Speaker 1: From Mahard where Innovation, Money and power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hide and Ed Ludlow.
Speaker 3: I met Ludlow in San Francisco. Caroline hides off this week.
Speaker 3: This is Bloomberg Technology coming up from the program. Apple's
Speaker 3: Vision Pro is officially for sale. We'll discuss early demand
Speaker 3: for the pricey product and why big names like Spotify,
Speaker 3: Netflix in YouTube are snubbing the device, plus Forward announcing
Speaker 3: plans for production cuts the f one to fifty lightning
Speaker 3: electric truck. More on a weakening demand picture for evs
Speaker 3: and the fourteen hundred employees impacted by that pullback, and
Speaker 3: Amazon's one point four billion dollar deal for i robot
Speaker 3: is expected to be blocked by the e use antitrust watchdog,
Speaker 3: sending shares of the rumber maker plunging. All that and
Speaker 3: so much more. Happy Friday. It is the end of
Speaker 3: a shortened week because of the US holiday. This is
Speaker 3: what financial markets look like in the technology context. And
Speaker 3: as that one hundred upper percentage point, let's be honest.
Speaker 3: The big story, the single name of the week has
Speaker 3: been Apple. Catalysts are both the upside and the downside.
Speaker 3: On a five day basis, we are up two point
Speaker 3: four percent and we're headed for our second consecutive weeks
Speaker 3: of gains. Remember, one big catalyst was Bank of America's
Speaker 3: upgrade to buy with some enthusiasm about what Vision Pro
Speaker 3: does on the hardware and services side of the top line.
Speaker 3: For Apple, you can now place a pre order for
Speaker 3: a Vision Pro. But if you go on the website,
Speaker 3: you'll notice one thing. The date of delivery is getting
Speaker 3: pushed back further and further. We have the perfect voice,
Speaker 3: Bloomberg's chief correspondent, Mark German with us. Now, let's start
Speaker 3: with the data we see in real time. If you
Speaker 3: try to orso a vision Pro, right now, what do
Speaker 3: you see?
Speaker 1: Yeah, Ed, thanks so much for having me us always.
Speaker 1: That's right.
Speaker 4: The Vision Pro went on sale for pre order this
Speaker 4: morning five am Pacific time, and right now, if you're
Speaker 4: going to place a new order, it's likely if you're
Speaker 4: doing it for an online delivery, not to come until
Speaker 4: mid March. You're seeing between March eighth and March fifteenth,
Speaker 4: for all three storage capacities two hundred and fifty six gigs,
Speaker 4: half a terabyte, and a terabyte. Now, if you're trying
Speaker 4: to do in store pickup. The first day of availability
Speaker 4: is also booked up, but depending on the sizing of
Speaker 4: the headset that you need, you do a face scan
Speaker 4: when you order it, and it gives you a custom size.
Speaker 4: There's about twenty five different sizes. You may be able
Speaker 4: to get pick up in the first couple of days availability,
Speaker 4: but for the most part, if you're doing a delivery
Speaker 4: to your home, you're not gonna be able to get
Speaker 4: one deep into March.
Speaker 3: I think that you know, we're using the delivery date
Speaker 3: as a kind of proxy for early demand, and the
Speaker 3: vision pro is going to be initially a pro like
Speaker 3: high price, point, small volume, niche product. But it does
Speaker 3: seem like there is demand there.
Speaker 4: You agree with that people are quite excited about this product.
Speaker 4: There is absolutely demand. Now, it's unclear exactly what the
Speaker 4: slips mean, right. It could be a combination of demand,
Speaker 4: a combination of supply, a combination of both. You could
Speaker 4: be seeing really low demand but really really low supply.
Speaker 4: So it's not entirely clear what it means. But based
Speaker 4: on what I'm seeing on X when I'm seeing on
Speaker 4: other social media platforms, the usual suspects, so to speak,
Speaker 4: The early adopters in the Apple community are all over
Speaker 4: this thing. I ordered one personally, as you know, I
Speaker 4: have a deep interest in Apple products. So it's people
Speaker 4: sort of in my category early adopters, big time Apple fans,
Speaker 4: people that really want to learn more about the company,
Speaker 4: that are buying misting for now, and I imagine once
Speaker 4: some tech enthusiasts start trying it in an Apple detail
Speaker 4: store storing on February second, they'll get about a twenty
Speaker 4: twenty five minute demo. You'll see sales go up as well.
Speaker 4: On that opening weekend. They'll have some inventory for non
Speaker 4: pre orders, but the company itself, they're expecting a pretty
Speaker 4: strong opening couple of weeks, but for sales to taper
Speaker 4: from there, which is what you would expect from a
Speaker 4: new major product category at this price. The people who
Speaker 4: want to buy this thing have been wanting to buy
Speaker 4: it for months now, since it was introduced in June,
Speaker 4: so they're going to get their orders in early and
Speaker 4: then it's really going to take price cuts in new
Speaker 4: generations of this product to really expand market share for
Speaker 4: Apple and the VR space and make it a real
Speaker 4: revenue maker.
Speaker 3: Right. It follows the format of the iPhone right, you
Speaker 3: have Vision Pro, but I guess we're waiting on the
Speaker 3: Vision Songs Pro at a later date. The newsflow this
Speaker 3: week has been astonishing when it comes to Apple, and
Speaker 3: in the context of Vision Pro, we did a lot
Speaker 3: of reporting about the developers or content creators that are
Speaker 3: choosing not to make a Vision Pro specific application. Tell
Speaker 3: us those names and what we've learned.
Speaker 4: Yeah, someone deeply involved in development of the product told
Speaker 4: me it's going to be the applications that make or
Speaker 4: break this product. And right now you're seeing some of
Speaker 4: the top tier platforms designing to not participate. I'll give
Speaker 4: you three names.
Speaker 3: Netflix, YouTube, and Spotify.
Speaker 4: Spotify is interesting, but you can use that through the web,
Speaker 4: and it's a music streaming service. And who really knows
Speaker 4: or cares, to be honest, if this is going to
Speaker 4: be a great platform for music listening. But Apple's really
Speaker 4: positioning this as a video and a movie watching device.
Speaker 4: And if you're not going to have YouTube or Netflix
Speaker 4: applications on here, that's a real drawback now. So they
Speaker 4: certainly have Max Disney plus Peacock.
Speaker 1: ESPN, NBA, you name it.
Speaker 4: But the two biggest streaming services in the world, right,
Speaker 4: YouTube and Netflix not being on there is a real omission,
Speaker 4: and it's potentially a problem for Apple out of the gate. Now,
Speaker 4: I have some theories as to why they're not participating.
Speaker 4: I think both are taking a wait and see approach.
Speaker 4: In the case of Netflix, maybe they don't want to
Speaker 4: prop up a rival in streaming who has Apple tv Plus.
Speaker 4: But at some point you may see enough people tell
Speaker 4: YouTube and Netflix they don't want to use their services anymore.
Speaker 4: If you're not on the Apple Vision pro, then they'll
Speaker 4: have to get on there. But I think that's going
Speaker 4: to take a while. They're okay to lose one thousand users,
Speaker 4: but if you start seeing tens of thousands of people
Speaker 4: saying we're not going to subscribe anymore over this, they'll
Speaker 4: have to make a change. But of course that's going
Speaker 4: to take many many months, if not longer.
Speaker 3: Mark. The final story I want to touch on is
Speaker 3: in the context of the European Union. But if you're
Speaker 3: an iPhone user and you go into a store or
Speaker 3: grab some food, you can pay by tapping your iPhone
Speaker 3: on the receiver. And what Apple seems to be doing
Speaker 3: now in the context of regulatory action, is opening up
Speaker 3: that technology to some of its competitors explain that one.
Speaker 4: Yeah, it's interesting. So this morning, you know, the European Union,
Speaker 4: so that Apple had agreed to open up the NFC
Speaker 4: chip to third party payment serve. So right now, that
Speaker 4: tap to pay feature you described ed only could work
Speaker 4: with Apple Pay Apple service if you're a third party,
Speaker 4: if you're a Chase, if you're an Amex, you can't
Speaker 4: integrate your own tap to pay service using that hardware
Speaker 4: component through your application. Now Apple sit there agreeing to
Speaker 4: open that up to change that. It's funny because on
Speaker 4: March seventh, they're going to be doing that anyways. Right
Speaker 4: March seventh is when the Digital Markets Actor.
Speaker 3: EO kicks in.
Speaker 4: That is a requirement of the DMA to open up
Speaker 4: things like NFC, to open up the app sort of
Speaker 4: third party billing services.
Speaker 1: Right, so Apple.
Speaker 4: Basically said they're going to be doing something that they're already
Speaker 4: planning to do in two months anyway, So not necessarily
Speaker 4: a womin here for Apple. You know, there is a
Speaker 4: scenario where they might lose a little royalty on Apple
Speaker 4: Pay because of this, but if it continues to fend
Speaker 4: off regulators and avoid multi billion dollar fines, that certainly
Speaker 4: is a positive for the company.
Speaker 3: Okay, Apple up eight ten percent in the session, up
Speaker 3: two percent on the week, And I highly recommend that
Speaker 3: you subscribe to Marks and Us there to power on
Speaker 3: because you summarize all that on a weekly basis. Bloomberg's
Speaker 3: Mark German, chief correspondent, turn into some breaking news just
Speaker 3: out on the Bloomberg terminal open. AI CEO Sam Altman
Speaker 3: is seeking billions of dollars specifically in an effort to
Speaker 3: secure supply for AI chips. It is part of a
Speaker 3: broader initiative that we're reporting here in Bloomberg myself and colleagues,
Speaker 3: including Dina Bass, that the aim is to set up
Speaker 3: a series of fabs globally plants or factories with specific
Speaker 3: dedication to capacity for these AI chips. Let's get right
Speaker 3: to Bloomberg's Dina Bass, one of the co bylines with
Speaker 3: me on this story. And Dina, you know, we've done
Speaker 3: a lot of reporting on this kind of initiative. We
Speaker 3: know that Sam Outman was looking at chips, but actually
Speaker 3: what's new here is the focus on capacity future capacity.
Speaker 5: Yes, that's right.
Speaker 6: So in the kind of week of the exam of
Speaker 6: an ouster, we you know, add you and a couple
Speaker 6: of other reporters reported this chip initiative, but I think
Speaker 6: the belief or assumption was that what open ai would
Speaker 6: be doing here similar to what Microsoft is doing, is
Speaker 6: similar to what Google does, is similar to what aws
Speaker 6: that Aprontat does, which is design their own artificial intelligence chips.
Speaker 6: In reality, what we hear from our sources is that
Speaker 6: we're often trying to address is the chip shortage, that
Speaker 6: there's not enough fabrication capacity to make enough chips.
Speaker 5: Now that's been.
Speaker 1: Going on for a while.
Speaker 5: But what open ai in m Altman want.
Speaker 6: Will address is actually not the current shortage. It's you
Speaker 6: know what our sources tell us at Veltman fears that
Speaker 6: there will be a significant shortage a couple of beers
Speaker 6: out from now. So when we come to the end
Speaker 6: of the decade, if artificial intelligence is as pervasive as
Speaker 6: s m Altman thinks it will be, if you remember,
Speaker 6: he's very focused on heading towards AGI artificial general intelligence,
Speaker 6: then there will simply not be in his view, enough
Speaker 6: processors for what he thinks is going to go on
Speaker 6: at that point.
Speaker 3: There are still many questions about how mechanically this would work. Right,
Speaker 3: you know what I'm hearing you're hearing is that there's
Speaker 3: all these talks with all kinds of investors to raise
Speaker 3: a huge sum of money, tens and tens of billions
Speaker 3: of dollars. But in reality, it's not just as simple
Speaker 3: as saying, Okay, great, we've got the funds, let's build
Speaker 3: a load of chip factories wherever we want. You know,
Speaker 3: the market is dominated by TSMC, Samsung and a hopeful
Speaker 3: newcomer and Intel. What do we know about what's on
Speaker 3: the table here in terms of the proposed way this
Speaker 3: would work.
Speaker 1: So what we're.
Speaker 6: Hearing is an otment is now on the stage of,
Speaker 6: as you see, putting together sort of a group of partners.
Speaker 6: So some of that is the capital the investors who
Speaker 6: is going to fund all of this, and some of
Speaker 6: that is talking to the existing chep fab companies. We're
Speaker 6: not you know, we're not hearing that open AI wants to,
Speaker 6: you know, start learning how to pour concrete or anything
Speaker 6: like that. This is a really complicated business with really
Speaker 6: just about three competitors in it, and you know, it
Speaker 6: takes a ton of expertise to do. So what we're
Speaker 6: hearing is that the idea would be to work with
Speaker 6: the people that know how to do this, but again
Speaker 6: to figure out a way to dramatically expand the capacity
Speaker 6: so that five years from now the industry doesn't find
Speaker 6: that it's not in a position to produce what's necessary
Speaker 6: an arm to view.
Speaker 3: I just want to relate to our audience that open Ai, Intel, SoftBank, TSMC, Microsoft,
Speaker 3: and G forty two, which is a firm that we
Speaker 3: had reported in the past wanted to give Sam Outman
Speaker 3: money for this, did not respond to Bloomboat requests to
Speaker 3: comment or decline to comment. Samsung in particular, just a
Speaker 3: key name in the fab space, didn't respond to our
Speaker 3: request for comment. But the takeaway that I have is
Speaker 3: that forget what happened with Sam Outman's short departure from
Speaker 3: open Ai and then return He's able to go out
Speaker 3: there and talk to people, raise money, and come up
Speaker 3: with these big plans, which, let's be honest, this is
Speaker 3: a bold move in the context of how chip manufacturing
Speaker 3: actually works.
Speaker 6: Right, absolutely, And he was obviously in Daubos this week,
Speaker 6: so we will see if anything comes out of any
Speaker 6: meetings there as he tries to protect together some sort
Speaker 6: of consortium behind this. You mentioned Microsoft, you know we
Speaker 6: have reported previously have reported again today that Often has
Speaker 6: help talks with Microsoft about this idea and that the
Speaker 6: software giant remains interested, you know, potentially in being being
Speaker 6: a part of it. Again, they declined to comment as well, but.
Speaker 5: You know what we're reporting.
Speaker 6: In what we're reporting, you see Sam trying to put
Speaker 6: together the pieces of what he would need to do this,
Speaker 6: to put together financial backing. As we mentioned in the story,
Speaker 6: they're also been talking with soft Bank and to put
Speaker 6: together the expertise around Chippan manufacturing. And as you said,
Speaker 6: this is a this is a much more dramatic initiative,
Speaker 6: and there's various forecasts for the AI chip field. You know,
Speaker 6: there are some people who feel that there will might
Speaker 6: be enough, and there are some people that feel that
Speaker 6: the industry is on a trajectory to increase the number
Speaker 6: of AI chips that are manufactured.
Speaker 7: That will be just fine, And the reality is that
Speaker 7: will will be fun right, And all I was saying
Speaker 7: is that what we're reporting, the reality of is that
Speaker 7: it's the world's leading AI company trying to have a
Speaker 7: more direct control over its supply chain.
Speaker 3: For one of a better summary, Bloombostina Bass great to
Speaker 3: work with you on this story. Thanks for joining the show. Now,
Speaker 3: another story that we're tracking is Forward. It says it's
Speaker 3: going to reduce the number of workers that are making
Speaker 3: its F one fifty lightning truck, and that is due
Speaker 3: to demand for electric vehicles weakening. About fourteen hundred employees
Speaker 3: will be impacted that work on the assembly lines for
Speaker 3: F one to fifty lightning. I want to bring in
Speaker 3: my friend and colleague, Keith Norton out of Detroit, and Keith,
Speaker 3: you know this is directly linked to what we already knew.
Speaker 3: The F one fifty lightning production this year will be
Speaker 3: half what for previously estimated. But just explain mechanics of
Speaker 3: how they're carrying that out.
Speaker 8: Yeah, So they are, as you said, eliminating fourteen hundred
Speaker 8: people at the foin fifty lightning plant. Interestingly, and seven
Speaker 8: hundred of them will move over to an internal combustion
Speaker 8: engine plant here in Detroit that builds the Ford Bronco
Speaker 8: suv and Ranger pickup truck because those traditional gas fueled
Speaker 8: vehicles are selling very well. So they're adding a third
Speaker 8: crew to that plant while going down to one shift
Speaker 8: at the lightning plant. It really does reflect on this
Speaker 8: weakening demand that we're seeing for electric vehicles. Sales of
Speaker 8: electric vehicles are still up, but their growth has slowed dramatically.
Speaker 8: UBS sees their growth at about eleven percent.
Speaker 1: In the US this year.
Speaker 8: Last year, electric vehicle sales grew by forty seven percent.
Speaker 3: And therein is the story, right Keith, that you know
Speaker 3: they're saying they're still demand globally, it's just even less
Speaker 3: than are already load exptions. And at the same time,
Speaker 3: we've got to make sure we build enough of our
Speaker 3: popular combustion engine cars. Tell us that the summary of
Speaker 3: the EV story with Forward, all I see is lightning,
Speaker 3: and all I see is Marqi, n Okay transit. What
Speaker 3: are their bigger picture plans from this point? You and
Speaker 3: I did a lot of reporting on that historically, but
Speaker 3: things kind of seem a bit stale.
Speaker 8: Yeah, So what they have is their first Gen EV
Speaker 8: vehicles out there, which you know arrived, as you recall
Speaker 8: ed with a lot of fanfare, but they've really slowed.
Speaker 8: They've also cut production of the Mustang Maqui. There's incentives
Speaker 8: on that. Now they're really talking up their next Gen
Speaker 8: EV vehicles, which will be ground up electric vehicles with
Speaker 8: all kinds of digital capabilities that are, you know, to
Speaker 8: be discovered by consumers, but they promised they'll be very exciting,
Speaker 8: but those are still a ways away twenty twenty five,
Speaker 8: twenty twenty six, and that's one of the reasons uvs
Speaker 8: actually cut forward week to hold from buy. They feel
Speaker 8: like the payoff fund forwards EV strategy is going to
Speaker 8: take longer than expected.
Speaker 3: All right, Bloomber's Keith Norton on the Auto beat, Adam Detroit.
Speaker 3: It's great to catch up. Thanks for joining the program.
Speaker 3: They're coming up here on Bloomberg Technology, and all European
Speaker 3: commercial crew is on its way to the International Space Station,
Speaker 3: the first time that all the seats are occupied by Europeans.
Speaker 3: We're gonna have those details coming up next. I'm also
Speaker 3: taking a look at shares of AMD. We're currently up
Speaker 3: three and a half percent in the session. AMD pushing
Speaker 3: fresh record highs and what's so interesting about it is
Speaker 3: its outperformance relative to Nvidia. They closed a record high Thursday.
Speaker 3: The momentum in that stock continues. It's a twelve percent
Speaker 3: gain on the week. And this is a name that
Speaker 3: in the next couple of weeks reports earnings. What are
Speaker 3: we looking for? I three hundred x the AI accelerator.
Speaker 3: What do we want to know? How many of them
Speaker 3: are they really selling in the real world. But investors
Speaker 3: seem really bullish around this name as one of the
Speaker 3: picks and shovels, as Karro calls it in the AI space.
Speaker 3: This is Bloomberg Technology three two one significant bid for power.
Speaker 3: They're on the way SpaceX rocket blasting off yesterday carrying
Speaker 3: the first all European commercial crew to the International Space Station.
Speaker 3: It's a landmark mission for europe space industry, which frankly
Speaker 3: has been struggling to get off the ground due to
Speaker 3: a number of delays on the launch system side. I
Speaker 3: want to bring in Bloomberg Space correspondent Lauren Grush. You know,
Speaker 3: this is kind of business is normal for SpaceX, for Axiom,
Speaker 3: It's an important moment with an all europe And crew
Speaker 3: and for commercial spaceflight also important. Just give us the
Speaker 3: basics of this mission.
Speaker 9: Sure, So this is actually the third mission for Axiom Space,
Speaker 9: which is a company based in Houston hoping to build
Speaker 9: their own private space stations in the future, and basically
Speaker 9: these missions that they've been doing with SpaceX. They held
Speaker 9: a contract to do a number of these missions to
Speaker 9: the International Space Station. They're a bit like practice missions
Speaker 9: pre cruiser missions to an Axiom has its own private
Speaker 9: space station orbit which it's hoping to launch this decade,
Speaker 9: So this is giving them kind of a dress rehearsal
Speaker 9: for when they send humans to their own station one day.
Speaker 3: What you said is really interesting. I kind of see
Speaker 3: the mission as as more evidence or momentum of the
Speaker 3: public sector space agencies handing over to the private sector
Speaker 3: to get this done. And you know that I love
Speaker 3: the numbers, right, SpaceX charges like what fifty five million
Speaker 3: dollars a seat to carry people up. And then the
Speaker 3: idea is that Axiom wants to be like the travel operator,
Speaker 3: you know, the broker, the middle man. Is Is that
Speaker 3: a good summary?
Speaker 9: That's essentially what's happening with these axiomissions. And then eventually,
Speaker 9: you know, they'll move to their own space station. But yes,
Speaker 9: the idea is to eventually transfer kind of the or
Speaker 9: give the keys over to the commercial space industry. You know,
Speaker 9: right now the main destination for astronauts in lower orbit
Speaker 9: is the International Space Station, which is overseen by NASA.
Speaker 9: But you know, eventually the space station will have to
Speaker 9: come down. It's destined to stay up until the end
Speaker 9: of the decade, but the idea is eventually private space
Speaker 9: stations will take over what the International Space Station has
Speaker 9: provided for astronauts, and Axiom Space hopes to be one
Speaker 9: of those companies to take over the reins when the
Speaker 9: space station has to eventually come to its end.
Speaker 3: Lauren, real quick. I know you cannot be in two
Speaker 3: places at once, but while we speak, there's a key
Speaker 3: lunar mission being carried out by Japan Space Agency. Just
Speaker 3: give us a quick summary of what's happening above our heads.
Speaker 9: Yes, so, this morning Japan attempted to land its first
Speaker 9: probe on the service of the Moon, and we.
Speaker 5: Were kind of left in a.
Speaker 9: State of ambiguity when they said that it landed, but
Speaker 9: they could not confirm the status of the lander. I
Speaker 9: believe we just got confirmation that it did indeed land.
Speaker 9: They secured a signal, but are not sure if it's
Speaker 9: generating power with its solar panels, which is not necessarily
Speaker 9: a good sign. I believe there is a press conference
Speaker 9: going on as we speak, so maybe we can get
Speaker 9: more details once I sign off.
Speaker 3: Here from Planet Earth. For all views on space, Bloomberg's
Speaker 3: Louren Brush it's great to have you on the program.
Speaker 3: Next week, the story is all about earnings and into
Speaker 3: that valuations are high and expectations are high. How does
Speaker 3: AI God, that's a lot, isn't it factor in to
Speaker 3: that equation? Next week in the newsflow too clear, movers
Speaker 3: I wrote out down twenty seven percent. Amazon is hired
Speaker 3: by half a percentage point. Bloomberg reporting that according to sources,
Speaker 3: the EU will move to block the one point four
Speaker 3: billion dollar acquisition by Amazon of I Robot because they
Speaker 3: have not offered remedies and they've not addressed the EUS
Speaker 3: concerns with arguments. And what's interesting about this. Ten days
Speaker 3: ago the EU Competition Chief, Margaret a vest There joined
Speaker 3: me here in this studio, and at that time we
Speaker 3: knew that Amazon had not offered remedies, and she said,
Speaker 3: very simply, we need to understand them, what their arguments are.
Speaker 3: Have listened to this.
Speaker 10: In any merger, it is so that if we have concerns,
Speaker 10: it is for the businesses either to address these concerns
Speaker 10: by debunking them or by addressing them by coming up
Speaker 10: with remedies that will solve the problem. And if a
Speaker 10: company say we will not come.
Speaker 3: Up with remedies.
Speaker 10: Well, then, of course we expect that they have good
Speaker 10: arguments that our concerns should not be sustained. And we
Speaker 10: are still in the process of assessing our concerns compared
Speaker 10: to a situation where we do not have a remedy
Speaker 10: to the concerns that we have have drawn up.
Speaker 3: So that was the EU Competition Commissioner ten days ago
Speaker 3: talking to me about this Amazon I Robot deal, saying
Speaker 3: we don't have remedies, so we need good arguments on
Speaker 3: why this deal should proceed. I want to bring in
Speaker 3: Bloomberg to Mark Bergen out of London and Mark what
Speaker 3: do we know? Because it seems like Amazon did not
Speaker 3: have good arguments, and it also seems like the issue
Speaker 3: here is that some kind of meeting has taken place.
Speaker 1: You know.
Speaker 3: Our understanding, according to sources, is that there was a
Speaker 3: meeting between EU officials and there was a meeting between
Speaker 3: Amazon representatives and the had been informed that the EU
Speaker 3: intens to blot that deal. I think we're having some
Speaker 3: issues or reporter will go back to it later on.
Speaker 3: I want to stick with m and A and acquisitions. Valsoft,
Speaker 3: the Montreal based company specializing in acquiring and growing vertical
Speaker 3: software Businesses announce the closing of a one hundred and
Speaker 3: seventy million dollar funding. Investors include Co two and Viking
Speaker 3: Until I'd Save also CEO Sam Yusif and my good
Speaker 3: friend Bling Vaccinali Bassak join us now and Sonali. I'm
Speaker 3: gonna let you take it away in a second. But Sam,
Speaker 3: this is an unusual financial transaction, so you're raising money,
Speaker 3: but the investors are basically handing it over to you
Speaker 3: so you can go shopping.
Speaker 11: Yes, basically, we thanks love for having me on first, Sonali,
Speaker 11: it's a pleasure to be here.
Speaker 1: Basically, we're at.
Speaker 11: A point where we twenty twenty two and twenty twenty
Speaker 11: three were very good years for MNY with interest rates
Speaker 11: going up, uncertainty around the economy.
Speaker 1: For a cerin acquire like us, it was a good environment.
Speaker 11: We deployed the capital, did really well, and we went
Speaker 11: out to the market to you know, get additional funding
Speaker 11: to execute on our pipeline.
Speaker 1: And we had.
Speaker 11: Option to raise money through equity, but we had this
Speaker 11: offer from Kristuan Viking that involved you know, hybrid type
Speaker 11: of arrangement where they give us money and there's a
Speaker 11: payment in kind rather than cash.
Speaker 1: Interest allowing us.
Speaker 11: To preserve maximum liquidity to execute our pipeline and diminish
Speaker 11: the dilution. Given that we had such a clear way
Speaker 11: to allocate the capital, we decided to go with something
Speaker 11: like that because we could increase the value of the
Speaker 11: company and create more shareholder value that way and delay
Speaker 11: a little bit the equity financing.
Speaker 12: Sam tell us about the process here, because there are
Speaker 12: a lot of questions about crossover investor big hedge funds
Speaker 12: in the venture capital space. How hard was it to
Speaker 12: raise money at this point in time and why did
Speaker 12: you go to Viking in CO two.
Speaker 1: Yeah, well, Viking was already an investor in the company.
Speaker 1: They bought.
Speaker 11: Fifteen percent or so equity stake back in twenty twenty
Speaker 11: two and twenty three, and then they chose to participate
Speaker 11: in this funding, backing us to do more what we've
Speaker 11: been doing. Could Sue has this new crossover fund that
Speaker 11: suited our needs perfectly? For us, It wasn't hard to
Speaker 11: raise equity. I think there's a big divergence that's happening
Speaker 11: in the market between you know, speculative growth and sort
Speaker 11: of quality. Valsov's business model is around mission critical software
Speaker 11: and the serial acquisition of these small to mid size companies.
Speaker 1: The market is consolidating, and.
Speaker 11: Valsov has been able to build a global platform to
Speaker 11: be a significant player that consolidation. The market participants appreciated
Speaker 11: that and wanted to be part of it.
Speaker 12: Sam, what about the valuations you're seeing in the market.
Speaker 12: Presumably they're still falling, So how are the pricing mechanisms
Speaker 12: behind what you're buying assets for.
Speaker 11: So what we saw happening in the market is around
Speaker 11: the twenty twenty two you know, mid twenty twenty two
Speaker 11: and all of twenty twenty three.
Speaker 1: It was a good market for us.
Speaker 11: So we're like a value is the buyer we're looking at,
Speaker 11: you know, buying things that.
Speaker 1: We feel could be a creative to our shareholders.
Speaker 11: So with interest rates going up, private equity being a
Speaker 11: little bit more cautious, the private equity portacoles doing a
Speaker 11: little less deals, there was an exceptional environment for us
Speaker 11: because we are cash buyers. We do deals on unlevered basis,
Speaker 11: and we saw our record pipeline and that continues for now.
Speaker 11: But you could see, you know, like with the rally
Speaker 11: that's been happening in the markets, we're starting to see
Speaker 11: a little bit more competition than we saw over the
Speaker 11: course of twenty twenty three.
Speaker 12: What about the potential to go public? If you think
Speaker 12: about your own path moving forward and the rivals around you,
Speaker 12: the potential things that you could buy. Are the public
Speaker 12: markets attractive or are people preferring private ends.
Speaker 11: I think for for a company like ours, the market
Speaker 11: will be would be reactive like the private market interests
Speaker 11: and indication of that, and I think we we it
Speaker 11: would be our plans to execute on an IPO potentially
Speaker 11: in the next you know, twenty four months or so,
Speaker 11: if the opportunity.
Speaker 3: Comes sam in the market, but also in your operations.
Speaker 3: I got to ask, how's AI factored into all of this?
Speaker 1: Yeah, of course it's the jury remains out.
Speaker 11: I mean there's there's I was reading about this this
Speaker 11: new Star by Shamat Palapatilla the eighty twenty where they're
Speaker 11: promising to build eighty percent of the futures at ninety.
Speaker 1: Percent less of the cost. Our feeling is we deal
Speaker 1: in vertical.
Speaker 11: Market software, so the integrations in a specific industry are
Speaker 11: very difficult to replicate and give us a barrier of entry,
Speaker 11: like we haven't seen any meaningful impag We haven't seen
Speaker 11: any impact at all other than the fact that it's
Speaker 11: enabled us to offer more to our customers.
Speaker 1: For a similar price, and so far.
Speaker 11: It's given us some efficiency in terms of we support
Speaker 11: our customers.
Speaker 1: There's efficiency around that.
Speaker 11: We've seen the productivity of our developers who up significantly
Speaker 11: and that's accelerating. The jury remains out. I think it's
Speaker 11: still not clear, but you could see a world or
Speaker 11: or software companies become more efficient, and you could also
Speaker 11: see a world where software companies could become a little
Speaker 11: bit more commodity, especially more horizontal companies.
Speaker 3: Also CEO sam Yusef and bloomd octionality. That's thanks to
Speaker 3: you both. Some breaking news crossing the bloom Bag terminal
Speaker 3: within Google deep Mind. Some of its key scientists are
Speaker 3: in talks to leave and start a new AI startup.
Speaker 3: Bloom Bag also reporting that those scientists are well looking
Speaker 3: at fundraising in some big numbers are involved. Let's bring
Speaker 3: in Bloomberg smart Bergen who is out in London. Mark,
Speaker 3: you led some of the reporting on this. What do
Speaker 3: we know?
Speaker 13: We don't know a great deal, but we do note
Speaker 13: that the names are involved are two key long term
Speaker 13: scientists at deep Mind, which is like being long long
Speaker 13: considered probably the most leading AI research.
Speaker 14: Lab in the world. They're based in Paris, where there's
Speaker 14: a lot of activity around French AI. We saw the
Speaker 14: miestrel ai, the Open AI competitor that came up last
Speaker 14: year and it's now worth two billion. This is a round,
Speaker 14: we've heard, an initial funding round potentially they're in talks
Speaker 14: with investors at two hundred million euros, which is a
Speaker 14: huge amount even for generative AI. But these are researchers
Speaker 14: that two of them at least, that have had multiple experience.
Speaker 14: One of them was involved with the Alpha Go paper,
Speaker 14: if everyone remembers that from twenty sixteen, where deep Mind
Speaker 14: built that algorithm that was the first to ever master
Speaker 14: the game of Go, and it was the seminal work
Speaker 14: in the field.
Speaker 3: All right, Bluebo's Mark Bergen, who is one of the
Speaker 3: team add in Europe and here in San Francisco reporting
Speaker 3: out that story. And to your point, two hundred million euros,
Speaker 3: I mean Mistrel's debut fundraising round was just north of
Speaker 3: one hundred million US dollars. These are big sums for
Speaker 3: a two person act that we've seen a lot of
Speaker 3: activity around in recent months. Thank you very much. Now,
Speaker 3: coming up here on Bloomberg Technology. We continue talking about
Speaker 3: all things tech M and A in twenty twenty four
Speaker 3: with Masha Butcher from day one Ventures. My goodness, as
Speaker 3: Friday's go, there is a lot going on. That conversation
Speaker 3: is coming up next. This is Bloomberg Technology. After the
Speaker 3: Adobe Figma deal was called off, where do we stand
Speaker 3: in M and A and particularly in looking ahead to
Speaker 3: twenty twenty four? Delighted to say we're going to talk
Speaker 3: about that with Masha Butcher in today's VC Spotlight. She
Speaker 3: is the general partner and founder of Day one Ventures,
Speaker 3: an early stage VC firm but with lots of asset
Speaker 3: under management. At Masha, we got obsessed in September about
Speaker 3: a very short lived IPO window, and then we kind
Speaker 3: of lamented that a lot of deals got shut down.
Speaker 3: If you're a vented catalyst with a portfolio of maturing companies,
Speaker 3: what are your options in twenty twenty four? What do
Speaker 3: you advise them to pursue?
Speaker 15: I think, first of all, Pigama's banner was the most
Speaker 15: interesting and most of important companies of our time. That's
Speaker 15: creating a tone of value for freelancers and for early
Speaker 15: stage entrepreneurs and for people, and this deal being call of.
Speaker 5: Meant a lot.
Speaker 15: I think first of all, it meant for later stage
Speaker 15: investments that looking to invest in later stage and right
Speaker 15: now that investors realize, as you had a deal and
Speaker 15: there is someone who wanted to acquire your portfolio companies
Speaker 15: and ready to pay sizeable amount for this opportunity, it
Speaker 15: might not go through because some.
Speaker 5: Of the regulator might not let this deal to go through.
Speaker 15: This is first and I do think it will lead
Speaker 15: to decreased the amount of investments in later stage. I
Speaker 15: think for early stage it would also mean a lot.
Speaker 15: If this deal went through, it would have been seven
Speaker 15: billion dollars of fresh capital that it would go back
Speaker 15: to vcs, to some of.
Speaker 5: The early investors in Cligma.
Speaker 15: So it's seven billion dollars that would have gone to
Speaker 15: top tier funds and some other funds that have invested
Speaker 15: in Figma earlier that they could reinvest in other opportunities
Speaker 15: and right now they wouldn't be able to do so.
Speaker 5: And I think it's.
Speaker 15: Also influency early stage in different directions. Right now, everyone
Speaker 15: understand if you invest in a company in a very
Speaker 15: early stage at five to ten billion viediation like our
Speaker 15: fund does you do still can have very good and
Speaker 15: sizable returns because you have secondary opportunity. You could still
Speaker 15: make a lot of money. If your company has an
Speaker 15: advanced billion, it doesn't have to grow as far as
Speaker 15: twenty billions. So I do think mid term it will
Speaker 15: increase competition on early stage, on the stage where we're operating.
Speaker 3: The AI case study is very interesting because if you
Speaker 3: look at early private market investor enthusiasm and take some
Speaker 3: examples like healthcare or biotech, those types of companies do
Speaker 3: seem right for acquisition for mature or long standing publicly
Speaker 3: traded healthcare companies, right that they could be a destination
Speaker 3: for it. For a smaller firm with a microfocus.
Speaker 5: Well, I think AI is very exciting.
Speaker 15: I personally think that they are is the only way
Speaker 15: for us to solve some of the most pressing problems
Speaker 15: that's related to climate change, that related to some horrible
Speaker 15: disease like cancer, and it's really there one of the
Speaker 15: very few ways in the world to increase equality and
Speaker 15: to give economic opportunities to let us develop places and
Speaker 15: less develops part of the population. But I do at
Speaker 15: the same time, if UAI company, culturally you're so different
Speaker 15: and you operate so differently compared to the rest of
Speaker 15: economy is that I don't think it's a good past
Speaker 15: way for any progressive air company to be acquired by
Speaker 15: old school big public companies invite for in any other field.
Speaker 15: So I actually do think we will be in the
Speaker 15: world when AI companies will be bigger than their old
Speaker 15: school companies that's not AI companies. And I do think
Speaker 15: that in a few years from now, I wouldn't honestly
Speaker 15: tell you which company would be bigger Open AI, Microsoft,
Speaker 15: I actually need to work thinking that it would be
Speaker 15: Open AI. And we can use this analogy when we
Speaker 15: think about any other A companies.
Speaker 3: Musha, what is twenty twenty five all look like for you?
Speaker 3: You know, where are you going to be focused in
Speaker 3: writing checks? Thematically or geographically?
Speaker 15: I'm really focused on humans my entire career from two perspectives.
Speaker 15: On the one hand, I think there's like only one
Speaker 15: topic right now that's as exciting for me as AI,
Speaker 15: and this is future of human And I think there
Speaker 15: very different things that falls into this bucket.
Speaker 5: That can have to do with longevity and health.
Speaker 15: It has to do with future of reproduction, it has
Speaker 15: to do with mental health.
Speaker 5: I do want to explore.
Speaker 15: What it is future of human and I do think
Speaker 15: there are different new leaders like Brian Johnson that pushing
Speaker 15: the boundaries of what's possible. And I do think Brian
Speaker 15: himself creating a burse for so called blueprint economy when
Speaker 15: people will organize the.
Speaker 5: Entire lifestyle around that.
Speaker 15: I do like to say that future of consumer is longevity,
Speaker 15: because I think you can get too healthy and you
Speaker 15: can't get too happy.
Speaker 5: And more and more people finding out about.
Speaker 15: The opportunity to improve their house, to improve their mental health.
Speaker 5: To improve their relationships. So I think future of human
Speaker 5: is really interesting. And I'm kind of investors that.
Speaker 15: Invest very early, and I invest in founders, and I
Speaker 15: keep being excited about meeting new founders, which is different from.
Speaker 5: Anyone else and can change the world.
Speaker 15: I think tech founders and tech entrepreneurs are the ones
Speaker 15: that will drive the biggest change for humanity and definitely
Speaker 15: change for the better. And I'm very hopeful to meet
Speaker 15: new companies and find out what are the other crazy
Speaker 15: things that I come up with that will change the
Speaker 15: world that we live in right now with such a
Speaker 15: big spid.
Speaker 3: Day one Benchres general partner and founder Marsha Bulcher. Great
Speaker 3: to have you on the program and good to catch up.
Speaker 3: Thank you. Now we're also going to stick with AI
Speaker 3: for the rest of the program. Okay. Ai powered wearables
Speaker 3: are taking on smartphones, a new crop of pins, monocles,
Speaker 3: smart sunglasses. We're all coming to market and are trying
Speaker 3: to challenge the dominance posed by traditional smartphone. I want
Speaker 3: to bring in Bloomberg's Sharing Gafari, who's been writing about
Speaker 3: this in her newsletter. I must say at CES this
Speaker 3: was the thing. AI is real. It's in these devices.
Speaker 3: What have you been writing about? That's right.
Speaker 16: I think we're seeing the most hype and excitement around
Speaker 16: AI wearables since perhaps ten years ago when Google Glass
Speaker 16: first came out. You know, people are really trying to
Speaker 16: capitalize on the rapid advancements that have been made on
Speaker 16: the software side with Jenai and bring that into hardware.
Speaker 3: A part of this story is a bet that human
Speaker 3: beings change how they interact in terms of communication. Right.
Speaker 3: Humane is what we're showing on the screen. Now, we've
Speaker 3: had the CEO on the show, but it's going to
Speaker 3: be different from having something physically in your hands. Seems
Speaker 3: to be the main takeaway.
Speaker 16: Correct The idea is for a lot of these devices.
Speaker 16: They're not aiming to miss necessarily completely replace the smartphone
Speaker 16: right out, but try to be a supplement to it,
Speaker 16: kind of like how we have an Apple Watch, so
Speaker 16: humane is a pin that you can attach to your clothing.
Speaker 16: There are monocles that you can add to your glasses.
Speaker 16: Meta has its smart ray bands, and then of course
Speaker 16: we're seeing Apple's Vision Pro, which is a lot more
Speaker 16: heavy duty, and you know, it seems like it's being
Speaker 16: pitched very much in an enterprise fashion as well, coming
Speaker 16: out next week.
Speaker 3: And a few monocle the monocle three hundred dollars from
Speaker 3: Brilliant Labs, aipowder. It makes me think about that emoji,
Speaker 3: which you know, I'll post it on X after this,
Speaker 3: but we have fifteen seconds. Which of all those things
Speaker 3: are you most inclined to use?
Speaker 16: You know, for me, it's the classic sunglasses.
Speaker 17: Actually, on a recent trip to Hawaii, I crushed my
Speaker 17: normal analog glasses and I had to use Meta's ray
Speaker 17: band testers that I had for fun, and they kind of,
Speaker 17: you know, we're sort of seamless because they looked like again,
Speaker 17: regular shades. I didn't look strained if I was walking
Speaker 17: around in public wearing them. So for me, something that's
Speaker 17: sleek and designed well and looks normal is what I about.
Speaker 3: Them, all right, Bloomberg Shrien Gafari check out her newsletter,
Speaker 3: Thank you very much. That does it for this edition
Speaker 3: of Bloomberg Technology. Check out the pod. By the way,
Speaker 3: new Time starts next week. This is Bloomberg Technology.