Speaker 1: From Mahart.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4: I'm Caroline Heiner Bloomberg's World headquarters in New York, and
Speaker 4: I'm Ed Ludlow in San Francisco.
Speaker 5: This is Bloomberg Technology coming up.
Speaker 4: Of course, full coverage of Open Ai ahead, as investors
Speaker 4: seek to reinstate Oltman as CEO while the company tries
Speaker 4: to prevent an employee exodus.
Speaker 5: More ahead, and we'll preview what to expect from chip
Speaker 5: giant Nvidia, with AI accelerators expected to drive a sales
Speaker 5: surge for the company. We have all the details.
Speaker 4: Plus Elomsqu's x IT sues Media Matters in a lawsuit
Speaker 4: of maliciously trying to drive away advertisers from the social
Speaker 4: media platform. I want to discuss that and so much
Speaker 4: more throughout this hour. Let's get right to it. The situation.
Speaker 4: It just continues to unfold, and it's chaotic, certainly has
Speaker 4: been for the last few days of boardroom coup investors
Speaker 4: pushing for Altman's return, Microsoft hiring Alman and to lead
Speaker 4: a new AI research team, and in a show supporting
Speaker 4: nearly all of open AI's employees, threatening to quit enjoying
Speaker 4: Microsoft unless Altman is reinstated and the board resigns look.
Speaker 4: An open Ai memo viewed by Bloomberg says that the
Speaker 4: company is in quote intense discussions to unify once again.
Speaker 4: Look whatever the outcome ends up being, Microsoft CEO Saturn
Speaker 4: Nadella emphasized the company fully backs Sam Alman and former
Speaker 4: open ai chair Greg Bockman. Just take a listen.
Speaker 3: We are leading in this next generation of AI technology.
Speaker 6: We continue to be committed to open ai, and we
Speaker 6: continue to be committed to Sam and Greg and the
Speaker 6: team irrespect your where they.
Speaker 4: Are joining us now to break it all down, Bloomberg's
Speaker 4: Sharon Gafari and Sharon, you had up to the moment
Speaker 4: reporting on what's happening internally at those left at open ai,
Speaker 4: and really it feels as though we could even see
Speaker 4: a reinstatement or reunification.
Speaker 3: That's right.
Speaker 7: So there is still hope.
Speaker 8: With buyo employees and management at the company that they
Speaker 8: will be able to reach some kind of agreement with management.
Speaker 8: But at around eight thirty last night, management sense a
Speaker 8: memo to staff saying that you know they're going to
Speaker 8: call it a night and in the morning, you today Tuesday,
Speaker 8: when people have a little more sleep, they'll pick back
Speaker 8: up for sure and.
Speaker 5: Grab aable supper water, because I know it was a
Speaker 5: late night for you just as much as it was
Speaker 5: for me. This memos come from Anna MacAndrew, who's basically
Speaker 5: this was, as I understood it, the global affairs chief.
Speaker 5: I think what the audience doesn't have a sense of
Speaker 5: is who is inside open AI actually doing any of
Speaker 5: this negotiating, at least on the open AI side.
Speaker 8: Yeah, so there's kind of a you know, a core
Speaker 8: management team. It's it's kind of like almost you know,
Speaker 8: government in exile, you could call it, right, It's sort
Speaker 8: of a group of people who are trying to act
Speaker 8: as a bridge right between this new board and the
Speaker 8: old guard, and of course their goal is to try
Speaker 8: to get Sam Altman, Greg Brockman, the old leaders of
Speaker 8: open AI back in place.
Speaker 5: There's a difference between the reporting that we've done, which
Speaker 5: is basically Satya Nadela is behind the scenes being the
Speaker 5: peace broker bringing the investors to the table. The board
Speaker 5: wasn't talking for a while, are they now talking? And
Speaker 5: then there's what he said on camera, which is we
Speaker 5: back Sam either way. Do we have a real sense
Speaker 5: of what Sam's position is in all of this.
Speaker 8: I mean, look, we know that Sam has said he's
Speaker 8: going to go to Microsoft right with his old colleague
Speaker 8: Greg Brockman and start an AI leader AI department there. However,
Speaker 8: at the end of the day, we also know that
Speaker 8: Sam's goal is ultimately you know, Opening is a company
Speaker 8: that he built, right, So if he's being offered an
Speaker 8: executive position to go lead again back there, it's hard
Speaker 8: to imagine him not taking that. And that's definitely what
Speaker 8: inmployees rallying for him right now.
Speaker 9: We're pushing for all.
Speaker 5: Right, bloom Mosteringforry, late night for you, late night for
Speaker 5: the team. Once again, Let's keep a conversation going on
Speaker 5: the story though, and we're excited to say. Josh Wolfe,
Speaker 5: co founder and managing partner of Lux Capital, joins us
Speaker 5: on the program. Josh, just as a scene setter, you
Speaker 5: are not an investor in open Ai, as I understand it,
Speaker 5: there's this tender that was due to happen in the background.
Speaker 5: Start by asking you would you invest in open ai
Speaker 5: right now if you could through a tender mechanism or otherwise.
Speaker 10: Right now, I would not just because of the instability.
Speaker 10: You could see that as an opportunity. I will say,
Speaker 10: I actually think that they should, once they get this
Speaker 10: as sorted out, immediately file to go public. I think
Speaker 10: that the demand and the outpouring and interest that you've
Speaker 10: seen and the support for SAM is just absolutely unprecedent
Speaker 10: in the tech company. It's almost like an unintended pre
Speaker 10: IPO roadshow to shill the overwhelming demand. So while we're
Speaker 10: not an investor in Opening Eye, I do think that
Speaker 10: if them and I was the ultimate board, which I
Speaker 10: think has to be a restructured, real governance board, I
Speaker 10: would file for IPO.
Speaker 4: I'm digging in there, Josh, because that is a contrarian view.
Speaker 4: When ultimately it looks like the entire company is destroying itself.
Speaker 4: What would the governance have to look like if a
Speaker 4: company was to go public.
Speaker 10: I think it's the kind of traditional governance that you
Speaker 10: want to see. You want to have checks and balances.
Speaker 10: There's a big difference between giving founders control, which has
Speaker 10: actually worked we know in tech from Google and Meta
Speaker 10: and many others, and then just having basic governance checks
Speaker 10: and balances that you can avoid these sort of capricious
Speaker 10: whims of just a handful of individuals around a table.
Speaker 10: You want the judgment to avoid, As you said, this
Speaker 10: sort of making devastating mistakes that can be very hard
Speaker 10: to recover from. And the really important thing here we're
Speaker 10: seeing is this wasn't because of absence of GPUs, This
Speaker 10: wasn't because of absence of compute, This wasn't because of algorithms.
Speaker 10: You know, the great irony is people are so worried
Speaker 10: about AI destroying all this stuff. It was human nature.
Speaker 10: It was a bunch of people in a room and
Speaker 10: the emotions that drove the sort of whimsical and capricious
Speaker 10: decision to say we're going to oust this beloved leader
Speaker 10: in tech.
Speaker 5: We just showed a graphic with some of your portfolio companies.
Speaker 5: You guys are investing in AI, either AI native IAI
Speaker 5: adjacent companies. What does this do for the competitive landscape?
Speaker 5: Right there are dozens of companies building large language models.
Speaker 5: We all recognize that open AI was the sort of
Speaker 5: technological leader and in some sense the commercial leader. What
Speaker 5: opportunity does this present to those you're backing.
Speaker 10: Well, start generally and just remember that the one thing
Speaker 10: that open ai had was this pole position, and I
Speaker 10: believe that they can recover it. But they had predictability,
Speaker 10: they had stability, they had reliability, and all of that
Speaker 10: gives confidence, and confidence gives trust, and trust is the
Speaker 10: ultimate currency. The reason that I watch Bloomberg, the reason
Speaker 10: that people watch you every day is because they trust you.
Speaker 10: People partner with a company because they trusted and this
Speaker 10: weekend trust blew up. So it could take ten years
Speaker 10: to build a reputation, ten to build trust, and ten
Speaker 10: seconds to lose it. So a week prior, you had
Speaker 10: all of these startups that basically with the open Aide
Speaker 10: demo day thought all right, they just killed our latest
Speaker 10: product or our latest feature. Now they have a second chance.
Speaker 10: Because any company that's working with a hospital system, or
Speaker 10: a government group or a major corporation, all those entities,
Speaker 10: all those customers want to know that they're working with
Speaker 10: someone who is reliable and predictable and stable. Now you
Speaker 10: look at some of our companies hugging face on the
Speaker 10: open source. We are huge believers in open source. We
Speaker 10: think that this is probably like exhibit A of why
Speaker 10: you want open source systems as opposed to closed siloed
Speaker 10: concentrated systems. If you care truly about humanity, if you
Speaker 10: care about AI really getting out into the far reaches
Speaker 10: of the industry, you want open systems. So, whether it's
Speaker 10: hugging face together, doing distributed compute Mosaic mL, which we
Speaker 10: sold to Data Bricks, Runway mL, they're all the fastest
Speaker 10: growing and well positioned companies in these spaces because they
Speaker 10: are very heavily geared towards open.
Speaker 4: Source, marked to being safe, and to ultimately ensuring that
Speaker 4: in some way that aligns if not. In open AI's case,
Speaker 4: came first above profitability, and I'm interested in that tension
Speaker 4: that we continue to see around artificial intelligence and ultimately
Speaker 4: whether or not we can see absolutely monumental valuations and
Speaker 4: profitability at the same time as well ethical use and deployment.
Speaker 3: I do think so.
Speaker 10: I think that the ethics and the safety are just
Speaker 10: basic good judgment. You know what we saw here in
Speaker 10: this board coup and all this craziness was just bad judgment.
Speaker 10: Now you just want good people making good decisions. And
Speaker 10: whenever I hear anybody say, oh, I'm just trying to
Speaker 10: do this to save the world, that actually really gets
Speaker 10: my spidey sense going I actually find it quite cynical.
Speaker 2: I don't trust that.
Speaker 3: But when you have somebody that's.
Speaker 10: Just like I want to build this thing. I want
Speaker 10: to solve problems. I want to get every student a
Speaker 10: teacher in a tutor. I want to help reduce hospital
Speaker 10: bills and get people better differential diagnoses. I want to
Speaker 10: help discover new drugs. Those are the things that you
Speaker 10: really want to be backing. Most of those people are
Speaker 10: thinking what could go wrong. I always say that failure
Speaker 10: from a failure to imagine failure, and if you are
Speaker 10: adequately thinking about the downsides, what can go wrong?
Speaker 3: Without just a pure.
Speaker 10: Techno optimist view, we're going full speed of had without
Speaker 10: looking to the sides and looking through this year rear
Speaker 10: view mirrors. You don't have to have regulation, you don't
Speaker 10: have to have intense scrutiny. It should just be self
Speaker 10: reflection and good leadership to anticipate the failure points so
Speaker 10: as to avoid them. What happened this weekend with open
Speaker 10: AI and what's still happening was a failure of imagination.
Speaker 10: People did not imagine that this was possible, that so
Speaker 10: much risk could be concentrated in just a handful of
Speaker 10: people's hands. To make a decision on what the future
Speaker 10: would be. There's one big winter here. There's one big
Speaker 10: winter gear, which, as you noted just in the prior comms,
Speaker 10: is Microsoft. Microsoft.
Speaker 3: I mean people are forgetting this ten.
Speaker 4: Really, Josh really, because ultimately they now have regulatory exposure,
Speaker 4: they now have a cost exposure. They also don't have
Speaker 4: that arm's length protection of seeing hallucination built on their
Speaker 4: own brand type.
Speaker 10: I will trade that if I was a Microsoft shareholder
Speaker 10: or a board member or employee there, I would trade
Speaker 10: that every time they put ten billion dollars of committed capital,
Speaker 10: how much actually has gone in whatnot? And what did
Speaker 10: they get in marketcap value? A trillion dollars. That is
Speaker 10: one of the best trades in technology history. Ten billion
Speaker 10: dollars to create a trillion dollars of market value. So
Speaker 10: I think that they can afford, whether it's one hundred
Speaker 10: million dollars of regulatory costs, whether it's Bradsmith going and
Speaker 10: trying to get regulatory capture, which I don't approve of.
Speaker 10: I think it's wrong for this industry. I think that
Speaker 10: it's really disingenuous in its attempt. But Microsoft has won
Speaker 10: ten billion dollars to yield. The trillion dollars of market
Speaker 10: value is a coup of epic proportions.
Speaker 4: Boy, are we going to talk about that a little
Speaker 4: bit more perfect? Start to the show, Josh Warfe, We
Speaker 4: thank you so much, co found a managing partner of
Speaker 4: Lux Capital, and of course an investor in hugging face.
Speaker 4: Just to warn you a little bit later, of course,
Speaker 4: you have Margaret Mitchell joining us on the show. She's
Speaker 4: hugging face, chief ethics scientist, so a little bit more
Speaker 4: there on the ethics side of the equation. Meanwhile, they're
Speaker 4: coming up. We push ahead to the big earnings after
Speaker 4: the bell calls. We're talking AI. Of course, we're talking
Speaker 4: in videos results as a bloom make technology.
Speaker 5: In Video's earnings are the big one coming after the bell.
Speaker 5: Here's what to watch for. Analyst expects sales to jump
Speaker 5: one and seventy one percent from a year ago, driven
Speaker 5: by demand for its AI accelerators. Profit also expected to jump.
Speaker 5: Wall Street also sees a leap in profit three dollars
Speaker 5: thirty six cents of earnings per share, and Video already
Speaker 5: leads the market with its h one hundred GPU used
Speaker 5: to train artificial intelligence models. Investors will want an update
Speaker 5: on the GH two hundred or Great Shopper super chip,
Speaker 5: the next gen accelerator that started shipping last quarter. An
Speaker 5: improved version with HMB three E memory supposed to go
Speaker 5: out in the second quarter of next year. Those are
Speaker 5: the numbers. Let's get the analysis with Bloomberg Intelligence and
Speaker 5: this Kunjan Sabani high bar going into earnings, what do
Speaker 5: you look for.
Speaker 11: A significantly higher beaten Race. I mean, look, the expectations
Speaker 11: have been climbing up and up. Everyone expect them to
Speaker 11: beaten race. But it's going to come down to how
Speaker 11: much more can they keep repeating the performance that is
Speaker 11: in the last two quarters.
Speaker 5: A part of the repeat performance is that their supply constraint, right,
Speaker 5: So wherever you look those demand for AI accelerators, how
Speaker 5: does that factor into your model.
Speaker 11: I think they're going to definitely ship a lot more
Speaker 11: H one hundreds. Based on our estimates, the first half
Speaker 11: H one hundred contribution would be thirty to forty percent
Speaker 11: of the total GPU volumes server GPU volumes. We expect
Speaker 11: that to significantly increase in the second half because with
Speaker 11: each H one hundred they get a lot more ASP
Speaker 11: fascinating Counji.
Speaker 4: We thank you so much you'll be glued to the
Speaker 4: screens after the bell Conjensibani bluemeg Intelligence. We appreciate it
Speaker 4: joining us now to think more broadly about AI and
Speaker 4: indeed where we're currently trading across the board for the
Speaker 4: nasdac Heni fishes with us senior research analyst of Technology
Speaker 4: software at Clearbridge and really do deep dive insights into
Speaker 4: certain names out there that have been powered and benefiting
Speaker 4: from artificial intelligence. Have we seen valuations exceed ultimately the
Speaker 4: growth trajectory the monetization options here?
Speaker 9: It's good to be here. Thank you care lyon think
Speaker 9: you had no, I don't think so. I think we've
Speaker 9: been playing a little bit of push and pull between
Speaker 9: valuations and fundamentals coming through. But fundamentals are only just
Speaker 9: starting to come through. AI monetization is just in the
Speaker 9: earliest stages. We're just on the cusp of seeing what
Speaker 9: these companies will garner from their GENAI offerings.
Speaker 4: What has been so disruptive, largely to sleep of journalists
Speaker 4: and those working in open AI, but also just the
Speaker 4: ecosystem more broadly, has been this sort of self destruction
Speaker 4: path that open air has been on. More generally now
Speaker 4: this is a private company, not one that you'll be
Speaker 4: doing deep dive research on too much. But what they
Speaker 4: have done has created fierce competition and exuberance ever since
Speaker 4: the launch of originally CHATCHYPT back in November of last year.
Speaker 4: Is it more competitive now the space? Do you think the.
Speaker 9: Space is more competitive? And it will become increasingly competitive.
Speaker 9: But the opportunity set continues to rise with each week,
Speaker 9: each month, meaning companies are figuring out more and more
Speaker 9: ways to utilize AI. Vendors are figuring out more and
Speaker 9: more applications to which to apply it. And I think
Speaker 9: we're we're just in the infancy of all that. So yes,
Speaker 9: it will become more competitive.
Speaker 3: Absolutely.
Speaker 4: Has it been a worry for you for the companies
Speaker 4: that you do monitor or those that more broadly that
Speaker 4: your company holds, that are based upon the large language
Speaker 4: models of open ai?
Speaker 9: Do you think I'm sorry with your painting?
Speaker 4: Well, ultimately, many companies have been building around the architecture
Speaker 4: that open ai has built. Oh yeah, and now everyone
Speaker 4: suddenly is worrying about that architecture, about its resiliency.
Speaker 9: Sure, is that a concern? Well, none of the situation
Speaker 9: at open ai has introduced some level of near trum uncertainty.
Speaker 9: But Microsoft just gave every open Ai employee big bear hug.
Speaker 9: Sam Altman has apparently joined Microsoft in a research fashion.
Speaker 9: I think it's too soon to call this a major issue.
Speaker 9: I think Microsoft has had exclusive access to the technology,
Speaker 9: So I think what Microsoft needs to do is actually
Speaker 9: just to draw this situation to some form of conclusion.
Speaker 9: Either they can help stabilize open Ai. They could encourage
Speaker 9: sam Altman to go back to a I to open AI,
Speaker 9: or they could actually take on the majority of the
Speaker 9: employee base of open Ai or the employees which they like,
Speaker 9: which they certainly can do. So I think I think
Speaker 9: we're going to see conclusion before not too long, and
Speaker 9: then we can look forward. Other companies are certainly competing.
Speaker 9: I'm not sure that this gives them a major leg up,
Speaker 9: yet there seems to be some loyalty on the part
Speaker 9: of that team. They would like to stay together if
Speaker 9: they can. Microsoft just clearly gave signals that they're making
Speaker 9: that possible.
Speaker 4: We always have having you on because you like stocks
Speaker 4: like Microsoft, Hype Scalers, CRM, Snow, and Oracle, to name,
Speaker 4: but a few really appreciate you coming on this holiday
Speaker 4: shorten week, It's called Hillary Fish of Clearbridge time now
Speaker 4: for talking tech. First up crypto exchange platform Craken is
Speaker 4: in some hot water with the USSCC, the Securities in
Speaker 4: Exchange Commission. Now, the SEC is saying Cracken com mingled
Speaker 4: client assets with its own, even going as far as
Speaker 4: to pay expenses from bank accounts that held customer cat.
Speaker 4: Craghan said it disagreed with the SEC cleans and planned
Speaker 4: to vigorously defend its position. Meanwhile, President Biden and Vice
Speaker 4: President Kamala Harris are officially on threads. White House officials
Speaker 4: also open accounts for the First Lady and second and Gentlemen,
Speaker 4: and the move, of course, comes just days after the
Speaker 4: White House condemned enol Musk's endorsement of anti Semitic posts
Speaker 4: on x Fulling known as Twitter plus. The US Senate
Speaker 4: Judiciary Committee is calling a number of social media executors
Speaker 4: to testify at a Decembiner sixth hearing regarding online child
Speaker 4: sexual exploitation. Those subpoenad include Jason Citron of Discord Snaps,
Speaker 4: Evan Spiegel, an X CEO, Ninda Yakarina at more on X.
Speaker 5: Yeah More on X, the platform formerly known as Twitter
Speaker 5: is suing watchdog group Media Matters, claiming it quote maliciously
Speaker 5: drove advertisers away from the social media platform. Let's bring
Speaker 5: in Bloomberg's ashaccounts. Who's been all across this. Musk has
Speaker 5: been very vocal on X. Yakarino has been quite vocal
Speaker 5: on X. What is it that they're accusing Media Matters of.
Speaker 7: Well, they're essentially saying that Media Matters mischaracterize some of
Speaker 7: the content on the platform.
Speaker 5: Right, This is in a report a week ago exactly,
Speaker 5: a Matters report.
Speaker 7: Yes, the Media Matters report came out and basically said
Speaker 7: they found ads from huge advertisers like IBM and Apple
Speaker 7: next to pro nazi content. And so what Yakarino and
Speaker 7: Musk and the Right Association X are arguing is that
Speaker 7: that's not the case. It was only a small number
Speaker 7: of people that saw it that Media Matters sort of
Speaker 7: manipulated their feed to do that. So they have all
Speaker 7: these sorts of arguments against why they don't think that's
Speaker 7: exactly accurate.
Speaker 4: Meanwhile, Media Matters says they stand by their reporting and
Speaker 4: ultimately think that this is well a mistrodden path for
Speaker 4: them to be being sued right now.
Speaker 7: Yeah, Medium Matters is saying that, look, we see the ads.
Speaker 7: We looked at them, we saw the ads next to
Speaker 7: pronati content. And unfortunately this is not something that is new, right.
Speaker 7: Advertisers have seen this over the past year. This has
Speaker 7: been an ongoing saga of advertisers finding their ads next
Speaker 7: to content that they don't like, and so media managers saying, look,
Speaker 7: we've done the research, we saw the ads, here's examples
Speaker 7: of it, and so they stand by what they put.
Speaker 5: At the heart of this is the pervasiveness of fake
Speaker 5: content on the platform and the exposure of the advertisers.
Speaker 5: You and I reported that Yakarino has acknowledged broadly advertiser flight.
Speaker 5: What has she said about addressing the issue at heart,
Speaker 5: which is the pervasiveness of content on that platform.
Speaker 7: I mean, again, they sort of continue to go back
Speaker 7: to their part. They said they've taken a number of
Speaker 7: steps to combat anti submitic content on the platform. They
Speaker 7: stand by some of the policies that they have, but
Speaker 7: it's just hard because they continue to say that, but
Speaker 7: then advertisers are continuing to see their ads next to
Speaker 7: this content, and agency executives at this point are pretty
Speaker 7: fed up with a lot of the stuff that they're seeing,
Speaker 7: and so they've consistently pointed to their policies into the
Speaker 7: actions that they're taking. But from the advertiser perspective, it
Speaker 7: doesn't seem to be making a difference, which is why
Speaker 7: we're seeing Apple and IBM and Comcast and all these
Speaker 7: companies pull their ads off the platform or at least
Speaker 7: suspend temporarily.
Speaker 4: And she counts busier is always We thank you so
Speaker 4: much for the date dive, the.
Speaker 5: Welcome back to Bloomberg Technology. I'm Ed Loveler in San Francisco.
Speaker 4: I'm Caroline Heid in New York. We had some breaking
Speaker 4: news earlier this hour, the Wall Street Journal reporting that
Speaker 4: the CEO of Binance and it is founder Ceazy, has
Speaker 4: a step down and plead guilty to violating US anti
Speaker 4: money laundering requirements. Now, the cryptocurrency exchange will also pay
Speaker 4: some four point three billion dollars in fines, but no
Speaker 4: mention Oni bus I is here with the breakdown. This
Speaker 4: is in of course, the DOJ's investigation, not the SEC.
Speaker 4: But what caught your attention from this line from the
Speaker 4: Wall Street Channel.
Speaker 1: Well, we've already reported that the fines could be more
Speaker 1: than four billion dollars. We now know that it will
Speaker 1: be four point three billion dollars, and it does close
Speaker 1: a matter that has been going on for many, many years.
Speaker 1: This investigation from the Justice Department, with involvement also from
Speaker 1: the Treasury Department and the Commodity's Futures Training Commission, the CFTC.
Speaker 1: So this does close that page for Finance and Chong Panjao.
Speaker 1: He's not only stepping down to CEO. You have to
Speaker 1: remember also, according to the Wall Street Journal, he can
Speaker 1: retain his majority ownership of Finance, and the settlement would
Speaker 1: allow them to keep operating. Remember this is the world's
Speaker 1: largest crypto exchange we're talking about, so to kind of
Speaker 1: save the company is a big deal. In light of
Speaker 1: this probe and settlement, he is expected, according to the Journal,
Speaker 1: to appear in a federal court on Tuesday afternoon and
Speaker 1: enter his guilty plead. I think what's interesting here too
Speaker 1: is the Journal does draw parallel to a prior case
Speaker 1: to bitmex and in that instance, Arthur Hayes had plied
Speaker 1: guilty to violating anti money laundering laws and was sentenced
Speaker 1: to two years of probation and avoided jail time. So
Speaker 1: the sentencing of course will come later, but he is
Speaker 1: expected to plead guilty today in court.
Speaker 4: So notably, as you say, Hayes didn't have any jail time.
Speaker 4: And we wonder what, indeed what would happen in terms
Speaker 4: of the guilty plea coming from cz But is this
Speaker 4: enough to then appease the SEC as well? What would
Speaker 4: be the potential offering to them to be able to
Speaker 4: settle the ongoing investigation.
Speaker 1: These are interesting questions because we know that the SEC,
Speaker 1: among all regulatory bodies, the DJ has come down quite
Speaker 1: hard on the industry, but the SEC, the sheer scale
Speaker 1: of how they've been approaching the industry has been massive,
Speaker 1: and you just saw recently their approach to Kraken, for example,
Speaker 1: And they're concerned with many crypto exchanges and their ability
Speaker 1: to list tokens or what the SEC believes are secure.
Speaker 1: And so for Binance to keep operating, it draws a
Speaker 1: lot of questions not only just about the SEC's approach
Speaker 1: to Binance itself, but also remember what is fixed here?
Speaker 4: If he's pled guilty to.
Speaker 1: Violating anti money laundering laws in the United States, what
Speaker 1: is being fixed at a place like Binance to be
Speaker 1: able to ensure that this doesn't happen in the future,
Speaker 1: I think is another critical question as we think about
Speaker 1: the future of these crypto exchanges.
Speaker 4: And indeed the future of retaining talent at that company,
Speaker 4: which quite a few executives have been departing of late
Speaker 4: Chanali Bassec always all across these breaking news headlines. You
Speaker 4: can catch Nali along with Calee lines coming up on
Speaker 4: Bloomberg Crypto one pm New York time. They'll be speaking
Speaker 4: with the SEC Commissioner has to piss. Perfect time for
Speaker 4: that conversation ed right.
Speaker 5: The other top story that we're trying to keep on
Speaker 5: top of, open ai investors are still trying to return
Speaker 5: co founder Sam Outman to a leadership role at the company.
Speaker 5: At the same time, open ai staff are threatening mass mutiny,
Speaker 5: saying they'll follow Outman to Microsoft unless the board resigns.
Speaker 5: Microsoft c Satianadella spoke with bloombergs Emily Chang last night.
Speaker 5: He says he would not suppose Altman's return to open Ai.
Speaker 5: Take a listen.
Speaker 3: We are leading in this next generation of AI technology.
Speaker 6: We continue to be committed to open ai, and we
Speaker 6: continue to be committed to Sam and Greg and the
Speaker 6: team in respect to where they are and you know,
Speaker 6: I think about Sam has chosen multiple times now to
Speaker 6: work with us, and that's fantastic to see. And I
Speaker 6: think the real thing is that the capability that Microsoft
Speaker 6: has across the tech stack is what attracts great people
Speaker 6: like Sam, you know, and people like Sam and you know,
Speaker 6: innovators like Sam when it comes to ai to come
Speaker 6: to us, and we are thrilled about it.
Speaker 12: You incredibly quickly hired Sam as well as Greg. We
Speaker 12: are hearing that Sam wants to return. Investors want him
Speaker 12: to return to open ai. How would you feel about that?
Speaker 6: Yeah, as I said, we really want to partner with
Speaker 6: open ai, and we want to partner with Sam. And
Speaker 6: so in respect to where Sam is, he's working with
Speaker 6: Microsoft and that is the case on Friday, and that
Speaker 6: will be. That's the case today and we will I
Speaker 6: absolutely believe that will be the case tomorrow.
Speaker 12: Now we understand that to support a return of Sam
Speaker 12: mom and two open Ai, Microsoft wants some changes to
Speaker 12: the board to governance to its overall contract with open Ai,
Speaker 12: so something like this never happens again. What specifically are
Speaker 12: you looking for, for example, would you want to board
Speaker 12: see and if not, what else?
Speaker 3: Yeah?
Speaker 6: I mean I think we definitely will want some governance changes,
Speaker 6: so you know, you know, surprises are bad and we
Speaker 6: just want to make sure that things are.
Speaker 3: Done in a way that will allow us to continue
Speaker 3: to partner. Well, that's about it, right.
Speaker 6: You know, this idea that somehow, you know, suddenly changes
Speaker 6: happen without being you know, in the loop is not good,
Speaker 6: and we will definitely ensure that some of the changes
Speaker 6: that are needed to happen and we continue to be
Speaker 6: able to go along the partnership with open Ai.
Speaker 4: Microsoft CEO Sati under the Nadella there along with our
Speaker 4: own Emily chang Us keep digging on how all of
Speaker 4: this impacts Microsoft and indeed well broadly AI in general.
Speaker 4: But Austin Carr has a really interesting take our own
Speaker 4: Brimberg reporter. Austin the initial read was Satio wins lemonade
Speaker 4: out of lemons. He manages to do this deal very
Speaker 4: quickly and turn around the situation. But you're digging perhaps
Speaker 4: shows that longer term, this is not the best case
Speaker 4: scenario to have Microsoft bringing open Ai in house.
Speaker 6: Yeah.
Speaker 13: I think right at the beginning there was that sort
Speaker 13: of the idea that Microsoft was the big winner and
Speaker 13: all of that and I think the reality is a
Speaker 13: bit more complicated. They've invested ten to thirteen billion dollars
Speaker 13: in open Ai. If that suddenly falls apart, that doesn't
Speaker 13: look good for Microsoft. It doesn't look good that they
Speaker 13: invested so much money given so much governance hurdles that
Speaker 13: the startup clearly had. The second thing is just hiring
Speaker 13: Sam Oltman. You heard how many times Satya said Sam
Speaker 13: and that inner you maybe about a dozen, if not more.
Speaker 13: This was a lot about damage control. How can we
Speaker 13: keep Sam Altman within the Microsoft family? And that was
Speaker 13: the first thing that they did. Hire Sam to read
Speaker 13: this new advanced research group. But that doesn't come without complications.
Speaker 13: It's going to be tremendously expensive if you have these
Speaker 13: one hundreds of employees exiting open Ai to try to
Speaker 13: rebuild something similar from scratch. Inside Microsoft, you have IP issues,
Speaker 13: and then you all have a lot of bureaucratic issues
Speaker 13: within Microsoft, which has its own AI and research teams
Speaker 13: that are working on other things. So I think it's
Speaker 13: really too early to say that Microsoft is the clear
Speaker 13: winner in all this. Sachi, I think doing a really
Speaker 13: excellent job at damage control in these last seventy two hours,
Speaker 13: all Right, bloom.
Speaker 5: Bezos Sinkhar who's been writing in The Tech Daily. You
Speaker 5: should subscribe to the Tech Daily. It's a fantastic summary
Speaker 5: and smart take on the news of the day in
Speaker 5: the news of the hour. Let's send to another actual
Speaker 5: player in the field of artsficial intelligence. Hugging Face dive
Speaker 5: more into the implications for the AI industry at large
Speaker 5: with Delcense, to be joined by Hugging Faces chief ethics
Speaker 5: scientists Margaret Mitchell and Margaret I know that you have
Speaker 5: relationships with many that work at open AI. They are
Speaker 5: your industry peers that you have direct relationships. I'd just
Speaker 5: like to first invite you to give your overall thoughts
Speaker 5: of what is happening at open ai HQ about three
Speaker 5: miles from where I'm sitting right.
Speaker 14: Yeah, So I think I have a sort of different
Speaker 14: perspective than a lot of people, although your recent interviews
Speaker 14: are sort of hitting on them where I don't know
Speaker 14: that it's the case that the board has failed broadly.
Speaker 14: I do think they've failed the employees because of this
Speaker 14: creation of shock and trauma, and what we're seeing is
Speaker 14: a response based on that. Right when you have the
Speaker 14: rug pulled out from you, you just want to get
Speaker 14: the rug back. So that is happening, and that can
Speaker 14: be arguably be a failure of the board. But I
Speaker 14: think broadly the board is sticking to some of its
Speaker 14: original goals, which is to balance the profit and the
Speaker 14: non profit, make sure that safety concerns are being taken seriously,
Speaker 14: and even making the decision to lose profit in cases
Speaker 14: where some of the safety concerns are starting to become overwhelming.
Speaker 4: I think if one goes openly to open AI's website
Speaker 4: and looks at its governance and the statements it makes,
Speaker 4: it makes it abundantly clear that they put safety ahead
Speaker 4: of profits and are not for profit governance board. In hindsight,
Speaker 4: perhaps for vcs wasn't totally aligned. Has the discussion point
Speaker 4: changed longer term here, Margaret, Do you think that people
Speaker 4: start to say, Okay, well, we have to put the
Speaker 4: safety to one side because we need to keep on
Speaker 4: building and founders need to keep on doing deals and
Speaker 4: the compute power is so expensive.
Speaker 14: Yeah, I mean, I think that there will definitely be
Speaker 14: some changes and updates to this kind of structure. The
Speaker 14: profit model that OpenAI was spearheading was more of an experiment,
Speaker 14: and with experiments, in general with AI and in science,
Speaker 14: you just update based on the results you're getting, and
Speaker 14: so I think we're seeing that here. We'll probably see
Speaker 14: changes in light of the fact that there clearly is
Speaker 14: a need to have a reliance on commercial interests companies
Speaker 14: like Microsoft to provide compute and so you don't want
Speaker 14: to surprise Satchya, right if you have this kind of dependency.
Speaker 14: So there probably will be some updates here. But I
Speaker 14: do think that the board as originally constructed is basically
Speaker 14: doing what it's supposed to be doing.
Speaker 5: Margaret, how do we find a middle ground? If this
Speaker 5: existential threat issue is the issue, and frankly, we don't
Speaker 5: know why the board fired, Sam Outman, how do you
Speaker 5: appease both sides?
Speaker 14: Actually, if you work towards the solutions, if you sort
Speaker 14: of take what the issue is and then work backwards
Speaker 14: towards the solutions, you'll find that the solutions for safety,
Speaker 14: for existential risk, for bias issues, non discrimination, a lot
Speaker 14: of these sort of ethical values that a lot of
Speaker 14: tech companies are holding right now, the solutions end up
Speaker 14: being roughly the same, as far as I can tell.
Speaker 14: And so really the middle ground is, let's go back
Speaker 14: to what the solutions are for all these issues that
Speaker 14: we're thinking and seeing, and can we agree on these
Speaker 14: solutions even if our goals are somewhat different, and I
Speaker 14: think that will really be a place where across the
Speaker 14: industry we'll see alignment.
Speaker 5: Margaret Chief Ethic Scientists, Margaret Mitchell, thank you for being
Speaker 5: with us. We have some breaking us just crossing the Bloomberg.
Speaker 5: Open AI and its board are in open talks with
Speaker 5: Sam Outman about a return for Sam Outman to Open AI.
Speaker 5: I'm reporting this with actually Evans. What we're hearing the
Speaker 5: latest is that Adam D'Angelo is talking with Sam Altman.
Speaker 5: One source tells me that a possible scenario is that
Speaker 5: a transition board comes into place and Sam Altman takes
Speaker 5: a director role on that transition board. That is one
Speaker 5: caroline possible way forward that we're hearing about. Investors are involved,
Speaker 5: Investors are speaking with both the open AI side and
Speaker 5: the open aiye board. And what we're hearing myself, Ashley
Speaker 5: Emily Chang reporting this as well, is that EMMITTT. Sheer,
Speaker 5: whose interim open AI CEO is having a pretty tough time,
Speaker 5: is basically in the dark and at breaking point. At
Speaker 5: this point, and.
Speaker 4: It's notable, of course that Veno Kosler, for example, very
Speaker 4: early investor in open Ai, had been saying how much
Speaker 4: the Quora ceo had DeAngelo had been digging in and
Speaker 4: ultimately whether or not that was going to be a
Speaker 4: difficult scenario to be able to have a board change
Speaker 4: of direction. Ultimately, though, what are you hearing in terms
Speaker 4: of being pushed for of the makeup of that board,
Speaker 4: because many would say it doesn't just need Sam Altman
Speaker 4: to be reinstated.
Speaker 5: Yes, I mean the name Brett Taylor, who is the
Speaker 5: co CEO of Salesforce, keeps coming up time and time
Speaker 5: again as someone that would be an appeasement to both
Speaker 5: sides of the discussion that we make the point in
Speaker 5: the story we've just reported, just as the sources make
Speaker 5: the point to us that the fact that Sam is
Speaker 5: even speaking to Adam Dangelo is news. It is complete
Speaker 5: change from the weekend. We sat there all day Sunday saying, Okay,
Speaker 5: well Sam's definitely coming back and the board's going to go.
Speaker 5: That wasn't the case at all. The board was digging
Speaker 5: in and there was very little communication at AOLS. So yeah,
Speaker 5: we keep going, we do.
Speaker 4: And as Emily chattered to Satya yesterday, he of course
Speaker 4: supports no matter where Sam ends up being, whether at
Speaker 4: OpenAI or in house with Microsoft. So much more to come,
Speaker 4: and of course we're going to be talking a little
Speaker 4: bit more about Ed's scoops one about a chip venture
Speaker 4: that Sam Ammon was apparently trying to be bringing to
Speaker 4: the world. Will have Cleo Capital Serracance joining us. Next,
Speaker 4: this is blue Meg Technology. Now, of course we just
Speaker 4: had that breaking news coming from our own Ed Ludlow
Speaker 4: and team that Sam Alman and the Open Ai board
Speaker 4: are open to talks for his possible return. And while
Speaker 4: the saga continues, we want to go to our VC
Speaker 4: spotlight now Cleo Capital founder and managing director Serracus, for
Speaker 4: your own take on all of this, the repercussions for
Speaker 4: AI startup ecosystem more broadly, Sarah, is it that it
Speaker 4: becomes more competitive? Is it that becomes more concerning of
Speaker 4: profits visa V safety?
Speaker 15: You know, I honestly think the biggest takeaway about this
Speaker 15: isn't going to be about AI.
Speaker 2: I think it's going to be about corporate governance.
Speaker 15: You know, this on the heels of everything that happened
Speaker 15: with FTX, and obviously could not be more different situations.
Speaker 15: But in both cases you have companies that have been
Speaker 15: super super hot, you know, is billions of dollars, and
Speaker 15: there's no board, there's no traditional corporate governance, and so
Speaker 15: when things go sideways, they tend to go sideways in
Speaker 15: a really big way and catch a lot of people unawares.
Speaker 15: You know, ventures a business where we usually like to
Speaker 15: sort of handle the messy stuff a little bit quietly,
Speaker 15: and that's really impossible to do when there's no board,
Speaker 15: you know, no traditional board just sort of say, let's sit.
Speaker 5: Down and hash this out quietly. We're reporting that one
Speaker 5: possible outcome is that there's a transitional board, right Sam
Speaker 5: Outman joins this transitional board as a director, as a
Speaker 5: bench capsus. If somebody put in front of you the
Speaker 5: opportunity to participate in the tender, which we believe is
Speaker 5: still pending based on that information I just gave you,
Speaker 5: would you take an allocation?
Speaker 15: I do early stage ventures, so they are out of range,
Speaker 15: and that's all I'll say.
Speaker 2: But you know the reality is that I.
Speaker 15: Think that this is going to be a moment where
Speaker 15: the investors around the table say, look, you know, we
Speaker 15: played by your rules. You started as a nonprofit, you
Speaker 15: had this capped profit model, you know, you had this
Speaker 15: board that didn't directly oversee you know, and wasn't wasn't
Speaker 15: necessarily a fiduciary to the for profit arm.
Speaker 2: I have a feeling that if Sam.
Speaker 15: Comes back, that is all going to change, possibly in
Speaker 15: a good way for him, but I think probably in
Speaker 15: a way that's a.
Speaker 2: Bit more investor in for profit friendly as well.
Speaker 4: A rule early stage investment outlook right now, there is
Speaker 4: this thesis at one point when indeed we thought that
Speaker 4: Sam was going to be sticking with Microsoft, is that
Speaker 4: open AI talent might not just go there, and they
Speaker 4: might go off and start creating their own businesses. One
Speaker 4: found at telling us that yesterday, are you seeing as
Speaker 4: much exuberant about building AI companies at the smaller check
Speaker 4: range at the moment?
Speaker 15: So, you know, there's it's structurally hard to build a
Speaker 15: true AI company right foundational models. You know, it takes
Speaker 15: billions and billions of.
Speaker 2: Dollars worth of compute power.
Speaker 15: You know, we've heard reports this year of VC who
Speaker 15: are actually going out and you know, getting compute space,
Speaker 15: getting cloud space, you know, buying chips AI chips so
Speaker 15: that they can use that as sort of an enticement
Speaker 15: to founders, And the other reality is it's not just
Speaker 15: enough to be sort of smart and hungry when you're
Speaker 15: talking about building in these kind of foundational AI spaces.
Speaker 15: You really need serious engineering chops, and not a ton
Speaker 15: of people have them. So, you know, certainly the bloom
Speaker 15: is a bit off the rose right now at open AI.
Speaker 15: And I think that, you know, when things change, they
Speaker 15: tend to stay somewhat changed, and so we might see people,
Speaker 15: you know, who are planning to stick around a couple
Speaker 15: more years.
Speaker 2: You know, the macro environment's not great.
Speaker 15: They you know, liked what they were doing at open AI,
Speaker 15: who are now you know, sitting there saying, you know,
Speaker 15: have whiplash and feel like, wow, maybe I do want.
Speaker 2: To go out on my own. And that's not necessarily
Speaker 2: a bad thing.
Speaker 5: Clear Capital Founder Managing Directors, Hurricanes Goods catch up here
Speaker 5: on bloom By Technology.
Speaker 4: Zoom was out with earnings, reporting better than expected revenue
Speaker 4: on some strong enterprise sales and raising is fully of forecast.
Speaker 4: In fact, Zoom CFO Kelly Stackowa joins us now and
Speaker 4: Kelly there was some significant international slowdown and I'm interested
Speaker 4: as to how resilient the sort of growthing you saw
Speaker 4: in the prior quarter is for the next.
Speaker 16: Yeah, So we were really pleased with our Q three results.
Speaker 3: As you said, we.
Speaker 16: Exceeded both our top line as well as our profitability expectations,
Speaker 16: and we were able to raise for.
Speaker 2: The full year.
Speaker 16: We saw growth in the Americas. We did see some
Speaker 16: headwinds both in AMYA and Asia Pac, some of that
Speaker 16: due to FX and currency. Were an Asia Pac for example,
Speaker 16: we would have been flat year every year, but we
Speaker 16: are starting to see some momentum in both of those
Speaker 16: regions and are looking forward to further progress as we
Speaker 16: moved through the rest of this year and in the
Speaker 16: next year.
Speaker 5: Like Kelly, the sales side analysts are basically saying that
Speaker 5: the raising guidance is just not bullish, and they're still
Speaker 5: worried about the long term growth of Zoom based on
Speaker 5: how society behaves today, how we communicate one another. How
Speaker 5: do you tell them definitively I can grow this company forever.
Speaker 3: You know, we.
Speaker 16: Achieved some amazing milestones during Q three. For example, Zoom
Speaker 16: Phone hit seven million seats, our Zoom contact center grew
Speaker 16: to over seven hundred customers, and Zoom AI Companion It's
Speaker 16: only been out for approximately two months and it's already
Speaker 16: activated in over two hundred thousand accounts.
Speaker 3: So that shows you that.
Speaker 16: We are expanding to be a full collaboration and communication platform,
Speaker 16: and that's really what's going to drive our growth in
Speaker 16: the future. And that's exactly what investors are looking for.
Speaker 16: They're looking for reacceleration in our direct segment and they're
Speaker 16: looking for stabilization.
Speaker 2: And our online segment.
Speaker 16: And as I said, the expansion of the platform is
Speaker 16: exactly what's going to drive that over time.
Speaker 4: How then, have you been reacting to the going changes
Speaker 4: within AI?
Speaker 16: Right now?
Speaker 4: You've got Companion AI, you incorporate, you have a federated approach,
Speaker 4: you incorporate your own MLM, you have metas you have
Speaker 4: open AIS Andthropic. Your key competitor really is Microsoft in
Speaker 4: the space and they look to we ever closer to
Speaker 4: open AI. How does this situation impact you.
Speaker 16: Yeah, So in setting up this model, just like we
Speaker 16: do everything, we think about it from a customer's perspective
Speaker 16: and we want them to have the best possible performance
Speaker 16: and we believe that a federated approach does that. As
Speaker 16: you mentioned, we're working with many partners in this space.
Speaker 16: That gives us the opportunity to really fine tune our
Speaker 16: models and get the absolute best result for our customers.
Speaker 16: And I also want to highlight that we're doing it
Speaker 16: in a very cost effective way. Zoom ad compand is
Speaker 16: included for free in all of our paying for all
Speaker 16: of our paying customers. So that's a really key competitive
Speaker 16: differentiator as it comes included where some of our competitors
Speaker 16: are char charging up to thirty dollars per month per
Speaker 16: user for that.
Speaker 4: Certainly the focus on the competition there. We thank you
Speaker 4: so much soom CFO k Steckelberg on the reporting of
Speaker 4: earnings and future growth drivers. Meanwhile, another extraordinary show of
Speaker 4: Bloomberg Technology. We're just breaking news after breaking news.
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