Speaker 1: From Marhart where Innovation, Money and Power.
Speaker 2: Collie in Silicon Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4: And Caroline Heinder Bloomberg's world headquarters in New York and
Speaker 4: I'm d Ludlow in San Francisco.
Speaker 2: This is Bloomberg Technology coming up.
Speaker 4: Look Spotify it slashes its workforce by seventeen percent. Is
Speaker 4: amit the company's steepest job cuts this year. Will break
Speaker 4: down the streaming services, push to costs and drive profitability.
Speaker 2: Plus, the crypto rally gains steam as Bitcoin tops forty
Speaker 2: two thousand US dollars for the first time since April
Speaker 2: of twenty twenty two. We'll discuss what it means for
Speaker 2: the digital currency ecosystem in today's VC Spotlight, and.
Speaker 4: We sit down with the oculist creator Palmer Lucky as
Speaker 4: his defence technology startup, Andreill veils a tiny, reusable fighter
Speaker 4: jet to blow up drones. All that and so much
Speaker 4: more ahead, let's get into these markets. Look, we are
Speaker 4: in sell off mode. We're just hearing from Guy and
Speaker 4: Alex that basically we're just getting back to the levels
Speaker 4: we're out on Thursday. Such has been the drive higher
Speaker 4: in risk assets of late, we're off by one point
Speaker 4: one percent. Now we know mainly just reassessing how much
Speaker 4: we've a run up already, but also really with the
Speaker 4: direction of travel for the Federal Reserve and a lot
Speaker 4: of the jobs data that.
Speaker 2: We're learning this week.
Speaker 4: Two year yield currently up by some ten basis points,
Speaker 4: so clearly seeing a sell off in bonds and stocks
Speaker 4: Blue mug Donar Index on the higher side by some
Speaker 4: five ten percent. After we've seen such weakness in the
Speaker 4: US dollars so far this year, let's move on because
Speaker 4: the strength of the US dollar not out matching the
Speaker 4: strength in bitcoin and ED. We're going to dwell on
Speaker 4: this a little bit later in the show much more.
Speaker 4: But the fact that we are now piercing above forty
Speaker 4: two thousand at one point in earlier training, now at
Speaker 4: forty one and a half thousand, let's call it. We
Speaker 4: know the driving force behind all of this. Will we
Speaker 4: get in spot bitcoin ETF come January? Will, of course
Speaker 4: the harving process next year draw demand yet further, But
Speaker 4: ultimately this is about risk asset demand as well, isn't it.
Speaker 2: Yeah, we call it our risk asset of choice, and
Speaker 2: it's interesting that on days like today, where equities are
Speaker 2: broadly lower, bitcoin is higher, but so are crypto related stocks.
Speaker 2: And I guess that there are two rationales, right. It's
Speaker 2: a proxy for Wall Street to get some exposure to
Speaker 2: cryptocurrencies like bitcoin without investing in them directly by investing
Speaker 2: in stocks that are relevant to it. Or the other
Speaker 2: way of looking at it that if the thing that
Speaker 2: is important to these equities does well, in this case bitcoin,
Speaker 2: then they do well as well. And you are seing
Speaker 2: some pretty outsized moves. I mean, these are big moves
Speaker 2: right on these single names on a day where equities
Speaker 2: are lower.
Speaker 4: And I think perhaps we've got a little bit used
Speaker 4: to a lack of volatility, dare we say it? In
Speaker 4: broader bitcoin prices, we were used to things flinging about
Speaker 4: by ten double digit percentage points. But on the day, well,
Speaker 4: we have been only up about five six percent, But
Speaker 4: that feels a big move. And I think these numbers,
Speaker 4: we're still way off the sixty nine thousand dollars level
Speaker 4: that we had in previous highs, but we were back
Speaker 4: at that level that we saw in Eightril twenty twenty two,
Speaker 4: prior to the Taro Luna Debarkle and all of this
Speaker 4: just slowly rebuilding confidence really in the ecosystem.
Speaker 2: Yeah, and we've had guests on this show saying sixty
Speaker 2: thousand dollars next year, one hundred thousand dollars maybe next year.
Speaker 2: Seeing is believing, I think when it comes to bitcoin.
Speaker 2: But we're excited about twenty twenty four. The other top
Speaker 2: story that we've got to get back to, Carrie is
Speaker 2: Spotify reducing its workforce by seventeen percent. That's fifteen hundred jobs.
Speaker 2: This is the company's biggest cuts yet this year. They've
Speaker 2: done three trims. I want to bring in Bloomberg's actually
Speaker 2: calm and give us the details. Actually, what did Spotify
Speaker 2: say about the timing and rationale for cutting fifteen hundred employees.
Speaker 5: Yeah, so today Spotify's CEO Daniel Eck put out a
Speaker 5: blog post sort of explaining the cuts. He said, basically,
Speaker 5: these decisions were going to have to be made, possibly
Speaker 5: over the next couple years, and he decided to just
Speaker 5: rip the band aid off and cut a bunch of
Speaker 5: people all at once. He essentially said that yes, they've
Speaker 5: cut operating costs quite a bit, but not enough, and
Speaker 5: that they needed more people to go and more people
Speaker 5: to focus on their core mission, which is building for
Speaker 5: creators and consumers.
Speaker 4: Yeah, I think just realigning the fact that too many
Speaker 4: people were ultimately building things that weren't core to the
Speaker 4: ultimate mission of building profitability or building margin, and that
Speaker 4: seems to be what analysts like so much at the moment, Ashley.
Speaker 4: And it's interesting that a lot of them saying eventually
Speaker 4: margin is going to be buoyed by what have been
Speaker 4: some really outsized commitments to the world of well podcasting
Speaker 4: in particular.
Speaker 5: Yes. Yeah, so the story of Spotify really is that
Speaker 5: they since twenty nineteen, have committed over a billion dollar
Speaker 5: to the podcast world. They bought studios, they bought creation technology,
Speaker 5: they bought a hosting service, and really what we've seen
Speaker 5: over the past year is just a total backtrack on
Speaker 5: that business. And I imagine as we learn more about
Speaker 5: today's clubs, we'll hear about how that impacts their podcast
Speaker 5: business as it is.
Speaker 2: Yeah, it's interesting. Loads of technology companies have gone through
Speaker 2: this the mic grow focus on profit. The other metric
Speaker 2: you can look at is say, well, actually, Spotify is
Speaker 2: on track for an astonishingly good year one hundred million
Speaker 2: new subscribers or users. It's going to add based on
Speaker 2: how it's done so far. What is the overall health
Speaker 2: score for Spotify actually based on your reporting.
Speaker 5: Yeah, I mean, I think that's what's very puzzling here,
Speaker 5: right is they've had amazing growth from a monthly average
Speaker 5: user perspective. They do have more free users than subscription
Speaker 5: so that's an issue. You know, they want to be
Speaker 5: able to monetize those subscriptions more. But broadly speaking, they
Speaker 5: continue to grow, which is pretty incredible. I think they
Speaker 5: just have to figure out what is going to be
Speaker 5: the way that they make more money because they keep
Speaker 5: having to pay these music rights holders, which makes a
Speaker 5: ton of sense, but they also need to find other
Speaker 5: revenue opportunities. So we've seen price increases, we've seen them
Speaker 5: cut costs, we've seen them move into podcasting, and then
Speaker 5: very recently they moved into audiobooks. So maybe that'll be
Speaker 5: magic bullet. I don't know.
Speaker 4: And all of this at a time where Daniel let
Speaker 4: does speak about the macro realities as well. He talked
Speaker 4: about the fact that look, money's more expensive than it
Speaker 4: used to be. Boring coss have been on the rise.
Speaker 4: This is perhaps just really trying to instead of what
Speaker 4: we started to talk these micro cuts that are happening
Speaker 4: at tech companies at the moment, he's just, as you say,
Speaker 4: ripping the band aid and just showing his intent to
Speaker 4: still have this year of efficiency to coin a metaphrase.
Speaker 5: Yeah, And I don't know if we knowed it at
Speaker 5: the top, but this is the third round of cuts
Speaker 5: this year. So they did a significant chunk in January,
Speaker 5: they did another chunk in June, which was primarily the
Speaker 5: podcast team. And yeah, now here we are with the
Speaker 5: biggest cut that they've made all year. So overall, over
Speaker 5: two thousand employees will have lost their jobs.
Speaker 2: Yeah, I like your point on users. I mean, I'm
Speaker 2: on the premium Family monthly subscription which I pay, and
Speaker 2: I have some other family members on there which do
Speaker 2: not pay. But I guess the free user points Big
Speaker 2: Bloomberg's actually come and busy night early morning for you,
Speaker 2: Thank you so much. Are more tech layoffs and other
Speaker 2: stories happening elsewhere. Twilio cutting five percent of its workforce,
Speaker 2: it's third major headcount reduction in order to reach profitable growth.
Speaker 2: The cuts mostly affected salespeople for Twilio's consumer data platform
Speaker 2: and contact center software. That's according to a memo from
Speaker 2: the CEO, Jeff Laws and the company has shed more
Speaker 2: than three thousand workers since September twenty twenty two, which
Speaker 2: is about one third of its total workforce in that time.
Speaker 4: Core Weave it's a cloud computing provider that's among the
Speaker 4: hottest startups in the AI race. It says it's close
Speaker 4: to minority stake sale to investors led by Fidelity, others
Speaker 4: including as you can see JP Morgan Asset Management. We're
Speaker 4: also gotting Zoom Ventures among them, all participating. They can
Speaker 4: transaction the values of the company that get this seven
Speaker 4: million dollars acording to sources, well, we can get a
Speaker 4: source very close to the deal now, none other than
Speaker 4: the CEO core Weave, Mike and Trader. Is great to
Speaker 4: have you on the show. Mic and extraordinary story really
Speaker 4: of cour We've going from its origins. Well, you are
Speaker 4: a commodities tradee or the space for crypto, you're doing
Speaker 4: mining aneath and then of course you become a specialized
Speaker 4: cloud AI provider. At what makes your offering different from
Speaker 4: the more general purpose cloud providers out there.
Speaker 6: Sure, First of all, thank you very much. It's great
Speaker 6: to have an opportunity to speak with you. Topically a
Speaker 6: very exciting day over here. Weave and my whole team
Speaker 6: is very excited about these transactions as we go into
Speaker 6: the end of the year, looking forward to really getting
Speaker 6: off to next year in the same putting. So, to
Speaker 6: answer your question, Creweed is a specialized cloud computing company,
Speaker 6: and what we mean by that is we've made every
Speaker 6: decision from the hardware stack all the way through the
Speaker 6: software stack to really build a cloud that is specialized
Speaker 6: to address the needs of companies that need massive scale,
Speaker 6: paralyized computing. When we talk about that, we're really talking
Speaker 6: about the three industries that we address. The first one
Speaker 6: is media and entertainment, and so if you go to
Speaker 6: see a Marvel, you know there's a good chance that
Speaker 6: several of those studios will have rendered their images on
Speaker 6: our infrastructure. The second one is basic science synthetic biology,
Speaker 6: so think of that is like drug discovery and protein folding.
Speaker 6: And then finally and most importantly right now obviously, is
Speaker 6: the build out of infrastructure that is very very appropriate
Speaker 6: for artificial intelligence and machine learning.
Speaker 2: Mike, I keep hearing about core We've I have done
Speaker 2: all year long about just the sort of booming growth
Speaker 2: that you've experienced I think you started the year disclosing
Speaker 2: you had three data centers online. Now I believe it's
Speaker 2: somewhere between fourteen and eighteen. How have you been able
Speaker 2: to move so quickly on the infrastructure side, Yeah.
Speaker 6: You know, great teams all across our infrastructure internal to
Speaker 6: the company, just an incredible coordination automation to allow us
Speaker 6: to kind.
Speaker 2: Of build and scale that.
Speaker 6: We also have great relationships up through the supply chains
Speaker 6: that have been so difficult for everyone to navigate. The
Speaker 6: support from our partners all through the supply chain has
Speaker 6: been incredible and unimers are correct, We've made a massive
Speaker 6: push in terms of the number of data centers that
Speaker 6: we are in. It puts us in a position to
Speaker 6: be able to serve the largest, most important artificial intelligence
Speaker 6: models that are being trained, that are being served in
Speaker 6: the public right now, and it's very exciting. We've got
Speaker 6: a lot more work to do, but definitely improving and
Speaker 6: increasing our footprint every day.
Speaker 2: One of those partners is in video. We're just showing
Speaker 2: some of your key customers on the screen, but in
Speaker 2: VideA is a tech partner as well, right, and my
Speaker 2: understanding is that you're actually helping them. You yourselves to
Speaker 2: build their own next gen supercompute. What can you tell
Speaker 2: us about that project?
Speaker 6: So, in Videos is one of the partner of ours.
Speaker 6: They invested alongside Magnetar and K two in our B round,
Speaker 6: which was where we raised four hundred and twenty million
Speaker 6: dollars in April of this year.
Speaker 1: It was.
Speaker 6: A kind of massive step for us as we began
Speaker 6: to accelerate our growth through the year, and so by
Speaker 6: having a partner like in Vidia invest in the company,
Speaker 6: it made it very clear to all of our partners
Speaker 6: across the debt space, across the equity space that they
Speaker 6: had looked at our infrastructure and were comfortable with the
Speaker 6: way that we built it in order to deliver the
Speaker 6: most performing configuration of the accelerated compute that is defined
Speaker 6: by their GPU.
Speaker 4: You've been raising money, whether it be equity or debt,
Speaker 4: at quite a pace because of course what you're doing
Speaker 4: needs a lot of money. Would you tap the public markets?
Speaker 4: Would you think about going public as soon as twenty
Speaker 4: twenty four?
Speaker 6: So, as you said, we really made three different transactions
Speaker 6: in the capital markets this year. We did the BE
Speaker 6: round early on that was, as I said, a quandred
Speaker 6: and twenty one million dollar raise. We came back and
Speaker 6: we did a very very large debt facility that was
Speaker 6: two point three billion dollars that was really dedicated to
Speaker 6: purchasing the capital intensive infrastructure that's required. And then this
Speaker 6: secondary transaction is the final transaction for us for the year.
Speaker 6: We are not committed or having no real comment around
Speaker 6: the concept of going into the public markets other than
Speaker 6: to say that we are capital intensive business and that
Speaker 6: we are going to need to continue to access capital
Speaker 6: markets in the most efficient way possible, and as far
Speaker 6: as that goes, all options are absolutely on table for
Speaker 6: us as we look into the future.
Speaker 2: Mike quickly, you've built on H one hundred and DGX,
Speaker 2: but AMD's coming with mi I three hundred. Have you
Speaker 2: looked at that?
Speaker 6: Yeah, so we do. We spend a lot of time
Speaker 6: researching all of the different silicon alternatives in the market.
Speaker 6: Right now, our focus is on the H one hundred.
Speaker 6: I would argue that, you know, as you look across
Speaker 6: the AI space at large, their focus is on the
Speaker 6: H one hundred. It's an amazing piece of silicon. It
Speaker 6: does incredible things in terms of moving the AI space forward,
Speaker 6: and so it's really been the majority of our effort,
Speaker 6: but we do monitor all of the different silicon alternatives
Speaker 6: that are out there that could potentially be integrated into
Speaker 6: a provider like US COOL.
Speaker 2: We've see Mike can transit greats. Catch up with you
Speaker 2: setting minorities taking that company at a big valuation. Thank you.
Speaker 2: Coming up here on Bloomberg Technology, former US Treasury Secretary
Speaker 2: Larry Summers weighs in and what it means to be
Speaker 2: a member of open AI's newly formed bulb. We're gonna
Speaker 2: bring you those details next. This is Bloomberg Technology. Okay,
Speaker 2: time for talking tech and first up. COMMA Secretary Gina
Speaker 2: Romondo says if the US truly wants to stop China
Speaker 2: from making cutting edge semiconductors, then her department is going
Speaker 2: to need more funding. During its defense forum on Saturday,
Speaker 2: Romondo also urged American chip companies to prioritize national security
Speaker 2: over their revenue, and one of the chip making industry's
Speaker 2: most valuable suppliers is sinking deeper into debt despite holding
Speaker 2: more than ninety percent share of the silica used to
Speaker 2: polish silicon wafers, Fuso Chemical, based in Japan, hasn't lifted
Speaker 2: prices because it fears it would sky out its relationships
Speaker 2: with customers like Samsung, Intel, and Taiwan Semiconductor. FUSO also
Speaker 2: struggling to make its CAPEX targets. Plus, California's Privacy Agency
Speaker 2: has drafted a set of rules They aim to give
Speaker 2: residents more agency over how their personal data is used
Speaker 2: by automated tools. If adopted, the proposal would affect how
Speaker 2: tech companies develop AI, which relates heavily on data to
Speaker 2: train itself. Board members will discuss the draft on Friday,
Speaker 2: though enforcement isn't likely to start anytime.
Speaker 4: Seeing Caroline Let's stick on AI ed because the former
Speaker 4: US Treasury Secretary Larry Summers, well, he's hoping to get
Speaker 4: settled into his new role as a board member of
Speaker 4: the so called interim Board of Open AI, of course,
Speaker 4: the key AI startup. He shared his thoughts on the
Speaker 4: matter in bluemog Television's On Wall Street week A, David weston,
Speaker 4: take a listen.
Speaker 1: This was something that was extraordinarily important. You know, no
Speaker 1: one could be certain whether this is a once a
Speaker 1: decade technology, at once a peth century technology, at once
Speaker 1: a century technology, at once a millennium technology. No one
Speaker 1: can know that for sure, but it sure looks like
Speaker 1: it's awfully important to develop rapidly and safely and to
Speaker 1: disseminate effectively and well. So when I was offered an
Speaker 1: opportunity to be part of contributing to that, overseeing to
Speaker 1: make sure that that was effectively done, and to do
Speaker 1: it working with some very great people, I thought it
Speaker 1: was a real opportunity and I was glad to do it.
Speaker 3: I don't want to take anythway from your technological expertise,
Speaker 3: but what you just said safely strikes me as probably
Speaker 3: part of what you're going to be focused on, and
Speaker 3: that gets to questions of governance about how you handle
Speaker 3: this technology wherever it's going and how a powerful may be.
Speaker 3: Do you have an overall sense of what you need
Speaker 3: to do to govern it to get this safely part right?
Speaker 1: You know, David, I've been on the job two days
Speaker 1: and they're going to send me the onboarding packet for
Speaker 1: the board on Sunday. So I shouldn't be saying too
Speaker 1: much at all because I don't know enough. Here's some
Speaker 1: things I think I know. I think I know that
Speaker 1: a company like this has to be prepared to cooperate.
Speaker 1: Doesn't mean always agree with but cooperate with key government
Speaker 1: officials on regulatory issues, on national security issues, on development
Speaker 1: of technology issues. I think I know also, and this
Speaker 1: is integral to the structure of open AI, where the
Speaker 1: for profit entity is itself a creature of a not
Speaker 1: for profit entity, that this needs to be a corporation
Speaker 1: with a conscience, and that we need to be always
Speaker 1: thinking about the multiple stakeholders in the develop into this technology.
Speaker 1: And as a board member, that will be part of
Speaker 1: my responsibility working with other board members to.
Speaker 2: Make that certain.
Speaker 1: You know, my colleague at Harvard Lake, colleague Ken Galbraith,
Speaker 1: said that conscious is the knowledge that someone is watching,
Speaker 1: and I think it's the responsibility for everybody involved in
Speaker 1: this to be thinking very carefully always about both opportunities
Speaker 1: and uncertainties and to make sure that those are balanced
Speaker 1: in the best way that's possible.
Speaker 2: That was former US Treasury Secretary Larry sum Is sitting
Speaker 2: down with Bloomberg's David Weston. We should also know that
Speaker 2: Larry Summers is a Harvard University professor and a paid
Speaker 2: contributor to Bloomberg TV and Will Street. We now as
Speaker 2: we keep an eye on the situation with the Israel
Speaker 2: Hamas Wall. The situation is also one that's been hard
Speaker 2: to manage online. TikTok is having a hard time moderating
Speaker 2: deep fake videos of her mass victims and other private citizens,
Speaker 2: even though these videos violate their content moderation policies, which
Speaker 2: ban AI generated videos of private citizens and miners. And
Speaker 2: yet these videos are racking up thousands to millions of views.
Speaker 2: I want to bring in Bloomberg Alex Brinko, who's been
Speaker 2: writing about this this morning on Bloomberg. That is the struggle.
Speaker 2: They're in contravention of the policy, but they're being seen
Speaker 2: by millions, Alex. Absolutely.
Speaker 7: And in the days after the October seventh attack by
Speaker 7: Hamas in Israel on that music festival, I was looking
Speaker 7: on the app for some of the names of some
Speaker 7: of the believed victims, and some of the top videos
Speaker 7: were AI generated videos that purported to and showed folks
Speaker 7: like Shannie Luke, the twenty two year old now known
Speaker 7: to be dead Germans. Really woman who you saw her face.
Speaker 7: You saw an image like her standing in front of
Speaker 7: folks in military garb holding guns, talking about her thoughts
Speaker 7: on the attack, talking about her mother.
Speaker 2: But this was not in.
Speaker 7: Fact showne Luke. This was a digital resurrection, as experts
Speaker 7: call it, where somebody went online used one of these
Speaker 7: increasingly inexpensive tools to take some photos of her from
Speaker 7: the Internet and turn it into an AI generated video.
Speaker 7: Now these videos are against the content guidelines of TikTok.
Speaker 7: Private citizens and miners are not allowed to be portrayed
Speaker 7: in what TikTok calls synthetic media, which includes AI videos.
Speaker 7: But that video wrapped up seven million views alone before
Speaker 7: I sent it to TikTok and they took it down.
Speaker 7: There are dozens of additional videos like this portraying both
Speaker 7: victims of hamas portraying three year old murder victims in
Speaker 7: a child's voice talking about how they died and the
Speaker 7: injuries they sustained. And these videos are live and again
Speaker 7: racking up thousands to millions of views and sometimes going viral.
Speaker 7: So this is just an indicator to me of this
Speaker 7: kind of early wave of w where AI is hitting
Speaker 7: real people, and in particular people who, since they are deceased,
Speaker 7: cannot actually come in and defend themselves when they see
Speaker 7: their likeness out there on social media.
Speaker 4: So deeply emotive, Alex and just to say what TikTok
Speaker 4: has indeed come back. Of course parent company Byte Dancing,
Speaker 4: Like how the platforms, TikTok continues to invest in detection
Speaker 4: and transparency and in industry and partnerships to address this
Speaker 4: rapidly evolving technology. But therein lies the issue. It is
Speaker 4: a rapidly evolving technology. What do you think more could
Speaker 4: be done internally by TikTok and indeed the other key
Speaker 4: social media players out here.
Speaker 7: They've already rolled out tools to ask users to opt
Speaker 7: into label AI on videos that use AI, but most
Speaker 7: of these videos Caroline that I came across didn't have
Speaker 7: that label. So it's clear they need to be doing
Speaker 7: more behind the scenes with their incredibly powerful algorithms, with
Speaker 7: their human moderators to be picking up on this stuff.
Speaker 7: But when I talk to experts, they're already raising a
Speaker 7: flag not just in these digital resurrections, but also looking
Speaker 7: forward to things like the election. Right now, a lot
Speaker 7: of these videos have this kind of uncanny valley weird feel.
Speaker 7: They're going to get more realistic and the apps are
Speaker 7: going to need to do more to be able to
Speaker 7: detect them.
Speaker 4: Alex BLERINCA thank you so much for bringing us the
Speaker 4: story from New York and San Francisco. This's a Bloomberg Technology.
Speaker 2: Welcome back to Bloomberg Technology. Ed love Low here in
Speaker 2: San Francisco.
Speaker 4: Caroline hid and New York. Let's quit check on these
Speaker 4: markets because actually we're having the biggest cell offon indeed
Speaker 4: the NASAK one hundred in more than a month now
Speaker 4: October twenty sixth we're seeing and we're off by more
Speaker 4: than a percentage point. Now is this profit taking after
Speaker 4: the run up that we've had. Of course throughout the
Speaker 4: month of November, is in a little bit of caution
Speaker 4: as perhaps we're baking a little bit too much dubbishness
Speaker 4: into a federal reserve and the direction of travel for bonds.
Speaker 4: But nevertheless, the sell off in stocks and a sell
Speaker 4: off in bonds as well, the two year yields spiking
Speaker 4: as well. I'm looking though at in spite of this
Speaker 4: sell off in risk assets, one stands out bitcoin actually
Speaker 4: powering up. We're up at one point in excess of
Speaker 4: forty two thousand dollars and we're still on the higher
Speaker 4: side despite the stronger US dollar today. You know, the
Speaker 4: driving forces we're still talking about spot bitcoin ETF will
Speaker 4: that we signed off in January will we get of course,
Speaker 4: and what we know the harving's going to come next year,
Speaker 4: but what will macro policy mean for bitcoin into twenty
Speaker 4: twenty four. So still on the higher side, let's look
Speaker 4: at some of the individual movers today. I'm having quick
Speaker 4: look at Uber because well, maybe I've be including the
Speaker 4: S and P five hundred. That's of course what's driving
Speaker 4: it higher, up some five percent on the day. But
Speaker 4: actually one of the only fields are green other than
Speaker 4: cryptostocks and Uber. Let's go to some of the losers. Interestingly,
Speaker 4: some inside selling happening and in video in November, in fact,
Speaker 4: three hundred and seventy thousand shares were either sold or
Speaker 4: filed to be sold by internal candidates of course executives
Speaker 4: at the company. So we're currently see that off by
Speaker 4: about two point four percent offter of course, a massive
Speaker 4: run for twenty twenty three. Anady meta same that one
Speaker 4: of course from Mark Zuckerberg himself first time in a
Speaker 4: couple of years, ed that he's actually selling his own
Speaker 4: company shares currently off by one point eight percent, as
Speaker 4: you can see. But we've got a key company to
Speaker 4: be talking about next.
Speaker 2: Yep, and we're going private this time, Anderil is out
Speaker 2: with a new autonomous air vehicle. Road Runner is akin
Speaker 2: to a mini reusable fighter jet that blows up drones,
Speaker 2: and the startup says the US will deploy it in
Speaker 2: the field next year. Delighted to say joining US now
Speaker 2: is Andrew founder Palmer Lucky down in Costa Mesa, California.
Speaker 2: We've just showed images of it. But from a technology perspective, Palmer,
Speaker 2: you've been working on this in secret and stealth for
Speaker 2: a couple of years. What is new here? What is
Speaker 2: the technology at play?
Speaker 6: Well?
Speaker 8: Roadrunner is an AI piloted autonomous air vehicle. It's got
Speaker 8: a lot of cool features. It's powered by two twin
Speaker 8: turbojet thrust vector and engines. It's very very fast, carries
Speaker 8: a significant payload, It's very maneuverable. But the really cool
Speaker 8: thing about it is that it can be reused. It's
Speaker 8: actually a vertical takeoff and landing vehicle, and that means
Speaker 8: that with certain payloads, you can go out there, perform
Speaker 8: the mission, come back, reland, and then refuel, rearm and
Speaker 8: use it again. With other payloads, Let's say a one
Speaker 8: way warhead to go up against a large aircraft, I
Speaker 8: can send a whole swarm of road Run is out there,
Speaker 8: and only the ones that actually engage the target are consumed.
Speaker 8: Everyone else can come home. And that allows you to
Speaker 8: have much greater effective magazine depth and to use these
Speaker 8: things in way that you can't use traditional one way missiles,
Speaker 8: where once you launch it, it's gone, whether you launch
Speaker 8: a bunch of them or one of them.
Speaker 2: Palmer, we share with our audience at the top of
Speaker 2: this segment. Actually Vance wrote about it in his story
Speaker 2: that the US plans to put this to deployment next year, right,
Speaker 2: But so much of the newsflow around drones has been
Speaker 2: in the context of the war in Ukraine. You know,
Speaker 2: drones are a key strategy for both sides, it seems.
Speaker 2: Do you see road Runner being deployed in Ukraine in
Speaker 2: the natime? What kind of talks have you had around that.
Speaker 8: Well, I'll tell you this, I see it in my
Speaker 8: mind's eye. But whether it goes there isn't up to me.
Speaker 8: It's up to a bunch of people in the US government.
Speaker 8: You know, the foreign military sales process, the transfer process
Speaker 8: is government driven rather than company driven the vast majority
Speaker 8: of the time. And we've been in Ukraine since the
Speaker 8: second to the war, not just with our products, but
Speaker 8: also sending people over there. I actually was in Kiev
Speaker 8: to meet with Zelenski for the second time. I met
Speaker 8: with him ahead of the war, because he was interested
Speaker 8: in purchasing our technology to help secure their eastern border. Unfortunately,
Speaker 8: that wasn't something we were able to make happen because
Speaker 8: of those restrictions that I mentioned earlier. And so it's
Speaker 8: certainly something that I would love to see personally.
Speaker 4: What about demand from Europe in and of itself, Palma.
Speaker 8: So, I mean, we have a lot of we have
Speaker 8: a lot of European customers, and we do a lot
Speaker 8: of work in particularly with the United Kingdom and the
Speaker 8: UK Royal Marines especially, But you know, there's a little
Speaker 8: bit of a tricky dynamic with some European countries. Some
Speaker 8: European countries really see their defense apparatus as a way
Speaker 8: to run a jobs program, and they are forcing US
Speaker 8: companies like ANDROL to compete with their own domestic capabilities.
Speaker 8: It might not be as advanced, might be years behind,
Speaker 8: might be more expensive, but it's pretty hard for them
Speaker 8: to get over the fact that they would be dropping
Speaker 8: that internal program to buy some from an American company.
Speaker 8: It's a difficult pill to swallow for some of these countries,
Speaker 8: especially ones that do have what anyone would consider a
Speaker 8: pretty strong defense industry of their own.
Speaker 4: One country that has a strong defense industry of their
Speaker 4: own is China, and you've been outspoken on this. We've heard,
Speaker 4: of course, not only about china strength in defense, but
Speaker 4: also their strength in ai And of course you're twinning
Speaker 4: the two here. I'm interested as to how much those
Speaker 4: conversations surrounding Taiwan, the concerns there are building, and whether
Speaker 4: or not it's actually something that you are having conversations
Speaker 4: with the dood about.
Speaker 8: I mean, it's all about that. Everyone is talking about
Speaker 8: making sure that the capabilities that we're building today are
Speaker 8: ready to go for a fight in the Pacific in
Speaker 8: twenty twenty seven or earlier, because that is the latest
Speaker 8: that we see China trying to launch an offensive for
Speaker 8: a variety of reasons. That's the timing for some kind
Speaker 8: of action against Taiwan, which is critical to our economy.
Speaker 8: You know, there's a lot of places around the world
Speaker 8: that we call partners. There's a lot of places around
Speaker 8: the world that we say are important to our interests
Speaker 8: and their semiconductor industry is really about as important as
Speaker 8: it gets, especially for such a small country so close
Speaker 8: to China. The good news is, I think people are
Speaker 8: recognizing this threat. Big tech companies years ago thought that
Speaker 8: China was something one that was going to be a
Speaker 8: huge growth market for them. They thought they were going
Speaker 8: to get in and sell them social media, sell them services.
Speaker 8: And I think people are starting to realize that that's
Speaker 8: not what's happening. They're coming here and they're eating our lunch,
Speaker 8: and that is I think positive for tech companies decision
Speaker 8: to start working with the dood again.
Speaker 2: There's an interest, in an intense interest, excuse me, in Anderil.
Speaker 2: People don't, let's know that much about the company. So
Speaker 2: if we take the kind of Taiwan case study road
Speaker 2: Runner aside, what are the products and technologies that you
Speaker 2: can offer that you would deploy it and get a
Speaker 2: hypothetical scenario like that.
Speaker 8: Well, our core product is something called Lattice AI. It's
Speaker 8: kind of the AI engine that powers all of our products.
Speaker 8: We actually have more people at ANDROL working on software
Speaker 8: than hardware, even though we have over a dozen hardware products,
Speaker 8: and that's because Lattice is something our software investment is
Speaker 8: something that can reach across all these systems and a
Speaker 8: lot of external systems. Lattice AI is integrated with more
Speaker 8: third party products than anderill made products. Even so, we
Speaker 8: make loitering munitions like the Altis Line, we make autonomous
Speaker 8: underwater vehicles like the Dive Submarine. We make counter UAS systems,
Speaker 8: electronic warfare systems, surveillance systems, tactical UAS systems like the
Speaker 8: Ghost helicopter drone. We've got a lot of things that
Speaker 8: could make a really big difference. And again, everything that
Speaker 8: we're doing, and most of what the DoD is doing,
Speaker 8: is preparing for our conflict with a great power like
Speaker 8: China in the Pacific on a near term timeframe. Anything
Speaker 8: that we make that is not going to be ready
Speaker 8: to go into that type of fight, whether it's a
Speaker 8: blockade or a real invasion, is not something that I
Speaker 8: think is particularly relevant or worth heavy investment at Palma.
Speaker 2: When I posted on social media, you are coming on
Speaker 2: the show, I guess the most common question from the
Speaker 2: r audience was about manufacturing. You know, if you take
Speaker 2: Roadrunner as an example, they know it's a cutting edge technology,
Speaker 2: but they actually want to know more about how you
Speaker 2: scale the output of that product.
Speaker 8: Well, there's a few things that go into that, you know,
Speaker 8: first of all, Androl is a defense product company more
Speaker 8: than a defense contractor. We use our own money to
Speaker 8: decide what to build, how to build it, and then
Speaker 8: we build it and sell it when it's done. And
Speaker 8: it's very different than companies that get paid more when
Speaker 8: they have let's say, an inefficient manufacturing process or a
Speaker 8: longer manufacturing process because they're on a cost plus contract.
Speaker 8: And our head of manufacturing comes from Tesla, where he
Speaker 8: scaled several lines to very very large numbers of vehicles.
Speaker 8: We have a lot of other people who have experienced
Speaker 8: making consumer electronics on a very tight schedule. We've done
Speaker 8: five new revisions of Century Tower, four new revisions of
Speaker 8: Cent of our Ghost drone in just five or six years,
Speaker 8: and so we're on more of a consumer electronics manufacturing
Speaker 8: and iteration cycle than any traditional defense.
Speaker 2: Company would be.
Speaker 8: And look, my previous company was OCULUSVR. I started that
Speaker 8: when I was nineteen years old living in a camper trailer,
Speaker 8: sold it to Facebook for a few billion dollars. Was
Speaker 8: there for a few years before getting fired. But while
Speaker 8: I was there, we've made millions of virtual reality headsets
Speaker 8: in China. I know how China does things. I know
Speaker 8: how these things can be done, and I'm trying to
Speaker 8: bring a little bit of that Chinese energy here to
Speaker 8: US manufacturing, absent all the stuff that I hate about China.
Speaker 4: Interesting perspective on what you can learn, perhaps even though
Speaker 4: you dislike parts of what's evident. I'm palm up to
Speaker 4: that point. I mean, everyone's currently handringing about artificial intelligence
Speaker 4: US versus China, China versus everyone. I mean, you've just
Speaker 4: been in the UK, I mean at least saying that
Speaker 4: you've been building relationships there, and we just think about
Speaker 4: the UKAI summit, where what was it, thirty one country
Speaker 4: signed up to some sort of guardrails When it comes
Speaker 4: to well, the acceleration of deployment of AI in the military.
Speaker 4: What do you make of these moves too put in
Speaker 4: guardrails in artificial intelligence's use within military.
Speaker 8: A lot of these are decades behind. The US government
Speaker 8: has been thinking about these things literally for decades. It
Speaker 8: really bothers me when people say, oh, man, we need
Speaker 8: to come up with rules that tell the DD what
Speaker 8: to do about AI. I mean they haven't been thinking
Speaker 8: about these things. They don't understand how important autonomous weapons.
Speaker 8: I mean, what are you talking about. The US Government's
Speaker 8: been deploying autonomous weapons like radar seeking missiles and missiles
Speaker 8: that can differentiate between targets for decades. Now, look at
Speaker 8: something like a sea ram or a sea whiz. The
Speaker 8: automated guns that are protecting our bases and our ships
Speaker 8: from incoming mortar fire, incoming artillery fire, incoming missile and
Speaker 8: rocket fire.
Speaker 2: Those are autonomous weapons.
Speaker 8: They're making decisions about what to shoot down and what
Speaker 8: to not without a person manually deciding what to do,
Speaker 8: beyond deciding to turn on the system and allow it
Speaker 8: to engage targets.
Speaker 1: Period.
Speaker 8: So the US government has very strong doctrine around this
Speaker 8: that really boils down to making sure a human is
Speaker 8: always responsible for any decision, and that doesn't mean that
Speaker 8: the person's responsible for pulling the trigger. I hate this
Speaker 8: idea too.
Speaker 2: People say, well, can't.
Speaker 8: You agree that a day I should never be able
Speaker 8: to decide when to pull the trigger. And I don't
Speaker 8: agree with that because I don't think there's any moral
Speaker 8: high ground in making let's say, a landmine that can't
Speaker 8: tell the difference between a school bus full of children
Speaker 8: and a Russian tank column. I think that it is
Speaker 8: good for it to be able to decide when to
Speaker 8: pull the trigger as long as a person is taking
Speaker 8: responsibility for that employment and whatever goes wrong in the end.
Speaker 8: And so I'd see a lot of this is performative.
Speaker 8: There are people who have never thought about AI, never
Speaker 8: thought about weapons until very recently, and they're now declaring
Speaker 8: themselves to be AI safety experts, and they are decades
Speaker 8: behind the people who have actually been working on autonomous
Speaker 8: weapons policy and ethics and guidelines. I think the United
Speaker 8: States is clearly far and away the leader in this space.
Speaker 2: Palmer, I just wanted to point out, you know, when
Speaker 2: I put on social media coming on the show. Of course,
Speaker 2: there are a body of people out there that don't
Speaker 2: agree with the use of any technology in the context
Speaker 2: of war because they don't want to have any consideration
Speaker 2: of war right they are believe in peace. Frankly, it
Speaker 2: would be remissing me not to ask you as well
Speaker 2: about Oculus. You mentioned it in your prior answer. I
Speaker 2: think we're almost at the ten year anniversary of then
Speaker 2: Faith for acquiring then your company Oculus. Over the last
Speaker 2: ten years, where have we landed in VR and AR.
Speaker 2: This year, we had Metaquest three, we had Vision Pro
Speaker 2: from Apple. Just give me your assessment of the technology
Speaker 2: field for headsets.
Speaker 8: Well, the people who think that we shouldn't be using
Speaker 8: tech in any of this stuff, I'd say, let's arm
Speaker 8: Nato with sticks and stones and water guns and see
Speaker 8: how that goes for you guys. As far as VR,
Speaker 8: I'm really excited with how it's going. I am happy
Speaker 8: to see a lot of my deeply held technical beliefs
Speaker 8: playing out in the market. One example is the Apple
Speaker 8: Vision Pro being kind of an augmented reality, virtual reality,
Speaker 8: mixed reality combo headset that is doing full reprojection of
Speaker 8: the world where it's capturing the world using sensors and
Speaker 8: then using all new photons to project in your eyes,
Speaker 8: rather than an optically transparent AR system that a lot
Speaker 8: of people were trying to build over the last decade.
Speaker 8: I've always been on the hard AR full reprojection side.
Speaker 8: Happy to see that kind of pan out with Apple.
Speaker 8: I've used the new Apple headset. It's amazing.
Speaker 2: You know.
Speaker 8: Probably the best accomplishment that I've done on the VR
Speaker 8: side was making sure that VR came back from the dead.
Speaker 8: It is now something that other people are working on,
Speaker 8: so that for the rest of my life, I'm going
Speaker 8: to be able to go out and buy really nice
Speaker 8: virtual reality headsets without having to do it myself, which
Speaker 8: is what I was doing when I was fifteen and
Speaker 8: sixteen starting Oculos.
Speaker 2: Andreill founder Palmer Lucky. Good to catch up. Good to
Speaker 2: have you with us here on Bloomberg Technology. Thank you
Speaker 2: for your time. So coming up on the show, the
Speaker 2: crypto rally Gaviz steam as Bitcoin tops forty two thousand
Speaker 2: US dollars, we're going to keep conversation going and discuss
Speaker 2: investing in the digital currency ecosystem more broadly. That's the
Speaker 2: VC Spotlight. Next, this is Bloomberg Technology.
Speaker 4: Let's talk crypto for a moment, because Bitcoin, if you
Speaker 4: hadn't noticed, has just surged past forty two thousand dollars again,
Speaker 4: extending the largest digital tokens at rally to more than
Speaker 4: one hundred and fifty percent so far this year, far
Speaker 4: outpacing stocks and other risk assets. For today's VC Spotlight,
Speaker 4: that we're going to be investing and looking at the
Speaker 4: turn of digital currency ecosystem and the startups within it.
Speaker 4: Morgan Bellers with us NFX general partner. You invest in
Speaker 4: a whole broad remit of companies, but what we love
Speaker 4: is your background and the fact that you were there
Speaker 4: building one of the first ever stable coins with Libro,
Speaker 4: and as part of Facebook, you of course investing companies
Speaker 4: such as Ramp, which is about FIAT into crypto. This
Speaker 4: exuberance around bitcoin seems to be about institutional access, whether
Speaker 4: or not we get a bitcoin, a spot, bitcoin ETF
Speaker 4: where do you think that really works for the ecosystem
Speaker 4: at large?
Speaker 9: Thank you again for having me so seeing this turn
Speaker 9: is exciting, although cautiously optimistic. I think that there have
Speaker 9: been several like Schrodinger's cats in crypto is dead?
Speaker 2: Is it Alive?
Speaker 9: And one of those has been the BITCOINYTF like is
Speaker 9: it dead?
Speaker 5: Is it alive?
Speaker 9: And I think we're turning a corner as I not
Speaker 9: gotten all of the wood, that it might finally actually
Speaker 9: be happening, which would be huge, if not the largest
Speaker 9: impact that could be had on institutional adoption. And the
Speaker 9: second Joininger's cat was Binance, Like people were worried about Binance.
Speaker 9: What was there, what wasn't there? What was going to happen,
Speaker 9: what wasn't going to happen, and I think what we
Speaker 9: saw happen a few weeks ago was like minimal impact
Speaker 9: on the space, so I think it. So those are
Speaker 9: two huge unknowns that I think are now becoming known
Speaker 9: in a positive way. So that's exciting for the space.
Speaker 2: Morgan. Earlier in the show, Caroline and I were talking
Speaker 2: about how you know when bitcoin goes up, publicly traded
Speaker 2: crypto related stocks also go up, either because it's like
Speaker 2: a proxy for exposure if you're not invested in a
Speaker 2: digital currency, or it's a logic where well, if coins
Speaker 2: doing well, that's the thing that underpins all of those companies,
Speaker 2: so they do as well. Spin that forward to the
Speaker 2: VC context, is bitcoin being up good for you when
Speaker 2: you decide okay, I'm going to invest here here or that.
Speaker 9: I like to think that I stay sober enough that
Speaker 9: it doesn't matter, but in reality it probably does affect
Speaker 9: mine and others psyches.
Speaker 2: I think I've said this on the show.
Speaker 9: Before, but for me, there's always three questions, which is
Speaker 9: one is this company solving a problem for anyone? Two
Speaker 9: is anyone using this thing? And three is this product
Speaker 9: or a company making money or has any potential to
Speaker 9: make money? And when you look at the history of
Speaker 9: crypto and crypto startups at blockchain companies, there's very few
Speaker 9: that actually check all three of those boxes, let alone
Speaker 9: one or two. And bitcoin is one of the few
Speaker 9: use cases that is, you know, checks all of those
Speaker 9: boxes and is real and is definitely a case study
Speaker 9: for potentially other But at the seed stage, I try
Speaker 9: to not look at the price of bitcoin when.
Speaker 4: What you look at is probably the general energy of
Speaker 4: building in the seed stage right now. And to that end,
Speaker 4: amid what has been termed yet another crypto winter, has
Speaker 4: the building still been going? Have there been problems that
Speaker 4: are being solved in this time where we could stop
Speaker 4: just talking about prices and actually look at what fundamentally
Speaker 4: is being built.
Speaker 9: Building is still going. When the market was nuts, you
Speaker 9: had what my partner James caused, the fruit flies coming in.
Speaker 9: So the founders who thought it was just like, you know,
Speaker 9: the sexiest successory to have a crypto company and thought
Speaker 9: overnight they would be worth a lot on paper. And
Speaker 9: what the market cooling down dat is it filtered those
Speaker 9: founders out. So now you really only have founders coming
Speaker 9: in who really really care, who actually have a problem
Speaker 9: to solve, So in a weird way. The bear market's
Speaker 9: very nice because it automatically applies a filter at least
Speaker 9: to the top of the funnel of startups that isn't
Speaker 9: necessarily there in a ballmarket.
Speaker 2: Morgan, bigger picture. We've had a lot of guests on
Speaker 2: the show that criticized the US as a regulatory environment
Speaker 2: or a market environment to foster the underlying technology, let's
Speaker 2: say blockchain in this instance. Your view on that.
Speaker 9: I am proud to be an American. However, I do
Speaker 9: wish that crypto regulation was a bit more founder friendly
Speaker 9: than it currently is. To bring back my Schrodinger's cat analogy,
Speaker 9: which I think still applies here.
Speaker 2: There are a lot of.
Speaker 9: Unknowns or fears or concerns about which way various regulatory
Speaker 9: bodies can go on various regulatory topics in crypto that
Speaker 9: are scaring founders away from starting companies in the US.
Speaker 9: And if there was more clarity in one direction or
Speaker 9: another that would limit the amount of guessing or fear
Speaker 9: that was required to start a company, I think that
Speaker 9: would be a lot more conducive to founders, specific specifically
Speaker 9: starting companies in this space in the United States.
Speaker 2: Morgan Bella an f X general partner. We always enjoy
Speaker 2: having you on the show, The Schrodinger's Cat Analogy. Let's
Speaker 2: see if it gets traction, we'll see.
Speaker 9: I'm a dog person, by the way.
Speaker 2: But oh, I know I've met as you know, I've
Speaker 2: met your dog, which is always at your side. But
Speaker 2: we're out of time for today. Thank you, okay. Apple's
Speaker 2: long anticipated breakup with its main financial services partner, Goldman
Speaker 2: Sacks is underway, with the iPhone maker offering the bank
Speaker 2: a path out of their deal. But who might replace Goldman?
Speaker 2: It's the focus of this week's Power On column, and
Speaker 2: Bloomberg's Mark German joins me here in San Francisco. You
Speaker 2: have a thesis Chase outline it. Yeah, first of all,
Speaker 2: thank you for having me.
Speaker 10: We've heard about City Bank, We've heard about American Express,
Speaker 10: but I think Chase is absolutely the most likely company
Speaker 10: to take over four Goldman Sacks.
Speaker 2: In terms of the Apple card partnership, Chase is a lot.
Speaker 10: Going for it. It makes a ton of money, so
Speaker 10: it has the cash balance, It has the management, It
Speaker 10: has the reserves to take on a partnership that may
Speaker 10: not be entirely lucrative at the get go. It does
Speaker 10: have time to sort of bake into its financials that
Speaker 10: this is going to be a long term strategy and partnership. Goldman,
Speaker 10: as you know, lost a couple billion dollars maybe a
Speaker 10: little bit more than that on this.
Speaker 2: They couldn't really sustain it. Chase probably could.
Speaker 10: The other thing is is Apple and Chase, most people
Speaker 10: don't know, have a long term relationship. Chase is one
Speaker 10: of the biggest partners for credit card transactions in the
Speaker 10: app store, Apple online services, Apples, retail stores, online stores,
Speaker 10: and Apple probably gets a better rate right because of
Speaker 10: that deal with Chase and how much Chase credit card
Speaker 10: usage there is. And there's all sorts of stuff behind
Speaker 10: the scenes storing Apple's cash balance, so that long term
Speaker 10: relationship means their prime for a bigger expansion.
Speaker 4: It was a great write up. I urged people to
Speaker 4: go wells also learned that well Steve scuer is off
Speaker 4: playing golf with Eddiq sometimes Mark Coman always with the
Speaker 4: facts you thank you meanwhile. That does it for this
Speaker 4: edition of Bloomberg Technology.
Speaker 2: Check out the pod Apple, Spotify, Heart and on Bloomberg.
Speaker 2: This is Bloomberg Technology