WEBVTT - Peloton Plunges, Nvidia Set to Report & Huawei's Secret Chip Network 0:00:01.400 --> 0:00:06.640 From Marhart where Innovation, money and power Collie in Silicon Vallet, Nbon. 0:00:07.040 --> 0:00:11.080 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:25.280 --> 0:00:27.600 I'm Caroline Heide and Bloomberg's Wilter Quarters in New York 0:00:28.080 --> 0:00:29.880 at Amed Ludlow in San Francisco. 0:00:30.040 --> 0:00:32.360 This is Bloomberg Technology. 0:00:31.880 --> 0:00:35.479 Coming up full earnings coverage ahead of course, as Palatine 0:00:35.520 --> 0:00:38.840 plunges after issuing pretty disappointing forecast, will. 0:00:38.680 --> 0:00:39.560 Break down the numbers. 0:00:40.280 --> 0:00:42.760 Plus we push ahead to earnings out after the bell 0:00:43.000 --> 0:00:47.080 from chip giant Nvidia. Does the AI rally have staying power? 0:00:47.920 --> 0:00:52.280 And speaking of semiconductors, look, we're looking at the communications 0:00:52.360 --> 0:00:56.000 giant Huawei, maybe building a secret network of chip fabrications 0:00:56.000 --> 0:00:59.200 center across China. We'll bring you the y from our 0:00:59.240 --> 0:01:01.320 Bloomberg's c said, but first there, let's check in on 0:01:01.360 --> 0:01:04.440 these markets. Because well, even though we've got anxiety, it 0:01:04.440 --> 0:01:06.199 feels as though a short squeeze in the bond market 0:01:06.280 --> 0:01:08.120 is helping lift the tech stocks high. We're looking at 0:01:08.120 --> 0:01:09.840 more than one point six, we said, let's call it 0:01:09.920 --> 0:01:12.160 on the Nasdaq. On the upside, there is still much 0:01:12.200 --> 0:01:14.120 hope on the earning still to come, even though some 0:01:14.160 --> 0:01:16.479 of those earnings are about to dive into We're looking 0:01:16.480 --> 0:01:18.520 pretty ugly. I'm looking at a two year yeeld being 0:01:18.600 --> 0:01:21.960 squeezed higher. Therefore the boring costs come down nine basis 0:01:21.959 --> 0:01:24.360 points almost ten. We're seeing it across the entire curve, 0:01:24.480 --> 0:01:26.559 and you're seeing it across the entire world. You're seeing 0:01:26.600 --> 0:01:29.000 really bonbuying across in the UK and Europe. Here in 0:01:29.000 --> 0:01:31.520 the US as well, many feeling that basically we've been 0:01:31.840 --> 0:01:34.640 some technical elements at play here. We've been soling off 0:01:34.680 --> 0:01:37.560 so hard, so fast, and some ugly data when you're 0:01:37.560 --> 0:01:40.160 looking at the PMI data certainly slowing in Europe. Seeing 0:01:40.160 --> 0:01:42.679 weakness here in the US means maybe that bad news 0:01:42.800 --> 0:01:44.360 is good news at least on the day we're seeing 0:01:44.400 --> 0:01:46.480 the Golden Dragon China Index. Of course, this is a 0:01:46.520 --> 0:01:47.760 Naska Golden Dragon. 0:01:47.680 --> 0:01:48.360 Just shining like that. 0:01:48.400 --> 0:01:50.520 Actually, there has been buying in the Chinese names as well, 0:01:50.560 --> 0:01:53.080 even after we've seen such a selloff on the CSI 0:01:53.160 --> 0:01:55.280 three hundred, for example, at the training at the lowest. 0:01:55.520 --> 0:01:57.720 Since November, we've been on a look at what's happening 0:01:57.720 --> 0:01:59.920 in terms of the world a bitcoin look. We're mid 0:02:00.120 --> 0:02:03.040 this macro picture of bad news being good news. The 0:02:03.120 --> 0:02:05.240 dollar is selling off as many feel that perhaps the 0:02:05.280 --> 0:02:07.640 Fed can't tighten into that sort of moon music. Dollar 0:02:07.680 --> 0:02:10.239 goes lower, Bitcoin goes up five percentage point end, but 0:02:10.320 --> 0:02:12.160 go into the micro The earnings. 0:02:12.440 --> 0:02:16.120 Yeah, the big story and video expectations incredibly high. What 0:02:16.160 --> 0:02:19.800 we're forecasting is top line growth sixty five percent to 0:02:19.840 --> 0:02:23.800 eleven billion dollars in the fiscal second quarter. Institution investors 0:02:23.840 --> 0:02:26.720 want even more. They're looking for twelve billion dollars of 0:02:26.840 --> 0:02:30.359 sales data center the majority of that. Does the AI 0:02:30.440 --> 0:02:32.840 story have staying power? Is there still demand for the 0:02:32.960 --> 0:02:35.400 H one hundreds? What about the GH two hundred, the 0:02:35.520 --> 0:02:39.440 next gen GPU with greater memory capacity? How does that 0:02:39.560 --> 0:02:41.239 drive the story for in video for the rest of 0:02:41.280 --> 0:02:44.920 the year. Options market pricing a ten percent swing. This 0:02:45.040 --> 0:02:47.280 is almost four percent of the s and P five hundred. 0:02:47.440 --> 0:02:49.480 It is more than thirty percent of the nazdette one 0:02:49.560 --> 0:02:52.320 hundreds rally year to date. We care and we cannot 0:02:52.360 --> 0:02:55.240 wait for these earnings after the bell. The others end 0:02:55.240 --> 0:02:58.840 of the scale, opposite story is Peloton. The sock at 0:02:58.840 --> 0:03:02.120 a record low after it's fiscal fourth quarter earnings. It's 0:03:02.160 --> 0:03:05.040 guiding for the fiscal first quarter revenue of six hundred million, 0:03:05.360 --> 0:03:09.040 way below expectations even at the high end of its 0:03:09.080 --> 0:03:12.320 given range. The story in the quarter gone well, the 0:03:12.360 --> 0:03:15.560 seat Post issue a recall seven hundred and fifty thousand. 0:03:15.560 --> 0:03:17.680 People say, yeah, I do want a new seat post 0:03:18.040 --> 0:03:21.440 that was way above what Peloton expected. Subscribers hit past 0:03:21.639 --> 0:03:24.959 subscribers lost in the quarter twenty nine thousand. The story 0:03:24.960 --> 0:03:28.040 of Peloton going from a hardware maker to a subscription 0:03:28.120 --> 0:03:30.880 and software based provider is unraveling a little bit. Let's 0:03:30.880 --> 0:03:33.000 get more on these Peloton earnings. I'm ringing in Schwetter 0:03:33.080 --> 0:03:36.320 Cojuria everquaisi Alyss. Schweeder has an inline rating on the 0:03:36.360 --> 0:03:39.360 stock and a ten dollars price target Sweda. What worried 0:03:39.400 --> 0:03:41.160 you most about what you heard from Peloton? 0:03:42.320 --> 0:03:44.800 Well, thanks for having me ed. It's always great to 0:03:44.840 --> 0:03:48.400 be on. There are a few things. One is a Peloton. 0:03:48.480 --> 0:03:49.040 It's clear. 0:03:49.320 --> 0:03:53.040 It is clear that they are having some potentially structural 0:03:53.080 --> 0:03:54.640 issues in terms of being their. 0:03:54.520 --> 0:03:56.320 Ability to sell more hardware. 0:03:56.560 --> 0:04:01.560 The fundamental question for Peloton remains whether there are already 0:04:01.840 --> 0:04:03.120 enough number of households and. 0:04:03.080 --> 0:04:07.280 Owners for fitness equipment already. 0:04:07.320 --> 0:04:09.839 And the reason why I say that is because yes, 0:04:10.400 --> 0:04:13.839 it was a seasonally soft quarter, but they also changed pricing. 0:04:13.560 --> 0:04:14.200 On their hardware. 0:04:14.240 --> 0:04:17.479 They've also been marketing against it and Peloton is a 0:04:17.600 --> 0:04:20.760 very well known brand, and yet they came in below expectations. 0:04:21.000 --> 0:04:23.520 Understood that the seat recall did not help their brand, 0:04:23.560 --> 0:04:25.839 Imagine did not help in terms of the pausing of 0:04:25.839 --> 0:04:28.680 the subscription, So that fundamental question is in play in 0:04:28.760 --> 0:04:32.400 terms of the sustainability of top line growth. The second 0:04:32.400 --> 0:04:35.919 thing is profitability, even on Ibida. The Ibida for the 0:04:36.400 --> 0:04:39.400 coorting quarter came in low expectations and their guidance also 0:04:40.360 --> 0:04:43.640 is below where the street was for first fiscal quarter. 0:04:43.960 --> 0:04:46.160 That said, they guide it to positive free cashule in 0:04:46.200 --> 0:04:49.919 the back half of the next criscal year, and partly 0:04:50.080 --> 0:04:52.000 it is because they are going to be leaning into 0:04:52.080 --> 0:04:54.920 the holiday quarter. What this tells us is it is 0:04:55.080 --> 0:04:57.680 very difficult to drive top line growth. 0:04:57.360 --> 0:04:59.520 As well as show meaningful. 0:04:59.160 --> 0:05:02.440 Expansion in the bottom line, and for this company, this 0:05:02.720 --> 0:05:04.960 balance is going to be the biggest challenge. How are 0:05:04.960 --> 0:05:08.240 they going to show sustainable positive free cash flow and 0:05:08.320 --> 0:05:10.360 at the same time drive top line growth And we're 0:05:10.400 --> 0:05:12.680 seeing that they're having challenges already. 0:05:12.640 --> 0:05:13.440 So what's the answer? 0:05:13.520 --> 0:05:16.440 I mean, pm A comital market saying I like the 0:05:16.520 --> 0:05:20.280 ton of phrase. They should bear hug their loyalists. Basically, 0:05:20.440 --> 0:05:24.040 be smaller, be healthier, be more niche should we remind 0:05:24.080 --> 0:05:27.240 ourselves that this isn't a mass market player. 0:05:28.680 --> 0:05:29.480 I would agree with that. 0:05:29.520 --> 0:05:32.240 I mean, we had a tactical underperform into the print 0:05:32.320 --> 0:05:35.080 for that reason, because we thought that profitability for the 0:05:35.200 --> 0:05:38.279 quarter is going to be in question and that that 0:05:38.480 --> 0:05:40.520 came true. And I think that at this point that 0:05:41.480 --> 0:05:46.279 I would somewhat agree with that. Now the question is 0:05:46.360 --> 0:05:49.720 can Peloton be a standalone company for the foreseeable future? 0:05:49.839 --> 0:05:53.240 Is this something that can last as a standalone company? 0:05:53.279 --> 0:05:55.360 And I would argue that it may not. I mean, 0:05:55.400 --> 0:05:57.920 the pot as soon as they get to positive free 0:05:58.000 --> 0:06:01.320 cash on a sustainable basis with some sort of modestly 0:06:01.400 --> 0:06:05.320 higher top line growth, people the company may be looking 0:06:05.360 --> 0:06:06.719 for acquisition targets. 0:06:08.279 --> 0:06:11.320 Schweter, your ten dollar price target, your inline rating on 0:06:11.360 --> 0:06:14.960 the stock is in review. After the numbers, do you 0:06:15.000 --> 0:06:18.400 assess this company as a technology company or does it 0:06:18.440 --> 0:06:19.560 just make fitness equipment? 0:06:21.160 --> 0:06:23.520 With vary As the CEO, I would have to say, 0:06:23.760 --> 0:06:26.320 they're they're pivoting to a technology company. 0:06:26.360 --> 0:06:27.800 And the reason why you say. 0:06:27.600 --> 0:06:30.800 That is because they are managing the company. The leadership 0:06:30.839 --> 0:06:33.880 team is managing the company as a technology company with 0:06:34.000 --> 0:06:36.119 a great focus on the subscription piece. 0:06:36.320 --> 0:06:38.960 It is clear that that's what the intrinsic value of 0:06:39.000 --> 0:06:39.760 the company is. 0:06:39.839 --> 0:06:43.520 The retention of the subscribers is high, intrinsically high still 0:06:43.880 --> 0:06:47.120 even though the term was sequentially higher in the quarter. 0:06:47.839 --> 0:06:50.320 But that's where that's where the value of the company is. 0:06:50.360 --> 0:06:54.400 And the companies is actually focusing on the subscription piece. 0:06:54.440 --> 0:06:56.480 And some of the examples are. 0:06:56.440 --> 0:06:59.800 That they are allowing the three tiers of the subscription 0:06:59.839 --> 0:07:03.799 there they have several hundreds of thousands of monthly active 0:07:03.880 --> 0:07:07.040 users for the free subscription tier. They are also expanding 0:07:07.080 --> 0:07:10.880 those tiers into different price points. They're focusing more and 0:07:10.920 --> 0:07:14.240 their ability to enter these households at a lower price point. 0:07:14.320 --> 0:07:17.160 I think that that's their focus. The question is whether 0:07:17.200 --> 0:07:18.240 it's going to work or not. 0:07:19.360 --> 0:07:22.120 That's the question. Shwerda Kasharia, we want to thank you 0:07:22.160 --> 0:07:24.600 shout up because understand you're on vacation and you've come 0:07:24.640 --> 0:07:27.320 on to discuss all of this, diggest the numbers and. 0:07:27.320 --> 0:07:28.200 Give it to our audience. 0:07:28.240 --> 0:07:29.320 We really appreciate it. 0:07:31.720 --> 0:07:33.800 Great to stick with you. I mean, let's get on though, 0:07:33.800 --> 0:07:36.280 because we've got other earnings that are all important for 0:07:36.360 --> 0:07:38.520 the direction of the entire market at this stage. And 0:07:38.600 --> 0:07:40.960 VideA the chip company of course front and center when 0:07:40.960 --> 0:07:43.560 it comes to this AI frenzy and it's our ending tonight. 0:07:43.600 --> 0:07:45.920 We've been talking about it all week me Meg Intelligence 0:07:45.920 --> 0:07:50.880 senior semiconductor analyst Kanjunzman who's here with us, and so 0:07:51.080 --> 0:07:54.760 much baked in people raising their price targets into these numbers. 0:07:55.680 --> 0:07:57.080 Do you think we're going to see the sort of 0:07:57.120 --> 0:07:59.720 sixty five percent increase in revenue the market's anticipating. 0:08:00.960 --> 0:08:03.160 I do think there's a high confidence we see that number, 0:08:03.200 --> 0:08:05.600 and the primary driver of that is going to be 0:08:05.640 --> 0:08:09.160 their data center segment and driven by the A one 0:08:09.280 --> 0:08:12.640 hundreds and h one hundred hardware systems. Remember, data center 0:08:12.720 --> 0:08:15.440 is estimated to almost double on a year over a 0:08:15.520 --> 0:08:18.760 year basis and add about not of fifteen billion dollars 0:08:19.000 --> 0:08:21.520 to a company that did twenty seven billion last year. 0:08:21.920 --> 0:08:24.520 There could be some addition from the gaming, but it's 0:08:24.560 --> 0:08:27.200 primarily going to come from the data center segment. 0:08:27.560 --> 0:08:29.920 You know you're coming at this from the Bloomberg Intelligence 0:08:29.960 --> 0:08:35.040 analysis perspective, right. The story is, does the AI momentum 0:08:35.080 --> 0:08:37.520 have staying power. So what do you need to hear 0:08:37.559 --> 0:08:42.600 from Nvidia to believe that, you know, the hyperscalers and 0:08:42.640 --> 0:08:46.920 the LLLM developers and everyone else continues to buy into 0:08:46.960 --> 0:08:48.600 AI for the rest of the year and beyond. 0:08:49.040 --> 0:08:50.680 I mean, look, since the last running call, we have 0:08:50.760 --> 0:08:53.800 seen a lot of demand strength signals that the demand 0:08:53.880 --> 0:08:56.600 is there and rising. The two key things we want 0:08:56.640 --> 0:08:58.960 to hear is can they ship to the demand and 0:08:59.080 --> 0:09:02.360 are they able to get successfully their additional supply here? 0:09:02.640 --> 0:09:06.720 And also a validation on visibility and backlog orders going 0:09:06.720 --> 0:09:07.520 into the next year. 0:09:08.160 --> 0:09:10.160 You know, I think for me, Caroline, the big question 0:09:10.200 --> 0:09:13.120 as well is technology leadership. You know we've covered on 0:09:13.160 --> 0:09:17.280 the show. AMD has its own offering in the GPOs 0:09:17.440 --> 0:09:20.520 GPUCPU hybrid space. Intel wants a piece of the pie. 0:09:20.679 --> 0:09:22.640 I wonder how they maintain their leadership. 0:09:23.120 --> 0:09:25.760 It does come down to market dynamics here Conngenta and 0:09:26.120 --> 0:09:29.320 really it's felt like in videos the only game in town. 0:09:29.480 --> 0:09:31.680 Just look at it's trillion dollar market valuation when it 0:09:31.679 --> 0:09:34.200 comes on bets and AI, is it or are other 0:09:34.280 --> 0:09:35.600 players playing catch up here? 0:09:36.920 --> 0:09:39.440 When look at the most fastest growing market right now 0:09:39.440 --> 0:09:42.800 in semiconductors, so definitely other players are trying to get 0:09:42.840 --> 0:09:45.520 a piece of it and are playing catch up. We 0:09:45.559 --> 0:09:49.600 don't expect Nvidia to lose its leadership anytime soon, but 0:09:49.720 --> 0:09:52.720 I think there's definitely room for other players to grab 0:09:52.720 --> 0:09:54.800 a piece of pie, which is again a huge pie, 0:09:55.000 --> 0:09:57.800 and a small percentage could add in the order of 0:09:57.840 --> 0:09:59.520 billions of dollars to their revenues. 0:10:00.040 --> 0:10:02.960 When the bar is high, and when the stakes are high, 0:10:03.320 --> 0:10:06.679 there's always room for disappointment. How worried are you about 0:10:06.679 --> 0:10:10.679 the supply issue at TSMC being able to hand over 0:10:10.760 --> 0:10:11.360 enough chips. 0:10:11.559 --> 0:10:14.120 I think, look, the supply is definitely going to be, 0:10:14.160 --> 0:10:17.200 like I said, a key factor going into today's call, 0:10:17.960 --> 0:10:20.400 in the near term. I'm not as worried because the 0:10:20.400 --> 0:10:23.720 company seems confident that they've garnered enough supply to meet 0:10:23.800 --> 0:10:27.000 at least the guided numbers, which are driven by them. 0:10:27.160 --> 0:10:29.760 I would definitely like to see if they can meet 0:10:29.760 --> 0:10:32.520 the long term, especially the twenty twenty four numbers, and 0:10:32.640 --> 0:10:33.760 gather supply for that. 0:10:33.920 --> 0:10:36.120 You remind us of something very important that the guided 0:10:36.200 --> 0:10:38.800 numbers did come from the company, and that's why that 0:10:38.920 --> 0:10:42.360 note from City about institutional investors seeing even greater upline 0:10:42.400 --> 0:10:45.720 growth is worth bearing in mind. Conjent Siavani the Bloomberg 0:10:45.760 --> 0:10:56.840 Intelligence thank you time for talking tech first Up. India 0:10:57.040 --> 0:11:00.200 is now the first country to land a spacecraft near 0:11:00.200 --> 0:11:03.959 the Moon's south pole. The Chandrayan three launched last month 0:11:04.000 --> 0:11:06.679 and is carrying a rover now tasks of analyzing the 0:11:06.760 --> 0:11:10.000 chemical makeup of the Moon's surface. Russia recently tried to 0:11:10.080 --> 0:11:12.840 land in the same area but crashed into the Moon 0:11:13.120 --> 0:11:16.240 following an engine malfunction. And foreign investors are selling off 0:11:16.320 --> 0:11:19.800 China's blue chip stocks, extending the streak of outflows over 0:11:19.800 --> 0:11:22.920 the course of thirteen days, the longest on record. Data 0:11:22.960 --> 0:11:26.239 track by Bloomberg found that investors have offloaded the equivalent 0:11:26.400 --> 0:11:30.280 of ten point seven billion dollars between August seventh and eighteen. 0:11:30.360 --> 0:11:33.400 Some of the stocks most sold include solar company lang 0:11:33.480 --> 0:11:38.040 Gee Ev, maker byd and medical supply maker Mindre And. 0:11:38.080 --> 0:11:42.240 Speaking of which, telecommunications giant Huawei may be building a 0:11:42.320 --> 0:11:46.760 secret network of chip fabrication centers across China. That's according 0:11:46.800 --> 0:11:50.760 to the Semiconductor Industry Association, the leading global trade group 0:11:50.800 --> 0:11:53.959 for chips. Huawei has been blacklisted by the US Department 0:11:53.960 --> 0:11:57.280 of Commerce amid tensions with China and a shadow chips 0:11:57.320 --> 0:12:01.520 manufacturing network will allow the company to skirt those US sanctions. 0:12:01.559 --> 0:12:02.000 Caroline. 0:12:02.040 --> 0:12:03.960 We're going to be digging into that story so much 0:12:04.000 --> 0:12:05.839 a little bit later in the show, but for here 0:12:05.880 --> 0:12:08.080 and now, let's just talk about a meeting that's going on. 0:12:08.280 --> 0:12:11.800 It's the SEC perhaps imposing new requirements on hedge funds, 0:12:11.800 --> 0:12:15.360 on private equity firms to disclose fees, which is aimed 0:12:15.360 --> 0:12:19.079 at impacting, of course, investors helping them. We'll see what 0:12:19.120 --> 0:12:21.080 the market makes of it, but we mention Ali basych 0:12:21.200 --> 0:12:24.839 Is here. And ultimately, why are venture capital companies that 0:12:24.880 --> 0:12:26.960 we talk about a lot from this show, like Andresen 0:12:27.040 --> 0:12:29.120 Horowitz worried about these new rules? 0:12:29.200 --> 0:12:31.319 Andresen Horowitz and remember, you have to think about these 0:12:31.360 --> 0:12:33.640 other funds like Tiger Global and d One that had 0:12:33.679 --> 0:12:36.840 been traditional headfunds moving more into the private equity structure, 0:12:37.280 --> 0:12:38.720 venture capital structures. 0:12:38.960 --> 0:12:40.679 What they're initially concerned. 0:12:40.280 --> 0:12:44.600 About is straightforward, very much new rules for a seventeen 0:12:44.679 --> 0:12:48.200 trillion dollar industry that had not based this much disclosure 0:12:48.320 --> 0:12:51.440 or scrutiny before. But the industry has ballooned quite meaningfully. 0:12:51.679 --> 0:12:54.120 I will also say, even though they're concerned about these 0:12:54.160 --> 0:12:57.360 new rules, one of which involves sidecar vehicles, and these 0:12:57.440 --> 0:13:01.360 are preferential treatment which often apply to large investors that 0:13:01.440 --> 0:13:03.120 tend to co invest and do all sorts of other 0:13:03.160 --> 0:13:05.040 deals with them. The SEC is trying to level the 0:13:05.080 --> 0:13:08.959 playing field in terms of fee structures. Now, importantly, there 0:13:09.000 --> 0:13:12.600 have already been large wins for the investment industry when 0:13:12.640 --> 0:13:14.600 it comes to the rules as they have been put 0:13:14.600 --> 0:13:16.679 out today. When you look at the open meeting, they 0:13:16.679 --> 0:13:18.640 are still very much discussing these rules. 0:13:18.679 --> 0:13:19.640 But the Commission is. 0:13:19.640 --> 0:13:22.080 Made out of five members, in which three of them 0:13:22.120 --> 0:13:25.000 are democratic expected to vote in favor of these rules. 0:13:25.280 --> 0:13:28.320 Where the industry has already won is this idea of 0:13:28.360 --> 0:13:32.680 a grandfathering provision, so existing agreements with investors. 0:13:32.280 --> 0:13:33.679 Will continue to live on. 0:13:33.840 --> 0:13:35.079 So this will be for. 0:13:35.920 --> 0:13:39.040 New investors and new agreements that are being made. There's 0:13:39.080 --> 0:13:41.760 also an idea here of indemnification. There is a worry 0:13:41.800 --> 0:13:44.880 that the standard of negligence would also be made more strict, 0:13:45.160 --> 0:13:50.160 which would, in theory, according to industry participants, restrict certain 0:13:50.200 --> 0:13:52.520 forms of risk taking because it would be easier to 0:13:52.559 --> 0:13:55.240 sue your investment advisor. There's another thing I want to 0:13:55.240 --> 0:13:57.440 pull up here, let's pull up a screen here from 0:13:57.760 --> 0:14:01.360 pangaeas Terry Haynes, who's already weigh in with a lot 0:14:01.400 --> 0:14:04.200 of doubt. Remember, the MFA has already said it could 0:14:04.200 --> 0:14:06.560 potentially sue within two weeks. But then Terry Haynes also 0:14:06.600 --> 0:14:09.680 believes that the SEC gets stopped in its tracks and 0:14:09.720 --> 0:14:13.920 will ultimately get shut down in its venture here because 0:14:14.200 --> 0:14:17.680 the courts may put this plan on hold and the 0:14:17.760 --> 0:14:20.280 court lower courts won't be convinced that the SEC would 0:14:20.280 --> 0:14:22.360 be likely to prevail on appeal. 0:14:22.560 --> 0:14:23.520 So there's a lot of. 0:14:23.440 --> 0:14:25.360 Doubt on how much these rules see. 0:14:25.120 --> 0:14:25.840 The light of day. 0:14:26.160 --> 0:14:27.560 But certainly it is. 0:14:27.520 --> 0:14:30.680 A moment of tension between these private funds and their 0:14:30.720 --> 0:14:32.200 main regulators. 0:14:32.320 --> 0:14:36.640 Who lies on how much transparency ultimately investors get Shanani Us, 0:14:36.760 --> 0:14:39.000 we thank you so much for the breakdown. Meanwhile, coming up, 0:14:39.120 --> 0:14:40.880 we're going to be talking to the CEO of Financial 0:14:40.920 --> 0:14:44.320 Platform Ramp. This is the company securing some three hundred 0:14:44.320 --> 0:14:46.800 million dollars an additional funding and time is going to 0:14:46.880 --> 0:14:49.200 do with us from New York, from San Francisco. 0:14:49.640 --> 0:15:32.480 This is booting bag technology. 0:15:13.600 --> 0:15:15.600 Time now for work shifting is where we look at 0:15:15.640 --> 0:15:18.520 the changing landscape of the labor market amid some advances 0:15:18.520 --> 0:15:22.600 in technology, and today we're focused on how corporate legal departments, well, 0:15:22.600 --> 0:15:26.680 they're tentatively embracing artificial intelligence by harnessing AI to do 0:15:27.080 --> 0:15:30.200 the grunt work on tasks like reviewing simple contracts in 0:15:30.240 --> 0:15:32.720 house counsel that can reduce the time and the money 0:15:32.760 --> 0:15:33.640 of course needed. 0:15:33.400 --> 0:15:36.000 To perform those tasks to a fraction of what would 0:15:36.000 --> 0:15:36.960 be needed by humans. 0:15:37.200 --> 0:15:39.920 But since generator of AI is new, the industry is 0:15:40.000 --> 0:15:43.520 navigating critical questions around the security and the quality of 0:15:43.560 --> 0:15:43.960 the data. 0:15:44.360 --> 0:15:45.720 So slowly, slowly we go. 0:15:45.960 --> 0:15:47.840 Meanwhile, let's look at another way in which work has 0:15:47.840 --> 0:15:49.600 shifted and maybe got a little bit cheaper for you, 0:15:49.640 --> 0:15:53.000 because financial services platform RAMPS just raised three hundred million 0:15:53.040 --> 0:15:55.640 dollars for a total valuation of five point eight billion. 0:15:55.920 --> 0:15:58.000 We spoke with one of the investors, Keith Roboy of 0:15:58.080 --> 0:16:01.200 Founder's Fund, who had some thoughts on well AI more 0:16:01.240 --> 0:16:03.640 broadly in the space stick listen, and. 0:16:03.720 --> 0:16:06.800 Some of these technologies are disruptive, and they disrupt incumbents 0:16:06.800 --> 0:16:09.840 and their powers, and some actually enabling cumbents to get stronger. 0:16:10.160 --> 0:16:13.440 AI is most likely going to generate more power for 0:16:13.600 --> 0:16:18.080 large tech, large market tech companies not really be a substitute, 0:16:18.080 --> 0:16:20.080 and if there is a substitute, it's probably going to 0:16:20.120 --> 0:16:21.720 be open AI, which we've investigated. 0:16:21.760 --> 0:16:25.480 Unfortunately, he's also invested in RAMP, and RAMP CEO Eric 0:16:25.560 --> 0:16:27.720 Lyman is here on the back of his fundraise, and 0:16:27.760 --> 0:16:29.440 we're not going to start on AI, even though that's 0:16:29.440 --> 0:16:31.200 where Keith was going at that point. But we're going 0:16:31.240 --> 0:16:34.240 to go on this environment for fundraising. You've got it, 0:16:34.280 --> 0:16:37.360 you've got the money, but you have significantly cut your valuation. 0:16:38.280 --> 0:16:38.960 Why do that? 0:16:39.040 --> 0:16:40.680 Why was it just you. 0:16:40.720 --> 0:16:43.520 Needed the money in the here and the now. 0:16:43.600 --> 0:16:46.120 This was an opportunistic raise really for us. We were 0:16:46.160 --> 0:16:48.680 approached by our investors who were excited by the extraordinary 0:16:48.720 --> 0:16:51.720 growth we announced that we were. The fact we reach 0:16:51.760 --> 0:16:54.240 over three hundred million dollars in annualized revenue less than 0:16:54.280 --> 0:16:56.960 three and a half years from the launch for products 0:16:57.000 --> 0:17:00.640 where the fastest ever. And really it's just about investing customers. 0:17:01.040 --> 0:17:03.360 Most of our competitors and most of the industry are 0:17:03.440 --> 0:17:07.800 spending less on their customer experience. Ramp's purpose is to 0:17:07.840 --> 0:17:11.240 help our customers' businesses be more profitably, more efficient with 0:17:11.280 --> 0:17:13.840 every dollar spent, and we view this as an extraordinary 0:17:13.880 --> 0:17:17.880 opportunity to increase not only our balance sheet, but also 0:17:18.080 --> 0:17:21.200 increase the pace at which we can invest in innovations 0:17:21.240 --> 0:17:23.399 for our customers. So we're super excited to do this. 0:17:24.800 --> 0:17:27.159 Eric on the three hundred million in annualized revenue. There 0:17:27.160 --> 0:17:31.040 will be lots of founders watching this show who may 0:17:31.080 --> 0:17:34.680 be able to raise opportunistically as you put it, or 0:17:34.720 --> 0:17:38.840 face you know, unfavorable terms. How much emphasis did investors 0:17:38.840 --> 0:17:41.600 put on that metric and what other metrics did they 0:17:41.640 --> 0:17:43.720 want to see from you before they signed off on 0:17:43.760 --> 0:17:44.440 the round. 0:17:44.560 --> 0:17:46.920 Of course, I mean, I think for most investors it's 0:17:46.920 --> 0:17:49.879 a simple proposition. Is this a large market? Are you 0:17:49.920 --> 0:17:52.639 building a product that can serve an extraordinary number of customers? 0:17:53.320 --> 0:17:55.879 Is to structurally great business? And last, is this a 0:17:55.960 --> 0:18:00.400 product that customers love? For us, what made the raise 0:18:00.480 --> 0:18:02.760 simple was first the growth of the business. Since the 0:18:02.840 --> 0:18:05.959 last raised, transaction volume on RAMS platform is increased by 0:18:05.960 --> 0:18:08.119 a factor of over six into the tens of billions 0:18:08.119 --> 0:18:11.080 of dollars per year. We are the number one rated 0:18:11.119 --> 0:18:15.200 spend management platform in the United States, and we believe 0:18:15.240 --> 0:18:17.679 there's no better deal in business. We help the average 0:18:17.720 --> 0:18:20.719 business save three and a half percent per year on 0:18:20.800 --> 0:18:25.000 their expenses from corporate cards, expense management to accounting automation, 0:18:25.760 --> 0:18:30.000 and I think investors were really excited for the prospects 0:18:30.000 --> 0:18:32.440 of RAMP taking on what has been a pretty sleepy 0:18:32.440 --> 0:18:33.480 industry classically. 0:18:33.640 --> 0:18:35.960 How do you take it on with this three hundred million? 0:18:36.000 --> 0:18:38.639 Is it more about marketing spend? Is it organic growth? 0:18:38.920 --> 0:18:40.400 Is it inorganic and purchasing. 0:18:40.640 --> 0:18:43.480 Yeah, it's two sets of things. First, it's that customer experience. 0:18:43.480 --> 0:18:45.080 So at the time of the last raise, we had 0:18:45.119 --> 0:18:48.800 saved all time for customers one hundred million dollars. Now 0:18:48.880 --> 0:18:51.479 that figures over six hundred million dollars in over eight 0:18:51.560 --> 0:18:54.000 and a half million hours of work. And we've done 0:18:54.000 --> 0:18:56.760 that by launching into new verticals. When we last launched, 0:18:56.800 --> 0:18:59.360 we were only a corporate card with expense management. We're 0:18:59.359 --> 0:19:01.760 now the fastest growing accounts payable platform in the US 0:19:01.880 --> 0:19:04.159 recently spend in a procurement, travel and the like. So 0:19:04.240 --> 0:19:06.560 some of this is making the experience better for the 0:19:06.600 --> 0:19:09.399 average customer, and some of this is reaching more businesses. 0:19:09.800 --> 0:19:12.280 The number of businesses that use RAMP today number over 0:19:12.320 --> 0:19:16.320 fifteen thousand, whether that's small businesses to leading publicly traded companies, 0:19:16.760 --> 0:19:19.080 and so a lot of this really is expanding and 0:19:19.080 --> 0:19:19.920 taking market share. 0:19:21.359 --> 0:19:24.280 Eric, your pitch is that incentives are aligned, right, what's 0:19:24.320 --> 0:19:26.360 good for your customers is good for you and what's 0:19:26.400 --> 0:19:29.440 good for the advice versa. Does that sound too good 0:19:29.520 --> 0:19:30.680 to be true? 0:19:30.800 --> 0:19:35.000 You know, we think aligned businesses and customer obsessed businesses win. 0:19:35.720 --> 0:19:38.680 I think for too long, this was an industry where 0:19:38.680 --> 0:19:40.040 if you were a bank you could move money and 0:19:40.080 --> 0:19:41.760 if you weren't you couldn't. And as the world went 0:19:41.800 --> 0:19:44.160 from no phones the flip phones, iPhones, your credit card 0:19:44.200 --> 0:19:47.639