Speaker 1: From Marhard.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: I'm Caroline Hyde Bloomberg's worldtad quarters in New York, and
Speaker 2: I'm Med Ludlow in San Francisco. This is Bloomberg Technology
Speaker 2: coming up the US.
Speaker 4: It plans titan measures against China to restrict its access
Speaker 4: to advanced chip technology. We're going to break down the
Speaker 4: details and the market implications.
Speaker 2: And we have the latest updates from the Israel Hamass
Speaker 2: war and discuss the role social media plays in delivering
Speaker 2: up to date and accurate news.
Speaker 4: Plus, we're going to kick off the coverage of New
Speaker 4: York Tech Week as industry titans gather in the Big
Speaker 4: Apple for a full week of panels, events and much more.
Speaker 2: The top story is Bloomberg reporting expanding technology export curbs
Speaker 2: to China in the semiconductor's space. It had a pronounced
Speaker 2: impact in markets in Asia and Europe, ovin Night, also
Speaker 2: in US pre market. Actually a lot of those names
Speaker 2: are now markedly higher. But pay attention to the chip
Speaker 2: equipment makers because that is a focus of these curves.
Speaker 2: Let's get the specifics and bring in Bloomberg's Mackenzie Hawkins,
Speaker 2: one of the reporters on that Bloomberg exclusive and Mackenzie
Speaker 2: Bloomberg sources are telling us these chip curbs are going
Speaker 2: to be expanded, how so in what ways?
Speaker 5: So these chip curbs are building on initial restrictions that
Speaker 5: the Biden administration posed in October of last year, and
Speaker 5: there's a couple venues for the tightening. So first, we're
Speaker 5: going to see some additional restrictions on graphics chips sales
Speaker 5: to Chinese companies and advanced manufacturing equipment sales to Chinese companies.
Speaker 5: And we're also going to see some tightening on potential
Speaker 5: attempts by Chinese companies to avoid country specific restrictions by
Speaker 5: routing their shipments through other countries. And the last thing
Speaker 5: to keep an eye on is adding Chinese chip design
Speaker 5: firms to a US trade restriction list that basically requires
Speaker 5: overseas manufacturers to get a license from the US government
Speaker 5: before filling orders from those companies.
Speaker 4: McKenzie, what prompted this tightening? Is it well the Republicans
Speaker 4: or is it Huawei? And late more recent events that
Speaker 4: shows that maybe some of these cubs just all working.
Speaker 5: So the US announced as initial rule in October of
Speaker 5: last year and took a couple of months to get
Speaker 5: key allies, particularly the Netherlands and Japan on board, and
Speaker 5: they've been working on a final version of that rule
Speaker 5: for a while. So this is not to be interpreted
Speaker 5: as a reaction to the huge tech breakthrough in China
Speaker 5: in August when Huawei released a smartphonem powered by an
Speaker 5: advanced chip. But that has pretty much defined the conversation
Speaker 5: in US China tech relations in the month and a
Speaker 5: half since, and we'll be looking to the administration to
Speaker 5: see what actions specifically they might take on Huawei and
Speaker 5: its chip making partner.
Speaker 4: Snick indeed keeping a close eye on the implications, and
Speaker 4: so too will of course, the Chinese, who have notably
Speaker 4: said that they don't want this to be weaponized or
Speaker 4: indeed politicized when it comes to technology and trade. Mackenzie Hawkins,
Speaker 4: great bit of reporting, me, thank you. Let's continue the conversation.
Speaker 4: Joanne Phoenie's with US partner and portfolio manager at Advisor's
Speaker 4: Capital Management, with deep knowledge expertise when it comes to
Speaker 4: semiconductors in the landscape and ultimately, is this ever an
Speaker 4: efficient way of trying to curtail what is ultimately an
Speaker 4: ability to make it home really advance chips in China.
Speaker 6: It's never going to be efficient, you know, let's not
Speaker 6: try to guess the ultimate goals of the US policy.
Speaker 6: One effect likely though, is that it will slow down
Speaker 6: China's ability to deploy really advanced chips for use in
Speaker 6: AI oriented servers.
Speaker 7: So it will slow China down now.
Speaker 6: In the meantime, though it's harmful to to the US
Speaker 6: companies that want to sell China those chips, you know,
Speaker 6: potentially like in video that Fortunately, we're in a period
Speaker 6: of time when there's such strong demand for AI capabilities
Speaker 6: in servers that even if in Vidia loses some sales
Speaker 6: in China because of more restrictions, it will likely be
Speaker 6: able to sell them in the United States or someplace
Speaker 6: else in the world.
Speaker 7: So it'll slow China down.
Speaker 6: But the horse has really left the barn in terms
Speaker 6: of the ability of China to ultimately produce advanced chips.
Speaker 7: They just can't do it in a lot of volume
Speaker 7: right now.
Speaker 6: But ultimately, over some years, you know, they'll be able
Speaker 6: to do this because chip technology, you know, has reached
Speaker 6: sort of the limits mostly of Moore's law, and so
Speaker 6: it's hard for you know, our companies to stay ahead
Speaker 6: when all China has to do is copy what we've
Speaker 6: done so far.
Speaker 1: Juanne, good to see you.
Speaker 2: We're just showing the names actually now moving to the
Speaker 2: upside in video and a m D on the GPU
Speaker 2: or graphics side, and then the chip equipment makers LAMB
Speaker 2: PLA also positive. You said that this won't slow China down,
Speaker 2: but there's a refocus on the chip equipment makers, in
Speaker 2: particular with those US based companies with exposure to China.
Speaker 2: Is this more of a concern now than it was
Speaker 2: to you yesterday?
Speaker 6: Yeah, So you know, we've been avoiding exposure to most
Speaker 6: of the equipment guys for a while because of these
Speaker 6: tensions with China, and so you know, our position on
Speaker 6: that hasn't really changed. We have some selective exposure, but
Speaker 6: not to the major players like A Lamber applied. And
Speaker 6: I think what happened earlier, right when when China saw
Speaker 6: this coming, you know, and saw the timing of these restrictions,
Speaker 6: they actually imported a boatload of equipment.
Speaker 7: So they're pretty well positioned. You know. Again, it's going
Speaker 7: to slow them down in terms of deploying.
Speaker 6: Really high end AI based servers because they're not going
Speaker 6: to be able to get all those chips, but they
Speaker 6: have a lot of equipment from lithography out of you know,
Speaker 6: the metalin from ASML to the etching machines to the
Speaker 6: deposition machines, right so they can do an awful lot
Speaker 6: right now with the equipment that they have. There are
Speaker 6: always ways to get the smaller and smaller future sizes
Speaker 6: to those more advanced chips using the older technology. It
Speaker 6: just takes many more steps to get there. It's much
Speaker 6: more expensive. So your question earlier ed, is it efficient.
Speaker 6: It's not going to be efficient for China to make
Speaker 6: these advanced chips, but they're going to be able to
Speaker 6: make almost everything with the equipment they have except for
Speaker 6: the most the very most advanced ships. And that's where
Speaker 6: US policy, I think wants to be binding, and it
Speaker 6: will be for a while until China can make further
Speaker 6: advances in their own deployment of equipment or refinement of
Speaker 6: the equipment that they already have in place.
Speaker 2: Bloomberg's reporting that these expanded restrictions could come early this week.
Speaker 2: For what it's worth, the US Commisces Department and National
Speaker 2: Security Council declined to comment on the story, but a
Speaker 2: Chinese Foreign Ministry spokeswoman called this the US politicizing, instrumentalizing,
Speaker 2: and weaponizing trade and tech issues. Our colleague me and
Speaker 2: Mackenzie Hawkins pointed out that this is not sort of
Speaker 2: an escalation from the US, It's a rethink of a
Speaker 2: year long policy. Where do you stand on what this
Speaker 2: is or is not the US doing?
Speaker 6: So you're asking me to sort of put on a
Speaker 6: policy walk head.
Speaker 7: I'll do my best. I mean, clearly, the US wants
Speaker 7: to slow.
Speaker 6: Down China's ability to use AI and to develop AI applications,
Speaker 6: particularly in the military, and so to the extent that
Speaker 6: the US can succeed in that by restricting their access
Speaker 6: to these most advanced chips and the equipment to make
Speaker 6: the most advanced chips, the US will be successful. It's
Speaker 6: not the first time that trade policy has been used
Speaker 6: for things other than you know, tamping down illegal trade.
Speaker 6: I mean, clearly this is a political objective, not an
Speaker 6: unfair trade practices response, and so you know, it's certainly
Speaker 6: not something that's probably authorized under WTO rules. Nevertheless, under
Speaker 6: national security reasons, clearly the US is pursuing the strategy
Speaker 6: and it will be effective. It'll just slow China down.
Speaker 6: But as many have been saying, we have also it's
Speaker 6: only going to accelerate China's own investments in developing their
Speaker 6: own capabilities. Now, we think they're a long way off
Speaker 6: from being able to replicate what ASML has done or.
Speaker 7: What WEAM has done.
Speaker 6: But again by repeating the processes that the intels and
Speaker 6: ibms and global founderies and tsmcs of the world used,
Speaker 6: SMICK can get to pretty close to some of the
Speaker 6: most advanced chips, as they've shown in that Huawei chip
Speaker 6: for example.
Speaker 4: Joan, we ask you sometimes to put a policy hat on,
Speaker 4: and to that point, do you try and take that
Speaker 4: policy hat off when it comes to actually having exposure
Speaker 4: to such companies? He said, how you've limited your exposure
Speaker 4: to chip equipment makers because of some of the issues
Speaker 4: with US and China. Well, what about an Nvidia that
Speaker 4: at the moment can sacrifice Chinese sales? But ultimately do
Speaker 4: you want to be out of companies that have such
Speaker 4: exposure to China?
Speaker 7: Yeah?
Speaker 6: No, so right, So the investor hat, the portfolio manager hat,
Speaker 6: requires that you look at policy.
Speaker 7: Obviously, you need.
Speaker 6: To handle have a little bit what is going to
Speaker 6: be in the US interests, what they're going to try
Speaker 6: to do, as well as sort of the economic outlook.
Speaker 6: So you know, at ACM, at Advisor's Capital, what we
Speaker 6: do is both the top down macro and political situation,
Speaker 6: and we then build up the bottom up analysis of
Speaker 6: companies by companies.
Speaker 7: So in video is a great example, they have so.
Speaker 6: Many different opportunities because demand is so strong right now
Speaker 6: for AI capabilities in servers that.
Speaker 7: We think if they lose a little bit from China,
Speaker 7: they'll be able to make it up elsewhere. It looks
Speaker 7: to us like.
Speaker 6: They have kind of a waiting list, if you like,
Speaker 6: of companies that would like their most advanced chips. So
Speaker 6: you know, China could potentially hurt in the longer run
Speaker 6: if China is able to replicate the level and quality
Speaker 6: of chip that Invidia could otherwise supply. But if they can't,
Speaker 6: and we don't think they'll be able to do that
Speaker 6: for some years, China's going to have to be satisfied
Speaker 6: with lower end graphics chips out of the likes of
Speaker 6: Nvidia and amb So ultimately we don't think there's going
Speaker 6: to be a big shift in spending by China, They're
Speaker 6: going to have to be satisfied with lesser chips, even
Speaker 6: more so than they were.
Speaker 7: After last Octobers a level of.
Speaker 6: Restrictions and Video will be able to sell again more
Speaker 6: of its ultimately higher endships to US and European and
Speaker 6: other Southeast Asian customers.
Speaker 2: To FOMI partner and portfolio manager and advisors capital management,
Speaker 2: but also just long, long time.
Speaker 1: Researcher in the field of semiconductors. Thank you.
Speaker 2: Speaking of and sticking with chips in Video's H one
Speaker 2: hundred GPU has been one of the technology stories of
Speaker 2: the year. Before the Israel hamass war broke out. The
Speaker 2: chip giant had planned on holding its AI summit today
Speaker 2: in Tel Aviv, with insight into its AI strategy expected,
Speaker 2: but then canceled the event. Bloomberg Technology visited in VideA
Speaker 2: and took a look at what the H one hundred
Speaker 2: GPU used to train AI models looks like in the
Speaker 2: real world. This is an individual H one hundred GPU
Speaker 2: or graphics processing unit in Videa's AI accelerator, but in
Speaker 2: reality it's not just a chip that comes out of
Speaker 2: a plant. When we talk about the H one hundred
Speaker 2: GPUs training AI models. We're likely talking about dgxh one hundred,
Speaker 2: Nvidia's AI supercomputer. That's eight h one hundred GPUs combined,
Speaker 2: capable of thirty two quadrillion floating point operations per second,
Speaker 2: crazy computer performance. It's a server design, and this is
Speaker 2: what it looks like under the lid. It starts with
Speaker 2: an h one hundred GPU seen here in the form
Speaker 2: of an SXM module. Eight individual sxms are topped with
Speaker 2: heat six, designed to dissipate heat generated from running big
Speaker 2: AI workloads. Those are connected on a single baseboard by interconnectors,
Speaker 2: and that assembly alone weighs sixty pounds. Add CPUs and
Speaker 2: other components, and a finished DGX system weighs almost three
Speaker 2: hundred pounds. But the scale in the real world is
Speaker 2: bigger still. Some of the most powerful large language models
Speaker 2: are trained on the Nvidia DGX super Pod, that is
Speaker 2: thirty two DGX eight one hundred systems combined into what's
Speaker 2: called a scalable unit. At its absolute most mind modeling scale,
Speaker 2: DGX Superpod can be up to sixty four scalable units.
Speaker 2: That's more than sixteen thousand individual h one hundred GPUs
Speaker 2: an AI company may use several superpods to train their LLLM.
Speaker 2: In the end, the DGX infrastructure sent out to the
Speaker 2: hyperscale cloud providers to put in their massive data centers.
Speaker 2: I wanted to get my hands on an H one
Speaker 2: hundred Caroline, but it isn't just this little chip. That's
Speaker 2: the reality of what we're talking about.
Speaker 8: You happen to do squatz squats to be able.
Speaker 2: To I just wanted to demonstrate that in the real
Speaker 2: world sometimes you have to deadlift what we're talking about.
Speaker 2: And I've already got a lot of flak for that
Speaker 2: on the show, but check it out online. Really interesting
Speaker 2: experience going down to Nvidia.
Speaker 4: It's a great piece to just digest really what is
Speaker 4: behind technology. We thank you for it. Meanwhile, coming up,
Speaker 4: we are going to get serious and turn our attention
Speaker 4: back to the latest in Israel and Hamas the war
Speaker 4: and discuss the wall of social media during the times
Speaker 4: of isis One. Next this is Bloombog technology.
Speaker 2: Mid ongoing war between Israel and Hamas. President Biden is
Speaker 2: weighing a visit to nation. Want to get more in
Speaker 2: the latest from the ground of bringing Bloomberg's Oliver Crook,
Speaker 2: who's life for us in Tel Aviv. Biden's visit largely
Speaker 2: speculative at this point. There are other leaders both from
Speaker 2: North America and the EU coming to town.
Speaker 1: What is the latest on the ground, Oliver.
Speaker 9: Yeah, so let's talk for us about the military action.
Speaker 9: Over the weekend, we got sort of confirmation from something
Speaker 9: that we've widely anticipated, but basically Israel saying that the
Speaker 9: next stage of this war is going to involve a
Speaker 9: ground operation of some kind, and that was sort of
Speaker 9: confirmed over the weekend. Their focus right now has been
Speaker 9: on the aerial assault. They have been absolutely pummeling Gaza
Speaker 9: for at least the last week. They've had a few
Speaker 9: evacuation passages a few hours where they say they're not
Speaker 9: going to bomb major arteries so that people can move south.
Speaker 9: We had one today, yesterday and on Saturday as well.
Speaker 9: And the main question on the ground there is a
Speaker 9: question of AID. There is AID that is not really
Speaker 9: being able to get through. There have been speculation all
Speaker 9: day and reports about potentially AID being able to move
Speaker 9: through the Egyptian border at the checkpoint at Rafa, but
Speaker 9: that has not been.
Speaker 7: Confirmed by US.
Speaker 9: In terms of the diplomacy side, yes, we're expecting all
Speaker 9: Off Schultz, the German Chancellor, to arrive tomorrow, and whether
Speaker 9: or not Biden comes, you know, to try to again
Speaker 9: as a sort of deterrent, but also to show the
Speaker 9: support of the United States for Israel, which has been
Speaker 9: fairly vocal at this point.
Speaker 4: Meanwhile, I mean, you bring our attention to the human cost, Oliver,
Speaker 4: and we appreciate it. Just talk to us about the
Speaker 4: timing and time running out. According to Iran, at least
Speaker 4: Auran's foreign minister really talking about and if we're going
Speaker 4: to avoid some sort of expungeon to the conflict.
Speaker 9: Yeah, so this has been we've been hearing from Iran
Speaker 9: kind of on the sidelines of this for the last
Speaker 9: few days. On Friday was sort of the first kind
Speaker 9: of ominous threat. And then we had the other foreign
Speaker 9: ministries today saying that the time for the political the
Speaker 9: political solution is running out and the expansion of the
Speaker 9: war to other fronts approaching is inevitable, they said in
Speaker 9: on An X And again, this is part of the
Speaker 9: whole reason that Lincoln has been going to uh Qatar,
Speaker 9: the UAE, Saudi Arabia, Egypt, Bahrain. This is where he
Speaker 9: has been because it's in one side to get sort
Speaker 9: of the back channels communicating with Tehran, but also deterrence.
Speaker 9: We also have a second aircraft carrier fleet that is
Speaker 9: coming to the Eastern Mediterranean. This is all about trying
Speaker 9: to provoke that sort of deterrence. But it's not just Iran,
Speaker 9: right So, just in the same way that the Israelis
Speaker 9: saw all of the horror on their phones, they were
Speaker 9: glued to it, the rest of the Arab world is
Speaker 9: seeing the exact same thing on what's going on in
Speaker 9: Gaza right now. And you've had protesters through the streets
Speaker 9: throughout this process.
Speaker 4: II thank you so much for most Oliver Krook there
Speaker 4: with an latest on the ground from Tel Aviv, But
Speaker 4: I mean lot of it just painted the picture there
Speaker 4: of how much everyone has turned to social media in
Speaker 4: this moment, and indeed, well the Uranian foreign minister actually
Speaker 4: posting on x You want to understand really how people
Speaker 4: are using social media and what they should be looking
Speaker 4: at if at all nor A Benavidez is with us
Speaker 4: just free press and or are You're a senior counsel,
Speaker 4: your director of Digital Justice and civil rights, and really
Speaker 4: you run the organization's platform accountability, the digital civil rights
Speaker 4: work there and how accountable ultimately are x, Meta, TikTok, Town,
Speaker 4: and bike Dance. How much are they looking for this
Speaker 4: moment of responsible nurturing of what's being put onto the
Speaker 4: platforms right now?
Speaker 10: Well, thanks for having me, both of you. You know,
Speaker 10: most of the major platforms have really failed the massive
Speaker 10: stress test over the last week and a half. In particular,
Speaker 10: Twitter or x now has created the perfect environment for
Speaker 10: disinformation to thrive. And as your colleagues mentioned, people are
Speaker 10: turning to social media now more than ever as their
Speaker 10: primary way of getting rapid information. Most of us are
Speaker 10: hungry to figure out what's going on on the ground
Speaker 10: and whether it's family members, journalists, or others returning to
Speaker 10: these platforms only to be met with a deluge of
Speaker 10: mislabeled videos, images that are taken from other time places, regions,
Speaker 10: et cetera. Ultimately, Elon Musk has shown that Twitter has failed,
Speaker 10: I think with a kind of grandeur. You know, his
Speaker 10: bad decisions have literally led us to this moment. He
Speaker 10: gutted critical teams as other platforms have, like Meta and
Speaker 10: TikTok and YouTube.
Speaker 11: Elon Musk has also changed the blue check.
Speaker 10: Mark feature, which is in the scheme of all of
Speaker 10: these swirling forces.
Speaker 11: One of the really big problems.
Speaker 10: It incentivizes people to now subscribe and they pay us
Speaker 10: small fee, but their content gets boosted. So if you're
Speaker 10: willing to pay that eight dollars, your content might be
Speaker 10: featured in more people's feeds. He also needs add money
Speaker 10: because advertisers have been fleeing the platform for a lot
Speaker 10: of these reasons, and one of his incentives has been
Speaker 10: to pay people for engagement and virality.
Speaker 1: Yeah, it's crazy, Naura Nora. Just for our audience.
Speaker 2: X's response to this has been to basically call an
Speaker 2: all hands on deck situation. They've told us here on
Speaker 2: Limo Technology that all staff are focused on the Israel
Speaker 2: hamass war. They've given us data on community notes action,
Speaker 2: and for Meta's part, they have a special operations team
Speaker 2: in place now with fluent Hebrew and Arabic speakers that
Speaker 2: are basically working twenty four to seven to review content.
Speaker 2: But at issue specifically seems to be video content, videos
Speaker 2: purporting to show one thing when in reality they are another.
Speaker 2: What is your view on the role video is playing here?
Speaker 11: Video is one of the last frontiers.
Speaker 10: It's really very difficult to moderate video content, and frankly,
Speaker 10: Elon Musk pointing to community notes as a way for
Speaker 10: users to do his job is inadequate. It's also inadequate
Speaker 10: that a week and a half after the conflict escalated,
Speaker 10: now is the moment that social media companies are pulling
Speaker 10: their rapid crisis centers together.
Speaker 11: That is days and days too late.
Speaker 10: Citing to the ability to remove hundreds of thousands of
Speaker 10: posts is also inadequate, because we have to understand the
Speaker 10: environment here is there are millions and millions of posts
Speaker 10: going out every day about this subject, and billions of
Speaker 10: active monthly users trying to get that content, and so
Speaker 10: the lack of teams, the lack of policies in place,
Speaker 10: the slow to respond crisis centers are just not enough
Speaker 10: to rain in the level of toxicity.
Speaker 2: All right, Nora Benavidez a free Press thank you for
Speaker 2: your time here on the show. This is Talking Tech
Speaker 2: First up kPr raising seven hundred and twenty three million
Speaker 2: dollars in Japan's largest listing in nearly five years, that
Speaker 2: of chip equipment maker Kokutse Electric Shares a expence to
Speaker 2: begin trading on October twenty fifth, plus Indonesia's biggest tech firm,
Speaker 2: go To, plunged it's most on record earlier today after
Speaker 2: revelations of a stock sale by a co founder, which
Speaker 2: ignited a selloff, but go To recovered after anlis argued
Speaker 2: the selloff was overdone and not some more supported by
Speaker 2: Fundamental School.
Speaker 4: Welcome back to Blue Meg Technology. I'm Caroline Hid in New.
Speaker 2: York, Meed Lovelow in San Francisco, Cara A very quick
Speaker 2: check in on the market. So we started the week
Speaker 2: with the NASDA one hundred higher fi percentage point. Remember
Speaker 2: we're coming off three straight weekly gains on the NAZAQ
Speaker 2: one hundred amid all of the volatility of global markets,
Speaker 2: worries about China's economy. We're ahead of earning season, but
Speaker 2: two of those weeks we notched again of just like
Speaker 2: a tenth of one percent, and that's inclusive of the
Speaker 2: IPO window that we had, which hasn't done much to
Speaker 2: give us sort of that much momentum to the upside.
Speaker 1: This week's big a lot of FED speak.
Speaker 2: We get China g GDP reading on Wednesday, but there
Speaker 2: is a growing list of factors and if you read
Speaker 2: that story about on the Bloomberg. A lot of hope
Speaker 2: pinning on those big five megacap tech names this earning
Speaker 2: season in terms of owning's growth to bring that positive
Speaker 2: story back to tech, but also tech continuing to lead
Speaker 2: the way amid a broader market that's kind of not
Speaker 2: sure where it stands.
Speaker 4: And that's in the public markets. Of course, this all
Speaker 4: feeds into the private markets as well, and we're going
Speaker 4: to be talking about both right here in New York
Speaker 4: because it's Tech Week upon us officially kicking off in
Speaker 4: the Big Apple with industry titans, startups gathering well basically
Speaker 4: throughout the entire week for events, there's can be panels, conversations, breakfast,
Speaker 4: much more, a week on blueing bog technology. Look, we're
Speaker 4: going to be speaking with those founders, with those investors,
Speaker 4: with those executives to discuss the tech ecosystem here in
Speaker 4: New York City and why they choose to call it
Speaker 4: home NYC. I please to say we're now joined by
Speaker 4: two key players when it comes to investing in the area.
Speaker 4: David Haber, General Partner Andrews and Horowitz, who focuses on
Speaker 4: technology investments, particularly in financial services, and Julie You and
Speaker 4: general partner in the bio and health team at Andrewson,
Speaker 4: who needs investments in companies that are transforming how we access, pay,
Speaker 4: and experience healthcare, a lot of which is an epicenter
Speaker 4: here in New York. And David, I start with you,
Speaker 4: because what do you see at the moment in New
Speaker 4: York that is making more people put boots on the ground,
Speaker 4: particularly Andrews and what You've got eighty plus New York
Speaker 4: based employees, now you've got new office space.
Speaker 12: Absolutely why Yeah. Look, I've always believed that opportunities live
Speaker 12: between fields of expertise, and I really enjoy exploring those intersections.
Speaker 12: And I think it really is a metaphor for New
Speaker 12: York City because technology has a tendency of cunning across industries,
Speaker 12: and I think the companies that really represent New York
Speaker 12: best are those really live at the intersection between technology
Speaker 12: and many of the large incoming industries that exist here
Speaker 12: in New York, whether that's media, advertising, fashion, or financial services.
Speaker 4: And indeed healthcare. And it's interesting, Julie, that's the area
Speaker 4: that you focus on, and how much are you seeing
Speaker 4: that health is becoming some of the deals the checks
Speaker 4: the VC count that so we're currently seeing a chart
Speaker 4: just showing that about four hundred and three in the
Speaker 4: third quarter is how many per metro area we've seen
Speaker 4: the share of us VC deals, the count that is
Speaker 4: in New York. How much of that as healthcare and
Speaker 4: how much should it be?
Speaker 3: Absolutely, I mean healthcare in many ways. When I started
Speaker 3: investing here at the firm about four years ago, I
Speaker 3: sort of likened it to the nineteen ninety nine of
Speaker 3: the Internet era, and so I feel like we're really
Speaker 3: at the beginning of a dawn of this new digital
Speaker 3: health era in domain.
Speaker 13: And to David's point.
Speaker 3: I think maybe a little known fact about the New
Speaker 3: York tech scene is that, whereas most people think about
Speaker 3: fintech is really the biggest sort of cohort of startups
Speaker 3: and venture capital activity, it turns out that depending on
Speaker 3: what charge do you look at, health tech is also
Speaker 3: number one or number two within the New York tech
Speaker 3: scene as well, because of the incumbency. In the same
Speaker 3: way that we have financial services, bank companies and such
Speaker 3: in the New York scene, we also have tremendously huge
Speaker 3: healthcare companies, whether they be insurance companies, whether they be
Speaker 3: biopharmaceutical companies, whether they be hospital systems also based in
Speaker 3: that city, and it creates a really unique ecosystem for innovation,
Speaker 3: and so we've really seen a ton of activity in
Speaker 3: recent years in that domain.
Speaker 2: Julia, let's show that chart again, which is deal count
Speaker 2: right in San Francisco or the Silicon Valley area has
Speaker 2: kind of led historically from a deal count even dollar
Speaker 2: volume perspective. But if you extrapolate back, the gap in
Speaker 2: terms of deal count and dollar volume is closing between
Speaker 2: New York and San Francisco.
Speaker 1: What does that tell you?
Speaker 6: Yeah?
Speaker 13: Absolutely.
Speaker 3: This is one of the reasons that we've invested so
Speaker 3: heavily in the New York tech scene is that healthcare
Speaker 3: in particular has really seen a rise there. One of
Speaker 3: the feces that we have about why that's the case
Speaker 3: is that we have this concept of what's called a
Speaker 3: digital health native founder, someone who has actually grown up
Speaker 3: in digital health companies that have been quite successful and
Speaker 3: are now coming out and starting their own businesses and
Speaker 3: really seeding the next generation of entrepreneurs. And many of
Speaker 3: those companies, most of those companies, in fact, have actually
Speaker 3: been based in New York. So we have the legs
Speaker 3: of companies like Oscar Health, which is a publicly traded
Speaker 3: insure tech business that has now spawned a number of
Speaker 3: entrepreneurs that we've backed that have again grown up in
Speaker 3: a company that sits at the intersection of healthcare, technology
Speaker 3: and financial services and can now take those skills into
Speaker 3: the next wave of companies that are being built.
Speaker 2: David, the story in San Francisco Bay Area Silicon Valley
Speaker 2: is well told, right, you have the Stanford Computer science
Speaker 2: drop out and they start a company here because the
Speaker 2: funding was here and the like minded people were here.
Speaker 1: And in some.
Speaker 2: Sense that's still true, right, We talk about it on
Speaker 2: the show all the time.
Speaker 1: What is the equivalent story in New York?
Speaker 12: Look, as I said, I think New York is such
Speaker 12: a unique ecosystem.
Speaker 8: I joined.
Speaker 12: I first moved to New York City in two thousand
Speaker 12: and nine in the wake of the financial crisis, you know,
Speaker 12: and at the time, technology was sort of this cute
Speaker 12: little underdog industry again in the shadows of you know,
Speaker 12: many of the large kind of incoming industries here in
Speaker 12: New York. As I mentioned, you know, bea media, you know, advertising,
Speaker 12: you know, fashion, or financial services. And again, I think
Speaker 12: the companies that are really sort of indicative of this
Speaker 12: ecosystem are those that sort of intersect with those in industries.
Speaker 12: You know, obviously I'm quite biased, but fintech is you know,
Speaker 12: a huge presence here in New York and it's really
Speaker 12: a great place to become sort of bridge between the
Speaker 12: startup ecosystem and a lot of these you know, decision
Speaker 12: makers at a lot of these large companies.
Speaker 4: The reason, perhaps, David, that your bio hasaw that you
Speaker 4: might say, is because you were a founder. Of course,
Speaker 4: Bond Street was brought by Goldman. It was all about
Speaker 4: sort of growth financing to businesses. What is the financing
Speaker 4: like right now for entrepreneurs who want to go and
Speaker 4: build things, who want to be ensuring that they're bringing
Speaker 4: together the large caps meet the startup ecosystem? Are you
Speaker 4: writing checks? Is the see community energize right now to
Speaker 4: write checks?
Speaker 8: Absolutely?
Speaker 12: Again, just for context, you know, I joined in dres
Speaker 12: and Horowitz in July twenty twenty one really to help
Speaker 12: plant the flag here in New York City. At the time,
Speaker 12: we were six people in New York. Today were over
Speaker 12: eighty people in New York, which makes us likely one
Speaker 12: of the largest venture capital firms at least by headcount
Speaker 12: here in New York City. So you know, we're incredibly
Speaker 12: excited to be here and to be writing you know,
Speaker 12: checks into the entrepreneurs in this ecosystem. And again we've
Speaker 12: seen a lot of other large firms join, you know,
Speaker 12: open up offices in New York in the last twelve months.
Speaker 12: And so while the markets are challenging, I think there's
Speaker 12: plenty of capital available for entrepreneurs starting new companies.
Speaker 2: Julie, You're academic background MIT both as an undergrad and
Speaker 2: then have an MIT for masters. I believe how closely
Speaker 2: as an expanded group of partners in New York City
Speaker 2: in the East Coast do you track the academic basis
Speaker 2: that talent can come from. You know, there's a lot
Speaker 2: of emphasis here obviously on Stanford and Berkeley. Is there
Speaker 2: the same pool of talent being generationally created each year
Speaker 2: out of the East Coast?
Speaker 8: Absolutely?
Speaker 3: I mean, I think when you look at our portfolio,
Speaker 3: roughly about half of our biown health portfolio is based
Speaker 3: somewhere on the East Coast, whether it be in the
Speaker 3: Boston ecosystem largely biotech focused there. And then the majority
Speaker 3: of my personal portfolio is actually based in New York
Speaker 3: and hence I spend a ton of time there with
Speaker 3: my partner David on companies that really sit at the
Speaker 3: intersection actually of healthcare and fintech, where we see a
Speaker 3: huge amount of opportunity. I think the other piece of
Speaker 3: this David mentioned that he is a recovering fintech entrepreneur.
Speaker 3: I'm also a way of recovering health tech entrepreneur, and
Speaker 3: that's really where we see a huge advantage for our
Speaker 3: team in that we have all been ex builders in
Speaker 3: these domains, and really that's I would say probably more
Speaker 3: where we focus is where the pools of talent that
Speaker 3: have actually built businesses that are native to different industries
Speaker 3: that can now come together and see these unique opportunities
Speaker 3: at those intersections.
Speaker 4: Of course, you were only member of a software engineering
Speaker 4: team that was eventually acquired by Oracle, so you know
Speaker 4: how the exit route tends to look like, Julie, and
Speaker 4: I'm interested as to whether or not it's more diversity
Speaker 4: in terms of the founders that you see in New York.
Speaker 4: I mean, there's always been this concern that you know,
Speaker 4: when we are seeing it from the same pool of
Speaker 4: Mit and Harvard as you two sit in front of us,
Speaker 4: as there has been within that ecosystem not always as
Speaker 4: much diversity as you'd like to see in terms of
Speaker 4: people of color, women coming forward with businesses ideas.
Speaker 8: How does that look at New York?
Speaker 3: Yeah, I think New York has always been a huge
Speaker 3: exemplary sort of diversity pool in many ways, whether it
Speaker 3: be culturally, whether it be based on background, and more importantly,
Speaker 3: as we've talked about, in terms of the actual experience
Speaker 3: set that founders are able to bring to this next
Speaker 3: wave of startups. So we absolutely do see that in
Speaker 3: the New York scene.
Speaker 2: David, tell me what New York Tech Week looks like
Speaker 2: for you. How many hackathons are you going to, how
Speaker 2: many mixes, what kind of events? Seriously, that's what's going
Speaker 2: on out here on the West coast. What's it like
Speaker 2: on the East coast.
Speaker 12: Yeah, we're really incredibly exciting to be here. You know,
Speaker 12: as I mentioned in Reason has been hosting these tech
Speaker 12: weeks in cities like San Francisco and Los Angeles. York City,
Speaker 12: New York Tech Week stands to be our largest event ever.
Speaker 12: We have three hundred and fifty different events hosted not
Speaker 12: only by our firm, but by folks across the tech ecosystem,
Speaker 12: which again, I think speaks to how dynamic this ecosystem
Speaker 12: has become. So we're kicking things off with an event tonight,
Speaker 12: which we're really excited about. And then Julie and I
Speaker 12: are hosting an event again at the intersection of healthcare
Speaker 12: and fintech and really excited to host you know a
Speaker 12: number of entrepreneurs building at that intersection and I love it.
Speaker 4: David Haber, Julieu, thank you as your well Social Endeavors
Speaker 4: pick up a please for this particular wig. We thank
Speaker 4: you both from Andrews and Horowitz. And what else we've
Speaker 4: got coming up.
Speaker 2: Well, digesting recovering fintech entrepreneur, recovering health tech founder. What's
Speaker 2: said about but coming up on the show talking targeted
Speaker 2: advertising on your social media feeds and how it isn't
Speaker 2: likely to change anytime soon. We're going to discuss this
Speaker 2: is bloomber technology.
Speaker 4: We want to do a bit of a deep dive on, well,
Speaker 4: a certain business model at play at the moment, the
Speaker 4: economics of zero ad versions on mainstream social media services.
Speaker 4: They're not particularly likely to appeal to tech companies or
Speaker 4: indeed their users.
Speaker 1: It would seem.
Speaker 4: Indeed, targeted advertising it totally revolutionized the media business. May Meta,
Speaker 4: for example, one of the most valuable companies in the world,
Speaker 4: A very own Bloomberg Max Chafkin writes in Today's Bloomberg
Speaker 4: Business Week, all about the pros and the cons You
Speaker 4: join us now, and basically, why will they be ultimately
Speaker 4: such a push against this unless they're regulated that way?
Speaker 8: Right?
Speaker 14: So, the big reason that this model is popular is
Speaker 14: that it's extremely lucrative. Facebook Meta has built a very
Speaker 14: large a business that generates more than one hundred billion
Speaker 14: dollars a year serving these targeted ads to people. It
Speaker 14: has a lot of power or over retailers anyone wants
Speaker 14: to show sell products on the Internet, as well as
Speaker 14: media companies because it's amassed this huge database essentially of
Speaker 14: personal information about people that it can then rent to
Speaker 14: third parties.
Speaker 8: And in Europe right now, we have regulators pushing.
Speaker 14: Back against aspects of that model, and metas sort of
Speaker 14: turning around saying, well, Okay, if you don't like it,
Speaker 14: you can pay us for Facebook and Instagram, pay us
Speaker 14: a relatively high monthly price. It looks like they're talking
Speaker 14: somewhere in the neighborhood of twenty dollars a month and
Speaker 14: you'll see no ads at all, which you know, I
Speaker 14: would guess that very few people will actually be willing
Speaker 14: to pay for because you're talking about a price, you know,
Speaker 14: that costs more than some wireless plans obviously costs more
Speaker 14: than a lot of newspapers, Disney plus Netflix and so on.
Speaker 8: It's a lot of money for social media.
Speaker 4: It is, and it's also a lot of money for
Speaker 4: people who don't make as money as others. And in
Speaker 4: some way then means someone who is well has more
Speaker 4: money to spend becomes able to pay for more privacy,
Speaker 4: and that doesn't seem particularly fast.
Speaker 14: So this is an argument that Mark Zuckerberg, under of
Speaker 14: Facebook and Meta, has long used as an argument against this,
Speaker 14: saying that it would be unfair, be unequal to allow
Speaker 14: people to sort of buy their way out of ads.
Speaker 8: What happened, you know?
Speaker 14: Twenty eighteen, Europe passes the GDPR, this big privacy regulation,
Speaker 14: and basically Facebook has been fighting.
Speaker 8: Ever since over exactly how it.
Speaker 14: Applies the company, and now this is kind of their
Speaker 14: latest gambit to make the regulators happy. Yet to be
Speaker 14: seen where the regulators will definitely sign off on this plane,
Speaker 14: although it's looking certainly possible if not likely.
Speaker 2: Max, Let's look at the proposed subscription costs Facebook and
Speaker 2: Instagram versus everything else.
Speaker 1: There it is twenty bucks.
Speaker 2: I pay for X premium for example, eight dollars a
Speaker 2: month or eighty four dollars a year, depending how you
Speaker 2: look at it. And I did that because I wanted
Speaker 2: to experience those additional features. But beyond price, what this
Speaker 2: chart illustrates is choice. Right, at some point, you're just
Speaker 2: going to say this is a platform be it Facebook
Speaker 2: or Instagram, that I don't need to have.
Speaker 14: Yeah, although the thing is you're not going to have
Speaker 14: to make that choice, and that's the whole point of this,
Speaker 14: because you will be allowed to continue looking at your
Speaker 14: personalized ads. And I think that's the bet here from
Speaker 14: from Mark Zuckerberg's standpoint that you know, most people are
Speaker 14: going to look at twenty dollars and say, you know,
Speaker 14: heck no, I don't want to pay for that, and
Speaker 14: they'll stay in the in the personalized advertising scheme, which
Speaker 14: generates a ton of money. So the you know, average
Speaker 14: revenue per user in the United States for Facebook is
Speaker 14: something like two hundred more than two hundred dollars a year,
Speaker 14: so they're totally happy to have you continue to experience
Speaker 14: this free social network and for them to have you know,
Speaker 14: a near monopoly or a doopoly, depending on how you
Speaker 14: think about it.
Speaker 8: On social ads, you know, on the internet.
Speaker 2: The buzzword right now in tech across both social media
Speaker 2: and a guess e commerce's personalization and meta's whole thing
Speaker 2: has been taking data to make sure that what you
Speaker 2: look at is relevant to you. How does a premium
Speaker 2: subscription to impact that, Well, what.
Speaker 14: They'll say is that you know, if you if you pay,
Speaker 14: if you have no ads whatsoever, then it would be fine. Right,
Speaker 14: You're still going to see the personalized feed you know,
Speaker 14: your friends and and things that you're interested in. You
Speaker 14: will no longer see personalized ads, which you know if
Speaker 14: if you're talking to like their ad sales people. That
Speaker 14: would be a huge problem for most people, it's probably
Speaker 14: no big deal. The thing that they're really fighting against
Speaker 14: would be some kind of rule that would prevent them
Speaker 14: or allow people to opt out of personalization, or make
Speaker 14: it easy to opt out of personalization, because then they
Speaker 14: would just have to serve you ads you know, based
Speaker 14: on you know, your location or whatever. Some essentially use context,
Speaker 14: like the way that Google does to serve you ads
Speaker 14: rather than serving ads based on things it knows about you,
Speaker 14: which from their point of view would be bad and
Speaker 14: I think would certainly be less lucrative.
Speaker 4: Ultimately, I mean, you can in some way pay for
Speaker 4: what a blue take subscription subscription, I don't think it
Speaker 4: seemed a subscription, but to be in some way anointed
Speaker 4: someone that should be listened to on Meta and Facebook
Speaker 4: in the same way that Twitter does a little bit.
Speaker 4: But I think you actually have to take some bookses
Speaker 4: and actually whether you're someone who needs to have that
Speaker 4: privacy and needs to have it said that you are
Speaker 4: whom you say you are and pay for it. So
Speaker 4: how is that thing going that sort of whole experiment
Speaker 4: the start.
Speaker 8: So and we.
Speaker 14: Should say this is something that not just Meta is
Speaker 14: playing with. TikTok is testing sort of paid paid experiences
Speaker 14: with fewer ads or no ads. Snapchat has a no
Speaker 14: ads paid experience that's piloting, and Twitter, of course x
Speaker 14: has this you know, much vaunted blue.
Speaker 8: Check system and might go to three. You don't level
Speaker 8: and exactly.
Speaker 14: And Linda Acarino is signal there's going to be a
Speaker 14: higher tier, you know, as EDG just said, the current
Speaker 14: subscription costs between eight and eleven dollars, depending on where
Speaker 14: you buy it. You know, maybe the new one will
Speaker 14: cost twenty dollars or something like that. For no ads,
Speaker 14: we should say none of these have done very well.
Speaker 14: Elon Musk has relentlessly promoted you know, this subscription thing.
Speaker 14: We're talking about a tiny percentage of Twitter X's audio,
Speaker 14: you know, a revenue stream that in no way replaces
Speaker 14: the kind of revenue they were able to achieve from advertising.
Speaker 14: I mean, the problem here isn't necessarily that people don't want,
Speaker 14: you know, ad free experiences or premium social network experiences.
Speaker 14: It's that online advertising is a much much better business
Speaker 14: than that, and so companies that are looking to, you know,
Speaker 14: change their business model would be giving up huge sums
Speaker 14: of revenue, which something maybe Elon Musk can do, you know,
Speaker 14: private company, and he's Elon Musk, but it's.
Speaker 8: Going to be a lot harder for most public companies
Speaker 8: to pull off.
Speaker 13: All right.
Speaker 2: Bloomberg Business Feed columnist Max Chafkin with the breakdown, Thank you.
Speaker 2: Apple's iPhone fifteen may not be as hot a commodity
Speaker 2: on the smartphone market, at least in China. Data from
Speaker 2: Counterpoint Research estimates the iPhone fifteen sales are down nearbly
Speaker 2: five percent compared to the iPhone fourteen after the first
Speaker 2: seventeen days post release. However, the data does lump of
Speaker 2: those phone fifteen models together in aggregate, joining us who
Speaker 2: else Bloomberg's Mark Gum and chief correspondent Mark It's an
Speaker 2: interesting data point because it's kind of counted to the
Speaker 2: commentary that Apple gave us in earnings to the end
Speaker 2: of the June quarter, right iPhone would accelerate.
Speaker 1: We thought the iPhone fifteen be a hit. What have
Speaker 1: we learned?
Speaker 13: Yeah, these are a couple interesting data points.
Speaker 15: They're pointing towards the iPhone potentially going down double digits
Speaker 15: in recent weeks in terms of.
Speaker 13: Sales in mainland China.
Speaker 15: Now, the June quarter was very strong for Apple and China,
Speaker 15: one of their strongest in the company's history. But there's
Speaker 15: been a few things that happened since then. There was
Speaker 15: the launch of the Walway, the new mate phone. There
Speaker 15: there was discussion of some government agencies banning the use
Speaker 15: or expanding the banning of use of iPhones. There there
Speaker 15: were some concerns around nationalism and potentially some consumers in
Speaker 15: China souring on the iPhone.
Speaker 13: Ahead of that launch.
Speaker 15: We saw when the new iPhone fifteens went on sale
Speaker 15: in China that there was a tremendous amount of early
Speaker 15: demand the credible lines for the iPhone fifteen in China.
Speaker 13: So these are two data points.
Speaker 15: We won't necessarily know for sure what's going on with
Speaker 15: the iPhone, not even this earning cycle. Right Apple reports
Speaker 15: fourth quarter earnings November two. We're not going to get
Speaker 15: a full picture of how the iPhone is doing in
Speaker 15: China the latest model until the end of January or
Speaker 15: early February when they report Q one sales. Obviously, the
Speaker 15: fourth quarter only had about a week and a half
Speaker 15: or so of iPhone sales, so we have to take
Speaker 15: all these data points into consideration, probably have to wait
Speaker 15: a few months to know the real story, but certainly
Speaker 15: I am tending to believe that there is some decline.
Speaker 13: There on the iPhone in China.
Speaker 15: The good news is as you're seeing a tremendous increase
Speaker 15: for the iPhone momentum in the United States and elsewhere,
Speaker 15: so you're probably going to get a bit of an
Speaker 15: offset there from going down in one country and significantly
Speaker 15: up in the other.
Speaker 4: And talk to us therefore about the US and the
Speaker 4: executive team that they have based here, Mark, because you
Speaker 4: wrote over the weekend that actually, well, amid sort of
Speaker 4: these pushes and pulls glob there has been some more
Speaker 4: elevated titles in VP land at least.
Speaker 13: Yeah, that's right.
Speaker 15: So Apple obviously is run by Tim Cook, and under
Speaker 15: him is what's called the ET. That's the executive team.
Speaker 15: That's about eleven senior vice presidents. That's your head of hardware,
Speaker 15: head of software, hed illegal, CFO, etc. But below all
Speaker 15: of those people is a group called the top one hundred, right,
Speaker 15: that is their vice presidents. The top one hundred actually
Speaker 15: includes all of those people, but you have about one
Speaker 15: hundred vps below them. They do promotions every October. They
Speaker 15: lost about a dozen vice presidents over the last two
Speaker 15: years or so, and so they're sort of refueling those ranks.
Speaker 13: There's new vps for retail.
Speaker 15: Actually three women have been elevated to the vice president
Speaker 15: level in the retail organization, which is pretty significant for
Speaker 15: the company in terms of the diversity efforts and putting
Speaker 15: new lieutenants under their head of retail. There there are
Speaker 15: new vice presidents in Operations, Product operations and product manufacturing,
Speaker 15: and a few new vice presidents in software engineering, so
Speaker 15: pretty significant elevations across the board at the company, sort
Speaker 15: of creating this new generation of top executives at the Firm's.
Speaker 4: Mart Bogerman always with the best breakdown. We thank you
Speaker 4: so much. Meanwhile, look, and that does it for this
Speaker 4: edition of Bluebot Technology.
Speaker 2: Yeah, big thank you to those of you listening to
Speaker 2: the podcast. You can get it on all the bluebo platforms, Apple, Iheartspotify,
Speaker 2: and we're also posting the show to YouTube from SF
Speaker 2: in New York City.
Speaker 1: This has been Bot Technology