WEBVTT - South Korean Chipmakers to Supply OpenAI’s Stargate 0:00:04.160 --> 0:00:08.560 Bloomberg Tech is alive from coast to coast with Caroline 0:00:08.640 --> 0:00:11.760 Hide in New York and Eva Low in Sent Francisco. 0:00:14.560 --> 0:00:17.400 This is Bloomberg Tech coming up another day, another deal. 0:00:17.560 --> 0:00:21.880 Samsung and sk Heiniz forge initial agreements to supply chips 0:00:21.920 --> 0:00:24.680 and other gear to open AI's Stargate projects. 0:00:24.720 --> 0:00:28.120 Plus Peloton shares drop after hiking prices and announcing an 0:00:28.160 --> 0:00:31.120 overhaul of its hardware lineup and a new AI system. 0:00:31.280 --> 0:00:35.960 And Google also introduces new Nest branded hardware, including video cameras, 0:00:36.000 --> 0:00:38.960 a doorbell, and a compact speaker, as the company advised 0:00:38.960 --> 0:00:41.440 to integrate AI throughout the smart home. 0:00:42.080 --> 0:00:44.120 Hardware abound. But let's get to the hard fact of 0:00:44.159 --> 0:00:44.400 the day. 0:00:44.479 --> 0:00:46.280 When it comes to the markets, we are flat on 0:00:46.320 --> 0:00:47.720 the nastat one hundred. 0:00:47.440 --> 0:00:48.880 A lot to digest for investors. 0:00:49.080 --> 0:00:51.919 Whether we're looking at weaker jobs data once again signaling 0:00:52.200 --> 0:00:54.960 weakness that the Federal Reserve might cut rates into. 0:00:55.320 --> 0:00:57.440 But will we get of course, the non. 0:00:57.240 --> 0:01:00.240 Farm payrolls on Friday, we are amid a government shut down, 0:01:00.440 --> 0:01:02.360 and we will go to that best conferences and when 0:01:02.360 --> 0:01:04.280 it starts with the leaders of the Democrats in the House. 0:01:04.280 --> 0:01:06.480 But I'm looking at gold Spot currently get a. 0:01:06.480 --> 0:01:09.720 Record high that anxiety fueling a bid for a haven 0:01:09.880 --> 0:01:10.840 ED But what are you looking at? 0:01:11.200 --> 0:01:12.960 Yeah, I think we've got to get out to talk 0:01:13.000 --> 0:01:15.840 more about what's happening with this shutdown because it's impacting 0:01:15.880 --> 0:01:18.679 markets right now, including the tech sector. Bloombergs Tyler Kendall 0:01:18.959 --> 0:01:21.720 is at the White House in DC for more. Sorry, Tyler, 0:01:22.000 --> 0:01:25.080 explain the basics of where we stand in the shutdown 0:01:25.319 --> 0:01:27.000 and what we're expecting to happen next. 0:01:28.400 --> 0:01:30.560 Right, So, ED, at this point, we haven't seen any 0:01:30.600 --> 0:01:34.000 side really budge on their main points here. So at 0:01:34.040 --> 0:01:38.120 this point, negotiations are continuing, but the government is shut down, 0:01:38.120 --> 0:01:41.440 and we did hear from Republican leadership earlier today, including 0:01:41.480 --> 0:01:45.120 House Speaker Mike Johnson and his words, more pain will 0:01:45.160 --> 0:01:48.360 be inflicted the longer this shutdown goes on. It's our 0:01:48.440 --> 0:01:51.720 understanding that House Republicans will hold a call later today 0:01:51.760 --> 0:01:53.840 with the O and B Director of US Vote about 0:01:53.840 --> 0:01:56.840 the potential for permanent layoffs. This has been a threat 0:01:56.960 --> 0:01:59.600 that has been issued from this White House, essentially as 0:01:59.600 --> 0:02:01.240 an ego shaving tactic. 0:02:00.960 --> 0:02:02.560 In these talks. 0:02:02.600 --> 0:02:04.920 But we should note at this point we haven't actually 0:02:04.960 --> 0:02:09.520 seen the agency's outline plans for permanent firings. As of now, 0:02:09.680 --> 0:02:12.440 Republicans are really standing firm behind this idea that they 0:02:12.440 --> 0:02:15.560 want to see what's known as a clean continuing resolution 0:02:15.639 --> 0:02:18.160 that would fund the government until mid November with no 0:02:18.400 --> 0:02:21.399 other provisions attached. The Democrats say they want to see 0:02:21.400 --> 0:02:24.560 policy changes now, and they all have to do with healthcare. 0:02:24.600 --> 0:02:26.800 Really at the heart of this, the chief concern is 0:02:26.840 --> 0:02:31.160 extending those expiring Obamacare premium tax subsidies that are set 0:02:31.200 --> 0:02:32.919 to end at the end of this year. I would 0:02:32.919 --> 0:02:34.680 watch out on that front because we have heard from 0:02:34.680 --> 0:02:37.400 Senate Majority Leader John Thune there could be some room 0:02:37.440 --> 0:02:40.400 for negotiation on that, but the government has to reopen 0:02:40.440 --> 0:02:42.320 first in order for those talks to start. 0:02:42.440 --> 0:02:44.280 We were just showing some live picks of what we 0:02:44.360 --> 0:02:46.680 expect to be House Democrats in a press conference on 0:02:46.720 --> 0:02:49.680 the shutdown, and Askar said earlier, when it happens, will 0:02:49.680 --> 0:02:51.760 bring you what you need to know. Bloombers Tyler Kendall 0:02:51.960 --> 0:02:54.119 staying in DC for US, that's kind of the big 0:02:54.160 --> 0:02:56.160 picture of what's happening in tech markets, but there are 0:02:56.200 --> 0:02:58.959 stories out there that are driving specific moves as well. 0:03:00.320 --> 0:03:04.160 I'm looking at Micron moving pretty much six percent to 0:03:04.200 --> 0:03:06.640 the upside, like it was lower in pre market on 0:03:06.680 --> 0:03:09.400 the news that it's big rivals in memory, sk Heinix 0:03:09.440 --> 0:03:12.480 and Samsung have won the Stargate deal. Do you expect 0:03:12.520 --> 0:03:14.200 it to be up six percent? Well, it is, and 0:03:14.240 --> 0:03:17.720 then there is tension between the United States and Taiwan. 0:03:18.080 --> 0:03:21.200 Taiwan pushing back on the idea. There's an agreement here 0:03:21.440 --> 0:03:25.160 that they will push more manufacturing to be on shore 0:03:25.200 --> 0:03:30.000 in the United States through TSMC. TSMC's usadrs are up 0:03:30.000 --> 0:03:31.519 two percent. We need to get the details. 0:03:31.919 --> 0:03:35.840 There is a through line between these two key stories, 0:03:36.000 --> 0:03:38.240 and Michael Shepherd, as always, can talk us through the 0:03:38.320 --> 0:03:40.560 nuances and what's happening when it comes to the chip 0:03:40.600 --> 0:03:42.840 industry and Washington's into play. 0:03:43.040 --> 0:03:44.320 So talk us through first and foremost. 0:03:44.360 --> 0:03:49.200 You've got Samsung Shynix of course, basically Asian players winning 0:03:49.240 --> 0:03:52.360 contracts with Open AI and Stargate. But this is as 0:03:52.400 --> 0:03:56.800 the leadership in Washington and really pushing for more domestic manufacturing. 0:03:57.080 --> 0:03:58.400 Just talk us through it. 0:03:59.120 --> 0:04:00.840 Well, when you think think about it, you have to 0:04:00.880 --> 0:04:04.040 look at it in the broader AI context, and for 0:04:04.080 --> 0:04:07.440 the Trump administration, this would certainly support their goal of 0:04:07.520 --> 0:04:11.200 propelling investment in Stargate in Open Ai, in that big 0:04:11.280 --> 0:04:14.320 data center project that the President heralded at the beginning 0:04:14.400 --> 0:04:18.279 of his term. But there were a few questions left unanswered. 0:04:18.320 --> 0:04:20.800 One is the price tag and will this help support 0:04:21.120 --> 0:04:24.440 what is part of a trade deal with South Korea 0:04:24.520 --> 0:04:26.360 that calls for as much as three hundred and fifty 0:04:26.360 --> 0:04:29.880 billion dollars in South Korean investment in the US over 0:04:29.880 --> 0:04:33.560 the next several years. Also left unanswered is where all 0:04:33.600 --> 0:04:36.800 of this high bandwidth memory is going to be produced, Caro. 0:04:37.120 --> 0:04:39.000 We don't know whether this is going to be made 0:04:39.640 --> 0:04:41.760 in Asia or if they may try to do some 0:04:41.839 --> 0:04:43.479 of this production in the US. 0:04:43.600 --> 0:04:45.880 And that is certainly a goal of. 0:04:46.200 --> 0:04:49.360 The US and of the Trump administration to onshore more 0:04:49.360 --> 0:04:52.120 of that chip production. And so there may be more 0:04:52.160 --> 0:04:55.320 pressure from the administration on these two companies, on the 0:04:55.360 --> 0:04:57.840 government and SOUL to try to make some more of 0:04:57.880 --> 0:04:58.400 that happen. 0:04:59.320 --> 0:05:03.080 Shap headline out of DC Trump's proposed changes to VISA 0:05:03.240 --> 0:05:05.919 rules assailed by the chip industry. 0:05:06.120 --> 0:05:07.880 What's the team been reporting on here. 0:05:09.000 --> 0:05:12.599 Well, this is another cross current that we're seeing here 0:05:12.720 --> 0:05:17.039 in Washington, and that is, namely that for all of 0:05:17.080 --> 0:05:21.599 the push on getting manufacturing on short here. There is 0:05:21.680 --> 0:05:24.320 a tension over the workforce, and we have heard administration 0:05:24.400 --> 0:05:27.560 officials talk about trying to develop the workforce, but the 0:05:27.839 --> 0:05:31.040 industry has outlined a major challenge, and that is simply 0:05:31.080 --> 0:05:34.400 that the country is not producing enough graduates here in 0:05:34.440 --> 0:05:37.560 the US to meet the potential demand of all of 0:05:37.640 --> 0:05:42.159 that manufacturing and data center and AI expansion that is 0:05:42.240 --> 0:05:44.760 projected to happen over the next five years. There is 0:05:44.800 --> 0:05:49.120 an estimated sixty seven thousand job gap according to the 0:05:49.160 --> 0:05:53.679 semiconductor makers. Now, what we're seeing is pushback from chip 0:05:53.839 --> 0:05:57.680 makers against an administration plan the crackdown on the F 0:05:57.760 --> 0:06:01.400 one student visa. This is a key pipeline for talent 0:06:01.520 --> 0:06:03.719 in the tech industry. It is something that they have 0:06:03.800 --> 0:06:07.160 relied on for years. Students currently are able to say 0:06:07.240 --> 0:06:10.680 for an indefinite period as long as they're actively in 0:06:10.800 --> 0:06:13.440 a course of study, but the administration wants to shorten 0:06:13.480 --> 0:06:16.120 that to four years, and industry is saying, look, a 0:06:16.200 --> 0:06:19.840 less friendly approach to immigration will drive away talent to 0:06:19.920 --> 0:06:23.599 other countries that are more welcoming, and it will hurt competition, 0:06:24.040 --> 0:06:27.280 one CEO wrote in An unnamed chief executive from a 0:06:27.320 --> 0:06:30.120 semiconductor company wrote in to say that they were deeply 0:06:30.160 --> 0:06:33.080 troubled to see this and that it will harm competitiveness 0:06:33.279 --> 0:06:36.040 for the industry here in the US. And this comes 0:06:36.160 --> 0:06:39.760 as also the administration is raising the fee for H 0:06:39.839 --> 0:06:43.719 onebvs's to one hundred thousand dollars for new applications and 0:06:43.800 --> 0:06:47.239 for chip companies that could mean one hundreds of millions 0:06:47.279 --> 0:06:50.080 of dollars in additional fees. Trying to get all that 0:06:50.240 --> 0:06:53.680 talent here in the US to meet this demand that they. 0:06:53.600 --> 0:06:54.360 Have for jobs. 0:06:54.640 --> 0:06:57.719 Bluembogs Mike Shechpad with two critical stories out of DC 0:06:57.839 --> 0:06:59.440 and there are several that we didn't touch on. We'll 0:06:59.440 --> 0:07:03.360 try to throughout the hour. Energy Secretary Chris Wright says 0:07:03.400 --> 0:07:06.919 the US has taken an equity stake in Lithium Americas 0:07:07.240 --> 0:07:10.040 in a bid to level the competitive playing field with China. 0:07:10.200 --> 0:07:13.040 Wright said on the close that the US government will 0:07:13.080 --> 0:07:15.480 have a five percent stake in the company and a 0:07:15.560 --> 0:07:18.680 five percent stake in the actual mind all with an 0:07:18.680 --> 0:07:19.560 exit strategy. 0:07:20.600 --> 0:07:23.360 So we did was a creative deal engaged with GM 0:07:23.520 --> 0:07:28.000 and Lithium Americas to find a way to bring more capital, 0:07:28.160 --> 0:07:33.240 equity capital into the mine. Yes, for US to take 0:07:33.280 --> 0:07:36.239 an equity stake in the mind and to do those things. 0:07:36.240 --> 0:07:39.120 So the mind's going to be viable, economically sound, it's 0:07:39.160 --> 0:07:41.680 not going to be the next Cylindra. And then we 0:07:41.720 --> 0:07:44.240 can advance the loan capital that will help that mind 0:07:44.280 --> 0:07:44.920 get finished. 0:07:45.400 --> 0:07:47.680 And you have creative deals coming from the administration. Let's 0:07:47.720 --> 0:07:50.400 get to the broader tech readA cross therefore with Frea Sincotos, 0:07:50.400 --> 0:07:53.480 your senior market analyst at City Index. Look, we talk 0:07:53.520 --> 0:07:56.200 about anxiety in the market, we talk about a government shutdown. 0:07:56.240 --> 0:07:58.200 We worry about maybe the push and the pull of 0:07:58.200 --> 0:08:01.040 trade deals, whether it's with Taiwan, whether it's with South Korea. 0:08:01.080 --> 0:08:02.560 And yet videos. 0:08:02.240 --> 0:08:05.320 At a record high today, Micron's had a record high today. Fiona, 0:08:05.440 --> 0:08:08.760 do you just keep on allocating to the ai trade? 0:08:09.720 --> 0:08:11.880 It feels like it's that way. I mean, whilst we 0:08:12.040 --> 0:08:17.520 are seeing pockets of safe haven demand. So obviously we've 0:08:17.560 --> 0:08:21.000 seen goals trading at record high, We've seen the Japanese 0:08:21.120 --> 0:08:26.360 Yenni's strengthening against the US dollar. We're seeing equities still 0:08:26.400 --> 0:08:30.120 remaining very well supported. So I think there is very 0:08:30.200 --> 0:08:34.800 much this sense that particularly tech stocks are still attracting 0:08:35.040 --> 0:08:38.040 a lot of attention because investors want to put their 0:08:38.040 --> 0:08:41.600 money somewhere, and big tech in the US remains a 0:08:41.840 --> 0:08:44.960 solid trade, you know, and we've still got the outlooks, 0:08:45.600 --> 0:08:47.880 will be getting more information of that when we get 0:08:47.920 --> 0:08:51.000 into earning season. But it does feel that we've had 0:08:51.040 --> 0:08:54.200 this sort of you know, gradual climb higher that's not 0:08:54.520 --> 0:08:58.720 really letting up, even though there are clearly plenty of 0:08:58.800 --> 0:09:02.600 risks out there, the shutdown of the US government, but 0:09:02.800 --> 0:09:06.040 still those you know, optimism surrounding those fed rate cuts 0:09:06.160 --> 0:09:07.920 is still helping the sector as well. 0:09:08.720 --> 0:09:11.400 It is about the macro policy making, whether or not 0:09:11.400 --> 0:09:13.320 we get the jobs data on Friday or not. Fiona, 0:09:13.760 --> 0:09:16.040 what's happening in Europe because I'm looking at ASML is 0:09:16.080 --> 0:09:18.200 also at one point three percent. Are you getting a 0:09:18.240 --> 0:09:20.240 pull across to other regions right now? 0:09:21.720 --> 0:09:23.439 Yes? I think there has been, And you know, it's 0:09:23.480 --> 0:09:26.440 quite interesting because I think there was a period just 0:09:26.520 --> 0:09:30.040 recently where Europe was struggling against the US. We were 0:09:30.080 --> 0:09:32.920 seeing the US climbing fresh record highs. We were seeing 0:09:32.920 --> 0:09:34.560 the nasdak Art, we were seeing the s and P 0:09:34.720 --> 0:09:37.400 five hundred up, and yet in Europe we were sort 0:09:37.400 --> 0:09:39.920 of suffering a little bit on down days. But I 0:09:39.920 --> 0:09:42.079 think there is a sense now that that is starting 0:09:42.120 --> 0:09:44.920 to turn around again. As you said, there is that 0:09:44.920 --> 0:09:48.160 sort of pull across that we're getting from the US 0:09:48.240 --> 0:09:52.120 into tech stocks in Europe, which is helping. As far 0:09:52.160 --> 0:09:54.959 as sort of other sectors. There had been a strength 0:09:55.000 --> 0:09:58.719 in defense stocks in Europe, which I think has just 0:09:58.760 --> 0:10:01.679 sort of wound down a little bit. But yeah, as 0:10:01.720 --> 0:10:06.320 far as techook are concerned, we are seeing some encouraging signs. Again. 0:10:07.559 --> 0:10:09.920 A story we did not get to with Bloomberg's Mike 0:10:09.960 --> 0:10:14.000 Shepherd was Taiwan's Vice Premier coming out and saying that 0:10:14.040 --> 0:10:18.640 the country rejects the United States demand for Taiwan to 0:10:18.840 --> 0:10:24.840 actively help in bringing fifty percent half of semiconductor manufacturing 0:10:25.400 --> 0:10:29.240 for the US supply base into the United States. This 0:10:29.320 --> 0:10:31.840 is a sort of part of the negotiation broadly on 0:10:31.880 --> 0:10:34.720 trade with that nation. But it speaks to other things 0:10:34.720 --> 0:10:37.240 that Caroline outline to you, which is the impact of 0:10:37.240 --> 0:10:40.400 this administration's policy on the technology sector. 0:10:40.600 --> 0:10:41.400 What do you make of that? 0:10:42.960 --> 0:10:46.640 Yeah, you know, I think with this administration, policy is 0:10:47.080 --> 0:10:51.600 very much a central part of how markets are responding 0:10:51.880 --> 0:10:56.640 as to the outlook for stocks and also for sentiment. 0:10:56.720 --> 0:10:58.600 As we've talked about, you know, it does feel like 0:10:58.720 --> 0:11:02.439 the a saidministration is having a very active role, as 0:11:02.480 --> 0:11:06.880 we know, in setting out policy and involving themselves in policy, 0:11:06.920 --> 0:11:11.480 which is affecting stocks. It's affecting sentiment to a degree. 0:11:11.640 --> 0:11:13.679 But I think also that there is a little bit 0:11:13.720 --> 0:11:17.959 of court and we're not seeing the same rapid, quick 0:11:18.120 --> 0:11:21.760 responses that we used to see at the beginning of 0:11:21.960 --> 0:11:25.600 Trump's administration, where he would make these announcements and we 0:11:25.600 --> 0:11:29.319 would see a big reaction in stock, big reaction in 0:11:29.360 --> 0:11:34.040 the markets. We're seeing more relaxed response, I would say 0:11:34.080 --> 0:11:36.600 to the comments that come out from Trump, although they 0:11:36.600 --> 0:11:39.680 are still there, they're just not making the same impact 0:11:40.360 --> 0:11:41.880 that perhaps they have previously. 0:11:42.559 --> 0:11:46.960 Fiona, did technology investors start looking for opportunities in sectors 0:11:46.960 --> 0:11:49.800 and companies where a US government might take a stake. 0:11:52.200 --> 0:11:54.719 Yeah, that does seem to feel like it could be 0:11:55.280 --> 0:11:57.640 the next one to be watching for. You know. I 0:11:57.640 --> 0:12:01.600 think they have been much more pro active in looking 0:12:01.840 --> 0:12:04.800 for stakes as we've had with the lithium deal as well, 0:12:05.520 --> 0:12:08.280 that they are keen to get a foot in and 0:12:08.360 --> 0:12:13.080 perhaps make the US potentially even more competitive than it 0:12:13.120 --> 0:12:16.840 is against peers such as China. So that could be 0:12:16.880 --> 0:12:18.240 the next one to be watching out for. 0:12:18.559 --> 0:12:20.120 Peer and a duty signs of a bubble. 0:12:22.960 --> 0:12:25.439 I see that we are high value. There are high 0:12:25.480 --> 0:12:27.520 valuations at the moment. I mean that was something that 0:12:27.640 --> 0:12:31.120 was noted by Federal Reserve Chair Jerome pal just a 0:12:31.160 --> 0:12:34.840 few weeks ago. But I think really what we need 0:12:34.880 --> 0:12:38.079 to see is what earnings are going to be telling us. 0:12:38.120 --> 0:12:39.520 You know, I think there's going to be a lot 0:12:39.520 --> 0:12:43.720 of focus on earning season, on forward guidance. I don't 0:12:43.760 --> 0:12:47.240 think we're in bubble territory, but I do feel that 0:12:47.320 --> 0:12:50.480 we are quite overstretched in some areas. But that doesn't 0:12:50.600 --> 0:12:52.960 mean to say that we necessarily are going to see 0:12:53.080 --> 0:12:55.240 a big collapse here at all. I think there is 0:12:55.320 --> 0:12:59.200 potential for some consolidation. And if we do get okay 0:13:00.280 --> 0:13:03.240 readings from the earnings at the end of this month 0:13:03.280 --> 0:13:07.160 going to November, then I think that could potentially be 0:13:08.920 --> 0:13:12.520 a reasoner catalyst for another like high especially if we're 0:13:12.520 --> 0:13:14.720 seeing the Federal Reserve cutting interest. 0:13:14.480 --> 0:13:18.480 Rates further ASML earnings on October fourteenth, how is it 0:13:18.559 --> 0:13:22.720 earning season already? Fionasencoda from City Index, thank you, We're 0:13:22.720 --> 0:13:26.439 ready coming up why some investors are rethinking their private 0:13:26.520 --> 0:13:28.920 market play. But we're going to speak with Matt with Eiler, 0:13:29.000 --> 0:13:32.480 Wellington Management late stage growth lead. This is where the 0:13:32.480 --> 0:13:35.199 conversation is right now, and as you know, I want 0:13:35.240 --> 0:13:36.199 to talk about debt. 0:13:36.360 --> 0:13:37.280 This is momboke tech. 0:13:45.800 --> 0:13:49.000 There's a lot happening in technology and private markets today 0:13:49.040 --> 0:13:51.600 from London to LA. Startups are raising money and in 0:13:51.640 --> 0:13:53.880 some cases, like the UK's n Scale in the former 0:13:54.000 --> 0:13:57.560 quick follow on round around the world, pension fund state 0:13:57.600 --> 0:14:02.840 back investment firms, venture catalysts are rethinking the private market's playbook. 0:14:03.200 --> 0:14:06.000 Matt with Hyler, Wellington Management's late stage growth lead joins 0:14:06.040 --> 0:14:09.080 us now. Wellington Management has more than nine point six 0:14:09.120 --> 0:14:12.560 billion dollars in assets under management in the private investment bucket. 0:14:12.800 --> 0:14:15.360 I have so much to ask you, but we were 0:14:15.360 --> 0:14:17.800 showing a really well read story on the Bloomberg about 0:14:18.280 --> 0:14:21.840 any participant in private markets after an era of easy 0:14:21.840 --> 0:14:24.760 gains is now changing approach. Is that true of you 0:14:24.880 --> 0:14:26.320 and what you're doing in your strategy? 0:14:26.840 --> 0:14:28.960 Well, I think for us, similar to what we've seen 0:14:29.000 --> 0:14:32.200 over the last multiple decades is companies are just staying 0:14:32.200 --> 0:14:36.480 private longer, right, and as that happens, then the historic 0:14:36.520 --> 0:14:39.800 returns and public market investors would have gotten as companies 0:14:39.840 --> 0:14:42.440 went public and then appreciating the public market those are 0:14:42.440 --> 0:14:45.560 really only available those returns in the private market as 0:14:45.600 --> 0:14:48.000 those companies continue to grow. So for us, it's more 0:14:48.000 --> 0:14:50.440 of the same, continuing to capitalize on that trend and 0:14:50.480 --> 0:14:53.720 apply the kind of full picture of Wellington, which is 0:14:53.760 --> 0:14:56.360 seeing the public markets and applying that knowledge to the 0:14:56.360 --> 0:14:57.160 private markets. 0:14:57.560 --> 0:15:03.200 Matt across infrastructure projects largely relating to AI and m 0:15:03.280 --> 0:15:07.800 and A debt is in the headlines on a daily 0:15:07.800 --> 0:15:11.960 basis at the moment different types of mechanisms. I'm trying 0:15:12.000 --> 0:15:15.720 to understand how worried or not private market participants are 0:15:15.800 --> 0:15:20.000 about the use of debt, Like the CLO market must 0:15:20.000 --> 0:15:22.160 be like this is great. The m and A market 0:15:22.280 --> 0:15:26.120 is claiming it's the connective tissue issuance giving life to it, 0:15:26.160 --> 0:15:29.040 but others are saying this is really worrying. 0:15:29.560 --> 0:15:31.360 I mean, I think the amount of leverage we see 0:15:31.400 --> 0:15:35.360 being deployed as capex expense for AI and all things 0:15:35.360 --> 0:15:38.960 AI continues to increase, I think that the debt service 0:15:39.040 --> 0:15:43.240 for that will be wholly determined by the revenue streams 0:15:43.280 --> 0:15:46.680 that AI in general is creating. And so assuming AI 0:15:46.800 --> 0:15:49.320 continues to deliver on the dream and continues to deliver 0:15:49.400 --> 0:15:52.360 on the revenue forecasts, then I think that that leverage 0:15:52.360 --> 0:15:57.880 in that debt is probably okay. But obviously if the 0:15:57.920 --> 0:16:01.440 secular shift in AI doesn't act result in the revenue 0:16:01.920 --> 0:16:05.520 that people are expecting, then that overleverage will be a challenge. 0:16:05.840 --> 0:16:09.760 So what is your base case for whether we meet 0:16:09.760 --> 0:16:10.080 the hype. 0:16:11.440 --> 0:16:13.960 I think we believe that AI is a once in 0:16:14.000 --> 0:16:17.280 a decade, maybe once in a generation technology shift, and 0:16:17.920 --> 0:16:20.880 that as a result, a lot of this leverage and 0:16:20.920 --> 0:16:22.600 a lot of the death that's put into the system 0:16:22.600 --> 0:16:23.600 actually will be fine. 0:16:24.040 --> 0:16:24.680 I would say. 0:16:24.840 --> 0:16:28.120 I think our take is really that this trend of 0:16:28.160 --> 0:16:32.560 companies staying private longer does have implications for the availability 0:16:32.600 --> 0:16:34.920 of AI businesses in the public market, which is I 0:16:34.960 --> 0:16:36.400 think a really interesting topic. 0:16:36.880 --> 0:16:37.800 Let's delve into that topic. 0:16:37.880 --> 0:16:40.360 If we look at your portfolio, we can see the 0:16:40.400 --> 0:16:42.680 companies that you did back from an early stage and 0:16:42.760 --> 0:16:45.000 well a late stage growth area in the private markets 0:16:45.000 --> 0:16:49.000 and have successfully gone public, most recently Klana, but Airbnb affirm. 0:16:49.520 --> 0:16:52.520 I'm also thinking about the ones that still haven't gone public. Stripe, 0:16:52.560 --> 0:16:55.040 I mean, massive company that many would have thought would 0:16:55.040 --> 0:16:57.480 have gone to IPO and it hasn't as yet. Data 0:16:57.480 --> 0:17:02.520 Bricks just an one hundred billion dollar valuation. When is 0:17:02.560 --> 0:17:06.040 it likely that the IPO market will open for these companies? 0:17:06.119 --> 0:17:09.160 Is there just too much to be gained from remaining private. Look, 0:17:09.200 --> 0:17:11.560 we've just had EA return to the private market, so 0:17:11.560 --> 0:17:12.440 that the deal goes through. 0:17:12.760 --> 0:17:14.879 Well, I think there's two ways to answer your question. 0:17:14.960 --> 0:17:17.240 The first way is to say that over the last 0:17:17.320 --> 0:17:20.800 three years we had a historically low period of IPO activity. 0:17:20.840 --> 0:17:22.680 You all talk about it on the show all the time. 0:17:23.160 --> 0:17:27.200 Q three there were thirteen venture backed IPOs. Those companies 0:17:27.280 --> 0:17:31.040 raised thirty six billion dollars in the public market or 0:17:31.160 --> 0:17:33.400 have a combined market value of thirty. 0:17:33.160 --> 0:17:34.040 Six billion dollars. 0:17:34.320 --> 0:17:38.080 That's three thousand percent more than happened last year at 0:17:38.080 --> 0:17:40.800 this time. So the IPO market is absolutely coming back, 0:17:40.840 --> 0:17:42.199 and we're starting to see signs so that. 0:17:42.320 --> 0:17:43.720 If the SEC is opened. 0:17:43.800 --> 0:17:46.000 If the SEC reopens, that will throw a wrench in 0:17:46.040 --> 0:17:50.080 companies like NAVAN, companies like Ethos, companies like wealth Front 0:17:50.119 --> 0:17:52.960 that have filed their S one and are waiting. The 0:17:53.040 --> 0:17:55.600 SEC is not open for business, so new issuances will 0:17:55.640 --> 0:17:55.960 be down. 0:17:56.280 --> 0:18:00.960 Matt, has your definition of a late stage growth investment 0:18:01.040 --> 0:18:02.720 changed definitely? 0:18:03.000 --> 0:18:05.359 And it has because companies stay private longer. 0:18:05.480 --> 0:18:07.840 So I know, to be fair, you've said that before, 0:18:08.160 --> 0:18:11.679 So I'm trying tounstand, like, what specific company fits your 0:18:11.720 --> 0:18:12.439 profile right now? 0:18:12.560 --> 0:18:14.360 Yeah, So let's talk about data bricks, which I think 0:18:14.440 --> 0:18:17.440 is a great example. When I started a decade ago 0:18:17.560 --> 0:18:20.120 investing in late stage private companies, the idea that we'd 0:18:20.119 --> 0:18:24.040 be investing in a sixty plus billion dollar now one 0:18:24.080 --> 0:18:27.640 hundred billion dollar private company was really hard to wrap 0:18:27.640 --> 0:18:30.480 my head around. But as companies stay private longer, the 0:18:30.960 --> 0:18:34.240 larger companies are just commanding more market cap in the 0:18:34.280 --> 0:18:35.040 private market. 0:18:35.320 --> 0:18:36.840 And that's a big, big. 0:18:36.640 --> 0:18:39.040 Change from where things were a decade ago. There was 0:18:39.119 --> 0:18:41.560 no sixty or one hundred billion dollar private companies ten 0:18:41.600 --> 0:18:44.080 years ago. Today we sit and we can count dozen, 0:18:44.240 --> 0:18:45.120 probably of them. 0:18:45.800 --> 0:18:49.080 What's interesting is Wellington does well in both scenarios as 0:18:49.119 --> 0:18:53.040 we said, and you've well haven't exited yet Klana because 0:18:53.080 --> 0:18:55.359 Klana goes public, you still hold, but there's a lock 0:18:55.440 --> 0:18:58.240 up situation. Eventually, maybe Wellington on the one point three 0:18:58.359 --> 0:19:00.720 trillion dollar assets on a management side, starts buying that 0:19:00.800 --> 0:19:01.000 up in. 0:19:01.000 --> 0:19:01.880 The public markets. 0:19:01.920 --> 0:19:04.600 But when is it that you decide to exit from 0:19:04.600 --> 0:19:06.919 the late stage growth perspective? Is it always when the 0:19:06.920 --> 0:19:09.080 lock up expires, how long do you want to ride 0:19:09.119 --> 0:19:10.719 these companies once they do go public? 0:19:11.359 --> 0:19:15.240 For us, we think about holistically as a firm where 0:19:15.320 --> 0:19:21.560 the return characteristics for specific strategy lie and are we 0:19:21.600 --> 0:19:24.920 able to achieve those return objectives? And so oftentimes it 0:19:24.960 --> 0:19:27.119 will happen is one of our companies on the private 0:19:27.160 --> 0:19:30.200 side will go public, we will have generated sufficient return 0:19:30.280 --> 0:19:33.280 to what we underwrite two that may still leave plenty 0:19:33.280 --> 0:19:35.720 of opportunity for the public market side to be buying. 0:19:35.760 --> 0:19:38.680 And it's that combination of again, as I said before, 0:19:38.760 --> 0:19:41.240 seeing the full picture of here's how they operate in 0:19:41.280 --> 0:19:44.240 the private markets, in how they executed, and here's what 0:19:44.240 --> 0:19:46.800 we believe can happen in the public markets mean that 0:19:46.840 --> 0:19:49.120 although we may be selling out of the private side, 0:19:49.240 --> 0:19:51.479 our one point three trillion on the public side may 0:19:51.520 --> 0:19:53.040 be potentially buying those companies. 0:19:53.080 --> 0:19:56.040 And really quick we break the story in July SpaceX 0:19:56.080 --> 0:19:58.600 at four hundred billion dollars it was a tender secondary 0:19:58.680 --> 0:20:01.240 as a case study with your assets on the management. 0:20:01.280 --> 0:20:04.480 Can you even get into something like that at that valuation? 0:20:04.640 --> 0:20:07.800 And at that stage the answer is yes, assuming that 0:20:07.840 --> 0:20:10.280 we think that the return potential is there, and I 0:20:10.280 --> 0:20:12.960 think One of the really interesting trends is companies stay 0:20:12.960 --> 0:20:16.920 private longer. Is really to highlight the fact that perpetually 0:20:17.000 --> 0:20:19.639 private for the vast majority of companies is not a 0:20:19.680 --> 0:20:23.360 thing because the volume of liquidity in the private markets 0:20:23.440 --> 0:20:28.240 is not sufficient to give employees, founders, and investors return 0:20:28.280 --> 0:20:31.320 of capital that they need. The best way to illustrate that, 0:20:31.359 --> 0:20:33.200