Speaker 1: Bloomberg Tech is a live from coast to coast with
Speaker 1: Caroline Hide.
Speaker 2: In New York and Eva Low in Sent Francisco.
Speaker 1: This is Bloomberg Tech coming up, Small moves and socks
Speaker 1: this morning as traders I, Iran and Oil will bring
Speaker 1: you the tech sector reaction.
Speaker 2: As Palenteer closes.
Speaker 1: In on a new record high plus investments in defense tech,
Speaker 1: they continue to increase the venture capital story this hour
Speaker 1: and Tesla's Robotaxi it finally hits the streets of Austin
Speaker 1: shares sow we discussed the reality of the company's city expansion.
Speaker 2: Bloomberg's un Verstelica joins us.
Speaker 1: Now I start with Palenteer, which has in encroaching on
Speaker 1: a record high once again. It is the defense tech
Speaker 1: stock that's being played on today.
Speaker 3: Yes, absolutely, thanks for having me on. So it does
Speaker 3: see a lot of demand in interest from sort of
Speaker 3: government contracts, defense adjacent sort of services. So the fact
Speaker 3: that you have this sort of increase in jail political
Speaker 3: uncertainty right now, it's not surprising that Palanteer is one
Speaker 3: of the initial beneficiaries of this.
Speaker 1: Let's look at also what the beneficiaries could be. More broadly,
Speaker 1: I want to highlight a note what came from Wedbush
Speaker 1: analysts this morning, and they're really talking about how maybe
Speaker 1: if we do dial down anxiety surrounding Iran, this could
Speaker 1: end up refueling regalvanizing the AI trade in particular because
Speaker 1: of the Middle East focus. They say, the biggest threat
Speaker 1: to the region and the potential Blackswan event was Iran
Speaker 1: and its nuclear program, and now that threat is gone,
Speaker 1: so basically we can see the AI revolution come more
Speaker 1: into play.
Speaker 2: Which stocks does that affect?
Speaker 3: Ryan, Well, we've seen a number of these AI companies
Speaker 3: like Nvidia announces major sovereign deals with AI and company
Speaker 3: or countries in the Middle East. Excuse me, So if
Speaker 3: we do see some sort of you know, follow through
Speaker 3: on these kinds of deals, these kinds of contracts as
Speaker 3: kind of a region as an area for new unappreciated
Speaker 3: revenue growth, obviously this is something we could continue to
Speaker 3: see being a driver of stock prices from here.
Speaker 1: It's interesting though that NVIDIAs started the day lower and
Speaker 1: it's ultimately would have pulled the benchmark itself in the red.
Speaker 2: Why are we seeing and dialing back in risk aversion?
Speaker 2: Do you think? Well, I think in.
Speaker 3: General, like when you have this kind of rise in
Speaker 3: geopolitical uncertainty, big tech stocks often act as a kind
Speaker 3: of safe haven in the market. I think, kind of
Speaker 3: regardless of what else is going on, this is a
Speaker 3: group that has seen as having pretty durable growth prospects,
Speaker 3: pretty strong and reliable earning streams, tons of cash, very
Speaker 3: strong economic modes and competitive modes, all these things, and
Speaker 3: you kind of put them together in uncertain environment, they
Speaker 3: still look like safe plays, you know, like all things considered. Obviously,
Speaker 3: there are some concerns about valuation, but I think ultimately,
Speaker 3: you know, they sort of act as you know, this
Speaker 3: sort of generation's version of defensive and sort of safe
Speaker 3: haven trades.
Speaker 2: Rand Vlastelica on the market reaction. Thank you so much.
Speaker 1: Let's bring you more analysis on when next in terms
Speaker 1: of the geopolitics. Emily Harding's with us from the Center
Speaker 1: for Strategic and International Studies. You're also the director for
Speaker 1: its Intelligence, National Security, and Technology Program and vice president
Speaker 1: of the Defense and Security Department. Emily, we turned to
Speaker 1: you for your tech and your intelligence expertise here and
Speaker 1: actually you say this is the moment for intelligence officers
Speaker 1: to shine.
Speaker 4: Why so one of the really important questions going forward
Speaker 4: is going to be just how much damage was done
Speaker 4: to Iran's three main nuclear facilities. And I mean it
Speaker 4: seems obvious to say it, but you can't exactly walk
Speaker 4: up to these facilities on the ground and take a look.
Speaker 4: So it's going to be the skill and the work
Speaker 4: of people who do things like geospatial analysis, people who
Speaker 4: collect human intelligence to really do their best work here
Speaker 4: and figure out what was destroyed and what wasn't. And
Speaker 4: why that matters is because if Iran was left with
Speaker 4: an enrichment capability and with a weaponization capability, they could
Speaker 4: try to sprint to a weapon as soon as the
Speaker 4: Israeli campaign is over.
Speaker 1: What's really interesting is I think a military satellite makers,
Speaker 1: in fact, one of them is eyeing an IPO at
Speaker 1: the moment. ICI, can you tell us a little bit
Speaker 1: about the sets that need to be in place for
Speaker 1: us to get the imagery that's necessary here.
Speaker 4: It's a really interesting moment for what we call open
Speaker 4: source intelligence. And that's just another way of saying that
Speaker 4: all of these industry actors that are out there with
Speaker 4: these amazing satellite constellations are doing phenomenal work trying to
Speaker 4: map and identify things that are going on inside ORN.
Speaker 4: So you've got the government's exquisite assets, and we call
Speaker 4: them exquisite because they are the most advanced generally speaking.
Speaker 4: They can do things like loiter over an area to
Speaker 4: actually get continuous coverage of a space.
Speaker 2: But then you have this huge.
Speaker 4: Industry space where all of these actors are coming out
Speaker 4: with really quite good information and a lot of coverage
Speaker 4: that the government can't provide. And the combination of those
Speaker 4: two things is going to give us great insight into
Speaker 4: what's going on on the ground inside Iron and.
Speaker 2: Now the market.
Speaker 1: But most notably, the administration has to play out what
Speaker 1: the best and the worst case scenarios potentially are here.
Speaker 1: What from a defense tech perspective might come into play.
Speaker 4: So they're going to have to think a lot about
Speaker 4: defense stocks. We've talked lot about the defense industrial base
Speaker 4: inside the US and how deep our benches basically on
Speaker 4: some of the key weaponry that we have. Before this
Speaker 4: round of strikes, there was a big debate inside the
Speaker 4: administration about what you needed to preserve for a China contingency,
Speaker 4: what you could send to Ukraine, and what you could
Speaker 4: maintain in the Middle East. This particular operation didn't really
Speaker 4: draw down our stocks much at all. We can pretty
Speaker 4: easily replace what we used. But if you're looking at
Speaker 4: more of a drawn out contingency, if Iran were to
Speaker 4: unwisely retaliate against the US in a really dramatic way,
Speaker 4: and you're looking at much more activity on the ground,
Speaker 4: what you'd want to think about is do you have
Speaker 4: the defense stocks to backfill what you're spending and can
Speaker 4: you do it quickly?
Speaker 1: And we have supply chain analysis from certain companies.
Speaker 2: Yvonne is one of them. For example.
Speaker 1: I'm interested Emily is to which is the forward looking
Speaker 1: analysis for whether we have the manufacturing capability here in
Speaker 1: the United States. That is something that many people have
Speaker 1: debated about bringing that sort of expertise back to the US.
Speaker 4: It is the key question for the next probably ten
Speaker 4: years of deterrence against China. One has to think that
Speaker 4: they looked at what we just did and went, oh,
Speaker 4: the US is serious. However, any kind of modeling that
Speaker 4: we've done of a conflict between US and China, you know,
Speaker 4: if it were unfortunately to happen, shows that we would
Speaker 4: run out of precision weaponry very quickly and have to
Speaker 4: move to backfilling rapidly. With our defense industrial base, and
Speaker 4: that involves not just manufacturing, no how, but also the.
Speaker 5: Ability to scale up very quickly.
Speaker 4: The US likes to think of itself in the sort
Speaker 4: of the World War II context, where we flipped a
Speaker 4: switch and all of a sudden there was all this,
Speaker 4: you know, dramatic growth in American manufacturing of planes and boats.
Speaker 4: I hate to say it, but today's F thirty five
Speaker 4: cannot be made in a Ford factory. You have to
Speaker 4: have much more specific kind of construction, and we really
Speaker 4: need to think about preparing for that contingency, in part
Speaker 4: because we hope it doesn't.
Speaker 2: Happen, but emani actually we've seen that preparation.
Speaker 1: It's inspired the likes of pal Maerlucky, of Tray Stevens
Speaker 1: to go out there and build and drill because they've
Speaker 1: been worried about how quickly we can deploy and manufacture
Speaker 1: here in the United States. Have we seen that industrial
Speaker 1: base thicken enough in recent years for this moment.
Speaker 4: It has thickened, but not enough. You're absolutely right about
Speaker 4: Palmer Lucky. Chris Brose, who also is at ANDREL, is
Speaker 4: one of the foremost proponents of this, talking about how
Speaker 4: we can't just depend on what we have, we have
Speaker 4: to think about how to build I think that andrel
Speaker 4: is leading the way in this pollunteers in a way too,
Speaker 4: but a lot of other sort of you know, bigger
Speaker 4: defense firms need to catch up also. I mean I
Speaker 4: talked to these folks all the time, and what they
Speaker 4: say is that they're not going to make these huge
Speaker 4: capital investments if they don't have a demand signal from
Speaker 4: the US government. So they look at the government and
Speaker 4: they say, where's our demand signal? And the government sort
Speaker 4: of shrugs and says, well, it's either stuck in Congress,
Speaker 4: or it's stuck in the president's budget, or we kids
Speaker 4: can't give it yet. And that kind of chicken egg
Speaker 4: situation is what is keeping us from really building up
Speaker 4: the way we need to.
Speaker 1: So are they getting any more signal at this moment,
Speaker 1: because it feels as though there's trying to be the words,
Speaker 1: but what you're saying is that they need the walk,
Speaker 1: not just the talk.
Speaker 2: At this moment. Absolutely.
Speaker 4: So it's nice to sit in a meeting and here,
Speaker 4: we need to build up our defense industrial base. But
Speaker 4: before you spend millions of dollars on a new facility
Speaker 4: and the environmental studies and recruiting all of the talent
Speaker 4: you need to recruit. What you want is words on paper,
Speaker 4: the contracts or what's really going to have to come.
Speaker 1: Is there enough money financing the startups or at least
Speaker 1: the ecosystem to be able to put it there. Because
Speaker 1: there are innovative ways in which we can finance the
Speaker 1: build out from some of the legacy defense companies, not
Speaker 1: just the bench capital companies that have been there to
Speaker 1: foster the Andrills and Soronis and those sorts of companies.
Speaker 4: Right, So, this year's one trillion dollar defense budget, depending
Speaker 4: on how you measure it, was meant to do some
Speaker 4: of that to really bolster that startup ecosystem. Plus, the
Speaker 4: Defense Department has done some innovative things trying to create
Speaker 4: alternative funding mechanisms for some of these smaller companies. Really,
Speaker 4: what the tension is is that if you're not one
Speaker 4: of the big prime defense contractors, you don't have the
Speaker 4: multitude of lawyers and government affairs officials and people who
Speaker 4: have run through government contracts, you know, five hundred times
Speaker 4: to really help you break through that bureaucracy. So one
Speaker 4: of the things that I think people are really hoping
Speaker 4: to see out of the Trump administration is a new
Speaker 4: way of doing business that is much more welcoming to
Speaker 4: the tech startups and kind of the alternative defense companies,
Speaker 4: things like Sons of and or Realmpalaneer.
Speaker 1: So that's the technology play of which you are key
Speaker 1: with expertise. What about the intelligence side here as well,
Speaker 1: because are we seeing enough innovation there to be able
Speaker 1: to decipher what the next move is for Iran?
Speaker 2: It's never enough innovation.
Speaker 4: So this is really an interesting moment for open source intelligence.
Speaker 4: I grew up in the intelligence community. I grew up
Speaker 4: believing that what we were getting on the classified side
Speaker 4: was going to be far better than what we could
Speaker 4: ever get on the open source side. And for a
Speaker 4: long time that was true. But the space has really changed.
Speaker 4: The amount of open commercially available data that's out there
Speaker 4: in the world really can bolster and change the game
Speaker 4: for intelligence. And there's some companies out there that are
Speaker 4: trying to do that, that are working with AI, that
Speaker 4: are working with huge amounts of data to try to
Speaker 4: pull the signal out of the noise. So a moment
Speaker 4: I think for the intelligence community to sort of be
Speaker 4: open minded. Are there some great leaders inside the IC
Speaker 4: right now who are working on this and working to
Speaker 4: partner with the private sector to make the intelligence that
Speaker 4: we collect on the classified side fit really well with
Speaker 4: that open source intelligence, and the two together is going
Speaker 4: to be much stronger than anything we.
Speaker 2: Had in the past.
Speaker 1: Be open minded on open source, Emily Harding, we love it.
Speaker 1: Thank you from the Center of Strategic and International Studies.
Speaker 2: Stay well. Like another story that we're watching.
Speaker 1: Deep Seek, Well, it's assisting China's military and intelligence officials
Speaker 1: while exploring ways to help Beijing circumvent sanctions and gain
Speaker 1: access to advanced chips. That's all according to a Reuters
Speaker 1: report citing a US State Department official who says that
Speaker 1: Deep Seek was mentioned more than one hundred and fifty
Speaker 1: times in procurement records for the military and defense affiliated entities.
Speaker 2: Coming up, Tesla's long.
Speaker 1: Promised driveris taxi service. It hits the road in Austin.
Speaker 1: We'll discuss the rollout next. This is blueleg Tech.
Speaker 2: Tesla.
Speaker 1: It rolled out its long promise driveral as taxi service
Speaker 1: to a handful of riders on Sunday. It was pretty
Speaker 1: modest debut from what in OMSKS is as a transformative
Speaker 1: new business line joining us now is Regina Klilo, CEO
Speaker 1: and co founder of Populus is, a mobility analytics software company. Regina,
Speaker 1: what do you make of the initial rollout, Well.
Speaker 5: It's very exciting to have another big player in the mix.
Speaker 6: As I'm sure many folks know, Weimo has been active
Speaker 6: in the market for at least twenty months with commercial service,
Speaker 6: and so it's a pretty big development to have Tesla
Speaker 6: now delivering fully autonomous vehicle service.
Speaker 1: Might have been a modest rollout, it's not a modest
Speaker 1: stock move round more than ten percent. There's a lot
Speaker 1: of hopes and prayers based on why this technology takes us.
Speaker 1: In your mind's eye, Regina, how will we see the
Speaker 1: roll out in Austin be picked up by other cities.
Speaker 1: What is pressure is it putting on others in terms
Speaker 1: of their regulatory environment.
Speaker 6: Well, San Francisco has been an operation for over twenty months,
Speaker 6: but Weimo then very quickly began expanding into Los Angeles, Austin, Phoenix,
Speaker 6: Atlanta with partnerships with Uber, and they have Miami and
Speaker 6: Washington coming up next year. And it is putting extreme
Speaker 6: pressure on cities to really catch up and build their
Speaker 6: digital infrastructure. So they can communicate with these vehicles and
Speaker 6: make sure that these rollouts occur safely, because in the
Speaker 6: case of Weymo, they've grown very very quickly in the
Speaker 6: San Francisco market.
Speaker 1: And populous is all about that communication, right, Just tell
Speaker 1: us about what are the learnings, what's the experience. So
Speaker 1: the states and the cities that are watching Austin in
Speaker 1: particular in Texas do this, what do you think then
Speaker 1: they need to learn what is it that Weymo and
Speaker 1: Tesla need to do more efficiently to ensure that streets
Speaker 1: do remain safe well.
Speaker 6: Many cities are building digital infrastructure to begin preparing for
Speaker 6: the future of mobility. We work with cities to help
Speaker 6: them manage shared mobility, so micromobility, shared scooters services like
Speaker 6: Lime and Bird they actually do need to digitally communicate
Speaker 6: with cities, and cities can digitally communicate back. They can
Speaker 6: share parking policies, no rite policies, and these same exact
Speaker 6: policies are really important for services like autonomous vehicles, whether
Speaker 6: or not there are major events occurring or protests, and
Speaker 6: cities need to close roads for emergencies all the way
Speaker 6: to you know, basic planning services like making sure they're
Speaker 6: enough pickup and drop off zones in a city.
Speaker 1: To this point, you talk about Mobility Data Specification MDS.
Speaker 1: This is basically the establishment of open source standard that's
Speaker 1: already in place. How quickly do you think these companies,
Speaker 1: private companies have been willing to adopt this to be
Speaker 1: able to share their data and get the data in return.
Speaker 6: Well, we saw with micromobility the transition happened very very quickly.
Speaker 6: Cities were more prepared after having experienced Uber and Lyft
Speaker 6: in cities to put down some regulations that required mobility
Speaker 6: operators to share data in the case of scooters. So
Speaker 6: it happened within the course of you know, a few
Speaker 6: months to a year. Almost every city in America and
Speaker 6: now around the world requires data from those operators through
Speaker 6: that Mobility Data Specification standard, and standardization makes it easy
Speaker 6: for those large operators to then turn on data feeds
Speaker 6: in cities from Redwood City all the way to New
Speaker 6: York City. And so we delivered data through our platform
Speaker 6: using that data standard and with larger operators like Uber,
Speaker 6: lyftwaimos have a little bit more resistance. But what we've
Speaker 6: seen is that when cities have put down policies that
Speaker 6: require that data sharing. They are often able to get
Speaker 6: operators to comply. Maybe there are some battles here and
Speaker 6: there with states in terms of who's in charge, but
Speaker 6: we've seen cities prevail on that front in terms of
Speaker 6: data sharing and the sharing mobility space.
Speaker 1: So it's kind of their having to deploy the stick
Speaker 1: attitude here rather than the carrot of saying like, here's
Speaker 1: the rules and regulations for you to.
Speaker 2: Ascribe by, but talk us through the carrot.
Speaker 1: Because these companies will glean a lot if they get
Speaker 1: the data back from the city right.
Speaker 5: Well, they'll gain to a couple of things.
Speaker 6: One, they'll be able to operate more efficiently if cities
Speaker 6: are able to then carve off the space that they
Speaker 6: need in order to do really efficient pickups and drop offs.
Speaker 5: We've seen, for example, with a surge of delivery.
Speaker 6: You have ups and FedEx trucks that really don't have
Speaker 6: the space that they need for the volume of delivery
Speaker 6: that we experience in cities, and it's very difficult, I
Speaker 6: believe you know. There are a lot of conversations around
Speaker 6: bureaucracy and how governments can sometimes move slowly. It's really
Speaker 6: important for cities to be able to have data in
Speaker 6: order to facilitate making change more quickly.
Speaker 5: And we've seen when operators share.
Speaker 6: Data with cities, cities are able then to respond much
Speaker 6: more quickly to create the space that they need to
Speaker 6: run efficient services.
Speaker 1: I mean mobility is slowly, slowly, then all at once.
Speaker 1: I mean it's extraordinary to think how we all have
Speaker 1: access to an electric bikeron electric scooter now most cities
Speaker 1: in the way from which we sort of expanded the
Speaker 1: catchment areas. How quickly do you think that adoption will
Speaker 1: be replicated when it comes to actually not having someone
Speaker 1: in the front of the car and steering a vehicle.
Speaker 6: The growth of Weymo in San Francisco has been pretty
Speaker 6: inc ardible. They only launch to their widespread commercial service
Speaker 6: that anyone could sign up for about eighteen months ago,
Speaker 6: and now they have more than twenty seven percent of
Speaker 6: the market.
Speaker 5: So they've already passed Lifts, one of the earlier players
Speaker 5: in the space.
Speaker 6: And so I would anticipate that we'll see similar rapid
Speaker 6: adoption of other av services in other cities because people
Speaker 6: enjoy the service. Some data shows that people are willing
Speaker 6: to pay over twenty dollars an hour for a Weimo
Speaker 6: versus just over fifteen dollars for an uber. So I
Speaker 6: expect we'll see pretty rapid adoption in other major metros
Speaker 6: as well.
Speaker 1: Because we get a humanous price point a full dollars
Speaker 1: twenty coming from you know, Musk company.
Speaker 2: How do things differ with Tesla.
Speaker 5: Well, I think that you know Tesla is catching up
Speaker 5: on that front.
Speaker 6: So they do have a brand that's interesting, and so
Speaker 6: there are definitely people who really enjoy that experience who
Speaker 6: have been I Heard customers for a while, and so
Speaker 6: we'll see how how their rollout is different from Weimo's
Speaker 6: and how quickly they're able to grow.
Speaker 1: It's been great speaking with you, Regina Klilo, Thanks so
Speaker 1: much for your time. The CEO of Populace, It is
Speaker 1: time now for talking tech.
Speaker 2: First up, open ai has.
Speaker 1: Removed details of its deal with former Apple designer Johnny
Speaker 1: Eyes from the web over a trademark dispute. Now, the
Speaker 1: six and a half billion dollar acquisition of I's startup
Speaker 1: called io Products is meant to help the chatchubt make
Speaker 1: a move into AI devices.
Speaker 2: A judge temporarily blocked.
Speaker 1: Open ai from using the io Moniker after a wearable
Speaker 1: audio device maker accused it of trademark infringement plus tech
Speaker 1: investor process where What did a profit for the first time.
Speaker 1: Under its new CEO, the company has acquired businesses including
Speaker 1: online travel firm that Dispago and food delivery business Just Eat,
Speaker 1: with an eye toward building out large e commerce platforms.
Speaker 1: And Chinese tech giant Shaomi will be releasing a host
Speaker 1: of new products and an event later this month. They
Speaker 1: include a tablet powered by self developed O one chip
Speaker 1: and its first suv. Pricing for the new vehicle, the
Speaker 1: Yu seven is also supposed.
Speaker 2: To be released at the event.
Speaker 1: Welcome back to Blue meg Tech and Caroine Hide in
Speaker 1: New York. Let's get your check on these markets because
Speaker 1: the geopolitical anxiety is starting back just a little bit.
Speaker 1: We're still all focused on Israel, Iran and of course
Speaker 1: what occurred over the course of the weekend as US
Speaker 1: struck those three sites in Iran.
Speaker 2: We're seeing that.
Speaker 1: We're bounced back in stocks are up by five tens percent,
Speaker 1: and I want to dig into some of the individual.
Speaker 2: Moves in a moment.
Speaker 1: But Bitcoin as well looking more like a proxy for
Speaker 1: well some stability rather than risk a version. Over the
Speaker 1: course of the weekend, we saw some of the old
Speaker 1: coins perform much worse than Bitcoin renown our one oh
Speaker 1: one thousand level. I'm looking at what's happening for the
Speaker 1: individual names though, and Palo Alto Networks up more than
Speaker 1: a percentage point. I'm looking also at checkpoint why, because
Speaker 1: we're thinking about the cyber implications here after the US
Speaker 1: attack on Iran and what's happening between Israel and ram More. Generally,
Speaker 1: US officials are in fact issuing a warning to businesses
Speaker 1: to brace the potential cyber attacks from Iran. This following
Speaker 1: US air strikes that we saw the country's nuclear facilities
Speaker 1: really be targeted. Lumergs, Patrick how O'Neil joins us some
Speaker 1: more and Patrick, some of the names that we're highlighted
Speaker 1: are on the higher side because people are thinking company
Speaker 1: is going to have to double down.
Speaker 2: Here, that's right.
Speaker 7: So the Department of Homeland Security issued a warning over
Speaker 7: the weekend that US companies are going to have to
Speaker 7: watch out for Irani and cyberactivity. But I think one
Speaker 7: important note here to make is that they specifically emphasize
Speaker 7: that it would be quote low level activity. And the
Speaker 7: key there is that this is a thread actor who's
Speaker 7: been prolific and brazen, but not particularly sophisticated, And so
Speaker 7: it really speaks to the kind of level of a
Speaker 7: thread and the specific things that US companies and organizations
Speaker 7: and individuals are going to have to be looking out for.
Speaker 1: So perhaps not that sophisticated. Perhaps the bark is worse
Speaker 1: than the bite. But Iran has primarily targeted who in
Speaker 1: the past.
Speaker 7: Well, the real answer to that would be Israel. There's
Speaker 7: been incredible amount of Israel aro on cyberactivity over the
Speaker 7: years back and forth. But in the US there's been
Speaker 7: a long history of Iranian cyberactivity of varying levels. They've
Speaker 7: targeted famously, they targeted US financial institutions about ten.
Speaker 2: Or fifteen years ago.
Speaker 7: They were able to get some top Wall Street banks
Speaker 7: off the Internet. They've also targeted individuals that they deem
Speaker 7: to be enemies of the regime. They've done defacements, they've
Speaker 7: done ransomware. So it's a wide gamut of targets and
Speaker 7: a lot of it is about the psychological impact. A
Speaker 7: lot of it is about looking powerful intimidation rather than
Speaker 7: a real demonstrable impact. In many cases, and.
Speaker 1: I imagine defense contractors, government bodies right now are really
Speaker 1: bracing themselves, Patrick, But what has also been demonstrated is
Speaker 1: the impact that Israel has had on Iran in terms
Speaker 1: of cyber as well.
Speaker 2: What have we've seen over the last few weeks.
Speaker 7: It's been really interesting. So to describe what we've seen,
Speaker 7: we have to preface it with the potentially obvious that
Speaker 7: there is a really significant fog of war right now,
Speaker 7: so we're still doing our best to understand. But most notably,
Speaker 7: there is a group called Predatory Sparrow, and it maintains
Speaker 7: this image of a activist, activist group, but it's been
Speaker 7: engaged in some really high profile activity. It's taken a
Speaker 7: huge Iranian bank offline because of alleged links to the IRGC,
Speaker 7: the Republican Guard. It's essentially burned tens of millions of
Speaker 7: dollars in crypto from a major Iranian crypto exchange, again
Speaker 7: because of links to evading sanctions. And it's all really
Speaker 7: been in the effort of having a psychological impact.
Speaker 2: Again.
Speaker 7: I mean, don't get me wrong, the financial impact is significant,
Speaker 7: but I think it's about in their case, showcasing that
Speaker 7: the emperor has no clothes in this case, and that Israel,
Speaker 7: this group that most experts say is aligned with Israel
Speaker 7: is really able to operate freely during this conflict.
Speaker 1: Fascinating, Patrick Howl O'Neil do come back, Thanks so much,
Speaker 1: and let's just stick with defense tech more broadly now.
Speaker 1: Marlin Spike is a notable VC investor in the sector,
Speaker 1: backing companies such as Palenteers, Shield Ai Andre Will Marlin
Speaker 1: Spike CEO Keegan joins us.
Speaker 2: Now, look, you've been in this game a long time.
Speaker 1: What is it since twenty twenty, I've been backing some
Speaker 1: of these names. Palenteer's near a record high today, So congratulations.
Speaker 1: What are we seeing in terms of the rest of
Speaker 1: the VC industry following your lead?
Speaker 7: Sure?
Speaker 8: Well, first of all, thank you very much for having me, Caroline.
Speaker 8: It's an honored bey on Bloomberg, particularly on a day
Speaker 8: where there's a lot more green than red on the screen.
Speaker 8: So what we're seeing, particularly as it relates to defense
Speaker 8: technology and dual use, which is where we spend our
Speaker 8: time investing, We're looking for very disruptive companies that can
Speaker 8: make an impact on our industrial base. I mean, we're
Speaker 8: here to build with these hygro technology companies the most
Speaker 8: robust and durable industrial base that we can, and as
Speaker 8: it relates to Iran, look, this is a long time
Speaker 8: common for this strike and we've significantly degraded their capabilities.
Speaker 8: But I think it highlights that that, you know, a
Speaker 8: country like Iran and some of our other competitors are
Speaker 8: not going to come at us in traditional ways. We
Speaker 8: need to be ready for asymmetric threats and that is
Speaker 8: one of the real goals for where we're investing and
Speaker 8: looking for companies that can not suffer a failure of imagination.
Speaker 8: After nine to eleven, we need to focus on all
Speaker 8: the tools that we have at hand in terms of AI,
Speaker 8: autonomous systems and advanced manufacturing. These are the new companies
Speaker 8: that are going to work in concert with some of
Speaker 8: the great defense companies that we have that produce our
Speaker 8: exquisite capital systems that we actually saw on display over the.
Speaker 2: Weekend working concert. Is that happening more at the moment.
Speaker 8: Neil, absolutely, and first of all, hats off to our
Speaker 8: brave men and women that plan this decisive strike. There
Speaker 8: was a lot of thought and coordination that went into this,
Speaker 8: and I like to paraphrase you know Admiral Palparo, who
Speaker 8: likes to say we need not only the will, but
Speaker 8: the capability, and I think we demonstrated both with a
Speaker 8: high degree of success on Saturday evening. I do see,
Speaker 8: or we do see from our team, more coordination with
Speaker 8: the large legacy primes and really the new you can
Speaker 8: call them new kids in the block, but companies like
Speaker 8: SpaceX and Palneer have been around for over twenty years.
Speaker 8: And what I think is really fascinating is we're seeing
Speaker 8: a very open tie up between these market leaders to
Speaker 8: work together so we can effectively renew freedoms Forwards two
Speaker 8: point zero, which is the coming together of the public
Speaker 8: and the private markets to defend America in our allies,
Speaker 8: so we can be ready with the best possible tech
Speaker 8: to give it to our war fighters and an intelligence community.
Speaker 1: Neil, it's interesting you say the intelligence community. We do understand. Still,
Speaker 1: really a battle damage assessment is needed to show clarity
Speaker 1: of the effectiveness of what happened over the course of
Speaker 1: the weekend. We started this conversation this show with the
Speaker 1: csis Emily Harding on the show really talking about how
Speaker 1: now intelligence can be an area of innovation and of fostering.
Speaker 2: Is that something you've been looking at? How is AI
Speaker 2: changing that game?
Speaker 8: Sure is and it's an integrated part. I mean you mentioned,
Speaker 8: you know, Palneer Palenteer was really formed in the wake
Speaker 8: of nine to eleven. They were an early Inky Tel investment.
Speaker 8: Ink you tell, as you and a lot of your
Speaker 8: viewers may know, has been investing in the intelligence community
Speaker 8: on behalf of our country for over twenty five years.
Speaker 8: This is a group that we're very close to. We
Speaker 8: understand their return on mission. You know, we're also in
Speaker 8: this to make great returns for our investors, but it's
Speaker 8: very important that these groups, you know, work handing glove together.
Speaker 8: And I see that happening more and more and more,
Speaker 8: and that's a great thing, not only at the at
Speaker 8: the later stage where these companies have really blossomed and
Speaker 8: they've got product market fit, growing revenues, getting major contracts,
Speaker 8: but also on the earlier stage. You know, we're very
Speaker 8: excited to see that. It seems like almost every day
Speaker 8: there are bright young men and women that are leaving
Speaker 8: great companies like Tesla and Androl and Palneer and space Act,
Speaker 8: and they're starting new companies with new capabilities, and we're
Speaker 8: excited to spend time with them and to back them
Speaker 8: in the earlier stages. As well.
Speaker 1: What's interesting is we're still perhaps wondering what the key
Speaker 1: buy signal is here for yet more contracts, Neil. We
Speaker 1: keep saying the same names time and time again, Pal
Speaker 1: Andeer Andrel because they have made such moves they have
Speaker 1: managed to intertwine themselves with the administration and get more contracts.
Speaker 1: But is that going broader? Because Emily Hardening at the
Speaker 1: top of the show was sort about lning that there's
Speaker 1: a lot of talk about allocating funds towards these startups,
Speaker 1: but sometimes not enough walk.
Speaker 8: I would say that's a fair assessment, and I want
Speaker 8: to be labor the Valley of Death comment. In our space,
Speaker 8: there's been a lot written about that we must change
Speaker 8: what we buy, how we buy it, and get new
Speaker 8: technology with a lot of the newer entrance in the
Speaker 8: space to the warfighter, and thankfully that is happening in
Speaker 8: our Vieu's not happening fast enough, but there are pockets
Speaker 8: of opportunity. I think Golden Dome is going to be
Speaker 8: a really good example. We're very pleased to see the
Speaker 8: new energy around this because I think this is something
Speaker 8: that is much bigger than just counter defenses. This is
Speaker 8: an integrated, layered system, both at home and abroad. It's
Speaker 8: going to involve very exquisite programs but also asymmetric defense. Again,
Speaker 8: I said it before and I'll see it again. We
Speaker 8: can't failure the lack of imagination after nine to eleven,
Speaker 8: so we need to be very creative as it comes
Speaker 8: to homeland defense, securing our border, critical infrastructure, cyber capital
Speaker 8: markets and some of these newer, more innovative companies are
Speaker 8: going after this, and I think they've got a real
Speaker 8: role to play in concert with the large legacy primes
Speaker 8: as well as the new market leaders like Androl and
Speaker 8: Poundteer Neil.
Speaker 2: I like the way you said there's new energy. There
Speaker 2: is new energy.
Speaker 1: Around well defense tech investing more broadly, far more vcs
Speaker 1: getting in on it, but far more big tech company
Speaker 1: is willing to go there. I think meta and an
Speaker 1: error relationship that they're now having with Andrew, you're thinking
Speaker 1: of the relationship that we're seeing Google now redeploying and
Speaker 1: focusing on military applications.
Speaker 2: Has that taken by surprise?
Speaker 1: As someone who's been working on this intersection since twenty twenty.
Speaker 8: I wouldn't say it's taken me by surprise or our
Speaker 8: team by surprise. I mean, our team has been in
Speaker 8: this space a long time. You know, my background, I
Speaker 8: was a Naval Academy graduate or naval officer, was actually
Speaker 8: in the Arabian golf in the in the late nineties,
Speaker 8: going through the straits of Horror Mouz. So you know,
Speaker 8: we were ready. We were ready then and as we're
Speaker 8: ready now, and we need to continue to be ready
Speaker 8: for these asymmetric threats. And I think this is where
Speaker 8: you know, we're going to shine. And I'm actually very
Speaker 8: pleased and gratified to see this continued, not only public recognition,
Speaker 8: but having the private sector really stepped into this. And
Speaker 8: I think a lot of the tech leaders back in
Speaker 8: the late teams, you know, I think again Andrell, you know,
Speaker 8: is a great example where you know, this is private capital.
Speaker 8: These are founders. These are folks that are very tech
Speaker 8: savvy that they took a risk, they've built a great company,
Speaker 8: and then now more have followed. So I think that's
Speaker 8: going to be a continued trend. And again there are
Speaker 8: more entrants in the defense tech dual use investing space,
Speaker 8: and that's a good thing. We need that we are
Speaker 8: our missions driven, we co invest together, we share ideas,
Speaker 8: and at the bottom line is you know, we're in
Speaker 8: this not only for profit, but also for purpose and
Speaker 8: that's the mission mindset I see of our cohort in
Speaker 8: this space.
Speaker 1: Well, we take note that you've invested in twenty five
Speaker 1: companies so far and some of the leading names that
Speaker 1: have stood out in defense tech. So, Neil Keegan, we
Speaker 1: listen to you with Marlin Spike, thanks so much for joining.
Speaker 1: Coming up, Thank you CenTra Systems. It aims to modernize
Speaker 1: the way a key component in aerospace and defense tech
Speaker 1: is made. We speak with CenTra system CEO John and Black. Next,
Speaker 1: this is a Bloomberg Tech. We have some breaking news
Speaker 1: for you. Let's just take you out to Kata to
Speaker 1: temporarily suspend traffic over its airspace. This is of course,
Speaker 1: as anxieties have dialed up and indeed real world implications
Speaker 1: for Iran after the attacks from the US over the
Speaker 1: course of the weekend and Israel in Iran, the tensions
Speaker 1: continued to foster over this weekend. We have seen notable
Speaker 1: lack of access to Dubai for example, certain airlines British
Speaker 1: Shareways for example, curtailing some of their flights to those destinations.
Speaker 1: Now we understand that Kata is to temporarily suspend traffic
Speaker 1: over its airspace.
Speaker 2: We'll keep you up to date with all the news.
Speaker 1: Meanwhile, CenTra Systems, I want to talk about how it's
Speaker 1: announced it's raised twenty five million dollars in a Series
Speaker 1: A funding round and then aim to modernize whire harnesses
Speaker 1: using the aerospace and defense industry. Jordan Black, CenTra system
Speaker 1: CEO and co founder, joins us. Now, congrats on the rays.
Speaker 1: Talk to us about harnesses. What exactly is it that
Speaker 1: you're making, What exactly is it that you feel needs
Speaker 1: to be disrupted?
Speaker 9: Yeah, thank you for having me so, probably don't have
Speaker 9: too much no wire harnessing, but it's in everything. It's
Speaker 9: in your rockets, it's in your cars, it's in your
Speaker 9: coffee maker. It's what connects all electronic components together. Without it,
Speaker 9: nothing would fly, nothing would run, nothing would work, nothing
Speaker 9: would turn on. And it's an industry that hasn't changed
Speaker 9: since the World War, mainly because it's an entirely manual
Speaker 9: process to design it and to also manufacture it from
Speaker 9: scratch too. It's entirely done by labor. It's fairy arts
Speaker 9: and crafts like and it's one of those really un
Speaker 9: sexy businesses that has just been in the US for
Speaker 9: a while and all over the world, but we're excited
Speaker 9: to disrupt it from starting to finish.
Speaker 2: You found it sexy.
Speaker 1: You went around the world when you're working with SpaceX
Speaker 1: to go and see what really the bottlenecks were as
Speaker 1: to why you can't scale this. So what's your answer,
Speaker 1: how do you end up making this more automated more
Speaker 1: quickly to replicate.
Speaker 9: The way we believe we have to solve this thing
Speaker 9: is that it comes both from the input and the
Speaker 9: output side of it too. And what I mean by
Speaker 9: that is some of the largest companies today are using
Speaker 9: Excel spreadsheets and powerpoints slides to design their electrical wire
Speaker 9: harnessing because there's no industry standard to actually design it
Speaker 9: to give it to a contract manufacturer like ourselves to
Speaker 9: build off of. And this is where they have the
Speaker 9: back and forth and a lot of the inefficiency in
Speaker 9: the process too. So we're creating a design tool called
Speaker 9: AMP where anyone can pretty much design a wire harness
Speaker 9: within minutes versus months. Then we take that data and
Speaker 9: we send it to our manufacturing facility. So right now
Speaker 9: the headquarters is in southern California, Redondo Beach, and we
Speaker 9: use that data to streamline the entire process from ordering
Speaker 9: the parts, giving work constructions, to the technicians using machines
Speaker 9: that we either build internally or off the shelf, to
Speaker 9: empower almost anyone to be able to build the wire
Speaker 9: harness too. The thing that was really the biggest struggle
Speaker 9: even at SpaceX was it would take at least twelve
Speaker 9: months for someone to be able to be a skilled
Speaker 9: technician to touch a wire harness that goes into a
Speaker 9: SpaceX rocket or satellite or anything else like that.
Speaker 2: And it's just.
Speaker 9: This process of it hasn't changed since the Cold War,
Speaker 9: like I mentioned too.
Speaker 2: So you got twenty five million, Where does that go?
Speaker 1: Because is it about ensuring that you can scale the
Speaker 1: manufacturing the footprint You say you're in Soco, Los Angeles
Speaker 1: as well with a factory, do you scale that out?
Speaker 1: Is it about hiring more technicians of your own?
Speaker 2: It's both.
Speaker 9: It's putting more effort into our software design tool. We've
Speaker 9: already released our beta and we have customers actively using
Speaker 9: it too and really being able to create that industry
Speaker 9: standard right off the bat. And then we're scaling manufacturing
Speaker 9: we can't keep up with the demand. Two years ago
Speaker 9: I started building wire harnesses in my apartment. A year
Speaker 9: after that, we're in our current facility and we've already
Speaker 9: most outgrown it, and so it's continued to keep up
Speaker 9: with the demand as we continue to grow too.
Speaker 1: I mean, that feels weird that you were able to
Speaker 1: build a wire harness in your apartment from just a
Speaker 1: regulatory perspective, I mean, Jordan, what are the sort of
Speaker 1: boxes you have to take when you make these things?
Speaker 9: When I started, I unfortunately my first customer wasn't a
Speaker 9: SpaceX or a large company like that, but it was
Speaker 9: actually a pizza automation company, and so I started with
Speaker 9: just going to almost every startup.
Speaker 5: Probably the third week, I.
Speaker 9: Opened up and said, I don't care what you pay me,
Speaker 9: I don't care what the harness is. I will just
Speaker 9: build it for you because I want that eager to
Speaker 9: just get my hands dirty and be able to start
Speaker 9: this company round the scratch. But it shows also how
Speaker 9: manual the processes that I'm able to build into my
Speaker 9: apartment because I don't need very expensive machines or the
Speaker 9: crazy technology to build this, and that's what the industry
Speaker 9: needs to be able to scale out of an apartment.
Speaker 1: When the industry is getting it not just from you,
Speaker 1: but also from Hadrian. For example, there is now this
Speaker 1: push for automated manufacturing here in the United States. You
Speaker 1: share similar vcs for example Founders fund a sixteen Z
Speaker 1: caffeinated capital. You seeing this desire come from the capital
Speaker 1: markets right now.
Speaker 9: It's really this push to keep up with the demand
Speaker 9: because I think the industrial supply chain is just it's dwindling,
Speaker 9: and there's in at least in wire harnessing, there's eight
Speaker 9: hundred plus mom pop shops that build this and they're
Speaker 9: struggling to scale, the struggle to keep up with demand.
Speaker 9: And I think our customers they're emerging, such as like
Speaker 9: the Andrels of the world, They need a supply chain
Speaker 9: can quickly iterate that can build them high quality harnesses, faster, cheaper,
Speaker 9: everything else on that side of it too. But I
Speaker 9: think this is why this capital market's very excited for
Speaker 9: this is they're not only putting their capital into some
Speaker 9: of the new incumbents in the space like Anderid, but
Speaker 9: also the industrial supply gen that's going to make them
Speaker 9: successful in the long run too.
Speaker 1: Jordan Black of Central Systems. Thanks so much for talking
Speaker 1: about the rays.
Speaker 2: We appreciate it. Now.
Speaker 1: That does it for this edition of Bloomberg Tech. You
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