WEBVTT - Spotify Layoffs, Crypto Rally and Defense Tech

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<v Speaker 1>From Marhart where Innovation, Money and Power.

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<v Speaker 2>Collie in Silicon Valley, NBN.

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<v Speaker 3>This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.

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<v Speaker 4>And Caroline Heinder Bloomberg's world headquarters in New York and

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<v Speaker 4>I'm d Ludlow in San Francisco.

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<v Speaker 2>This is Bloomberg Technology coming up.

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<v Speaker 4>Look Spotify it slashes its workforce by seventeen percent. Is

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<v Speaker 4>amit the company's steepest job cuts this year. Will break

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<v Speaker 4>down the streaming services, push to costs and drive profitability.

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<v Speaker 2>Plus, the crypto rally gains steam as Bitcoin tops forty

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<v Speaker 2>two thousand US dollars for the first time since April

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<v Speaker 2>of twenty twenty two. We'll discuss what it means for

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<v Speaker 2>the digital currency ecosystem in today's VC Spotlight, and.

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<v Speaker 4>We sit down with the oculist creator Palmer Lucky as

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<v Speaker 4>his defence technology startup, Andreill veils a tiny, reusable fighter

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<v Speaker 4>jet to blow up drones. All that and so much

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<v Speaker 4>more ahead, let's get into these markets. Look, we are

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<v Speaker 4>in sell off mode. We're just hearing from Guy and

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<v Speaker 4>Alex that basically we're just getting back to the levels

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<v Speaker 4>we're out on Thursday. Such has been the drive higher

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<v Speaker 4>in risk assets of late, we're off by one point

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<v Speaker 4>one percent. Now we know mainly just reassessing how much

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<v Speaker 4>we've a run up already, but also really with the

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<v Speaker 4>direction of travel for the Federal Reserve and a lot

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<v Speaker 4>of the jobs data that.

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<v Speaker 2>We're learning this week.

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<v Speaker 4>Two year yield currently up by some ten basis points,

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<v Speaker 4>so clearly seeing a sell off in bonds and stocks

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<v Speaker 4>Blue mug Donar Index on the higher side by some

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<v Speaker 4>five ten percent. After we've seen such weakness in the

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<v Speaker 4>US dollars so far this year, let's move on because

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<v Speaker 4>the strength of the US dollar not out matching the

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<v Speaker 4>strength in bitcoin and ED. We're going to dwell on

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<v Speaker 4>this a little bit later in the show much more.

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<v Speaker 4>But the fact that we are now piercing above forty

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<v Speaker 4>two thousand at one point in earlier training, now at

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<v Speaker 4>forty one and a half thousand, let's call it. We

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<v Speaker 4>know the driving force behind all of this. Will we

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<v Speaker 4>get in spot bitcoin ETF come January? Will, of course

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<v Speaker 4>the harving process next year draw demand yet further, But

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<v Speaker 4>ultimately this is about risk asset demand as well, isn't it.

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<v Speaker 2>Yeah, we call it our risk asset of choice, and

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<v Speaker 2>it's interesting that on days like today, where equities are

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<v Speaker 2>broadly lower, bitcoin is higher, but so are crypto related stocks.

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<v Speaker 2>And I guess that there are two rationales, right. It's

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<v Speaker 2>a proxy for Wall Street to get some exposure to

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<v Speaker 2>cryptocurrencies like bitcoin without investing in them directly by investing

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<v Speaker 2>in stocks that are relevant to it. Or the other

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<v Speaker 2>way of looking at it that if the thing that

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<v Speaker 2>is important to these equities does well, in this case bitcoin,

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<v Speaker 2>then they do well as well. And you are seing

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<v Speaker 2>some pretty outsized moves. I mean, these are big moves

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<v Speaker 2>right on these single names on a day where equities

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<v Speaker 2>are lower.

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<v Speaker 4>And I think perhaps we've got a little bit used

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<v Speaker 4>to a lack of volatility, dare we say it? In

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<v Speaker 4>broader bitcoin prices, we were used to things flinging about

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<v Speaker 4>by ten double digit percentage points. But on the day, well,

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<v Speaker 4>we have been only up about five six percent, But

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<v Speaker 4>that feels a big move. And I think these numbers,

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<v Speaker 4>we're still way off the sixty nine thousand dollars level

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<v Speaker 4>that we had in previous highs, but we were back

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<v Speaker 4>at that level that we saw in Eightril twenty twenty two,

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<v Speaker 4>prior to the Taro Luna Debarkle and all of this

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<v Speaker 4>just slowly rebuilding confidence really in the ecosystem.

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<v Speaker 2>Yeah, and we've had guests on this show saying sixty

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<v Speaker 2>thousand dollars next year, one hundred thousand dollars maybe next year.

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<v Speaker 2>Seeing is believing, I think when it comes to bitcoin.

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<v Speaker 2>But we're excited about twenty twenty four. The other top

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<v Speaker 2>story that we've got to get back to, Carrie is

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<v Speaker 2>Spotify reducing its workforce by seventeen percent. That's fifteen hundred jobs.

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<v Speaker 2>This is the company's biggest cuts yet this year. They've

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<v Speaker 2>done three trims. I want to bring in Bloomberg's actually

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<v Speaker 2>calm and give us the details. Actually, what did Spotify

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<v Speaker 2>say about the timing and rationale for cutting fifteen hundred employees.

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<v Speaker 5>Yeah, so today Spotify's CEO Daniel Eck put out a

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<v Speaker 5>blog post sort of explaining the cuts. He said, basically,

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<v Speaker 5>these decisions were going to have to be made, possibly

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<v Speaker 5>over the next couple years, and he decided to just

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<v Speaker 5>rip the band aid off and cut a bunch of

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<v Speaker 5>people all at once. He essentially said that yes, they've

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<v Speaker 5>cut operating costs quite a bit, but not enough, and

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<v Speaker 5>that they needed more people to go and more people

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<v Speaker 5>to focus on their core mission, which is building for

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<v Speaker 5>creators and consumers.

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<v Speaker 4>Yeah, I think just realigning the fact that too many

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<v Speaker 4>people were ultimately building things that weren't core to the

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<v Speaker 4>ultimate mission of building profitability or building margin, and that

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<v Speaker 4>seems to be what analysts like so much at the moment, Ashley.

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<v Speaker 4>And it's interesting that a lot of them saying eventually

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<v Speaker 4>margin is going to be buoyed by what have been

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<v Speaker 4>some really outsized commitments to the world of well podcasting

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<v Speaker 4>in particular.

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<v Speaker 5>Yes. Yeah, so the story of Spotify really is that

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<v Speaker 5>they since twenty nineteen, have committed over a billion dollar

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<v Speaker 5>to the podcast world. They bought studios, they bought creation technology,

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<v Speaker 5>they bought a hosting service, and really what we've seen

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<v Speaker 5>over the past year is just a total backtrack on

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<v Speaker 5>that business. And I imagine as we learn more about

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<v Speaker 5>today's clubs, we'll hear about how that impacts their podcast

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<v Speaker 5>business as it is.

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<v Speaker 2>Yeah, it's interesting. Loads of technology companies have gone through

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<v Speaker 2>this the mic grow focus on profit. The other metric

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<v Speaker 2>you can look at is say, well, actually, Spotify is

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<v Speaker 2>on track for an astonishingly good year one hundred million

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<v Speaker 2>new subscribers or users. It's going to add based on

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<v Speaker 2>how it's done so far. What is the overall health

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<v Speaker 2>score for Spotify actually based on your reporting.

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<v Speaker 5>Yeah, I mean, I think that's what's very puzzling here,

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<v Speaker 5>right is they've had amazing growth from a monthly average

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<v Speaker 5>user perspective. They do have more free users than subscription

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<v Speaker 5>so that's an issue. You know, they want to be

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<v Speaker 5>able to monetize those subscriptions more. But broadly speaking, they

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<v Speaker 5>continue to grow, which is pretty incredible. I think they

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<v Speaker 5>just have to figure out what is going to be

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<v Speaker 5>the way that they make more money because they keep

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<v Speaker 5>having to pay these music rights holders, which makes a

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<v Speaker 5>ton of sense, but they also need to find other

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<v Speaker 5>revenue opportunities. So we've seen price increases, we've seen them

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<v Speaker 5>cut costs, we've seen them move into podcasting, and then

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<v Speaker 5>very recently they moved into audiobooks. So maybe that'll be

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<v Speaker 5>magic bullet. I don't know.

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<v Speaker 4>And all of this at a time where Daniel let

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<v Speaker 4>does speak about the macro realities as well. He talked

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<v Speaker 4>about the fact that look, money's more expensive than it

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<v Speaker 4>used to be. Boring coss have been on the rise.

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<v Speaker 4>This is perhaps just really trying to instead of what

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<v Speaker 4>we started to talk these micro cuts that are happening

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<v Speaker 4>at tech companies at the moment, he's just, as you say,

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<v Speaker 4>ripping the band aid and just showing his intent to

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<v Speaker 4>still have this year of efficiency to coin a metaphrase.

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<v Speaker 5>Yeah, And I don't know if we knowed it at

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<v Speaker 5>the top, but this is the third round of cuts

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<v Speaker 5>this year. So they did a significant chunk in January,

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<v Speaker 5>they did another chunk in June, which was primarily the

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<v Speaker 5>podcast team. And yeah, now here we are with the

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<v Speaker 5>biggest cut that they've made all year. So overall, over

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<v Speaker 5>two thousand employees will have lost their jobs.

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<v Speaker 2>Yeah, I like your point on users. I mean, I'm

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<v Speaker 2>on the premium Family monthly subscription which I pay, and

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<v Speaker 2>I have some other family members on there which do

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<v Speaker 2>not pay. But I guess the free user points Big

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<v Speaker 2>Bloomberg's actually come and busy night early morning for you,

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<v Speaker 2>Thank you so much. Are more tech layoffs and other

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<v Speaker 2>stories happening elsewhere. Twilio cutting five percent of its workforce,

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<v Speaker 2>it's third major headcount reduction in order to reach profitable growth.

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<v Speaker 2>The cuts mostly affected salespeople for Twilio's consumer data platform

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<v Speaker 2>and contact center software. That's according to a memo from

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<v Speaker 2>the CEO, Jeff Laws and the company has shed more

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<v Speaker 2>than three thousand workers since September twenty twenty two, which

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<v Speaker 2>is about one third of its total workforce in that time.

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<v Speaker 4>Core Weave it's a cloud computing provider that's among the

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<v Speaker 4>hottest startups in the AI race. It says it's close

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<v Speaker 4>to minority stake sale to investors led by Fidelity, others

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<v Speaker 4>including as you can see JP Morgan Asset Management. We're

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<v Speaker 4>also gotting Zoom Ventures among them, all participating. They can

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<v Speaker 4>transaction the values of the company that get this seven

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<v Speaker 4>million dollars acording to sources, well, we can get a

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<v Speaker 4>source very close to the deal now, none other than

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<v Speaker 4>the CEO core Weave, Mike and Trader. Is great to

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<v Speaker 4>have you on the show. Mic and extraordinary story really

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<v Speaker 4>of cour We've going from its origins. Well, you are

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<v Speaker 4>a commodities tradee or the space for crypto, you're doing

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<v Speaker 4>mining aneath and then of course you become a specialized

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<v Speaker 4>cloud AI provider. At what makes your offering different from

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<v Speaker 4>the more general purpose cloud providers out there.

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<v Speaker 6>Sure, First of all, thank you very much. It's great

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<v Speaker 6>to have an opportunity to speak with you. Topically a

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<v Speaker 6>very exciting day over here. Weave and my whole team

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<v Speaker 6>is very excited about these transactions as we go into

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<v Speaker 6>the end of the year, looking forward to really getting

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<v Speaker 6>off to next year in the same putting. So, to

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<v Speaker 6>answer your question, Creweed is a specialized cloud computing company,

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<v Speaker 6>and what we mean by that is we've made every

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<v Speaker 6>decision from the hardware stack all the way through the

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<v Speaker 6>software stack to really build a cloud that is specialized

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<v Speaker 6>to address the needs of companies that need massive scale,

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<v Speaker 6>paralyized computing. When we talk about that, we're really talking

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<v Speaker 6>about the three industries that we address. The first one

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<v Speaker 6>is media and entertainment, and so if you go to

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<v Speaker 6>see a Marvel, you know there's a good chance that

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<v Speaker 6>several of those studios will have rendered their images on

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<v Speaker 6>our infrastructure. The second one is basic science synthetic biology,

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<v Speaker 6>so think of that is like drug discovery and protein folding.

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<v Speaker 6>And then finally and most importantly right now obviously, is

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<v Speaker 6>the build out of infrastructure that is very very appropriate

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<v Speaker 6>for artificial intelligence and machine learning.

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<v Speaker 2>Mike, I keep hearing about core We've I have done

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<v Speaker 2>all year long about just the sort of booming growth

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<v Speaker 2>that you've experienced I think you started the year disclosing

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<v Speaker 2>you had three data centers online. Now I believe it's

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<v Speaker 2>somewhere between fourteen and eighteen. How have you been able

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<v Speaker 2>to move so quickly on the infrastructure side, Yeah.

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<v Speaker 6>You know, great teams all across our infrastructure internal to

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<v Speaker 6>the company, just an incredible coordination automation to allow us

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<v Speaker 6>to kind.

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<v Speaker 2>Of build and scale that.

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<v Speaker 6>We also have great relationships up through the supply chains

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<v Speaker 6>that have been so difficult for everyone to navigate. The

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<v Speaker 6>support from our partners all through the supply chain has

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<v Speaker 6>been incredible and unimers are correct, We've made a massive

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<v Speaker 6>push in terms of the number of data centers that

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<v Speaker 6>we are in. It puts us in a position to

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<v Speaker 6>be able to serve the largest, most important artificial intelligence

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<v Speaker 6>models that are being trained, that are being served in

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<v Speaker 6>the public right now, and it's very exciting. We've got

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<v Speaker 6>a lot more work to do, but definitely improving and

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<v Speaker 6>increasing our footprint every day.

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<v Speaker 2>One of those partners is in video. We're just showing

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<v Speaker 2>some of your key customers on the screen, but in

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<v Speaker 2>VideA is a tech partner as well, right, and my

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<v Speaker 2>understanding is that you're actually helping them. You yourselves to

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<v Speaker 2>build their own next gen supercompute. What can you tell

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<v Speaker 2>us about that project?

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<v Speaker 6>So, in Videos is one of the partner of ours.

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<v Speaker 6>They invested alongside Magnetar and K two in our B round,

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<v Speaker 6>which was where we raised four hundred and twenty million

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<v Speaker 6>dollars in April of this year.

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<v Speaker 1>It was.

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<v Speaker 6>A kind of massive step for us as we began

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<v Speaker 6>to accelerate our growth through the year, and so by

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<v Speaker 6>having a partner like in Vidia invest in the company,

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<v Speaker 6>it made it very clear to all of our partners

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<v Speaker 6>across the debt space, across the equity space that they

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<v Speaker 6>had looked at our infrastructure and were comfortable with the

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<v Speaker 6>way that we built it in order to deliver the

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<v Speaker 6>most performing configuration of the accelerated compute that is defined

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<v Speaker 6>by their GPU.

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<v Speaker 4>You've been raising money, whether it be equity or debt,

0:11:58.480 --> 0:12:00.800
<v Speaker 4>at quite a pace because of course what you're doing

0:12:01.160 --> 0:12:04.360
<v Speaker 4>needs a lot of money. Would you tap the public markets?

0:12:04.360 --> 0:12:06.280
<v Speaker 4>Would you think about going public as soon as twenty

0:12:06.320 --> 0:12:07.280
<v Speaker 4>twenty four?

0:12:07.600 --> 0:12:12.600
<v Speaker 6>So, as you said, we really made three different transactions

0:12:12.640 --> 0:12:14.319
<v Speaker 6>in the capital markets this year. We did the BE

0:12:14.440 --> 0:12:17.360
<v Speaker 6>round early on that was, as I said, a quandred

0:12:17.360 --> 0:12:22.480
<v Speaker 6>and twenty one million dollar raise. We came back and

0:12:22.600 --> 0:12:26.040
<v Speaker 6>we did a very very large debt facility that was

0:12:26.080 --> 0:12:29.160
<v Speaker 6>two point three billion dollars that was really dedicated to

0:12:30.000 --> 0:12:34.000
<v Speaker 6>purchasing the capital intensive infrastructure that's required. And then this

0:12:34.240 --> 0:12:38.240
<v Speaker 6>secondary transaction is the final transaction for us for the year.

0:12:39.520 --> 0:12:43.680
<v Speaker 6>We are not committed or having no real comment around

0:12:44.120 --> 0:12:47.320
<v Speaker 6>the concept of going into the public markets other than

0:12:47.360 --> 0:12:50.520
<v Speaker 6>to say that we are capital intensive business and that

0:12:50.559 --> 0:12:54.640
<v Speaker 6>we are going to need to continue to access capital

0:12:54.640 --> 0:12:57.160
<v Speaker 6>markets in the most efficient way possible, and as far

0:12:57.200 --> 0:13:00.520
<v Speaker 6>as that goes, all options are absolutely on table for

0:13:00.640 --> 0:13:02.320
<v Speaker 6>us as we look into the future.

0:13:02.920 --> 0:13:06.000
<v Speaker 2>Mike quickly, you've built on H one hundred and DGX,

0:13:06.160 --> 0:13:08.960
<v Speaker 2>but AMD's coming with mi I three hundred. Have you

0:13:09.000 --> 0:13:09.520
<v Speaker 2>looked at that?

0:13:10.800 --> 0:13:12.920
<v Speaker 6>Yeah, so we do. We spend a lot of time

0:13:12.960 --> 0:13:16.600
<v Speaker 6>researching all of the different silicon alternatives in the market.

0:13:16.760 --> 0:13:19.240
<v Speaker 6>Right now, our focus is on the H one hundred.

0:13:19.240 --> 0:13:22.680
<v Speaker 6>I would argue that, you know, as you look across

0:13:23.000 --> 0:13:26.760
<v Speaker 6>the AI space at large, their focus is on the

0:13:26.880 --> 0:13:29.080
<v Speaker 6>H one hundred. It's an amazing piece of silicon. It

0:13:29.120 --> 0:13:32.840
<v Speaker 6>does incredible things in terms of moving the AI space forward,

0:13:33.200 --> 0:13:36.199
<v Speaker 6>and so it's really been the majority of our effort,

0:13:36.280 --> 0:13:39.600
<v Speaker 6>but we do monitor all of the different silicon alternatives

0:13:39.600 --> 0:13:42.160
<v Speaker 6>that are out there that could potentially be integrated into

0:13:43.040 --> 0:13:44.760
<v Speaker 6>a provider like US COOL.

0:13:44.760 --> 0:13:46.960
<v Speaker 2>We've see Mike can transit greats. Catch up with you

0:13:47.480 --> 0:13:50.480
<v Speaker 2>setting minorities taking that company at a big valuation. Thank you.

0:13:50.960 --> 0:13:54.040
<v Speaker 2>Coming up here on Bloomberg Technology, former US Treasury Secretary

0:13:54.080 --> 0:13:56.880
<v Speaker 2>Larry Summers weighs in and what it means to be

0:13:56.960 --> 0:13:59.800
<v Speaker 2>a member of open AI's newly formed bulb. We're gonna

0:13:59.800 --> 0:14:15.800
<v Speaker 2>bring you those details next. This is Bloomberg Technology. Okay,

0:14:15.840 --> 0:14:18.920
<v Speaker 2>time for talking tech and first up. COMMA Secretary Gina

0:14:19.000 --> 0:14:22.240
<v Speaker 2>Romondo says if the US truly wants to stop China

0:14:22.520 --> 0:14:25.800
<v Speaker 2>from making cutting edge semiconductors, then her department is going

0:14:25.880 --> 0:14:28.520
<v Speaker 2>to need more funding. During its defense forum on Saturday,

0:14:28.720 --> 0:14:33.400
<v Speaker 2>Romondo also urged American chip companies to prioritize national security

0:14:33.760 --> 0:14:37.160
<v Speaker 2>over their revenue, and one of the chip making industry's

0:14:37.160 --> 0:14:41.240
<v Speaker 2>most valuable suppliers is sinking deeper into debt despite holding

0:14:41.280 --> 0:14:43.840
<v Speaker 2>more than ninety percent share of the silica used to

0:14:43.880 --> 0:14:48.200
<v Speaker 2>polish silicon wafers, Fuso Chemical, based in Japan, hasn't lifted

0:14:48.240 --> 0:14:51.239
<v Speaker 2>prices because it fears it would sky out its relationships

0:14:51.320 --> 0:14:55.000
<v Speaker 2>with customers like Samsung, Intel, and Taiwan Semiconductor. FUSO also

0:14:55.000 --> 0:14:59.800
<v Speaker 2>struggling to make its CAPEX targets. Plus, California's Privacy Agency

0:14:59.840 --> 0:15:02.000
<v Speaker 2>has drafted a set of rules They aim to give

0:15:02.040 --> 0:15:05.960
<v Speaker 2>residents more agency over how their personal data is used

0:15:05.960 --> 0:15:09.520
<v Speaker 2>by automated tools. If adopted, the proposal would affect how

0:15:09.560 --> 0:15:13.080
<v Speaker 2>tech companies develop AI, which relates heavily on data to

0:15:13.120 --> 0:15:16.400
<v Speaker 2>train itself. Board members will discuss the draft on Friday,

0:15:16.640 --> 0:15:19.160
<v Speaker 2>though enforcement isn't likely to start anytime.

0:15:19.200 --> 0:15:21.640
<v Speaker 4>Seeing Caroline Let's stick on AI ed because the former

0:15:21.760 --> 0:15:24.600
<v Speaker 4>US Treasury Secretary Larry Summers, well, he's hoping to get

0:15:24.720 --> 0:15:26.920
<v Speaker 4>settled into his new role as a board member of

0:15:27.120 --> 0:15:30.280
<v Speaker 4>the so called interim Board of Open AI, of course,

0:15:30.320 --> 0:15:32.440
<v Speaker 4>the key AI startup. He shared his thoughts on the

0:15:32.440 --> 0:15:35.400
<v Speaker 4>matter in bluemog Television's On Wall Street week A, David weston,

0:15:35.520 --> 0:15:36.120
<v Speaker 4>take a listen.

0:15:37.120 --> 0:15:41.960
<v Speaker 1>This was something that was extraordinarily important. You know, no

0:15:42.000 --> 0:15:44.680
<v Speaker 1>one could be certain whether this is a once a

0:15:44.760 --> 0:15:48.960
<v Speaker 1>decade technology, at once a peth century technology, at once

0:15:48.960 --> 0:15:53.880
<v Speaker 1>a century technology, at once a millennium technology. No one

0:15:53.920 --> 0:15:57.120
<v Speaker 1>can know that for sure, but it sure looks like

0:15:57.360 --> 0:16:05.840
<v Speaker 1>it's awfully important to develop rapidly and safely and to

0:16:05.960 --> 0:16:11.040
<v Speaker 1>disseminate effectively and well. So when I was offered an

0:16:11.040 --> 0:16:17.000
<v Speaker 1>opportunity to be part of contributing to that, overseeing to

0:16:17.120 --> 0:16:22.760
<v Speaker 1>make sure that that was effectively done, and to do

0:16:22.800 --> 0:16:25.840
<v Speaker 1>it working with some very great people, I thought it

0:16:25.920 --> 0:16:28.880
<v Speaker 1>was a real opportunity and I was glad to do it.

0:16:28.880 --> 0:16:31.400
<v Speaker 3>I don't want to take anythway from your technological expertise,

0:16:31.520 --> 0:16:34.640
<v Speaker 3>but what you just said safely strikes me as probably

0:16:34.720 --> 0:16:36.680
<v Speaker 3>part of what you're going to be focused on, and

0:16:36.720 --> 0:16:39.600
<v Speaker 3>that gets to questions of governance about how you handle

0:16:39.680 --> 0:16:42.200
<v Speaker 3>this technology wherever it's going and how a powerful may be.

0:16:42.560 --> 0:16:44.520
<v Speaker 3>Do you have an overall sense of what you need

0:16:44.560 --> 0:16:47.360
<v Speaker 3>to do to govern it to get this safely part right?

0:16:48.440 --> 0:16:50.600
<v Speaker 1>You know, David, I've been on the job two days

0:16:50.640 --> 0:16:53.760
<v Speaker 1>and they're going to send me the onboarding packet for

0:16:54.760 --> 0:16:58.680
<v Speaker 1>the board on Sunday. So I shouldn't be saying too

0:16:58.800 --> 0:17:04.760
<v Speaker 1>much at all because I don't know enough. Here's some

0:17:04.840 --> 0:17:07.600
<v Speaker 1>things I think I know. I think I know that

0:17:08.440 --> 0:17:13.600
<v Speaker 1>a company like this has to be prepared to cooperate.

0:17:13.800 --> 0:17:18.640
<v Speaker 1>Doesn't mean always agree with but cooperate with key government

0:17:18.720 --> 0:17:27.320
<v Speaker 1>officials on regulatory issues, on national security issues, on development

0:17:27.720 --> 0:17:34.520
<v Speaker 1>of technology issues. I think I know also, and this

0:17:34.600 --> 0:17:39.920
<v Speaker 1>is integral to the structure of open AI, where the

0:17:39.960 --> 0:17:44.920
<v Speaker 1>for profit entity is itself a creature of a not

0:17:45.000 --> 0:17:51.240
<v Speaker 1>for profit entity, that this needs to be a corporation

0:17:52.080 --> 0:17:56.600
<v Speaker 1>with a conscience, and that we need to be always

0:17:56.640 --> 0:18:01.560
<v Speaker 1>thinking about the multiple stakeholders in the develop into this technology.

0:18:01.600 --> 0:18:04.840
<v Speaker 1>And as a board member, that will be part of

0:18:04.880 --> 0:18:10.399
<v Speaker 1>my responsibility working with other board members to.

0:18:12.080 --> 0:18:13.640
<v Speaker 2>Make that certain.

0:18:14.040 --> 0:18:18.280
<v Speaker 1>You know, my colleague at Harvard Lake, colleague Ken Galbraith,

0:18:18.480 --> 0:18:21.880
<v Speaker 1>said that conscious is the knowledge that someone is watching,

0:18:22.560 --> 0:18:26.119
<v Speaker 1>and I think it's the responsibility for everybody involved in

0:18:26.160 --> 0:18:32.400
<v Speaker 1>this to be thinking very carefully always about both opportunities

0:18:32.960 --> 0:18:37.679
<v Speaker 1>and uncertainties and to make sure that those are balanced

0:18:38.240 --> 0:18:40.960
<v Speaker 1>in the best way that's possible.

0:18:41.359 --> 0:18:44.160
<v Speaker 2>That was former US Treasury Secretary Larry sum Is sitting

0:18:44.200 --> 0:18:47.040
<v Speaker 2>down with Bloomberg's David Weston. We should also know that

0:18:47.119 --> 0:18:50.280
<v Speaker 2>Larry Summers is a Harvard University professor and a paid

0:18:50.440 --> 0:18:54.280
<v Speaker 2>contributor to Bloomberg TV and Will Street. We now as

0:18:54.320 --> 0:18:56.560
<v Speaker 2>we keep an eye on the situation with the Israel

0:18:56.600 --> 0:18:59.480
<v Speaker 2>Hamas Wall. The situation is also one that's been hard

0:18:59.520 --> 0:19:03.919
<v Speaker 2>to manage online. TikTok is having a hard time moderating

0:19:04.000 --> 0:19:08.000
<v Speaker 2>deep fake videos of her mass victims and other private citizens,

0:19:08.359 --> 0:19:12.120
<v Speaker 2>even though these videos violate their content moderation policies, which

0:19:12.240 --> 0:19:15.879
<v Speaker 2>ban AI generated videos of private citizens and miners. And

0:19:15.960 --> 0:19:20.480
<v Speaker 2>yet these videos are racking up thousands to millions of views.

0:19:20.480 --> 0:19:22.280
<v Speaker 2>I want to bring in Bloomberg Alex Brinko, who's been

0:19:22.280 --> 0:19:26.080
<v Speaker 2>writing about this this morning on Bloomberg. That is the struggle.

0:19:26.280 --> 0:19:29.280
<v Speaker 2>They're in contravention of the policy, but they're being seen

0:19:29.320 --> 0:19:31.160
<v Speaker 2>by millions, Alex. Absolutely.

0:19:31.240 --> 0:19:33.800
<v Speaker 7>And in the days after the October seventh attack by

0:19:33.840 --> 0:19:37.520
<v Speaker 7>Hamas in Israel on that music festival, I was looking

0:19:37.560 --> 0:19:39.119
<v Speaker 7>on the app for some of the names of some

0:19:39.160 --> 0:19:42.359
<v Speaker 7>of the believed victims, and some of the top videos

0:19:42.800 --> 0:19:47.520
<v Speaker 7>were AI generated videos that purported to and showed folks

0:19:47.680 --> 0:19:51.160
<v Speaker 7>like Shannie Luke, the twenty two year old now known

0:19:51.200 --> 0:19:54.879
<v Speaker 7>to be dead Germans. Really woman who you saw her face.

0:19:54.960 --> 0:19:57.280
<v Speaker 7>You saw an image like her standing in front of

0:19:57.560 --> 0:20:01.800
<v Speaker 7>folks in military garb holding guns, talking about her thoughts

0:20:01.800 --> 0:20:03.960
<v Speaker 7>on the attack, talking about her mother.

0:20:04.600 --> 0:20:05.640
<v Speaker 2>But this was not in.

0:20:05.560 --> 0:20:09.600
<v Speaker 7>Fact showne Luke. This was a digital resurrection, as experts

0:20:09.640 --> 0:20:12.840
<v Speaker 7>call it, where somebody went online used one of these

0:20:13.000 --> 0:20:16.520
<v Speaker 7>increasingly inexpensive tools to take some photos of her from

0:20:16.520 --> 0:20:19.879
<v Speaker 7>the Internet and turn it into an AI generated video.

0:20:20.000 --> 0:20:23.840
<v Speaker 7>Now these videos are against the content guidelines of TikTok.

0:20:23.920 --> 0:20:27.600
<v Speaker 7>Private citizens and miners are not allowed to be portrayed

0:20:27.600 --> 0:20:31.320
<v Speaker 7>in what TikTok calls synthetic media, which includes AI videos.

0:20:31.560 --> 0:20:35.320
<v Speaker 7>But that video wrapped up seven million views alone before

0:20:35.359 --> 0:20:37.480
<v Speaker 7>I sent it to TikTok and they took it down.

0:20:37.800 --> 0:20:41.120
<v Speaker 7>There are dozens of additional videos like this portraying both

0:20:41.200 --> 0:20:45.239
<v Speaker 7>victims of hamas portraying three year old murder victims in

0:20:45.359 --> 0:20:48.000
<v Speaker 7>a child's voice talking about how they died and the

0:20:48.040 --> 0:20:51.480
<v Speaker 7>injuries they sustained. And these videos are live and again

0:20:51.640 --> 0:20:55.679
<v Speaker 7>racking up thousands to millions of views and sometimes going viral.

0:20:55.800 --> 0:20:58.320
<v Speaker 7>So this is just an indicator to me of this

0:20:58.480 --> 0:21:01.160
<v Speaker 7>kind of early wave of w where AI is hitting

0:21:01.240 --> 0:21:05.000
<v Speaker 7>real people, and in particular people who, since they are deceased,

0:21:05.000 --> 0:21:07.800
<v Speaker 7>cannot actually come in and defend themselves when they see

0:21:07.840 --> 0:21:09.439
<v Speaker 7>their likeness out there on social media.

0:21:09.960 --> 0:21:14.120
<v Speaker 4>So deeply emotive, Alex and just to say what TikTok

0:21:14.160 --> 0:21:16.840
<v Speaker 4>has indeed come back. Of course parent company Byte Dancing,

0:21:16.920 --> 0:21:19.800
<v Speaker 4>Like how the platforms, TikTok continues to invest in detection

0:21:19.920 --> 0:21:23.119
<v Speaker 4>and transparency and in industry and partnerships to address this

0:21:23.240 --> 0:21:26.600
<v Speaker 4>rapidly evolving technology. But therein lies the issue. It is

0:21:26.920 --> 0:21:30.399
<v Speaker 4>a rapidly evolving technology. What do you think more could

0:21:30.440 --> 0:21:33.440
<v Speaker 4>be done internally by TikTok and indeed the other key

0:21:33.440 --> 0:21:35.680
<v Speaker 4>social media players out here.

0:21:35.040 --> 0:21:37.960
<v Speaker 7>They've already rolled out tools to ask users to opt

0:21:38.000 --> 0:21:41.480
<v Speaker 7>into label AI on videos that use AI, but most

0:21:41.520 --> 0:21:43.560
<v Speaker 7>of these videos Caroline that I came across didn't have

0:21:43.600 --> 0:21:46.440
<v Speaker 7>that label. So it's clear they need to be doing

0:21:46.520 --> 0:21:49.639
<v Speaker 7>more behind the scenes with their incredibly powerful algorithms, with

0:21:49.680 --> 0:21:52.359
<v Speaker 7>their human moderators to be picking up on this stuff.

0:21:52.400 --> 0:21:54.520
<v Speaker 7>But when I talk to experts, they're already raising a

0:21:54.560 --> 0:21:57.879
<v Speaker 7>flag not just in these digital resurrections, but also looking

0:21:57.880 --> 0:22:00.199
<v Speaker 7>forward to things like the election. Right now, a lot

0:22:00.200 --> 0:22:03.000
<v Speaker 7>of these videos have this kind of uncanny valley weird feel.

0:22:03.200 --> 0:22:05.280
<v Speaker 7>They're going to get more realistic and the apps are

0:22:05.280 --> 0:22:06.760
<v Speaker 7>going to need to do more to be able to

0:22:06.800 --> 0:22:07.480
<v Speaker 7>detect them.

0:22:07.600 --> 0:22:09.800
<v Speaker 4>Alex BLERINCA thank you so much for bringing us the

0:22:09.840 --> 0:22:13.040
<v Speaker 4>story from New York and San Francisco. This's a Bloomberg Technology.

0:22:22.800 --> 0:22:25.159
<v Speaker 2>Welcome back to Bloomberg Technology. Ed love Low here in

0:22:25.200 --> 0:22:26.560
<v Speaker 2>San Francisco.

0:22:26.320 --> 0:22:28.240
<v Speaker 4>Caroline hid and New York. Let's quit check on these

0:22:28.280 --> 0:22:30.520
<v Speaker 4>markets because actually we're having the biggest cell offon indeed

0:22:30.680 --> 0:22:32.879
<v Speaker 4>the NASAK one hundred in more than a month now

0:22:32.920 --> 0:22:35.240
<v Speaker 4>October twenty sixth we're seeing and we're off by more

0:22:35.240 --> 0:22:37.760
<v Speaker 4>than a percentage point. Now is this profit taking after

0:22:37.760 --> 0:22:39.200
<v Speaker 4>the run up that we've had. Of course throughout the

0:22:39.200 --> 0:22:41.359
<v Speaker 4>month of November, is in a little bit of caution

0:22:41.440 --> 0:22:44.719
<v Speaker 4>as perhaps we're baking a little bit too much dubbishness

0:22:44.920 --> 0:22:47.280
<v Speaker 4>into a federal reserve and the direction of travel for bonds.

0:22:47.280 --> 0:22:49.040
<v Speaker 4>But nevertheless, the sell off in stocks and a sell

0:22:49.040 --> 0:22:50.840
<v Speaker 4>off in bonds as well, the two year yields spiking

0:22:50.880 --> 0:22:53.240
<v Speaker 4>as well. I'm looking though at in spite of this

0:22:53.280 --> 0:22:56.119
<v Speaker 4>sell off in risk assets, one stands out bitcoin actually

0:22:56.119 --> 0:22:58.200
<v Speaker 4>powering up. We're up at one point in excess of

0:22:58.240 --> 0:23:00.240
<v Speaker 4>forty two thousand dollars and we're still on the higher

0:23:00.280 --> 0:23:02.240
<v Speaker 4>side despite the stronger US dollar today. You know, the

0:23:02.280 --> 0:23:05.440
<v Speaker 4>driving forces we're still talking about spot bitcoin ETF will

0:23:05.440 --> 0:23:07.400
<v Speaker 4>that we signed off in January will we get of course,

0:23:07.600 --> 0:23:09.480
<v Speaker 4>and what we know the harving's going to come next year,

0:23:09.520 --> 0:23:13.200
<v Speaker 4>but what will macro policy mean for bitcoin into twenty

0:23:13.240 --> 0:23:15.040
<v Speaker 4>twenty four. So still on the higher side, let's look

0:23:15.040 --> 0:23:17.040
<v Speaker 4>at some of the individual movers today. I'm having quick

0:23:17.040 --> 0:23:19.040
<v Speaker 4>look at Uber because well, maybe I've be including the

0:23:19.080 --> 0:23:20.600
<v Speaker 4>S and P five hundred. That's of course what's driving

0:23:20.640 --> 0:23:22.919
<v Speaker 4>it higher, up some five percent on the day. But

0:23:23.240 --> 0:23:25.280
<v Speaker 4>actually one of the only fields are green other than

0:23:25.320 --> 0:23:28.160
<v Speaker 4>cryptostocks and Uber. Let's go to some of the losers. Interestingly,

0:23:28.200 --> 0:23:31.600
<v Speaker 4>some inside selling happening and in video in November, in fact,

0:23:31.760 --> 0:23:34.159
<v Speaker 4>three hundred and seventy thousand shares were either sold or

0:23:34.280 --> 0:23:37.840
<v Speaker 4>filed to be sold by internal candidates of course executives

0:23:37.840 --> 0:23:39.359
<v Speaker 4>at the company. So we're currently see that off by

0:23:39.400 --> 0:23:41.240
<v Speaker 4>about two point four percent offter of course, a massive

0:23:41.280 --> 0:23:45.000
<v Speaker 4>run for twenty twenty three. Anady meta same that one

0:23:45.119 --> 0:23:47.040
<v Speaker 4>of course from Mark Zuckerberg himself first time in a

0:23:47.080 --> 0:23:49.600
<v Speaker 4>couple of years, ed that he's actually selling his own

0:23:49.680 --> 0:23:52.479
<v Speaker 4>company shares currently off by one point eight percent, as

0:23:52.520 --> 0:23:54.119
<v Speaker 4>you can see. But we've got a key company to

0:23:54.160 --> 0:23:55.160
<v Speaker 4>be talking about next.

0:23:55.760 --> 0:23:58.280
<v Speaker 2>Yep, and we're going private this time, Anderil is out

0:23:58.320 --> 0:24:01.720
<v Speaker 2>with a new autonomous air vehicle. Road Runner is akin

0:24:01.880 --> 0:24:05.960
<v Speaker 2>to a mini reusable fighter jet that blows up drones,

0:24:06.280 --> 0:24:08.280
<v Speaker 2>and the startup says the US will deploy it in

0:24:08.320 --> 0:24:10.919
<v Speaker 2>the field next year. Delighted to say joining US now

0:24:10.960 --> 0:24:14.840
<v Speaker 2>is Andrew founder Palmer Lucky down in Costa Mesa, California.

0:24:15.200 --> 0:24:20.080
<v Speaker 2>We've just showed images of it. But from a technology perspective, Palmer,

0:24:20.080 --> 0:24:22.080
<v Speaker 2>you've been working on this in secret and stealth for

0:24:22.119 --> 0:24:24.639
<v Speaker 2>a couple of years. What is new here? What is

0:24:24.640 --> 0:24:25.760
<v Speaker 2>the technology at play?

0:24:26.840 --> 0:24:26.959
<v Speaker 6>Well?

0:24:27.000 --> 0:24:29.840
<v Speaker 8>Roadrunner is an AI piloted autonomous air vehicle. It's got

0:24:29.840 --> 0:24:31.879
<v Speaker 8>a lot of cool features. It's powered by two twin

0:24:31.920 --> 0:24:35.200
<v Speaker 8>turbojet thrust vector and engines. It's very very fast, carries

0:24:35.200 --> 0:24:38.480
<v Speaker 8>a significant payload, It's very maneuverable. But the really cool

0:24:38.480 --> 0:24:41.119
<v Speaker 8>thing about it is that it can be reused. It's

0:24:41.160 --> 0:24:44.200
<v Speaker 8>actually a vertical takeoff and landing vehicle, and that means

0:24:44.440 --> 0:24:47.720
<v Speaker 8>that with certain payloads, you can go out there, perform

0:24:47.760 --> 0:24:51.560
<v Speaker 8>the mission, come back, reland, and then refuel, rearm and

0:24:51.680 --> 0:24:54.720
<v Speaker 8>use it again. With other payloads, Let's say a one

0:24:54.760 --> 0:24:57.840
<v Speaker 8>way warhead to go up against a large aircraft, I

0:24:58.080 --> 0:25:00.720
<v Speaker 8>can send a whole swarm of road Run is out there,

0:25:00.800 --> 0:25:03.639
<v Speaker 8>and only the ones that actually engage the target are consumed.

0:25:03.720 --> 0:25:06.359
<v Speaker 8>Everyone else can come home. And that allows you to

0:25:06.480 --> 0:25:09.320
<v Speaker 8>have much greater effective magazine depth and to use these

0:25:09.359 --> 0:25:12.640
<v Speaker 8>things in way that you can't use traditional one way missiles,

0:25:12.640 --> 0:25:15.280
<v Speaker 8>where once you launch it, it's gone, whether you launch

0:25:15.280 --> 0:25:17.119
<v Speaker 8>a bunch of them or one of them.

0:25:17.520 --> 0:25:19.560
<v Speaker 2>Palmer, we share with our audience at the top of

0:25:19.600 --> 0:25:21.960
<v Speaker 2>this segment. Actually Vance wrote about it in his story

0:25:22.280 --> 0:25:26.080
<v Speaker 2>that the US plans to put this to deployment next year, right,

0:25:26.200 --> 0:25:30.520
<v Speaker 2>But so much of the newsflow around drones has been

0:25:30.520 --> 0:25:32.960
<v Speaker 2>in the context of the war in Ukraine. You know,

0:25:33.080 --> 0:25:36.399
<v Speaker 2>drones are a key strategy for both sides, it seems.

0:25:36.760 --> 0:25:40.919
<v Speaker 2>Do you see road Runner being deployed in Ukraine in

0:25:40.920 --> 0:25:43.040
<v Speaker 2>the natime? What kind of talks have you had around that.

0:25:44.080 --> 0:25:45.639
<v Speaker 8>Well, I'll tell you this, I see it in my

0:25:45.760 --> 0:25:48.800
<v Speaker 8>mind's eye. But whether it goes there isn't up to me.

0:25:48.880 --> 0:25:50.800
<v Speaker 8>It's up to a bunch of people in the US government.

0:25:50.880 --> 0:25:54.160
<v Speaker 8>You know, the foreign military sales process, the transfer process

0:25:54.520 --> 0:25:58.080
<v Speaker 8>is government driven rather than company driven the vast majority

0:25:58.080 --> 0:25:59.600
<v Speaker 8>of the time. And we've been in Ukraine since the

0:25:59.600 --> 0:26:02.040
<v Speaker 8>second to the war, not just with our products, but

0:26:02.040 --> 0:26:04.240
<v Speaker 8>also sending people over there. I actually was in Kiev

0:26:04.280 --> 0:26:06.920
<v Speaker 8>to meet with Zelenski for the second time. I met

0:26:06.920 --> 0:26:08.960
<v Speaker 8>with him ahead of the war, because he was interested

0:26:08.960 --> 0:26:12.040
<v Speaker 8>in purchasing our technology to help secure their eastern border. Unfortunately,

0:26:12.240 --> 0:26:14.360
<v Speaker 8>that wasn't something we were able to make happen because

0:26:14.400 --> 0:26:18.840
<v Speaker 8>of those restrictions that I mentioned earlier. And so it's

0:26:18.880 --> 0:26:21.320
<v Speaker 8>certainly something that I would love to see personally.

0:26:21.960 --> 0:26:27.440
<v Speaker 4>What about demand from Europe in and of itself, Palma.

0:26:25.760 --> 0:26:27.840
<v Speaker 8>So, I mean, we have a lot of we have

0:26:27.880 --> 0:26:30.040
<v Speaker 8>a lot of European customers, and we do a lot

0:26:30.040 --> 0:26:32.320
<v Speaker 8>of work in particularly with the United Kingdom and the

0:26:32.400 --> 0:26:35.760
<v Speaker 8>UK Royal Marines especially, But you know, there's a little

0:26:35.800 --> 0:26:38.639
<v Speaker 8>bit of a tricky dynamic with some European countries. Some

0:26:38.720 --> 0:26:42.320
<v Speaker 8>European countries really see their defense apparatus as a way

0:26:42.440 --> 0:26:45.760
<v Speaker 8>to run a jobs program, and they are forcing US

0:26:45.800 --> 0:26:49.760
<v Speaker 8>companies like ANDROL to compete with their own domestic capabilities.

0:26:49.800 --> 0:26:52.159
<v Speaker 8>It might not be as advanced, might be years behind,

0:26:52.320 --> 0:26:54.760
<v Speaker 8>might be more expensive, but it's pretty hard for them

0:26:54.800 --> 0:26:58.240
<v Speaker 8>to get over the fact that they would be dropping

0:26:58.280 --> 0:27:01.159
<v Speaker 8>that internal program to buy some from an American company.

0:27:01.840 --> 0:27:04.600
<v Speaker 8>It's a difficult pill to swallow for some of these countries,

0:27:04.680 --> 0:27:08.000
<v Speaker 8>especially ones that do have what anyone would consider a

0:27:08.040 --> 0:27:10.000
<v Speaker 8>pretty strong defense industry of their own.

0:27:10.920 --> 0:27:13.439
<v Speaker 4>One country that has a strong defense industry of their

0:27:13.480 --> 0:27:16.960
<v Speaker 4>own is China, and you've been outspoken on this. We've heard,

0:27:17.000 --> 0:27:20.520
<v Speaker 4>of course, not only about china strength in defense, but

0:27:20.600 --> 0:27:22.840
<v Speaker 4>also their strength in ai And of course you're twinning

0:27:22.840 --> 0:27:25.520
<v Speaker 4>the two here. I'm interested as to how much those

0:27:25.520 --> 0:27:29.240
<v Speaker 4>conversations surrounding Taiwan, the concerns there are building, and whether

0:27:29.359 --> 0:27:32.520
<v Speaker 4>or not it's actually something that you are having conversations

0:27:32.560 --> 0:27:33.560
<v Speaker 4>with the dood about.

0:27:34.560 --> 0:27:37.360
<v Speaker 8>I mean, it's all about that. Everyone is talking about

0:27:37.440 --> 0:27:39.879
<v Speaker 8>making sure that the capabilities that we're building today are

0:27:39.920 --> 0:27:42.040
<v Speaker 8>ready to go for a fight in the Pacific in

0:27:42.119 --> 0:27:45.560
<v Speaker 8>twenty twenty seven or earlier, because that is the latest

0:27:45.600 --> 0:27:48.119
<v Speaker 8>that we see China trying to launch an offensive for

0:27:48.119 --> 0:27:50.840
<v Speaker 8>a variety of reasons. That's the timing for some kind

0:27:50.840 --> 0:27:53.560
<v Speaker 8>of action against Taiwan, which is critical to our economy.

0:27:54.119 --> 0:27:55.920
<v Speaker 8>You know, there's a lot of places around the world

0:27:56.000 --> 0:27:58.000
<v Speaker 8>that we call partners. There's a lot of places around

0:27:58.000 --> 0:27:59.640
<v Speaker 8>the world that we say are important to our interests

0:28:00.359 --> 0:28:04.240
<v Speaker 8>and their semiconductor industry is really about as important as

0:28:04.240 --> 0:28:06.959
<v Speaker 8>it gets, especially for such a small country so close

0:28:07.280 --> 0:28:09.119
<v Speaker 8>to China. The good news is, I think people are

0:28:09.119 --> 0:28:12.560
<v Speaker 8>recognizing this threat. Big tech companies years ago thought that

0:28:12.680 --> 0:28:14.480
<v Speaker 8>China was something one that was going to be a

0:28:14.560 --> 0:28:16.240
<v Speaker 8>huge growth market for them. They thought they were going

0:28:16.280 --> 0:28:18.760
<v Speaker 8>to get in and sell them social media, sell them services.

0:28:19.040 --> 0:28:20.640
<v Speaker 8>And I think people are starting to realize that that's

0:28:20.640 --> 0:28:23.680
<v Speaker 8>not what's happening. They're coming here and they're eating our lunch,

0:28:24.200 --> 0:28:28.440
<v Speaker 8>and that is I think positive for tech companies decision

0:28:28.640 --> 0:28:31.000
<v Speaker 8>to start working with the dood again.

0:28:32.240 --> 0:28:35.920
<v Speaker 2>There's an interest, in an intense interest, excuse me, in Anderil.

0:28:36.280 --> 0:28:39.280
<v Speaker 2>People don't, let's know that much about the company. So

0:28:39.320 --> 0:28:42.680
<v Speaker 2>if we take the kind of Taiwan case study road

0:28:42.760 --> 0:28:45.560
<v Speaker 2>Runner aside, what are the products and technologies that you

0:28:45.680 --> 0:28:49.000
<v Speaker 2>can offer that you would deploy it and get a

0:28:49.080 --> 0:28:50.880
<v Speaker 2>hypothetical scenario like that.

0:28:51.560 --> 0:28:54.120
<v Speaker 8>Well, our core product is something called Lattice AI. It's

0:28:54.200 --> 0:28:56.880
<v Speaker 8>kind of the AI engine that powers all of our products.

0:28:56.880 --> 0:28:59.280
<v Speaker 8>We actually have more people at ANDROL working on software

0:28:59.480 --> 0:29:02.680
<v Speaker 8>than hardware, even though we have over a dozen hardware products,

0:29:02.680 --> 0:29:05.880
<v Speaker 8>and that's because Lattice is something our software investment is

0:29:05.920 --> 0:29:08.440
<v Speaker 8>something that can reach across all these systems and a

0:29:08.440 --> 0:29:11.240
<v Speaker 8>lot of external systems. Lattice AI is integrated with more

0:29:11.320 --> 0:29:15.000
<v Speaker 8>third party products than anderill made products. Even so, we

0:29:15.080 --> 0:29:18.520
<v Speaker 8>make loitering munitions like the Altis Line, we make autonomous

0:29:18.600 --> 0:29:22.400
<v Speaker 8>underwater vehicles like the Dive Submarine. We make counter UAS systems,

0:29:22.520 --> 0:29:26.880
<v Speaker 8>electronic warfare systems, surveillance systems, tactical UAS systems like the

0:29:26.920 --> 0:29:29.800
<v Speaker 8>Ghost helicopter drone. We've got a lot of things that

0:29:29.840 --> 0:29:32.680
<v Speaker 8>could make a really big difference. And again, everything that

0:29:32.720 --> 0:29:35.600
<v Speaker 8>we're doing, and most of what the DoD is doing,

0:29:35.680 --> 0:29:38.800
<v Speaker 8>is preparing for our conflict with a great power like

0:29:38.880 --> 0:29:42.240
<v Speaker 8>China in the Pacific on a near term timeframe. Anything

0:29:42.240 --> 0:29:44.120
<v Speaker 8>that we make that is not going to be ready

0:29:44.160 --> 0:29:46.600
<v Speaker 8>to go into that type of fight, whether it's a

0:29:46.640 --> 0:29:51.280
<v Speaker 8>blockade or a real invasion, is not something that I

0:29:51.320 --> 0:29:55.680
<v Speaker 8>think is particularly relevant or worth heavy investment at Palma.

0:29:55.720 --> 0:29:57.560
<v Speaker 2>When I posted on social media, you are coming on

0:29:57.600 --> 0:29:59.760
<v Speaker 2>the show, I guess the most common question from the

0:29:59.800 --> 0:30:02.880
<v Speaker 2>r audience was about manufacturing. You know, if you take

0:30:02.960 --> 0:30:05.880
<v Speaker 2>Roadrunner as an example, they know it's a cutting edge technology,

0:30:06.320 --> 0:30:08.640
<v Speaker 2>but they actually want to know more about how you

0:30:08.720 --> 0:30:10.760
<v Speaker 2>scale the output of that product.

0:30:10.960 --> 0:30:12.960
<v Speaker 8>Well, there's a few things that go into that, you know,

0:30:12.960 --> 0:30:15.479
<v Speaker 8>first of all, Androl is a defense product company more

0:30:15.520 --> 0:30:17.880
<v Speaker 8>than a defense contractor. We use our own money to

0:30:17.880 --> 0:30:20.120
<v Speaker 8>decide what to build, how to build it, and then

0:30:20.160 --> 0:30:21.760
<v Speaker 8>we build it and sell it when it's done. And

0:30:21.760 --> 0:30:24.920
<v Speaker 8>it's very different than companies that get paid more when

0:30:24.960 --> 0:30:27.280
<v Speaker 8>they have let's say, an inefficient manufacturing process or a

0:30:27.280 --> 0:30:30.880
<v Speaker 8>longer manufacturing process because they're on a cost plus contract.

0:30:31.120 --> 0:30:33.520
<v Speaker 8>And our head of manufacturing comes from Tesla, where he

0:30:33.640 --> 0:30:36.400
<v Speaker 8>scaled several lines to very very large numbers of vehicles.

0:30:36.400 --> 0:30:38.280
<v Speaker 8>We have a lot of other people who have experienced

0:30:38.280 --> 0:30:41.640
<v Speaker 8>making consumer electronics on a very tight schedule. We've done

0:30:41.760 --> 0:30:45.080
<v Speaker 8>five new revisions of Century Tower, four new revisions of

0:30:45.160 --> 0:30:49.320
<v Speaker 8>Cent of our Ghost drone in just five or six years,

0:30:49.320 --> 0:30:52.520
<v Speaker 8>and so we're on more of a consumer electronics manufacturing

0:30:52.560 --> 0:30:55.520
<v Speaker 8>and iteration cycle than any traditional defense.

0:30:55.240 --> 0:30:55.840
<v Speaker 2>Company would be.

0:30:55.880 --> 0:30:59.280
<v Speaker 8>And look, my previous company was OCULUSVR. I started that

0:30:59.320 --> 0:31:01.520
<v Speaker 8>when I was nineteen years old living in a camper trailer,

0:31:01.680 --> 0:31:03.720
<v Speaker 8>sold it to Facebook for a few billion dollars. Was

0:31:03.720 --> 0:31:05.880
<v Speaker 8>there for a few years before getting fired. But while

0:31:05.920 --> 0:31:08.520
<v Speaker 8>I was there, we've made millions of virtual reality headsets

0:31:08.560 --> 0:31:11.800
<v Speaker 8>in China. I know how China does things. I know

0:31:11.880 --> 0:31:14.120
<v Speaker 8>how these things can be done, and I'm trying to

0:31:14.120 --> 0:31:17.160
<v Speaker 8>bring a little bit of that Chinese energy here to

0:31:17.320 --> 0:31:20.560
<v Speaker 8>US manufacturing, absent all the stuff that I hate about China.

0:31:21.960 --> 0:31:25.040
<v Speaker 4>Interesting perspective on what you can learn, perhaps even though

0:31:25.040 --> 0:31:27.640
<v Speaker 4>you dislike parts of what's evident. I'm palm up to

0:31:27.680 --> 0:31:31.840
<v Speaker 4>that point. I mean, everyone's currently handringing about artificial intelligence

0:31:31.960 --> 0:31:34.760
<v Speaker 4>US versus China, China versus everyone. I mean, you've just

0:31:34.800 --> 0:31:37.000
<v Speaker 4>been in the UK, I mean at least saying that

0:31:37.040 --> 0:31:39.120
<v Speaker 4>you've been building relationships there, and we just think about

0:31:39.120 --> 0:31:41.719
<v Speaker 4>the UKAI summit, where what was it, thirty one country

0:31:41.800 --> 0:31:44.240
<v Speaker 4>signed up to some sort of guardrails When it comes

0:31:44.240 --> 0:31:47.880
<v Speaker 4>to well, the acceleration of deployment of AI in the military.

0:31:48.280 --> 0:31:51.080
<v Speaker 4>What do you make of these moves too put in

0:31:51.120 --> 0:31:54.440
<v Speaker 4>guardrails in artificial intelligence's use within military.

0:31:55.240 --> 0:31:58.280
<v Speaker 8>A lot of these are decades behind. The US government

0:31:58.320 --> 0:32:00.760
<v Speaker 8>has been thinking about these things literally for decades. It

0:32:00.800 --> 0:32:03.760
<v Speaker 8>really bothers me when people say, oh, man, we need

0:32:03.760 --> 0:32:06.360
<v Speaker 8>to come up with rules that tell the DD what

0:32:06.400 --> 0:32:08.120
<v Speaker 8>to do about AI. I mean they haven't been thinking

0:32:08.120 --> 0:32:11.080
<v Speaker 8>about these things. They don't understand how important autonomous weapons.

0:32:11.080 --> 0:32:13.160
<v Speaker 8>I mean, what are you talking about. The US Government's

0:32:13.160 --> 0:32:16.560
<v Speaker 8>been deploying autonomous weapons like radar seeking missiles and missiles

0:32:16.600 --> 0:32:19.320
<v Speaker 8>that can differentiate between targets for decades. Now, look at

0:32:19.320 --> 0:32:20.960
<v Speaker 8>something like a sea ram or a sea whiz. The

0:32:20.960 --> 0:32:23.680
<v Speaker 8>automated guns that are protecting our bases and our ships

0:32:23.760 --> 0:32:27.280
<v Speaker 8>from incoming mortar fire, incoming artillery fire, incoming missile and

0:32:27.400 --> 0:32:28.040
<v Speaker 8>rocket fire.

0:32:28.280 --> 0:32:29.440
<v Speaker 2>Those are autonomous weapons.

0:32:29.480 --> 0:32:31.480
<v Speaker 8>They're making decisions about what to shoot down and what

0:32:31.560 --> 0:32:34.280
<v Speaker 8>to not without a person manually deciding what to do,

0:32:34.560 --> 0:32:37.280
<v Speaker 8>beyond deciding to turn on the system and allow it

0:32:37.280 --> 0:32:38.160
<v Speaker 8>to engage targets.

0:32:38.200 --> 0:32:38.560
<v Speaker 1>Period.

0:32:38.840 --> 0:32:41.440
<v Speaker 8>So the US government has very strong doctrine around this

0:32:41.520 --> 0:32:44.240
<v Speaker 8>that really boils down to making sure a human is

0:32:44.280 --> 0:32:47.360
<v Speaker 8>always responsible for any decision, and that doesn't mean that

0:32:47.360 --> 0:32:49.480
<v Speaker 8>the person's responsible for pulling the trigger. I hate this

0:32:49.600 --> 0:32:50.120
<v Speaker 8>idea too.

0:32:50.160 --> 0:32:51.200
<v Speaker 2>People say, well, can't.

0:32:50.960 --> 0:32:53.120
<v Speaker 8>You agree that a day I should never be able

0:32:53.120 --> 0:32:55.400
<v Speaker 8>to decide when to pull the trigger. And I don't

0:32:55.400 --> 0:32:57.040
<v Speaker 8>agree with that because I don't think there's any moral

0:32:57.080 --> 0:32:59.600
<v Speaker 8>high ground in making let's say, a landmine that can't

0:32:59.600 --> 0:33:01.800
<v Speaker 8>tell the difference between a school bus full of children

0:33:02.160 --> 0:33:05.000
<v Speaker 8>and a Russian tank column. I think that it is

0:33:05.080 --> 0:33:06.560
<v Speaker 8>good for it to be able to decide when to

0:33:06.600 --> 0:33:08.960
<v Speaker 8>pull the trigger as long as a person is taking

0:33:08.960 --> 0:33:12.280
<v Speaker 8>responsibility for that employment and whatever goes wrong in the end.

0:33:12.280 --> 0:33:14.600
<v Speaker 8>And so I'd see a lot of this is performative.

0:33:14.600 --> 0:33:16.600
<v Speaker 8>There are people who have never thought about AI, never

0:33:16.640 --> 0:33:19.920
<v Speaker 8>thought about weapons until very recently, and they're now declaring

0:33:19.960 --> 0:33:25.120
<v Speaker 8>themselves to be AI safety experts, and they are decades

0:33:25.160 --> 0:33:28.120
<v Speaker 8>behind the people who have actually been working on autonomous

0:33:28.160 --> 0:33:30.840
<v Speaker 8>weapons policy and ethics and guidelines. I think the United

0:33:30.840 --> 0:33:33.800
<v Speaker 8>States is clearly far and away the leader in this space.

0:33:34.520 --> 0:33:36.239
<v Speaker 2>Palmer, I just wanted to point out, you know, when

0:33:36.280 --> 0:33:38.200
<v Speaker 2>I put on social media coming on the show. Of course,

0:33:38.240 --> 0:33:41.080
<v Speaker 2>there are a body of people out there that don't

0:33:41.080 --> 0:33:43.680
<v Speaker 2>agree with the use of any technology in the context

0:33:43.680 --> 0:33:47.520
<v Speaker 2>of war because they don't want to have any consideration

0:33:47.600 --> 0:33:52.000
<v Speaker 2>of war right they are believe in peace. Frankly, it

0:33:52.000 --> 0:33:53.760
<v Speaker 2>would be remissing me not to ask you as well

0:33:53.760 --> 0:33:56.520
<v Speaker 2>about Oculus. You mentioned it in your prior answer. I

0:33:56.520 --> 0:33:59.640
<v Speaker 2>think we're almost at the ten year anniversary of then

0:33:59.760 --> 0:34:05.320
<v Speaker 2>Faith for acquiring then your company Oculus. Over the last

0:34:05.360 --> 0:34:09.920
<v Speaker 2>ten years, where have we landed in VR and AR.

0:34:10.320 --> 0:34:13.160
<v Speaker 2>This year, we had Metaquest three, we had Vision Pro

0:34:13.280 --> 0:34:16.879
<v Speaker 2>from Apple. Just give me your assessment of the technology

0:34:16.920 --> 0:34:18.480
<v Speaker 2>field for headsets.

0:34:19.719 --> 0:34:21.680
<v Speaker 8>Well, the people who think that we shouldn't be using

0:34:21.719 --> 0:34:23.359
<v Speaker 8>tech in any of this stuff, I'd say, let's arm

0:34:23.480 --> 0:34:25.879
<v Speaker 8>Nato with sticks and stones and water guns and see

0:34:25.920 --> 0:34:28.760
<v Speaker 8>how that goes for you guys. As far as VR,

0:34:28.880 --> 0:34:32.600
<v Speaker 8>I'm really excited with how it's going. I am happy

0:34:32.640 --> 0:34:35.720
<v Speaker 8>to see a lot of my deeply held technical beliefs

0:34:35.760 --> 0:34:38.360
<v Speaker 8>playing out in the market. One example is the Apple

0:34:38.440 --> 0:34:41.960
<v Speaker 8>Vision Pro being kind of an augmented reality, virtual reality,

0:34:42.000 --> 0:34:45.160
<v Speaker 8>mixed reality combo headset that is doing full reprojection of

0:34:45.160 --> 0:34:47.680
<v Speaker 8>the world where it's capturing the world using sensors and

0:34:47.719 --> 0:34:50.319
<v Speaker 8>then using all new photons to project in your eyes,

0:34:50.440 --> 0:34:53.319
<v Speaker 8>rather than an optically transparent AR system that a lot

0:34:53.320 --> 0:34:55.320
<v Speaker 8>of people were trying to build over the last decade.

0:34:55.320 --> 0:34:58.600
<v Speaker 8>I've always been on the hard AR full reprojection side.

0:34:58.719 --> 0:35:00.680
<v Speaker 8>Happy to see that kind of pan out with Apple.

0:35:00.760 --> 0:35:02.760
<v Speaker 8>I've used the new Apple headset. It's amazing.

0:35:04.080 --> 0:35:04.319
<v Speaker 2>You know.

0:35:04.480 --> 0:35:07.600
<v Speaker 8>Probably the best accomplishment that I've done on the VR

0:35:07.719 --> 0:35:11.040
<v Speaker 8>side was making sure that VR came back from the dead.

0:35:11.280 --> 0:35:13.359
<v Speaker 8>It is now something that other people are working on,

0:35:13.480 --> 0:35:15.000
<v Speaker 8>so that for the rest of my life, I'm going

0:35:15.080 --> 0:35:16.279
<v Speaker 8>to be able to go out and buy really nice

0:35:16.360 --> 0:35:19.200
<v Speaker 8>virtual reality headsets without having to do it myself, which

0:35:19.239 --> 0:35:20.600
<v Speaker 8>is what I was doing when I was fifteen and

0:35:20.640 --> 0:35:21.920
<v Speaker 8>sixteen starting Oculos.

0:35:23.360 --> 0:35:26.520
<v Speaker 2>Andreill founder Palmer Lucky. Good to catch up. Good to

0:35:26.520 --> 0:35:28.920
<v Speaker 2>have you with us here on Bloomberg Technology. Thank you

0:35:28.920 --> 0:35:32.560
<v Speaker 2>for your time. So coming up on the show, the

0:35:32.600 --> 0:35:36.680
<v Speaker 2>crypto rally Gaviz steam as Bitcoin tops forty two thousand

0:35:37.080 --> 0:35:39.480
<v Speaker 2>US dollars, we're going to keep conversation going and discuss

0:35:39.719 --> 0:35:43.400
<v Speaker 2>investing in the digital currency ecosystem more broadly. That's the

0:35:43.480 --> 0:35:46.239
<v Speaker 2>VC Spotlight. Next, this is Bloomberg Technology.

0:36:00.040 --> 0:36:02.200
<v Speaker 4>Let's talk crypto for a moment, because Bitcoin, if you

0:36:02.200 --> 0:36:04.879
<v Speaker 4>hadn't noticed, has just surged past forty two thousand dollars again,

0:36:04.880 --> 0:36:07.440
<v Speaker 4>extending the largest digital tokens at rally to more than

0:36:07.480 --> 0:36:09.839
<v Speaker 4>one hundred and fifty percent so far this year, far

0:36:10.280 --> 0:36:13.800
<v Speaker 4>outpacing stocks and other risk assets. For today's VC Spotlight,

0:36:13.840 --> 0:36:16.359
<v Speaker 4>that we're going to be investing and looking at the

0:36:16.440 --> 0:36:19.680
<v Speaker 4>turn of digital currency ecosystem and the startups within it.

0:36:19.760 --> 0:36:22.560
<v Speaker 4>Morgan Bellers with us NFX general partner. You invest in

0:36:22.560 --> 0:36:25.759
<v Speaker 4>a whole broad remit of companies, but what we love

0:36:25.800 --> 0:36:27.160
<v Speaker 4>is your background and the fact that you were there

0:36:27.200 --> 0:36:29.240
<v Speaker 4>building one of the first ever stable coins with Libro,

0:36:29.320 --> 0:36:31.800
<v Speaker 4>and as part of Facebook, you of course investing companies

0:36:31.840 --> 0:36:35.480
<v Speaker 4>such as Ramp, which is about FIAT into crypto. This

0:36:35.920 --> 0:36:39.759
<v Speaker 4>exuberance around bitcoin seems to be about institutional access, whether

0:36:39.840 --> 0:36:42.640
<v Speaker 4>or not we get a bitcoin, a spot, bitcoin ETF

0:36:43.520 --> 0:36:46.360
<v Speaker 4>where do you think that really works for the ecosystem

0:36:46.360 --> 0:36:46.920
<v Speaker 4>at large?

0:36:47.280 --> 0:36:50.920
<v Speaker 9>Thank you again for having me so seeing this turn

0:36:51.280 --> 0:36:55.480
<v Speaker 9>is exciting, although cautiously optimistic. I think that there have

0:36:55.560 --> 0:37:00.279
<v Speaker 9>been several like Schrodinger's cats in crypto is dead?

0:37:00.360 --> 0:37:00.920
<v Speaker 2>Is it Alive?

0:37:01.320 --> 0:37:03.920
<v Speaker 9>And one of those has been the BITCOINYTF like is

0:37:03.920 --> 0:37:04.239
<v Speaker 9>it dead?

0:37:04.320 --> 0:37:04.840
<v Speaker 5>Is it alive?

0:37:05.200 --> 0:37:07.640
<v Speaker 9>And I think we're turning a corner as I not

0:37:07.719 --> 0:37:10.840
<v Speaker 9>gotten all of the wood, that it might finally actually

0:37:10.880 --> 0:37:13.760
<v Speaker 9>be happening, which would be huge, if not the largest

0:37:14.640 --> 0:37:18.440
<v Speaker 9>impact that could be had on institutional adoption. And the

0:37:18.480 --> 0:37:22.719
<v Speaker 9>second Joininger's cat was Binance, Like people were worried about Binance.

0:37:22.760 --> 0:37:24.800
<v Speaker 9>What was there, what wasn't there? What was going to happen,

0:37:24.880 --> 0:37:27.719
<v Speaker 9>what wasn't going to happen, and I think what we

0:37:27.760 --> 0:37:32.800
<v Speaker 9>saw happen a few weeks ago was like minimal impact

0:37:32.840 --> 0:37:34.719
<v Speaker 9>on the space, so I think it. So those are

0:37:34.760 --> 0:37:39.279
<v Speaker 9>two huge unknowns that I think are now becoming known

0:37:39.560 --> 0:37:43.440
<v Speaker 9>in a positive way. So that's exciting for the space.

0:37:44.280 --> 0:37:46.360
<v Speaker 2>Morgan. Earlier in the show, Caroline and I were talking

0:37:46.360 --> 0:37:49.440
<v Speaker 2>about how you know when bitcoin goes up, publicly traded

0:37:49.520 --> 0:37:52.759
<v Speaker 2>crypto related stocks also go up, either because it's like

0:37:52.760 --> 0:37:55.840
<v Speaker 2>a proxy for exposure if you're not invested in a

0:37:56.239 --> 0:38:00.440
<v Speaker 2>digital currency, or it's a logic where well, if coins

0:38:00.440 --> 0:38:03.640
<v Speaker 2>doing well, that's the thing that underpins all of those companies,

0:38:03.800 --> 0:38:06.560
<v Speaker 2>so they do as well. Spin that forward to the

0:38:06.640 --> 0:38:10.719
<v Speaker 2>VC context, is bitcoin being up good for you when

0:38:10.760 --> 0:38:12.920
<v Speaker 2>you decide okay, I'm going to invest here here or that.

0:38:13.480 --> 0:38:15.960
<v Speaker 9>I like to think that I stay sober enough that

0:38:16.080 --> 0:38:19.440
<v Speaker 9>it doesn't matter, but in reality it probably does affect

0:38:19.520 --> 0:38:21.320
<v Speaker 9>mine and others psyches.

0:38:21.360 --> 0:38:23.240
<v Speaker 2>I think I've said this on the show.

0:38:23.040 --> 0:38:26.480
<v Speaker 9>Before, but for me, there's always three questions, which is

0:38:26.520 --> 0:38:30.600
<v Speaker 9>one is this company solving a problem for anyone? Two

0:38:30.680 --> 0:38:34.280
<v Speaker 9>is anyone using this thing? And three is this product

0:38:34.360 --> 0:38:36.520
<v Speaker 9>or a company making money or has any potential to

0:38:37.200 --> 0:38:40.520
<v Speaker 9>make money? And when you look at the history of

0:38:40.840 --> 0:38:44.080
<v Speaker 9>crypto and crypto startups at blockchain companies, there's very few

0:38:44.520 --> 0:38:47.920
<v Speaker 9>that actually check all three of those boxes, let alone

0:38:48.440 --> 0:38:51.080
<v Speaker 9>one or two. And bitcoin is one of the few

0:38:51.880 --> 0:38:54.799
<v Speaker 9>use cases that is, you know, checks all of those

0:38:54.800 --> 0:38:58.200
<v Speaker 9>boxes and is real and is definitely a case study

0:38:58.239 --> 0:39:02.399
<v Speaker 9>for potentially other But at the seed stage, I try

0:39:02.440 --> 0:39:05.040
<v Speaker 9>to not look at the price of bitcoin when.

0:39:06.360 --> 0:39:09.160
<v Speaker 4>What you look at is probably the general energy of

0:39:09.360 --> 0:39:12.719
<v Speaker 4>building in the seed stage right now. And to that end,

0:39:12.800 --> 0:39:15.960
<v Speaker 4>amid what has been termed yet another crypto winter, has

0:39:16.000 --> 0:39:18.239
<v Speaker 4>the building still been going? Have there been problems that

0:39:18.280 --> 0:39:20.720
<v Speaker 4>are being solved in this time where we could stop

0:39:20.719 --> 0:39:23.280
<v Speaker 4>just talking about prices and actually look at what fundamentally

0:39:23.360 --> 0:39:23.880
<v Speaker 4>is being built.

0:39:24.120 --> 0:39:28.960
<v Speaker 9>Building is still going. When the market was nuts, you

0:39:29.120 --> 0:39:31.960
<v Speaker 9>had what my partner James caused, the fruit flies coming in.

0:39:32.080 --> 0:39:34.920
<v Speaker 9>So the founders who thought it was just like, you know,

0:39:34.960 --> 0:39:37.640
<v Speaker 9>the sexiest successory to have a crypto company and thought

0:39:37.680 --> 0:39:41.239
<v Speaker 9>overnight they would be worth a lot on paper. And

0:39:41.280 --> 0:39:44.359
<v Speaker 9>what the market cooling down dat is it filtered those

0:39:44.440 --> 0:39:47.560
<v Speaker 9>founders out. So now you really only have founders coming

0:39:47.600 --> 0:39:50.240
<v Speaker 9>in who really really care, who actually have a problem

0:39:50.280 --> 0:39:53.480
<v Speaker 9>to solve, So in a weird way. The bear market's

0:39:53.600 --> 0:39:56.879
<v Speaker 9>very nice because it automatically applies a filter at least

0:39:56.920 --> 0:39:59.479
<v Speaker 9>to the top of the funnel of startups that isn't

0:39:59.480 --> 0:40:01.880
<v Speaker 9>necessarily there in a ballmarket.

0:40:03.200 --> 0:40:05.600
<v Speaker 2>Morgan, bigger picture. We've had a lot of guests on

0:40:05.640 --> 0:40:08.480
<v Speaker 2>the show that criticized the US as a regulatory environment

0:40:08.680 --> 0:40:12.839
<v Speaker 2>or a market environment to foster the underlying technology, let's

0:40:12.840 --> 0:40:15.480
<v Speaker 2>say blockchain in this instance. Your view on that.

0:40:16.040 --> 0:40:19.600
<v Speaker 9>I am proud to be an American. However, I do

0:40:19.760 --> 0:40:24.360
<v Speaker 9>wish that crypto regulation was a bit more founder friendly

0:40:24.960 --> 0:40:27.960
<v Speaker 9>than it currently is. To bring back my Schrodinger's cat analogy,

0:40:28.000 --> 0:40:29.680
<v Speaker 9>which I think still applies here.

0:40:29.800 --> 0:40:30.760
<v Speaker 2>There are a lot of.

0:40:31.360 --> 0:40:36.160
<v Speaker 9>Unknowns or fears or concerns about which way various regulatory

0:40:36.200 --> 0:40:39.960
<v Speaker 9>bodies can go on various regulatory topics in crypto that

0:40:40.200 --> 0:40:45.080
<v Speaker 9>are scaring founders away from starting companies in the US.

0:40:45.840 --> 0:40:49.880
<v Speaker 9>And if there was more clarity in one direction or

0:40:49.880 --> 0:40:52.840
<v Speaker 9>another that would limit the amount of guessing or fear

0:40:52.880 --> 0:40:55.239
<v Speaker 9>that was required to start a company, I think that

0:40:55.280 --> 0:41:00.440
<v Speaker 9>would be a lot more conducive to founders, specific specifically

0:41:00.480 --> 0:41:04.120
<v Speaker 9>starting companies in this space in the United States.

0:41:04.160 --> 0:41:06.640
<v Speaker 2>Morgan Bella an f X general partner. We always enjoy

0:41:06.680 --> 0:41:10.080
<v Speaker 2>having you on the show, The Schrodinger's Cat Analogy. Let's

0:41:10.080 --> 0:41:12.280
<v Speaker 2>see if it gets traction, we'll see.

0:41:12.440 --> 0:41:13.719
<v Speaker 9>I'm a dog person, by the way.

0:41:13.800 --> 0:41:16.640
<v Speaker 2>But oh, I know I've met as you know, I've

0:41:16.680 --> 0:41:18.719
<v Speaker 2>met your dog, which is always at your side. But

0:41:19.040 --> 0:41:29.720
<v Speaker 2>we're out of time for today. Thank you, okay. Apple's

0:41:29.719 --> 0:41:33.320
<v Speaker 2>long anticipated breakup with its main financial services partner, Goldman

0:41:33.400 --> 0:41:36.160
<v Speaker 2>Sacks is underway, with the iPhone maker offering the bank

0:41:36.160 --> 0:41:39.120
<v Speaker 2>a path out of their deal. But who might replace Goldman?

0:41:39.400 --> 0:41:42.080
<v Speaker 2>It's the focus of this week's Power On column, and

0:41:42.719 --> 0:41:45.000
<v Speaker 2>Bloomberg's Mark German joins me here in San Francisco. You

0:41:45.040 --> 0:41:48.600
<v Speaker 2>have a thesis Chase outline it. Yeah, first of all,

0:41:48.640 --> 0:41:49.279
<v Speaker 2>thank you for having me.

0:41:49.320 --> 0:41:52.880
<v Speaker 10>We've heard about City Bank, We've heard about American Express,

0:41:52.920 --> 0:41:56.520
<v Speaker 10>but I think Chase is absolutely the most likely company

0:41:56.600 --> 0:41:58.920
<v Speaker 10>to take over four Goldman Sacks.

0:41:58.960 --> 0:42:01.880
<v Speaker 2>In terms of the Apple card partnership, Chase is a lot.

0:42:01.760 --> 0:42:03.799
<v Speaker 10>Going for it. It makes a ton of money, so

0:42:03.840 --> 0:42:06.440
<v Speaker 10>it has the cash balance, It has the management, It

0:42:06.440 --> 0:42:09.399
<v Speaker 10>has the reserves to take on a partnership that may

0:42:09.440 --> 0:42:12.319
<v Speaker 10>not be entirely lucrative at the get go. It does

0:42:12.400 --> 0:42:15.120
<v Speaker 10>have time to sort of bake into its financials that

0:42:15.160 --> 0:42:18.480
<v Speaker 10>this is going to be a long term strategy and partnership. Goldman,

0:42:18.480 --> 0:42:20.520
<v Speaker 10>as you know, lost a couple billion dollars maybe a

0:42:20.520 --> 0:42:21.480
<v Speaker 10>little bit more than that on this.

0:42:21.840 --> 0:42:24.280
<v Speaker 2>They couldn't really sustain it. Chase probably could.

0:42:24.480 --> 0:42:27.040
<v Speaker 10>The other thing is is Apple and Chase, most people

0:42:27.120 --> 0:42:30.160
<v Speaker 10>don't know, have a long term relationship. Chase is one

0:42:30.160 --> 0:42:32.759
<v Speaker 10>of the biggest partners for credit card transactions in the

0:42:32.800 --> 0:42:37.360
<v Speaker 10>app store, Apple online services, Apples, retail stores, online stores,

0:42:37.640 --> 0:42:40.200
<v Speaker 10>and Apple probably gets a better rate right because of

0:42:40.239 --> 0:42:42.279
<v Speaker 10>that deal with Chase and how much Chase credit card

0:42:42.320 --> 0:42:44.879
<v Speaker 10>usage there is. And there's all sorts of stuff behind

0:42:44.880 --> 0:42:47.759
<v Speaker 10>the scenes storing Apple's cash balance, so that long term

0:42:47.800 --> 0:42:50.280
<v Speaker 10>relationship means their prime for a bigger expansion.

0:42:50.640 --> 0:42:52.440
<v Speaker 4>It was a great write up. I urged people to

0:42:52.480 --> 0:42:55.400
<v Speaker 4>go wells also learned that well Steve scuer is off

0:42:55.400 --> 0:42:58.759
<v Speaker 4>playing golf with Eddiq sometimes Mark Coman always with the

0:42:58.760 --> 0:43:00.440
<v Speaker 4>facts you thank you meanwhile. That does it for this

0:43:00.600 --> 0:43:02.279
<v Speaker 4>edition of Bloomberg Technology.

0:43:02.640 --> 0:43:05.320
<v Speaker 2>Check out the pod Apple, Spotify, Heart and on Bloomberg.

0:43:05.400 --> 0:43:08.120
<v Speaker 2>This is Bloomberg Technology