Speaker 1: From the heart where innovation, money and power Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde.
Speaker 2: And Ed lud Love.
Speaker 3: And Caroline Heind and Bloomberg's well head quarters in New
Speaker 3: York and Ludlow He's off.
Speaker 4: This's in Bloomberg Technology.
Speaker 3: Coming up, we'll have the latest on Microsoft and Activision
Speaker 3: as UK regulators reject those claims they're.
Speaker 4: Bowing to pressure to clear the deal or ahead.
Speaker 3: Thus we'll talk ai regulation of big tech commits to
Speaker 3: safeguards for the technology that's at the White House's request.
Speaker 3: We'll bring you the details and bankrupt Crypto Exchange FTX
Speaker 3: sues San Bankman Freedom executives over one million dollars in
Speaker 3: bad deals, including a plan.
Speaker 4: To buy an island nation.
Speaker 3: We'll have more on the new laysuit and so much
Speaker 3: more throughout the hour. Meanwhile, let's go across the pond
Speaker 3: in the UK. Britain's top ad trust enforcerers pushing back
Speaker 3: against those claims that have been out there that it
Speaker 3: was kind of forced by outside pressure to reconsider its
Speaker 3: veto of the Microsoft Activision Blizzard deal. Here's the CMA CEO,
Speaker 3: Sarah Kuddle at the moment our decision on prohibition stands.
Speaker 3: We investigated very thoroughly the deal. We found that there
Speaker 3: were serious concerns in relation to cloud gaming and.
Speaker 4: The proposals that were put forward.
Speaker 3: By Microsoft at the time did not resolve our competition concerns.
Speaker 3: So Microsoft have indicated that they are considering how they
Speaker 3: might restructure the deal in a way that resolves our concerns.
Speaker 3: And the regulator had found itself increasingly isolated, pretty much
Speaker 3: the loan watchdog standing in the way of the deal.
Speaker 4: Now, after a week of drama.
Speaker 3: The acquisition has some pretty fresh momentum in the US.
Speaker 3: For example, the FDC has just paused its in house
Speaker 3: trial against Microsoft, leaving room for potential settlement talks.
Speaker 4: Let's break it all down.
Speaker 3: Bloomberg's Catherine Gammel is with us and what else did
Speaker 3: the Competition and Market Authority have to say? The CEO
Speaker 3: about this deal and how it's progressing in the UK, thanks.
Speaker 4: So much for having me.
Speaker 5: Yes, so in this morning we had said a Cardell
Speaker 5: in the London studio to talk us through where we're
Speaker 5: at with the Microsoft activision probe. And you know, one
Speaker 5: thing that she made really clear is that the UKCME
Speaker 5: has still vetoed this deal, and that veto will still
Speaker 5: stand until Microsoft offers up officially fresh restructuring ideas. So
Speaker 5: that's a big one that we need to keep in
Speaker 5: mind that those are still to be officially submitted. Another
Speaker 5: thing that was an interesting point that she made is
Speaker 5: that you know, after if they consider Microsoft's new proposals,
Speaker 5: if they still don't think that those actually address the
Speaker 5: competition issues at the heart, then this deal could be
Speaker 5: vetoed again and we might go back to the phase
Speaker 5: that we're at before, where we're at the competition appeal
Speaker 5: tribune and we're getting a full of peel. I think.
Speaker 5: Also the most important thing that you touched on a
Speaker 5: moment ago was that Cardile really put to bed any
Speaker 5: claims that they UKCME had bowed to UK political pressure
Speaker 5: or that had in some way its decision to reconsider
Speaker 5: this had in some way been a fit impacted by
Speaker 5: the FDC's loss at court on the eleventh.
Speaker 3: Yeah, trying to still stand by their independence. What then
Speaker 3: does a deal, What recommendations, what remedies are likely to
Speaker 3: actually cut the mustard when it comes to the CME.
Speaker 5: Yes, So Cardile touched on this early in her interview,
Speaker 5: and I think the only sort of remedies are going
Speaker 5: to cut the mustard at this point as divestitures. Bloomberg
Speaker 5: News reported, according to sources earlier that that this could
Speaker 5: possibly be a divestiture of their UK cloud unit. It's
Speaker 5: yet to be made public or clear what the actual
Speaker 5: remedies as that Microsoft is going to offer up the CME,
Speaker 5: so that still remains to be seen what exactly will
Speaker 5: cut the mustard.
Speaker 4: I started that phrase and we're going to keep on
Speaker 4: running with it. A little bit of.
Speaker 3: British sotuly in the morning and it's great to catch
Speaker 3: up with you. Go have a great weekend, Kafum Gammel.
Speaker 3: She has been one busy woman throughout this week. Meanwhile, well,
Speaker 3: the whole market's been busy, hasn't it In terms of
Speaker 3: fun flow data, for example, come from Bank of America
Speaker 3: showing that despite the distancing themselves from broader equity markets,
Speaker 3: investors have continued to pile into tech stocks. Tech funds,
Speaker 3: for example, attracted one point eight billion dollars in the
Speaker 3: past week, pulling in money for the fourth consecutive week
Speaker 3: and while outperforming the rest of the sectors. How long
Speaker 3: can this last Mahony Asset Management. See you, Ken Mahoney,
Speaker 3: who is invested in Microsoft, Apple, and Vidia, Tesla to
Speaker 3: name but a few, and peace to say, welcomes us
Speaker 3: and Ken. It is interesting that tech has just continued
Speaker 3: to fight off all that demongering, the fear of the economy.
Speaker 4: And plow forward.
Speaker 3: Will that come to an end perhaps with the rebalancing
Speaker 3: and then as that one hundred for example, Look.
Speaker 6: I don't think it's gonna happen because the rebalance of
Speaker 6: the NAZAG one hundred. I think it's got legs and
Speaker 6: the AI we keep talking about, and a lot of
Speaker 6: people feel like they missed it. I think when the
Speaker 6: second or third inning of this AI, I mean, this
Speaker 6: is gonna be a multi year move here. And you
Speaker 6: know the picks and shovels of the last decade or
Speaker 6: nineteen ninety nine, where was you know, Oracle and Cisco
Speaker 6: pixing shovels of this gold rush, Microsoft and the videos
Speaker 6: and the names you mentioned before. So I think in
Speaker 6: the early innings, yes, it's gonna be violatile. I don't
Speaker 6: think the nats QUE one hundred be shuffling is going
Speaker 6: to change anything because I think the fundamentals are very
Speaker 6: strong for this group.
Speaker 3: Well, the fundamentals be shown in these earnings. Will we
Speaker 3: get a guide of how much AI is going to
Speaker 3: power revenue?
Speaker 6: I think so On Microsoft, by the way, which come
Speaker 6: out next week. They're very good for beating estimates and
Speaker 6: raising guidance, and then the analysts have to scramble to
Speaker 6: catch up with them and raise targets and so forth.
Speaker 6: So I suspect we're going to see that again for
Speaker 6: some time until the levels off, and this AI is
Speaker 6: helping companies longer their costs and helping their top line.
Speaker 2: So it's a creative.
Speaker 6: So it's not just a line item on an expense sheet.
Speaker 6: It's actually something that can actually help these companies.
Speaker 3: Ken a bit tactical, perhaps, but how do you play
Speaker 3: the run up and the aftermath of an earnings?
Speaker 4: Do you try and trade of it in any way?
Speaker 3: Do you just wait until the print comes and well
Speaker 3: move within that volatility?
Speaker 4: Do you trade or do you just push through?
Speaker 6: I think you kind of pushed through again. It's so
Speaker 6: difficult sometimes, like it's like rushroa roulette. We never know
Speaker 6: which ones are going to sell off, which one's going
Speaker 6: to go last week a couple of days ago Tesla
Speaker 6: Netflix we saw kind of sell the news again a
Speaker 6: little soft guidance, So we don't know exactly how they're
Speaker 6: going to go. But and I just see past this quarter,
Speaker 6: and that's probably with the investors. They kind of get in,
Speaker 6: they trade wrong, they get out, and again these are
Speaker 6: multi year I hope to think multi year growth because
Speaker 6: of what's happening AI and some other thinking about Microsoft
Speaker 6: by the way, all the different verticals you get when
Speaker 6: you own Microsoft, from gaming to network security, to Windows
Speaker 6: to you know, cloud to now AI integrating all that,
Speaker 6: So this to me is not just a good quarter
Speaker 6: to jump in and jump out. I think there's there's
Speaker 6: a lot more tailwind here.
Speaker 3: But valuations ken thirty six times future earnings currently for Microsoft,
Speaker 3: it was eighty or something for no One.
Speaker 4: Do we see a bit of softness?
Speaker 3: Do you think these valuations can be vindicated in the
Speaker 3: short term, in the near.
Speaker 6: Term, Well, that's what we were going through this digestion
Speaker 6: process because these multiples are really kind of whacko. We
Speaker 6: get it, but the old side is too. You see
Speaker 6: some valuations with the PE six and PE seven, you
Speaker 6: look aback a year and now later and you still
Speaker 6: find some of those same companies still trading with multiples
Speaker 6: that are stuck at six or seven. So what we've
Speaker 6: seen with top line growth, with the analysts trying to
Speaker 6: play catch up, we've seen some of these multiples expand
Speaker 6: and justifiably sol because there's only a handful of companies
Speaker 6: that can really roll the way they're growing. And that's
Speaker 6: why again those multiples.
Speaker 3: Oh I'm interested in that only a handful? Are there
Speaker 3: only a handful? Are we not looking hard enough? There's
Speaker 3: sort of Kathy Wood perspective that in videos just so obvious,
Speaker 3: try and go for some slightly different AI plays.
Speaker 6: You know, I kind of think about Picte and Shovel
Speaker 6: are kind of the gatekeepers of this, and now would
Speaker 6: be Microsoft in the video and some of those names.
Speaker 6: There are gonna be some secondary names. It's gonna be
Speaker 6: like the dot com and the nineteen nineties. We're gonna
Speaker 6: have go from three to twenty. Well, there are one
Speaker 6: stra ponies. What I like about is that these companies
Speaker 6: have a lot of verticals. Again, you think about the
Speaker 6: video with the timeless striving, the video with a gaming
Speaker 6: and everything that they're doing and a creative to earnings
Speaker 6: is now this AI place, So I'd rather play this
Speaker 6: way with the kind of proven winners that already have
Speaker 6: a lot of verticals, have a lot of businesses, have
Speaker 6: a loud opportunities within those businesses. Oh and then let's
Speaker 6: at AI on top of that, and then then you
Speaker 6: get this kind of great growth rate.
Speaker 4: Ca Mahoney.
Speaker 3: Great to have some time with you, Thank you, Mahony,
Speaker 3: Asset Management CEO. It's going to be busy week ahead,
Speaker 3: so you have a fun weeknd ahead of it. Meanwhile,
Speaker 3: coming up, we're gonna be talking more about investing in
Speaker 3: ourltivision Intelligence. But at the earlier stage in private stage
Speaker 3: one received bending six hundred million dollars with a new
Speaker 3: fund backing startups focus solely on artificial intelligence at all,
Speaker 3: with Vege capitalists behind the investment. Next, I mean, well,
Speaker 3: look we're just talking about earnings. Let's talk about one
Speaker 3: company that has been under strain from a share price
Speaker 3: perspective today following its earnings, American Express ames actually lower
Speaker 3: after investors concerned by some slower payment volume growth. But
Speaker 3: I had some time with the CEO C Square a
Speaker 3: little bit earlier on the phone.
Speaker 4: He's less concerned.
Speaker 3: He was trying to reiterate, look look at our record revenue,
Speaker 3: look at our record at earnings for share, look at
Speaker 3: our record billings. And he's also showing really about some
Speaker 3: of the risks surrounding this economy. He feels, actually those
Speaker 3: recession risks are fading, that hard landing fading as we
Speaker 3: go forward. So really we see a company that he
Speaker 3: says is standing by its growth plans firing on all cylinders.
Speaker 3: And it was just some tough comparisons if you're looking
Speaker 3: from the previous year in extraordinary numbers that we had
Speaker 3: in twenty twenty two post COVID interesting take on AI, though,
Speaker 3: he's trying to push back on some of the dangers
Speaker 3: of generator AI, particularly when you're looking at credit scoring,
Speaker 3: worries about bias in the system. He says, look, our models,
Speaker 3: like everyone else in the industry, heavily regulated, heavily reviewed.
Speaker 4: Our algorithms are reviewed.
Speaker 3: This doesn't come cheap, and the FED and not the
Speaker 3: oversight bodies have them in their sites, so he's.
Speaker 4: Not too fearful of that bias.
Speaker 3: From New York as a Bloomberg Technology.
Speaker 4: Wing Bench Capital is betting big on artificial intelligence.
Speaker 3: Now, the firm closing a six hundred million dollar fun
Speaker 3: that's forth to back startups focused on just really AI.
Speaker 4: Let's get right to it. The wing founding partner goa gard.
Speaker 3: I mean, is there anything out there that isn't in
Speaker 3: some way AI powered?
Speaker 1: Now? Well, our view is that.
Speaker 7: In today's day and age, as we move from digital
Speaker 7: transformation to AI transformation, if you're investing in business technology,
Speaker 7: it's not worth doing unless it's AI focused. And an
Speaker 7: example might be do you think people are even going
Speaker 7: to buy a tractor that is not A powered and
Speaker 7: cannot drive itself? So we feel that way about the
Speaker 7: entire landscape.
Speaker 3: Okay, so do you put money to work on AI
Speaker 3: powered tractor companies or is it really more about the
Speaker 3: foundational models, about the underpinnings about these companies that are
Speaker 3: going to be almost plugged into other corpus out there.
Speaker 7: Well, first, thank you for having me on the show.
Speaker 7: About half of our investments are in business applications and
Speaker 7: the other half are in software infrastructure that powers AI,
Speaker 7: data security, developer led tools, things like that. Let's mostly
Speaker 7: software and why.
Speaker 3: Are those entrepreneurs where are those companies being built? There's
Speaker 3: been this narrative that Silicon Valley is back where it's at.
Speaker 4: When it comes to AI.
Speaker 3: Is that true or is this more democratized across the
Speaker 3: US and internationally?
Speaker 7: Yeah, it is fairly significantly in California where we have
Speaker 7: companies all over the country, and we also have some
Speaker 7: in Europe and Israel.
Speaker 3: We've just been looking at some of your current portfolio
Speaker 3: already Bedrocks System inserting Unicorn, and you've had successful exits
Speaker 3: in the past. I think of fire Eye, I mean
Speaker 3: long ago, Jasper required by Cisco Mobile Iron These a
Speaker 3: lot of these not only were acquisitions or IPOs. How
Speaker 3: does that market for exits even look now at the
Speaker 3: moment for.
Speaker 7: You, well, the IPO windows kind of locked up right now,
Speaker 7: and in fact, i'd ask you when you think it's
Speaker 7: going to open.
Speaker 1: You've talked to everybody.
Speaker 7: But in the long term, we feel that capital markets
Speaker 7: go up and down, but the role of technology in
Speaker 7: the economy is growing, and particularly this time around, we
Speaker 7: feel that anything that can tolerate ninety five percent accuracy
Speaker 7: will be impacted or significantly by AI. So we just
Speaker 7: feel the opportunity is so enormous and will pervade.
Speaker 3: All of GDP and the LPs saw that opportunity to
Speaker 3: how quickly were you able to raise the six hundred million.
Speaker 1: Yeah, it went pretty quickly.
Speaker 8: It was a slightly more difficult environment than last time,
Speaker 8: but in some ways our last one was raised right
Speaker 8: at the start of COVID, so this one felt a
Speaker 8: little easier and it took about the same amount of
Speaker 8: time in a few months.
Speaker 3: And you really are focused on the very early stage.
Speaker 3: How broad are these companies already when you're starting to
Speaker 3: look at them and you're looking at.
Speaker 4: Entrepreneurs with an idea.
Speaker 3: Are you having to see revenue already being generated? How
Speaker 3: are you deciding which companies to back in what is
Speaker 3: a very noisy field.
Speaker 7: Half the companies are seed stage, the other half our
Speaker 7: series age. We write checks in the seed up to
Speaker 7: three or four million, and in the series age up
Speaker 7: to twenty million as our first check, So it's a
Speaker 7: pretty wide remit. I would say that we are quite
Speaker 7: distinct in that ninety five percent of our companies have
Speaker 7: less than a milllion dollars in revenue when we invest.
Speaker 7: So we invested Inception pre product in very early revenue
Speaker 7: as well, and we're willing to take on that uncertainty
Speaker 7: because it results in the best long term returns.
Speaker 3: Well, come back when you start to write those checks,
Speaker 3: when we start to hear about or maybe even an
Speaker 3: Ibo window opening for your larger, more well older mature companies.
Speaker 3: Wing Value Partner, thank you so much for your time.
Speaker 3: Time now for talking tech. First up TikTok Shop. It's
Speaker 3: teaming up with a fintech platform at Home to expand
Speaker 3: its online retail platform in Malaysia. And platform will integrate
Speaker 3: a tomes by now pay later service check out rivaling
Speaker 3: the likes of c and Ali. Babba's BMPL options. Parent
Speaker 3: company fit Dance says it's looking to invest billions of
Speaker 3: dollars in Southeast Asia markets in the coming years. Meanwhile,
Speaker 3: Open Ai seems to support certain requirements here government regulation.
Speaker 3: This is according to an internal policy memo drafted Forralling
Speaker 3: a meeting with the White House officials and other tech
Speaker 3: executives back in May.
Speaker 4: Now.
Speaker 3: The document laid out a series of policy commitments and
Speaker 3: a government licensing system. Executives from leading AI firms like Well, OpenAI,
Speaker 3: Meta Alphabet will join President Biden today to discuss transparency
Speaker 3: and security of AI.
Speaker 4: Will have that plus FTX.
Speaker 3: It's banking on a new lawsuit against its centorious founder
Speaker 3: and former Topic associates.
Speaker 4: In order to recover cash for its creditors.
Speaker 3: Now the suit Sam Mackwin Freed, co founder Gary Wang,
Speaker 3: and others, it's all as from making fraudulant transfers that
Speaker 3: benefited them personally but in nothing for FTX more broadly,
Speaker 3: and the complaint is filed Thursday, and it seeks to
Speaker 3: undo more than a billion dollars from those transactions. And
Speaker 3: while those details just keep on coming. And what's so
Speaker 3: interesting is some of the intricacies within this recent lawsuit
Speaker 3: and the co founder Sam Mamuin Freed and former top executives.
Speaker 3: Let's get straight to it with Hannah Miller to really
Speaker 3: discuss well, some of the more questionable behavior. And the
Speaker 3: thing that caught my eye and we'll catch everyone's eye
Speaker 3: is a private island.
Speaker 4: Really what was that for?
Speaker 9: Yes, So, the complaint alleges that there was this memo
Speaker 9: exchanged between an executive at the FTX Foundation, which was
Speaker 9: the charity arm of FTX, and Gabriel Bankman Freed Sam Bankman,
Speaker 9: Freed's brother, and it basically laid out this plan that
Speaker 9: you know, hey, maybe we should buy the country of
Speaker 9: Nauru uh and build a bunker there that could be
Speaker 9: used to protect effective altruists in the event of an
Speaker 9: apocalyptic you know, crisis that would take over the world.
Speaker 9: And we know that Sam Bankman Freed publicly said that
Speaker 9: he embraced effective altruism, so it makes sense that that's.
Speaker 4: Who they'd want to protect.
Speaker 3: A wonder who would have been in that crew, uh
Speaker 3: if any la. Some of the other allegations are well
Speaker 3: just about the sheer amount of money that was already
Speaker 3: realized to have been lost prior to the ultimate demise,
Speaker 3: particularly by well heads of alimedia, and like can you
Speaker 3: just detail some of the other more shocking revelations and
Speaker 3: just the knowledge of how badly this was doing.
Speaker 9: So the complaint alleges that in March twenty twenty two,
Speaker 9: Caroline Ellison, the former CEO of Hour Meter Research, estimated
Speaker 9: that there was a ten billion dollar deficit around the
Speaker 9: same time she gave herself.
Speaker 4: A twenty two million dollar bonus.
Speaker 9: That's what the complaint alleges. So it's very interesting to
Speaker 9: see that contrast there, but it highlights how the executives
Speaker 9: really you know, were very generous to themselves that they
Speaker 9: took you know, huge bonuses equity even in your common shares.
Speaker 4: I mean some of the details.
Speaker 3: What was it potentially alleged fraudulent transfers of four hundred
Speaker 3: and seventy seven million dollars worth of FTX common shares
Speaker 3: to the former director of engineering, payments made by Sam
Speaker 3: Macmunfried allegedly granted himself, right some more than six million
Speaker 3: dollars in equity. I mean, all of this starts to
Speaker 3: add up. Can you just remind us of the timeline
Speaker 3: of all of this to when these sorts of accusations
Speaker 3: are going to be laid, whether we can really understand
Speaker 3: whether there's truth to them or not, and ultimately whether
Speaker 3: the creditors are going to see much So.
Speaker 9: The allegations spread out over a period of several years
Speaker 9: leading up to the collapse of FTX. You know, there's
Speaker 9: stuff happening in twenty twenty one, twenty twenty two, according
Speaker 9: to the complaint, but that is prior to the collapse
Speaker 9: of FTX, which was in November twenty twenty two. Prior
Speaker 9: to that, the company had given this perception that it
Speaker 9: was extremely strong and engaged in a series of bailouts
Speaker 9: helping out struggling crypto companies. During the summer of twenty
Speaker 9: twenty two.
Speaker 3: I'm just kind of also interested, I suppose in robin Hood.
Speaker 3: Within all of this, can you just remind us as
Speaker 3: to how much money ended up being purchased of a
Speaker 3: public company. We're all so aware of that purchase and
Speaker 3: then felt the one point FTX wanted to actually buy
Speaker 3: out robin Hood.
Speaker 4: They used money from Alamedia.
Speaker 9: Though, yes, the complaint alleges that and Bankment Freed and
Speaker 9: Gary Wang, his co founder, actually took over five hundred
Speaker 9: and million, five hundred million dollars from Alameda and used
Speaker 9: that to buy robin Hood shares. So they just took
Speaker 9: that money. They didn't really have to give anything in return,
Speaker 9: according to the complaints allegations. So it's pretty crazy to
Speaker 9: see that they were really, you know, taking huge steps
Speaker 9: in terms of you know, looking at robin Hood.
Speaker 3: I feel I've become numb to pretty crazy allegations and
Speaker 3: you keep them coming. Thank you so much, Hannah Miller
Speaker 3: on All Things FTX. Remember you've got to go and
Speaker 3: listen to the podcast. So they have about Sammi Munfried
Speaker 3: as well. Welcome back to Bloomberg Technology. Now let's talk
Speaker 3: a little bit what's happening over in Washington, because leading
Speaker 3: USAI companies publicly admitted to safeguards to the booming technology
Speaker 3: at the White House's request. Today, President Biden joined by
Speaker 3: executive from Amazon and Alphabet Meta, Microsoft, Open Ai, and
Speaker 3: others for a key event. We understand now one advisor
Speaker 3: to the administration has been Neverinasing Creato AI.
Speaker 4: CEO.
Speaker 3: Creato is a responsible AI governance platform and you empower
Speaker 3: organizations basically to deliver to embed AI responsibly by trying
Speaker 3: to measure, monitor and manage some of the AI risks.
Speaker 3: And what do you make of these safeguards that are
Speaker 3: really being driven by the administration right now?
Speaker 10: Well, Carolyn, so good to see you again and thanks
Speaker 10: for having me on the show.
Speaker 2: You know, just a reminder Credo AI.
Speaker 10: We are on this mission to ensure that AI is
Speaker 10: always in the service of humanity, and we do so
Speaker 10: by providing an AI governance software that provides that continues
Speaker 10: oversight and accountability of artificial intelligence by managing, mitigating, and
Speaker 10: monitoring AI introduced risks. So today's announcement, we are very
Speaker 10: encouraged to see the Biden Harris administration, you know, continuing
Speaker 10: to depict their commitment to responsible innovation as well as
Speaker 10: to AI governance.
Speaker 2: I think a lot will be seen in the.
Speaker 10: Coming months because right now these are still voluntary commitments
Speaker 10: and what is going to be.
Speaker 2: Important is the executive.
Speaker 10: Order that is going to be coupled with these commitments.
Speaker 10: That's where the eyes are on right now.
Speaker 3: They claig over a meta saying these voluntary commitments are
Speaker 3: important first step, and let's just talk about some of
Speaker 3: the commitments there because big names also private names like
Speaker 3: Anthropic and Inflection AI are in on this and they're
Speaker 3: saying they're going to share information most importantly trying to
Speaker 3: mitigate some of the risks for governments and civil society.
Speaker 3: But what do you make of the sort of water
Speaker 3: marking virtual water marking and being understood basically when you're
Speaker 3: looking at AI.
Speaker 10: Yeah, Carolyn, I think watermarking is a really important aspect
Speaker 10: of really figuring out, you know, the provenance these systems.
Speaker 2: But before we go there, I want to step back and.
Speaker 10: Just focus on what these voluntary commitments are. As you
Speaker 10: indicated that these voluntary commitments are being committed to by
Speaker 10: seven leading generative Aian Foundation model providers, and they are
Speaker 10: focused on security, safety, and trust, and as you can
Speaker 10: imagine these are not comprehensive, but a great forst step
Speaker 10: to ensure that, you know, the US citizens and the
Speaker 10: federal government deserve the transparency from these large language model providers.
Speaker 10: So coming back to water marking, I think one of
Speaker 10: the core things is really understanding the entire provenance of.
Speaker 2: How these systems are built, where.
Speaker 10: The data is coming from, and water marking is a
Speaker 10: mechanism to really distinguish what is human generated versus what
Speaker 10: is AI generated. So though an important commitment, there needs
Speaker 10: to be more work done in that space.
Speaker 3: We understand actually the system needs to be developed also,
Speaker 3: I mean we understand that you required to report some
Speaker 3: of the risks, but they're not actually required to eliminate
Speaker 3: the risks.
Speaker 4: How do you go about doing that?
Speaker 2: Yeah, I think that's a really important question.
Speaker 10: You know, as we look at some of the poor
Speaker 10: things missing in today's White House announcement. One is, as
Speaker 10: you mentioned, not only reporting, but how are you going
Speaker 10: to hold these companies accountable to what they're reporting against.
Speaker 10: There is no indication in today's announcement around those commitments,
Speaker 10: those benchmarks, and I think those are really critical thing
Speaker 10: that we should be you know, watching out for the
Speaker 10: second thing is these are completely voluntary, So I think
Speaker 10: going back to we've seen in the history that voluntary
Speaker 10: commitments don't really have the impact that we are you know,
Speaker 10: looking to see from these important but.
Speaker 2: Limited set of model providers.
Speaker 10: So the next steps, as I mentioned, is the executive
Speaker 10: of order and more importantly, what would that executive order mandate?
Speaker 2: Because I think.
Speaker 10: What these large POWERFOLII systems need right now is set
Speaker 10: informed regulations and mandates to make sure that there is
Speaker 10: delivery against what is expected of them.
Speaker 3: Okay, so in executive order coming from the administration again
Speaker 3: because Congress is well, unsurprisingly perhaps a little bit slow
Speaker 3: to truly try and get through any changes in law
Speaker 3: and overseeing AI there.
Speaker 4: But what about how it compares to what's Europe's upting.
Speaker 10: I think right now one of the great things that
Speaker 10: I've seen with today's announcement is that there has been
Speaker 10: discussions with the allies, you know, notably we've seen engagement
Speaker 10: with France, Germany, India, UK and others. But I think
Speaker 10: what's going to be really important in the coming weeks
Speaker 10: and months is how there is a global EI governance
Speaker 10: framework aligned to you know, what we care about in
Speaker 10: the United States, but also the great work that European
Speaker 10: Commission has done with respect to the Risk Based EUAI Act,
Speaker 10: which is you know, in works right now and most
Speaker 10: likely going to be past it this year.
Speaker 3: From your perspective, what is self regulation like VISA be
Speaker 3: perhaps and is there some sort of way in which
Speaker 3: we can fundamentally oversee these companies. Is there some sort
Speaker 3: of new part of a regulator that needs to oversee it?
Speaker 10: Yeah, Carolyn, So you know, I do want to note
Speaker 10: that I Advice President Biden, and I sit on the
Speaker 10: National AIA Advisory Council, but.
Speaker 2: Today I'm speaking on personal capacity and as a CEO
Speaker 2: of Predo AI.
Speaker 10: So when we look at these self regulations though, an
Speaker 10: important step to really showing commitment that you know, these
Speaker 10: powerful AI technologies need to be transparent and in service
Speaker 10: of US citizens and federal government. You know, we need
Speaker 10: to make sure that as we progress, there is a
Speaker 10: bigger focus on what does that continuous oversight look like?
Speaker 2: And right now there's two pathways.
Speaker 10: In the short term, we should be looking at our
Speaker 10: current agencies and building capacity to ensure that they provide
Speaker 10: that oversight of.
Speaker 2: These powerful systems.
Speaker 10: But we are also you know, looking ahead in long term,
Speaker 10: and do believe that there's room for a global regulatory
Speaker 10: body that is really tasked with keeping pace with this
Speaker 10: very fast changing, very you know, massive scale technology and
Speaker 10: providing oversight to it.
Speaker 3: And can that break through the geopolitical tension between US
Speaker 3: and China?
Speaker 2: You know, we hope so.
Speaker 10: But I think right now what is really important is
Speaker 10: making sure that United States and its allies come together
Speaker 10: on this global regulatory framework and start putting the foundation
Speaker 10: for what this regulation regulatory body globally could look like.
Speaker 3: Avaruna, great to get your expertise when you are indeed
Speaker 3: helping advise the administration, but here is a capacity, as
Speaker 3: credo A CEO, Averrena is saying me, thank you.
Speaker 4: Meanwhile, sticking with Biden, the president seeing a.
Speaker 3: Major setback to one of his key legislative achievements after
Speaker 3: TSMC has been forced to delay production and its project
Speaker 3: in Arizona, key battleground state next year's election. The company
Speaker 3: won't start production of chips at the Arizona plant until
Speaker 3: after the US presidential elections in twenty twenty five, citing
Speaker 3: look a lack of skilled labor as.
Speaker 4: Well as costs. In America, there's reasons for the postponement.
Speaker 3: Let's talk about VC money a little bit more now next,
Speaker 3: because coming up, safire Adventures is joining us. Of course,
Speaker 3: it's going all in on AI with one billion dollar commitment.
Speaker 4: But we'll discuss the firm's president and co founder I
Speaker 4: do a little bit more. Next. This is Bloomberg Global
Speaker 4: Software VC firms. Safire Venture has.
Speaker 3: Just announced well a commitment of some undeployed capital specifically
Speaker 3: towards AI investing, particularly technology setups that are specializing, perhaps
Speaker 3: even in generative AI. The firm will focus on all
Speaker 3: areas of emerging AI techtact though we understand foundational models
Speaker 3: and neighbors, middleware, next gen AI applications, let's stick into
Speaker 3: all of it. Safire Ventures president and co founder Jadas
Speaker 3: joins us more for today's VC Spotlight and ju are
Speaker 3: the second VC on today talking about a commitment in AI.
Speaker 4: The previous was a new round of funding.
Speaker 3: Yours is money you'd raise, but really want to signal
Speaker 3: basically to entrepreneurs that this is your sweet spot that
Speaker 3: you want to remain and show commitment to AI. You
Speaker 3: already have loads though, right, how much have you already
Speaker 3: got deployed across ais.
Speaker 1: First of all, Caroline, thank you for having me on
Speaker 1: the show. We have about ten billion under management. Ron
Speaker 1: Off that about two and a half billion has been
Speaker 1: invested already in sixty AI companies. This new commitment and
Speaker 1: in AI companies is really a signal to entrepreneurs that
Speaker 1: you know, not only are we open for business for
Speaker 1: investing in AI oriented companies, but more importantly, we are
Speaker 1: creating a full suite of services that will help these
Speaker 1: entrepreneurs build and you know, the next generation of AI companies.
Speaker 3: Oh that almost takes me back to the heady days
Speaker 3: of what twenty one, where all vcs are out there
Speaker 3: trying to say, why choose me? Isn't that fierce the
Speaker 3: competition for the latest and great stay I entrepreneurs.
Speaker 1: No, that's not the case. You know. I think it's
Speaker 1: a little bit of a signal within our firm to
Speaker 1: help kind of solify the goals of what all the
Speaker 1: investors should be looking for. But it's also a set
Speaker 1: of services that we are building up around AI where
Speaker 1: we kind of go in and help our portfolio companies
Speaker 1: and the company that we invest in in how they're
Speaker 1: going to use AI and how they're actually going to
Speaker 1: take it to market and figure out how they can
Speaker 1: use AI to solve certain solutions and certain problems that's
Speaker 1: out there.
Speaker 3: You tend to invest in companies that already have some
Speaker 3: sort of product market fit. What pain points are you
Speaker 3: really focused on that you want the AI to solve.
Speaker 1: Well, first and foremost, you know, I think this new
Speaker 1: generation of AI, the generative AI, will really really help
Speaker 1: increase the way that people are actually change the way
Speaker 1: people interact. The user interface is going to change completely, Right.
Speaker 1: We typically interact with each other through voice and text
Speaker 1: and in the natural way, but when we interact with
Speaker 1: an application, we're always using a keyboard and announce, right,
Speaker 1: and that will completely change with generative AI that's coming out.
Speaker 1: But I think fundamentally, you know, this technology that has
Speaker 1: come up recently with large language models is going to
Speaker 1: change the way we actually do and solve all our tasks. Right.
Speaker 1: The way we develop software, the way we you know,
Speaker 1: go in and create and do certain tasks will all
Speaker 1: be changed because of this new technology.
Speaker 3: What are valuations like to some of the companies that
Speaker 3: you're currently looking at.
Speaker 1: Yes, the valuations are back to the heady days, right
Speaker 1: where if you have AI companies you know, you can
Speaker 1: raise that practically any valuation you want, but we actually
Speaker 1: believe in the fundamental still. So we have been pretty
Speaker 1: looking at companies that have efficient business models but are
Speaker 1: using AI to kind of change the way they are
Speaker 1: going to market, the way they are changing the problem
Speaker 1: that they're solving.
Speaker 3: I feel like I'm asking this day in day out,
Speaker 3: but I'm not yet sure. I didn't know if you
Speaker 3: are as to how the overall open source versus closed
Speaker 3: foundational models ends up being used.
Speaker 4: How do you see that evolving?
Speaker 3: What are the key areas that you feel startups should
Speaker 3: be building in.
Speaker 1: Yeah, Look, I think that the fundamental thing that has
Speaker 1: changed with this new generation of technology is the data mode.
Speaker 1: As we talk about, right, models that are out there,
Speaker 1: you know, whether they're open source or closed source is
Speaker 1: as good as they can be. Actually, the application that
Speaker 1: are being built on the models are far behind and
Speaker 1: the models themselves. So we fundamentally think it doesn't matter
Speaker 1: if it's an open source or a closed source model.
Speaker 1: It's how you use the data to train those models
Speaker 1: and provide the intelligence and solve the problem that you
Speaker 1: need to solve. Right, And I think the startups that
Speaker 1: will be successful are the ones who are able to
Speaker 1: use this data that they're able to collect and preserve
Speaker 1: and solve the problem. It's not going to be about
Speaker 1: the foundational models, right I think those things have been done,
Speaker 1: and there might be some closed source models that might
Speaker 1: become popular, but overall, I think open source models are
Speaker 1: going to win out, and it's all about the data
Speaker 1: and how you use the data train those models.
Speaker 4: So data is value proposition here Jabe.
Speaker 1: Exactly.
Speaker 4: That's sort of changing as well.
Speaker 3: I mean, individuals suddenly become aware of how much their
Speaker 3: own data is valuable. We have certain institutions trying to
Speaker 3: stop the amount of scraping that's going on.
Speaker 4: How are you seeing startups.
Speaker 3: Navigate this and ensure that they do build these modes
Speaker 3: and they have access to the right data to create.
Speaker 1: Real value exactly. Well, these are all opportunities for startups
Speaker 1: right where large enterprises do not want their data to
Speaker 1: go out to the open source community, and other people
Speaker 1: can use them use their data to train their models.
Speaker 1: So this is an opportunity. And also we are looking
Speaker 1: for startups who are able to get to the data
Speaker 1: and use that data you know in some way that
Speaker 1: they solve the problem. So I think, you know, there's
Speaker 1: going to be going to see number of use cases
Speaker 1: where large enterprises will build applications because they have the
Speaker 1: data within you know, in their in their in house
Speaker 1: programs or software. And then there will be startups that
Speaker 1: enable these prices to build applications using the data that
Speaker 1: they have and provide you know, some kind of solution
Speaker 1: for their customers. And then of course there's going to
Speaker 1: be companies that enable you to protect your data right
Speaker 1: so that it doesn't get corrupt or used by somebody
Speaker 1: else to train their models and make a profit out
Speaker 1: of it.
Speaker 3: What do you think these B to B companies are
Speaker 3: being grown right now? And how diverse are those founders?
Speaker 1: You know, the founders that we are finding again are
Speaker 1: coming from areas where they actually know the domain. Right
Speaker 1: in B to B software, having the domain is very
Speaker 1: very critical. So if you're coming from legal tech or
Speaker 1: if you're coming from healthcare, you know the domain and
Speaker 1: you know the problem, and then you're going out and
Speaker 1: using this new technology to actually solve this problem better
Speaker 1: and easier. Right, So, we are still looking for entrepreneurs
Speaker 1: who have domain expertise because just because you are you know,
Speaker 1: in depth in AI or generative AI doesn't mean that
Speaker 1: you are understand how you can solve the problem for
Speaker 1: a lawyer or for a healthcare specialist.
Speaker 4: Jade As, thank you for joining us.
Speaker 3: SAFA Ventures president co founder on the reallocation of funds
Speaker 3: really specifically towards artificial intelligence.
Speaker 4: It's been going viral.
Speaker 3: New Jersey suing the federal government this in the hopes
Speaker 3: to block New York's congestion pricing proposal, which would charge
Speaker 3: drivers entering Midtown Manhattan as much as twenty three dollars.
Speaker 4: Bloomberg's Michelle Caski joins us now for.
Speaker 3: More and they call it a brazen money grab?
Speaker 4: Is it, Michelle?
Speaker 11: From New Jersey's perspective, it is. They're saying, Look, our
Speaker 11: residents New Jersey commuters heading into Manhattan already paid tools
Speaker 11: and crossings such as the Hudson Tunnel and Kinternnel, George
Speaker 11: Washington Bridge. And what they're saying is if you put
Speaker 11: this additional potential twenty three dollar charge on top of that,
Speaker 11: that's going to be it's going to be tough for
Speaker 11: New Jersey families.
Speaker 3: They're also trying to fight this from an environmental impact perspective,
Speaker 3: Can you explain that they're saying that, particularly to the
Speaker 3: north of Manhattan and the George Washington Bridge, that you're
Speaker 3: going to have a build up.
Speaker 2: That's that's the risk here.
Speaker 11: That's that is that is what could happen is you
Speaker 11: could have more traffic in certain areas of New Jersey,
Speaker 11: maybe even the South Bronx, increased pollution in those areas,
Speaker 11: while at the same time congestion pricing. The goal of
Speaker 11: congestion pricing is to ease traffic in midtown Manhattan and.
Speaker 2: Produce and reduce pollution in midtown Manhattan.
Speaker 3: How much of a risk is this? I mean, this
Speaker 3: has been done in other cities. I think of London's
Speaker 3: had a congestion charge for years now, but obviously doesn't
Speaker 3: have different states. They perhaps just have different counties to
Speaker 3: be marked to be navigating with. But ultimate there's always
Speaker 3: some nimbiasm to all of these things. Do you think
Speaker 3: that they can be navigated?
Speaker 11: There is a chance, I mean, maybe that is part
Speaker 11: of Governor Phil Murphy's New Jersey Governor Phil Murphy's plan
Speaker 11: is to go forward with this suit against the United
Speaker 11: States Department of Transportation in.
Speaker 2: The hopes that New York will compromise.
Speaker 11: In some way maybe give some sort of an exemption
Speaker 11: to New Jersey commuters.
Speaker 2: That's very possible. But the problem with trying to figure
Speaker 2: out a.
Speaker 11: Tolling structure is that the more exemptions you give that
Speaker 11: means the higher the actual toll needs to be because
Speaker 11: other motorists will be making up for those exemptions.
Speaker 3: Yeah, the point is to either have more evs so
Speaker 3: it's less dabveraging into the environment if you don't count
Speaker 3: the battery and element, or indeed more people on public
Speaker 3: transports so you cut down on those fumes. We'll see
Speaker 3: how the battle commences. Michelle Caskey, thank you sin great
Speaker 3: on is there? Meanwhile, look, that.
Speaker 4: Does it for this day, this week of Bloomberg Technology.
Speaker 4: Do not forget to check out our podcast though you
Speaker 4: can find it on the terminal if you've got one.
Speaker 3: Also go online on Apple or Spotify, on iHeart from
Speaker 3: New York and well from New Jersey.
Speaker 4: Just then as well, this is Bloomberg Technology. Have a
Speaker 4: wonderful weekend.