 0:43:54.120 here in New York this week. I'm really happy to 0:43:54.120 --> 0:43:57.120 be here. Incredible amount of news recap this show. EA, 0:43:57.320 --> 0:43:59.799 that's a big moment podcast. You know where to find 0:43:59.800 --> 0:44:03.239 it online on the Bloomberg platforms. Let's do it from 0:44:03.280 --> 0:44:05.879 New York today. This is Bloomberg Tech.