Speaker 1: From Marhart. We're Innovation, Money and Power Collie in Silicon
Speaker 1: Vallet NBN. This is Bloomberg Technology with Caroline Hyde and
Speaker 1: Ed Ludlow.
Speaker 2: Ed Ludlow here in San Francisco. Caroline Hyde off today.
Speaker 2: This is Bloomberg Technology. Massive show coming out. Full coverage
Speaker 2: on artificial intelligence. We speak to someone who testified before
Speaker 2: lawmakers just twenty four hours ago on the risks of
Speaker 2: the technology, as well as the CEO of character AI
Speaker 2: and Dina Trace. Last, we bring you the biggest takeaways
Speaker 2: from the Tesla AGM and break it all down with
Speaker 2: Tasha Kini of ARC invest and we'll discuss the state
Speaker 2: of venture capital investing and go life to sol Y
Speaker 2: Connections Forum focus on global finance, tech and public policy.
Speaker 3: But first it's going to check on these markets.
Speaker 2: There's a lot of attention from Wall Street on what's
Speaker 2: happening in DC and the debt ceiling, a smaller group
Speaker 2: trying to accelerate negotiations. There's fighting talk from the President
Speaker 2: and Chuck Schumer as well.
Speaker 3: How that looks in markets?
Speaker 2: Now's that one hundred up half a percentage point outperformance
Speaker 2: in semiconductors. You look at names, I can video AMD
Speaker 2: a number of names in that basket up in the
Speaker 2: high single digits, some of it AI related, I am sure.
Speaker 2: In terms of the bomb market, US Tenure, Yeald three
Speaker 2: point five six percent a little higher, and Bitcoin interesting.
Speaker 2: We're back now below twenty seven thousand US dollars per token.
Speaker 2: We'll bring you some details of newsflow in the crypto
Speaker 2: space later in the program in terms of specific names
Speaker 2: and movers. One piece of news out this Wednesday morning
Speaker 2: is Amazon with new Echo devices, a real emphasis on
Speaker 2: Alexa and part of the narrative around generative AI tools.
Speaker 2: I guess in the voice context of what they'll do
Speaker 2: to push back in some of the advances of their
Speaker 2: peers like Alphabet Dina, Trace now down one point four percent,
Speaker 2: have been much higher in pre market lease on strong
Speaker 2: earnings beating the quarter gone in a full year outlook,
Speaker 2: there was above expectations. We will speak to the CEO
Speaker 2: letter later in the program. Then Tesla up four percent,
Speaker 2: now really accelerating in terms of its gains. The big
Speaker 2: takeaways out of the annual general meeting. They will now
Speaker 2: look at advertising in a limited way. Jbi Strawbell added
Speaker 2: to the board and Elon Musk is there to stay.
Speaker 3: He will remain as CEO.
Speaker 2: He's going to really focus now a lot more on Tesla,
Speaker 2: having of course been distracted by Twitter in recent weeks
Speaker 2: and months. Let's stick with a Tesla story. Yesterday, CEO
Speaker 2: Elon Musk held that company and your shareholder meeting, and
Speaker 2: while taking questions from investors, he excited the crowd basically
Speaker 2: by saying this.
Speaker 4: And although there's there's obviously a lot of people that
Speaker 4: follow like to say the Tesla count and the you
Speaker 4: know my account whatever on Twitter, to some degree, it
Speaker 4: is preaching to the choir, and the choir is already convinced.
Speaker 4: So I think what you're saying does does have some merits,
Speaker 4: and you know what, I believe in taking taking suggestions.
Speaker 4: So we'll try a little advertising and see how it goes.
Speaker 2: Let's get into Tesla and his ad shift with Tasha
Speaker 2: Kini Ark invest director of Investment Analysis. That's choir as
Speaker 2: convinced Tasha, does advertising convince others that aren't in the choir?
Speaker 5: Yeah, I mean, I think it's certainly the point that
Speaker 5: everyone is harping on here. You know, I think generally
Speaker 5: it's not a bad idea to at least try advertising,
Speaker 5: right I mean from our research, we know that on
Speaker 5: both a sticker price basis now and a total cost
Speaker 5: of ownership basis, evise are better cars. Right, They're cheaper,
Speaker 5: they're more performant. So you know, if you're not buying
Speaker 5: an electric vehicle, the question is why. Maybe you know
Speaker 5: that information just hasn't reached you yet. Maybe an ad will.
Speaker 5: So I don't think it's a bad idea there, you know,
Speaker 5: I'd say what I was most excited about from last
Speaker 5: night was all the talk around autonomy. You know, Elon
Speaker 5: said he thinks this will be the greatest asset unlock
Speaker 5: in human history, and i'd agree. You know, we've modeled
Speaker 5: that autonomous driving could add an additional twenty six trillion
Speaker 5: dollars to GDP in the next ten years. It is
Speaker 5: going to totally change touslis business model and we're e's
Speaker 5: ated for it.
Speaker 2: I want to get into a five year forecast. But
Speaker 2: let's react to the other announcements, which is JB. Strubble
Speaker 2: being added to the board. And also you know the
Speaker 2: comments from Elon Musk about his focus on Tesla remaining
Speaker 2: as CEO, particularly to get the company through its next
Speaker 2: focus on artificial intelligence. What did you make of that, Tasha, Yeah,
Speaker 2: you know, I think JV.
Speaker 5: Strubble is a great addition to the board, right you know,
Speaker 5: right now he's working with his own company on battery cycling.
Speaker 5: We know that's crucial to scale the battery industry as
Speaker 5: a whole. They're seeing great efficiency, I think over ninety
Speaker 5: percent and recycling. You know, we've always thought that it's
Speaker 5: important for Elon to stay on as CEO as they
Speaker 5: reach full autonomy again because we think that this is
Speaker 5: the next greatest milestone for Tesla. And you know, arguably,
Speaker 5: you know, any automaker out out there, this is what
Speaker 5: they really should be going for. So we think that
Speaker 5: autonomous driving or autonomous ridehill, which is how we expected
Speaker 5: to play out, will constitute roughly two thirds of Tesla's
Speaker 5: enterprise value in the next five years. So this is huge.
Speaker 5: Tesla has an enormous data advantage and you know you
Speaker 5: shouldn't miss it.
Speaker 2: Investors or shareholders rejected a proposal for Tesla to publish
Speaker 2: a key person risk report, and Tessa's argument was, well,
Speaker 2: if we put all of our talent in the shop window,
Speaker 2: our competitors will try and take them. But do you
Speaker 2: still have a key man risk concern around Elon Musk.
Speaker 2: I guess, you know, a new CEO at Twitter goes
Speaker 2: some way to allaying those concerns.
Speaker 5: Yeah, you know, I think there's a lot of focus
Speaker 5: on this question. What I what I'd broadly say is
Speaker 5: I'd be a lot more concerned if he said he
Speaker 5: was stepping away from Tesla. Right again, I think he's
Speaker 5: crucial to cross that autonomy finish line. You know, autonomous
Speaker 5: driving lowers the cost per mile of ride hill significantly
Speaker 5: invites a lot of people that are not currently in
Speaker 5: the red hill market into it. You know, it's going
Speaker 5: to be a multi trillion dollar industry over the next
Speaker 5: five years. So, you know, and on Elon's time. You know,
Speaker 5: we've heard this question come up so many times over
Speaker 5: the past five years. I mean, Tesla's SpaceX. You know,
Speaker 5: he was one of the founders of Open AI. He's
Speaker 5: clearly demonstrated that he can juggle a lot of tasks
Speaker 5: and ultimately we're just focused on his execution, right and
Speaker 5: I think given that Tesla has the best you know,
Speaker 5: cost relative to performance of any electric vehicle maker out there,
Speaker 5: you know, he's already proved sort of that that he
Speaker 5: can juggle multiple things and succeed at it.
Speaker 2: There was a demonstration of progress, apparent progress in Optimus
Speaker 2: that the humanoid.
Speaker 3: Bolts.
Speaker 2: When you saw that, did it give you any feeling
Speaker 2: that they are making progress in the field of AI
Speaker 2: in that use case at least?
Speaker 3: Yes?
Speaker 5: I think Optimist is really interesting. So it's definitely out
Speaker 5: of our five year forecasting window. You know, our our
Speaker 5: price target for Teslas that our expected value is roughly
Speaker 5: two thousand dollars per share in twenty twenty seven. That
Speaker 5: actually doesn't include Optimists because I think that you know,
Speaker 5: by the time it's a meaningful contributor. Again, it could
Speaker 5: be further into the future. But I think the important
Speaker 5: thing to look at here is you know why Tesla,
Speaker 5: Why why humanoid robot? Well, given that they have this
Speaker 5: massive data advantage from autonomous driving. You know, they have
Speaker 5: millions of cars on the road, they're collecting over a million,
Speaker 5: they have over a million miles driven in FSD daylight daily,
Speaker 5: which they can then pull data from. You know, that's
Speaker 5: an order of magnitude more than competitors. So I think
Speaker 5: this sets them up well to base create robots that
Speaker 5: move through the physical world and the autonomous car will
Speaker 5: be the first version of that, but they can you know,
Speaker 5: poort that knowledge over into other robots, and I think
Speaker 5: the Optimist robot is a good example. You know, we
Speaker 5: talk a lot at ARC about backwards integration. I think
Speaker 5: the fact that this is a humanoid robot and it
Speaker 5: can move through spaces that were already built for humans
Speaker 5: is big. And I think this, you know, in the future, yeah,
Speaker 5: could be a major productivity enhancer like all AI. You know,
Speaker 5: we'll see you know, non market labor activity turn into
Speaker 5: market labor activity, and I think the productivity of the
Speaker 5: individual worker will ultimately increase because of this. So we're
Speaker 5: excited about it.
Speaker 2: So your twenty twenty seven coal is two thousand dollars
Speaker 2: per share, which I'll give you an opportunity to explain.
Speaker 2: But the question is, did anything in that presentation or
Speaker 2: in the interview with CNBC afterwards move the needle for
Speaker 2: you guys change the course of where you see this
Speaker 2: company going.
Speaker 5: Yeah, I think again, since we're so focused on the
Speaker 5: long term horizon, that five year view, you know, I
Speaker 5: would stick to that two thousand dollars per share estimate
Speaker 5: that we put out, And you know, I think again,
Speaker 5: what I'm more looking forward to is everyone else realizing
Speaker 5: the opportunity and autonomous driving, because I actually think that
Speaker 5: Tesla does not get enough questions about this opportunity, given
Speaker 5: how monumental it will be. So I was glad that
Speaker 5: we heard Elon talk about that last night again because
Speaker 5: I think that most don't truly understand how big of
Speaker 5: a productivity unlock and a cash flow unlock, because it
Speaker 5: will be because we think autonomous ride hill could have
Speaker 5: software like Margins, and we heard affirmation of that last night.
Speaker 5: So again, it's a recurring revenue stream software like Margins,
Speaker 5: So you know, it's up to let's say, roughly ten
Speaker 5: thousand dollars in cash flower car per year. I mean
Speaker 5: that's unheard of, and no other traditional automaker is, you know,
Speaker 5: close to the data advantage that Tesla has at least,
Speaker 5: so they're in a major position there.
Speaker 2: Yeah, it's interesting because ahead of you coming on, a
Speaker 2: number of people tweeted at me saying, actually they wanted
Speaker 2: to hear a little bit more about the plan for
Speaker 2: autonomous driving or at least the robotaxi vision of the
Speaker 2: future are Thanks to Tasha Kini Promark invest for that reaction,
Speaker 2: to Tesla's AGM before a Senate Judiciary subcommittee on Tuesday.
Speaker 2: Open AI CEO Sam Outman praised AI's potential, but warned
Speaker 2: that the emerging technology is powerful enough to change society
Speaker 2: in unpredictable ways. Joining us now as someone who also
Speaker 2: testified on the Hill alongside him, NYU Professor emeritus and
Speaker 2: Geometric Intelligence founder Gary Marcus. Of course, you're also the
Speaker 2: host of the podcast Humans Versus Machines, which is kind
Speaker 2: kind of the debate that we're having as a nation
Speaker 2: and globally. Right now, let me ask you this, what
Speaker 2: good came out of yesterday's hearing?
Speaker 3: What was the net result?
Speaker 6: I thought the hearing was actually fantastic. It far exceeded
Speaker 6: my own expectations that I think probably most others. It
Speaker 6: was really bipartisan, and I think we all agreed there.
Speaker 6: Almost everybody except the IBM executive all agreed that we
Speaker 6: need to have some kind of national agency governing AI,
Speaker 6: and probably want some global agency doing that. Sam Altman
Speaker 6: was supportive of that. That's an idea I've been pushing
Speaker 6: for the last month or two. So it was wonderful
Speaker 6: to have his endorsement and the government or the Senators
Speaker 6: as a whole were pretty positive towards it. I think
Speaker 6: the notion is that the United States should try to
Speaker 6: lead the way if we're going to do something global,
Speaker 6: and I hope that will happen. And there was also
Speaker 6: strong support for having something like FDA kind of regulations
Speaker 6: where you have a sufficiently large model, you need to
Speaker 6: show that it is sufficiently safe.
Speaker 1: You can't just release something to one hundred million people.
Speaker 6: So there's lots to discuss, but I thought it was
Speaker 6: a very positive atmosphere, very bipartisan, and people recognized how
Speaker 6: serious the problems were.
Speaker 1: And also I think there was a lot of.
Speaker 6: Sense from the senators that they feel like they didn't
Speaker 6: do the right thing yes with Section two thirty in
Speaker 6: the Internet, and that they wanted to do better this
Speaker 6: time in there here a lot faster. You know, it
Speaker 6: took them like fourteen years after social media before they
Speaker 6: really did anything, and you know, it's only six months
Speaker 6: after shat GPT made it big that they're trying to
Speaker 6: yes handle it. So I saw a lot of seriousness
Speaker 6: on the part of the senators.
Speaker 3: Gary.
Speaker 2: I invited our audience to put forward questions. A lot
Speaker 2: of people interested on you coming on the program, We'll
Speaker 2: give you a second to take on some water. There
Speaker 2: are many that tweeted at me saying that what you
Speaker 2: were doing was scare mongering. Is that a fair accusation
Speaker 2: that they've led at you.
Speaker 1: I don't think so.
Speaker 6: I mean, it's true that I'm trying to raise alarms
Speaker 6: about things that I think are genuinely risky. But I
Speaker 6: think scare mongering is if you don't actually think that
Speaker 6: there's a risk.
Speaker 1: And you're just trying to manipulate people. And I think
Speaker 1: the real risk.
Speaker 6: I've put all my own effort, I'm not getting paid
Speaker 6: for this into trying to help us address those risks
Speaker 6: because I think they're real. Sam thought they were real too,
Speaker 6: you know. Sam agreed with me. Yes, there were risks
Speaker 6: to our elections and possibly much graver risks in the
Speaker 6: long term if we don't figure out how to control
Speaker 6: our AI systems.
Speaker 2: One of the proposals that Sam put forward was to establish,
Speaker 2: at least here in the United States, an agency to
Speaker 2: license or have some sort of license seeing system for
Speaker 2: the development of AI. There are many that believe that
Speaker 2: would basically centralize activity control power among the biggest tech companies.
Speaker 3: What's your response to that, I mean, just to clarify.
Speaker 6: Even before this meeting, I wrote our ed and Economist,
Speaker 6: and I gave a TED talk on April eighteenth about
Speaker 6: having an international agency to regulate AI, and.
Speaker 1: Sam was supportive of that.
Speaker 6: He emphasized licensing, and he emphasized excuse me, sorry about
Speaker 6: the cough. I've been doing so many interviews. He emphasized
Speaker 6: licensing for large scale models, not necessarily for small models.
Speaker 6: I think we all agree that we don't want to
Speaker 6: cut off research. We don't want to cut off small
Speaker 6: companies from having a role. But the larger the model,
Speaker 6: the larger the impact, the more we might need licensing.
Speaker 2: One of the questions from our audience is for you
Speaker 2: to explain what is the difference between fooling a human
Speaker 2: with artificial intelligence and fooling a system with artificial intelligence.
Speaker 6: I'm not sure what you mean by fooling a system
Speaker 6: with artificial intelligence, but I think.
Speaker 2: What I mean is that if you're a consumer and
Speaker 2: you're confronted by information from a generative a tool and
Speaker 2: it's false, you have fooled. But you can also use
Speaker 2: llms and foundation models to automate all kinds of processes
Speaker 2: from SaaS through to internal workflow, whatever it will be.
Speaker 2: And I think the root of that question is what
Speaker 2: is the greater risk about human interaction with AI or
Speaker 2: broadly automation that comes from those tools.
Speaker 6: That's a good question, I guess. You know, there are
Speaker 6: different risks of different timescales. The thing that I'm most
Speaker 6: currently worried about is the risk to democracy, and the
Speaker 6: risk to democracy actually comes both from kind of accidental
Speaker 6: mistakes from these systems. We know they can fabulate, or
Speaker 6: some people call it hallucinate. They do that automatically without
Speaker 6: human intervention. They're just not a very reliable technology, and
Speaker 6: then bad actors can deliberately use them to make enormous
Speaker 6: amounts of misinformation that's incredibly plausible. They can do that
Speaker 6: with deep fix for images, they can do it with
Speaker 6: TEX and so they're both the fact that the systems
Speaker 6: are unreliable, they don't know what they're talking about, can't
Speaker 6: verify what they're saying, and they can be abused. So
Speaker 6: it's kind of like both similarly, in terms of long
Speaker 6: term risk, you can think of deliberate scenarios where people
Speaker 6: try to manipulate the markets and things go wrong and
Speaker 6: there's violence because people misattribute things that are happening, or
Speaker 6: maybe machines do things that are entirely different from what
Speaker 6: we program them do. So I don't know if you
Speaker 6: can neatly dichotomize it them that way. The reality is
Speaker 6: the machines are not reliable, and the machines are not
Speaker 6: very well controlled, and so that leads to all kinds
Speaker 6: of risks.
Speaker 2: Gary, why is the large language model approach not the
Speaker 2: right approach to achieve AGI in your opinion?
Speaker 6: Well, I just saw other words on your screen safer
Speaker 6: and more relied, more aligned. Excuse me, These systems aren't
Speaker 6: that safe. They're not that sophisticated. They don't have a
Speaker 6: model of the world. They don't understand what's going on,
Speaker 6: and so, for example, they make stuff up all the time.
Speaker 6: They up a sexual harassment charge. They said Elon Musk
Speaker 6: was dead when he's alive. I mean, all kinds of craziness.
Speaker 3: They're just not.
Speaker 6: Systematic, trustworthy bits of AI. You know, when we look
Speaker 6: back twenty years ago, I mean twenty years from now,
Speaker 6: it'll be like looking back at cell phones from twenty
Speaker 6: years ago. It's like they had a phone that big.
Speaker 6: We're going to say they used AI that was that unreliable?
Speaker 1: Like, what were they.
Speaker 2: Thinking, Gary, what do you want to happen next? You know,
Speaker 2: you actually quite praising or complementary of the hearing itself
Speaker 2: it being bipartisan. But if there is a concrete step
Speaker 2: for law makers or regulators to take, what does it
Speaker 2: look like to your mind?
Speaker 6: I think the next step is to actually figure out
Speaker 6: what regulation would look like. I think we probably need
Speaker 6: a cabinet level agency and I think we should start
Speaker 6: drafting plans for how that would work. And there's lots
Speaker 6: of complications in terms of how it would work with
Speaker 6: existing agencies, how it would work international. I think we
Speaker 6: should start, you know, taking the consensus that we've got
Speaker 6: and try to represent what that might look as actual legislation.
Speaker 2: And finally, Gary, you talked about the need for a
Speaker 2: global regulator or a global agency. Do you recognize a
Speaker 2: sort of multi speed approach what Europe is doing, what
Speaker 2: China is doing when it comes to the regulation and
Speaker 2: development of AI technology.
Speaker 6: So I think we have an opportunity here to do
Speaker 6: something rational rather than just sort of arbitrary. In Balkani
Speaker 6: so it's not actually in the interest of the AI
Speaker 6: companies if we have like one hundred and ninety three
Speaker 6: or one hundred and ninety five rivers. You know, many
Speaker 6: different places where you have to train your own language model.
Speaker 6: So as you probably well know, it's very expensive to
Speaker 6: train these models. It's very costly in terms of climate impact.
Speaker 6: And so if everybody is requiring their own set of rules,
Speaker 6: their own set of giant language model that takes you know,
Speaker 6: millions of dollars to train and you know a certain
Speaker 6: number of jet flights in terms of emissions and so forth,
Speaker 6: that's not a great thing.
Speaker 1: And so I think the.
Speaker 6: Companies themselves would like some kind of alignment here, some
Speaker 6: kind of systematic.
Speaker 1: Way of doing business.
Speaker 6: And then you know, there's all this talk about global
Speaker 6: tension and stuff like that, and some of it is
Speaker 6: of course real, but in terms of AI, like, no
Speaker 6: country wants their citizens to be completely overwhelmed by misinformation,
Speaker 6: nobody wants to be completely overwhelmed by cybercrime, and nobody wants,
Speaker 6: you know, robots to take over the world, which is
Speaker 6: not an immediate concern, but in the long term we
Speaker 6: do have to make sure we get that right. So
Speaker 6: I think even if you know some countries are going
Speaker 6: to do some things differently. I think there's a lot
Speaker 6: of intersection between what different countries want and even the companies,
Speaker 6: you know, want some alignment here. So I think there's
Speaker 6: a real opportunity, even though, of course the politics are difficult.
Speaker 2: M YU Professor Emeritis Gary Marcus, also the host, of course,
Speaker 2: of the podcast Humans Versus Machines, were very grateful for
Speaker 2: your time.
Speaker 3: Thank you. Out of Washington, d C.
Speaker 2: Now sticking with AI, Goldman Sachs says artificial intelligence offers
Speaker 2: the biggest potential long term support for US profit margins.
Speaker 2: AI can boost net margins by nearly four hundred basis
Speaker 2: points over a decade, but the Goldman team notes that
Speaker 2: predicting AI's impact is tricky due to the large number
Speaker 2: of unknown factors surrounding it, such as as we just
Speaker 2: discussed regulation. There have been about sixteen hundred mentions of
Speaker 2: AI by US and European firms in the first quarter
Speaker 2: earning's conference calls alone, of course, a record number now
Speaker 2: coming up. How Kim Kardashian is using her social reach
Speaker 2: to attract investors for a private equity fund. Keeping our
Speaker 2: eye also on shares of Cisco. We get their earnings
Speaker 2: after the bell. Another name to what's we're hired by
Speaker 2: around seven tenths of one percent. Again, would we be
Speaker 2: surprised if AI is a key term when it comes
Speaker 2: to them, but more I guess on the networking side.
Speaker 3: This is Bloomberg.
Speaker 2: Welcome back to Bloomberg Technology, imed Love in San Francisco.
Speaker 2: It's got a quick check in on the markets as
Speaker 2: you want to pay pretty close attention to bitcoin. We're
Speaker 2: down now below twenty seven thousand US dollars per token,
Speaker 2: off six tens of a percent in a session.
Speaker 3: Remember we're trading twenty four seven.
Speaker 2: When it comes to bitcoin, there is some technology news
Speaker 2: out there in terms of engagement between platforms.
Speaker 3: No real news driver.
Speaker 2: There isn't really a close correlation between the trading we
Speaker 2: see in bitcoin and other risk assets, particularly as it
Speaker 2: relates to the debt ceiling.
Speaker 3: Although I would say.
Speaker 2: We've kind of traded in this range from twenty six
Speaker 2: to twenty eight thousand US dollars per token over the
Speaker 2: last couple of weeks or so.
Speaker 3: In terms of the.
Speaker 2: Specific equity moves, there is newsflow that is driving particular names.
Speaker 2: We're thinking of course about Amazon dot Com. They're out
Speaker 2: with a new range of eco device and we'll give
Speaker 2: you those details in just a moment. But when we
Speaker 2: consider AI, a lot of commentary right now from the
Speaker 2: companies themselves about how they're taking the R and D
Speaker 2: side of what they've done in the field of afterivisial
Speaker 2: intelligence and putting it into products. Alphabet continuing to see momentum.
Speaker 3: We're actually now.
Speaker 2: Flat on the stock, but it has seen a lot
Speaker 2: of gains in recent sessions based on the announcements that
Speaker 2: were made.
Speaker 3: At Google io I teased it.
Speaker 2: Let's talk a little bit about Amazon introducing an updated
Speaker 2: slate of e co devices and pledging to bring chat
Speaker 2: GPT style AI to Alexa powered gadgets. Amazon Senior vice
Speaker 2: president of Devices and Services Dave Limp said the new
Speaker 2: more conversational capabilities will roll out incrementally with a few
Speaker 2: things to solve along the way. Now it's not just Alexa,
Speaker 2: and it's not Alexa, but it does offer personalized AI assistance.
Speaker 2: I'm talking about Character Ai, a platform launched last September
Speaker 2: which is now reaching two hundred million platform visits per month.
Speaker 2: Noam Shazir, founder and CEO of Character Ai, and of
Speaker 2: of course, former Google Brain team member, joins us now
Speaker 2: for more.
Speaker 3: Noah, welcome to the program.
Speaker 2: We wanted to have you on Bloomberg Technology for a
Speaker 2: little while. It's interesting to see the engagement with character RAI,
Speaker 2: and I start by asking you this. You have a
Speaker 2: history and a story in the development of AI. But
Speaker 2: character AI is a pretty simple tool. Why did you
Speaker 2: start it?
Speaker 7: Well, I mean, I've been involved in inventing a lot
Speaker 7: of the technology behind large language models. But like, this
Speaker 7: is a technology that has like a billion use cases,
Speaker 7: and you know it's something where you will no longer
Speaker 7: need a developer to invent like a billion new applications.
Speaker 7: Users can just talk to the thing and come up
Speaker 7: with new value and so, like the most important thing
Speaker 7: is get it to the users, like right right now.
Speaker 7: So we just wanted to do that as quickly as
Speaker 7: possible and let people figure out what it's good for it.
Speaker 2: Okay, so I've been using character AI in recent weeks.
Speaker 2: You have the choice, right, you can use a pre
Speaker 2: created app Baitar, which we'll show an example of in
Speaker 2: just a second, or you can create your own. But
Speaker 2: it's interesting. You offer an avatar in the likeness of
Speaker 2: Elon Musk and you can interact with it. You can
Speaker 2: ask questions. We're showing that on the screen right now.
Speaker 2: He starts by saying, you're wasting my time. I literally
Speaker 2: rule the world. You ask if you could go back
Speaker 2: in time, where, when and where would you go? Just
Speaker 2: explain what one could use character AI for.
Speaker 7: Well, it's not our job to tell you what to
Speaker 7: use it for. Like our job is to put out
Speaker 7: something general and have users figure it out. And what
Speaker 7: we're seeing is a lot of fun, a lot of entertainment,
Speaker 7: and the huge amount of emotional support. We see testimonials
Speaker 7: of people saying like I have no friends, I was
Speaker 7: depressed to save my life, like all kinds of wonderful
Speaker 7: stuff that we just had never imagined and and it's happening.
Speaker 2: And I should point out again that is a generative
Speaker 2: AI avatar is not the real Elon Musk, But therein
Speaker 2: lies the point of the platform. Does this show the
Speaker 2: limitations of where we are with large language models? You know, respectfully,
Speaker 2: the character AI is a platform is a simple interaction
Speaker 2: for the user. Right is that where large language models are?
Speaker 5: Right?
Speaker 3: Now?
Speaker 7: Yeah, I mean this is what it's good for now,
Speaker 7: So let's let people use it for now, Like we
Speaker 7: have on every page it says. Everything the characters say
Speaker 7: is made up, so users understand that this is fiction,
Speaker 7: but it's still bringing a huge amount of value from
Speaker 7: what is really the very very beginnings of this technology.
Speaker 7: This is like iteration, like zero point zero point one,
Speaker 7: you know, relative to to you know to what's coming next.
Speaker 7: And we're just going to keep making this thing better.
Speaker 7: But at the same time, like, let let's let's let
Speaker 7: people use it.
Speaker 3: So how do you monetize this platform?
Speaker 7: Now, Well, we are we are starting with you know,
Speaker 7: with the freemium model, but you know what we you know,
Speaker 7: we're convinced that the real value is to consumers and
Speaker 7: end users, and so we will continue to as things
Speaker 7: get better, you know, monetized to users.
Speaker 2: You you were at Google Brain and I know you've
Speaker 2: talked about this idea of the twenty percenters, in other words,
Speaker 2: people who were kicking around Menlo Park at the time
Speaker 2: and working on AI in their spare time in the
Speaker 2: working day, right, And I wondered when you saw Google
Speaker 2: at Google Io make all of these product announcements and
Speaker 2: put their work in AI into the real world, what
Speaker 2: your reaction.
Speaker 7: Was, Oh, that's one, It's wonderful. Google's an incredible company.
Speaker 7: Google has been bringing trillions of dollars of value to
Speaker 7: the world, you know, directly to consumers for you know,
Speaker 7: for decades, and very excited to see that continue.
Speaker 2: What did you make of yesterday's here of Sam Outman,
Speaker 2: Gary Marcus and the conversations that we.
Speaker 7: Had, Well, I mean, I mean, like we don't even
Speaker 7: know what the best use cases are. It's it's the
Speaker 7: actual users, like the individual like every individual person on earth,
Speaker 7: who can actually unlock the value in this stuff. So
Speaker 7: I am kind of dubious about the ability of the
Speaker 7: federal government to you know, to regulate and to tell
Speaker 7: people what the thing is good for, because you know,
Speaker 7: they just don't have the capacity.
Speaker 2: All right, No, I'm She's a founder and CEO of
Speaker 2: Character AI, at one time a member of Google Brain.
Speaker 3: Thank you so much for your time. Thank you, ed Now.
Speaker 2: In other news that we're following, Elizabeth Holmes lost her
Speaker 2: final request to remain free on bail while she appeals
Speaker 2: her fraud conviction. The ruling means the Pharaenos founder will
Speaker 2: soon have to report to prison to begin her more
Speaker 2: than eleven year sentence after being convicted of defrauding investors
Speaker 2: last November former farahno's president Ramesh Sunny Balwani's similar request
Speaker 2: was also denied, and he reported to prison last month
Speaker 2: to begin his thirteen year sentence. Coming up, we'll discuss
Speaker 2: the globalization of VC money and opportunities with companies that
Speaker 2: have ties with China US or next with Patrick John
Speaker 2: from M thirty one Capital.
Speaker 3: This is Bloomberg.
Speaker 2: Let's head out to Sault Eye Connections. The Global Finance,
Speaker 2: Tech and Public Policy Forum happen over in New York
Speaker 2: right now Bloomberg. Shnali Bassak there with our next guest,
Speaker 2: M thirty one Capital founding partner Patrick Jong, just off
Speaker 2: a panel way discussed globalization of bench capital and tech entrepreneurship.
Speaker 8: Shnali, thank you Ed, and thank you Patrick for joining
Speaker 8: us because I understand that this is your first trip
Speaker 8: back to New York since COVID.
Speaker 3: What has that been.
Speaker 8: Like and what has the reopening been like in China?
Speaker 3: Well, it's been a long time.
Speaker 9: I used to before COVID, I travel as much as
Speaker 9: like one hundred and ninety seventy six days a year globally,
Speaker 9: but COVID and kind of hold everybody's back and in
Speaker 9: China right now, I think on the ground, there are
Speaker 9: a lot of activities going on. I think the consumer
Speaker 9: is very eager to you know, embrace the world, embrace
Speaker 9: new life.
Speaker 3: And so there have been.
Speaker 9: Kind of doing all kinds of interesting activities. And so
Speaker 9: let's just see, you know, what's going to happen and
Speaker 9: in the second half of the year and for the economy.
Speaker 9: But so far, I think everybody is so eager to
Speaker 9: go back.
Speaker 8: You know, it's interesting when you think about globalization, the
Speaker 8: panel that you were just on, there's a lot of
Speaker 8: questions about how quickly the world may be deglobalizing in
Speaker 8: the wake of China, in the wake of geopolitical tensions,
Speaker 8: in the wake of COVID. What are you seeing in
Speaker 8: terms of technology companies in particular, is it more competition
Speaker 8: or are you seeing just little flights of cooperation here?
Speaker 9: You know, I think everybody to be frank uh. You know,
Speaker 9: a lot of my friends had talked to being the
Speaker 9: investor entrepreneurs, they're all worried. And it's actually the same
Speaker 9: here with American investors and entrepreneurs as well between the
Speaker 9: two countries. But I have to say this, I think
Speaker 9: the world is truly interlinked. And you know, I've been
Speaker 9: talking to a think tank in America and they actually
Speaker 9: said to me, they said, you know, if there is
Speaker 9: a complete the leakage between China and the US American companies,
Speaker 9: we potentially could lose half of its market cap just
Speaker 9: because of cost will go up so significantly.
Speaker 8: Another interesting aspect of this is kind of the competition
Speaker 8: to develop technologies faster, harder, stronger than the other. And
Speaker 8: I'm wondering how you see that playing out in the
Speaker 8: world of AI. A lot of American investors here are
Speaker 8: talking about how AI will push the market so much faster.
Speaker 8: Is there anything China is doing when it comes to
Speaker 8: artificial intelligence that the US is not particularly doing.
Speaker 9: First of all, I think if you talk to the
Speaker 9: AI community, I mean, there's certainly a community in the US,
Speaker 9: there's a community in China, there's a community in Europe.
Speaker 9: And this guy's they work in the virtual world. They
Speaker 9: actually talk to each other quite a lot. And I
Speaker 9: wouldn't say it's a competition. If it's a competition, it's
Speaker 9: a competition amount different technologies, or a competition among different entrepreneurs,
Speaker 9: different businesses. But I still see pretty optimistic. I think
Speaker 9: people wanted to work with each other to give you
Speaker 9: an example, and China for the mobile Internet. That's sort
Speaker 9: of the last generation digital economy. I mean, China was
Speaker 9: the lead in the world. And you know, I advise
Speaker 9: some of the European very large multinational company CEOs. They
Speaker 9: actually said to me the consumer experience on the digital
Speaker 9: side in China was the best for their old reasons.
Speaker 9: US was number two and Europe was number three. So
Speaker 9: and China had a lot of talents, you know, I
Speaker 9: mean so many engineers, and they're battle tested. They work
Speaker 9: on very large scale consumer operations. So I actually see
Speaker 9: a lot of interesting innovations going to come.
Speaker 3: Out of it.
Speaker 9: By the way, when we think about internet, how many
Speaker 9: of us remember who actually invented the internet? How many
Speaker 9: of us, you know, kind of remembered who invented refrigerator.
Speaker 9: But it is the Amazon, the world is Coca Cola.
Speaker 9: The world benefited from this great invention. So the bottom
Speaker 9: line is, I think a great entrepreneurs when they have
Speaker 9: this kind of new technology wave, they're going to leverage
Speaker 9: it to create something very exciting for consumer or businesses.
Speaker 2: Patrick, thank you for your time. I'm here on Bloomberg Technology.
Speaker 2: There is a debate about US domicile vcs putting money
Speaker 2: into Chinese technology companies. What are you seeing in terms
Speaker 2: of the LP appetite US institutional money and LPs wanting
Speaker 2: to invest in China technology companies.
Speaker 9: I think for right now, I feel like everybody kind
Speaker 9: of put it on hold because of the duo political concerns.
Speaker 9: You know, as I said, listen, I mean this is
Speaker 9: the first trip I did to America since COVID. I
Speaker 9: think many of the LPs in America, many of the
Speaker 9: company are CEOs in America, haven't traveled to China. And
Speaker 9: they used to travel to China like once a quarter,
Speaker 9: but they haven't been back since COVID. Just give you
Speaker 9: a number the flights between US and China today in
Speaker 9: Q one It was only five percent that capacity.
Speaker 3: Prior to COVID.
Speaker 9: So there's a lack of interactions, lack of communication.
Speaker 3: So people kind of tend.
Speaker 9: To think everything in a very abstract way when you
Speaker 9: actually don't meet, don't talk.
Speaker 2: When you were at Wellington, you held some of the
Speaker 2: top China tech names as an institutional investor. How attractive
Speaker 2: right now are the USA drs for some of these
Speaker 2: China tech names.
Speaker 3: You know, there's been a.
Speaker 2: Lot of back and forth on the listing delisting, but
Speaker 2: they are still giants of technology globally.
Speaker 9: Yes, you know, I think they are still working very hard.
Speaker 9: And by the way, and the China or the companies
Speaker 9: for the last twenty years, they have accumulated a lot
Speaker 9: of nohas. They have a world class engineering force working there.
Speaker 9: And you know, I think the world, to be honest,
Speaker 9: is a or sad because we do politics, people don't
Speaker 9: talk to each other.
Speaker 3: But I feel these.
Speaker 9: Companies that are doing real work, and they're ones who
Speaker 9: come up with real and exciting products, especially writing on
Speaker 9: this the next wave of AI. And again I think
Speaker 9: on the application side, I think the Chinese companies potentially
Speaker 9: can do really really well.
Speaker 8: For a couple of months, there were fears there from
Speaker 8: US investors investing in Chinese check giants because of crackdowns
Speaker 8: regulatory crackdowns. How much is that a concern for you
Speaker 8: as a local.
Speaker 9: Investor, So I think, you know, we're venture capital investors,
Speaker 9: so we have to think everything a little bit longer term,
Speaker 9: and we look at the technology, how the company is
Speaker 9: sort of organized. We compare them to the best of
Speaker 9: companies in the world, into the companies in Silicon Valley.
Speaker 9: We actually see some of the companies they're really really competitive,
Speaker 9: and so it's investors job to help them to bridged
Speaker 9: the gap and helped them actually even grow globally.
Speaker 8: Patrick, thank you so much for your tank. Ed back
Speaker 8: to you.
Speaker 2: Yep, that was thirty one Capital founding partner Patrick Johng
Speaker 2: and of course INVOTIONALI BASSEG infrastructure software company diner trace
Speaker 2: out with earnings, beating expectations and offering an upbeat forecast
Speaker 2: which came in above analyst expectations for the full year.
Speaker 2: Dina Tray CEO Rick McConnell with us now that full
Speaker 2: year guidance coming in strong, Rick, how much of that
Speaker 2: was to do with euphoria around AI?
Speaker 10: Well, first, thanks so much for having us again, I
Speaker 10: appreciate it.
Speaker 3: Actually, none of it.
Speaker 10: We see generative AI as a fascinating and very compelling technology,
Speaker 10: but we didn't factor any of that into our guide
Speaker 10: for half way twenty four.
Speaker 3: It's all side.
Speaker 2: That's a quite candid and fresh response rate, because what
Speaker 2: we've heard for weeks is the AI is everything that said.
Speaker 2: You know, it seems like there is actually some potential upside.
Speaker 2: Just what are you doing to integrate generative AI tools
Speaker 2: to boost your infrastructure offering as it is well.
Speaker 10: We do think that generative AI is highly synergistic with
Speaker 10: the observability space, the fifty billion dollars observability and application
Speaker 10: security space in which we dine a Trace participate in lead.
Speaker 3: And the way that.
Speaker 10: Generative AI is going to foster itself in this environment
Speaker 10: is it is going to generate massive gains in productivity.
Speaker 10: And that productivity isn't just from writing text, it's also
Speaker 10: from writing source code. And more code means more productivity,
Speaker 10: means more applications, more workloads, more cloud and stantiations. As
Speaker 10: you get through all of that, you need more observability capabilities,
Speaker 10: which is precisely what we do to make sure that
Speaker 10: that environment works perfectly.
Speaker 5: And that's what Dina trace is all about.
Speaker 10: So huge synergy and generate.
Speaker 5: Of AI with the capabilities from Dynatris.
Speaker 2: You know, the kind of enterprise cloud area is really interesting.
Speaker 2: Barkley's had a note out and response to your numbers
Speaker 2: saying that it hints at improving macro conditions. Are you
Speaker 2: hearing that from your customers that things are getting better
Speaker 2: out there?
Speaker 10: We didn't say that in our comments today. In fact,
Speaker 10: our guidance assumes no change in the macro environment through
Speaker 10: FA twenty four for US, which just began on April first,
Speaker 10: so we are not factoring that into our guidance. Again,
Speaker 10: any macro upside would be an opportunity potentially for accelerated
Speaker 10: growth in our performance.
Speaker 5: Turning off way twenty four.
Speaker 2: You know you've talked about what the potential generative AI is.
Speaker 2: How are you hiring to ensure that you can harness
Speaker 2: that potential?
Speaker 10: Well, we continue to bring new engineer design globally to
Speaker 10: take advantage of inordinate increase is an opportunity in our market.
Speaker 10: As we look at the hyperscalers aws as your GCP
Speaker 10: one hundred and seventy five billion dollars of annualized revenue
Speaker 10: they just reported in their latest quarters. All of these
Speaker 10: cloud and santiations really benefit from observability. So the observability
Speaker 10: attach raate to overall cloud deployments should be substantial and
Speaker 10: as such we continue to grow our business. We just
Speaker 10: reported a quarter with twenty nine percent adjust Today are
Speaker 10: our growth twenty nine percent, subscription revenue growth, twenty nine
Speaker 10: percent pre cash flow margin. These are exceptional results with
Speaker 10: a balance model of revenue and profitability that we couldn't
Speaker 10: be more enthusiastic about.
Speaker 2: As we look to f y twenty four, quickly, geographically,
Speaker 2: where is the most activity for your business right now?
Speaker 3: Where is the strength globally?
Speaker 10: It's interesting, Ed, as you and I talked about last
Speaker 10: quarter we had we had an answer that we were
Speaker 10: seeing more track in the America as last order, more traction.
Speaker 3: In Europe the quarter before that.
Speaker 10: We really saw a very balanced geographic distribution with really
Speaker 10: strong growth in each of our geos in year every
Speaker 10: year arr last quarter. So we were really pleased across
Speaker 10: the board with the results.
Speaker 2: All Right, Rick McConnell, Dinah Trace CEO, good to catch up.
Speaker 2: Another quarter in the bag. Thank you for your time,
Speaker 2: Thanks to you, Ed, Thank you. That does it for
Speaker 2: this edition of Bloomberg Technology. Don't forget to check out
Speaker 2: our podcast. We are only three days into a monster week,
Speaker 2: so so much to consider. Wherever you get your podcasts, Apple, Spotify, iHeart.
Speaker 2: There's been a huge focus on artificial intelligence in this program,
Speaker 2: but you look at the news flow, you look at
Speaker 2: the markets, that is where we've been.
Speaker 3: This is Bloomberg