Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hyde in New York
Speaker 1: and ever though in sent Francisco.
Speaker 2: This is Bloomberg Tech Live from Washington. Coming up, arm
Speaker 2: announces plans to sell its own chips for the first time,
Speaker 2: with Meta as the first major customer.
Speaker 3: Plus space stocks on the move after reports that SpaceX
Speaker 3: aims the file of prospect us for an IPO as soon.
Speaker 2: As this week, and kind of Perkins makes its largest
Speaker 2: raise ever three point five billion dollars. We'll discuss next
Speaker 2: with partner Ilia.
Speaker 3: Fishman, but first we check in on these public markets
Speaker 3: and what volatility we have experienced today. We're at one
Speaker 3: point two percent, let's call it on the nasat one hundred.
Speaker 3: Video on the lead got many of the real tech
Speaker 3: and growth named surging on hope that c SPA talks
Speaker 3: can start between Iran and the United States, even though
Speaker 3: in Ran pushes back on that. Great crude down three
Speaker 3: point eight percent and we're still above one hundred dollars,
Speaker 3: But this topic front and center at this year's Hill
Speaker 3: and Valley Forum and Blomberg Senior Tech Editor Mike Sheppard
Speaker 3: I'm pleased to say has the latest for US. Look,
Speaker 3: there seems to be caution necessary because Iran's saying, no, thanks,
Speaker 3: you don't want your fifteen point piece plan. We've actually
Speaker 3: got five of our own. But the market is still optimistic.
Speaker 4: Well, there is at least some sign of engagement, at
Speaker 4: least through intermediaries. The US had sent its fifteen point
Speaker 4: plan through Pakistan. It was promptly rejected, and it contains
Speaker 4: some of the familiar provisions, limits on Iran's missile program
Speaker 4: or rollback of its nuclear efforts, and then also international
Speaker 4: guarantees for access through the Strait of Moves. And now
Speaker 4: we have seen tay Ran respond with its own five
Speaker 4: point plan or its conditions if you will. That include
Speaker 4: actually halt hostilities, a demand for reparations from the devastating
Speaker 4: assault by the US and Israel, honored cities and critical facilities,
Speaker 4: but also very important sovereignty recognize internationally over the strait
Speaker 4: of horror moves. So that is emerging as a sticking point,
Speaker 4: and that's actually something we heard discussed during the proceedings
Speaker 4: yesterday at Hill and Valley. During your interview with Pounteer's
Speaker 4: Chief Technology office. He brought up the importance of the
Speaker 4: Strait as an access for critical materials that are needed global.
Speaker 2: Right, But then that's why you see markets seeing what
Speaker 2: they are right, Technology stocks up, oil a little lower.
Speaker 2: Even when those headlines from Iranian state TV hit pushing
Speaker 2: back on the states of affairs with negotiations apart from
Speaker 2: an algo move, status quo resumed. Let's go to that
Speaker 2: conversation with Sean Sankar. We talked about where the conflict
Speaker 2: in Eras sits in the history of war frankly, and
Speaker 2: the role that technology has played.
Speaker 5: Listen to this.
Speaker 6: The current operations aren't going, but I think people will
Speaker 6: reflect back and say, this is the first large scale
Speaker 6: combat operation that was really driven enhanced, made substantially more
Speaker 6: productive with technology with.
Speaker 2: AI, the first AI driven war pollunteer name little higher today.
Speaker 5: What else do we take from that?
Speaker 4: Pallunteer is really front and center in this question of
Speaker 4: AI's role in warfare because it is their Maven system
Speaker 4: that is being used as the mission control for a
Speaker 4: lot of the US combat operations, and it has really
Speaker 4: accelerated in the view of combat commanders, the way that
Speaker 4: they process enormous amounts of incoming information and on the battlefield,
Speaker 4: and when you think back to prior conflicts in the region,
Speaker 4: the current one is so vastly different. And it is
Speaker 4: simply because of the enormous amounts of data that they
Speaker 4: now have coming in from satellites and other surveillance equipment
Speaker 4: scattered around the region. Commanders have to assess, but they
Speaker 4: simply don't have the personnel all in one place at
Speaker 4: a time. They really do need that machine learning and
Speaker 4: artificial intelligence capability to be able to sort through all
Speaker 4: of that. I think another critical point that also came
Speaker 4: up in the conversation, not only would Schiam during your interview,
Speaker 4: but during his remarks in the panel yesterday, was just
Speaker 4: the need to accelerate US procurement and make it more
Speaker 4: agile so that the US government and its allies can
Speaker 4: develop for the battlefield more quickly. These drones, for instance,
Speaker 4: the low cost drones, but other technology that could be
Speaker 4: brought to bear very quickly against an adversary. And he
Speaker 4: looked back to World War Two when there were more
Speaker 4: than one hundred different airframes developed by industry by the
Speaker 4: US industrial base, only a handful to improved critical but
Speaker 4: he made the point that look, we have to be
Speaker 4: trying harder and really spreading.
Speaker 2: A lot of this pull towards ending the w in
Speaker 2: Iran is what's pushing technology shares higher this morning. Blue
Speaker 2: Mist Mike Sheppard, thank you very much. From Defense Tech
Speaker 2: to space some stocks moving off on news around SpaceX's IPO, Echo, Star,
Speaker 2: Rocket Lab, Ast Space Mobile, many others. All rallying is
Speaker 2: the information reports that SpaceX aims to fire our perspectus
Speaker 2: for an IPO as soon as this week. That follows
Speaker 2: a previous Bloomberg report that SpaceX was paying to list
Speaker 2: this month or file the documents at the end of
Speaker 2: this month, which, by the way, if you look at
Speaker 2: your calendar.
Speaker 5: Is fast approaching.
Speaker 2: Let's get out to Bloombos, Kyle Porter, We've been over this.
Speaker 2: This is likely to be the biggest IPO.
Speaker 5: Of all time.
Speaker 2: I've either on a dollar raised perspective or on evaluation perspective.
Speaker 5: Let's talk about the latest car.
Speaker 7: Indeed, the more recent reporting suggests that they are on
Speaker 7: target for a June IPO, which, as you correctly point out,
Speaker 7: would be the largest IPO by both evaluation and by
Speaker 7: amount of capital raised. The current record was held by
Speaker 7: Sadi Arabia as a RAMCO there raise around twenty nine
Speaker 7: billion dollars. This would be according to recent reports, at
Speaker 7: least double that. So you've got to look at a
Speaker 7: huge range of institutional and retail mix to get this
Speaker 7: sort of an IPO done.
Speaker 3: And real demand at a time of real market volatility
Speaker 3: and big deals being done. That is that still all
Speaker 3: buttoned up? Of course, it was only recently that SpaceX
Speaker 3: consumed Xai.
Speaker 7: Indeed, it wasn't only very recently, and you know that's
Speaker 7: a business that has a huge cash burn attached to it,
Speaker 7: but it doesn't seem to have entered any enthusiasm for
Speaker 7: this IPO. You've really got a situation where institutions are
Speaker 7: looking at SpaceX as a monopoly and the retail component
Speaker 7: are looking at it. As you know, master Eland strikes again.
Speaker 7: Of course they're going to want to get into this.
Speaker 7: He's made spectacular returns for his investors over the past
Speaker 7: twenty years.
Speaker 2: We are we're just showing a chart Kyle that that
Speaker 2: is the kind of anticipated IPOs and the valuation of
Speaker 2: SpaceX like one point seven five trillion. It's worth reminding
Speaker 2: the audience that post merger SPACEXXAI, that private market transaction
Speaker 2: value the company, the combine entity at one point two
Speaker 2: to five trillion.
Speaker 5: This is big.
Speaker 2: There's a lot at stake here, right, Like, there's a
Speaker 2: reason that all of these space and SpaceX adjacent stocks
Speaker 2: are pushing higher. This is one that the world wants
Speaker 2: to get in on, and there are a long list
Speaker 2: of krem de la creme investors that are already on.
Speaker 5: The cap table.
Speaker 2: Just go over the basics of what we know of
Speaker 2: the existing backing the SpaceX act.
Speaker 7: I mean, the existing backing includes people blue chip funds
Speaker 7: like the like the Fidelity. You have dedicated space infrastructure
Speaker 7: or telecom infrastructure like Ecostar is in the Google is in.
Speaker 7: The Bank of America is in there. Given the amount
Speaker 7: of fundraising that's happened and how long SpaceX has been public,
Speaker 7: there's been a very private sorry, there's been a very
Speaker 7: long tail of people who've wanted to get into this,
Speaker 7: and that's going to reils real questions of how they
Speaker 7: go get out of hits. Typically, an IPO doesn't allow
Speaker 7: much in the way of individual investors to sell their shares.
Speaker 7: Given how long some of these people have pin locked up,
Speaker 7: there may be more of a push to do that
Speaker 7: sooner than the typical twelve month local period.
Speaker 3: It is going to be one for the record books
Speaker 3: for most Kyle Porter, we so appreciate your reporting on it. Look,
Speaker 3: let's go to a publicly traded name already that has
Speaker 3: some big moves today. We're watching ARM. That's after the
Speaker 3: company announced plans to sell its own chips for the
Speaker 3: first time, not just design them, not just licensing technology.
Speaker 3: URM CEO Rene has sat down at Bloomberg Tech Europe's
Speaker 3: Tom McKenzie.
Speaker 8: It is a very big day for ARM. There's no
Speaker 8: doubt about that. We've been an IP provider since we started.
Speaker 8: We started selling combut subsystems a few years ago, which
Speaker 8: was sort of the next step but it's not a
Speaker 8: physical thing. But as we grew into the CSS business,
Speaker 8: we had customers that kept asking for more and more
Speaker 8: and more, and here we are today with ARMS first
Speaker 8: priorate Armagi CPU, which Meta is our lead partner for
Speaker 8: and Meta asked us to do it with them, so
Speaker 8: we did.
Speaker 9: Talk to them about Meta and the partnership. Then one
Speaker 9: of your customers, open Ai, also also a customer. What
Speaker 9: are the commitments from Meta from open Ai to take
Speaker 9: this chip on board? When do you start shipping?
Speaker 8: So as Mohammad said, it's available now and we'll start
Speaker 8: shipping at the end of this year. We're not saying
Speaker 8: anything publicly about the volumes associated with it, but they
Speaker 8: are material enough that we have to start talking about
Speaker 8: the product because it's going to start showing up on
Speaker 8: our revenue this year.
Speaker 9: The revenue starts showing up this year, and in your
Speaker 9: presentation earlier here in San Francisco, you talked about potentially
Speaker 9: just this one revenue stream, just this one part of
Speaker 9: the business potentially one hundred billion dollars by twenty thirty.
Speaker 9: Talk us through how you get to that one hundred
Speaker 9: billion dollars.
Speaker 8: So we're looking here then, Tom at the general purpose
Speaker 8: CPU CHAM, which today in twenty twenty six is about
Speaker 8: sixty billion dollars seventy dollars depending on your your maths.
Speaker 8: I talked about agenta AI driving a four XCPU workload
Speaker 8: even today. So sixty billion dollars going to one hundred
Speaker 8: billion dollars by the end of the decade. In terms
Speaker 8: of market opportunity, it's not really that much of a stretch.
Speaker 2: I'm CEO Renee Has there speaking with Bloomberg's Tom McKenzie.
Speaker 2: Now coming up on the program a conversation with Congressman
Speaker 2: Suhas to Bremenian of Virginia on the future of AI
Speaker 2: data centers.
Speaker 5: That's next, This is Bloomberg Tech.
Speaker 3: Apple, Well, let's set to unveil a new standalone SyRI
Speaker 3: app featuring a redesigned interface and an ask Siri capability
Speaker 3: that works across its software ecosystem. Now that's according to sources.
Speaker 3: The app is expected to debut this year's WWDC in June.
Speaker 3: For more, Bloomberg's Apple and Consumer Tech editor, It's Mark
Speaker 3: German joins us with the breaking news that you brought
Speaker 3: and I think for many it will be a finally
Speaker 3: feeling if this happens.
Speaker 10: Finally.
Speaker 11: Indeed, Apple is revamping Siri for iOS twenty seven, macOS
Speaker 11: twenty seven, and iPad os twenty seven, launching in September.
Speaker 11: This is going to be quite significant. This is going
Speaker 11: to include a serie app. It's going to include many
Speaker 11: of the features that originally we're supposed to launch last year,
Speaker 11: Personal context, so being able to tap into your personal
Speaker 11: data and on your screen to fulfilled queries. The idea
Speaker 11: is to transform Siri from just a voice assistant to
Speaker 11: an AI agent that you can use sort of like
Speaker 11: a copilot throughout your day to help you get things
Speaker 11: done and to solve queries. So this is a really
Speaker 11: big deal for Apple, and the hope internally and the
Speaker 11: belief internally is they'll be able to pull it off
Speaker 11: in time for the iPhone eighteen pro.
Speaker 2: The other story that you broke is Amazon has been
Speaker 2: pretty active in m and A on the field of robotics.
Speaker 5: What do we need to know?
Speaker 11: Amazon is acquiring a company called Fauna Robotics, which makes
Speaker 11: this adorable I should say humanoid robot.
Speaker 12: It's about three and a half feet tall.
Speaker 11: It could dance, it could hold hands, it could respond
Speaker 11: to being called out by name, it could pick things up,
Speaker 11: it could take things from the kitchen and bring it
Speaker 11: to you.
Speaker 5: This is a big deal.
Speaker 11: And what's really clear here from what I'm hearing, is
Speaker 11: that this is not meant for deliveries or for manufacturing
Speaker 11: or anything within their fulfillment centers or operations. The idea
Speaker 11: here is to learn about humanoid robots and to get
Speaker 11: the technology and the right people to potentially build a
Speaker 11: consumer grade humanoid robot. So they'd be obviously going to
Speaker 11: toe to toe here with companies like Tesla Boston Dynamics
Speaker 11: figure you name.
Speaker 5: It right, mark it down eleven twelve.
Speaker 2: On March twenty fifth, Bloombo's mark gum and use the
Speaker 2: word adorable, Thank you very much. Now Here in Washington,
Speaker 2: the Trump administration says it's working to cut red tape
Speaker 2: around AI in the buildout of critical infrastructure, but that
Speaker 2: push is facing fresh resistance on Capitol Hill. Senator Bernie
Speaker 2: sand In Congresswomen Alexandria Cassio Cortez A set to introduce
Speaker 2: legislation that would impose a moratorium on new AI data
Speaker 2: centers until stronger safeguards are in place.
Speaker 5: That debate is especially.
Speaker 2: Relevant in Virginia, home to one of the largest concentrations
Speaker 2: of data centers in this country. Joining us now as
Speaker 2: Representative suehas Supermney in Democrat from Virginia. Your reaction, I
Speaker 2: supposed to that initiative and we can then talk about
Speaker 2: the scale of footprint of data centers in your state.
Speaker 13: Yeah, it's important to understand where it's coming from. I
Speaker 13: don't support a full data center moratorium at all, but
Speaker 13: I do think there's a lot of frustration in communities
Speaker 13: like mine when it comes to data center steamrolling. Communities
Speaker 13: and having citing issues where they can create power problems
Speaker 13: in those communities. And so if we did a comprehensive
Speaker 13: look at where we should be citing data centers across
Speaker 13: the country, what would be best for industry, will be
Speaker 13: best for the communities. I think you would actually allay
Speaker 13: a lot of the concerns that people who are supporting
Speaker 13: data s emergenty have about these data centers.
Speaker 2: You represent a region that you cannot understate the footprint
Speaker 2: there seventy percent of the world's Internet traffic flowing through
Speaker 2: servers inside what are essentially tin cans.
Speaker 13: But if my district were a country, would be one
Speaker 13: of the top five countries in terms of number of
Speaker 13: data centers and then amount of Internet running through it.
Speaker 2: What therefore is your position and how you represent your constituents,
Speaker 2: because there is a split right Nimby is one pocket.
Speaker 2: There is job creation, there is economic value created from
Speaker 2: the build out that we're seeing.
Speaker 13: Well, the data centers don't create a lot of jobs,
Speaker 13: but the local government likes it because they create a
Speaker 13: lot of revenue for local government and state government. They
Speaker 13: also don't have create a lot of jobs, which means
Speaker 13: less traffic through those communities, less schools, you have to build,
Speaker 13: less roads, you have to build so the local government
Speaker 13: loves it, which is why they keep approving them. But
Speaker 13: it's shortsighted because then you start to create energy problems.
Speaker 13: You start to have to build energy infrastructure through communities
Speaker 13: that weren't expecting it, didn't sign up, very lower home value,
Speaker 13: and people get angry about it, and rightfully so it's
Speaker 13: more than just a nimbiaism. I think people have legitimate concerns.
Speaker 13: But we can do this as a country. We can
Speaker 13: build out the data centers that we need to build
Speaker 13: out in this country. We don't need to do a moratorium.
Speaker 13: But we have to deal with the buy in of
Speaker 13: communities across the country because I know there's communities that
Speaker 13: want data centers that are coming to ours right now.
Speaker 13: If we had all our data centers, you know, it
Speaker 13: takes more power than the city of DC and we're
Speaker 13: doubling the number of data centers, so we have too
Speaker 13: many in one spot. That's a national security concern as well.
Speaker 13: What we really need to do is just start spreading
Speaker 13: out the data centers across the country and getting it
Speaker 13: in place to where community buying is there.
Speaker 3: How can we hear from communities simultaneously. Clearly we're hearing
Speaker 3: from leadership of big tech. Look today, yet another technology council.
Speaker 3: The President is creating one at the moment where we
Speaker 3: understand Jensen hung is going to be part of it.
Speaker 3: Mark Zuckerberg is going to be part of it. Larry Ellison.
Speaker 3: People very committed to data center build out, to compute
Speaker 3: build out. So how do you ensure that at the
Speaker 3: same time the voices of constituents are heard about these
Speaker 3: anxieties about jobs, about what's happening in terms of energy prices.
Speaker 13: We need to give them a voice in Congress, at
Speaker 13: the state level, at the local level, every level of
Speaker 13: government needs to give their constituents a voice. And we
Speaker 13: don't have to be adversarial all the time to tech.
Speaker 13: We can work together and we can solve this together.
Speaker 13: But certainly we have to make sure that constituents' voices
Speaker 13: do a say, do have a seat in the table,
Speaker 13: because otherwise there's going to be a huge backlash towards
Speaker 13: data centers. You're starting to see it more prominently now.
Speaker 13: Right now you've got members of Congress introducing these moratoriums.
Speaker 13: You're going to see it even more prominently if they
Speaker 13: continue to steam all these communities.
Speaker 3: We have the NSCALE CEO on to start this week,
Speaker 3: which already feels a very long time. Agover is on
Speaker 3: Monday talking about how they're thinking vertical integration and they're
Speaker 3: bringing electricity and infrastructure to the bear. We had Cruso,
Speaker 3: the CEO on earlier yesterday talking about how they're also
Speaker 3: thinking about infrastructure and building it out. Are there innovative
Speaker 3: ways in which you can sil have data centers being
Speaker 3: built near you without sunning a price push, without a
Speaker 3: national security risk, without any detriment to your property prices.
Speaker 5: Yes, and no.
Speaker 13: I'd like to see exactly what they mean that because
Speaker 13: you know, a lot of times people talk about SMRs
Speaker 13: small nuclear reactors. Essentially you need three or four of
Speaker 13: them for each data center, and who wants those nuclear
Speaker 13: reactors next to their homes for instance, and sales.
Speaker 3: Using gas provisions like you.
Speaker 5: I think, I don't know how innovative that is.
Speaker 2: When it comes down to congressmen, you know, on the
Speaker 2: industry side, they would argue they take on the capital
Speaker 2: burden of grid modernization, they buy electricity in bulk, and
Speaker 2: that they would argue there's a deflationary impact for everyday
Speaker 2: people's energy prices. There's also a lot of Bloomberg reporting
Speaker 2: and investigation that shows in zip codes where there's a
Speaker 2: high concentration of data center electricity prices have gone up
Speaker 2: and energy.
Speaker 5: Prices have gone up. What do you see the real
Speaker 5: on the ground view.
Speaker 13: My home in Ashburn, Virginia, our electricity prices have gone up,
Speaker 13: and it's because we had to pay for that infrastructure.
Speaker 13: They're not taking that costs into accounts. So, yes, you
Speaker 13: bring more energy infrastructure long term lower costs, but when
Speaker 13: we have to pay front for that energy infrastructure, it
Speaker 13: raises our utility prices.
Speaker 5: So that needs to change.
Speaker 13: When you to make sure that communities aren't subsidizing the
Speaker 13: data center's energies. And again we can do is a
Speaker 13: lot of companies are actually volunteering to do this to
Speaker 13: be able to pay for their own energy infrastructure. I
Speaker 13: like that idea. That's going to help a lot, and
Speaker 13: that's the type of thing we need to be doing
Speaker 13: when it comes to getting community buyering.
Speaker 2: What is your view of your constituents and the American
Speaker 2: people's relationship with AI. I think Caroline and I have
Speaker 2: had a lot of conversations in the last twenty four
Speaker 2: hours where AI doesn't have very much good PR at
Speaker 2: the moment with every day Americans. One thing that Sean Sankar,
Speaker 2: he's the CTO at Palenteer, put to us is that,
Speaker 2: you know, there's a distinction between what is AI slop
Speaker 2: what people see in their social media feeds, and how
Speaker 2: they actually might benefit from it in their working and
Speaker 2: at home lives.
Speaker 13: You know, I worked at the White House as a
Speaker 13: tech advisor ten years ago. AI was exciting to people.
Speaker 13: They couldn't wait to use it, they couldn't wait to
Speaker 13: adopt it. But they've seen the job displacement. It's hard
Speaker 13: to love AI when companies are putting out announcements saying
Speaker 13: because of AI or laying off jobs, congratulations to us. Right,
Speaker 13: people don't like to hear that. They don't like to
Speaker 13: hear about data centers coming to their community and making
Speaker 13: them pay for the energy costs and energy infrastructure. So
Speaker 13: AI has a PR problem, but they've earned it because
Speaker 13: of the way they talked to communities about AI. And
Speaker 13: so what we need to do is we're collaborative with government.
Speaker 13: I think Congress needs to get more involved than it
Speaker 13: has already when it comes to safety and national security
Speaker 13: and communities.
Speaker 3: Representative sus sobre Money, I'm Democrat of Virginia. It's a
Speaker 3: wonderful to have time with you today. Thank you very much. Indeed,
Speaker 3: now coming up Striker still reeling from a March eleventh,
Speaker 3: I ran link cyber attack that stalled global operations, will
Speaker 3: discuss the cyber landscape amid the continuing war in Iran.
Speaker 3: That's next, this will be their attack, Striker. Well, it
Speaker 3: says a March eleventh cyber attack that stalled global operations
Speaker 3: is lightly contained, but disruptions persist ten days after the event.
Speaker 3: That's according to the EIGHTK filing from the company just yesterday.
Speaker 3: Blumberg cyber Editorestone joins us with more what is keeping
Speaker 3: it so long from being able to really ascertain operations?
Speaker 14: Again, this is a really complicated, intense, complex attack carried
Speaker 14: out excuse me, by a nation state against the company
Speaker 14: that just wasn't expecting this kind of thing. You know,
Speaker 14: these hackers exploited in old vulnerability to get in. They
Speaker 14: somehow had access to you know, pretty deep confines within
Speaker 14: the in the corporate systems, and then they wiped data
Speaker 14: from their kind of perch in there. So it just
Speaker 14: takes a lot of investigation, It takes a lot of cleanup.
Speaker 1: You know.
Speaker 2: We started this segment talking about how you know, ten
Speaker 2: days after the initial attack, this is still causing an issue.
Speaker 5: We've also sought a lot on the show.
Speaker 2: This past week with experts in the industry about the
Speaker 2: sophistication and competence of Iran's cyber threat. Right where does
Speaker 2: this rank, Jeff in sort of historic attacks at the
Speaker 2: nation state level against the United States of America.
Speaker 14: This is not the kind of threat that national security
Speaker 14: officials have warned about from the likes of a Russia
Speaker 14: or China. Iran is a little more specialized. They are
Speaker 14: a little more opportunistic. What they do is they try
Speaker 14: to inflict pain and project power in any way they can.
Speaker 14: So they saw an opportunity here to go against the
Speaker 14: US healthcare sector, right and cause some economic pain for
Speaker 14: this company.
Speaker 15: They've disrupted some surgeries.
Speaker 14: We know that some facilities around the country have pushed
Speaker 14: back procedures as a result of this. It is not
Speaker 14: the level of a big kind of blackout or electrical
Speaker 14: failure like you see in the.
Speaker 5: Movies, Jeff.
Speaker 3: We are seeing hopes maybe dash for many but hopes
Speaker 3: that maybe there's a de escalation in the current conflict
Speaker 3: with Iran. But are you feeling that the ongoing conflict
Speaker 3: from a cyber perspective is still happening. What are companies
Speaker 3: currently need it being affected by?
Speaker 14: Briefly, we know that the companies have to have the
Speaker 14: defenses up against things like phishing attacks. I don't expect
Speaker 14: there to subside US national security officials. European officials have said,
Speaker 14: don't rest on this because this is a reliable means
Speaker 14: for Aran to try to even the playing field.
Speaker 2: Both Jeff Stone with the reporting, thank you very much.
Speaker 2: Like coming up from the show, we speak with Rachel Hoff,
Speaker 2: policy director at the Ronald Reagan Institute, on key takeaways
Speaker 2: from the Hill and Valley Forum where we were yesterday,
Speaker 2: but also the growing prominence of the defense tech sector
Speaker 2: and its relationship with the administration and government here in Washington,
Speaker 2: d C. It is halftime in the program. This is
Speaker 2: Bloomberg Tech. Welcome back to Bloomberg Tech. This is what
Speaker 2: financial markets look like. Technology stocks in particular, pushing higher,
Speaker 2: oil coming down a little bit. The market is weighing
Speaker 2: up the prospects of a ceasefire of a plan towards
Speaker 2: peace in the context of the war in Iran, America
Speaker 2: has put out some proposals.
Speaker 5: What we've seen throughout the morning.
Speaker 2: Is lines principally via Iran state television pushing back actually
Speaker 2: on their interest in engaging with US. But at least
Speaker 2: in the technology sector, we haven't seen then as that
Speaker 2: one hundred or the Philadelphia semi Conductor Index Change directory
Speaker 2: you still see, Brent Krue that's the global benchmark for
Speaker 2: oil hold above one hundred dollars a barrel, and a
Speaker 2: lot of focus on supply chain, particularly the passage of
Speaker 2: ships through the Strait of Horror moves in the context
Speaker 2: of energy, but other things as well. That's what we've
Speaker 2: been talking about for twenty four US straight.
Speaker 3: It is because we've been talking about how technology intertwines
Speaker 3: with defense and how are all aligns. Here in Washington,
Speaker 3: we were at the Hill and Valley Forum n and it
Speaker 3: held a spotlight really on defense tech in the age
Speaker 3: of AI. But SIB data shows just how early that's
Speaker 3: shit still is. While Pentagon spending on defense tech has
Speaker 3: more than doubled from out one point eight billion in
Speaker 3: fiscal year twenty twenty three to four point three billion
Speaker 3: for fiscal year twenty twenty five. It still makes up
Speaker 3: get this, less than one percent of total contract dollars.
Speaker 3: He discuss more on this. It's Rachel Hoffe, policy director
Speaker 3: that Ronald Reagan Institute which issued the report, and it's
Speaker 3: stark warnings. Basically, you not only highlight how little in
Speaker 3: the grand scheme of things money is going to defense
Speaker 3: tech for all the amount that we talk about it,
Speaker 3: but you also try and outline ways in which it
Speaker 3: could be adopted faster. First and foremost, why do we
Speaker 3: get so much excitement about defense tech? Why is the
Speaker 3: VC community pouring in money when the end client isn't
Speaker 3: putting money in as much.
Speaker 16: Well, it's a great question, and I think you've got
Speaker 16: to look at, you know, not just the end client,
Speaker 16: but the threat environment the world that you were just
Speaker 16: speaking about in which that client is operating, And simply.
Speaker 10: Put, it's a dangerous world.
Speaker 16: It's getting more complex and complicated as we see tension
Speaker 16: on the rises, we see conflicts erupting in different corners
Speaker 16: of the world, and that means that protecting American national
Speaker 16: security is good business and it's important business. And so
Speaker 16: we're seeing those private dollars flow those that private capital
Speaker 16: from the venture capital community, But those investors are going
Speaker 16: to need to see the public dollars line up in
Speaker 16: terms of Pentagon spending if it's going to continue and
Speaker 16: if they're going to continue to take that risk.
Speaker 3: The reporting that ED and team and women continue doing,
Speaker 3: ANDRIL now looking at an overall market cap of sixty
Speaker 3: one billion dollars, raising another four billion dollars, and yet
Speaker 3: we're just talking that less than that is how much
Speaker 3: has been directed to all's defense tech from the Pentacon.
Speaker 3: What your policy prescriptives to get the government even more
Speaker 3: comfortable with aligning that money.
Speaker 16: There's a lot of work that we've done at the
Speaker 16: Reagan Institute with regard to this national security innovation based
Speaker 16: kind of thinking about how public investments, but public policy
Speaker 16: can help tackle this problem that we're seeing the private
Speaker 16: sector stand up to solve. Right now, they're operating at
Speaker 16: two different speeds. Where the private sectors in the lead
Speaker 16: were really seeing innovation, we're seeing progress and the guy
Speaker 16: is struggling to keep up.
Speaker 10: It's improving.
Speaker 16: You mentioned at the top defense tech spending has doubled.
Speaker 16: That's great, and yet it's still less than one percent
Speaker 16: and so I think continuing to improve the demand signal
Speaker 16: that government and that's not just the Pentagon, that's also Congress,
Speaker 16: political leaders at the White House level and beyond are
Speaker 16: sending two private sector partners, the clarity with which they're
Speaker 16: communicating their policy priorities, their technology priorities, and then the
Speaker 16: spending to back up those acquisition pathways.
Speaker 2: I want to define what that spending is. What we've
Speaker 2: looked at on the show. Historically RACHEL is unclassified or
Speaker 2: declassified missile spending, and to ham A home the point
Speaker 2: largely it goes to Lockheed Martin and others of that
Speaker 2: legacy Prime ilk. The question I suppose that this juncture
Speaker 2: is does what's happened with the war in Iran change
Speaker 2: that you know, we've done a lot of covering the
Speaker 2: use of drones, lower costs, autonomous technology. The question for
Speaker 2: your report is jectory different.
Speaker 16: Now it's becoming different, it is changing. I think what
Speaker 16: we're seeing with the conflict in Iran and Operation Epic
Speaker 16: Fury is really driving.
Speaker 10: Home the point that defense.
Speaker 16: Tech matters, that these low cost systems are going to
Speaker 16: be an important part of ensuring America's national security. But
Speaker 16: the fact remains that most of the platforms, the weapon
Speaker 16: systems and platforms that we've used in Operation Epic Fury
Speaker 16: are from the Reagan administration or before forty sixty eight,
Speaker 16: eight year old systems, and those are important platforms. Right.
Speaker 16: Aircraft carriers moving into the region are an important part
Speaker 16: of projecting American strength. But the fact that only one
Speaker 16: weapon system, the Lucas drone, is being used in Operation
Speaker 16: Epic Fury, that's been developed in the last fifteen years,
Speaker 16: only one system in this operation that's less than fifteen
Speaker 16: years old, really shows how we need to keep up
Speaker 16: to meet those challenges that you're speaking to.
Speaker 2: The word procurement comes up quite a lot when you're
Speaker 2: at somewhere Light Hill and Valley Forum, and there's a
Speaker 2: bit of an exasperation for industry.
Speaker 5: About how that works.
Speaker 2: PowerPoint presentations is something that they stress over. Is this
Speaker 2: administration better than prior administrations and this Pentagon better than
Speaker 2: prior toations of it at dealing with more nimble, smaller technology.
Speaker 10: Companies well politics aside.
Speaker 16: At the Reagan Institute, we've developed a report card to
Speaker 16: look at exactly this, and we've seen improvements in some
Speaker 16: grades that matter in this defense innovation ecosystem over time,
Speaker 16: and we've seen some grades moving in the other direction,
Speaker 16: but the biggest year on year jump that we've ever seen,
Speaker 16: biggest improvement and grade is something we call customer clarity
Speaker 16: that demands signal that the government's signaling.
Speaker 10: To private sector partners.
Speaker 16: And we see that not just through spending and acquisition pathways,
Speaker 16: but some of the reforms that this administration has pursued,
Speaker 16: the acquisition transformation strategy, streamlining technology priorities. They've said a
Speaker 16: fewer number of technologies are important and then sent that
Speaker 16: signal to private sector partners in terms of what the
Speaker 16: administration wants to focus on, and from what we hear
Speaker 16: from those private sector partners, that's helping helping them align
Speaker 16: to national security priorities.
Speaker 3: I want to talk about talent for a minute because
Speaker 3: Chris power Hadrian joined us yesterday from the Henna Valley Forum,
Speaker 3: and his point was talent is a real issue, and
Speaker 3: that's why in many ways they've got this novel way
Speaker 3: of training people up because there's a huge retirement block.
Speaker 2: That's said the average age of working that industry is
Speaker 2: sixty five, yeah, or something like that, and not everyone
Speaker 2: works until the present generational thing in the school.
Speaker 3: Sorry character, no, but what's so great about your national security? Basically,
Speaker 3: an innovationion based port card is it reads like a
Speaker 3: school report and you're saying talent based D plus in America?
Speaker 3: What do we need more? Look, I said, as a
Speaker 3: British person who luckily enough.
Speaker 5: Works also a British person working in America.
Speaker 3: Do we need more immigration? What is it that's needed
Speaker 3: to boost the D plus?
Speaker 10: It's all of the above.
Speaker 16: We need to attract foreign born talent here to the
Speaker 16: United States to work on some of our hardest problems,
Speaker 16: with appropriate controls of course in place for an national security,
Speaker 16: but we also have to be channeling our domestic talent
Speaker 16: toward STEM careers, toward not just high skill but also
Speaker 16: skilled trades. Companies like Hadrian are doing some very interesting
Speaker 16: and innovative things in that regard, and also thinking about
Speaker 16: how technology itself, AI and beyond can make our workforce
Speaker 16: more productive, even in smaller numbers.
Speaker 10: That it's not just about.
Speaker 16: Maintaining the workforce of the past, but preparing for the
Speaker 16: workforce of the future. And our low grade I think
Speaker 16: in the talent and workforce domain shows that there's a
Speaker 16: lot to be done both with private sector and public
Speaker 16: sector collaboration here to really get that challenge.
Speaker 2: Rachel Hoff, Ronald Reagan Institute.
Speaker 5: It's great to have you on Bloomberg Tech. Thank you
Speaker 5: very much.
Speaker 2: Now coming up, fifty four year old VC firms Kinda
Speaker 2: Perkins makes its largest rays ever three point five billion dollars.
Speaker 2: Will discuss next with partner Ilia Fushman.
Speaker 5: This is bloom Bag Tech.
Speaker 3: Kleine Perkins, the half century old venture capital institution, has
Speaker 3: raised three and a half billion dollars to make bets
Speaker 3: on AI startups and current portfolio stars innovating cross autonomy, transportation,
Speaker 3: professional services, and space for example. Kind Of Perkins partner
Speaker 3: Elia Fishman, I'm pleased to say, joins us for more.
Speaker 3: And look, you've got one billion dedicated to what is
Speaker 3: your twenty second early stage fund. You then got to
Speaker 3: and a half billion going in the growth areas. Just
Speaker 3: tell us about what excites you, Why this amount of money? Why?
Speaker 14: Now?
Speaker 17: Well, we're really at the early innings of probably the
Speaker 17: biggest transformation in technology that any of us have witnessed.
Speaker 17: We see companies growing at big scale, faster than ever before.
Speaker 17: We see AI penetrate all facets of our lives, Whether
Speaker 17: it's on the consumer side with search media, we have
Speaker 17: video models that are still on the come. And then
Speaker 17: on the work side, we see companies all transform how
Speaker 17: they operate, whether it's across legal and professional services with Harvey,
Speaker 17: healthcare with open Evidence, transportation and autonomy with Weimo, and
Speaker 17: we're still very much in the early innings of all
Speaker 17: of this. If we look at how some of the
Speaker 17: leading AI forward companies operate and we compare that to
Speaker 17: the more traditional companies, the opportunity to penetrate the enterprise
Speaker 17: with AI is just infinite from where we sit, and
Speaker 17: that's reflected in the funds.
Speaker 3: Where excites you the most. Is it putting the money
Speaker 3: into fresh new startups that haven't even been designed now,
Speaker 3: or is it backing say a star performer anthropic we
Speaker 3: know is looking to be ipo ing. You've got standout
Speaker 3: names like SpaceX on the books as well. But where
Speaker 3: are you thinking about where you can follow on your capital?
Speaker 17: So our model is pretty simple. We try to back
Speaker 17: companies as early as possible out of our venture funds
Speaker 17: and as they hit inflection, as they hit escape velocity,
Speaker 17: to really concentrate and double down with our funds. Sometimes
Speaker 17: we see things a little bit later, and so we
Speaker 17: come in with a very high conviction, big check out
Speaker 17: of our growth funds straight away.
Speaker 15: But the really.
Speaker 17: Exciting thing we're seeing in the market today is that
Speaker 17: as companies hit really large scale, like in the case
Speaker 17: of Anthropic, that we've really never seen before, the opportunity
Speaker 17: to back these as they progress to escape velocity is
Speaker 17: near infinite, and so that really is reflected in the
Speaker 17: fund structure. So the venture fund we're looking for application
Speaker 17: layer companies, we're looking for infrastructure companies, we're looking for autonomy,
Speaker 17: and as models cheaper and more performant, the physical economy
Speaker 17: becomes an opportunity. But as these companies then hit scale,
Speaker 17: hit growth, we really concentrate with our growth funds.
Speaker 2: We see extremes at both ends of the spectrum.
Speaker 5: Wrote a few weeks ago.
Speaker 2: About the seed round now being more like the coconut
Speaker 2: round the avocado seed round, where you are putting huge
Speaker 2: checks into a collective of a few individuals and you're
Speaker 2: basically betting on their intellectual power. What are you seeing
Speaker 2: in that early stage. I'm really interested you've dedicated those
Speaker 2: funds to that part of the market.
Speaker 17: Well, what we're really seeing is just the opportunity again
Speaker 17: to transform industries with AI business models is again near infinite.
Speaker 15: I mean, everything is really up for grabs.
Speaker 17: We're kind of past what I would call the hype
Speaker 17: buying part of the cycle where folks just wanted AI,
Speaker 17: and we've seen companies like Harvey, for example, in market
Speaker 17: with customers with data around engagement and growth and performance
Speaker 17: to inform how we should think about these opportunities. At
Speaker 17: the early stage, there is a novel case of structure
Speaker 17: of companies where you have sort of the formation of
Speaker 17: next generation labs, which could be the next inflection in
Speaker 17: AI itself, and those are very interesting. But then you
Speaker 17: have really runaway successes that are helping people do their
Speaker 17: work better, that are helping consumers get answers around healthcare.
Speaker 17: And so we try to balance our investing across all
Speaker 17: of those because there is another frontier to be unlocked here,
Speaker 17: and those are the model companies of the future. But
Speaker 17: then you have the model companies of today like Anthropic,
Speaker 17: which are growing faster at a scale that's never been
Speaker 17: seen before, and I think that's still early in their trajectory.
Speaker 5: At the other end of the spectrum.
Speaker 2: Bloomberg also reporting today that SpaceX could seek to raise
Speaker 2: seventy five billion dollars in an IPO confidential filing this week,
Speaker 2: targeting Dune the evaluation one point seventy five trillion to
Speaker 2: two trillion. Pine Perkins has participated in some price SpaceX rounds.
Speaker 2: What's going to happen? How is that going to impact
Speaker 2: the world? Space is a domain that you want to
Speaker 2: go after in the new funds that you've raised.
Speaker 15: I think we want to go after many domains.
Speaker 17: Spaces is a really good example of bringing communication to
Speaker 17: the world, and that's incredible kind of activity that lifts everything.
Speaker 17: If you think about technology, right the Internet was the
Speaker 17: big unlock and getting more of connectivity throughout the world
Speaker 17: is important. But it's also a testament to the fact
Speaker 17: that you now can build companies that are truly transformational
Speaker 17: when it comes to both the physical world and the
Speaker 17: digital world. And that's something that we will focus on
Speaker 17: quite a bit. And that's autonomy. That's autonomy maybe in
Speaker 17: the defense tech sector, that's also autonomy on the consumer side.
Speaker 17: We have a position in Weimo as well, and so
Speaker 17: we just see a really really large scale opportunity across everything.
Speaker 5: Elliot.
Speaker 3: According to people familiar I'm told that you managed to
Speaker 3: raise this amount of money pretty fast and it was oversubscribed,
Speaker 3: and I imagine LPs were excited because of the opportunity
Speaker 3: and the delivery of liquidity, unlike a lot of other
Speaker 3: funds you delivered. When it comes to the Figma IPO,
Speaker 3: we saw the Windsurf acquisition. We might see enormous returns
Speaker 3: if SpaceX and indeed Anthropic and maybe Data Bricks or
Speaker 3: Away may do go public. Is that what locked in
Speaker 3: the LP base? How do you think about the need
Speaker 3: for the markets to open in twenty and twenty six.
Speaker 17: We're very fortunate to have an incredibly supportive lpbase, so
Speaker 17: we're very thankful for that, and ultimately it's all a
Speaker 17: testament to the entrepreneurs that we back, because they're the
Speaker 17: ones building these incredible companies. But if you look at
Speaker 17: the public markets, and if you look at what's really
Speaker 17: driving value, it's technology companies. And if you look at
Speaker 17: the private markets, you know there's a public market MAG
Speaker 17: seven and there's probably a future private market MAG seven
Speaker 17: that's on the come. And that's really the interest that
Speaker 17: we're seeing from limited partners because these companies are getting
Speaker 17: to again revenue scales that we've never seen before, faster
Speaker 17: and compounding at those scales faster than ever before. And
Speaker 17: there's probably the next level of the future future max
Speaker 17: seven and these could be the application companies like at
Speaker 17: Harvey like and Open Evidence, which are then going to
Speaker 17: be the next generation. It's really just a testament to
Speaker 17: the fact that tech is driving pretty much most of
Speaker 17: the value you see today. LP's recognize that and recognize that,
Speaker 17: and we think that's the really big opportunity here.
Speaker 3: And we've talked about this, but public market sentiment might
Speaker 3: be an all time hyphotech. Public sentiment is not. Certainly
Speaker 3: when it comes to AI. They're fearful, they're worried about jobs,
Speaker 3: they're worried about energy prices. And from your portfolio companies,
Speaker 3: are you trying to get across that the opportunity here
Speaker 3: You talk about the infinite possibilities, but for many listening
Speaker 3: at home, it feels like infinite worries and concerns.
Speaker 17: Well, I think one by product, which will be pretty straightforward,
Speaker 17: as quality of life will improve for everyone. Right, we
Speaker 17: will have better access to information, better access to healthcare,
Speaker 17: better access to services, better more performant world around us.
Speaker 15: Really, I mean you think think they're aout WAYMO.
Speaker 17: The ability to have very safe transportation on demand is incredible.
Speaker 17: On the flip side, there is a very clear worry
Speaker 17: because these changes are happening on a timescale that's faster
Speaker 17: than ever before.
Speaker 15: And one of the things we do think about quite.
Speaker 17: A bit is how do we help folks upskill, how
Speaker 17: do we help folks learn and transition into this world.
Speaker 15: It's going to be a world of abundance. But what
Speaker 15: we have to be thoughtful of is.
Speaker 17: I think the industry is making sure that the abundance
Speaker 17: is accessible and distributed.
Speaker 2: Kleiner Perkins Partner earlier Fisher and great to have you
Speaker 2: on Bloomberg Tech.
Speaker 5: Thank you very much.
Speaker 2: Now coming up on the program, open ai nears an
Speaker 2: eight hundred and fifty billion dollar valuation, as it is
Speaker 2: also close on a deal to raise ten billion dollars
Speaker 2: more in its latest funding round. We have the details next,
Speaker 2: This is Bloomberg Tech. Open Ai is nearing a deal
Speaker 2: to raise about ten billion dollars from venture investors including
Speaker 2: Andrews and Horowitz, Abudabi's MGX, and Microsoft. That's, according to sources,
Speaker 2: that would bring its total hall from its latest funding
Speaker 2: rounds to one hundred and twenty billion dollars, boosting its valuation,
Speaker 2: and to eight hundred and fifty billion dollar bloemost shuring
Speaker 2: Gafari is with us part of the team that broke
Speaker 2: the story. Okay, so let's just be very clear about
Speaker 2: what this is. It's basically an extension or expansion of
Speaker 2: the round they were already doing. So they did one
Speaker 2: hundred and ten billion dollars from corporates basically, and now
Speaker 2: they're adding a little bit more. But it's the vcs
Speaker 2: that are getting in. What else do we need to know?
Speaker 12: That's right? So this is sort of the second part
Speaker 12: of the round.
Speaker 18: We're heading into the final close, you know, as soon
Speaker 18: as the end of month, which could be next week,
Speaker 18: and we're seeing some you know, big names traditional vcs
Speaker 18: as well as other funds like a d shaw Co two.
Speaker 18: And we are seeing one more company investor jump in
Speaker 18: on this part of the round, which is Microsoft.
Speaker 3: And that maybe raised a few eyebrows, surean because there's
Speaker 3: been much questioning of that relationship. What does their participation
Speaker 3: look like? What does it signal?
Speaker 18: Yeah, I think there's been a lot written about open
Speaker 18: AI and Microsoft ups and downs, of course, Microsoft being
Speaker 18: the biggest sort of early corporate backer of open Ai,
Speaker 18: critical to their expansion into this GPT era. However, in
Speaker 18: recent times we've seen open ai diversify it's cloud you know,
Speaker 18: it's compute based, diversify its corporate partner base, and so
Speaker 18: I think this signifies a Microsoft still in open Ai
Speaker 18: now how much and how deep? And are they the
Speaker 18: kind of sole corporate partners in early days? No, but
Speaker 18: we are seeing a continuation, at least on the funding
Speaker 18: side here Swen.
Speaker 2: Another big headline on open ai is it's discontinuing support
Speaker 2: for Sora and winding down a deal that it had
Speaker 2: with Disney. I remember when that deal hit. We broke
Speaker 2: it on this show and made a pretty big deal
Speaker 2: of it. Pardon the expression, why are they winding down Sora?
Speaker 2: And why did Disney and that relationship fall apart?
Speaker 5: That's right.
Speaker 12: It was sort of an abrupt ending.
Speaker 18: So if you remember, Sora launched an app not so
Speaker 18: long ago, and it was sort of had a viral.
Speaker 12: Beginning and was topping charts.
Speaker 18: But as viral apps do sometimes, kind of user activity
Speaker 18: on that app seemed to die down in recent months.
Speaker 18: And remember that producing videos, especially ai videos.
Speaker 12: It's an expensive business.
Speaker 18: It can cost a lot more to produce even a
Speaker 18: ten second video clip than it does, you know, a
Speaker 18: paragraph of texts in a chatbot. So you have to
Speaker 18: think about the cost benefit ratio for a company like
Speaker 18: open ai when it's facing stiff competition from Anthropic on enterprise,
Speaker 18: when it's facing stronger Google Gemini models. Is it the
Speaker 18: right decision to go all in on video when there's
Speaker 18: limited compute, limited resources.
Speaker 12: I think is probably the question the company was thinking.
Speaker 18: Now the dynamics with Disney, you know, we're it's I
Speaker 18: think there's going to probably be more about this store.
Speaker 18: We're going to look into exactly what happened there more.
Speaker 12: But I think that you know, we're seeing this.
Speaker 18: Pushback on video front from a major lab is very significant, and.
Speaker 3: It really does seem part of this border strategy shift
Speaker 3: honing in on on where to win that Fujisimo is
Speaker 3: really bringing open ai as well. Blue Moost showing Gafari
Speaker 3: great reporting as always, Thanks so much for bringing it
Speaker 3: to us. And look, we've got to talk a little
Speaker 3: bit more ed about what all this means for Disney,
Speaker 3: because what a first week for Josh Tomara at the moment,
Speaker 3: like the unraveling of the Story deal that many people
Speaker 3: thought would be the next experience. We were going to
Speaker 3: get Disney Plus and the like, and now also there's
Speaker 3: issues with Epic Games.
Speaker 2: So Josh Tomorrow became CEO last Wednesday the eighteenth at
Speaker 2: the annual shareholder meeting. He's seven days in and Disney
Speaker 2: put money into this open AI relationship. It was supposed
Speaker 2: to yield things. They also have an investment in Epic
Speaker 2: Games video game maker, a company that's doing big layoffs,
Speaker 2: so hard start to that tenures.
Speaker 3: Welcome to the role of CEO. It would feel like, well,
Speaker 3: that does it for this extraordinary edition of Blue mag
Speaker 3: Tech right here from the heart of Washington.
Speaker 2: Yeah, lots to recap on tech and politics. Do it
Speaker 2: on the podcast. You know where to find it online, Apple, Spotify,
Speaker 2: and iHeart from Washington.
Speaker 5: DC. S has been back