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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live

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Speaker 1: from the heart of Silicon Valley with ed La throw

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Speaker 1: In Fan Francisco.

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Speaker 2: This is Bloomberg Tech coming up.

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Speaker 3: An AI fueled stock route in South Korea spills over

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Speaker 3: into the US market Monday, sending sk Heinez ADR's falling

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Speaker 3: just their second US trading day. Plus Apple and open

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Speaker 3: AI's AI rivalry enters the courtroom with Apple filing a

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Speaker 3: sweeping trade secrets lawsuit against the chatgbute maker, and we're

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Speaker 3: joined by FCC Chairman Brendan Carr to talk regulating space

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Speaker 3: and Pallenteer co founder and ABC managing partner Joe Lunsdale on.

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Speaker 2: AI to defense tech.

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Speaker 3: Wall Street has been rattled by a selloff in chip

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Speaker 3: makers that once again originates from the trading session in

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Speaker 3: South Korea, Samsung, the Cosby, sk Heinix. Overnight, the Cosby tumbles,

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Speaker 3: sk Heinix suffers its biggest one day drop on record,

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Speaker 3: Samsung also sinking sharply that weakness is spilling into the

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Speaker 3: US session with sk Heinix's newly listed ADRs, but also

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Speaker 3: more broadly looking at the socks AI chip stocks under

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Speaker 3: presser so just the trading second trading session after s

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Speaker 3: k Heinix's record breaking US debut, investors again questioning whether

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Speaker 3: the AI rally has simply run too far, too fast.

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Speaker 3: Bloomberg's AI Infrastructure reported Dina bass Is with us and Dina,

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Speaker 3: the last thing that you and I wrote about heading

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Speaker 3: into the weekend, the question fundamentally is has AI changed

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Speaker 3: the memory business?

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Speaker 2: Right? Is it no longer cyclical?

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Speaker 3: Today's sell off maybe some of those questions are being raised.

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Speaker 2: Go back to that story.

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Speaker 3: What was the net conclusion that we as a team

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Speaker 3: had from sk Heinix selling ADRs.

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Speaker 4: Sure?

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Speaker 5: I think the next conclusion that we have is that

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Speaker 5: certainly the memory companies like Skhinix, like Micron are trying

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Speaker 5: to leverage the interest in AI to make their market

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Speaker 5: less cyclical, which is to say, there's been such a

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Speaker 5: shortage of memory chips that the customers that need them

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Speaker 5: need them desperately, and so they've been coming to these

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Speaker 5: companies and asking for multi year deals, which is a

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Speaker 5: new thing in that business at least. And so you know,

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Speaker 5: sk Group as chairman and s k Heinex's CEO, we're

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Speaker 5: telling us, look, you know this is now less, you know,

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Speaker 5: not really a cyclical business when somebody comes to you

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Speaker 5: and signs, you know, a bunch of your customers signed

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Speaker 5: deals that go over many, many, many years, and we

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Speaker 5: don't expect supply to catch up with.

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Speaker 6: Demand anytime soon.

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Speaker 5: So certainly those companies are trying to figure out ways

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Speaker 5: to make this less cyclical.

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Speaker 3: The ADRs are down six percent, but not as severe

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Speaker 3: as the record drop that we saw in career. I

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Speaker 3: think it'd be really helpful just to set the scene

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Speaker 3: and explain the field.

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Speaker 2: There are just three names really in memory, and.

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Speaker 3: The situation right now is that demand far out paces

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Speaker 3: their ability to supply, like in any market, is a

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Speaker 3: pretty healthy position to be in sure.

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Speaker 5: And you know what's happened here is that s k

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Speaker 5: Heiniks kind of pioneered using a type of memory called

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Speaker 5: HBM for the critical AI chips that gets that are

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Speaker 5: sold by video, the GPU chips, and there are not

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Speaker 5: enough of those. Everyone is seeking more and more of those,

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Speaker 5: and it's so it's made these three memory vendors who

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Speaker 5: all make HBM, uh, you know, much more central to

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Speaker 5: the AI market. At the same time, you know, while

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Speaker 5: in Vidia dramatically dominates the AI chip space, we are

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Speaker 5: seeing some you know, smaller new competitors as well as

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Speaker 5: larger competitors like Google. And you know, different types of

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Speaker 5: chips are you know, in some cases using other kinds

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Speaker 5: of memory.

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Speaker 3: You know.

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Speaker 5: The other question I think more long term is if

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Speaker 5: the HBM chips are such a bottleneck that they're holding

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Speaker 5: everything up, do we see any sort of innovation any

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Speaker 5: way that you know, companies develop to either have to

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Speaker 5: use less of it or to use some different because

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Speaker 5: at a certain point, being able to use something other

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Speaker 5: than the thing you can't get enough of could become

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Speaker 5: a huge benefit value add lead in a way to

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Speaker 5: lead the market. If you're a company, they can figure

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Speaker 5: that out, and so that over the long term also

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Speaker 5: becomes the pressure. If this is, if the supply is

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Speaker 5: so short for so long and these companies, even with

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Speaker 5: building out manufacturing facilities, can't keep up, there's a strong

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Speaker 5: incentive to figure out a way to do it differently

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Speaker 5: or use less of it. Whether that's possible, we'll see.

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Speaker 3: Bloomberg Cinabas who leads our coverage of AI infrastructure.

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Speaker 2: Thank you very much.

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Speaker 3: Let's take a look at today's big number, four point

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Speaker 3: four trillion dollars. That's the combined value of TSMC, Samsung

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Speaker 3: and sk Heinex, three tech socks driving outsize returns in

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Speaker 3: emerging markets. Now, here's the story. Here's kind of what

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Speaker 3: happened overnight. Rotate investors are looking to rotate out of that.

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Speaker 3: Those three names kind of have the equivalent weighting in

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Speaker 3: emergent markets indices as the Max seven does in the

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Speaker 3: S and P five hundred and lots of eviddents that

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Speaker 3: big funds now are looking away in other areas of

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Speaker 3: the emerging market economy, energy, gaming, and those three names

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Speaker 3: maybe having some of the shine whereof Our next guest

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Speaker 3: believes a correction in chip stocks is already underway and

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Speaker 3: tech investors should brace for a deeper drop. Swiss Coat

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Speaker 3: senior market analyst Epei joins us for more correction, technical correction,

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Speaker 3: but also psychological. You saw this coming, We've talked about

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Speaker 3: it in recent weeks.

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Speaker 2: Just reflect on.

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Speaker 3: What you saw in the Asia session, particularly career and

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Speaker 3: what that's telling you.

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Speaker 7: Well, exactly, we see a huge volatility, especially in the

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Speaker 7: Korean membership makers since weeks actually we can even say months,

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Speaker 7: and what we see today is that the latest like

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Speaker 7: up of the sk heinez for example, is thought to

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Speaker 7: be in the leads to the US listing and what

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Speaker 7: we see today, especially what we saw in the Korean session.

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Speaker 7: The fifteen person drop in esk Nick's share price was

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Speaker 7: probably due to some profit taking, but also the very

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Speaker 7: usual investor behavior of by the remers sell the fact

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Speaker 7: now it does not matter much why, because what we

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Speaker 7: see is huge volatility, and if you look at the

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Speaker 7: price short today, we do see that correction is on

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Speaker 7: the way and we think that the downside rusts do

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Speaker 7: prevail as long as the volatility remains this high.

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Speaker 3: It was only Friday that SK Heinex broke the record

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Speaker 3: for a first time US share sale. They priced the

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Speaker 3: ADRs one hundred and forty nine. They're just under one

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Speaker 3: hundred and fifty eight right now. The first question I

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Speaker 3: asked SK group chair JK One was well, when you're

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Speaker 3: going to sell more ADRs?

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Speaker 2: Listen to his answer, I.

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Speaker 8: Have some confident then the demand that will be grown.

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Speaker 8: Our supply compacity never want to catch up. So first

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Speaker 8: thing is that while we have to keep.

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Speaker 7: The suck price stable and well hopefully in our long run,

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Speaker 7: then well we can have that the well upside potentials.

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Speaker 3: SK wanted to see some stability in the ADR before

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Speaker 3: they come back for more. But the timing of this

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Speaker 3: so interesting because there has been volatility of late.

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Speaker 7: Well, especially looking at the market, we also see a

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Speaker 7: lot of speculation and some incommodity that has become so speculative.

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Speaker 7: Right now there are ETFs and leverage ETFs. We're trading

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Speaker 7: these funds and that's amplifying the intro damus. We see

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Speaker 7: up to double digit percentage up and downs in the

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Speaker 7: Korean chip making stocks every single day, almost so the

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Speaker 7: price stability could be rich, but with that would also

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Speaker 7: come the less speculative nature of this price action, which

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Speaker 7: would actually lead to stable, sustainable gains. But at the

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Speaker 7: current prices, I don't think.

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Speaker 6: That that would be possible.

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Speaker 7: Again, the key here is stability of the prices, and

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Speaker 7: this is why we are watching every single day the

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Speaker 7: volatility that we have in the Korean chip maker stocks,

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Speaker 7: and we are far far from the levels that we

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Speaker 7: could call stable right now.

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Speaker 3: You PEG overall, is Swiss code bullish or bearish on

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Speaker 3: the technology sector outright.

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Speaker 7: Bulish especially in the longer run, and this bolish view

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Speaker 7: is also share by our bigger institutional clients. This being

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Speaker 7: said in the short one. There are risks that many

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Speaker 7: of spress code clients are also pointing out regarding the

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Speaker 7: high valuations and some packets of the technology stocks, especially

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Speaker 7: including the chip makers, and the valuation gap with the

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Speaker 7: em technology stocks that could eventually help ESK, Henix and

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Speaker 7: some one gain even more and squeeze more juice out

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Speaker 7: of US markets. But also the geopolitical uncertainties and the

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Speaker 7: rise in borrowing cost environment. So the short term risks

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Speaker 7: are there, but what our clients are looking to do

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Speaker 7: is to buy the depths each time NASA goes down,

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Speaker 7: because this is exactly what they think is going to happen.

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Speaker 7: It is that not only technology will benefit from AI,

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Speaker 7: but the AI productivity gains will echo through industries and

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Speaker 7: will help in the sees and the economy grow bigger,

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Speaker 7: faster and more stable.

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Speaker 3: You pay Oscar Dskaya of Swiss cote back on Bloomberg Tech.

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Speaker 3: Thank you very much. Indeed, we're also looking at the

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Speaker 3: US listed shares of ADRs of TSMC softer seven ten

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Speaker 3: to one percent. The Taiwanese shares were modestly higher. We

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Speaker 3: got June data, so June sales rose sixty eight percent

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Speaker 3: year on year. What the street then did was put

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Speaker 3: that into its model for the month of June and

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Speaker 3: try and work out where they think the June quarter was.

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Speaker 3: And basically Bloomberg's calculations are that TSMC sales jumped thirty

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Speaker 3: six percent and that there is a lot of AI

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Speaker 3: spending momentum. It's a big story out there, but the

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Speaker 3: US listed shares kind of modestly lower. Remember TSMC releases

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Speaker 3: its quarterly earnings this Thursday. Now coming up, regulators like

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Speaker 3: the FCC are becoming a bigger part of the picture

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Speaker 3: when it comes to the space race. FCC Chairman Brendan

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Speaker 3: Carr joins us. Next, this is Bloomberg Tech. The Seattle

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Speaker 3: Seahawks are about to get a new owner. A group

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Speaker 3: led by tech billionaire vinod Kosler will purchase the Super

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Speaker 3: Bowl champions, beating out reported bidders including Arsalon, Mataosio, a

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Speaker 3: DTM Matau, and former Boston Celtics owner Wick Grosbeck. The deal,

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Speaker 3: valued at nine point six billion dollars, is expected to

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Speaker 3: set an NFL record. Regulators are increasingly shaping America's space race.

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Speaker 3: The FCC decides who gets access to spectrum, approves satellite

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Speaker 3: communications systems, and is now confronting the next frontier of

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Speaker 3: the space economy, from orbital data centers to direct a

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Speaker 3: device connectivity.

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Speaker 2: Joining us now is FCC Chairman.

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Speaker 3: Brendan Carr to discuss the future of space communications, spectrum,

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Speaker 3: wireless policy before we turn to some of the major

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Speaker 3: media issues facing the Commisson and Chem and Kak, thank

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Speaker 3: you so much for being back on Bloomberg Tech.

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Speaker 2: Should we start with maybe the more.

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Speaker 3: Nascent area of SpaceX's business plan, which is orbital data center.

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Speaker 3: I think a lot of value to the audience and

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Speaker 3: to Americans is could you just explain how the SEC

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Speaker 3: regulates orbital data center, why it has a role in

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Speaker 3: oversight of how much material from a compute perspective will

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Speaker 3: be in orbit above the Earth.

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Speaker 6: Yeah, it's your question.

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Speaker 9: So at the SEC, and frankly all across the Trump administration,

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Speaker 9: we're focused on two things. One, we want to make

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Speaker 9: sure that consumers are right away feeling a difference in

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Speaker 9: their life, and right now we're seeing that on the

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Speaker 9: connectivity front, with speeds are up, prices are down, competition

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Speaker 9: is intensifying. But the second piece coast your question, which

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Speaker 9: is what are the fundamental regulatory changes we can do

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Speaker 9: they're going to pay off for consumers in the long run,

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Speaker 9: and a lot of that has to do with the

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Speaker 9: emerging space economy. To your point, we're seeing many, many

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Speaker 9: more things go into orbit, whether it's all of this

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Speaker 9: new generation of low worth orbit satellites or data centers,

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Speaker 9: and so the SEC has a role to play one

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Speaker 9: to make sure that everyone has the spectrum access they

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Speaker 9: need in order to launch those.

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Speaker 6: But even things like orbital debris end up hanging.

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Speaker 9: Off of a lot of the SEC's authorizations, and of

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Speaker 9: course that's in conjunction with a broader group of regulators

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Speaker 9: as well.

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Speaker 3: When SpaceX or another player comes to the FCC seeking

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Speaker 3: approval to deploy data centers in the form factor of

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Speaker 3: a satellite into orbit, what are the considerations by which

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Speaker 3: the SEC decides approval to block approval.

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Speaker 9: Well, the first thing for us is we want to

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Speaker 9: go much more quickly. You know. When I took over,

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Speaker 9: we launched what we call a Build America agenda, and

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Speaker 9: a key piece of that is boosting.

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Speaker 6: America's space economy.

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Speaker 9: And it used to be when we would get satellite

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Speaker 9: applications that would come in, we would get you know,

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Speaker 9: one or two or three a year and we would

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Speaker 9: do individualized, bespoke custom reviews. And what we're fundamentally changing

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Speaker 9: is to an assembly line mindset. In fact, we're going

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Speaker 9: to vote this month to change how we run our

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Speaker 9: Space Bureau operations, so it'll be objective criteria and if

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Speaker 9: you hit those, you should expect much faster SEC approvals.

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Speaker 9: In fact, we've cut the backlog of SEC approvals down

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Speaker 9: by about half. We're moving much faster, and so we're

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Speaker 9: giving people objective criteria to hit. That way we can

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Speaker 9: end up improving you know, thousands or hundreds of thousands

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Speaker 9: of applications, whereas before our processes would take us, you know,

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Speaker 9: months or years to do a small handful of that.

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Speaker 3: Away from orbital data sense, it's a big focus right

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Speaker 3: now is the wireless networks in the context of space.

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Speaker 3: Prior iterations of the SEC debated and looked at a

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Speaker 3: fourth national wireless network with Echo start right, and I

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Speaker 3: think come right in saying, chairman, call you you are

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Speaker 3: critical of prior approaches to that future market. What has

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Speaker 3: happened in the interim is that the SEC has handed

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Speaker 3: some of those same licenses to SpaceX for starlink. What

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Speaker 3: do we interpret through that mechanism.

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Speaker 6: Well, you're right.

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Speaker 9: There was a mindset several years ago that said we

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Speaker 9: have to have four separate standalone mobile wireless providers, let

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Speaker 9: alone many other competitors that we have in the broader

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Speaker 9: connectivity market.

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Speaker 6: And people said that if you.

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Speaker 9: Didn't have four, that prices would rise for consumers or

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Speaker 9: speeds would slow down.

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Speaker 6: And we haven't seen that obviously at all.

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Speaker 9: We've completed the process of facilitating dish EchoStar effectively exiting

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Speaker 9: the market when it comes to mobile wireless, and consumers

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Speaker 9: continue to benefit from a lot of price competitions. It's

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Speaker 9: a great time for consumers, but it's also a really

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Speaker 9: good time for companies because we're taking a lot of

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Speaker 9: the costs, unnecessary costs out of the system, whether it's

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Speaker 9: permitting reform, whether it's allowing providers to retire these old

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Speaker 9: copper networks that they had to subsidize in addition.

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Speaker 6: To their new networks.

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Speaker 9: And so this old view of having to have four

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Speaker 9: individual mobile wireless providers or the sky would fall, we

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Speaker 9: didn't buy. And obviously I think the evidence is coming

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Speaker 9: in to show that this new theory is correct.

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Speaker 3: He's told Bloomberg last week that you have not had

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Speaker 3: substantial conversations with SpaceX about their wireless ambitions. Substantial conversations,

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Speaker 3: so chem CARX decides if you had any conversations of

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Speaker 3: any degree of substance with SpaceX about it.

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Speaker 9: No, I don't think I've had any of much. I

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Speaker 9: guess if I hadn't used a substantial maybe I would

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Speaker 9: have avoided the follow one question. But I don't recall

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Speaker 9: having any conversations with them about that. Look, I do

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Speaker 9: think one of the things we're really excited about is

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Speaker 9: this new emerging trend towards direct to sell technology. We

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Speaker 9: can go straight from one of these low worth orbit

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Speaker 9: satellites right to a handset. Obviously Starlink is doing that,

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Speaker 9: we've facilitated them getting some spectrum to do it, but

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Speaker 9: also Amazon is looking to do it, ast space Mobile

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Speaker 9: is looking to do it. So we want every single

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Speaker 9: competitor in this sector to do well.

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Speaker 3: Overall, you know, the SEC has done quite a large

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Speaker 3: body of work to come up with some kind of

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Speaker 3: regulatory framework. I think right for direct to device, the

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Speaker 3: accusation is of maybe favoritism towards SpaceX. You've also denied

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Speaker 3: several of their requests. How are you going about building

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Speaker 3: out that framework.

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Speaker 6: Yeah, a couple of things on direct to sell in particular.

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Speaker 9: You know, our view was to have two or three

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Speaker 9: facilities based providers in that segment so that the United

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Speaker 9: States could lead the world in that. And that's something

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Speaker 9: I think it's really important to President Trump is that

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Speaker 9: US lead when it comes to these new emerging technologies,

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Speaker 9: and we are in really good position to do that.

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Speaker 9: There are always lots of stories about SEC taking action

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Speaker 9: to benefit Starlink or SpaceX, and I get it, it

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Speaker 9: probably results in more clicks. But the reality is we are,

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Speaker 9: you know, uplifting every single operator or business that's in

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Speaker 9: the space economy, or taking actions that benefit Amazon Lead,

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Speaker 9: that benefit many smaller providers as well, so reflect Orbit Logos, Ast,

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Speaker 9: Space Mobile, of course SpaceX as well. So there's many

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Speaker 9: many companies in this sector that are benefiting from our

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Speaker 9: new mindset at the FCC, which is to go faster

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Speaker 9: with these approvals. We don't want to get stuck naval gazing.

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Speaker 3: We're live on Bloomberg Television and on Bloomberg Radio. This

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Speaker 3: is Bloomberg Tech speaking with FCC Chairman Brendan Karr. There's

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Speaker 3: also a technical consideration about spectrum which is why is

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Speaker 3: it important, Chairman, for a directed device provider to have

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Speaker 3: exclusive spectrum use in amongst everything else that's happening up there.

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Speaker 9: Well, it's a very efficient way to operate to have

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Speaker 9: your own spectrums. We've been very open to spectrum deals.

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Speaker 9: On the one hand, we've had about one hundred and

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Speaker 9: thirty billion dollars worth of deal flow go through the

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Speaker 9: FCC this Trump administration, not just mobile wireless, but across

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Speaker 9: the board, and we're moving hard on spectrum as well,

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Speaker 9: and not just direct to sell. We're voting this month

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Speaker 9: to create one hundred and sixty megahertz of new spectrum

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Speaker 9: for midband offerings and what's called the C band, and

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Speaker 9: it's effectively going to create what we're referring to as

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Speaker 9: a super band of four hundred and forty megahertz wide

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Speaker 9: channel for midband spectrum for five G for six G.

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Speaker 9: But you're right on the satellite side as well, so

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Speaker 9: SpaceX has access to I think it's sixty five megahertz

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Speaker 9: of spectrum that they can use for direct to sell.

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Speaker 9: Amazon just announced that they are looking to purchase Global Star,

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Speaker 9: which also has spectrum that could be used for direct

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Speaker 9: to sell technology.

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Speaker 6: So you see a.

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Speaker 9: Lot of the players in this space ast as well

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Speaker 9: that are looking to obtain their own spectrum rights so

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Speaker 9: they can stand alone and offer that service in a

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Speaker 9: compliment to existing connectivity services.

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Speaker 2: Chemin Cook.

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Speaker 3: Just before the show started, Bloomberg broke some news in

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Speaker 3: a story that a group of about a dozen states

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Speaker 3: is poised to sue to block the Paramount Skuidance Warner

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Speaker 3: Brothers deal. I think they had been reporting that various

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Speaker 3: attorneys across those states have been preparing for that. Anyway,

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Speaker 3: I know that the FCC kind of has a nominal

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Speaker 3: role to look at the foreign financing of such a deal,

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Speaker 3: But I hope you appreciate to ask you about what

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Speaker 3: the latest is there and your reaction to a stateswide

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Speaker 3: anti trust suit.

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Speaker 9: Well, it's hard to see a real legitimate anti trust action,

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Speaker 9: but of course, you know, I leave it to the

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Speaker 9: anti trust experts.

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Speaker 6: To weigh in on this.

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Speaker 9: I did think it was interesting that there was a

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Speaker 9: statement at least attributed to the California Attorney General that

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Speaker 9: said that they would not sue if Paramount agreed to

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Speaker 9: spin off CNN.

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Speaker 6: It's hard to conceive.

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Speaker 9: Of a competition any trust theory that takes you all

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Speaker 9: the way up to the point where owning or not

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Speaker 9: owning CNN as part of that broader group is a

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Speaker 9: legitimate line that anti trust or competition law would draw.

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Speaker 9: For our part, we do have a piece of this

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Speaker 9: with respect to some of the foreign investment, and we're

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Speaker 9: running a standard process on that, and we haven't made

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Speaker 9: a final decision there yet.

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Speaker 3: In recent interviews, you've also been asked, of course, about Disney,

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Speaker 3: and you've said that you've not made a decision on

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Speaker 3: whether to pool Disney's broadcast licenses over various diversity and

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Speaker 3: inclusion practices. Again, remind us of the SEC's remit in

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Speaker 3: that area, But what it would take for you to

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Speaker 3: look at a potential action.

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Speaker 9: Yeah, with respect to Disney in particular, the SCC has

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Speaker 9: three proceedings that are going on, or sort of three

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Speaker 9: buckets of issues, one starting all the way back in

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Speaker 9: March of twenty twenty five, I wrote a letter to

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Speaker 9: Disney leadership raising concerns about some of their practices, including

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Speaker 9: what we call invidious forms of DEI discrimination, where there's

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Speaker 9: potential evidence indicating that they may have been discriminating with

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Speaker 9: respective pay or compensation or workplace opportunities based on race, gender,

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Speaker 9: or protected characteristics.

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Speaker 6: There's a role for the SEC there.

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Speaker 9: We have particular rules on EEO policies and discrimination.

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Speaker 6: So we've been looking into that for quite a while.

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Speaker 9: In fact, we've been doing some letters of inquiry, our

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Speaker 9: versions of subpoena, and frankly, the view was that Disney

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Speaker 9: was being disingenuous in the way it was responding to

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Speaker 9: the FCC's inquiries, and so we took the next step

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Speaker 9: in our enforcement abilities, which would be called in all

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Speaker 9: of Disney's broadcast licenses for early renewals. So Disney has

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Speaker 9: now applied and they have to demonstrate that they've been

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Speaker 9: operating in the public interests.

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Speaker 6: There have been petitions to deny.

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Speaker 9: The renewal of those Disney stations, and so the FC

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Speaker 9: is looking at all of that very carefully right now.

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Speaker 9: To your point, we've not made the final decision, but

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Speaker 9: at this point Disney is demonstrating, attempting to demonstrate that

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Speaker 9: it should get those licenses renewed, and we'll ultimately see

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Speaker 9: what the record shows.

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Speaker 6: We have obviously a separate issue going on.

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Speaker 9: With Disney right now with respect to the View and

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Speaker 9: their claims of the View being a bonifide news program.

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Speaker 9: But we have the DEI, the license renewal in the

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Speaker 9: view proceding going. But we're broadly, we're trying to hold

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Speaker 9: all broadcasters accountable to their public interest standard. We have

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Speaker 9: issued similar actions with respect to a number of other broadcasters.

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Speaker 9: I think for years people took the view that broadcast

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Speaker 9: TV should be treated just like cable or a podcast

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Speaker 9: or a newspaper. But that's not what the Communications Acting

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Speaker 9: in Congress said, and so we want to make sure

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Speaker 9: that all broadcasters are in fact living up to their

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Speaker 9: public interest obligations.

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Speaker 3: FCC Chairman Brendan Carr joining us from our DC studio,

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Speaker 3: Thank you very much. Indeed, Apple and open AI's AI

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Speaker 3: rivalry has entered the courtroom.

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Speaker 2: Here's what happened. On Friday.

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Speaker 3: Apple filed a sweeping trade secrets lawsuit against open ai,

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Speaker 3: alleging it encouraged former Apple employees to bring confidential information

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Speaker 3: and unreleased hardware as it ramped up its own device ambitions.

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Speaker 3: Bloomberg's Consumer Tech and Apple Managing editor Mark Germans with

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Speaker 3: us and throughout the weekend into today, Mark, you've written

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Speaker 3: about what this means. The latest piece from you is

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Speaker 3: about what it means for open AI's hardware rethink, what

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Speaker 3: do we need to know?

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Speaker 10: Yeah, in my view, this lawsuit really will put a

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Speaker 10: halt to the behavior that Apple's alleging. At least I

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Speaker 10: believe that Apple employees who right now are considering job

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Speaker 10: offers from open Ai, considering applying to open Ai in

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Speaker 10: discussions with open Ai, they're going to think twice about

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00:23:15,800 --> 00:23:17,480
Speaker 10: it if they don't end up going to open Ai,

443
00:23:17,520 --> 00:23:19,439
Speaker 10: and anyone a Apple finds out they were considering going

444
00:23:19,480 --> 00:23:23,000
Speaker 10: to open Ai, definitely the company leadership is not going

445
00:23:23,040 --> 00:23:25,000
Speaker 10: to be too pleased with them. If they do leave

446
00:23:25,040 --> 00:23:27,080
Speaker 10: to open Ai, they're going to open themselves up to

447
00:23:27,160 --> 00:23:31,080
Speaker 10: all sorts of scrutiny and potentially being dragged into litigation

448
00:23:31,240 --> 00:23:33,600
Speaker 10: down the road. So certainly there's going to be a

449
00:23:33,640 --> 00:23:34,680
Speaker 10: lot of rethinking over there.

450
00:23:35,280 --> 00:23:38,600
Speaker 3: This was open AI's statement, we have no interest in

451
00:23:38,680 --> 00:23:41,879
Speaker 3: other companies trade secrets at the center of this and

452
00:23:41,960 --> 00:23:45,040
Speaker 3: a defendant named by Apple in the suit was Tang Tan,

453
00:23:45,720 --> 00:23:48,960
Speaker 3: formerly of Apple, now open AI's hardware chief. That specific

454
00:23:49,000 --> 00:23:50,160
Speaker 3: accusation mark.

455
00:23:50,520 --> 00:23:51,200
Speaker 6: Yeah, Tang Tan.

456
00:23:51,320 --> 00:23:54,600
Speaker 10: He was the VP of iPhone Product Design until twenty

457
00:23:54,640 --> 00:23:56,520
Speaker 10: twenty four, so one of the most senior people in

458
00:23:56,600 --> 00:24:00,080
Speaker 10: Apple created this company with Johnny I and Samuelton a

459
00:24:00,119 --> 00:24:03,560
Speaker 10: few other folks, and he's alleged to be telling people

460
00:24:03,560 --> 00:24:06,200
Speaker 10: at Apple to bring prototypes and other components over to

461
00:24:06,280 --> 00:24:09,720
Speaker 10: job interviews. And Apple really presents him as the ring

462
00:24:09,800 --> 00:24:12,080
Speaker 10: leader here, so to speak. So we'll see what happens

463
00:24:12,080 --> 00:24:14,800
Speaker 10: in court once they get through discovery. But right now,

464
00:24:14,880 --> 00:24:16,960
Speaker 10: everything I'm hearing is that open Ai is still on

465
00:24:17,040 --> 00:24:20,080
Speaker 10: track to announce their first device this year and chip

466
00:24:20,080 --> 00:24:22,639
Speaker 10: it in twenty twenty seven, and we'll see if that

467
00:24:22,720 --> 00:24:23,359
Speaker 10: ends up happening.

468
00:24:24,280 --> 00:24:27,040
Speaker 3: Boombers Mark German, who leads our coverage to consumer tech,

469
00:24:27,119 --> 00:24:27,960
Speaker 3: Thank you very much.

470
00:24:28,359 --> 00:24:29,640
Speaker 2: It's halftime coming up.

471
00:24:29,880 --> 00:24:34,119
Speaker 3: Joe Lonsdale, AVC managing partner and Palentier co founder joins us.

472
00:24:34,160 --> 00:24:36,399
Speaker 3: It's going to be a wide ranging conversation the firm's

473
00:24:36,440 --> 00:24:39,639
Speaker 3: new fund, AI Defense Tech, and we're going to go

474
00:24:39,880 --> 00:24:41,480
Speaker 3: pretty much for the rest of the show. There are

475
00:24:41,480 --> 00:24:44,040
Speaker 3: a lot more news stories and market movies to check into.

476
00:24:44,560 --> 00:24:46,520
Speaker 3: Don't go very far. There's a lot more to come.

477
00:24:46,600 --> 00:25:05,560
Speaker 3: This is Bloomberg Tech. Welcome back to Bloomberg Tech. It's

478
00:25:05,600 --> 00:25:08,919
Speaker 3: just the second day of trading for sk Heinez's ADRs

479
00:25:08,960 --> 00:25:13,199
Speaker 3: as an ai field stock route in South Korea spilled

480
00:25:13,200 --> 00:25:16,639
Speaker 3: over into US market. Monday, Bluembo Tech equity reporter common

481
00:25:16,720 --> 00:25:19,960
Speaker 3: Rhinikey has latest fresh off our interview with sk Group

482
00:25:20,040 --> 00:25:24,000
Speaker 3: chair Cha. He wanted price stability in the ADRs while

483
00:25:24,000 --> 00:25:26,320
Speaker 3: we're only two days in and we haven't quite got it.

484
00:25:26,359 --> 00:25:27,080
Speaker 2: What are you looking at?

485
00:25:27,400 --> 00:25:29,600
Speaker 11: Yeah, So what we're seeing here is that the route

486
00:25:29,640 --> 00:25:32,639
Speaker 11: in South Korea's market has spilled over into the US,

487
00:25:32,680 --> 00:25:36,240
Speaker 11: with sk heinis ADR is down about nine percent. What's

488
00:25:36,280 --> 00:25:40,679
Speaker 11: really interesting here is that the South Korean stock it

489
00:25:40,760 --> 00:25:43,360
Speaker 11: felt it's fallen lot more than thirty percent draw down,

490
00:25:43,400 --> 00:25:46,280
Speaker 11: and it actually has brought the company's market cap below

491
00:25:46,400 --> 00:25:49,760
Speaker 11: a key one trillion dollar level that it hit after

492
00:25:49,800 --> 00:25:52,800
Speaker 11: a blistering rally in memory stocks that we've also seen

493
00:25:52,800 --> 00:25:55,920
Speaker 11: in the US market. So we've seen sk Henix now

494
00:25:55,960 --> 00:25:58,280
Speaker 11: dip below that level. It's about eight hundred and seventy

495
00:25:58,280 --> 00:26:01,119
Speaker 11: five billion in market cap. That also weight on Samsung

496
00:26:01,240 --> 00:26:04,399
Speaker 11: brought that below that key one trillion market cap level.

497
00:26:04,680 --> 00:26:07,040
Speaker 11: And we've seen more pain here in the United States

498
00:26:07,040 --> 00:26:09,120
Speaker 11: as well. So not only are we seeing those sk

499
00:26:09,280 --> 00:26:13,320
Speaker 11: Heinecks ADRs today, we're seeing shares of Micron Western digital

500
00:26:13,560 --> 00:26:16,480
Speaker 11: sand disc all fall. The socks is down on the day,

501
00:26:16,560 --> 00:26:19,119
Speaker 11: the Nasdaq one hundred is down, so we're seeing a

502
00:26:19,119 --> 00:26:21,919
Speaker 11: lot of pain here come over from that South Korean

503
00:26:21,960 --> 00:26:22,840
Speaker 11: market route.

504
00:26:23,720 --> 00:26:26,720
Speaker 3: Blobber's Carmen Rhinikey across sk Heinex, thank you very much.

505
00:26:26,760 --> 00:26:30,760
Speaker 3: Alarm bells are ringing in Washington over concerns that Chinese

506
00:26:30,800 --> 00:26:34,800
Speaker 3: firms are training their AI on US models. This process,

507
00:26:34,840 --> 00:26:38,199
Speaker 3: known as distillation, can be a cost effective way to

508
00:26:38,240 --> 00:26:41,920
Speaker 3: make new models that perform nearly as well as advanced systems,

509
00:26:41,920 --> 00:26:45,119
Speaker 3: but on certain tasks. Bloomberg's Magi Eastlan has been writing

510
00:26:45,119 --> 00:26:48,720
Speaker 3: about these concerns in the latest edition of Bloomberg BusinessWeek

511
00:26:48,760 --> 00:26:51,760
Speaker 3: and Maggie. The most recent flag on this from the

512
00:26:51,840 --> 00:26:55,000
Speaker 3: US side comes from Anthropic tell Us about.

513
00:26:54,800 --> 00:26:59,440
Speaker 12: That absolutely so, Anthropics sent a letter to the White

514
00:26:59,440 --> 00:27:02,520
Speaker 12: House and to several Senators, essentially accusing one of its

515
00:27:02,520 --> 00:27:07,320
Speaker 12: biggest Chinese competitors, Ali Baba, of using this tactic of distillation,

516
00:27:07,760 --> 00:27:10,120
Speaker 12: which is highly technical, but as we note in this

517
00:27:10,359 --> 00:27:13,960
Speaker 12: feature piece, a lot of researchers in the US also

518
00:27:14,200 --> 00:27:17,280
Speaker 12: use this technique. So it's a bit of a thorny

519
00:27:17,400 --> 00:27:19,840
Speaker 12: problem for Washington to try to solve though there have

520
00:27:20,000 --> 00:27:24,160
Speaker 12: been some early efforts.

521
00:27:22,600 --> 00:27:29,120
Speaker 3: So for through legislation, through executive or what's the mechanism

522
00:27:29,640 --> 00:27:31,360
Speaker 3: that the administration's looking at.

523
00:27:32,560 --> 00:27:35,639
Speaker 12: Absolutely, So for now, the White House has released a

524
00:27:35,720 --> 00:27:40,600
Speaker 12: memo specifically OSTP, so that's Michael Kratzios, the White House official,

525
00:27:40,680 --> 00:27:44,399
Speaker 12: signed this memo essentially saying that the Trump administration was

526
00:27:44,440 --> 00:27:48,520
Speaker 12: going to work to share more information with the closed

527
00:27:48,560 --> 00:27:52,679
Speaker 12: weight AI model company. So that's OPENINGI anthropic Google in

528
00:27:52,720 --> 00:27:55,000
Speaker 12: some cases. So essentially, the US is going to be

529
00:27:55,000 --> 00:27:59,400
Speaker 12: sharing information to help them find users who are improperly

530
00:28:00,040 --> 00:28:03,480
Speaker 12: stilling and sort of crack down on that activity. The

531
00:28:03,720 --> 00:28:07,040
Speaker 12: AI companies also want more action from the US. They're

532
00:28:07,040 --> 00:28:11,520
Speaker 12: currently pushing and lobbying for some protection so that they

533
00:28:11,520 --> 00:28:14,359
Speaker 12: could share more information with each other without having to

534
00:28:14,400 --> 00:28:17,280
Speaker 12: worry about any antitrust prosecutions.

535
00:28:17,760 --> 00:28:20,840
Speaker 3: Bloomberg's Maggi eastlam where they must read in BusinessWeek magazine.

536
00:28:20,840 --> 00:28:21,560
Speaker 2: Thank you very much.

537
00:28:21,560 --> 00:28:24,560
Speaker 3: Indeed, let's stick with the AI race, but how investors

538
00:28:24,600 --> 00:28:27,000
Speaker 3: are approaching it. Joe Lonsdale's the managing partner of a

539
00:28:27,200 --> 00:28:31,000
Speaker 3: VC and a co founder of Palanteer and Joe, welcome

540
00:28:31,000 --> 00:28:32,919
Speaker 3: to Bloomberg Tech. Thanks for avay I good to have

541
00:28:32,960 --> 00:28:35,359
Speaker 3: you here in SF. Look, I think you've said a

542
00:28:35,400 --> 00:28:38,000
Speaker 3: number of times that you believe the US is still

543
00:28:38,040 --> 00:28:41,280
Speaker 3: leading in the AI race, but there are a number

544
00:28:41,320 --> 00:28:44,840
Speaker 3: of factors to consider, particularly on biotech as well, which

545
00:28:44,880 --> 00:28:47,360
Speaker 3: we'll get to a little bit later. But take that

546
00:28:47,400 --> 00:28:50,200
Speaker 3: and run with it. You know, your current attitude to

547
00:28:50,320 --> 00:28:51,400
Speaker 3: this market.

548
00:28:51,440 --> 00:28:54,160
Speaker 4: I mean you're just talking about distillation. China for the

549
00:28:54,200 --> 00:28:57,200
Speaker 4: last few decades has been very good doing whatever they

550
00:28:57,240 --> 00:28:59,960
Speaker 4: can to copy and steal rip and our trade secret

551
00:29:00,560 --> 00:29:03,000
Speaker 4: and this is no different right and then fortunately we

552
00:29:03,040 --> 00:29:04,880
Speaker 4: are I don't know if it's six months ahead or

553
00:29:04,880 --> 00:29:06,120
Speaker 4: twelve months ahead or what it is.

554
00:29:06,160 --> 00:29:07,479
Speaker 8: We are significantly ahead.

555
00:29:07,720 --> 00:29:09,479
Speaker 4: And you know, in a world where the agents are

556
00:29:09,480 --> 00:29:12,560
Speaker 4: doubling capabilities every few months, that's a very very large gap,

557
00:29:12,560 --> 00:29:15,000
Speaker 4: which means we're way ahead in cyber it means we're

558
00:29:15,040 --> 00:29:16,880
Speaker 4: way ahead in other critical areas that will allow us

559
00:29:16,880 --> 00:29:19,120
Speaker 4: to compete with China. So it's a great spot we

560
00:29:19,160 --> 00:29:20,960
Speaker 4: find ourselves. And then we got to make use of it.

561
00:29:21,200 --> 00:29:23,160
Speaker 4: And you know, I think it's almost silly to expect

562
00:29:23,160 --> 00:29:24,800
Speaker 4: the government to be able to stop them from stealing.

563
00:29:24,800 --> 00:29:26,520
Speaker 4: We haven't done that for years. It's going to be

564
00:29:26,600 --> 00:29:28,680
Speaker 4: up to these companies to figure out how to detect

565
00:29:28,720 --> 00:29:30,400
Speaker 4: and stop these to acces. That's the only way it's

566
00:29:30,400 --> 00:29:30,840
Speaker 4: going to happen.

567
00:29:30,960 --> 00:29:34,640
Speaker 3: You're you're an adventure investor but also a serial entrepreneurs

568
00:29:35,000 --> 00:29:37,800
Speaker 3: founder called it what you will. It's interesting to read

569
00:29:37,840 --> 00:29:40,920
Speaker 3: some remarks by Palmer Lucky the other day saying basically,

570
00:29:41,280 --> 00:29:44,240
Speaker 3: stop patenting things because the moment you put something into

571
00:29:44,280 --> 00:29:47,560
Speaker 3: a patent, it becomes vulnerable to theft, is how he

572
00:29:47,560 --> 00:29:48,040
Speaker 3: would put it.

573
00:29:48,120 --> 00:29:51,000
Speaker 4: You're just educating, You're just educating our adversaries. I mean,

574
00:29:51,040 --> 00:29:53,640
Speaker 4: the patent office is completely broken at this point. You

575
00:29:53,680 --> 00:29:56,640
Speaker 4: will have things in China in the biotech world, for example,

576
00:29:56,800 --> 00:29:59,280
Speaker 4: in biotech, you kind of have to patent certain things

577
00:29:59,320 --> 00:30:01,440
Speaker 4: because you have a put all this money into and

578
00:30:01,480 --> 00:30:03,600
Speaker 4: you don't want someone else to be able to obviously,

579
00:30:03,680 --> 00:30:04,000
Speaker 4: you know.

580
00:30:03,920 --> 00:30:04,840
Speaker 8: To sell that molecule.

581
00:30:05,040 --> 00:30:07,800
Speaker 4: But China will within twenty four hours, someone in China

582
00:30:07,800 --> 00:30:10,520
Speaker 4: will see a new target your patentings, and they'll see

583
00:30:10,560 --> 00:30:13,120
Speaker 4: the results and they'll start their own programs and even

584
00:30:13,120 --> 00:30:15,520
Speaker 4: file other patents themselves right away that are similar but

585
00:30:15,640 --> 00:30:18,200
Speaker 4: just different. And the whole thing is a mess.

586
00:30:18,320 --> 00:30:18,680
Speaker 8: Right now.

587
00:30:19,320 --> 00:30:23,720
Speaker 3: You are very focused on biotech in the context of

588
00:30:24,080 --> 00:30:27,880
Speaker 3: US versus China. I think you've had some strong feelings

589
00:30:27,880 --> 00:30:29,680
Speaker 3: about it. It raised the alarm on it. I don't know

590
00:30:30,040 --> 00:30:31,920
Speaker 3: what is the sort of core of your concern.

591
00:30:32,400 --> 00:30:35,160
Speaker 4: Well, you know, obviously we work in defense, and we

592
00:30:35,200 --> 00:30:37,200
Speaker 4: work in healthcare, and we work in other areas, and

593
00:30:37,360 --> 00:30:39,640
Speaker 4: you know, biotech's a very exciting area right now, in

594
00:30:39,680 --> 00:30:42,120
Speaker 4: particular because AI is going to allow us to cure

595
00:30:42,120 --> 00:30:44,560
Speaker 4: a lot of diseases. It's already making some really really

596
00:30:44,560 --> 00:30:46,800
Speaker 4: big breakthrough since this is one of the most exciting

597
00:30:46,800 --> 00:30:50,520
Speaker 4: new areas. But China has been successfully stealing our sector

598
00:30:50,600 --> 00:30:52,840
Speaker 4: over the last seven years, and so we've gone from

599
00:30:53,080 --> 00:30:55,720
Speaker 4: being the vast majority of new therapeutics and drugs in

600
00:30:55,760 --> 00:30:58,480
Speaker 4: the US and now China. If you look at the curve,

601
00:30:58,720 --> 00:31:01,080
Speaker 4: it's come up to all over a third of all

602
00:31:01,120 --> 00:31:02,760
Speaker 4: the new ones and in some cases more than a

603
00:31:02,760 --> 00:31:04,400
Speaker 4: half of what you can measure earlier stage.

604
00:31:04,440 --> 00:31:06,120
Speaker 8: So they're basically taking over the sector.

605
00:31:06,160 --> 00:31:07,840
Speaker 4: And be one thing, if they were purely doing this

606
00:31:08,280 --> 00:31:10,320
Speaker 4: on a competitive basis, that's you know, if people are

607
00:31:10,320 --> 00:31:12,800
Speaker 4: really talented and and they're doing competitively, that would be fair.

608
00:31:12,880 --> 00:31:14,560
Speaker 8: But it's not like that.

609
00:31:14,600 --> 00:31:18,640
Speaker 4: What it is is it's taking US firms and taking

610
00:31:18,720 --> 00:31:20,720
Speaker 4: US investors and getting them to be able to do

611
00:31:20,760 --> 00:31:23,400
Speaker 4: things cheaper and better. In China, it is stealing things

612
00:31:23,520 --> 00:31:26,800
Speaker 4: using a patent office, it's stealing things using PhD for

613
00:31:26,880 --> 00:31:28,080
Speaker 4: people come over here and are.

614
00:31:27,960 --> 00:31:28,920
Speaker 8: Forced to send things back.

615
00:31:29,120 --> 00:31:31,520
Speaker 4: Like the whole thing is a very active kind of

616
00:31:31,600 --> 00:31:33,800
Speaker 4: rape of the sector, which is and is also is

617
00:31:33,800 --> 00:31:36,600
Speaker 4: also exacerbated by the fact that our FD is slow. So,

618
00:31:36,640 --> 00:31:38,520
Speaker 4: for example, in China, if you want to take a

619
00:31:38,560 --> 00:31:41,160
Speaker 4: drug to a phase one trial, it takes some places

620
00:31:41,160 --> 00:31:42,800
Speaker 4: you can just do it right away for certain areas

621
00:31:42,800 --> 00:31:44,520
Speaker 4: and some places it's ninety days for the pre I

622
00:31:44,600 --> 00:31:45,880
Speaker 4: and D and I and D it's called to go

623
00:31:45,920 --> 00:31:47,680
Speaker 4: to a phase one. In the US, the pre I

624
00:31:47,720 --> 00:31:49,720
Speaker 4: and D and I and D over seven hundred days.

625
00:31:49,840 --> 00:31:52,080
Speaker 4: So we have to accelerate this if we're going to compete.

626
00:31:52,840 --> 00:31:54,640
Speaker 2: What about through the lens of AVC.

627
00:31:54,800 --> 00:31:57,800
Speaker 3: So I think you write recently that America needs to

628
00:31:57,800 --> 00:32:01,960
Speaker 3: beat China and unleash cures. Yes, how does your activity

629
00:32:01,960 --> 00:32:04,880
Speaker 3: as an investor in what vcs focus on reflect that,

630
00:32:04,920 --> 00:32:07,840
Speaker 3: what's in the portfolio that you think you're supporting to

631
00:32:07,960 --> 00:32:08,440
Speaker 3: enable that?

632
00:32:08,640 --> 00:32:10,640
Speaker 8: I mean, listen, there's so much exciting stuff. Going on.

633
00:32:10,840 --> 00:32:12,920
Speaker 4: We had really great news in the last couple of

634
00:32:12,920 --> 00:32:16,200
Speaker 4: weeks orco Bio was officially approved, got their labels. That

635
00:32:16,240 --> 00:32:18,400
Speaker 4: means it went through phase one, phase two, phase three,

636
00:32:18,520 --> 00:32:21,160
Speaker 4: and that the data was so strong that you know,

637
00:32:21,400 --> 00:32:23,120
Speaker 4: it got through it a little bit faster than normal

638
00:32:23,360 --> 00:32:26,720
Speaker 4: and is able to basically do brow miurographs, which are

639
00:32:26,800 --> 00:32:29,360
Speaker 4: used against blood cancers much more safely, much higher s

640
00:32:29,360 --> 00:32:31,800
Speaker 4: evaporate over the first year. And then this also has

641
00:32:31,840 --> 00:32:35,120
Speaker 4: lots of potential applications against autoimmune diseases like crones and

642
00:32:35,160 --> 00:32:38,040
Speaker 4: multiple sclosis. So that company is very exciting to me.

643
00:32:38,280 --> 00:32:40,479
Speaker 4: There's a lot of other stuff we're doing with AI

644
00:32:40,880 --> 00:32:45,440
Speaker 4: and antibodies, antibody platforms, you know, with alloy for examples.

645
00:32:45,480 --> 00:32:47,440
Speaker 4: There's just a lot of new discoveries being made. The

646
00:32:47,480 --> 00:32:49,960
Speaker 4: problem is, if we have new discovery made where Confident's

647
00:32:50,000 --> 00:32:51,880
Speaker 4: going to save a lot of lives, if we invest

648
00:32:51,880 --> 00:32:53,360
Speaker 4: in it and China is able to copy it and

649
00:32:53,400 --> 00:32:56,000
Speaker 4: go faster, it stops our ability to invest in it.

650
00:32:56,040 --> 00:32:58,560
Speaker 4: So what we're fighting for is I want the ability

651
00:32:58,600 --> 00:33:01,440
Speaker 4: to make profitable investments the businesses built in the US

652
00:33:01,600 --> 00:33:04,040
Speaker 4: and not stolen too China because our system is broken.

653
00:33:04,000 --> 00:33:06,560
Speaker 3: You're raising Also an interesting point about oversight. You know,

654
00:33:06,560 --> 00:33:09,360
Speaker 3: earlier in the program we had FCC cham and Brendan

655
00:33:09,440 --> 00:33:11,560
Speaker 3: kara On talking about regulating space.

656
00:33:11,880 --> 00:33:14,680
Speaker 2: That's the FCC. So in this case it's the FDA.

657
00:33:15,240 --> 00:33:20,400
Speaker 3: And how much you feel the FDA should have direct

658
00:33:20,480 --> 00:33:23,400
Speaker 3: oversight of how AI is used in that field.

659
00:33:23,960 --> 00:33:25,760
Speaker 8: It's a good question. Listen.

660
00:33:25,840 --> 00:33:28,320
Speaker 4: I think there's a spectrum here, right, And I'm not

661
00:33:28,560 --> 00:33:31,400
Speaker 4: some kind of like wildlide radical that wants some narco

662
00:33:31,440 --> 00:33:32,600
Speaker 4: capitalism and no government.

663
00:33:32,600 --> 00:33:33,760
Speaker 8: That's that's not what I'm arguing for.

664
00:33:33,800 --> 00:33:36,200
Speaker 4: There's a spectrum where I think Europe we all see,

665
00:33:36,240 --> 00:33:39,600
Speaker 4: has gone way towards safetyism, towards a culture of proceduralism

666
00:33:39,720 --> 00:33:42,120
Speaker 4: where nothing gets done and everyone attacks new things and

667
00:33:42,240 --> 00:33:42,960
Speaker 4: they take forever.

668
00:33:43,080 --> 00:33:46,600
Speaker 2: Right, you mean from the blocks perspective, the regulatory perspective.

669
00:33:46,120 --> 00:33:47,200
Speaker 8: Feel of regulatory perspective.

670
00:33:47,240 --> 00:33:48,880
Speaker 4: I was just over there, like none of the bottle

671
00:33:48,880 --> 00:33:51,160
Speaker 4: caps come off as their big innovation, right, which is,

672
00:33:51,440 --> 00:33:54,000
Speaker 4: but it's everything's very slow and they've had far fewer

673
00:33:54,000 --> 00:33:56,480
Speaker 4: big wins the last fifty years because of that, and

674
00:33:56,760 --> 00:33:59,800
Speaker 4: so that's obviously a failure case. And then I'm not

675
00:33:59,840 --> 00:34:01,560
Speaker 4: our You're going to go all the way to no regulation.

676
00:34:01,640 --> 00:34:05,560
Speaker 4: But right now FDA is very slow. It's very unaccountable.

677
00:34:05,920 --> 00:34:08,160
Speaker 4: It's like a mafia where if you criticize it too much,

678
00:34:08,200 --> 00:34:10,480
Speaker 4: they might just decide to make you wait a year.

679
00:34:10,920 --> 00:34:13,960
Speaker 4: You know, it's unaccountable, unchecked power. We shouldn't have that

680
00:34:14,040 --> 00:34:16,040
Speaker 4: in a free society. We should have multiple bodies that

681
00:34:16,160 --> 00:34:18,279
Speaker 4: have to compete. We should have multiple paths, and they

682
00:34:18,280 --> 00:34:19,800
Speaker 4: should be held accountable to going faster.

683
00:34:20,600 --> 00:34:24,120
Speaker 3: Let's go back from the focus of the vertical of

684
00:34:24,200 --> 00:34:28,480
Speaker 3: biotech to broadly AI in America. Where do you see

685
00:34:28,480 --> 00:34:30,560
Speaker 3: America's biggest advantage right now?

686
00:34:31,600 --> 00:34:34,480
Speaker 4: I mean, our biggest advantage is that we are still

687
00:34:34,640 --> 00:34:38,320
Speaker 4: like the most free society with property rights and checked

688
00:34:38,320 --> 00:34:41,440
Speaker 4: power and the ability to have what we call creative destruction.

689
00:34:41,600 --> 00:34:44,040
Speaker 4: So when we come up with new technology with his

690
00:34:44,120 --> 00:34:46,960
Speaker 4: AI wave, there's a lot of new possibilities for higher

691
00:34:46,960 --> 00:34:49,919
Speaker 4: productivity in every industry. It's changing how defense works, changing

692
00:34:50,040 --> 00:34:53,520
Speaker 4: manufacturing works, changing how healthcare works. And we do have

693
00:34:53,600 --> 00:34:56,040
Speaker 4: in some areas too much regulation, but overall, we still

694
00:34:56,040 --> 00:34:58,400
Speaker 4: have a society unlike China, where it's going to be

695
00:34:58,480 --> 00:35:01,879
Speaker 4: much easier to redo our industries and to shift them

696
00:35:01,880 --> 00:35:03,920
Speaker 4: in ways that are much more productive. So not only

697
00:35:04,000 --> 00:35:07,080
Speaker 4: are we ahead in AI, we're also ahead in deploying

698
00:35:07,120 --> 00:35:08,040
Speaker 4: it to a bunch of areas.

699
00:35:08,800 --> 00:35:10,480
Speaker 3: Later in the program, we're going to zero in on

700
00:35:10,600 --> 00:35:15,279
Speaker 3: defense tech. You know, you co founded Palenteer two thousand and.

701
00:35:15,280 --> 00:35:17,319
Speaker 8: Three, that's right, twenty three years ago.

702
00:35:17,360 --> 00:35:21,799
Speaker 3: So like, take that experience, but specifically to AI software side, Right,

703
00:35:21,920 --> 00:35:27,480
Speaker 3: how does this administration facilitate success differently to prior administrations?

704
00:35:27,600 --> 00:35:31,080
Speaker 3: You know, what is your experience present day twenty twenty

705
00:35:31,120 --> 00:35:34,560
Speaker 3: six versus what it was like when you guys started

706
00:35:34,600 --> 00:35:38,160
Speaker 3: Palenteer and you were trying to get this into the

707
00:35:38,200 --> 00:35:39,680
Speaker 3: real world the software itself.

708
00:35:39,840 --> 00:35:42,520
Speaker 4: Well, listen, and I don't think your defense in America

709
00:35:42,600 --> 00:35:44,640
Speaker 4: is not a very partisan thing, which is great, by

710
00:35:44,680 --> 00:35:46,480
Speaker 4: the way. I think this is a this is a

711
00:35:46,480 --> 00:35:48,480
Speaker 4: not a question about even this administration, which is doing

712
00:35:48,560 --> 00:35:50,160
Speaker 4: a great job. But I think it's like a shift

713
00:35:50,160 --> 00:35:53,440
Speaker 4: in the mindset of the Pentagon which was been reflected

714
00:35:53,480 --> 00:35:55,319
Speaker 4: for the last several years. And what you've seen is

715
00:35:55,320 --> 00:35:59,080
Speaker 4: that Palenteer in SpaceX and then later and Androl and

716
00:35:59,239 --> 00:36:01,000
Speaker 4: now Seronic broke through.

717
00:36:01,080 --> 00:36:02,160
Speaker 8: And when they broke through.

718
00:36:02,000 --> 00:36:04,440
Speaker 4: And showed these better solutions, showed what was possible. It

719
00:36:04,480 --> 00:36:06,680
Speaker 4: was ten times better than what was there before. The

720
00:36:06,760 --> 00:36:09,879
Speaker 4: add roles learned, the generals learn and people in picturement said,

721
00:36:09,880 --> 00:36:12,400
Speaker 4: wait a second, we can't just keep giving these like

722
00:36:12,800 --> 00:36:16,440
Speaker 4: giant documents ridden by Raytheon and Lockheed and all the

723
00:36:16,480 --> 00:36:17,799
Speaker 4: other primes, you.

724
00:36:17,719 --> 00:36:19,839
Speaker 8: Know, the full power to block everyone else.

725
00:36:19,880 --> 00:36:22,200
Speaker 4: We have to actually say, let's have more up in competition,

726
00:36:22,280 --> 00:36:25,080
Speaker 4: let's let in new possibilities. And you're seeing that cultural

727
00:36:25,120 --> 00:36:28,000
Speaker 4: shift happen pretty dramatically over the last five or six years.

728
00:36:28,320 --> 00:36:31,400
Speaker 4: I have friends, you know, like Emil who's under Secretary

729
00:36:31,440 --> 00:36:34,840
Speaker 4: and Engineering or research, and people like like you know,

730
00:36:34,880 --> 00:36:37,120
Speaker 4: deps like Feinberg and the Secretary and others who are

731
00:36:37,120 --> 00:36:39,480
Speaker 4: being a lot bolder and pushing things in the right direction.

732
00:36:39,560 --> 00:36:41,840
Speaker 4: So you're definitely seeing the culture of the whole place

733
00:36:42,120 --> 00:36:44,000
Speaker 4: has been moving the right direction for years now.

734
00:36:44,080 --> 00:36:46,279
Speaker 3: We're going to return to that conversation on defense tech

735
00:36:46,320 --> 00:36:47,879
Speaker 3: in a little bit. We're going to take a quick break.

736
00:36:47,960 --> 00:36:50,920
Speaker 3: Joe Lunscale from ABC and a co founder of Palentist,

737
00:36:50,920 --> 00:36:51,480
Speaker 3: sticks with us.

738
00:36:51,560 --> 00:36:53,560
Speaker 2: We'll be right back. This is Bloomberg Tech.

739
00:37:10,719 --> 00:37:13,640
Speaker 3: Okay, we're back with Joe Lunsdale, managing partner at EIGHTVC

740
00:37:14,160 --> 00:37:16,680
Speaker 3: Co founder at Palented. Big recent news is that eight

741
00:37:16,800 --> 00:37:19,440
Speaker 3: VC closed a one point five billion dollar fund, the

742
00:37:19,480 --> 00:37:21,320
Speaker 3: firm's largest to date.

743
00:37:21,440 --> 00:37:22,680
Speaker 2: And I think we just start there.

744
00:37:23,080 --> 00:37:25,360
Speaker 3: I don't think you've said very much more about the

745
00:37:25,400 --> 00:37:27,600
Speaker 3: fund than what's in that post on the screen on

746
00:37:27,920 --> 00:37:29,280
Speaker 3: x YEP timing.

747
00:37:29,640 --> 00:37:30,600
Speaker 2: Why what for?

748
00:37:31,200 --> 00:37:32,520
Speaker 4: I mean, you know, we're in the middle of the

749
00:37:32,560 --> 00:37:36,160
Speaker 4: most exciting you know, revolution, industrial revolution, i'd call it,

750
00:37:36,200 --> 00:37:38,200
Speaker 4: and in a very long time in the United States,

751
00:37:38,560 --> 00:37:40,759
Speaker 4: and we've had our best couple of years ever at

752
00:37:40,800 --> 00:37:41,200
Speaker 4: the firm.

753
00:37:41,320 --> 00:37:42,600
Speaker 8: There's just, you know, there's just a.

754
00:37:42,520 --> 00:37:44,759
Speaker 4: Lot of things happening that are possible now that we're

755
00:37:44,800 --> 00:37:47,360
Speaker 4: definitely not possible a couple of years ago in the economy.

756
00:37:47,760 --> 00:37:50,600
Speaker 4: And you know pollunteer as an example. I think before

757
00:37:50,680 --> 00:37:53,880
Speaker 4: AI was probably worth thirty or forty billion dollars and

758
00:37:54,080 --> 00:37:56,879
Speaker 4: like past AI now is you know, over three hundred

759
00:37:56,880 --> 00:37:58,319
Speaker 4: billion dollars. I think I think this is a ten

760
00:37:58,480 --> 00:38:01,400
Speaker 4: x bigger wave similar early than anything we've seen before

761
00:38:01,480 --> 00:38:03,000
Speaker 4: versus the you know, the sasas way, if you're doing

762
00:38:03,040 --> 00:38:05,880
Speaker 4: versus what's going on now, and we have companies across

763
00:38:05,920 --> 00:38:07,920
Speaker 4: the board growing five x ten x a years.

764
00:38:07,960 --> 00:38:08,839
Speaker 8: It's a really fun time.

765
00:38:09,200 --> 00:38:12,680
Speaker 3: When Joe, do you and VC get into those what

766
00:38:12,760 --> 00:38:15,879
Speaker 3: stage do you principally deploy at? And how do things

767
00:38:15,920 --> 00:38:19,080
Speaker 3: kind of cross your desk? I always find that part interesting, Yeah,

768
00:38:19,160 --> 00:38:19,719
Speaker 3: you find them.

769
00:38:19,760 --> 00:38:20,120
Speaker 8: So this is.

770
00:38:20,120 --> 00:38:23,600
Speaker 4: Avc's seventh core fund, and you know, we're we're a

771
00:38:23,600 --> 00:38:25,640
Speaker 4: little bit different in that about thirty percent of our

772
00:38:25,680 --> 00:38:28,920
Speaker 4: money goes towards things we helped found ourselves and build ourselves,

773
00:38:28,960 --> 00:38:31,760
Speaker 4: companies like Seronic, which we'll talk about companies and healthcare

774
00:38:31,840 --> 00:38:35,400
Speaker 4: and logistics and other areas as well. And you know,

775
00:38:35,440 --> 00:38:38,440
Speaker 4: we were usually seed Series A, some Series BCE, so

776
00:38:38,480 --> 00:38:41,360
Speaker 4: we're earlier stage investors. But these days, like a Series

777
00:38:41,360 --> 00:38:43,040
Speaker 4: A could be a sixty or one hundred million dollar

778
00:38:43,160 --> 00:38:44,799
Speaker 4: round and we could be doing you know, fifty of

779
00:38:44,800 --> 00:38:47,040
Speaker 4: that from the fund, So so it's a lot bigger checks.

780
00:38:47,080 --> 00:38:49,360
Speaker 4: So having one point five billion dollar fund in venture

781
00:38:49,400 --> 00:38:52,200
Speaker 4: capital today, I would say it's sort of like having

782
00:38:52,239 --> 00:38:54,200
Speaker 4: a four or five hundred million dollar fund a decade

783
00:38:54,239 --> 00:38:56,920
Speaker 4: ago when the market in terms of in terms of

784
00:38:57,000 --> 00:38:59,080
Speaker 4: how much you do and the size and the Yeah,

785
00:38:59,080 --> 00:39:01,319
Speaker 4: it's not it's if you if someone were to tell

786
00:39:01,360 --> 00:39:03,160
Speaker 4: me fifteen years ago, I was in one point five

787
00:39:03,160 --> 00:39:04,680
Speaker 4: billion dollar fund, I like, that's ridiculous.

788
00:39:04,719 --> 00:39:05,560
Speaker 8: That's so much money.

789
00:39:05,880 --> 00:39:08,920
Speaker 4: Now it's like a reasonably normal size top venture firm.

790
00:39:09,800 --> 00:39:12,680
Speaker 3: What about from the LP's perspective, I appreciate that there's

791
00:39:12,760 --> 00:39:15,240
Speaker 3: value in discretion, right, but what is it the LP's

792
00:39:15,280 --> 00:39:18,960
Speaker 3: ask you about their interest in AI broadly? What they

793
00:39:19,200 --> 00:39:22,120
Speaker 3: sort of they're investing with you because they want exposure

794
00:39:22,160 --> 00:39:23,080
Speaker 3: to something specific.

795
00:39:23,360 --> 00:39:25,640
Speaker 4: Yeah, it's always unclear. I'm supposed to like boast about

796
00:39:25,640 --> 00:39:27,799
Speaker 4: my returns on TV or something, but like we think.

797
00:39:27,880 --> 00:39:29,480
Speaker 4: I think, just like when you absolutely hit it out

798
00:39:29,520 --> 00:39:31,480
Speaker 4: of the park and you're in a bunch of things

799
00:39:31,800 --> 00:39:33,600
Speaker 4: that are working. I mean, you know, we're lucky to

800
00:39:33,920 --> 00:39:36,480
Speaker 4: get to work on Airbor with Palmer Lucky last year, right,

801
00:39:36,520 --> 00:39:39,399
Speaker 4: We're lucky to get to work on I mean, it's

802
00:39:39,400 --> 00:39:41,360
Speaker 4: just this long list of these things that are working

803
00:39:41,480 --> 00:39:43,960
Speaker 4: very very well in our portfolio, both of the Fence

804
00:39:44,080 --> 00:39:46,680
Speaker 4: and then kind of Corey a Cognition we let around

805
00:39:46,719 --> 00:39:48,440
Speaker 4: last year and it's absolutely crushing at one of the

806
00:39:48,440 --> 00:39:51,040
Speaker 4: most important new AI companies. I think it's had three

807
00:39:51,160 --> 00:39:53,719
Speaker 4: rounds now since we since we got in a year ago. Right,

808
00:39:53,760 --> 00:39:56,160
Speaker 4: So these the pace of everything, like things that happen

809
00:39:56,239 --> 00:39:58,359
Speaker 4: now in a quarter is like things used to happen

810
00:39:58,360 --> 00:39:59,719
Speaker 4: in a year. It feels like the pace is sped

811
00:39:59,800 --> 00:40:01,600
Speaker 4: up four or five x. And so I think there's

812
00:40:01,640 --> 00:40:05,120
Speaker 4: only a certain number of firms that are involved consistently

813
00:40:05,120 --> 00:40:06,840
Speaker 4: in a bunch of the very very top talent and

814
00:40:06,920 --> 00:40:09,359
Speaker 4: best companies, and so so you can end up being

815
00:40:09,400 --> 00:40:10,120
Speaker 4: very oversubscribed.

816
00:40:10,160 --> 00:40:13,920
Speaker 3: So Scott's regular on the show, and you're a visitor

817
00:40:13,920 --> 00:40:15,400
Speaker 3: to San Francisco, regular visitor.

818
00:40:15,480 --> 00:40:16,960
Speaker 2: Yeah, set up by a Broadway tunnel.

819
00:40:16,960 --> 00:40:20,360
Speaker 3: There's a bus stop ad and it says Devin, but

820
00:40:20,440 --> 00:40:22,520
Speaker 3: it works better now, and that's all it says.

821
00:40:24,040 --> 00:40:26,759
Speaker 8: I mean, it keeps getting a lot better. It's really good.

822
00:40:27,280 --> 00:40:29,200
Speaker 3: It's just, you know, it's it's just how like some

823
00:40:29,280 --> 00:40:32,160
Speaker 3: of these companies from a very small start have grown

824
00:40:32,239 --> 00:40:35,080
Speaker 3: quickly but got themselves into the culture of what's happening

825
00:40:35,120 --> 00:40:35,719
Speaker 3: in industry.

826
00:40:36,360 --> 00:40:38,839
Speaker 4: And it's really fun right now because you're I'm working

827
00:40:38,840 --> 00:40:40,399
Speaker 4: with these entrepreneurs and a lot of them.

828
00:40:40,400 --> 00:40:42,680
Speaker 8: I'm forty three now, So my karma.

829
00:40:42,440 --> 00:40:43,719
Speaker 4: Is I have to work with like a little bit

830
00:40:43,760 --> 00:40:45,560
Speaker 4: difficult young people, right which guess what I get.

831
00:40:45,680 --> 00:40:46,680
Speaker 8: I was twenty years ago as.

832
00:40:46,600 --> 00:40:49,799
Speaker 4: Suppose, but now it's like, I mean, these companies are

833
00:40:49,800 --> 00:40:52,160
Speaker 4: growing to billions of revenue in three or four years.

834
00:40:52,640 --> 00:40:55,000
Speaker 4: One of the entrepreneurs we're working with, they're like doubling

835
00:40:55,040 --> 00:40:57,680
Speaker 4: revenue every quarter, and you're having a conversation, how are

836
00:40:57,680 --> 00:40:59,319
Speaker 4: we going to keep doubling for the next three or

837
00:40:59,360 --> 00:41:00,000
Speaker 4: four quarters?

838
00:41:00,480 --> 00:41:02,600
Speaker 8: And I mean it's really fun. This is stuff you

839
00:41:02,640 --> 00:41:03,720
Speaker 8: could never have done before.

840
00:41:04,440 --> 00:41:07,239
Speaker 3: You said a moment ago. You're coming off the back

841
00:41:07,280 --> 00:41:10,520
Speaker 3: of two very good years at the firm. What does

842
00:41:10,840 --> 00:41:11,880
Speaker 3: do the exits look like?

843
00:41:11,920 --> 00:41:12,040
Speaker 2: Then?

844
00:41:12,080 --> 00:41:17,000
Speaker 3: You're talking about returns as realized through an exit or I.

845
00:41:16,920 --> 00:41:18,040
Speaker 8: Mean, I mean, I mean there's both.

846
00:41:18,080 --> 00:41:20,840
Speaker 4: There's definitely there's I mean, listen, we're big investors in

847
00:41:20,960 --> 00:41:23,480
Speaker 4: XAI and x which became space X, and we're very

848
00:41:23,480 --> 00:41:26,280
Speaker 4: happy to be involved in that. I'm very very bullishing

849
00:41:26,280 --> 00:41:28,000
Speaker 4: and hold onto that for a long time. I think

850
00:41:28,000 --> 00:41:29,880
Speaker 4: Elon's writ it could be bigger than the economy of

851
00:41:29,920 --> 00:41:30,880
Speaker 4: the Earth if we get are right.

852
00:41:30,920 --> 00:41:33,160
Speaker 8: But so, I mean there's there. I guess that's an exit.

853
00:41:33,280 --> 00:41:35,839
Speaker 4: I mean, we're we're invested in all sorts of things

854
00:41:35,880 --> 00:41:38,080
Speaker 4: in AI that are likely to go public soon. We

855
00:41:38,120 --> 00:41:39,680
Speaker 4: have other things we invested in that have just had

856
00:41:39,719 --> 00:41:41,720
Speaker 4: seven or eight up rounds, and that have high margins

857
00:41:41,719 --> 00:41:43,520
Speaker 4: and billions of revenue now right, So I think it's

858
00:41:43,560 --> 00:41:45,560
Speaker 4: it's it's a spectrum. I mean, I don't really plan

859
00:41:45,600 --> 00:41:48,640
Speaker 4: on exiting our very best defense positions for the most part.

860
00:41:48,680 --> 00:41:50,360
Speaker 4: I think these are things that you could exit. You

861
00:41:50,400 --> 00:41:53,920
Speaker 4: could obviously sell the entire androle position or seronic position

862
00:41:54,040 --> 00:41:55,120
Speaker 4: or others, but we're not going.

863
00:41:55,120 --> 00:41:55,759
Speaker 8: To do that for now.

864
00:41:56,280 --> 00:41:57,640
Speaker 3: I want to ask you a final, sort of more

865
00:41:57,680 --> 00:42:01,600
Speaker 3: academic question, which is every one you know, uniformly at

866
00:42:01,600 --> 00:42:03,799
Speaker 3: the moment is said we've moved from software is eating

867
00:42:03,880 --> 00:42:06,919
Speaker 3: the world, it's now hardware is eating the world. Does

868
00:42:06,960 --> 00:42:11,400
Speaker 3: that reflect weight where EIGHTVC is currently positioned or you

869
00:42:11,440 --> 00:42:13,560
Speaker 3: still think that there is a world for both.

870
00:42:13,560 --> 00:42:17,640
Speaker 4: As an investor, you know, I'm really focused on how

871
00:42:18,080 --> 00:42:20,600
Speaker 4: we bring more advanced manufacturing to the US, and that's

872
00:42:20,600 --> 00:42:22,440
Speaker 4: going to evolve a lot of AI and a lot

873
00:42:22,480 --> 00:42:23,719
Speaker 4: of hardware. I think to be able to do what

874
00:42:23,760 --> 00:42:26,120
Speaker 4: the manufacturing engineers in China can do, we have a

875
00:42:26,120 --> 00:42:27,880
Speaker 4: lot more to build here. We have some of our

876
00:42:27,920 --> 00:42:30,799
Speaker 4: companies working on that problem. I think in general, we're

877
00:42:30,800 --> 00:42:34,120
Speaker 4: focused on productivity and outcomes, and so yes, hardware is

878
00:42:34,200 --> 00:42:36,759
Speaker 4: very important, but I think outcomes, I mean you listen,

879
00:42:36,800 --> 00:42:39,440
Speaker 4: you have a five trillion dollar a year wages in

880
00:42:39,480 --> 00:42:41,680
Speaker 4: the services industry in the US. This is a massive

881
00:42:41,680 --> 00:42:44,279
Speaker 4: industry in the US. You know, we can make those outcomes,

882
00:42:44,600 --> 00:42:46,680
Speaker 4: you know, two or three or four times more productive,

883
00:42:46,680 --> 00:42:48,680
Speaker 4: which we've see we can. That's just going to be

884
00:42:48,719 --> 00:42:51,200
Speaker 4: a multi trillion intollar wealth creation. So hardware is important.

885
00:42:51,400 --> 00:42:54,240
Speaker 4: But I wouldn't just ignore outcomes and these other massive

886
00:42:54,239 --> 00:42:56,399
Speaker 4: industries that we're clearly transforming right now at.

887
00:42:56,360 --> 00:42:58,520
Speaker 3: Joe lunsdaye AVC. Stay with us. We have a story

888
00:42:58,560 --> 00:43:01,759
Speaker 3: out of Europe. European drones start up Helsings close a

889
00:43:01,800 --> 00:43:04,280
Speaker 3: one point eight billion dollar funding rounds. It's an eighteen

890
00:43:04,360 --> 00:43:07,920
Speaker 3: billion dollar valuation. The around cementing the firm is Europe's

891
00:43:08,200 --> 00:43:12,400
Speaker 3: largest defense startup, demonstrating investors continued interest in the region's

892
00:43:12,400 --> 00:43:15,160
Speaker 3: defense firms and mid of course, the ongoing war in Ukraine.

893
00:43:15,520 --> 00:43:19,279
Speaker 3: Investors included Goldman Sachs, Dragon Air Investment, JP, Morgan Chase,

894
00:43:19,400 --> 00:43:23,480
Speaker 3: but helsing says the company remains predominantly European owned, so

895
00:43:23,560 --> 00:43:26,280
Speaker 3: let's focus in on defense tech. Joe, I mean, interesting

896
00:43:26,280 --> 00:43:28,960
Speaker 3: case study out of Europe. I don't think you guys are.

897
00:43:28,760 --> 00:43:32,680
Speaker 4: In my good friend Jeannette first and Brogohealths run General Catalyst. Yea,

898
00:43:33,200 --> 00:43:35,080
Speaker 4: she was an only investor there before she was at GC.

899
00:43:35,840 --> 00:43:37,400
Speaker 4: I think it was founded by people who had been

900
00:43:37,400 --> 00:43:40,640
Speaker 4: a Palenteer in Europe, and so for fans in them,

901
00:43:40,680 --> 00:43:41,880
Speaker 4: it's a very ecosystem.

902
00:43:42,000 --> 00:43:43,239
Speaker 2: Is a lot of people that know each other.

903
00:43:43,280 --> 00:43:45,920
Speaker 4: I'm very lucky to have all these people who help

904
00:43:46,000 --> 00:43:48,960
Speaker 4: me build Palenteer and out Aparl like Scott Woe for example,

905
00:43:48,960 --> 00:43:51,920
Speaker 4: from cognition, from out of part building and running a

906
00:43:51,920 --> 00:43:54,480
Speaker 4: lot of these You dozens of top companies right now,

907
00:43:54,520 --> 00:43:56,399
Speaker 4: so it does tend to come from a small number

908
00:43:56,440 --> 00:43:57,880
Speaker 4: of places, and a lot of these people did used

909
00:43:57,880 --> 00:43:58,439
Speaker 4: to work for us.

910
00:43:58,719 --> 00:44:00,759
Speaker 3: You talked a little bit about you know, there's no

911
00:44:01,040 --> 00:44:03,680
Speaker 3: there's no plan for some time to get out of

912
00:44:03,719 --> 00:44:06,120
Speaker 3: Vender or Seronic. You know you are long term investors

913
00:44:06,160 --> 00:44:09,040
Speaker 3: in those. But Soaronic in the here and now there

914
00:44:09,080 --> 00:44:10,680
Speaker 3: was news just before we came to air.

915
00:44:10,680 --> 00:44:11,560
Speaker 8: It's exciting morning.

916
00:44:11,680 --> 00:44:13,600
Speaker 3: So so could you explain it to us the basics

917
00:44:13,600 --> 00:44:15,600
Speaker 3: of what santcomm is demonstrating in a video.

918
00:44:15,600 --> 00:44:16,839
Speaker 2: I think we're going to pull the video up.

919
00:44:17,120 --> 00:44:18,279
Speaker 8: Yeah, well listen to sent Colm.

920
00:44:18,400 --> 00:44:21,480
Speaker 4: Just put this out so I can only say what's

921
00:44:21,480 --> 00:44:23,560
Speaker 4: what's what's public, but there were I'd say they said

922
00:44:23,560 --> 00:44:25,560
Speaker 4: there are three course airs involved in an attack on

923
00:44:25,600 --> 00:44:28,040
Speaker 4: the boundary of US based and so these are these

924
00:44:28,040 --> 00:44:30,840
Speaker 4: are unmanned you know drones. There's a the same drones

925
00:44:30,880 --> 00:44:32,560
Speaker 4: that saved the pilots in the straight up harmas you

926
00:44:32,560 --> 00:44:34,840
Speaker 4: know when they attach crash last month, and in this

927
00:44:34,960 --> 00:44:37,920
Speaker 4: case they're being used in an attack. And you know,

928
00:44:38,120 --> 00:44:40,040
Speaker 4: right now there's three of them, and you can imagine

929
00:44:40,080 --> 00:44:42,680
Speaker 4: what you can do one hundreds of them.

930
00:44:42,920 --> 00:44:46,800
Speaker 3: Saronic I think is the biggest position or individual company

931
00:44:46,880 --> 00:44:48,680
Speaker 3: or or weal I scope.

932
00:44:48,440 --> 00:44:48,799
Speaker 2: It for me.

933
00:44:49,239 --> 00:44:51,360
Speaker 4: We have, we have, we have quite a few large positions.

934
00:44:51,360 --> 00:44:53,200
Speaker 4: But Saronic we co founded out of the firm.

935
00:44:53,200 --> 00:44:55,800
Speaker 2: And that's what you explained earlier. It's formats different.

936
00:44:55,840 --> 00:44:56,239
Speaker 8: It's an eight.

937
00:44:56,320 --> 00:44:57,920
Speaker 4: So we have so thirty percent of our money go

938
00:44:58,000 --> 00:45:00,120
Speaker 4: to sorts companies we helped build. So Dino is the

939
00:45:00,160 --> 00:45:03,000
Speaker 4: main founder along with Vibdal from Mavrucus, who is a

940
00:45:03,080 --> 00:45:05,600
Speaker 4: Navy seal and they've built an amazing team of top

941
00:45:05,600 --> 00:45:08,319
Speaker 4: talent around them in Austin, Texas. And you know, just

942
00:45:08,400 --> 00:45:10,359
Speaker 4: so many people in AI and hardware are people who

943
00:45:10,440 --> 00:45:13,359
Speaker 4: experienced from Tesla and other places, and they're scaling very

944
00:45:13,440 --> 00:45:15,800
Speaker 4: very quickly as one of the most important defense companies

945
00:45:15,800 --> 00:45:16,320
Speaker 4: in the US.

946
00:45:16,880 --> 00:45:19,640
Speaker 3: Could I ask you for your assessment of how Secretary

947
00:45:19,640 --> 00:45:25,320
Speaker 3: Hegsef has or has not changed the relationship between the Pentagon,

948
00:45:25,400 --> 00:45:30,000
Speaker 3: the Department of War and how it works with startups essentially,

949
00:45:30,040 --> 00:45:31,600
Speaker 3: not just the private sector.

950
00:45:31,719 --> 00:45:34,560
Speaker 4: Listen, I think it's become more obvious to the leadership

951
00:45:34,560 --> 00:45:38,319
Speaker 4: in the Pentagon that the very top startups are way

952
00:45:38,360 --> 00:45:40,719
Speaker 4: ahead of the primes in a bunch of areas. And

953
00:45:40,840 --> 00:45:42,799
Speaker 4: what they've done is they've shifted things. And he's been

954
00:45:42,880 --> 00:45:46,480
Speaker 4: very bold about this to focus on fair competitions. So

955
00:45:46,560 --> 00:45:49,680
Speaker 4: let others break in, let others prove they can create designs.

956
00:45:49,680 --> 00:45:51,600
Speaker 4: I mean, what was happening before is the incentives were

957
00:45:51,680 --> 00:45:54,960
Speaker 4: to create very very exquisite designs that were very very expensive.

958
00:45:55,160 --> 00:45:56,640
Speaker 4: So you might be able to build the best thing

959
00:45:56,640 --> 00:45:58,920
Speaker 4: in the world, but it's one hundred times more expensive.

960
00:45:59,239 --> 00:46:02,440
Speaker 4: And what Ornandral and you know, It's Seronic and others

961
00:46:02,480 --> 00:46:05,520
Speaker 4: have demonstrated is actually there's designs that you can make

962
00:46:05,560 --> 00:46:07,080
Speaker 4: one hundred or a thousand more of these for the

963
00:46:07,120 --> 00:46:09,759
Speaker 4: same costs, and that are many times cases even better.

964
00:46:10,360 --> 00:46:11,920
Speaker 3: One of the things we've been tracking over the last

965
00:46:11,920 --> 00:46:15,759
Speaker 3: couple of years is sort of, well, it's declassified allocations.

966
00:46:15,800 --> 00:46:17,920
Speaker 3: It's a lot of it still goes to Lockheed. But

967
00:46:17,960 --> 00:46:20,719
Speaker 3: do you see it changing, Yeah, the propulsion.

968
00:46:21,360 --> 00:46:21,520
Speaker 8: Yeah.

969
00:46:21,600 --> 00:46:21,680
Speaker 9: No.

970
00:46:21,719 --> 00:46:23,279
Speaker 4: I think this is what people don't realize is we're

971
00:46:23,280 --> 00:46:24,800
Speaker 4: still the little kids in some ways. I mean, we

972
00:46:24,880 --> 00:46:27,799
Speaker 4: have that best stuff, but it's still it's growing from

973
00:46:27,840 --> 00:46:29,920
Speaker 4: a small base, and it's growing very quickly, and you're

974
00:46:29,920 --> 00:46:32,319
Speaker 4: starting to see very large, very important contracts that are

975
00:46:32,360 --> 00:46:34,799
Speaker 4: changing the nature of warfare and what's possible with these

976
00:46:34,800 --> 00:46:37,279
Speaker 4: new companies. But the vast majority of money is still

977
00:46:37,360 --> 00:46:40,680
Speaker 4: captured by the primes. The primes have these congressional districts

978
00:46:40,719 --> 00:46:43,520
Speaker 4: locked down with the producing things in forty nine states,

979
00:46:43,520 --> 00:46:45,960
Speaker 4: and it's kind of bolted into the NBAA that they

980
00:46:46,000 --> 00:46:48,439
Speaker 4: automatically get the contract even if their stuff sucks, because

981
00:46:48,480 --> 00:46:51,440
Speaker 4: it's from a jobs program. It's not about deterring our enemies.

982
00:46:51,560 --> 00:46:54,239
Speaker 4: But slowly, over time, our Congress is waking up and saying,

983
00:46:54,239 --> 00:46:56,719
Speaker 4: wait a second, this shouldn't just be about a jobs program.

984
00:46:56,800 --> 00:46:58,280
Speaker 8: There's actually bad guys in the world.

985
00:46:58,440 --> 00:47:00,399
Speaker 4: We actually have way too much debt in this, let's

986
00:47:00,440 --> 00:47:02,880
Speaker 4: spend less money on better things, even if it's not

987
00:47:02,920 --> 00:47:03,720
Speaker 4: as policarly connected.

988
00:47:03,800 --> 00:47:05,680
Speaker 3: Joe, we're just in the last forty five seconds of

989
00:47:05,719 --> 00:47:07,759
Speaker 3: the show. The next frontier in defense tech for you

990
00:47:07,800 --> 00:47:10,120
Speaker 3: a specialist area that you're most focused on.

991
00:47:10,440 --> 00:47:12,680
Speaker 4: Well, listen, I think there's I think there's a lot

992
00:47:12,680 --> 00:47:17,120
Speaker 4: of stuff going on with massive production of drones in

993
00:47:17,160 --> 00:47:19,800
Speaker 4: the land was like overland and the sea was seronic

994
00:47:19,920 --> 00:47:21,680
Speaker 4: in the era of course, with so many different companies,

995
00:47:21,680 --> 00:47:24,360
Speaker 4: and in space as well, with you know, Apex and others,

996
00:47:24,560 --> 00:47:27,000
Speaker 4: you know, dominating that area. And I think how we

997
00:47:27,040 --> 00:47:30,200
Speaker 4: counter that with new forms of high power microwave, with

998
00:47:30,200 --> 00:47:32,919
Speaker 4: like people like Eparus, and you know, in other types

999
00:47:32,920 --> 00:47:35,279
Speaker 4: electronic warfare. There's just lots of advances being made there.

1000
00:47:35,280 --> 00:47:37,759
Speaker 4: So it's a very dynamic time. Really important to engage

1001
00:47:37,800 --> 00:47:38,680
Speaker 4: in this sin stay ahead.

1002
00:47:38,440 --> 00:47:39,000
Speaker 8: Of the bad guys.

1003
00:47:39,120 --> 00:47:42,920
Speaker 3: Joe Lunsdale, managing partner at AVC, co founder Palenteer here

1004
00:47:42,960 --> 00:47:45,200
Speaker 3: on Bloomberg Tech for the first time. That does it

1005
00:47:45,239 --> 00:47:48,240
Speaker 3: for this edition of Bloomberg Tech. Another look at markets.

1006
00:47:48,280 --> 00:47:50,319
Speaker 3: This is what we've looked like for most of this

1007
00:47:50,440 --> 00:47:54,480
Speaker 3: morning session. Ship stocks leading declines, s K Hynix ADRs

1008
00:47:54,600 --> 00:47:57,080
Speaker 3: under pressure, but not as severe as they were in

1009
00:47:57,120 --> 00:48:00,719
Speaker 3: the Korean trading session. Remember they price those ADRs at

1010
00:48:00,719 --> 00:48:02,520
Speaker 3: one hundred and forty nine. We're getting close to it.

1011
00:48:02,600 --> 00:48:06,239
Speaker 3: A reminder for Thursday, we have an exclusive conversation with

1012
00:48:06,320 --> 00:48:10,040
Speaker 3: Ryan Cohen, the CEO of GameStop, which withdrew a bonus

1013
00:48:10,080 --> 00:48:12,520
Speaker 3: plan that could have paid him as much as thirty

1014
00:48:12,560 --> 00:48:16,000
Speaker 3: five billion dollars so that that company can focus on

1015
00:48:16,040 --> 00:48:18,200
Speaker 3: a bid for eBay. You don't want to miss. It's

1016
00:48:18,200 --> 00:48:20,400
Speaker 3: going to be around eleven thirty easton time eight thirty

1017
00:48:21,160 --> 00:48:22,360
Speaker 3: here in San Francisco.

1018
00:48:22,760 --> 00:48:23,960
Speaker 2: A lot to recap on the show.

1019
00:48:24,000 --> 00:48:26,960
Speaker 3: An extended conversation with SEC chair Bren and Car, An

1020
00:48:26,960 --> 00:48:31,160
Speaker 3: extended conversation with AVC and Palenter co founder Joe Lunzell.

1021
00:48:31,280 --> 00:48:33,279
Speaker 3: Find it all on the pod. You know exactly where

1022
00:48:33,280 --> 00:48:36,719
Speaker 3: it is online, Apple, Spotify, iHeart all the Bloomberg platforms.

1023
00:48:37,040 --> 00:48:39,560
Speaker 3: What a way to start the week, Ceda Murrow, This

1024
00:48:39,600 --> 00:48:40,359
Speaker 3: is Bloomberg Tech