Speaker 1: From Marhart where Innovation, Money and power Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: I'm Caroline Hyde at Bloomberg's World headquarters in New York
Speaker 2: and I'm Ed Lodlow in San Francisco.
Speaker 3: Big Friday. This is Bloomberg Technology.
Speaker 2: It is big coming up full coverage of all those
Speaker 2: tech earnings from Snapchat to Amazon to Pinterest.
Speaker 3: We have got you covered and sticking with earnings, I'm
Speaker 3: going to bring you my interview with Intel CEO Pat Gelsinger,
Speaker 3: the company projecting a return to free cash flow, plus.
Speaker 2: How AI is going to impact hiring and managing in
Speaker 2: the workplace. We'll discuss the CEO of Lettice, Jack Altman.
Speaker 2: But first from those privately VC back companies to the
Speaker 2: public markets, where we're a little bit more cautious. Some
Speaker 2: of the big eco data that we got, the drops
Speaker 2: on the inflation reads ahead of the FED next week,
Speaker 2: and look, inflation is still brisk here in the United States.
Speaker 2: It's still brisk over in Europe, but maybe trading down
Speaker 2: a little bit. We've seen the NASLAG still managing to
Speaker 2: punch up three tens percent even though Amazon is that
Speaker 2: drag two year yield though we're seeing two basis points lower.
Speaker 2: In fact, we're seeing a buying into US bonds day
Speaker 2: and mid risker version. Perhaps that's around the banking sector.
Speaker 2: All eyes on First Republic. I'm looking at MSCI or
Speaker 2: Country World innext up about half a percentage point. Europe
Speaker 2: managed to just push on through towards the end of trading.
Speaker 2: Let's slick it on and look at what's happening in
Speaker 2: the great big world of crypto, because we are seeing
Speaker 2: don ogcoin having a good set of five days. We're
Speaker 2: up six percent, We're back at near that thirty thousand level.
Speaker 2: There's been a lot of volatility along the way for bitcoin,
Speaker 2: but edit does feel as though that's still some sort
Speaker 2: of safe harbor on the day.
Speaker 3: Yeah, I'm still really focused on earning season. Take a
Speaker 3: look at Intel. We kind of paired some of our
Speaker 3: earlier games. A tough first quarter, to be honest to
Speaker 3: trough on the top and bottom line, but the outlook
Speaker 3: for the second half of this year a bit more
Speaker 3: rosy and analyst really buying into that. We will hear
Speaker 3: from the CEO Pat Gelsinger later in the show about
Speaker 3: what the green shoots are that are giving the market
Speaker 3: confidence elsewhere. Social media a really big theme of this
Speaker 3: earning season. Snap usually reports earlier. It's a little bit
Speaker 3: later this quarter, but basically it's first ever revenue decline,
Speaker 3: and you can see how that's weighing on the shares.
Speaker 3: Biggest dropping around six months. Pinterest another one where it's
Speaker 3: kind of failing to gain traction, particularly in the US
Speaker 3: on the user growth perspective, and in this world of AI,
Speaker 3: we're worried about visibility. How is this relevant anymore? We'll
Speaker 3: dig into that. And then Amazon down four percent. This
Speaker 3: is all about the cloud. Sequentially into April from the
Speaker 3: first quarter, AWS top line growth slowing by around five
Speaker 3: hundred basis points. This has been the cash cow for Amazon,
Speaker 3: but it hasn't come to the rescue this quarter actually
Speaker 3: cost discipline on the top and bottom line beating the
Speaker 3: course of gone. The strength of the e commerce business
Speaker 3: definitely there that the cloud a little more worrying, Caroline.
Speaker 2: Yeah, and as you say, that has been such an
Speaker 2: important growth driver. Let's talk about it even more. Now
Speaker 2: we've got pack to you, president and co founder and
Speaker 2: of course someone who used to work over at Amazon.
Speaker 2: Melissa Verdick. You were previously of Cool, spending a decade
Speaker 2: at the company. You helped launch the CpG, the health
Speaker 2: beauty retail business. You understand the ad product, but focus
Speaker 2: on the cloud for a minute, in particular, how warring
Speaker 2: is this cash cow is thoughting to slow out in
Speaker 2: terms of growth.
Speaker 4: Yeah, there's well, there's a couple of things for sall
Speaker 4: things for having me glad to be back, but you know,
Speaker 4: sixteen percent growth in AWS still not anything to sneeze about.
Speaker 4: But there's a couple of worrying things. I think One
Speaker 4: is AWS has been the leader. They had forty percent
Speaker 4: growth a year ago.
Speaker 5: Now it's slowing.
Speaker 4: Their competitors are catching up. So Azure and Google Cloud
Speaker 4: both grew faster. Another thing that I think there are
Speaker 4: two other things that are a little bit concerning. One
Speaker 4: is it is impacted by macroeconomics. Amazon talked about how
Speaker 4: customers of all sizes are looking to optimize their cost
Speaker 4: savings and that is where we're seeing some slowing growth.
Speaker 4: And then lastly is on the AI front. So one
Speaker 4: of the things you know, Chat GBT OpenAI launch, they're
Speaker 4: the market leader in Microsoft Azure has a direct integration
Speaker 4: with them. Yes, so that's going to be one challenge
Speaker 4: for them. Amazon did announce Bedrock and their solution for
Speaker 4: Microsoft's Copilot called co Whisper. So I think the question
Speaker 4: is going to be how much adoption can they get
Speaker 4: of their integrations with ADBs given the fact that Chatter
Speaker 4: is leader.
Speaker 3: You know, they're offering something broad right, foundational models for
Speaker 3: those that want to use third party or Titan within Bedrock.
Speaker 3: One thing that really caught my eye the impact of
Speaker 3: machine learning on advertising. To take a look at this
Speaker 3: chart that shows ad growth across the advertising based companies,
Speaker 3: and actually Amazon comes top of the pile. Milist a
Speaker 3: real bright spot. What's your read into that?
Speaker 5: Yeah, definitely.
Speaker 4: I mean my company pack You sits on top of
Speaker 4: the Amazon's APIs for ads, and it's been a great
Speaker 4: business for us. Advertising is highly profitable. Actually, this week
Speaker 4: we looked at earnings across Meta, Google, Snap and Amazon
Speaker 4: was way better than twenty three percent growth, whereas you
Speaker 4: did not do as well. There's an interesting new partnership
Speaker 4: that Amazon announced Whiches with Pinterest. Pinterest has been struggling
Speaker 4: a little bit. They want to monetize their pins, and
Speaker 4: so this is kind of a win for Amazon, this
Speaker 4: new partnership that will drive traffic to them. And then
Speaker 4: one of the other bright spots with the Amazon is
Speaker 4: that they have lots of injury. You know, they continue
Speaker 4: to add more placements. They're pushing more towards upper funnel
Speaker 4: and streaming TV. There's a big opportunity around non indemic
Speaker 4: So even you know, cars that don't sell products on Amazon,
Speaker 4: you can leverage Amazon's audience. So there's just there's a
Speaker 4: lot of opportunity. Amazon has great space to grow in
Speaker 4: the advertising business.
Speaker 3: All right, Melissa Bird, I could pack for you, Thank
Speaker 3: you so much. The other name we're tracking them, course,
Speaker 3: Snap shares set for the worst day in six months
Speaker 3: after posting its first ever revenue decline. Joining us now
Speaker 3: is Jasmine Mburg Insider Intelligence Principle analysts. There was a
Speaker 3: phrase that jumped out, continued disruption in demand in advertising.
Speaker 2: What is that?
Speaker 6: Well, I think over all, looking at Snap's revenue decline,
Speaker 6: what we see is that it has really deep challenges within.
Speaker 5: Its ad business.
Speaker 6: So yes, there was a disruption and demand in the
Speaker 6: sense that it is revamping its ad platform. It is
Speaker 6: unifying its ad formats to make them easier for users,
Speaker 6: it's investing in machine learning, and all of this, of
Speaker 6: course is to provide more ROI for advertisers, and Snap
Speaker 6: is right, you know, these things take time to ramp
Speaker 6: up and really you know, impact its bottom line. But
Speaker 6: for me, you know, this issue really runs deeper, and
Speaker 6: that's that Snap is a much smaller player than say
Speaker 6: Facebook or Instagram. And we saw Meta come in, you know,
Speaker 6: with a three percent revenue growth in Q one, and
Speaker 6: you know, Snapchat also isn't a textbook ad supported platform
Speaker 6: the way that those two players are.
Speaker 7: It's been very clear about this itself.
Speaker 6: It is a messaging app and its users primarily use
Speaker 6: it for visual messaging, and messaging apps are notoriously difficult
Speaker 6: to monetize.
Speaker 2: Three hundred and eighty three million users daily is nothing
Speaker 2: to be sniffed out, though overalled, How do they end
Speaker 2: up trying to set themselves apart from not being well
Speaker 2: and also RAN, but a different RAN, offering something different,
Speaker 2: particularly when it comes to VRAR.
Speaker 6: Yeah, and that's something that Snap has been trying to
Speaker 6: do from the very beginning. You know, they position themselves
Speaker 6: as the as as a gen Z platform, calling it
Speaker 6: the Snapchat generation.
Speaker 5: And it's true.
Speaker 6: It really does have a stronghold on gen Z. Where
Speaker 6: it has struggled is being able to attract audiences outside
Speaker 6: of gen Z, older audiences in particular, and a lot
Speaker 6: of the things that they're doing, particularly around AR, really
Speaker 6: do appeal to its audience. I would say that, you know,
Speaker 6: convincing advertisers that AR in advertising is valuable, especially in
Speaker 6: this economic environment, has been difficult. But it's also working
Speaker 6: towards bringing AR off platform. It has a new RS
Speaker 6: which is its Augmented Reality Enterprise Service division, where it's
Speaker 6: incorporating it's AR technology into brand apps and websites, as
Speaker 6: well as bringing some of that technology eventually in store.
Speaker 6: So this of course is you know, part of it
Speaker 6: diversifying its revenue streams and being able to monetize AR
Speaker 6: outside of its core Snapchat platform.
Speaker 2: All about the monetization Jasmine Great hasent time with the
Speaker 2: jasmin Enberg of insider intelligence from Snap to Pinterest. Let's
Speaker 2: have a look at how those shares perform, because we
Speaker 2: know that it's under pressure. We know that it's more
Speaker 2: perhaps about the lack of cost cutting going on to
Speaker 2: that particular business right now. Tom Forte, DA Davidson's senior
Speaker 2: research analyst who has a neutral rating on the stock.
Speaker 2: I understand, and you're sticking with a twenty two dollar
Speaker 2: price target even though we're still seeing sort of the
Speaker 2: pain trade that is the restructuring going on.
Speaker 7: Sure, so I think I lowered my price target by
Speaker 7: a dollar.
Speaker 8: To twenty two, and I think the good news is
Speaker 8: that pinterest has made strides and engagement. They found an
Speaker 8: interesting way to solve their monetization in e commerce by
Speaker 8: partnering with Amazon. The bad news, and what I think
Speaker 8: is weighing on the shares in addition to year of
Speaker 8: comments on cost pressure, is that their sales expectations for
Speaker 8: the June quarter suggests.
Speaker 7: They were lower than expected.
Speaker 8: So the digital ad market, when you look at Snapchat,
Speaker 8: when you look at pinterest, it's still challenging out there.
Speaker 5: Hey Tom.
Speaker 3: When we look at pinterest, when you think video and
Speaker 3: the emphasis from its pays, then you think about artificial intelligence.
Speaker 3: There seems to be a narrative in the market that
Speaker 3: pinterest is at risk of being left behind. Do you
Speaker 3: share that concern?
Speaker 8: I do not to the extent that if you say
Speaker 8: that Pinterest's functionality is as a visual social network an
Speaker 8: excellent place to view for example, kitchens if you're thinking
Speaker 8: about doing a kitchen remodel, or a parel if you're
Speaker 8: thinking about buying new clothes. I do think that they
Speaker 8: leverage artificial intelligence to the extent that they use artificial
Speaker 8: intelligence to find more things that you might be interested
Speaker 8: in based.
Speaker 7: On what you've looked at so far. So I'm not
Speaker 7: overly concerned about it being left behind.
Speaker 2: No what therefore can Pinterest run home to the investor
Speaker 2: base right now? About how close it is to actual
Speaker 2: people making investment purchase decisions. How can they continue to
Speaker 2: ultimately be a need to have for many of these
Speaker 2: companies looking to advertise a little bit closer.
Speaker 8: So here's where Amazon comes in from an advertising standpoint.
Speaker 7: So to the extent that they're going to work.
Speaker 8: With Amazon to improve their advertising and e commerce make
Speaker 8: it easier for consumers to find things on Pinterest, to
Speaker 8: find ads on Pinterest, to click on those ads and
Speaker 8: buy them with Amazon. I think that's going to help
Speaker 8: Pinterest over the next twelve to eighteen months. And the
Speaker 8: challenge for everyone not named meta platforms is monetization. Pinterest
Speaker 8: has a large global user based for under ninety three
Speaker 8: million monthly active users, but they need to improve their
Speaker 8: MATIZI and I think over time that ad advertising effort
Speaker 8: with Amazon can help.
Speaker 3: It's on forte DA Davidson, thank you so much. Intel
Speaker 3: shares pushing higher after chipmaker projected a return to free
Speaker 3: cash flow in the second half of the year, with
Speaker 3: analysts saying the worst now may be over for the company.
Speaker 3: Moments ago, I sat down with Intel CEO Patal Singer.
Speaker 5: Have listen.
Speaker 9: You know, the second half in our industry is typically
Speaker 9: stronger than the first half, and we expect that to
Speaker 9: be the case your second You know, a lot of
Speaker 9: inventory adjustments are occurring in the first half of the year,
Speaker 9: and particularly we see those finished in the client the
Speaker 9: PC industry, but we're also seeing progress through our networking
Speaker 9: and data center and cloud business as well, so improving
Speaker 9: inventory position, and you know that's very typical of the industry.
Speaker 9: You go through a sharp decline, you have inventory, a
Speaker 9: lot of fixed costs, and then you gradually work through that.
Speaker 9: So we see that as the second factor. But the
Speaker 9: third one is an improving product position that improves our
Speaker 9: market share overall, and that I think in particular you're
Speaker 9: our data center business in particular, we're seeing Q one
Speaker 9: as a turning point where a stronger product line the
Speaker 9: market is looking at you know what we're saying for
Speaker 9: our process and product and saying, boy, that's a little
Speaker 9: bit better than we were expecting. So seeing some of
Speaker 9: those positive green shoots, and maybe finally, you know, at
Speaker 9: least parts of the world, China clearly is showing some
Speaker 9: economic strength as well, so hopefully some economic green shoots
Speaker 9: in the second half as well.
Speaker 3: The turning point idea is really interesting. There's a number
Speaker 3: of analysts that say Intel has hit its troth essentially
Speaker 3: when they look at margins and top line growth. Is
Speaker 3: Intel in its trough coming out of its trough?
Speaker 9: To your mind, well, you know, we guided Q two
Speaker 9: better than Q one, and we expect second half to
Speaker 9: be stronger than that. So clearly from a top line
Speaker 9: growth perspective, but also from a margin perspective, you know,
Speaker 9: we expect that we're so margins in Q two, but
Speaker 9: improving as we go through the years. We get out
Speaker 9: of the thirties and back into comfortably into the forties
Speaker 9: as we go through the year. So an improving position
Speaker 9: on margins and an improving position then on the bottom
Speaker 9: line as we go through the year. So clearly, you know,
Speaker 9: we're seeing that momentum, but I'd also say there's a
Speaker 9: lot of turbulence macroeconomic uncertainty, so it also requires a
Speaker 9: lot of execution and financial discipline, which we demonstrated in
Speaker 9: Q one. So overall, I think the company is doing
Speaker 9: what I've asked them to do, to be very thoughtful
Speaker 9: with how we spend, but execute, execute, execute, product process,
Speaker 9: new areas like foundry, all of those gaining momentum as
Speaker 9: we go through the year.
Speaker 3: Intel CEO Pat Gelsinger there, Caroline.
Speaker 2: Really fascinating conversation overall, and the focus on chips, which
Speaker 2: of course we know have been a bit of a laggot.
Speaker 2: Over the course of the week, we've got to dig
Speaker 2: in a little bit more about Intel's earnings and the
Speaker 2: chip sector more broadly, bringing Bloomberg Intelligences, man needs sing
Speaker 2: what do you make of some studying? Is the worst
Speaker 2: behind us? To that extent, I think it.
Speaker 10: Was interesting that they said that the PC market is
Speaker 10: stabilizing and they call for two hundred and seventy million
Speaker 10: units for the year.
Speaker 7: My sense is, you know, the inventory.
Speaker 10: Situation is still not clear in terms of you know,
Speaker 10: the channel inventory clearing they sounded a lot more optimistic,
Speaker 10: So you have to take the word because Intel is
Speaker 10: the largest player. And look, on the client side, they
Speaker 10: have less of competitive issues than on the data center side,
Speaker 10: where we know the demand is high for high performance
Speaker 10: computing chips. We've seen expectations for Nvidia. So clearly Intel
Speaker 10: has more secular headbinds to deal with on the data
Speaker 10: center side. The client side will be cyclical, whether it
Speaker 10: comes back in the second half or it takes two
Speaker 10: or three more quarters.
Speaker 1: I think we.
Speaker 5: Still have to figure that part out.
Speaker 3: Yeah, I think he said he was confident the inventory
Speaker 3: would be corrected, it would be completed, though he didn't
Speaker 3: say when you know, relatively. Pat's trying to sell this
Speaker 3: story right, mandate that Intel can return to being a
Speaker 3: technological leader. Do you see evidence that he is managing
Speaker 3: that process well while also sort of catching up on
Speaker 3: the day to day of running a chip company.
Speaker 10: I mean, look, turn around stories in tech are tough,
Speaker 10: and look, he has a very tough hand in this quorder.
Speaker 10: Intel actually had negative nine billion dollars in free cash flow,
Speaker 10: so that just goes to show what he is dealing
Speaker 10: with in terms of, you know, the fab aspect of
Speaker 10: it catching up to TSMC and really kind of dealing
Speaker 10: with the data center headminds that I alluded to before.
Speaker 10: A lot I think depends on the government and the
Speaker 10: Chips Act, because that's where things can be supported, you know,
Speaker 10: in terms of driving more onshore manufacturing of chips, and
Speaker 10: that's where the free cash flow headminds can be eased,
Speaker 10: and you know, it can be more kind of dealt
Speaker 10: with down the line as opposed to, you know, convincing
Speaker 10: investor that Intel won't keep losing money for the next
Speaker 10: two three years.
Speaker 3: Caroline, as you can imagine, I couldn't resist the temptation,
Speaker 3: and I asked, we asked a question about artificial intelligence.
Speaker 2: Yeah, and it seems as though that's got to be
Speaker 2: an area they focus on. I mean, Amandie your point
Speaker 2: that we're looking at Amazon developing chips to help with
Speaker 2: that sort of capacity that computer needed with generative AI.
Speaker 2: Is this something that Intel just has to be a
Speaker 2: part of and are they a significant part of it?
Speaker 10: And that's the challenge, right, So the hyperscalers all want
Speaker 10: to do their own chips. I mean, Google is doing
Speaker 10: their own TPUs, Amazon the Graviton, and Microsoft has I
Speaker 10: think There'll been rumors that they're doing their own chips.
Speaker 10: So that's the challenge for somebody like Intel, which is
Speaker 10: the leading market share leader when it comes to you know,
Speaker 10: the data center chips, and now they are partnering with ARM.
Speaker 10: I mean, we know Intel is eighty six, and so
Speaker 10: it's not very clear whether they have that you know
Speaker 10: technology parac with PSMC now to really get more enterprises
Speaker 10: at least in terms of joining you know, the AI
Speaker 10: side of things. And in Vidia at the same time
Speaker 10: is running away with that market.
Speaker 7: AMD is doing well.
Speaker 10: So clearly a lot of competitive pressure and there aren't
Speaker 10: enough foll points in terms of you know, uh manufacturing
Speaker 10: coming back. That's where the government supports is key and yeah,
Speaker 10: they have to start showing that in bad manufacturing.
Speaker 2: So take us there the bait you laid in. What
Speaker 2: did he say in terms of AI?
Speaker 3: So Mandy's flat was really interesting because he was pretty
Speaker 3: committed to competing with Nvidia those high of higher endgpus
Speaker 3: for the deep learning part. But really where Intel's looking
Speaker 3: man Deepa's inference right, they have a range of CPU
Speaker 3: and GPU products that they think can compete there. Just
Speaker 3: so what you said about the chips ACT. Pat seems
Speaker 3: confident that those dollars flow through this year. How crucial
Speaker 3: is it to then to get that public sector money
Speaker 3: to drive that vision that Pat has.
Speaker 10: Yeah, look, I think that is key because the more
Speaker 10: these tabs are underutilized, it's going to.
Speaker 1: Be a drag on the gross margin.
Speaker 10: And we've seen that fifteen percentage points in gross margin
Speaker 10: compression in the last two three quarters. Guess what. The
Speaker 10: more lower utilization for these fabs, it's going to continue
Speaker 10: to pressure THATAB. So if he gets that funding and
Speaker 10: if he gets something tangible from the Chips ACT, I
Speaker 10: think that will certainly is that pressure.
Speaker 1: And also the inference market.
Speaker 10: Is sort of running away from them because Apple does
Speaker 10: its own chips for its PCs and max. That's where
Speaker 10: a lot of infrints will also happen. So Intel really
Speaker 10: wants to make sure that you know the x eighty
Speaker 10: six ecosystem, the Windows ecosystem stays with them on the
Speaker 10: client side.
Speaker 2: Always great to have some time with you of Freebag Intelligence.
Speaker 2: The one and only man leaps saying, one of the
Speaker 2: busiest people in this building. Mean while coming up, we've
Speaker 2: got to talk about that bitcoin scam, a Moonland, a
Speaker 2: craft so much more, but it all coming up and
Speaker 2: talking tech that's next, and this is Blomberg.
Speaker 3: Time for talking tech. A US jarge ordered a South
Speaker 3: African executive to pay more than three point four billion
Speaker 3: dollars in restitution and fines for a fraud scheme involving bitcoin,
Speaker 3: which impacted more than twenty three thousand people in the US.
Speaker 3: This is the highest ever civil monetary penalty in any
Speaker 3: CFTC case. Ice Faces Moonlander crash is now wiped out
Speaker 3: about six hundred million dollars, almost half of the Tokyo
Speaker 3: based startups value of shares slumping for a third straight session,
Speaker 3: and Sony casting doubt on its PlayStation momentum. The company
Speaker 3: offered a pretty conservative profit outlook after warning about the
Speaker 3: impact of the global consumer spending slump on its electronics
Speaker 3: and entertainment business. And finally, Baine Capital has built a
Speaker 3: stake in Software Ag, raising the prospect of a takeover
Speaker 3: battle for the German company that, according to sources, the
Speaker 3: firms areying a potential merger with its own portfolio firm,
Speaker 3: Rocket Software.
Speaker 2: Welcome back to Bloomerg Technology. I'm Paralyine Hyde in New York.
Speaker 3: And Amed Lovelow in San Francisco. It's the final trading day,
Speaker 3: Caroline of April, so I thought I get some scores
Speaker 3: on the doors in terms of where we're at. Now's
Speaker 3: that one hundred out performance, right, We're up four and
Speaker 3: a half percent relative to sort of other specific areas
Speaker 3: of the technology space, the Philadelphia Semiconductor Index being one
Speaker 3: laggage you talked about earlier in the show. It's been
Speaker 3: a really interesting month because of the banking concerns that
Speaker 3: we've had, but then a really condensed period of earnings
Speaker 3: in the final sort of ten days of April when
Speaker 3: it comes to the technology sector, and honestly, it's been
Speaker 3: a real mixed bag. I think you and I can
Speaker 3: talk about that on our Twitter spaces later. On Megacap's
Speaker 3: NYC Fangpus index, you also have some of the US
Speaker 3: listed shares of Chinese tech companies sprinkled in there. Speaking
Speaker 3: of which, then there's that Gorden Dragon index is a
Speaker 3: clear laggard in the month of April, and you and
Speaker 3: I have been talking about how geopolitical concerns have ramped
Speaker 3: up in that period between the US and China. In
Speaker 3: the moment during Friday session, Cloud is a big concern.
Speaker 3: We've been talking about how Amazon is down because of
Speaker 3: their commentary around the sequential decline in growth at AWS,
Speaker 3: but take a look at cloud Flare. That is a big,
Speaker 3: big drop for that name all cloud related. There are
Speaker 3: concerns about growth, concerns about structural issues one name that
Speaker 3: we don't often cover, but that is a pretty steep drop.
Speaker 2: Talking of steep drops, let's get straight to it. When
Speaker 2: we're talking about the banking sector. And because US officials
Speaker 2: are reportedly in talks with government agencies to throw First
Speaker 2: republic banker lifeline, now, the San Francisco based lender has
Speaker 2: really struggled to navigate through the aftermath of failed Silicon
Speaker 2: Valley Bank and to other regional lenders. In March, for
Speaker 2: more on this, we turned to Lumnus Wall Street reporter
Speaker 2: Schnarali Bassak, who has been I'm sure of all the
Speaker 2: volatility in the name, the pausing that we're seeing, what's the.
Speaker 11: Latest beyond that in the center of a lurry of
Speaker 11: telephone calls as well. Remember is we describe the situation,
Speaker 11: it is a live situation and can best be described
Speaker 11: as a frenzied last minute effort to save the bank.
Speaker 11: Now whether it falls into FDIC receivership. Now there's a
Speaker 11: sense for the last couple of days that this could
Speaker 11: continue to limp along as a bank with a clear
Speaker 11: hole in its balance sheet. However, at this point, remember
Speaker 11: we have reported a few times now that some of
Speaker 11: the banks that were involved in the rescue actually even
Speaker 11: prefer an FDIC receivership in some manners. Here now, remember
Speaker 11: there's another thing about the FDIC receivership. The FDIC, the
Speaker 11: deposit fund has already taken a massive hit of more
Speaker 11: than twenty two billion dollars here are tied to the
Speaker 11: rescue of two prior banks to fail banks that is
Speaker 11: Silicon Valley Bank as well as Signature Bank. So this
Speaker 11: kind of a hole is a thirty billion dollar hole
Speaker 11: or and then some. I mean, the exact amount is
Speaker 11: not quite understood, but it is a large one. So
Speaker 11: no matter what happens to this bank, it is a
Speaker 11: costly situation for the banks that are in and around
Speaker 11: the situation already, the government itself, and of course for
Speaker 11: the shareholders that are remaining for FRC.
Speaker 3: I think the idea SNALI is that investors are struggling
Speaker 3: to understand what of the many possible scenarios is most
Speaker 3: likely to happen. This talk in the market that now
Speaker 3: a US takeover is the most likely outcome.
Speaker 11: Listen, and that's what I was trying to convey here.
Speaker 11: This is very much a search for things to come
Speaker 11: together here. Now, getting a consortium of people together is
Speaker 11: a difficult thing to do. And remember we've reported multiple
Speaker 11: times here at as well that the government would need
Speaker 11: to be involved in such a manner and pony up
Speaker 11: a little bit here under the FDS receivership plan. The
Speaker 11: issue here is which is a more costly solution. The FDIC,
Speaker 11: as we've been saying, would take another massive hit here IFFRC,
Speaker 11: we're supposed to fall under receivership. So yes, the market
Speaker 11: is trying to set us out to your point, the
Speaker 11: most likely outcomes here, Again, this is not you cannot
Speaker 11: say that this bank will necessarily fail. It's not to
Speaker 11: that point yet, but it is possible that it does
Speaker 11: get to that point in some scenario if they don't
Speaker 11: find a solution.
Speaker 3: All right, Bloombergshnili Bassi, you've earned your weekend alongside Man
Speaker 3: Deep singer bi Off. You go go and have some fun.
Speaker 3: Let's pivot a little bit Can AI replace our jobs?
Speaker 3: That is a question Caroline and I have been asking
Speaker 3: quite a lot recently the rise of generature of AI.
Speaker 3: It may not expect to impact all jobs in the
Speaker 3: same way uniformly, but there's going to be an impact
Speaker 3: on hiring and managing in the workplace at large. That's
Speaker 3: according to the CEO of People Management Software Lattice. Jack
Speaker 3: Oltman is here with me. Now, how many times a
Speaker 3: day internally do you say the words artificial intelligence? Or
Speaker 3: are you already sick of it? Because actually you've been
Speaker 3: doing it for a while.
Speaker 12: Now.
Speaker 5: First of all, thanks for having me. I don't get
Speaker 5: sick of it.
Speaker 13: I think it is like the most important topic in
Speaker 13: tech right now. I think they're is still a lot
Speaker 13: to be understood, but I think we're already seeing a
Speaker 13: lot of ways in which AI is starting to impact companies,
Speaker 13: individuals productivity. So I think, finally, after many many years
Speaker 13: of people anticipating this with beta breath, we're we're here
Speaker 13: and we're seeing a lot of the impacts, and so
Speaker 13: it's super exciting.
Speaker 1: Not sick of it.
Speaker 3: LA's this is a really interesting example.
Speaker 1: Jack.
Speaker 3: You know you had a billion dollar valuation twenty twenty
Speaker 3: one raise new funds the beginning of the year three
Speaker 3: billion dollar valuation. But you're kind of a key example
Speaker 3: of where AI tools can be applied in enterprise and SaaS.
Speaker 3: Why is that such a good marriage?
Speaker 13: So the way I've been thinking about large language models,
Speaker 13: which is sort of the thrust of what's been happening
Speaker 13: in the last couple quarters in AI, is kind of
Speaker 13: like what calculators did for Math. I believe large language
Speaker 13: models are going to do in many ways for things
Speaker 13: like reading and writing. So they're going to make people
Speaker 13: much more readily able to digest and comprehend and text
Speaker 13: and information. We're going to be able to help people
Speaker 13: draft concepts, so like, for example, in a Lattice world
Speaker 13: where people are doing lots of writing around performance reviews
Speaker 13: or goals or feedback. There's a lot of ways in
Speaker 13: which AI can help people get to good answers more
Speaker 13: quickly and get to good content more quickly. But I
Speaker 13: see this as boosters for people, and the way that
Speaker 13: calculators did for Math, I see that happening for reading
Speaker 13: and writing, and so for companies like Lattis, but for
Speaker 13: tons of enterprise software, I think this is going to
Speaker 13: be one of the ways in which we see AI
Speaker 13: really help people.
Speaker 2: Jack. Of course, your entire business is HR tools is
Speaker 2: efficiency as culture in many ways, and I know you've
Speaker 2: personally had to navigate that in januarly having to let
Speaker 2: go of people within your team and trying to think
Speaker 2: about how you can support them. Is Ultimately this general
Speaker 2: of AI and AI going to mean more people get
Speaker 2: let go because they can be replaced in some.
Speaker 13: Way, sort of like you mentioned at the beginning, We're
Speaker 13: definitely going to see different industries and roles be impacted
Speaker 13: in different it is. But in my view, it's most
Speaker 13: likely that AI is not going to reduce the demand
Speaker 13: for labor. I think it's going to increase the demand
Speaker 13: for labor. Generally, what we see when any asset in
Speaker 13: the economy becomes more productive is there's more demand for it.
Speaker 13: So if a software engineer becomes three times more productive
Speaker 13: as a result all of AI supporting them, more companies
Speaker 13: are going to want to hire that person because they're
Speaker 13: going to be able to produce so much more. So,
Speaker 13: in my view, the lens should be that we're going
Speaker 13: to become so much more productive and therefore there's going
Speaker 13: to be much more demand for labor from companies thinking.
Speaker 2: About lenses and AI is something that you're doing a
Speaker 2: lot of your brother's doing a lot of of course,
Speaker 2: in any way, some altman who I know you've built
Speaker 2: businesses with, you live with previously, he's at the cutting
Speaker 2: edge of where we think ethically general to AI can
Speaker 2: be built. Do you are you on the optimistic side?
Speaker 2: Are you thinking in general that we can harness the
Speaker 2: productivity and we're not going to have some of the
Speaker 2: worries about regulation this, or that it's developing just too
Speaker 2: swiftly for humans.
Speaker 13: I am optimistic about it. I do tend to believe
Speaker 13: that it is going to be wildly exciting and positive
Speaker 13: for humanity. I think it is something that is extremely potent,
Speaker 13: and so I think it is really smart to be
Speaker 13: paying a lot of attention. I do think it's something
Speaker 13: that requires quite a bit of care and attention. But
Speaker 13: that's why I think having companies with thoughtful leaders who
Speaker 13: want to really invest into AI safety and making sure
Speaker 13: that we're testing things before we release them to the world,
Speaker 13: and that we're working hard on alignment. I think those
Speaker 13: things are critical. But the way I see it, this
Speaker 13: has got the potential to be one of the most
Speaker 13: amazing things for humanity, and so I think investing in
Speaker 13: it hopefully optimistically, with a lot of conviction and desire
Speaker 13: to build that kind of world, it is the right mindset.
Speaker 13: But of course, you know, being careful because this is
Speaker 13: such a potent technology. I think that really matters.
Speaker 3: Jack. Founders all across the country are considering how they
Speaker 3: can become relevant or not miss the opportunity that AI presents.
Speaker 3: And that's just one fact. I know you've been tweeting
Speaker 3: about things that founders have been getting wrong. How hard
Speaker 3: is it out there right now? Is really the question?
Speaker 3: You know, you raised more money at the start of
Speaker 3: the year at a significantly high evaluation at a time
Speaker 3: where others were doing the opposite down rounds.
Speaker 13: Yeah, I think it is a It is a challenging
Speaker 13: time for founders in some sense relative to the last
Speaker 13: couple of years, you know, separate from this whole AI acceleration,
Speaker 13: which is incredibly exciting. On a completely unrelated path, we've
Speaker 13: had this real economically challenging time for tech and specific
Speaker 13: we've seen this happen. As you know, you've covered extremely
Speaker 13: well tech stocks in the public markets have really suffered
Speaker 13: for a lot of reasons, and that's led to hard
Speaker 13: times for startups. And so you have two things going
Speaker 13: on here se, which is that the world of investing
Speaker 13: and raising capital for startups has really changed. But we
Speaker 13: have this really exciting platform shift in a new technology
Speaker 13: being developed around AI, and we're seeing more and more
Speaker 13: startups be built with these concepts in mind. I don't think,
Speaker 13: you know, most startups should say AI is an entire
Speaker 13: concept for building a new company. But any idea that
Speaker 13: you had two years ago, I think can now you
Speaker 13: can re ask the question, in what ways does AI
Speaker 13: help us solve this problem for customers? You know, it's
Speaker 13: sort of a misunderstanding of the moment to say I'm
Speaker 13: going to build AI and we'll see what happens. I
Speaker 13: think you still need to build companies rooted in solving
Speaker 13: real problems to real people. But AI is this technology
Speaker 13: that can really help in a lot of in a
Speaker 13: surprisingly large number of cases.
Speaker 2: And let's talk about the problems that Lattice is solving,
Speaker 2: and it's trying to make people more efficient, particularly in
Speaker 2: working smoother, being more productive, ensuring that your workflow becomes
Speaker 2: one that you get feedback more efficiently. About are people
Speaker 2: wanting that at the moment you had five thousand customers,
Speaker 2: is that still building in this environment?
Speaker 1: Yeah? I mean I think what people want.
Speaker 13: There are things that individuals want and that companies want,
Speaker 13: and I think there is a deep alignment when management
Speaker 13: has done really well. And so I think what individuals
Speaker 13: want is they want a sense of impact. They want
Speaker 13: to understand that their company and their manager cares about them.
Speaker 13: They want to be part of a team doing something important,
Speaker 13: and they want to know how they're going to be
Speaker 13: able to grow. What companies want is to build strong
Speaker 13: cultures of people who are going to be well equipped
Speaker 13: to do great things and drive the business forward. And
Speaker 13: so I think what Lattice strives to be is this
Speaker 13: intersection of those where you find that individual and company
Speaker 13: alignment to such a degree where those things are incredibly
Speaker 13: in harmony. And so I think whether we are in
Speaker 13: the sort of boon times of twenty twenty one or
Speaker 13: the new sort of paradigm of twenty twenty three, I
Speaker 13: think those principles hold no matter what. And so I think,
Speaker 13: you know, for Lattice, just finding the ways to do
Speaker 13: that for customers is still the north star.
Speaker 2: See you have of Lattice. Thank you, Jack Altman, I
Speaker 2: appreciate the time. Meanwhile, coming up, well, we've got to
Speaker 2: talk more about AI in all sorts of manners. Wing
Speaker 2: Venture Capital has actually just been backing a new AI startup,
Speaker 2: Pine Code. It's actually New York based, valued at seven
Speaker 2: hundred and fifty million dollars. Now we're on that next.
Speaker 2: This is a Bloomberg.
Speaker 3: We were just talking about generative AI and its impact
Speaker 3: on the workplace. We've been talking about generative AI and
Speaker 3: the arms race going on in tech all week because
Speaker 3: at the core of earnings was artificial intelligence. Speaking of
Speaker 3: some of the big players that reported numbers, we asked
Speaker 3: our audience, Caro, who's.
Speaker 5: Won for you?
Speaker 3: Who, to your mind, has made the most convincing case
Speaker 3: that they're leading in AI. Those answers speak for themselves.
Speaker 2: They do. Clearly Microsoft, with their tie up being integrating
Speaker 2: open AI's chatchipt for the fact that they're managing to
Speaker 2: brag ed about a quadrupling in app downloads that they've had.
Speaker 2: Clearly sat In Adela has stall in the march on
Speaker 2: this one. I mean, what was it? Overall? Though more
Speaker 2: than two hundred times AI was mentioned in these earnings
Speaker 2: calls this week alone, so they're all trying to really
Speaker 2: still a little bit of the line. Like Meta, I
Speaker 2: think did a pretty good job on it.
Speaker 3: Two, Yeah, I did, And I did account on the
Speaker 3: blogs of how many times AI was mentioned in each
Speaker 3: earning's press release, because that's the kind of guy I am.
Speaker 3: Amazon's going to feel agreed by those results, though we'll
Speaker 3: come back to that. So, speaking of AI, pine Cone,
Speaker 3: the startup whose platform supports AI software, just raised one
Speaker 3: hundred million dollars in a funding round that values the
Speaker 3: company at around seven hundred and fifty million dollars. The
Speaker 3: round led by Andres and Horowitz, with participation from existing
Speaker 3: investors Menlo Ventures and Wing Venture Capital. So it's bringing
Speaker 3: Wing Venture partner Jake Flumenberg for more the round, the timing,
Speaker 3: the valuation, explain you'll rationale behind getting involved.
Speaker 5: Sure, well, thank you for having me on the show.
Speaker 14: We've been involved with this company for a long time,
Speaker 14: certainly before the rapid adoption that we've seen as of late,
Speaker 14: and it fundamentally has to do with the types of
Speaker 14: things that you need for machine learning. Most relational databases,
Speaker 14: most data warehouses, they need just data that most people
Speaker 14: understand numbers, texts, things like this.
Speaker 5: Machine learning algorithms operate on vectors, embeddings.
Speaker 14: This is a different type of data that needs a
Speaker 14: different type of database. And so if you're building a
Speaker 14: generative AI startup or a generative AI application and you
Speaker 14: want to marry that with your own company's data, or
Speaker 14: if you want to remember things from one one question
Speaker 14: to the next, you need a vector database like incomb
Speaker 14: And so with the rise of all these generative AI applications,
Speaker 14: we're seeing more and more people adopt Mincombe. Pine Cone
Speaker 14: is still a really early company. Oh, public market metric
Speaker 14: is going to say, you know, justify this valuation.
Speaker 5: This is a valuation that's based off of the potential.
Speaker 14: If this is the database for AI, that's a tremendous
Speaker 14: opportunity going for.
Speaker 2: New York based company. Jake. What's really interesting about your
Speaker 2: background and the fact that you've been investing these sorts
Speaker 2: of companies for a while now, including pine Cone, is
Speaker 2: you're trying to have an expertise about how you operationalize AI.
Speaker 2: And this is kind of at the core of all
Speaker 2: of our conversations. Everyone's trying to work out where and
Speaker 2: sort of the stack is the most value to be had.
Speaker 2: You about infrastructure, Are you about big companies applying AI?
Speaker 2: Where do you lie in terms of where the most
Speaker 2: disruption will be?
Speaker 14: Yeah, I mean, well, we invest in early stage companies
Speaker 14: and so we're certainly believers that they're going to have
Speaker 14: an outsized portion of the returns.
Speaker 5: But we invest up and down the stack.
Speaker 14: We've made investments in semiconductor companies, and certainly the first
Speaker 14: group of companies are the core infrastructure.
Speaker 5: Then you see the cloud vendors.
Speaker 14: That are making money hosting some of these foundation in
Speaker 14: large language models and in the limit. A lot of
Speaker 14: these things are going to be new pieces of infrastructure,
Speaker 14: and just the way we turn to the cloud vendors
Speaker 14: you mentioned, we're going to turn to these AI foundation
Speaker 14: model vendors for some of that technology, and some of
Speaker 14: them are partnering up. But we're most excited about the
Speaker 14: applications on top because there'll be a few winners in
Speaker 14: each of those lower levels, but there'll be hundreds, if
Speaker 14: not thousands of opportunities to build interesting applications powered by AI.
Speaker 3: Jake, I'm hearing a lot of companies as similar size
Speaker 3: to pine Cone are trying to get rounds done. You know,
Speaker 3: early through growth stage. How wary are you all of
Speaker 3: open ai because open ai also has a small fund
Speaker 3: that it's investing across startups in AI and those that's
Speaker 3: deploying its own technology.
Speaker 14: Yeah, I would say we're not worried at all about
Speaker 14: open ai as a source of venture capital. There's lots
Speaker 14: and lots of dollars and certainly open ai has a
Speaker 14: bunch of things that can bring to bear. But we
Speaker 14: were with companies at the really early stages on that
Speaker 14: journey from zero to partner market fit, which is a
Speaker 14: really hands on endeavor that takes a lot of time
Speaker 14: and energy, and I think there's a role for people
Speaker 14: that have.
Speaker 5: Been doing that for a long time.
Speaker 14: In terms of open Ai as a competitor, absolutely, you know,
Speaker 14: as a competitor it's something to watch. But it's just
Speaker 14: like the cloud vendor landscape. We don't think it's going
Speaker 14: to be a winner take all. We do think it's
Speaker 14: going to settle into a small number of larger foundation
Speaker 14: model players and we're going to use them as infrastructure.
Speaker 5: So they're a building block, they're an enabler.
Speaker 2: Well, you're someone who's had leadership roles that it's cloud era,
Speaker 2: so got a lot of experience from software to the
Speaker 2: AI journey. We thank you so much. We venture capital
Speaker 2: partner Jake Flumenberg, great to have you. From Cochella live
Speaker 2: stream to having influences belled out the hottest viral song
Speaker 2: on a short YouTube. It seems to always be looking
Speaker 2: for new innovative ways to bring music to the masses,
Speaker 2: despite some pretty tough competition in the digital space. Neil
Speaker 2: Cohen YouTube Global had of Music speak to us Ana.
Speaker 12: We're a global platform and we're focused on Our mission
Speaker 12: is give everybody a voice and show them the world.
Speaker 1: And boy of we've done that. We have gone from.
Speaker 12: Three stages where we live stream to six stages.
Speaker 1: We've introduced shorts.
Speaker 12: As a really fun way for the kids to suggest
Speaker 12: their favorite artists to do some of their songs that
Speaker 12: they want, and so they're influencing the sets they are
Speaker 12: able to be and create lightweight short form video to
Speaker 12: explain to the rest of the world that they were there,
Speaker 12: they were enjoyed the experience, whether they were at Coachella
Speaker 12: or experiencing from their living room.
Speaker 1: We introduced for this.
Speaker 12: It's actually the second year where shopping has been an
Speaker 12: integral part of the experience where kids are able to
Speaker 12: buy merchandise and you know, rock their t shirts that
Speaker 12: they were there, that they experienced it. And of course
Speaker 12: the production has gotten so much better, and we introduced
Speaker 12: live chats and and so there's a lot of work
Speaker 12: that goes into it, but it's been incredibly fun and enjoyable.
Speaker 2: Tell us about the international focus, but this was interesting
Speaker 2: about the lineup of Coachella this year was, Yes, there
Speaker 2: were the big American artists, but I'm also thinking Black Pink,
Speaker 2: I'm thinking Bad Bunny, these truly international stars. So how
Speaker 2: much was the viewership coming internationally?
Speaker 12: Well over sixty five percent of viewership came from outside
Speaker 12: of America. And when the fans are able to experience
Speaker 12: Nigerian Burner Boy, Korean Black Pink, and I don't know
Speaker 12: if you saw, but Rosalia shut the place down. She's
Speaker 12: from Spain and was one of the most moving performances.
Speaker 12: And we had the first Punjabi artist perform and they're
Speaker 12: celebrating in India the fact that they have an Indian
Speaker 12: Pujabi artist on Coachella, and it's just fabulous to see.
Speaker 2: Leo Cohen there, global head of Music at YouTube now
Speaker 2: ed but He's sort of like the man almost that
Speaker 2: helped drive the birth of hip hop. He was there
Speaker 2: and unsigned Rumdiancy. He can see around corners. What's interesting
Speaker 2: is pretty optimist about AI's impact on music.
Speaker 3: Yeah, you and I grew up in the MTV era, right,
Speaker 3: video and music? How do you push it forward? It
Speaker 3: is so fascinating.
Speaker 2: Yeah, his artists don't seem to be worried about official
Speaker 2: intelligency in their lunch for now. That does it for
Speaker 2: this edition of Bloomberg Technology.
Speaker 3: Yet, such a huge week, so much recap, So don't
Speaker 3: forget the podcast, Apple, Spotify, iHeart Bloomberg. Join us on
Speaker 3: Twitter spaces right now on Twitter, This is Bloomberg