Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: To welcome everybody on Bloomberg Radio, Bloomberg TV across Bloomberg platforms. Yes, indeed,
Speaker 2: Carol Masser, Joe Matthew here at the Milk and Institute
Speaker 2: Global Conference. We have a special guest. And I feel
Speaker 2: like reading in this morning the headlines were made.
Speaker 3: It's like they knew Kathy was going to join us.
Speaker 2: Kathy would CEO CIO and of course the founder of
Speaker 2: ARC invest It's so nice to talk with you again.
Speaker 4: Thanks, delighted to be here.
Speaker 1: You gave me my big break in twenty fifteen.
Speaker 4: I'll never forget that.
Speaker 2: Well, it's so funny because I want to talk to
Speaker 2: you on because you kind of put him for me
Speaker 2: on the radar, and I just feel like it was
Speaker 2: a time when so many people questioned what he was
Speaker 2: up to. Now everybody is so excited about the SpaceX ipo.
Speaker 2: We see increasingly how he's kind of melding his universe together.
Speaker 2: Tell us about kind of that bet, and even today
Speaker 2: we have that he's building a chip factory at least
Speaker 2: fifty five billion in investment, maybe as much as almost
Speaker 2: one hundred and twenty and he's doing this chip factory.
Speaker 3: SpaceX with Tesla. How are you looking at Elon right now?
Speaker 3: What his next era is?
Speaker 4: So this is why I founded ARC invest.
Speaker 1: We knew that the seeds that were planted in the
Speaker 1: twenty years that ended in the bubble, they've been germinating
Speaker 1: for twenty twenty five years and now they're flourishing. And
Speaker 1: what we're seeing is fifteen different technologies evolving and they're
Speaker 1: all converging. And Elon about six months ago, and we've
Speaker 1: been using the word convergence for a long time, he said,
Speaker 1: you know what, I think my companies are converging more
Speaker 1: than even I understood. And so we're seeing of course
Speaker 1: SpaceX XAI, rumors about Tesla, and really he believes that
Speaker 1: in the new world, or to create the new world,
Speaker 1: a company has to be vertically integrated. And so that's
Speaker 1: what's happening here. He is moving into incredible vertical integration
Speaker 1: as he moves data centers into space.
Speaker 3: Is it all about our Bloomberg intelligence?
Speaker 2: George Ferguson cover Space covers defense, but he said, it's
Speaker 2: all about Elon controlling the supply chain. Kathy, But I
Speaker 2: do feel like globally, we're seeing countries companies really thinking about.
Speaker 3: Their supply chain. Is that part of his strategy?
Speaker 4: Absolutely?
Speaker 1: Absolutely, And also when a company is breaking new ground
Speaker 1: literally in this case, and really inventing something, the supply
Speaker 1: chain doesn't exist very often or not all parts of
Speaker 1: it exist. And I think also as he's discussing where
Speaker 1: he's going and how he's going to do it, he is.
Speaker 4: Getting the supply chain ready.
Speaker 1: You know, he always sets the time frame, you know,
Speaker 1: much sooner than most.
Speaker 4: People would expect.
Speaker 1: But it's to get his employees and the supply chain focused,
Speaker 1: because when he moves, he moves fast.
Speaker 5: You've really helped to define people's perception of Elon Musk
Speaker 5: and the company Tesla largely as one that is not
Speaker 5: about making cars, but one that's about autonomy and robotics.
Speaker 5: When you walk out the Hilton here different than where
Speaker 5: I live in Washington, DC, driverless weymos are picking people
Speaker 5: up and driving away with them all day long. The
Speaker 5: mainstreaming of autonomous vehicles is just about here. I'd like
Speaker 5: to know if you see that actually fulfilling itself in
Speaker 5: the next year, and if this is a zero sum
Speaker 5: game or you're going to have Uber, Weimo, Tesla all.
Speaker 1: Involved Okay, this is where vertical integration comes back into
Speaker 1: the conversation. In the robotaxi world. Tesla's vertically integrated and
Speaker 1: has created the platform upon which others will build their companies.
Speaker 1: So I credit our team, So Tasha, Daniel Brettwinton have
Speaker 1: been focused on this from day one twenty fourteen when
Speaker 1: I founded ARC and yes, slowly, slowly than all at once.
Speaker 1: So vertical integration for Tesla means it will have the
Speaker 1: lowest cost structure by far. Now it's going to use
Speaker 1: Uber's umbrella here three dollars plus per mile, but if
Speaker 1: our analysis is correct, those costs as robotaxis scale are
Speaker 1: going to drop to twenty five cents per mile.
Speaker 4: Think about it.
Speaker 1: The cost of transportation is going to collapse here and
Speaker 1: no one Waimo's cost structure, according to our estimates in
Speaker 1: twenty thirty, will be fifty percent higher than Tesla's because
Speaker 1: they're dependent on other auto manufacturers and others in the
Speaker 1: supply chain that Tesla is not.
Speaker 2: How are you thinking about the SpaceX ipokathy, do you
Speaker 2: anticipate there's so much enthusiasm going into it, massive side,
Speaker 2: massive interest, But do you think there'll be a drop
Speaker 2: off initially after you know, once it makes its public debut,
Speaker 2: and then ultimately kind of play out like Tesla did
Speaker 2: that eventually it goes up again, like how do you
Speaker 2: see the trajectory?
Speaker 4: Right?
Speaker 1: So this is only at least what we know so far,
Speaker 1: seventy five billion dollars.
Speaker 4: There is so much demand out there.
Speaker 1: We have in our venture fund, so ARKVX SpaceX is
Speaker 1: the largest position. And because we're direct to consumer when
Speaker 1: it comes to venture although the fund has scaled north
Speaker 1: of eight hundred and fifty million, investors had to look
Speaker 1: for us and how did they find us? They were
Speaker 1: looking for SpaceX. So the demand is voracious out there.
Speaker 1: Only seventy five billion. Yes, it's a big IPO, but
Speaker 1: just think about how SpaceX has reawakened the dream of spacexlation.
Speaker 1: This has captured the imagination not just of investors but
Speaker 1: really everyone.
Speaker 2: So does that mean you don't think it'll fly? You
Speaker 2: think the anim will continue? Do you think there will
Speaker 2: be some settling ing, there'll be.
Speaker 1: Supply demand imbalance in the beginning, you'll see that pop.
Speaker 1: It will be volatile, I would imagine, But we hope
Speaker 1: to serve in terms of providing our research We've already
Speaker 1: got a SpaceX model out there on our site arc
Speaker 1: dash invest dot com. We have not added data centers
Speaker 1: orbital data centers in However, our preliminary work suggests that
Speaker 1: that part of the business could take relative to our
Speaker 1: existing model, could take Tesla from a revenue generation point
Speaker 1: of view, orders of magnitude higher, ten twenty times higher.
Speaker 3: I'm so glad you went there data centers in space.
Speaker 2: And I mentioned before we got going it came up
Speaker 2: on a real estate panel where so many of the
Speaker 2: real estate investors, even related companies, has switched their focus
Speaker 2: to data centers. But we brought up data centers in space.
Speaker 2: What does that mean though? Then for all of the
Speaker 2: data center build out and money that is happening here
Speaker 2: on Earth, does that mean.
Speaker 3: A lot of that goes away? There's a little bit
Speaker 3: of a bubble, like how do we reconcile that we think?
Speaker 4: And this is the important judgment call.
Speaker 1: Is this hype? Is this nineteen ninety nine? I can
Speaker 1: tell you unequivocally it is not. As I mentioned, the
Speaker 1: seeds were planted. Then now we're ready and we think
Speaker 1: this technology revolution is going to dwarf the industrial revolution.
Speaker 4: By far so.
Speaker 1: I think that we'll need the orbital data centers. And
Speaker 1: of course Elon is informed by his experience in Memphis,
Speaker 1: Tennessee and now Mississippi.
Speaker 4: Memphis became not in my.
Speaker 1: Backyard, you're increasing my electricity prices and you're ruining our land.
Speaker 1: So he's basically saying, I'm not going to have to
Speaker 1: worry about not in my backyard in space.
Speaker 3: But does it make a bubble of the stuff on that.
Speaker 4: I don't think so. I don't think so. We think
Speaker 4: we're going we need all of this.
Speaker 2: Yep.
Speaker 3: Sorry, I know I'm dominating.
Speaker 5: I mean you guys should walk away with this, go
Speaker 5: to ask you about something that took place today. You
Speaker 5: woke up and saw your third largest holding just go
Speaker 5: through the roof in AMD another blow the doors off quarter.
Speaker 5: And it's really creating this question now about whether we
Speaker 5: should be paying a lot more attention the market is
Speaker 5: to CPUs after GPUs went crazy. We're looking at people
Speaker 5: take money out of Nvidia now and chase stocks like AMD.
Speaker 5: Do we need both or is that where you're looking?
Speaker 4: We think we need both.
Speaker 1: I do think there is more competition. We want it,
Speaker 1: we need it. But it was interesting Sarah Fryar at
Speaker 1: Open AI.
Speaker 4: I'm going to give her a shout out because I
Speaker 4: heard her.
Speaker 1: Speak and she was saying, you know, people are chasing GPUs.
Speaker 1: They're they're going to be really shocked at how agentic
Speaker 1: AI activates CPUs and infernt generally activate CPUs. Yesterday, Lisa
Speaker 1: Sue provided a stat we had.
Speaker 4: Never heard before. Right now, for.
Speaker 1: Every for every CPU, there are four to five GPUs
Speaker 1: when it comes to enabling AI. Lisa thinks it's going
Speaker 1: to go one to one in the future. I think
Speaker 1: that has been the sleeper and you see Intel has
Speaker 1: taken off.
Speaker 4: In fact, we're seeing a lot of stocks that were you.
Speaker 1: Know, they were very big in the bubble. And I
Speaker 1: just said to our team today, I said, what's going on.
Speaker 1: We're going back to the future. You know, Intel resurrecting, Yes,
Speaker 1: and Flextronics is now called flex Boom.
Speaker 4: So I think we need it all.
Speaker 5: Not to mention data storage, which has been one of
Speaker 5: the most remarkable exam of a shortage creating a monster rally.
Speaker 5: So you need these old fashioned chips, yes, to get
Speaker 5: to this new fashion AI.
Speaker 4: All hands on deck.
Speaker 2: We want to ask you about a story that came
Speaker 2: out Google, Microsoft to give US agency early access to
Speaker 2: AI models. So basically the White House vetting AI models
Speaker 2: those good are bad and.
Speaker 1: Knowing this administration and David sachs our ais are, I
Speaker 1: don't think we're talking about heavy regulation here. We might
Speaker 1: be talking more about national security. National security. We heard
Speaker 1: this with Metho's you know software that you know has
Speaker 1: not has been a place for sixty years and never
Speaker 1: been penetrated. AI can find these vulnerabilities, So they're probably
Speaker 1: trying to tighten up a lot of what we do
Speaker 1: out there and make sure that our industries are safe.
Speaker 5: Doesn't that bring a political implication though, to what may
Speaker 5: or may not be available to people if the White
Speaker 5: House is choosing which platform we auto use.
Speaker 1: No, you know what's interesting, and this is taking a
Speaker 1: leaf from open ai in its early days GPT. You
Speaker 1: are saying, we don't think we can release this. This
Speaker 1: is too powerful is great marketing. It's true that it's
Speaker 1: very powerful, but it's also great marketing. A lot of
Speaker 1: the people at Anthropic came from open AI. So while
Speaker 1: they're blazing trails, no question about it, and they're leapfrogging
Speaker 1: one another, which is great. Competition is great for US here,
Speaker 1: including competition from China. I think that you know, we're
Speaker 1: on our way.
Speaker 2: I want to ask you about stable coins tether and
Speaker 2: their potential. Do you think it has a chance to
Speaker 2: become big in the US under the Genius Act?
Speaker 3: And you've also invested in Circle?
Speaker 2: Are you looking at other stable coin related players.
Speaker 3: Beyond that crypto Bild? Tell me there's a lot going
Speaker 3: on right now.
Speaker 4: It is a lot going on.
Speaker 3: There's a big meeting at Morlago, Like I know, a
Speaker 3: lot of crypto folks like.
Speaker 4: Tell us well.
Speaker 1: And you know, in the last election, I do think
Speaker 1: the crypto community was very was part of the swing
Speaker 1: factor because they knew deregulation would take place under this administration.
Speaker 1: That's absolutely true. So yes, we're seeing the deregulation. You know,
Speaker 1: this is creating a new financial world order. Many people
Speaker 1: think the dollars should be going down because of our
Speaker 1: deficit and debt and all of that, and what we're
Speaker 1: seeing here in the United States is deregulation, tax cuts,
Speaker 1: and a very business friendly, very business friendly administration. We
Speaker 1: think the return on invested capital is going to go
Speaker 1: up in the US generally, and we think that the
Speaker 1: crypto revolution we were at risk of losing it. Yeah,
Speaker 1: and yes we do think USAT has a shot.
Speaker 2: You do, yes, all right, I'm not going to have
Speaker 2: like a million more who's doing?
Speaker 3: Kathy, thank you so much.
Speaker 4: Really appreciate it, Thank you real, thank you so much.
Speaker 3: Really appreciate it.
Speaker 2: Kathy would of course, she's the CEO, CIO and of
Speaker 2: course founder of arc in vas someone like I said,
Speaker 2: it was ten years ago, yes, that we first started talking,
Speaker 2: yes about Elon Musk, so really tremendous to catch up
Speaker 2: with her again and